“America is addicted to oil . . .the best way to break this addiction is through technology . . . and we are on the threshold of incredible advances” – George W Bush, January 2006. (Dallas Morning News)

Like our last two presidents, many people seem to think a new energy structure is inevitable; that a totally different scene is just around the corner, about to shake everything up, so we better get ready.

Why?

For my opinion, read the full post on my new site: http://www.luthercrogers.com/is-green-energy-inevitable/

Unfortunately, much like the right wing hype of the “warming has stopped and now the world is cooling variety” (a typical example of such silliness can be found here, with a rebuttal from Phil Plait of Slate.com here and the UK Met Office here), the true facts and figures present a somewhat different picture.

David J. Hughes of the Post-Carbon institute  has a report out called “Drill baby Drill” which suggests that while there has been quite substantial growth in Shale gas and tight oil (otherwise known as Shale oil) production recently, there is a limit to how much of America (or indeed the world’s) energy can be derived from such sources. Furthermore, any boost to production from such sources will likely be short lived (as in a few decades at most).

Part of the problem with Shale gas or tight oil production (aside from the environmental problems, which I highlighted before) is the very large quantity of wells that need to be drilled to support production. While a small scale conventional oil field can be supported by just one or two wells, a similar sized Shale oil/gas field needs dozens of them.

Figure 1, Declines in Shale Gas Prospects [Credit: The Oildrum.com and Arc Financial Research (2012)] Note Dr Hughes (2013) reports suggest that decline rates might actually be much higher than illustrated above

A further complication is the amount of land such drilling operations take up. Large swades of the American countryside are increasingly being eaten up by such fracking rigs. Furthermore fracking operations, particularly tight oil production (like Tar sands) also needs substantial quantities of water. Both to aid in the production activities but also to “flush” away the various “nasties” that get such operations produce. Of course, as fracking and shale gas have been “found out” by the public (thanks to that film of a few years ago “Gasland”), people are less willing to tolerate such operations on or near their land. This eventually will lead to a major squeeze on such fracking operations. Indeed the ramp up of production from some fields (as Hughes report suggests) is nowhere near as high as supporters would like, suggesting that only one or two of the larger shale fields (both gas and oil) are actually economically viable.

Figure 2, Intensity of Shale Gas wells on the Barnett Shale Field, note that black dots indicate the top 20%, representing multiple wells [Credit: Hughes (2013)]

Figure 3, Anti-wind farm protests

Given that the best potential well locations (often referred to in the industry as “plays”) were likely drilled first, much like a fruit picker first goes for the juiciest low hanging fruit on the tree, operations have to move on to less promising “plays”. Pretty soon drilling rigs are running 24/7 just to stand still. Obviously beyond a certain tipping point the entire fracking operation in that area enters into a state of terminal decline (i.e. it peaks in production) and no matter how many wells you drill, production will continue to fall, until the whole field is essentially spent.

Hughes report suggests that the day with this finally occurs may not be that far away. While Shale gas supporters claim it’s a boom in production that will last centuries and power the entire United States, the data (drawn from official DOE and EIA figures) suggest a temporary boost to domestic production for a decade or two.

Figure 4, Growth of Shale gas production by field, note plateau after 2011 [Credit: Hughes (2013)]

I choose my words “plateaued” carefully, as it’s not clear yet whether this is a “peak” in shale gas production or merely a pause in the rate of growth. As I reported in a previous post (“is Shale Gas a Fracking Ponzi scheme”) many shale gas “plays” are simply not economic. Its costing more to produce the gas than the company can get selling it on the open market. As Hughes reports, this has resulted in a move away from dry “gas” fracking operation over to operations that extract both oil and gas.

This is also one of the reasons why there is talk of exporting shale gas to Europe or Asia. Not because they are awash with the stuff in America, but because the higher retail gas prices in Europe and Asia is the only way to make Shale gas competitive. Of course the implication of that would be that Americans take all the environmental damage associated with shale gas drilling, have their water supply polluted, Europeans and Asians get the gas and a few mega corps make all the profit. Could someone please point out to me what’s in it that for the average Joe in America?

The factors above probably explain why the EIA has begun to cut its forecasts as to the potential extractable reserves of Shale gas. They’ve pushed such “theoretical reserves” (i.e. not all are proven reserves!) down to 579 trillion cfg, or about 24 years supply at current production rates, a 42% drop on previous estimates. Of course that doesn’t mean all this gas will be produced, nor that we can maintain production at current levels for 24 years. In all probability there might be some future growth, before output peaks and then sharply declines. Indeed the EIA suggests the bulk of these reserves will be consumed in the next two to three decades. Which implies shale gas cannot function as a long term solution to America’s energy needs.

And tight oil? Tight oil (otherwise known as Shale oil and confusingly not to be mixed up with oil shales) production began a bit after shale gas fracking so it’s a little behind the curve. Hughes, again based on DoE and EIA figures predicts production ramping up from a current output of 1.2 milion bbl/day to a maximum of around 2.2 million bbl/day in 2017, before declining sharply.

Figure 5, Past and projected future production of tight oil [Credit: Hughes (2013)]

The reality is that unconventional fossil fuels, as experts such as me have been saying for years, simply cannot be ramped up to match the production levels of the major conventional sources of fossil fuels (such as those in the Middle East). Once such sources peak, which it’s likely they will between now and 2030 (or indeed some commentators believe they’ve already peaked, see here and here), the decline rate from such fields cannot be matched by unconventional sources. As I describe here, a modest decline rate of just 3 % per year of global oil supplies would require bringing online some 2-3 million bbl/day worth of production capacity each year (i.e. we’d need to add as much tight oil capacity per year as its going to take the Americans twenty years to develop!).

Unconventional fossil fuels benefit only one group of people, that being the fat cats in charge of the companies behind such operations, who will make a tidy profit out of this small temporary blip in production, leaving the bill for the clean-up to society and the tax payer.

For of course the other major issue with unconventional fossil fuels is the much heavier carbon footprint associated with them. I discussed in previous post how shale gas might actually be worse than coal for carbon emissions. This could mean we could face a scenario in future where despite the fact that fossil fuel output levels are falling significantly (not necessarily by choice either!), the levels of greenhouse gas emissions continue to rise, due to this higher carbon footprint of unconventional fossil fuels.

Figure 6, GHG emissions by oil production method [Credit: Pershing & Kelly (ND), University of Utah]

Now many in the cornucopian camp would probably argue that I, and others such as Dr Hughes, are being a little unfair in the above analysis. One possible criticism is that the figures above rely heavily on data from the EIA and DOE. Both have shown to be considerably behind the curve on the topic of Shale Gas. As I mentioned in a prior post, some of the DoE’s long term forecasts for shale gas production (discussed in an article from WTG News here) by 2020 were already close to being outstripped by actual output. I relied on this data for a number of prior posts on Shale gas, and like I said, the current output now outstrips those DoE projections. Could they be wrong again?

I would argue that the reason for this mismatch is because the DOE were banking on Shale gas being a bit of a slow burner, whereas instead its turned into something of a blast and grab raid by the drilling companies. Many of the same people who a few years ago were selling sub-prime mortgages have since moved into speculating on shale gas and this has created a bit of a bubble.

A little elementary maths might help. The total area under our production curves (representing available reserves) is a fixed quantity, but we can change the slope of the curve bounding this area, i.e. produce the gas or oil more quickly (within reason of course! as such a change in slope runs into the problems I mentioned earlier), but of course we can only sustain that production for a shorter time period (as the area under the curve is still the same) and a steep rise in output will generally lead to a steep drop off the other side.

You’ll also note that I’ve been comparing future production to present demand. Of course what I should be doing is comparing future production to future demand. One of the reasons many on the right oppose renewables or taking action on climate change is that they argue that our current economic model requires ever greater levels of economic growth, which requires ever growing levels of energy to feed it. While indeed I would note there is such a link between energy production and economic growth (they are some who’d say the current economic malaise we’re experiencing is due to high oil prices and declining output). I would question how sensible it is to continue this strategy.

As it would imply that the current US energy demand (that 2,200 mtoe I mentioned) would have to increase by 3% per year to double by the mid 2040’s. Chuck in the extra energy demand from China, India and the other BRICS (growing by about 10% per year) and you wind up with a global energy demand in the order of 2-4 times its current level by 2050. You will struggle to find anyone, save a few demented Libertarians, within the energy industry who actually believes that such a feat is possible, even if we ignored the urgent crisis that is climate change, even if we exploited ever available energy source possible to its maximum potential.

The Party’s over

This also serves to vindicate a key point made in the 1970’s by the Club of Rome’s report “the limits to growth”. They point they were trying to make wasn’t that “the worlds going to run out of oil/water/copper by 2035” or something of that nature. Instead they were trying highlight that a finite resource cannot sustain an ever increasingly level of demand indefinitely. And that the time line between exceeding the natural carrying capacity and collapse of supply was likely to be very short.

For example, let’s suppose I throw a party (to celebrate Thatcher’s demise!). I could keep 20 friends and I partying till dawn if I squeezed 200 beers into my fridge (or bought enough kegs to provide the equivalent) assuming we all drank roughly one beer an hour. However, if instead I started off with just one friend and I, and we then both texted and invited another friend each to the party each hour (with everyone else who came doing the same), we would run out of beer after about 6.5 hours (when there would be just shy of 100 revellers at the party). Even if, in anticipation of this I doubled my initial supply to 400 beers (how going to squeeze that many beers in my fridge is another story!….in fact I doubt I could get that 200 in to start with…and what am I going to do with all those empties!) would only sustain the party for a little more than an hour. Indeed if we somehow managed to keep the party going (by perhaps holding it in an off license or something!…hopefully one with a very large fridge and next to a recycling centre!) by the tenth hour the demand for beer would be 1024 beer/hr (i.e. 5 times the starting supply to keep the party going for just a further hour).

In a similar vein, even if by some miracle we could double available fossil fuel production rates via unconventional sources (and as I think I’ve shown, we can’t!), such a move would only offset the inevitable peak in supply by a few years or a decade.

But there is another way. 97 GW’s of Renewable energy capacity was installed in 2011 (as mentioned in the REN 2012 report), a little under half of all electricity generating capacity installed that year. The Germans have demonstrated, that you can grow an economy and cut overall energy consumption, while increasing reliance on renewables. And Germany hasn’t exactly got the world’s best renewable resources (they are at the same latitude as Newfoundland and have significantly poorer wind coverage that countries such as America or the UK). In short, they’ve proven it’s possible to break the energy – economy link I mentioned earlier. And Portugal is doing even better than Germany, getting a good 70% of its electricity from renewables.

Now, as I speculate (here) there is probably some upper limit to how much of renewable energy that can be installed at any one time, but it’s clearly a much more sensible strategy than continued reliance on fossil fuels. Especially once you accept the age of such sources is in its twilight years.

Now while I would accept the argument that the so-called “peak oil pessimists” have perhaps unrated the potential of unconventional oil and gas sources. But given that such sources still cannot rescue us from the inevitable train wreck and given their very heavy environmental and carbon footprint, I would therefore argue in favour of abandoning such extraction and focusing on other resources instead.

From PatternDynamics (TM) by Tim Winton

A comment has just appeared below my post on The Wave/Pulse of Human History.  “The Emergist” writes:

Nice article. Fun to see you weave together the separate stories. I didn’t know Holmgren was into Odum. How do you see the idea of pulsing as changing your approach to design, specifically bridging the gap between pulses? Or do you think there isn’t much we can do as individuals to bridge larger scale pulses?

I thought I’d answer here, as my Earth Day blog post.  It seems appropriate to honor David Holmgren and Howard T. Odum on Earth Day, so much of this post will be extended excerpts from Holmgren’s 1994 article Energy and Permaculture.

Yes, Odum has been a huge influence on Holmgren (perhaps as much or more as his ‘in the flesh’ mentor Bill Mollison).  As far back as the first Permaculture book (“Permaculture One”), with Holmgren as lead author, the first footnoted reference was to Howard T. Odum.

In the 1994 article, Holmgren writes:

The work of ecologist Howard Odum provided a theoretical framework and conceptual tool which was critical in the development of the permaculture concept. In the 1970′s there was a flurry of research in this field but it declined along with oil prices in the 1980′s. Odum was one of the leading ecologists who developed a systems approach to the study of human/environment interactions. He uses energy as a currency to compare and quantify the whole spectrum of natural and man-made elements and processes.

Odum’s ecosystem approach:

• Analyses ecosystem elements and processes in terms of energy flows, storages. transformations. feedbacks, and sinks.
• incorporates non-living and living elements of the natural environment.
• and incorporates human systems and economies as an integral part of the natural world.

As I wrote in my post about the Pulse, “Howard Odum was of the opinion that all systems on all scales pulse.  Storages gradually accumulate, consumers consume and develop, and eventually decline, and then dispersing materials that will be used in the next pulse.” And if “energy flows, storages, transformations, feedbacks, and sinks” are central to any system, man-made or otherwise, we can see that the peaking of world oil production is going to have a huge effect.

So, how does the idea of pulsing change one’s approach to design?

First, you’ve got to estimate where you are in the pulsing cycle.  In this case meaning, where are we currently on Hubbert’s Curve? And second, if your trajectory on the pulse is changing, then you’ve got to change as well. Time to do a reset on your design. Adapt or die.

[M. King Hubbert drew this graph circa 1956, showing his estimate for the peaking of world oil production. Comments inside the graph from Rob Hopkins, published in The Transition Companion]

Many of us believe we are now at or near the peak of this graph. This means two things. One, we don’t have to judge as “wrong” our culture’s past use of oil (at least until we learned of its affect on climate) – Odum told us that all systems maximize use of available power.  Two, when you approach and enter the downside of the pulse, you can’t continue operating as if the pulse were continuing to climb upwards.  Systems have to adapt to changing circumstances – especially when it’s a change in available energy.

Howard Odum, in A Prosperous Way Down:

What is appropriate during one stage may be poor policy in another stage,” he wrote. “For example, for a system in a stage of descent, it will not be good policy to foster growth that is no longer possible.”

And here is how Holmgren put it (more from Energy and Permaculture):

Odum’s work shows exactly how and why it is impossible to avoid those rules in any case without the need to resort to moral injunctions. High-energy industrial society is revealed as a quite natural response to fossil fuel abundance but maladapted in every way to a low energy future.

…If there is a single most important insight for permaculture from Odum’s work it is that solar energy and its derivatives are our only sustainable source of life. Forestry and agriculture are the primary (and potentially self-supporting) systems of solar energy harvesting available. Technological development will not change this basic fact. It should be possible to design land use systems which approach the solar energy harvesting capacities of natural systems while providing humanity with its needs. This was the original premise of the permaculture concept. While available solar energy may represent some sort of ultimate limit to productivity it is other factors which primarily limit it.

Here is where the Permaculture Principles come in. Our culture is currently embedded in principles (acknowledged or not) that are adapted toward energy ascent, the left side of the pulse.  We need now to consciously embrace principles that are adapted for energy descent, the right side of the pulse. The principles that will serve us best will be those that “use energy as a currency to compare and quantify the whole spectrum of natural and man-made elements and processes.”

Holmgren continues:

Odum states, “Those systems that survive in competition among alternative choices are those that develop more power (rate of energy flow) inflow and use it to meet the needs of survival.” They do this by–

• 1. developing storages of high-quality energy

• 2. feeding back work from the storages to increase inflows

• 3. recycling materials as needed

• 4. organizing control mechanisms that keep the system adapted and stable

• 5. setting up exchanges with other systems to supply special energy needs, and

• 6. contributing useful work to the surrounding environmental systems that helps maintain favorable conditions, e.g.. micro-organisms’ contribution to global climate regulation or mountain forests’ contribution to rainfall.

When fossil fuel energy is abundant, systems can achieve the above differently than when fossil fuels become scarce.  When the net energy yields decline from fossil energy, then we change our approach to design by aligning more with natural systems to achieve the above.  Holmgren’s 1994 article laid out some of the foundations that were later developed into his Permaculture Principles (you can read them online here) that were discussed in his classic book Permaculture: Principles and Pathways Beyond Sustainability. I agree with Stuart B. Hill, who wrote, “If the ‘Permaculture Principles’ that David Holmgren discusses in this extremely important book were applied to all that we do, we would be well on the road to sustainability, and beyond.” But here are the ideas as expressed by Holmgren in 1994:

• Does the system work to catch and store water and nutrients for as long as possible and as high as possible within its catchment landscape?
• How does it compare with the performance of pristine natural systems as well as wild and naturally regenerated ones (weeds included)?
• It is possible for managed productive landscapes to collect and store energy more effectively than pristine systems by the careful use of external, often non-renewable energies.

To summarize…

• Reduce, Reuse, Recycle (in that order).
• Grow a garden and eat what it produces.
• Avoid imported resources where possible.
• Use labor and skill in preference to materials and technology.
• Design, build, and purchase for durability and repairability.
• Use resources for their greatest potential use (e.g. electricity for tools and lighting, food scraps for animal feed).
• Use renewable resources wherever possible even if local environmental costs appear higher (e.g. wood rather than electricity for fuel and timber rather than steel for construction).
• Use non-renewable and embodied energies primarily to establish sustainable systems
  (e.g. passive solar housing, food gardens, water storage, forests).
• When using high technology (e.g. computers) avoid using state of the art equipment.
• Avoid debt and long-distance commuting.
• Reduce taxation by earning less.
• Develop a home-based lifestyle, be domestically responsible.

Related articles

• Will Fossil Fuels Be Able to Maintain Economic Growth? A Q&A with Charles Hall (scientificamerican.com)

Data through February.

via (pdf) http://www.fhwa.dot.gov/policyinformation/travel_monitoring/13febtvt/13febtvt.pdf

We have it within our power to create merciful acts.”

– naturalist and author Terry Tempest Williams

(Thanks to Orion Kriegman of Jamaica Plain New Economy Transition for bringing this quote by one of my favorite authors to my attention.)

On one hand, hooray Earth Day! Let’s all be responsible to the planet! Let’s recycle! Go Druidry! Go Earth Mother! Yay!

On the other? Is this kind of popular activism actually changing anything? Somehow I don’t think so.

Earth Day really strikes me as a big fat cop out a lot of the time. Like Earth Hour (where you use no electricity for one hour on one evening in March), it’s a day where people can pretend to do things that are good for the Earth and feel good about themselves, and then go right back to doing whatever they were doing before. It’s about the warm fuzzy feelings, and not about meaningful change.

For example, today in celebration of Earth Day my office “environmental team” is handing out “Earth-colored” cupcakes and cookies. That’s how we’re celebrating. Who knows what kind of dyes are in the coloring for the cookies and cupcakes, or where they were purchased, or if they come wrapped in plastic.  It’s Earth Day! Any excuse for baked goods is a good excuse! Oh and there’s a contest for the best Earth Day poster, created by the child of an employee.

Still, the sentiment is a good one, and so I’m torn about it. It’s good to do even little things to help the Earth. But I don’t want to overstate the importance of things like Earth Day in the face of very real activism and the very real changes that need to happen to reduce our impact on the planet.

If we keep going how we’re going, we’re going to quickly run out of planet to take advantage of. We’re already pushing close to (or past) peak oil – the point after which the amount of oil we can get out of the ground can no longer continue to expand, but after which our desires for oil and electricity aren’t going to go down. It’s a scary thought, but one that is bolstered by alternative and nontraditional energy sources (of which I think there won’t be “one star savior”, but it will take a combination of energies and conservation attempts and changes in our lifestyle to make work).

In the face of things like that, or the rash of oil related disasters, or the floating trash “islands” or the constant degradation of our wetlands (like the swamp near which I live), it’s hard to be really positive about Earth Day, because I don’t feel like it provokes meaningful change. It’s a great thing to teach kids, but as adults, it loses some of it’s oomph for being just another social excuse and day of pointless social-media-activism.

Of course, I have no better ideas about how to provoke meaningful change from people who aren’t interested in changing. In fact, I think that exercise is pretty fruitless, so maybe it’s through campaigns like Earth Day that we find little handholds and footholds for bigger environmental projects.

And I’m always drawn back to the words of the great Dr. Seuss, from The Lorax:

UNLESS someone like you
cares a whole awful lot,
nothing is going to get better.
It’s not.

The whole point of the Lorax is individual change, and the impact that one person can have – good or bad – on the world around them. And maybe that’s the whole point of Earth Day – maybe it’s fruitless and silly and superficial, but that doesn’t mean that I can’t personally take it as a challenge to myself as a Child of the Earth.

In short, I want my own Druidry to be a recognition of Unless. I’m going to take up the mantle of Unless, and use today as a reconfirmation of the things that I CAN do to protect the Earth and reduce my footprint, even as a cubicle-working, long-commute-driving, suburb-living Druid.

I CAN compost, and plant trees, and garden organically, and turn lights off, and use LED bulbs, and recycle as much as I can (and try to buy less plastic too). I CAN re-use produce bags and bring my own grocery sacks. I CAN combine errands so that I’m not doing unnecessary driving, and make sure my car is in good working order for my long (70 mile round trip) commute, so that I pollute as little as possible. I CAN work from home when I’m allowed, to save gas. I CAN work on hobbies and crafts that promote reusing things, repurposing things, and valuing the hard work that goes into them. I CAN donate my clothes to goodwill when they no longer fit, instead of throwing them away. I CAN work to value people, time, and experiences over things, money, and stuff. I CAN spend time with my landbase, and support organizations that take care of it and the wildlife who live here.

I can’t change how other people react (or don’t) to Earth Day or Earth Hour or whatever other pop-culture, warm-fuzzy environmentalism that gets tossed around on Facebook but doesn’t create any progress. In the face of the overwhelming mess that we’ve made of the planet, something like Earth Day can seem silly – and maybe it is.

The changes made for one day are only useful if they truly become changes made for every day. A tree planted on Earth Day, but left untended, will die of lack of water in the Texas heat.

I can’t change what Earth Day has become, and I can’t make other people change their habits or live up to the cute graphics they post on social media.

But I can take up the mantle of Unless for myself.

Will you?

The timing of the peak in global oil production is highly controversial because of the political and economic impacts expected from Peak Oil, particularly transportation fuels. Many analysts believe Peak Oil is imminent, even though estimates of the exact year of the peak vary widely from 2010 to 2050 or beyond. However, some analysts, such as Matthew Simmons, have concluded that global oil production has already peaked [1] and present credible evidence that it has.

“Peak oil” is a concept originally recognized and described by geologist Dr. M. King Hubbert (the peak in oil production curves is called Hubbert’s Peak) in 1955 that refers to the fact that the oil production curve, as the sum total of all individual oil wells, starting from zero, rises to a peak, and then declines until all oil resources are depleted. Hubbert’s hypothesis initially was largely ignored by his peers in the scientific community and the energy industry at large. However, Hubbert was proven correct when US oil production actually did peak in 1971!!! Recent analysis(2005, 2006, 2007) of Saudi and all significant global oil production suggests that global oil production capacity has also peaked and will permanently decline. In fact, all four countries that were once the world’s number one oil producing countries have peaked and are in permanent decline(Azerbaijan, USA, Venezuela, and Saudi Arabia).

Oil is essentially “captured sunshine.” It took extremely long periods of time for the energy in sunshine to be converted by biological organisms into chemical energy, “cooked” into oil and then accumulated and preserved in significant quantities. The science of Petroleum Geology and the last 150 years of oil exploration has revealed that oil and natural gas is actually quite rare and large areas of Planet Ocean lack the geological conditions to hold oil, for example areas of volcanic rocks that are too newly formed.

The accumulation of oil in the world can be described as similar to an electrical capacitor slowly accumulating a charge. The production of oil is similar to a capacitor suddenly discharging it’s charge. It took millions of years of sunshine to accumulate the oil. But in 150 years the oil industry has explored for and produced half the oil available in the world. Although the same geologic processes that created oil are still active, they are too slow to “charge the capacitor” fast enough to create commercially significant quantities of stored energy in the form of oil ever again.

Warnings about Peak Oil may be misunderstood as an argument that the world is “running out of oil (the sky is falling!). The problem is not that we are running out, there is plenty of oil left, approximately 1.0 Trillion barrels or so, the problem is inadequate production capacity. Worldwide demand simply due to population growth will fast outpace supply and this time, supply has not, and most likely will not, be replaced by new discoveries.

Analysis of all major world oil reservoir production data, analysis of geologic exploration data, recent oil price increases, political turbulence in the Middle East, and an increasing awareness of the impact we humans have on the environment have all fostered concerns that Peak Oil will have significant economic consequences including extreme devaluations in securities of companies whose price does not adequately reflect the balance sheet impact of things like increased transportation costs due to oil price hikes or devaluations caused by a Global Economic Collapse including a crash of the banking system.

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Quarterly oil supplies, courtesy of the IEA
Have we hit peak oil? Oil production has remained fairly flat since the end of 2005, at around 85 million barrels per day, as compared to, say, production of 80 million barrels per day in 2003. The chart demonstrates that oil production has flattened out. Whether this trend represents a temporary slowdown in the rate of increase of production and an associated “false summit,” or the actual peak of oil production, is dependent upon the cumulative rates of production of the world’s major oil producers but assuming similar relative ratios of production from country to country and similar rates of production in those countries, oil has peaked. On January 14, 2009 energy industry investment banker and analyst Matthew Simmons presented information that “hard data” now confirms that global oil production peaked in 2005.[1].
Regardless, with over one trillion barrels of oil reserves proven around the world, hitting peak oil would mean not that we are running out of oil, but rather that we cannot produce enough oil and therefore, cannot consume oil at the same rate. This will have drastic implications for major consumers of oil (of which the U.S. is the largest, US consumes about 25% of global daily supply), as well as for fast-growing emerging markets, such as China and India, who are rapidly increasing their oil consumption as they become wealthier (e.g., by buying and using more cars).

Jodi,Many people would not icdulne being able to see the big picture as a part ofhow to effectively influence others, but that is the key to gaining momemtum .you must realize that there are a lot of dimensions in life, and only if you cansee the big picture, do you allow all of those dimensions to interact with one another.Well done!

Mexican oil production Declines 9% year over year

May 23 (Bloomberg) — Petroleos Mexicanos, the state-owned oil company, said April crude production fell the most in more than 12 years as output at its largest field declined faster than the company forecast. Crude oil production fell 13 percent to 2.767 million barrels a day in April, Mexico City-based Pemex, as the company is known, said today on its Web site. Output a year earlier was 3.182 million barrels a day. The decline was the largest since October 1995, when output fell 29 percent. Pemex Chief Executive Officer Jesus Reyes Heroles set a goal of producing 3.1 million barrels of crude a day in July of last year. The company has only met that goal once since it was set. Output has been on a decline since reaching a peak in December 2003. Since 1999, proved reserves have been more than halved to 14.7 billion barrels of crude oil equivalent. “There is no clear sign that this decline is going to slow down, said David Shields, an independent energy analyst in Mexico City. “ I don’t think there is any point in trying to forecast an annual average.

“Supplies not growing is still the main thing. OPEC can turn the tap but they cannot do it forever, and non-OPEC growth is not enough,” said Tony Nunan, risk management executive at Tokyo-based Mitsubishi Corp. “Demand…is not falling as much as expected,” he added. Oil production from countries outside OPEC is stagnating and forecast to remain below 50 million barrels per day this year, at 49.56 million bpd, lower than earlier forecast, a Reuters survey of 12 analysts showed on Thursday. The failure of non-OPEC producers to increase output significantly has helped drive oil prices up more than a third since the beginning of the year. It has also sent long-term prices even higher, at close to $150 a barrel, as concerns mount that supplies will not be enough to meet demand from developing countries in the future. OPEC Secretary-General Abdullah al-Badri on Thursday repeated the group’s stance that it can do nothing to lower oil prices in a “crazy” market, blaming record prices on factors such as geopolitical tensions, speculation and the weak dollar. The cartel’s view was shared by the chief executive of Royal Dutch Shell Plc. Jeroen van der Veer, who told Reuters Television that oil prices are rising due to market sentiment rather than a shortage of supply.

Companies who stand to benefit

Saudi Aramco has the largest proven oil reserves in the world, but, like many of the world’s largest oil companies, it is government owned, so investors are left to choose from the other oil majors with control of large oil reserves. Royal Dutch Shell and Chevron are both attractive options.

Sasol, a South African company, was forced by the isolation imposed by apartheid to develop pioneering coal-to-liquid technology, and as a result, has a headstart on competitors in developing alternative technologies for oil production.

‘Suncor Energy ( SU on Toronto and NYSE) ‘a leading independent oil sands exploration company in Alberta, Canada, is one among many companies developing new technologies for discovery and production of oil, including oil sands and shale rock exploration.

Production in 2008 is at ( approx) 250,000 BOE scheduled to nearly double with production plans by 2012.

Oilexco ( OIL on London and Toronto ) a junior in the North Sea , production began in 2007 Joseph Schacter ( Maison Placements ) Raised his Forecast for Oilexco from $ 25 to $ 30

Based on 2008 production rising at year end to 45,000 BOE 2009 production at 65,000 BOE 2010 production at 100,000 BOE and this assumes no further discoveries until 2010.

Again Schacter’s $30 target in twelve months is conservative measured against $ 80 as a long time average for the commodity price until 2010 and against potential discoveries by that time.

Companies who have already invested in oil-saving technologies will have a head start, and possibly a long-term competitive advantage, over their competitors, who will suffer from an increased cost base as oil prices rise. This advantage would be most notable in oil-intensive sectors such as transportation, where airlines with newer fleets using less oil per mile flown (such as JetBlue) or auto manufacturers with existing high fuel efficiency vehicles (such as Toyota, or the SmartCar, a division of Daimler Chrysler) will stand to benefit relative to their competitors.

Lastly, contractors to the oil industry, such as Halliburton and Schlumberger, as well as suppliers of equipment to the oil industry, such as Caterpillar, will benefit mightily from the inevitable boom of oil exploration activity that arises from fear of peak oil.

Companies who stand to lose

All companies issuing securities for investment stand to lose from the impact of Global Peak Oil. None are immune. The argument can be made that US based companies are at greatest risk due to the unfortunate fact that the US uses 25% of global daily oil production and therefore will be most severely impacted. Japan is another economy where energy to run the economy comes almost entirely from oil. The EU countries and it’s companies are at extreme risk also.

Companies most heavily involved in transportation and shipping will be hit the hardest by peak oil. Though they will try to pass price increases on to customers, peak oil will likely hurt profits at major airlines, especially those with legacy fleets, such as United or British Airways, as well as shipping companies, such as Federal Express, who depend heavily on a fleet of trucks and airplanes. On the other hand railway companies might benefit because rail transportation is much more energy efficient than truck transportation and some transportation of goods might be moved to rails.

Auto-makers finding themselves behind the curve on fuel efficient technologies will also suffer. Though all auto-makers are scrambling to invest in such technologies, the U.S. based auto-makers such as General Motors or Ford Motor, whose profits are driven by SUVs and other large vehicles, are more likely to lag in these efforts.

Companies indirectly exposed to the transport industry will be hurt as well. These will include companies with the most global supply chains and those that depend heavily on shipping goods long-distances. For example, Wal-Mart depends on a large fleet of airplanes and trucks to deliver its goods around the world. Peak oil might require it to invest in more distribution centers, enabling shorter truck and airplane routes.

Consumer and retail companies more broadly would likely be damaged by peak oil. When forced to spend more on gasoline (in order to commute to work), the majority of consumers will tighten their belts elsewhere. Such belt-tightening will have the most serious impact on companies, such as Target, Home Depot or Lowes, who serve middle-class America, though could also ultimately impact luxury consumption.

Peak Oil is a term that means that we have hit the peak of oil production which can meet global demand for it.  Simply put, a peak occurs when demand outstrips production.  There are plenty of online resources, some of which are here: The Oil Drum and Peak Oil, among a great many others.  For a great, ongoing discussion of the implication of Peak Oil and his own exploration of the religious implications of Peak Oil, among a great many other topics, Archdruid John Michael Greer’s The Archdruid Report is one of the best I have seen.

Rather than discuss the science and charts and such, since I have, compared to others, a limited layman’s understanding of Peak Oil, I wanted to dive right into what Peak Oil can mean for us as Pagans.

What are the religious implications of Peak Oil?

Gebo is Foremost

Gebo means gift for a gift, and for a long time the West has been able to, by and large, ignore its share of Gebo to nature and the poor.

If Western society has a chief ill it is that it seeks something for nothing.  Capitalism’s strength is predicated upon infinite exponential growth when, realistically speaking, this is not possible.  There are hard limits to growth, whether it is the forest providing timber, the mine providing gold, or the computer number-crunching.  All things have their limit, and without respect to that, disaster is inevitable because all future hopes and plans hinge on a single method of interacting with the world.  So, my understanding is that the first implication of Peak Oil is that Gebo must come before all else.

Naudhiz is the Measure of All Things

Naudhiz translates to need or distress.  In this, I am primarily thinking of need, and the maxim “What does it do?  How well does it do it?” becoming the measure by which all things will be measured.  Do I need this electronic device?  Can I break it down or build it up into something more useful?  Will this get in the way of me being productive?  If it breaks down, what can I do with it?  Can I repair it?  Do I need it or a replacement if I cannot repair it?

Naudhiz is the rubbing together of two sticks to make fire.  It is the necessary work needing to be done to survive, if not begin to thrive.  It is the laundry getting done, the garden planted, the animals fed, etc.  Whatever work is needing to be done so things progress.  Getting busted down this hard to basics is not something a lot of people in America are used to, though with half of America officially in poverty that is quickly changing.  What can I truly live without?  What am I willing to do to make it?  Hard questions that more are asking, and many more yet need to ask.  Once we know Gebo it is easier to measure what must be done.  It is far better to voluntarily start the process of asking these questions when you may have abundance than to wait until you must get answers on the fly.  Naudhiz is a good measure to budget by once Gebo is known.  In knowing the limits of what is asked, and what you can deliver via Gebo, you can best know what you need, and from there, determine how to meet that need in exploring Naudhiz.

Right Relationship

While this is part of Gebo it also deserves direct mention.  Right relationship is the idea that there is a way we should interact with and within the world.  It means not dumping chemicals on your lawn just so it looks green.  It means not ripping up every bit of habitat around us for more parking structures or development space for single-story, large, wasteful, polluting businesses.  Right relationship implies that we not only understand the aforementioned limits of our society, its reach, or the environmental impact we have, but respecting that limits and staying well within them.  It means remediation of wild places and a radically different way of life.  In respecting that we have stretched much of our environment to its breaking point, local, as well as State and national ways of doing things will need to change.  Each person’s situation will be different, but one way we can reduce rampant consumption and its many branching effects is conservation.  Conserve electricity, water, food, everything your life depends on that you need can, past a certain point, be conserved.  Even if you yourself do not garden, conserving food where possible and composting it where it is not, or handing it to a neighbor or friend, will make much better use of food and landfill space.

More than anything else we need to reduce our rampant consumption here in the West, especially America.  We consume 25% of the world’s resources with only 5% of its overall population.  This equation needs to change if we are to live in right relationship with the world around us.

Looking to Our Ancestors

Modern society provides very little actual grounding for living.  Unless you are taking classes in school with practical application, such as a Home Economics course, or if you are in a homeschooling situation where people are preparing you for the real world, modern society has more or less thrown up its collective hands in teaching or instilling much in terms of practical lessons.  Most Americans do not know how to grow food, much less how to make fire.  Repairing things is almost entirely a lost art; rather, we are encouraged to buy the new thing.  Repair shops used to be a nationwide phenomena.  If something broke, you fixed it.  Without throwing on rosy-colored glasses or romanticizing the past, either recent Americana or further back, there were a good number of practical skills a person, or someone close to you, might know that make sense for us to retain into a world beyond Peak Oil.

What does this have to do with Ancestors?  Everything.  Our Ancestors at some point or another had to live off the land.  The occupation for 90% of Americans, at one point, was farming.  In a post Peak Oil time, while we may not get back to that 90%, we are going to need to devote more of our energy to it.  This will mean regaining skills we have not used, or wholesale reskilling ourselves to the task at hand.  My grandfather collects old farm tools.  Seeing these I can see the Ancestors’ hands on them, and how these tools are ancestors themselves to the electrical and gas-powered machines we have today.  Far better we learn to use these older machines, and start demand for them now, than having to completely reinvent the wheel and/or play catch-up.

This can be a form of working with, if not worshiping our Ancestors in a very direct way.  Everyone has Ancestors who were farmers.  They tilled the soil, they knew how hard it can be to grow things.  Does everything they did work for us?  No, certainly not.  My German Ancestors worked different soil, but many of the lessons translate well.  The point is, is that by and large farming itself has not grown by leaps and bounds in terms of its basic ingredients or complexity.  It is merely the scale that has become so huge, so complex.  Our Ancestors hold many of the keys to future prosperity, whether we find that in how we raise our crops, our houses, or our communities.  Will everything our Ancestors did be right for our age?  No, but the collective wisdom They hold is worth at the least considering, if not employing in our lives.

Industriousness

Using a hand-cranked masher, I made pear sauce last year and sealed them in mason jars.  No sugar added, just three large, sealed mason jars full of pears that will keep for a good long while.  This is something my parents and grandparents have done most of their lives, something that was not passed down to me until I demanded to be taught it.  Will it keep me alive through a harsh winter?  Well, no, not just on canned pears, but it, and similar skills will, even if the post Peak Oil future is a generation or so down the road, save me a lot of money.  Think of how much we spend on canned goods, frozen goods.  Growing it yourself is a savings of a large chunk of money, especially if you can do it well.  Money does grow on trees because food is real wealth you can put in your mouth.

What does this have to do with religion?  Religion is a framework through which we understand our place in the Worlds.  Industriousness, what we do with ourselves on a regular basis, is an important part of that.  We have, in our Pagan traditions, Gods of the hearth, the home, and certain crafts.  When I clean I dedicate that work to Frigga and Frau Holle.  When I till the Earth or plant, I dedicate that Work to Jörð, Freyr, and Gerda, depending on where I am planting and what I am planting.  I speak with the landvaettir as well as  Jörð, Freyr, and Gerda prior to planting, when setting up the space, when working within the space, and when harvesting.  I hail Nidhogg and Hel when I take out the compost.

The point of a religious life is that the Work of that life does not stop at the temple, church, or shrine.  It is enlivened by the Work done in the temple, church, or shrine, and extends into every area in which one lives and breathes and works.  The world is full of holiness if we would recognize it.  So when you put yourself to work, whether at a computer, a field, someone’s home, or the living room, it is a time that the Gods, Ancestors, and spirits can be honored, praised, and involved in your life.  In this way, I see Pagan religion not so much practiced as it is lived, and industriousness is one key way in which we can connect to the Gods, Ancestors, and spirits.

Wealth

I mentioned something in the last section that I want to dig into a bit more: Money does grow on trees because food is real wealth you can put in your mouth.  Most ancient societies judged the wealth of a person by how much stuff they had.  In the Germanic and Norse case, it was cattle and grains.  They, rather than currency, were markers of wealth because if you had lots of cows and/or grain you had lots of land, people to work that land, raise those animals, etc.  Food and land equaled wealth.  What is often remarked upon as wealth, calculated in numbers that most human minds reel at fathoming, is basically numbers in a computer.  I cannot eat the ones and zeroes any more than I can the paper they are now represented by.  It is not what I would call ‘real’ wealth.

Peak Oil destroys the concept of fiat currency, which is the economic regime we currently live under in most of the world, because the US dollar is predicated on growth and is not backed by anything.  It is essentially a thoughtform which we have agreed upon, saying that ‘the full faith and credit of the US Federal Reserve is so good it can be used to pay debts’.  It is, in essence, a massive act of faith that keeps the economy chugging along, and all it would take is something like Peak Oil, or people switching en masse over to the Euro to destroy a good deal of its so-called wealth.

Cows, meanwhile, do not lose inherent value because the dollar tanks, the Euro rises, or the whole global economic system comes crashing around our heads.  The cow will still eat grass, chew cud, produce milk, and be a viable meat source.  The grain in the field will still grow, be able to be produced into bread and countless other things, regardless of how commodities pricing is.  Both still have inherent value not propped up by a largely fabricated economic system.  When a fiat currency’s users no longer have faith in it the currency has no value period, and it never had inherent value, beyond perhaps being able to be smelted in the case of coins, or burned in the case of fiber-based paper currency.  The ones and zeroes in a machine have no lasting impact upon us or use for us when the system collapses; it does not produce more money, does not regenerate, and has no connection to real wealth once the glamour is broken.  It is telling that the Germanic/Norse God Freyr is a God of agriculture and of wealth.

There are several warnings about wealth and greed in ancient Pagan religion, but using the Hávamál as an example, it is more concerned with wealth in terms of coins and gold, in other words currency wealth, in these warnings, and often reminds the reader/listener that this wealth is transitory at best, and fickle.  Meanwhile true wealth stays with one long-term and is found in friendship and good company.  It is that understanding of wealth that is key.  To not only understanding what is more important in terms of material wealth, but what is true wealth, and what will truly help in the long term.  One may stock food for some eventuality, but once that store is gone, what use is it if there is no one to lean on, no food to grow?  You starve.  As Freyr is the God of both agriculture and wealth, I see one of His lessons is that if one establishes a good relationship with the land they live on, one may truly be said to be wealthy.

So where is wealth to be found?  In good friends, in hard work, and in doing well by others.  In working with the land and living beings, and doing right by both.  In other words, by living in Gebo and right relationship with others and the world around you, meeting you and your family’s/community’s/etc. needs, and in being industrious.

Crafting

The religious implication of crafting could be an entire post on its own.  The first Goddess that comes to my mind is Frigga, the spinner, the weaver, the homemaker, Who spins Wyrd.  Wow.  Just think about that for a moment: one of the Asynjur is the one who spins the primal stuff of potential into what was, what is, and what will will be.  It is said She knows all Wyrd but will not speak of it.  That is power.  In a legend Her favored army beat Her husband’s army, Who is a renowned God of battle, cunning, and skill.  Our Goddesses of crafting, of homemaking, and the hearth are neither to be underestimated, nor belittled.  They are powerful, holy, and glorious in Their own rights.

We underestimate craftswomen and craftsmen to our own detriment.  We buy inferior, polluting products from countries who allow their workers to burn when the factory is on fire.  Our food comes to us out of season on the backs of millions of underpaid and exploited farmers from other countries while our own crops rot in the field because large-scale agriculture relies on illegal workers.  Many of the arts that would produce these goods closer to home are becoming more and more scarce despite our wealth of able-bodied workers.  If Peak Oil is to be navigated effectively crafting will need to come back into its own, and the way to make this transition easier and far less haphazard is to support it now, both in terms of the current generation and those coming up in it.  This support needs to be as much from the ground up as possible, including spinners as well as clothing makers, those who harvest clay to those who shape with it.

In short, in supporting crafting the supply chain needs, as much as is possible, to be returned back to the local level and scaled to the local level’s needs to start with.  Sure, we can grow bigger, perhaps this town has an excessive amount of sheep and supplies wool to its neighbors, and they have cows and supply butter, yogurt and milk to theirs.  Still, Peak Oil’s biggest challenge is to stop consuming like there’s no tomorrow and rework our methods of producing back down to local, but scale-able design.

The religious implication here is that in supporting this from the ground up, and reworking our supply chain in such a way, even if our neighbors do not worship the Gods we do we can still bring our religious values in line, particularly in the belief that this world is holy, as is the work we do, and so can the things we support.  In this case we instill that in our everyday life by supporting change, by building up our neighbors so we may all thrive.  We make this change part of an unfolding of our religious values, especially suited to an age where acting in Gebo and right relationship are not just niceties but keys to survival.

Peak Oil as a Whole

Peak Oil is a direct challenge to many of the ideas that we as Americans have gotten used to: that we can spend our way to a better future, that conservation is no longer a needed thing, that consumption is growing the economy, that we can spend what we have like we will have it tomorrow, and that there can be growth without limits.  It directly attacks American exceptionalism, hegemony, empire, and our place in the world.  Peak Oil is our society hitting the limits on our ability to tap the resources we need for our modern lifestyle.  Peak Oil’s coming does not mean we have to all go into a neo-primitive lifestyle, although that is, to my mind, a viable option for some.  What it does mean is that Gebo, right relationship, meeting our needs on a consistent basis, looking to our Ancestors, supporting our crafters, and engaging in industriousness at all levels will be necessary.

To religion Peak Oil is a direct challenge: do your instructions, traditions, orthodoxy, orthopraxy, etc. aid the survival or hasten the destruction of human life and well-being, now and in the future?  Do your religious views, institutions, etc. provide comfort, direction, purpose, and empowerment to living in a way that is geared towards LESS (Less Energy, Stuff, and Stimulation) while providing hope for the future?  Do your religious leaders provide focal points for community building, or are they needlessly divisive and disruptive to cohabitation and cooperation in age where both are key to survival?  Does religious instruction raise children equipped to handle the world as it is, or is it looking forever backward or forward at some mythic Golden Age, trapped in worlds to come that will not arrive?

There are many more questions, and they will be answered by each person as much as each priest, by each religious institution as by each religious community.  Yet they are worth pondering, as surely as it is how we, as Pagans, as fellow citizens in this country, will navigate the near future.

I invite anyone who wants to engage in this dialogue to comment here, to reblog, and start more conversations on this topic.

As long as the price of oil keeps rising, there is at least some chance the amount of oil extracted each year will keep rising, because more oil resources will become economic to extract. The real problem arises when oil price falls back from a price level it has held, as it has done recently, and as it did back in July 2008. Then there is a real chance that investment will become non-economic, and because of this, oil production will fall.

Figure 1. World crude oil price and production, based on monthly EIA data.The corresponding price in late April is approximately $100 barrel, so is even lower yet.

Oil prices play multiple roles:

1. High oil prices encourage extraction from more difficult locations, because the higher cost covers the additional extraction costs.
2. High oil prices allow exporters to have adequate money to pacify their populations, even if their oil exports have been declining, as they have been for many exporters.
3. High oil prices allow funds for investment in new oil fields, as old ones deplete.
4. High oil prices tend to put oil importing countries into recession, because it raises the costs of goods and services produced, without raising the salaries of the workers. In fact, there is evidence that high oil prices lower wages (both directly and through lower workforce participation).
5. High oil prices make countries that use large amounts of oil less competitive with countries that use less fuel in general, and less oil in particular.

When oil prices decline, it is evidence that Items 4 and 5 above are outweighing Items 1, 2, and 3.  This tips the scale in the direction of a fall in oil production.

Debt also affects oil prices. As long as investors have faith that businesses can make money, despite high oil prices, they will continue to borrow to expand their businesses. This additional debt helps drive up demand for goods and services of all kinds, including oil, so oil prices rise. Also, if consumers are able to borrow increasing amounts of money, this also drives up demand for goods that use oil, such as cars. But once the debt bubble bursts, it is easy for oil prices fall very far, very fast, as they did in 2008.

If we look at the 2008 situation, oil limits were very much behind the overall problem, even though most people do not recognize this connection. It was the fact that oil limits eventually led to credit limits that caused the system (including oil prices) to crash as it did. High oil prices led to debt defaults and bank write offs, and eventually led to a huge credit contraction in economies of the developed world. This credit contraction affected not just oil demand, but demand for other energy products as well.

The problems of the 2008 period were never really solved: the lack of growth in world oil supply remains, and this lack of growth in world oil supply continues to hold back world economic growth, particularly in developed countries. We recently have not been feeling the effects as much, because with deficit spending, the problems have largely moved from the private sector to the government sector.

The situation remains a tinderbox, however. The financial situation is propped up by ultra-low interest rates, continued government deficit spending, and Quantitative Easing. In a finite world, debt growth cannot continue indefinitely. But if debt growth permanently stops, and switches to contraction, we would end up in an even worse financial mess than in 2008. In fact, such a change would very likely to would lead to a contraction of “Limits to Growth” proportions.

In this post, I will explain some of these issues further.

The Rise and Fall of Oil Prices in 2008

Figure 2. World crude oil production and Brent oil prices, based on monthly EIA data, with different scale for oil production.

If we look at world oil production and price between January 1998 and July 2008 on an X-Y graph, we see that as long as oil demand stayed below 71 million barrels a day, oil price stayed low (Figure 3, below). But once demand started to push above that level, oil price started to rise rapidly, with little increase in production. It was as if a brick wall on oil supply had been hit. No matter how much the oil price rose, virtually no more production was available.

Figure 3. X-Y graph of world of monthly world oil production and price data, based on the EIA data shown in Figures 1 and 2.

If we look at an X-Y graph of the non-OPEC portion of oil supply, we see that the situation was even worse for the non-OPEC portion (Figure 4, below). The amount of oil that could be produced at a given price had actually begun to fall back. While in 2003 and 2004, non-OPEC had been able to produce 42 million barrels a day for only $30 barrel, by 2008, non-OPEC could not reach 42 million barrels a day, no matter how high the price. It looked as though non-OPEC had hit “peak oil” production. Geological limits appeared to have the upper hand.

Figure 4. X-Y graph of world of non-OPEC world oil production and price data, based on EIA data.

Fortunately, during this period OPEC was able to raise its production somewhat, in response to higher prices, as illustrated in Figure 5, below. Between July 2007 and July 2008, it was able to raise oil production by 2.1 million barrels a day, in response to a $56 dollar a barrel increase in price in a one-year time-period. (The small increase in response to a huge price rise suggests that OPEC’s spare capacity was not nearly as great as claimed, however.)

Figure 5. X-Y Graph of OPEC oil production and price, based on EIA data.

What brought about the collapse in oil prices in July 2008? I believe it was ultimately a financial limit that was reached that eventually worked its way to the credit markets. Once the credit markets were affected, individuals and businesses were not able to borrow as much, and it was this lack of credit that cut back demand for many types of products, including oil.

The way this cutback in credit came about was as follows: Oil prices had been rising for a very long time–since about 2003, affecting the inflation rate in food and fuel prices. The Federal Reserve Open Market Committee tried (unsuccessfully) to get oil prices down by raising target interest rates. I describe this in an article published in the journal Energy called, “Oil Supply Limits and the Continuing Financial Crisis,” available here or here.  The combination of high oil prices and higher interest rates led to falling housing prices starting in 2006 (big oops for the Federal Reserve), and debt defaults, particularly among the most vulnerable (those with sub-price mortgages). As early as 2007, large banks had large debt write-offs, lowering their appetite for more debt of questionable quality. Total US household mortgage debt reached its maximum point on June 30, 2008, and began to fall the following quarter.

Figure 6. US Mortgage Debt Outstanding, based on Federal Reserve Z1 Report.

By July 2008, the financial problems of consumers in response to high oil prices and falling housing prices had transferred to other credit markets as well. Revolving credit outstanding (mostly credit card debt), hit a maximum in July 2008, and has not recovered (Figure 7 below). (July 2008 is exactly the same month as oil prices began to fall!) Non-revolving credit, such as auto loans, hit a maximum in the same month.

Figure 7. US Revolving Debt Outstanding (mostly credit card debt) based on monthly data of the Federal Reserve.

Credit issues kept getting worse. The Federal takeover of Fannie Mae and Freddie Mac took place in September 2008, as did the bankruptcy of Lehman Brothers. By late 2008, cutbacks in credit had spread to businesses including all sectors of the energy industry. I wrote an article on December 1, 2008, documenting that credit issues led to lower prices not only for oil, but for coal, natural gas, nuclear, and renewables as well.

The reason why a cutback in credit availability is a problem is because it is very difficult to buy a new car or home, or to finance a new business operation, if credit isn’t available. In fact, the amount a business or family can spend depends on the sum of their income during a period, plus the amount of additional debt they take on during that period. If the amount of debt outstanding is going down, then, for example, old credit card debt is being paid down faster than new credit card is being added, and the amount currently spent is lower.

The Federal Government tried to fix the situation by running larger deficits  (Figure 8), starting the very next quarter after oil prices hit a peak and started declining.

Figure 8. US Federal Debt, from Federal Reserve Z-1 Report. (Excludes debt owed to Social Security and other Federal programs.)

Oil prices rose again starting in 2009 as demand outside the US, Europe, and Japan continued to grow. By 2011, high oil prices were back. The economies of US, Europe and Japan did not bounce back to the kind of economic growth most expected, because at high oil prices, their products were not competitive in a world marketplace that relied on an energy mix that was slanted more toward coal (which is cheaper), and also offered lower wages.

In 2013, world oil supply is still constrained.

It is easy to get the idea from news reports that everything is rosy, but the story presented to us is painted to look much better than it really is. Production from existing sites is constantly depleting. In order to replace declining production, huge investment must be made in new productive capacity. It is as if oil producers must keep running, just to stay in place.

Part of the problem is that the cost of new capacity keeps escalating. I have called this the Investment Sinkhole Problem. The Financial Times describes the problem as Energy: More Buck, Less Bang.

Cash flow has historically financed much investment. Now we read, Energy Industry Struggling to Generate Free Cash Flow.

Many naive people believe Saudi Arabia’s stories about their “productive capacity” of 12.5 million barrels a day, but their maximum crude and condensate production in recent years has been only been 10,040,000, according to the EIA. Their recent production has been only a little over 9 million barrels a day in recent months, according to OPEC Monthly Oil Market Report.

Iraq is supposed to be the great hope for future oil production, yet it increasingly seems to be stumbling toward civil war.

Russia is now the largest oil producer in the world, with a little over 10.0 million barrels a day of crude and condensate production.   According to a Russian analyst,”Gas condensate production is the real driver behind the [recent] growth. Crude oil output is falling and organic growth currently is impossible.”

Figure 9. US crude oil production, based on EIA data. 2012 data estimated based on partial year data. Tight oil split is author’s estimate based on state distribution of oil supply increases.

Admittedly, tight oil production has ramped up quickly. But it is an expensive technology, that requires a high oil price, and lots upfront investment. There is evidence that such oil is concentrated in “sweet spots” and these get tapped out quickly. In North Dakota, the earliest area for US tight oil extraction, rig count is down from 203 at the beginning of June, 2012, to 176 at April 19, 2013, according to Baker Hughes. Lynn Helms, Director of the North Dakota Department of Mineral Services gave this explanation, “Rapidly escalating costs have consumed capital spending budgets faster than many companies anticipated and uncertainty surrounding future federal policies on hydraulic fracturing is impacting capital investment decisions.” Meanwhile, North Dakota oil production has recently been flat–perhaps because of weather; perhaps because of other issues as well.

The ramp-up in US crude oil production amounted to 812,000 barrels a day in 2012–very small in comparison to world crude oil needs. World oil production, shown in Figures 1 and 2, is barely affected. In a world with 7 billion people, most of whom would like vehicles, the amount of oil supply being added is tiny.

In 2013, the financial problems of the United States, the Euro-zone, and Japan haven’t gone away.

Current high oil prices make the big oil-importing countries less competitive. It is hard to compete with countries with lower average fuel costs, thanks a mix that it much heavier on coal, and lighter on oil.  A graph of oil consumption shows that oil is increasingly going to the Rest of the World, rather than the US, EU, and Japan (Figure 10).

Figure 10. Oil consumption by part of the world, based on EIA data. 2012 world consumption data estimated based on world “all liquids” production amounts.

The countries that see little growth in oil consumption are the same ones struggling with low economic growth. Low economic growth makes debt very difficult to repay. Governments are tempted to add more debt, to try to fix their problems.

Tackling government debt problems in 2013 tends to bring recession back.

The big problem when oil prices rise is that workers’ discretionary income is squeezed, because their wages don’t rise at the same time. This problem can somewhat be offset by deficit spending of governments for programs to help the unemployed, and for stimulus.

Once taxes are raised, or benefits are cut, the old problem of lower discretionary income for workers reappears. Thus, the recession that governments so cleverly found a way around previously, re-emerges.

In 2005, there was a very sharp impact to oil prices when high oil prices indirectly affected the credit system.  This time, a big issue is rising government taxes and lower benefits. These are staggered in their implementation, so the effect feeds in more slowly.  Greece and Spain started their cut-backs early. The US raised Social Security taxes by 2% of wages, as of January 1, 2013. Later it added sequester cuts. All of these effects feed in slowly, and add up.

With respect to debt, in 2013  we are rapidly approaching the time when this time truly is different.

There has been a great deal in the press about a mistake Rienhart and Rogoff recently made in their book, This Time Is Different. I think Rienhart and Rogoff, as well as economists in general, have missed an issue that is much more basic: In a finite world, debt, like anything else, cannot keep growing. The economy (whether economists realize it or not) depends on physical resources, and these are in limited supply. One piece of evidence with respect to the limited supply of oil is the fact that the cost of its extraction keeps rising. This means that fewer resources are available to be used for making other goods and services.

I show in my paper, Oil Supply Limits and the Continuing Financial Crisis, that lower economic growth rates make debt harder to repay. Reinhart and Rogoff seem to confirm this relationship works in practice. In their NBER paper, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises,” they make the observation, “It is notable that the non-defaulters, by and large, are all hugely successful growth stories.”(They did not seem to understand why, though!)

The 2007-2009 recession partially brought the level of debt down, outside the government sector. Government debt has been ramping up rapidly because tax revenues are down and benefits are up (Figure 8).

Figure 11. US Debt by Sector, based on Federal Reserve Z.1 data. (Amounts shown exclude government debt that is not publicly held.)

Government debt helps take the place of “missing” debt from other sectors (at least in theory). Now government debt is above acceptable levels. US debt is around 100% of GDP, and growing each quarter.

Without rapid economic growth, only a small portion of the debt that remains can be repaid. If increases in taxes/cutback in benefits leave more without work,  a new round of debt defaults can be expected. Student loans are particularly at risk. Business loans maybe a problem as well, especially in discretionary industries. Government debt is likely to be a problem, especially for states and municipalities. Banks may again have financial problems, especially if they have exposure to debt from other countries, or student loans.

I am not certain what will happen to the huge amount of US government debt, if Quantitative Easing ever stops. The same might be said of the debt of all of the other countries doing quantitative easing. Who will buy the debt? And at what interest rate? If the interest rate rises, there will be a huge problem, because suddenly loans of all types will have higher interest rates. Governments will need higher taxes yet, to pay their debts. It will be hard to sell cars with higher interest rates on debt. Home prices will likely drop, because fewer people can afford to buy homes with higher interest rates.

I showed in Reaching Debt Limits what a big difference increases in household debt can make to per capita income (Figure 12).

Figure 12. Per capita wages (excluding government wages) similar to Figure 5. Also, the sum of per capita wages and the increase in household debt, also on a per-capita basis, and also increased to 2012$ level using the CPI-Urban. Amounts from US BEA Table 2.1 and Federal Reserve Z1 Report.

If debt starts long-term contraction, we will truly have a mess on our hands. Businesses will have a hard time investing. Individuals will have a hard time buying big-ticket items, like cars, furniture, and houses. Demand for all types of goods and services will fall. I showed in my post Why Malthus Got His Forecast Wrong that increasing debt was what allowed rapid growth in fossil fuel use. If debt stops growing and starts shrinking, we will get to see the reverse of this phenomenon.

What is Ahead?

Lower oil prices indicate that demand is declining. (The cost of extraction is not lower!) Lower oil demand seems to be related to poorer earnings reports for the first quarter of 2013, which in turn is at least partly related to the increase in US Social Security taxes withheld, starting January 1, 2013.  Nothing will necessarily happen quickly, but by next quarter’s earnings reports, some of the “sequester” cuts will be added to the cuts. Businesses with poor earnings are likely to lay off workers, and those workers will file for unemployment benefits. Gradually, we will see increasing evidence of recession.

It is not clear that this time will necessarily lead to the “all time” switch to long-term debt contraction, but it will bring us one step closer, at least in US, and probably in Europe and Japan as well. Oil supply may not drop very much, very quickly. If we are lucky, demand will bounce back and bring prices back up, as in 2009-2010. But with all of the debt problems around the world, it is possible that a contagion will begin, and defaults in one country will spread to other countries. This is what is truly frightening.

TRAINING
Water Filters/Purifiers
Generators
Portable Toilets
Five gallon plastic buckets
Seasoned Firewood (6 – 12 months to become dried)
Lamp Oil, Wicks, Lamps (CLEAR)
Mole skin
Coleman Fuels
Guns & Ammunition
Cleaning kits (for weapons)
Pepper Spray
Knives (fighting, hunting, utility)
Machete (quality)
Slingshots & ammunition
Hand-can openers
Hand egg beaters
Whisks
Potato masher
Honey/Syrups
White, brown sugar
Rice
Dry Beans
Wheat (hard red)
Vegetable Oil (for cooking)
Charcoal & Lighter Fluid
Water Containers (food grade if for drinking)
Mini Heater head (Propane) (Without this item, propane won’t heat a room.)
Grain Grinder (Non-electric)
Large Propane Cylinders (grill cooking, other)
Hard copy resources: Build a Survival Library for reference (woodcraft, gardening techniques, first aid instruction, food procurement)
Hard copy resources: Build an entertainment library (to read for enjoyment)
Mantles: Aladdin, Coleman, etc.
Baby Supplies: Diapers/formula/ointments/aspirin, etc.
Condoms
Washboards
Camping stoves (Propane, Coleman & Kerosene)
Vitamins
Bar Soap (body/washing)
Petroleum jelly
Propane Cylinder Handle-Holder
Feminine Hygiene/Haircare/Skin products
Thermal underwear (Tops & Bottoms)
Bow saws, axes and hatchets, Wedges (honing oil)
Basic construction tools….hammers, screw drivers
Aluminum Foil Reg. & Heavy Duty (Great Cooking and Barter Item)
Gasoline Containers (Plastic)
Garbage Bags – various sizes (Impossible To Have Too Many)
Toilet Paper (you can never have enough)
Medicated body powder
Kleenex
Paper Towels
Milk – Powdered & Condensed
Heirloom Garden Seeds (Non-Hybrid)
Clothes pins/line/hangers
Coleman’s Pump Repair Kit
Tuna Fish (in water)
Fire Extinguishers (alt: large box of Baking Soda in every room)
First aid kits
Batteries (Stadardize gear whenever possible, but obtain all sizes…buy furthest-out for Expiration Dates)
Garlic
Spices
Vinegar
Baking supplies (pans)
Dogs
Dog food
Flour
Yeast
Salt
Matches (wooden)
Writing paper/pads/pencils
Solar calculators
Insulated ice chests
Work boots
Belts
Durable pants and shirts
Flashlights
Headlamp
LIGHT STICKS
Lanterns (globes)
Fishing gear: poles, reels, line, hooks, floats, nets, etc.
Journals, Diaries & Scrapbooks (jot down ideas, feelings, experience; Historic Times)
Garbage cans – Plastic
Men’s Hygiene: Shampoo, Toothbrush/paste, Mouthwash/floss, nail clippers, etc.
Cast iron cookware (sturdy, efficient)
Fishing supplies/tools
Mosquito coils/repellent, sprays/creams
Duct Tape
Tarps/stakes/twine/rope/spikes
Plastic sheeting
Candles
Laundry Detergent (liquid)
Backpacks, Duffel Bags
Garden tools & supplies
Scissors, fabrics & sewing supplies
Canned Fruits
Canned Veggies
Canned Soups, stews, etc.
Bleach (plain, NOT scented)
Canning supplies (Jars/lids/wax)
Knives & Sharpening tools: files, stones, steel
Bicycles: Tires/tubes/pumps/chains, etc
Sleeping Bags & blankets/pillows/mats
Carbon Monoxide Alarm (battery powered)
Board Games, Cards, Dice
Rat poisons and Roach Killer
Mousetraps, Ant traps & cockroach magnets
Paper plates/cups/utensils (stock up, folks)
Baby wipes, oils, waterless & Antibacterial soap (saves a lot of water)
Rain gear, rubberized boots, etc.
Shaving supplies (razors & creams, talc, after shave)
Hand pumps & siphons (for water and for fuels)
Soy sauce
Bullion/gravy/soup bases
Reading glasses
Chocolate/Cocoa/Tang/Punch (water enhancers)
Woolen clothing, scarves/ear-muffs/mittens
Boy Scout Handbook
Roll-on Window Insulation Kit
Graham crackers, saltines, pretzels
Trail mix/Jerky
Popcorn, Peanut Butter, Nuts
Socks
Underwear, T-shirts, etc.
Lumber (all types and sizes)
Wagons & carts
Cots & Inflatable mattress’s
Gloves: Work/warming/gardening, etc.
Lantern Hangers
Screen Patches
Glue
Nails
Screws
Nuts & bolts
Teas
Coffee
Cigarettes
Wine/Liquors (barter, medicinal, etc.)
Paraffin wax
Chewing gum/candies
Atomizers (for cooling/bathing)
Hats
Large zip ties
Head dressing/scarves/wraps
Goats/chickens/rabbits
Motor oil
WD-40
All purpose grease
Chainsaw (chains/sharpeners)
2-cycle oil

#SemperParatus

This morning I came across an excellent movie entitled ‘Obey’ based on Chris Hedges’ brilliant book ‘Death of the Liberal Class’. For those who want to hear an insightful and perceptive analysis of the real world in which we exist, please watch:

…Passivity permits societies to transfer their emotional allegiance to the absurd and ignore real problems. It exacerbates despair. It keeps us in a state of mass self-delusion. Once we are drawn into this form of magical thinking, the structure and goals of the corporate state are not questioned. This magical thinking coupled with the bizarre ideology of limitless progress holds the promise of an impossible, unachievable happiness. It has turned whole nations into self-consuming machines of DEATH…

…The giddy, money-drenched choreographed carnival, the petty spectacle of politics will divert our attention from the collapsing world around us. The glitz and propaganda, the ridiculous obsessions imparted by our electronic hallucinations, and the spectacles that pass for political participation will mask the deadly ecological assault by the corporate state. We will convince ourselves that global warming never existed or we will concede that it exists, but insist that we can adapt. Both responses will satisfy our mania for eternal optimism and our huge reckless pursuit for personal comfort. And all around us the natural world will change…

…The death of the planet is just another investment opportunity.

Many human monstrosities have burst forth from the bleak and soulless landscape of American suburbia, reaping their 15 minutes of infamy. The brothers Tsarnaev are simply the latest. American society, for the most part, does not exist; it’s been bought out, chopped up, and repackaged for the corporate state’s consumer culture. A society that has been broken up and atomized is ripe for control and plunder.

I was poking around the twitter account of Dzhokhar ‘Jahar’ Tsarnaev and found some ironic and disturbing reflections on life in America. With the morbid fascination our throwaway culture has with its own social atrocities, perhaps it’s not so odd that ‘Jahar’ now has nearly 85,000 followers.

Sifting through the evidence, people want to know why, but one thing that won’t be analyzed is the society from which such horrors spring.

American society always emerges squeaky-clean out of all the investigations, post-mortems, examinations, inquiries that follow. Its guiltlessness is asserted by implication that the motives for such slayings are incomprehensible, unfathomable…

…The script is now word-perfect. Whenever some violent event erupts in the US, the chronology is identical. The shock is followed by flowers at the site of the deed, which is transformed into a temporary shrine, the comforting of the bereaved and injured, the assertion of solidarity, the lessons to be learned. In the end, American society becomes the hero of the tragedy, with its perpetual penitence, its never-again reflex, its openness to the cleansing effects of trauma, its avowals of solidarity, its ritualistic counselling which is a form of cancelling, as people ‘come to terms with’ their grief.

What is never asked is, what kind of social pathology creates such disorders? ‘No Entry’ signs are posted on all avenues of exploration where some clue is most likely to be found… – source

(in chronological order)

]]> http://cambridgesolar.wordpress.com/2013/04/20/peak-oil/ Sat, 20 Apr 2013 12:19:23 +0000 Owen Morgan http://cambridgesolar.wordpress.com/2013/04/20/peak-oil/

Why is this not a mainstream topic?!?!?

When was the last time you saw it mentioned in the media?

]]> http://tennesseetransitions.wordpress.com/2013/04/19/its-a-beautiful-day-in-the-neighborhood-2/ Sat, 20 Apr 2013 01:59:06 +0000 simpleintn http://tennesseetransitions.wordpress.com/2013/04/19/its-a-beautiful-day-in-the-neighborhood-2/

I thought you might need some good news, something to brighten this dreary post-bombing day. Here’s what’s beautiful in my neighborhood this week:

* My daily walk took me on a different route, where I discovered a lively new beehive in one neighbor’s suburban driveway! I wrote a card and told ‘them’ I was very happy to see their bees and that I support their efforts, then delivered it in person to their door. If you see your neighbor planting a garden, tending their chickens, hanging their clothes out or some other such similar effort to live their urban life in a way that supports the things you care about, a supportive voice might be appreciated by them~and, you may make a new friend in the process!

* I’m making more of a point to engage the two young men that live next door to us. They have a new puppy, are grad students at the local university and seem truly nice. They’re slowly warming up by asking questions about us, our dog, our current backyard project of raised bed building, etc. It’s nice to know Ryan and what’s-his-name   OK, so I forgot one name, but I’ll make it a point to ‘get it’ again soon-the pup’s name is Pippa)

* We’re taking part in our neighborhood’s annual cleanup tomorrow, as part of the Great American Cleanup. I plan to go over early to help the graffiti cleanup team, then Michael and I are giving a ‘State of the Community Garden’ address at the community center.

* Our ‘neighborhood association’, a fun, loose-knit group, is planning a walk-about porch party May 4th. Similar to the Christmas walk-about, neighbors walk to the designated hosts porches this time, where we’ll be served each family’s signature drink and a #!hor derve?&% snack. I love this idea and am already looking forward to my new hood’s annual July 4th party too! You can start a similar group for your hood by signing up at: https://westholston.nextdoor.com/refer/?is=nfhd (and if you let me REFER you before you launch your own website, we’ll BOTH win a $50 Starbucks gift card. It’s an easy, relaxed way to stay connected with your neighbors, I promise. And of course, if you ever ARE in a ‘lock in/cell-phones-down’ situation like those folks are in Boston today, you can still connect and communicate.

“From oil dependence to local resilience”. I feel strongly that building community with our neighbors is going to be KEY to our ability to respond to the challenges of climate change, resource depletion and global inequity that we are facing.  Seeing the residents of cities and towns come together when they are under duress-from Newtown to Boston-proves that it’s our neighbors and friends that we’ll turn to when times are hard. Making those connections is so much easier, and definitely more fun, when you’re NOT in a stressful or tragic situation. It’s spring- get out and find out what’s beautiful in your neighborhood too!

]]> http://mygreenmisadventure.wordpress.com/2013/04/18/the-power-of-pee/ Fri, 19 Apr 2013 01:04:42 +0000 jbovinet http://mygreenmisadventure.wordpress.com/2013/04/18/the-power-of-pee/ Are we entering an age where our supplies of certain commodities have reached their utmost production and are bound to decline inexorably?  I could easily be talking about peak oil, the concept of which has been much discussed for the past forty years or so.  Instead, I am talking about the potential for the era of peak fertilizer.

Peak fertilizer?  Really?  Not really peak fertilizer, per se, but peak potassium and peak phosphorous which are two thirds of fertilizer’s chemical building blocks alongside nitrogen.  The always excellent Tom Philpott over at Mother Jones has done an excellent job explaining the issue in an article from November of last year.

The basic issue is that potassium and phosphorous cannot be synthesized like nitrogen, which can literally be made out of thin air in a nearly hundred year old process.  The other two elements must be found in the earth and large deposits are scattered in very few sites.  Some of these sites are in regions where ownership is hotly contested or the locals are not very friendly to western nations.  In essence, we are reaching a point where our ability to make fertilizer, the backbone of modern industrial agriculture, is threatened by many of the same geopolitical forces that impact oil.  Yet no one is really talking about this in a serious way because we do not fill up our SUVs with phosphates.

However, the problem of peak fertilizer does have a solution.  It requires the recycling of nutrients in the soil and the building up of the organic matter in soil.  These are the central tenants of biodynamic or sustainable or organic agriculture.  So, industrial agriculture’s future is not so certain because the inputs that make it possible are threatened by scarcity themselves.

Closer to home there is a free and easy solution…your urine.  Generally, urine is composes of approximately 95% water, 2% urea, and the remainder is trace elements like minerals, salts, hormones, etc.  Check out the chemical composition:

Do you see that urine already contains potassium and phosphate?  Where is the nitrogen?  Urea is the source of nitrogen.  So, your pee already has the chemical components to be an excellent fertilizer.  It also happens to be sterile when fresh.  After about a day the urea will turn into ammonia and give off that awesome smell you remember from shady bars in college.  Nothing like the smell of stale beer and urine in the evening!

If you’re like me, that is to say living in a suburban neighborhood, your neighbors would probably frown on you just dropping your trousers and taking a leak on the lilacs.  Plus, to make sure you do not “burn” the plants with too much nitrogen it is a good idea to dilute your urine with water.  Some sites suggest a 10 to 1 water to urine ratio, but I have never been that scientific.  I just pee into a watering can—the benefit of being male is apparent here—and dilute with water in the morning or afternoon every day before pouring it on one of my plants.  Sometimes I just pour it out onto the grass.  It really is that simple.  If you live in a more arid climate than me there might concerns about salts from your urine accumulating in the soil.  Eastern Iowa gets enough rain where the soil is cleansed of salts.

As an aside, I avoid pouring this DIY liquid fertilizer on any plants where I might be eating the fruit just to be safe.  It seems like a simple precaution to take.

If your urine gets old and smells like window cleaner, just pour it on the compost pile and let nature break that stuff down into the wonderful black gold.

A further benefit to using your urine in this way is that you are saving water in addition to recycling nutrients.  I used to be obsessed with dual-flush toilets because I thought it was so wasteful to use over 1.5 gallons of clean water to whisk away some pee.  Guess what?  I do not use any water—1.5 gallons or otherwise—now because I pee in a watering can.  Now, it’s just the solid waste that goes down with the fresh water.  I have not broached the idea of humanure with my wife quite yet.  Next year…

A group based in Colorado, the dZi Foundation, is working with villages in Nepal to utilize human urine in agriculture.  The system is not much more complex than what I have described.  Instead of using watering cans, urine is collected centrally, diluted, and applied using drip irrigation directly onto the soil rather than broadcast to avoid contact with food.

As the world tries to figure out what to do when industrial methods of production begin to fail, we can look closer to home for solutions to solve problems.  It’s amazing!

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