What they don't want you to know about the coming oil crisis

This: What they don't want you to know about the coming oil crisis is perhaps the most important thing you could read to aid understanding the oil and energy problem. The oil and energy problem is very likely going to sink our modern way of life. Why? Because our way of life is utterly dependant on hugely extravagent energy use, facilitated by fossil fuels like oil and gas. Why is this a problem? Because the oil and gas are in limited supply, and relatively soon the oil and gas companies will be unable to supply the demand.

The other day I wrote a posting quoting an oil company economist saying not to worry, market forces will take care of it. Consider this effect of market forces:

Meanwhile, domestic gas bills, which rose by more than a third last year, are expected to rise even higher in the next few months. For many people, such fluctuations have lethal implications. Last winter, there were some 35,000 "excess winter deaths" in the UK, most of them attributable to old people not being able to keep warm enough; and last winter was a relatively mild one.

That's market forces at work. The price rises, people can't afford to stay warm, and 35,000 people die as a result. Yup, sorry about your grandma, but that's just market forces at work.

We have allowed oil to become vital to virtually everything we do. Ninety per cent of all our transportation, whether by land, air or sea, is fuelled by oil. Ninety-five per cent of all goods in shops involve the use of oil. Ninety-five per cent of all our food products require oil use. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles. The world consumes more than 80 million barrels of oil a day, 29 billion barrels a year, at the time of writing. This figure is rising fast, as it has done for decades. The almost universal expectation is that it will keep doing so for years to come. The US government assumes that global demand will grow to around 120 million barrels a day, 43 billion barrels a year, by 2025. Few question the feasibility of this requirement, or the oil industry's ability to meet it.

They should, because the oil industry won't come close to producing 120 million barrels a day; nor, for reasons that I will discuss later, is there any prospect of the shortfall being taken up by gas. In other words, the most basic of the foundations of our assumptions of future economic wellbeing is rotten. Our society is in a state of collective denial that has no precedent in history, in terms of its scale and implications.

The article goes on from there to describe America's contribution to this mess. The U.S. domestic oil supply reached its peak output in 1970, and U.S. domestic oil production has only declined since, while U.S. oil demand has only climbed. "Of America's current daily consumption of 20 million barrels, 5 million are imported from the Middle East, where almost two-thirds of the world's oil reserves lie in a region of especially intense and long-lived conflicts. Every day, 15 million barrels pass in tankers through the narrow Straits of Hormuz, in the troubled waters between Saudi Arabia and Iran. " The U.S. could reduce demand by 5 million barrels of oil very easily by requiring an increase in fuel efficiency of only 2.5 gallons per mile. This would be easy for Detroit to achieve, but realistically speaking with President Enron and Vice President Halliburton in office is there a chance of that happening?

The SUV market share in the US was 2 per cent in 1975. By 2003 it was 24 per cent. In consequence, average US vehicle fuel efficiency fell between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time when other countries were producing cars capable of up to 60 miles per gallon.

With this kind of trend, we are literally driving ourselves to oblivion.

The importance to this question lies with how is it going to be solved. No amount of economic free market theory will cover up the fact that what we have is a limited, and declining, resource. We will not have the luxury of waiting 6 million years for oil reserves to recover through geologic mechanisms. Instead, when the oil peaks and begins to run dry, the wars we're seeing now will seem tame in comparison.

If we are to avoid that fate, we must begin working on some alternative way of moving our butts from place to place. And it's not just transportation, it's our food supply. As the article says, agriculture is a huge user of oil if only because the Market Economy has resulted in most cities not having their own food production capacity, and instead relying on the ability to ship food from far remote places. How else can arctic cities have fresh fruit in the dead of winter???

It takes time to develop a new energy technology. A lot of time. Fortunately there are some alternative technologies being worked on, but they are all struggling with limited funding for research. Plus they all are suffering from a playing field shaped by market forces that are strongly favoring the entrenched fossil fuel resources.

What they don't want you to know about the coming oil crisis

This: What they don't want you to know about the coming oil crisis is perhaps the most important thing you could read to aid understanding the oil and energy problem. The oil and energy problem is very likely going to sink our modern way of life. Why? Because our way of life is utterly dependant on hugely extravagent energy use, facilitated by fossil fuels like oil and gas. Why is this a problem? Because the oil and gas are in limited supply, and relatively soon the oil and gas companies will be unable to supply the demand.

The other day I wrote a posting quoting an oil company economist saying not to worry, market forces will take care of it. Consider this effect of market forces:

Meanwhile, domestic gas bills, which rose by more than a third last year, are expected to rise even higher in the next few months. For many people, such fluctuations have lethal implications. Last winter, there were some 35,000 "excess winter deaths" in the UK, most of them attributable to old people not being able to keep warm enough; and last winter was a relatively mild one.

That's market forces at work. The price rises, people can't afford to stay warm, and 35,000 people die as a result. Yup, sorry about your grandma, but that's just market forces at work.

We have allowed oil to become vital to virtually everything we do. Ninety per cent of all our transportation, whether by land, air or sea, is fuelled by oil. Ninety-five per cent of all goods in shops involve the use of oil. Ninety-five per cent of all our food products require oil use. Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles. The world consumes more than 80 million barrels of oil a day, 29 billion barrels a year, at the time of writing. This figure is rising fast, as it has done for decades. The almost universal expectation is that it will keep doing so for years to come. The US government assumes that global demand will grow to around 120 million barrels a day, 43 billion barrels a year, by 2025. Few question the feasibility of this requirement, or the oil industry's ability to meet it.

They should, because the oil industry won't come close to producing 120 million barrels a day; nor, for reasons that I will discuss later, is there any prospect of the shortfall being taken up by gas. In other words, the most basic of the foundations of our assumptions of future economic wellbeing is rotten. Our society is in a state of collective denial that has no precedent in history, in terms of its scale and implications.

The article goes on from there to describe America's contribution to this mess. The U.S. domestic oil supply reached its peak output in 1970, and U.S. domestic oil production has only declined since, while U.S. oil demand has only climbed. "Of America's current daily consumption of 20 million barrels, 5 million are imported from the Middle East, where almost two-thirds of the world's oil reserves lie in a region of especially intense and long-lived conflicts. Every day, 15 million barrels pass in tankers through the narrow Straits of Hormuz, in the troubled waters between Saudi Arabia and Iran. " The U.S. could reduce demand by 5 million barrels of oil very easily by requiring an increase in fuel efficiency of only 2.5 gallons per mile. This would be easy for Detroit to achieve, but realistically speaking with President Enron and Vice President Halliburton in office is there a chance of that happening?

The SUV market share in the US was 2 per cent in 1975. By 2003 it was 24 per cent. In consequence, average US vehicle fuel efficiency fell between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time when other countries were producing cars capable of up to 60 miles per gallon.

With this kind of trend, we are literally driving ourselves to oblivion.

The importance to this question lies with how is it going to be solved. No amount of economic free market theory will cover up the fact that what we have is a limited, and declining, resource. We will not have the luxury of waiting 6 million years for oil reserves to recover through geologic mechanisms. Instead, when the oil peaks and begins to run dry, the wars we're seeing now will seem tame in comparison.

If we are to avoid that fate, we must begin working on some alternative way of moving our butts from place to place. And it's not just transportation, it's our food supply. As the article says, agriculture is a huge user of oil if only because the Market Economy has resulted in most cities not having their own food production capacity, and instead relying on the ability to ship food from far remote places. How else can arctic cities have fresh fruit in the dead of winter???

It takes time to develop a new energy technology. A lot of time. Fortunately there are some alternative technologies being worked on, but they are all struggling with limited funding for research. Plus they all are suffering from a playing field shaped by market forces that are strongly favoring the entrenched fossil fuel resources.

RIGZONE - U.S. Won't Run Out of Fuel if Iran Flows Stop - API

This is meant to calm us? In U.S. Won't Run Out of Fuel if Iran Flows Stop - API, an economist is quoted about near term oil supply and pricing worries. Namely, the U.S. is probably getting ready to beat up on Iran like we've been doing to Iraq. As I've pointed out in numerous postings, the Project for a New American Century (and the NEOCON's in general) have had this plan since at least 1992, to reshape the Middle East beginning with Iraq and moving on to either Syria or Iran (or both), toppling governments as they go and "installing" moderate democracies in their wake.

The current tough stance against both Iran and Syria fits right into that plan, regardless of how dangerous either country really is.

But back to this nutball economist and his attempt at psychological mass influencing of opinion.

In all likelihood it will be a tight market," said John Felmy of the American Petroleum Institute. "But as long as the market system is allowed to work we will have price adjustments that allocate scarce supplies," he told reporters at a briefing, "I would not expect to see shortages."

... Felmy acknowledged that Saudi Arabia, the world's only producer with significant spare capacity, would not be able to totally fill the gap should Iranian flows stop and that U.S. motorists could experience spot shortages of fuel.

... We can see occasional gas lines and spot (supply) problems like we experienced right after Hurricane Katrina if the public panics but that was a real special situation," he said.

The context is that ... assuming some significant action is taken against Iran, then we can expect an oil supply disruption. Quite possibly Iran will become unable to export oil. Oil prices have been surging the last couple weeks because of that expectation.

So, when the economist says "the market system is allowed to work we will have price adjustments that allocate scarce supplies" ... well ... let me provide an interpretation.

• It means that oil products will become scarcer ...
• hence the price will go up ...
• hence once the price goes up, people will decrease their usage ...
• then with decreased usage, the demand will fall (some) and eventually the supply/demand equation will reach some equilibrium.

He says the same thing himself, but he's pussyfooting around the effect. It means disruption to our calm lives in the U.S. It means there will be a lot of angst this year, again, just like last year, over oil, gasoline prices, and "why won't the government do something about this". Just like last year.

Why won't the government do anything about this? Well, it's because the people re-elected that sleazeball corrupt President Enron, Vice President Halliburton and Secretary of Defense Chevron. That's why.

The government isn't about to do anything about this, because the government was bought and paid for by the oil industry. That's why.

Oh, and what should the government do about it anyway? The people in their grand lunacy are buying humongous SUV's that get 10 miles/gallon when there's a tailwind. In other words, the oil demand has only been going up, and up, and up, and up. So long as the U.S. demand for oil keeps going up the problem will only get worse and worse.

The fact is the U.S. has very little oil within its own territory. That means we have to look outside the U.S. for the majority of the oil we consume (aroundd 70% of our oil comes from foreign sources). Since oil is such a crucial part of the U.S. economy (we can hardly do anything without burning some oil), the supply of oil is absolutely essential to continuing life as we know it in this country.

That means, like it or not, that the government has to go to great lengths to ensure supplies of oil. Because without the oil the country will collapse.

And what are those great lengths? Try, for starters, to consider the purpose of invading Iraq.

The reasons given by the government for the war have all been shown to be poppycock, and what's worse is it's clear they were consciously lying to us and the world as they originally told us those stories. It wasn't about WMD, it wasn't about evil Saddam, etc. There's lots of WMD and evil dictators in the world which the U.S. is doing nothing about. Instead Iraq has the second largest oil reserves in the world. And Iran, the next target apparently, is right up there with its own large oil reserves.

The real solution is for the U.S. to permanently decrease its oil usage. But so long as President Enron, Vice President Halliburton and Secretary of Defense Chevron are in office don't expect that kind of wisdom to escape from the mouth of government.

Instead it's up to the people to do this on our own.

RIGZONE - U.S. Won't Run Out of Fuel if Iran Flows Stop - API

This is meant to calm us? In U.S. Won't Run Out of Fuel if Iran Flows Stop - API, an economist is quoted about near term oil supply and pricing worries. Namely, the U.S. is probably getting ready to beat up on Iran like we've been doing to Iraq. As I've pointed out in numerous postings, the Project for a New American Century (and the NEOCON's in general) have had this plan since at least 1992, to reshape the Middle East beginning with Iraq and moving on to either Syria or Iran (or both), toppling governments as they go and "installing" moderate democracies in their wake.

The current tough stance against both Iran and Syria fits right into that plan, regardless of how dangerous either country really is.

But back to this nutball economist and his attempt at psychological mass influencing of opinion.

In all likelihood it will be a tight market," said John Felmy of the American Petroleum Institute. "But as long as the market system is allowed to work we will have price adjustments that allocate scarce supplies," he told reporters at a briefing, "I would not expect to see shortages."

... Felmy acknowledged that Saudi Arabia, the world's only producer with significant spare capacity, would not be able to totally fill the gap should Iranian flows stop and that U.S. motorists could experience spot shortages of fuel.

... We can see occasional gas lines and spot (supply) problems like we experienced right after Hurricane Katrina if the public panics but that was a real special situation," he said.

The context is that ... assuming some significant action is taken against Iran, then we can expect an oil supply disruption. Quite possibly Iran will become unable to export oil. Oil prices have been surging the last couple weeks because of that expectation.

So, when the economist says "the market system is allowed to work we will have price adjustments that allocate scarce supplies" ... well ... let me provide an interpretation.

• It means that oil products will become scarcer ...
• hence the price will go up ...
• hence once the price goes up, people will decrease their usage ...
• then with decreased usage, the demand will fall (some) and eventually the supply/demand equation will reach some equilibrium.

He says the same thing himself, but he's pussyfooting around the effect. It means disruption to our calm lives in the U.S. It means there will be a lot of angst this year, again, just like last year, over oil, gasoline prices, and "why won't the government do something about this". Just like last year.

Why won't the government do anything about this? Well, it's because the people re-elected that sleazeball corrupt President Enron, Vice President Halliburton and Secretary of Defense Chevron. That's why.

The government isn't about to do anything about this, because the government was bought and paid for by the oil industry. That's why.

Oh, and what should the government do about it anyway? The people in their grand lunacy are buying humongous SUV's that get 10 miles/gallon when there's a tailwind. In other words, the oil demand has only been going up, and up, and up, and up. So long as the U.S. demand for oil keeps going up the problem will only get worse and worse.

The fact is the U.S. has very little oil within its own territory. That means we have to look outside the U.S. for the majority of the oil we consume (aroundd 70% of our oil comes from foreign sources). Since oil is such a crucial part of the U.S. economy (we can hardly do anything without burning some oil), the supply of oil is absolutely essential to continuing life as we know it in this country.

That means, like it or not, that the government has to go to great lengths to ensure supplies of oil. Because without the oil the country will collapse.

And what are those great lengths? Try, for starters, to consider the purpose of invading Iraq.

The reasons given by the government for the war have all been shown to be poppycock, and what's worse is it's clear they were consciously lying to us and the world as they originally told us those stories. It wasn't about WMD, it wasn't about evil Saddam, etc. There's lots of WMD and evil dictators in the world which the U.S. is doing nothing about. Instead Iraq has the second largest oil reserves in the world. And Iran, the next target apparently, is right up there with its own large oil reserves.

The real solution is for the U.S. to permanently decrease its oil usage. But so long as President Enron, Vice President Halliburton and Secretary of Defense Chevron are in office don't expect that kind of wisdom to escape from the mouth of government.

Instead it's up to the people to do this on our own.

Re: The price of gasoline could get ugly in 2006

The "Hybrid Cars Blog" suggests that in 2006, the price of gasoline could get ugly. That is, the high gas prices seen in the U.S. last year could be as bad, or worse. See: The price of gasoline could get ugly in 2006

The story seems to be that the cause for last years oil price surge can be found in the gap between China having increasing oil use and weather related outages in oil delivery. This year China's surging oil demand is still there, plus we have several possible outages in oil delivery such as "rebels" in Nigeria attacking oil platforms, and the situation in Iran from which there could be several ways oil delivery could be blocked.

While that story is very true, it is also an example of short term thinking.

In the long term picture the price for oil can only go up. In the short term there will be fluctuations, but long term is a different story. Why? It's because the demand continues to go up in an unabated curve, and the Peak Oil scenario is looming out there.

The Peak Oil scenario is a model developed by oil company scientists that describes production capacity over time. The model shows that the world oil production capability will peak. Already discoveries of new oil fields has dried up with discoveries not at all meeting the growth in demand for oil.

UPDATE in December 2006 ... the price for oil and gasoline did get very high up until September. Then it curiously dropped just before the election, and then has curiously risen a little since the election. Makes one wonder if some kind of price manipulation was being tried by the oil industry to prop up the Republicans? If so, it didn't work.

The Story about Oil you NEED to Hear

Wow, now I understand the significance of something I've seen mentioned in the press. The U.S. Federal Reserve is planning to stop publishing the M3 number. I've seen this in the news, but it didn't register for me the significance, but according to The Story about Oil you NEED to Hear this technical detail in the economic statistics reporting couldn't be more important.

M3 is a measure of American currency in circulation. It is the total of physical currency in actual circulation (M0), the amount held in bank accounts (M1), the amount held in other kinds of accounts (M2) and the amount held outside the U.S. (M3).

What's important here is that oil is traded in only two exchanges: New York and London. For all oil bought and sold worldwide, the transaction occurs either in the New York or London market. Plus, the transaction occurs in U.S. Dollars, and the M3 statistic is largely a measure of the currency used in those oil transactions.

Enter Iran and a plan they announced. They wish to establish another oil exchange, and on that oil exchange the transactions will be denominated in Euros.

And, enter Iraq with a plan they launched shortly before they were invaded. Namely, they began, in 2000, to sell their oil with transactions denominated in Euros.

Look at what happened to Iraq, and what the U.S. government is threatening to do to Iran.

The conclusion that's being implied is that the Iraq war was launched so the U.S. would retain control over the world oil market, and that an Iran war is threatened for the same reason. Hmmm...??

The Story about Oil you NEED to Hear

Wow, now I understand the significance of something I've seen mentioned in the press. The U.S. Federal Reserve is planning to stop publishing the M3 number. I've seen this in the news, but it didn't register for me the significance, but according to The Story about Oil you NEED to Hear this technical detail in the economic statistics reporting couldn't be more important.

M3 is a measure of American currency in circulation. It is the total of physical currency in actual circulation (M0), the amount held in bank accounts (M1), the amount held in other kinds of accounts (M2) and the amount held outside the U.S. (M3).

What's important here is that oil is traded in only two exchanges: New York and London. For all oil bought and sold worldwide, the transaction occurs either in the New York or London market. Plus, the transaction occurs in U.S. Dollars, and the M3 statistic is largely a measure of the currency used in those oil transactions.

Enter Iran and a plan they announced. They wish to establish another oil exchange, and on that oil exchange the transactions will be denominated in Euros.

And, enter Iraq with a plan they launched shortly before they were invaded. Namely, they began, in 2000, to sell their oil with transactions denominated in Euros.

Look at what happened to Iraq, and what the U.S. government is threatening to do to Iran.

The conclusion that's being implied is that the Iraq war was launched so the U.S. would retain control over the world oil market, and that an Iran war is threatened for the same reason. Hmmm...??

sustainablog: Building an Open-Source Community for Appropriate Technology

The "Open Source" meme is making widespread change in the computer industry. Nobody can doubt that, and the change is moving step-by-step through the whole of the computer industry. It means a change from the former normal business practice of having proprietary advantage over your competitors, and using secrecy to preserve that advantage. But I think society as a whole loses from the secrecy, because what's allowed science and technology to flourish is for each succeeding generation to stand on the shoulders of science. But in the computer industry the secrecy actively prevented succeeding generations to stand on the shoulders of giants.

Building an Open-Source Community for Appropriate Technology: is an article discussing the possibility of using the open source model in the development of "appropriate technology". Open Source concepts are obviously new to Jeff.

"Appropriate technology" generally, as I understand it, is in opposition in many ways to business-as-usual. Business-as-usual depends on consumption, the more the better, as high levels of consumption mean higher sales which mean higher revenues.

Since appropriate technology generally doesn't fit normal business practices, it's probably a good fit for open source development models.

My take on open source models, from having used open source software over the last 25 years, is that the owner of a product is the one who gets to determine the licensing under which it's distributed. By licensing, I mean the ability to take the product design and make your own. For example only the Ford Motor Company is able to make a Ford car, because it is Ford that owns the design and doesn't tell anybody else the design except under license agreements in the cases where they outsource parts construction.

It is the goals of the owner/developer of a product which determines the sort of license they use.

In the open source software world, the people generally have a goal of sharing and openness. In contrast the closed source software companies have a goal of control, and making the most money they can.

Jeff mentions some difficulty with learning to use open source software. This is an interesting byproduct of the OSS process. The quality of an OSS application depends on the contributions by the community that builds around that application.

In some cases the community cares a lot about usability and documentation. But often the community around a project is made of software developers, and software developers are notorious for not quite grokking real usability issues. For example, an error message that makes sense to a developer is often completely foreign to the typical end user.

I think this partly stems from the "we're building this ourselves" nature of the open source process.

This may be a resulting attribute of any appropriate technology developed under an open source model. In fact I came across an example the other day.

Maria 'Mark' Alovert and others are developing designs and documentation for producing biodiesel. The web sites are biodieselcommunity.org and localb100.com. There's a lot of great information there, but it's a little haphazardly organized, and certainly not a finished and polished product you can just buy and begin using. Instead they have a bunch of pieces, parts, documentation, etc, and expect the end user to do a lot of learning and assembly.

What would tend to happen is some people are willing to roll up their sleeves and dig into the problem. It's those people who are most motivated by the problem set, and it really does, I think, contribute to the overall increase in knowledge among society as a whole.

For example I can offer an analogy from operating system design. If the only computer operating systems one could get were closed source, then almost nobody would understand the fine art of operating system design. But because of Linux, FreeBSD, Darwin, and other operating system projects, there are a large number of people who have spent a lot of time studying, analyzing, modifying, tweaking and improving operating system design. The result is, I think, very good in demystifying and opening up computer system design.

Green Car Congress: US Petroleum Consumption Hits Record Highs in 2005

We're screwed if this keeps going like this. US Petroleum Consumption Hits Record Highs in 2005 What this means is the demand for oil is continuing to grow unabated. And this year saw record oil prices in the U.S. as well, yet it didn't slow the growth in demand.

Green Car Congress: US Petroleum Consumption Hits Record Highs in 2005

We're screwed if this keeps going like this. US Petroleum Consumption Hits Record Highs in 2005 What this means is the demand for oil is continuing to grow unabated. And this year saw record oil prices in the U.S. as well, yet it didn't slow the growth in demand.

Green Car Congress: Russia Turns the Natural Gas Screws on Ukraine, Europe Feels Effect

Green Car Congress has a report about a crisis in natural gas supply between Russia, Ukraine and the rest of Europe. Apparently Russia has jacked up Ukraine's prices, and the resulting dispute has interrupted natural gas supply to Ukraine. Russia Turns the Natural Gas Screws on Ukraine, Europe Feels Effect (Green Car Congress, 2 January 2006)

One of the comments on GCC is "Ukraine has to pay market price, so US can't object to capitalism. This is direct result of Ukraine's orange revolution." to which I say... your nuts. It isn't capitalism to jack up prices just because of a change in government. That's manipulation. Russia was on the losing side of the Orange Revolution event, and I suppose now they want to use the cold of winter to create a heating crisis and maybe anger the people of Ukraine enough to topple the government. That is not capitalism at work.

Some interesting factoids in the article -- Russia has the largest Natural Gas reserves in the world, followed by Iran. The three major fields, Urengoy, Yamburg, and Medvezh’ye, are in Siberia and the Russian Gas company, Gazprom, admits these fields are in decline and there will be "steep" declines in output between 2008-2020.

That makes part of this episode looking to the future of the peak for natural gas having been reached.

The "peak oil" effect also applies to other natural resources. The model is that there is a fixed amount of each resource on the planet. And humans have a given ability to tap those resources. Between usage of the resource, the resulting depletion of the resource, and the ease/difficulty of tapping the resource, a peak will be reached in production capacity. For example the U.S. reached its peak of oil production capacity in 1970. The world is projected to reach its peak of oil production capacity, well, any day now, if not already.

Try as you might, after the peak is reached you can't increase production because the resources are heading towards depletion.