This is not religion…

“I just think…”, “I believe…”, “if we just…”, “all we got to do is…”

Belief and hope have no place in parachute packing, brain surgery, rock climbing, bomb-detection, land mine removal, AND ENERGY SUPPLIES. While prices speak louder than words, supply numbers speak louder than prices, as prices reflect the value of the currency used to purchase the commodity.

“Behind the rhetoric about speculators, inadequate refining capacity, and geopolitical threats there lies the fundamental fact that world oil stockpiles have begun to shrink. The IEA reports that during the 3rd quarter, OECD stockpiles fell by 33 million barrels or 360,000 b/d during a quarter when stocks normally increase by 280,000 b/d.

Outside of the US, stockpiles are near the low end of the normal range and there are fears that they will continue to drop to critical levels this winter. Beyond this there is fear that given flat production and high demand from Asia, these stocks will never be replaced.” - Tom Whipple

There is a reason oil hit $90 per barrel (my underhanded disparagement of the U.S. Dollar above notwithstanding). The recent price increase was necessary to balance the supply of oil with demand from the market place – sort of. I say “sort of” because we still have the buffer of inventories. Should that buffer begin to disappear… look out! It is lights out.

”As this unfolds, you're going to have to find alternatives that are going to do the job that oil is doing. Everyone is going to have to come to grips with this in the next two or three years. People are going to have to figure it out.'' — T. Boone Pickens at the ASPO-USA Houston Conference October 19 2007

And that begs the question: figure out what, exactly? There is no simple solution (see above “all we got to do is…”). The solution(s) is going to happen over time with a great many adjustments to myriad unforeseen consequences, the majority of which, for Americans, is going to be drastic changes in their lifestyle. Specifically, most Americans will become considerably poorer.

Dr. James Schlesinger, the first U.S. Energy Secretary, said that “Americans have to be hit over the head with a 2 X 4” to get them to make the changes needed to adjust to our energy situation.

Well, of course! Who, “on the long end of the stick” and raised in a competitive society, would agree to willingly become poorer? I don’t imagine the local convenience store would be terribly successful in selling lottery tickets for that outcome.
In a previous post I quoted the famous line “If you find yourself in a hole – stop digging”. Well, we are all in a hole here, and the only difference is the depth.

The big problem is with our assumptions… My house will build equity as I pay the mortgage… U.S. Dollars will hold value… I will always be able to drive to work/school/grocery shopping… life is fair… this outrageous student loan for a literature degree is a good investment… the stock market always goes up in the long term… I can always borrow money… Food comes from the grocery store… water comes from the tap in my kitchen… I can live off interest and social security payments…

Many (most, if not all) of these assumptions will prove invalid at some point during a period of contracting energy availability, and since ALL OF THE DATA point to NOW as the beginning of energy decline this is an excellent time to revisit your assumptions.

Yours for a better world,

Mentatt (at) yahoo (d0t) com