Category Archives: Peak Oil

What happens after the gold rush?

Peak Oil in the New York Times

Thanks to alert reader Tad L.  This article shows again that peak oil is moving into the mainstream.  However I may be too sensitive, because I think this makes the people who understand the realities of peak oil to seem….kooky.  And I think the article focuses too much on the truly nutty survivalist aspect of peak oil.  No one survives on guns and beans and gold. The article does relate the gap that exists bewteen the people who can see what’s happening and those who can’t/don’t want to.

What do you think?

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Imagining Life Without Oil, and Being Ready

By JOHN LELAND, New York Times June 5, 2010

As oil continued to pour into the Gulf of Mexico on a recent Saturday, Jennifer Wilkerson spent three hours on the phone talking about life after petroleum.

For Mrs. Wilkerson, 33, a moderate Democrat from Oakton, Va., who designs computer interfaces, the spill reinforced what she had been obsessing over for more than a year — that oil use was outstripping the world’s supply. She worried about what would come after: maybe food shortages, a collapse of the economy, a breakdown of civil order. Her call was part of a telephone course about how to live through it all.

In bleak times, there is a boom in doom.

Americans have long been fascinated by disaster scenarios, from the population explosion to the cold war to global warming. These days the doomers, as Mrs. Wilkerson jokingly calls herself and likeminded others, have a new focus: peak oil. They argue that oil supplies peaked as early as 2008 and will decline rapidly, taking the economy with them.

Located somewhere between the environmental movement and the bunkered survivalists, the peak oil crowd is small but growing, reaching from health food stores to Congress, where a Democrat and a Republican formed a Congressional Peak Oil Caucus.

And they have been resourceful, sharing the concerns of other “collapsitarians,” including global debt and climate change — both caused by overuse of diminishing oil supplies, they maintain.

Many people dispute the peak oil hypothesis, including Daniel Yergin, the Pulitzer Prize-winning author of “The Prize: The Epic Quest for Oil, Money and Power” and chairman of IHS Cambridge Energy Research Associates, a company that advises governments and industry. Mr. Yergin has argued that new technology continues to bring more oil.

Andre Angelantoni is not taking that chance. In his home in San Rafael, Calif., he has stocked food reserves in case an oil squeeze prevents food from reaching market and has converted his investments into gold and silver.

The effects of peak oil, including high energy prices, will not be gentle, said Mr. Angelantoni, a Web designer whose company, Post Peak Living, offers the telephone class and a handful of online courses for life after a collapse.

“Our whole economy depends on greater and greater energy supplies, and that just isn’t possible,” he said. “I wish I could say we’ll quietly accept having many millions of people unemployed, their homes foreclosed. But it’s hard to see the whole country transitioning to a low-energy future without people becoming angry. There’s going to be quite a bit of social turmoil on the way down.”

Transition US, a British transplant that seeks to help towns brace for life after oil, including a “population die-off” from Continue reading

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Everywhere I look I see cheap oil

This is from Charles Hugh Smith over at http://www.oftwominds.com/blog.html

The foundation of the American lifestyle and economy is cheap oil. Remove that prop and every aspect of that lifestyle becomes questionable.

Not to sound too cinematic, but everywhere I look, I see cheap oil. The results, of cheap oil, actually; or more precisely, a complete and total dependence on cheap, abundant oil.

When I see expansive, well-manicured lawns, I see cheap oil.

When I see busy airports and taxiing aircraft, I see cheap oil.

When I see news about the latest “surge” in Afghanistan, I see cheap oil.

When I see goods from China on sale for less than a dollar, I see cheap oil.

When I see branded water in plastic bottles, I see cheap oil.

When I see inexpensive meat in supermarket coolers, I see cheap oil.

When I walk through aisles of frozen food, I see cheap oil.

When I see vast swaths of America dotted with rural mini-estates, I see cheap oil.

When I see the “free” Internet, I see cheap oil.

When I see retirees walking their dogs, I see cheap oil. (Ultimately, all pensions are based on cheap oil.)

When I see bakeries which sell only dog treats, I see cheap oil.

When I see jammed freeways, I see cheap oil.

When I feel air conditioning in desert cities, I see cheap oil.

When I see new fiberglas boats with large inboard engines, I see cheap oil.

When I see boxes of “free clothing” set on the curb, I see cheap oil.

When I read about vast bureaucracies dedicated to regulating complex industries, I see cheap oil.

When I see a new iPad, I see cheap oil.

When I meet an enthusaistic young person who is jetting to a distant land to work for an NGO (non-governmental organization), I see cheap oil.

When I see auto rentals, I see cheap oil.

When I see college graduates applying to graduate school, I see cheap oil.

When I see electric bicycles, I see cheap oil.

When I see a Prius, I see cheap oil. (Mining and processing all that lithium into complex batteries requires a lot of energy.)

When I see well-dressed people filing into a corporate meeting, I see cheap oil.

When I see imported furniture, I see cheap oil (and clear-cut native forests).

When I see adverts for cosmetic surgery, I see cheap oil.

When I see a stadium full of sports fans, I see cheap oil.

Virtually all of the things which characterize the “American way of life” are utterly and completely dependent on cheap oil, cheap coal, cheap natural gas and cheap uranium (as long as the waste products of which can be “cheaply” stored).

Once liquid petroleum is no longer abundant and cheap, the “American way of life” will change in ways that few seem to anticipate. Continue reading

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Peak Oil and Freedom of Mobility

This is another review of Charlie Maxwell’s vision of the consequences of peak oil. From early 2008. from energytechstocks.com

Dean of Oil Analysts’ Maxwell: U.S. Pump Prices to Hit $12 to $15 a Gallon

Posted: February 5, 2008

As America enters a world of ever-increasing oil scarcity, there is going to be a “horrific” rise in the price Americans pay for gasoline, Charles T. Maxwell, senior energy analyst at Weeden & Co., told EnergyTechStocks.com.

Think $3 a gallon is high? Get ready for $12 to $15 a gallon within a few years, the “dean” of energy analysts predicted during a discussion about the future of energy that sounded like a preliminary draft of a valedictory address.

12-dollar-gal330.jpg

Maxwell said it will take $12 to $15 a gallon to get Americans to let go of what he called the “precious freedom of mobility.” As much as Maxwell laments the loss, he sees no other way for the U.S. to impose enough conservation to deal with the growing imbalance between oil demand and supply that he sees developing around 2010 and getting worse in 2012 or 2013, as the world hits a “peak” in conventional oil production.

Because he expects Americans to hang on for dear life to their freedom of mobility, Maxwell says there will have to be a “stomping exercise” to “get them to let go.” Basically, Maxwell said, Americans’ freedom of mobility will have to be stomped on by allowing the supply-constrained price of oil to steadily rise starting in 2010, reaching $180 a barrel in 2015 and $300 a barrel in 2020.

Maxwell doesn’t see how this stomping exercise can be avoided. While he sees great promise in oil demand-reducing technologies such as cellulosic biofuel and plug-in electric vehicles, he says there just isn’t enough time left to displace the upwards of 1 billion oil-consuming cars and trucks that are expected to be on global highways when oil production peaks and starts down early in the next decade. Even if the world were suddenly to find a number of huge new oilfields – an unlikely possibility – it would still take too long to develop them to head off this crisis, he noted.

One can only imagine the anger Americans will feel if and when they are staring at $15 a gallon pump prices. (In Europe, presumably, prices might be even higher, unless European nations decide to remove some of their gasoline taxes, which they financially can ill afford to do.) While Maxwell’s “Nightmare on Main Street” scenario may sound far off, the fact is whoever wins the White House this November will face the voters’ wrath, especially if he or she wins reelection.

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Lexington 2030 – A Vision

What will we be like in 20 years?  20 years ago this summer, the first Bush war for oil began its intial stages.  Tim Berners-Lee was formulating his idea for the world-wide web – yeah the web as we know it hadn’t been born.  The world’s population was 5.2 billion humans.  (Today, it’s 6.8 billion. When I was born in 1964, it was 3.2 billion)

This vision acknowledges the imminent threats of energy descent, and climate change, and the end of globalization.  It accepts the fact that “local” is the path to independence.

This is based on Portland’s climate action plan primarily, as well as other peak oil plans such as Bloomington’s.

I’ve been thinking about what Lexington should be doing to prepare for its next comprehensive plan.  I’m betting on business as usual – denial is very strong here - but I’m also beginning now to sound the alarm:  business as usual will not improve or even maintain our quality of life.  And that’s really all we have, isn’t it?

This is not about my values.  This isn’t a choice between values.  The world is changing rapidly to the negative. We must act now to protect ourselves and our place.

Here’s the goal:  An 80% reduction in carbon usage by 2030.   

An 80 percent reduction of carbon emissions by 2030 will entail re-imagining the entire community— transitioning away from fossil fuels and strengthening the local economy while shifting fundamental patterns of urban form, transportation, buildings and consumption.

A vision:

■ In 2030, Lexington and Fayette County are at the heart of a vibrant region with a thriving economy, rich cultural community and diverse, ecologically sustainable neighborhoods.

■ Personal mobility and access to services has never been better. Every resident lives in a walkable and bikeable neighborhood that includes retail businesses, schools, parks and jobs. Most people rely on walking, bicycling and transit rather than driving. Pedestrians and bicyclists are prominent in the region’s commercial centers, corridors and neighborhoods.

Public transportation, bikeways, sidewalks and greenways connect neighborhoods. When people do need to drive, vehicles are highly efficient and run on low-carbon electricity and renewable fuels.

■ Green jobs are a key component of the regional economy. Products and services related to clean energy, green building, sustainable food, green infrastructure, and waste reuse and recovery providing living-wage jobs throughout the community, and Lexington is one of North America’s  hubs for sustainable industry and clean technology.

■ Homes, offices and other buildings deliver superb performance. They are durable and highly efficient, healthy, comfortable and powered primarily by solar, wind and other renewable resources.

■ The urban forest and green roofs cover the community, reducing the urban heat island effect, sequestering carbon, providing habitat, and cleaning the air and water.

■ Food and agriculture are central to the economic and cultural vitality of the community, with backyard gardens, farmers’ markets and community gardens productive and thriving. A large share of food comes from farms within the region, and residents eat a healthy diet, consuming more locally grown grains, vegetables and fruits.

■ The benefits of green infrastructure, walkable and bikeable neighborhoods, quality housing, and convenient, affordable transportation options and public health services are shared equitably throughout the community.

■ Residents and businesses use resources extremely efficiently, minimizing and reusing solid waste, water, stormwater and energy.

■ The Bluegrass region has prepared for a changed climate, making infrastructure more resilient, developing reliable supplies of water, food and energy and improving public health services. Policies, investments and programs are in place to protect the residents most vulnerable to climate change and rising energy prices.

What do you think?

If you care about these issues at all, the City of Portland and Multnomah County Climate Action Plan is a must read:  http://www.portlandonline.com/bps/index.cfm?c=49989&a=268612

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Peak Oil and the Financial Crisis

This is an interview from early 2008 – read it and see if it’s not dead on.  And if you dont know Charlie Maxwell, you should.  google him.  This is from energytechstocks.com

‘Dean of Oil Analysts’ Maxwell: Oil Crisis Will Lead to 10-Year Financial & Political Crisis

Posted: February 7, 2008

A growing chorus of voices is screaming for the United States to undertake a Manhattan Project-type program to wean America off its oil dependency. But as Charles T. Maxwell, the “dean” of Wall Street’s energy analysts, looks into the future, he deeply fears that Washington won’t do anything to head off the oil crisis he sees rapidly developing starting in 2010. He says this will make the financial crisis he fears even worse. Also, because Washington will be seen by angry voters (who will be paying $12 to $15 for a gallon a gas) as the cause of their “Nightmare on Main Street,” Maxwell sees the American political system being shaken to its roots.

Princeton and Oxford-educated Maxwell believes that if the Democrats are in power, their core constituencies – farmers, workers and intellectuals – will be ranged against one another, resulting in an impasse. If the Republicans are in power, he expects whatever “solution” they come up with to be politically untenable because it will be premised on people with money continuing to consume as before, with the have-nots expected to do without.

oil-capitol330.jpg

Seeing no chance of a timely political response to America’s looming oil calamity, Maxwell, senior energy analyst at Weeden & Co., expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe. 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), while waiting for new technologies that can wean nations off their oil dependency to take hold in the marketplace. (It will take time to change over the world’s one billion or so oil-consuming cars and trucks.)

As this combined oil and financial crisis worsens, Maxwell would not be surprised if the U.S. government started functioning the way it did in World War II, when the democratic dialogue was often put on hold so that unilateral decisions could be made by people given special powers. He described them as little tyrants who will be able to cut off debate, effectively weakening the democratic process. Not a pleasant prospect, Maxwell emphasized, but one that may be unavoidable in the oil-scarce world that’s coming.

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Oil Price Paradox – demand down, prices up

Bloomberg Businessweek has a typical MSM reaction to peak oil:  (scratching head) “How can prices be up while demand is down?”  In fact, according to the magazine “demand has peaked” in the advanced western economies, while high prices have spurred new exploraiton that is bringing new supply on-line.  So, how can it be that prices are still high?  Well, the magazine thinks that the market is going to correct itself soon.  More traders have bets on $50-$60 oil than $100 oil.   So rest easy American drivers, “The current imbalance between supply and demand will likely lead to increasing storage levels and lower prices going into the summer,” says Goran P. Trapp, global head of oil trading at Morgan Stanley in London.  Yep, high oil prices are nothing but a bubble that’s getting ready to pop. 

Ah, that’s good news.  Except that oil rose over $86 on Friday.  Really, the cost isn’t going to go down again until the recession deepens.   We’re trying to claw out of the economic hole that peak oil has put us in, and as we do prices are rising.  When they rise high enough, WHAM, recession again, and oil prices will drop.  This will be the pattern from now on.  The only thing that will keep a lid on high oil prices is a permanently crippled economy.  Which is the same as saying that we’ve hit peak demand because we’ve hit peak supply. 

Bloomberg Businessweek cannot admit this new reality – if it did, it would mean acknowledging the end of their reason for being…..

Oil Price Paradox: Firm Prices, Weak Demand

Some traders bet a recovery will strain supply by yearend

By Mark Shenk, Stanley Reed and Alaric Nightingale

• “Slower rates of…growth mean that OECD demand has peaked”

Riding on the blue-green waters off the tiny emirate of Fujairah is a growing fleet of Iranian supertankers. Some 15 of the monster ships, which hold 2 million barrels each, are loitering around the Gulf in hopes that now depressed demand for Iranian crude will pick up. Much the same is happening off the U.S. Gulf Coast, where nine tankers holding some 19 million barrels of oil, a day’s U.S. consumption, are idling. At the oil depot in Cushing, Okla., the largest in the U.S., storage tanks are filled to near-record levels.

Tankers on a trip to nowhere are symptomatic of today’s paradoxical oil market. Current demand looks weak, but prices remain firm, recently testing the highest levels since October 2008. Many traders argue the world economy will stage a strong recovery that strains supply by yearend. “We’re heading for $100,” says John Kilduff, a partner at Round Earth Capital, a New York hedge fund. “The industry is going to get caught flat-footed again.”

Take a hard look at the oil market and such fears seem unfounded. Some forecasters, including the International Energy Agency in Paris, believe this downward shift could be long-lasting. The big price surge of 2008 helped dampen demand while encouraging investment in new wells and increasing supply. Consumption in the industrial countries that belong to the Organization for Economic Cooperation & Development will average 45.4 million barrels per day this year, down a hefty 8.8% since 2005, when OECD oil consumption hit an all-time high. “Slower rates of economic growth mean that OECD demand has peaked,” says Rick Mueller, director of oil markets at Energy Security Analysis in Wakefield, Mass. Demand in China may be rising by a brisk 7%, but in the U.S., which consumes twice as much oil, inventories are well above the closely watched five-year average.

While demand in developed markets levels off, global oil output keeps rising. The Organization of Petroleum Exporting Countries, which helped put a floor under prices last year with sharp production cuts, is now opening the valves. Production has risen by 1.5 million barrels per day from the low in March 2009.

Producers outside of OPEC are getting in on the act. The U.S., long dismissed as an energy weakling, produced 5.5 million barrels in March, the highest since 2005, according to the American Petroleum Institute. The world also has a healthy margin of six million barrels per day of spare capacity, largely thanks to a huge Saudi investment program. “The current imbalance between supply and demand will likely lead to increasing storage levels and lower prices going into the summer,” says Goran P. Trapp, global head of oil trading at Morgan Stanley in London.

How low? BP (BP) CEO Tony Hayward expects prices to stay in the $60 to $90 range for the medium term. A hard core of skeptical traders has a darker perspective on prices than Hayward’s more mainstream view. The New York Mercantile Exchange has 130,000 put options for June sales in the $50 to $60 per barrel range compared with just 51,000 calls to buy at $100 per barrel. Says Eugen Weinberg, senior analyst with Commerzbank in Frankfurt: “It’s a bubble, and it’s just a question of time” before it bursts.

The bottom line: The Saudis are the key to where prices will settle. They like $80 a barrel but could cut output fast if prices drop.

http://www.businessweek.com/magazine/content/10_19/b4177013129633.htm

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Peak Oil: Read The “Prediction” from 2004

HOLY SHIT – this is the first time I’ve come across this….6 years ago a wise old oil man simply predicted what is happening right now.   He calls it exactly right…..we mistook an energy crisis for a financial crisis….Folk’s, I’m not making this shit up….And you MUST get to know Charlie Maxwell….google him

The Gathering Storm

By CHARLES T. MAXWELL

Barron’s

MONDAY, NOVEMBER 15, 2004

(The dean of energy analysts sees a difficult futureTHE ENERGY CRISIS WE ARE IN today is entirely different from the temporary problems we experienced in 1973-74, 1979-86, 1990-91 and 2000. Then, there were political issues: Some nations were willing and able to produce oil for our use and some were not. There was always sufficient worldwide geological capacity to produce additional barrels of crude oil to meet the world’s needs.
No longer. In the next major energy crisis, that capacity will likely be eroded. So the crisis should have a severe impact, be global in scope, and be difficult to solve. Plainly, it will be unprecedented. What may emerge could well be a restructured world, as well as a restructured oil industry.)

Over the next 25 years, a new world energy economy will arrive in three waves. We are near the top of the first and smallest one, a warning wave. A second more powerful wave likely will hit in the 2009-2010 period when the non-OPEC world may reach its all-time highest output of crude oil, subsequently declining to become ever more dependent on OPEC for incremental barrels of production. The final wave should break around 2020, or earlier, as even OPEC’s vast reserves are tapped at a maximum rate of production. After that, oil volume should head down and keep falling, never to revive.

Then the world’s energy companies and governments finally may begin to address new sources of energy to replace oil, and this issue should become the principal economic and political preoccupation for the rest of the century.

An international economic disturbance of this magnitude will create potential conflicts between nations and civil competition within societies. These could be a trial for us and for our children, made worse in the early years by our lack of preparation and our failure to understand what is Continue reading

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Peak Oil: Volvo Calls It

This is from Perth, Oz – the reality from the Volvo guy is remarkable – he admits we’re never gonna make the transition to cars with different energy sources, but he does forget that even if we did, that we use oil in making the actual car, not just burning it in the engine.  If it’s too expensive to burn, then it’s too expensive to make whole cars…..

Demand for oil to outstrip supply within two years

  • Paul Syvret
  • From: The Courier-Mail

RISING oil prices pose a grave threat to global economic recovery, according to some experts.

“The fear has been expressed by the US military and by the automobile industry.

This week in Perth, Volvo’s head of product planning, Lex Kerssemakers, said “we all know that oil is running out”.

“We need to find alternative solutions and though we are aware of the alternatives – LPG, CNG, ethanol, electric and so on – we have to introduce these to the market,” he said.

“If we don’t do it now, we won’t be ready in five years when oil may be prohibitively expensive.”

Mr Kerssemakers said Volvo would have an electric car on the world market in 2012 that would use less than 1.5 litres/100km of fuel - about one-tenth of that used by a current V8-engined sedan.

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Peak Oil:Governments Starting to Worry

This is a great overview of the recent activity surrounding peak oil acknowledgment…study the graph by the US Energy Agency, it’s astounding……

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By Chris Nelder

In the first part of this series, I reviewed a series of reports from March supporting the peak oil view, and warning that world oil production very well may go into terminal decline by 2015 or sooner.

The sources included the UK Industry Task Force on Peak Oil and Energy Security and officials within the British government; researchers within the College of Engineering and Petroleum at Kuwait University; researchers from Oxford University; and ConocoPhillips (COP), the third-largest oil company in the U.S.

On March 25, the U.S. Department of Energy (DoE) joined the officially worried, with a report in French newspaper Le Monde titled “Washington considers a decline of world oil production as of 2011.

The author had pestered Glen Sweetnam, director of the International, Economic and Greenhouse Gas division of the Energy Information Agency (EIA), for details about a presentation he had given at a semi-public DoE round-table with oil economists in April 2009. How he got wind of it, I don’t know, but I admire his persistence.

The zinger was this chart:

worlds liquid fuels supply
Source: Glen Sweetnam, “Meeting the World’s Demand for Liquid Fuels – A Roundtable Discussion,” EIA 2009 Energy Conference, April 7, 2009, Washington, DC

The implication was obvious: The EIA has no idea how production could increase after 2012. In the absence of these “unidentified projects,” they expect global oil supply to decline by about 2% per year – from 87 million barrels per day (mbpd) in 2011 to 80 mbpd by 2015 – while demand rises to 90 mbpd.

Within five years, then, there will be a 10 mbpd gap between supply and demand—roughly a Saudi Arabia’s worth of production (currently 10.8 mbpd).

(I should note that although Sweetnam’s chart gives the EIA’s Annual Energy Outlook 2009 as the source, I found no such chart, nor even the data that might produce it, in my copy of that publication. I am unable to explain that discrepancy.)

The agency officially continues to lay any concerns about future supply at the feet of insufficient investment. In Sweetnam’s interview with Le Monde, he put it this way: “‘a chance exists that we may experience a decline’ of world liquid fuels production between 2011 and 2015 ‘if the investment is not there.’”

It’s a weak position to take in the wake of the oil price blow-off of 2008. The world’s developed economies simply cannot tolerate the high prices that would entice that investment (see “‘Peak Oil Demand,’ Yes… But Not the Nice Kind“), and I’m sure the EIA knows it.

You’d think the American media would have been all over the story, as it signaled a major about-face in the official U.S. position on peak oil. As recently as 2008, the EIA’s base case scenario was for oil supply to rise through 2030, and not decline until 2090!

Yet five days later when I Googled it, there was not one story from a major domestic publication. Only blogs and the usual peak oil sites had picked it up.

In my seasoned judgment, the American media blackout is deliberate.

And speaking of media blackouts…

Media Blackout at the World’s Biggest Energy Forum

On March 30-31, the biennial International Energy Forum (IEF) summit took place in Cancun. Attendees at the world’s largest energy forum included ministers from 64 countries, members of the IEA and OPEC, and other dignitaries.

In parallel, Cancun also hosted the International Energy Business Forum, attended by some 36 companies including the top executives of China National Petroleum Corp (CNPC), ExxonMobil (XOM) and Royal Dutch Shell (RDS.A).

In short, the twin conferences were a Very Big Deal.

But when I searched Google News for stories containing the exact phrase “International Energy Forum” and published during the conference, it wasn’t until the seventh page of results that I found any stories from major American media outlets, and those stories were strictly focused on specific issues like oil and gas prices. They said not a word about peak oil.

A journalist from the oil and gas media organization Platts explained what happened on his blog. All media were barred from the IEF conference room, and exiled to a press room where the presentations were shown on monitors with no sound. When reporters asked for sound, the monitors were turned off. All sessions were then declared to be private, and the reporters that had come from around the globe to cover the conference were simply shut out.

According to journalist Matthew Wild, the presentations included one from PFC Energy titled “Unpacking Uncertainty: Investment Issues in the Petroleum Sector.”

The document reviews three forecasts for oil supply: The IEA’s, which shows it reaching 109 mbpd by 2030; OPEC’s, which expects it to reach 111 mbpd; and PFC’s own, which expects supply to peak around 2020-2025 at 95 mbpd, then decline to 90 mbpd by 2030.

Although it sees the decline of mature fields proceeding at a slower rate than the IEA, PFC Energy still believes it will be “rapid enough to produce a world energy picture that differs vastly from previous long-range energy assessments,” and goes on to explain:

This is not a world of “peak oil” where global hydrocarbon potential is exhausted, but rather of peak production, where the petroleum industry’s ability to continue to increase-or even maintain-production of conventional oil (and eventually gas) is constrained. Exploitation of unconventional oil will provide additional liquids, but in all probability only at increasingly higher costs, and it will depend on significant investments to develop appropriate technologies to convert today’s resources into tomorrow’s reserves.

The exact timing of both the plateau and onset of irreversible decline will be influenced by the factors that determine long-term changes in supply and demand. Nevertheless, the challenge is coming, and this emerging world of limited conventional production will require major adjustments on the part of both consumers and producers.

The phrasing of the first statement is curious. Serious observers know that “peak oil” has never meant the exhaustion of hydrocarbon potential, and has always meant the peak of production flow rates. I covered a presentation by Michael Rodgers of PFC Energy at last year’s peak oil conference, so I must believe that PFC Energy knows better than to characterize peak oil that way and simply chose to do so for the appeasement of its IEF audience.

In any case, we now know that the world’s top energy ministers have seen a serious presentation on peak oil, and heard the warning about its seriousness, albeit a somewhat soft-pedaled one.

Most reports on the conference featured the theme that better data and transparency on reserves reporting is needed – a bell that peak oil mavens like Colin Campbell have been ringing for over a decade. Without it, the world is in the dark about the true future of oil supply.

To reinforce that point, IEA head Nobuo Tanaka told the Financial Times at the conference that it has invited China to join the IEA because global oil demand has shifted to the East. “Our relevance is under question,” he worried, as the opacity of data on Chinese oil demand and inventory threatens to blind the agency to the true state of the world’s oil markets.

Another key theme was an evident widespread concern about the volatility of oil prices. By the end of the conference, IEA, OPEC, and the IEF were expected to announce a “joint action plan” to control volatility and ensure that prices remain stable enough to encourage new production.

While the IEF was under way, the chairman of the Intercontinental Exchange (ICE) told Reuters that blaming speculators for price spikes was a “crutch” used to avoid looking at the realities of oil supply and demand. As I explained in July 2009, traders have turned to the ICE to skirt the stricter position limits on the NYMEX. The Commodity Futures Trading Commission (CFTC) has now proposed new regulations to limit the influence of speculators in the energy markets, which are up for public comment until April 26.

You (Still) Can’t Handle the Truth

By any measure, March was a watershed month for the truth about peak oil.

Estimates on the timing of the peak have narrowed dramatically, and now center on the 2012-2015 time frame. The range of estimates on the peak rate of production remain a bit broader and shrouded in caveats, but they are rapidly drawing closer to 90 mbpd. And the globally averaged, post-peak annual decline rates are settling in around 2%.

In other words, industry and governments appear to be coming around to what my call has been all along: 2012, at 90 mbpd or less, then declining at about 2.5% per year.

Now we know that the oil and gas industry, as well as the world’s governments, are not only aware of the peak oil threat… they too are deeply worried about it.

Worried enough to huddle behind closed doors, away from the press. Worried enough to formulate plans to control price volatility. Worried enough to agitate for more transparent data. Worried enough to begin planning for a future of relentlessly declining energy.

//

About the author: Energy and Capital
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Energy is such a pervasive resource that it affects every single human endeavor. Energy has become fundamental to the very basic functions of contemporary civilization. And it is imperative to the future growth, prosperity, social stability and security of nations around the world. Without… More

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Peak Oil: Our Economy Cant Take It

Just read this and see if the economic implications dont sound pretty real – and this is from one year ago…when oil was much cheaper…

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“The Global Crisis Is Really About a 140-dollar Barrel of Oil”
Chris Arsenault interviews economist JEFF RUBIN

From InterPress Service
VANCOUVER, Jun 15, 2009 (IPS)

Sitting in the restaurant of Vancouver’s posh Fairmount Waterfront Hotel, the former chief economist for one of Canada’s largest banks doesn’t seem like the typical apocalyptic peak oil theorist.

But in his new book, “Why Your World is About to Get a Whole Lot Smaller”, Jeff Rubin argues that globalisation, fuelled by cheap oil, is finished. In the book, Rubin contends the current global recession is a result of expensive oil, rather than subprime mortgages in the U.S.

Frequently ranked as Canada’s top economist, Rubin predicts that one barrel of oil will cost 225 dollars by 2012. Other analysts consider that number outlandish; the conservative National Post newspaper, where he was frequently quoted as an economic expert before leaving his job at CIBC World Markets, accuses him of “anti-materialism” and “Big oil paranoia.”

But in 2000, Rubin correctly predicted that oil would top 50 dollars per barrel by 2005. And, in 2005 he got it right again, forecasting prices would top 100 dollars per barrel in 2007.

Rubin sat down with IPS at his hotel after giving a lunch address to the Vancouver Board of Trade.

IPS: If Iraq’s security situation improves, and its cheap oil comes back online for export, could that stop your prediction of 225 dollars per barrel by 2012?

Jeff Rubin: Not even close. Nor would it stop the prediction that exports from OPEC (the Organisation of Petroleum Exporting Countries), instead of growing, are likely to fall by about one to one and a half million barrels per day over the next four or five years.

It’s not just about depletion [of OPEC oil fields], though depletion is playing a key role. It is also about the explosive growth of oil consumption in OPEC countries themselves. This is the reason why exports have not grown from OPEC in the last five years; they are in effect cannibalising their own exports.

IPS: If the world economy can function with oil at 140 dollars a barrel, are there not huge reserves of unconventional petroleum – oil shale in Utah, heavy oil in Venezuela’s Orinoco belt and deep offshore deposits – that become viable to exploit?

JR: What happened to the world economy when oil hit 140 dollars? Is this deepest recession in the post-war period really about the U.S. subprime mortgage market? Or is it about 140-dollar a barrel oil? I’d argue it is about a 140-dollar barrel of oil.

What blew up Jeff Rubin’s bonus last year? That was about [subprime mortgages in] Cleveland. But blowing up Jeff Rubin’s bonus and blowing up global GDP are two very different gigs.

IPS: At what point does the price of oil make export-driven globalisation untenable?

JR: The model as we know it peaked in 2007. If we measure globalisation by the percentage of world GDP that is an export or an import, 2007 will mark the peak of a past age.

You are going to see less and less container ships. All of those containers are about one thing: a wage arc. Moving your factory from someplace where you pay folks 30 bucks an hour to somewhere where you pay folks 30 bucks a week is great, if it’s just about wages.

But what moves those container ships is oil. At 150-200 dollars per barrel, the wage arc becomes pennywise and a pound foolish because what you save on a wage bill you more than spend on bunker fuel.

IPS: Some analysts estimate that 25 percent of the world’s hydrocarbons are located in the Arctic and will soon be open to exploitation due to, ironically, global warming.

JR: The stuff in the Arctic is a drop in the bucket. You are losing sight of what the Cambridge Energy Research Associates and Exxon don’t tell you about. They hold big press conferences to talk about ‘oh we just discovered the Jack Field – 10,000 feet under the hurricane ravaged waters of the Gulf of Mexico, isn’t that fantastic’.

They don’t hold press conferences [to announce] ‘see this field here? It has been producing for 50 years. It’s about to run dry.’

Every year we lose four million barrels a day [of production due to depletion]. Over the next five years, we are going to have to find 20 million barrels a day of new production, just so that we can [continue to] consume what we consume today.

IPS: Even if you are correct that supplies of cheap oil are dwindling, couldn’t increased efficiency make up for shortfalls in production?

JR: We think that efficiency leads to conservation but history has shown that is not what happens.

The average engine today is 30 percent more efficient than the engines produced before the OPEC oil shocks [of the 1970s]. Yet, the average [North American] vehicle consumes just as much gasoline in the course of a year.

Back in the 1970s, we [North Americans] used to drive about 9,000 miles a year, now we drive 12,000. Back in the 1970s, we weren’t living in the far-flung suburbs. All those gains in efficiency have led us to, ever more efficiently, consume more and more oil.

IPS: What do you think is a bigger threat, peak oil or peak water?

JR: Peak water is a whole other ballgame. But let me tell you a place where peak oil and peak water intersect: the Canadian oil sands. To produce one barrel of synthetic oil, you have to burn 1,400 cubic feet of natural gas, schlep two tonnes of sand [and] pollute 250 gallons of water.

Just like carbon emissions, water is free. If you are an oil sands operator and you pollute 250 gallons of water, it is costless.

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Peak Oil: US Military says it’s happening

I scooped this report 2 months ago but now it’s in the mainstream….folks, this is happening but we aren’t hearing anything locally are we?  But I’m sure it wont be long before the Repubs at least tell us it’s happening – cause they believe everything the military says….

US military warns oil output may dip causing massive shortages by 2015

• Shortfall could reach 10m barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel

  • Terry Macalister
  • Surplus oil production capacity could disappear by 2012 a report from US Joint Forces Command, says. 

     The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.

    The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.

    “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day,” says the report, which has a foreword by a senior commander, General James N Mattis.

    It adds: “While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India.”

    The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with “an intellectual foundation upon which we will construct the concept to guide out future force developments.”

    The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk.

    The Wicks Review on UK energy policy published last summer effectively dismissed fears but Lord Hunt, the British energy minister, met concerned industrialists two weeks ago in a sign that it is rapidly changing its mind on the seriousness of the issue.

    The Paris-based International Energy Agency remains confident that there is no short-term risk of oil shortages but privately some senior officials have admitted there is considerable disagreement internally about this upbeat stance.

    Future fuel supplies are of acute importance to the US army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.

    But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that “a chance exists that we may experience a decline” of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.

    Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.

    “It’s surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on,” he said.

     “The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was “decades away”. In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?”

    The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. “One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest,” it points out.

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    Who Said It?

    “Our country’s leaders have three main choices: Taking over someone else’s oil fields until they are depleted; carrying on until the lights go out and Americans are freezing in the dark; or changing our life style by energy conservation while heavily investing in alternative energy sources at higher costs.” Continue reading

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    Peak Oil: China Is Thirsty

    Less than 5 years ago we thought that China wouldnt overtake us in car sales until at least 2020.    In early 2010 they already have.  See how mainstream economic predictions go?  Now there are hundreds of millions of Chinese who want to live like us.  Our problem is this – their incomes are on the way up -ours on the way down,  Increasing oil prices for them arent  that bad a thing – never having had to pay too much because they never had that much.  Its bad for us though….

    China passenger car sales up 63 pct in Mar, sales up 76 percent in first quarter

    ap

    • Elaine Kurtenbach, AP Business Writer, On Friday April 9, 2010, 8:44 am EDT

    SHANGHAI (AP) — China’s passenger car sales jumped 63 percent in March from a year earlier as manufacturers scrambled to meet strong demand driven by tax cuts and government subsidies, a state-affiliated industry group reported Friday.

    Passenger car sales rose to 1.26 million vehicles in March, according to the China Association of Automobile Manufacturers.

    The figures show sustained growth for automakers in a market that bounced back from a slowdown in late 2008-2009 as the government pumped hundreds of billions of dollars into economic stimulus.

    Weak sales in the United States and a surge in car purchases by newly affluent Chinese buyers helped to make this the world’s largest auto market last year, when total vehicle sales jumped 45 percent over 2008 to 13.6 million units.

    The U.S. market is recovering but cannot match growth in China, where many are still buying their first cars. Demand for bigger cars is growing as families that bought small cars the first time trade up to better, larger vehicles.

    Sales in the U.S. climbed 24 percent in March compared to the same month a year earlier, according to figures compiled by AutoData Corp. China’s auto industry does not release comparable monthly sales data adjusted for annual rates.

    The Chinese industry group said total vehicle sales rose 56 percent in March from a year earlier to 1.7 million units, bringing sales for the first three months of the year to 4.6 million.

    “Passenger car sales turned out to be even better than earlier market estimates,” said Rao Da, general secretary of another industry group, the Shanghai-based China Passenger Car Association, which released separate data showing similar trends.

    “We are confident that China’s vehicle sales will surpass 17 million units this year, growing by about 25 percent,” he said.

    China’s searing growth has buoyed foreign automakers like General Motors Co. and Toyoto Motor Corp. as they weather languid sales in their saturated home markets.

    GM reported earlier that its sales in China jumped 68 percent in March over a year earlier to a new monthly record of 230,048 vehicles. First quarter sales surged 71 percent to 623,546 units.

    Ford Motor Co. said first quarter sales jumped 84 percent to a record 153,362 units.

    Toyota Motor Corp.’s sales in China rose 33 percent in March from a year earlier to 61,200 units, lagging the market and its rivals but still growing despite its massive recall problems in other markets.

    China’s domestic automakers, who tend not to release sales data on as regular a basis, are also generally enjoying strong growth, and running double shifts to meet demand.

    Production of passenger cars rose 72 percent from a year earlier in March, to 1.3 million units, the CAAM reported. First quarter output rose 84 percent to 3.5 million units.

    It said sales of vehicles with engines of 1.6 liters or less totalled 868,300, accounting for 69 percent of total passenger car sales.

    Exports of fully assembled vehicles in March jumped 78 percent from the year before to 39,500 units, suggesting a recovery in auto exports, it said.

    Chinese automakers slowed production in late 2008 and early 2009 as global economic woes dragged sales sharply lower. By mid-year, car factories were struggling to keep up with reviving demand thanks to government rescue measures and China’s economic recovery.

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    Peak Oil: Watch Venezuela Closely

    This is how interdependent we are on the rest of the world – and most Americans dont want to even acknowledge it

    The Peak Oil Crisis: Countdown at the Guri

    By Tom Whipple   
    Wednesday, April 07 2010 11:40
    Most Americans have never heard of Venezuela’s great Guri dam. Completed in 1978 with 20 generators and 10,200 MW of generating capacity, at one time it had the most generating capacity of any hydro dam in the world.By way of comparison, the Three Gorges dam in China is to produce 22,500 MW when completed next year and the U.S.’s Grande Coulee which dates back to 1942 can produce 6,800 MW. If you disregard the ecological damage caused by great dams, they can be wonderful things for they produce prodigious amounts of emissions-free energy at very low cost — provided, of course, it keeps raining in the dam’s watershed. Until recently nobody gave this much thought until last summer when El Niño, and perhaps a touch of global warming, started doing funny things to Venezuela’s weather.The rainy season in Venezuela which refills the reservoirs runs from June to October. The summer of 2009 it was a catastrophe. Rainfall was only about one third of normal so that by last fall alarm bells began sounding as it looked as if the water could fall to the level where the dam would have to shut down most of its generating capacity. The Guri dam has a lower and older generating hall with much less capacity than the main hall and there are two smaller dams located downstream from the Guri. The problem is that if they have to stop letting water through to the turbines in the main Guri dam, the water is no longer available to the downstream plants so their output drops markedly too.

    Now, if you are wondering why a falling water level in the Venezuelan highlands should be if interest to Americans, the answer is easy. Despite years of political tensions between the Chavez government and Washington, the U.S. is still importing some 800,000 barrels a day of crude from Venezuela. Should these imports go away, it is likely to come suddenly – shipping oil from Venezuela to Louisiana only takes two days — we are going to see an instantaneous jump in gasoline prices. Given that the U.S. is at the top of President Chavez’s least favorite countries list, it does not take much imagination to figure out who would be shut off first if exports have to be curtailed.

    The length of any shutdown would be dependent on rainfall in the Guri’s watershed. This week 600 m3 of water per second is flowing into the Guri reservoir and 4300 m3 per second are being released to generate power at the Guri and downstream dams. At the height of the summer rainy season, up to 12,000 m3 /second can flow into the Guri reservoir. However, unless heavy rains begin in the next six weeks or so, much of the dam’s power production will have to be shut down somewhere around the end of May.

    If this happens, the Chavez government will have a very serious problem. The country has already been enduring rolling blackouts for months in an effort to reduce electricity consumption. Major industrial enterprises have been closed. There is much unemployment and the whole nation was forced to take a week off work over Easter to reduce power consumption. A recent currency devaluation has run up prices of imported goods and the first signs of social unrest are starting to appear. Should electricity production drop 50 percent or more, there is no telling where all this would lead in terms of oil exports and the cohesiveness of the Venezuelan society.

    Despite constant government assurances that most of the electricity used to pump and refine oil comes from dedicated thermal generation plants, it is difficult to imagine Venezuela’s cities enduring lengthy power outages for very long while the refineries and oil export pumps continue to hum. The choice between 27 million outraged people, 93 percent of whom live in urban areas, taking to the streets or cutting oil production so that power can be diverted to ease life in the cities is not a hard one. If significant social unrest does occur there is obviously a risk of reduced oil production.

    A second problem for the Chavez government is that this crisis may not go away anytime soon. While the summer rains are likely to allow the Guri dam to resume production, the key question is how much the reservoir refills before the dry season starts in October. It will take some prolonged torrential downpours this summer to return the situation to normal.

    There are many possible outcomes to this story. The best, for the Venezuelan people and U.S. wallets, would be the arrival of heavy summer rains within the next month so that nothing would have to shut down and the oil would keep flowing — until the next drought. At the minute the government is scrambling to import additional thermal generating equipment, but building and integrating such facilities into a national grid is usually measured in years and not months.

    At the other extreme, the drought continues so that some shutdown of power generation is necessary later this spring and the Guri’s water level builds slowly over the summer months as large inflows never materialize. Because Venezuela has parliamentary elections (Chavez seems to have made himself something close to President-For-Life) coming up in the fall, the government will do everything in its power to ensure that the lights are on for Election Day. Should extended blackouts occur, there would be paralysis in the cities; factories would close; water, food, communications, and transportation would be in short supply; and crime would explode. The viability of the government would be sorely tested and it is not difficult to conceive of Venezuela’s oil exports dropping precipitously amidst the turmoil

    Take more than a million barrels of oil exports a day off the table, and we are likely to see some very high oil prices no matter how much spare capacity the Saudis have.

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    The End of Peak Oil Denial

    This is a great overview of where we stand and add to this the fact that Obama administration officials have spoken of “supply challenges” recently and you will get a good picture.  This guy and his firm are simply realists – they are studying the situation and seeing where they can make money off of it….not hippie idealists.

    Officials Wake Up to Peak Oil

    Part 1:

    By Chris Nelder Energy and Capital Investments
    Friday, April 2nd, 2010

    When I began writing about peak oil professionally in 2006, it was generally considered a tinfoil hat theory. The notion that oil production might peak around 2012 (plus or minus) was only taken seriously by a few analysts who were considered extremely pessimistic.

    Official forecasts had no cognizance of it whatsoever. All were confident that oil supply would continue to grow steadily to 130 million barrels per day (mbpd) and beyond, at prices that would be considered astoundingly cheap by today’s standards. Oil companies rarely mentioned peak oil, and when they did, it was in a casually dismissive way.

    But as time marched on, the cornucopian arguments fell one by one. My longtime readers have seen the story unfold, but for the benefit of new readers, here’s a quick summary…

    Forecasts grew increasingly pessimistic as it became apparent that regular conventional crude supply had peaked at the end of 2004. Even as the biggest oil price spike in history ensued from 2005-2008, crude production remained flat and unresponsive.

    OPEC scaled back some of its development plans as costs soared. Non-OPEC production not only failed to deliver any actual increase, but began to decline. Forecasts were revised lower.

    Corn ethanol boomed and busted, as it was revealed to be the net energy non-starter that serious analysts always knew it was. It also was suspected of adding pressure to food prices at a most inopportune time.

    Unconventional production from oil shale and tar sands failed to grow as expected, as producers shied away from high-cost, low-production projects.

    The International Energy Agency (IEA) finally included the depletion of mature fields in its analysis, and became increasingly shrill in its warnings about future supply.

    A few current and former oil industry executives began making public statements about the diminishing prospects for new supply, and a few even acknowledged that it would be hard to increase production much beyond current levels.

    Then high oil prices proved intolerable to an economy stretched thin by the bursting of the bubbles in the real estate and financial sectors.

    Yet official recognition of the peak oil threat remained muted, couched in warnings about “adequate investment” and blithe assertions that demand would soon peak, averting any supply shortage.

    All that seems to have changed in the last month. A sudden deluge of reports and summit meetings suggest that the oil industry and energy officials are now taking peak oil very seriously indeed.

    UK Task Force on Peak Oil: Shortages by 2015

    The first bombshell was actually dropped on February 10, when the UK Industry Task Force on Peak Oil and Energy Security issued a report called “The Oil Crunch: A wake-up call for the UK economy.” I only mentioned it in passing at the time, but it was a stern warning that “oil shortages, insecurity of supply and price volatility will destabilise economic, political, and social activity potentially by 2015.”

    It only made the news because Sir Richard Branson personally endorsed it; but the fact that the task force comprised top UK executives and energy experts lent it enough weight to be rather widely circulated in the press.

    The British government, including energy minister Lord Hunt, responded by staging a closed-door summit meeting with the taskforce on March 22. As the UK’s Guardian reported, the government intended to develop an action plan to contend with a near-term peak, and to “calm rising fears over peak oil.”

    Veteran peak oil analyst and taskforce member Jeremy Leggett explained: “Government has gone from the BP position — ’40 years of supply left, the price mechanism works, no need to worry’ — to ‘crikey’.” He urged the assembly to properly assess the risks of peak oil, and to immediately begin preparing for the end of globalization and an era of oil shortages in the West.

    According to reports from attendees, the summit yielded some important conclusions:

    • Peak oil is either here, or close enough.
    • Prices will have to go higher as demand outstrips supply.
    • Governments will be forced to intervene to maintain critical levels of oil supply, and limit volatility.
    • Rationing measures may be unavoidable.
    • Electrification of transport must be pursued in order to reduce demand.
    • Communities will need to work quickly to reorganize around walking instead of driving, producing food and energy locally instead of importing, and generally try to reduce their need for oil.

    However, the notion that peak oil will mean the end of economic growth, as I have argued, apparently fell on deaf ears. Still, the very fact that the government has engaged with the peak oil community and formed a parliamentary group to study the issue offers a sliver of hope that, at least in the UK, we’ll have some measure of consciousness about the issue and an idea of what to do about it as we drive off the peak oil cliff.

    Kuwait Report: Peak by 2014

    The next was a report that surfaced around March 12. Three authors from the College of Engineering and Petroleum at Kuwait University had applied advanced mathematics to reserve and production data for the top 47 oil producing countries using a multi-cycle Hubbert model, which demonstrated a much better fit to historical data than single-cycle Hubbert Curve analyses.

    The model estimates the world’s ultimate crude oil production at 2140 billion barrels, with 1161 billion barrels remaining to produce as of the end of 2005. It forecast that world production would peak in 2014 around 79 mbpd. The annual depletion rate of world reserves was estimated to be around 2.1%.

    The results weren’t really news to the peakists, for they matched up quite well with the models of Colin Campbell, Jean Laherrère, and other analysts who have warned about peak oil since 1995. What made this report interesting was that first, it was from Kuwait; and second, it brought a new level of mathematical rigor to the study.

    The model indicated that non-OPEC production peaked in 2006 at 39.6 mbpd. It forecasts that OPEC production will peak in 2026 at 53 mbpd, up from 31 mbpd in 2005, with the majority of the increase coming from Iraq, Kuwait, and the United Arab Emirates. Then OPEC production is expected to decline to 29 mbpd by 2050.

    Oxford Report: Reserves Exaggerated by One Third

    On March 22, another bombshell exploded in the press as former UK chief scientist David King and researchers from Oxford University released a paper claiming that the world’s oil reserves had been “exaggerated by up to a third,” principally by OPEC.

    Their “objective analysis” showed that conventional oil reserves stand at just 850-900 billion barrels — not the 1,150-1,350 billion barrels that are officially claimed by oil producers and accepted by the politically influenced IEA.

    They anticipated that demand could outstrip supply by 2014-2015.

    In a statement that sounded like a direct echo of what peak oil analysts like me have been saying for years, co-author Dr. Oliver Inderwildi remarked, “The belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving efficiency.”

    Again, it was hardly a revelation. I detailed the “political reserves” additions of OPEC producers in 2007, when I was writing Profit from the Peak. But the fact that it was recognized widely in the press was a marked change from the past.

    The future of fuel will indeed be all about efficiency and alternative energy. This process — whether you’ve noticed or not — is well underway. Hundreds of billions will be made as a select group of companies slowly eradicate the rampant waste in our electricity distribution system, which has been estimated at upwards of 60% by analysts.

    ConocoPhillips Gives Up on Growth

    On March 25, ConocoPhillips CEO Jim Mulva admitted that pursuing new oil reserves just doesn’t pay. The remaining resources have become too marginal and too expensive, and the competition for them has become too intense.

    Rather than keep slugging it out with bigger and better-funded players in pursuit of growth, Conoco has decided to sell $10 billion worth of its assets over the next two years, all of them in the marginal category, and concentrate on producing its core assets.

    The proceeds will be used to buy back its stock, reduce its debt, and raise dividends — just as rival ExxonMobil has been doing for the last five years or so.

    When I inferred in Profit from the Peak that the oil majors were spending vastly more money on buying back stock than investing in new exploration because reserves were getting too expensive and risky, veterans of the Street greeted the idea with extreme skepticism.

    Now it’s a plain fact. A Rice University study released in July 2008 found that the five largest international oil companies spent about 55% of their profits on stock buybacks and dividends in 2007, but only about 6% on new exploration and production. “Could we spend $20 billion or $25 billion [on exploration]? Absolutely,” Conoco spokesman Gary Russell said at the time. “Could we do it effectively, in a way that provides ultimate value to our shareholders? Probably not.”

    Those of us who have been observing the trend for years greeted the latest Conoco comments with little more than a shrug, but it did get the attention of the laggard mainstream press.

    In my next Energy and Capital column two weeks from now, we’ll see how the U.S. Department of Energy is now considering the possibility of a decline in world liquid fuels production by 2015, and pick up a few more clues from the International Energy Forum held this week.

    Until next time,

    Chris…

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    Still think that we can trust the “powers that be” on peak oil? Look how well they did on the whole finance thing

    April 4, 2010
    Op-Ed Contributor

    I Saw the Crisis Coming. Why Didn’t the Fed?

    By MICHAEL J. BURRY

    Cupertino, Calif.

    ALAN GREENSPAN, the former chairman of the Federal Reserve, proclaimed last month that no one could have predicted the housing bubble. “Everybody missed it,” he said, “academia, the Federal Reserve, all regulators.”

    But that is not how I remember it. Back in 2005 and 2006, I argued as forcefully as I could, in letters to clients of my investment firm, Scion Capital, that the mortgage market would melt down in the second half of 2007, causing substantial damage to the economy. My prediction was based on my research into the residential mortgage market and mortgage-backed securities. After studying the regulatory filings related to those securities, I waited for the lenders to offer the most risky mortgages conceivable to the least qualified buyers. I knew that would mark the beginning of the end of the housing bubble; it would mean that prices had risen — with the expansion of easy mortgage lending — as high as they could go.

    I had begun to worry about the housing market back in 2003, when lenders first resurrected interest-only mortgages, loosening their credit standards to generate a greater volume of loans. Throughout 2004, I had watched as these mortgages were offered to more and more subprime borrowers — those with the weakest credit. The lenders generally then sold these risky loans to Wall Street to be packaged into mortgage-backed securities, thus passing along most of the risk. Increasingly, lenders concerned themselves more with the quantity of mortgages they sold than with their quality.

    Meanwhile, home buyers, convinced by recent history that real estate prices would always rise, readily signed onto Continue reading

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    “Good” Economic News = Higher Oil Prices

    This is happening today.  We are in a terrible trap – if our economy even remotely looks like it’s going to “recover” then oil jumps higher.  The U.S. has had ONE MONTH of job increases and look what oil does…..

    Oil rises above $85 as US jobs market improves

    Oil rises above $85 in Europe, extending rally as improving US jobs market cheers investors

    ap Pablo Gorondi, Associated Press Writer, On Monday April 5, 2010, 7:59 am

    Oil prices rose above $85 a barrel Monday, extending gains from last week as investors bet an improving U.S. job market will herald growing crude demand. By early afternoon in Europe, benchmark crude for May delivery was up 56 cents to $85.43 a barrel in electronic trading on the New York Mercantile Exchange, but down from a peak of $85.89 earlier in the session. On Thursday, the contract climbed up $1.11 to settle at $84.87 following a gain of $1.39 on Wednesday. Global oil trading was closed for the Good Friday holiday.

    Crude has jumped from $69 a barrel in early February on expectations a growing U.S. economy will eventually spark higher oil consumption. On Friday, the U.S. Labor Department said employers added 162,000 jobs in March, the largest job gain in three years. The unemployment rate stayed at 9.7 percent for the third straight month.

    “The market was positive before but now it’s been confirmed,” said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. “If the job growth can be sustained for several months, we’ll definitely see crude demand pick up.”

    Analysts, however, warned that the rise in oil prices caused by speculative investments could harm the recuperation of the global economy. “The last time we had oil prices at current levels, what followed was the worse recession ever and we will worry about what the combination of what is still high unemployment and higher fuel expenditure does to the economic recovery,” said Olivier Jakob of Petromatrix in Switzerland.”On a fundamental basis we still do not see the indicators that would justify crude oil to trade at $90 a barrel.”(I TAKE THIS TO MEAN THAT THERE REALLY ISNT A RECOVERY IN THE WORKS AND THAT OIL SHOULD BE PRICED THIS HIGH….what will it do IF there really is a recovery?)

    “We still expect that this technical rally will start to work its way against the economic recovery,” Jakob said.

    Edward Meir, senior commodity analyst at MF Global in New York, said higher oil prices were part of an overall surge in the value of commodities, with investors betting that commodity prices will benefit as the global recovery picks up steam. “The flip side to this argument is that the rally has already discounted a recovery, and that continued gains, particularly in energy, could potentially slow growth down, increase inflation and interest rates, and in a worst case, short-circuit the very recovery markets have been banking on,” Meir said.

    In the near term, nonetheless, oil prices will likely go higher. “Technically, there is very little resistance showing on the charts given the upside breakout evident, which means that prices will likely have to define their own tops at this stage,” Meir said.

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    Drill, baby, drill: The myth of energy independence

    Our dear Obama must think we are none too bright:  opening up off shore oil drilling won’t ever allow us energy independence.  Instead, by denying reality,  it keeps us oil dependent, which will make the transition tougher than it already is going to be.  Further, there is no gaurantee that the oil companies would sell whatever oil they find to us and not to, say,China. 

    The article below is written for a mainstream audience, but explains very concisely the issues we face.

    —–

    Jon Talton, Seattle Times

    We’re told that President Obama’s political calculus in opening large areas off the U.S. to new oil exploration is to gain bipartisan support for comprehensive energy and climate change legislation. If so, it’s a fool’s errand. Even though presidential candidate John McCain supported the kind of drilling and nuclear power now backed by Obama, the Republican party is united in its unwillingness to support this administration.

    The economics of the matter are equally clear-cut and unforgiving. As more of the developing world industrializes and adopts American car culture, demand for oil is rising at a rapid rate, far more than new production can handle. Also, light sweet crude, the cheapest and easiest to extract and refine, is in decline in many regions and is probably in absolute global decline. The remaining oil will be costlier when it reaches end-users, whether manufacturers or drivers. This is no small matter considering that the structure of the global economy, including international supply chains, has been based on a cheap oil era.

    Alternatives provide little relief from this reality. They generally require more energy inputs than the new energy they create; even “green” alternatives often require large inputs from fossil fuels. And they can produce unintended consequences, from disrupting the food supply to environmental damage.

    As for oil itself, although the world is at or near peak, we’re not “running out.” The remainder of this one-time gift of geology will just be more expensive and harder to find, extract and refine. But because oil tends to trade in a world market, we will find ourselves bidding against every other nation. Some will also try to protect domestic supplies, as was happening before the Great Recession. In any event, most oil is controlled by national entities, leaving the American majors — who sell in the world market — with a small share.

    The end result is we’re probably going to need every kind of energy source for the future, but we need to be clear about the trade-offs and adjustments necessary. If we attempt to sustain the current American lifestyle, that, too, will be a fool’s errand. We can’t drill, baby, drill, back to 1965. On the other hand, the recession has provided a breather to make a transition — if we have the will and imagination to make it.

    One other thing is clear: Nations will increasingly be in competition in the new energy era. Not for nothing has China declared renewables a strategic industry and is aiming to dominate the market not just in manufacturing but research. China has also quietly lined up its own overseas oil supplies, even as America maintains military in the Persian Gulf partly to enforce the Carter Doctrine (yes) to protect our national energy interests. This portends an uneasy future of global competition for resources. It could also, if we got our act together, mean new jobs and industries — including building more transit and rail to give people choices.

    President Obama, like his predecessors, mentioned energy “independence.” Such a thing is not possible, especially since the U.S. hit national peak oil in 1973, and even less so since we were an oil superpower in the mid-20th century — no small element in winning World War II. We will be more interdependent than ever. George W. Bush talked more about peak oil, albeit parenthetically, than Mr. Obama. The president had better start preparing the American people for a very different future than the past.

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    Peak Oil: Wall Street Journal’s Credibility Gap

    In Rupert Murdoch’s ongoing effort to destabilize the U.S. by printing and televising outright bullshit, here comes another doozy.  Obama has agreed to open some offshore areas for drilling – a cynical move himself.  In the WSJ article describing this — “Energy Firms Hopeful on Obama Plan” (April 1, 2010) the writer notes that “crude oil futures ended the quarter at a 17 month high…fueled mainly by a weaker dollar and momentum from recent gains.”

    This is how the one of the highest oil price gains in history is brushed off; in a small paragraph near the end of the story.   It sounds reasonable, and to a layperson reading it, it would sound plausible.  The price is nothing to be concerned about, it’s easy to explain.   Everyone knows that there’s been some momentum, ie., talk about growth in the global economy, which would drive up prices.   And everybody knows that the dollar has really been sucking lately, so yeah, it’s all cool.

    EXCEPT IN THE VERY SAME EDITION OF THE PAPER a headline blares:  “Dollar Revival Gains Pace.”

     Wait, what?

    “After almost being given up for dead last autumn, the dollar continued to revive in the first quarter, extending a rebound begun in the final weeks of 2009.  And although the greenbacks gains were uneven, the foundation may be set for the U.S. currency to make a broader run higher.”

    I shit you not.  So which is it?  A weaker dollar?  Or a dollar getting stronger?  If the dollar is gaining, oil prices should be lower.  Except they aren’t.  So if we can’t blame a weaker dollar for higher oil prices, what COULD we blame it on? 

     Sounds like peak fucking oil to me.   And the WSJ is hiding it in plain sight.  And we are such sheep, they know we won’t question it.

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    Peak Oil: Expect a new peak for prices

    Our friend Jeff Rubin keeps the hits coming.  He writes that we are living in a dream world regarding the current and future price of oil. I know that there are many techno-morons out there who will say that high prices will simply serve as the catalyst for more high tech drilling, thus gaining more oil.  All this new oil will lower the price right back down to where it is today.  All will be well.

    But are things rosy today?  We are in the midst of the worst economic crisis in 75 years.  This is what $80 a barrel oil does to us. And the techno-morons have to remember that when the price of oil crashed in late 2008 it wasnt because new supplies were brought on line. It was because the entire world’s economy crashed.  So we can’t take $80 and even the techno-morons would have to admit that what it takes to get prices way below that isnt a good thing for anyone.

    We are in the peak oil time.  There are no solutions – we can only adapt.

    ——

    By Jeff Rubin, Toronto Globe and Mail 3.31.10

    What does $80-per-barrel oil say to you?

    Three years ago, it would have told you that global oil markets were at record tightness. Back then, the U.S. president was making a personal pilgrimage to Saudi Arabia to vainly plead for more production. And economists were worrying about the implications for global economic growth.

    Today, it seems the goalposts have suddenly moved. After filling up on $4-per-gallon gasoline only two Memorial Day weekends ago, today’s $2.20-per-gallon average gasoline price doesn’t seem so expensive to American motorists anymore.

    Gas prices over $5 per gallon are posted at a gas station in Gorda, Calif., March 11, 2008.

    And suddenly, $80-per-barrel oil is no longer seen by the Saudis as threatening global oil demand, but is instead viewed as a minimum price for their nation to invest in new supply. And as far as my fellow economists are concerned, we’ve heard not even a peep from them about what these types of oil prices may mean for the global economy in the days ahead.

    But how much longer can the world pretend that it won’t soon be facing another energy shock, one every bit as challenging as the one it faced two years ago?

    Does anyone still believe the reassuring forecasts from discredited feel-good organizations like the International Energy Agency about new sources of cheap supply, like those that once flowed from places like Prudhoe Bay in Alaska or the North Sea? If so, where is that supply of new affordable oil coming from? Surely not from tar sands or from ultra-deep water fields six miles below the ocean’s floor.

    And what will suddenly put the brakes on world demand over the next year that will pull oil prices back from the precipice of triple-digit range? Are car sales about to tank in China and India over the coming months, suddenly halting the otherwise insatiable demand from these countries for more oil? Will OPEC suddenly start charging its drivers and its utilities world oil prices and halt the explosive demand growth in their own economies for the very oil they are supposed to supply to the rest of the world?

    Whether we are talking about supply or demand, there is nothing on the horizon to prevent the imminent return of the very same oil prices that put us into the deepest postwar recession yet in the first place.

    By the fourth quarter of this year, oil prices will be back in triple-digit range, and by next year oil prices will rise to record highs, taking out the high-water mark of $147 per barrel set back before the recession began in 2008.

    We’re barely out of the recession, and already we face prices that, just a few years ago, our government, our oil industry and our economists told us we would never see.

    Where do you think oil prices will be trading in the future?

    —–

    (read the comment thread below the story – will give you an interesting insight on how the techno-morons think:  http://www.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/expect-a-new-peak-for-oil-next-year/article1517154/

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    Oil rises above $85, higher fuel costs ahead

    Ah oh….good economic news = higher oil prices….Oil has only been this high once…in later 2007 and early 2008 as it was going up to $147….

    “Oh but Steve, these higher prices are actually GOOD for oil prices, as they will lead to more discovery and drilling…. and then it will all be ok.  Why are you such a pessimist?”

    What do YOU think? READ THE STORY IN THE POST ABOVE TOO

    Oil rises above $85, extending 2-month rally ahead of holiday weekend

    ap

    On Thursday April 1, 2010, 1:51 pm
    Oil prices have been stuck in a range of about $70 to $85 a barrel for months. That may be changing and it could mean higher fuel costs before long.

    Crude pushed to an 18-month high Thursday. It passed $85 a barrel at one point, driven by optimism that the world will need more oil as it pulls out of the Great Recession.

    Continued signals of strength in the manufacturing industry helped extend a recent rally. Oil prices have risen about 23 percent from early February as the industrial sector leads a gradual recovery in the U.S. economy. Some analysts are becoming worried, however, that too steep of a climb in oil prices could choke off the economic rebound.

    Motorists are already feeling the effects at the pump, where the average nationwide retail price of gasoline is at the highest level since October 2008 and is expected to top $3 per gallon this spring or summer. Tom Kloza, chief oil analyst for Oil Price Information Service, expects motorists will pay a little more than $300 million more for gas this Easter Sunday than they did on Easter Sunday last year. That’s the difference between gas at a national average of $2.05 in 2009 and about $2.84 by this Easter, according to Kloza.

    That doesn’t bode well for consumer spending, which only recently has shown signs of picking up. If that trend were to reverse, the strength in manufacturing could ebb.

    Pump prices rose half a penny to a nationwide average of $2.803 per gallon on Thursday, according to AAA, Wright Express and Oil Price Information Service. Prices are up 10 cents over the past month and 75.6 cents higher than they were a year ago.

    Oil prices have jumped from $69 a barrel in early February on expectations of a recovery, albeit gradual, in the U.S. economy. Prices also tend to move up in the spring as demand improves for fuel with the warmer weather.

    So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of oil to restart the nation’s factories.

    The Institute for Supply Management, a trade group of purchasing executives, said Thursday that its gauge of industrial activity rose for the eighth straight month with the fastest growth since July 2004.

    That report, coupled with a rising stock market and more signs of economic growth in China, helped pushed benchmark crude for May delivery up $1.11 to settle at $84.87 a barrel on the New York Mercantile Exchange. Prices have about doubled in the past year.

    Volume has been weak this week because of the Easter holiday. The market is closed Friday for Good Friday.

    Analysts are trying to discern the next move for prices. Could oil hit $100 for the first time since October 2008?

    Adam Sieminski, chief energy economist for Deutsche Bank, said he worries that triple-digit oil prices would push the global recovery back into recession. Prices are higher than he thought they’d be this year, but he can’t predict where they may end up because a lot depends on sellers and buyers.

    If China continues growing while oil supplies come down, “presumably you might be able to get $100 per barrel,” Sieminski said.

    Other traders look at the range in prices. If oil again breaks through $85 and stays there, the next range could be $85 to $95 a barrel.

    “With the break of the previous highs, the positive momentum is starting to be created,” said Olivier Jakob of Petromatrix. “Above $85.70 there will be no solid resistance until $90 a barrel.”

    Phil Flynn of PFGBest said this week’s jump in prices has been fueled by reports showing unemployment is staying stubbornly high and, as a result, federal policymakers will keep interest rates low.

    Nearly zero percent interest rates have helped keep the dollar weak. Because crude is traded in dollars, it becomes more expensive when the dollar falls and allows investors holding other currencies like the euro to get more oil for less.

    Throw in government stimulus programs in China, the U.S. and elsewhere, and oil prices are probably $10 to $15 per barrel higher than what they otherwise would be, he said.

    “This oil price is supported by the biggest global economic steroid that the world has even seen,” Flynn said.

    (OF COURSE IT IS….Because without stimulus we would truly be in a great depression…..and thus demand would be seriously hampered)

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    Global Oil reserves ‘exaggerated by one third’

    The world’s oil reserves have been exaggerated by up to a third, according to Sir David King, the (British) Government’s former chief scientist, who has warned of shortages and price spikes within years.

    Worker at an oil pump - Oil reserves 'exaggerated by one third'

    By Rowena Mason, City Reporter, UK Telegraph

    The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over-reported reserves in the 1980s when competing for global market share.

    Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the International Energy Agency (IEA), BP, the Energy Information Administration and World Oil do not take this into account in their statistics.

    “It is necessary to investigate ambiguities and sources of error that are broadly acknowledged but not taken into account in public data due to political sensitivities,” the researchers said. The paper also raises concerns that public statistics have started to incorporate non-conventional reserves such as the Canadian tar sands, where oil and gas are much more difficult to extract and may never be economically attractive to develop.

    Sir David said that although the IEA was doing a good job of warning that more investment in oil and gas exploration is needed, governments need to pay more attention to independent research.

    “The IEA functions through fees that are paid into it by member companies and has to keep its clients happy,” he said. “We’re not operating under that basis. This is objective analysis. We’re not sitting on any oil fields. It’s critically important that reserves have been overstated, and if you take this into account, we’re talking supply not meeting demand in 2014-2015.”

    The concept of “peak oil” has gained traction in recent years, although energy companies such as BP and Shell insist that production will be able to keep pace with growing Asian energy needs.

    Sir David said he was “very concerned” that Western governments were not taking the concept of “peak oil” – where demand outstrips production – seriously enough, while China is throwing all its efforts into grabbing as many energy resources as possible.

    Sir Richard Branson , founder of the Virgin Group, and Ian Marchant, chief executive of Scottish & Southern Energy, are members of the Peak Oil Industry Taskforce, which is trying to raise awareness of potential shortages in the coming decade.

    Dr Oliver Inderwildi, who co-wrote the paper with Sir David and Nick Owen for Oxford University’s Smith School, believes radical measures such as switching freight transport to airships could become common in future.

    “The belief that alternative fuels such as biofuels could mitigate oil supply shortages and eventually replace fossil fuels is a pie in the sky. Instead of relying on those silver bullet solutions, we have to make better use of the remaining resources by improving efficiency.”

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    Peak Oil Means the End of Zoning

    As we move forward into the peak oil time, we will need to begin to adjust the way that we “plan” Lexington.  One thing that is certain is that zoning as we knew it is dying.  Zoning arose in the early 20th century as a way to segregate the harmful effects of the industrial revolution from the highest ideal in life – our homes.   It was a vital tool that provided several generations with a high quality of life.

    The map above shows how “planning” is done with zoning.  All the yellow and orange areas are residential. Red areas are commercial. Blue areas are institutional. And so on.  It looks so tidy on a map.

    Planning by zoning, however, has now condemned most of us to a lower quality of life.  For decades our planners continued the philosophy of segregation of land uses.  This meant that commercial areas had to be separated from business centers which had to be separated from schools which had to be separated from homes, etc.  All this separation means that we are forced to use our cars to do everything in our daily lives. All these car trips made us poorer in terms of actual money and, more importantly, in time. All these car trips hurt the environment. All these car trips made us fatter.  All these car trips contributed to the breakdown of community. All these car trips resulted in over 45,000 people a year being killed on the roads.  All these car trips made us dependent on the places that have the oil, most of which aren’t very concerned with our well being.

    All these car trips made us completely dependent on our cars.  So dependent, in fact, that we can’t imagine our lives without the ability to hop in and go whenever and wherever we want to.

    Peak oil is changing that.

    Higher oil prices will demand a new set of city planning realities. Gone are the days where we could afford to segregate the work place from the home.  Gone are the days when we could afford to segregate the home from the market. Gone are the days when we could afford to segregate the school from the kids.

    Distance is beginning to matter a great deal in the peak oil time.   Zoning MANDATED distance.  The new planning reality will accommodate PROXIMITY.

    And the best place to address the new reality of proximity is with our homes. In the 1920s, when our current zoning philosophy was born, no one could imagine doing anything other than living a domestic life within one’s home.  Today, and into the future, our suburban homescape is going to be radically different. The new economic realities brought on by peak oil will cause the change.   Our homes will become little factories, offices, show rooms, distribution centers, farmsteads, scrap yards, warehouses, and schools.

    It’s already happening today.  All across Lexington, people use their homes for their businesses, be it for a professional career or selling stuff on eBay.  Home schooling is on the rise. People are storing scrap.  More people than ever have small gardens. More people are living together, boarding house style. And this isn’t just single family homes; it’s happening in apartment homes as well.

    In the old days of zoning, none of that would have been dreamed about.  There were places for all those things, and the home wasn’t one of them.

    Now, this change will not come without some pains.  Those who still cling to the 100 year-old suburban ideal will have problems with their neighbors.  City officials will be harassed. Therefore, now is the time to begin rewriting the codes of the city to make them more peak oil friendly. Instead of fighting reality, or hoping that we can “recover” to some version of the past, we need to adjust to the new demands.

    Commercial areas will evolve as well.   We’ve hit peak retail in the U.S. which leaves us with WAY too much commercial square footage in strip malls and the like.  Current zoning prohibits these areas being used for anything else.  But empty, blighted properties tend to bring down the areas of the city in which they are located.  Better to allow for additional land uses in these places – like dormitories and apartments, manufacturing, warehousing.  The parking lots of these transformed strip malls will become great places for neighborhood markets – people can bring the stuff they’ve made or grown at their nearby home to sell and trade.

    The future is here.  It’s gonna look different than the past. Fortunately, humans are resourceful and they are already adapting their lives to suit the conditions.  Trying to fit an old model over this will only continue to hold us back from making the transition to the low energy future as smooth as possible.

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    Peak Oil: Happening in Front of Our Eyes

    The information in the post below is still simply amazing to me.   The U.S military has announced one of the gravest threats to national security – peak oil.  And by inference, it shows us the huge challenges we face internally.   Oil is not running out.  But we are very near when oil will become extremely expensive.  That report says 2012.  This is exactly in line with others that have been issued on the subject.  The folks that write these things have access to information that you and I don’t and this is what they see.

    Yet, even this revelation by such a conservative organization as the U.S. military is unlikely to make much of a dent in motivating people to seriously address this issue.  The vast majority of people go complacently on. I’ve struggled to understand this.  Much may be due to sheer ignorance of the subject.  Several people I’ve talked to have said they’ve never heard of peak oil.  I think some of it is from sheer disbelief.  “This can’t be happening – that’s not the way the world works.”  “It doesn’t fit with my worldview.”  “Surely someone would have told us about this.”  Some of it is pure denial.  “This isn’t happening.”  “Peak oil isn’t important.”  Some of it is bargaining.  “Technology can save us.” “I’ll live greener – drive less – it wont matter that much to me.”  “Something good will happen to keep us in this lifestyle – God loves us.”  A lot of it is anger.  “This ain’t goning to happen to us, we’re Americuh!”  And a lot of it is just plain apathy.   “Who cares?  This doesn’t matter.”  Each one of these sentiments is likely to happen in most people throughout any uncomfortable contact they have with the subject of peak oil.

    Whatever the reason, we put off adapting to a low energy life at our peril.  And I think that the peril is not some vague unease, but something with real local consequences. I think there will be a huge social backlash when energy and commodity prices explode, when food supply becomes an issue to all of us, not just the poor, and when the economic recession hits fully home here.  Those who knew or should have known that peak oil was going to be a big issue will have a hard go of it.

    Peak oil is now so clear, we are watching it unfold in front of our very eyes.  Look around you today.  You are looking at the beginnings of the post peak world.  THIS is what it feels like to live in the early stages of peak oil.  High unemployment, job insecurity, declining wages, limited credit, collapsing industries, international tensions in oil rich areas worse than ever, concern over food supply, etc.  That is what is happening around us.  You mustn’t mistake the energy shock that we’ve gone through to be a financial crisis, a credit crisis, or anything else.  We touched a hot stove in 2008 – $150 a barrel oil – and we flinched.  The stove is still just as hot today.  The minute we get near it again, we’ll get burned.  Peak oil will be with us the rest of our days.

    So.  What to do? Here’s what I want us to do.

    1. Official acknowledgement from local government that peak oil will shape our economic and social future in ways that are different from what we’ve envisioned until now.  There are no short term “solutions” – and maybe no long term ones either – to keep us rolling along in a high energy culture. The only way to move forward is adaptation to the new realties.
    2. We must study what our strengths and vulnerabilities are in the low energy future.
    3. We must begin to mitigate our vulnerabilities now.
    4. We must set timelines for appropriate actions as the energy descent continues.
    5. We must base every discussion about how our city, businesses, and lives work around this central question:  “how will this work in a low energy future?”

    Not too much, right?  :-) Yet this is nothing more than cities like Bloomington, Indiana and Portland, Oregon, among others have begun.

    We can wait – hell, we probably will wait – until the evidence is beyond overwhelming.  (It’s just overwhelming now.)   When it is, thankfully we will have had some great local people and groups preparing in their own way. They will be the leaders of tomorrow.

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    U.S. Military Confirms Peak Oil

    This is serious.  The U.S. Military has issued their bi-annual report entitled Joint Operating Environment (JOE).  This report is a “perspective on future trends, shocks, contexts and implications for… the national security field.”

    The 2010 JOE warns, “By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD” (p. 29). Sounds like peak fucking oil to me.

    Well it does to them too.  The report has this cute little info box that says:  “Peak Oil – …petroleum must continue to satisfy most of the demand for energy
    out to 2030. Assuming the most optimistic scenario for improved petroleum production through enhanced recovery means, the development of non-conventional oils (such as oil shales or tar sands) and new discoveries, petroleum production will be hard pressed to meet the expected future demand of 118 million barrels per day.” (24)

    That is the limpest definition of peak oil I’ve ever read.  But it does get to the central truth:  more demand, less oil.  Anyway, did you ever think that you’d be reading the words “peak oil” in one of the top level U.S. Military document?  Me neither.  (AND DONT ASSUME THAT JUST BECAUSE WE WILL HAVE OIL OUT TO 2030 THAT YOU WILL BE ABLE TO AFFORD ANY OF IT! – This is a mistake most people make.)

    “By the 2030s, (oil) demand is estimated to be nearly 50% greater than today. To meet that demand, even assuming more effective conservation measures, the
    world would need to add roughly the equivalent of Saudi Arabia’s current energy production every seven years.”  (24) READ THAT AGAIN!  World oil discoveries peaked in 1964.   46 years later, we are not finding anything much at all – sure it sounds like a lot – 6 billion barrels here or there.  But NOTHING like a new Saudi Arabia every seven years.

    The report questions the “degree of commitment the United States and others display in addressing the dangerous vulnerabilities the growing energy crisis presents.” (24)

    This ought to scare the shit out of you:  “The Chinese are laying down approximately 1,000 kilometers of four-lane highway every year, a figure suggestive of how many more vehicles they expect to possess, with the concomitant rise in their demand for oil. The presence of Chinese “civilians” in the Sudan to guard oil pipelines underlines China’s concern for protecting its oil supplies and could portend a future in which other states intervene in Africa to protect scarce resources. The implications for future conflict are ominous, if energy supplies cannot keep up with demand and should states see the need to militarily secure dwindling energy resources.” (26)

    Notice how only the Chinese are singled out.  And note the sneering reference to Chinese “civilians.”  Yeah, unlike our uniformed “freedom fighters” guarding oil wells in Iraq.

    And we can’t be lone cowboys anymore, W!:  “Another potential effect of an energy crunch could be a prolonged U.S. recession which could lead to deep cuts in defense spending (as happened during the Great Depression). Joint Force commanders could then find their capabilities diminished at the moment they may have to undertake increasingly dangerous missions. Should that happen, adaptability would require more than preparations to fight the enemies of the United States, but also the willingness to recognize and acknowledge the limitations of America’s military forces. The pooling of U.S. resources and capabilities with allies would then become even more critical. Coalition operations would become essential to protecting national interests.” (28)

    Here’s the grand finale: ” A severe energy crunch is inevitable without a massive expansion of production and refining capacity.  While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict.  One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.” (28)

    Oil crash equals great depression equals totalitarian regimes implies endless wars….that’s what this paragraph says to me.   And to avoid that we must have a  “massive expansion of production.” But this just isn’t possible.  We’ve reached the peak.

    Folks, this ain’t me.  And while we might suspect the military has a reason to make shit up, there isn’t any indication that it is in this case.   This follows the Australian Military as well as a host of other global business leaders.   It’s here.  When will we face it?

    read it here:  http://www.jfcom.mil/newslink/storyarchive/2010/JOE_2010_o.pdf

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