Peak Universe

October 22, 2007
    The big Peak Oil conference of the year took place in Houston last week – but before we get to the substance of that, a few words about where we were.  It is hard to imagine a more horrifying urban construct than this anti-city in the malarial swamps just off the Gulf of Mexico.  And it is hard to conceive of a more desolate and depressing urban district, even of such an anti-city, than the utter wasteland around Houston’s convention center.

     Luckily, we didn’t have to enter the convention center itself across the street -- a baleful megastructure the size of three aircraft carriers, adorned with massive air-conditioning ducts to counter Houston’s gym-sock-like climate.  And when I say “street” you understand we are talking about four or six-laners, with no curbside parking, which is the norm for this town. The effect is that every street behaves like an extension of the freeway at the expense of pedestrians – but pedestrians have been eliminated anyway because in ninety percent of Houston’s so-called downtown of glass towers there are no shops or restaurants at the ground-floor level, only blank walls, air-conditioning vents, parking ramps, and landscaping fantasias.  We were informed that in parts of downtown there existed a network of air-conditioned underground corridors with shopping, but that everything in it closed at 7 p.m. when the last office workers straggled home.  Anyway, none of it extended as far as the convention center.  The rest of district was devoted to surface parking.

     It has often been stated that Houston’s ghastly development pattern comes from having no official zoning laws.  But all it really proves is that you can achieve the same miserable results of typical American boneheaded zoning with no zoning – as long as your don’t give a shit how people feel in their daily environments.

     The convention center itself, though, demonstrated something beyond even that degree of thoughtlessness.  Its pharaonic hugeness was a metaphor for the fatal grandiosity at the heart of contemporary life in American today, the utter disregard for a scale of human activity consistent with what the planet has to offer within its ecological limits – and of course the oil issue was at the center of that story.

     Oh, one final thing about Houston life per se.  Judging by the local items in the daily newspaper, the so-called city enjoys a level of mayhem that makes Baghdad look like a Sussex garden party.  Sample headlines: “10 Charged in Burglary Spree,”  “Pit Bull Shot Dead After Pony Attack,”  “Jury Gives Man Life in Carjacking Death,” “Two Killed in Home Invasion.” One particularly insane story told of a man who shot and stabbed a visiting friend who “dissed” his dog.  We didn’t see any of that action around the convention center's Hilton Americas, where the ASPO conference actually took place, but the news didn’t exactly make you want to venture out beyond the lobby.  Anyway, you couldn’t buy a stick of gum within a mile walk of the place, and the thought of traipsing past all those surface parking lots in 90-degree heat was like an invitation to reenact the Bataan Death March.

      It was a sublime coincidence of fate and history that throughout the ASPO conference, the price of a barrel of oil surged up through the high eighty-dollars range and briefly touched $90-a-barrel on Friday (just as the stock market was tanking by 360-odd points).  It was also interesting that as all this action was unfolding, MSNBC was running an interview with Senator Larry Craig (R. Idaho), lately accused of soliciting sex from a policeman in an airport toilet.  Apparently what the nation really wants to know about is the Senator’s self-described “wide stance” in bathroom technique.  Perhaps when Craig is finally forced from his senate seat, he can get a job as a “personal toilet coach,” and become the pioneer in a whole new realm of self-improvement science, teaching others how to assume the manly “wide stance” and become more effective leaders.

      So, while the price of oil ratcheted up hour by hour, the ASPO conference members heard from an impressive range of experts who have been leading the public conversation on the Peak Oil story – with no help from the mainstream media or the political sector.  Among them were Robert Hirsch, co-author of the now-famous 2005 Hirsch Report, commissioned by the US Department of Energy, which, much to the consternation of its sponsor, first told the nation in no uncertain terms that it was heading for a catastrophic set of disruptions in “normal” American life if we heedlessly continued energy business-as-usual.  Hirsch went a little further now, two years on, than he had in his famous report, predicting a future of “oil export withholding,” panicked markets, and allocation disturbances that would make the 1973 OPEC embargo look like a golden age.

      Matt Simmons, the leading investment banker to the oil industry, who has worked tirelessly to lift public awareness of Peak Oil, also raised the specter of shortages, telling the audience that market allocation problems in the near future would almost certainly induce “hoarding behavior” among the public that would cripple the economy, lead to enforced rationing, and shock the nation. Simmons compared the current public mood over energy issues to a “fog of war.”  He also repeated his oft-stated opinion that the drilling rigs and other equipment used around the world to pump oil out of the ground are so uniformly old and decrepit that they pose a problem every bit as dire as peak oil itself.  In the meantime, he said, to offset climbing prices, the developed nations have lately dipped so deeply into their accumulated stocks of crude and “refined product” that some countries may breach what is called their “minimum operating levels.”  Offstage, he told me, “We’re too preoccupied trying to figure out the exact date of the peak.  Meanwhile, we’ll drain the gasoline pool and it will be gone forever.”

      The other most significant contribution came from Texas geologist Jeffrey Brown who presented a full-blown version of his theory that world export rates from the countries with oil to sell are liable to decline so much more sharply than their actual production decline rates that the world would be thrust into an oil export crisis within the next five years – and that this export crisis would turn out to be the defining condition of the Peak Oil story.

      There were plenty of other fruitful contributions on subjects ranging from the future of the airline industry to reviving passenger rail service, to the question of nuclear power.  And there was one real clunker presentation by a shill from the Toyota corporation, designed to blow green smoke up the audience’s ass about the future of happy motoring (Toyota’s products will save it from Peak Oil).
      For coverage of the particulars, visit TheOilDrum.com, the nation's best energy discussion website.

      If there were reporters from the mainstream media present at this event, I didn’t run into of them.  They are apparently uninterested in the fate of industrial economies, at least as long as Senator Larry Craig is out there on the frontiers of toilet coaching science, and Britney Spears is still sparring with K-Fed, and Diddy is beating people up in nightclubs, and people are murdering their friends for dissing their dogs.

Comments

[Dave]

Dear JHK

Thanks for hoot on a Monday that finds me bewildered by this ever nuttier world ! The toilet coaching stance of Senator Craig had me lauging out loud ! Thanks again now I have to get out there in my soon to be extinct job and drive three to four hundred this week. How many more years of this will the world we are entering into allow. But I must tell you that from what I have observed over the years at many a highway john there quite a few Senator Craig protogees out there assuming their bathroom stances. No coaching needed !

[Tangurena]

The Larry Craig Circus is an example of the media's lack of interest in important matters. That he is reproducing behavior documented in a 30-year old book "Tea Room Trade" is considered as irrelevant as his pleading guilty of the crime. What is interesting, sort of, is how the media is using the same tactics documented in "Trust Us, We're Experts," and used to discredit the idea that tobacco causes cancer, or that global warming exists, or even that peak oil could possibly happen.

[Zack S]

From todays Guardian;

http://www.guardian.co.uk/oil/story/0,,2196435,00.html

Steep decline in oil production brings risk of war and unrest, says new study
Output peaked in 2006 and will fall 7% a year
Decline in gas, coal and uranium also predicted
Ashley Seager

Monday October 22, 2007
Guardian

World oil production has already peaked and will fall by half as soon as 2030, according to a report which also warns that extreme shortages of fossil fuels will lead to wars and social breakdown.
The German-based Energy Watch Group will release its study in London today saying that global oil production peaked in 2006 - much earlier than most experts had expected. The report, which predicts that production will now fall by 7% a year, comes after oil prices set new records almost every day last week, on Friday hitting more than $90 (£44) a barrel.
"The world soon will not be able to produce all the oil it needs as demand is rising while supply is falling. This is a huge problem for the world economy," said Hans-Josef Fell, EWG's founder and the German MP behind the country's successful support system for renewable energy.
The report's author, Joerg Schindler, said its most alarming finding was the steep decline in oil production after its peak, which he says is now behind us.
The results are in contrast to projections from the International Energy Agency, which says there is little reason to worry about oil supplies at the moment.
However, the EWG study relies more on actual oil production data which, it says, are more reliable than estimates of reserves still in the ground. The group says official industry estimates put global reserves at about 1.255 gigabarrels - equivalent to 42 years' supply at current consumption rates. But it thinks the figure is only about two thirds of that.
Global oil production is currently about 81m barrels a day - EWG expects that to fall to 39m by 2030. It also predicts significant falls in gas, coal and uranium production as those energy sources are used up.
Britain's oil production peaked in 1999 and has already dropped by half to about 1.6 million barrels a day.
The report presents a bleak view of the future unless a radically different approach is adopted. It quotes the British energy economist David Fleming as saying: "Anticipated supply shortages could lead easily to disturbing scenes of mass unrest as witnessed in Burma this month. For government, industry and the wider public, just muddling through is not an option any more as this situation could spin out of control and turn into a complete meltdown of society."
Mr Schindler comes to a similar conclusion. "The world is at the beginning of a structural change of its economic system. This change will be triggered by declining fossil fuel supplies and will influence almost all aspects of our daily life."
Jeremy Leggett, one of Britain's leading environmentalists and the author of Half Gone, a book about "peak oil" - defined as the moment when maximum production is reached, said that both the UK government and the energy industry were in "institutionalised denial" and that action should have been taken sooner.
"When I was an adviser to government, I proposed that we set up a taskforce to look at how fast the UK could mobilise alternative energy technologies in extremis, come the peak," he said. "Other industry advisers supported that. But the government prefers to sleep on without even doing a contingency study. For those of us who know that premature peak oil is a clear and present danger, it is impossible to understand such complacency."
Mr Fell said that the world had to move quickly towards the massive deployment of renewable energy and to a dramatic increase in energy efficiency, both as a way to combat climate change and to ensure that the lights stayed on. "If we did all this we may not have an energy crisis."
He accused the British government of hypocrisy. "Tony Blair and Gordon Brown have talked a lot about climate change but have not brought in proper policies to drive up the use of renewables," he said. "This is why they are left talking about nuclear and carbon capture and storage. "
Yesterday, a spokesman for the Department of Business and Enterprise said: "Over the next few years global oil production and refining capacity is expected to increase faster than demand. The world's oil resources are sufficient to sustain economic growth for the foreseeable future. The challenge will be to bring these resources to market in a way that ensures sustainable, timely, reliable and affordable supplies of energy."
The German policy, which guarantees above-market payments to producers of renewable power, is being adopted in many countries - but not Britain, where renewables generate about 4% of the country's electricity and 2% of its overall energy needs.

[Jeffrey S]

This just in from the Guardian:
"Steep decline in oil production..."
http://www.guardian.co.uk/oil/story/0,,2196435,00.html

Nice description of Houston JK. You might consider working for their Chamber of Commerce...

[bud4wiser]

JK, what a tasty plate of Peak Oil eggs you serve up this week. Your essay is a veritable buffet of greasy items – just what an [average American needs] when pulling off the Interstate in his/her Lincoln Navigator to partake of some Denny’s/Shoney’s/McD’s garbage.

For those who have the appetite for even more grease –

Here’s the 411 on the how and why Peak Oil will become [noteworthy] when [haves-nations] slow down their exports to [have-not-nations.] And the article even explains why this kind of [news] simply can’t compete with the importance of Larry Craig’s toilet training. http://www.theoildrum.com/node/2767

If you are really in need of a PO-info-fix – here’s what’ up. http://www.aspo-usa.com/

And if you don’t believe anything I post – listen to this guy – he actually makes money – but curiously – is somehow not taken seriously by the media when he talks PO.
http://www.aspo-usa.com/index.php?option=com_frontpage&Itemid=35

Meanwhile – my prediction – Feb 2009 – TSWHTF – but again, it may not be known as PO problem so much as -- “Hey Gringo – we don’t want your stinkin’ dollars no more.” – (this mean the dollar will fall so much – that we don’t know how much oil went up)

Meanwhile, have a good week…….

[oneEyeOpen]

It is a known fact that as currently projected our nation's Social Security system is unsustainable. The numbers are attainable and transparent. Yet nothing is done.

The same is true of our nation's ability to provide health services, should we continue down our current path. Again the projections are fairly transparent and easy to obtain.

The amount of oil or coal or uranium still left in the ground is not transparent. It is hidden from sight and much is deposited in lands that are in direct opposition to Western ways that have absolutely nothing to gain in sharing what they believe to be their respective reserve numbers.

So, while there are easily obtainable numbers, that suggest to continue business as usual in certain entitlement programs will lead to catastrophic results, we choose to sit and do...nothing. Why is it so hard for so many people that post at this site to understand that where the numbers are murky, regarding world energy reserves, that we should choose to sit and do...even more nothing?

[RJG]

Yes..
we'll do what we do till we can't..
then we wont.

[oneEyeOpen]

Heres a particularly brilliant piece of writing:

"Oil and Iran
Published: October 22 2007 07:42 | Last updated: October 22 2007 08:05
The prospect of Turkish tanks rolling into northern Iraq – current oil exports: virtually zero – was enough to send crude prices soaring. So what would happen if bombs started dropping on Iran, the world’s fourth largest exporter?

While the debate in Washington remains unresolved, the US has clearly made preparations for a potential strike on Iran’s nuclear research facilities. A more general attack on its oil infrastructure looks highly unlikely, as does an Iranian oil embargo. Even if this occurred, Iran’s net exports of 2.5m barrels a day could, in theory, be mostly covered by spare capacity in Saudi Arabia and the world’s 4bn barrels of commercial and strategic stocks.

More important would be Iran’s military response – most likely, asymmetric retaliation against US interests. The possibilities, which include missile or suicide attacks on critical Saudi facilities, which process one in 10 of the world’s barrels, may read like the jottings of khaki novelist Tom Clancy. But the vulnerability of the region’s oil network is real enough.

The mere threat of attacks on oil infrastructure would probably be enough to push oil beyond $100 a barrel. What then? Big economies have so far proved resilient to high oil prices. At 6 per cent, the current proportion of US disposable income spent on energy is below 1980’s 8 per cent peak. Yet falling oil demand in the US and efforts to run cars on hooch and chip-fat show high prices are biting.

Three-digit oil prices would accelerate this trend, particularly if they sparked a US recession. Economic expansion across the Middle East – an important region in terms of incremental oil demand growth, not just supply – would reverse. A short-term price spike, therefore, could well be quickly followed by a sharp drop – as happened with oil after the Gulf War and with gas after the 2005 hurricanes.

Once high and volatile prices have savaged underlying demand, it does not bounce back with supply. Consumer behaviour and energy policies change. So hostilities in Iran would undoubtedly usher in the long-anticipated “superspike” in oil prices. But for those looking for an investment angle, alternative energy looks a better bet.

Copyright The Financial Times Limited 2007"

Now analyze the final paragraph. This mororn (the article is not attributed) says that when oil prices spike and demand drops that demand will not necessarily return when prices fall. Their conclusion? That in terms of an investment "alternative energy looks a better bet"? Whaaatt??? Is this fucking idiot aware that alternative energies only work when the price of oil is high? You don't mine oil sands when conventional crude is $9.00 a barrel. Nor do you build a still or erect a wind mill. There is no need for alternative energies when the price of oil is low. And this brilliant piece of writing is from a publication called Financial Times, where the authors are supposed to have sat through econ 101? The end is fucking near!

[upnatpishtim]

the only way out of the oil and energy fiasco is to convert to holar power.
now i had solar power but i dismantled it in favor of holar power.
do you know that a city of huston could run for a week if you coverted JHK's holar power?
and that same city could run for a year if you convered all the holar power from all these postings.
sad-dam, the ex dictator of iraq was murdered because his holar power was too strong.
and ex Israeli Prime Minister Ariel Sharon will never die because of his holar power. in fact his holar power is running the entire mid east piece process.
uhmerika is great because of president bush's holar power.you cant say with confidence that uhmerica is holar power capitol of the world.
my boss is running on holar power.
i bet your boss is cranking out the power of the hole.
and you may ask, "what hole?".
scyncrotron radiation from black holes? oh, come on!
i am talking about the power of assholes! wrap your minds around it! holar power will save us.
PRAISE BE TO ZARDOZ!

[asoka]

Great piece this week, JHK. Your metaphors were particularly nutritious. Thanks for a good Monday morning read.

[Johnny Rico]

Well I gather from Jim’s report that ASPO 2007 was a huge success. Another giant leap forward for mankind.

Hey, OneEye – what do you pay for that Financial Times subscription? Whatever it is, it sure seems worth it. I tried to link to that article off of the Oil Drum this morning but it’s behind a paywall.

What I want to know is what is going to happen if the Kurds kick Turkey’s ass.

[Ed]

We hardly ever hear it said that there are too many people for resources available meaning that we are already into population overshoot. The question that remains will we the crisis or experience the catastrophic resolution? Catastrophy appears to be winning.

[oneEyeOpen]

"Hey, OneEye – what do you pay for that Financial Times subscription?"

Not one centavo. It's free.

[comrade simba]

Great post - it seemed to me that the tone was ho hum, here's what the idiot world has to offer up today as per usual, rather than the OMG we are doomed!
Hell I know powerdown and economic disruption are showing themselves in just about every area you care to look. It's only good for entertainment purposes now - just like a slow motion train wreck. The zero prep crowd's antics are just comical, nothing to get bent out of shape about anymore.

[SolubleFish]

Funny rant about Houston. I had the same kind of reaction to the convention center when I attended my brother's med school graduation there a year and a half ago. It reminded me of a large generic airport terminal.

I think we are reaching peak mammoth structures in the US. For proof of that I merely point to Sally Jesse Raphael, who now easily dwarfs the convention center in size. I know...boo. But by the time any day-time talk show host starts talking about peak anything in the universe that will be when it's too late and you will know Armageddon is here on the streets of America and not only in the homes.

[Movenonup]

Dear Posters and Lurkers of our late, great, Clusterfuck Nation:

There will be a tribal gathering tonight, 10/22/07, right here on this blog at 10:00 EST (or so we think!). Two of our regular posters, Dr. Doom and Johnny Rico will debate the topic “How Doomed, How Soon.” Both posters agree that we’re screwed. Global warming and Peak Oil are inescapable. At issue is the timeline. Dr. Doom feels strongly that we have little time left. Johnny Rico thinks we have at least 20-30 years left before things are “really bad.” This is to be a gentlemen’s smack down, they have agreed to engage in a clean debate. Coarse language will be permitted but everyone involved believes it is important to debate the facts, not have a name-calling contest, so that you dwelling here in the Clusterfuck Nation can develop your own impressions regarding how long we’ve got and how bad it could get.

If you have time, check it out.

See you round the Clusterfuck!

MOU

[Driver1953]

A rapid meltdown of Western society, with its high demand for fuel and other natural resources, could in fact solve the problem.

Demand destruction--also known as genocide, ethnic cleansing, mass murder, collateral damage, holocaust, act of God, or tragic accident--is the quickest, cheapest solution. Funny that the ones who would control the oil also have the most lethal weapons.

[Dave]

i bet that last week was peak comment for this board, 842.

mein gott im himmel.

[Holmes, I presume]

“But by the time any day-time talk show host starts talking about peak anything in the universe that will be when it's too late and you will know Armageddon is here…” -- Soluble Fish

Yeah, it’s just a matter of time. Discussions of peak anything have certainly crept into some talk shows (albeit not the day-time talk shows, as far as I know) and of course into mainstream media. Just a few examples…

“Al Gore: we're at or near peak oil”
http://www.energybulletin.net/17142.html

“June 14, 2007: The Day “Peak Oil” Became a Household Word”
http://www.whiskeyandgunpowder.com/Archives/2007/20070614.html

“How Peak Oil Went Mainstream”
http://www.moneyweek.com/file/30904/how-peak-oil-went-mainstream.html

Gotta run. I hope to see you all tonight!

[PeakOilBoy]

The Term "Peak Oil" is jaded now - it's a tainted frame. People are too scared to deal with reality, including the biggest players on the planet.

Because institutionalized change means loss of control, and the elite just can't fathom local economies with their own local currencies. There's too much invested in the previous system.

I compare it to computer operating systems. Currently, America (and the world) are running on OilSystem X.

We need to port over to LocalAlcoholSystem 1.0, which would run the economy and world just fine with private and government investments.

Imagine, couples heading into showrooms with a variety if different Stills, like the Moonshine2000. They could order it and have it delivered and installed!

If neighbors went in on it together, the government would foot half the bill as a tax credit.

As for EROEI... Brazil is getting about 8:1 returns on their alcohol fuel. With 70 million acres of mesquite, kelp farms and other high-starch/sugar crops, we don't need to face the food VS fuel debate - without even factoring in corn.

So there are solutions if we want to avoid wars and social collapse. It will either be forced by the masses or the elites caving in, unless some itchy trigger fingers have us jump head first into nuclear oblivion.

Option two simply sucks.

[Johnny Rico]

Certain rather moderate members of the peak-oil community predicted that as 2006 was the year that Global Warming become a household name, 2007 would bring recognition to Peak Oil.

I strongly disagree. Even with oil at $90, The percentage of Americans that know anything at all about energy is miniscule. I seriously doubt that the number is any gretaer than it was in say 2004.

People in general are a clueless bunch. Ford and GM are still selling F150s. People are still buying houses and wide-screen TVs. I pay pretty close attention, and I’d say that for every person you can find who knows who Matt Simmons is, I could find one who still thinks gasoline grows on trees.

Offstage, he told me, “We’re too preoccupied trying to figure out the exact date of the peak. Meanwhile, we’ll drain the gasoline pool and it will be gone forever.”

Yeah, whatever. Simmons had made plenty of bad predictions himself. I’m quite well versed in the history of the Peak Oil crowd trying to call the top. I certainly wouldn’t have any faith in their ability to time and judge the ultimate path of any of the effects or a collapse. Especially when we have solid historical experience with large-scale energy crises and social upheaval. World War II. The 1970’s and early 1980’s. Those transitional periods took decades to play out and the end result was not catastrophic for most people most places.

I don’t really understand why Dr.Doom and I are supposed to have a debate. I don’t fundamentally disagree with him on anything. He could even be right. I think a lot of things are possible or even mildly probable. Did the two of us have some argument I’m forgetting?

My disagreement is with anybody he thinks they can predict the future with any accuracy. Whether it is the price of oil or when the US will leave Iraq. If I were to bet and the odds were right I would take Hillary in 2008, which is one thing that makes this campaign so exhausting and pointless in my eyes. Does anybody even watch any of these debates? Do you really think the system is serving you and that you are going to change something by voting for anyone of these automatons in particular?

By the way, I’ve been thinking about this national-passenger rail system that Jim has been flogging for years. And I’ve finally decided that it is fucking stupid. Primarily because it makes no logical sense. You would then have to completely rework the system around it. It can’t possibly serve even a quarter of the population. What do people do once they reach the end of the line? Take a cab?

If I were to start somewhere it would be with heavy carbon taxes replacing income and other taxes. At least a lot of intelligent people from all parts of the political spectrum already see this as a step in the right direction.

[scott]

JR,
Were you serious when you posted ".04% yoy decline in oil production and the world hasn't noticed" a couple weeks ago?

[Johnny Rico]

wasn't it .4%?

[Johnny Rico]

I think the last time I ran the calculation I found that since the "peak" in 2005 or 2006, depending on where to decide it is depending on what data set you use and depending on how you measure a decline rate, you can get between a per annum .4% decline all the way up to a slight increase (IEA's numbers I believe).

Since oil supply actually fluctuates by as much as 1 million barrels per day on a month to month basis, I would just call supply flat.

The price average I think $60 in 2005, $66 in 2006, and will probably be(could be) $72 or $74 in 2007. Gasoline is cheaper than it was last year.

No I don't think anybody except those who frequent peak-oil websites, those who watch CNBC, or those with some close relationship to oil like the Saudi Royal family, or the CEO of Chevron know or care.

Politicians don’t talk about it for a reason. It’s not a conspiracy. It isn’t even on the radar.

I would say a portion of the peak-oil community is partially responsible for this state of affairs as well.

Calling Daniel Yergin and CERA names isn’t really cutting it.

[scott]

maybe