The economic/banking collapse has masked the Peak Oil problem - but only temporarily.
Now Toyota has joined several other major international corporations in accepting the inevitable:
“Last summer’s $4-a-gallon gasoline was no anomaly, it was a brief glimpse of our future,” Irv Miller, U.S. group vice president of environmental and public affairs for the Toyota City, Japan-based company, said in the statement today.
“We must address the inevitability of peak oil by developing vehicles powered by alternatives to liquid-oil fuel, as well as new concepts, like the iQ, that are lighter in weight and smaller in size,” he said. “This kind of vehicle, electrified or not, is where our industry must focus its creativity.”
Notice the nod to "Peak Oil" in there?
See, major corporate manufacturers like Toyota have a 5 year productive plan. It is impossible for them to move much faster. And even with this admission, the vast majority of their cars will have an internal combustion engine.
Right now, there is little to no new investment in productive capacity in the energy space. That means that the depletion (every year production in the world's existing fields declines - every year the energy industry must increase investment in productive capacity to make up for that decline, as well as any increased demand) issue will overwhelm the demand issue at some point in the near future. If that event where to happen in the near term we could see inflation in energy assets even while the balance of the economy is in deflation.
Boy, getting that right will do wonders for your net worth.
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I gotta say, I am so very impressed with Obama so far.
I did not vote for Obama because I did not believe his campaign rhetoric was truthful or in the best interests of the country. Now, it appears that he was doing what was necessary to win, but is willing to eat his words to do the right thing. I am sure he will be getting blasted from several directions because of this, but not from me. I hope he continues on this trajectory.
I would like to point out to Obama's supporters in the fall that his tax rhetoric was suicidal, and I thank the heavens it was just campaign talk to assuage the more developmentally challenged of the Left (but they do vote) and I said as much in this forum. What is good for the economy in bad times is also good for the economy in good times, but in good times government can do bad things - like confiscatory tax policy to seize money from the opposition to pay off special interest groups or spend wildly on ill advised wars - that get glossed over in good times. To those morons that think the U.S. will exit Iraq before the end of Obama's second term - it must be nice to be so detached from political reality (and I opposed the invasion of Iraq and wrote GWB to express my position. He did not write back.). Afghanistan? The U.S. will be there until we run out of money. Just take look at German, Japan, Korea...
The Obama Administration appears to be the Bill Clinton administration, second act, but with a more engaged guy at the top regarding our economic predicament. And I am OK with that.
I just gotta wonder about the crazies in his constituency... Will they and the media turn on him, now that he appears to be much more measured (with the exception of his fiscal stimulus plan, which I will withhold opinion on) and rational in his approach to the economy, tax policy, and foreign policy? Will the others turn on him when the economy does not "turn around" as expected?
His move to the center was more dramatic than that of any president-elect in the post war era. Are we witnessing THE great politician of the 21st Century?
Amazing.
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I am a BIG Arnold fan. That said, he has been an unmitigated disaster as California's Governor. I thought he was nuts for seeking the office in the first place. Politics takes practice. Corporate CEO's and State Senators, Congressmen, etc... have the kind of experience that might lend an understanding of what needs to be done. A-List actors? Not so much.
I cannot see how California can correct their budget issues through tax increases and spending cuts. California will absolutely, positively need a Federal bail out. There is NO OTHER WAY. Many municipalities in California will file Bankruptcy under Chapter 9 of the Federal Bankruptcy code, but states cannot go Bankrupt. ergo, the bailout. New York is right behind Cal.
California, home of the tax-and-give-it-away, San Francisco Left that dominated its politics (from Diane Fienstein to Willie Brown) is about to see the chickens come home to roost. Guess who gets to pay for it all? Non Californian, hard working, frugal people like you and me.
Mentatt (at) yahoo (d0t) com
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11 comments:
> To those morons that think the U.S. will exit Iraq before the end of Obama's second term - it must be nice to be so detached from political reality. Afghanistan? The U.S. will be there until we run out of money. Just take look at German, Japan, Korea... <
Add it up...
A US economic collapse with dollar crisis means the US will not be able to afford a dominant military and diplomatic presence in the ME in the near future. And the ME is already becoming massively destabilized even with a full power US military effort. This is not even calculating in the possiblities of an Iran attack or an Al Qaida attack on the Saudi Abqaig refinery complex. Or the implosion of Pakistan. Or an Arab backlash due to our active support of Israel in the Gaza invasion.
US policy is bankrupting the country and destabilizing the very oil regions that we depend on. Think the Saudis like accepting depreciating dollars for oil when they have a good friend and large market in China? Maybe that is why they are accelerating plans for a gold-backed ME regional currency in order to break free from dollar hegemony. They are watching the US go bankrupt and waiting for right time to make their move away from the $USD.
And this means the odds favor the US losing much of our access to ME oil supplies in the near future.
Individuals, families, and communities had better prepare for post-peak oil conditions in the USA in the near future.
Get working on those gardens....
Gardens don't do much in the frigid winters in Chicago. :)
I'm glad Mr. Jeffers is happy with Obama's re-flation plan, and his comfort with the "lie to get elected and then change back to the truth" thing. I myself am less thrilled. I wanted Obama and I voted for him. He's been given a bag of rotten apples for an economy, sandbagged by the previous admin. (this all didn't have to happen), and now Obama's people are telling him that all he has to do is do "pump-priming" to the max, with lots of borrowed and printed dollars. It isn't going to work. It didn't work during the depression and it didn't work in Japan for the past 20 years. It oughta work. All the economists say it should work. But it doesn't work. How do you solve too much borrowing and spending by more borrowing and spending? Obama is being set up for a big fall, and the children are the ones who'll have to pay for it, all to preserve baby boomer pride that they too are a "great generation" and can make no mistakes. *phtt!*
Dear Anon@7:45PM.
I DID add it up, and I will take the other side of your trade. The U.S. will be in Iraq for the next couple of DECADES.
I don't like it, either. Nobody asked me what I "liked".
Again, as I said...
"To those morons that think the U.S. will exit Iraq before the end of Obama's second term - it must be nice to be so detached from political reality."
That is my story, and I am sticking to it.
Bureaucrat:
You and I seem to be in different dimensions regarding our ability to communicate.
I said I was withholding judgment on the fiscal stimulus plan. That is the "reinflation" aspect you speak of.
I was referring to his abandonment of most of the silly shit he was saying in the campaign to motivate his base - you, the delusional folks that have NO idea how our fractional reserve system works. ALL of the promises he made during the campaign were UNTRUTHFUL. But his people WANTED to believe - they were willing to accept ANYTHING in order to win... after all he was much better looking than McCain, and he was pro choice. Those issues, and the banking collapse sealed the deal.
The circumstances we find ourselves in are not GWB's fault, nor Bill Clintons, nor GHWB, nor Reagan... get over it! Presidents are not KINGS. We had an unsustainable model, and the model is in its death throws.
Bureaucrat,
Japan is the only Non-gold standard example of deflation. Every other time govts have tried this kind of stimulus it has "worked" i.e ended with hyperinflation or very high inflation.
Injecting the cash and credit into the system will indeed create inflation of a high order, but it could be years before the banks are willing to loan out all that money. Their losses are immense, and them withholding credit from the " fractional reserve lending" system isn't boneheaded on their part. :) In the meantime, I've slowed my spending a bit (not totally, but a bit), but then again, I've got a regular paycheck. Others aren't so lucky.
And to clarify, it wasn't Bush specifically that caused this mini-depression. It was Greenspan and his too cheap credit for too long thing that started it (he should have known better). Bush didn't allow the bureaucracy to regulate the financial industry/mortgages properly, which didn't help.
Deflation by definition is very hard to get out of. It will be awhile before the inflation picks up in earnest.
Bureaucrat:
With all do respect, you, in fact ALL of us, are tainted in our views of what happened an who's to blame by our politics.
Americans, "only know what they read in the newspapers". And then, only believe what their politics lets them believe or what they want to believe.
How we arrived at the unsustainable system is far more about our social programs and defense spending than about 3 years of low interest rates, but people on the Left deny the social program issue and people on the right ignore the huge defense spending issue.
Welcome to politics, and welcome to the reason why the system is not sustainable.
Touche' :)
On another subject ..
And I hope, Mr. Jeffers, you will comment on the determination by tonight's 60 Minutes show that the price for a barrel of oil went up to almost $150 not because of supply and demand, or because there was an upcoming oil shortage, but because it was a gross leveraging and speculation by the big retirement funds, the hedge funds, etc investment banks, etc., who were bidding up the price of oil from late 2007 thru May of 2008. Everyone thought peak oil was coming very soon, and everyone wanted to have exposure to the "investment of the century". Peak oil is indeed coming soon in my un-expert opinion. But for all the people who were saying last summer that oil was having supply problems and the commodity markets were just reflecting that, they were obviously way off, way off :)
Bureaucrat:
I have much to say on this issue and will write a post on it shortly.
Thanks!
All the latest spin is directed at scaring/enticing the public to accept HUGE government intervention everywhere. Time Magazine is advocating bigger more controlling "partner" government. Obama is being straight, or using the unfortunate truth to advance bigger government. CBS is scapegoating those bad boys on wall-street for the run up in oil prices so that they can be better controlled. Those bad boys are responsible for a lot. They ought to burn. BUT, oil price isn't one of them. The Fascists have won. Bend over and prepare to receive. Obama may be talking like a centrist, but I'll bet the upcoming legislation is way out in left field.
Regards,
Coal Guy
Jeffers- Just because the US has stayed decades in Japan, Germany, etc does not mean that we can AFFORD to occupy Iraq in a similar way. It is costing 15 billion a month $US to stay there- and that is with Iran trying to stabilize the situation. The whole mideast fiasco will become 2-3 times as expensive if Pakistan implodes.
After WW2, conditions were starkly opposite to what we face now..
1.USA was the only industrial power left standing. Everybody needed what we produced- which made up over 50% of the world's output.
2.USA was the world's creditor. Everybody needed our financial support to rebuild.
3.USA was the Saudi Arabia of the world and won the war on sea of home produced oil.
4.USA had the best industrial systems management and was willing to use it to put everybody else back on track.
5.Everbody feared an aggressively expansionist USSR with Stalin at the helm and looked to the US for protection.
All of these conditions are reversed at this point.
Dmitry Orlov agrees that expensive US foreign occupations will end with a US economic collapse.
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