Oil inventory data was provided on schedule today by the U.S. Department of Energy's EIA and the 9.7 million barrels that were, what was their word? "Temporarily" delayed? Have stayed that way. Total commercial inventories were up 200k with crude having a big draw and gasoline and diesel having an offsetting build. In any event oil sold off - it would seem the market is more concerned with product builds than crude draws. Perhaps if this were to keep up we would have ZERO crude and huge supplies of gasoline and diesel.
While we cannot be sure that trend would continue, I am betting that it does, and that we have begun a permanent decline in imported oil into the U.S., and a permanent decline in total vehicle mile traveled averaging something on the order of 5% per year.
In a conversation earlier today with one of the partners in my fund I mentioned what the impacts this outcome might be to him personally:
- By the end of 2010 traffic would be down 15% from 2007.
- Gasoline prices would be high enough to force most of his employees to use public transportation by year end 2010.
- It was likely that he would be riding the bus too, out of necessity.
- The bus service is so unreliable as to be almost unusable.
- That his business relies on consumers and housing and those sectors are doomed.
- His business, as he knows it, is doomed. Businesses that shed their marginal people and focus on their most productive will survive. Those that discount the probability of the new reality likely won't be around long enough to argue the point.
- By the end of 2010, the reality that no hydrogen, ethanol, bio-diesel, tooth fairies, etc... had made up for the loss of petroleum supplies, and the STARK reality of the future would be staring us down. The reaction in the financial markets to this is profound.
- Electricity rates were going to explode, doing a double whammy on the South Florida McMansion Market - driving to and from them has become too costly to maintain and supply them, and cooling them sufficiently to enjoy all that extra room was going to impossible, and not just because of electricity rates. RATIONING of electricity will make its way onto the scene sometime before 2015.
- Airline travel will be prohibitively expensive for weekend getaways by 2012, driving the last nail in the coffin of second home markets - like South Florida - and evacuating 5 million people out of South Florida for a hurricane will not be possible. Myanmar ring a bell?
- The value of his dollar denominated assets would plummet.
He responded that he hates talking to me and that he "hopes" my analysis is wrong. I respond that hope has nothing to do with it, it is all in the BTU's. He tells me to drop dead, politely, and goes back about his business as if we had been talking about the weather.
And the beat goes on...
Yours for a better world,
Mentatt (at) yahoo (d0t) com
11 comments:
Hi all:
Well I just got involved in a transition town movement locally. Yes, me. But you thought I am a Perma Bear did you? Well I am that in spades. I am an Ultra Bear, a Super Doomer Grizzly Bear. Why, I am so Bearish you can call me Yogi, I am so Bearish that if I was light I would be Ultra Violent Bear, If I was sound - only the dogs would hear me growl. That is how Bearish I am. But one must do something and work together with like minded people to improve things. Or there really is no hope. We are really on our own here so it is up to us to keep things holding together. So check out the Transition Town Movement in your area and get involved.
Best,
Chuck H.
Chuck:
Places like South Florida, Southern Cal, Arizona... places with extreme weather, lack of water, or other significant geo-liabilities do not have the luxury of Powering Down. (One of the reasons my farm home is in Tennessee). The poor living in these areas are in a truly tough spot - i have no solution. For those with the means... insurance comes in many forms, and denial does not help the cause.
Speaking of electricity, I obtained a cost estimate on grid-tied solar PV (photovoltaics) for my home this week - $68,000. That was up substantially from just a couple of years ago.
Payback period works out to 28.7 years, assuming grid electric rates average are 150% of what they are now. Needless to say, not feasible on my (or most middle class families') income, sorry to say.
In fact, I would hazard to gripe that despite nearly 30 years of empty promises regarding technological breakthroughs being just around the corner and economies of scale, PV is less affordable today, even adjusted for inflation, than it was in 1980.
More evidence that we are not going to tech our way out of this huge hole.
Two years ago, I installed a 3 KW solar PV system on my roof. The total cost was $27,000 ($9 per watt) of which I paid a touch less than $9,000. The rest was paid by the state of NJ as part of their clean energy program. In addition to free electricity (roughly 3 MWH per year), I also earn more than $700 in cash per year by selling so called SREC's (Solar Renewable Energy Certificates). I am not selling my electricity - I am selling only the fact that my system has generated 3 MWH of renewable electricity every year.
My original motivation for installing the system was the desire to hedge the runup of future electricity prices due to peak energy.
Robert S.
Robert:
I have a farm in Middle Tennessee and would very much like to install PV there.
Any insights you might have would be appreciated. My email:
mentatt at yahoo dot com
Sadly, my state (Georgia) and grid supplier (Flint Energies) offer no rebates, refunds, tax incentives, clean energy certificates or what have you. Further, the small tax deduction offered briefly by the federal gov't for such a system was not renewed and expired, leaving me to foot the entire bill, so for now it must wait.
What worries me most of all is that if I, a reasonably well to do middle class American, arguably better off financially than 95% of the world's population, cannot afford PV, then few of the world's 6.6 billion people will ever be able to.
Final note: my place of employment, a CONUS AFB base, once had a large PV collector array. It was dismantled, scrapped, and converted to an asphalt covered parking lot some time ago. What shortsightedness.
Best wishes and prayers for those in the transition of energy. To begin with my personal views, I belive very much in a Magnificent and Powerful Creator of earth and the sky and the heavens, who is and was the Lord and always will be. "I Am the Lord who exercises kindness, justice and righteousness on earth for in these I delight" (Jeremiah 9)
I am concerned for the sake of many people who I believe are dangerously dependant on a substance that is finite and will be depleted. I myself hope that the transition to renewable energy will be a smooth change and that substantial and effective advances can be made in a timely and very necessary way. I will do my best to fulfill my part in these trying times.
Stephen
A believer of Christ Jesus.
Dear Stephen:
I am so glad that you have something that gives you hope. I have none for any help from God. If God has allowed his only son to be tortured and killed in a horrible way and done nothing to stop it then what hope is there for all of us? As far as dying for our sins is concerned, I would have much preferred Jesus to live a long happy life of a thousand years or more and help a lot more people instead of spawning horrible religious wars and persecution through his untimely death. I think that would have been a lot more effective as a demonstration of gods love an power.
So we are on our own. Get a move on and take care of your family. Don't wait for god to save your behind. That is up to you.
Best regards,
Chuck H.
Dear Chuck,
Thank you for your response. I hope for your faith and your happiness as well as your security. I belive Christ loves us more that is fathomable to us at the moment.
Christ died and suffered terribly and with sadness we sometimes reflect on His death and sacrifice. But what a magnificent sacrifice that he would himself choose to give His life for us who are sinners. The scriptures and historical documents say. "He was despised and rejected by men a man of sorrows, and familiar with suffering...Surely he took up our infirmities and carried our sorrows, yet we considered him stricken by God, smitten by Him and afflicted, But he was pierced for our transgressions he was crushed for our iniquities, the punishment that brought us peace was upon Him." (Isaiah 53)However, I got the impression from your writing that you don't understand the message of Christ. I'm not talking about a Christ that died and was left dead in a tomb. I'm talking about the Christ of Nazareth that died and then rose again defeating death itself and making satisfaction for sin for those who accept and trust in Him, The Christ who is now seated at the right hand of the Holy Father and is one who constantly makes intercession for us with the Father. So with all do respect I will glady wait for the Risen Son of God who told me to love my enemies and feed the hungry and the one who during his death asked His father in heaven to forgive those who were at the time taking His life. For His faithfulness is unending and his love wisdom and power have no limit. Again with all do respect I cannot say that I hope in mans wisdom to save us from this depleting resource because that would be untrue and for me impossible to say without going against conscience.
It was Christ choice and He chose to be obedient to the Father to lay down his life for us in order so that we may have life more abundantly. If he lived a life of a thousand years in peace and tranquility on a planet where all have rebelled against its creator where there is no peace and tranquility then by the very rule of things he could not have helped us as much as he did by His demonstration of Love by giving His life to atone for the sin of this broken world. It was not the spotless lambs peace that paid the price for our sins but his suffering. I do not belive that the Father or His Son will solve our energy problems for people if they continue to be dishonest with one another or be violent and calloused toward one another if people oppress the needs of the poor for their own riches then they cannot be blessed.
For Christ all who believe in Him are his sheep, they are His family and He is our Shepard. We are not lost nor are we forsaken. Jesus conquered death and He says to save my life I need only trust in Him. I think that comparatively gasoline is not the real issue.
A testimony of Christ.
Steve
O.K. Lets see here, this is what we have to look forward to;
Can't afford gasoline at any price,so forget driving a gasoline powered car.Eventually riding public transit will be so expensive as well, nearly everyone will have to walk,or ride a bicycle.(with a permit of course)
Forget about flying anywhere in 20 years..only aircraft in the air will be military.(they will be limited too)Blimps will carry cargo, or ships.
Can't afford to eat good nutrious foods because they will be to expensive,can't find enough food because of no stocks.
State manufactured cheap,gut filling pablum made out of plant fibers,grains,and rendered creature fats/parts will be what the poor eat.(high end dog food)"SMEAT it's what's for dinner!"
Thanks Monsanto, and ADF....Yummy!
Can't afford to heat my home, because natural gas will astronomically high.
Can't use electricty to power my home, because it will outragously expensive.
Can't afford the taxes on my home,as the state just keeps raising the tax to the point I can't afford it.
I won't be able to take a bath, or cook, or wash, because fresh water is nearly depleted.
I will not be able to go anywhere, because I will have to have a pass and papers and permission under the NEW rules of our Socialist/facist govenment.
Health care will be only available to the elitist's, the poor can just die! Or be riddled with health problems. "Witch Doctors" will make a big comeback. And be illegal.
I will never have enough money,or good enough credit to buy major items, such as a Hydro/solar-car,a solar/electric home,or hyponic-hot house fresh foods.
All information; reading materials,movies,radio and television will be given the offical "Stamp of Approval" first, before the people can read,hear,or see it."state propaganda"
Your children will belong to the State, as well as your DNA which will be patented and owned by the state.
Religion will be a happy smiley faced state religion and be totally devoid of any references to GOD.
No more s/elections,the supreme leaders will be in power for life.
"Welcome to HELL! Have a nice day,and enjoy your stay! We demand it..."
Dear Anonymous:
Easy! Things will not bet that bad!
I have travelled a great deal in the Third World, and I am pleased to report that most of the folks there seem pretty happy. What makes people UNHAPPY is being confronted and educated that they SHOULD not be happy with what they have and will only be happy with more stuff, white teeth, a better hair style, and a certain car.
My bet is that America will be a very free, more so than now, country. Of course, some local law and or social norm enforcement might be a bit harsh... as it has been for 8000 years, but I bet it will be fairer than now. People tend to clan up when their horizons are constrained.
My family produces a ton of food from a 1/2 acre vegitable garden, milk from our goats, eggs from our chickens, etc... and we grow most of our own chicken feed. You will eat, but you will have to work for it.
Things won't be as bad as the doomers lead you to believe - but they will be different.
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