Memorial Day, 2008: The Tipping Point in the Peak Oil Debate

Full article here.

Those of us who have watched for the inevitable arrival of the peak oil crisis have been waiting for years for the day when we no longer had to fight for the acceptance of the idea, and could start getting on with the hard business of what to do about it.

And then, just like that, it happened.

Like a chorus line turning in unison from left to right, the media and the financial markets turned and embraced the notion of peak oil last week.

For convenience, let's call it Memorial Day, 2008.

CNBC devoted a whole day to peak oil coverage, allowing some in-depth discussion of the issue possibly for the first time. In the evening, it broadcast a special called "Oil Crisis."

Billionaire hedge fund manager and oil man T. Boone Pickens said he saw oil going to $150 this year, and this time, was widely quoted in the financial press. (Check out this excellent interview with him from the Milken Institute Global Conference 2008 in April.) He put the reasons behind rising oil prices plainly:

"They've got to go up, because the people that have the oil want it to go up. They're running out of oil. They're going to have to have—85 million barrels a day is all the world can produce. The demand is 87 million. It's that simple. It doesn't have anything to do with the value of the dollar. It's a fact of supply and demand. That's it."

While we might politely disagree with the legendary oil investor about the dollar part, in terms of the overall trend being about the fundamentals, he was spot-on. He took a 14 percent loss in the first two months of this year by shorting oil and natural gas, and quickly learned from the error to get long again and back into the black.

Goldman Sachs analyst Arjun Murti, the only major investment bank analyst who correctly predicted oil over $100 last year, said that oil could breach $200 this year, and $150 was very likely. Again, this time, Wall Street sat up and took notice instead of laughing.

In the last couple of weeks, when I talked about peak oil in my radio and TV appearances, I didn't get shouted down immediately, or dismissed for holding a "controversial theory." Instead, they actually listened to hear what I had to say next.

In an interview with CNN radio last week, I think the host was rather shocked when she asked me if recent predictions of $12 gasoline in the next few years could happen.

"Easily," I said, "easily." And then explained why peak oil means that prices will have to keep going higher as long as global demand continues higher, because supply appears to be maxed out. Even as demand in the developed world declines due to price-induced demand destruction, the red-hot developing economies of the world are more than making up for it.

And you could have heard a pin drop when I explained that "there are no supply side solutions to peak oil" to another radio interviewer last week.

The dialogue didn't shift because pundits suddenly understood the importance of flow rates, or because the data on reserve estimates suddenly became clear.

It was the price that did it.

Fighting Hunger, Energy Poverty, Deforestation & Climate Change At The Same Time

How biochar works
A nation that destroys its soils, destroys itself. - Franklin D. Roosevelt

Biochar is a carbon-rich product obtained from the pyrolysis of biomass. As the central element of a new and highly promising integrated soil management technique it is capable of halting slash-and-burn farming in the humid tropics by making nutrient-poor, acidic soils productive. As such it offers one of the few sustainable strategies to halt deforestation while simultaneously eliminating hunger amongst subsistence farmers at the forest margins. Biochar doubles as a stable carbon sink, making it a key tool in the climate fight.

http://biochar-international.org

Older readers will remember the original "Green Revolution" in agriculture, i.e. using petrochemical-based fertilizers and pesticides. This led to "Silent Spring" and terrible consequences for both animals and humans.

Peakniks identified by mainstream media--that's us!

Energy fears looming, new survivalists prepare

Wow. Are there THAT many of us now that they're writing articles about us? lol I didn't know I was becoming part of a movement back in '04!

Part of article here:

BUSKIRK, N.Y. - A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.

Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.

"I was panic-stricken," the 50-year-old recalled, her voice shaking. "Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible."

Convinced the planet's oil supply is dwindling and the world's economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn't prepare.

The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.

Saving themselves
These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.

Some are doing it quietly, giving few details of their preparations — afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation's cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.

"There's going to be things that happen when people can't get things that they need for themselves and their families," said Lynn-Marie, who believes cities could see a rise in violence as early as 2012.

Lynn-Marie asked to be identified by her first name to protect her homestead in rural western Idaho. Many of these survivalists declined to speak to The Associated Press for similar reasons.

'Peak oil'
These survivalists believe in "peak oil," the idea that world oil production is set to hit a high point and then decline. Scientists who support the idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.

On the PeakOil.com Web site, where upward of 800 people gathered on recent evenings, believers engage in a debate about what kind of world awaits.

Some members argue there will be no financial crash, but a slow slide into harder times. Some believe the federal government will respond to the loss of energy security with a clampdown on personal freedoms. Others simply don't trust that the government can maintain basic services in the face of an energy crisis.

The powers that be, they've determined, will be largely powerless to stop what is to come.

....more at link...see guys, I'm not the only peak oil obsessor out there!

Why Dems and Republicans are Afraid of Two Words: Peak Oil

Full article by Kelpie Wilson on alternet

excerpt:

The economics of it make no sense. It would at best save the average motorist about $30 over a summer of driving, and at worst the increased demand would drive up gas prices. Obama's position shows he understands that oil supply is not meeting demand, even if he has not used the words "peak oil."

In the last two weeks, Congress has seen a slew of silly proposals from both sides. Democrats want President Bush to twist Saudi arms to get the kingdom to produce more oil. If that doesn't work, they want to cut off their arms -- weapons that is. Senator Reid plans to bring an expedited resolution to the Senate floor that would block $1.37 billion in arms sales to the Saudis unless they increase oil production by one million barrels a day.

Peak oil educator Richard Heinberg warns where all this confrontation might lead: "[S]uppose we get tough with the Saudis and end up destabilizing the kingdom so that forces unfriendly to us take over. Then we will feel more or less forced to invade in order to maintain access to our national drug of choice. Where would it end? Does any of this help?"

Meanwhile, what Democrats would do to the Saudis, Republicans want to do to the polar bear and the caribou. Republicans are generally in favor of drilling in the Arctic National Wildlife Refuge (ANWR) despite the fact that even at peak production it would meet only two percent of American's oil demand. But not all Republicans favor drilling in ANWR. Peak Oil Caucus Co-Chair Roscoe Bartlett thinks we should save the Arctic oil for a real emergency. Speaking in opposition to drilling, he said "I am having trouble understanding how it is in our national security interest to use up our little bit of oil as quickly as we can. If we could pump ANWR tomorrow, what would we do the day after tomorrow?"

Bartlett takes this position because he is operating with the knowledge that oil is finite and that the world is nearing or has surpassed peak production. If all members of Congress were operating within this framework, then we would see some very different policy proposals. I asked Lisa Wright why Bartlett's office thinks the peak oil issue has gotten so little traction in the media and with politicians. Wright blamed a human psychological condition known as cognitive dissonance, "the phenomenon that you only hear what you're interested in hearing."

"Hard truths are hard to talk about as well as hard to absorb," she said. "It's much easier to believe people who say that if we just have more American production then we wouldn't have to worry about foreign imports, without explaining that we're already pumping our minute portion of world reserves three or four times faster than the rest of the world. But we can't drill our way to self-sufficiency because you can't pump what's not there."

When asked if she saw peak oil becoming an issue in the presidential campaign, Wright said, "It will become a campaign issue if candidates make it an issue and candidates will choose to make it an issue if it shows up as being a motivating issue for voters." But, she said, "It's a chicken and egg conundrum. To the extent that voters become informed and aware through media, you'll find that candidates will follow. That's generally the way American politics works."

After years of toning down the message of peak oil in public discourse, voters need to let candidates know that now is the time to tone it up.

Fours years since discovering peak oil....

It's now been four years since I've discovered the concept of peak oil. Today a tank of regular gas is $3.99 where I live, Ford has announced that it is cutting production for the the rest of this year, the airlines will be adding surcharges and charging $15 for the first bag taken on a flight, and OPEC won't increase production. That's just what I've heard in the news TODAY.

Four years ago in February 2004, I was gearing up politically and hoping for change. In the midst of my political anticipation and hopes, I stumbled upon the concept of "peak oil" on a democratic discussion board online. Someone posted a link to Matt Savinar's website Life After the Oil Crash (listed on my sidebar under Peak Oil 101) and I decided to click and read. Needless to say, I was devastated and mentally traumatized to immobility for about 6 months when I realized the full implications of what life would be like without cheap oil. I spent that next 6 months reading and reading everything, from every source about oil...the history of oil, the geopolitical implications of peak oil, the stats, the proven oil reserves, what the government reports were saying about it, how to prepare for life without cheap oil, and on and on. Finally, I began to 'find my legs' as soon as the 2004 elections were over. All I could think of was that I needed to find like-minded community and prepare myself and my family for the coming hardships.

Now, there has and will always be a debate in my mind about how this is going to play out. In 2004, some of us thought the actual oil peak would come around 2008 and the real effects would start to rear their ugly head and come to a full throttle crash somewhere around 2012. Others gave it a little longer, maybe 20 years or so. Now looking back, I feel that things are occurring faster than I had expected starting around 2006...at least the signs are looking favorable to it happening sooner rather than later, especially with other factors in the mix.

Immediately after the 2004 elections, I scheduled a library meeting room spot and announced my presentation of "The End of Suburbia" and community discussion of oil depletion, a.k.a. 'peak oil'. Mind you, the price of a barrel of oil was ONLY $30-35 a barrel and gas was close to $2 but still nobody obviously wanted to listen or I would've had at least ONE person attend my event!

In 2004-2005 I was just like Cassandra. I was telling everyone I knew about how oil was going to go up, demand would outstrip supply and to prepare--to get a bicycle, to plant a garden, reduce consumption, save energy, etc. As you can imagine, I don't think many people listened to me or heard what I was saying. I wrote a LTTE that entitled me to become a "guest columnist" because it was so much information that it took half the page--evidently too much information for the average reader's attention span when reading the newspaper! I got no response. Through 2005, I contacted my local Mayor, the local economic development leader, the newspaper editor and told them about the end of cheap oil. When I was getting nowhere with my outward expressions of concern to my community, I turned inward toward preparing for the future myself. The compromise for letting others know about the implications of diminishing cheap oil has been redirected to this blog. It's now out here for anyone who wants to search for it.

Over the past four years, I've been learning how to grow my own food and how to preserve it. I've been working on becoming debt free since 2003, and I can proudly say that this goal has been reached! I have zero debt. Ultimately, nobody can ever be totally be prepared for life without cheap oil but as I can imagine it, I am closer to that goal than I was four year ago. At least I will be more comfortable because I have prepared to the best of my ability. It remains a work in progress.

Since finding out about peak oil I can note some things I've watched over this period of time. The president actually came out and said "We're addicted to oil". CNN, CNBC, Yahoo, The History Channel, and other mainstream media outlets have actually talked about, had specials about, and acknowledged peak oil. I've seen congressman Roscoe Bartlett (R-MD) give HOURS of presentations on peak oil in special sessions live on cspan with hardly anybody in the 'House' (makes me feel a little less alone when nobody showed up to my local presentation!).

I must also note that I still haven't heard of any refineries being built. The contemplation has always been around the peak oil crowd that the reason no refineries have been built or rebuilt is because the oil. won't. be. there. Again, if anyone wants to blame the government or the congress, remember, this IS a free market and anyone can start building or investing anytime now! Why hasn't anyone? ....and it really makes me chuckle when supposed unregulated free market advocates start complaining about price gouging, want price gouging controls, and want regulations or price controls on oil. Excuse me, but aren't these interventions against the free market ideology? I'm not arguing for or against--it's just my libertarian side poking out! Oil depletion is oil depletion and it's going to occur whether we have price controls or not. When demand/consumption outstrips supply & production, there 'ain't nothin' going to help us in the long run.

From the long view, prices will go up, then demand destruction will occur or the government will give us a temporary fix. People will think everything is alright, start consuming more again, and then the same cycle will begin again over and over until the price can't come down any longer. Like many of us peaksters have referred, it will feel just like a roller coaster. I'm not even including any other economic factors here, either.

Again, I've spent since 2005 building this blog to inform others about the coming calamity. There is a whole smorgasboard full of links in my sidebar added over 3 years. Please begin with Peak Oil 101 links and then work your way down. It's 3 years worth of work at your fingertips to get started. Climate change has been instrumental to peak oil effects, and is a cousin to the peak oil concept, so there are a lot of links that are intertwined in ideology. They might not all speak of peak oil, per se, but every link I have is helpful concerning the implications of the end of the cheap oil era.

Are we a day late and a dollar short? We are pretty close. Act now. Think globally, act locally.

U.S. House Passes Renewable Energy Tax Credit Extension Bill

Full article here.

On Wednesday, the U.S. House of Representatives passed The Renewable Energy and Job Creation Act of 2008 (H.R. 6049), a bill that could extend production and investment tax credits for renewable energy, by a vote of 263-160.

...The bill could still face obstacles when it comes up for consideration in the Senate, largely because there is no consensus on how to pay for the extensions. The Bush administration has also threatened to veto the legislation.

Congress has been trying unsuccessfully for a year to extend tax credits for individuals, businesses and developers who invest in clean power. When the credits expire at the end of this year it’s estimated that more than 100,000 jobs and close to US $20 billion in investment will disappear.

Richard Heinberg on alternet: Have We Really Hit Peak Oil?

Click for full article.

Last week, Senate Democrats introduced legislation that would halt a U.S. arms sale to Saudi Arabia worth $1.4 billion. The implication is clear: no more war toys for the Saudis unless they agree to up their oil output.

The same day, the House approved a Senate plan to suspend oil deliveries to the Strategic Petroleum Reserve in hopes of diverting that oil to the market, thus lowering the pump price a tiny amount. A week earlier, a handful of Senators proposed a bill threatening a trade dispute with members of OPEC if the organization doesn't stop "its anti-competitive practices and illegal export quotas on oil."

It's understandable that our elected leaders would want to do something about the meteoric rise of gasoline, diesel, and heating oil prices that are now bankrupting independent truckers and forcing many folks in colder states to choose between being able to stay warm and being able to drive to work. Yet efforts like the ones just mentioned are based on a profound misperception of why oil prices are rising. The real problem is summed up in the phrase "Peak Oil."

Petroleum is a finite substance and we have reached the inevitable point at which it simply isn't possible to increase the rate at which we extract it from the ground. Most oil producing countries, including the US, have already seen their glory days and are now watching output from their wells gradually dwindle. Only a few nations are early in the production cycle and able to ramp up the rate of flow. Here is a concise definition of Peak Oil from my colleague Chris Skrebowsi, the editor of Petroleum Review in London. He says: "Global oil production falls when loss of output from countries in decline exceeds gains in output from those that are expanding."

Well, how are we doing? Who's winning, the decliners or expanders?

According to last year's scorecard, the decliners won. The same happened in 2006. And that's with oil prices at record highs, presumably offering every incentive for nations that can produce more oil to do so. Does this mean we are at the all-time peak of global oil flow rates now? Not necessarily. There are large new production projects coming on line this year and next, including one in Saudi Arabia that will add several hundred thousand barrels a day to that nation's productive capacity.

Oil crosses $129 for first time, heads for $130

Click here for yahoo story.

excerpt:

NEW YORK - Oil prices spiked to a new trading high Tuesday, sweeping toward $130 a barrel as supply concerns intensified the momentum buying that has lifted crude deeper into record territory.

The June contract for light, sweet crude traded as high as $129.58 on the New York Mercantile Exchange before settling back to $129.09, up $2.04. The imminent expiration of that contract created additional volatility in the market, and raised the very real possibility that crude could hit $130 before the end of the day, when the contract was ending.

Retail fuel prices also shattered records set the previous day. The national average price for a gallon of regular gasoline touched $3.80 for the first time, according to AAA and the Oil Price Information Service, while diesel jumped nearly 2 cents to a record $4.54 a gallon. Gas prices are up about 19 percent from this time last year.

Oil's trek toward $130 coincided with the Labor Department's report of an unexpectedly sharp rise in wholesale inflation last month. The combination raised fears that inflation will slice into Americans' discretionary spending, and that sent stocks falling sharply on Wall Street.

Jim Ritterbusch, president of oil trading advisory firm Ritterbusch & Associates in Galena, Ill., said oil prices were being supported by strong demand for diesel fuel in Asia, and a weakening of the U.S. dollar against the euro, which makes oil cheaper for some investors overseas.

"We're getting a combination of two price drivers this morning," he said.

Oil prices are now about twice as high as the were just a year ago. Prices have been propelled by a number of factors, including supply concerns, soaring global demand and a sliding dollar.

Washington Post: Time Running Out for Energy in Mexico

Click here for full article.


By Marcela Sanchez
Special to washingtonpost.com
Friday, May 16, 2008; 12:00 AM

WASHINGTON -- Mexican Energy Secretary Georgina Kessel's warning to the Mexican Congress last week sounded ominous: If legislators did not approve reforms within the oil sector, the country would suffer a "severe energy crisis" within a decade.

That's probably an understatement.

Mexico's oil production is rapidly declining. The Cantarell oil field, one of the world's largest, is responsible for almost two-thirds of Mexico's production. In 2004, it brought up 2.1 million barrels a day; today it produces only half that. Unless new sources are found, Mexico -- up until last year the second-largest supplier to the United States -- will become a net oil importer by the year 2018.

For some countries, being a net oil importer is no big deal. But for Mexico, oil represents the single largest amount of revenue for the federal government -- about 40 percent. This looming "energy crisis" would be felt more than just at the pump. It would be across the board, impacting financial, social and political sectors as well.

Still, almost every expert on this issue I've interviewed or heard speak in recent months insists that it won't get that bad. They say Mexico will come to its senses and adopt the kind of overhaul that will give the country's state-run oil company, Petroleos Mexicanos -- Pemex -- enough flexibility to invest more of its profits in modernizing its operations. That way, the experts say, it could become more like Brazil's state-run Petrobras, regarded as one of Latin America's most well-run companies.

At the same time, Mexico's attitude about oil and Pemex's serious systemic flaws don't inspire much optimism. The energy proposals introduced last month by President Felipe Calderon offer some modest reforms, but probably not enough to stem the crisis. As Jeffrey Davidow, a former U.S. ambassador to Mexico, put it diplomatically, "the steps they are taking are not sufficient."

I met Barack Obama and gave him a copy of Richard Heinberg's "The Party's Over" yesterday!

That's it in his right hand!

I attended a small town hall meeting in South Bend today. The meeting was mainly focused on energy and farming. Several farmers were present. Approximately 80 people were there in a pole barn with hay stacks around the speaking area.

After the meeting was over, he made his rounds shaking hands and greeting people. Since I had the opportunity, I brought and gave my copy of Richard Heinberg's book "The Party's Over: Oil, War, & the Fate of Industrial Societies" to him with my name, address, and blog address written on the inside of the cover. I told him to wait until the campaign is over and then read it and my blog where he could find more information when he has time (if THAT would ever be the case! lol). Maybe Michelle might have some time to read it.

I could've asked him a question but I'm not a very good speaker. I chickened out. I speak better with smaller crowds and definitely not while I could possibly be on CNN! The cameras were straight on me because I was sitting behind where he was standing.

Anyway, I've personally gone to the straight potential top! I'm not messing around this time! :)