Land of Make Believe

October 10, 2005
     For the moment, it's back to business-as-usual for Easy-motoring Nation.
     Yet 73 percent of oil from the Gulf of Mexico remains "shut in" or unavailable because of hurricane damage, and about 63 percent of natural gas production. Prior to the hurricanes, 24 percent of the nation's non-imported supply of crude came from the gulf. There are also eight refineries still shut down representing 2.1 million barrels a day of refined product capacity (900,000 barrels a day of gasoline, 500,000 of diesel and heating fuel, and 200,000 of jet fuel).

    For the past month, the European Union has been sending two million barrels of crude a day to the US out of its own emergency reserves. The original deal was made in the brief lull between Katrina and Rita. It took a while for those tankers to get here. The EU imports over 15 million barrels of oil a day itself, somewhat more than the US did in pre-hurricane times.

   The Federal government has loaned the oil companies crude from the Strategic Petroleum Reserve. The SPR contained 700 million barrels of crude when the hurricanes hit. The US uses 20 million barrels of oil a day, of which we produce altogether about seven million barrels ourselves. It is unclear how much oil is coming out of it now, but the last time a president tapped the SPR (Clinton) one million barrels a day were released.

    These actions have beaten down the price of crude oil on the various futures markets. At the same time, gasoline pump prices have leveled off from the refinery squeeze. I doubt that the motoring public is driving a whole lot less. The commutes haven't magically gotten any shorter out in Dallas and Denver over the past month. The national fleet of SUVs has not been changed out either.

     What's happening, therefore is that we have entered an eerie hiatus. Some band-aids have been applied to our oil and natural gas supply injuries and the bleeding seems to have stopped. But the truth is that our energy supplies are badly compromised and at the worst time of the year -- just as we slide into the home heating season. Here in the northeast, we have barely had to turn on the furnaces yet, but that will change in a week or two.

     In the background of this scene, the global oil production peak lurks -- meaning that there does not seem to be any surplus production capacity anywhere in the world, including OPEC's big gun, Saudi Arabia. So all we have here in America is a temporary appearance of normality. When the furnaces go on, the WalMart aisles will be empty. If there is any reduction in car trips, it will be because Americans are making fewer visits to the Big Box stores. There will also be fewer trips out to visit the model homes in the new subdivisions.

     Another unpleasant truth about the situation is that the US public wants to pretend that everything is okay as much as its leaders do. The public is not so much being misled as demanding that its leaders in government, business, and the news media continue a game of make-believe -- that we can still run a cheap oil economy without cheap oil.

Comments

[ross]

Well, jorge, as your last post shows, since the sheep are plentiful and lacking much critical insight, they will get sheared. I pity anyone who has their world view shaped by television or any adjunct, (i.e. Newsweek and Time Magazine) of television culture. No, Virginia, it's not safe to come out and drive your SUV because oil is hovering around $60 dollars a barrel.

[ross]

Let me amend my statement. Maybe what you describe doesn't show that the sheep will get sheared, but I do think it demonstrates they don't have much in the way of critical insight.

[jemison]

I see the lumbering SUV's driving gingerly around with their windows down. Stupid lemmings--sold out by Madison Avenue. Things aren't normal and gas is still too cheap considering all the other costs--they're salivating over drilling in the Eastern Gulf of Mexico now.

I just bought a hybrid--why? Because if people like me don't, the myopic beancounters won't make them. Our automobile industry could be cashing in on the hybrid purchases but instead they've ben making these obnoxious hulks because that's what has made them the most money. it's like the late 70's early 80's all over again where we're playing catch-up with Honda and Toyota.

[Aladdin Sane]

Some readers here might find this interesting (link is to a PDF file):
http://www.wildershares.com/pdf/SNL%20Financial-Dr.%20Wilder.9.26.05.pdf

The PowerShares WilderHill Clean Energy Index is an ETF, symbol is PBW.

[EastCoastShock]

Andy -
I agree with you that it is good that Barbour has embraced New Urbanism. However, I'm just saying I wish Barbour was a Democrat because the Democrats need to get on board with New Urbanism immediately. I've been a registered Democrat since I've been able to vote and I'm absolutely furious with their foot dragging as of late.

[A. Realist]

Maybe someone should query Mr. Kunstler about his October stock market crash prediction. Remember the one? He said that the Dow Jones would crash to 4000. Uh huh.

Business as usual is right. Now excuse me while I fill up my Hummer.

[dangerbird]

Careful A. Realist. Don't pick on the natives. They get real touchy when you point out their obvious inconsistencies. Look out, here they come now. Behind you! Weaseldog's got a pitchfork. Ross has got a reaper. Run for your life! Aaaahhhhhh!!!!

[ross]

Now now dangerbird, all I need's a pea shooter,the junior model.

[dangerbird]

You wouldn't shoot a guy in the back would you?

[dangerbird]

By the way Ross.
Just for the record, and I know this is not the place for a discussion about this, but how would you characterize your compositions? Classical, Romantic, 20th century, Modern, Post-modern, post-post modern, or something in between? Just curious.

[ross]

It's atonal, neo-romantic and or neo-classical depending on the piece. And you?

[allan Jirikowic]

One of the great developments of higher air fuel cost and consequently much higher air fares will be the fewer flights family members will embark-- to psycho family forced reunions over the holidays... relieved family members can bask in the excuse it's too expensive to fly and stay home and relax.. while sitting in their triple sweaters as it is too expensive to keep the heat up past fifty and also debate on the single car trip they may take that day... to the grocery store , perchance.

[Don in Colorado]

I sent a letter to the editor last week thanking the Europeans for sending their spare oil and fuel to the U.S. in the wake of Katrina and Rita.

Although I think it just puts off the inevitable, it was a decent thing to do.

Unfortunately I doubt if most Americans even realize the Europeans and Venezuelans saved them from paying $5 a gallon over the past few weeks.

[Fieldsie]

Interesting article on oil/ gas fields under the artic ocean.
http://tinyurl.com/dcmd2, just want to hear peoples opinions...

Is this just another fantasy about the oil based economy being sustained?

[Jeroen Polak]

Perhaps it's nice to say that last sunday, Discovery Channel Europe ran an (as far as i know updated) version of the fictional documentary "Oil Storm". I think it was updated, 'cause in this documentary the Hurricane Katrina was mentioned. Anyway, for my wife, "Oil Storm" was an eye opener. And before, i had my problems with telling her about the future of oil in the world.

Even though i had my doubts with the way this documentary was presented, i think it might have hit a non-believer or two. And if they're able to spread the news on what they saw exponentially, perhaps awareness on the issue will raise slowly, but surely.

So once again: keep banging that drum, Jim. Your work is a must read, everytime.

[Joerg Daehn]

Just a book recommendation:

John Brunner - "The Sheep look up". Basically describes what we are into now - FUBAR and in the end the US burns (That's not what I wish! That's John Brunners fiction). The president in the book ("Prexy") sounds a lot like GW. But maybe it was/is pointless for you to read it because reality is much more interesting and stunning anyway.

Maybe JHK is "Austin Train" and we might become his "Trainites" ;-))

BTW. My PO Story:
I heard about PO about a year ago while browsing through some Slashdot thread and then I instantly knew why all the years since teenage times I felt that all of the free motoring, globalization etc. was too good to be true.

I also abhorred cars since early age but got a driving license nontheless - and drove a car the last three years. But I will now switch to the local flavour of FlexCar here in Hannover, Germany. It is insane how much money I spent on that car and I could easily take a cab 6-10 times a month with the money I will save. And my main commute is by train anyway and I ride a bike every day, while the car sits in a garage 25 days a month.

Thanks to all of you who write on the net and share their thoughts. I hope the internet survives in some way or the other. Best thing ever to do with electrons.

[Weaseldog]

Kuntsler's been wrong about a few things. There's certainly an aspect to his work that I would characterize as sensationalism.

But he hasn't been wrong about most things IMO.

On the Peak Oil topic, he's come in a bit on the back side. Almost all of the discussion I've seen the last two years is rehashing of discussions that I've been in the middle of since 1998. That's when Colin Campbell and Jean Laherre published, "The End of Cheap Oil" in Scientific American.

Back in 1998 oil at $30 / barrel was considered impossible. Something that wouldn't happen in our lifetimes. Folks vehemently argued that gas lines would never be back, that you'd never again see a gas station run out of gas. Then folks argued that if gasoline prices went up, they see their wages go up to match. So if gasoline went up to even $100/gallon, they'd still be driving monster SUVs, because they'd be earning 10 times more money.

Other folks argued they didn't care if they went broke driving SUVs, because SUVs represent American freedom. No matter the cost of gasoline they'd keep driving these wonderful machines. In 1998-2001, I don't recall ever hearing anyone say they'd ever trade in an SUV based on gasoline prices. Everyone vehemently argued that they'd never lose their SUV loyalty.

With ever argument as supply and demand have squeezed prices up, the cornucopians and flat earthers, have simply moved the goal posts. And their still saying, well oil won't prices won't cross this line, so I'm still right. Then they step back and draw another line.

Gasoline prices have more than doubled since 1998. The big prediction then is that if gasoline prices doubled, wages would double so that everyone could keep buying the same quantity of gasoline to power our freedom loving SUVs. My wages haven't doubled since 1998/2000. In fact they've taken a hard hit.

Have your wages more than doubled so you can drive a freedom loving SUV? Or has the SUV gouged your pocketbook and enslaved you to support it's freedom?

How much happier and how much more freedom do you enjoy now, compared to 1998?

[Jorge]

To A. Realist:

Hey, Realist, predicting is hard, especially the future. Since William Miller announced the end of the world on 1843 the doom and gloom people have had a very bad rap. So much so that the usual depiction we see about these guys is the long-bearded, obviously deranged man in a frayed robe with the hand-scrawled message "The End is Coming". And, sure enough, the end doesn't and hasn't come. The anxious acolytes are left high and dry like all those hapless Millerites who sold hearth and home and sat on the hill in Miller's farm waiting for the Big Bang.

Miller based his predictions on complicated interpretations of the Bible which persuaded him that the end was nigh. I don't recall from history that he based his conclusions on any astronomical, geological, ecological, or otherwise scientific and economic facts. Just his own homespun interpretation of the Good Book.

Methiks that something quite different is happening here this time with the PO discussion. Certainly JHK got a big booboo for predicting stock crashes. Serves him well. As we say in Spanish, "Cobbler, to your shoes". JHK had as much business tracking the stock market as the stockbrokers and investment bankers have had predicting the path of storms or the technical feasibility of proven oil reserves. I cringe when I listen to one of these Wall Street types wax poetic about deep ocean drilling and shale deposits. Almost makes me cry if it weren't so funny.

So, Realist, don't put too much stock on the JHK mishap with the stock market. The PO bunch is not a lunatic fringe of death-wished social misfits (even though there's always some of those, but hey, we also find them in our schools and churches, so chill). The PO crowd is only trying to raise the societal level of awareness regarding a momentuous change in human social, economic, military, and international relations tied to the eventual but inevitable decline of oil. Our opinions are not based on readings of the Bible (which is a source of religion, not technical or financial data), the entrails of a white dove or the tea leaves. They are based on facts as best we can ascertain them and on the most unbiased observation of macroeconomic and technical data. These persuade us that something evil this way comes, and we might as well be prepared before reality delivers us the proverbial bite in the ass.

So go ahead and fill your Hummer. Take a minute or two to reflect about how all the little pieces (China, India, Russia, OPEC, the scramble for energy, the war in Iraq) come together. And then come back and tell me (if you still can), that we live in the best world possible.

[dangerbird]

Ross
Thanks for the description of your music. Sounds interesting.
As for mine. I'm not sure if I could categorize my stuff. I guess it would be a mixture of Steve Howe, Leo Kottke, Michael Hedges, and Nei Young. Sometimes straight ahead classical guitar. Of course I spend a lot of time working to keep up my chops, (i.e. playing other people's stuff, etudes etc.) Play a lot of Villa-Lobos, Tarrega, some Bach, Fernando Sor. Not being in an academic environment anymore its easy to drift away from that kind of stuff, but I try to keep my irons in the fire so to speak.

[netkat]

And now what a spot bush is in...anyone recall when Cheney said something like "Conservation is NOT the answer!"?

So now we have a must/can't situation..must conserve to keep things from unravelling, but if consumers pull back TOO much, things will begin to unravel anyway in the form of economic ripples in the "buy more stuff" world of American Fantasy.

netkat

[dangerbird]

Jorge
Why so touchy? Did A.Realist step on your dogma's toes? I'm sorry. I'll tell him not to veer from the TRUTH anymore. Bad A.Realist, bad ARealist.

[kd]

Remember the old Chinese curse, "May you live in interesting times"?

http://www.dissidentvoice.org/Oct05/Goldsmith.1010.htm

*

Dangerbird,

The Neo-con "dogma" or agenda has been clearly outlined over the years. Indeed, pundits have been honing it for decades. And the infamous Project for the New American Century was outlined before GWB & crew came to power.

On the other hand, just what constitutes the "dogma" or agenda of the Left? Since you seem to know, could you outline it for us, or provide some links?

[kd]

I'll try that lonk again:

http:/www.dissidentvoice.org/Oct05/Goldsmith1010.htm

[kd]

http://www.dissidentvoice.org/Oct05/Goldsmith1010.htm

[batlle]

>>>"Even those of us who believe it's coming and won't shed tears over the demise of Uncle Sam.."

Tell us how you really feel.

NOW can I call you anti-American? Now can I question your patriotism?