Tuesday, December 25, 2007

90 Days Later

Merry Christmas, as Ambrose Evans-Pritchard warns the entire world that the banking problems "could make 1929 look like a walk in the park." The global financial system has thankfully not imploded - yet. But as Richards notes, "lenders are hoarding the cash, shunning peers as if all were sub-prime lepers." The more that the central banks pump into the system, the more cash the largest banks are holding, refusing to lend to anyone else except at extreme rates. Basically the largest banks, with access to central bank lending windows in various countries, are holding on to cash to protect themselves. In other words, the largest banks do not believe what Bernanke and his European central bank friends are saying - that liquidity is the problem. Liquidity is not the problem here. The real problem is that we still do not know who is insolvent and who is not. Bernanke and friends are covering up bad business practices but some of these banks must go out of business due to being insolvent from bad business practices.

Meanwhile the economists are also fighting inflation, citing unusual rises in energy and food prices. There appears to be no awareness that non-monetary issues may be at play here. So they believe they are facing two opposing forces - inflation and deflation. They fear deflation the most but must pay lip service to fighting inflation or everyone will see the central bank scam for what it is, a cartel that enriches its members by constantly inflating the money supply. But this cosmetic necessity, paying lip service to fighting inflation, is preventing the central banks from lowering interest rates further. Thus they are in a box canyon of their own choosing, which may now destroy them and take down the modern economy with it. The full quote from Pritchard's article actually comes from York professor Peter Spencer, chief economist for the ITEM Club. "The central banks are rapidly losing control. By not cutting interest rates nearly far enough or fast enough, they are allowing the money markets to dictate policy. We are long past worrying about moral hazard," Spencer said.

On the climate front, we have seen more urgent calls regarding climate change, yet at the same time the deniers continue to deny that the climate is even changing or have begun to change their tune to saying that it's not humanity's fault. Gee, the deniers were wrong before so why should I believe their new stance is right now? Same old deniers, new song. Go review the history of the most vocal deniers. These are the same people who were funded by large corporations hostile to climate change legislation and who claimed there was no warming occurring. Their revised stance is now that warming is occurring but that it is natural. One sees this sort of denial and one hopes there really is a hell, just so that there can be a special place for liars who place their own financial gain ahead of the lives and safety of hundreds of millions of people.

Even so we continue to see weird effects beginning to pile up. Again, fortunately, nothing major occurred this fall but the ripple effects continue to mount, especially effecting global grain production. Shortfalls this year, largely due to climate change in Australia, and "bad weather" elsewhere are leading to lower than normal grain harvests while consumption continues to rise due to population growing.

Petroleum continues to behave fairly predictably. Robert Rapier appears poised to win his bet that oil would not hit $100 this year but it was close, closer than he wanted to see. And Robert won't go near that bet for next year. He knows, like all of us, that we are in a supply crisis. Robert still believes peak is a few years away while I still believe that peak C&C was May 2005 but the difference is not going to be much in the long run. The world is still on plateau though the last few months saw new preliminary "all liquids" totals. Matthew Simmons believes this is the result of gas caps being blown off world wide as the production of NGLs is up significantly over that time. If Simmons is correct, then the forecast made by Ace looks more and more reasonable, with serious declines beginning by 2009 and becoming obvious to all by 2011.

We again face a winter hanging in the balance. Odds are good that this winter won't be excessively cold but you never know. Climate change is primarily about change, driven by the overall warming but that doesn't mean that specific regions can't experience colder weather for part of the year. The larger than normal snowfalls of recent years have been due to more water vapor in the atmosphere, a direct side effect of warming. My personal expectations, which could be very wrong, of course, are for lower US demand after Christmas going into 2008 allowing global prices to stabilize or even decline slightly. If the last few years are any guide, we'll see the bottom of the oil price curve in mid to late spring followed by a relentless climb back up. Next August through October should see us well above $100 per barrel barring economic collapse.

Personally, I will be buying oil futures in the spring with an eye towards the late summer and early fall price increases. This has been a fairly safe and consistent play for the last few years and I have no reason to expect it to be otherwise this year, unless Bernanke and friends cannot hold their game together. And if that happens, all bets are off anyway. I've accomplished some additional preparations for myself and my family over the last 90 days but there is always more to do. January is right around the corner and I will need to be getting my seed orders placed and seedlings started for March/April plantings here in Texas. This year when my seedlings go into the ground, they'll be 4-8 weeks closer to maturity than last year. I also have decided to add 3 additional raised beds to my current set. That's a good bit of labor but my youngest son has volunteered to come over and help me with that task.

Again, I urge each of you to do what you can to be as prepared as possible for problems. The world is on a collision course with population growth and the effects of population growth. Climate change, peak oil, other resource scarcity, loss of arable farm land, depletion of water tables... these are all symptoms of the real problem. Add in that our false economic system is trying to implode under these pressures as well and things do not look good.

I wish each of you a happy holiday season. Enjoy the company of friends and family but do not delay. Time may be running out on us even as we celebrate.

Thursday, October 18, 2007

Why?

Why am I a doomer? The key question facing humanity post-peak oil is "What is the decline rate going to look like?" Right now nobody has a good answer to that because we're still arguing about whether we've even peaked or not. But ignoring that problem for a moment, whenever peak does arrive, the decline rate question becomes the big one.

The key problem becomes adaptation rate of alternative technologies versus the decline rate of fossil fuels (because natural gas appears to be at or near peak also and coal is not really that far off). If we can adapt as fast or faster than we decline then we may even experience a "boom" of sorts. If we cannot adapt as fast or faster than the decline rate, then we have problems. The exact nature and scope of the problems are not clear and it is not even clear that worse declines would lead to worse problems. Worse declines might trigger an emergency mindset sooner, thus saving us from ourselves, for example.

The problem that most "doomers" see is that historically, no energy shift in the history of industrial society has occurred in less than 50 years, or about 1.5%-2% change annually. Decline rates are already posited to be likely larger than this with the lower bound on decline rates most frequently expected to be around 4% and even industry experts seeing the possibility of 8% declines. Clearly, society has never faced this sort of problem before and therefore this problem is very likely going to require extraordinary measures rather than "business as usual" methods. So far, there has been no "crisis" mindset adopted by any nation in the world and therefore we remain in the "business as usual" mindset. This is what gives many "doomers" concern.

It is important to note that we have the technology to solve these problems but that using the technology we have would result in a society that looks different than the one we have today. Solving the energy crisis would mean denser housing, more transit oriented development, electrification of transportation, and a vast array of other effects that would fall out from those primary changes. Such a society would not necessarily be a bad place to live, just different than the "happy motoring suburbia" we have today, and maybe even better.

The negativity often expressed here is an outgrowth of the lack of response by national governments coupled with the awareness that the problem is already expected to be larger than normal modes of operation can handle. Also, note that many here refuse to accept that we also have massive concurrent problems with climate change, loss of arable soils, fresh water depletion, loss of biodiversity, and overpopulation. These problems are compounded by the extraordinary nature of the projected decline in fossil fuels. It is my belief that all of these problems are technically solvable but technology alone never solved anything by itself. Problem solutions involve politics, i.e. human interaction. If a political solution is not forthcoming then there will not be a solution, regardless of whether technology offers us such a solution or not. So what we need and are not yet getting is a crisis mindset on the political landscape to deal with these sorts of problems. Even in the European nations the notion is "business as usual".

Now, I will say up front that I cannot prove that the "business as usual" methods will definitely fail but, based on history, I can find no example where these business as usual methods have solved problems like these ever before. So by not adopting a crisis mindset througout our entire society, we are taking a gigantic gamble and it is a gamble that history suggests we are going to lose. I am not aware of a single prior civilization that continued to do things the same way and which faced one or more of these kinds of problems that did not collapse. Those civilizations cited by Tainter and Diamond that did survive serious crises, did so by changing urgently. Thus, until I see our society deliberately choosing to succeed, I must assume, based on the historical record, that we will fail (and therefore collapse). Given that many population biologists are of the opinion that we are in serious population overshoot only enabled by our civilization's existence (and dependence on fossil fuels), the loss of that civilization must be presumed to be accompanied by serious loss of life and disintegration of the social structure, as has happened repeatedly throughout history.

Monday, September 17, 2007

Let's watch the next 90 days

There are longer term trends emerging in the biosphere and we'll just have to wait on mother nature to reveal those to us when she is ready. She's not going to be rushed or held back by us. But closer to home I am watching the frantic economic hokum try to play out. Of interest was last week's run on Northern Rock, one of Britain's largest banks. That run caused a 31% drop in value and today it dropped another 30% as Britons withdrew billions of pounds from the troubled financial institution. This comes on top of a run on Countrywide bank in the United States last month by Hollywood's own stars and moguls, some of whom withdrew millions. One starts to wonder if bank runs will begin to spread and what the official reaction will be if they do spread. Have YOU got enough cash on hand if there is a bank holiday declared? No? Well tough cookies if your bank closes due to a "bank holiday" and you cannot cash a check or even do check based or electronic transactions!

Meanwhile today the Federal Reserve has (so far) injected $16.75 billion into the markets. Not too long ago we used to see one or two Fed actions per week, totaling $2 to $5 billion for the week. Now we see actions like that every day with at least once per week going into double digits, and sometimes even more often. If you check the Temporary Open Market Actions record for the Fed, and view the historical data, you can see a steady increase in Fed intervention over the last 18 months to where we are today, with near daily injections of credit. You'll also note that the market tends to be soft all week until Thursday when, on most weeks, the Fed does a double digit injection. Since they just did a double digit injection today, will they do another Thursday? And has anyone accounted for all these digi-dollars and what they are going to do to inflation globally?

So all this comes down to watching the next 90 days with some interest, because, if humans are capable of anything, it is upstaging mother nature. And we may be about to enter a period where we try to do just that, at least for a little while. The Taiwan situation is heating up a little bit. George Bush began beating the drums of war against Iran right on predicted schedule after Labor Day. Even France is now warning of war with Iran while the Bush administration continues to leak larger and larger target lists inside Iran. The current count is up to 2000 targets, and remember that Bush wants to use B61 "bunker buster" nuclear warheads which have dialable yields from 0.5 KT to 170 KT of TNT equivalent explosives. For reference, the Hiroshima and Nagasaki weapons were in the 15-20KT range so these are "city destroyers" if dialed high enough.

NATO and Russia continue to not see eye-to-eye over deployment of nuclear weapons with Russia recently threatening to deploy nuclear weapons in a very dangerous location - Kalingrad. And, of course, the economic house of cards is trying to fall apart. And oh! Did you see Alan Greenspan taking Bush to task by publicly stating that Iraq was always mainly about oil?

Meanwhile, back in the real world, Rembrandt Koppelear's Monthly Oil Watch Report for September is out and documents the continuing decline of global oil production. That's right, people. Despite record high prices, oil production is continuing to decline. This is the exact opposite of what economic "theory" tells you should happen, unless the resource is, indeed, finite and constrained and past its peak of production. Daily production was 84.60 million b/d in August 2007 compared to 85.454 million b/d in August 2006. And worse, we are down 1.53 million b/d from the July 2006 all-liquids peak of 86.13 million b/d. Note also that plain old Crude and Condensate (which excludes natural gas liquids, biofuels, and other non-petroleum liquids), peaked in May 2005 and has been lower than that in every month since and showing a generally declining trend.

And oh yeah! The arctic ice sheet is still out there, isn't it? Well thank goodness that it appears to have stopped melting, right? I mean, after all, establishing a new record low of 2.92 million square kilometers of ice, more than 1 million square kilometers lower than the previous record, is just an anomaly, right? Nothing to worry your little head about here. Move along! Move along! But do you want to get really weird? See the September 12th comments at Cryosphere Today - ice mass in the Antarctic is setting record highs!

I think we are starting to see the beginnings of extremely harsh and violent climate shifts beginning, while at the same time the current mythology of homo sapiens (growth economics) is about to blow up in our collective faces, and further, we have a madman in the White House who is prepared to risk starting World War III.

"May you live in interesting times," goes the old Chinese curse. I think we're there, don't you? If we get through the next 90 days without some major problems, I will probably breathe a great big sigh of relief, at least for the short term. Oh... and let's hope we get lucky and have another warm winter in the US and Europe this year. Might as well hope for all the fairy tales to come true at once, right?

Wednesday, September 05, 2007

Random Thoughts

This is just a collection of random thoughts and observations.

Just the other day I was debating a retired professor of economics. Like so many others who believe in economics, he cannot even see that there is no real science there, just theology. We went roundabout on the topic of changes to statistical gathering methods made by the government since the 1970s intended to paint a better picture than actually exists but even after finally admitting that he could not compare 1970s data to 2007 data, he wanted me to bet him whether the 2007 data for the fourth quarter would be "positive" or not... using the government's own statistics to settle the bet, of course. The sheer hypocrisy and ignorance that he demonstrated throughout that discussion should give great pause to any of you who still think that homo sapiens is a "rational" animal and that this rationality is leading somewhere sensible.

I've also noticed that the arctic meltdown has entered the mainstream media, at least briefly. I don't expect it to displace Hollywood stars though. After all, this culture has to focus on what's really important, not piddling things like destroying the planet, right? Nonetheless, we are establishing new record lows for Arctic sea ice, more than a million square kilometers below the old record of just 2 years ago. Has this turned exponential? You can't say for sure based on one year's data but my gut feel is that it has.

And the naysayers are out in force now that it is September. They are picking on Matthew Simmons who said IF we have a bad combination of circumstances that global oil and especially gasoline tightness could result in much unpleasantness here at home. Well so far it happens that the US of A has managed to escape any unpleasantness this summer. Hurricanes have luckily steered south and there's been no huge need for a surge of gasoline in any one week. Lucky for us but there are the cornucopians claiming Simmons said something he did not say and then trying to crucify him for it.

Meanwhile, the credit crunch continues with some extraordinary borrowing in the last two weeks from the Fed to customers. Certain Fed customers are getting loans (via repos) at 0% to 1%!! Check out the temporary open market actions by the NY Federal Reserve, which is the branch of the Fed that does this if you want to see what I mean. Look at the late August period for examples. (You can always get that from the historical series even if it falls off the most recent 25 actions list.) So who is getting the sweet deals with very cheap money exactly when the Fed says money should not be getting cheaper? Methinks Bernanke speaks with a forked tongue.

Worse, on Thursday, September 6, the Fed injected a near record $31.25 billion dollars into the economy. (Look for the September 6, 2007 data in the above Temporary Open Market Actions link.) Unfortunately, it's not going anywhere from all accounts. The inner circle of "credit worthy" banks to whom the Fed has restricted its lending does not seem to be lending this money back out except at exorbitant rates so no one is borrowing. (You can see this rate discrepancy in the T-Bill/LIBOR difference.)

At the same time there is no letup in what is happening out in the real world. Mortgage foreclosures are at record highs and not turning downward it seems. Unemployment is far worse than the BLS is letting on as they revise prior months and try to put the best face on the current month. So far today (September 7th), the DOW is down over 200 points though it looks like the PPT is just trying to run a holding action and keep it from utterly crashing while the Fed figures out their next move since the inter-bank lending has apparently all but dried up.

Meanwhile oil is testing its old highs as demand remains stiff and OPEC refuses to budge. The prior drops in oil were directly attributed to market players trying to raise cash to protect other positions. Now that wave of selling has ended and oil has popped right back up near $80 per barrel. Then add in Israeli overflights of Syria to which Syria responded with anti-aircraft fire and we have the makings of a reintroduction of the $15 "fear premium".

And then there are the curious military activities over the next month, roughly. We have (a) an Air Force stand down action (which they did right before and during 9/11), (b) an Army exercise aimed at simulating the declaration of martial law throughout a large portion of the United States, and (c) a Homeland Security exercise aimed at simulating the detonation of "dirty" radioactive bombs in Guam, Phoenix, and Portland (recalling the locations from memory so don't quote me on those). We also just had the "accidental" overflight of a B-52 carrying nukes through the center of the United States, which is not supposed to happen. Except that it landed at Barksdale Air Force base and Barksdale is from where we ran the last set of Middle Eastern B-52 and B-2 attack flights at the start of the Iraq war. Curious, no?

Finally we have the massive anonymous short positions against the European and US stock markets that expire before the end of September, all betting that both markets will decline by 30% from their record highs.

This is all just so surreal that I can't believe I am seeing it happen. If we get a real event on US soil in the next two months and if it is radiological in nature, I will be firmly convinced that we will be witnessing a false flag operation by the Bush administration to further consolidate domestic power and to incite public reaction against Iran to allow for war.

But I am going to keep telling myself that this is all just coincidence - unless the radiological event really happens. Then look for the market crash and the US to hit Iran with a massive nuclear strike. And if that happens, all bets are off as to where we go then.

Thursday, August 30, 2007

The Arctic Crisis Worsens

Remember when I told you that We've Crossed a Threshold...? Well, have you been paying attention? I strongly suggest you visit The Cryosphere Today and read the entries for August 9, 2007 then the entry for August 28, 2007. I'll wait while you go do that.

Ok, read those entries? Has it sunk in yet? Sea ice reached a record low on August 9 of 3.98 million square kilometers. That is an all-time record with 6 weeks roughly left to go in the melt season. Now please pay attention. The sea ice minimum in the 1970s was 5.5 million square kilometers. Then in the 1980s it was 5.0 million square kilometers. Then in the 1990s it reached 4.5 million square kilometers. Then by 2005 we touched 4.01 million square kilometers as the prior record.

Then comes 2007. Oh my, does 2007 come roaring by! On August 9, 2007 we set a new record low of 3.98 million square kilometers! But just 19 days later we set a new minimum of 2.99 million square kilometers.

Did you get that yet? We lost one million square kilometers of sea ice in 19 days. People told me in email that I was nuts for projecting a sea ice free arctic by 2010 but guess who is laughing now? The jackasses out there still refuse to acknowledge that we are in a positive feedback loop. The change in sea ice level is definitely not linear yet the IPCC still refuses to model it any way except linear! And all of that open water is dark color and absorbs yet more heat rather than white and reflecting it away. What is this doing to the Greenland ice sheet? Anyone care to speculate? It sure is not going to make that ice sheet colder or more stable!

And yet the world continues to plod along, sleepwalking straight into the jaws of hell, throwing away all we have accomplished by being faithful to myths, superstitions, and lies. Our culture is showing that it is more important to continue the illusion of "business as usual" than to react to the multiple crises around us. Our culture is demonstrating its collective insanity.

I want to urge each of you to read Jared Diamond's Collapse: How Societies Choose to Fail or Succeed. You need to understand that when there is harsh environmental mismanagement that any society's response to the damage it has inflicted becomes the ultimate arbiter of that society's ability to succeed. You need to understand that we are literally destroying our environment around us on a scale and with speed never before experienced in human history. You need to understand that "destruction of natural habitats (mainly through deforestation); reduction of wild foods; loss of biodiversity; erosion of soil; depletion of natural resources; pollution of freshwater; maximizing of natural photosynthetic resources; introduction by humans of toxins and alien species; artificially induced climate change; and, finally, overpopulation and its impact" are a combination of problems that no human civilization has faced all at once ever before. You need to realize that we are doing this on a global scale. And finally, you need to realize that you are destroying yourself as well as any future descendants.

Of course, no one will react to this. Some of you will read it and shrug. A few will read it and feel "concern" but actually change your lifestyle? Not a bloody chance. No, this is Chaco Canyon on a global scale and you are all going to be the players in this horror story. And when it comes to you eating your neighbor and whining about it, will any of you think that you could have done something to avoid that fate?

Tuesday, August 14, 2007

The mind simply boggles at the ignorance

Reading TOD these days has become an exercise in self-discipline, enforcing a "do not reply" zone around the idiots, morons, and scientific illiterates that populate the place. So there I am reading a comment in Drumbeats and the responses just get me laughing til I cannot stop. One each theantidoomer is raving like a lunatic about electric charging stations and how "easy" it will be to put these everywhere. Then Twilight dutifully takes him to task, walking him through the insane math of the situation, showing why such charging stations simply cannot exist, at least not easily nor quickly. And then the ignorant replies begin, starting with theantidoomer himself who simply dismisses the physics of the problems with a wave of his hand and then asks why not (on charging stations)?

Is it any wonder why these morons who believe in magical technology are considered scientifically illiterate dreamers? Replies like this just leave you shaking your head. Of course we might be able to build the recharging stations to do this but as Twilight points out, it is one massive hellacious engineering problem! It is non-trivial in the extreme and it shows why we need to move to electrified mass transit rather than more cars. Yet there are the defenders of the suburban craziness inventing even more nonsense out of thin air to defend their non-sustainable way of life.

Meanwhile, right there on TOD, Rembrandt has published Oil Watch Monthly - August 2007 and the data sits there, ignored by the cornucopians. Global exports are down by nearly 5% year over year. That's 5% in the second year post-peak if May 2005 was the actual peak. This is when all the happy faced people insisted that decline would be so small as to not be noticeable yet we have 1.6% decline in actual C&C production and over 5% decline in exports. It sure looks like Jeffrey Brown's "Export Land Model" (ELM) is kicking in to me!

And then the massive ignorance of the financial system that surrounds us and controls us! Capital is just not written off to the tune of tens of trillions of dollars. It cannot be. It has been invested and the world is relying on those investments producing more real products that can then be reinvested downstream. If those products never come forth there can never be a conversion to alternatives. If we cannot amortize the costs already invested, we cannot get our money out to reinvest! This means we go broke and have no capital with which to invest. But hey, the techno-geeks just gloss over this too and assume that where there is a will there must be a way. Yet if a doomer decries the capitalist system, these same people who shrug off the limits of that system arise immediately to defend it. It's absurd comedy. You couldn't make this stuff up and our survivors descended from us won't even be able to understand the depths of this insanity.

At the end of it all you don't know whether to laugh or to cry, the replies become so absurd, like Roger Connor building straw men to knock down to dismiss the doomers. Hey Roger! Have a clue - it does not matter how many straw men you knock down! When mother nature comes to call for you, she is still going to haul away your ass to the fertilizer pile somewhere. Be afraid, Roger. Be very afraid, because the future is looking to feed on people just like you.

Wednesday, August 08, 2007

We've crossed a threshold...

This is important, really important. In the summer of 2007 we have crossed some threshold, what others have called a tipping point. Something dramatic has occurred in the Arctic.

If you watch the following animation (credit to BostonGeologist at TOD) it shows the extent of melting for August 7, 2006 versus August 7, 2007. The melt rate has been increasing at a constant rate since 2000 when then last change occurred. But this change is even larger than the last change. There is a good chance that the old minimum ice extent may be broken by 25% or more before the melt season is done. The rate of ice melt has turned up sharply. This has implications for both the Arctic ice sheet and the Greenland ice mass as well. Further, this has implications for the thermohaline circulation.

What is now occurring may have crossed the line into the unstoppable. Dr. James Hansen's belief that we had 10 more years to stop global warming may be 10 years too wrong. And Hansen is derided as an extremist! People need to look around at what is occurring!

Very clearly we have crossed a threshold where the positive feedback forces are growing stronger at an exponential rate. The summer Arctic ice sheet may have less than five years left at this rate, maybe as little as three years. And the Greenland ice sheet just became a terrible unknown, whose melt rate has always exceeded prediction after prediction and now it may jump upward yet again.

There are two possibilities for the future here. The first, and most likely insofar as our limited understanding can discern, is runaway warming resulting in a much hotter planet, rapid desertification, loss of agricultural land, loss of fresh water supplies, and destruction of civilization. The less likely is just as bad with the climate being pushed into a warming event that ends the current warm period and thrusts us into another ice age. Both of these consequences can occur suddenly. Climate shifts have been recorded that happened in as little as five years and the typical climate shift is a few decades max.

And note that our civilization collectively refuses to do anything about climate change. We won't act until it is too late. I am now officially expecting something dramatic on the climate front this fall. I hope I am wrong but let's see what we get. It's almost too late now to prepare if you haven't been preparing already but you still have a tiny window. Remember, you were warned. Don't cry to me about your situation if your world suddenly changes for the worse.

Monday, August 06, 2007

Ace's Updated Forecasts

Ace updated his bottom-up analysis over at The Oil Drum recently. The were only two pieces of good news in there. The first was that there should be a roughly 1.5 million barrel per day increase in the production of NGLs beginning in the middle of next year and peaking by the fall. Unfortunately, that NGL peak tails off as soon as it is reached, basically sitting on a very slowly declining plateau thereafter. The second was that we should see global growth in ethanol by another 1.5mbpd but again, it hits a plateau and stops. And worse, ethanol takes from 2007 to 2012 to gain that 1.5 mbpd while C&C declines by 9mbpd over the same period.

Unfortunately global C&C production has already declined by 1% from last year. That 1% decline more than offset any other gains so far and with another 1% decline next year, this will mean that the NGLs and initial ethanol coming onstream will barely replace the prior two years of decline in production. After that it is all downhill, and rapidly, with decline rates forecast for about 4% annually. And this is a 4% decline with the ethanol and NGLs factored in which leaves us dropping from 86 mbpd to about 76 mbpd by late 2012. If we assume anything remotely approaching a similar economic response to the last time such a large drop in production occurred, then oil should triple to quadruple in price. That's right - we're talking about $200 per barrel oil by 2012.

The economic impact of this will be unlike anything most people living today can possibly understand. What's happening now in the credit markets is only the tip of the iceberg. Most of the baby boomers were either in college or young adults or older teens at the time the last such decline occurred and it happened quickly, was over quickly, and was only 5% of production. This time it is forever, with production falling endlessly until we approach bottom. I am going to recommend something that most of you will not do but I'll recommend it anyway. Go visit Survival Acres and order 6 months of stored food. Yeah, I know you don't really believe this is happening or that the government will take care of you. Too bad. I even recommend this for people living on farms and such, unless they already have 6 months or more of food stored anyway.

For those of you expecting an intelligent response to the looming energy crisis, I suggest reading Robert Rapier's Pure Venom article. Robert has a track record of telling it as he sees it, regardless of whether it's good or bad for his industry. I've disagreed with Robert in the past but I respect his positions because they are well-researched and intelligently thought out just about every time. You might also consider the words of Professor Ken Deffeyes about the recent National Petroleum Council report. (Note: I will try to update that to a more permanent link once he puts it in his archives.)

None of the babble coming from the vast majority of politicians these days looks very realistic. Most of it is noise wrapped around vote buying bills that assume that these converging crises are not real and will pass away so that the good times can roll again. Too bad that Ponzi schemes have to always come to an end, eh?

Tuesday, July 31, 2007

Have we entered the downslope?

Over at The Oil Drum recently, Ace, one of their contributors, made the following comment:

"According to IEA, current Peak Oil (total liquids) is potentially 86.13 mbd on Jul 2006. One year later, production in Jun 2007 was 84.3 mbd, which is a drop of 1.83 mbd or just over 2%/yr. This is a bigger drop than I have forecast! I hope that Jun 2007 was just an unusual month."

This is a shocking observation! While the world twiddles its collective thumbs, while the dark recesses of the human brain scream that what is happening cannot be happening, here we have this odd little fact sticking out at us.

Ace again raised this issue near the bottom of the July 30th Drumbeat section. It was again met with either raw silence or incredulity from those that saw it. Hopefully Ace will be posting more soon on his bottom up analysis which now points to peak liquids as possibly having passed by already.

This is fairly serious because if the decline rate now, at the very beginning of the downslope is 2% when it is supposed to be at its mildest, just how bad is it going to get? If 2005 was peak C&C, and if 2006 was peak liquids, and if 2% is the current decline rate at the start of the downslope, then all bets are off people. The peak decline rate may soar into the double digits somewhere, perhaps 10% to even 20%. Right now it's all a rather large crapshoot but the preliminary data do not support the happy faced crowd at all.

This fall is looking more and more like a period of initial shock and awe as nature may begin to assert real limits against a rapacious humanity. And if that happens, there is no telling what reactions will be like around the world. The race may be on for the remaining global resources and that race will not be a free market race at all. Instead it will be a military race with all that this implies.

Monday, July 23, 2007

They are Angry! Very very Angry!

The Oil Drum is getting amusing lately. I opened up TOD and the techno-cornucopians are going nuts over anything that does not promote or espouse their agenda. The poster named Asebius, reveals himself to be a self-proclaimed "centrist" who wants to automatically tar and feather anyone associated with TOD as "terrorists", maybe so that his fedgov homeboys can come along and shut down that blog. In fact, Asebius is quite full of himself but he's not the only one. The esteemed (not) luisdias is in that group too as well as a few others. Now I just recently wrote about this in They Took The Blue Pill and in Techno Geek Optimism but this latest outburst looks positively silly.

After the Asebius incident, in which Professor Goose finally had to give him a public warning for being disruptive, we followed that up with more of the same the following day. Oilmanbob and others kept running off the end of the proverbial fishing pier rather than showing any reasonableness at all. Of course this was all one sided and aimed at anyone who possessed an opinion that things would turn out less than perfectly according to the particular poster's own utopian visions. Such venom was never aimed at anyone who suggested things might turn out better than the positivists expected. No, those espousing positive views had to be "debated" and respected. All quite absurd. Oilmanbob even tried the very typical ploy of playing psychoanalyst online and recommending that I take Prozac for my "depression". It was quite the laugh, especially when he revealed that he is the one that is clinically depressed and taking various drugs yet projecting his own problems on everyone else.

And further, Professor Goose at TOD also ran an article titled A Request to Our Readers about how TOD is being blacklisted by Reddit and Digg. Then he had another post, titled Peak Oil Media Redux (Or "The Course of Our Lives WILL Be Determined by the First Derivative of a Function, Redux), in which he praised certain basic materials useful for understanding peak oil, such as Dr. Albert Bartlett's presentation amongst others. Both of these articles generated much heat and little light. The techno geeks were there in full force actively shouting down any opposing viewpoint and making it very clear that for them there is no other future other than success. No planning for a rainy day from that crowd, let alone planning for a massive disruption.

Matt Savinar asked Professor Goose if he was ready yet to accept the notion that he cannot change the world, that neither he nor the rest of the TOD staff would receive positions of high importance in some new world energy order, and if they would instead decide to focus on some form of preparation for what he views as inevitable. There has been no reply yet from the good professor but I fully expect him to continue tilting at windmills because that is what he's chosen to do. In the case of Professor Goose, I suspect that it is a conscious decision and that he realizes the consequences of being wrong much as Alan Drake realizes it. But most of those at TOD who keep calling any position more negative than their own "extreme" don't realize that according to the rest of the world they are extremists too.

Most of these people don't realize that anyone who argues against the current planetary religion (infinite growth economics) is viewed as a heretic and even a bit insane. Any position that does not allow for sustained growth is viewed as unacceptable. Oh, if you challenge the average man in the street he says he realizes that growth cannot continue forever and he may even say something like "Besides, we're just going to continue growing throughout my life and my children's lives. Surely some brilliant human being will solve this problem for us before it becomes acute, right?"

It's never the responsibility of someone today to change that pattern of behavior. It's always assumed that someone tomorrow will provide a solution that stops growth yet avoids all the negative fallout from that.

And then there is population - the 800 pound pink gorilla in the room that everyone ignores. Even if we solve peak oil, we still have huge numbers of problems facing us, any single one of which could destroy our civilization. What is worse is that most people do not realize that these problems are all intertwined and they are not all arriving at close to the same time by chance but because they feed on each other.

The optimistic silliness is pretty deep at TOD lately. I am not talking about people discussing specific technical approaches to particular problems, even when I don't fully agree with them. The key posts by Professor Goose and all the other contributors and editors at TOD remain top notch and interesting to read. It's in the comments section that it has become looney toons time, with those who choose to shout down any idea they dislike as "doomer porn" demonstrating the deep seated fears in the dark corners of the human brain.

People will undoubtedly again accuse me of wanting civilization to fail. I've said before that I do not want this to happen. I just see it as a sad yet inevitable outcome due to our collective desire to ignore the problems until they become too large to address. Other people will accuse me of various other things without even knowing me personally. They will also accuse anyone else who sees collapse as strongly possible. This is exactly the sort of reaction that will stifle further debate, that will push consideration of the worst case scenarios off the table, and allow the business-as-usual crowd to urge no action on any of these issues at all. In fact, this is exactly what the business-as-usual crowd wants - to see any other perspective marginalized so that it does not threaten business-as-usual. It's when you realize that and then realize we are seeing this happen before our very eyes that you come to the conclusion that things may be worse than people think, precisely because of the human interactions (politics) and human state of mind (psychology).

Tuesday, July 17, 2007

Afraid of Extremes

Scientists are often critical of businessmen for expecting things to stay the same rather than change. Yet scientists exhibit the exact same reluctance to consider change as well even when faced with it clearly. The Big Thaw, a National Geographic article about global melting ice and its consequences, treads fearfully around the topic of ice melt. The article cautiously quotes the International Panel on Climate Change (IPCC) about sea level rise claiming we might see a foot by 2100. Then it gets braver and talks about 3 feet of rise by 2100. These scientists are terrified of being seen as extremists if they say anything more yet the geologic history tells us to be terrified.

Dr. James Hansen, the most outspoken and well known of the climatologists concerned with global warming, has recently published a paper titled Climate Change and Trace Gases. The paper was presented in the British Journal Philosophic Transactions of the Royal Society. In this paper, Dr. Hansen notes that in prior warming periods the ice did not melt slowly after the temperature warmed. Indeed, the ice melted rapidly while it warmed. Further, Dr. Hansen shows that the last time the earth was this warm and then warmed another 3 degrees centigrade that the ocean levels did not rise 30 cm (about 1 foot) at all. No, indeed the ocean levels rose more than 25 meters. Worse, as Hansen demonstrates, the bulk of the sea level rise comes during the temperature rise. This means if we see 3 degrees celsius rise in temperatures, that we logically should not expect a 30 cm rise in sea levels at all. In other words, Hansen is warning that sea levels may rise by 25 meters between now and 2100!

Think about this. Even if we divide the rise unevenly and ascribe 80% of the sea level rise to a time after 2050, that still means we would likely see 5 meters (16 feet) of rise before 2050. That's a foot every 3 years or 4 feet in 12 years. And if the rise is more even? Then it would be more like a meter (3+ feet) every 4 years, or 12 feet every 12 years. We're talking about a 82+ foot sea level rise in a century and no, it won't all wait til after you are dead to happen.

That is the real data from paleoclimatology sources about what happened before. It wasn't a linear relationship at all which is what the IPCC assumes. It was an exponential relationship with positive feedback loops built into it. We know that. These climate scientists know that. They've read the papers. They've studied these specific topics in school and professionally. And yet despite factual evidence, none of these scientists in the National Geographic article is willing to admit the possibility that we might see similar melts as past evidence tells us. Instead they try to believe that tomorrow is going to be just like today or so little different that it does not matter.

I bring this up not because of the sea level rise issue, which is important in itself, but because it demonstrates the powerful human tendency to want to believe that tomorrow will be similar to today and to deny facts about tomorrow when those facts get in the way of this belief. This is happening with climatologists who have been trained to think critically, examine facts, and consider impacts on the future yet they still tend towards the human norm of expecting tomorrow to be like today.

Given this sort of behavior by even those with clear training otherwise amongst us, why would our leaders, the politicians of the world, ever be expected to consider anything except "business as usual" for what is coming?

Now go on and couple this sort of mental attitude amongst trained scientists with the sort of outlook that covers up problems such as those found at Kashawazaki nuclear power plant after the earthquake. These are the trained professionals whom the rest of us rely upon for clearheaded thinking. The entire world is refusing to consider the radical impact of resource scarcity (peak oil included) and climate change. At most it is simply an excuse to party or get rich in the current business climate by trading carbon credits.

These are the people who are supposed to be leading us through the wilderness of these difficult times. These are the people in whose judgments we entrust our futures and our children's futures. Are you getting a sense yet that our culture is sick? Are you getting a sense yet that our culture is in denial?

Friday, July 13, 2007

They took the blue pill

So I open up The Oil Drum and what do I see? It's a thread to discuss The NPC Report. And immediately I see many people very upset that a hand picked council headed by Lee Raymond (former CEO of Exxon) comes to the conclusion that no peak in oil is imminent and that all is pretty much ok, with a few tiny caveats. There is yelling, screaming, and a great deal of incredulous shock that anyone could say this in the face of the evidence of the last several years. There is great cries calling for more activism, more publicity, more, more, more... well more something, anything to change the minds of those that refuse to accept what is happening.

I dissented, which got a rather poor reception. I told them that the general public has taken the blue pill and they don't want to be bothered with reality. In my opinion, the optimal course now is assisting some group (maybe an entire town) as it transitions to the post-peak age. Concentrate on the local with an eye towards utter and total disaster and hope that things don't get that bad. But certainly do have a plan in case they do get that bad. Odds are very high against you and yours getting through the coming bottleneck but that's what you should worry about, not the other 6.5 billion people on the planet. They've chosen the path they are on and they don't want off. They don't want to even hear of getting off. So focus on saving yourself and those close to you. Do whatever you can to maximize your chances no matter how small. Any edge you give yourself is an edge that those who die will not have. And trust me, as the ecosystem goes to crap, and as the resource game advances, there will be plenty of opportunity for the unprepared to rejoin the ecosystem as fertilizer.

Someone suggested I get more specific. There's no point in having that discussion at TOD, none at all. The TOD staff don't even like to admit that anything other than a happy ending can occur to all this. They just want credit for being the ones to warn humanity and "save" it from itself.

Well I have a question for those peak oil activists - when is it time to do something different? What is your cutoff when you say no more, I can't help, I have to focus on myself because the rest of you chose to be dead? I'll bet that most of the TOD activists, who believe peak oil is bad but that everything can somehow still be saved, have never even considered those questions. They just have faith that if they proselytize long enough that everything will turn out fine.

I wish them all the luck in the world and then some, because, believe me, they will need it.

And no, I am not planning to rescue your ass when things go south. I'll be too busy trying to rescue mine and those dear to me.

Tuesday, July 03, 2007

Techno Geek Optimism

It never ceases to amaze me when otherwise bright people assume that just because something is technically doable that it must automatically happen and be doable. This happens constantly, probably because over the last few centuries there have been more cases of success than failures. In the 1860s, machine labor was clearly already superior to slave labor yet technology did not inevitably supplant slavery without fighting a very destructive and very human civil war.

The latest bit of techno euphoria is from Euan Mearns over at The Oil Drum in a piece entitled "Crisis? What energy crisis?" and which appears to put forth the notion that all will be well because all must be well. Further down in the comments section, Euan actually admits to worries about certain things so even the techno euphoria isn't enough to fully cloud the brain about looming issues.

I've stated this to other people and I've never gotten a satisfactory answer but if technology is the be-all and end-all of every human decision then why isn't New Orleans rebuilt yet? It's only been two years. Surely in two years we could have mustered the technological prowess in the most powerful, richest nation on the planet to rebuild one single rather smallish city that was hit by a hurricane? And yet the city remains far from rebuilt, not because of technology but because of the human factor, because of politics.

I told Euan that it is not technology that I fear. I fear Bush, Putin, Blair, Clinton (both of them), and others. Anyone who believes that these people will willingly give up power to preserve some kind of civilization has far more faith in our leaders than I do. As a counterpoint, I can think of exactly one leader in the last 50 years who would do exactly that, step aside to allow civilization to reorganize and change and that man was Jimmy Carter. I didn't always agree with Jimmy then nor do I always agree with him now, but I do greatly respect him. I don't know many ex-presidents or ex-prime ministers who go out and build houses for the poor on a regular basis.

Saturday, June 09, 2007

Juggling Balls

So now we have NASA reporting that the interior of Antarctica is showing early signs of melting, an event that should not even have occurred in this century if current warming models are correct. Then along comes news that Greenland's ice sheet is melting faster than previously thought, which is amusing because every time they measure it, the melt is getting faster. And the Bush administration continues to dawdle along, not taking any action at all to change CO2 emissions because it might hurt the economy.

Well, how is the economy doing? According to the government's own stats, it's not so hot. The number that normally gets reported in the media is the "core" Consumer Price Index (CPI), which does not include important things like energy or food. How they can realistically calculate inflation while excluding energy or food begs the imagination but that is what they do. However, there are additional numbers that the news media simply normally do not report that tell us what is really happening. So let's look at this chart:



YearJanFebMarAprMayJunJulAugSepOctNovDecAnnualHALF1HALF2
196798.698.798.999.199.499.7100.2100.5100.7101.0101.3101.6100.0

1968102.0102.3102.8103.1103.4104.0104.5104.8105.1105.7106.1106.4104.2

1969106.7107.1108.0108.7109.0109.7110.2110.7111.2111.6112.2112.9109.8

1970113.3113.9114.5115.2115.7116.3116.7116.9117.5118.1118.5119.1116.3

1971119.2119.4119.8120.2120.8121.5121.8122.1122.2122.4122.6123.1121.3

1972123.2123.8124.0124.3124.7125.0125.5125.7126.2126.6126.9127.3125.3

1973127.7128.6129.8130.7131.5132.4132.7135.1135.5136.6137.6138.5133.1

1974139.7141.5143.1143.9145.5146.9148.0149.9151.7153.0154.3155.4147.7

1975156.1157.2157.8158.6159.3160.6162.3162.8163.6164.6165.6166.3161.2

1976166.7167.1167.5168.2169.2170.1171.1171.9172.6173.3173.8174.3170.5

1977175.3177.1178.2179.6180.6181.8182.6183.3184.0184.5185.4186.1181.5

1978187.2188.4189.8191.5193.3195.3196.7197.8199.3200.9202.0202.9195.4

1979204.7207.1209.1211.5214.1216.6218.9221.1223.4225.4227.5229.9217.4

1980233.2236.4239.8242.5244.9247.6247.8249.4251.7253.9256.2258.4246.8

1981260.5263.2265.1266.8269.0271.3274.4276.5279.3279.9280.7281.5272.4

1982282.5283.4283.1284.3287.1290.6292.2292.8293.3294.1293.6292.4289.1

1983293.1293.2293.4295.5297.1298.1299.3300.3301.8302.6303.1303.5298.4

1984305.2306.6307.3308.8309.7310.7311.7313.0314.5315.3315.3315.5311.1308.1314.2
1985316.1317.4318.8320.1321.3322.3322.8323.5324.5325.5326.6327.4322.2319.3325.1
1986328.4327.5326.0325.3326.3327.9328.0328.6330.2330.5330.8331.1328.4326.9329.9
1987333.1334.4335.9337.7338.7340.1340.8342.7344.4345.3345.8345.7340.4336.7344.1
1988346.7347.4349.0350.8352.0353.5354.9356.6358.9360.1360.5360.9354.3349.9358.7
1989362.7364.1366.2368.8370.8371.7372.7373.1374.6376.2377.0377.6371.3367.4375.2
1990381.5383.3385.5386.2386.9389.1390.7394.1397.5400.0400.7400.9391.4385.4397.3
1991403.1403.8404.3405.1406.3407.3408.0409.2411.1411.5412.7413.0408.0405.0410.9
1992413.8415.2417.2417.9418.6419.9420.8422.0423.2424.7425.3425.2420.3417.1423.5
1993427.0428.7430.1431.2432.0432.4432.6433.9434.7436.4436.9436.8432.7430.2435.2
1994437.8439.3441.1441.4441.9443.3444.4446.4447.5448.0448.6448.4444.0440.8447.2
1995450.3452.0453.5455.0455.8456.7457.0458.0459.0460.3460.1459.9456.5453.9459.1
1996462.5464.2466.5468.2469.0469.5470.4471.1472.7474.1475.0475.0469.9466.7473.1
1997476.7478.2479.3479.7479.6480.2480.7481.6483.0484.1483.9483.2480.8479.0482.8
1998484.2484.9485.8486.8487.7488.2488.8489.6490.1491.3491.3491.0488.3486.3490.4
1999492.3492.9494.4497.8497.7497.9499.2500.7502.9503.9504.1504.1499.0495.5502.5
2000505.8508.7512.8513.2513.6516.5517.5517.6520.3521.2521.5521.1515.8511.8519.9
2001524.5526.7528.0529.9532.2533.3531.6531.8534.0532.2531.3529.2530.4529.1531.7
2002530.6532.7535.5538.6538.5538.9539.5541.2542.1543.2543.1541.9538.8535.8541.8
2003544.2548.5551.8550.5549.7550.4550.9553.0554.7554.3552.7552.1551.1549.2553.0
2004554.9557.9561.5563.2566.4568.2567.5567.6568.7571.9572.2570.1565.8562.0569.7
2005571.2574.5579.0582.9582.4582.6585.2588.2595.4596.7592.0589.4585.0578.8591.2
2006593.9595.2598.6603.5606.5607.8609.6610.9607.9604.6603.6604.5603.9600.9606.9
2007606.348609.594615.145619.140













These numbers are provided by the BLS themselves via a Java applet. You have the option, on this web page, to report against the original CPI base of 100 in 1967. I chose that option and then selected 1967 as my start year. So what is really happening in the world of inflation? Good question.

The media continues to report inflation rates like 0.4%. First of all that number is relative to the total for the prior month. Since the total is always increasing, the rate of inflation always appears to be going down. But that is also only the inflation rate for that single month. You can annualize it by multiplying it by 12 to see what that month's inflation would look like for the entire year (relative to the prior month). But what happens if we measure inflation against a constant base so that every month can be compared to every other month? Then January of 2007 to February of 2007 saw a change in the rate from 606.348 to 609.594. Against a constant base this was 6% inflation in a single month!! Furthermore, unless you are making 6 times what your counterpart made in 1967, your standard of living has fallen over the last generation. So, if a counterpart to yourself made $15,000 in 1967, you'd need to make over $90,000 in 2007 to be even comparable. Note also what happened between those two months - a 6 base point rise in prices, which annualized, becomes about 60 points, and against a 600 point starting base is about 10% inflation. Keep that number in mind for a moment as you think about the government reporting 2% inflation.

Now let's step away from the government statistics for a while and check out what John William's Government Shadow Stats has to tell us. What John does is "unwind" the yearly manipulations of government statistics so that you can actually compare year to year. The US government does not hide these manipulations. Indeed, they are clearly documented in the appendices to each annual report. But cumulatively these changes constantly attempt to make the current situation look better than it really is. By unwinding these changes to get a common base set of stats, John gets to see what is really going on.

First we get a look at the annual inflation rate:

John clearly shows us that the real inflation rate is vastly higher than the reported rate, something that we detected ourselves when we got the 10% inflation number, which agrees very well with John's own 10% number.

But let's go further and examine the annual GDP for the United States. Bush claims the economy is in better shape than every but is it? What has happened since the dot-com bubble burst?


What we see here is the result of understating inflation and overstating production - the US has been in a depression since 2001 with only a few months of even a fraction of a percent growth back in 2004 and everything else in a slow contraction. So what has kept the apparent bubble going? The housing bubble, which is now beginning to burst, has been the driver to mask the lack of any other growth in the entire economy over this time period. With the housing bubble bursting, this shows clearly that the ongoing depression cannot be hidden much longer unless the Federal Reserve resorts to even higher rates of inflation. Will they do that? That's not for us mere mortals to say but if they do continue to inflate without raising the interest rates, there will be a larger and larger gap between the value of a dollar and borrowing against that dollar. This also explains why so many other nations have, in the last 12 months, begun to unpeg their own currencies from the US dollar. They don't want to be hit when the house of cards collapses. This also explains why China is using its dollar holdings to buy oil and other natural resource deals from Africa. China clearly believes those resources are more valuable than the dollars they are trading.

So we have the climate getting worse and we have the economy actually worse than reported. What else could go wrong? How about our hollow Army? How about dangerously increasing levels of antibiotic resistant versions of old diseases? How about the ongoing problems with Russia rebuilding its arsenal as we try to ram a missile defense shield down their throats after having taken away all the nations that acted as buffer between Russia and a hostile Europe?

There are a whole bunch of dangerous balls in the air right now, folks, and dropping any one of them would be a disaster in itself but what if multiple balls dropped at once? Try to imagine that. And after you imagine that, think about where you are, what you can do to help and protect yourself versus what you have actually done so far.

Friday, May 18, 2007

Facing the Music

Previously I wrote about broad issues that must be tackled to mitigate the oncoming crises. No mitigation effort that serious has ever taken place in the history of mankind nor do I expect it to happen this time. Instead, we are about to face the music for our collective foolishness and these trials may begin as soon as this summer.

GliderGuider over at TOD Canada has authored a new piece called Peak Oil, Carrying Capacity and Overshoot: Population, the Elephant in the Room. This is one of those rare pieces outside the Dieoff website that dares to try to grapple with the elephant in the room. Unfortunately, as the responses demonstrate, there are still people who believe this problem can be solved and proceed to act in that manner. This was followed by Ecological Footprint, Energy Consumption, and the Looming Collapse by Professor Francois Cellier. Both posts were attacked with absolutely no useful quantitative rebuttals and only emotional rhetoric hinged upon faith-based solutions.

Today we are seeing the crisis a bit closer to home. According to a televised NBC report, barges carrying finished gasoline or gasoline components have been diverted from the east coast to the south to avert spot shortages. And Memorial Day driving has not even begun yet. A government report states that the Minimum Operating Level (MOL) for the gasoline system in the US is 185 million barrels. To understand the MOL, imagine a pipeline 1000 feet long. If you put a gallon of gasoline in one end, it's not going to come out the other end. It will just sit in the pipeline. Instead, the pipeline must be pressurized and filled with gasoline. The pipe might contain 1000 gallons of gasoline, so that when you push one gallon in one end, one gallon can come out the other end. But there is still 1000 gallons in between. That 1000 gallons is the MOL for that pipeline.

Now jump from this hypothetical example to the real world where we have thousands of miles of pipelines crisscrossing the entire country. We need 185 million barrels of gasoline as MOL to keep the national pipeline system pressurized and working. But the MOL gets counted as part of national inventories even though you cannot directly use it without shutting down the pipeline and draining it by hand. This is why the current inventory number of 195 million barrels is worrisome - 185 million of that is MOL, and that leaves just 10 million barrels as real cushion in the system. And how much do we use daily? Well, according to the EIA, for the week ending May 11, 2007, we used 9.4 million barrels per day of gasoline. This means that after we take out MOL, that the US has barely one day's worth of spare supply on hand just as we enter the main driving season. And most people have no clue about what is going on, so consequently they think this will pass shortly and will go off on their annual vacations. This summer may get interesting. All it will take is one single hurricane approaching US landfall to spur a massive auto-based evacuation and then people will find they don't have the fuel to evacuate. The oil companies are in for a gigantic nightmare if motorists are stranded on the highway as a Cat 4 or Cat 5 storm zeroes in on them. And if people die because of this, the public anger is going to be amazing to behold, even if it is misplaced.

Finally, we see another poor nation begin to slide out of the modern age, out of the petroleum age, and into some form of the past. Senegal is experiencing severe shortages of diesel and may have to impose "unprecedented power cuts" (i.e. blackouts). Note that Senegal already has 10 hours of blackout time per day anyway so what could be worse than this? Try maybe no power at all.

As Jeffrey Brown is fond of noting, forced energy conservation is moving up the wealth chain. It started with the poorest nations but it is coming to a neighborhood near you, and perhaps sooner than you think. Or, as Matt Savinar is fond of saying, "The future is here now. It's just not widespread yet."

We're about out of time, people. If you haven't made some preparations by now, things could get very ugly very fast. And even if we muddle through this summer, there is no guarantee that things are going to get better next fall or next year.

Wednesday, May 02, 2007

Mitigating the Crisis

Aniya over at TOD has frequently prodded me to write about what a society might look like that successfully mitigates the oncoming horsemen of the apocalypse. I've given this a great deal of thought and I actually can see several such societies. None of them are like our current society though and that is the key differentiator. So as I thought about this, I thought I would first point out what must be done in order to mitigate successfully.

The core problem driving everything else is overpopulation. Those that argue that population is a side effect are missing the point entirely. So the first successful mitigation strategy must be controlling the birth rate. More importantly, the birth rate must fall low enough to produce a contracting population. I can see lots of ways to do this, from police state tactics to more market oriented type solutions. The police state tactics are obvious - look at China. But how about market oriented solutions? One thing the market has always had trouble with is defining the costs to the commons that any activity generates. These are "hidden" costs and economists constantly attempt to debate them. So one solution might be to allow couples to have one child at zero cost. The next child would impose a commons cost tax of 1 x the commons cost of one human life (value - TBD). The third child would impose a commons cost tax of 10 x the commons cost of one human life. Simply keep raising the cost of each subsequent child by one order of magnitude and very shortly people will opt to not have more than one child generally or maybe two. The exact tax numbers here are open to debate. The exact number of children is open to debate. One child? Two? Maybe the second child only invokes a fraction of the commons tax such that most people will have 2 children, a large subset have one and another large subset have zero? The exact values would depend on the rate of decline in population that you would want to achieve.

Further, you can allow couples to trade their zero cost child allowance. Say a couple decides to not have children at all. They could trade that allowance for some fair market value. How much? It depends on the family having the children. For a second or third child, they might pay very dearly for that license. But this still brings us back to what do you do about people who violate the law? Most people focus on the fetus alone but that's not the problem - it's the irresponsible parents. If a couple violates the law, they could be forcibly sterilized and still fined the tax plus punitive amounts on top of that. Further, their existing children might be taken from them as they are not adequate role models.

This all sounds rather horrific to some people and it is but this is the cost of successfully mitigating overpopulation. The population growth must be halted and it must be reversed. Now the exact rate of reversal and towards what target are open to some debate but let's assume that we have a century of time left and a target of 2 billion. This is a roughly 1.2% decline rate per year.

Then there is the general topic of sustainability. Either what we produce must be biodegradable and there must be few enough of us that it properly can biodegrade or it must be completely recycled. There is no in between. Take the Pacific Ocean's subtropical gyre, a region of ocean lacking nutrients to support much ocean life but because of currents has accumulated a surface trash layer of plastic roughly the size of Texas. That area is an example of the ecological impact problem of large numbers of homo sapiens. So the problem is not just our carbon footprint. It's larger than that and we must live within the boundaries of the existing global environment without damaging it.

Again, this could be accomplished via multiple means, including a police state and enforced living at primitive poverty agricultural levels but that's not very attractive, is it? And again there are alternatives on how to motivate people to make sustainable decisions over non-sustainable ones.

But this leads to a discussion of economics and that leads to discussions like sustainable economics, which is a new way of looking at economics that tries to account for the physical world. Gilman is by no means the only writer in the sustainable economics field but it is growing rapidly. And interestingly, it is attempting to tackle those issues that traditional economics has failed to embrace. Sustainable economics is a rather new field, sort of the quantum mechanics of economics compared to classical economics being Newtonian physics.

However, the key point I would make to Aniya and others is that the scope of the chance required is staggering. We cannot piecemeal this. We cannot pretend that infinite growth is an allowable option anymore. Whatever form a civilization takes that successfully mitigates the problems of overpopulation and general resource depletion, it most definitely will bear no resemblance to what we have now. And that's the rub, isn't it? That's precisely why I have a view that civilization will collapse, because civilizations are problem solving entities that arise to address specific problems and which have a notoriously poor track record at adapting to different problems than those which gave them birth.

Thursday, April 19, 2007

Bumping Up Against the Walls of the Petri Dish

George Ure recently used the phrase "bumping up against the walls of the petri dish" to describe many of the resource issues that are becoming steadily more visible. These issues have been ongoing for a few decades but in very slow motion. Now, in the last few years, we seem to have picked up steam.

Tom Whipple over at the Falls Church News astutely asks The Peak Oil Crisis: Have the Troubles Begun? Tom dives into the current situation frequently and eloquently and all I can do is urge you to read his comments. The currently developing gasoline situation is not critical yet but we're running out of time to build summer inventories. Guess what happens if the inventories are insufficient? Also, as Tom noted, "Two weeks ago, as a number of observers pointed out, refinery utilization increased while gasoline production dropped. This may be a one-time glitch, or it could mean that sufficient quantities of light, sweet crude, that are optimal for making gasoline, are becoming difficult to find. If this is indeed the case, then the US has a problem of major proportions."

Meanwhile, more resource issues rear their ugly heads. In the state of Punjab, India they have been experiencing water table declines of 5o cm per year, which has increased to 74 cm per year in 2005. We are talking about 2-3 feet of lost water table per year. That's water that is not coming back for thousands of years, if ever. And there are over a billion people in India dependent on these waters.

In Australia the drought has reached crisis levels. They are now considering cutting irrigation to farm fields - the land that produces their food. Australia's cotton crop has crashed by 2/3rds, its grape crop has dropped by 30%, and it may not have a rice crop at all this year. Rice production had already plummeted in prior drought years from 1.6 million tons per year to 106,000 tons per year, a 90% loss. Australia is counting on the rest of the world to feed them while they hope to have enough water for basic human consumption.

Here at home the devastation due to the weird cold snap continues. In Arkansas, Governor Beebe declared 34 counties disaster areas because of crop loss due to last week's freezing temps. Almost every agricultural state has declared serious crop losses. Many states are rushing to replant but some crops cannot be replanted, such as fruits and nuts. And even with replanting, total production looks to be seriously down for vegetables and grains. Expect food prices to rise dramatically.

And drought in the US continues. Rather than talk about it, let's look at the map from the US Drought Monitor for April 17th (click to enlarge):



The US drought continues to worsen. Florida is getting into severe trouble as issues arise with Lake Okeechobee. It's probably worth pointing out that the geologic record strongly suggests that most of the central US is normally a desert. It is a cold dry desert during ice ages, up to the edge of the glaciation mass which typically stretches from San Francisco to Washington, DC. And it is a hot dry desert when global temperatures and CO2 levels are higher, as they were for much of the last 65 million years. We've constructed our entire national culture on weather patterns that exist for a few thousand years out of every million. Let's hope this is not presaging a return to "normalcy" in the weather, ok? In fact, the IPCC thinks this is the direction we are headed now, with Hotter climate ramifications 'faster, larger' than expected.

Oh, by the way, on the financial front the inflation rate news is bad, despite reports from the mass media. All the mass media report is the "core" rate, which ignores food, fuel, and other essentials. In effect, it is an absurd abstraction used to calm idiots in the markets. But the government does track other inflation numbers that are more realistic.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.9 percent in March, before seasonal adjustment, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The March level of 205.352 (1982-84=100) was 2.8 percent higher than in March 2006.

The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 1.0 percent in March, prior to seasonal adjustment. The March level of 200.612 (1982-84=100) was 2.7 percent higher than in March 2006.

The Chained Consumer Price Index for All Urban Consumers (C-CPI-U) increased 0.8 percent in March on a not seasonally adjusted basis. The March level of 118.953 (December 1999=100) was 2.5 percent higher than in March 2006. Please note that the indexes for the post-2005 period are subject to revision.

When you look at those numbers and annualize them you see something horrific - double digit inflation. The all urban consumer index is inflating at 10.8% annually. The index for urban wage earners and clerical workers is inflating at 12% annually. The index for all urban consumers is inflating at 9.6% annually.

These are truly horrific numbers yet they get ignored by the press. This is the heart of stagflation - declining production, declining or stagnant wages, and inflating prices. And things have not even gotten really bad yet.

George Ure's phraseology - "bumping up against the walls of the petri dish" - is apt for yeast. As Bob Shaw is fond of asking, "Are humans smarter than yeast?" So far the answer is a resounding "NO!" If you are not ready now for what is coming, this may be your last real chance to do anything at all. Do what you can, even if it is just buying excess food and storing it in your apartment. This summer and the other side of this summer might turn ugly if the world cannot significantly increase the oil supply. You may not use that food store this year, but if you regularly rotate it as the Mormons are urged to do, then you will be ahead of the game when troubles start. And if you can do more, then there's no time like the present, is there?