Friday, February 20, 2009

Peak Oil--What Do We Do Now?

The past few months, I have been paying much more attention to the growing economic crisis than I have peak oil, although that will probably change soon, as I find peak oil a much more dire and long-term problem than a slide in our economy. In the meantime, I found this article by Robert Hirsch, in which he notes that although peak oil has retreated into the background due to our economy and the lowering oil prices, it would be a mistake to forget about it, as it will likely confront us again in the near future. Also, I'm not sure how many of you come here, but I am getting a tax return (not sure if that will be enough to get in), and I am seriously considering investing it in a commeodity like oil. I think it's gone about as low as it's going to, and if it goes up again (or even higher than it did), then I don't want to miss out. If you know anything, or where to go, email me.

Peak oil - what do we do now?
by Robert Hirsch
The history of world peak oil production has been truly remarkable. Modern day concerns were rekindled in 1998 when Campbell and Laherrere published their peak oil thinking in Scientific American. Not surprisingly, they were largely ignored. Some in the establishment took the time to utter “Bah-humbug,” but a few independent souls decided to seriously consider the problem.

ASPO was formed soon thereafter and began annual meetings, fostering communication and helping to create increasing interest in the subject. Peak oil concernists began to form a community and momentum increased. Counter arguments buttressing the no-problem point of view came from OPEC, CERA, EIA, IEA, and some of the major oil companies. The denier proclamations grew in intensity, indicating that the serious consideration of peak oil was beginning to trouble parts of the establishment. Various new studies supporting the peak oil threat emanated from independent individuals and groups. Forecasts for the onset of peak oil went from being up to 20 years into the future, to roughly 15 years and then to less. The establishment continued to argue that the problem was so distant that people need not worry.

There were a number of significant milestones along the way - one of special note being Matt Simmons’ book, Twilight in the Desert. As time went on, IEA and some of the major oil companies began to join the list of those who were openly concerned. Momentum grew, influenced in large part by the remarkable increase in oil prices.

In mid-2008 the economic crisis struck. As world economies slowed, oil demand declined. To the surprise of almost everyone, oil prices dropped from near $150 per barrel to less than $40. With gasoline prices in the U.S. retreating to what was considered generally tolerable levels and economic threats avalanching, it’s no wonder that peak oil slid to the back burner of public consciousness.

The world is now in a period of epic economic chaos. People are disoriented and unsure of what it will take to restore their economies. Many serious economists, financiers, and executives are loath to even forecast when an economic recovery might begin. It’s easier for me now to understand how my parents and grandparents must have felt during the 1930s.

But the peak oil problem has not gone away. World liquid fuels production reached a plateau in mid-2004 and has fluctuated within a relatively narrow range in spite of mighty efforts to increase world production. In mid-2008, benefitting from the work of Campbell, Laherrere, Skrebowski, Aleklett, Simmons, Robelius, Gilbert, Bentley, Al Husseini, Deffeyes, Koppelaar, Birol, and others, I came to believe that world liquids production might stay on the existing plateau for the next 2-5 years and then go into a 3-5% per year decline

Recently, OPEC cut back oil production in an attempt to stem the oil price decline. How much might their cutbacks delay the onset of world liquid fuels production decline? Assuming the plateau model and five years to the onset of decline, each million barrels per day of oil production withholding buys roughly three weeks delay, so a steady, continuing reduction of say four million barrels per day over five years might result in a delay in the onset of world oil production decline by maybe three months. That’s not very much.

We’ve now in a period of major human disorientation, but geology does not become disoriented on the human timescale. The impending peak oil problem may now be generally absent from the media and the public consciousness, but it has not gone away. We would do well to continue meaningful studies of peak oil production and mitigation during this period of peak oil quiet. More studies of practical physical and administrative mitigation options are needed. Totally remaking our cities and transportation systems are wonderful goals but will require an extremely long time. In the meantime, we have relatively little in-depth thinking about what we can do when the will-to-act suddenly appears. We need better analyses on such options as rationing (how to do it), carpooling (how to force and police it), telecommuting (how to make it happen), rapidly switching to more fuel efficient vehicles during a deepening recession, rapidly implementing EOR, CTL, shale oil, etc (business-as-usual won’t do), etc. Between now and the wakeup, we can develop carefully thought-out mitigation options for when people are ready to begin to seriously mitigate peak oil. Working on practical solutions represents a high calling.

Robert L. Hirsch is Senior Energy Advisor at MISI. Previously he was Assistant Administrator of U.S. ERDA; EPRI VP; ARCO VP; and Chairman of the Board on Energy and Environmental Systems at the National Academies. He was lead author of “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” (Feb 2005).

Tuesday, February 17, 2009

Stimulus Package Explained

This is a funny post (while being all too true), from The Big Picture blog, although it's also making the rounds via email as well:

Sometime this year, taxpayers will receive an Economic Stimulus Payment. This is a very exciting new program that I will explain using the Q and A format:

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. No, they are borrowing it from China. Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn’t that stimulating the economy of China ?
A. Shut up.

Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:

If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda
If you purchase a computer it will go to Taiwan.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan and Korea.
If you purchase prescription drugs it will go to India
If you purchase heroin it will go to the Taliban in Afghanistan
If you give it to a charitable cause, it will go to Nigeria.

And none of it will help the American economy. We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer (domestic only), or tattoos, since those are the only businesses still in the US.

It's me again. This is very funny, and tragic at the same time. It's bad enough that 70 percent of our GDP (or roughly that) is built upon consumption, or consumer spending. So according to our government, you're not supposed to save or service your debt, but when you get this stimulus, you're supposed to spend it, right? This results in ecomomic growth, according to them. However, as this post so simply points out, you are really not stimulating our economy by spending your stimulus check on consumption, but rather, some other nation's economy. And besides, as this post also points out, it isn't our money anyway.