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?

No comments: