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One of the side effects of the Hubbert Oil Peak is that sudden high prices cause great drop in usage and ergo, prices drop for a brief while.
Alas, we won't even get that effect since we are handing dollars to our competitors who can use these to bid up the price of oil anyway even if we do contract.
Yoiks as usual.
I like your graph better. David's gives the illusion that US production has declined since 1950. I note using his chart etc. that perhaps it has doubled (while total US production is up by 6x).
Alas, we won't even get that effect since we are handing dollars to our competitors who can use these to bid up the price of oil anyway even if we do contract.
I think the dollar-oil relationship is getting weaker every month... I just commented on this on the last post but will do so here again:
Go to this site... go to page 4... check out the charts of euros/bbl & dollars/bbl...
...it is impossible to say whether the dollar is falling or oil is rising from this except to say... they are all 'confounded'... the variables are so tangled as to not easily know what drives and what follows...
...and that there is some major league arbitrage going on.
pgl, I like Altig's graph in that it shows how our economy has become less dependent on energy in general. I think my graph measures the impact of imported oil on our economy.
dry fly, thanks for that link.
Elaine, oil is definitely an exhaustible resource (Hubbert's peak general concept), but I don't think we are on the downside of the peak yet.
I tend to be an optimist. I think people will find substitutes for oil and high prices will drive that innovation.
Regards to all!
Substitutes for oil: there is a profound misunderstanding about what this means. When the peak is reached, this is when all available oil is pumped like mad and yet demand for more rises and it can't keep up.
The geological peak is when half the world's oil is gone. When the two forces collide, as they are this very year, this means, pumping and refining shoot up but then can't go any higher and then prices take off.
Since consuming is flexible, this means, prices drive down purchases after a while (this is called "starving the poor" as poorer nations can't buy fuel) there is a "glut" if the producers keep pumping like crazy.
So the Hubbert Oil Peak will be a PLATEU. Things will look "balanced" for a brief while, about five to eight years, as prices hover and swoop on small turns of the screw.
THEN the geological forces hit like a hammer: depletion causes world wide drops that CANNOT EVER be made up. Our present, extravagent use of energy will be GONE FOREVER. Never ever again, will we live like this.
I have lived a Victorian lifestyle in the past with horse and carriage, little electricity, no running water, wood burning stoves and cooking on a Victorian wood stove. It can be done! It isn't that hard to do! Except for catching the horse...heh...but....it won't work in modern America unless 75% of the people here abandon their homes and change radically overnight, a coming disaster. The suburbs are doomed.
This is why 'picture the future" is a good exercise. Are YOU read for the future? Do you expect a future? Will it be like today? No?
Guess what?
It is 100% not going to be even remotely like modern America. The present infrastructure is doomed. The present life style is going to be gone with the oil. The cheap, happy use of oil is doomed. 100% chance. There is no option.
The only thing is timing. I guess five years because of the rate China is gaining on us in oil slurping. If China and America abate and eat less oil, it will be further in the future, the unhappy day of doom.
BUT it is coming. If not in five years then in ten or fifteen. I will still be relatively alive, namely, under 65 in any case when it comes.
I am almost ready for it...about 1% of America is ready. These stats are terrible. Do you have solar power? Do your neighbors? Are there grocery stores within walking distance to you? Hardware stores? Trains? Do you know how to ride a horse?
When I lectured about this thirty years ago, people said in 1980, hey, oil is cheaper! Whoo hoo. Then the Iraq/Iran war broke out and oil became dear only this time, people said, "when the war is over, oil will be cheap" and it was...until the Day of Doom which is about now, as I predicted. No wars, except for the America oil war theft experiment...and the price is up, pumping is frantic and it isn't enough.
So...what proof does anyone need? $150 a barrel and your car is inert and you lost your job and the grocery shelves are empty except for very expensive stuff like bread? Look ahead: starvation is one of the Four Horsemen.
The suburbs aren't doomed, but suburban life will change dramatically. Exurbs will be impacted the most, but near suburbs might come through surprisingly well with a shift from car commuting to bus lines or commuter/light rail. The location of retail will probably revert to a more decentralized model.
If I were a retailer like Wal-Mart predicated on folks with lower incomes that are gas$ sensitive driving to a big box, I'm not sure I would like the long-term outlook.
Buying solar today: not that difficult. Easy financing, doesn't cost too much.
Try this in ten years: interest rates at 20% as the Fed tries to cope with high costs due to the $150 a barrel oil and costs of energy systems way up due to frantic buying. Wages, way down so people quadruple up in homes that are very expensive to heat, mass abandonment of the further suburbs which suffer from crime and mass arson...people using their pathetic wages to buy essentials like food...yup. That is time to invest in an energy system in a modern home! Yup.
Not.
I like the modern lifestyle because I have lived without it. So this is why I work to make it work: building a passive/solar house, a root cellar (food preservation time!) a dry storage, twenty years of coal storage, garden and horses and carriage and three wheeled bicycles...etc. Solar/wind energy system. This is NOW. This is what "normal" purchases should be NOW. Not ten years from now.
The government should be massively pushing for this.
Elaine
Peak oil isnt going to be that big of a deal unless politicians use it to make a 'big deal'. I know this is heresy but it just isnt. It is going to be akin to the end of slavery in the south slave owners couldnt imagine a world with out slaves but there was one and it was better.
There is going to be a pretty ugly economic shock on the front end as energy intensive activities feel the pinch and as those industries initially shed workers. But this isnt going to be a good reason to eat cyanide. The new activities will reabsorb all and then some... we will need to make sure we have good gov't then - something we don't now.
I dont have time to go into why I think Peak Oil is if not overrated maybe even a God Send and certainly not here on CRs forum, not now that would be stealing his thunder but later this summer when I have time I am going to do this... somewhere.
I was trained as a chemical engineer, worked in the early bio fuels industry (80s) before going into business for myself and finished a MS in manufacturing systems basically how stuff is made and transported to people while I dont have the background to speak to the social, political or psychological aspects of Peak Oil I have a pretty good feel for the difficulty of transitioning our technology and infrastructure to a new and reasonable commercial lifestyle. It need not be that hard and might actually help the worlds poor a lot more than hurt them.
And a lot of it will be from that Victorian Lifestyle you mentioned only coupled to wise use technology.
That and think: Half then half again.
Change the number and scope of your activities to use half as much energy as you did before. Then change the way you DO those remaining activities to use half as much energy again. If you do that, you cut energy usage by 75%.
Example: If the average American moved closer to work, school, shopping. Made fewer unplanned spontaneous trips, used some mass transit, and stayed & ate at home more... In effect drive half as much, it would cut their fuel energy consumption in half. Then trade in the large SUV for a diesel Jetta or hybrid which gets about twice the fuel efficiency that would cut the remaining fuel consumption in half again. Total cut 75%... and that isnt even a huge change in lifestyle very small change around the perimeter.
Practice that strategy in almost every facet of our lives (and Im convinced it can be) and Peak Oil is a blessing not a curse
Elaine -- just to clarify, are you claiming we have already depleted 50% of the world's oil reserves?
I mean this in the friendliest manner possible, but isn't all this doomsday talk just another case of "the sky is falling"? The human capacity for adaptation is being underestimated. Even if all the world's oil was depleted in the next 20 years (not that this number is reasonable) we are not going back to the Stone, Bronze, Victorian or whatever Age.
World oil reserve depletion will occur transparently (I mean we will all see it coming for decades) with time to plan and build alternative energy sources to support our lifestyle. Nuclear (nucular
) energy can provide for our needs -- there is no reason to adjust our consumption to mere solar -- it only needs the political will to implement it. Scarce & expensive oil will of course, drive the political will for the very sensible nuclear power solution.
dry fly: Don't forget scale, and that a lot of the transition will have to happen in a relatively short time window, i.e. esentially at the same time.
Looking not from the money side, but fundamentals, today's alternative fuels, alternative energy equipment, and production equipment for about anything are being produced using available oil. Oil is used for producing the energy needed for construction. Plastics are made from oil. (Think about going back to wood & metals? Medical equipment anybody?)
When oil becomes scarce, something has to give, and a number of activities have to be curtailed. Much of healthcare as it is now may well go out the window. Production of everything containing plastics is affected. The volume of automation has to be reduced (productivity!). Finally, "full employment" when manual labor in 12-hour days is revived; engineers go back to pencil & paper and re-employ human number-crunching farms like pre-WWII (this is hopefully a stretch).
Sure, recycling will help stave it off, and you can even dig up garbage dumps for raw materials. I'd say this will become economical.
It does sound apocalyptic, but think for a moment how everything hinges on oil and you realize that you cannot think in "marginal" terms.
Nevertheless, hope springs eternal, but ignoring dangers alone will not make them go away ...
BTW, my previous comment is 1300+ chars. I checked.
Of course, much can be done in the way of more efficient processes and materials use (sterilization of medical gadgets instead of one-way items, simpler and more efficient goods packaging, refilling systems, washing dishes & cutleries instead of using discardable plastic foam & forks (!!), etc.), and more "efficient" services -- less volume of service equipment means customers will take longer waits and utilization goes up. This will be OK as you don't have the gas to drive around instead anyway.
And do I have to mention that with scarcity of resources corruption and crime will become rampant?
Elaine, just trying to give you some help here ...
dry fly: Don't forget scale, and that a lot of the transition will have to happen in a relatively short time window, i.e. esentially at the same time.If there was one thing I learned as a practicing Chem E working for the largest ag processor in the world - was scale.
And the time window is HUGE really... something like 30-50 years. We will never run out of oil completely... we will runout of CHEAP oil and probably already have. That is a HUGE difference too - cheap vs none. We'll have oil for a real long time, just not cheap oil. So how we use it it critical.
The only thing I worry about is the 'political & social' side of the equation... the technical & economic aspects I feel will be painful - but painful in the way getting in shape for a marathon is painful... painful and rewarding.
My fear is that the opportunity for demagogery is so large - both from conservatives and progressives - that the opportunity for a fresh start spirals away from us. That is my only REAL fear...
"Moving closer to jobs"....ahem. We have to sell the home to move or go bankrupt, letting go of the mortgage. Most of American suburbia is bankruptcy city if all have to sell in the same 20 year time span and move to the city. Cost in city=way up. Profits selling suburban homes=pummets. Banks=bankrupt.
See?
Let's go to transportation. Everyone decides to go to gas miser cars. Only, they need money for this, they need bank loans. Banks ain't loaning because of real estate tanking. All the used cars are gas guzzlers! Those who do downsize, it is too late, even a Geo Metro will be too much financially!
Food: we paved over our farms that surround urban America! Look at a map. All our cities have huge concentric rings around them. I even remember when Phoenix was farmland! All gone. New Jersey was "the Garden State" even when I bought Victorian houses there to fix. It is now "McMansion Mess". Reclaiming farmland from this sea of cement and wood and asphalt will be a huge effort, essentially, it is a farm desert.
Going backwards: everything ran pretty good back in my godmother's hey day. She was born in 1862. The population of the earth was around a billion, in toto. Think of this. We are over six times over that now.
My blog today has a parable of what is coming.
Dangerous Gullies
Also about the Window of Opportunity: the longer we wait, oil is NOT gone, it is at its most plentiful right now!---this, today, is the window of opportunity. Already, this year, it has begun to inch downwards. Step by relentless step, down and down it comes. You don't wait thirty years for the last 1" of window opening to close up. This is just beyond stupid.
Alas, already, America is at war for oil and fighting fiercely and losing vast sums trying to secure the oil in Iraq. We want Iran, Venezuela, all. This is why it isn't a matter of "fixing" something, this is WWIII we are witnessing. It already began.
dry fly: Yes, of course the window will span several decades, but you know how long major construction projects take, no?
And the construction will have to compete for resources with everything else. Are you going to sit in a cold and dark house without food while new energy-efficient offices are being built?
And then there are other societies around the globe who want to do the same thing.
Well, of course it will not be so black & white. But the pinch will be everywhere. If you look closely, today's economic and social problems are very much related to the fact that the resources cannot accomodate epic waste by too many plus decent availability for everybody.
dry fly: Yes, of course the window will span several decades, but you know how long major construction projects take, no?
Absolutely - I did chemical plant start ups... like I said I get this stuff. But most of the NECESSARY changes involve SMALL projects initiated by individuals because they have to for their own good... like moving closer to work and driving a car with twice the fuel efficiency. Half and half again. Just that alone pushes out the crisis by a couple decades... without even doing things like mass transit projects or infrastructure make overs...
The technology isn't the problem. And we won't make these decisions until it is 'time' and now is not the 'time' - only when it is urgent will it happen and it will be painful but need not be a 'drop dead' situation. Unless the demagogs take over...
It's the political & social ramifictions of Peak Oil that we need to worry about - think 1930s Germany like situations. A sense of 'collective entitlement' that we are owed the resources... our birth right, our leibensraum...
Actually we have a century or more of oil - not decades - we just won't have 'cheap oil'... ans with other price driven conservation alone maybe more than that.
Again imagine how much less oil & energy we use if we "half & half again"... and I from a technology stand point it isn't that hard.
I mean there is plenty to worry about - but I don't worry about 'running out of energy'... I worry about how we as a society - a rather militarized society - accept EXPENSIVE energy.
Elaine:
I think it difficult to predict the social effect of a severe decline in the economy. Crime fell dramatically during the great depression.
How a society responds to crisis is (tautology) social. You are choosing a model of doom and hopelessness, the militia approach which in itself is somewhat a self fulfilling prophecy.
I personally see an immense number of potentially positive responses which still promise life well beyond that of our grandparents. Change the average number of commuters in cars to 2 and 1/2 and you come to close to doubling efficiency. Increase the average mpg by 25% and another drop in energy costs.
There is quite simply a huge historically unimaginable slack of wealth in this country. Suburban lawns can be turned to gardens. We get 3 months of more than we can eat from a few square feet of tomatos. The average square foot per per person is huge in this society. When I was young lower income people (students etc.) routinely shared the huge Edwardian and Victorian homes, in the last 25 years individual families have reclaimed them and built similarly sized places, but shifting economics can break the viability of this, meaning reallocation.
I can't predict the choices society will make, but your certainty that it will be the worst seems almost a wish.
David: Yes, valid points. Your word into the divine ear.
And dry fly, If the transition can be made gradually enough, it may be smooth. The problems usually come when everybody tries to do the same thing at the same time.
A few people moving to the city is fine. One million people trying to move is a different thing.
There is also the prisoner dilemma thing (which will cause things to be pushed out) -- people who voluntarily conserve or reorient themselves have to take a cut in their (at least material) living standard. Nobody wants to feel like an idiot by taking a hit conserving, so that others can waste even more at their expense, and blow raspberries at them on top of it.
It might also be interesting to look at the substitution into alternative energy sources as the relative price of oil changes. How much more coal, natural gas, solar, etc. is used for each incremental increase in the price?
This is essentially a question about the elasticity, and of course it would differ in the short-run and the long-run. Both would be of interest (to me at least).
It might also be interesting to look at the substitution into alternative energy sources as the relative price of oil changes. How much more coal, natural gas, solar, etc. is used for each incremental increase in the price?
This is essentially a question about the elasticity, and of course it would differ in the short-run and the long-run. Both would be of interest (to me at least).
I think you are going to see a WHOLE lot of that and hopefully folks will get 'smart' about it too... consider where they live and what makes sense for them not what they read in a national mag or see on TV or even read about here on the web...
For instance... I go out to South Dakota on business ('yes' there is business in So Dak)... and I am amazed at what I see for 'housing'... The majority of homes are the typical wood frame boxes you see everywhere with little windows.
The climate here is one of the most severe anywhere with summer temperatures over 100 deg F and winter temperatures to -30 deg F and the switch from season-to-season can be as short as a few days... seriously. It is not uncommon to go from heating season to air conditioning season in one week (if not the same day)... I have friends out there who have $400 heating or cooling bills almost every month... and that was when energy was cheap!
Now understand SD is one of the windiest and sunniest places on the continent... the public utilities are just now taking advantage of the wind via wind turbines... especially in places like along the nearby Buffalo Ridge... but that still doesn't explain why tindividuals don't use PASSIVE solar everywhere they can... and better yet earth sheltered passive solar... that is something they can do as individuals NOW without utility blessings or gov't decree.
I did a calculation for a 'theoretical' earth sheltered design situated in central SD... something like 2000 sqft and came to the conclusion you could heat and cool for less than a few hundred dollars per year total... and that included putting air-to-air heat exchange so as not to have sick house syndrome...
...and the home would cost no more, probably less, to build than an existing conventional home...
...oh and it wouldn't be like a cave... lotsa a natural light and bright indoor gardens...
This particular solution won't work everywhere... that's the point... tailor solutions to the location... something ancient man understood viscerally... something we need to relearn. Peak Oil will be our tutor... it isn't going to be all bad.
Read Winning the Oil Endgame
Winning the Oil Endgame-Read the Book
Great article. Another graph I would like to see and explore is amount of oil imported ( BTU ) over the years and the average price of oil per BTU.
Since the US consumes around 20% of the energy resources it would be interesting to see how the importing (and not consumption) of oil impacts the pricing of oil.
Yes, Dryfly, building for the climate is ridiculously easy. I designed and built my present home. Siting the windows, we determined where due north was and set it up with the right eaves for full sun in winter and little sun in summer coming through my southern windows which cover the entire south side of my house. There are double layers, outer windows and inner windows. When it is -20 zero, if the sun is shining, the indoor temperature rises to 80%. In the summer, the air moves from the basement to the attic, and it is cool and pleasant.
But...to rebuild America this way? Cost a fortune! It should have been done 30 years ago. I talked about this for years and years. But almost never saw it implimented. When my daughter weds, I will design and build her a house, too. She can't "buy" what I have, there are virtually no houses like mine on the east coast!
Ooops. 80 degrees...
At my new blog, Culture of Life Science News I will do pictures and other data concerning my present house. I love this place, everything is designed to be hyper efficient. Even passing heat/cold through the various floors, etc. Easy access, it has 14 doors because doors are more fun than mere windows! Solid glass on the south yet hyper insulated....Designing and building for the midwest---amazing, you can make tornado proof homes, if you really want to...
Elaine please do... I will look for the pictures... btw using solar well where you live is not easy - congrats to you...
I know how hard it is out there to change mind set - My own daughter is studying engineering at RPI and if I'm not mistaken is a rocks throw from Berlin NY... She likes it there but misses the 'sun'... Not like she was used to growing up on the northern prairie where the sun is almost a constant companion...
I will look for your pictures...
Dryfly, your daughter is in Troy?
Wow! My kids own a house next to RPI. They work for Russell Sage! I used to work at RPI!
Go, Engineers! Whoo hoo!
Anyway, there is hope. But boy, are we way behind what should be done...
Elaine is an optimist.