Peak Oil consumption appears to be here for the West. Jeffrey Brown should take a bow (while I cue the theme from "The Godfather").
That this has happened before any measurable decline in the production (looks like 6 years of flat production to me) in Crude & Condensate (the stuff we use for transportation fuels) leaves me wondering: What happens when production decline takes place?
A rate of change of 2 or 3% is what we have been experiencing... what might 6% to 8% feel like? Somewhat different, I should imagine. Even the present 2% or 3% will compromise the Financial System over time.
I had this to say in my November 28, 2007 Post:
An Apocalypse NOT!
I get a decent amount of email from the “doom and gloom” folks asking me when I think the “collapse” takes place. Collapse? What collapse?
The decline in oil availability will be a slow, grinding process (in my opinion) that will not fit nicely in a 2 hour movie, 3 minute pop hit, or 15 second political sound bite mindset. I hope I can disabuse the doomers that visit here that they need some kind of bomb shelter. Although I fully appreciate your point of view, my commentary is directed toward how one might direct the investments that they have worked so hard for. I sincerely believe that the U.S. oil supply situation will have profound effects on our financial and real estate markets and currency over the next 5 years, but I do not think this will happen on a Tuesday afternoon. Nor do I believe that we will descend into anarchy. Are not resource wars (starting with Iraq), and the prospect of hyperinflation, and stagnant or declining GDP enough? Well, at least I hope they are.
My issue is this: Why should you work so hard only to pour your investment dollars into a leaking bucket? You would have been better off spending those shekels on vacations, expensive wine, and song. (Actually, that sort of appeals to me.) Some might find that pecuniary, but those that do probably did not spend a career doggedly pursuing some level of financial independence. Actually, I am quite sure that on some level the tied dye set is HOPING for a collapse. Teach those yuppie pricks a lesson.
I know that a lot of the peak oil blogsphere is filled with disaster scenarios, but I sincerely doubt this is the most likely outcome. That argument that we will experience immanent agricultural disaster due to declining energy inputs is just not that likely. The markets are efficient enough to redistribute those inputs away from Suzie-Cuzie’s trip to the mall and into the farmer’s tank and fertilizer bin. Yes, food is going to get much more expensive, and yes, this will fall disproportionately on the poor. But the aggregate AMOUNT of food available to Americans is not the problem, but rather how to pay for assistance to the poor.
This is not to say that our agricultural exports won’t decline and harm others. I sadly think that is a rather likely outcome. Those of you that have been following my blog know that I have great concerns in this area. Wheat and corn production will become an increasingly expensive proposition, and that will negatively affect aggregate crop production, just look at wheat inventories, and in turn available exports and domestic meat production, but the lesson of history is that people will be “incentivized” to produce some of their own food. As an avid gardener, I can tell you that a simple kitchen garden can overwhelm your ability to consume all that is produced at harvest time, the surplus of which can certainly be preserved. It will not be necessary to produce ALL of our own food (at least not for 20 or 30 years, all bets are off at that point in the oil production curve) just enough to bring the marginal scarcity food cost down to an affordable level.
I get email from one dour fellow who tells me that we have lost all of the knowledge to do this. What knowledge, gardening? Get a grip, and join my garden club. You would be impressed with what these folks know.
As my friend FireAngel from theoildrum.com likes to point out, if India can feed over 1 billion people with less arable land and far less fossil fuel imports, North America certainly can feed its population.
There is also some slack for the economy in the wasteful way in which we use oil. FireAngel recently pointed out that driving around in circles does not increase GDP.
If it were going to be Armageddon, what would be the point of investing? Better to blow it all on a trip around the world.
No, the Apocalypse won’t be arriving anytime soon, but a paradigm shift is, in my opinion, underway as I write this. In this paradigm shift, there will be winners and there will be losers. Not much different than our current reality. It is the INSISTING that things be a certain way that will get you into trouble. Flexibility and adaptability will go a long way in the environment I foresee.
No, it won’t be business as usual. We are likely to be a whole lot less mobile, live in smaller homes, and consume less frilly BS. We won’t be commuting as far, be more involved in our communities and our children’s lives, and we even might all have a new hobby – gardening. But I ask you: Is that really Armageddon?
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Clearly, my estimate (in other posts) that total availability of Oil to the U.S. in 2020 would be 8 to 12 million barrels per day in 2020 looks a bit aggressive... perhaps 12.5 to 15.5 million bpd? Then again, maybe Iraq comes in in Spades and things are not so dour... or perhaps not.
This may feel like a whimper to some of us... but I think that that is completely subjective as it appears to me that a "collapse" has already begun for some... for a fortunate minority, said "collapse" won't be happening in their lifetimes. Life is not fair.
Given the attack on the system by The Tea Party and the Occupy folks, my bet is that the current system of rationing fuel solely by price will become untenable/unacceptable. It will be hard to justify allowing Fat Cats fuel for their private jet while people freeze in Northern Maine. I am curious to see how that works out... and it might convulse for a while, but in the end I think (hope?) the beast starves to death.
More soon.