Does Mr. O Know?

      A lot of readers are twanging on me for refraining to castigate President-elect Obama for deeds yet undone. They're discouraged by the advisors and cabinet sectetaries he's picked, ostensibly because the crew coming in are Washington "insiders," meaning they can't possibly see or do things differently.
     My own starting point for this is the belief that in the years just ahead any sociopolitical entity organized at the giant scale will flounder -- this includes everything from the federal government to global corporations to factory farms to centralized high schools to national retail chains. So even expecting Mr. Obama's government to act effectively may be asking too much in a situation that will require mostly local action.
      The meta-situation will be the overall decline of energy resources and the necessary downscaling of our activities. We are obviously in a transitional period between the old profligate energy economy and the new economy of relative scarcity. We have no idea how disorderly this transition will be, but there is certainly potential for tremendous instability in daily life.
      For a while, perhaps, the federal government may retain some ability to affect the way things go, or give the appearance of doing so. This raises the issue of what Mr. Obama and his team really know about our energy predicament. The president-elect has made some noises -- recently on the 60 Minutes show -- that he understands something about the current price dislocations in the oil markets resulting from the larger financial turmoil. He alluded to the public's erroneous notion that current low-ish oil prices mean the oil problem is over. But does the incoming president know some of the following details?
     For instance, does Mr. O know that global oil production appears to have peaked at around 85 million barrels a day, with poor prospects of ever getting beyond that? This single naked fact has broad ramifications, above all whether we can continue to think in terms of industrial "growth" as the benchmark for economic health. There are many interpretations of the current financial fiasco. Some of them are based on long-term technical wave theories. A more down-to-earth view suggests the shock of peak oil -- though it doesn't exclude wave theories.
     Does Mr. O know that world oil discovery has fallen to insignificant levels after peaking long ago in the 1960s. Does he know we are finding no more super-giant oil fields on the scale of Arabia's Ghawar or Mexico's Cantarell, which have supplied most of the world's oil for the past forty years and are now running down? Does he know that you can't produce oil that hasn't been discovered?  Does Mr. O know that virtually all the oil-producing nations have entered production decline. Surely someone has whispered in his ear about the IEA's projection that global oil production would fall 9.1 percent in the coming year.
      Does Mr. O know that oil exports have been trending to decline at a steeper rate than oil depletion? That is, the exporting nations are losing their ability to send oil to the importers (like us) at a rate mathematically greater than the run-down in their production.They are using more of their own oil even while their production is going down. For example, Mexico is depleting overall at more than 9 percent a year (with the Cantarell field alone running down at more than 15 percent annually). Does he know Mexico's net exports are crashing? Mexico has been our number three leading source of imports. In a very few years they will not be able to send us any oil. A deluded American public has no idea that this is happening. Will Mr. O explain it to them?
     Does Mr. O know that the "old major" oil companies (Exxon-Mobil, Texaco, Shell, et al) produce less than 10 percent of the world's oil now -- the other 90 percent coming from the foreign nationals -- and that blaming them for the situation is a waste of time. The foreign national companies are changing the landscape of the oil markets. They're making special contracts with "favored customers" rather than just putting their oil up for auction on the futures markets. One thing you can infer from this is that we're entering a period of national oil hoarding based on coming scarcity. The futures markets were based on relative abundance, and they will not operate very well in a climate of scarcity. Consider that the USA will probably not be among the "favored customers" for several oil producing nations. Figure that in with the coming loss of imports from Mexico (and Venezuela and Nigeria).
     Does Mr. O know that the current drop in oil prices (due to massive financial deleveraging) has resulted in the cancellation or postponment of the very oil production projects that were hoped to offset the coming depletions? It's not worth it for an oil enterprise (private or foreign) to drill in deepwater or venture into arctic regions when oil is priced at $50-a-barrel -- if it costs $80 to get the stuff out of the ground. It's not worth digging up tar sands in Canada at that price. This halt in activity is going to boomerang back on the US in a year or so, with depletions ongoing everywhere and no new oil to take its place. Does Mr. O know that we're just as likely to see shortages as a resuming rise in oil prices here in the US during his coming term?
     Does Mr. O know that the current re-inflation program being run by the Treasury and the Federal Reserve is so egregious that it may lead to loss of the dollar's legitimacy, to the renunciation of dollar holdings by other nations, to the down-rating of US Treasury debt instruments, and finally to an inability of the US to purchase foreign oil -- which comprises two-thirds of all the oil we use every day?
     Does Mr. O know that we are not going to run the US automobile and truck fleet on any combination of alt.fuels? Continuing it by other means is a fantasy that will only disappoint us. The motoring era is coming to an end. Heroic investments in highway infrastructure to create jobs will be a tragic waste of our dwindling capital. The pressure for Mr. O to make these misinvestments will be enormous, perhaps insurmountable. There are probably not a thousand people in the US who agree with what I am saying -- meaning the consensus to keep the cars running at all costs overwhelms reality at the moment. Does Mr. O's concept of "change" include the possibility that we may have to live very differently in this society?
     Chances are, if Mr. O knows any of these things he might be crucified in the polls and the media by acknowledging them. The only "change" that America really wants to hear about is evicting George Bush from the White House. They're sick of him and all the disturbance he has caused in their financial affairs. But beyond that, the American public is deathly afraid of the kind of changes we actually face -- such as, the end of consumer culture, the gross loss of value in suburban real estate (which forms the bulk of the middle class's private wealth), the prospect of food and fuel scarcities, the need to re-localize our lives, the need to physically shape up to stop the costly and unnecessary drain on our medical resources, to grow more of our own food, to work harder at things that actually matter, and to save whatever we can for a difficult future.
     If Mr. O introduces any of these themes into the national discourse, the public and the media and the bloggers will all dump on him for failing to prop up the wild party that American life became in recent decades.
____________________________________
My new novel of the post-oil future, World Made By Hand, is available at all booksellers.  

Comments

[judetennessee]

I believe you Jim but I am considered a Cassandra and a nutjob by my friends. O is doomed by circumstances that are way beyond his or anyone elses ability to correct. U are right, it is a changing way of life and folks are terrified of the changes that the future holds.

[LaughingAsRomeWasBurningDown]

The low price of oil really puts a crimp on alt's...

http://www.thedailygreen.com/environmental-news/latest/corn-ethanol-47110502

The U.S. ethanol industry is reeling, with only the financial crisis preventing massive consolidation as more and more companies face the prospect of bankruptcy, according to the New York Times. The drop in oil prices, coupled with wildly fluctuating corn prices, have conspired to sap energy from the industry.

VeraSun, a large ethanol producer, has already filed for bankruptcy, and several others may follow suit. Even agrichemical giant Archer Daniels Midland is losing money on its ethanol endeavors.

[Frank Gifford]

Thanks for your post Jim. Did you know that Change.gov (the Obama transition site) solicits our ideas about governing? I have detected a low level hysteria among mainstream media talking heads about our current predicament. I agree that the public is NOT ready to face reality. This is our biggest challenge: to be able to perceive the reality of our situation. I fear that Mr. O may be a bit too embracing of technofantasies: like alternative fuels, smart grid, electric cars, etc... Mr. O has made some noises about rail. I would also like to see some initiatives to stimulate local food production. The fact is, those from the mainstream are functionally unable to perceive our situation due to their biases. Mathew Simmons is the one exception to this I can think of. It is going to be an interesting next few years. I again urge everyone to embrace a strong positive but realistic vision of the future and to seek the strength, courage, wisdom, and perseverance to make this vision a reality-for the sake of the children of future generations of all living beings:) Visit http://entropypawsed.org

[bud4wiser]

JK, we have left our futures to the vagaries of 2, 4 or 6 year election cycles with cash as the primary influence of our leadership.

Necessity as always seems to be the only influence of change or innovation for Americans. But as you pointedly remark, necessity can spark more or less orderly transformations.

The recent noteworthy drop in discretionary petroleum consumption gives hope to the possibility of a time-frame that will allow an orderly transition away from personal petroleum- consumption-based transportation.

Yet the sales figures from the holiday weekend belie the actions of a nation of consumers who either don't "get it" or don't care.

Peak Plateau or "cliff" - depending on which side of a bailout you work - you're assured of one or the another.

In either scenario, there's likely to be greater changes to the social landscape in the next four years than the last forty.

[RealProblems]

We are to assume these are retorical questions Jim has asked? Ofcourse Mr. O does not know any of these answers. Everyone was in such a hurry to evict Bush no one bothered to figure out just what Mr. O knows or who he is. Well he knows nothing except populous nonsense written by a speech writer and his own books were written by a ghost writer. His only business has been going after the man. Never worked with his hands, never been in the military, never managed a payroll or business. He admits to owning a hybrid car but never driving it. His hobbies are his blackberry, excercise, and Chicago thug politics. He seems a nice enough man but it's a little late to be asking what he knows.

[Cymon Dendu]

BO, you don't know Diddley!

Haha.

Seriously, where is the tipping point for Obama? If he tells the truth (if he knows it) now he'll be crucified, as Jim points out. But at what point will he be crucified for concealing the truth?

BTW, am I the only one who's sick to effing death of the yearly Christmas narrative of retailers and their prospects for good sales?

[zerotsm]

Well, it MIGHT be possible to run most everything on alt.energy. I say "most" everything, I'll get to that. By going on a crash program to build more wind, solar, geothermal and small scale hydro projects, we could get the energy equivalent of 5 billion barrels a year from these alternative sources. That sounds like a lot. About the energy used in the 1950's by the entire world.

But this will be electric energy, which pretty much has to be used as it's generated, it can't be stored. So that's the end of aviation. As Jim has been saying, we'll have to go back to rail service for everything, freight as well as passenger. Any automobiles or trucks will have to be "Neighborhood electric", to get from a home or business to the nearest local freight terminal or passenger rail station.

Some say, "What about fusion"? Well, billions have been spent on Tokamak reactors that have yet to produce one watt hour of net energy. An alternative fusion reactor that looks promising is the Polywell reactor. For info, visit http://en.wikipedia.org/wiki/Polywell . Of course the US Government cut the funding for this project to pay for the illegal invasion of Iraq, but the numbers look good. For 200 million dollars (pocket change compared to other research projects) the last experiment can be duplicated to verify the results and if it works, a full scale prototype capable of generating commercial amounts of power, in the megawatt range, can be up and running in 4-6 years. But again, this will be electric. The friendly skies will be quiet and the happy motoring era will be gone, to be replaced by the joyous revival of passenger rail service in the US.

[envirosponsible]

"Does Mr. O know that the current re-inflation program being run by the Treasury and the Federal Reserve is so egregious that it may lead to loss of the dollar's legitimacy"

Of course he knows. He also knows that we'll soon be living in the North American Union earning and spending Ameros.

[Flamsey]

Ted Turner was on 60 minutes last night and he mentioned the coming energy crises. Count him among the 1000 people who believe you Jim.

[LaughingAsRomeWasBurningDown]

1000 people? More like a cult of millions. Just the other day here in cube-land overheard two of my cow orkers discussing what would happen when it "crashed the rest of the way down" (mostly with respect to the economy).

Meahwhile, have a banana, and here's something to cheer up a Gray Monday:

http://www.youtube.com/watch?v=myPYhqByS1Y

[Nicholas Paredes]

I'll leave predictions to those who want to play that game, but we are of course in for plenty of trouble. Surely O knows this.

We didn't need a leader when the economy was still running, albeit on fumes, and we didn't get one. Now we do, and I have my hopes that, while nobody perhaps could navigate the straits we are about to enter, Obama is at least up to the challenge.

Somehow I can't believe that things are still holding!

[dale]

JHK,
One correction Jim, Chavez has no choice but to sell his oil to us, because we are the only ones who can refine high sulfur crude. I suspect the planet could stumble along for quite a long while at PO, if PO turns out to be a sustained plateau. If the declines some predict occur, a lot of your predictions will be spot on, but unfortunately the record for such predictions are laughably inaccurate. The prudent course of action at this point on PO would be awareness, that alone is a serious advantage.

Zero,
Actually, electrical energy can be stored in a number of ways, pumping water up hill is the lowest tech version, hydrogen generation another.

Real”Politics”
What someone “knows” is a highly overrated metric. It matters little if you “know” something if what you know is wrong to start with or becomes wrong in the process of time. Flexibility and mental acumen are far more important. I voted for Obama because he has the intelligence and temperament to synthesize information from a wide range of sources into something rational and useful. Let's hope the political system is not so badly broken as to prevent his abilities from being properly used.

[Nicholas Paredes]

Oh, and via Krugman, Tanta at Calculated Risk has died... RIP.

[Dave]

ya, layed my nuts out on the porch this morning. fucking squirel came by and bit 'em. little bitch.

[LaughingAsRomeWasBurningDown]

> He seems a nice enough man but it's a little late to be asking what he knows.

Yeah, what dale said. Also, lesser of two evils and all that. He at least seemed to grasp that drilling-baby-drilling wasn't going to solve anything unlike some other goofs I can think of.

[Peak Oil Hausfrau]

We need someone who can perform civilization triage for us - making hard choices to save what is essential and what preserves some basic quality of life. Saving the lives of what can be saved, not just what we want to save, not what is already doomed. That might include some program of alternative energy, but more likely that we will have to let go of a lot of our cherished overpriveleged nonsense.

[Dave]

it kinnda freaks me out when those squirels change thier minds crossing the road. suicide squirels.

[Dave]

one time, a fucking racoon was crossing the road. so i slowed down, gave him wide berth. but as i was passing he DELIBERATELY made u-turn and walcked under my rear wheel. suicide coon.

[Dave]

musta left his den without his CUMPASS. his life was in vain.

[Dave]

he had no direction in life. either that, or he lost his sense of direction and become suicidal.

[Dave]

I voted for Obama because he has the intelligence and temperament to synthesize information from a wide range of sources into something rational and useful.

my bets are on the racoons. i skin the mutherfuckers then put em ina pot with wild carrots and mushrooms an make soup.

[we_are_toast]

I think you underestimate the number of people who understand the problems with oil. Count me in as one of the 1000. If a 1000 people went to change.gov and expressed that we know how serious the oil situation is and that Mr. O has to do something about it, they'd notice! A 1000 copied responses gets tossed, a 1000 suggestions covering a dozen different issues gets ignored, but a 1000 suggestions about a little discussed issue, gets noticed.

Now send a 1000 suggestions to ONE reporter who will be at the 1st press conference to ask a question about this critical issue, and the whole administration takes notice.

[Dave]

no nuts for the squriels this year, that's why they eat mine. little fucks.

[Dave]

i hate oil. it's sticky gooy and smells bad. i do everything within my extremely limited abilities to ignore oil.

[MaryW]

I think BO probably doesn’t know too much about PO, or if he does know it must have dawned on him that his time on the throne will be a one term if he raises the topic too soon. The only possibility of him sticking around for another term will be to wait until oil is at the $200 mark and then start dropping big hints about the need for rail and how it will mop up a lot of unemployed people particularly truck drivers.

He could use the situation as a rallying call to reduce consumption of oil from all those countries that don’t have America’s "interests" at heart but would people be willing to give up their selfish, cosseted ways?

Cymon – good comment re Christmas sales.

JHK has some new clips at the Vermont Independence Convention 2008 – first of 3 but just watch 1 and 3 because number 2 is a repeat of number 1:

http://nz.youtube.com/watch?v=GKRBSwuxvMA