Peak Oil: MORE Peak Demand BS

(painting Zero Sum Game by Michael Fajans)

The mainstream media cannot get its mind around peak oil – probably because mainstream people cannot. Each mirrors the other. So, the media reaches for other explanations about why things are changing in front of our eyes. They find people in the oil industry who know that things are going to get radically different because of extremely expensive oil, but who explain it almost as a choice we are making. That somehow we will demand less – and that our lower demand will be the reason that less oil is produced. Less oil = higher prices. 

To explain it as a supply issue would be to admit that it is really going to happen – that the ground can’t keep up. And to them, that is really bad news – and who wants to be the bearer of bad news?

From the New York Times By JAD MOUAWAD

Published: February 15, 2010:

“This year, the International Energy Agency expects oil demand to grow by 1.4 million barrels a day, to 86.3 million barrels a day, or 1.7 percent higher than last year, mostly reversing a drop of 1.3 million barrels a day in 2009 and 300,000 barrels a day the previous year.”

“But none of this expected growth will come from consumers in the United States, Europe and Japan. For industrialized nations, which account for 60 percent of global oil demand, energy-saving measures, government subsidies for renewable fuels and declining populations mean that oil demand is unlikely ever to grow again.”
 “We’ve really hit peak demand in developed nations, and so the name of the game now is China,” said Daniel Yergin, the chairman of IHS Cambridge Energy Research Associates. “In terms of the dynamism of the market, the vector of demand will be China and the dynamo of supplies is Iraq.”

Remember, demand and supply are always equal. What this is telling us is that supply cannot keep up with our demand, so we will adjust our demand downward accordingly. Forget the bullshit about our declining population – we are projected to add 120 million new people by 2050. Forget the bullshit about how we are adopting energy saving measures – what exactly? I’ve never heard of any measures, other than requiring new cars to get a few miles to the gallon better. Forget the bullshit about government subsidies for renewable fuels – when was the last time you put a renwable fuel in your tank, or used a renewable to heat your house?

Remember, demand and supply are always equal. So we can take this sentence, “…oil demand is unlikely ever to grow again” and rewrite it thus: “…oil supply is unlikely ever to grow again.”

See how easy it is to read peak oil clearly?

And the bullshit about “China being the vector of demand?” And that Iraq will supply China? Even the article itself says that ain’t going to happen. “The (Iraqi) government aims to raise output rapidly and to rival Saudi Arabia by the end of the decade, with production increasing to 12 million barrels a day, from about 2.4 million barrels a day currently. Petroleum executives do not believe in this optimistic scenario. In private, they point to Iraq’s lack of pipeline infrastructure and export terminal capacity to accommodate such a rapid growth, and a shortage of workers with the skills to sustain the planned ramp-up in production. And though the security environment has been getting better, there remains huge uncertainty about the country’s political stability.”

All that is saying is that China, and others, including us, will help to drive the price of oil sky high over the next couple of years. Because if our demand is constrained by supply, then theirs will be too. And more people competing for a scarce resource means higher prices. To quote Dave Cohen: “Here’s the deal. Once we run through the current spare capacity, the oil supply then and for the rest of your life is essentially a Zero Sum Game. If China uses more, someone else must use less.”

Lexingtonians, get ready. Within a few years, we will see an enormous increase in basic costs in our daily life. This huge spike in costs will cause an even deeper recession, meaning more job losses – among many other losses. Job losses will drive down average wages. So at the same time things are getting more expensive, we will earn less.

What are our adaptation plans?


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