Today's Quote
"The man who views the world at fifty the same as he did at twenty has wasted thirty years of his life." Muhammad Ali (easily my favorite athlete of all time)
I remember speaking with Jeffrey Brown circa the ASPO conference in Boston in the fall of 2006 about the impact of Peak Oil on the importing nations. Some time in 2008, Jeff sent me a detailed analysis of the top 5 exporters production and internal consumption trends. The Mad Scientist and I poured through it pretty well; we gave it the proverbial "scrubbing". The assertions on each exporting nation stood up to rigorous fact checking and statistical analysis (that does not mean that these assertions are a "certainty", but it would indicate a very high probability).
Given that this analysis was already over 1 year old when I received it, and given that the analysis has proved accurate for imports into the OECD overt the 2007 - 2009 time period, I am going to base MY investments and life planning on the predictions for U.S. and OECD oil imports for the remainder of the analysis period (which, if memory served had a mid case scenario for near ZERO exports sometime in middle of the 2020's). Some very smart people have crunched the data many, many, many times over. That doesn't make the model perfect - hence it has a best, worst, and mid case scenario - but it makes it a better data point than an arm-chair-general's analysis. I am talking oil import calculations here; what that means in terms of our collective and individual lives is anyone's guess. Still some guesses are better than others.
People frequently talk about unintended consequences - usually as if there is only a single unintended consequence to a particular action. I can tell you with great assurity, because I know from personal experience living as I do in a house full of "unintended consequences" that these said "consequences" continue to manufacture new, and expensive, unintended consequences each and every day - tuition, car insurance, health insurance, braces, lack of sleep... (if I knew the permutations of the unintended consequences of indulging my carnal instincts I might have opted for a monk's life... Just kidding... sort of...). Cut supplies, and therefor sales, of gasoline - and the taxes used to maintain roads evaporate before your eyes. Shift the burden elsewhere, and that industry dissipates before you can even blink. Replace "inefficient" cars with 100mpg motorcycles... ever go shopping and then try and transport home a dishwasher on a motorcycle? What about the thousands of catastrophic injuries surely to result with millions of middle aged fatso's taking to a motorcycle as their primary source of transportation?
Life is dynamic, not static, and of course we will "adapt". I like that word - "adapt". I wonder if anyone used that word when speaking to the Haitians after the earthquake. After all, OF COURSE they will adapt - all "survivors" of any outcome by definition have adapted, otherwise they would have been classified as "victims". (BTW... ever hear the term "survivor bias"? We see it every time a combat veteran speaks. My bet is he feels differently from those killed in the conflict... survivors HAVE a bias! The dead are not around to make themselves heard. If you could wake up those that perished, show them the family they could have had, the travels, wine, women, song, pleasure, pain, thrill et al that makes up the buoyant surge we know as being alive, had they not lost it all... I wonder what they might say about the conflict that cost them all of that...)
But I digress.
Back to adapt. Yes, of course the "survivors" will adapt - some folks will come out ahead, some will come out with the short end of the stick, and some will come out dead. I know which camp I want to be in. But this process happens all day everyday irrespective of the crisis de jour... making short shrift of this won't do you much good.
And there you have it and there it is. So far, the Export Land Model is tracking the real world outcome quite well. If it continues, we are all going to get a chance to live with our decisions. It will be interesting to see how each of us feels about them at that time, though I doubt most will have the luxury of time to ponder this - we might be rather busy doing other things. In the end, for those that do adapt life can just as easily become MORE enjoyable, MORE fun, MORE meaningful as LESS so.
To Life!
29 comments:
life is hard. Thats part of what makes it life.To me making money is great but I don't necessarily want it to fall out of the sky on me. earning it overcoming all the obstacles to wealth is part of the reward itself. life is a struggle. Everyone particapates in the struggle. o matter how hard each of us struggle in the end the struggle will be in vain.So might as well end the struggle now or find a way to find reward in the struggle itself
As Greg says the decisions you make right now are going to be the ones that really matter. The decisions you are making will be the differrencd of riches or poverty maybe even life or death.I hope everybody that has been following this blog makes the right ones and we all come out the other side of this mess intact and well.
Yeah, you better be around in ten years so we can see what our world is like (I'm printing this post), and if it isn't ANYTHING like all the gloomydoomy people and you have suggested, we're gonna want our blog money back. :)
In the meantime: higher taxes, higher costs, more defaults, gold, silver, commodities, reduction of personal debt, store stuff that has long expirations, walk, public trans, live either on a damn farm or within a city where you can walk and has resources, etc. etc. etc.
And grow potatoes at least. Any idiot can grow (vitamin-enriched) potatoes in the back yard. Hell, I grow potatoes. :)
I'll keep you up-to-date on the Chevy Volts when we get some, if we get some.
Funny comment on the fatsos on the motorcycles!
My own experience was a few years getting around only with a motorcycle- night/day, sunny/rainy, summer and winter. I rode many many miles in an urban area even with snow on the roads. It's hard and the cold wind cuts right through your clothes like a knife. Didn't have any accidents but that is a very serious situation on a motorbike. Not sure this is a long-term solution to transportation problems.
Chris Martenson has a recent commentary that sums up the seriousness of the current situation-
"Hopefully, we can all appreciate that this is a most (if not the most) crucial turning point in history. We are about to run a very large experiment, where we take the largest and most complex economic system ever devised and starve it of the exponentially increasing flow of energy upon which it was entirely fashioned."
http://www.financialsense.com/Market/daily/wednesday.htm
Regards, Marshall
When I first mentioned the motorcycle I was only interested in the engine for a different application. However I have since learned, on this blog, Volkswagen had the same ideal and exceeded what I thought possible by 100% also found out it likely will not work due to road maintenance.
Oh well, I know from my misspent youth that a enduro can haul 150lbs of gear down trails a jeep can only dream about. Also, looks like I can go 14K miles on an acre of rapeseed. Looks like I found a solution for me.
From the LA Times:
"Oil companies look at permanent refinery cutbacks"
You've talked of the Export Land Model. The latest incarnation ELM2 also talks of Chindia 'needing' ALL the oil exported within 8 years.
What price fuel for the rest of the importing countries? I just did a quick supply/demand calc and it comes up that fuel prices would quadruple in 3 years.Have you done anything similar?
First let me say that the ELM is an awesome model and Mr. Brown is a super stud in my book. That was an absolutely insanely awesome insight into to the nature of the problems that NO ONE has thought about or at least demonstrated so succinctly in a mathematical way with such predictive accuracy. His ELM is what made me appreciate the short time frame we have to make adjustments to PO and this ELM is what makes this truly a crisis with very short (less than a two decades at most) time frames and not a long drawn depletion scenario of 30-40 years.
Lets recap in short: The population of net export producers is increasing their use of oil faster then production and thus the net exports from those countries will crash with frightening speed. Since the importer countries can only import what is left for the exporters to export they will face rapidly declining available imports.
This being said there is one thing that can play havoc with this model. And that is politics. There is nothing that says that the oil will continue being available to the population of exporter countries in the same amount or at the same highly subsidized price. A simple crackdown from within or an invasion from without can eliminate subsidies and or ration the domestic supply. Will it happen - with all the domestic unrest and economic damage it would cause in export countries probably unlikely. Can it happen - absolutely. Will it buy us a couple of more years - it may. It could be a wild card and a game changer.
Just for the record. I am NOT advocating this course of action. I don't believe that anyone is sitting on OUR oil. Theirs is theirs and ours is ours. We should be letting people be instead of meddling in their affairs.
Chuck; point well made. But if a country has declining exports (like, say, Mexico) its hard to turn off the tap to your own population in line with falling production, leave alone cutting even more so that you can continue to supply your own population, probably at a low price! The opportunity cost makes it even worse.
But really I'm not talking so much about supply as about price. Oil is inelastic, and small supply shocks have demonstrated a rapid doubling of price in the past.
It is ultimately price which will curtail demand; what's the highest price someone will pay? And what price food then?(now they're linked through ethanol and biofuels)?
On another (related) topic; we've all gotten used to the internet these last 10 years, but it takes 10% of US electricity to keep all those servers running.
And its an obvious target for Chinese or Russian or anyoneelse with a mind to hack the systems.
What happens if the internet fails? How will you get at YOUR money? Or prove title? What happens to taxes? Banking? Trade?
Dan:
There will be MANY micro solutions - I simply doubt motorcycles as a macro solution.
Still, I will absolutely own one.
WASHINGTON — One recent morning, George S. Hawkins, a long-haired environmentalist who now leads one of the largest and most prominent water and sewer systems, trudged to a street corner here where water was gushing into the air.
A cold snap had ruptured a major pipe installed the same year the light bulb was invented. Homes near the fashionable Dupont Circle neighborhood were quickly going dry, and Mr. Hawkins, who had recently taken over the District of Columbia Water and Sewer Authority despite having no experience running a major utility, was responsible for fixing the problem.
As city employees searched for underground valves, a growing crowd started asking angry questions. Pipes were breaking across town, and fire hydrants weren’t working, they complained. Why couldn’t the city deliver water, one man yelled at Mr. Hawkins.
Such questions are becoming common across the nation as water and sewer systems break down. Today, a significant water line bursts on average every two minutes somewhere in the country, according to a New York Times analysis of Environmental Protection Agency data.
In Washington alone there is a pipe break every day, on average, and this weekend’s intense rains overwhelmed the city’s system, causing untreated sewage to flow into the Potomac and Anacostia Rivers.
State and federal studies indicate that thousands of water and sewer systems may be too old to function properly.
...An E.P.A. study last year estimated that $335 billion would be needed simply to maintain the nation’s tap water systems in coming decades.
http://www.nytimes.com/2010/03/15/us/15water.html?ref=business
...And we're going to fix these systems NOW?!? With what money?
Oh, Lucy!
We have lots of (borrowed) Federal dollars for public works if we wanted, but 80% of those dollars go to Social Security, Medicare, Medicaid, Interest on the Debt and Defense .. in other words, they instead go to programs that will NEVER be cut. So if this is a complaint post on sewers, try to remember that pipes aren't going to get fixed because of you, me and them :), not because we don't have the money.
'China buys 50% stake in Argentine oil company'
http://news.bbc.co.uk/1/hi/business/8567440.stm
B, it isn't a "complaint post" but rather, it's an attempt to keep people informed here as to the situation regarding society's ability or inability to pay for things it has grown used to having and expects to continue enjoying.
With all due respect, you project a rather patronizing attitude. Are you sure you don't work for the government? Oh, wait! Nevermind.
Of course I know that we're still spending lots of money on other things and that a reallocation to sewers could get them fixed. But then again, we'd have to do without that other stuff you mentioned, potentially causing further discontent and unrest.
My point is, if we ever thought we could "have it all", we certainly can't, and that sewage and water systems are yet another expensive thing we might be scratching from the shopping/wish list.
Patronizing is my middle name, and yes, I do work for the govt. :)
I had to ask myself ... what is he trying to say by putting this comment up? Do you want the infrastructure repaired or not? I think you, like everyone else, does. However, with the Federal budget priorities being what they are (listed above) and the states blowing 90% of their money on four programs (education, human services, health services and govt. pensions), we better hope that the pipes and sewers DON'T need much more work cause without the inevitable tax increases, they aren't gonna get done. ;)
Baby boomers have demanded artificially lower taxes and govt, borrowing for the last 30 years to push the bills for their neglect onto future generations. That is now clear.
Bur,
If you think that your fave 5 programs are hard to give up, the stink that will be raised when the toilets don't flush will be a wonder to behold ;). At some point reality will set in. It always does. Our infrastructure is going to pieces, and still the greater part of government expense goes to pay people who don't work. Even Obama's stimulus package was over half welfare. One way or another, it will stop. Unfortunately, it will take a catastrophe. Oh, yeah, we're on the verge.
Regards,
Coal Guy
You mean the government employees who don't work (kinda like me) or you mean the poor people on welfare who don't work? :)
I'm not talking about government employees that don't work. I'm talking about the idle millions on the dole and unemployment. It just seems odd to me that there are millions paid by the government to press the seats of their pants, when they could be paid to do something productive, like keeping the toilets flushing. If there is no money for the latter, there should definitely be no money for the former. Period.
Regards,
Coal Guy
Stephen B just pointed out another reason why I don't think cities will be viable options in the next 5-10 years if we follow the scenario presented by Greg. City infrastructure simply won't be there to support the population: water, sewage, roads, bridges, tunnels, etc. How are city-dwellers going to live if they can't get food and water?
Coleman; work it out, a kilo of food per person, 10 million people in a city = 10,000 tons of food per day into the city. Say 20 tons per truck = 500 fully laden big trucks (plus trucks for all the other stuff they need) all running on increasingly expensive fuel.
Famine is where people are unable to afford food, not usually a shortage of food.
Re: Donal Lang
A small correction, what I call "Two If's and a Then."
If our best case projection for the (2005) top five net exporters is approximately correct, their combined net oil exports will be down to about 15 mbpd in 2018 (eight years hence), down from 24 mbpd in 2005.
If "Chindia" maintains their current rate of increase in net oil imports of about 9%/year,
Then, Chindia in 2018 would be net importing about 15 mbpd, which would be 100% of the projected (2005) top five net oil exports.
The (2005) top five net oil exporters comprise about half of current global net oil exports.
Chindia's combined net imports, expressed as a percentage of (2005) top five net exports, rose from 19% in 2005 to 27% in 2008 (and probably to about 33% in 2010).
Sam's best case is that the (2005) top five net oil exporters are currently depleting their post-2005 CNOE (Cumulative Net Oil Exports) at about 9%/year. My guesstimate is that the overall global post-2005 CNOE depletion rate is on the order of around 6%/year.
The ELM 2.0 thesis is that developing countries will continue to outbid developed countries for declining net oil exports. I suspect that the total remaining volume of global CNOE available to developed countries could have a current depletion rate of something on the order of 12%/year, or about 1% per month.
Neither China nor India has a prayer if the buying of crap from those countries goes over a cliff. U.S., Europe and Japan and the huge amounts of borrowing these countries have done is guaranteeing that China and India will have a hell of a hard time selling their wares and services to tapped-out First Worlders. Neither country is ready to start selling all their stuff domestically. No export income = no need for oil = ELM continues, but with much bigger Asian oil demand drops.
Remember, NOBODY predicted the Panic of '08, except for a small number of blog-reading lucky ducks (like me). Mainstream media missed it entirely. China can't sell to people will no more credit to tap.
Donal -
You said: "Famine is where people are unable to afford food, not usually a shortage of food."
I remembered a post of Greg's back in November about Food Stamp participation. (Nov 6th, 2009. The AP article linked is no longer available.) Luckily, there are sheets of data on the Supplemental Nutrition Assistance Program online. (http://www.fns.usda.gov/pd/29SNAPcurrPP.htm)
Participation is up 22% from Dec 2008 to Dec 2009, and over 2% just from November to December, to a total of 39 mln people.
A current estimate of the entire population of the U.S. is 309 mln, which means roughly 12.5% of the population receives food aid.
Let's just assume the concentration of this subset of the population does not differ between urban and rural areas. What happens when this 12.5% of the population cannot afford food shipped to the city?
Westexas; thanks for the detail, even if you're saying the situation is potentially worse than I suggested from my reading of your previous article!
You're front line on these analyses - have you done any calcs on the potential price of oil in these scenarios?
Coleman; re,"What happens when this 12.5% of the population cannot afford food shipped to the city?"
The question is twofold:
Will the Gov't increase food aid in line with increased costs of food? Probably not, they can't afford to.
So if food prices increase, what percentage of the 'poor' people's income can be transferred from other expenditure to purchase food? That's more difficult to say.Once the car, satellite and junk food is gone and they are growing food in gardens, wasteland and pots, there isn't much 'elasticity' left. Some people will undoubtedly be unable to cope, especially the old, infirm, isolated, etc.
One thing is for sure though - house rents and prices will have to continue to fall if disposable income falls for most people.
Vermont Car Insurance state law requires minimum Bodily Injury Liability limits of $25,000 per injured person up to a total of $50,000 per accident, and Property Damage Liability coverage with a minimum limit of $10,000. This basic coverage is often referred to as 25/50/10 coverage with 50/100 UM limits.
Post a Comment