Peak Oil consumption appears to be here for the West. Jeffrey Brown should take a bow (while I cue the theme from "The Godfather").
That this has happened before any measurable decline in the production (looks like 6 years of flat production to me) in Crude & Condensate (the stuff we use for transportation fuels) leaves me wondering: What happens when production decline takes place?
A rate of change of 2 or 3% is what we have been experiencing... what might 6% to 8% feel like? Somewhat different, I should imagine. Even the present 2% or 3% will compromise the Financial System over time.
I had this to say in my November 28, 2007 Post:
An Apocalypse NOT!
I get a decent amount of email from the “doom and gloom” folks asking me when I think the “collapse” takes place. Collapse? What collapse?
The decline in oil availability will be a slow, grinding process (in my opinion) that will not fit nicely in a 2 hour movie, 3 minute pop hit, or 15 second political sound bite mindset. I hope I can disabuse the doomers that visit here that they need some kind of bomb shelter. Although I fully appreciate your point of view, my commentary is directed toward how one might direct the investments that they have worked so hard for. I sincerely believe that the U.S. oil supply situation will have profound effects on our financial and real estate markets and currency over the next 5 years, but I do not think this will happen on a Tuesday afternoon. Nor do I believe that we will descend into anarchy. Are not resource wars (starting with Iraq), and the prospect of hyperinflation, and stagnant or declining GDP enough? Well, at least I hope they are.
My issue is this: Why should you work so hard only to pour your investment dollars into a leaking bucket? You would have been better off spending those shekels on vacations, expensive wine, and song. (Actually, that sort of appeals to me.) Some might find that pecuniary, but those that do probably did not spend a career doggedly pursuing some level of financial independence. Actually, I am quite sure that on some level the tied dye set is HOPING for a collapse. Teach those yuppie pricks a lesson.
I know that a lot of the peak oil blogsphere is filled with disaster scenarios, but I sincerely doubt this is the most likely outcome. That argument that we will experience immanent agricultural disaster due to declining energy inputs is just not that likely. The markets are efficient enough to redistribute those inputs away from Suzie-Cuzie’s trip to the mall and into the farmer’s tank and fertilizer bin. Yes, food is going to get much more expensive, and yes, this will fall disproportionately on the poor. But the aggregate AMOUNT of food available to Americans is not the problem, but rather how to pay for assistance to the poor.
This is not to say that our agricultural exports won’t decline and harm others. I sadly think that is a rather likely outcome. Those of you that have been following my blog know that I have great concerns in this area. Wheat and corn production will become an increasingly expensive proposition, and that will negatively affect aggregate crop production, just look at wheat inventories, and in turn available exports and domestic meat production, but the lesson of history is that people will be “incentivized” to produce some of their own food. As an avid gardener, I can tell you that a simple kitchen garden can overwhelm your ability to consume all that is produced at harvest time, the surplus of which can certainly be preserved. It will not be necessary to produce ALL of our own food (at least not for 20 or 30 years, all bets are off at that point in the oil production curve) just enough to bring the marginal scarcity food cost down to an affordable level.
I get email from one dour fellow who tells me that we have lost all of the knowledge to do this. What knowledge, gardening? Get a grip, and join my garden club. You would be impressed with what these folks know.
As my friend FireAngel from theoildrum.com likes to point out, if India can feed over 1 billion people with less arable land and far less fossil fuel imports, North America certainly can feed its population.
There is also some slack for the economy in the wasteful way in which we use oil. FireAngel recently pointed out that driving around in circles does not increase GDP.
If it were going to be Armageddon, what would be the point of investing? Better to blow it all on a trip around the world.
No, the Apocalypse won’t be arriving anytime soon, but a paradigm shift is, in my opinion, underway as I write this. In this paradigm shift, there will be winners and there will be losers. Not much different than our current reality. It is the INSISTING that things be a certain way that will get you into trouble. Flexibility and adaptability will go a long way in the environment I foresee.
No, it won’t be business as usual. We are likely to be a whole lot less mobile, live in smaller homes, and consume less frilly BS. We won’t be commuting as far, be more involved in our communities and our children’s lives, and we even might all have a new hobby – gardening. But I ask you: Is that really Armageddon?
End of Post
Clearly, my estimate (in other posts) that total availability of Oil to the U.S. in 2020 would be 8 to 12 million barrels per day in 2020 looks a bit aggressive... perhaps 12.5 to 15.5 million bpd? Then again, maybe Iraq comes in in Spades and things are not so dour... or perhaps not.
This may feel like a whimper to some of us... but I think that that is completely subjective as it appears to me that a "collapse" has already begun for some... for a fortunate minority, said "collapse" won't be happening in their lifetimes. Life is not fair.
Given the attack on the system by The Tea Party and the Occupy folks, my bet is that the current system of rationing fuel solely by price will become untenable/unacceptable. It will be hard to justify allowing Fat Cats fuel for their private jet while people freeze in Northern Maine. I am curious to see how that works out... and it might convulse for a while, but in the end I think (hope?) the beast starves to death.
More soon.
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Revisiting that article on the Maine couple freezing, I couldn't help but notice the man was standing in a totally uninsulated basement, complaining about the cold, in a short sleeve polo jersey.
I mentioned over on Stuart Staniford's blog that quick computer modeling of my small (1050 sq ft) northern Maine home took its oil consumption down from 1150 gallons a year, to about 95. This was done through aggressive reinsulation of walls (that need their badly beaten sheet rock replaced anyways), including closed cell foam all over the attic, and 1 inch of rigid foam over the studs before new drywall, new windows (the house only as 14), and lots of rigid foam insulation (to R 20 - 4 inches) covering expansive, but easily accessed, basement walls, along with insulating the basement ceiling.
The reorganization folks in the US will suffer will be painful, but it can indeed be done, and the outcome could be a good one.
It will continue to be a long, slow grind (or emergency, as Kunstler put it), but don't discount the potential for many, inflamed crises along the way either.
In a follow up story to the Maine couple's predicament, tens of thousands of dollars of donations flowed in from NYT readers to the oil company to pay for heat. One local energy guy donated his services to do an energy audit on their house as well.
From my experience, any donated $$ would be much better spent on an aggressive implementation of whatever the energy auditor ended up recommending.
Oh, and as for that 95 gallons of oil my house will still need, I'm putting in a wood stove or masonry heater. The wood equivalent of 100 gallons of fuel oil is a measly single cord or so.
BTW, anybody notice that the letter images Blogger is using to screen out posting bots is getting harder and harder for people to decipher too? :-(
The couple in that NYT's article about freezing in Maine also had 4 cats and a dog... between pet food and vet bills, seems like $500 to $1000 per year to me ($100 per year feed costs for the cats and $250 for the dog, and some vet bills...
The government would find it cheaper to relocate this couple to a warmer state than to subsidize their heat.
They have a distribute the heating oil fund but no distribute the insulation fund. This country has totally lost the ability to plan ahead. I have seen projects get turned down because of cost when the when the payback was 18 months and the savings would continue into perpetuity.
Up in Dixfield, ME, where the article is centered the average low for Jan is 10°F and the cold hardiness zone is -25°F. That is not a big problem if you deal with it rationally, if you simply buy more heating oil... Everyplace has it’s pros and cons and below the tree line the cons can be dealt with. Heat calcs are simple and god knows we have enough out of work engineers. If the government is going to have programs, is it too much to ask they be sensible.
Best,
Dan
Another thing, natural gas has cushioned the blow from high priced oil.
Between the shale gas increasing supply and the general, oil-shock-induced recession of the past few years, demand for natural gas, especially industrial demand, fell way off.
One wonders just how bad things could be if/when the shale gas thing passes and nat. gas prices start heading skyward with oil.
A metaphor I have used is the old joke about a woman who walks in and find her husband in bed with another woman. He denies that he is in bed with another woman, and asks, “Who are you going to believe, me or your lying eyes?”
Many analysts point toward slowly rising US crude oil production (up from 5.4 mbpd in 2004 to about 5.65 mbpd in 2011) and a slow increase in global total liquids production (inclusive of low net energy biofuels) as evidence that we don’t have any supply problems, but they are asking consumers, in effect, not to believe their lying eyes in regard to a doubling of annual global crude oil prices in six years–which is fundamentally a result of the ongoing decline in Global Net Exports of oil (GNE), with the Chindia region consuming an increasing share of a declining volume of GNE*.
At the Chindia region’s 2005 to 2010 rate of increase in their combined net oil imports, as a percentage of GNE, the Chindia region alone would consume 100% of GNE in about 19 years.
The dominant trend we have seen since 2005 is that the US, and other oil importing OECD countries, are being forced to consume a declining share of a declining volume of GNE. The bottom line is that the volumetric decline in ANE (Available Net Exports, or GNE less Chindia’s net imports) was about one mbpd (million barrels per day) per year from 2005 to 2010, from 40 mbpd in 2005 to 35 mbpd in 2010. I estimate that this volumetric decline rate will accelerate to between 1.4 and 2.0 mbpd per year between 2010 and 2020, with ANE being between 15 and 21 mbpd in 2020, versus 40 mbpd in 2005.
The fact that the US became a small net exporter of refined petroleum products last year is simply evidence that the US is being forced to reduce our oil consumption, via price rationing.
Incidentally, the seven major net oil exporters in the Americas and the Caribbean are: Venezuela, Canada, Colombia, Mexico, Argentina, Ecuador, Trinidad & Tobago. Their combined net oil exports fell from 6.0 mbpd in 2005 to 4.8 mbpd in 2010 (BP)–a one-fifth decline in only five years.
Slowly increasing net oil exports from Canada could not come close to even offsetting the ongoing regional net export decline.
For more info, do a Google Search for: Peak Oil Versus Peak Exports
*Top 33 net oil exporters in 2005, Primarily BP data base, total petroleum liquids, minor EIA data input
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