Peak Oil

[RoyalShock]

In browsing another forum I ran across this link:

Peak Oil: Life AFter the Oil Crash

Ultimately, this is a doomsday perspective on what the world will face when we hit the downside of the "peak oil" bell curve.

What I find interesting is how the author examines the many different ways oil runs our society, the problems with alternative sources of energy and the issues of our monetary/banking system. It is a long read, especially if you follow the very many source links (which I did not).

I don't think the picture will be as bad as this site paints it because of advancements that we have yet to see. But I thought the research was pretty well done and presented in a logical, easy-to-understand fashion.

I'd be curious what some of you (Maggie, SubGod, Ixiah, engrshock, Spangler and others) think after reading it.

[Maggie]

I started scanning the article and it is really long. My ADD prevents from reading further (just kidding). Let me take a longer look over the weekend and I’ll write what I think.

Enjoy the holiday.

[Ixiah]

Here is my opinion - course I am not NostraIxiah. ;-)

Well, in general I think the United States is going to be a lot better off then other countries. We have the capacity/technology to switch to electricty for most of our needs. Also, there are significant untapped oil reserves available. Add to this we have huge amounts of coal which, if I recall correctly, can be converted into a type of oil.

I believe in the future almost all cars and heating will be powered by electricty (since it can come from a number of sources such as coal, dams, wind, nuclear, etc).

I don't know enough about agriculture to know if there are alternative fertilizers available. If not I would expect exports of food from the United States to drop. This could very well cause famine in other countries.

Recycling of plastic will become more common and perhaps even some "back to the old days" on some items (paper sacks replacing plastic ones, glass bottles replacing plastic, etc). Automobile (electric) and train transportation will be more common. Perhaps, we might see those high speed rail systems gradually replacing planes due to rising aviation fuel costs. In fact, I think that as oil declines it will be used primarily by the military. Fighter jets need fuel - there is just no alternative.

As for wars - well I could see any country with a large military take action if it feels it will be unable to defend itself with its existing oil resources. Fortunately, the United States and Russia have significant oil reserves. While China and North Korea do spend a large amount of $ on the military their navies are relatively small so their ability to exert force is limited.

Me and ABC had a long discussion about this earlier. We really disagreed on one thing (regarding oil) if I recall. ABC thought markets should be left alone and rising prices would result in the market finding cheaper alternatives (which is true). My problem with this approach is that businesses tend to take a very 'short term' outlook on things. So by the time the prices are sufficiently high the lag for alternatives to become commonly available will be very painful. One has only to look at GMC right now - their product line up is unsuited for high gas prices and they are scrambling. They will get it resolved of course but the next couple of years are going to be very painful. Why are they in this mess? Because low mileage models were not as profitable as trucks and SUV's and gas mileage was not as significant an issue. Same thing will happen with the switch from high MPG to electricty (even a Prius will make you cry when you have to fill up when its say $15/gallon). That is why I favor some proactive investment in technology and infrastructure by the governmnet to ease the transition.

[Maggie]

Interesting thoughts, Ixiah. Of course, I am not NostraMaggie either. Notwithstanding, I'll take a stab at the issues brought up by this writer.

I think the writer makes some interesting points; however, I am reluctant to accept his conclusions as an absolute certainty. When I read something like this, which covers a wide range of different subjects, unfortunately I have to assume that while it may contain some facts there is also likely to be a lot of supposition as well.

Oil is, of course, not a renewable resource. Moreover, he correctly points out that our economy, and the indeed the world's economy, heavily relies on oil and not just for gasoline. In addition, the demand for oil will increase as "emerging nations" (India, China, etc.) continue to industrialize.

Our reliance on oil is a very serious problem to which I do not have a perfect answer. Furthermore, I don't see anyone political leader out there with real answers either. I also do not agree with the writer that the reason we have no new refineries built in 30 years is due to the fact that the oil companies don't see new refineries as a good investment because oil will eventually run out. American energy companies are jumping at the opportunity to get into Iraq, build refineries and help that country extract oil more efficiently. Oppressive regulation and taxation probably has had a greater impact on why we have no new refineries.

I am beginning to believe that we (Americans) need to start taking care of ourselves. Perhaps, the best policy would be to deregulate and decontrol this nation’s great energy industry. Unleash all of our energy companies and entrepreneurs, allowing them to develop whatever it takes on oil, gas-to-liquid, clean coal, nuclear, offshore, onshore, oil shale, wind, solar, and biofuel. Lift the moratoriums. Stop attacking our own businesses. Put technology to work. Put venture capital to work, with rock-bottom capital-gains and corporate tax rates. Stop being mau-maued by the extremist who have prevented energy production for over three decades.

I believe that we, meaning Americans, have the technology, the entrepreneurial spirit and the will to eventually solve this problem. However, we need to move now – in fact, we should have been doing something along these lines a long time ago.

[RoyalShock]

I believe that we, meaning Americans, have the technology, the entrepreneurial spirit and the will to eventually solve this problem. However, we need to move now – in fact, we should have been doing something along these lines a long time ago.

I think the most significant thing I took away was that when we hit the peak oil downslope, will the US and the world be able to convert the many systems now dependent on and designed for oil quick enough to avert a financial meltdown caused by skyrocketing oil prices and shortages?

[Maggie]

I believe that we, meaning Americans, have the technology, the entrepreneurial spirit and the will to eventually solve this problem. However, we need to move now – in fact, we should have been doing something along these lines a long time ago.

I think the most significant thing I took away was that when we hit the peak oil downslope, will the US and the world be able to convert the many systems now dependent on and designed for oil quick enough to avert a financial meltdown caused by skyrocketing oil prices and shortages?

His peak theory is interesting (and on its face logical) but I am not sure I am ready to take it to the extremes he does.

I hope the answer to your question is yes, at least as far as the US is concerned. However, think we need to start by taking advantage of the natural resources that remain untapped in the United States. Shore up our own oil reserves, because we will have to rely on oil for an extended period of time, while at the same time encourage real, practical research into alternative fuels, etc. Encourage the private sector to do what they do best.

[RoyalShock]

His peak theory is interesting (and on its face logical) but I am not sure I am ready to take it to the extremes he does.

I'm not sure I am either, but until it actually happens (passing "peak") we're not going to know how people and the markets are going to react.

I hope the answer to your question is yes, at least as far as the US is concerned. However, think we need to start by taking advantage of the natural resources that remain untapped in the United States. Shore up our own oil reserves, because we will have to rely on oil for an extended period of time, while at the same time encourage real, practical research into alternative fuels, etc. Encourage the private sector to do what they do best.

Certainly, we need to buy as much time as possible. And we're clearly at the point where new drilling needs to happen. Of course, it won't do us much good in the long run if the alternatives aren't researched and refined at the same time.

[WuShockFan]

I read that site, and I agree with you Royal that the effects of Peak oil will not be as dire as the author paints it, because of technological advances we haven't yet seen. I'm not worried at all about it. First of all, change is good. So what if peak oil makes us have to change our lives as Americans. I'm ready to roll with it if it does. If it has no effect, that's fine also.

Maybe there will be less plastic crap to buy at Wal-Mart, cities won't sprawl as much because they can't afford the asphalt and construction costs so people have to live and refurbish more established parts of town, people can't drive as much so they start walking and bicycling and in the process get out and meet their neighbors, there are food shortages so people start planting gardens and raising small game for food and get more in touch with nature. There is an upside to everything. Maybe we need something like Peak oil to make us change our habits and live differently. Whatever happens, it will be gradual because the oil supply will slowly diminish every year. You will have time to prepare for it.

An asteroid impact on the other hand...now THAT'S something to worry about.

[RoyalShock]

Yes, the oil supply will gradually diminish. But look at what has already happened with oil prices. Just wait until supply begins to recede. That is my concern. The price and panic will rise disproportionately to the drop in supply. And if we don't already have fallback sytems and energies in place, things will get ugly in a hurry.

One positive step would be the government taking back control of the dollar and backing it with something of real value. At least a reasonably stable currency might minimize the effects.

[SubGod22]

That's why I say we start drilling now. But, in the mean time we also need more R&D with alternatives as I believe Maggie said earlier. We need to get away from oil as much as possible. It's not going to go away but the more we can do without it the better we are.

I'll still have to read the article sometime this weekend when I get a good chance.

[dregn]

Count T. Boone Pickens as someone who sees this as a possible reality. Many scientist and oil people have approached the government with this possibility and have presented plans which would reduce our dependency on forgein oil by over 50%. Mainly with a varity of ways to produce energy (wind farms, nuclear plants, etc) along with getting more oil here in the US and talking people into changing their lifestyles. The government hasn't seemed interested yet to this point.