Denial II – Why we deny our Energy Condition
“Denial is the psychological process by which human beings protect themselves from things which threaten them by blocking knowledge of those things from their awareness. It is a defense which distorts reality; it keeps us from feeling the pain and uncomfortable truth about things we do not want to face. If we cannot feel or see the consequences of our actions, then everything is fine and we can continue to live without making any changes.” - CAIP website, author unknown
Before I delve further into the psyche of our national denial I want to make clear that I am not hoping for an energy crisis, population decline, financial crash, or even a date with Jessica Simpson (I'm happily married). I just call it as I see it. Further, I am more than willing to change my conclusions and assertions the VERY MOMENT THAT THE DATA CHANGES. I merely wish to explore the truth. That said, let's get to it.
Our collective denial regarding our society’s energy situation begs the questions why and how (or, more precisely, the process of how)? The “why” is, perhaps, more simply explained. The “how” is somewhat more complicated.
I am often asked: Does the “government”, or “the President”, or do “They” know about “Peak Oil”? And, “if this is true, why haven’t I/we been thoroughly informed”? Though the United States federal government has funded and received detailed reports on the issue from the U.S. Department of Energy and the Pentagon, the American body politic, and the American people, have and must continue to deny the reality of a permanent and accelerating decline in energy supplies – if we do not continue this denial WE WOULD HAVE TO ACTUALLY DO SOMETHING ABOUT IT. And those “somethings” are going to have real and immediate intended AND unintended consequences, much to the chagrin of our political leaders.
Why isn’t this front-page news? Why, indeed. It is not a conspiracy. The mainstream media is in the business of selling advertising, not public service. While they delight in the opportunity to bleed one unfortunate sot or another on the rack, they have little incentive to gore their holy cow(s) – the energy intensive industries that make up the backbone of their advertising revenues - residential real estate and automobiles.
Don’t count on Big Oil to be forthcoming on the issue. The executives at Big Oil are pulling down as much as 9-figure (that’s over $100,000,000) yearly compensation, and not for their brilliant execution (although that’s what the press releases claim). The record profits these corporations are enjoying at the moment have nothing to do with executing and everything to do with commodity prices (which these executives have no control over and have provided no value added, although they have been paid as such), but if you were in line for a $400 million compensation package, would you let ”Peak Oil” and high commodity prices take credit?
Corporate America outside of the energy sector is in no mood to be a hero (martyr). Once this issue breaks into the national dialogue corporate America’s stock options and 401k’s are going down like a rock in a pond.
If the media, corporate America, and our elected officials are disinclined to bring this issue to the fore… why would John Q. Public? It is far easier for John Q. Public to use his highly developed sense of denial (the same technique he uses for his obesity, smoking, drinking, lack of savings… we might not be able to save for the future but we sure can work the denial button).
Consider what might result should a sitting President (I should say "when", because this speech is coming, relatively soon) of the United States hold a news conference and state:
"My fellow Americans. It is my unfortunate duty to inform you that our petroleum supplies have entered a period of sustained and accelerating decreases in supplies. Within 15 years America will have 50% less oil available to its citizens than today, and within 30 years approximately 90% less….” (This speech does not have to take place all at once… it might be delivered over the course of several years by many political leaders. It might have already begun with the “America is addicted to oil” line in the last State of the Union address.) The speech will be entirely reactive. Most informed people will already know that we have entered terminal decline of energy supplies, and the uniformed will just be angry.
Of course the speech would be much longer and filled with pointless platitudes about the American people’s ability to handle adversity, blah, blah, blah… but then things get interesting. Upon waking from their denial, and once the idea is in the public domain and now without fear of ridicule, the American inteligencia would begin to explore the ramifications, combinations, and permutations of all of the possible outcomes, as well as the timing, of the overwhelming impacts that energy descent will have on our political, social, and economic structures, and they are going to do it OUT LOUD. Denial is going to evaporate instantly, only to be replaced by something worse – panic. Right now there is the heavy brake of denial slowing its momentum, but once we reach critical mass, nothing, and none of us, will be able to stand in its way.
The inteligencia will be the spark - but it is “middle management” on down to migrant farm worker that will become the fire. The lumpen masses will figure out that their ship ain’t coming in, and some might even be bright enough to figure out that they were the victims of societal propaganda, and that their ship was NEVER going to come in – and then they might get mad (more on that in the next article in this series titled ANGER). But first they will hoard.
They will hoard gasoline, propane, kerosene, etc… they will hoard food, water, and medicine, etc… they will hoard gold, silver, diamonds, etc… they will hoard weapons, etc… THEY WILL HOARDE EVERYTHING (everything except US dollars). This is the point when systems will likely begin to break down. But I digress; we are talking denial here…
I received more emails about the implications of declining energy availability and population on the housing market than anything else! What happens to housing when people can’t get to their second home in the mountains or at the beach, and there are less people in the society in the first place? Talk about denial: This is barely worth discussing – we have much bigger problems, folks.
Can the U.S. fiat currency system survive the knowledge that most fossil fuel energy supplies will dwindle to nothing before my infant son reaches middle age? NAFC (Not A Freaking Chance). Will people continue to pay back their 30-year mortgage? They won’t be able to (and will have no incentive to do so). So what happens to the financial markets and the banking system if people do not pay back their loans and the currency collapses? Nothing good. Unemployment in this environment would make the 1930’s look like a prom date.
Just “how” did we get to this level of denial? Not enough space here to do that justice. It was not some great conspiracy; more of a phenomena. Our method of government is purposely decentralized and its missions fragmented, our corporate institutions were not charged with saving us from ourselves, the media is there to entertain (after all, how can the media explain such a complicated issue in 12 minute segments punctuated by 3 minutes of 30 second distractions extolling the virtues of eating, driving, and then dieting, with the occasional “hope in a bottle” pitch?), and our educational institutions were too busy deceiving the American proletariat into believing that if you spent 10% of your working life and several hundred thousand dollars at their schools getting a certificate that says you were competent in sports massage therapy, art appreciation, or sensitivity training, or some other impossible to measure, nearly worthless “skill” (easy, if you think the skills have value, why are their compensation rates so low?), that you could compete with Ivy League graduates from establishment families, get a job at a Goldman Sachs, Lehman Brothers, or Bear Stearns (where the AVERAGE employee compensation, including secretaries, is over $500,000 per year) and live in a mansion in Greenwich, irrespective of your families social position.
I am not suggesting American life is, or should be, fair. Only that we have deceived ourselves into believing that it is. Life has always been a competition with its resultant “winners” and “losers”. If you are a self-made “winner” that came up out of the muck and mire, you understand this without further explanation. If you were born into a “winner” family, advantages such as private schools, summers on the Vineyard, a semester abroad, before beginning your career on Wall Street, the Law, or Medicine were the norm. Our very own George W. Bush, an admitted “C” student, was accepted to the prestigious Harvard Business School. Considering how limited seating was at HBS my bet is that some less-well-connected straight “A” student was the “loser” in that competition (it gets even better… “W” once said in commenting on performance enhancing drug use by athletes that “there are no short cuts to success” – "W" was a Yale legacy student (his family were Yale Aumni)! Hypocracy knows no bounds.) If you were born into a “loser” family, your experience was somewhat different than W’s. Still, “losers”, at least in America, did not starve. The rest of the world’s “losers” have not been so fortunate.
The definition of “winner” is going to be markedly different in our new environment: your progeny will survive. “Losers”, in the 21st century, will get a far less satisfactory consolation prize than the “losers” of the 20th century. That’s what population decline means. It’s just that when the U.N. says it, it sounds nicer.
We were all too busy with our nose to the grindstone to notice that the scale of growth in our population, energy, food consumption, and environmental impacts (over-fishing, anyone?) had grown beyond our ability to sustain them. Well, not everybody. SOMEONE OR SOMETHING spent an awful lot of money to dissuade Americans from accepting mankind’s contribution to climate change and that they could pump CO2 into the atmosphere with reckless abandon and without consequence. It wasn’t until the Chinese threatened to usurp our position as the CO2 emission leader that we began to realize that, while it is OK if WE do it, everybody can’t live like this (and by the way, why are you guys trying to steal “our” oil?).
I continue to maintain that there is no macro solution to this condition - and it is a condition, not a problem; problems have solutions - any more than there was a solution to the Tsunami of 2004, or the 1918 flu pandemic. You either survived these challanges or you did not, you were either a "winner" (survivor) or a "loser" (casualty). There will be "winners" and "losers" in the new paradigm brought to you courtesy of energy descent, and all of our denial in the aggregate will not change that outcome.
My infant son, born earlier this year, will likely never need a driver’s license. His children will not experience air travel. My older son’s first car will survive its fuel supply. Our denial is most prominently displayed in the way we prepare our children for their future – a future that will not exist.
Mentatt (at) yahoo (dot) com
Monday, May 28, 2007
Thursday, May 24, 2007
Denial. A powerful force, that. Einstein once famously remarked that: “compound interest was the most powerful force in the Universe” (of course he was referring to the exponential function, the most common representation of which is known as compound interest). Perhaps it is. I'm gonna go with denial.
Denial shapes our politics and policies, our parenting, our planning, our view of the future, and our recollection of the past. Denial shapes our relationships (a second marriage, after all, has oft been said to be the triumph of hope over experience) with our spouses and lovers, our families, our friends and co-workers. Without it there would be many days that many of use would be unable to cope. Denial has its positive attributes. But denial of the magnitude of our (think you and your family) dependence on oil, natural gas, and coal and of the CERTAINTY that, at some point, we will deplete these resources is not one of these. And it is a certainty – probability = 1.00. Not up for debate.
The lead story for all of 2006 and 2007 in the mainstream media has been energy (prices). Let’s connect the dots, shall we?
The President of the United States says we must reduce oil usage by 20% by 2017 (gonna happen anyway as there will be less oil available). D’ya think he knows something?
Worldwide inventories of the major foodstuffs – wheat, corn, rice, milk and dairy – are at their lowest levels of “days of supply” in over 30 years. Inventories of processed, preserved, or fresh foods, the stuff Americans have come to rely on, can be measured in DAYS (got that? The food you are going to eat next week is, for the most part, a work in progress today. I worked in the Fulton Fish market one summer where the saying went: “sell it or smell it”. If the trucks and farm equipment can’t roll because of a lack of diesel… Or if the electricity goes out - no refrigeration - local food supplies will not be what we have come to expect, to say the least.)
Inventories of crude oil, motor gasoline and distillates are at multi decade lows when measured in days of supply (does any other measure really matter?).
America has not built a new refinery in over 30 years, although we have expanded capacity at the existing refineries. What does the industry need with a new refinery if our oil supply is decreasing?
Oil companies are investing their record earnings by increasing dividends and buying back stock, rather than expanding exploration and production. Makes sense if their is little oil to find.
The average American has a 0% savings rate, and the U.S. runs a budget and trade deficit in the trillions (how can this improve if we borrow $1 BILLION per day just to buy the oil we import?).
The U.S. $ is falling in value relative to gold and our major trading partners' currency (Iran and Venezuela no longer wish to take U.S. $ and are now taking payment for their oil in Euros).
The average American lives in a car dependent environment. He needs a car to get to and from his home, collect food, and perform his livelihood.
America has less arable farmland in production than in 1950 (but we do have a bunch of soon to be worthless housing divisions on that former farm land).
U.S. population is over 300 million (considering our immigration issue, this is most certainly an understatement) at this time, up from 151 million in 1950. World population has followed a similar trajectory.
80% of the cost of food is fuel inputs. As fuel prices rise (supply falls), food prices will also rise (supply falls). Less oil = less food.
Almost 2 years of data show that, despite rising prices and their incentive on producers, oil production has been in decline (not population though, that continues to grow).
China is a net importer of coal, and the U.S. coal production PEAKED in 1998, in terms of BTU’s (not tonnage; all coal is not created equal in it’s energy content). Only 15% of the WORLD’S coal production is available for import (85% of it is used where it is produced).
Natural Gas production peaked in North America in 2002, with drilling activity up 100% since that year. Although Natural Gas can be imported, it is far more difficult to do so than oil or coal.
COnsidering the previous 2 "dots": The U.S. has increased, and will increase, its dependence on foreign energy sources. (Unfortunately, these sources will no longer be there to import and depend on in the first place. See "dot" number 1.)
Human population growth tracked the rise in Oil use since 1859 (Colonel Drake's oil well), compounding already advancing population growth brought on by the use of coal in the industrial revolution.
Prior to the industrial revolution (marked by the use of hydrocarbons) very little financial capital, in proportion to the general population, existed. The growth in financial capital, fiat currency, bonds, stocks, mortgages, debt obligations, etc… closely mirrored man’s increased use of hydrocarbon’s.
Here is how I connect these dots:
The industrial revolution was made possible by hydrocarbons. As hydrocarbon availability declines, so will industrial output. At the end of the hydro carbon era, which for all intents and purposes to the common person will be 75 years, more or less, mankind will find the end of hydrocarbon industrial output. Over the next 40 years or so, we are going to rewind most of the industrial revolution. I find this disconcerting, as it does not bode well for my 401k.
Financial capital will decline with the decline of energy usage, and will be back to its pre-industrial revolution level at the end of hydrocarbons. Its decline will track the decline in hydrocarbon usage.
Population levels will decline with the decline in energy usage. Given a variable population number at the end of hydrocarbon availability, i.e. 1 billion, 2 billion, 3 billion, and given a time period certain, i.e. 75, 85, or 100 years, it is not a terribly complicated equation to arrive at an average number of excess deaths over births to arrive at that population target.
For instance, if one were to model a 2 billion person carrying capacity of the planet at the end of oil age, and that date would be 75 years hence, excess deaths over births would be 6.5 billion - 2 billion/(75*365) or 164,000 excess deaths over births per day, every day, for 75 years. This would be a hell of a shock to a world that is used to 300,000+ excess births over deaths per day. To put this in context, the Nazi genocide against European Jews, Roma, Gays, the Disabled, Catholic Poles, and other groups (no disrespect meant to any group not specifically mentioned, a la'shalom) resulted in roughly (using data points from wikipedia.org) 6500 excess deaths (murders) per day.
I have 2 young sons. This issue will likely be settled in its entirety within their lifetimes. However, this progression lends itself to a bell chart, with the maximum excess deaths over births occurring sometime around 2030 – a mere 23 years from now. In case you think I have flipped my lid, this is not an original line of thinking. Several excellent white papers have been written on the subject and I am merely boiling down the salient points here.
Here comes the denial. I can feel it. You think : "SOMETHING WILL SAVE THE DAY"... Bio-fuels, hydrogen, nuclear power, tidal power, hydro, wind, prayer, little green men... Sorry, even when taken together, these energy sources/sinks will supply no more than a small fraction of the BTU's we get from fossil fuels (guess what percentage of American voters know; a: what BTU stands for, and b: what measurement BTU represents?).
I am not running for office. No American politician at this time in our history is going to run on a platform of catastrophe. But there are alot of people in our federal government that know this issue well. Just Google the term "peak oil congressional caucus", or the former Director of the CIA "James Woolsey, Peak Oil". It is not just me.
Think my math is wrong? The modeling is not an exact science (but the math is). Ask yourself 2 questions:
What is the population carrying capacity of the planet in the absence of oil?
How many years between today and the end of oil (the peak date does not really matter in this context)?
Even if you stretch the final date out 100 years (NAFC - "not a freaking chance", is a technical term in hospital triage) and use a 3 billion-population figure (about double the pre oil human population) the number of excess deaths over births is mind-boggling. You can then slope the graph any way you see fit. Guess what? No matter how you slope that graph, or how much margin of error you give to the final date and final population, the excess deaths over births each and every year during all model periods is horrific (ever hear of Easter Island?).
There is no macro (society wide) solution. “They” are not going to be able to come up with a solution to this conundrum under any circumstance. "They" are going to take care of their own. Many of "them" are preparing for this as we speak. There are going to be less people, a lot less people, on G-d’s (formerly) green earth in the coming decades. The people who make the right decisions and take the right actions (whatever that may be), right now, will be far better off than the rest.
Have a nice day!
mentatt (at) yahoo (dot) com
Denial shapes our politics and policies, our parenting, our planning, our view of the future, and our recollection of the past. Denial shapes our relationships (a second marriage, after all, has oft been said to be the triumph of hope over experience) with our spouses and lovers, our families, our friends and co-workers. Without it there would be many days that many of use would be unable to cope. Denial has its positive attributes. But denial of the magnitude of our (think you and your family) dependence on oil, natural gas, and coal and of the CERTAINTY that, at some point, we will deplete these resources is not one of these. And it is a certainty – probability = 1.00. Not up for debate.
The lead story for all of 2006 and 2007 in the mainstream media has been energy (prices). Let’s connect the dots, shall we?
The President of the United States says we must reduce oil usage by 20% by 2017 (gonna happen anyway as there will be less oil available). D’ya think he knows something?
Worldwide inventories of the major foodstuffs – wheat, corn, rice, milk and dairy – are at their lowest levels of “days of supply” in over 30 years. Inventories of processed, preserved, or fresh foods, the stuff Americans have come to rely on, can be measured in DAYS (got that? The food you are going to eat next week is, for the most part, a work in progress today. I worked in the Fulton Fish market one summer where the saying went: “sell it or smell it”. If the trucks and farm equipment can’t roll because of a lack of diesel… Or if the electricity goes out - no refrigeration - local food supplies will not be what we have come to expect, to say the least.)
Inventories of crude oil, motor gasoline and distillates are at multi decade lows when measured in days of supply (does any other measure really matter?).
America has not built a new refinery in over 30 years, although we have expanded capacity at the existing refineries. What does the industry need with a new refinery if our oil supply is decreasing?
Oil companies are investing their record earnings by increasing dividends and buying back stock, rather than expanding exploration and production. Makes sense if their is little oil to find.
The average American has a 0% savings rate, and the U.S. runs a budget and trade deficit in the trillions (how can this improve if we borrow $1 BILLION per day just to buy the oil we import?).
The U.S. $ is falling in value relative to gold and our major trading partners' currency (Iran and Venezuela no longer wish to take U.S. $ and are now taking payment for their oil in Euros).
The average American lives in a car dependent environment. He needs a car to get to and from his home, collect food, and perform his livelihood.
America has less arable farmland in production than in 1950 (but we do have a bunch of soon to be worthless housing divisions on that former farm land).
U.S. population is over 300 million (considering our immigration issue, this is most certainly an understatement) at this time, up from 151 million in 1950. World population has followed a similar trajectory.
80% of the cost of food is fuel inputs. As fuel prices rise (supply falls), food prices will also rise (supply falls). Less oil = less food.
Almost 2 years of data show that, despite rising prices and their incentive on producers, oil production has been in decline (not population though, that continues to grow).
China is a net importer of coal, and the U.S. coal production PEAKED in 1998, in terms of BTU’s (not tonnage; all coal is not created equal in it’s energy content). Only 15% of the WORLD’S coal production is available for import (85% of it is used where it is produced).
Natural Gas production peaked in North America in 2002, with drilling activity up 100% since that year. Although Natural Gas can be imported, it is far more difficult to do so than oil or coal.
COnsidering the previous 2 "dots": The U.S. has increased, and will increase, its dependence on foreign energy sources. (Unfortunately, these sources will no longer be there to import and depend on in the first place. See "dot" number 1.)
Human population growth tracked the rise in Oil use since 1859 (Colonel Drake's oil well), compounding already advancing population growth brought on by the use of coal in the industrial revolution.
Prior to the industrial revolution (marked by the use of hydrocarbons) very little financial capital, in proportion to the general population, existed. The growth in financial capital, fiat currency, bonds, stocks, mortgages, debt obligations, etc… closely mirrored man’s increased use of hydrocarbon’s.
Here is how I connect these dots:
The industrial revolution was made possible by hydrocarbons. As hydrocarbon availability declines, so will industrial output. At the end of the hydro carbon era, which for all intents and purposes to the common person will be 75 years, more or less, mankind will find the end of hydrocarbon industrial output. Over the next 40 years or so, we are going to rewind most of the industrial revolution. I find this disconcerting, as it does not bode well for my 401k.
Financial capital will decline with the decline of energy usage, and will be back to its pre-industrial revolution level at the end of hydrocarbons. Its decline will track the decline in hydrocarbon usage.
Population levels will decline with the decline in energy usage. Given a variable population number at the end of hydrocarbon availability, i.e. 1 billion, 2 billion, 3 billion, and given a time period certain, i.e. 75, 85, or 100 years, it is not a terribly complicated equation to arrive at an average number of excess deaths over births to arrive at that population target.
For instance, if one were to model a 2 billion person carrying capacity of the planet at the end of oil age, and that date would be 75 years hence, excess deaths over births would be 6.5 billion - 2 billion/(75*365) or 164,000 excess deaths over births per day, every day, for 75 years. This would be a hell of a shock to a world that is used to 300,000+ excess births over deaths per day. To put this in context, the Nazi genocide against European Jews, Roma, Gays, the Disabled, Catholic Poles, and other groups (no disrespect meant to any group not specifically mentioned, a la'shalom) resulted in roughly (using data points from wikipedia.org) 6500 excess deaths (murders) per day.
I have 2 young sons. This issue will likely be settled in its entirety within their lifetimes. However, this progression lends itself to a bell chart, with the maximum excess deaths over births occurring sometime around 2030 – a mere 23 years from now. In case you think I have flipped my lid, this is not an original line of thinking. Several excellent white papers have been written on the subject and I am merely boiling down the salient points here.
Here comes the denial. I can feel it. You think : "SOMETHING WILL SAVE THE DAY"... Bio-fuels, hydrogen, nuclear power, tidal power, hydro, wind, prayer, little green men... Sorry, even when taken together, these energy sources/sinks will supply no more than a small fraction of the BTU's we get from fossil fuels (guess what percentage of American voters know; a: what BTU stands for, and b: what measurement BTU represents?).
I am not running for office. No American politician at this time in our history is going to run on a platform of catastrophe. But there are alot of people in our federal government that know this issue well. Just Google the term "peak oil congressional caucus", or the former Director of the CIA "James Woolsey, Peak Oil". It is not just me.
Think my math is wrong? The modeling is not an exact science (but the math is). Ask yourself 2 questions:
What is the population carrying capacity of the planet in the absence of oil?
How many years between today and the end of oil (the peak date does not really matter in this context)?
Even if you stretch the final date out 100 years (NAFC - "not a freaking chance", is a technical term in hospital triage) and use a 3 billion-population figure (about double the pre oil human population) the number of excess deaths over births is mind-boggling. You can then slope the graph any way you see fit. Guess what? No matter how you slope that graph, or how much margin of error you give to the final date and final population, the excess deaths over births each and every year during all model periods is horrific (ever hear of Easter Island?).
There is no macro (society wide) solution. “They” are not going to be able to come up with a solution to this conundrum under any circumstance. "They" are going to take care of their own. Many of "them" are preparing for this as we speak. There are going to be less people, a lot less people, on G-d’s (formerly) green earth in the coming decades. The people who make the right decisions and take the right actions (whatever that may be), right now, will be far better off than the rest.
Have a nice day!
mentatt (at) yahoo (dot) com
Sunday, May 20, 2007
This just in (and this is hilarious!):
In a statement on May 19, 2007 the G8 said, “volatile energy prices remain a concern and we will remain vigilant”.
HAHAHAHAHAHAHAHA!!!!
You do that! Remain vigilant! Thanks!
HAHAHAHAHAHAHA!!!!
Gosh! That kills me!
OK, I have recovered my composure.
First off, G8 guys, is that energy prices are not volatile. Here is a definition of volatile from wikipedia.org:
"Volatile means something changing or changeable"
The volatility of oil prices this year has been on the low end of recent years, primarily because we did not have a “shoulder period” this spring. Oil prices have been surprisingly steady in their price direction – UP.
All right, I’ll cut these guys a break for misusing volatile or not knowing the meaning of the word. After all, the G8 ministers are only our best and brightest… now I will kick the s#*%t out of them for the “vigilant” gig.
As King Arthur said to the Black Knight in "Monty Python and the Holly Grail", after he cut off the Black Knight’s arms and one leg and the Black Knight still wanted to fight:
“What are you going to do? Bleed on me?”
Exactly what, of value, are the G8 ministers going to do if oil supplies decline and the price continues to rise? I am sure an ambitious prosecutor or two will hang a couple of energy executives for the benefit of the “mobs of Rome”, a couple of world leaders will make a speech or 100, CNN will run a special “We Were Warned, Part 1 thru 75”, Wall Street will lead the Establishment in its standard program of denial… but that does not answer the question.
So I will.
Nothing. They will do nothing. You are on your own. Get paddling.
The powerful will not be so powerful without the energy to power their power.
Unless they can run the system with the hot air they continue to blow.
Mentatt (at) yahoo (dot) com
In a statement on May 19, 2007 the G8 said, “volatile energy prices remain a concern and we will remain vigilant”.
HAHAHAHAHAHAHAHA!!!!
You do that! Remain vigilant! Thanks!
HAHAHAHAHAHAHA!!!!
Gosh! That kills me!
OK, I have recovered my composure.
First off, G8 guys, is that energy prices are not volatile. Here is a definition of volatile from wikipedia.org:
"Volatile means something changing or changeable"
The volatility of oil prices this year has been on the low end of recent years, primarily because we did not have a “shoulder period” this spring. Oil prices have been surprisingly steady in their price direction – UP.
All right, I’ll cut these guys a break for misusing volatile or not knowing the meaning of the word. After all, the G8 ministers are only our best and brightest… now I will kick the s#*%t out of them for the “vigilant” gig.
As King Arthur said to the Black Knight in "Monty Python and the Holly Grail", after he cut off the Black Knight’s arms and one leg and the Black Knight still wanted to fight:
“What are you going to do? Bleed on me?”
Exactly what, of value, are the G8 ministers going to do if oil supplies decline and the price continues to rise? I am sure an ambitious prosecutor or two will hang a couple of energy executives for the benefit of the “mobs of Rome”, a couple of world leaders will make a speech or 100, CNN will run a special “We Were Warned, Part 1 thru 75”, Wall Street will lead the Establishment in its standard program of denial… but that does not answer the question.
So I will.
Nothing. They will do nothing. You are on your own. Get paddling.
The powerful will not be so powerful without the energy to power their power.
Unless they can run the system with the hot air they continue to blow.
Mentatt (at) yahoo (dot) com
Saturday, May 19, 2007
"Correlation does not imply causation”
This elementary scientific concept certainly gets short shrift from the American mainstream media. To be fair, they are in the business of selling advertising, not accuracy. (If my writing seems distracted, I am singing nursery rhymes to my 3 month old as I write this.)
The following is a definition from Wikipedia..org
“Correlation does not imply causation” is a phrase used in the sciences and statistics to emphasize that correlation between two variables does not imply there is a cause-and-effect relationship between the two. Its converse, correlation implies causation, is a logical fallacy by which two events that occur together are prematurely claimed to have a cause-and-effect relationship. It is also known as cum hoc ergo propter hoc (Latin for "with this, therefore because of this") and false cause.”
Here is a perfect example from USA Today:
“The average American motorist is driving substantially fewer miles for the first time in 26 years because of high gas prices and demographic shifts, according to a USA TODAY analysis of federal highway data.
The growth in miles driven has leveled off dramatically in the past 18 months after 25 years of steady climbs despite the addition of more than 1 million drivers to the nation's streets and highways since 2005. Miles driven in February declined 1.9% from February 2006 before rebounding slightly for a 0.3% year-over-year gain in March, data from the Federal Highway Administration show. That's in sharp contrast to the average annual growth rate of 2.7% recorded from 1980 through 2005.”
Let’s start out with the salient fact – “The average American motorist is driving substantially fewer miles for the first time in 26 years” the explanation supplied by the journalist as to WHY is just an example of the media’s warm embrace of the written word and their abject terror of math.
If there is less fuel being provided to the system, but the number of; a) drivers and b) vehicles, increases; what must, by mathematical necessity, happen? Each person must drive less (provided no change in gas mileage, and there was none). The PRICE of gasoline CORRELATES, but is not the CAUSE. How did I come to this conclusion? There was less gasoline inventory at the end of the 12-month period. If prices were the cause of the drop, rather than the supply, inventories would have increased. In fact, they declined.
For arguments sake, let’s say that the 2.7% decline was to continue (the decline will accelerate), and that the average American drives 15,000 miles per year. At a decline rate of 2.7%, the average American will be down to driving 11408 miles per year in 2017.
Now let’s move to a range, applied to all liquid fuels, I think will be closer to reality: a 6 – 8 % per year decline. With a 6% decline, in 2012 the average American would be able to drive “only” 11009 miles per year, and 8,080 miles in 2017. With an 8% decline you are down to 9,886 miles driven in 2012 and 6,516 in 2017. In addition to being overly simplified, this assumes that the population stays constant, and that heating oil, shipping, and industrial use drops by a commensurate amount. This is extremely unlikely as, for example, a consumer is going to view his daughter’s social driving as having less importance than heating the family’s home, among other variables.
This is why I firmly believe that the new car you buy in 2007 will outlive its fuel supply.
Why, then, are we building new highways and improving the ones we have? Denial. What is to become of the Big 3, Honda, Toyota… the steel and glass companies that supply them, and the advertising agencies that represent them, and the networks that air their commercials? Good-bye, Nick (I am dating myself here). What effect does that have on your business, job, portfolio, home value..? but there’s more!
How, exactly, are you going to get to your home out in the suburbs? How are you going to shuttle the chachkas (knickknacks) you bought at Home Depot to that home? How are you going to get to Home Depot?
Now extrapolate this conundrum out to the food supply. Still want to keep digging that hole?
As Kurt Vonnegut would say: “Welcome to the Monkey House”
Mentatt (at) yahoo (dot) com
This elementary scientific concept certainly gets short shrift from the American mainstream media. To be fair, they are in the business of selling advertising, not accuracy. (If my writing seems distracted, I am singing nursery rhymes to my 3 month old as I write this.)
The following is a definition from Wikipedia..org
“Correlation does not imply causation” is a phrase used in the sciences and statistics to emphasize that correlation between two variables does not imply there is a cause-and-effect relationship between the two. Its converse, correlation implies causation, is a logical fallacy by which two events that occur together are prematurely claimed to have a cause-and-effect relationship. It is also known as cum hoc ergo propter hoc (Latin for "with this, therefore because of this") and false cause.”
Here is a perfect example from USA Today:
“The average American motorist is driving substantially fewer miles for the first time in 26 years because of high gas prices and demographic shifts, according to a USA TODAY analysis of federal highway data.
The growth in miles driven has leveled off dramatically in the past 18 months after 25 years of steady climbs despite the addition of more than 1 million drivers to the nation's streets and highways since 2005. Miles driven in February declined 1.9% from February 2006 before rebounding slightly for a 0.3% year-over-year gain in March, data from the Federal Highway Administration show. That's in sharp contrast to the average annual growth rate of 2.7% recorded from 1980 through 2005.”
Let’s start out with the salient fact – “The average American motorist is driving substantially fewer miles for the first time in 26 years” the explanation supplied by the journalist as to WHY is just an example of the media’s warm embrace of the written word and their abject terror of math.
If there is less fuel being provided to the system, but the number of; a) drivers and b) vehicles, increases; what must, by mathematical necessity, happen? Each person must drive less (provided no change in gas mileage, and there was none). The PRICE of gasoline CORRELATES, but is not the CAUSE. How did I come to this conclusion? There was less gasoline inventory at the end of the 12-month period. If prices were the cause of the drop, rather than the supply, inventories would have increased. In fact, they declined.
For arguments sake, let’s say that the 2.7% decline was to continue (the decline will accelerate), and that the average American drives 15,000 miles per year. At a decline rate of 2.7%, the average American will be down to driving 11408 miles per year in 2017.
Now let’s move to a range, applied to all liquid fuels, I think will be closer to reality: a 6 – 8 % per year decline. With a 6% decline, in 2012 the average American would be able to drive “only” 11009 miles per year, and 8,080 miles in 2017. With an 8% decline you are down to 9,886 miles driven in 2012 and 6,516 in 2017. In addition to being overly simplified, this assumes that the population stays constant, and that heating oil, shipping, and industrial use drops by a commensurate amount. This is extremely unlikely as, for example, a consumer is going to view his daughter’s social driving as having less importance than heating the family’s home, among other variables.
This is why I firmly believe that the new car you buy in 2007 will outlive its fuel supply.
Why, then, are we building new highways and improving the ones we have? Denial. What is to become of the Big 3, Honda, Toyota… the steel and glass companies that supply them, and the advertising agencies that represent them, and the networks that air their commercials? Good-bye, Nick (I am dating myself here). What effect does that have on your business, job, portfolio, home value..? but there’s more!
How, exactly, are you going to get to your home out in the suburbs? How are you going to shuttle the chachkas (knickknacks) you bought at Home Depot to that home? How are you going to get to Home Depot?
Now extrapolate this conundrum out to the food supply. Still want to keep digging that hole?
As Kurt Vonnegut would say: “Welcome to the Monkey House”
Mentatt (at) yahoo (dot) com
Friday, May 18, 2007
“When you find yourself in a hole, stop digging” – well known proverb, author Unknown
The energy markets continue to roil worldwide as it sinks in that perhaps, this time, the boy who cried wolf’s wolf actually showed up. Is this the beginning of the grinding effects of depletion? It is impossible to be sure; all roads lead to Rome, and all data point this way. However, if it is, and you don’t make contingency plans NOW, all you are doing is digging yourself, and your family, a deeper hole.
For better or worse we are entering a significant “tragedy of the commons” period, in that we will acutely feel its consequences . For those not familiar with, or who have forgotten their European history (and because I am feeling lazy today, I will use someone else’s stuff) I have attached here an explanation by Gary W. Harding:
The Commons
What is the Commons?
“The "commons" is any resource which is shared by a group of people. Such things as the air we breath and the water we drink come from commons. In many parts of the world; new land for farming and grazing land for stock, fish from the sea, and wood for fuel and housing are treated as commons.
What is the Logic of the Commons?
The "logic of the commons" is as follows: Each household has the right to take resources from and put wastes into the commons. To accumulate wealth, each household believes that it can acquire one unit of resources or dump one unit of waste while distributing one unit of cost across all of the households with whom the commons is shared. Thereby, the gain to the household appears large and the cost very small. Some households accumulate wealth more rapidly than others and this, in turn, gives them the means to access an even larger share of the commons.
The fallacy in the logic of the commons lies in the failure to recognize that all households are attempting to do the same thing. Thus, on average, one unit of gain for a household actually produces a net one unit of cost for each household. However, selfish households accumulate wealth from the commons by acquiring more than their fair share of the resources and paying less than their fair share of the total costs. Ultimately, as population grows and greed runs rampant, the commons collapses and ends in "the tragedy of the commons" (Garrett Hardin, Science 162:1243, 1968).
How does the Commons work?
The logic of the commons breaks down when resources decline and/or population grows too large. Consider the following example:
Fourteenth century Britain was organized as a loosely aligned collection of villages, each with a common pasture for villagers to graze horses, cattle and sheep. Each household attempted to gain wealth by putting as many animals on the commons as it could afford. As the village grew in size and more and more animals were placed on the commons, overgrazing ruined the pasture. No stock could be supported on the commons thereafter. As a consequence of population growth, greed, and the logic of the commons, village after village collapsed.
An apparent solution to avert the collapse of the commons was the introduction of private ownership. Common lands were parceled up into small tracts, each owned by a household. If a household greedily destroyed its plot, its demise was its own fault. However, as population grew, each new generation of households was left with a smaller and smaller portion of the original holdings. And, there was still the opportunity for some households to accumulate wealth by acquiring land from others, one way or another. Thus, private ownership did nothing to control greed. It merely shifted to a new arena [See essay Politics, Economics and the Perpetuation of the Commons]. The number of landless households grew rapidly, each one descending deeper and deeper into abject poverty.
Commons other than land were not so easily parceled up. How could anyone own rain, wind, and the open ocean? The logic of the commons still prevails today for: fishing rights in coastal waters; roads and highways for travel and commerce; and a standing military for defense of territory.
The logic of the commons also includes a much more sinister element. As an example, consider the following episode:
"After the Civil War, the cattlemen in Edwards County, Texas overstocked the land, and when settlers started showing up in the 1880s, the cattlemen's answer was to crowd even more animals onto the land. At a stockmen's meeting, they produced: 'Resolved that none of us know, or care to know, anything about grasses, native or otherwise, outside of the fact that for the present, there are lots of them, the best on record, and we are after getting the most of them while they last.' (D. Duncan, MILES FROM NOWHERE, Penguin Books, 1994, pg. 145)."
Thus, we have cases of deliberate destruction of the commons to not only get the wealth out of it before someone else does, but also to leave nothing for others. Often, this has involved the ruin of other commons resources along with the ones sought after. The history of the quests for gold and whales are other examples. These kinds of episodes reflect instances of pure greed.
The commons is an ancient cultural and economic organizing principle. Before the agricultural revolution, each clan or tribe staked out a territory and all members had the right to hunt and gather within it. They often did so cooperatively. This worked well as long as their territory could be held, the commons was vast, and the relative population was small. Before the agricultural revolution, a commons tragedy was rare. It usually involved declining resources due to natural events, such as ice-ages. The tragedy of the commons has become more and more frequent since the agricultural revolution and its concomitant population growth. Its frequency has accelerated with the industrial revolution and the resultant population explosion. Now, the commons includes the whole Earth.
Why does the Commons continue?
In addition to the obvious (land, water, and air), much of our world is still treated as a commons today. In many cases, resources from these commons are no longer free for the taking. Dumping our wastes into the commons is not as free as it once was. One must pay a fee or be licensed to get access to the commons. In some cases, how much one can take away or dump into the commons is managed and/or regulated. But, all around the world; fisheries, wood, national parks, highways, parking and many other resources are commons just the same. Access to them merely requires a desire to do so and sufficient means.
Population growth, greed, and the logic of the commons has virtually destroyed the worlds ocean fisheries and the Amazon rain forest. Huge tracts of land have succumbed to desertification. Crowding overwhelms Yosemite National Park and the freeways and parking facilities in our big cities. The accumulation of greenhouse gasses in the atmosphere is precipitating significant global warming which will produce climate change [See essays The Atmospheric Commons and Global Warming and Human Population and Global Warming]. A significant loss of biodiversity is underway; some call it a mass-extinction event [See essay The Commons Unshared; Loss of Biodiversity].
Although international negotiations on managing the global commons for a sustainable yield continue, progress toward resolution is nil. Selfish points of view dominate the discussion [See essays Unpopular Science; The Tragedy Denied, We The People, and The Golden Rule]. Particularly intractable is control of population growth. The freedom to breed has been called "the second tragedy of the commons". Without population-growth control, greed and the logic of the commons makes a global-wide tragedy of the commons inevitable.”
You and I are part of the tragedy. Still the world is a competitive place, the rules are the rules, and if you and your progeny want to get through this next challenge, time is of the essence.
In case you were thinking that I would enclose herewith some kind of instruction manual for your investments, living, family and social arrangements, sorry, there are far too many permutations and combinations of circumstances unique to your situation. What I am advocating is that you act now as it takes far longer, is more complicated, with unseen failures along the way, in any solution-action that you undertake.
While an instruction manual on how best to deal with declining energy availability for each and every personal circumstance would be an impossible undertaking, an instruction manual on how best to really ruin your chances is easy:
JUST KEEP DOING WHAT YOU ARE DOING. KEEP DIGGING YOUR HOLE.
Mentatt (at) yahoo (dot) com
The energy markets continue to roil worldwide as it sinks in that perhaps, this time, the boy who cried wolf’s wolf actually showed up. Is this the beginning of the grinding effects of depletion? It is impossible to be sure; all roads lead to Rome, and all data point this way. However, if it is, and you don’t make contingency plans NOW, all you are doing is digging yourself, and your family, a deeper hole.
For better or worse we are entering a significant “tragedy of the commons” period, in that we will acutely feel its consequences . For those not familiar with, or who have forgotten their European history (and because I am feeling lazy today, I will use someone else’s stuff) I have attached here an explanation by Gary W. Harding:
The Commons
What is the Commons?
“The "commons" is any resource which is shared by a group of people. Such things as the air we breath and the water we drink come from commons. In many parts of the world; new land for farming and grazing land for stock, fish from the sea, and wood for fuel and housing are treated as commons.
What is the Logic of the Commons?
The "logic of the commons" is as follows: Each household has the right to take resources from and put wastes into the commons. To accumulate wealth, each household believes that it can acquire one unit of resources or dump one unit of waste while distributing one unit of cost across all of the households with whom the commons is shared. Thereby, the gain to the household appears large and the cost very small. Some households accumulate wealth more rapidly than others and this, in turn, gives them the means to access an even larger share of the commons.
The fallacy in the logic of the commons lies in the failure to recognize that all households are attempting to do the same thing. Thus, on average, one unit of gain for a household actually produces a net one unit of cost for each household. However, selfish households accumulate wealth from the commons by acquiring more than their fair share of the resources and paying less than their fair share of the total costs. Ultimately, as population grows and greed runs rampant, the commons collapses and ends in "the tragedy of the commons" (Garrett Hardin, Science 162:1243, 1968).
How does the Commons work?
The logic of the commons breaks down when resources decline and/or population grows too large. Consider the following example:
Fourteenth century Britain was organized as a loosely aligned collection of villages, each with a common pasture for villagers to graze horses, cattle and sheep. Each household attempted to gain wealth by putting as many animals on the commons as it could afford. As the village grew in size and more and more animals were placed on the commons, overgrazing ruined the pasture. No stock could be supported on the commons thereafter. As a consequence of population growth, greed, and the logic of the commons, village after village collapsed.
An apparent solution to avert the collapse of the commons was the introduction of private ownership. Common lands were parceled up into small tracts, each owned by a household. If a household greedily destroyed its plot, its demise was its own fault. However, as population grew, each new generation of households was left with a smaller and smaller portion of the original holdings. And, there was still the opportunity for some households to accumulate wealth by acquiring land from others, one way or another. Thus, private ownership did nothing to control greed. It merely shifted to a new arena [See essay Politics, Economics and the Perpetuation of the Commons]. The number of landless households grew rapidly, each one descending deeper and deeper into abject poverty.
Commons other than land were not so easily parceled up. How could anyone own rain, wind, and the open ocean? The logic of the commons still prevails today for: fishing rights in coastal waters; roads and highways for travel and commerce; and a standing military for defense of territory.
The logic of the commons also includes a much more sinister element. As an example, consider the following episode:
"After the Civil War, the cattlemen in Edwards County, Texas overstocked the land, and when settlers started showing up in the 1880s, the cattlemen's answer was to crowd even more animals onto the land. At a stockmen's meeting, they produced: 'Resolved that none of us know, or care to know, anything about grasses, native or otherwise, outside of the fact that for the present, there are lots of them, the best on record, and we are after getting the most of them while they last.' (D. Duncan, MILES FROM NOWHERE, Penguin Books, 1994, pg. 145)."
Thus, we have cases of deliberate destruction of the commons to not only get the wealth out of it before someone else does, but also to leave nothing for others. Often, this has involved the ruin of other commons resources along with the ones sought after. The history of the quests for gold and whales are other examples. These kinds of episodes reflect instances of pure greed.
The commons is an ancient cultural and economic organizing principle. Before the agricultural revolution, each clan or tribe staked out a territory and all members had the right to hunt and gather within it. They often did so cooperatively. This worked well as long as their territory could be held, the commons was vast, and the relative population was small. Before the agricultural revolution, a commons tragedy was rare. It usually involved declining resources due to natural events, such as ice-ages. The tragedy of the commons has become more and more frequent since the agricultural revolution and its concomitant population growth. Its frequency has accelerated with the industrial revolution and the resultant population explosion. Now, the commons includes the whole Earth.
Why does the Commons continue?
In addition to the obvious (land, water, and air), much of our world is still treated as a commons today. In many cases, resources from these commons are no longer free for the taking. Dumping our wastes into the commons is not as free as it once was. One must pay a fee or be licensed to get access to the commons. In some cases, how much one can take away or dump into the commons is managed and/or regulated. But, all around the world; fisheries, wood, national parks, highways, parking and many other resources are commons just the same. Access to them merely requires a desire to do so and sufficient means.
Population growth, greed, and the logic of the commons has virtually destroyed the worlds ocean fisheries and the Amazon rain forest. Huge tracts of land have succumbed to desertification. Crowding overwhelms Yosemite National Park and the freeways and parking facilities in our big cities. The accumulation of greenhouse gasses in the atmosphere is precipitating significant global warming which will produce climate change [See essays The Atmospheric Commons and Global Warming and Human Population and Global Warming]. A significant loss of biodiversity is underway; some call it a mass-extinction event [See essay The Commons Unshared; Loss of Biodiversity].
Although international negotiations on managing the global commons for a sustainable yield continue, progress toward resolution is nil. Selfish points of view dominate the discussion [See essays Unpopular Science; The Tragedy Denied, We The People, and The Golden Rule]. Particularly intractable is control of population growth. The freedom to breed has been called "the second tragedy of the commons". Without population-growth control, greed and the logic of the commons makes a global-wide tragedy of the commons inevitable.”
You and I are part of the tragedy. Still the world is a competitive place, the rules are the rules, and if you and your progeny want to get through this next challenge, time is of the essence.
In case you were thinking that I would enclose herewith some kind of instruction manual for your investments, living, family and social arrangements, sorry, there are far too many permutations and combinations of circumstances unique to your situation. What I am advocating is that you act now as it takes far longer, is more complicated, with unseen failures along the way, in any solution-action that you undertake.
While an instruction manual on how best to deal with declining energy availability for each and every personal circumstance would be an impossible undertaking, an instruction manual on how best to really ruin your chances is easy:
JUST KEEP DOING WHAT YOU ARE DOING. KEEP DIGGING YOUR HOLE.
Mentatt (at) yahoo (dot) com
Wednesday, May 16, 2007
“With Congress, every time they make a joke it's a law, and every time they make a law it's a joke.” – Will Rogers
Someone should point this blog, among others, to the jokers on Capitol Hill.
The Congress’ House Judiciary Panel has begun a series of hearings regarding the oil industry and gasoline prices, and they are looking for someone to blame - other than themselves, of course.
This is an absolute embarrassment: These are educated, well informed individuals. They know full well where the #@*!!!$ we are. We are in “deep doo-doo” as the elder President Bush would say.
The chairman of the House Judiciary Panel, Rep. John Conyers Jr., D-Mich., made this idiotic observation:
“Oil companies today are enjoying record profits, and while they could use those profits to invest in more production capacity, instead they use the money to buy back shares in the markets.”
Believe you me, Mr. Conyers, oil exploration companies would drill in their CEO’s mother’s backyard, right through her dog skippy’s grave, if they thought there was oil to be found. They are not in the business of drilling dry holes just to satisfy you, at the expense of their shareholders.
The world has been picked over, Mr. Conyers. Onshore oil production PEAKED over 30 years ago, and has steadily declined since then. That’s right. The world’s production of land-based oil has been in decline for DECADES. All of the incremental gains have occurred offshore. Unfortunately, that, too, is peaking. You can say it, Mr Conyers: "Peak Oil". There are no super-giant oil fields left to find, Mr. Conyers. Oh, we will find some oil to be sure, maybe as much as 100 - 150 billion barrels remain to be found. Just an FYI, Mr. Conyers – if we found the upper range of that estimate tomorrow, and we produced it as fast as we wished starting the day after, the world would finish off that 150 billion barrel addition to world reserves in 5 years – then we would be RIGHT BACK WHERE WE ARE NOW. And what if we don’t find that 100 – 150 billion barrels? The U.S. will be a third world nation in 10 years, tops. 13 years if we do.
Mr. Conyers, all the hearings that Congress could possibly schedule along with all the silly, pandering, meaningless BS the Members of Congress can spin, won’t do a thing but waste precious oil driving your leaderless butts to Capitol Hill.
Lest you think Conyers was the only dim wit present at this charade…
“Rep. Bart Stupak, D-Mich., who has crafted a bill that would make oil and gas price gouging a federal crime, questioned why gasoline prices soared even as crude oil prices dropped.
“In April ... crude oil was $7 a barrel cheaper than last year (but) gas prices were almost 50 cents a gallon higher,” said Stupak. “Clearly there’s more at play than simply the world crude oil market.” MSNBC.com
Ya think, Mr Stupak? You thought that up all by yourself? Impressive. We are talking gasoline, not crude oil, right? And sophisticated free market, free trade guys like us recognize that, like, if the U.S. consumer doesn’t like the price - the refiners could ship their product elsewhere. Further, Mr. Stupak, stick to lawyering, this clearly isn’t your thing. The U.S. imports gasoline, not just crude oil, Mr. Stupid – er , sorry – Mr. Stupak, and it is the price paid for those imports that sets the $#^$!!@ price of all of the #%$$!!@ gasoline! If we don’t like it, we don’t have to pay it! That’s how markets work. But before you do anything rash, like import tariffs or restrictions (I don’t think even Members of Congress are that daft), think of what would happen in the U.S. without those imports. OUR ENTIRE SYSTEM WOULD JUST SHUT DOWN. KAPUT. Think you’ve got political risks now? So let’s recap a little international commodity trade 101: It is the incremental unit of imported supply that sets the market price.
The MoRons in attendance were not limited to Members of Congress.
“Connecticut Attorney General Richard Blumenthal told the task force that “lax and lackluster” federal enforcement of antitrust laws has led to an explosion of oil industry mergers, “many of them profoundly anticompetitive and anti-consumer.” – MSNBC.com
Well, there you have it folks. We can solve the enrgy crisis with some good old fashioned enforcement of the antitrust laws. You know, oil is a G-d given right, kind of like electricity, and we should treat it like some kind of Utility company.
Mr. Blumnethal! Can you count? Sorry, I forgot, you’re a lawyer (worse, actually - you're a politician/lawyer trying to exploit the people's ignorance and their propensity to want to believe).. No matter, I’ll keep this simple… The major oil companies are small potatoes next to the National Oil Companies – ya know, like Saudi Arabia’s Aramco and Russia’s Yukos. You could chop up all of the U.S. based “big oil” companies anyway you like and it won’t change the one primary fact of the matter – the U.S. has only 2% of the world’s oil reserves! We are not in charge any more. All that the idiotic rumblings by U.S. politicians of a windfall profits tax has done over the past several years is wake up the governments of the countries that have the oil. If there is any windfall-profit-taxing to be done, it will be done by the country’s that have the oil.
The sad fact is that I don’t really believe that these guys are this dumb. I think they are cowardly, hard-boiled, political opportunists willing to manipulate young men into losing their lives and their limbs in the military while they cannot bring themselves to risk losing their political office by telling the American people the truth:
We have a serious energy problem, a crisis, really. There is no simple, no painless, solution to the problem. Oil was a one time geological gift, and there is no substitute or alternative for it in the scale we are accustomed to. Our lifestyle will be permanently and profoundly degraded as the supply of oil declines. At some point in the not too distant future, our collective way of life will no longer exist. Our Social Security system will not be able to function, nor will Medicare and Medicaid. Our currency, the dollar, will lose most of its value, as will most of our financial assets. Your new car will outlast its fuel supply, and your suburban home its energy supply. American’s will have to grow some, or a great deal, of their own food, and what food they consume will have traveled far less distance to their dinner plate. The family will be important again (if you don’t have a family, get one). Travel will be infrequent. Consumerism will be dead. Population will decline. Lawyers will be, for the most part, unnecessary and superflous (as will accountants, advertising agencies, investment bankers...). All of the bombing, invading, burning, and murdering of Oil producing nations will not change this outcome.
We are leaving the age of Oil behind.
mentatt (at) yahoo (dot) com
Someone should point this blog, among others, to the jokers on Capitol Hill.
The Congress’ House Judiciary Panel has begun a series of hearings regarding the oil industry and gasoline prices, and they are looking for someone to blame - other than themselves, of course.
This is an absolute embarrassment: These are educated, well informed individuals. They know full well where the #@*!!!$ we are. We are in “deep doo-doo” as the elder President Bush would say.
The chairman of the House Judiciary Panel, Rep. John Conyers Jr., D-Mich., made this idiotic observation:
“Oil companies today are enjoying record profits, and while they could use those profits to invest in more production capacity, instead they use the money to buy back shares in the markets.”
Believe you me, Mr. Conyers, oil exploration companies would drill in their CEO’s mother’s backyard, right through her dog skippy’s grave, if they thought there was oil to be found. They are not in the business of drilling dry holes just to satisfy you, at the expense of their shareholders.
The world has been picked over, Mr. Conyers. Onshore oil production PEAKED over 30 years ago, and has steadily declined since then. That’s right. The world’s production of land-based oil has been in decline for DECADES. All of the incremental gains have occurred offshore. Unfortunately, that, too, is peaking. You can say it, Mr Conyers: "Peak Oil". There are no super-giant oil fields left to find, Mr. Conyers. Oh, we will find some oil to be sure, maybe as much as 100 - 150 billion barrels remain to be found. Just an FYI, Mr. Conyers – if we found the upper range of that estimate tomorrow, and we produced it as fast as we wished starting the day after, the world would finish off that 150 billion barrel addition to world reserves in 5 years – then we would be RIGHT BACK WHERE WE ARE NOW. And what if we don’t find that 100 – 150 billion barrels? The U.S. will be a third world nation in 10 years, tops. 13 years if we do.
Mr. Conyers, all the hearings that Congress could possibly schedule along with all the silly, pandering, meaningless BS the Members of Congress can spin, won’t do a thing but waste precious oil driving your leaderless butts to Capitol Hill.
Lest you think Conyers was the only dim wit present at this charade…
“Rep. Bart Stupak, D-Mich., who has crafted a bill that would make oil and gas price gouging a federal crime, questioned why gasoline prices soared even as crude oil prices dropped.
“In April ... crude oil was $7 a barrel cheaper than last year (but) gas prices were almost 50 cents a gallon higher,” said Stupak. “Clearly there’s more at play than simply the world crude oil market.” MSNBC.com
Ya think, Mr Stupak? You thought that up all by yourself? Impressive. We are talking gasoline, not crude oil, right? And sophisticated free market, free trade guys like us recognize that, like, if the U.S. consumer doesn’t like the price - the refiners could ship their product elsewhere. Further, Mr. Stupak, stick to lawyering, this clearly isn’t your thing. The U.S. imports gasoline, not just crude oil, Mr. Stupid – er , sorry – Mr. Stupak, and it is the price paid for those imports that sets the $#^$!!@ price of all of the #%$$!!@ gasoline! If we don’t like it, we don’t have to pay it! That’s how markets work. But before you do anything rash, like import tariffs or restrictions (I don’t think even Members of Congress are that daft), think of what would happen in the U.S. without those imports. OUR ENTIRE SYSTEM WOULD JUST SHUT DOWN. KAPUT. Think you’ve got political risks now? So let’s recap a little international commodity trade 101: It is the incremental unit of imported supply that sets the market price.
The MoRons in attendance were not limited to Members of Congress.
“Connecticut Attorney General Richard Blumenthal told the task force that “lax and lackluster” federal enforcement of antitrust laws has led to an explosion of oil industry mergers, “many of them profoundly anticompetitive and anti-consumer.” – MSNBC.com
Well, there you have it folks. We can solve the enrgy crisis with some good old fashioned enforcement of the antitrust laws. You know, oil is a G-d given right, kind of like electricity, and we should treat it like some kind of Utility company.
Mr. Blumnethal! Can you count? Sorry, I forgot, you’re a lawyer (worse, actually - you're a politician/lawyer trying to exploit the people's ignorance and their propensity to want to believe).. No matter, I’ll keep this simple… The major oil companies are small potatoes next to the National Oil Companies – ya know, like Saudi Arabia’s Aramco and Russia’s Yukos. You could chop up all of the U.S. based “big oil” companies anyway you like and it won’t change the one primary fact of the matter – the U.S. has only 2% of the world’s oil reserves! We are not in charge any more. All that the idiotic rumblings by U.S. politicians of a windfall profits tax has done over the past several years is wake up the governments of the countries that have the oil. If there is any windfall-profit-taxing to be done, it will be done by the country’s that have the oil.
The sad fact is that I don’t really believe that these guys are this dumb. I think they are cowardly, hard-boiled, political opportunists willing to manipulate young men into losing their lives and their limbs in the military while they cannot bring themselves to risk losing their political office by telling the American people the truth:
We have a serious energy problem, a crisis, really. There is no simple, no painless, solution to the problem. Oil was a one time geological gift, and there is no substitute or alternative for it in the scale we are accustomed to. Our lifestyle will be permanently and profoundly degraded as the supply of oil declines. At some point in the not too distant future, our collective way of life will no longer exist. Our Social Security system will not be able to function, nor will Medicare and Medicaid. Our currency, the dollar, will lose most of its value, as will most of our financial assets. Your new car will outlast its fuel supply, and your suburban home its energy supply. American’s will have to grow some, or a great deal, of their own food, and what food they consume will have traveled far less distance to their dinner plate. The family will be important again (if you don’t have a family, get one). Travel will be infrequent. Consumerism will be dead. Population will decline. Lawyers will be, for the most part, unnecessary and superflous (as will accountants, advertising agencies, investment bankers...). All of the bombing, invading, burning, and murdering of Oil producing nations will not change this outcome.
We are leaving the age of Oil behind.
mentatt (at) yahoo (dot) com
There is a big difference between Europe and America
People often remark to me that Europe has been paying $6 (give or take a $) a gallon for gasoline and diesel and it hasn’t caused them much harm, so why do I think higher prices are going to be so damaging here?
I must answer that in 2 parts:
I am not nearly as concerned by the price of fuel as I am about the total AVAILABILITY of fuel. That said, I am still VERY concerned about the price, and;
Europe pays the same for a barrel of oil as we do. The difference in the retail cost of fuel is the increased sales tax. If Europeans pay $6 per gallon for fuel, only about $1.50 of the $6 goes to oil exporting countries. The balance of the $6 funds roads, healthcare, social programs… while giving great incentive to conserve. (Spare me the politics, I am a hardcore libertarian and I HATE big government, we are just talking energy policy and economics.) One of the effects of which is that Europe, for the most part, has no trade deficit, and one heck of a rail system (only to be outdone by Japan’s rail system).
The U.S., on the other hand, BORROWS OVER $1 BILLION PER DAY TO FUND ITS OIL IMPORTS. U.S. motorists have little, when compared to Europeans or the Japanese, incentive to conserve energy in our tax environment, as long as the rest of the world is willing to fund our trade deficit. If that should come to an end the price of oil in dollar terms would quickly put our retail price of fuel very near our European counterparts without the benefit of keeping 75% of the retail price in the U.S. economy in the form of government receipts, nearly all of which would wind up in the coffers of some Petro-dictatorship.
I see these outcomes as inevitable, the timing of which is much sooner than most of us are willing to make contingencies for. Energy prices, Oil, Natural Gas, and Coal, are heading up and the availability of BTU’s from hydrocarbons for the U.S. economy, and the world’s, is heading down.
I see hints of what is to come in the commodity markets. The world has very low inventory of wheat, corn, rice, and now dairy products. Our agricultural system takes oil and turns it into foodstuffs. Less oil, less foodstuffs. Pretty simple, really. The rate of world oil production has declined for 21 months, and motor gasoline usage is up, it follows then that some other consuming sector’s usage is down. It appears that sector is food production.
Who needs food when the economy and the stock market are sooooo gooooood?
Mentatt (at) yahoo (dot) com
People often remark to me that Europe has been paying $6 (give or take a $) a gallon for gasoline and diesel and it hasn’t caused them much harm, so why do I think higher prices are going to be so damaging here?
I must answer that in 2 parts:
I am not nearly as concerned by the price of fuel as I am about the total AVAILABILITY of fuel. That said, I am still VERY concerned about the price, and;
Europe pays the same for a barrel of oil as we do. The difference in the retail cost of fuel is the increased sales tax. If Europeans pay $6 per gallon for fuel, only about $1.50 of the $6 goes to oil exporting countries. The balance of the $6 funds roads, healthcare, social programs… while giving great incentive to conserve. (Spare me the politics, I am a hardcore libertarian and I HATE big government, we are just talking energy policy and economics.) One of the effects of which is that Europe, for the most part, has no trade deficit, and one heck of a rail system (only to be outdone by Japan’s rail system).
The U.S., on the other hand, BORROWS OVER $1 BILLION PER DAY TO FUND ITS OIL IMPORTS. U.S. motorists have little, when compared to Europeans or the Japanese, incentive to conserve energy in our tax environment, as long as the rest of the world is willing to fund our trade deficit. If that should come to an end the price of oil in dollar terms would quickly put our retail price of fuel very near our European counterparts without the benefit of keeping 75% of the retail price in the U.S. economy in the form of government receipts, nearly all of which would wind up in the coffers of some Petro-dictatorship.
I see these outcomes as inevitable, the timing of which is much sooner than most of us are willing to make contingencies for. Energy prices, Oil, Natural Gas, and Coal, are heading up and the availability of BTU’s from hydrocarbons for the U.S. economy, and the world’s, is heading down.
I see hints of what is to come in the commodity markets. The world has very low inventory of wheat, corn, rice, and now dairy products. Our agricultural system takes oil and turns it into foodstuffs. Less oil, less foodstuffs. Pretty simple, really. The rate of world oil production has declined for 21 months, and motor gasoline usage is up, it follows then that some other consuming sector’s usage is down. It appears that sector is food production.
Who needs food when the economy and the stock market are sooooo gooooood?
Mentatt (at) yahoo (dot) com
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