Peak Behavior

May 1 , 2006
     I try to avoid the term "peak oil" because it has cultish overtones, and this is a serious socioeconomic issue, not a belief system. But it seems to me that what we are seeing now in financial and commodity markets, and in the greater economic system itself, is exactly what we ought to expect of peak oil conditions: peak activity.

     After all, peak is the point where the world is producing the most oil it will ever produce, even while it is also the inflection point where big trouble is apt to begin. And this massive quantity of oil induces a massive amount of work, land development, industrial activity, commercial production, and motor transport. So we shouldn't be surprised that there is a lot happening, that houses and highways are still being built, that TVs are pouring out of the Chinese factories, commuters are still whizzing around the DC Beltway, that obese children still have plenty of microwavable melted cheese pockets to zap for their exhausting sessions with Grand Theft Auto.

      But in the peak oil situation the world is like a banquet just before the tablecloth is pulled out from under it. There is plenty on the table, but it is about to be overturned, spilled, lost, and broken. There's more oil available then ever before, but also so many people at the banquet table clamoring for it that there is barely enough to go around, and the people may knock some things over trying to get it.

     A correspondent in Texas writes: "On a four week running average basis, total US petroleum imports (crude + products) have been falling since 2/24/06, until last week, when we finally showed an increase of 1.3 percent, after bidding the price of oil up by about 20 percent. IMO, we bid the price up enough to (temporarily) increase our imports.  We will see what subsequent weeks show, but I think that we are in the early stages of a bidding war for remaining net export capacity.  The interesting question is what countries may not be importing because they can't afford the oil."

     A substantial amount of total house sales are made up of new suburban McHouses built in places at the furthest extreme distance from employment centers -- because that's where the remaining cheap land is after sixty-odd years of suburban development. How many prospective house-buyers will close on those things with gasoline over $3 a gallon? Probably fewer than are required to sell them all. And more McHouses will be coming on the market in any case because they are products of a planning and permitting process that takes years for things to finally get built. Once the house-selling racket, and its associated mortgage racket, stop grinding along, the machinery of the US economy has to seize up. The financial sector, which used to be an appendage of the economy, but has become an end in itself, has to implode when the stream of rebundled securitized mortgage debt stops flowing into it.

     When tablecloths are pulled out from under banquet tables, it is hard to say how the platters, bowls, and ewers will tumble and fall, but we can bet that few if any of them will land right-side up, unspilled. One also has to wonder how the other people at the table are going to behave when things come tumbling down.

Comments

[fizure]

For those who wish to experiment with a new format:

http://www.clusterfucknationforum.com/

...

[Corey]

I can give you a concrete example that we're past peak oil NOW. I just bought a plane ticket here in Japan, and the "fuel surcharge" was a measly $200 on top of the regular fare, and they "reserve the right to raise the fuel surcharge at any time." Start of the end anybody?

[Slick]

It seems 3USDgas is causing a stir...and that to me is still real cheap...here are the Politicians wanting to "go after the oil companies" Yeah thats like killing the goose that lays the golden eggs...Well the USA can at least look back and say its been fun...
The party is over..Going to get interesting from here out..Who knows maybe Hillary can distract high oil prices with "racism or Lets hire More Mexicans"/?

[Euthydemos in Athens]

I think your role as 'canary in the coal mine' is about to become painfully clear to everyone. The forecasts I have seen say $3.15 nat'l. avg by Memorial Day. I am afraid to even guess where it will be by Labor Day. Yet, even now, the only major policy issues I see are whether or not to repeal the gas tax or drill in ANWR. No one is talking about real solutions, because there are no real solutions. Senator Murkulski was on with Bob Schieffer Sunday and actually said, 'the largest find in history may be waiting out there for us (in the contintental shelf).' She then went on to say that ANWR might provide "a million barrels a day!!" She has to know that we are sucking down 25 million barrels a day, and a million, is quite literally a drop in the bucket. Should be a long hot summer.

[Jeff-Bob]

Couldn't happen to a nicer country. Collective Karma comes down hard sometimes.....

Make sure and read today's (mon) front page article in the NY Times about the grand Republican plan to send 100 dollars to everyone to try and placate them about the price of gas.

Is it possible to underestimate the stupidity of the American public? Will they remember the two oil men they allowed to run this country into the ground for the last 6 years? Will they still believe that the "free markets" will provide all?

We deserve everything we get.

[Stephen Kepple]

The irony is that the temporary state of superabundance that Jim describes will tend to confound efforts to head off the coming collapse. We're still mostly fat and happy, so why sacrifice?

[karl with a k]

any body think that peak oil will be associated with the return of christ? they say He is coming soon.

[Corey]

Sorry, please read sarcasm in the above "measly"...

[odograph]

I can keep the geology of peak oil apart from the cultish fringe - and I am sorry to hear you make the binding.

Remember, one reason many don't worry about the geology, discovery curve, etc., is that "it's a cult."

[Tooz]

"A substantial amount of total house sales are made up of new suburban McHouses built in places at the furthest extreme distance from employment centers -- because that's where the remaining cheap land is after sixty-odd years of suburban development. How many prospective house-buyers will close on those things with gasoline over $3 a gallon?"

Front page story today in the Minneapolis Star Tribune:

Computing the commute
With gas prices up, commuters who sought more house for their money in the outer suburbs are concerned about increasing costs.

http://www.startribune.com/462/story/403117.html

[mpg]

JHK makes a good point about the time lags. It also takes a long time to make changes. I'm sure there are a bunch of people leasing SUV's who are thinking
that when the lease is up to maybe check out a hybrid. They aren't going to save any $$ by having two payments. On a broader level it takes years, if not decades, to rebuild the rails, install wind mills, start farms etc. Our litigous, sclerotic, inflexible, have it your way society has to get lithe and adaptive real quick.

[george]

"people who sought more home for their money..."? How about people who just sought a home for their money, and the fartherest 'burbs filled the bill and allowed their kids to go to school in safety and get a good education? I think you will see folks dragging '68 VW vans out of the junkyards and carpooling as well as working from home one or more days a week, as well as lobbying for drastically increased commuter rail. JK has NEVER addressed the fact that affordable, decent, safe housing in a good school district in ANY major US city is just not obtainable. He paints commuters as morons who enjoy being gridlocked several hours a day in traffic.

[ChrisS]

Jim, people are starting to get it, though. My brother and his wife, the typical small town working class family, have started to do most of their grocery shopping at local farmers' markets. He even works part-time on occassion with a local cattle farmer that nets him (in addition to a few extra dollars) sun-fed, organic beef.

PS - I was in Saratoga Springs two weeks ago on business (groundwater sampling at the old Ni-Mo manufactured gas plant) and I was struck by how gorgeous the downtown area is, yet they still persist in building the same surburban sprawl just down the road. However, we stayed in the in new Marriott on Excelsior St and it was very nicely done, I think, for a big chain-type place. It fit the parcel it was on, and was in walking distance to downtown. (The first night we ate at the Old Bryan Inn, fabulous place).

[David Mathews]

Will Jesus return to Save Us from our own self-destruction? No. Humans exhausted God's sympathy a long time ago, long before this latest episode of exponentially destructive behaviors made possible by fossil fuels.

Will science save us from our own self-destruction? No, it is not science's job to save humankind from self-destruction. Science has done a whole lot to empower humans to self-destruct. Since humans lack wisdom I suppose that we will use this power for its intended purpose.

Will technology save us? No, please ... don't speak in such a silly manner. Technology gave us all of the WMDs and the automobile and the cell phone and the television. In other words, technology has made humans increasingly violent, fat, lazy and more dependant upon technology.

God, science and technology will not save us. Do you suppose that humans are capable of saving our species from our inevitable fate?

No. Look at these humans, see how they behave. Notice that they are completely overwhelmed with the cheap crap that you can buy and absolutely disinterested in the living Earth which pretty much makes human life possible in a Universe which is harsh and hostile to life.

Humans are made happy by buying and destroying things. Humans are entertained by hate, prejudice and violence. Humans are about the most miserable animal on the planet yet we are insane enough to claim pre-eminence over all other forms of life.

Nature has a way of punishing creatures that behave in an arrogant, foolish and self-destructive manner. By all objective measures humans are worthy of all of these penalties.

Life will first become difficult, and then life may become impossible. If you need cars, phones, televisions and grocery stores to survive there's a pretty good chance that you will not.

Unfortunately, those who want to depend upon the local environment for their own suvival will soon discover that humans have pretty much destroyed and depleted all of these local environments. Going local is a wonderful ideal but impractical and usually impossible. If you are forced to sustain your life by utilizing only local products there's a pretty good chance that you will not survive.

What other options are available for survival? None. The great die-off is about the begin. Hopefully some primitive self-sustaining tribes still exist in remote areas. These people are the best equipped to survive the end of the oil age because they never became addicted to the poisonous drug.

But modern energy-intensive technological society will come to an end. As it should.

[Semanticleo]

A person is smart but people act stupid in groups.

When they fight over a cabbage patch
doll in WalMart, how do you think
they'll react when food or gasoline
is the scarce commodity?

Mobs of so-called good people will
be trumped by all the sociopaths
we have been percolating.

Whatever National Guard remains
for domestic unrest will be saved
for protecting infrastructure rather than the populace.

The local police? They will stay
home to protect their own families
from the marauding 'fiends for
action' and mayhem. They'll just
be reugular folks out lookin' for
a little entertainment, and it may
be hard to distinguish those folks
from the 'good' neighbors seeking
baby formula.

[Joe]

Let's not forget the changing role of women as a consequence of peak oil. We MEN (and here I
mean testosterone fueled M-E-N, not New Age Girly-Men) will have to "reeducate" the
"fair-sex" on a scale reminiscent of Stalin's gulags. There'll be so much to do.....cleaning their
filth-ridden vocabularies, teaching them to dress as WOMEN, not androgynous workerbees,
prodding them back to their rightful place of home and hearth, etc. THEY (today's women)
will be the biggest block to a smoothly running society. They will protest over being forced to
give back their inalienable rights, such as ripping life from their wombs when it inconveniences
them. Mark my words: Only large funeral pyres of NOW wannabees will persuade these babes
that it's Martha Washington, not Martha Stewart that they should strive to emulate!

[t]

For the sake of discussion , let's assumes that one's commute is 60 miles per day. Let's say gas rises another $1 per gallon. If that person gets 20 miles per gallon, the additional cost is $.05 per mile or $3 per day or $66 per month, assuming a 22 day work month. Doesn't it seem likely that the $66 per month is going to be way less than the monthly price differential in housing?

Now, if that person trades in his or her vehicle for a Prius, then he/she can easily afford the extra gas cost.

Gasoline cost at 20mpg at $3.00 per gallon equals $.15 per mile and $.20 per mile at $4.00 per gallon.

Gasoline cost at 50mpg at $4.00 per gallon equals $.08 per mile.

So even with a dollar increase in gas, the homeowner can actually decrease his/her gas prices per mile over what they are now.

I think we have a long way to go before a significant number of people change their home buying behavior.

And, further, if more people try to move closer to the city, won't that just make the housing price differential greater -- thus tending to keep the incentive to live in outer slobovia?

Another factor, I think, is racism and fear. I used to live in Denver, which, actually , is a thriving, attractive city with a viable and interesting downtown with great housing all over the city. It continue to experience a renaissance which has been going on since the 70s. But there are still significant number of people who wouldn't live in Denver proper because of bias, fear, and refusal to live in an ethnically diverse community.

[Peter]

It's a little bit funny this feeling inside
I'm not one of those who can easily hide
I don't have much money but boy if I did
I'd buy a big house where we both could live

If I was a sculptor, but then again, no
Or a man who makes potions in a travelling show
I know it's not much but it's the best I can do
My gift is my blog and this one's for you:

http://karavans.typepad.com/karavans/2006/04/getting_offtheg.html

Talk about the perfect escape from the great rat race of civilization.
This swamp is probably a shopping mall today, or possibly a subdivision.

[Eddie]

"She has to know that we are sucking down 25 million barrels a day, and a million, is quite literally a drop in the bucket. Should be a long hot summer."

I would suggest that you consult a dictionary before using the word "literally" again.

[Peter]

t,

Do you really think that gas at the pump will go up in price in complete isolation? Does the transportation system that delivers your groceries, and basically everything else as well, run on air?

Hint: Start paying attention to prices for other things. They are creeping up too.

[Semanticleo]

Joe;

I predict you will be leading the
first wave of fun-seekers.

[Joe]

Well, I've been accused of being a cyber stalker, so I guess I can't easily hide

[sad truths]

George,

I hate to be harsh, but most people have kids voluntarily.

In many cases, doing so may turn out to have been a bad choice.

[george]

"Denver has...great housing all over the city". Yes, Denver is a beautiful city, but does it have any affordable, safe, housing in a good school district?

[German Mike]

t says: "If that person gets 20 miles per gallon, the additional cost is $.05 per mile or $3 per day or $66 per month, assuming a 22 day work month. Doesn't it seem likely that the $66 per month is going to be way less than the monthly price differential in housing? "

Ok, now try $8/gal, then we are at $330/month just for the commute. Forget vacation, not gonna happen. Now MacHomeonwer will also pay at least twice the power/gas bill to heat/cool his MacMansion, so add another $200/month. Due to rising energy costs the crap he/she buys at MacMall and MacGrocerystore will likely take another 10% (say $100 ...and that's being conservative) in addtional funds over today's prices. Now we are at an additional $630.-/month and we are MacBroke.
$8/gal won't arrive for a few more years, but I figure in 5 years or so it could easily happen. Till then, happy motoring.