Infectious Greed

We have temporarily dodged a bullet. The upcoming IEA World Energy Report will say that global oil supplies are falling faster than expected, and massive investments are required just to (almost) stand still. The only thing making things marginally less calamitous? The current downturn-induced demand collapse has given us a little more time to prepare for the inevitable.

The Financial Times got a leaked copy of the report, which is due Nov. 12.

We are not running out of oil (yet). However it will be increasingly more difficult to get it out of the ground at an economical price.

Hmm, the dollar is falling again, OPEC is cutting back, now this. We may be at or near a bottom in oil prices.

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‘A History of Oil’ comes highly recommended by both Sue and Wood at John Heron Project. (Haven’t had time to watch it yet, have been traveling and am at hotel with flaky wifi as I type this.)

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Gasoline historically has been extremely cheap. It still costs less than beer or most any other liquid. Matt Simmons thinks gas could go to $12-15 a gallon. Demand is increasing while supply is dropping. That’s the problem.

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To paraphrase Waylon Jennings, Don’t you think this doomster bit has done got out of hand.

That’s what Paul Kedrofsky asked on Twitter, “are peak oil theorists turning into doomster defeatists?”, linking to a discussion on The Oil Drum.

Yeah, some are. Peak oil and global warming have become religion to them and deviations from the doctrine are not tolerated. Then there’s the positive delight they obviously take in describing the imminent collapse of civilization due to our profligate, sinful ways. How very Old Testament of them.

Well, darn it, I don’t want to live in a yurt and spend my days capturing small furry creatures to eat for dinner. Nor do I think that’s going to happen. Do we face serious challenges? Absolutely. But, hey, the Black Death took out more than 50% of the known population of the planet and guess what, the rest survived and a few decades later, positively prospered. (Because there were less people and thus more resources. Not that I’m hoping for a die-off.)

So, I think we’ll muddle through.

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Jim Kuntsler on how the end of cheap oil quite possibly means the end of mass-scale enterprises like industrial farming and a rise in political turmoil as the dispossessed see their way of life slip away. Kuntsler is even less optimistic than Matt Simmons about the possibility of renewable energy supplying much of our needs.

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He sees the biggest obstacle stopping us from going to renewables is the mistaken belief that oil prices are temporarily high and will drop. So rather than deal with the problem, we’re going on a witch hunt to see who is keeping prices up.

Even if we started drilling offshore everywhere now, we wouldn’t see the results for ten years. One big problem. All the offshore rigs are already in use. He thinks 5-7 years hard work in renewables like geothermal and wave power could “get us out of a very deep hole” but we need to start now. We also need to, among other things, eliminate long-distance commuting and grow food locally.

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What’s up with oil prices? Well, it’s not speculators, and there’s no relief in sight, meaning at least five more years of high prices with no easy fixes. The ugly truth? Peak oil isn’t fringe anymore—it’s going mainstream.

The dozens of comments to this Wall Street Journal blog post indicate that even in this bastion of capitalism and conservatism that peak oil is now accepted as fact.

Now is the time for this country to decide what to do about peak oil. Conservation is key. Europe uses far less oil per capita than does the US. We can learn from them. R&D into renewable energy, hybrid vehicles, and smart electrical grids needs to be done on a huge basis. This would also have the side effect of creating new industries and new jobs. Obama has said his administration will spend $30 billion a year on such projects. Good.

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Peak oil, peak food, peak water, global warming too. Is the root cause of all of these problems that there are just too many people on the planet?

The current world population is about 6.6 billion and growing fast. Yet suggesting that we need less people opens up all manner of ugly issues. Who gets to decide how to limit population growth? What will the rules be? Will it be voluntary? And in what countries?

Less Developed Countries are understandably highly suspicious of such proposals coming from the prosperous countries. There is also the undeniable problem of masked racism, with some using this as a pretext to get rid of Those People.

Malthusians say that limited resources on earth at some point will not be sufficient to feed the planet so that leaves us with what, that a good healthy die-off is what we need? This does present a teensy ethical dilemma, hoping for hundreds of millions to die so the rest may live better.

But the question remains: Are there too many people on the planet competing for too few resources?

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Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, by Brian Hicks and Chris Nelder

The title here is maybe a little misleading. This isn’t a get rich quick book nor is it about profiting from the misery of others. In fact, you don’t get get to investment ideas until way into the book and even then, each idea is just a paragraph or two.

It’s the getting there that makes the ideas so valuable. The authors spend considerable time explaining peak oil, the various types of renewable energy and how they work, and scenarios for dealing with global warming and peak oil. So, when they say that Valero Oil (VLO) might be a long-term stock to buy, it’s after they’ve explained that most of the sweet light crude is gone, leaving only the more difficult sour crude, and that Valero is one of the only refineries in the US that can process sour crude.

There’s some fascinating stuff here. Did you know there are “green hawks” in the Pentagon? Yes, they may be hardcore neocons but they also believe peak oil and global warming are quite real and are trying to get the rest of the Pentagon to realize it too.

You can read Profit From The Peak for its excellent investment ideas but also because it one of the best explanations of peak oil and renewable energy I’ve seen.

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Why?

Stagnant supply
Increasing demand
Weak dollar

Seems clear enough to me.

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Breakthrough Blog has a fascinating post focusing on two bloggers from India who challenge the asceticism and anti-modernism of Gandhi, paralleling that with the similar views of the ascetic wing of the environmental movement

A few quotes to give the flavor.

When they hear Western environmentalist lionize Gandhi and moralize against coal burning in India, they hear the hypocritical rich wanting to deny prosperity for the poor.

As I learned more about him, I was less inspired by Gandhi’s view that India should embrace poverty, religion, and tradition against modern prosperity and freedom.

The problem with asceticism is simply this: asceticism is a rejection of the world around us. Asceticism places the concept (of nirvana) over the tangible (people).

“I don’t support conscious suffering,” Arduous writes, before quoting from Gandhi’s chilling, open letter urging the British people to give into the Nazis. “Let them take possession of your beautiful island, with your many beautiful buildings,” Gandhi counseled. “You will give all these, but neither your souls nor your minds.” It was a chilling coup de grace to nostalgic Western views of eco-Gandhi.

We can not and will not solve the problems of global warming and peak oil by rejecting the modern world and technology. Passivity is not the answer, nor is trying to retreat to a supposedly bucolic past that never existed in the first place. Rather, action and using the technological tools we have is how we will solve them.

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This due to decreased production in their monster Cantrell field. They say it could be for up to two years, but given that Cantrell is in decline, it’s difficult to see how production will ever return to what it was, something which will have profound impact upon both the US and Mexico.

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Watched a documentary recently about the Black Death. The known world had death rates of 25-50%. Think about that. No family was spared. Things got completely psychotic for a while, what with flagellants whipping themselves publicly (when they weren’t partying with the fair maidens) and Jews being slaughtered (surely they must be to blame, let’s torture them until they confess.) But the Black Death did finally burn itself out. When it was over, the population size was much less, so there were no more food shortages. Thus, peasants didn’t have to indenture themselves to royalty any more, they simply moved on. With more spare time, culture began to flower, and this eventually led to the Renaissance.

What we’re going through now is a blip compared to the Black Death. Still, there are unsettling parallels. The slaughter and torture of innocents by frenzied mobs looking for someone to blame, happens too often in history. Religion can provide a rationalization for it too. We are to blame for letting the Jew spread the Black Death, so torturing him is only just and might save his soul too. Uh huh. Or maybe that Jew had been a moneylender and if he’s dead, then the debts never need be repaid, now do they?

Will our planet, currently straining to provide resources to all, have another Die-off? Or will climate change and peak oil will somehow lead to another flowering of culture and technology?

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A suburb eating robot.

The two front legs crush and process the suburban houses, and turn them into materials ready for recycling (naturally, being giant robots, the compacted materials are fired off in missiles to the recycling plants). The middle and rear-legs slowly but surely terraform the earth left behind. Flora and fauna are brought to the site via these behemoths, and Mother Nature is restored.

This would appear to be extreme technophilia being used in a Luddite manner, a high tech destruction of abandoned human habitat then restoring it to nature. Will the housing crisis, peak oil, and climate change actually result in a world where the suburbs are emptied out and people return, voluntarily or not, to the cities?

Or maybe, just maybe, we can combine clean, renewable power and transportation with smart energy conservation and avert such a Malthusian world.

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Energy investment bank CEO Russell Simmons on what happens if (when?) India and China develop like Japan did in the ’50s and ’60s.

“If that happens, then we need to be prepared for for one of two things: either bringing on supply to the tune of a new North Sea every two or three years — which is impossible — or watching demand outstrip supply. And finally we [will] create shortages that literally create a run on the energy bank, just like we had a run on Bear Stearns.”

Except there will be no entity to force a deal and make things better (if just temporarily) like the Fed just did with Bear. There is no magical way to create more oil and lower prices.

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Sliding down Hubbert’s Curve….

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From Peak Oil Debunked comes a quite wonderful rant about Peakists, those peak oil adherents who delight in predicting gloom.

For those of you just coming to peak oil, you’re going to want to understand the most basic concept of peak oil: The doomer feedlot.

First you’re going to want to go to a doomer feedlot, like peakoil.com or DrumBeat at the Oil Drum, and get a user ID. It’s like one of those tags that they crimp onto your ear. All the doomers look the same, and they’re all packed nose-to-bunghole into the feedlot, so the feedlot needs a way to tell them apart in case one “goes down” or flips out etc.
…
So you get your head in there and start slurping those juicy news items.

Here comes a shovelful: “Babies freeze to death in Kyrgyzstan.”, cheering the end of civilization

That’s got the stink of doom all over it, and the cows’ eyes bug out with excitement…
…
You see, lesson 1 is that peak oil is not about peak oil. Peak oil is about the inevitable die-off of industrial society and mankind due to hubris and stupidity. Any news item which advances that thesis… goes in the feed.

This process (and it’s hardly just peakists who do it) leads to the extremists trying to out-do each other by making ever more alarmist predictions while mocking the moderates as being wimpy and unfit carry the banner. “Oh, so you think we’ll still have candles to provide light, do you? Not a chance, Perky Boy. Get ready to live in caves and burn wood.”

Peak oil and global warming are real. But the task at hand is to find solutions, not predicting gloom and doom.

Tip: Peak Energy

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Excerpts from an online chat with futurist / sf author Bruce Sterling on the State of the World 2008.

Moderator: The real question is how adaptable or fragile civilian institutions are to a rapid rise in the price of oil/rapid decline in supply

Sterling: I agree, but my problem with Peakists is that they’re desperately eager to prove that civilian institutions are fragile, mostly because they’re weird cranks who’ve never found one they like.

Some of whom seem positively wed to and delighted by the possibility of the end of society as we know it. Like some End Timers and Marxists, they want the current order to collapse, seemingly unaware that it will fall on them too.

M: Will the financial system go into cardiac arrest?

S: It might, but the financial system isn’t the heart of a civilization. Communism went into cardiac arrest. The GDP of Russia dropped something like 30 percent, the whole shebang was privatized to mobsters… The Asian financial system went into cardiac arrest a couple of years ago.

Yet they all just kept on keeping on, didn’t they?

M: Would we be able to raise sufficient quantities of food and get them to market?

S: Cuba had a peak oil experience when the Soviets stopped shipping it. The average Cuban lost thirty pounds, or so I’m told. It was a calamity of sorts, they called it the “special period.” Cuba is still there.

Cuba by necessity then went to organic gardening and locally produced food on a mass scale. That’s how they fed themselves now and once the blockade is lifted, will genuinely have quite a lot they can teach the rest of us about low petroleum farming.

M: Presumably there is a rate of change in price/supply that society can accommodate fairly gracefully, and no doubt a point at which the rate of change becomes uncomfortable, and another point at which it becomes catastrophic.

S: There’s also a rate of change of zero when oil is no longer consumed, and that would be the victory condition. So, anxiously wondering whether a loss of oil is merely bad or catastrophic is a little short-sighted. Oil has to go away like whale-oil went away.

M: Which scenarios are most likely? Is there anything we can do to influence the likelihood of a better outcome — and if so, how much influence can we have?

S: Stop using oil. Coal is worse, mind you.

M:What about the possibility of exporting economies like Mexico simply consuming all the oil they produce as they grow?

S: Texas does that already.

Texas also has their own internal electricity production and grid. They don’t need power from anyone else. Smart.

M: Examining the end stages of the Third Reich doesn’t provide us with much guidance.

S: If you wanna talk catastrophe, it’s important to have a coherent understanding of genuine historical catastrophes, not make-believe pipe-dream catastrophes that serve to feed somebody’s cornball apocaphilia.

Or, if you wanna explore the mental space of ALL POSSIBLE catastrophes, you can try this:

http://openthefuture.com/2006/12/an_eschatological_taxonomy.html

in which peak oil would barely register as a “class zero.”

This is Sterling’s key point. The human race will survive global warming and peak oil. Indeed, governments and private industry are just now beginning a huge mobilization and shift to a low carbon, renewable energy economy. This process will continue and speed up. Will there be speed bumps along the way? Sure. Like the human race hasn’t faced lots of them before?

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Matthew Simmons, chairman of energy industry investment bank Simmons & Co. in Houston, spoke to Bloomberg News in Jan 2007 about how we need to prepare for peak oil now. Not only is production lessening across the planet, the vast bulk of US offshore fleet of drilling rigs is at or near the end of its lifespan and new ones aren’t being built fast enough to replace them.

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From TakePart, who also has some of the lyrics.

“Gasoline,” from Sheryl Crow’s just-released Album “Detours,” is set in 2017, and foresees a nightmarish future when the world runs out of gas:

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Just a few years ago, peak oil and global warming were considered fringe ideas. Within the past year or so they both passed into the mainstream. When you think about, that’s not only quite startling, it’s also - dare I say it - quite hopeful.

Gosh, did I say hopeful. Environmentalists don’t use that word much, too often preferring instead to horrify those they wish to convince with scenarios of collapsing societies - when they’re not bemoaning how comatose the American public is.

These ideas, peak oil and global warming, are still quite new. But they are most definitely filtering into society at large. Wal-Mart now sells hundreds of millions of CFLs and probably, more than anyone, has mainstreamed their usage. A just-passed bill in the US bans the use of incandescent light bulbs after 2014. In 2006, no one thought CFLs would become so popular by 2008. But they have. And by 2014 we’ll be using the even more efficient LEDs rather than CFLs anyway.

Scientific American just did a lengthy proposal saying that solar in the American southwest could power much of the country. Others have figured out how to store solar power so it can be used at night. The CEO of GM says EVs will replace gas engines. Railroads are seriously studying using fuel cells to power locomotives. GE is putting $2 billion into renewables research.

And this is just the leading edge of what’s coming. In just a few years we’ll see huge strides forward in the creation of clean, renewable energy and transportation.

So, I think, there is real cause to be optimistic. Because increasingly, people do get it, and are working towards change.

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The Oil Drum does a superb job of refuting that tired, gloomy prediction by some peak oil theorists that we will need to go back to small farms and hand farming. They show this is not based on fact, but on nostalgia for the past.

Industrial agriculture is likely to be stronger and more profitable when oil prices are high, not weaker. So the reversalist future of local food production on smaller farms with higher labor input will not come to pass as a result of peak oil.

Thus the industrialization of the land is not a reversible process any time soon - it is a fallacy to think so. The reversalists are expressing wishful thinking and nostalgia for the past, not a reasoned analysis of how the future is likely to play out.

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Forecasts of peak oil are wrong, says a new study by industry experts that says there’s still lots of oil left in the ground.

This seems a bit evasive to me. Because the real question is not how much is left but what it costs to get it out. And much of the easy to get oil is already gone.

Besides, using oil generates carbon emission. We need clean energy instead.

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The world’s biggest car maker, General Motors, believes the global oil supply has peaked and a switch to electric cars is inevitable.

Thus, it becomes crucial to create electricity from renewable, clean sources. Millions of autos powered by electricity from coal plants is obviously no solution at all. Let’s hope all automakers now move full speed ahead towards building hybrids and EVs.

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Chart from an interview with Matt Simmons, who “has been an investment banker for 40 years. He is the founder and chairman of the world’s largest energy investment banking company, Simmons & Co. International. In 2005, he published ‘Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,’ a book that has galvanized the peak oil debate.”

The production curve hasn’t rolled over yet, but when it does, oil production will start declining. Simmon’s primary point is that nothing, no new production or technology, will get us back to the peak again.

Hybrid cars are one solution here, as they will cut demand for oil once widely used. Instituting workable mass transit in as many areas as possible is another. In other words, solutions do exist. We just need to implement them.

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