10/08/2005

Peak Oil Myth # 3 'The market will react.'

From lifeaftertheoilcrash :

Debunker Claim #3: 'The market will react.'

It certainly will, but as a report published by the US Department of Energy recently explained, the reaction is likely to be extremely nasty:

Without timely mitigation, world supply/demand balance will
be achieved through massive demand destruction
(shortages), accompanied by huge oil price increases, both
of which would create a long period of significant economic
hardship worldwide.

The report expounded on just how nasty things could get:

The problems associated with world oil production peaking
will not be temporary, and past 'energy crisis' experience will
provide relatively little guidance. The challenge of oil peaking
deserves immediate, serious attention, if risks are to be fully
understood and mitigation begun on a timely basis. . . the
world has never faced a problem like this. Without massive
mitigation more than a decade before the fact, the problem
will be pervasive and will not be temporary. Previous energy
transitions were gradual and evolutionary. Oil peaking will be
abrupt and revolutionary.

To the laymen or "Peak Oil newbie", the existence of "Peak Oil will be a non-event" sites creates an illusion that there is still some type of viable "debate" between the optimists and pessimists:

Maybe I can relax, comforted by the hope that the
pessimists will be proven wrong, right? Sure,
EnergyBulletin.net has 1000s of articles archived, most of
which tend to prove we are in really, really big trouble, but
since some guy who won't give his real name put up a blog
claiming to debunk it all, I guess "all is well." With all this
commotion on the internet, certainly the jury is still out as
to these issues, right?"

Well not really. While some of the case's minor procedural issues and technicalities may be hung up in appeals for years, the jury has already rendered the central verdict. As Matt Simmons explained in his interview with Michael Ruppert:

While the optimists estimate, the economist rectifies, the
debate still rages on; the jury basically has now rendered
the verdict. The optimists have lost. Too much field data
now proves their total thesis was wrong. Supply never
surged, demand did grow. But as it grows it still falls. This
doesn't prove though that the pessimists were right. The
pessimists unfortunately and ironically might also be wrong.
Most serious scientists worry that the world will peak in oil
supply. But most assume that this day of reckoning is still
years away. Many also assume that non-conventional oil will
carry us through several additional decades. They were
right to ring the alarm bell. But they too might also be too
optimistic.

Matt Simmons made this statement in June 2003. Since then, oil and gas prices have doubled to almost $70/barrel and $3.00/gallon, Saudi Arabia has failed to make good on its repeated promises to raise oil production, major players in the US economy such as GM and Ford have seen their debt ratings cut to 'junk status', several major airliners are on the verge bankruptcy as a result of high oil prices, global oil resources have been further depleted by almost 60 billion barrels, discoveries have declined to almost nothing, China almost succeeded in buying a major US oil company and has succeeded in buying a major Canadian oil company, Chevron has come out and all but said, "we're screwed and don't know what to do - you guys got any ideas?", US troops and innocent Iraqis are getting killed everyday in the Mesopotamian Oil Burglary (a.ka. "The M.O.B.") known as Operation Iraqi Freedom, and now the Iranians are threatening to start an oil bourse priced in euros while Cheney is threatening to attack them, which would get us involved in another nightmare, one that could go nuclear, and we are now being told that people in the Northeast will be facing a life-and-death situation due to sky-high heating oil prices.

Where are all the techno-messiahs, driven by the all-mighty "invisible hand of the market" that were supposed to fix all this stuff? They are nowhere. Meanwhile, we are more dependent on the black stuff than ever, our leadership is demonstrating a stunning inability to even begin to address these issues, and the public is too busy guzzling gas, popping Prozacs, and buying useless crap at WalMart to take a moment to look up from their plate of genetically modified, chemically laden fast food to realize anything is awry.

Finally, as if you needed to be reminded, our government's response to Katrina has shown it to be incredibly incompetent at best, criminally negligent at worse when it comes to preparing and responding to a massive crisis that was predicted by multiple, credible sources years ahead of time and could have easily been mitigated. Even if we acknowledge the obvious differences between Peak Oil and Hurricand Katrina, are we to realistically believe the US government will respond to Peak Oil much more effectively than it responded to Katrina?

While people love to pontificate about all the wondrous virtues of market mechanisms, hypercars, biodiesel-from-algae, super-duper windmills, space-based solar arrays, etc., these techno-saviors are doing absolutely jack-shit out here in the real world either by themselves or in conjunction with each other. "But it's just a matter of time . . ", the debunkers will claim. That's the problem: time. Or more accurately, lack thereof.

Given all of this, it should be obvious we are in the midst of a rapidly developing crisis - "collapse" has to be considered at least a possibility in the short-to-medium term future. Yet every week, half a dozen or so articles are published that say, more or less, "all will be fine, just give the market more time . . "

Peak Oil: Life After the Oil Crash: "
"

1 Comments:

Blogger Joe-in-Texas said...

In the general discussion of biodiesel / biofuels the notion always comes up that 'we' don't have enough crop land available to grow feed stocks for biofuels and / or the energy inputs are not balanced. The answer is - Perhaps Not'.

But, there are other motivating factors involved for growing, making and using biofuels beyond the idea of wholesale replacing petroleum.

And in these studies which question the viability of biofuels - all sources of feed stocks and other aspects may not have been considered.

Biofuels /Biodiesel (BF / BD and whatever comes next)

- BF / BD Contribute - or will contribute heavily in reducing our dependence upon foreign oil (especially from countries unfriendly to the U.S.).

- BF / BD allows for supplemental fuel supplies to be available in the U.S. (that for the most part are not necessarily generated in the vulnerable Gulf region ) - as far too many oil wells and refineries unfortunately are - thus, helping to stabilize fuel supplies. It is hard to hit Iowa or Missouri with a hurricane.

- BF / BD will help with general price stability - a steady supply of domestically grown feedstocks and domestically made biodiesel and ethanol help level out the price for fuel in general - over time. (not saying the price will stay low - but biofuels can (when in greater supply) help dampen erratic price fluctuations in the market)

- And of course there are the environmental factors - carbon cycle, etc.

- Biofuels will have more impact over time as new feedstock crops come online and become more wide spread using marginal crop lands.

Such crops are:

- Jatropha Curcas - which could possibly be grown in Florida (south of Orlando or so), in Southern California and along the Mexican border areas of New Mexico, Arizona and Texas. see d1plc.com and be inspired!

- Meadowfoam - currently grown - but not enough - could be a winter crop in certain areas of Texas, Arkansas and other places. Not currently used for biodiesel but could be.

- Nutsedge / Chufa (Cyperus esculentus) - a grass like plant with oil bearing tubers - absolutely no reason that this crop cannot be grown on a massive scale in most of the U.S. on marginal lands - it will just take development. Also, this crop could grow in the same fields as Jatropha Curcas - in between the rows of bushes.

- Algae - the economics of high fuel prices will eventually get this potential biodiesel feedstock going - probably in Asia first.

- WVO (used restaurant fryer oil / (Waste Veggie Oil) - a national incentive program directing WVO to biodiesel - not to pet foods and cattle feed would be a big help.

- Emerging technologies such as Butanol (Butyl Alcohol - beter than Ethanol) from anaerobic processes (tanks of chopped biomass slurry quietly making butyric acid then butanol). This technology should be encouraged by our federal government - maybe someday. .
(http://www.science.doe.gov/sbir/awards_abstracts/sbirsttr/cycle18/phase2/058.htm)

- Other biofuels will help relieve dependence upon imported petroleum. Cellulose based fuel pellets are fast becoming more than a trend. Currently there are many tons of sawdust being made into fuel pellets for stoves and furnaces . Many other tons of sawdust go to waste. In the harsh cold winter areas of the U.S. (especially the North and North East) 'fuel oil' bills are becoming too much to bear. When home heating oil bills get to $2500, then $3500 - then $4500 per winter season - home owners get very motivated to switch to fuel pellet furnaces and stoves and buy truck loads of fuel pellets for a big cost savings.

Fuel oil furnaces are fairly easy to deal with - fill the tank - light the furnace. Fuel pellets are more work - but the economic motivation makes working with a solid fuel more acceptable and it doesn't take long for savings in fuel costs to pay for the new pellet stove / furnace. This winter's fuel oil prices '05-'06 will be out of sight. For many a fuel pellet bill of only $1000 would be a welcome site.

Fuel pellets can be made from hays and grasses. There are quite a number of Canadian 'Switchgrass' projects that may well become a market reality (maybe already has). Grass / Hay based pellets fortified with a drop or so of veggie oil or perhaps biodiesel can become a reality..

My point - when analyzing biofuels and their potential - take every aspect into consideration. Biofuels don't compare to petroleum in a direct 'one to one' manner - there are many more points to consider.

Cordially - Joe-in-Texas

10/10/2005 08:35:00 PM  

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