In 2008, U.S. Oil imports fell 8.5% from 2007.
In 2009, U.S. Oil imports fell approximately 10% from 2008.
So far in 2010, U.S. Oil imports are off just over 6% from 2009.
So, for the sake of THIS discussion, let us assume that Jeffrey Brown's modeling is spot on, and imports into the U.S. fall at double digit percentages for the remainder of the decade (if memory serves the rate of decline should accelerate in early part of the decade, and if Jeff is around he can comment).
It is now 2015 and imports have fallen to 5.0mm bpd from 9.7mm bpd in early 2010, and 12.5mm bpd in 2006:
What happens?
During the last 4 years, the U.S. has experienced a 2.5 mm bpd decline in imports (give or take) but was able to increase production of ethanol 800k bpd, and increase domestic production roughly 500k bpd. Vehicle Miles Traveled for cars fell 3% or so, while consumption of truck diesel and jet fuel fell 15% +/-. In other words, industry took the decrease in supply on the chin with consumers outbidding industry.
I would argue that ethanol, which now consumes by my calculations 42.5% of the U.S. corn crop, was a "one off" with very little capacity left to increase its volume. Same with domestic production of crude, condensates, and NGL's.
Forget price. What happens if the system does in fact lose nearly 5 MILLION bpd, or 26% of the total liquid petroleum products available to us between 2010 and 2015? Of the nearly 9mm bpd of gasoline the U.S. consumes now, what will be available in 2015? If we assume a pari-passu decline in gasoline, - 6.5 mm bpd instead of nearly 9 mm bpd - what are the effects? What about a similar decline in diesel, heating oil, and jet fuel? I'll throw a few out there:
- Car pooling - that means we are not going to be wearing out those cars, tires... like we used to. Think about that and about those folks on unemployment waiting to be rehired in these industries. I guess we will be extending unemployment benefits out until 2020, then 2025, 2030... (snicker/he he/ha ha/)
- Staff that can work from home WILL work from home. Clearly surgeons and waitresses can't work from home... but a lot of folks can and will (be forced to)... and there will be a great many less waitresses and cosmetic surgeons making a living. What are we going to do with all that empty office, retail, and industrial space? What about the support industries surrounding those empty offices (dry cleaning, dog walking, whatever...)? What is the value of the mortgages on those properties? What about the balance sheet of the banks holding that paper?
- Commuter schools. All those exclusive private schools with the drop off/pick up line that mom has to drive to/from/to/from every day? The oil isn't there to support that behavior. Commuter colleges? Same drill.
- Heating. We are going to be doing a great less of it with 25% less Oil. States like Florida that depend on bunker oil for electricity generation are going to suffer rolling blackouts unless they can build and supply coal fired or nuclear power plants. Muhammad Ali said: "Your hands can't hit what your eyes can't see. Float like a butterfly, sting like a bee"; well, "power plants can't burn what they can't see, to generate electricity for your A.C".
- Unemployment. Industries and financial services are going to get CRUSHED.
- Tax revenues would "sh*t the bed". That's a technical term for a severe contraction in tax receipts. Social Security taxes, sales taxes (remember gasoline is a HUGE collector of sales taxes; less gas = less taxes unless the price rise offsets the volume lost), property taxes (who is going to pay taxes on a property they can't get to?) would all go down like a rock in a pond. Considering the fiscal status of the various state and local governments, I see a number of pensions that would be defaulted upon.
- Restaurant and retail traffic will decline precipitously.
- I should think that large homes requiring extensive ongoing maintenance and landscaping will have no resale value. That brings us back to banking...
- Many of those muffler, brake, tire, and car repair eye-soars you see along every main road in every little town in America are going to go DARK - and these properties will get even uglier (if that's possible).
- People will migrate slowly southward. The northeast U.S. relies on heating oil a great deal. That will not turn out so hot, no pun intended.
- The current trucking food distribution model will NOT survive this. Take from that what you will.
- The American people will blame their political leadership. This is absurd, but somebody will have to hang. Maybe literally.
I woud welcome any other economic/social/financial outcomes that don't mention roving hoards of looters eating people as I am putting together a presentation on this and would welcome any intelligent input. If you disagree about declining Oil imports, please save it for a near future post. This post ASSUMES that the rate of decline continues and accelerates slightly over the next 5 years. IF you disagree with my analysis GIVEN THAT INPUT (or lack thereof) please comment accordingly. I could use the idea flow.
30 comments:
You will see a changing face of social services. There will be a greater tolerance for the abuse and neglect of children as the definition will change. Out of home care for the elderly and disabled will be restricted to the wealthy. There is no way we will continue to fund the care of 1 pound premies. Travel for high school sports will be impossible. This will hold true for all of those traveling children's sports. Good-by swim teams and elite soccer clubs for 10 year olds. 15 year olds will not go to proms in limos. There will be collapse of theme parks. I will not miss the demise of destination weddings.
I think the implication are correct, but time frame is longer. In Seoul I ride around in natural gas powered taxis, ng will be the next ethanol for personal transport, at least for a while. Then come the mzbs!
Food prices will SOAR..
Especially meat and dairy as most local processing plants that could have handled the amounts needed for any given local population have been closed long ago in favor of large national plants.
I predict a time soon when locally grown veggies will be able to compete price-wise with large commercial produce. BUT the smaller scale plants to process meat and dairy will have to be regrown from scratch.
What small processing plants that are still around (right next to the muffler shops on main street in small town USA) will be able to charge a premium for a while.
Greg,
I will say this, whether the Gov. steps in or not the outcome will be severe. If they speak, hoarding starts instantanously ( use your imagination ),if they do not say anything we will be unprepared to do ANYTHING or have anything in place at the micro or macro level. Either way we all lose. The best the Gov will do is provide rationed food and health care. No wonder the gov is un willing to address this. I have personally started prepping since May 08, the day I found your blog.
If you are in firm belief of the future I recomend being informed and educated,the old ways won't hurt. Be ready to teach others to survive.
ps are you in Tenn or Fl for your talk? Open door?
peace
DaShui:
I am really hoping for good commentary WITHIN the assumptions prescribed, not a debate about time frame (either ELM modeling is correct or it is not. Some very, very smart folks have spend countless hours on it and there is little to add to the discussion. Being right or wrong would only be a random outcome for the layman), Nat Gas, Wind, blah, blah...
i really would welcome further commentary within the parameters - so please, let's have it!
Pioneer:
Agreed> The USDA is the dad-blam anti-christ as far as I am concerned... but i think processors will crop up out of nowhere any where they are needed.
The point is well taken.
Kathy:
Thank you. Excellent points all. I will use them...
Peace:
Excellent point. Of course the govt would set of hoarding by even mentioning the issue... ergo, no plan can take place in the open, and given the scale of the problem, it would by definition be very, very open.
thanks!
Small efficient Diesels, the military is now using a diesel motorcycle that goes 100mph and gets 110mpg. Right now the company making the engine has scrapped its plans to offer a civilian model because the DOD is buying their entire capacity, but eventually they will be on the market.
These are built for military service but if optimized for mileage I’m sure the mileage could be boosted considerably. Same goes for neighborhood electric vehicles, NEVs are losers but with an aerodynamic body and a small diesel engine they could probably get over 100mpg.
The Chevy geo (gasoline engine) got over 50-58mpg back in the late 80’s and its primary design objective was price; the Volkswagen Jetta diesel (tdi) gets 50mpg now and while it is designed to be fuel efficient it is also a comfy midsize sedan. If we go balls out on the design objectives we can cut all the fat and make cars that are ridiculously efficient today, without even relying on unproven technology. In the environment you are describing tastes will change and people will want vehicles as extreme as the hummer but designed the opposite way.
The best we can do today is 40 with expensive and unproven hybrid technology? Horse shit!
National Beef in liberal KS has rail service, so did the major meat packing plants in Chicago 100 years ago. however, liberal, KS is surrounded by prime ranchland, currently used to grow corn for cattle fattened on feedlots..
Dan:
I will grant much of that is true... I will also say that it does not scale by the end of the decade, let alone 2015.
Back to the issue. What are the outcomes besides diesel motorcycles for a society where in a few years 25% of the population will be over 65? I can just see my 86 year old mother hogging out the local grocery store...
Come on now, Dan. Stay on topic. I am looking for some idea flow.
BTW... I am not suggesting that there won't be brilliant responses - I am looking for eco, socio, system implications and outcomes.
On numerous occassions in the past few years when asked by my more intelligent acquaintances about the future of America, I would say that with luck America would be like South Africa or a Brazil with snow.
Actually, I imagine it will be worse, since winter in most places in America would be deadly without decent shelter, unlike Brazil or South Africa (places with significant portions of the populus living in squalor). In those cold places in America the people who lose their homes will either have to move south or find some alternative form of housing, like squatting, or sharing a home with a bunch of other people in order to split the rent or camp for months on end, etc.
Violent crime will rise. In 2015 I think most of it will be caused by new criminals; people using violence in order to procure food or shelter, etc., as a last resort. The government will continue to do nothing of substance to really help them.
Many of the refugees that move south, they'll set up shanty towns, simlar to the ones in Jo'burg or Rio. They'll eventually turn to "crime" to make a living. The police will use a heavy hand when dealing with them. The greedy sociopathic cops will shake them down for real or trumped-up charges. Occassionally some of the cops will organize the more skillful refugees into for-profit criminal gangs. In the more out of the way towns, there will be new style robber barons.
If America is unlucky then America will have another civil war, with a superficial resemblance to the 1990's civil war in Yugoslavia.
Eventually, America will have a Rapa Nui style of collapse, with most of the population dying of hunger, communicable disease, or lethal violence.
Anyone read The Jungle by Upton Sinclair? While he intended to expose cruel working conditions in meatpacking plants, the public fixated on food safety. Teddy Roosevelt was supposable having breakfast while reading it, sausages if I recall correctly, called in two guys and dispatched them to Chicago to find out if it was true. When they reported back that it was all true Roosevelt cooked up legislation that created the FDA.
Today the FDA fails at its core mission while simultaneously harassing everyone but those that need to be dealt with harshly. But, conditions are similar to 1905. Once agan Europe routinely turns away our agricultural products on food safety grounds; GM instead of chemicals and bacteria this time but essentially SSDD. Wall Street is run by Robber Barons and congress is bought off.
Is there any reason to think similar conditions won’t bring about a similar response? Especially once it all comes crashing down and the cost of the BS becomes undeniable?
Where I agree ...
1) Ethanol is a "passable" substitute for gasoline (I use it nearly every day in 85% ethanol form), but there isn't enough American corn, nor with there ever be enough corn (field corn to be exact) to displace all the BTUs U.S. cars and trucks burn every year. If you take every single kernel of U.S. field corn and make it into gasoline, you displace about 15% of the BTUs vehicles burn each year, and that number cannot be increased much. Plus field corn is used already for a lot of animal feed -- animals we eat.
2) Chicago has empty storefronts and apartments that are now noticeable. The emptying out of all buildings (big especially) will continue, and some will have to be destroyed. Exurbs will have to be destroyed, lost value and all.
3) Thee nuclear power industry is going to have the biggest "Leap Forward" in the history of big government projects. It's the only way to go.
Where I disagree for now ...
1) The new Chevy Volt could be a game changer, and usher in a realistic world of 100% electric-powered vehicles.
2) I still contend we waste SOOO much gasoline and diesel being lazy and inefficient in our lives, and higher prices would do wonders for that. I'll bet we could live without 50% of crude oil without much sweat.
3) You haven't said yet where you would put the imported oil if you could import it. Oil storage is at an all-time high.
4) Natural gas also overfloweth in America. That could be another game changer as well.
My point was that if an aerodynamically inefficient motorcycle 400lbs motorcycle can get 100mpg, then a aerodynamic 800lbs car between the size of a golf cart and a Chevy geo can too.
No unproven technology, no years of R&D, just draw up simple plans, tool up and go.
Aluminum frame on aluminum body, existing engine, new gearbox. KISS simple.
Let’s start at the micro level and work up. People in this country are already living from pay check to pay check and most of them not even that. As far as I can tell the real "growth industries" in my part of the country are dollar stores, payday/title loan places, pawn shops, tobacco stores, liquor stores, etc... People are already at the breaking point and most of them just don't know it. Now if you add an increase in the cost of gasoline not only does it compound the issue, it also creates a feedback loop. A person has to dedicate a larger portion of their income to fuel consumption. (Especially in the rural areas when an average commute is 15-30 miles each way) Now as my fuel expenses go up I have less money for food, clothes, entertainment, etc... However, if the cost of my fuel has increased substantially so has the cost of absolutely EVERYTHING I consume in my life. Costs more for the food to be grown by farmers, more for transport, etc... So now not only do I have less money, all of my expenses have gone through the roof as well. And so it goes. Pretty soon my 60K a year job is the equivalent of 30-40K in current dollars. And all this assumes the value of the dollar does not diminish.
The amazing thing is this doesn't even take into account the complete fall off the cliff the tax revenues will take as you mentioned. And again, ABSOLUTELY EVERYTHING is affected by tax dollars. Our schools are laying off teachers left and right and dipping into "rainy day funds" that are already depleted. Our jails are letting people out early because we can't keep them all in and nobody is willing to approve a bond to build a new one. Medicaid/Medicare provides jobs to countless private mental health companies, doctors, hospitals, etc... Our entire country is built around the idea of constant growth and increasing tax revenues, abundant oil, etc... It’s simply a matter of time before the first domino falls. If we're lucky oil will be the first one, if not it will only be an afterthought.
My thoughts here are, we have existing infrastructure that imposes design constraints and over the midterm, so individual transportation is imperative. With larger vehicles impossible to drive autos will not need the massive bumpers and other assorted safety features so cost and weight, and complexity can be trimmed. While people may not want to drive an over-glorified golf cart; including me, my last car was a sedan Deville; it beats the alternative.
Over the long term we have more options.
When the Club of Rome made prediction of catastrophe in their 1968 report, one of the responses was that their predictions could not take into account things that had not been developed yet, but would alleviate catastrophe.
The $600., 258 MPG, single passenger VW being developed and made in China is one such example.
I think it will be a slow slide to where we are consuming the same amount of energy per capita as the Europeans and Japanese. A lot of people are already living that in the US.
By virtue of the fact that we have such gross energy waste in our system, we will be able to adjust just by going on an energy diet.
The sunbelt in summer time is going to be hell without AC. I'd take the cold north anyday. Florida without AC...hmmm...gonna get a little funky there.
Cheers
If the gov't blames speculators and enacts price controls then we will have terrible shortages. If the free market is allowed to function then there will be a huge US drilling boom with good jobs and lots of people getting rich. Lots of nuke plants will be built. Nat gas and high efficiency diesel vehicles will be common. US manufacturing will boom as cost of labor becomes less important relative to energy costs and labor costs in China rise along with the increasing energy/food prices -- basically a leveling. There will be many technological breakthroughs in energy production and energy efficiency.
For me, the problem the US has is that its infrastructure is absolutely dependant on road transport, the country is large, and the investment money won't be there for restructuring; there won't be a hydrogen economy, there won't be enough electricity for electric cars or electrification of trains. There won't be the money to maintain the road system.
The result of this will be that the centralised structure of government will collapse, and Washington will become detached from the way most people live and organise their everyday lives. Localisation and community solutions will be found when the State fails to provide alternatives.
Politically, government agencies will try to hold power. That may mean martial law or 'police state' measures in cities, where their chances of control are best (and problems will be worst).
In more isolated communities the solutions may be very different in each; from well organised communities to more extreme, possibly violent situations. The differences will probably be based on the resources available to support that level of population.
Houses have a value based on rental values (investment return) and repayments, so based on income after essentials like food. Unemployment, long commuting distance, higher real food prices, lack of personal job security,will all hit both rent levels and house values.
As values drop banks will go bust, and the currency will collapse. Imports will stop; no-one will take dollars, no one will lend in dollars. savings and pensions will disappear.
Bottom line? Three times the population than before the US had lots of cheap oil. End of industrialised farming. Huge cities with urbanised population with very high expectations. Work it out.
That last post maybe sounds a bit negative :-)
Here's a (slightly) more positive take:
People are resilient. They want safety and security for themselves and their families. Most people will reorganise quickly to maintain their local food supply, provide education for their kids and mutual support. They will probably organise some version of protection, from police to militia, perhaps vigilante groups. local services will resume at a new, lower, local level.
But this means that many people won't pay their taxes or their loans - why would they? Already the mortgage 'walk away' is mainstream, and so is the 'repossession but stay', and those people who need somewhere to live will squat empty houses.
Farmers won't be able to run tractors, so sharecropping, or just taking over unused farmland for allotments will become normal - banks and courts won't be able to stop them.
The only retailers to remain will be selling essentials; tools, materials to make or fix things.
I work with Transition Towns who are pre-empting the coming crisis by organising local food production and distribution, co-operative housing/allotment schemes, bio-fuels, real education and essential services. This has gone from nothing to 300+ communities worldwide in 3 years.To me, its the best insurance/pension scheme you can invest in.
As rail will rise in importance, so will waterways. Ports will be precious, especially smaller ones along coasts, lakes, rivers and canals. Wind will be used for transport.
Hydro power returns. Think waterwheels.
International anything--transport, travel--becomes prohibitive. The entire concept of vacation changes, perhaps disappears. The hotel industry vanishes.
Bottled water disappears. Packaging industries disappear.
Those who mention nuclear as an alternative are forgetting just how much energy it takes to build one of those plants. Projects will be undertaken not based on dollar cost/dollar returned but upon energy cost/energy return.
Population migration from the country to the cities will reverse. Cities are unsustainable given your parameters. (How many sheep can graze in your local park?)
Knowing who your neighbors are becomes more important.
School may no longer be mandatory as labor is needed on "the farm". (What basic skills they taught you at school cannot be taught at home or by a neighbor? I don't want to belittle teachers, but just about anyone can teach the three Rs. Most useful things will be learned by doing them, not by reading about them.) Universities disappear, because they are not teaching what is important and the cost is prohibitive.
Gardening skills, soil and animal husbandry expertise rise in importance.
Property prices return to their utility values.
"Food not lawn" takes over the suburbs.
Diets change drastically. Snack foods? Sugar? French wine? That nuisance deer population? Heh.
Maintenance of every useful thing you own becomes more important. Spare parts will be precious.
Highly unlikely to be a big migration southwards until we enter another ice age, but thats a different time scale altogether. I grew up in a big drafty house with next to no heating (could often see your breath in the morning in bed) and when it got really cold and often snowy as it did for half the year we just put on more clothes. Problem solved. You could apply the same logic to not having AC in So cal or texas etc. causing people to move north.
Greg, I'm 98% with you on this, except I'm not so sure about the migration south, not that I want to start a battle over regionalism on this comment board.
Yes, it gets cold in the North/Northeast, but it's easier to stay survivably warm without energy compared to staying cool. Sharon Astyk has argued as much in various essays as well. Yeah, the trees up north will come under attack, but between better clothing, better insulation, and people hunkering down, consolidating themselves with friends and family in fewer houses, I'd rather do the cold than face a summer in the South without AC. I don't think it's an accident that the majority of the population lived in the north before oil and natural gas and only headed south after AC came into widespread use. Babies and the elderly, in particular, die from excess heat far more than from excess cold in actuality. The fact that the US climate is further heating up (at least as my garden records and observations confirm from over 30 years - even in this supposedly "cold" winter - snow does not equal cold) only suggests that the heat thing down south will get worse.
And *why* bother to stay up north? Well, the answer is W A T E R. I'm with Asktyk and Kunstler on this, water is going to limit who can live down south and particularly in the West. (I'm thinking of the recent metro Atlanta water worries and reservoir wars.)
Though as I say, the trees will take a huge hit and though we have too many people living here already (such is the case nearly everywhere in the US given the regional resources), I'll take water and seasonal cold over heat and scarce water, thank you.
Stephan B:
There is a BIG difference between the South and the West. The coastal region from Georgia to Maryland has some of the best weather on the planet, IMO.
The Kuntsler argument about the South and AC must be talking about Arizona, because we use the AC maybe 2 months in Tennessee, but the heat is on almost 6.
Rising oil prices will spur a change to alternate sources of energy. Oil heat will be replaced by electric. NG will become an alternate transport fuel, etc. etc. This will push the price of all energy sources upward, making investment in any new energy supply extremely profitable. Soon, everything will be short.
Burning of oil for fixed applications will disappear. If you look at the EIA's data for consumption of fuel oil by use, you can see that this has been happening at a rapid pace since 2002. The greater part of fuel oil decline has been due to this and declining rail shipments. Trucking hasn't changed as much as we might think. The trend in rail shipments will reverse rapidly with expensive fuel.
People will be reluctant to move South, away from family. If necessary, I'll build a kitchen and bath in the basement. The earth will keep it warm along with heat from the stove. The rest can go unheated. My grandmother grew up in such a house in Pittsburgh at the turn of the century. It didn't keep people from living in the North 100 years ago, and won't now. Even then, many considered the South to be uninhabitable because of the heat.
They didn't heat much during the depression either. My mother used to tell me how, as a teenager, she liked to keep the window cracked open for fresh air, and often saw snow on the windowsill and floor.
There will be a return to the cities from suburbia. Having the things you need within walking distance will be a plus. There will be benefits to living near the railroad. All urban areas are close to a rail line. There is still rail distribution available to most everywhere. Long haul trucking survives because of speed and labor costs and government subsidy. It is door to door and fast. Rail transport is slower and may require freight to be moved from truck to rail car to truck for the first and last mile. The intermediate handling is expensive. The trucking industry doesn't have to maintain the roads. The whole economic balance will change with expensive fuel.
I'm doubtful about redistribution of the population across rural America. This seems to me to exacerbate the last mile transport problem, unless your are living right on a rail line and within walking distance of a small town.
What would a switch to draught animals do to the food supply? I don't think it will come to that.
Just rambling...
Regards,
Coal Guy
Well, I'm a day late, but have a few thoughts. I won't rehash some of the great ideas and predictions that I agree with, and will only refer indirectly to predictions I disagree with.
1. The outcomes in various regions and cities will vary WIDELY depending on the local culture, work ethic, and ability of the people to work together towards a common end.
1a. The cultural attributes that enable a city or village or area to survive and even thrive will have almost NOTHING to do with current divisions of the body politic into the LEFT or RIGHT. The best correspondence of the traits needed to current political divisions might be traits found on both the libertarian left and libertarian right: those who look to themselves and their communities, and do not expect the government (especially Federal) to bail them out.
There are plenty of good,honest and hard working folk on the progressive side, and on the libertarian side.
1b. The worst hit areas and groups will be the outer ring suburbs. They don't even have sidewalks. The houses are way way too far from stores or main streets (which don't even exist). The houses are too big and cheaply built. They will become wastelands, and the survivors will be those who tear down their vinyl-sided boxes and built a small home, and start growing things. The rest will become refugees.
2. It is easy to built a highly efficient structure that uses a mere few logs a day to heat: earth-berm structures, straw-bale, etc. Heating is not much of a problem, when combined with good thick clothing.
3. Water resources will collapse in the SW and elsewhere. Without energy to build new water projects or transport it, whole regions will become unlivable. The refugees will be desperate, and will not be greeted with open arms. The Federal Government will have no resources to take care of them. They will slowly wither away and die through malnutrition and starvation. There will be no looting hoards, just a slow decline in population.
4. Water transport will make a big comeback. Being near a port or river or waterway will be a live-giving thing, allowing the community to trade with whole regions. Even coffee will get from Central America to New England via water.
5. Small industry, cottage industry, and small tradesmen will make a comeback, fast.
6. Those who accept the new life of less material wealth will be able to find a new life of greater community, communion, and spiritual fulfillment.
7. Entertainment will undergo a renaissance, as local musicians, actors, and orchestras provide what the human spirit needs. Barn dances will be big in the country. Seriously.
I agree with the person who focused on water instead of climate as the key aspect of the newly desirable places of migration. The key will be the availability of free flowing surface water. Not aquifers like the Ogalala and not deep bore water that needs to be piped using diesel pumps. Irrigation will be a real issue for crops and since the biggest use of electricity in California is for pumping water then you can forget about growing things in CA. Put a fork in it turn it over, its done. What people will find is that there is preciously little land available for growing crops with reliable yields if you have to rely only on rain for irrigation.
In our Peak Oil analysis we always talk about Nitrogen, Phosphorus, Potash, Pesticide, Herbicide and Farm Machinery but we usually forget about the diesel water pumps.
- The few old timers left that remember raising animals and crops with low external inputs will be the new superstars. People will want to apprentice with a 90 year old grandma who teaches canning and chicken processing more than hanging with wall street veterans and investors (sorry Greg, couldn't resist).
- Books written before the age of industrialism on raising crops, animals and doing general farm repair and activities will rank higher in sales than books that talk about how to build your 401(k)
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