Category: commentary

This week, we would like to present our agenda for the 2011 ASPO-USA Conference – Peak Oil, Energy & the Economy to be held November 2-5 (Wednesday – Saturday) in Washington DC.

Wednesday is a pre-conference day featuring visits with Congressional offices and Congressional staff. Thursday will focus on the latest information on oil and energy trends, and analysis of their implications for the economy. Friday will focus on strategies and opportunities to adapt to a new energy and economic reality. Finally, Saturday will focus on interactive roundtable sessions where YOU will have in-depth discussions with speakers and other invited guests.

The Thursday morning session will take place inside the Congressional Auditorium, the 450-seat theater inside the U.S. Capitol. We hope to see you in Washington.

Most approaches to “solving” our climate and resource crises focus on technology: replacing fossil fuels with a different technology (solar, wind, ethanol, nuclear), or increasing the efficiency of our current technology. We focus on increasing the efficiency of things which would then be used in the same way – adding insulation to single-family homes, or doubling the efficiency of single-user cars that sit idle in the garage and parking lot for the vast majority of their lives, or harnessing renewable sources of energy that would then continue to be used unnecessarily and wastefully. While these solutions may marginally slow the velocity of an economic and energy descent, they can’t seriously apply the brakes to the very unpleasant net energy free-fall that may be in store for our society.

Among the various solutions proposed to our predicament, the most promising innovation may be social innovation. Over the past one hundred years, we have manufactured vast amounts of things – houses, buildings, infrastructure, cars, machines, equipment, supplies, computers, networks, and so on. But these things – our already built resources – are often underutilized, or inefficiently used, due to our social customs, norms, habits, and expectations, and the psychology of status, privacy, and entitlement.

Back in the 1960s and 1970s, the country that was the “big growth story” was the Soviet Union. Its oil consumption grew by leaps and bounds. Its space program grew; its military program grew; and it became much more industrialized. But then something happened to stop the amazing growth story. The Soviet Union became the Former Soviet Union (FSU) in late 1991, and even before that, oil production and consumption slowed.

In this article I will further expound on my reasoning behind the ELP plan, otherwise known as “Cut thy spending and get thee to the non-discretionary side of the economy.”

I have been advising anyone who would listen to voluntarily cut back on their consumption, based on the premise that we were probably headed for a period of deflation in the auto/housing/finance sectors and inflation in food and energy prices.

On June 23rd, the International Energy Agency (IEA) and the US government announced the intention to tap strategic petroleum reserves (SPRs) of the US and other countries, with an eye to reducing oil prices. The US was to provide 30 million barrels (mb) and other countries a similar amount, for a total draw of 60 million barrels.

The market responded sharply, with oil prices falling nearly $6 / barrel within a day or two; the intervention appeared effective. But it was not too be. Within a week, oil prices had recovered the pre-announcement price. They are even higher now. The market simply absorbed and discounted the news.

In the issues of energy, many Americans pin their hopes on far-away technology solutions that will enable the nation to continue its growth in energy consumption, while sparing the public the challenge of making common-sense changes in our lives for greater community development, energy efficiency, and resource conservation. This week, Christine Patton, Co-Chair of Transition Oklahoma City, takes a humorous look at this line of thinking by describing a fictional future event and an out-of-this-world solution to America’s energy challenges. – ASPO-USA

June 18, 2012 — CAMBRIDGE, MASS —

In a Gallup poll released today, Americans chose dilithium crystals as the “most likely” fuel to run future cars and power plants, with 84% of Americans choosing the crystals over other options including nuclear, hydrogen, corn ethanol, shale gas, and photovoltaic solar panels. Respondents indicated that dilithium crystals are popular for providing quiet, clean energy, with a proven track record of seven-hundred twenty-six episodes in four different Star Trek television series.

The IEA decision to release 60 million barrels from strategic petroleum reserves (SPR) of member nations has been criticized as politically motivated, too small and too late to matter, or, at best, as a desperate attempt to fend off economic woes. The reality and impact of the decision are more complex than that. The move is a bold, price-suppressing “poke in OPEC’s eye” from nations that have been perpetual price takers in the world oil market. The short-term rationale for the decision, however, should not obscure our real oil problem – geopolitics is combining with economics and geology to put us in an oil crunch that is not likely to abate until our nation moves beyond oil.

The timing and volume of the decision make sense, and one need only to look at the vigorous complaints from Iran to gauge its significance. The Libyan conflict became a factor in February, and it took time to recognize that its 1.3 million barrels per day export volume was lost to the market on a relatively long-term basis, and to fully grasp the impact on the OECD economies. It took time to see that OPEC’s promise to cover the loss had little substance, as confirmed by the recent OPEC meeting.

Recently President Obama, under pressure from Republicans and the public to bring down gasoline prices, announced a plan to expand domestic oil production in Alaska and the Gulf of Mexico.

The media appeared to joyfully trumpet the idea that with expanded oil drilling in the U.S., oil production would ramp up. No one in the media appeared to question that idea although I’ve made the case on several occasions that U.S. oil production will, in general, trend down in the future even if every last acre of U.S. territory were soon opened for oil development.

The belief among the media, politicians and the public, in general, is that with increased drilling and expansion of available territory, oil production absolutely increases.

The world oil production data below tell a story about: 1) nations that are past peak (see “Peak Year,” turquoise fill), because of geologic limits (e.g., US, Norway, etc.) or other reasons; and 2) nations that have yet to peak (see “na” under “Peak Year;” Saudi Arabia, UAE, China), or if they have peaked it is not yet clear. An equally interesting trend is–irrespective of peaking–whether or not nations are increasing (first column; Brazil); have either flat or volatile production (second column, in blue; Iran, Iraq); or are experiencing decreasing production (third column, in red); the 2009 OPEC quotas continue to complicate the overall numbers here. Also, follow the trend of oil production nations whose exports are declining. Six non-OPEC nations increased by over 100,000 barrels/day-year (vs. 12 in 2004); two non-OPEC experienced declines over 100,000 barrels/day-year (also two in 2004). Peak appears to be close but not yet; we were on relatively plateau production during 2005-2008, then down in 2009, up strongly in 2010, up so far in 2011. Keep following the increasing roles of economic-driven demand destruction, violence, the Arab Spring, resource nationalism, timing of production investment and peak oil exports.

There are so many challenges facing us as a result of Peak Oil and related issues that it is easy to miss something important. ASPO-USA asked more than 50 leaders on Peak Oil to share what they felt was the most critical issue we’ve all been missing, the thing every one of us should be talking about – but aren’t. The answers were eye-opening, and have started a discussion that continues. This is the last in a three part series (First two parts available here and here), in place of a traditional commentary, Peak Oil Review will run a range of perspectives on this issue – from geologists to food experts, from social critics to scientists – what are we missing? Where should we be putting more attention, more resources? All of us miss things – but between so many working minds, we have a better chance of covering the expansive ground that we have to address. We thank all of our contributors for expanding our vision!