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EWolfe

Peak Oil

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From www.kunstler.com:

 

May 1, 2006

I try to avoid the term "peak oil" because it has cultish overtones, and this is a serious socioeconomic issue, not a belief system. But it seems to me that what we are seeing now in financial and commodity markets, and in the greater economic system itself, is exactly what we ought to expect of peak oil conditions: peak activity.

After all, peak is the point where the world is producing the most oil it will ever produce, even while it is also the inflection point where big trouble is apt to begin. And this massive quantity of oil induces a massive amount of work, land development, industrial activity, commercial production, and motor transport. So we shouldn't be surprised that there is a lot happening, that houses and highways are still being built, that TVs are pouring out of the Chinese factories, commuters are still whizzing around the DC Beltway, that obese children still have plenty of microwavable melted cheese pockets to zap for their exhausting sessions with Grand Theft Auto.

But in the peak oil situation the world is like a banquet just before the tablecloth is pulled out from under it. There is plenty on the table, but it is about to be overturned, spilled, lost, and broken. There's more oil available then ever before, but also so many people at the banquet table clamoring for it that there is barely enough to go around, and the people may knock some things over trying to get it.

A correspondent in Texas writes: "On a four week running average basis, total US petroleum imports (crude + products) have been falling since 2/24/06, until last week, when we finally showed an increase of 1.3 percent, after bidding the price of oil up by about 20 percent. IMO, we bid the price up enough to (temporarily) increase our imports. We will see what subsequent weeks show, but I think that we are in the early stages of a bidding war for remaining net export capacity. The interesting question is what countries may not be importing because they can't afford the oil."

A substantial amount of total house sales are made up of new suburban McHouses built in places at the furthest extreme distance from employment centers -- because that's where the remaining cheap land is after sixty-odd years of suburban development. How many prospective house-buyers will close on those things with gasoline over $3 a gallon? Probably fewer than are required to sell them all. And more McHouses will be coming on the market in any case because they are products of a planning and permitting process that takes years for things to finally get built. Once the house-selling racket, and its associated mortgage racket, stop grinding along, the machinery of the US economy has to seize up. The financial sector, which used to be an appendage of the economy, but has become an end in itself, has to implode when the stream of rebundled securitized mortgage debt stops flowing into it.

When tablecloths are pulled out from under banquet tables, it is hard to say how the platters, bowls, and ewers will tumble and fall, but we can bet that few if any of them will land right-side up, unspilled. One also has to wonder how the other people at the table are going to behave when things come tumbling down.

 

Other Links:

www.lifeaftertheoilcrash.net

 

www.dieoff.org

 

www.energybulletin.net

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This is a lot of crap. It assumes that supply and demand are completely price insensitive and that there will not be enough oil to meet the demand. This may be true over the short term due to volatility and speculation, but over the long term there will always be enough oil to meet the demand. Society will adjust to expensive oil by using less.

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Cool website, Dru. I've had an interest in magnet motors since seeing one on Johnny Carson's Tonight Show...um, a fortnight or so ago.

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571651-005-doom-handsup.jpg

When I am king, things will be different! Worse, no, better! Except for you there, you with the pointy head and the questionable hygiene, things will definitely be worse for you.

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This is a lot of crap. It assumes that supply and demand are completely price insensitive and that there will not be enough oil to meet the demand. This may be true over the short term due to volatility and speculation, but over the long term there will always be enough oil to meet the demand. Society will adjust to expensive oil by using less.

 

This is true in the long run, but there will be a lot of upheaval in the near term. US culture is predicated on cheap oil: think about rural sprawl that depends on cheap gas for long commutes, overly large houses, a US penchant for wasteful vehicles and such. Sadly, I suspect that a large percentage of the US population would support foreign conquest to attempt to maintain cheap oil before shifting into more of a Euro mode of energy consumption. It's appears to be "way of life" thing that trumps ethics.

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Somehow we've figured we'd never have to come to grips with more expensive oil as the Euros have. Well, that day has come.

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Somehow we've figured we'd never have to come to grips with more expensive oil as the Euros have. Well, that day has come.

 

Has it? The "Euros" pay something like $5 / gallon:

 

link

 

And at least they have real mass transit systems so you don't have to buy the stuff.

Edited by KaskadskyjKozak

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Biodiesel, coal to oil, and gas-to-liquid oil are competitive at around $60 a barrel and the price will only drop as the technology improves.

 

Ethanol is even cheaper.

 

What does this mean? Well, since we aren't currently peaking in coal or natural gas, and there's lots of surplus biomass out there (particularly cellulose), the long term price of "oil" is going to run around $50-60 a barrel whether that "oil" is actually oil, or not.

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I believe it's creeping up on about $7/gallon.

 

Another thing that's kind of funny about the US and cars: I think I read somewhere that >80% of cars sold in the US have auto transmissions, which is a flip of Europe and most of the rest of the world. The 5-10% fuel efficiency differential matters in the rest of the world, but not here. A LOT of fuel is wasted this way, but it never even comes up...

 

Oh and yes I know, the differential between manuals and autos is narrowing but still there and still significant.

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I KNEW Dru was going to say that. I've seen the EPA mileage specs that show comparable mileage, but have not been able to find anyone that has matched that in real use. My in-laws have a '03 Jetta TDI with an automatic that gets about 38mpg with regular diesel and a lot of highway use. I have an '03 Jetta TDI with a manual that gets 47 mpg on biodiesel and 50 mpg when I'm stuck using regular diesel. My conclusion is that the mileage on automatics is overstated in actual use and that the mileage on sticks is understated unless one drives aggressively.

 

Extend that kind of difference to the cross-section of vehicles used in the US and Canada and we're talking a lot of fuel!

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So you're basing your view on 2 vehicles out of how many on the road in the US? cantfocus.gif

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Biodiesel, coal to oil, and gas-to-liquid oil are competitive at around $60 a barrel and the price will only drop as the technology improves.

 

Ethanol is even cheaper.

 

What does this mean? Well, since we aren't currently peaking in coal or natural gas, and there's lots of surplus biomass out there (particularly cellulose), the long term price of "oil" is going to run around $50-60 a barrel whether that "oil" is actually oil, or not.

 

What this means with coal and GTL is that the Canadians will have us by the balls within a decade. US$1=CND$0.75 in 2010? hahaha.gif

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Nope, I've had a lot of vehicles and have always paid attention to comparable fuel effiency, since my first car in the 70s. I don't doubt that the differential will narrow as technology improves, but that doesn't deal with the current nationwide base of vehicles.

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I believe it's creeping up on about $7/gallon.

 

I was just in Europe and its around 5-6 a gal.

 

I can't help but notice folks in the US tend to exaggerate the cost of gas over there as well as the public transit system (it's affordability and it's greatness).

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