From the article:
WASHINGTON, DC, July 16 -- US petroleum product demand plunged to its lowest first-half level in more than a decade as the sluggish economy continued to squeeze oil consumption, reported the American Petroleum Institute.
Total product deliveries (how API measures demand) averaged 18.75 million b/d during this year’s first 6 months, 5.8% below the comparable 2008 period’s 19.9 million b/d and nearly 10% below the peak of 20.75 million b/d in first half 2005, API said as it released its latest monthly, quarterly, and 6-month statistics.
Ahh... but there are 3 kinds of lies: Mine, yours... and statistics.
In the 18.75 million b/d quoted above is .75 million b/d of ethanol, a volume that did not exist in the 20.75 b/d in first half 2005. We all know the ERoEI of ethanal, its ethical issues as a food stuff, etc... and the fact that its energy content by volume (and b/d is a VOLUME measurement) is 2/3 that of petroleum... ergo we are not "nearly 10% below the peak", but closer to over 13% below the peak.
If you think I am splitting hairs over 3.5%, I am not. The 3.5% represents about 3 years worth of increased GDP, and if we keep rolling back supplies at 5% plus per year, I assert that we are going to experience ongoing GDP contraction of roughly 2.5% to 3% per year.
And that assures that the pension system blows up, Medicare & Social Security blow up, and the banks blow up AAAALLLLLLLLL over again.
There is NO MACRO SOLUATION. All of the solutions will be intensely personal and local. Power will devolve away from the center, and aggregate locally. I have no idea, exactly, how a currency crisis or other black swan event would impact this... but I can't imagine it would be good.
The EIA Petroleum numbers will be out in a few minutes... so I will be back shortly.
Mentatt (at) yahoo
4 comments:
Thanks for the update.
It just convinces me that I need to increase my rate of preparation.
Amazingly, I am even starting to sell some of my beloved vintage audio equipment, including a Revox B795 turntable, one of the nicest linear-trackers ever made!
But I'll keep at least one good turntable and amplifier to get me through years of collapsing GDP. It doesn't take much fuel to sit at home and spin records - heck, a single solar panel could probably energize it all.
Regardless, I appreciate your efforts to inform, Greg. Keep it up.
Could I hire you to talk to my wife one-on-one and try to convince her to move up to the old family homestead up north?
Um, two little things ....
We had ethanol in 2005, and 1995, and 1985... The Midwest has had 10% added to gasoline for years now. Now, if you are talking strictly about E85 (85% ethanol), you may have a point. But the midwest states have been using an ethanol additive for decades, and that would show up in fuel numbers.
Also, there is no food problem with ethanol and corn. 99% of corn is field corn -- inedible by human beings. Human beings eat sweet corn, which is 1% of all the corn grown. There is no human food problem with (sweet) corn itself. HOWEVER, field corn is used for several things, including feed for the animals we eat (and corn syrup, pet food, etc). If you wish to make a case that the increase in field corn prices that the farm animals eat, thereby increasing the cost of meat, then maybe you have a point. But the prices of the cans of Jolly Green Giant corn were never in any danger of increasing in cost by very much.
Wow bureaucrat, there is no way to do justice rebutting your comments about corn in this tiny space, but...
Of course ethanol corn impacts human food availability and prices. The corn that goes into ethanol distilleries is the same corn that would have gone not just into livestock for humans, but into corn for tortillas and a million other direct uses for human consumption as well. The US also exports a large amount of field corn as well, and when we kept more for biofuels production, it contributed to the worldwide run up in grain prices around the world last year. Then too, as corn prices rose last year, more farmers switched soybean fields and even wheat and other grain fields to corn, contributing to upward price pressure in those grains as well.
Here is just one of Sharon Astyk's blog entries detailing it all last year: http://sharonastyk.com/2008/04/01/the-food-crisis-getting-worse-fast/
And here's another: http://sharonastyk.com/2008/05/01/the-great-big-food-kablooey-why-food-is-complicated/
Sharon quotes from a Washington Post article: “'The ethanol boom, in particular, is providing strong incentives to keep former wheat acres in corn. Within a year, Braaten will be able to truck his corn to three modern ethanol refineries, one already built and two others near completion. These huge distilleries will need corn from an area about the size of Rhode Island, and many of the acres will come at the expense of such traditional crops as wheat and sugar beets.'"
As well, theoildrum.com and a multitude of Peak Oil information sites were all over the multitude of ways biofuels production contributed to last year's food price run up. There were other factors of course too, but competition for grain, especially corn, was a key player in food price increases.
Stephen B.
The price runup last year was caused by lots of guys my age (42) who wanted to make the "investment of the century -- commodities -- betting on huge commodity shortages that they knew was coming, in oil, gas, corn, etc," and so hundreds of billions of dollars roared into the commodities markets. Take one look at the the SEVERE drops in prices that followed when all the money exited, and one could only conclude that the runup was caused by massive speculation inbound and outbound. It never had anything to do with shortages of any commodities/foodstuffs, including corn, which is now supercheap because of huge oversupply today. The world was fooled by the Wall Street hotshots that thought peak oil was coming the next month. They overdid it. Look at the HUGE drop in energy prices on NYMEX. Massive money came in and massive money went out -- simple as that. There was never any food shortage, and the overflowing food stores today reflect that.
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