Assumptions

October 29, 2007,
When historians glance back at 2007 through the haze of their coal-fired stoves, they will mark this year as the onset of the Long Emergency – or whatever they choose to call the unraveling of industrial economies and the complex systems that constituted them. And if they retain any sense of humor – which is very likely since, as wise Sam Beckett once averred, nothing is funnier than unhappiness – they will chuckle at the assumptions that drove the doings and mental operations of those in charge back then (i.e. now).
The price of oil is up 53 percent over a year ago, creeping up now toward the mid-$90-range. The news media is still AWOL on the subject. (The New York Times has nothing about it on today’s front page.) The dollar is losing a penny a week against the Euro. In essence, the American standard of living is dropping like a sash weight. So far, a stunned public is stumbling into impoverishment drunk on Britney Spears video clips. If they ever do sober up, and get to a “…hey, wait a minute…” moment when they recognize the gulf between reality and the story told by leaders in government, business, education, and the media, it is liable to be a very ugly moment in US history.
One of the stupidest assumptions made by the educated salient of adults these days is that we are guaranteed a smooth transition between the cancerous hypertrophy of our current economic environment and the harsher conditions that we are barreling toward. The university profs and the tech sector worker bees are still absolutely confident that some hypothetical “they” will “come up with” magical rescue remedies for running the Happy Motoring system without gasoline. My main message to lecture audiences these days is “…quit putting all your mental energy into propping up car dependency and turn your attention to other tasks such as walkable communities and reviving passenger rail….” Inevitably, someone will then get up and propose that the transition to all-electric cars is nearly upon us, and we should stop worrying. As I said, these are the educated denizens of the colleges. Imagine what the nascar morons believe – that the ghost of Davey Crockett will leave a jug of liquefied “dark matter” under everyone’s Christmas tree this year or next, guaranteed to keep the engines ringing until Elvis ushers in the Rapture.
The educated folks – that is, the ones subject to the grandiose story-lines of techno-triumphalism taught in the universities – are sure that we’ll either invent or organize our way out of the current predicament. A society that put men on the moon in 1969, the story goes, will ramp up another “Apollo Project” to keep things going here. One wonders, of course, what they mean by keeping things going. Even if it were hypothetically possible to keep all the cars running forever, would it be good thing to make suburban-sprawl-building the basis of our economy – because that’s the direct consequence of perpetually cheap energy. Has anyone noticed that the housing bubble and subsequent implosion is following the peak oil line exactly?
It’s a bit harder to discern what the assumptions really are among leaders in the finance sector, since so much of their activity the past ten years has veered into sheer fraud. The story line that everyone is putting out – from the Fed chairman Bernanke to the CEOs of the Big Fundz – is that American finance is a python that has swallowed a few too many pigs, but if we jigger around interest rates a little bit more, and allow some more money to be lent out cheaply, the python will eventually digest the pigs and go slithering happily on its way along the jungle trail with a burp and a fart. From this vantage, one sees a rather different story: more like a gang of human grifters sweating through their Prada suits as it becomes increasingly impossible to conceal massive losses incurred through overt reckless misbehavior. My own guess is that a lot of these boyz will be in line for criminal prosecution before too long.
The political assumptions one hears are the most astoundingly naïve and ridiculous, especially the ones that involve other countries and our relations with them. NY Times followers no doubt believe, along with Tom Friedman, that the global economy is now a permanent fixture of the human condition, and that soon it will transform itself into a colossal engine of “green” (i.e. benign) commerce. Friedman and his followers tend to forget the second law of thermodynamics when spinning their fantasies of a world that can harmlessly manufacture and market an endless number of plastic salad shooters from one side of the planet to the other without incurring any losses to the health of said planet.
My own assumptions are somewhat different. I think we’re likely to see a lot of nations scrambling for survival, initially manifesting in a contest for the world’s dwindling supply of oil (and oil-like substances). For instance, when viewing the globe, few people consider that Japan currently imports 95 percent of its fossil fuel. Japan has been a “good boy” among nations since its episode of “acting out” in the mid-20th century and has enjoyed a long industrial prosperity since then. But what happens when there is not enough oil in the world to be allocated rationally by markets among the powerful nations? Will Japan just roll over and die? Will they shutter the Toyota factories and happily turn to placid tea ceremonies. I think Japan will freak out, and it’s hard to predict exactly who will feel its wrath and how.
Similarly, Europe. Americans view Europe as a kind of theme park full of elderly café layabouts swaddled in cashmere as they enjoy demitasse cups in the outdoor cafes of their comfortable art-filled cities (some of them not long ago rebuilt from rubble). Europe has let America do its dirty work for it in the Middle East for the past decade while enjoying tanker-loads of oil coming up through the Suez Canal. Europe has only had to make a few lame gestures in defense of its oil supplies. But the North Sea oil fields, which for twenty years have hedged the leverage of OPEC, are crapping out at a very steep rate. Sooner or later Europe will freak out over oil, and geo-political flat-earthers will be shocked to see that all the nations of café layabouts can mobilize potent military forces. God knows whose side who will be on, exactly, when that happens, and where America will stand – if its own military is not so exhausted that it can even stand up.
Personally, I think the world will be growing a lot larger again, and less flat, and that eventually America will find itself isolated once again between two oceans – though incursions by desperate foreign armies in one way or another, is not out of the question as the great struggle for resource survival gets underway. In time, however, I think the current Great Nations of the world will lose their ability to project power in the ways we’ve been conditioned to think about it.
In the meantime, our own nation has become a society incapable of thinking, and the failure at all levels of rank, education, and privilege is impressive. If you listen to the people running for president – many of them overt clowns – you’d think that that all the comfortable furnishings of everyday life can continue with a few tweaks of the dials. They are cowards and it is possible that they perfectly represent a whole nation of cowards who deserve cowardly leadership. The danger, of course, is that when a non-cowardly leader finally does step forward in a desperate America, he will not shrink from pushing around a feckless people, or doing their thinking for them.

Comments

[Bubbanp]

I love Monday mornings.

Why, oh why, is the North American public not aware of these issues.

In my circle of friends, all of whom are well educated, peak oil and climate change, and economic risk are not even on the radar screen. Its simply consume, consume, consume.

My wife and I were planning a Carnival cruise, which we are cancelling. We are cancelling because we think a cruise is the epitome of gluttony.

Our friends think we're daft.

I'm off for a latte.

Bubba

[msjanket]

I've talked about this subject with friends and been amazed how denial has taken over in their minds. They don't want to talk about it, they figure our baby boomer generation won't feel the sting of depleted reserves and a lousier standard of living, that our retirement accounts will provide a decent subsistence level for us, etc. They don't know what The Oil Drum has been preaching for some years. I feel like a turncoat telling them their notions are out of touch with reality, they don't want to hear it because they have to pick their kids up from soccer practice and don't want to be bothered.
Sure, we don't know precisely how and when each and every one of us will be first afflicted by the oil shortage mess. Larger and larger amounts of money will be required first to buy gas, then the spot shortages, then ??.

[inquisitivemind22]

Pertaining to JHK's comment that the news media is "AWOL" on the price of crude oil and the effect high oil prices have on the US economy, I have found the business news community to be in their own form of denial. I work at a hedge fund and CNBC is on all day. As the commentators run their 30 second segments on the price of oil, most of the guests attribute the price increases over the past year or so to "speculators." The guest says that hedge fund managers bid up the front month contract, and the commentators nod their heads and seem to agree. Only once in a while does a guest come on CNBC and say the reality of why oil is at these prices: The world is out of swing producers, and that world supply is at 85.5mbd, and demand is at 87mbd.
Thus, the business news community seems to have come to the consensus that as long as the price of oil rises slowly, the economy can adjust. Well, it would make sense that people earning less than $50K this year who live in a house heated by heating oil will be affected by the increase in their bill this winter. Similarly, people will also be affected by rising gasoline prices, rising food prices, and the increase in the price of credit that has been going on over the past few years. How can the media conclude that this trend in rising prices is ok, as long as it is gradual? There are other trends in higher prices I have noticed over the past 10 years, such as the price of education. I think that as long as the media stays quiet on these trends, people are more likely to internalize how they are effected by the rise in the price of oil and less likely to start a public dialogue on the matter. Imagine if Oprah did a show on the price of oil and how it affects the middle class? The media would snap up the story in a second and it would be everywhere.

[Tangurena]

Russia has lots of oil. And "thanks" to the incompetence of the Soviet leadership, hadn't managed to sell it all before they ended up on the dustheap of history. Europe will end up with a choice in the future: continue sucking up to the Arabs, or cozy up to the NewSoviets (which is where Putin's nationalism appears to be heading). Russia will be the big player in the future, and many people don't like that one bit.

As for nationalized stupidity, we as a nation have despised intellectuals for over 200 years. Children have watched massive layoffs in engineering, science and software development; and then voted with their feet. We don't have a shortage of programmers, we have a shortage of cheap, young programmers. We don't have a shortage of engineers, we have a shortage of cheap, young engineers. Anyone over 30 is usually considered "old" in programming in the US. There has been only 1 US president who was an engineer: Jimmy Carter, and he's hated by the republican'ts and the Israeli lobby.

Further, the religious fanatics in the US have been waging war on science. When their misinterpretation of a book claims that the earth is 10,000 years old, then they campaign to have anything contrary to their fanatical faith thrown out of schools. When their misinterpretation of that same book claims that everything was created as-is, they wage war on evolution (and you'll see the word "evilution" used in their writings), and try to compel schools to teach their fanatical perversions.

Galileo was thrown in jail for 2 things:
1 - pointing out that the earth was not the center of the universe; in contradiction of the religious fanatics of that time.
2 - showing that the moon had mountains; also in contradiction of the religious fanatics of that time (they claimed all heavenly bodies were created by god, and as such, were created perfectly, therefore no mountains/craters could mar that perfection).
Others were thrown in jail for stating that a vacuum could exist, while the theocratical religious fanatics claimed that since god was everywhere, there was no place that god could not be, and since a vacuum was the absense of stuff, vacuum could never exist because it would be someplace that god wasn't. Which is why science spread in the protestant nations, and stagnated in the catholic ones. Today, the evangelicals in the US have become the ossified, anti-scientific catholics of 5 centuries ago.

We can't eliminate national stupidity without eliminating marketing, religion and advertising. I don't see that happening, so I can only conclude that the US is doomed.

[bud4wiser]

"Imagine what the nascar morons believe – that the ghost of Davey Crockett will leave a jug of liquefied “dark matter” under everyone’s Christmas tree this year or next, guaranteed to keep the engines ringing until Elvis ushers in the Rapture."

Great stuff JK. And let me tell you, my good buddy [Joe-Sixpack] is living the dream you describe. Joe, who doesn't watch Nascar but does drive a 100 miles to go bow-hunting, just picked a brand new Dodge Durango.

I mean - what's wrong with taking on $26,000 of debt, while grabbing a second vehicle that's [good for hunting trips?] Hey, this ride is brand new, at it "gets" 18mpg....

Life is good.

[Movenonup]

Oil Rises to Record Above $93 a Barrel

http://www.abcnews.go.com/Business/wireStory?id=3788891

[Postman]

Although massive rebuilding, or perhaps UNbuilding all of our residential and commercial space is one possible option (along with rebuiding all of our transportation infrastructure to favor rail transport), wouldn't it be simpler and FAR more cost effective to simply find an alternative energy source for the equipment we already have?

[adrian]

A great post, the trip to Houston must have been interesting..I have begun to seriously bore my friends here in Charlottesville with my talk of oil shortages as the 800 pound gorilla of the proximate future. People complain about the price of gas as it now averages $2.80, but continue to use as much as always, and they discount the notion that it may be $10 (in today's money) in 5 years or so.
Everyone thinks we'll all keep doing the same stuff in the proximate future (ten years), and nobody seems to connect the dots to be able to see where all of this is going.....

[Zack S]

From the most recent NY Magazine.

Zack S

http://nymag.com/guides/money/2007/39952/

The Catastrophist View

What would it take to send the U.S. economy—and New York’s—into free fall? A doomsday primer.

[scott]

Feckless pretty much sums it up and unfortunately most Americans will only agree with the benefit of the rear view mirror.

[jp]

I thought Cheney was ushering in the rapture..Now I am going to have mixed media nightmares about the King of the Wild Frontier, the Colonel, and Xmas.. thanks a lot Jim.
On the Mclaughlin Group (which I watch just to hear John say "Eh-whe nor Cwiff!) the old guy produced a Perot like list of what was going on..a similar one to some discussions here..including "the pwice of oil!"

[Movenonup]

Postman,

I am going to assume your question is real and you are not just baiting us.

All the known alternatives use fossil fuels. Fossil fuels have given us more than energy, they have given us a way of looking at the world that is not sustainable. The equipment and lifestyles that we have are built upon the premise of infinite growth. Without fossil fuels that kind of growth is not possible, yet we are trapped into thinking this is the way things naturally are. The infinite growth model is killing us. If you found an alternative energy source you still need to find alternate stuff to create pesticide, fertilizer, plastics, medicines, asphalt, fabrics, etc.

If we found an alternative, we would still need to shut down our own growth, or mother earth is going to do it for us. We are choking on our own excrement but we have become inured to the stench, the pain, and the sensation of drowning. The death of the planet has become the white noise of our lives.

[StephenB]

Here in my home town, a private venture firm has proposed a 580 MW, nat. gas-fired power plant. All the locals are up in arms over the 250 foot smoke stack and the 2 million gal of diesel reserve fuel over the towns aquifier, and the 200K gal a day of makeup water the thing will take.

I have repeatedly posted discussion and links to the impending nat. gas shortages from places like Matt Simmons' speeches and presentations page, ASPO, The Oil Drum etc. and nobody cares. I pointed out that even if it's built, it won't run for more than a fraction of its 30 year design life. I then pointed out that the only growth in nat gas supplies is via imported LNG and that the Coast Guard just last week banned a local company from building a very rare LNG import terminal in Fall River, MA on the Taunton River. One person who otherwise opposes the plant told me my low fuel discussions are "not relevant here." ....Ya.

Personally, I don't care about the eyesore value (it's in a far corner of town), but I hate seeing so many people invest so much mental energy into what's going to become a white elephant.

Next month there will be a public forum on this plant and I'll get up and speak about all the low-fuel issues again. I'm sure the reception I get will be colder than the power plant's idle turbines in 12 years.

People don't f'ing get it at all.

[Marcus]

Postman,

We do have alternative energy right now--coal.

Next emergency, death of the planet.

[Nicholas Paredes]

Tanqurena, Herbert Hoover was an Engineer. I remember a quote, where the Queen of England asked him about his profession, and her response was, “I thought you were a gentleman.”

I agree with Jim that heating oil will likely be the real reckoning, and that globalization will take quite the hit. I don’t feel that it will be down for the count, simply a return to high value exchange rather than supplying the Walmart crowd. I also agree all too well with him on the assumptions with respect to Europe.

“Old Europe” has only experienced a touch over fifty years of peace after an awful lot of death. Picture in your mind for a moment, the most horrific concepts of death in the 20th century. If they don’t include gas chambers and trench warfare, you know nothing about death or war. They also have quite the high-quality manufacturing plants and a highly educated labor force to execute. On my first trip to Europe a dozen years ago, watching television in the middle of the night for a few minutes, I was struck by the underlying violence. The surface is nice and soothing, but I unfortunately was raised in violence, and can discern it all too easily.

As my great-grandfather left Czechoslovakia in 1930, after having fought in the first conflict escaping from Siberia and walking home, I look around, and am rather uneasy with the level of anger. I always felt that he understood, and proceeded to make a decade long transition, moving the family here. We have never experienced either real poverty or real war as a population. We send the poor or hyper-idealistic. We have as a culture never quite had the pervasive real violence that makes one question their humanity either however. Maybe Europe, as well as the US, populations could retain what has been gained over the last hundred-odd years.

Perhaps my biggest concern is how we have as a culture abstracted and “industrialized” violence, so that it never quite overwhelms the participants. The distance from actual blood is the thing that makes war a game. Rarely is true war allowed to be a game. but the ramp-up, like Iraq, makes us less prone to question the “full immersion once it happens. “It’s defense!”

As somebody stated in a design conference recently, the future will be built upon the excesses of the past. My hope remains, but having recently gone three weeks without hot water, you realize how far it can go. How about three weeks without much oil-derived food supplies? And remember, 11 gallons of potable water requires a gallon of gasoline…

[IVAN]

I like your rant Jim but I don't think it is reaching the people who should be listening. People are so self-absorbed that any "bad news" is simply regarded as a problem technology will solve. Our society has disconnected itself from nature so much that most people simply have no real ability to insure their own survival. Hearing everyday some media expert or worse some moron politician ( yeah, Al I'm looking at you) telling me how I can save the world and still over consume leaves me hoping the shit does hit the fan, these folks will be the first to go. How the fuck can you save the planet when you can't save yourself?
Really all we need to survive is water, food and shelter, this is an indisputable fact. Maybe people should asses where they live to the proximity of these things, as well as the ability to provide them if the trucks stop rolling or the natural gas stops flowing. Most urban areas are miles from the sources of food and water, and promoting local agriculture and getting away from trucking food around just dosen't seem to be getting much attention. The water issue is far more seriuos than the oil issue, to me anyway, humans have survived without oil for a couple hudred thousand years, but we can't survive very long without water.
I live in a small town in the interior of BC, Canada. A five minute walk and I am drinking spring water, in fact, most of the creeks above town are drinkable (without treatment). There are lakes and rivers that still have fish, there are healthy populations of ungulates, I know the edible varieties of berries and mushrooms which grow in abundance. There is wood for building and heat. There is also a strong community of people who I know would help each other in hard times.
90% of the species that have ever lived on earth have gone extinct, this is not tragic, it is simply part of the changing nature of a dynamic world. Bring on the hard times, it will be a quick, and probably painful, culling of humans that have zero ability to survive. Maybe people who can grow food and hunt for it and have a understanding of how to actually survive will thrive in a world devoid of lawyers, marketing people, politicians, celebrities, and others whos only skill is an ability to exchange their money for things they need to survive. Fuck 'em, good riddance.

[Andy in San Diego]

JHK, I don't think people living in McMansions know what sash weights are. Just saying.

Here in San Diego where many houses in the suburbs have just burned down and thousands of houses are on the market you can bet that there will be lots of talk about rebuilding to restore a sense of normalcy. I'm sure the builders are happy.

[wisewebwoman]

I don't know what is hitting the MSM on all of this coming catastrophe. I don't read it or watch it. I do my own research and read alternative news and blogs to perform my reality checks.

I've been reading your blog for years, Jim and I've seen and admired your persipacity on docs.

First time commenting: I believe the water and oil crises - forcing a real long emergency - are going to hit at approximately the same time. I see the beginnings of the water crisis now in Georgia and the dry fires of Californa are another symptom.

The suicides of McMansion owners are just beginning. I agree with many posters in that none of my friends are facing up to this potential extinction at all (not to mention their children and grandchildren), Walmart bliss continues.

Four years ago I took the precaution of buying a property on the edge of nowhere, on the ocean with freshwater at hand. Arable acres and organic seeds are also in hand. It was dirt cheap. I cashed out my city property. I'm poor but am busy with taking myself off the grid and acquiring sustainable methods of heating (great self-replenishing wood lot)and some manual appliances (see me on that handcranked washing machine!)- which can be found if you hunt for them.

I too was living in the la-la land of never-ending gas and the gathering, guarding and grooming of ga-gas without a thought of consequences or effects on Mother Earth and was so totally unthinkingly citified that friends who see me now - living like this, gawp and fall down.

However:

Money is going to become a thing of the past.

True wealth will be in growing our own food and bartering our gifts for those of others, and oh yes, being virtually immobilized until new rail tracks are laid and the horses are groomed for cartage.

If I can do it anyone can. So do. Before it is far too late.

[JLee]

I've tried talking to my friends and neighbors about Peak Lifestyle and the huge changes that are coming. Do I get any response that indicates that they have even heard about the real problems of energy, climate change, population, food,....etc. You guessed it, no! The guy who runs my oil change place wasn't even aware that oil had gone up significantly in the last year. And if Gore was even serious about the ideas in his PR film I would have expected him to make some changes in his lifestyle. But no he won't do that. And Prince Charlie and Branson of Virgin airlines got on a list of the most "green" celebrities! Branson because he thinks he can buy more fuel efficient jet engines. Isn't that a better joke than hearing that Elvis is alive an living in New Jersey. And if that really is the level of action by those who do have some influence you can figure out quite easily if we are going to "solve" these problems. So what to do? Well enjoy some of mankinds finest achievements - listen to a little Mozart, Bruckner or Wagner, and make sure you keep your gun clean.

[XER]

Jim,

Europe will turn into it's old self again. They will use bio warfare on the "useless eaters." The next Hitler may be English this time around. The Europeans are by far the most morally depraved "educated" people on earth. I believe the completely amoral European elite's are preparing for the largest mass murder\enslavement of all times.

[steve duncan]

Impending hard times seem to be very good indeed for the markets. I have about zero schooling in economics and investing. Therefore I'm puzzled when glancing at the daily stock market comings and goings. Seemingly the more bad news that piles up the better. Last week Countrywide announced what appeared really lousy numbers and the market rose. New housing starts down? Markets rise. Oil above $90 for the first time. Markets rise. I swear India and Pakistan could start lobbing nukes at each other and the Dow would immediately crack 15,000. WTF?

[Dr.Doom]

IVAN,

What a gratuitous pain in the ass you are. Did you figure out this nice survivalist lifestyle all by yourself, or did you just get lucky that mommy and daddy decided to born you up there? What if we all "get it" like you obviously have, and decide to move up with you and the folks? Will you still have all that fresh fish and deer, and mushrooms in the forest? Will you still even have a forest?

A lot of fine people will suffer and die. Some, perhaps most, will never know the true reasons why they are suffering and will die. Why don't you learn a little humility while you can still read this blog, so some of us will know a few lucky ones, realizing that they were no better than their peers, just in a better situation, finally "got it".

[Dwayne Chandler]

In short, I am a currently
an active duty, extremely
bitter with a lack of
everything not being based
in reality, tired of having
my posts censored by all
of the supposedly "poltically
progressive" websites and blog;
rah, rah, hooray for freedom of
speech and democracy!
Well, I'll find out soon if the
trend continues here.

Dwayne Chandler, US Army.

[Dwayne Chandler]

In short, I am a currently
an active duty soldier, extremely
embittered with a lack of
everything not being based
in reality, tired of having
my posts censored by all
of the supposedly "poltically
progressive" websites and blog;
rah, rah, hooray for freedom of
speech and democracy!
Well, I'll find out soon if the
trend continues here.

Dwayne Chandler, US Army.

[Methane of Cawdor]

"There is also a strong community of people who I know would help each other in hard times."

Sure, IVAN. Your "strong community" will get along just fine . . . until one of you imposes his will as Alpha Male and proceeds to molest and enslave the rest of you. And when those delectable north-of-the-border resources of yours are nothing but a memory, you'll take to turning each other into Dahmerstrami. Have fun, eh!