Beyond Peak Oil
A Survey Based on Primary Statistics

"You take the blue pill and the story ends. You wake in your bed and you believe whatever you want to believe."

 Escape    Enter

"You take the red pill and you stay in Wonderland and I"ll show you how deep the rabbit-hole goes."
 

  Store and Support

 

The end of abundant, affordable oil is in sight, and the implications are colossal. About now in our hydrocarbon phase of human history, we have pulled out of the Earth approximately half of the available  petroleum (crude oil and natural gas). The other half still in the ground is harder to extract and may not - as assumed - fuel the global economy or even provide a transition to another phase.

Demand destruction is a modern way of saying catastrophic recessions and shortages as a result of higher energy prices. Our growing economy consumes more oil each and the only way to offset this growth in oil demand is higher prices. As the supply of a resource decreases, the price goes up to reduce the demand to match. This is called demand destruction.

 Normally, higher prices bring more suppliers to the market to take advantage of the higher price and in time, equilibrium is achieved. But with Peak oil now a reality, there is no more "supply" to meet the demand of 85mb/d. Americans want there SUV's, China and India demand more and more every year and there is no end in sight to the ever increasing demand. This is what Dick Cheney, then Halliburton CEO in 1999 meant when he stated,

... "by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? ... While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world's oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."
 

Indeed, where will this oil come from? Iraq is just the first in a salvo of preemptive military endeavors to maintain the realm of the American consumers way of life. But even the "democratization" of the middle east will not provide the additional barrels of oil because the infrastructure is not built to handle the demand. Billions of dollars will be needed to build the refineries and supply lines necessary to export the extra demand. Seeing there is no way for the system to balance itself out, demand destruction is inevitable. What are the ramifications?

· From a report commissioned by the United States Department of Energy (USDOE):  a. "'the economic loss to the United States [due to oil production peaking] could be measured on a trillion-dollar scale...Expediency may require major changes to ... lengthy environmental reviews and lengthy public involvement'...the authors believe "20 years is enough time to limit damage from any peak. However, they point out that 'if mitigation were to be too little, too late, world supply/demand balance will be achieved through massive demand destruction…'" b. "…which would create a long period of significant economic hardship worldwide." [(a) excerpted from, "US Report Acknowledges Peak-Oil Threat," Al Jazeera, March 9, 2005, and (b) excerpted from ASPO's March Newsletter. Al Jazeera here. ASPO here.]

What does this mean to the average American who is one pay check away from losing it all because he is maxed out on credit?

According to Cardweb.com  American credit card debt continues to grow. Americans now owe 2 trillion dollars in non-mortgage debt, that equates to $19,000 per household! The average American credit card debt is about $785 billion or approximately $7,500 per household!  It doesn't take a rocket scientist to discover what everyone already senses, that the American economy is built on smoke and mirrors. Gold is reaching record highs, a flight to real money and a sure sign of recession. The housing bubble looks to have already burst on both coasts and in Florida. The Federal Reserve no longer publishes the M3 chart of money supply, a move which raises the risk of higher long-term inflation and a new asset bubble The M3 is the broadest definition of the money supply: It includes coins, currency, checking accounts, money market funds, time deposits and institutional money market accounts and does a better job of showing long-term trends by central bankers than either M1 or M2. And what did it show before is was pulled? Recession, recession, recession which is just another name for depression.

Peak oil is creating the demand destruction we now see as the law of supply and demand is leading us to sustained energy supply shortages which will inflict heavy economic consequences for the average American just holding on. With world oil supply at its peak the ride is about to get bumpy with a big drop off off in the not to distant future. Sustainable living will soon eclipse modern Americas manufactured consumerist lifestyles

It is no coincidence then that the credit card lobbyists pushed through the passage of the new bankruptcy laws that allow for indentured servitude for failing to pay, essentially erasing the 13th amendment amendment abolishing slavery and indentured servitude. When the collapse takes place, are you prepared for the reality of having all your debts recalled. Dan Gougherty in "The Bankruptcy Bill and Indentured Servitude" says it best,
 

"While the bankruptcy law won't bring back slavery, it does appear to lay the groundwork for a new form of American indentured servitude. By taking away a persons choice to file a Chapter 7 bankruptcy and start over clean, the debtor can now be obliged to pay everything back to the creditors no matter how long it might take. A debtor suddenly becomes an indentured servant to the creditor. A kind of debtor prison without the three squares a day. Think of the possibilities. Give some 18 year-olds credit cards with a $25,000 credit limit and let them go to town. Before you know it, the poor suckers will only be making the minimum payment which makes the $25,000 worth of CD's and fast food dinners infinitely more valuable to the creditor. Got unexpected troubles? Lost your job? Divorced? Injured on the job? Tough luck. You're stuck, indentured if you will, to paying that credit card off for years to come."

Finally there a  few words on the future of oil   from Benjamin Marcus in a piece from www.thinking-east.net

Due to diminishing resources, the world will of necessity use less oil than it does now in the near future. This development can happen in an evolutionary or revolutionary manner, with the former meaning less death, destruction, catastrophe, and pain. Spreading the word is the first step in facilitating a civilized transition. Fast or slow, the transition will be marked by three actions already taking place, and may be, indeed probably will be, prioritized in this order:

1. Use of force and sidelining of public, human, and environmental rights and concerns to get the last "cheap" drop;
2. reduced use-demand side management;
3. finally, a switch to other, hopefully more renewable fuels.

The end of oil shall be the big test for the world on all fronts - political, civil, scientific, strategic, spiritual - and can lead us to a better understanding of our selves as individuals and groups, our planet, indeed, human existence.

Or it can all fall apart…

______________________

 

U.S. Report Acknowledges Peak-oil Threat
The effects of any oil peak are similarly not ignored. Specifically, the impact on the economy of the United States. "The development of the US economy and lifestyle has been fundamentally shaped by the availability of abundant, low-cost oil. Oil scarcity and several-fold oil price increases due to world oil production peaking could have dramatic impacts ... the economic loss to the United States could be measured on a trillion-dollar scale," the report says. More

Where Is the Hirsch Report?

The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking. More

 

Government, Financial, and Political Awareness of Peak Oil Prior to 2005

Five Rules for Survival of the Coming Collapse

In fact, by understanding clearly that political, economic and business elites have been aware of Peak Oil and its deadly implications, we can see that remedial actions designed to save lives and minimize the effects of collapse can and will only be initiated by individuals working through and as part of local communities. More

 

Demand Destruction- Who Gets Destroyed

The heightened price of oil would certainly encourage conservation--i.e., demand destruction--but that conservation might come in the form of terrible hardship for millions and perhaps billions of people and possibly death for many. That would give a rather gruesome connotation to the notion of demand destruction. High prices would also encourage the development of alternative energy sources, but that's assuming that world society does not become so disoriented and chaotic that such efforts cannot actually be effected.

 

World at Tipping Point; Oil Peak Arrives

This destructive paradigm provides the explanation for all that has transpired: the protection of what is left for elites, and the �destruction of demand." The Bush faction. Enron. The attacks of 9/11 and the �war on terrorism." The targeting of Muslim and other ethnic populations. Afghanistan-Iraq. The USA PATRIOT Act. The Bush administration�s �let them die� response to Hurricane Katrina. Cold war with China. Bird flu and other pandemics. The looting of Social Security. War against the sick and elderly.  More

 

Black Gold Vs.Yellow Gold

Interestingly, Halliburton is getting more work on the old Saudi reservoirs. This fits my thesis that the elephantine Saudi reservoirs are long in the tooth and could peak in a few years. If this happens, (this case is advanced by energy banker Matt Simmons) Saudi production could top out at 12 million barrels, not 15 million or 16 million. The price of oil would spike until it forced severe demand destruction. And while nobody knows what the number is, the talk of $100 per barrel oil would not be as irresponsible as it sounds today. More

 

 

FAIR USE NOTICE. This document contains copyrighted material whose use has not been specifically authorized by the copyright owner. GeoCrisis is making this article available in our efforts to advance the understanding of environmental, justice issues, corporate accountability, human rights, labor rights and social understanding. We believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner.