Making Sense of the US Oil Story

We frequently see stories telling us how well the United States is doing at oil extraction. The fact that there are stories in the press about the US wanting to export crude oil adds to the hype. How much of these stories are really true? If we believe the stories, the US is now the largest producer of oil liquids in the world. In fact, it has been the largest producer since the fourth quarter of 2012.

Figure 1. US Total Liquids  production, including crude and condensate, natural gas plant liquids, "other liquids," and refinery expansion.

Figure 1. US Total Liquids production, including crude and condensate, natural gas plant liquids, “other liquids,” and refinery expansion.

Oil “Extenders”

One of the issues is that a few years ago, the US created a new oil-related grouping, combining valuable products with much less valuable (lower energy content, less dense) products. Using this new grouping, the US was able to show much improved growth in total “oil” supply. The US EIA now calls the grouping “Total Oil Supply.” I refer to it as “Total Liquids,” a name I find more descriptive. Besides “crude and condensate,” the mixture includes “other liquids,” “natural gas plant liquids,” and “refinery expansion.”

“Crude and condensate” is the original grouping. Often, it is just referred to as “crude oil.”

“Other liquids” is primarily ethanol from corn. If we produced coal-to-liquids, it would be in this category as well.

Natural gas plant liquids (NGPL) are the liquids that condense out of natural gas when they are chilled and compressed in the natural gas processing plant.

Refinery expansion occurs when a refinery breaks long chain hydrocarbons into shorter ones. The resulting products take up more volume, but don’t really have more energy content. In some ways, the process is like making whipped cream out of whipping cream–more volume, but not really more product. The new products tend to be more valuable–say, diesel and lubricating oil made from something close to asphalt.

The process of breaking (cracking) long hydrocarbon chains is a valuable service to those producing heavy oils, because it makes valuable products from crude that otherwise would not have been useful for most purposes. The cracking process uses natural gas. Because natural gas in the US is inexpensive relative to its price in most other countries, the US can perform this process more cheaply than other countries. Because of this, it makes financial sense for the US to import heavy crude oil and process it in this way, whether or not US citizens can afford to buy the finished products. (Cracking is not useful on very light oil, such as Bakken oil, since it has primarily short chains to begin with.) If US citizens can’t afford the finished products, they are exported to others.

Whether or not the US should be credited with this expansion of volume is somewhat “iffy,” since the process doesn’t add energy content. Quite a bit of the oil processed in this way uses imported oil, such as oil from the Canadian oil sands.

If we look at the base figure reported by the US Energy Administration, that is, “Crude and Condensate”(Figure 2), the US does not come out as well in original comparison (Figure 1).

Crude and Condensate Prodution US Saudi Russia

The United States makes much greater use of extenders than do Russia and Saudi Arabia. If we calculate the ratio of extenders to the base (crude and condensate), the ratios are as follows:

Figure 3. Extenders as a percentage of crude oil production.

Figure 3. Extenders as a percentage of crude oil production, based on EIA data.

Both Russia and Saudi Arabia have much lower ratios of extenders. For both of these countries, the extenders are Natural Gas Plant Liquids.

Natural Gas Plant Liquids (NGPL), have varied in price. For a while, the price was up with the price of crude, but as supply increased, the US price dropped during 2011 (Figure 4).

Figure 4. Price Comparison per Million Btu for Oil (West Texas Intermediate), Natural gas plant liquids, and natural gas, based on EIA data.

Figure 4. Price Comparison per Million Btu for Oil (West Texas Intermediate), Natural gas plant liquids, and natural gas, based on EIA data.

This drop  in NGPL price occurred because the US market for at least some components of this grouping became saturated. With too much supply for demand, prices dropped. Excess ethane, for example, could be sold to be burned as natural gas, putting a floor under its price. As a result, recent prices seem to be influenced by changes in natural gas prices.

With the drop in NGPL prices, we hear more talk about the need for exports. We don’t really have use for all of the low value products that are being produced, other than to burn them as part of natural gas. Perhaps someone else does. If someone else does, it might get the price back up.

What is the Real US Trend in Production/ Consumption?

The US EIA makes fuel comparisons based on Btu energy content. This approach makes it easy to see how much of our fuel is US produced, and how much is imported (Figure 5).

Figure 5. Comparison of US production and consumption of oil plus NGPLs, based on EIA data.

Figure 5. Comparison of US production and consumption of oil plus NGPLs, based on EIA data.

Production is indeed rising, but it is still far below consumption–about 55% of consumption in 2013. Many articles make this situation confusing.

The emphasis in most news reports is the drop in imports–that is the difference between the blue line and the red line in Figure 5. If we look at the chart, though, we see that a big reason for the drop in imports is a drop in consumption, with the big step down coming in 2007 and 2008. Oil use is associated with jobs. It takes oil to make and transport goods. Also, workers with good jobs can afford cars and the oil to operate their cars. If they remain students forever, they can’t afford cars.

A person can better see the drop in consumption by looking at consumption on a per capita basis.

Figure 6. US per capita oil and Natural Gas Plant Liquids production and consumption, based on EIA data.

Figure 6. US per capita oil and Natural Gas Plant Liquids production and consumption, based on EIA data.

If prices don’t fall, consumers don’t feel the effect of more production. What they do feel the effect of is falling consumption-the top line. Young people especially have been finding it hard to get good paying jobs. With all of their student loans, it is hard to be able to afford to get married and buy a house. This holds down demand for new homes, and all of the things that go into new homes.

If we look at total per capita energy production and consumption in the US, we see even more of this trend. While production per capita is rising, an even bigger issue is falling consumption.

Figure 7. Total per capita energy production and consumption for the US, based on EIA data.

Figure 7. Total per capita energy production and consumption for the US, based on EIA data.

US per capita energy consumption has been dropping since 2000. 2000 is the year of peak US employment, as a percentage of the total population.

Figure 6. US Number Employed / Population, where US Number Employed is Total Non_Farm Workers from Current Employment Statistics of the Bureau of Labor Statistics and Population is US Resident Population from the US Census.  2012 is partial year estimate.

Figure 8. US Number Employed / Population, where US Number Employed is Total Non_Farm Workers from Current Employment Statistics of the Bureau of Labor Statistics and Population is US Resident Population from the US Census. 2012 is partial year estimate. (Sorry, not updated.)

With a smaller percentage of the US population employed (and lagging salaries for those employed), US consumers cannot afford to buy as large a quantity of energy products. Rising US oil production is not really helping US consumers, because at its high price, we cannot really afford it.

Rising oil production has not brought down oil price, making it more affordable. In fact, the situation is the reverse–high prices are needed for today’s oil production. It is questionable whether today’s prices are even high enough. Oil companies have to  keep adding debt, to keep extracting oil.  The EIA recently wrote an article about the situation called, As cash flow flattens, major energy companies increase debt, sell assets. Steven Kopits shows this chart of cash flows for Independent Oil Companies in a recent post.

Figure 9. Image by Steven Kopits showing Free Cash Flow of US independent oil and gas producers, from Platts Guest Blog.

Figure 9. Image by Steven Kopits showing Free Cash Flow of US independent oil and gas producers, from Platts Guest Blog.

With negative cash flows, companies have to keep increasing their debt levels–something that eventually becomes impossible.

When those producing the oil see that US oil prices are at times not as high as world oil price (Brent), they hope that selling their crude to world export markets, they will be able to get higher prices for their crude. If they are successful, there will be less crude available sold to US producers, perhaps raising the price of this crude sold in this country as well. The net impact may be higher prices for US consumers, making the US consumers even less able to afford the oil products.

Energy Growth is Needed for Economic Growth

There is a close tie between energy consumption and economic growth. Perhaps my statement “Energy growth is needed for economic growth,” in the header is a little too strong. Perhaps if energy consumption is flat, with the benefit of technological progress and efficiency changes, there can still be economic growth. There is definitely a connection, though. Energy of the right type is needed for every process we can think of–getting to work, shipping goods, operating our computers, heating metals when they are refined.

The problem comes when what we are facing in shrinkage of energy consumption, over and above what can be accommodated by technological progress and efficiency. Figure 7 hints that this is already happening. Then we have danger of a collapsing financial system, as the low energy consumption growth pushes the economy toward contraction. The economy has been held together since 2008 with quantitative easing and zero interest rates. The plan has been to allow consumers more income to spend, by keeping interest rates artificially low. I heard an excellent presentation on this subject recently called Global Financial System on Life Support by Roger Boyd.


I wrote a post recently called The Absurdity of US Natural Gas Exports. The situation with exports of crude oil is not quite as absurd. The issue is that current oil refineries are not configured for the influx of very light oil. Many of them are busy “cracking” long hydrocarbon chains, often using imported oil as their energy source. If US oil producers have the option of selling their crude oil abroad, perhaps they can get a higher price for it. If US oil producers can get higher prices for their oil, this may very well filter through to higher oil prices for US consumers, and less oil consumption by US consumers, but this is not the concern of oil companies.

A major concern with falling per-capita energy consumption it that the financial system may soon reach limits where it is stretched beyond what it can stand. The economy needs energy growth to grow, but the economy is not getting it.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to inadequate supply.
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1,009 Responses to Making Sense of the US Oil Story

  1. Rodster says:

    Just another example of another victim of an infinite growth economy in a finite world. The victim is Greece. You build worthless stuff that has little use or value just to create debt and keep your economy moving forward. The result is that Greece has been in a massive Depression for the last several years with no end in sight.

    “Ten Years Later: The Greek Olympic Wasteland In Photos”

  2. Pingback: RedTrack.ME

  3. J says:

    With so many subsidies and weird costs assiciated with each and every energy type, any analysis will always be a bit subjective. But we can see that the world is indeed starting to rebuild the nuclear energy fleet. Basically one new nuclear reactor will come online every month for the next 10 years, and who knows what happens after that.

    Almost no article differentiates between the value of base load power and intermittent. Nor that wind tends to produce energy where there is less need for it since other wind units are also running, so you can’t sell the energy for much. German is the best case study. They will soon reach limits as to how much renewable the grid can take.

    Very few articles frames renewable energy as the “fuel saver” as it truly is. You need the other plants as backup, and they become MORE expensive to run when they are on standby all the times waiting for the wind to die down.

    Another point is the lifespan of plants. Wind operators don’t like to talk about this very much, but a 15 year old wind turbine is kind of like a 70 year old man. Nuclear has a pretty impressive record of extending the life. Sure steam generators gets replaces, as do reactor vessel heads, but the reactor vessel can last 60 years if well made. That’s a lot of time to pay off the steep upfron cost of construction.

    I personally think nuclear has a future since EROEI on the fuel is so high due to the extreme energy density. But this may be offset by the high construction cost. Clearly more units could be built if we streamlined the process like it’s done for lets say deep water drilling. No questions asked there!

    With at least 10-1 of articles claiming that solar and wind is the future, someone claims the opposite. Emperor’s new clothes?

    • This point finds difficulty in its acceptance—but I’ll try
      Electricity is a form of energy that adds to our comfort levels and aids our continued survival.
      However we cannot survive on electricity alone. The electricity from nuclear plants does NOT produce stuff, except indirectly (via heat application)
      Oil coal and gas on the other hand provide everything we need for survival as a species. All the ‘stuff’ we use has a proportion of coal oil and gas (plus other basic elements) embedded with in it in a physical sense—
      The electricity from nuclear plants is not fungible.
      A nuclear plant uses a colossal amount of hydrocarbon fuel to build it and maintain it, and the distribute its product. It also uses hydrcarbon fuel to maintain its safety aspect, and ultimately dismantle it.
      Project the scenario forward say–50–60 years when a nuclear plant has reached the end of its useful life. There may be some debate over the future availability of oil, but you can be certain that by that time we wont have the necessary machinery available to take nuclear power plants apart
      Suggestions anyone? picks and shovels maybe?

      • James says:

        Nuclear power plants are going to be a problem. An ENDURING problem at that. And no, there won’t be any solutions, especially in a low energy density future, to the extremely high energy density time bombs we’re planting now.

        • Christian says:

          Yes. Two months ago a third nuclear power plant came online in Argentina. So we very probably added 50% to future unleashed radioactivity (at least it’s along another reactor, so from a geographical point of view it’s not so much terrible)

          • Paul says:

            It will be kinda like asking someone from the BC era to make sure the nuclear plants and spent fuel ponds are looked after. 4000 spent fuel ponds? 500 reactors? I think those are the numbers….

            This is likely to end not end only very badly — quite possibly it will just be the end – of everything.

            • Christian says:

              “It will be kinda like asking someone from the BC era to make sure the nuclear plants and spent fuel ponds are looked after”. Exactly

          • InAlaska says:

            I bet that new power plant is located near a very large body of water, too.

            • Christian says:

              Of course, and the sh¡t is likely to go to the Atlantic through Paraná river where it is located

      • J says:

        Agree that we can’t live on electricity. But we can make things with it. We can make aluminum from bauxite. We can also make steel, sweden is a large steel producer and they do it with electricity. A car manufacturing plant runs to a large extent on electricity. So it’s not useless from a manufacturing perspective.

        Then we have transportation. It is possible to electrify rail. It’s stunning that the US has been draggin its feet on this one, but I guess the enourmous distances from east to west makes it very expensive. That said. In 30 years you’re not visiting your parents by plane anymore, so rail might come back. But more likely we just won’t go visit places far away.

        Nuclear construction does take a lot of coal and oil, but the world only completes one every month. Compare that to TOTAL oil and gas uses over a month, and I’m pretty sure it’s insignificant in comparison.

        As for decomissioning, you can leave the plant standing as is as long as you got the fuel taken care of. The plant itself is not super dangerous to wander around. Demolision is a cosmetic thing.

        The fuel issue is interesting. Why are people so worried about the fuel if we’re going extinct anyway? The claim is that digging it into the earth again has risks as hypothetically someone could dig it out in 10K years. I mean come on. In 10K years there will be so few humans that they can choose to live at a place that doesn’t have contaminated ground water – should it leak. It’s not getting into the atmosphere ever again. The only problem with Yucca is the cost of transporting it all there and dry cask it etc. It’s simply cheaper to keep the fuel around in the spent fuel pool. Which is how we run most things.

        • gerryhiles says:

          J is so far removed from reality that he makes no sense whatsoever, so my only response is that those who believe in science fiction will forever deny facts, probably even beyond the point at which it is stark-obvious that we CANNOT live on a finite planet, with an economic absurdity requiring exponential growth.

        • they may MAKE steel with electricity, but they do not MINE iron ore with electricity. Neither does electricity provide all the ancillary aspects of steel production. It does not MINE bauxite.
          Then you have a roll of aluminium or steel, and cut it into manageable pieces—what exactly do you do with it? (without motive power of hydrocarbon fuels and their ancilliary products)
          A steam engine is essentially iron ore converted into a means to burn coal–in order to provide the power—to dig more mines—to extract more iron ore—to make more steam engines—to……….In other words, hydrocarbon heat engines self replicate, and can be used to recycle themselves with a little human assistance.
          that is what our industrial society is, a means by which we consume fuel at an ever faster rate to give the illusion of infinite prosperity. THAT is how we run things. We have no other way, we function in a hydrocarbon based society
          Electricity, of itself, cannot do that. Nuclear power plants cannot self replicate. Neither can electricity demolish a nuclear power plant—cosmetic or otherwise.

          • J says:

            “Electric-powered, remote-controlled drilling and ore handling equipment supplied by Atlas Copco and Tamrock is widely used.

            After blasting, load-haul-dump machines (some of which are fully automated) carry the run-of-mine ore to the nearest ore pass, from which it is loaded automatically on to one of the trains operating on the 1,045m level.

            After primary crushing, sampling using a Morgårdshammer automatic sampler to obtain the apatite and magnetite contents, and hoisting to surface, the ore is processed in Kiruna’s complex of a sorting plant, two concentrators and two pellet plants to give pellet and sinter fines products.

            Some ore is moved by rail to LKAB’s Svappavaara plant for pelletisation. Products are hauled by rail to the ports of Narvik (Norway) or Luleå for shipment.”


        • edpell says:

          Hi J, you have one supporter. Good point about nuclear plants with their fuel removed, they can just stand there for a few hundred years. Ugly but cheap. Once the fuel reduces in activity to the point it can be dry stored it is easy to handle. For cheap storage I would go with dropping in ocean trenches. Not perfect but fairly good.

          • Christian says:


            “nuclear plants with their fuel removed, they can just stand there for a few hundred years” Are you sure about that? I ask because a friend has some land a few miles away of a reactor, I don’t know if we can consider it as a “safe” place.

            As for spet fuel stored in ponds, I understand these must be actively cooled

            • Paul says:

              Spent fuel pools (SFP) are storage pools for spent fuel from nuclear reactors. They are typically 40 or more feet (12 m) deep, with the bottom 14 feet (4.3 m) equipped with storage racks designed to hold fuel assemblies removed from the reactor. A reactor’s pool is specially designed for the reactor in which the fuel was used and situated at the reactor site. In many countries, the fuel assemblies, after being in the reactor for 3 to 6 years, are stored underwater for 10 to 20 years before being sent for reprocessing or dry cask storage. The water cools the fuel and provides shielding from radiation.

              About a quarter to a third of the total fuel load of a reactor is removed from the core every 12 to 24 months and replaced with fresh fuel. Spent fuel rods generate intense heat and dangerous radiation that must be contained. Fuel is moved from the reactor and manipulated in the pool generally by automated handling systems, although some manual systems are still in use. The fuel bundles fresh from the core are normally segregated for several months for initial cooling before being sorted into other parts of the pool to wait for final disposal. Metal racks keep the fuel in controlled positions for physical protection and for ease of tracking and rearrangement. High-density racks also incorporate boron-10 or other neutron-absorbing material to ensure subcriticality. Water quality is tightly controlled to prevent the fuel or its cladding from degrading. Current regulations in the United States permit re-arranging of the spent rods so that maximum efficiency of storage can be achieved.[2]

              The maximum temperature of the spent fuel bundles decreases significantly between 2 and 4 years, and less from 4 to 6 years. The fuel pool water is continuously cooled to remove the heat produced by the spent fuel assemblies. Pumps circulate water from the spent fuel pool to heat exchangers, then back to the spent fuel pool. The water temperature in normal operating conditions is held below 50°C (120°F)[1]. Radiolysis, the dissociation of molecules by radiation, is of particular concern in wet storage, as water may be split by residual radiation and hydrogen gas may accumulate increasing the risk of explosions. For this reason the air in the room of the pools, as well as the water, must be continually monitored and treated.

              Uh hum,.. as the saying goes.. Houston — we have a problem

    • James says:

      With at least 10-1 of articles claiming that solar and wind is the future, someone claims the opposite. Emperor’s new clothes?

      Yes. The Emperor’s Naked! THERE! I SAID IT!

  4. antares71 says:

    I’m a newsletter subscriber to RMI (Rocky Mountain Institute I just got in my mailbox the latest newsletter and in it an article of Amory Lovins on Forbes confuting the claim that solar and wind are not cost-effective.
    Any thought?

  5. MG says:

    The trend in Slovakia: the people move back to towns. The trend of the 90s, when the people started to move from the towns to the neighbouring villages, is reversed. The suburbs are less attractive:

    According to the article, the same happens in the neighbouring Czech Republic.

    This is completely in line with my expectation that people concentrate around the energy hubs. The daily commuting is energy consuming – the price of the fuel, the infrastructure and services constraints further foster the trend in the depopulation of the (worse accessible) rural areas.

    • Good point and good for you, if so inclined you can capitalize on this trend, go against it and move into the rural area. In Europe “rural” homestead acreage (sub 50hectares) is usually prohibitivelly expensive as opossed to situation across the NA.

      • MG says:


        the situation in Slovakia is that the ownership of the agricultural land is fragmented, there are many unknown owners from the past who died e.g in the US where the Slovaks emigrated in the past. Most of the Slovakia is mountineous, such agricultural land needs larger energy inputs.

        The agricultural land here is mostly sold as building plots. Otherwise, when selling it, you got little for it, so it is better for the people to keep it.

        The spread of the Roma settlments in Slovakia is fostered by such situation from the past and also by the social benefits from the state (but they are lower and lower in the recent years):

        When the higher civilization recedes, it can be replaced with the civilization with a lower standard of living, i.e. that is using less energy and living on the debris of the higher civilization. Roma people come from India, they were wandering people (i.e. no farmers) for centuries in Europe. When the communist regime prohibited wandering way of life, they were given flats in the towns or created such settlements on “nobodys land” (i.e. the land as defined above).

    • James says:

      Concur. Additionally, here in the US the abandoned villages/farms were almost certainly agriculturally corporatized, prompting the flight to the cities in the first place, while likewise deindustrialized of any remaining supporting industry and small businesses, almost always to be replaced by the now ubiquitous WalMart Supercenter. All of which is meant to facilitate the main goal: transfer of local wealth to multi-national corporate coffers.

      • MG says:


        you have “agriculturally corporatized farms”, we had “communist industrialized cooperatives” – both because of the same reason: energy efficiency. When we do not have the cheap energy, many places will simply be taken back by the forest. Maybe the reason for the serfdom in the past was also to protect the agricultural land from turning back to the forest.

        • James says:

          I would still assert it was mostly about funneling local wealth up the pipeline to communist overlords, at least as practiced in the USSR (which didn’t practice true communism by the way). But the US midwest is almost certainly to revert to tall grass prairie across the great plains as the best case, and windblown desert in the most likely worst. Either way, the value of the land for farming has been extracted for several generations by industrial farming methods. The “breadbasket of the world” myth will blow away on the wind along with the cheap fossil fuels and fertilizers and depleted aquifers that made it all possible in the first place, never to return again in our lifetimes. It won’t be a pretty sight.

          • I am sure that if we can find a way to keep food production going, we will. In a way, food production is even more important than oil production. But I agree, lack of fossil fuel fertilizers and depleted aquifers will be big problems. So will be lack of fuel or lack of replacement parts for mechanical equipment.

        • Christian says:

          “When we do not have the cheap energy, many places will simply be taken back by the forest”. This is likely to be the case, especially in a die off scenario. After the soviet breakup Cuba lost farming capacity and some land gone wild again. Total wooden area augmented, I don’t know if it is the only country when this happened

    • Interesting. You may be right about people leaving the least accessible rural areas. I know that we have received a lot of fliers regarding “bank foreclosed property” up in the North Georgia mountains that someone was trying to sell as individual lots for people to retire to. The price has been cut way back, and even with that, it is not clear that they are doing very well on selling the lots. The lots are just too far from everything.

      • InAlaska says:

        I live in a very rural area in Alaska and people have been fleeing to Anchorage and Fairbanks in a steady trickle since 2009. Its pretty empty around here right now. School population is down by half and many of the businesses have closed. Cost of energy is high, services available are low. Commutes are long. Food and medical are 4 hours drive away. People are definitely leaving here.

        • it is a simple fact of geography and temperature that civilisation tapers off the further north/south of the equator you go
          you can use/burn trees until you get above the tree line—after that you are dependent of animal fats to survive,
          Right now we are reaching the end of an anomalous period where hydrocarbon fuels have enabled us to ignore nature—it has been just a short blip in the face of relentless reality
          Eskimos never built cities—we are perhaps coming to realise why

  6. Jerry McManus says:

    I don’t have a link handy, but I seem to recall reading somewhere that the U.S. military is one of the largest consumers of oil in the world.

    It would be interesting to see a discussion about what options the U.S. government has for dealing with a global contraction in the oil supply and its effect on the military. Someone already mentioned the possibility of nationalization of oil production.

    We have already seen examples in the last few years of countries halting food exports during a crisis, and I believe during the 2008 financial crash there was a problem securing credit for international shipments.

    I don’t think it’s too far fetched to imagine a scenario where our complex and interdependent global markets unravel fairly quickly and it becomes a mad scramble to keep the military well supplied with fossil fuels.

    Martial Law and fuel rationing would become the order of the day, turning most peoples world upside down.

    • James says:

      I don’t have a link handy, but I seem to recall reading somewhere that the U.S. military is one of the largest consumers of oil in the world.

      You are correct.

      It would be interesting to see a discussion about what options the U.S. government has for dealing with a global contraction in the oil supply and its effect on the military. Someone already mentioned the possibility of nationalization of oil production.

      They would scare the shit out of you, which is why you will never see such discussions in an official forum. See Dick Cheney’s still secret Energy Task Force meeting held shortly before 9-11.

      I don’t think it’s too far fetched to imagine a scenario where our complex and interdependent global markets unravel fairly quickly and it becomes a mad scramble to keep the military well supplied with fossil fuels.
      Martial Law and fuel rationing would become the order of the day, turning most peoples world upside down.

      Neither do I.

      • James says:

        And we might be very close to that point today, what with Iraq III and the siege of Gaza #? apparently underway and Russia replying tit for tat with US/EU sanctions.

      • InAlaska says:

        The military has already scoped this out thoroughly. They have made contingencies, as have many militaries around the world. The US has the Strategic Oil Reserve and that is just the one we know about. Peak Oil was the subject of intense study by the US military several years ago. German military has also done work on this problem.

    • I agree with you that there is possibility of a global contraction on oil supply. I expect the issue, most of the time, will be oil prices too low, rather than prices too high. They may briefly bounce higher, but then will be lower again, making it unprofitable to extract oil.

      It is not clear that the government can fix the problem, in large part because the government is getting weaker, not stronger. In such a scenario, the government would need to subsidize oil operations–something it would be hard-pressed to do. It is not possible simply to declare that all able-bodied people in an area will work on oil production, because the vast majority of people don’t have the skills. Some of the support needed will need to come from great distance, and thus will require payments to people in other countries. I don’t see the government being able to subsidize oil operations, to the extent necessary.

      There are many details to work out if there are shortages. Ability to pay is the usual way of allocating anything that there is a shortage of. Any other approach requires a lot of administration, unless it is very simple, like each purchase is limited to 5 gallons.

  7. PeterEV says:

    Looking at Figure 9 on Free Cash Flow and knowing that there is rapid decline in production with a long tail, we see the free cash flow rebounding from the lows of 2012 where there was a rapid build up of wells in 2011-2012. I take it that the some of the curves with better flow rates and/or
    more robust reserves will eventually break into positive territory in the coming years. To me, this means the steep rebound into 2013 will become less steep in 2014 and progressively less steeper in the coming years. So the Bakken may not be as bad for the early arrivers but that they will have to wait a number of years to see a positive cash flow and an overall profit.

    Meanwhile we bask in the temporary illusion of being “Saudi-America”. To paraphrase a meme from Sheikh Rashid bin Saeed Al Maktoum:
    My great grandfather rode a horse
    My grandfather sailed a steam ship
    My father took a train to work
    I drive a car everywhere
    My grand kid may have a tough time affording a car
    My great grand kid will ride a horse.

    What may delay this meme is the creation of affordable solar cells from a firm like Semprius, high energy density lithium ion cells as mentioned by the University of Tokyo Engineering School, Creative materials or even natural ones for building a vehicle. It seems we are finding alternatives that may offset or delay some of the dire predictions. I am becoming less pessimistic and more hopeful as I see intelligent people addressing problems cited here and elsewhere. It may be that my great great great grandkid is the one who rides a horse. Until then, I am grateful for people who see the problems we are facing and are working to alleviate them.

    I rode a bike the other day instead of taking the car. One very small step as I notice a number of others taking similar small steps. Our population is going up but our crude oil consumption is going down. I can also drive around town at the equivalent of $1/gallon using an electric vehicle with the difference helping to pay off an array of PV panels faster.

    Is it cheaper? No. Is it better? Perhaps. Is it an alternative that may work out? We’ll see but I am hopeful. I often remind myself that the success of a Rain Dance is all in the timing. I see some good clouds on the horizon.

    • James says:

      High tech solar cells and/or lithium ion batteries? REALLY? REALLY? REALLY?

      • Les Francis says:

        Non engineers believe these pipe dreams.

      • tfouto says:

        I find quite amusing that people like you think innovation wont take place on sollar cells and batteries. Really.

      • PeterEV says:

        Yes Really. It is happening now. Like a big game hunter, you have to follow the signs.

        If we go back to the EV1 and RAV4 E (for electric), they had greater range than today’s Leaf, Fiat 500e, Spark, etc. by about 50%. The press was all over them in a negative way. Fast forward to today. The Tesla is given Consumer Reports highest grades ever for any vehicle and Road and Track wrote an article as if it were their dream car. The only thing they complained about were the door handles. The Leaf is a “best seller” and the press is mildly positive over all. The Leaf also appears in Consumer Reports with a conventional write up. Some much for an antedotal analysis. This also points to the direction of development:

        The Leaf and the Tesla get about 3 miles per kilowatt-hour. A pickup will get about 2 miles per kwhr. With my PV array, I generate about 22 kwhrs per day. This works out to an average of about 66 miles of possible commuting each day. This is about twice the max. distance that 95% of commuters travel within each day. On weekends, I can travel 33 miles out per day to visit a farm for eggs, milk, etc. and bring a farmer or two items from town.

        There have been some recent announcements concerning Lithium Ion battery development where LG Chem is creating a 200 mile pack for 2016. If we assume that this is for the Leaf and other 70 mile range EVs, this is 3 times the energy density. Lawrence Berkeley National Lab is working on a Lithium Sulphur battery that contains about to over 3 times as much energy as laptop batteries and is much cheaper. To put this into perspective, the Tesla Model S has and range of 265 miles. Three times the energy is just under 800 miles on a charge. That is the rough distance between Raleigh, NC and Boston, MA.

        The maximum potential for Lithium based batteries is approximately 1500 to 3000 whr/kg. Current batteries, for calculation purposes, are around 150 whr/kg. So basically, we could have battery packs with the maximum potential of going coast to coast to back again on one charge. If we compare this to our aviation history, it’s like going from puddle jumping to cross country flights. With the Tesla, we can puddle jump from one super charging station to another and go across the country in about 20 recharges.
        Here is a pronouncement from the University of Tokyo:
        With a pack with this energy density, there will not be a need for super recharging stations in the same way that the range of airplanes increased and many small airports were eventually bypassed.

        The University of Tokyo mentions an energy density of 2570 whr/kg. Laptop batteries a few years ago contained about 150 whr/kg. The article mentions a factor of 7 but the numbers work out to be a factor of 17. If you could build an amphibious vehicle with a 150 mile pack of today’s Lithium Ion batteries, a pack with the U of T battery would allow you to reach any part of our globe by continent and island hopping.

        I am not trying to get political here. This is more just for perspective purposes. I read where we spent $1.7 trillion on the Iraq war. I wondered how that would translate to EV miles per day on average if that $1.7 trillion were spent on solar panels:

        250 watts * 1 hr * 2.0 kwhr/m^2/day * 1 kwhr * 3 miles
        panel 1.0 kwhr/m^2/hr * 1000 watt-hours 1 kwhr

        The 250 watts/panel is a typical size or thereabouts. This is based on solar insolation of 1.0 kwhr/m^2/hr
        In December, almost all of the USA, except for a very small portion of Washington State and Alaska receives an average of 2.0 kwhr/m^2/day or greater. Some areas receive 3 or more times that amount.
        The 1 hr multiple was added to convert the instantaneous value of 250 watts to 250 watt hours since the 1.0 kwhr/m^2/hr standard solar influx shines on the panel for one hour constantly to produce the 250 watt hours
        This works out to be a minimum of 1.5 miles/day/panel
        Costs for installing panels has come down to around $5 watt or $1250/panel

        $1.7 trillion * panel * watt * 1.5 miles
        250 watt $5.00 day-panel

        This works out to be 2.04 billion miles/day.

        I tried to attach a copy of the NERL December Average Daily Solar Radiation per Month for collectors tilted to latitude + 15 degrees but I am adding the URL for generating the map:
        Instead I am trying to insert a link to a similar map with an unique URL that shows about the same output:

        We can do the same thing for gasoline powered vehicles. The USA uses about 18 million barrels of oil per day. When refined, each barrel produces about 18 gallons of gasoline. If we assume that the average mpg is 25. This works out to be:
        21 million boe * 18 gallons * 25 miles = 8.1 billion miles
        barrel gallon

        Therefore, we could have been close to “Energy Independence”. The mpg for the USA gasoline fleet is a guess. I usually think of 10 whrs of electrical usage in an EV as being somewhat equivalent to a gallon of gasoline.

        The beauty of all this is that if gasoline costs $3.50 and 10 kwhrs of electricity costs $1.00, the difference is $2.50 for approximately 30 miles. If the EV mileage is 2.1 billion miles/day , that is 70 million recharges/day. The payback is $0.175 billion per day into $1.7 trillion or approximately 10,000 days or 28 years. The question or decision comes down to how fast the cost of electricity will rise versus the cost (and availability) of gasoline.

        The cost of a Leaf battery replacement pack is $5,500. The warranty is 8 years/100K miles. That is about $700/ year or $58/month or $2/day. Subtract from that $5,500 the cost of oil changes (20 to 30), timing belt replacement (1.5), fan belt replacements (2), air filter(10 to 15), coolant replacement(2), etc., If you saved your money, the cost of a replacement pack becomes more of an inconvenience. There may be an added bonus in that the range of the replacement pack could have 3 times the range.

        I have chosen to believe that the availability and cost of gasoline will become dearer with respect to electricity. The signs appear to be there.

        If Semprius is able to produce solar cells with 3 times the efficiency of current cells, then we have a real break through. In the summer, I am a slight electrical energy exporter while winter is a different story. With cells that are 3 times as efficient, I would be close to being a net electrical exporter in winter.

        The question comes down to what do we have to do?

        • Paul says:

          The world does not run on electricity – it runs on oil

          Note – 98% of the earths ag land is farmed using – you guessed it — oil and gas based pesticides — take those away and the soil is dead – it will not support a crop.

          Does Elon Musk’s lithium battery solve that problem?

          And does it replace all these critical things oil is made from

          And where does the electricity come from to run a Tesla? I suppose from a coal fired plant.

          Can a Tesla be charged in time for work using a solar panel?

          And even if it could,how do you make solar panels?

          You mine the materials — smelt them — and transport them to the factories — which are very complex things in themselves that require massive amounts of energy both to run them and make the components that are in them … and on and on and on and on and on….. and what is the basis for all of the above? Fossil fuels — primarily oil and coal.

          So when the global economy collapses due to the end of cheap oil (it is an imminent event 2008 was the warmup) what am I to do with my lithium powered car?

          The grid will not exist because it cannot be maintained.

          I’d like to say my Tesla could be used as a door stop for a giant door — but I’d have to find some people to help me push it up the driveway first….

          • tfouto says:

            The oil will not end soon. The price might go high. Really high. People will not be able to use private cars. They will have to use public transport. Damn… But the oil will still be used to produce things. I cant understand that flawed logic of there’s no oil for nothing.

            The majority of oil usage is on gasoline and diesel for private use. If oil is restricted for that matter, for really high prices, then oil demand will be lower and prices will lower for manufactaring products.

            • Oil will, at some point rise really high—far to high to allow it to be used for domestic purposes. At that point the oil infrastructure will collapse, because it is predicated on the consistent use by billions of little people (you and me that is) making short journeys and using relatively small quantities in an infinite variety of ways (think plastics as an example)
              Refineries will not be able to run on just production of vast quantities for specific usage, so they will virtually cease to function

            • Paul says:

              If the price goes really high people don’t buy oil – the price crashes and big oil goes bust because they MUST have oil selling at a high price otherwise they lose money on extracting it.

            • tfouto says:

              People wont buy oil… They cant. That’s the goal. No more oil for cars. Oil will be used only for what is strictly necessary. Oil companies will be taken over governments.

            • Paul says:

              Trust me – that won’t happen.

              When the SHTF unfortunately I will not be able to say I told you so because the internet will cease to exist — so take this as an advance I told you so — when the world is going to pieces and the pumping of oil stops because the global economy has stopped — you can think back fondly of my comments here.

              See p. 56 on this research paper to find out what is likely to happen when the collapse kicks off:

            • InAlaska says:

              The reason that you are missing the flawed logic that “there’s no oil for nothing” is that you aren’t factoring in what the price of that really really high price of oil will do to the world economy. Really high oil price will collapse the economy without which there will be no ability to produce ANY oil. There will be no public transport. No ability to mine, or farm, or collect taxes. High oil prices for a global economy built on cheap oil = collapse.

            • Paul says:


              According to the OECD Economics Department and the International Monetary Fund Research Department, a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second years of higher prices.

              Now imagine what $147 price oil would do the global economy — oh right — we had $147 oil — just prior to the 2008 collapse…

            • tfouto says:

              Oil will be very expensive for private use, not for other necessary things. It will be regulated. People if necessary will pay lots of taxes just to make oil extraction possible. Quality of life will decrease a lot for sure.

            • Right, InAlaska, really high oil prices, don’t work. This is something that a lot of folks have not figured out. Even current oil prices don’t work, without ultra-low interest rates.

          • PeterEV says:

            This is not an either or situation but one of transition. As our crude oil supplies become dearer, what do we have to replace them with? All I am saying that I can get by with EVs in place of gasoline powered vehicles. In a pinch, I can ride a bicycle to a store or farmer’s market. Gasoline was rationed in WW II. What did my folks do? My father went off to war and my mother used public transportation to get to work. After the war, my mom and a neighbor would carpool to buy groceries. If they can do it so can we.

            In place of big ore movers and even farm tractors, their diesel may have to come from long haul trucks. The trucks can be moved by train more efficiently. Again, this is a process. Trucks are already being moved by train with their cargoes onboard.

            • wheels dont bring you prosperity
              prosperity brings you wheels.
              try and grasp that
              WW2 cannot be equated to todays problem.
              WW2 was a fuel burning exercise—now we’re running out of fuel

            • Paul says:

              Peter – how do you make a bicycle without oil? Where will the inner tubes and tires come from? Where will the energy to mine and smelt the metals come from? etc etc etc…

              Remember in the 1800s prior to the industrial revolution coal could be scooped from open pits — oil bubbled to the surface — going forward none of these sources of energy will be available because we have picked the low hanging fruit and only advanced technology allows us to get at what is left (that technology will of course disappear)

              So we cannot go back in time and have blacksmiths making simple tools — what will they use for heat — trees?

              Well in Europe there was a huge problem with deforestation pre-industrial revolution…

              We are well and truly pickled. Of course there will likely be a short period of time after most people are dead where we can pick up bicycles and tools and use those — but that won’t last longer than perhaps a generation… these things bust and wear out.

              And let’s not forget the nuclear plants and thousands of spent fuel ponds — how do we maintain those when the power goes out? Cutting down trees and burning those will not cut it…

        • tfouto says:

          Who would have know that 100 years ago, we could would use smartphones and we can watch movies and do amazing things with it? Technology just as this amazing thing that can do things we are not aware of possible. To think that batteries will not increase dramatically in the future and solar efficiency will not get better is pure blindness. Really.

          • Paul says:

            Can you explain how battery powered cars can replace these things?

            Can batteries replace the oil and gas that are used to grow all of our food?

            I am not clear – will we eat lithium batteries while driving about in our Teslas?

            Remind me – are there any plastic components on a Tesla? If so how do you make plastics without petroleum?

            And what about the metal parts like the engine – how do you mine and transport those parts without petroleum? Do the super freighters run on lithium batteries too? And the trains? And the tractor trailers?

            And how to you make the computer systems in a Tesla without petroleum required to mine and refine the minerals that are in those systems? Can lithium batteries power a smelting furnace?

            And how do you make lithium batteries without petroleum and or other energy sources such as coal?

            And how to you build and operate the universities required to pump out the engineers required to design and build Tesla cars without petroleum? How do you heat and cool them — how do you make the chairs and tables and other gear that is in a university without petroleum? Can you make these things from lithium batteries?

            When you think these things through — as you can see you very quickly run into some major bottlenecks in your theory.

            The world does not and cannot run on batteries — in fact without other energy inputs from fossil fuels — batteries would not exist.

            Watching movies on smart phones is not exactly up there with the invention of fire – the wheel…

        • The mind numbing problem about vehicles is that the world system has about 900 million petrol/diesel versions.
          This is what has to be replaced by other means. Right now EVs are a tiny fraction of 1% of that. So if EVs are to be substituted for gasoline version during the period while we have liquid fuels available –20 years max?— those are the numbers that have to be produced.
          In addition, the manufacturing base for those 900m EV’s is itself oil fuelled.
          Over and above that of course, is this insane insistence that wheels are the source of our prosperity, when in fact it was growing prosperity that gave us wheels

          • Paul says:

            A Tesla in every garage – from Bangladesh to Costa Rica!

            • PeterEV says:

              I don’t know about a Tesla in every garage. I know the rich can afford one and the poor will walk. Not sure about everyone in between. I’m not rich by any means but I might be able to scrounge together a down payment and secure a second mortgage. But I would invest in other things first. Like maybe a good quality bike.

              I know that there are electric arc furnaces. I know that we have an abundant amounts of iron that have been thrown away into our garbage dumps. I know we can recycle and will continue to do so. Welding can be done with electricity using Mig and stick welders. My son says there are ways of converting organic material into tires. It all depends on the drive and innovations of our people. All this can go together to produce a bike.

              You and I did not invent the Lithium Iron Phosphate battery, Solar Cell, etc. Someone else did. Just because we did not invent them does not mean that it could not have been invented. We could assemble a very long list of modern inventions that someone else did. All I am saying is that we have to have a change in our goals. I was happy to read about the Semprius solar cell developments and the LG Chem announcement of a 200 mile pack by the end of 2016. This is enough to get me off gasoline and heat my home for the most part in winter. If I can do it, my neighbor can do it; so could my neighborhood…

              Already 110,000 Leafs have been sold. If they represent a gallon a day, that’s 6,000 barrels. Not much but a beginning. It’s a matter of understanding the issues and finding and adapting doable solutions. At least we have a leg up on the Roman and Greek civilizations, we have PV and batteries, that may eventually replace firewood to heat our homes.

              I am reminded of a young lad with his uncle fictitiously watching Orville Wright during First Flight at Kitty Hawk. The young lad tugs on his uncle’s trousers and says: “Uncle Boeing? What do you mean by “inflight meals”? Orville did not have time to unwrap a sandwich.” I do not know if we will survive the “Limits to Growth” meme but I do know that we have people that can slow it down.

            • Paul says:

              For those who cannot afford a Tesla of course they could always have a Prius…. and they can also eat cake.

            • I would strongly suggest that you invest in at least two bikes of the same kind, so you have one for parts. Even at that, you probably want more of the standard parts. You also will need a good lock, because if you have a bike, and others do not, your bike is likely to disappear when you park it.

        • I think we lose oil and electricity at about the same time (within a few years of each other). Also, the problem with oil prices is that they are too low, rather than too high. Maintaining roads is likely to become a problem in a similar timeframe. Electric cars don’t really fix our problem.

          • tfouto says:

            We can use concrete for roads , or use unpaved roads.

            • We can use concrete for roads , or use unpaved roads.

              After reading that comment—I now have YTREWQ imprinted on my forehead!!!!
              Concrete manufacturing plants are one of the biggest consumers of hydrocarbon fuel imaginable.
              And as to unpaved roads…impassable in winter and dustbowls in the summer.

            • Paul says:

              End – you have just exposed one of the pitfalls of posting opinions instead of arguments…

            • Concrete needs a lot of heat. Much of it is made in China with coal. We didn’t start building today’s hydroelectric dams, until the usage of coal enabled making both the concrete and metals needed for the dams. I expect “unpaved roads” will be the way of the future. If they are not paved, they quickly become rutted, or trees grow in their paths.

            • InAlaska says:

              Producing concrete is one of the most energy intensive endeavors known to man.

    • The problems with depending on the tail for profits are
      (1) A company can run out of ability to borrow before the tail ever arrives.
      (2) If the economy collapses between now and when the tail arrives, the profits will never be here. In fact, the issue is Liebig’s Law of the Minimum. If any necessary part of the chain of services to keep up the operation–for example, replacement parts, is missing, the future profits won’t be there.
      (3) It is easy to overestimate the amount of future profits (ether by underestimating future expenses, or by overestimating the amount of oil that will continue to flow 10, 20 or 30 years from now. If some wells need to be terminated because of lack of adequate profitability, it is likely that the cost of servicing the remaining wells will be higher on the per well basis.

      I have been writing about the limits of many kinds we are reaching. We are reaching diminishing returns with respect to many kinds of extraction (fresh water extraction, oil extraction, natural gas extraction, coal extraction, copper extraction, many other types of metals, including some needed for supplements for agriculture). Diminishing returns makes the economy act as if we are becoming less and less efficient at extraction, rather than becoming more and more efficient. The expected effect of diminishing returns is lower wages and lower standards of living for everyone–basically economic contraction, rather than economic growth. In such a scenario, the price of oil may drop, making what looks like certain future profits disappear.

      The question in such a contraction is what kinds of infrastructure and technology can be maintain. If we can’t maintain roads, we will be in big trouble no matter what kind of technology we hope to use.

      • PeterEV says:

        Hi Gail,

        I agree with you on your Point (1). The Figure 9 graph had quite a bit of uniformity that made me wonder about the data except for oxy and a few others.

        While I do not doubt the existence of limits, Chris Martenson has explained that quite well along with yourself, John Michael Greer, and others. I still have hope for some bright spots in the solar energy and battery arenas. My main thinking is on the LG Chem pronouncement of a 200 mile pack by the end of 2016, Lawrence Berkeley National Labs annoucement of some success in creating a 450 to 500 whr/kg Lithium Sulphur battery, and the University of Tokyo’s theoretical 2570 whr/kg Lithium Ion battery. Of note, these entities are concocting battery formulations where they are able to store more energy per kilogram with the emphasis on the per kilogram. More bang for the buck. This would be a kin to the PC industry being able to achieve Moore’s Law for several decades but in the form of storage devices.

        Add to this, Semprius’s multi-layer solar cell design to where they can achieve solar output of 50% compared to our current 15%. Such an efficiency increase would allow for me to keep relatively warm in the winter and export electricity in the summer. Instead of using energy as with the PC chips, we will be converting the sun’s energy to heat and electricity. With battery development, we can be put to use day or night. But we have to be receptive to the fact that we need to get this done sooner than later.

        In the 1920’s, we dreamed of going to the moon. We had to get through the Great Depression, WW II, Korean War, etc. and then get prodded by Sputnik to start the Space Race. I do not doubt that we will be tested again.

        • Paul says:

          Even if we could invent a super battery within the very limited time we have left before total collapse — it would be useless.

          Because the world does not run on batteries. It runs on oil.

          How would you make lithium batteries without oil?

          • PeterEV says:

            We will be pumping oil into 2100+. It might not be much. I understand that Col. Drake’s well from 1859 can still pump oil. I would not want to base our energy policy on the quantity of output from Col. Drake’s well.

            We may have very little time before the peak of total oil production but the allocation of resources is what is important. You and I can walk or ride bikes or carpool or take public transportation as necessary.

            • Paul says:

              Peter – you need calories to ride a bicycle — our food supply is completely dependent on oil and gas grown crops and animals.

              Where will the calories come from to give you the energy to peddle your bicycle?

              I am beginning to wonder if you are a troll taking the piss here — either that or you are a number 2. (see my previous post on 1. 2. and 3. types)

            • PeterEV says:

              First, I am not a troll. Personally, I think you are tossing that out here to see how it flies.

              For your information, I have PV on my roof along with solar hot water. I have put my money where my mouth is. My wife has a vegetable garden and the fellow next door to me has chickens that lay eggs. In a quid pro quo swap we have eaten a few of those eggs. This fall we will be trying various forms of food preservation. My one son has a set of skills that would have done him well in the 1800’s along with his grandmother’s green thumb. I live in the southeast and we can grow a lot. I am not worried about food but more about the people who are not prepared or who get desperate or people who get into power and are absolutely diabolical.

              Like everyone else here, we are trying to tease out the future which looks very precarious. History has taught us that humans go through periods of great trial. As John Michael Greer discussed in one of his recent blogs how would a Jew in 1940’s Germany realize that their predicament was brought on by an anarchist who shot a crown prince in 1914. Have you ever listened to some of the people who have tried or who are trying to run for US President??? I can see offering them a room at the Bedlam Inn complete with rubber walls.

              I am not going to sit on my butt without learning how to do something useful that might just help us get through the next couple of decades. This involves learning about solar, batteries, gardening, and various crafts. It also gets me out of a doomerish funk and provides some hope.

              If there is no gasoline or gasoline is very expensive, how do you propose that farmers get their chickens, eggs, and veggies to market? A bike or human can only carry so much. A pickup truck, if powered by battery and refueled by solar (either directly or indirectly via the grid), is a very doable (still expensive) solution. In Weimar Germany, people with jewelry, hiked and bicycled out to the countryside to purchase their food. An electric pickup truck is a possible solution. There are a number here: Here’s one made out of plywood: Can the same type of construction be used to make it into a pickup truck for hauling veggies, chickens and eggs? Why not??? How would you go about it? Lithium is replacing lead acid. Ranges have gone up appreciably to a point where local commerce could get by. Railroads for the long haul. Somewhere in this mix are solution**s**.

              The replacement cost of a Leaf pack is $5.5K for a 24 kwhr pack. Two of those packs at $11k is enough to propel a pickup truck 100 miles on a charge.

              During WW II, items were rationed and the energy of the country was focused on producing items for war. Women went without nylons. There were no Sunday drives into the countryside. People grew “Victory Gardens”. Gasoline was rationed. Prior to that was the Civilian Conservation Corp (CCC) helped some get through the Great Depression.

              Under this topic, everyone is expecting gasoline to be rationed “naturally”. Some **will** grow “Victory Gardens”. Others will raise chickens to produce eggs. Others will learn to preserve food. Starvation and deprivation are very strong motives for us to get off our butts and to do something. I could even see CCC’s to teach people some of these skills.

              This involves around what can be done, history, physics, availability of resources, capital, etc. If the Gov’t can print money to where it is stored in the Federal Reserve for banks to draw interest from, some of that could be released for solar home improvements in the form of long term loans, tax incentives, and business support. The Gov’t loaned Tesla 490 million which Tesla repaid.

              Hitler rebuilt German’s military in the 1930’s when Germany was flat broke repaying war reparations. We, the United States, are technically flat broke, how could we emulate what Hilter did economically but with solar? If Wall Street and Hitler can get creative with finance, why not the US Gov’t? This would be a fascinating topic for a PhD economics candidate.

              I see solar as the long term option to replace crude oil in the transportation field as 747’s replaced Sopwith Camels but it will be done in coordination with remaining crude oil supplies. I have already worked the numbers to show that we could be energy independent to power a quarter of our gasoline powered fleet using solar.

              I think we are all intimidated at the end of the petro era by what we read. What we read can be down right scary especially if some scenarios come to pass. I prefer to look for solutions than to dwell on being a complete doomer. Some of those solutions are already in progress; all are in development.

              My solar system is not very productive in winter. I am working on a solar thermal system and keeping an eye on Semprius’ development. Either one or both might be very beneficial. The pay back may take decades but it would allow me and my family to be relatively warm in the winter then it is a good investment.

            • You indeed have done a lot.

              A big issue is that a lot of the “conventional wisdom” being passed around on the Internet is out and out wrong. The real issue is too low oil prices, not too high oil prices. The too low oil prices lead to fighting and collapses of oil exporting countries and a reduction in oil production, even in countries that are not oil exporters. Follow on effects are likely to be financial and government collapses.

              Thus, what one needs to mitigate is loss of oil supply, not high prices. Also, loss of government services, and in fact, loss of basic services such as grid maintenance and electricity and water supply maintenance.

              The three big issues I see are

              (1) Personal water supply
              (2) Personal food supply
              (3) Ability to cook food and heat water to purify it

              There are a lot of other issues as well (transportation, clothing, heating homes, comfortable water temperature), but people don’t realize that these are the most basic.

            • How do you know we will be pumping oil until 2100+? You have to keep the system operating. There are a lot of very optimistic Hubbert Curves “out there,” showing someone’s idea of how much might be pumped, if everything hangs together. But they are simply based on wishful thinking. The situation we are in is much more like a set of building sticks, that will fall apart if the wrong piece is pulled out.

              Dome constructed using Leonardo Sticks

            • PeterEV says:

              Hi Gail,

              If the wells drilled at the turn of the last century are still being pumped, then it would stand to reason that we would have some wells still pumping into the year 2100. What I think is missing is that there will be a transition to solar and battery for transportation purposes. We see it already with people who have purchased Leafs and recharge their vehicles using solar either directly during the day or retrieving what was generated during the day from either the grid or a battery storage array. While there is not much penetration in the market place, 110,000 Leafs sold is a harbinger of things to come. There is a growing acceptance by us of EV, solar and the potential of battery storage. The ideal situation is for the Solar, battery, EV paradigm to grow as our crude oil supplies dwindle.

              My earlier calculation showing that $1.7 trillion invested in solar panels could power an EV fleet for 2 billion miles a day is based on average solar radiation values in December. The solar insolation value I used in the calculation was 2.0 kwhr/m^2/day. This was basically a minimum. There were large areas in the Southwest where that average was approaching 7 and 8 kwhrs. Denver, Phoenix, LA, etc. could produce way higher distances. The 2.0 kwhr values exist in the Pacific NW and in the Chicago, Detroit area to New England. This points to the idea that further investment in solar could ameliorate the effects of coming decline in crude oil supplies.

              Also notice that the large automakers are all introducing electric vehicles of some sorts. These are the folks that successfully killed the EV1 and RAV 4 E. They are giving up their profits from spark plug, fan belt, oil filter, replacements etc. willingly??? I don’t think so. I think they see the writing on the wall and if they are going to be car manufacturers, they will need to produce vehicles that are not as dependent on dwindling supplies.

              Bill Moore, Editor of, spoke with the director of the Toyota Museum about Peak Oil. he said the director talked with the CEO of Toyota. The CEO said they talk with the CEOs of Exxon, Total, Shell, etc. about fuel supplies. The board then convenes about their production strategy. The CEO said that if they get it wrong, they go bankrupt. That last remark has stuck with me. I look to the automakers from signs of Peak Oil. What company wants to give up profits from parts to produce cars that require very few parts to none? Everybody is building EVs; some grudgingly as in compliance cars. WE know that they see Peak Oil coming. We are not cc’ed on their internal memos and thoughts, thus fueling the conspiracy theorists. The best we can do is watch and listen for what they do.

              None of them are producing buggies for horses. The Hydrogen / Fuel Cell meme is on life support and appears to be alive due to state financed hydrogen refueling stations. We don’t take the train out to a farm to purchase food. What else is there? If that leaves EVs, then there will be a concerted effort to develop EVs and we see the car manufacturers headed in that direction.

            • I have visited Chevron’s oil production operations in Kern River, California. Today’s operations are far different from what they were 100 years ago. They are very much computer controlled. Even if exactly the same pumping equipment were used (which is not the case), it would have required a huge number of replacement parts.

              The issue is keeping our economy together well-enough to produce high-tech equipment of many kinds. We need a well-functioning international finance system to allow businesses to buy raw materials from around the world. We also need all of the parts of the supply chains to make whatever parts and equipment are needed. The issue is collapse of supply chains. If we have to replace parts with new parts, made solely with materials available in the Kern River/Bakersfield area, supply will fall off very quickly.

            • PeterEV says:

              >>How do you know we will be pumping oil until 2100+?<<

              If government collapses, it will be possibly be replaced by a "war lord" of some sort who will make sure there is enough coal to fire a power plant to produce electricity to run some oil pumps. I was not trying to infer that there will be BAU in the oil fields in 2100. Someone some place will be pumping oil. It is too good of a commodity.

            • Paul says:

              Can you explain in detail how the warlord will extract oil from the ground? What will he do — threaten an engineer to make it happen or he dies?

              So how does the engineer make this happen? Where does he get all the equipment to get the oil out of the ground? Things like the high tech drills — the pumps — all run by computers…

              If you are going to post comments like this — it really would be great if you would offer a little better explanation that just ‘some warlord will demand oil to be produced and it will happen’

              Perhaps you could preface this with — warlords will emerge from the chaos — and they will have special magical powers — given to them by the overlord formerly know as Dick Cheney who revealed himself as a grand master wizard from the Planet Ork — and these warlords will be able to utter a secret chant — and lo and behold oil will appear in barrels — ready for use on the plywood cars that the warlords conjured up the day before….

              I may not buy that either — but at least I will be amused….

            • I’m glad somebody else gets the joke

            • PeterEV says:

              >>What will he do — threaten an engineer to make it happen or he dies?<<
              Paul, what people do you care about personally? A Stalin would have no problem with threatening them to get to you. People who defected during the Cold War in MIGs, left behind no one they cared about for that very reason or they saw the horrors of their system and thought they had a moral obligation to defect.

              The idea is to try to keep a Stalin out of power.

              The other scenario is that a group comes together to see if they can revive an old oil well and distill its contents.

            • Paul says:

              Why not just invent a perpetual motion machine?

            • PeterEV says:

              I see CTG’s comment below but no reply button so I am answering via a sent comment from Paul above which arrived in my email with a send button. So it appears that I am answering CTG before he presents his comment below. This is weird.

              We can formulate any number of scenarios. One of them or many of them could become fact. My contention is that there will be enough parts, people, gumption, to keep a well operating. If some of the wells from a hundred years ago are still producing, the year 2100 is about 85 years away and oil wells from today could still be producing some oil.

            • it could always be boiled up and tipped on beseigers heads from castle ramparts

            • this realy is getting nonsensical—though i suppose it must reflect the real world at the same time

            • Paul says:

              I have a kernel of an idea!

              In my spare time I will start work on a screenplay for Idiocracy 2 — it will be based on the discussions on this forum of recent.

              I like Jeff Bridges for the lead — there absolutely must be a scene in which Jeff is driving a plywood car on a NASCAR track made of cement — his car will be sponsored by Chris Martenson and called ‘Koombaya’

            • PeterEV says:

              I think it says that there could be oil pumped 100 years from now but I don’t think anyone would count on it running a civilization. It could be put to practical but local needs. It would likely be part of what Greer calls a stair step downward progression.

              It also says that oil production just won’t stop as if it hit a brick wall. Some one some place will have the resources (likely salvaged) and technical knowhow to run a pumping operation. The State of Pennsylvania rebuilt Col. Drake’s derrick from photographs and guess work. A nearby well is the one that has been pumping for 150 years.

              I am amazed at how some of our ancestors created ancient devices such as the Antikythera Mechanism. The intellect and the wherewithal to fathom astrological movements and to incorporate them into a mechanical device is very impressive and humbling.

            • Paul says:

              Peter — have you seen the movie There Will Be Blood?

              Recall the oil derricks … simple contraptions made of wood… drilling for oil just below the surface…

              This is a modern rig

              It pumps oil from far beneath the surface. Imagine how many parts are on that thing — imagine if one of them breaks… imagine where the parts are made — probably by a high tech machine that is made in Germany — or perhaps Japan… and with our just in time supply chain there would be very few spare parts available on site…

              When this hits oil will be over rather quickly.

            • PeterEV says:

              The wells I am talking about are already in existence. Drilling is another matter.

              If you saw my message to CTG, it had a link to a well that has been pumping for 150 years. I think his issue is where do you get the parts to keep it running after the SHTF. My contention is that there will be parts that are around that can be salvaged or repurposed. Some may have to be made.

              A friend has a metal working shop. The machines run using “AC” electric motors. Most are actually DC motors with a rectifier bridge to convert the AC to DC. These can be bypassed. A battery/solar power system can be directly connected to the underlying DC motor. The same goes for a wood working shop. While some of these things can be done slowly by hand, if you have the electricity available, why not use it?

              He is the type of resource that you want to see survive after the SHTF.

            • when deciding the amount of power needed to run power tools, consider that
              a typical solar panel delivers 240w, two and a half lightbulbs.
              i could suggest a better use for that amount of power to illuminate some dim areas

            • PeterEV says:

              My system, on average, produces about 22 kwhrs per day. A 120 v 10 amp electric motor consumes 1.2 kwhr max. consumption. That’s about 18 hours running time.

            • your pv system must be 10 times average size/area
              very few people have that space available

            • PeterEV says:

              It’s basically a 5 kw nominal system with an after inverter efficiency netting 4.38 kw multiplied by a factor of 5 that produces the average of 22 kwhrs. The factor is based on the average amount of sunshine over daylight hours need to convert kw to kwhrs.

            • Paul says:

              How many wells are around like that?

              The replacement parts you speak of cannot be made without precision computerized machinery. You really think someone can make these complex parts by hand?

              Of course when the SHTF nobody will even be thinking of oil extraction — there will chaos — starvation — and those 150 yr old pumps will stop pumping — and they will corrode. And by the time anyone gets around to trying to fix them (assuming they can take time out from the drudgery of growing enough food to eat) they will be shot through.

              Can you remind me of where that rig was located? Was it in Texas? Isn’t Texas rather dry? So help me with this — people will be living in a place with little or no water — and they will be hand turning replacement parts for oil rigs…

              Have a look at some of the parts

              Add in all the valves and other things you would need to keep one of these suckers running…

              Then remember that they are machined to extreme precision by computers by gear made by the best German engineers on the planet.

              You seriously think someone is going to make a part that fits with another part — by eyeballing it?

              You really do need to think things through before you post — or perhaps you can pay me for doing that for you…. :)

            • PeterEV says:

              I went to the link you referenced but I do not see where those parts apply here:
              We maybe thinking of two different scenarios.

            • Paul says:

              Peter – that was an image for the parts that are inside this

              Machined no doubt micro mm… to fit together. A blacksmith could not do that… sorry to inform you

            • PeterEV says:

              Hello Paul,

              I did an internet search on “Jack pump parts list” and did not the find pictures of the parts you referenced associated with any of the several lists I viewed. Perhaps you can be more specific with URLs showing exactly where those parts go in a Jack Pump.

            • Paul says:

              peter – how do you think those pumps were made in the first place? a) By some guy in his shed with a hammer and anvil? Or b) by some high tech machinery that was made in Germany?

              Clearly B is the answer (I hope) — so how do you think some guy in his shed is going to service such a thing with a hammer and anvil going forward?

              It was not possible before the industrial revolution – it will not be possible after.

            • PeterEV says:

              Paul, I did not ask for your opinion, I asked for URL references. If you have any…

            • Paul says:

              I am not giving an opinion (I seldom give opinions I present arguments) — I am asking a question:

              How does someone make replacement components for machines that were made using the most sophisticated and exacting computer guided lathes and other high tech machinery — when all one has is a hammer — and anvil — and a fire?

            • CTG says:

              Peter – parts, parts, parts and skills. You don’t have to those in a “warlord” scenario. Highly engineered bearings? long copper wires? plastic cover and insulation?

            • PeterEV says:

              I hate using Nazi Germany as a poster child for something positive. But, Hitler did create a system in which Wernher Von Braun flourished and it was “Rocket Science”. It was also an example of a “warlord” directing human and natural resources to a project. There were a lot of people who suffered because of this but it was done and Von Braun did hit London.

              There were people there who were directed to make gyroscopes, turbo pumps, propellants, etc. These were educated people and some of the things they developed were on the cutting edge for their time. This means that they were backed by intelligent people who used their intellect to try different things and eventually came away with success.

              Yes. it take energy. Will we redirect hydroelectric power to a ball bearing plant? Will we redirect remaining coal and coke to a steel mill? Will we eventually use charcoal in something that resembles a forge? Will we lose the ability to salvage copper wire from abandon houses? Will we lose the ability or develop the ability to coat copper wire with insulating plastic made from non crude oil/natural gas sources?

              Will we redirect resources to develop high efficiency solar cells and high energy density batteries? I will say yes to that especially if someone out there is “the enemy” and they are working on these same projects. Harnessing of energy is power. There is no doubt that we are headed this way. Mother nature may have a different take on our endeavours.

              If you lose one source of energy, you can certainly be assured that another will be tried. The US Federal Gov’t giving a $7500 tax incentive for renewable energy producing systems is a prime example. If it were folly, the GOP would be all over this. But in the end, I am paying for this tax incentive through my taxes but at close to 0% interest rates. I look on it as a very cheap loan.

              EV production is ramping up. Therefore, we are **trying** to leave oil before oil leaves us. Especially the oil that is used to make gasoline (and diesel). Yes, it does take oil to make an EV, but once made, it can last a lot longer than it ICE brethren.

            • Paul says:

              Peter … peter… peter…. so many words — but so little said.

            • CTG says:

              PeterEV, I guess there is nothing much to say as everyone has a right to have their own opinion. Some years ago, I believe there is hope that things move forward and I live to see what happens in 2020. However, after the Fukushima incident (refer to for the latest update, you will be surprised) and what happens in the next 3 years, I realized that my time is running short. I have a family and 2 school-going children. 10 years ago, I resisted having more children even though my wife wanted more. We are financially strong and have no problems in having many kids but at that time, I felt that in future, my children will not have a good time. Little did I realize that by 2014, things changed for the worst (not worse). If I know about this in 2004 instead of end 2013, I would not have any children. I had hope that things will be better until late 2013 when I realized that government will continue to step on the accelerator even though the cliff is just in front, vey much visible.

              I have already given up any hope of talking to anyone about renewables and other “saviour”. I am totally not surprised if the only group of people who can understand the actual situation is probably less than 1000 worldwide. There are thousands who know something is wrong. Some may know that something is wrong in the stock markets, some on peak oil and some of other peak resources or social cohesion but very very few people can understand the whole view.

              I am a tinkerer. I repair my own things. I have background in electronics and I am adept at mechanical things. I can improvise and I can patch up things. I work in a large high-tech factory and I have the first hand experience in manufacturing, its complexity, it’s just in time logistics. My wife is a business owner and I have many relatives who are business owners. We know what credit is all about and how extensive it is used. I have completed my MBA from one of the best business schools in UK and I have gained a lot of insight on how the financial system works and how sheeple are made and herded.

              English is not my first language but I read extensively. I have completed and memorized the entire encyclopaedia at a young age. I read between the lines and I am open to any knowledge and to any conspiracy theories.

              I have the skills (tinkerer), the knowledge (I read a lot) and the experience (SARS, 2008 meltdown, just in time logistics, manufacturing, engineering, business owner, financials) and all these tell me that things are not bright at all and don’t even rely on the elites or government. If the government/elites are so great, then the Europeans would have built LNG terminals in 2000. Checking back, Russian has threatened Europe with oil/gas since 1990s. If they have the people/citizens at heart and willing/smart, then in 1995, they would have built LNG terminals and have dual sources of energy. Up till 2014, there are still no LNG terminals and they still depend on Russia. They are still at the mercy of Russia.

              I know what it takes to tinker and make things work and I know that when fossil fuel runs out,
              “Just-in-time” (JIT) inventory systems will ensure that human civilization will be wiped out in a matter of weeks. My relative’s factories and companies (trading) are using JIT. They keep no more than a few days of stock. They use credit extensively. They can get a loan based on the purchase order received. That loan will be used to buy raw materials to produce for the customer. The central bank policies squeezed the profits for all companies and the only way to move forward is to have JIT system. Stocks/inventories are money. Do you think the local supermarket stock up a lot of food or supplies? They will most likely (using internet) to order food directly from the supplier or manufacturer (with delivery in 1 or 2 weeks time) and the manufacturer will most likely order from China or get them to deliver. In US, how much production do you have within 100miles radius? Where are the food, soap, detergents and socks are made? Do you think your spare parts will be available in large quantities and in your area?

              Back to tinkering, you need energy to repair and replace parts. I know it is next to impossible if you cannot get the parts and heat to repair something simple like a generator or a valve. Sometimes, there are just no replacement parts and right now, it is easy, just go to the nearest shop and buy one replacement part.

              When working in the factory, we know that the parts and the product that we produce have a limited lifespan. Planned obsolescence is not a conspiracy theory. Do you think the wind turbines and solar panel can last 30 years? We have solar panels here and I know the people who installed them. Do me a favour. Talk to the one who install it, not the sales. We have solar panels spoiling within 2 years and even now, when we have a fully running supply chain, there are no parts because the manufacturer has gone bankrupt. We have solar panel subsidies here in my country but only a few people took that up as the reliability and quality is different that what is claimed. These are information from “boots on the ground” and not some pie in the sky talk by the sales people.

              Economies of scale. This is the key to making money in this tight-margin economy. Even if you have 1000 barrels of oil per day from your well, what are you going to do with it when the entire economy collapses? Why is going to refine it for you? What are you planning to use the “black goo?” for? Candle making? Do you know that the black goo is toxic ?

              Comparing to olden days is really something that a lot of people like to compare. The years from 2000 to 2005 is so different from 2014. What more you want to compare to 1970s and 1980s. The interconnectedness is so high now as compared to 2000. Globalization is in high gear. Exotic financial products that are not available (or rarely available) in 2000 are so common now (like derivatives, CDS, CDO, etc). TBTF just create new second or third order derivatives ( ). So much are tied to the market that one crash can trigger a tsunami of defaults and its cascading. I know what I am talking. I have done financial engineering and I understand how things work. Thins are so much easier and less complex in the early 1990s. People still use telegraph (low tech but sustainable) and mails. When the telegraph goes down or the mail is slow, it does not impact people much. Production (goods and food) are still local.

              I am not sure what your line of work is and if you have any real world experience or knowledge in what you say. I am not sure what you have written is something that you have read online or what you have done is your own research. Everyone has an opinion or a view and I do not have any intention to change anyone’s viewpoint.

              It is pointless to talk to anyone about collapse. Much as I like to avert it, I feel that it is getting very close to the end. People don’t just shoot down a plane (MH17) just to get another country to start a war. Conspiracy theory? Initially my wife does not agree to it (I said that it was on purpose) but after 1 month and no reports coming out? What do you think? TPTB are getting very very desperate.

              Lastly, do me a favour (I am from a British-based education system), think of something that is likely to happen in USA (I believe you are in USA). One day, if a virus is launched by someone/come country and it disables the EBT card (or many possibly down the internet or banking system). Tell me what will happen. Think about it in a sequence of event from day 1 onwards. Can it happen? Yes, it can happen and I am 100% sure it can happen. Will it happen? I don’t know. When will it happen? I don’t know?

              Be realistic on that thought experiment and come and share with us if your EV or your old oil well or anything at all is of any value to you.

              Now picture that you are in 1970s and the telegraph, radio and television system went down worldwide. What will happen? (Remember that we don’t have any internet at that time). Do you think there is a big difference between 1970s and 2014?

              Again – everyone is entitled to their own view and opinions. There is no point arguing over something that no one knows how it will turn out. However, base on knowledge and experience, I do know that it will be not what many has expected – happy ending.

            • PeterEV says:

              I hear what you are saying and have read too much. Your thoughts are some of my thoughts. JIT, viruses, hungry populations that are used to being satiated at a whim. I’ll add that the forests in the State of Vermont in the mid 1800’s were denuded until FF were used for heat and light. Populations are much higher today.

              In the 70’s and 80’s, I saw pickup trucks loaded down to their springs (and then some) with firewood. One had a flat, bald tires, and about a 1/2 cord of wood piled in the bed. Guess which tire was flat? My neighbors were all burning wood to stay warm and offset their heating bills. A number were delusional about how well this was working. “Our bedrooms are all warm and toasty.” My wife and I suffered some under the pale of smoke. The local utility had an air quality branch where the scientists there did a study and found that density of 150 wood stoves or greater per square mile was increasing the level of toxins to the point of being hazardous to health. We lived further out and it was not as bad. Solar seemed to be an answer.

              I see the problems ahead. Greer, Gail, Kunstler, Martenson, “Limits to Growth” have all had a lot of useful things to say about our predicament. Like you, I have kids that are out of the nest and on their own. I have people and friends I care about. The idea of seeing them get caught up in some aspects of human history is appalling to me. We can pick up today’s paper and read about various places with instabilities and see pictures of the dead and maimed bodies. The stage is mounting for our own instabilities. I was lucky, I survived the Vietnam War relatively intact physical and mentally. I can not say to same thing for my other classmates.

              I see some of the things that you and the others see. I wonder if there are ways to offset, delay and redirect our waning resources, energies, thoughts, and time. I have proposed EVs as a way of not using gasoline, recycling old shells, and storing solar PV output in batteries. The batteries are key and there has been a number of enhancements. I see your points about rare earths. Toyota says they have a Prius in development that does not use rare earths.

              Instead of denuding forests, I propose the use of solar hot water and thermal systems. I am not sure about PV. But I would rather see EV pickups piled up with corn instead of fire wood.

              I hear your comments and have read a lot about the poor quality of Chinese made PV panels. I maybe luckier but I have not had my PV system up for that long but I have been happy with it and it has been problem free so far. Again, there is the issue of rare earths and the need to get away from them. There is also the issue of efficiency and there has been some progress in that arena.

              My wife says that I can be argumentative. I don’t argue with her on that point. I hear what you are saying and wonder if there is a way around some of the obstacles raised. I see where people are working on these issues and some are having success. I keep hoping that it buys us time until we can come to our senses. Greer’s blog this morning raises the alarm bells of what is happening. I do appreciate your input.

              I may grab a fishing pole while the wife gardens. We’ll can and preserve in the fall and hope that our solar plans are sufficient in the winter. We’ll let the bees come out come in spring to start all over again. Hopefully, we will do this undisturbed by world and other events around us. History tends to say otherwise. Good luck.

            • Paul says:

              Excellent post Peter.

              Without a doubt we should not lay down and die as the few individuals who are aware of what is coming — we should do whatever we can — understanding what the likely limits are that we are up against here.

            • Paul says:

              CTG — you have most eloquently laid out the problems we are facing.

              Very sobering thoughts for anyone who may have been drunk on the kool-aid that convinces them that everything is not going to be completely dystopian when this crisis really gets going.

              Of course always hope for the best — but one should always anticipate the worst…

              Interesting comments on children — I met my wife 7 years ago — and married a few years ago — deciding not to have children first and foremost because we fear for the future.

              Friends are constantly harping to her about the joys of parenthood — she of course cannot tell them that she did not have kids because she thinks they will be living in hell on earth — so she cleverly side-steps saying ‘maybe later’

              Our timing was fortunate because we were already in the end game when the decision had to be made — so it was easy.

              Agree – I doubt a 1000 people on the planet understand the situation. Hopefully it stays that way.

    • Christian says:

      Cars (or trucks, or even bycicles) tires come from petroleum, just as seats, wires…

      • PeterEV says:

        Hello Christian,

        There is a fellow on the Electric Vehicle Discussion List who has made EVs out of plywood. What were seats made out of prior to the petroleum age? There are spark plug wires with non copper cores. I think it is a matter of refocusing our attitudes, energies, and investments toward those things that are possible, likely, and doable.

        I have looked at the hydrogen / fuel cell meme and have pooh-poohed it in its current form. But I am not blind to the fact that what I have listed out as its short comings can not be done if some of the technical hurdles can be solved. For instance, I recently read where a German firm said they can store the equivalent of 2 kwhrs of electricity as hydrogen at 70 bar instead of 700 bar (5 tons per square inch) using a metal alloy with the consistency of flour.

        They are on to something. 2 kwhrs is nothing but storing it at 70 bar is. I wish them well in their research efforts..

        • Paul says:

          And let’s not forget about ‘the guy’ who made a vehicle run for 100 miles on a litre of water — and of course the oil companies bought him out or murdered him …

          Do we honestly think that with what is at stake here — and with the literally trillions of dollars to be made from a breakthrough — that if there was something that could save the day — venture capitalists and governments would not be piling in hundreds of billions of dollars to roll the saviour of the world out?

          Instead of spending tens of trillions of dollars to try to prop up a civilization that is collapsing because the foundation of this civilization – cheap oil – is running out?

          We need a solution NOW.

          Oh and btw – even if we found a cheap replacement for oil that would not be a solution for very long — in case people have not noticed we serious problems with most other resources including fresh water.

          Cheap energy = a surge in population — so a replacement for oil only accelerates collapses in other key resources

          • PeterEV says:

            I am running pumps with solar instead of a gasoline generator. It is a “now” solution for what I use them for.

            What would it take for you to run your current household with current PV, Semprius PV, solar hot water, or drive around in a current Leaf or one with 200 mile pack in 2017? That is the beginning. Work the numbers. So what is doable or close to doable.

            Amory Lovins is growing bananas at 7,000′ near Aspen, Colorado at his Pocky Mountain Institute. It won’t feed Aspen but it is the mindset that is important.

            • Paul says:

              I would not try to run my house on PV because the moment you involve batteries it does not make sense. PV is at most ok for heating some water and irrigating a garden. Beyond that it makes no sense whatsoever.

              PV will not exist without oil, gas and coal inputs.

              PV has failed – before you go on and on about your Leaf and your solar panels you should first read Gail’s excellent article on this:

              Ten Reasons Intermittent Renewables (Wind and Solar PV) are a Problem

              Then — at the risk of busting your fragile matrix — you should look at the graph here:

              Solar – After Hundreds of Billions of Dollars of Subsidies and R&D and this is what we get?

              Then you can ask yourself- if PV is so great then why is this happening?

              The German Solar Disaster: 21 Billion Euros Burned

              Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

              If solar was the saviour you make it out to be then why – in a time when we desperately need a new energy source to replace oil — is solar still less than 0.2% of the entire global energy supply?

              And please don’t say it’s because Big Oil opposes it — because I’ll respond by posting even more data on how many billions governments have invested in trying to make it work… it plain and simply does not work.

            • Actually, it is the cost that is important, and the amount of fossil fuel inputs required to maintain the system. How many bananas can people carry away on foot? How many inputs does he need to grow his bananas? How are the roads maintained?

            • PeterEV says:

              Amory Lovins overbuilt his Rocky Mountain Institute so he could heat it with solar. The banana tree is part of that result. His method was not to do a typical cost vs energy savings analysis. The question he tried to answer was: “If fossil fuel energy is going away, how would I build a building today?” He basically overbuilt the place so he could use solar and/or wind.

        • Christian says:

          Plywood… Do you think we are able to replace oil as a material with land products? How much land do we need?

          • PeterEV says:

            I live in the southeast on 1/3 of an acre. I have enough trees that one could be cut down to produce a car shell, dash board, bench seats. etc.. If I wait another 16 years, my usual time between purchasing cars, the remaining trees might grow enough to build its replacement. However, electric motors don’t wear out like Internal Combustion Engines.

            Not sure about the electronics. The satellite, Voyager 1, launched in 1977 is still working as of today.

            Would I cut and hone my own car? Or would I sell the wood to a processor who would fashion the parts?

            I worry more about people cutting trees to heat their homes in winter. However, an efficient PV cell could be mandated and used instead. In medieval Japan, the Shoguns were alarmed at the rate their forests were being cut for firewood. They set strict limits. Japan still has its forests. They also enjoy sushi… It sure beats the alternative set by the Shoguns.

            The question to ask is: “Do **I** have the discipline to seriously ask myself what would **I** do to help ration supplies and then follow through from my own analysis?” A Leaf owner told me that the cost of his commuting last month (10 miles one way) was $12 in electricity at $0.11/kwhr. His savings over using gasoline was about $40. He was thinking of using PV either directly or indirectly (out to the grid during the day and recharging at night through a Time of Use strategy). As the late Matt Simmons said: “We have a liquid fuels problem.” How am I going to address it through my own individual actions? What is your strategy?

            • Paul says:

              Peter – my strategy is to own remote farmland that is under intensive permaculture and producing enough food for 8 families — stockpile hand tools, wheelbarrows, compost — I am replacing my bore pump with solar for irrigation purposes (the only thing that makes sense in terms of solar) — I have also put away at least 6 months of food stockpiles mostly canned protein — I am also trying to establish relationships within my rural community.

              I am not planning to buy a Tesla or Prius — or build a car out of plywood — because there will be no way to fuel or maintain any sort of motorized vehicle when the collapse comes.

              I do have a few good bicycles with some extra tires and tubes stockpiled but for the most part when this hits I don’t see myself venturing very far from our village. It’s not as if going to the Mall will be an option. We will be turning back the clock a thousand if not more years….

            • You’ve been watching too many re-runs of The Flintstones

            • What are you going to do for roads? Food? Job?

              Actually, cooking food is of far more importance than heating homes. We cannot live without some kind of processing (heating preferably, but a blender would work for some things) for at least part of our food. Have you figured out how many solar panels you would need to provide heat for cooking and killing bacteria in water supply, plus batteries to maintain supply when the sun is behind a cloud. Actually, you would want to figure this out for December or January. Heating is a necessity in the north–not quite as much in the South East. Of course, pipes would freeze without heat, assuming the water system is still operational.

            • Paul says:

              I can’t imagine a car made of old barn boards will hold up to well on potholed roads post pavement…

            • CTG says:

              Peter, the electronics on the Voyager are “military spec” standalone transistors, resistors, capacitors and some simple electronics. Right now, we are talking about integrated circuits which has much lower reliability than the electronics in Voyager. I am an electronic, electrical and microelectronic engineer by training.

            • PeterEV says:

              Electric motors can be controlled by a set of switches wired to various sized resistors. What would you use as the next step up after TSHTF?

              What would you use in place of power transistors?

            • PeterEV says:

              Hello CTG,

              I did a search and found an article by Ars Technica where they discussed recycling of some of the rare earths. It is at:
              By manually tearing apart hard drives for their magnets, the neodymium can be recycled for which cheap labor is needed. Shredding the hard drives has a different result.

            • Rare earths are very toxic. Recycling is likely to be a problem as well. We theoretically could have mines in more advanced countries, but we would insist on better pollution controls, and the costs would be out of sight.

            • PeterEV says:

              >>Rare earths are very toxic. Recycling is likely to be a problem as well.<<

              We recycle lead acid batteries and other hazardous materials and products. If we really need the elements, what do we have to do?

              My contention is the government established airports and airways for the fledgling airline industry why not recycling centers even if they are not profitable? This maybe anathema to capitalism but capitalism in a way put too few lifeboats on the Titanic. The IC fab labs and battery manufacturers such as A123 handle and use rare earths in their manufacturing processes. What do they do to recover the elements from rejects? 70 pounds of rare earths per Prius is a lot of rare earth material to throw into a land fill.

            • Paul says:

              I am by no means an expert but I am sure we could make circuit boars from plywood. At least that is my opinion… don’t ask me to back that up though… :)

            • I’m very fond of wild boar–I get it from my local farmers market.
              Ive complained about it being a bit chewy since he started feding them plywood chips tho

            • CTG says:

              Peter, you need the entire supply chain in order to get what you need. Discrete components (not standalone as stated earlier) are made in China and the manufacturers may not be able to ramp up. The plastics, rare earth and transportation will not be on your side when oil hits a very high price (I used to believe that oil prices will go very high but I changed my view a few years ago). We don’t have the skills anymore to do discrete electronics as most of the designers are “going digital”. Easy to design, program and people like digital stuff.

              Don’t compare with 1940s, 1970s and 1990s. We are so globalized. I have mentioned this a few times in my previous posts but you have not joined yet. Tell me what is produced within 100miles radius of where you stay. Tell me if you need any that is made outside that area. Shoes, toothbrush, clothes, food, nuts/bolts. You need to get them from the store. All of them are mostly made in Asia. Globalization will kill us all as we will never be self sufficient.

              We cannot downgrade our life when it comes modern conveniences. Any new doctors know how to diagnose without MRIs or any high tech diagnostics? Anybody knows Morse code or set up a telegraph system? Will the system work when internet goes down? Anybody know how to weave or make simple things? We have lost all the skills and knowledge that our forefather knows.

        • InAlaska says:


          Plywood for EVs? Constructing plywood is a hugely energy intensive endeavor that requires fast cutting saws, glue, and high pressure heat. I think you’ve missed the point of this blog, which is that cheap oil is the glue that holds our plywood economy together. To use a bad analogy. Without the cheap glue (oil) nothing that is currently done today, such as constructing electric vehicles can happen, and not any amount of walking or biking to work will change that. Oil is the “master resource” of our global economy. Take it away and the system collapse. It is system collapse we are talking about here, driven by loss of cheap oil. Not whether there will be oil in the ground in 2100.

          • PeterEV says:

            Or you can make them out of boards like they used to do with buck boards pulled by horses which is an alternative of sorts. The problem is we are shy of a few million horses and the infrastructure to take care of them.

            I do not think anyone here really wants to go through collapse. Some have already headed for the hills. There are those of us who would rather weather the coming storm by battening down the hatches here at home where we have friends, family, and good neighbors. What are the alternatives for getting around and how would we do it?

            I see EVs as an alternative to fossil fuel based vehicles along with walking and biking. The idea is to respect oil as the “master resource” and to be conservative about its use. However, the ship of state does not turn on a dime.

            On one of Gail’s posts: “The Myth that the US will Soon Become an Oil Exporter” posted on April 16, 2012, Figure 12 shows a graph of US Oil consumption in Quadrillion BTU’s.

            In that graph, we reached a high of slightly over 40 quadrillion BTUs in 2005 and by 2011, we were down to about 35.5 quadrillion BTUs. The use of conservation measures, hybrids, and a focus by government to set more stringent MPG standards are having an effect. Poor economy is also a contributing factor. We have others who have given up a second car. We have others who have chosen to walk and ride bikes. A number of us have chosen to buy EVs as opposed to buying a fossil fueled vehicle. It’s all working. The idea is to find alternatives before TSHTF and not after it.

            She has a similar post: “Why is US Oil Consumption Lower? Better Gasoline Mileage?” posted on January 31, 2013 with the following statement: “United States oil consumption in 2012 will be about 4.7 million barrels a day, or 20%, lower than it would have been, if the pre-2005 trend in oil consumption growth of 1.5% per year had continued. This drop in consumption is no doubt related to a rise in oil prices starting about 2004.”

            We need to do better but I think the message is starting to get out as we see the majors cut back on CAPEX spending and the automakers starting to make EVs. We also see LG Chem and Lawrence Burkeley National Labs announcing progress in battery development.

            I have no way of predicting about what will happen with any degree of accuracy. I can read history and I can read the posts here to get some ideas of people’s thoughts and preparations. For what it’s worth, I have chosen to make a stand at home with the idea of giving up a lot of the fossil fuel usage as I can. It is not an switch that can be turned off immediately. It is a process.

            • Paul says:

              Come on peter — vehicles made out of boards? You are pulling my leg right… please say you are having one on….

            • PeterEV says:

              Hi Paul,

              They make bridges in Holland out of wood. Our country expanded westward in Conestoga Wagons, Stage Coaches, etc. Wooden ships sailed across the oceans and made it through some strong storms. We build warehouses and barns with wooden beams and planked boards. Some of the ends are capped with iron and steel at wear parts. The Amish get by with horse and buggy. What are the buggies made of? The earliest cars were called horseless carriages.

              I don’t see BAU after the Peak, but I do see us having to adjust. We will scavenge resources and try to put them to use. Our scrap metal won’t be going to China.

              After the Roman Empire collapsed, swords and shields were still made. The Roman Roads are still in use today. I have read of various methods for repairing roads.

              It’s a matter of trying to find substitutes for everything the consumer used to get around in, use, and eat. Horse and buggies will eventually return or maybe we will figure out how to make EVs that can be repaired and/or recycled. The electric motors last about a million miles before the two main bearings have to be replaced. Is there a way we can learn to make replacement bearings?

              The Voyager electronics have lasted 30+ years. Is there a way to make electronics that last?

              There are a lot of talented people out there. I’m not ready to give up on their talents and ability to soften the other side of Peak Oil.

              I saw a film clip where the Romans figured out how to carve out and move a 1,000 ton block of stone several miles and fit it well into a structure.

              What these people had was a mission and time to work things out.

              Lady up the street made her own tapestries out of wool sourced locally. Her loom was foot powered. I could see driving her out to pick up a bundle of wool using an EV.

              Do I know enough on how to build solar drying tables to preserve food over the winter? If not, I might want to learn. Do I know enough on how to build a solar hot water system that does not require electric pumps?

              I think this civilization has some skills to acquire. The main street media is tauting young adults to learn trades instead of going to college. I think they are preaching happy talk while directing any one who will listen to those things that are likely to be useful after the Peak. This is another one of those signs I talked about earlier where the automakers are starting to make EVs instead of thinking of it as a heretical practice.

    • This is an image PeterEv sent me, that he would like to refer to in a comment to another commenter. I know I can add it to my comment. I am not sure he can.

      Average solar radiation per month-December

    • InAlaska says:

      The grandchild will ride a horse with five legs and a big tumor sticking out of its neck because of all of the strontium 90 in the grass that was released from thousands of runaway nuclear reactors.

      • Paul says:

        Remember the one Planet of the Apes movie — where the people were hideously deformed from nuclear bomb radiation — and lived underground?

        • InAlaska says:

          Yes, I do. Now we get to actually live the scifi dystopian fantasies of our youth! Yay!

      • interguru says:

        My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel. —Saudi saying

        • Christian says:

          Perhaps his son is just likely to walk (how many camels vs arabs in the 50’s, how many right now?). Of course, not taking note of some other little issues…

    • CTG says:

      Guys, please be realistic. I am speaking as an engineer. Do you guys know how much resources is required to make semiconductor chips? Do you guys know that everything that we use from phones to toys to transmission towers, cars and satellites use semiconductor chips? Do you know what are rare earths? Have a look at Do you know that you are using more than 70lbs of rare earth in a Prius (please correct me if I am wrong but the amount used is not a small amount). Do you know difficult it is to mine these rare earth ? Do you that the you need a lot of fossil fuel to mine them? Do you know that China has a monopoly? Do you know how much money, resources it takes to build semiconductor chips? Do you how many people with very very specialized resources to make them? Do you that now, we were warned the Helium is running low and we have to conserve (our purchase department asked us to do so)? Do you know that people with skills are in short supply? Do you know that the raw materials are getting very expensive to make chips? Do you know that the supply chain is so long fort he semiconductor and we have to rely on sole suppliers who has plants at the other side of the earth?

      How on earth are we going to have thousands of tons or rare earth to build the wind turbine (that really use up a lot of neodymium for magnets), Indium, etc for semiconductor? Do you know that a single spoilt capacitor or chip will render the whole solar panels, etc useless?

      We need a solution now. If you do research into the financial world, you will realize that we are indeed by the edge of the abyss. Not an inch more to go. We need to analyse the whole thing from many angles, not just from engineering or finance but in a holistic and “macro view”. Can a stock market go up 64 months with correction? Yes, it can maybe until 100 months but does anyone know when it will crash? If it crash, where will all the money come from to make the chips or mine the rare earth?

      Can we rely on a university to do the research? What if tomorrow an earthquake struck Tokyo. All gone? If an earthquake strikes Tokyo, that is the end. In 1990s, there was a report that states that if there is a big earthquake in Tokyo, then there will be a financial meltdown. The insurance company will liquidate to pay for the damages. They will liquidate assets worldwide and it will be a quick sell off. It will have a cascading effect. Every financial institution now is much more linked than 1990s. and this sell off will trigger a lot of defaults which will trigger derivatives default/payout and the 700T derivative monster will bite everyone.

      I cannot find that report anymore. Perhaps Gail has some connection in the insurance industry, can find that out.

      We are so fragile. Imagine if Ebola cuts off Nigeria’s oil and ISIS flooded Iraq. With those 2 countries’ oil out of the market, what will happen? Recession? what will the central bankers do?

      I am not a pessimist but a realist. A person who has done a lot of research into many things from finances to engineering and social science (human interaction and response during crisis). The more you read, the more you feel that modern civilization is a lost cause. Why would anyone built nuclear power plants on earthquake fault lines? If a disaster happens, why they deny everything (Fukushima)? Why no one else pitched in to help? If it is for the better of humanity, why not do something? Read up history and human behaviour and you will know what is happening and what is going to happen.

      Time is running out (not running short). We need something now. Central bankers are running out of tools. Could be weeks or months before something breaks? I don’t know but many things seems to happen at a shorter and shorter time frame…

    • CTG says:

      Guys, there are many jobs that are “attached” to low oil prices. Example : tourism and transportation of people (airplanes, cruises) and goods (trucks, containers) and also manufacturing like toys, trinkets, etc. These people need to live and work too. When prices of oil goes high, very less people will travel and hotels and other tourism related industry collapses. The people who invested in these will suffer and the supply chain will also collapse (laundry, the machine that makes the washing machine, the food supplier, the supplier of the food supplier, the air conditioning people, the computer system company that makes the software, the hiring agency that hires the call center).

      The truck transportation company (hey food is shipped in from somewhere) may collapse and did not pay the suppliers (the repairman, the tyre supplier, lubricant supplier, the factory that makes the lubricants). The cost of shipping food in will be so high that many will starve.

      Now, taking into consideration that there are so many people that is impacted with high oil prices, what will your leave and lithium battery do? Do you think you can still have car dealership selling EV ? The EV or battery may not even be made (hey, the rare earth, lithium, plastic also needs to be shipped in and these needs petroleum for the mining, manufacturing and transportation).

      We need to open up our minds. Don’t see things in a narrow view. Just looking at the oil prices alone or thorium or EVs or Lithiums will not work.

      When SARS was raging in Asia in 2003 my wife was working in a tourism related company. Her company enforced at 10% pay cut as no one came in to buy the duty-free goods that her company is selling. If SARS dragged another 2-3 months, she will be out of work. The entire tourism industry collapsed. Airport was deserted. Hotels were totally empty. You can have a great meal at the hotel for 20% the cost of a normal day.

      Any of you guys who are debating the lithium, EVs, high oil prices have a real life example or are you guys just yakking and yakking without even knowing the entire “macro picture” ?

      Sometimes, I wonder if you are really a paid troll. If you are, do you give any thoughts to what we are saying or you are so blind as to believe your paymaster? Anyone who has half a brain can understand what we are saying but there are many people who just shutoff as they cannot accept reality. I can accept if you are the second type (deny reality) but I cannot accept the first type (paid troll).

      • PeterEV says:

        When we had the oil embargoes back in the 70’s and early 80’s, life did not come to an end. We did not collapse. We contracted. International Trade did not stop and people still visited Yellowstone. Of course, Yellowstone was not going through a SARS scare/epidemic. Tourism was down. The only time that tourism came to almost halted was WWII where gasoline was rationed and taking a trip was low on people’s minds.

        Back during the oil embargoes, the Honda Civic was a POS car but it was a big seller because it produced a high MPG. Low MPG cars went sitting on the dealers’ lot and there was the first foray into alternative transportation. Dealers were scrambling to become franchisees of any manufacturer with a high MPG car.

        Fast forward to day. Gasoline is not being embargoed. It is becoming expensive. The cost of new oil is a lot more expensive and as older cheaper oil depletes, the overall cost to produce oil is going up faster than wages. I see a growing number of people riding bikes and scooters, taking public transportation, and just plain walking. My town has a lot more repurposed street corridors for bikes only. Four lanes for traffic are now down to 2 lanes. The outside lanes are now there for bikes only.

        There is the expression: ” We need to leave oil before oil leaves us.” My whole purpose of jumping into here is to say that Electric Vehicles are designed in part to leave oil. The internal combustion engine is gone. In its place and at its core are an electric motor, control and charger. The fuel is electricity which can be produced by renewable means. The motor bearings are replaced once every million miles and if the electronics are designed properly, they can last many decades. If electronics are not available, resistor switches can be used. If steel is not available, wood can be used for chassis parts. Eventually we may go to horse and buggy or we may figure out a way to create batteries without rare earths..

        We are still trading with China. We grow food that China eats. We have a growing reservoir of rare earths in our electronics. I am not worried about rare earth production. It benefits us all and in any contraction, rare earths will be used to where most needed. Are we recycling chips and electronics for rare earths?

        My main concern is the distribution of food. While my neighbor can raise chickens and we raise veggies, we are not food independent. To get the food from the farm to market, trucks are used. Pickup trucks can be made with electric motors and batteries. I just saw an ad for an 18 kwhr set for $4K. $10K will produce a set of batteries for a pickup with a 100 mile range.

        I am not ready to give up yet and watch supplies dwindle in a bug out place or create a small cluster of like minded people where no one may know how to remove an appendix or mend a broken leg. This is not BAU. It is more like WWII where things are rationed and my folks and yours fought or worked on a production line. No one at the top was publicly addressing this but they were working behind the scenes.

        • This is NOT WW2
          WW2 was a rather unpleasant way for the most powerful nations on earth to burn fuel and lift the world economy out of recession. (ignore Keynes on that one, congratulate Hitler)
          The USA won WW2 not because of superior soldiers and weapons, they won because the enemy ran out of gas first.
          The Germans had to make most of their liquid fuel out of coal, the Japanese had to ferry it from Indonesia—the USA had it gushing out of the ground, more or less for free.
          The similarity between then and now is that leaders (and blog commenters) did not and do not grasp the significance of abundant cheap fuel to drive armies, and economies.
          People accepted rationing because it was necessary to achieve an end. In places like UK, the average diet meant that many were better fed than pre war. This time there will be no end. There’s your difference.
          As to the rest of it, one can only assume a warped (sorry) sense of humour in suggesting using wood for chassis parts. (the Flintstone influence again)
          And its not setting a broken leg that’s the problem’ its preventing infection.—let’s hope you don’t need open heart surgery—or even a tooth extraction.

          • PeterEV says:

            The point I was trying to make is that a country can discipline itself if the need is great.

            If you followed one of my links, you would have come to an EV made out of plywood. The planks were a comment made to a reply that making plywood is energy intensive. Of course the seats would be covered. The edges would be sanded to prevent splinters.

            All I am trying to say is that we could do better.

            • the absence of splinters is a relief

            • PeterEV says:

              Ah, I see you got the “point”. 8^))

            • CTG says:

              A country can discipline itself but not its citizen, especially in a population overshoot situation. Realistically, do you think it is easy to control New York city in a panic situation? There are so few armed forces (police, army) as compared to the population. If they start shooting, the people will just shoot back and it will be a war.

              When food is running low or money worthless, do you think the police will risk their lives doing their work?

              Just have a read on the internet – the The Border Control of UK is protesting and maybe on strike(??). They complained that they will be the first to get infected by Ebola.

              Many experts tend to discount what human or a group of humans (population) will do in times of panic….

          • World War II certainly got a lot more US citizens employed and permanently into the workforce. The GI Bill after World War II gave veterans money to go back to school or start new businesses. A huge amount of debt became available after World War II to buy consumers goods. The reconstruction of Europe added a huge number of jobs and much oil use as well. Medical uses for oil blossomed at this point as well.

            Just looking at the economic data, a person might wonder if the US went into WWII to get the economy moving.

            • Maybe not WW2 to get the economy moving, but since Ive involved my thinking in the latest series of conflicts, I have had horrible doubts in that direction about the reasons for continued conflicts over the last 20 years or so–Eisenhower warned about having a military-economic industrial system

        • There were a lot of low-hanging fruit still to be plucked at that time. Japan was already making smaller cars. All it took was for the US to start importing their cars and start imitating their approach to bring gasoline usage down. Much electricity was made with oil, when other fuels would do–coal or nuclear primarily, because natural gas was expected to be in short supply, if oil was. There was also a lot of oil that was available, if world oil prices were a little higher–Alaska, North Sea, Mexico, to name a few areas. We already knew about that oil and had the technology. All that was missing was slightly higher prices to support the extraction.

          We are not reaching limits on the oil price the economy can handle. We have already mostly picked the low-hanging fruit of oil reduction approaches. The new potential areas for extraction are much more expensive, not just a bit more expensive.

          • PeterEV says:

            Hi Gail,
            I understand that. The Oil Shale projects on the other side of the Continental Divide are permitted to a maximum of 3 barrels of water for every barrel of “oil” produced. To get enough water, a pipeline from east of the Divide would have to be built (e.g., Missouri River, Platte River, etc.).

            I think my contention is that I would rather see Musk build electric pickups that apply the KISS principle than Model X’s with a lot of electronics. One of the problems going forward will be the production of food **and its distribution**. How do we get the fruit, veggies, eggs, chicken and beef to market?

            I think we have enough remaining energy and wherewithal to focus on producing electric pickups/small trucks. Gov’t is subsidizing PV arrays, energy saving improvements and commercially made EVs through tax incentives. How much does an Abrams tank cost? How much does an F35 cost? How many electric pickups can you build for 500 billion dollars if each costs $30K right now with a 100 mile range vehicle? I contend it is 16 million pickups serving a population of 320 million or 20 people per vehicle. It’s doable.

            What needs to be done to make it happen?
            How do we convince Musk, GM, Chrysler, Ford to change direction?
            How long will it take to ramp up so that we have enough (and maybe a surplus for EV racing ;^)) )?
            What are the resource constraints?
            What are the energy constraints?
            What are the economic constraints?
            On what do we have to focus our developmental efforts?
            What are alternatives?
            What sources can be made available to recharge each vehicle renewably?
            How can we recycle the rare earths (from the losers in EV racing)?
            How do we recharge 16 million or 220 million EVs via our grid?
            How do we work with the utilities to where we both benefit?
            What do we use as sources (e.g., solar, wind, natural gas, coal)?
            What policies do we implement to get the job done but not overtax our infrastructure?
            What improvements to the infrastructure should come first?
            How did Hitler turn around a moribund German society heavily indebted due to “war reparations”?
            What other questions should we be asking that will lead to a success result?

            We’ve got a good thing going with this type of government (give or take a few flaws). Some of the alternatives as shown by history are not in our best interests (e.g., Hitler’s Germany, Stalin’s Russia, Mussolini’s Italy, etc.).

            I think we need to explore this area in depth as we seem to be heading there from a transportation point of view and some of the number crunching I’ve done says its plausible.

      • Paul says:

        Chris Martenson recently opened his platform to some clown who was touting thorium stating that the reason BAU powers are not touching it is because Big Oil doesn’t want the competition.

        When I pointed out that BAU was funding solar with many billions the trolls rolled in on the attack — and my comments were removed.

        So I did a bit of searching and found out that the clown had a start up thorium business – which was NOT disclosed in the Martenson article…. (paid placement????)

        So whenever I see the word thorium I always wonder if it is this clown out there trying to raise money from people who are in despair over the situation and don’t know that thorium is a complete and utter failure and joke.

  8. Coast Watcher says:

    Gail. thank you for explaining the differing definitions being used today to explain the rise in U.S. “oil” production. The cornucopians have pointed repeatedly to “all liquids” charts as proof that the U.S. is bound for energy independence, without understanding that not all liquids are created equal. When I point out that the numbers include ultra-low EROEI ethanol from corn as well as refinery gains, for example, they simply dismiss the comparison as of no consequence.

    You mention that U.S. refineries are able to use low-cost natgas to crack heavy oils and thus aren’t oriented to handling light oil from frakking. Does this explain the rising amount of Bakken oil being shipped to refineries in Maritime Canada, 263,000 barrels a day in May, for example? That’s more than double the 125,000 bpd in May 2013.

    • I think so. Refineries on the East Coast (including Canada) tend to be configured for light oils, often from Africa. Refineries on the Gulf Coast (which is the easiest place to get the fracked oil to) tend to be configured for cracking heavy oils.

      Light oils are not welcomed at refineries configured with the high-powered equipment needed to crack long hydrogen molecules.

      I think of ethanol as being a gas and coal to liquids operation, intermediated by the growing of corn. (There is also oil used in the operation.) As long as nature provides a way to get a liquid fuel more cheaply than building a gas to liquid or coal to liquid plant, we will use ethanol from corn.

      • St. Roy says:

        Gail: I would change your last paragraph to read:
        I think of ethanol as being a gas and coal to liquids operation, intermediated by the growing of corn that denies the 2LoT and is net energy negative. Only as long a government subsidizes the conversion as a give away to the corn industry, will we continue to use ethanol from corn.

        • Whether or not the conversion is net energy negative, the fact of the matter is that we need energy in particular forms. We are constantly burning coal and natural gas to produce electricity. This process is arguably net energy negative as well, but the end product is more useful than the beginning product. South Africa has Coal-to-Liquid operations, and Qatar has Gas-to-Liquid operations, both because liquid end products are more valuable than other forms of energy.

          I do not really agree with this as being a big problem. The cost of replacing cars, trucks and other devices using oil is huge. Some energy products are far more valuable than others, and substitution makes sense, even at a net energy loss. The way our economy operates is on financial considerations, not EROI considerations.

          • St. Roy says:

            I understand your point, but if ethanol is more valuable, why does it’s production need to be subsidized?

            • Ethanol acts to wear out the soil quicker, besides using a lot of fossil fuel and labor inputs.

              Keeping the price of gasoline low is considered a national priority, and ethanol acts as en “extender” for gasoline. Ethanol is subsidized to keep the price of gasoline low.

  9. Don Stewart says:

    Dear Gail and All
    This is a response and question related to many different comments and responses above.

    Consider the Google self-driving car at the very end of Kopits’ presentation. Kopits holds his smart-phone up and states that the smart phone is the enabling technology. People will order a car with the phone which will pick them up and deliver them to a destination. The car will have a slow maximum speed and a relatively short range. The car will drive itself. If you are drunk in a bar, this is the way you want to get home (providing you can still operate your phone). Presumably, the person ordering the car will pay when the car is ordered.

    The cars themselves should be much cheaper to manufacture. They are essentially fancy golf carts. A local company builds pedal powered cars like this that cost a few thousand dollars. If this actually comes to pass, then large parts of the auto industry disappear or consolidate. There will still be heavy vehicles, but they may increasingly be replaced by trains. Intercity travel could even revert to the rails. I was pleasantly surprised to see rental bicycles at train stations in Washington, DC, and these electric cars could easily be offered as well. Because the cars are a more efficient solution to the problem of moving a 200 pound human from point A to point B, GDP declines. This is bad news for those who hold the debt of automotive companies, but good news for everyone else.

    Because the cars will be owned and serviced by specialist companies, the notion that solar and wind farms can recharge their batteries without reliance on a regional grid becomes a possibility. And on cloudy days, it may just cost more to get a fully charged vehicle and discretionary travel will be discouraged. Computers can deal with that.

    I am not claiming that everyone can continue to get what they have today. These cars may not work well in really cloudy places such as Detroit. And people who are commuting 100 miles each way won’t use them. But it seems clear to me that pedal or battery powered vehicles with more creature comforts than a standard bicycle are possible for decades into the future–provided we can let the bloated financial system collapse without causing permanent physical collapse. David Holmgren has a very nice visual showing how the real economy has been replaced by an obese, top-heavy financial economy.

    For government bureaucrats, the new vehicles offer lots of potential for ‘hedonic adjustments’, so official GDP might actually rise. The reality, of course, would be that less money would change hands. And some investors would lose their shirts.

    I appreciate the studies which try to break down GDP increases into energy use and energy efficiency components, but GDP is such a flawed measurement that I don’t know what they are telling us. Neither do I think that preservation of the grid the way it currently functions is either necessary nor feasible in a limits to growth world. I doubt that massive investments to keep the lights on around the clock are a good idea.

    Don Stewart

    • Sorry, I have a hard time believing this whole scenario. There are too many other pieces that have to be there–paved roads, a working government, a financial system that works, a GPS system that shows the self-driving vehicles the way home. “All” we have to do is keep the whole system operating.

      • xabier says:

        Let’s not forget that while we are siting in a self-driving car, we are sending messages to our house to turn its heating or a/c on, and the fridge is sending messages back to tell us what it ordered earlier on, and we are choosing the exact temperature of the bath into which will will step as soon as we’ve had a welcoming drink handed to us by the house robot servant. If we believe the fantasies. Flash Gordon had more credibility.

        • Don Stewart says:

          Dear Xabier
          I think you are rushing to judgment. You are describing a world with essentially infinite electricity from a national grid. I was describing a modest means of transportation which is not connected to any grid. But it does work through the cell phone system. If things get so bad that cellular service dies, then I don’t expect self-driving small cars would be around.

          The description is of a world using intermittent electricity, small cars owned by commercial companies, which are hired by the trip, by customers using cell phones. In other words, a much smaller footprint than today.

          If you are a committed Stone Ager, then you will scoff. If you are looking for a feasible way down, then you might be interested. Google has been right, before. Also, I am sure, their share of blunders.

          Don Stewart

          • Paul says:

            Don – Google has been right once – on search…. just as Microsoft has been right once — both companies endlessly throw new ‘ideas’ out there — which pretty much all fail — the main reason they do that is that as listed companies they MUST be seen to not be resting on their laurels…

            They must be seen to be looking for their next home run so attract investment and push share prices higher – next home runs seldom happen.

            This self driving car stuff is nonsense – there will be no cars in the very near future.

            I can imagine there may be plenty of these

            Irony of ironies would be to see a Tesla or a Prius being pulled by a horse!

          • xabier says:

            Dear Don

            It’s not just about the cars and the footprint, which is a point well made of course: it’s the whole inter-connected, hyper- complex lunatic Vision of the Future that they are pushing – the fridge choosing ordering food delivered by drones, the bath that you can talk to, the glasses that monitor your health and order appropriate drugs, etc. All working as a whole. These people are seriously disconnected from terrestrial probabilities, if we consider economic and political factors (which they are hopelessly naive about if they consider them at all).

            I’d put more faith in Lagarde’s Magick Yeare.

            • Don Stewart says:

              Dear Xabier
              I have no trouble making fun of the lunatic fringe of science fiction. But one of the things missing from this blog and discussion is any balancing of the mechanical versus information. I have recently posted several articles pointing to the rise of information in the realm of science theories, and the dematerialization even of fundamental physics. Lenton and Watson, the biologists, look at the sheer mind-boggling amount of energy around us, and believe that, somehow, humans are likely to not be limited by energy. They may be wrong about that, but they raise an interesting point.

              As I understand what Google wants to do with transport and what Kopits believes will work, it involves a considerable displacement of matter with information. We have seen enormous displacement of matter with information since WWII. It even began when the British invented sonar to find German U Boats. There was a recent article by a veteran geologist talking about the way information technology vastly improved the success ratio of gas wells. It is, of course, true that building information machines costs some energy, but the energy saved is very much larger than the energy expended (in a rational system).

              People talk about the energy required for server farms. But if you look at the traffic on the internet, it is overwhelmingly junk. We could shrink the internet 90 percent and no vital functions would cease. Yet you won’t find that discussed on this blog.

              To claim or pretend that dematerializing production is neutral in terms of energy requirements is, I think, the enormous blind spot on this blog. Not that I am claiming that dematerialization is entirely benign. We have historically paid people to do work which requires transforming materials. Chris Martenson and Charles Hugh Smith are two writers who are quite concerned about the social upheaval caused by the continuing pace of dematerialization of work.

              I think that the fact that people on this blog cheer when Kopits presents charts showing that oil is problematic, but then simply dismiss him when he points to a current project to dematerialize transport says some sad things about the participants on the blog.

              Don Stewart

            • interguru says:

              People talk about the energy required for server farms. But if you look at the traffic on the internet, it is overwhelmingly junk. We could shrink the internet 90 percent and no vital functions would cease. Yet you won’t find that discussed on this blog.

              There has been a decrease in miles driven over the last decade. Some of this decrease can be ascribed to a bad economy, but not all. A good part of it is due to the internet. People order online rather than drive to the store. Teenagers ( and older ) hang out on Facebook rather than at the mall. The whole care culture of the 50’s that I grew up with has evaporated. Check out the movie American Graffiti for a depiction of it.

            • David Korowicz makes the point that it is all of the games players and other non-essential users that pay the costs of the system. He believes that getting rid of them would make the system non-economic.

            • Don Stewart says:

              I agree that it is advertising that pays the freight for the internet. I have been around the internet long enough to remember when the influential corporations did not think advertising would ever pay for the internet. They became also-rans as companies such as Google and FaceBook and so forth built enormous financial value out of virtually nothing.

              At first, corporations were disadvantaged by the internet. They had to continue advertising in all the traditional places, and they had to create internet advertising on top of all that. I worked on an internet based retailing system in the late 1970s. The customer interface was so clunky that it cost a lot more to have the customer try to input data about what he wanted than it would have cost if he just called on the phone. They ended up calling on the phone anyway, trying to straighten things out…multiple contacts per completed sale is the road to bankruptcy. Amazon continues to amaze me with the sophistication of their interface and the way they mine data to sell more product. Who, in the late 1970s, really understood any of this?

              As times get tough, corporations have to cut back on something. While I am only a bystander in the retailing world, what seems to me to be happening is that companies are continuing to cut back on traditional advertising, and that big box retailers are suffering at the hands of small, neighborhood stores. Some Wall Street analyst recently predicted the demise of both Target and Wal-Mart, for this very reason. My son, who married into a very large family, says that most of the 20ish and 30ish people in the family simply don’t visit retail stores very much. They order online. He’s interested because his job depends on point of sale advertising.

              So will the internet fail as times get tough? I see that as one of those questions which abound in complex adaptive systems, which seem to be able to easily lead us astray when we try to predict the answers.

              I think that the immediate threat to the internet is the power-grab by corporations, with the backing of the Supreme Court. The disappearance of Net Neutrality may doom the whole thing as it currently exists.

            • Paul says:

              Don – the internet is one of the most energy intensive systems on the planet – server farms use massive amounts of power. Also keep in mind that to use the internet one requires a computer…

              None of this will exist post collapse.

            • Don Stewart says:

              You have a whole string of assumptions in your statements. I’ll leave it at that.

              Don Stewart

            • Paul says:

              Don – and what might those assumptions be?

              Here’s a server farm That is just one of the many complicated components of the internet

              How do you maintain something like that without oil?

              These server farms require enough electricity to run a small city to keep them cooled – where will that come from?

              How do the people who operate such high tech gear and maintain get to work without oil – do they ride horses?

              How do yo mine the materials that go into making computers without oil?

              How do you manufacture the mining equipment that mines the minerals that go into making a computer without oil?

              If you think this through I am sure you could find tens of 1000s of connections that all must not fail – for the internet to continue to function. Remove only ONE of them — and that is the end of the www.

            • Don Stewart says:

              Your assumption is that oil completely disappear, in a very short time frame. As I have previously discussed, I don’t buy into that scenario, for the reasons I have already given. Even if it should happen that way, again as I have explained, I don’t think that scenario is worth pursuing because most everyone reading this will be dead. See my post recommending the math book.

              Don Stewart

            • Paul says:

              Don – I do not see how oil gets produced when the financial system collapses. And the financial system – when it does go – will collapse very quickly.

              Recall 2008 — we were hanging on a thread — the only thing that stopped a complete implosion was that central banks agreed to back stop every single financial entity on the planet after they let Lehman go. That meant that credit started to flow again — because counter party insolvency was no longer a concern.

              I cannot see how central banks can do this again — they are already giving everything they have because no doubt they know that when the next shoe drops, they will be powerless.

              What is the trigger for the next shoe? I am not sure — but I suspect it will be when total oil production starts to fall — conventional started to drop in 05 – oil started to climb reaching a crescendo in the months prior to collapse…

              Drill Baby Drill (and oil sands) soon after helped tamp oil prices a bit as these helped oil production to grow again… however shale is expected to peak perhaps as early as next year — that would mean oil prices will again take off.

              As we know high oil prices destroy growth — so we will get another 2008 but this time on steroids (the ENTIRE economy is based on QE ZIRP now so far worse than 09) — central banks will be powerless to do anything so we will find out what would have happened in 08 if they had not stepped in

              And this time there will be no Drill Baby Drill to buy us more years — oil extraction requires a fully functioning market economy to be extracted. There will be no economy – there will be mass starvation – mass disease – mass dying … there will be nobody to buy oil or anything that runs on oil because there will be no jobs… there will be nobody available to operate the complex gear that is required to extract oil — there will be no spare parts for the machines and computers required to extract oil

              In short — there is absolutely no way we will be able to continue to produce oil when the SHTF.

            • Don Stewart says:

              Dear interguru
              I agree with you about the rise and fall of the car culture. I grew up before the American Graffiti crowd, but with internal combustion engines. I got my driver’s license at the age of 14 so I could get to farms to work. My first car was a Nash which had the top cut off with a torch, so it became a convertible, I suppose. Amish people still parked their buggies on the town streets.

              The American Graffiti culture came with the combination of cars and wealth. Kids in California started spending lots of money and work on ‘customizing’ cars. But where I lived and in my family, we were way too poor for all that. It was like some strange message from Mars.

              We are now seeing the first inklings of the end of the car culture, I think.

              Don Stewart

            • The ability to spend a huge share of our time on “higher education” and the Internet came about because we had fossil fuels to take over much of the drudgery of food production. The growth in oil usage, and electrification of farms, came especially about the time of World War II. The GI bill after WWII paid for many young people who might otherwise have been unemployed to go to school or start businesses–pumping money into the economy. We are not wealthy enough to reproduce this effect now.

              It is very hard to see that the information age will last. This is part of what the “Emergy” folks (University of Florida–Howard Odum started the group) write about. There is a huge cost energy cost associated with training people to become professors (including keeping them out of the farming workforce). Also, we have to have a wealthy enough society that young people are not badly needed in the fields as workers, if they are going to go to school.

            • Don Stewart says:

              I agree about food production. And there are lots of young people now working in food production. I have worked with them at the farm. They work hard, they are intelligent, they don’t blow their money.

              At the farm, cell phones have significantly changed the way the farm operates. For example, the farmer can communicate with workers in the field without walking there. The farmer can be working in a field and take a call from a restaurant which wants to order food. Farmers see a pest or disease they don’t recognize, photograph it, send it to the county agent or post it on our listserv, and somebody will know what it is and what, if anything, can be done about it.

              Quite a few people think that computers accomplished very little (except generate financial losses) up until around 1990. But for the last 15 years especially, it appears that computers are displacing labor. And human labor is quite expensive.

              So…if human labor is quite expensive, why do I agree with you about food production? Because what one is getting from fresh fruit and vegetables is not calories, but information. We now understand fairly well how cells use the information from the outside world, including the food we eat, to maintain health. The information content begins to degrade immediately on harvest. I do not think there is any substitute for eating fresh fruits and vegetables.

              It doesn’t matter where the wheat berries come from (except for the transportation angle, which is far less severe than with fresh fruits and vegetables.)

              Don Stewart

            • Paul says:

              “We could shrink the internet 90 percent and no vital functions would cease. Yet you won’t find that discussed on this blog.”

              Don – one man’s junk is another’s treasure …

              If you blocked the junk – which is seems most people want — the internet would not exist because those reading the junk would stop subscribing and just sit at home tapping into junk on the teevee…

            • Don Stewart says:

              The relevant question, I think, is whether a serious information sharing electronic system can operate after a financial collapse. Since I participated in the internet before the invention of the World Wide Web, I tend to think that the answer is ‘Yes’. Does that mean that it will be ‘free’ (which means supported by advertising)? Probably ‘No’. Will everyone have unlimited internet access in their own home? Probably ‘No’.

              Don Stewart

            • Paul says:

              Don – I don’t see how any sort of electronic communication will be possible without cheap oil. We never had it before we harnessed the power of oil — and we wont’ have it after we have burned through the cheap oil.

              I think you greatly underestimate just how difficult things will be — IF – anyone survives at all… food production and security will be the focus — much as it was the focus for everyone before the industrial revolution….

            • Don Stewart says:

              We have been through this before.
              Don Stewart

            • xabier says:


              I’m just putting my money, most reluctantly, on economic and societal collapse before these tantalising visions can be realised.

              Socially, politically and financially everything is just too fragile.

              We are much more likely to be hitting one another on the head for food, or some irrational cause, than calling up driverless cars…..

            • Don Stewart says:

              Everyone is not entitled to their own opinion, they are fools if they let someone else tell them what to think.

              I began expecting collapse when I was spending a lot of time in the base library, thanks to Uncle Sam’s army. I had been working on the fringes of the oil business, so knew a little about it, and began reading about Peak Oil. I became convinced.

              It’s now 50 years later, and consumption of oil, globally, is several multiples of what it was back then. When you have been completely wrong in a prediction, it makes you a little more humble.

              You might be right about complete collapse in the next 2 years, or you might be wrong. I’ll try to keep my options as open as possible, and preserve as much personal resilience as I reasonably can.

              Don Stewart

            • Paul says:

              Don — the one epiphany I have had re peak oil was when I found this site and understood that we would never run out of oil — at some point what is left will remain in the ground — because it will not be profitable to extract it.

              So projections on how much oil remains (recently I saw 53 years) are irrelevant.

              The disease is lack of cheap oil – the symptoms are financial calamity and collapse due to the end of growth caused by expensive oil.

              I think we are in the end game because we are now printing obscene amounts of cash – literally tens of trillions of dollars are being pumped out to fight the disease.

              Interest rates are at zero. And we are starting to push on a string

              Unless the Central Banks have some other tricks to roll out then I cannot see how this goes on for a whole lot longer

            • Don Stewart says:

              I have commented previously on the ‘expensive oil’ theory. Briefly, it assumes that oil is a single product, offered to customers with a single willingness to pay. That is true only under very limiting circumstances. There are a variety of customers, and some of them are willing to pay a thousand dollars a barrel. A thousand dollars a barrel oil which displaced an American worker would still be a bargain.

              Gail’s retort is that thousand dollar oil will sink the financial system. I agree with that. Where we part company is that Gail thinks that our society is so clueless that we could not rebuild an economy with some new financial system. I think humans have proven to be quite inventive. If the physical infrastructure stays in place, I believe it is possible to build a new financial system.

              Gail replies ‘but it wipes out the pensions’, to which I respond ‘the pensions have already been wiped out, the financial system just doesn’t reflect that fact as yet’.

              Gail also sometimes insists that the oil industry simply cannot shrink…for reasons both physical and financial. But there are regions of the world where oil was formerly produced in large amounts, which have shrunk 80 or 90 percent…yet the remaining oil is still produced. I grew up in such a town. It once had 6 refineries. When I lived there, the last one had just closed.

              I don’t think Gail and I communicate on this.

              Don Stewart

            • Under our current financial system, the price of oil is essentially identical for all buyers. Thus, whether or not a pill company would pay 10 times the going price for oil, if it had to, is irrelevant.

              If the price of oil escalates, so that only pill companies that can afford 10 times the price of oil can afford the oil, we have a different problem–the whole system collapses, because it cannot operate at this price level. The pill company cannot, in fact, obtain such high priced oil, even if it is willing to pay for it, because the system as a whole will not support this high price level. Food prices will rise out of sight. Consumers will cut way back on discretionary expenditures. Tax revenue will fall, and governments will fail. Banks will fail, because of a huge number of defaults on loans.

              Regions of the world shrinking are very different from the whole world shrinking. It is the price mechanism that allows the whole system to work.

            • Paul says:

              “Everyone is not entitled to their own opinion, they are fools if they let someone else tell them what to think.”

              Copied and Pasted:

              “An opinion, whether it is grounded in fact or completely unsupportable, is an idea that an individual or group holds to be true. An opinion does not necessarily have to be supportable or based on anything but one’s own personal feelings, or what one has been taught.

              An argument is an assertion or claim that is supported with concrete, real-world evidence. Many people confuse or lump the two terms because they cannot recognize the difference between evidence and reasons. In this case, reasons are typically associated with ‘feelings’ or commonly accepted ideals, while evidence is associated with measurable, objective truths or realities. While arguments may not always be ”right” or true, they must at least be supported by some kind of external evidence.

              Many people are unable to distinguish the difference between reasons and evidence because their own personal bias clouds the distinction between the subjective and the objective.”

              I try not to have opinions — because I find that when I do I am usually wrong – and I end up looking foolish when I state them.

              Instead I prefer to learn from others who have put forth arguments on issues that I do not know much about — or I research endlessly until I feel that I have enough facts and enough understanding of a subject that I can put forth a supportable position.

              We seem to be getting a lot of opinions on this blog of late – and a dearth of arguments.

              I find it quite useful to look at the archived topics on this site — there is a huge amount of knowledge to be gained.

            • Don Stewart says:

              The current issue of Permaculture Activist is concerned with Permaculture’s relationship to academic science. Peter Bane has a thoughtful article discussing the difference between typical reductionist science and the more holistic approach which is needed to understand organic processes. He uses a framework suggested by Jane Jacobs.

              It’s easy to find examples where feelings were more reliable than science in terms of living complex systems. For example, when I went to college the curriculum was strictly Skinner…just the facts, ma’am. Feelings and emotions and all that stuff were irrelevant.

              Yet, today, one of the hottest topics in psychological research is meditation…which would have got you laughed out of the room in the 1960s. I was disgusted by the Skinner approach, and pursued other interests, and finally the field came my way.

              So I try to treat all opinions with respect, whether they seem to agree with my version of science or not.

              Don Stewart

            • QUOTE—–
              Where we part company is that Gail thinks that our society is so clueless that we could not rebuild an economy with some new financial system. I think humans have proven to be quite inventive. If the physical infrastructure stays in place, I believe it is possible to build a new financial system.———-(sounds of insane laughter in the wings)

              It should be spelled out using a pointer and single syllables…because there are millions who don’t get it:
              You can-not build any ec-on-omy with a fi-nan-ci-al sys-tem.
              Just how hard is it to get that?
              Economies rise and fall on energy availability. not money availability.
              Without energy availability and continued input, no physical structure can stay in place—This law applies to a mud hut or a nuclear power station with equal inflexibility.
              Without energy input, things fall down, roads break up, bridges collapse, water goes cold, cars stop running. Sceptics should try shoving coins and banknotes into fuel tanks.
              Human ‘inventiveness’ and technology has been entirely due to energy availability and usage. it does NOT work in reverse.
              OK–so we look back and see that oil prices have always risen. True.
              But as I wrote in my book when the Saudis quadrupled the price of oil they found their own lifestyle crashing about their ears too. So what did they do? Pump more of it. This cancelled the shortfall and the overall effect was that oil stayed the same price, and effectively fell.
              So yes–we could have $1000 barrel oil–no problem. But only if ten times more oil was avialable to balance out the market.

            • Don Stewart says:

              Dear End of More
              As I have said repeatedly:
              1. I’ve been wrong before.
              2. I expect a population crash if we have a world financial failure.
              Then what happens?

              I think the survivors will pick up the pieces and do more or less the best they can. We have had financial systems that did not depend on perpetual increases in the ability to manipulate matter with fossil fuels. We can have them again. The replacement systems will just start from zero…no trying to pay off, somehow, the hundred trillion in debts that existed back in 2014.

              If we in 2014 were really clever, we would separate things such as letters of credit and loans to build pipelines from the financial speculation which rules Wall Street. Banking would become boring again. Then, when the derivatives crash and the stock market declines and Las Vegas ceases to exist, the world of production could pick up the pieces and go on. The pipeline company might go bankrupt, and write down its equity to zero and its debts by 50 cents on the dollar….those things have happened before. But I don’t expect our political leaders to do any such thing. So, as you see in number 2 above, I expect considerable pain and suffering which is not strictly necessary.

              We get into these circular discussions. Someone says ‘this can’t go on’. I agree, ‘it won’t go on’. But ‘if it can’t go on, it means the end of the world’. I say, ‘not unless we behave very stupidly’. And we never get past that point, to the real questions which revolve around ‘what does it mean to not behave stupidly?’

              Don Stewart

            • All finanicial systems and civilisations in history have manipulated biological matter for profit—we use oil coal and gas—but sheeps wool or timber works just as well if on a smaller scale.
              Wool gave the impetus to the trade that built cathedrals, later slave muscle provided sugar, tobacco and cotton that built entire cities–all we did was push the envelope out using hydrocarbons so we could all live like kings.
              As Ive pointed out before, it’s an interesting coincidence that the USA was concieved at the same time as the viable steam engine, and the slave trade ended with the first oilwells
              Our main problem is that few accept that our ‘ingenuity’ will allow this to go on forever. Therefore we will drive forward until physically prevented from doing so. Denial will result in bloodshed until there is no more energy left to shed blood, maybe then someting can be rebuilt–who knows?
              lets hope so

            • If governments collapse, and banks collapse, it will change the world profoundly. How the world goes on without these basic structures is open to speculation. How do businesses pay their employees? How do consumers pay their electric bills? You can speculate that there won’t be much of a problem, but I will have to disagree.

            • Paul says:


              Once upon a time there was a man who tilled his field and generated enough calories to feed his family – with no surplus. There was not much of an ‘economy’ because there were no surpluses.

              Then the man learned to enslave animals to do work – and thus he had significant surpluses — money was invented because rather than store surpluses he distributed them and took money (IOUs) in exchange. This resulted in a relatively small economy – mainly local.

              Then man harnessed the finite fossil fuel resources and of course the surpluses were astronomical – and we built a massive complex globalized economy based on the harnessing of fossil fuels.

              But now that economy is going to collapse – because the remaining fossil fuels are too difficult and expensive to extract.

              I suspect that once the collapse comes — we will at best revert to phase one of the above — virtually no economy – no trade – no commerce – because there will be no surpluses.

              We may down the road get back to a localized economy — but we are never going back to anything resembling what we have now because we have burned through all the cheap energy sources.

              Of course there is always the issue of the NUCLEAR PLANTS and FUEL PONDS – that need cooling for many decades… of course that cannot happen — so not only might there be no economy — there may be no life on the plant.

            • Everything I can see says that a debt based financial system is essential to running our current system, because it allows us to “make use of profits,” even before those profits have actually occurred. Because of this, the use of debt greatly pumps up the price of oil and other energy products, allowing them to be extracted.

              Without debt, it would be impossible for consumers to finance big purchases, like cars and homes, without waiting until they have accumulated savings to pay for these items. It would be impossible for businesses to finance new factories, until they have accumulated profits to pay for them. It would be impossible for oil companies to finance all of the fracking operations, or the deep sea operations.

              The new financial system would have to be a clone of the existing one. The catch is that the current one doesn’t work.

          • antares71 says:

            Hey Don Stewart,

            in regard to your comment below “I think the survivors will pick up the pieces and do more or less the best they can.” can you point me to books or resources that go through post-crash scenarios? I am particularly interested to anything that fits your phrase “… do more or less the best they can”.
            Thanks in advance for help!

            • Don Stewart says:

              Dear antares71
              The most relevant example I can think of is probably Cuba in 1990-95. Cuba was part of the densely interconnected Soviet economic system. Suddenly, they became a stand-alone island in a sea ruled by a hostile United States, with no transportation fuels. Their primary source of foreign exchange was probably sugar, which has been on a long term down trend in price. So…they had to make do with what they had.

              If you look at the link I posted to the pictures of the Europeans who have voluntarily decided to live in waste places, off the grid, you will see similar visual evidence to what you see in pictures from Cuba now. You see evidence of making everything useful, with not much attention to cosmetics.

              I saw a documentary a decade or so ago by a European who had visited Cuba. He reported that their day to day lives went on pretty much the same as humans always have: love affairs formed, conflict, love affairs under stress, get back together or break up; people well, people sick, people recover or else die; old friends bicker but remain friends. Etc. The emotional qualities of the day are more important than the technical qualities of the day. Can’t remember who made the documentary.

              Sorry to be so sketchy, but I haven’t really studied your question.

              Don Stewart

            • Interguru says:

              Study: Economic Crisis Improved Cuba’s Health


              During the devastating downturn of the 1990s, a new report shows, the average Cuban lost 11 pounds and was far less likely to be diagnosed with diabetes.

              After the collapse of the Soviet Union — and the subsequent termination of Soviet aid — and amid the tightening of the U.S. embargo, Cuba’s government was forced to implement tight rationing of food and fuel. But it also introduced policies like commercial neighborhood gardens and the use of animals in farming in place of machinery. Cuba imported 1.5 million bicycles from China, and produced half a million more.

              After the collapse of the Soviet Union — and the subsequent termination of Soviet aid — and amid the tightening of the U.S. embargo, Cuba’s government was forced to implement tight rationing of food and fuel. But it also introduced policies like commercial neighborhood gardens and the use of animals in farming in place of machinery. Cuba imported 1.5 million bicycles from China, and produced half a million more.

              But when the economic crisis ended in 1996,people in Cuba started to get heavier again, notes the study: although physical activity levels only declined slightly, by 2002 Cubans were enjoying their country’s sustained economic growth, consuming more food and drink than they were before the crisis, and putting on an average of around 20 lbs each between 1995 and 2010.

              Res ipsa loquitur

            • kerry dempsey says:

              When the ‘crunch” comes there will be 1/2 the oil still in the ground.Can we look at this in another way. Forget about the financial cost etc,it only matters because of the type of system we have at present . Which is we have to make a ” profit ” , selling something to somebody. The money system will be over. For survival as a human family we have to obtain the resources, FOOD,OIL, COPPER,IRON ORE, etc and use them as a society to survive.There is no such thing as profit anymore.You do what you need to do to get what you need as a society.You don’t need money, just the people and equipment .

          • antares71 says:

            Hey Don Stewart,

            I also think that Cuba is an interesting case study. I heartedly recommend you to watch this interview of Janaia Donalson to Megan Quinn I’m sure you’ll find it interesting:


        • InAlaska says:

          xabier. That sounds really nice. Can I order two of those futures? One for me and one for my split personality.

    • The common conception of any future has to be one involving wheels
      this is repeated time and again in every conceivable context—particularly economists, politicians and assorted daydreamers and fantasists
      But always it is wheels that will save us.
      As long as we can drive from A to b—maybe even C on vacation, all will be well.

      • James says:

        Lots of land to cover, especially here in the American west. But you’re right on a more general level. The abandonment of the American car and all of its derivatives will spell the end of life as we know it out here.

        • it will break up the American empire into clearly defined regions of geography and ethnicity—plus a helping of theocracy to poison the mixture,
          Then there will be fighting to prove which ‘system’ is right, in denial of the obvious one of energy depletion.
          When that happens, you won’t be covering lots of land.

    • edpell says:

      Don, self driving cars do not need GPS nor internet. They do need chips made by 10 billion dollar global factories. I expect the drive smarts will be a box 4x4x6 inches. It will needs some cameras and the motors to control the steering and braking.

      • interguru says:

        Self driving cars are a perfect terrorists’ bomb delivery system.

      • Don Stewart says:

        I think the point of the brief reference in the talk was not to the ‘self driving’ feature, per se. Instead, it was to the point that the customer need not own the car. And, therefore, need not deal with issues such as charging the battery. The car is essentially a driverless taxicab, which is hailed from a smart-phone which has the ability to transmit its GPS location to the computer which dispatches the car. If the destination is also entered, then the customer can get a real-time price quote. Which leads to my comment that prices might go up on cloudy days, when fully charged cars might be at a premium.

        All these items tend to reduce the footprint in terms of the cost of ownership, the garage space required, the insurance needed, etc.

        I agree that one could, let’s say, use self-driving about the way one currently uses cruise control. But that wouldn’t have the footprint repercussions that Kopits was talking about. (At least as I understood him.) In fact, Toyota warned that making it easier for people to commute long distances has reliably increased the number of people who choose to commute long distances, and thus increases greenhouse gas emissions. For example, if I have plenty of money and buy a self-driving car, I can move 3 hours out in the country, set the self-drive feature, and work on my inbox while the car drives me to work. The same sorts of people who think nothing of spending tens of thousands on their horses.

        Don Stewart

      • I think more than one version of self-driving cars must be around.

        Drive smarts in a box 4 x 4 x 6 are not going to get people very far, the first time a road is closed because a tree is down, or a bridge is out. In fact, whatever the box shows is not going to be up to date for very long. It sounds like a toy to me.

    • Paul says:

      Don – there will be nothing of the sort.

      We are returning to the middle ages — at best. – but without the survival skills of the people who lived then. No cars – no cell phones — no electricity – no gadgets – no solar panels.

      The industrial revolution ends with the end of cheap oil. Just as it started when we learned to extract and harness cheap oil.

  10. Pingback: Gail Tverberg: Making Sense of the US Oil Story » Plan B Economics

  11. it seems that we have a finite product, which must be burned as fast as possible in order to maintain its value

    • it seems that we have a finite product, which must be burned as fast as possible in order to maintain its value

      That is an interesting way of putting the problem. Pretty much true.

      • doomphd says:

        That’s another way of stating the Maximum Power Principle, which seems (to me) to be a corrollary to the Second Law of Thermodynamics, but some think it is a separate Law. Humans are energy dissapative structures, like cyclones.

  12. kina55 says:

    I’ve been watching this and other similiar links for some time now and wonder at our inability to realistically link the expectations most of the 7billion of us have, and our failure to recognise what we are doing to the biological world that clearly ultimately supports us!
    The reality is that many millions of us are too many. That if too many of us continue to consume like we do in the western world then much of the other wondrous lifeforms that share this space with us are doomed. Roll on the collapse, whether economic or energy based (linked I know) we need to start again, hopefully with some more wisdom on what we really need to live a loving fulfilled life …..and a long way from the ridiculous consumerist religion that most of us adhere to….powering down without fear
    Gails articles help provide motivation for constraint….thankyou

    • You are welcome. I wish that “cutting back” and “restraint” were enough.

      One of our problems is that all species, humans included, reproduce in greater numbers than needed to replace the parents. Our innate instinct is to try to help our offspring survive. Also, to survive as long as we can ourselves. As long as this happens (and we have the energy needed to make this happen), the result is continually growing population that quickly offsets any “cutting back” that some of us may do. It gets very frustrating. Birth control is possible, but it requires energy related inputs, including devices, and education, which also requires energy inputs.

    • James says:

      Second that opinion, although I’d change the “many millions of us are too many” to “we are many billions too many.” And that’s gonna be a tough nut to crack obviously, as I don’t see a whole lot of people standing around volunteering for elimination in my day to day, although I often see a whole lot of people who very likely will be. Rest assured, it will happen the way it always has: the poor, weak, and destitute first; the elderly and infirm second; the economically at risk (and this will eventually include almost everyone) third; and last but not least, the usual pot pourri of characters, misfits, and malcontents who defy authority and who are likely to be eliminated anytime and under any circumstances. In the end, it won’t be the dignity and wonder of the heights humanity has reached on the way up that will define us, but rather, the depths of indignity and suffering we’re willing to impose on each other on the way down.

      • Christian says:

        Yes. But after TSHF many people will just lay down to die, even many politicians will. Because the only chance of survival will be to go living in the countryside without a house nor skills, something like Middle Ages as the best case scenario

  13. antares71 says:

    This is old school politics. In Europe we are filled with examples where politicians change the meaning of things to make the numbers look good.
    Poverty? No, there is not poverty! You don’t really need bread, don’t ya? Let’s take it out from what constitute a daily diet below which you can’t sustain yourself. Let’s lower the standard and the poverty problem is solved.
    Unemployment? no, you’re not unemployed you’re just looking for job! that’s different!
    Debt? no, we don’t have debt! the industry last quarter registered a +0,3% so we’re on the way to paying it out.

    • Yes, exactly. The fun part is that the former east block governments were able to ride on very similar tactics for decades, I am not sure the western/south europe paupers are made of such stoicism material in comparison. In other words they might crack way sooner.

    • James says:

      Excellent points! And my feelings as well.

    • xabier says:


      Exactly: in Spain, the (Right-wing) government got rather angry with the Catholic church for pointing out rapidly increasing malnutrition and poverty among children. They were told to go away, shut up and stop disturbing people with ‘false warnings’!

  14. yoananda says:

    I don’t see what’s the problem with energy investments requirements, as reported by the IEA.

    In 2000 : 600 billion where spended
    In 2103 : 1600
    in 2035 : 2600 in average are needed.
    So in fact it correspond to +77 billion each year between 2000 and 2013, and +87 between 2014 and 2035 to reach 3514 billion spending, making an average of 2600 billion more per year starting with 1600 in 2013.


    we should compare spending growth from year to year. If we compute spending in % increase from previous year we have :
    from 2000 to 2013 : +8% to go grom 600 to 1600.
    from 2013 to 2035 : +4% to go from 1600 to 3831 to meet 2600 average.

    We see that there is no big deal in investments requirement for the future since it will be (relatively speaking) half what we did in the last decade.
    I’m right ?

    • The forecast going forward is the IEA’s “lowballed” estimate. The big increases to date are already causing huge problems–the price of oil is not rising enough to cover the higher cost of extraction. Any increase in costs is in a way like adding inefficiency (or new taxes) to the system. Wages do not rise to make up for this increased inefficiency. Instead, the added costs must come from reduced standards of living of all users of the oil. The rich nations (who are the big users of oil) are already feeling these effects on their financial systems, which are under great stress. We need very low interest rates to be able to more or less handle current oil prices.

      • yoananda says:

        Thanks Gail, but I don’t really understand how do we know oil prices are not (or wont be) high enough ?

        extraction costs and oil quality is not the same everywhere … how can we tell that oil market price (brent or WTI) is not globally (worldwide) enough ?

        I looked at EXXON, SHELL, TOTAL, BP for example : their stock value didn’t seem to suffer from the situation, which means that oil price is “enough” for them (at least for investors)…

        Maybe I missed some important information ?

        • The oil companies are not going out of their way to explain the situation to investors. Instead, they are selling off holdings and investing less in the beginning of future development. These changes look good on the financial statement–less expense for future extraction. The “catch” is that it will produce less oil in the future–something that oil companies have not pointed out. Dividends are being maintained, keeping investors happy.

          We pulled out the easy to extract oil first. As we get to more difficult to extract oil, the cost of extraction goes up. In many ways, it is as if we are becoming less and less efficient at extracting oil. (This is happening to other things as well. In some places, we need desalination plants because water is in such short supply, for example.) The higher cost of oil (and water) is not made up with higher wages. If oil (and water) prices rise, consumers find that they need to cut back on discretionary items, to balance their budgets. This leads to recession and less demand for oil (and water). Also, there tend to be debt defaults. These hurt the banks, making them less willing and able to lend. This also tends to cut back on demand. So what indirectly happens is that demand for oil products gets cut back, because consumers can no longer afford them. It is the lack of demand (because wages are not rising, and because credit starts becoming less available) that holds oil prices down.

          • yoananda says:

            Yes, maybe … maybe not. I would like to believe it but it’s just a theory. We have to prove it. I don’t know how, but there can be many other explanations. If oil companies were realy in trouble, it would be hard to hide for them. There are litteraly army of investors dissecting their every moves.
            They are not all easily fooled.
            We have to find a better explanation than market failure to explain why nobody is worried.
            The IEA reporting is not alarming, it’s just saying : keep running guys.
            It as always been like that : if we stop investing, oil will be missing.

            What would be the minimum price for oil to so that theses new investments bring enough dividends ?
            Whitout responses to theses kind of questions we can say all we wants.

            • Christian says:

              This is not a theory, it’s the true. Have you looked at the recent capex falling in the oil industry? How will they get more oil in the years to come if they don’t invest today?

            • yoananda says:

              Yes I have viewed Koppits presentation. Capex maybe falling for many reasons we don’t know. It’s not a long term tendency.
              An investment in oil takes often more than 10 years to be become profitable, so maybe (I don’t know) they have already invested enough for the next years to come.
              I’m not convinced by such arguments.

            • Paul says:

              I assume this would convince you?

              You don’t reduce capex when your reserves are dropping — you would increase capex…

              But if your exploration was turning up dry holes and destroying your bottom line — you’d conclude that the game is up — so rather than throwing more good money after bad you would start to reign in your costs — and eat your seed corn — to buy yourself time — until you starve.

              That is exactly what is happening. I don’t think there is any more clear sign than this that we are in the last innings of this game — when oil companies start to pull back on looking for new oil — the end is very very near.

            • Christian says:

              Yoananda, so you believe IEA’s forecasts despite they systematically overestimate the trends (and constantly redefine “oil”)? And how well are doing Kashagan, Gorgon and all the big conventional projects? Are you putting your money on that kind of enterprises?

            • yoananda says:

              I don’t, but look at their stock values, many still trust them … If it was so hard for them to maintain return on investments, we should see it.

              I don’t think “they are all idiot’s” (investors) is a valid argument.

              If we want to convice people outside of peakoilers blogs, we must address why obvious signal like “oil compagnies are failing to thrive” are simply not there.

              By the way, all the purpose of this post is to address the simple argument : “the global volume of oil is still incresing, your theory of peak oil is false”.

              One answer could be : yes, volume is increasing, but energy contained is not (in BTU for example) – because oil quality is not the same everywhere. I don’t know if it’s the case right now, it’s very difficult to compute.

              Another one is : why oil companies don’t go bankrupt …

            • Paul says:

              I can understand wanting to convince the world that we are right — but if we succeed that would not be a good outcome — because that would mean panic and immediate collapse.

              It’s not as if we can do anything about this if the world would just wake up and take action.

              It is best to let sleeping dogs lie…

            • yoananda says:

              Why somebody would like to keep the “truth” for itself ?
              Aren’t you happy that Gail, Koppits, Lahererre and other exposes their arguments publically ?

              But event then, maybe it’s not important to convice the whole world, but only those who are close to us … so that we can take actions togethers and not be asleep when time comes.

              And even then, I want the answer to know if peak oil is really real, or just a seducing theory.

              That’s why I’m asking. If peak oil is just something we want to believe, why bother with facts …

              So I repeat my question about bankrupt oil companies …

            • Paul says:

              I agree it makes sense to alert those close to us – but from my experience that is futile – there is only one person I know has ‘gotten it’ after I tried to explain this. The others vehemently disagree and continue as if BAU will go on forever.

              Now if the MSM started to tell the truth — and political leaders identified the problem for the masses — that would obviously accelerate the programme and steepen the death curve…

              I didn’t catch the question previously about oil companies and insolvency… can you restate

            • yoananda says:

              I was just saying : if there are really big problem ahead with investments in oil companies, why don’t we see them on their stock values ?
              As I explained in my first message, investments need to grow 4% per year in the next decade, after having growed at 8% per year. No big deal.

            • Paul says:

              1. Because they are able to tap into the cheap money that is floating around and use it to buy back their stocks — which increases the price.

              2. Also because by cutting capex and reducing new exploration oil companies because more profitable — because they tap into existing fields which are actually quite profitable with oil over $100 — so in the short term their share prices will reflect the higher profitability… but this is akin to a farmer eating his seed corn. It will end badly – as in complete collapse of the industry because unless an oil company is growing its reserves — it will wither and die.

            • yoananda says:

              Ok, interresting answer.
              Do we have any mean to prove it with numbers ?
              When do you think that will happen, and how ? what would be the first symptoms ? (I mean thoses obvious for the market, not just peakoilers)
              I know it’s difficult questions ;-)

            • Paul says:

              It emerged this week that the drilling of wells in the North Sea has crashed by around 50% this year, compared to the year-ago period. The reason for this is simple: the cost of extracting oil in North Sea has quintupled over the last decade, discouraging companies from investing within the region.

              Exxon and Chevron are cutting capex significantly.citing inability to find new sources of oil that are profitable to extract even with oil over $100 (as we know oil is already too expensive… so for it to go higher so that big oil looks for more — well… that’s not gonna happen)

              And then we have this rather interesting graph:

              So ask yourself – how does a share price go up — when your production is declining?

              See the answers in my previous response.

              When do the oil companies collapse?

              By all rights they should have collapsed already — declining production is the death knell for an oil company.

              QE and ZIRP allow them to continue this charade indefinitely — the phrase Don’t Fight the Fed applies here…

              If I am an investor in an oil company in normal circumstances and saw that they were cutting capex and issuing warnings that they cannot turn on a profit on new finds I would normally unload my shares.

              BUT because these are not normal times — these are Twilight Zone times — and I can see that Big Oil is able to tap cheap cash by the tanker load — and I can see that they are using that cash to make 1+1= 3 …. (i.e. they push shares higher by buying them back) then I would ride that gravy train hard by staying invested.

              (of course this does not only related to big oil stocks – it relates to ALL asset classes – the Fed will not all a fall – because that will trigger a deflationary spiral – the FT recently disclosed the Fed has participating in the equity markets to the tune of $29 trillion – as we know they lie so it’s probably a lot more)

              What cannot go on forever will stop – obviously if the Fed’s easy money is the only thing allowing big oil to stay afloat that has to stop.

              What is the signal that this is all going to end? I haven’t the slightest clue — and if anyone tells you they do then they are doing nothing more than guessing.

              Other than when this stops the civilization ends I don’t see how this particularly matters — if one is trading oil shares and trying to time an exit even if one guesses right — its all moot. Because the world as we know it ends.

            • You have hit on one of the reasons I have not worked as hard as I might have on putting a book together.

            • Paul says:

              Sadly the only time people will buy into something is when the MSM drops it on the front page.

              They seem to only trust the MSM — in spite of the fact that the MSM is a propaganda machine littered with lies and half truths.

              Most people don’t read – and those that do would dismiss a Gail Tvergberg book as another of those conspiracy theories — and refer to you as ‘yet another doomer’

            • tfouto says:

              That don’t make any sense. If the world knew that oil would end, we should use it more racionally. And oil would be available for longer, until we can to a oil free alternative.

              Maybe if nuclear fusion becomes a reality and super materials like graphene become available we can substitute oil.

            • Paul says:

              I am very excited about the plywood cars – I am wondering if we can make mining machinery out of plywood too that would allow us to mine the minerals that will be used to make the rest of the parts of the plywood cars — unless of course it is also possible to make the engines and breaks and transmissions and tires out of plywood too

            • fred flintstone was a man ahead of his time

            • CTG says:

              Yoananda, most of the people that I know just take whatever they are given, especially from “experts” like financial consultant. I have met a friend who happens to work as a a “client relationship manager” for a very large Swiss-based bank. It is “semi-technical job” as she needs to know what products is available and how to sell it to customers (so call rich and sometimes sophisticated customer”.

              Last month, she told me that she is asking people to pile into Europe. I asked “why?” She told me that Europe is already recovering. I asked back – “how?” Well, the answer is “The statistics from the government says so and the stock market is up”. I remarked that the unemployment is high, credit has shrunk, many sectors are shrinking. She stared at me blankly, said that you have go to believe the stats and walked away. I did not try to convince her after that.

              There are only a few people here and on other blogs that understand what is happening around us. It does not take a genius but the other 99.999% prefers to take the blue pill and go back to the Matrix. For a majority of us here, we are jumping in and out of the Matrix. In this blog, we are out of the matrix. Like Paul said there are 3 types of people and I don’t really bother to explain to others if they cannot accept the explanation.

            • Paul says:

              I am convinced that most people working in finance are robots – they are not people – they don’t actually think — they are produced like factories much like widgets — most come out believing that CNBC and Bloomberg as many believe in god – i.e. no questioning no matter what.

              As for their recommendations they generally do zero thinking — they follow the herd — that is why the most successful finance people make so much money — because they are the sheep herders…

              I don’t know how many business people and analysts who I have spoken to regarding topics such as japan – oil – the EU etc… every single one sounds like a mouthpiece from the MSM news — they simply regurgitate catch phrases.

              And we wonder why none of these clowns ever gets out of the way before the big crashes hit.

              See 2008 – a small handful of people saw what was coming AND made money off of it — (see The Big Short) — there are literally hundreds of thousands working in this industry… and none of them saw what was obvious

              I am not in the industry and by no means a sophisticated investor and I was getting out of everything about a year before and piling into gold and property — it was so blindingly obvious that a major train wreck was ahead — one thing I failed to do though was anticipate the Fed’s response — because if I had i would have bought Citi post Lehman at .20 and made a fortune…

              So few good thinkers in finance — and even those that are cannot navigate a world where fundamentals do not matter — all that matters is anticipating what action the Fed is going to take next…

          • James says:

            The oil companies are not going out of their way to explain the situation to investors. Instead, they are selling off holdings and investing less in the beginning of future development. These changes look good on the financial statement–less expense for future extraction. The “catch” is that it will produce less oil in the future–something that oil companies have not pointed out. Dividends are being maintained, keeping investors happy.

            Caveat emptor!

            • InAlaska says:

              Who are the oil companies “selling off holdings” to if the oil companies aren’t producing as much? Some oil companies must be buying up all of those old rigs and platforms and heavy equipment. Which means that some oil companies think they can still produce at a profit. Perhaps its more of an economy of scale. The big majors are too big to produce cheaply enough because they have to drag all of that overhead with them. But the smaller, independent, more nimble companies can still pull it off at these prices. This suggests to me that this can go on for quite a bit longer. The bumpy plateau could run for a decade(s).

            • Paul says:

              They are selling of to smaller companies that are involved in the smoke and mirrors fracking scam… Big Oil has realized that fracking never was — and they have bottom lines to protect — so they unload and focus on their reserves that are profitable.

              These smaller companies are pretty much scams — so they don’t care about their bottom lines … its all about getting suckers — I mean ‘investors’ – to buy into the 100 years of oil — the guys at the top unload on the suckers …

              As we can see it is getting more difficult to find suckers at least for north sea leases:

            • The article you link to says that high tax rates are a major reason companies are pulling out of North Sea drilling. When there is not much money to be made on drilling in the North Sea, the government wants more.

            • I ran across the answer to the question “Who are the oil companies ‘selling off holdings’ to?” this morning in the Wall Street Journal. The article is titled, “Blackstone Nears Deal for Stake in Gas Site.” According to the article,

              Private-equity firms, which for years have counted energy as one of their most lucrative investing sectors, have been snapping up oil-and-gas reserves in recent months.

              . . .

              Big oil companies have been shedding U.S. fields in efforts to focus on areas where they believe they can put the most money to work for the best returns.

              Meanwhile, private-equity firms have been buyers of these assets with specific views on how to wring profits from them, such as locking in gains with hedging, improving operations or combining them with other nearby assets.

              Perhaps hedging will move the losses to some greater fool. Somehow, this model is not likely to work, IMO.

            • Paul says:

              Or perhaps they know not to fight the Fed… perhaps they know that the Fed will – like the stock, bond and property markets — not allow these companies to fail — that they will do everything within their power to keep the share prices high — in effect defying gravity….

              If you knew that was the case then you might as well ride the coat tails.

              Logic and common sense are out the window these days — as an investor if you expect the markets to behave as they should you will quickly be bust …. you have to not only think outside of the box — you have to try to anticipate the types of things the Fed will do to keep the hamster on the wheel — you have to forget about everything you learned — about the rules of economics — of finance — of investing…

              Because those are not only worthless — they are dangerous.

              Of course this is quite difficult to do because it goes against instincts, intelligence and years of training.

        • Paul says:

          I’ve posted links to supporting articles earlier — so won’t repeat — but share prices are not crashing because companies are buying back shares using the cheap and easy money that is available. If I am an investor I am seeing that — and I will want to own these companies — because I get a free ride…

  15. Gail, thanks for such sharp summary.
    So much good material in recent days, e.g. Boyd’s and Kopits very latest presentations, Nicol Foss hour long lecture on ABC Australia Radio and more.

  16. Paul says:

    Another excellent article! Thanks

  17. Jan Steinman says:

    With all the “light, tight oil” out there from fracking, it would be interesting to see an analysis of the gasoline-diesel spread, in terms of price and volume.

    Perhaps consumers run on gasoline, but infrastructure (agriculture, shipping, air travel) runs on heavier fuels.

    • I have not seen a real breakdown as to what the light-tight oil produces, but I am guessing it is gasoline and naphtha, and other light ends; not much diesel or lubricating oil at all.

      • Dave Ranning says:

        The world runs on diesel.

        • Certainly the business economies of the world run on diesel. In the US, we have historically produced a lot of light oil that produced a lot of gasoline. I expect that that is why we used gasoline for cars. It has been fortunate that Europe chose to favor diesel for autos, because that helped bring down the world demand for gasoline, keeping prices for gasoline lower than diesel.

          • tfouto says:

            Here in Portugal, diesel is lower than gasoline.

            • The price of diesel relative to gasoline partly has to do with how governments choose to tax the various products. I believe that European countries tax gasoline higher than diesel.

              The price relativity also depends on relative demand. For years, diesel was cheaper than gasoline in the US. Then, the growth in ethanol production, a drop in the number of young people with cars (and jobs), and efficiency improvements started to cut into gasoline demand. At the same time, diesel demand grew, because of worldwide growth in business use.

            • JMS says:

              Exactly, Gail

              Here in Portugal, the excise tax on gasoline (super 95) is 0,88 € per liter. On diesel is 0,62 € per liter.

  18. Pingback: Making Sense of the US Oil Story | Our Finite World | Olduvaiblog

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  20. timF says:

    Less then 30 years from now, solar will be cheaper than coal. You can bet on that…

      • I am afraid T. Boone Pickens is probably right. If we can keep the world economy together (and I am not sure we can), the only fuel cheap enough and in more or less sufficiently adequate quantity is coal. He doesn’t mention, though, that even if it would work, coal will also run short in a few years.

        • timF says:

          Well, the article fails to mention Onshore wind. onshore wind is much cheaper. If coal will run short in a few years we can rest on natural gas. When natural gas prices also start increase, then eolic will be the cheapest way to produce energy. Even with the intermittency of wind, batteries will also become much more cheaper.

          • The financial system is what fails, as do governments and international trade. It is a figment of people’s imaginations that we can run the economy on some fuels, without the others. We have a very integrated, networked system. We need all current fuels. We can’t go back to coal alone. We certainly can’t go to natural gas by itself. For one thing, it takes a very long time period to change over cars and trucks and boats to run on natural gas. (Airplanes will never run on natural gas.)

            • tfouto says:

              Sure, but oil will not end. What will happen is that cars will have to move electric, hidrogen, or natural gas. Oil will still be used, but only on airplanes and manufacturing of products.

            • Whether or not oil will end, governments will end. The ability to keep up roads will end. The ability to keep up the electric grid will end. With these problems, it won’t matter what supposed replacements we have–we cannot maintain the system needed to build and operate the replacements.

            • Christian says:

              Gail, you’re right on all this excepting that Qatar Airlines planes are fueled with NG now

            • I looked up to see what Qatar airlines is doing. They have a lot of natural gas.


              Fri 11 Jan 2013 – A Qatar Airways Airbus A340-600 flight from Doha to London on Wednesday marked the introduction of commercial-scale synthetic blended jet fuel produced in Qatar. Supplies of the natural gas-to-liquid (GTL) jet fuel, which is blended 50/50 with conventional Jet-A1, are being produced by the Pearl GTL plant, a venture involving Qatar Petroleum and Shell. The GTL fuel will initially be restricted for use by Qatar Airways but it is likely to be supplied to other airlines serving Doha International Airport at some stage in the future. The Fischer-Tropsch Synthetic Paraffinic Kerosene (FT-SPK) blend was approved for commercial use in 2009 and there are expectations that up to one million tonnes of the fuel can be produced annually by Pearl GTL. GTL fuel does not provide reductions in lifecycle CO2 emissions but is cleaner burning with almost zero sulphur and lower particulate emissions compared with its petroleum-based equivalent.

              Qatar is not burning natural gas directly. They are using an expensive Gas to Liquid technology to provide a liquid fuel which can be blended 50%-50% with conventional airline fuel. It is a way of using natural gas as an extender to conventional oil supplies. It is not a substitute. And they definitely are not just burning natural gas. The Pearl GTL plant is a huge operation.

          • Paul says:

            If believing that makes you sleep better at night then best nobody bursts your bubble.

        • tfouto says:

          We wont be alive in 3 years? The entire human race will extinguish?
          Solar and wind can complement each other. Besides, people here are thinking that
          battery, solar and wind prices in 30 years will be the same then now. Batteries will be much, much cheaper. The same with solar. Even wind will be less expensive, but as dramatic.

          Also prices for solar will be so cheap that we can use it as double capacity. Even if there’s 50% sun, if the solar capacity to production is 200% it will get to 100%.

          The world will evolve, we might struggle to get there, but we’ll get there.

          • I am afraid not. Solar is mostly a temporary “toy” for the rich. You can’t keep the grid repaired using solar. You can’t keep governments operating using solar and wind. None of us will have jobs. How will we pay for this solar without jobs?

            • tfouto says:

              I live in Portugal.

              Last year (2013) Portugal used 58,3% of renewable energy.


              Grande Hidrica=Hydro

              Outras renováveis=other renewables

              Almost nothing of solar.
              Portugal use at night hidro as “batteries”. Eolic produces energy and hidro pump water to “save” energy.

              Even if Porgual might have a slighty expensive energy price, we are more ready in future when natural gas and coal prices go up, when shortages happen. We have already an infraestructure of wind and hydro.

              Regarding Oil we have the same dependency as everybody…

            • Having a lot of water and mountains is very helpful. Norway is in good shape in this regard as well. So is the US Northwest. The hydroelectric is helpful for balancing the wind. (Eolic is “wind” in the US.)

              A lot of the world does not have as favorable a situation with respect to hydro. This makes it harder to accommodate large amounts of wind.

              Staying away from solar PV was a good choice.

            • kerry dempsey says:

              hello Gail
              love your blog and the people who comment on it, it’s great to have other peoples views.I agree with you Gail. All your blogs keep saying over and over Financial and Energy CRUNCH !!.No more B.A.U.!!!, Brothers and Sisters forget about trying to keep our way of life, the way it is.It’s over, time to move on.The question is how are we going to do it.
              When we have
              1-not enough food able to be produced for 7B people, due to energy shortage etc
              2-no jobs when the crunch hits
              3-hence no wages
              4-no medical services
              5-no government
              6-no electricity supply etc
              7-no transport cars, etc -no fuel
              8-NO CITIES able to be supported
              love and light to you all kerry


            • Paul says:

              For the vast majority there will be no moving on – they (we) will starve and die or succumb to disease. Perhaps those who have prepared by starting remote organic farms might have a chance — but there is always the problem of the thousands of spent nuclear fuel ponds and live reactors that requires endless cooling and maintenance…

              I am leaning towards this being an extinction event.

            • Perhaps we enjoy the life we have now. Or we try to be one of the few who perhaps can make it through the bottleneck.

              Or we wonder if there is something about the future we don’t really understand. If our current world is in such perfect balance, and seems to have happened from a theoretically impossible “bing bang,” is the Force behind the big bang planning something different for us, when this world becomes impossible?

              The death rate in this world is 100%. Reaching limits doesn’t really change this fact–it just moves up the date for quite a few folks. We never know when we will die. In some ways, the situation hasn’t really changed.

            • tfouto says:

              I really dont get all the fatalism here in this blog. I think it has no connection to reality. It seems lovers of the apocalipse. Maybe it’s me who is wrong.

            • Paul says:

              I could go on at length but I will leave with one thought in the form of a quiz:

              98% of the all farmland on the planet is farmed using oil and gas based fertilizers and pesticides.

              Oil and gas are not going to be available in the near future.

              Land farmed with these inputs will not support crops if you remove them.

              What will happen to the 7.2 billion people on this planet?

            • tfouto says:

              Of course there will be gas and oil in the near future. What you are saying is pure faith by you.

            • Paul says:

              Once again you state an opinion….

              I can do that too!

              I think that the dark side of the moon has an ocean of sweet crude that is by volume bigger than the pacific and atlantic oceans combined. I think that we could build a pipeline to the dark side of the moon and pump that oil to earth and solve our energy problems. If we only had more cheap oil we would be living the vida loca for centuries. I do not worry about water shortages or the end of fish or other resources — i only care that we have oil — because I want to fly around the world and drive a Hummer. That is all that matters to me.

              That is my opinion. I do not care if you post arguments that prove my opinion is wrong. I believe I am correct – and that is all that matters.

            • tfouto says:

              I dont understand how people really think that oil will end abruplty. It’s like binary. 1 to 0.
              Oil will not end from one day to another. Oil wont be totally unavailable to people.

              If in fact oil extraction prices are getting expensive and expensive, and less available, what will happen is something like this:

              – oil for transportation (gasoline, diesel) will be REALLY expensive, 5-10-30 times the price of today. People will have to use public transportation mainly. People will have to use mainly trains and subways who use electricity. People will use the car very, very, very rarely…

              – oil will still be used for other things, like manufacturing of goods and infraestructure. Oil for cars which is by FAR the most % used, and because of that will be much, much less used. Oil for manufacturing goods and infraestructure will not be as cheap of today, but not as expensive as oil for transportation. We “just need” to make almost impossible for people to use oil for private transportation…

              People say that Wind energy is not price competitive and it’s intermittent. Well if in fact coal will end shortly, and natural gas later, eolic will be the cheapest energy available besides nuclear. Even solar and batteries, which now are not at all price effective, will be in the future. Their efficiency will get much higher, and price much lower. Other materials like graphene will appear.

              Who knows about fusion? Maybe will work, maybe not. If it works, maybe only on 150 years in future minimum…

              People will live it much less, but human race will not extanguish…

            • Paul says:

              Oil extraction requires a growing functioning economy – something that is impossible with oil over $100 because:

              High energy prices = less consumption because everything including the fuel in your tank costs more = layoffs = less tax revenue = government cutbacks, layoffs and debt increases = less consumption = more layoffs = less taxes ===== economic death spiral.

              A deflationary death spiral means the price of oil collapses because few have jobs and few are consuming — oil companies collapse (this CAN happen overnight – shareholders see the writing on the wall and they run for the exits) because they are unable to turn a profit if oil drops in price

              Already happening – lots of oil left in the North Sea BUT:

              OIL BECOMING TOO EXPENSIVE TO EXTRACT: It emerged this week that the drilling of wells in the North Sea has crashed by around 50% this year, compared to the year-ago period. The reason for this is simple: the cost of extracting oil in North Sea has quintupled over the last decade, discouraging companies from investing within the region.

              Compounding the problem is the fact that a weak labour market means real wages drop – as they are across the world right now – that means everything is more expensive and your buying power is dropping at the same time.

              Governments recognize this and are trying to offset with debt, easy lending (they are purposely inflating bubbles), lower interest rates and money printing.

              This all started in 2002 when oil went from $12 a barrel to nearly $40 (and of course has never looked back)

              Of course they will fail – because the disease is expensive oil. And there is no substitute

              The economic death spiral will accelerate when the QE and ZIRP no longer have any effect and the confidence game collapses.

              This moment will be known as the end of the industrial revolution by the few who survive.

            • gerryhiles says:

              There are some people who will never get it, whether because of woeful scientific and technical knowledge and/or a naïve Pollyannerish optimism. I give up trying to explain after a couple of attempts.

            • Paul says:

              There are three types of people:

              1. Those that who are capable of getting it but do not want to get it because getting it would send them into clinical depression – so they use defense mechanisms to block logical arguments that destroy their positions > these people do not last very long on this blog because they prefer to preserve their matrix so they run off and put their heads in the sand.

              2. Those who are incapable of getting it no matter how clearly the situation is laid out. Those people disappear as well and go back to watching re-runs of Dancing with Stars and American Idol.

              3. Then there are those who are curious and open minded — who seek truths regardless of if these truths bring bad news — those people generally stick around because this site keeps one sane in a world that is predominantly populated by 1’s and 2’s.

            • Perhaps the cut off is not from one day to another, but it is likely to be over at most a few years.

              We should not expect high prices to ration oil supply. The problem is likely to be the opposite–lack of jobs for people, and difficulty maintaining adequate prices for oil. We are seeing problems with this already. Would-be investors are selling off land, and cutting their investment portfolios. Perhaps we will have a temporary spike, when the decline in production hits, but it will be very temporary. Soon prices will be low again, leading to less oil production.

              You have been listening to too many economists, raised in a period when supplies of all fuels were abundant.

            • Paul says:

              I think once we hit the wall that things bust very quickly because as you say, the symptoms will be manifested in the form of a massive financial crisis. Once the Fed is out of bullets the props that have kept fracking going as well as allowing conventional oil producers to keep producing (in spite of declining reserves) the whole thing can turn on a dime.

              As often is the case most people believe all is well — right until the very last moment… We see that time and time again — when the herd moves it quickly turns into a stampede… that’s why so few people are able to time an exit from the markets — nobody has the slightest clue when it is going to change direction (a few will guess right of course)

              Imagine the day when the Fed’s propping up of the energy markets using QE ZIRP starts to push on a string — a slight whiff of this and the big money would start to fight the Fed — believing the Fed has lost its mandate from heaven…

              And pretty much overnight fracking could end and big oil could collapse. And when it goes this time the Fed has already thrown the kitchen sink at this — there will be nothing to stop it

            • PeterEV says:

              According to the late Matt Simmons, conventional natural gas production tends to peak 10 years after conventional oil production peaks. Solar cells are made using natural gas as a heat source. The meme is that we have a lot of natural gas.

              There were studies done to look at the amount of wood available for heating homes (and cooking food). Some states did not have enough wood to last a year. Some were good for about 5 years.

              I remember reading that Vermont back in the mid 1800’s was stripped of a lot of its wood. Col Drake’s well was what changed the direction of the Vermont tree population. Burning wood is not the answer.

              My contention is that solar is a partial answer. It will not replace oil and gas but it is useful. A home can be heated using solar thermal. Water can be heated using a solar hot water system, and electricity can be generated by solar cells. Solar thermal and PV systems will likely outlast our forests.

              If all money is loaned into existence, why not have the Federal Gov’t directly print money where the money is targeted to saving our forests via solar projects and the checks are written to the person, utility, and company making the installation thereby cutting back on fraud? The recipient of the system pays back the loan via their utility bill.

            • Coast Watcher says:

              Actually Col. Drake’s well had nothing to do with Vermont’s reforestation. It was Appalachian coal that made all the difference there, just as it did in New Hampshire, Maine, and the rest of the Northeast. Coal-fueled stoves and furnaces were ubiquitous from the mid-1800s until after WWII, when fuel oil became the heating fuel of choice. I grew up in a rural farmhouse heated with a coal-fired furnace, and the home we have now had an old coal furnace converted to fuel oil in the basement. We switched it out for one of the new high-efficiency oil furnaces. Coal was so important that entire towns turned out to help unload the coal ships when they arrived each autumn.

            • PeterEV says:

              You are correct. I was thinking kerosene for oil lamps.

              My uncle told stories of having to wake up in the middle of the night to feed the coal furnace. If the furnace fire went out it was a not easy to restart.

            • Paul says:

              There are high efficiency wood stoves that can keep a home warm overnight on low heat — worth having one of these.

              One other thing I think is worth having is a bore powered by a solar irrigation pump. I think this is the only thing that really makes sense in terms of solar power because it does not involve batteries…

              However if you have extra cash setting up a solar system that keeps the lights on and a few other things such as a fan — is worth considering… after all cash will be worthless so why not use it for something like this…

              I will go with the solar irrigation system only at this point as I am not that fussed about going beyond that… in fact I am informed that my pump just arrived in Hong Kong from China yesterday morning… will haul that with me to Bali when I head back.

          • JMS says:

            I’m portuguese and a longtime reader of Gail’s wonderful blog. But, tfouto, don’t forget that in our country electricity represents just 10-15% of the energy consumption . All the other 85-90% (mostly oil, natural gas, but also coal) is imported. So, unfortunately, our situation is not so rosy…

            • tfouto says:


              Only 15% of energy is from electricity? Where did you see that? The other 85%, are from where? Oil used in transportation? And natural gas heating?

              I dont get the part where you talk about coal in the 85%. Coal is used to generate electricity, so it must be on the 15%…

            • JMS says:

              In 2004 we imported 90% of our energy consumption. Today, the situation is not so bad as I thought. In 2012, last data I have, we “just” imported 79,4%.
              See here
              In short, oil represents 43,3% of our energy consumption, NG 18,4%, Coal 13,6% and renewables 20,8%

              “Portugal importa 80% da energia que consome”


              So, the private transportation in Portugal is in its last legs. Pity all the millions we spend in those shiny highways ins the last 20 years. But – cheer up – we’ll have the best cycleways in the world! (At least till the asphalt crumbles apart).

            • Yes, electricity is only a piece of the total. When you are start adding the other pieces, the role of renewables drops a lot.

            • tfouto says:

              JMS, thanks…

              Oil is such a high number because oil cars have such a low efficiency. Around 20%. Electric cars have 70%. So that’s why car change to electric is so important. It will take years and years, but we have to get there…

              We in Portugal have good and too many highways. We also have everyday lots of cars with only 1 people going car-work. People dont like to use public transportation. If they were using electricity transport like trains and subway, there would be less import energy.

            • Keeping up public transit requires oil. Making and transporting new electric cars requires oil. Maintaining roads takes oil. Operating farm machinery requires oil. Even if we try to go to electric cars, we will still have a need for oil.

              Importing energy is not the only issue. Another issue is collecting enough tax revenue to maintain governments. Sometimes it is the invisible problems that hit us first.

            • Paul says:

              Electric cars would not exist without the oil based infrastructure and economy that makes them possible.

              Explain how – even if we could switch the entire globe to electric cars — that would solve the problem of the end of cheap oil.

              How do you grow crops without oil and gas based fertilizers and pesticides? What would all these billions driving electric cars around eat?

          • CTG says:

            Tfouto, have a look at Solar, wind, hydro, etc requires complex supporting systems like electronics, mining, plastics and many many other high tech components which is totally reliant on fossil fuel.

            Your wind/solar/hydro will be totally useless if you cannot find a part that is missing (how about high tech synthetic lubricant that only made in Taiwan, Japan or Germany that is proprietary and protected by patent and only available from that company?). If you are working as an engineer in factories, power plants, telecommunication companies, transportation, etc and that you are “hands on”, you will know what I mean. Trying to replace a “high strength high tensile nut/bolt” with a normal “nut/bolt” will not work. Likely your wind turbine will just collapse.

            • Vibration is a huge problem in wind turbines if something is even a tiny bit “off.” We can’t make locally made parts to fix anything on a wind turbine.

          • James says:


            In response to all your posts below, let me suggest it will look something like this:

            Wages will continue to stagnate and drop as they already are. Prices will do likewise, as demand flattens and falls and corporate charlatans fight over the remains of a once vibrant economy. Regardless, prices for basic commodities will ratchet up slowly but relentlessly to reflect increased energy costs, as will everything else eventually, albeit almost invisibly at first. Most will not notice nominal price increases however, as the first and primary thing they’ll notice is lack of employment opportunities and thus falling wages, although, rest assured, corporate bean counters definitely will.

            In fact, the process above has been underway for better than 20 years now at least! The old saw about the frog slowly boiling to death in its own soup is by now a truism of sorts. And so it is and here we are.


          • Paul says:

            Ten Reasons Intermittent Renewables (Wind and Solar PV) are a Problem

            Solar – After Hundreds of Billions of Dollars of Subsidies and R&D and this is what we get?

            The German Solar Disaster: 21 Billion Euros Burned

            Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

      • Paul says:

        I posted an article on the last article indicating that Europe was preparing to burn filthy lignite coal — so ya… there is probably money to made on coal… but what use will money be in the near future

    • gerryhiles says:

      Um? At the risk of being a wet blanket.

      If, in 30 years time, photo-electric cells can provide base load and work on cloudy days and at night, then you are on a winner … sorta.

      If in 30 years time we can somehow synthetically produce plastics, fertilizers and the myriad other hydrocarbon derived products from electricity, then someone will have exceeded the wildest dreams of the alchemists of ancient times. They only believed that they could transmute base metals, never that they could produce a material from effectively “thin air” or electrons. Only the banksters believe that sort of thing, but that’s another (related) story).

      Nothing can be made from electricity, it’s only use is in powering the machines etc. used in manufacturing.

      • Paul says:

        In thirty years? We won’t be alive in 3 years – let alone 30

        • tfouto says:

          We wont be alive in 3 years? The entire human race will extinguish?

          • Michael Murphy says:

            3 years too short, but 35-40 year…a reasonable chance for near term human extinction.


            • Paul says:

              I am not concerned about climate change — because I am certain the end of cheap energy will collapse the global economy long before that hits — and civilization will end (and most if not all life will cease to exist)

            • Michael Murphy says:

              Actually collapse will increase warning in the short term due to a lessening of sulfate emissions. Also there is a lag in the effects of carbon emitted, so the warning already scheduled to occur will likely destroy any habitat for humans. Also collapse will mean the inability to keep pumping coolant for the hundreds of nuclear plants which will mean numerous releases of large amounts of radiation. Listen to the presentation…it is instructive.

            • Paul says:

              Yes – perhaps my biggest concern is the issue of the nuclear plants and stored fuel ponds.

              I would be interested to understand from what the impact globally would be when all these beasts are left uncooled.

              I suspect this would be an extinction event — thousands of Fukushima’s raging out of control (keep in mind Fukushima is still being cooled by tonnes of sea water… imagine what happens if that — one single plant – was left on its own)

              Also I understand that stored fuel ponds are exponentially more dangerous…

              Let’s see… what’s next on the bucket list…

          • Paul says:

            I am not sure if everyone — because I am not sure what impact that thousands of spent fuel ponds exploding when they are no longer cooled will have — could be an extinction event.

            But without a doubt many billions will die — the odds of being one of the survivors is small

      • photo electric cells to work at night?

        Your Nobel prize money is in the mail

    • I can also bet on solar not being able to run our electric grid, now, in 30 years, or in 100 years. The cost of solar has to include the back-up (such as a battery) for intermittency. This brings the cost way up. Solar does not replace oil. Solar, at best, provides intermittent electricity, much as an old fashioned wind mill would. It is good for doing jobs that can be done intermittently, such as pumping water and desalinating water.

      • antares71 says:

        Gail, with renewable energy engineers are looking more into storing energy then producing energy. The are many ways to store energy, batteries is not the only one. The electricity of wind turbine running at night, for example, is used for the electrolysis process to separate hydrogen and oxygen from water and store the hydrogen for later use.
        The peculiarity of renewable energy is diversification and continuous transformation, basically more dynamic then the static energy packaged into oil.

        • It is too late, and the cost hurdle too high. With all of these techniques, we need to keep all of today’s technology operating, as well as international trade, the financial system and governments, and solar (even with backup) doesn’t provide this. Energy sources need to “throw off” huge tax dollars, not act as continual “sinks” for subsidies. They do not scale well. Solar doesn’t replace oil. At best it is a small sliver. Our experience in Africa shows that solar by itself does a little–recharge cell phones, but not a whole lot more. See World’s poor need grid power, not just solar panels.

        • CTG says:

          Antares, batteries and other electrical/electronic parts require rare earth materials and it is very very difficult to get them out now as the ore quality has dropped. Furthermore rare earth is monopolized by China. If China collapses, we will have no rare earth (inventory is so little that it does not mean anything). No rare earth, no electric cars, batteries, electronic controllers, voltage stabilizers, transformers, etc. We are long past the point where we use standalone transistors, capacitors, (the ones that sticker out of the circuit board). We are now using integrated circuits that is complex to built and requires a huge huge supply chain.

          I know about this because I am a process engineer (making semiconductors) with electronic/electrical engineer academic background.

          I know that a small bloated capacitor ( See here: )will cause the entire circuit board (in this case the computer) to fail. It can fail dramatically or just “poof”. If the circuit board is a special one-of-a-kind patented circuit board from a company that produces machines that makes the neodymium (rare earth magnet) magnets for electric motors for electric cars. then what will happen to the electric cars. What if the company is bankrupt due to financial collapse?

          In my line of work, we have encountered so many patented one-of-a-kind circuit boards that no one can repair because we don’t know how the circuitry works. They use chips that are programmed inside and we have no way to see what is inside. You want one new board, you buy from us for a high price. No board? your machine is as good as a paper weight. You cannot repair. There are no second sources because it is patented.

          These are some of things that no will will know or understand unless you work in a factory. It is not easy to do second sourcing of parts. We know because we wanted to do cost cutting and it is really difficult to find a good quality second supplier. If we find one, chances are high that the quality is lousy and you cannot use the parts for long or they will damage your products.

          All the talk about wind turbine, solar, hydro, renewables replacing our fossil fuel is “total crap” to me. Without the extensive and massive supply chain, there is no one one can produce parts for the renewables. The economists (or whoever is giving a lot of comments on this matter) working by the table without even getting their hands dirty will never know that electronic controller for one solar panel cannot be used on another one. Reason – each company wants to monopolize the entire product and you cannot swap mine with others. You have to buy all from me. Talk about hedonic replacement….

          • antares71 says:

            Hi CTG,

            thanks for your reply.
            Since you’re in the field I have a practical question. I’ll fit my house with solar panels, and I want those panels to last 30 years, what spare parts will you recommend me to buy? Any book you would reccommend?


            • CTG says:

              Antares71, you cannot do that because the electronic parts will fail. There is a lifespan for electronic parts. Now, it is like <3 years. It is physics. Electro-migration and disintegration of aluminum lines in the chip. The structure may not be able to function properly in a few years time.. The circuit boards starts to crack (whether it is humid or not, it does not matter). The soldering may have problems. There is a saying if you have ever heard about it – "for electronic parts like hadrdisk, if you don't use it, it will spoil faster". Now, with many parts made in China and many companies cutting costs, they will just ensure that the lifetime is less than than 3 years so that you will replace again soon… (forced obsolescence)

            • CTG says:

              hey… how come a comes out? I typed 3 years

            • One issue is spare inverters. Another is batteries that will operate for the 30 year period. Don’t expect the grid to work for 30 years. You may also need spare parts for whatever devices you plan to run, like pumps.

          • antares71 says:

            Do you know Marcin Jakubowski? ( He did something interesting, an open source of the 50 most useful machines needed to run a civilization.
            He lacks though solar panel, although he has wind turbine. He designed the machines so that everybody can download the blueprint and re-create them themselves.
            However, those machines do not take into account post-carbon difficulties in getting the raw materials and the energy to buld them but since they are open-source it is still possible to include this requirement in the future evolution of the releases.
            Starting from physics photons->energy, it would be cool to work on a solar panel design that can be built with only local resources. Would you be able to do that?

            • He certainly is setting his sights high with his list of useful machines to run a civilization.

              How about things like wheelbarrow, shovel, ax?

            • antares71 says:

              Yes, he is an amazing person (with a PhD in nuclear physics) but you’re right he should consider the basics as well. I was thinking contacting him and mentioning a list of post-oil tools.

          • Thanks for your comments based on experience. This is one of the reasons I find a lot of academic analyses unhelpful. They start with a lot of assumptions, and the assumptions don’t hold up well.

            1. Assume the wind turbine will work for its stated lifetime. (Big assumption. How does this happen? Spare parts magically appear as needed?)
            2. Look at the ratio of energy out to energy in, considering only the energy that goes into making the wind turbine.
            3. Ignore all of the costs (and energy inputs) beyond the building of the turbine itself. Thus, ignore the need for fossil fuel balancing plants or battery or pumped hydro storage, and additional long distance transmission lines. Ignore the need to maintain the roads for the long term, and the need to be able to continue to be able to build spare parts.

            If the ratio is right, everything is fine–regardless of full system costs, when everything is included, and regardless of feasibility of maintaining the system.

            In some cases, the ratio of energy output to energy input is produced based on wind turbine specifications, not even what wind turbines deliver in the real world.

          • Coast Watcher says:

            There have been and are rare earth mines in the U.S., Australia and elsewhere. China drove them out of business several years ago by selling its rare earth products on the global market at below cost. As soon as the last mine closed (in Utah or Nevada IIRC), China announced it would ration rare earth exports to ensure domestic supplies. There was talk last year of reopening one or more of the U.S. mines, but investors are reluctant to risk another price war with China.

            • Paul says:

              I hate the throw cold water on this … but when this tips oil and gas end … in case you were not aware our food supply is 100% dependent on these inputs….

              I think we might be a little to preoccupied with killing each other for a can of dog food to worry about mining rare earths…

              Here’s some breaking news — BAU IS ENDING. All of these things you take for granted – like , nail clippers, plastic bottles, ball pens, bicycles, hair spray, tin cans, etc etc etc…. they will no longer exist… ya there will be piles of this junk around for some years — but we will not be making any more of it.

              No oil – no stuff. Period.

            • Coast Watcher says:

              I’m well of our oil dependency, Paul, and have been since 1973. I just don’t share your extremist views on when and how it all comes crashing down. During the Y2K hysteria, there was a common thread running through the ultra-doomer comments at places like the Greenspun board and Gary North’s forum that assumed everyone outside those “in the know” were completely stupid, helpless and clueless in the face of looming disaster. They discounted the massive momentum built into the system, as well as the consuming self-interest of those who operated the computer systems they all assumed would go up in smoke on 1/1/00. There is a huge personal investment in BAU, and those who have made the investment will go to great lengths to continue it. That’s why the financial system didn’t collapse in 2008.

              I’ve seen way too many doom parades in the past 40+ years, from John Shuttleworth telling the readers of Mother Earth News to stock up on food, water, land, and guns to Jay Hanson’s gif of people throwing dead babies into a dump truck in a post-Peak world. Thus part of the reason for my contempt for Ruppert. So I don’t automatically start running around with my hair on fire yelling “we’re all gonna die” every time I real Gail, or Kunstler, or JMG. I’ve seen it all before, and we’re all still here. Someday that will change, but not today. Rather like me and my cancer — someday it will kill me, but not today.

            • Paul says:

              A good friend of mine — in her 70’s — PHD from the US said the same thing recently….

              This time is different. Never have we printed literally tens of trillions of dollars — never have we had ZIRP. Absolutely never.

              And never have we had conventional oil production depleting. As has been pointed out the only thing between us and total collapse is shale oil — and as many experts have pointed out — that is a short term play.

              Unless we find some other sources of cheap oil to offset conventional oil declines we are done. And as we can see — big oil is cutting capex — that is akin to Roberto Duran throwing in the towel and saying ‘no mas’

              They are starting to give up — they know that if they keep blowing billions and coming up with dry holes they will be bankrupt overnight — so they are starting to pull in their oars.

              And the policies of central banks and governments reflect the utter desperation of the situation.

              2008 was the warm up — it signaled the beginning of what I see as reckless abandon….

              When you know the end is nigh why not take out the credit card and go on a spending frenzy — why not jam two pizzas, a gallon of ice cream and 3 giant bottles of cola down your gullet every meal?

              That is very clearly what we are doing — absolutely anything goes — if it buys us even another day of BAU.

              If that is not the case then why are we committing economic suicide? You simply cannot print trillions of dollars and engage in the types of economic madness that we are seeing – without blowing the system sky high.

              I am not by nature a doom and gloomer — but come on now — are we not like frogs boiling slowly in a pot — it’s gotten to the point where a trillion dollars is nothing — when a billion used to be a big number.

              Consider this — the largest 500 companies in the world — did not generate 1 trillion dollars of profit

              Of course the PTB will try to keep BAU going as long as possible — they have very clearly demonstrated that.

              But just because they don’t want it to fail — does not mean it will not fail.

              Cheap energy is the key to everything — and we have peaked on that. Shale + central bank intervention can delay the inevitable perhaps for a few more years…

              But make no mistake — this is no Y2K — there is no way out of this.

              When this goes it will be like 2008 — but on steroids, HGH, coke, smack, and speed — and nobody will be able to stop it…

              It’s kind of like you made a wrong turn in the desert — there are no petrol stations for a thousand miles — and you are running on the red line of the tank…. no way out.

            • Coast Watcher says:

              BTW Paul. Your last name isn’t Milne, is it?

            • Paul says:

              No. It is just Paul … kinda like a Brazilian soccer player…

            • Coast Watcher says:

              So the phrase “drinking dog piss out of a rusty hubcap” means nothing to you, eh?

            • Paul says:

              I only drink good whiskey so no… it doesn’t.

            • tfouto says:


              This had the potential to replace oil for transport. But it’s too late now. The massive-scale required would take years-decades…

              Neverthless, impressive. It’s the most sustainable approach i ever seen in terms of fuel substituion…

        • CTG says:

          Sorry, for my header, it should be Antares71 instead of antares.

          • antares71 says:

            CTG, please see the comment above about Marcin, it was for you not for me :-)
            (what does CTG stand for?)

            • CTG says:

              CTG happens to be the initials of my name. I am a Malaysian of Chinese ethnicity. I am not surprised if I am the few in my country who is aware of the limits to growth and that materials are not infinite.

              If you happen to look around houses from Japan to Indonesia. Many of them are built without using any nails. All these are joints. I believe it is not easy to make good nails (see here and it takes a lot of energy to make nails and they may be too brittle. That may be the reason why they are not used. It takes 100 tons of wood to make 10 tons of charcoal that will make 1 ton of iron.

              What Marcin has done is great but it will not work when you cannot find copper wires or grinder’s abrasive wheels. You need technology to make what is proposing. Without technology (that depends on FF), it will not work.

    • edpell says:

      5 cents per KWHr OK. What is the cost to store the energy for the 18 hours per day that do not get bright sunlight? And the cost to store for the cloudy weeks when there is no bright sun shine? How many cents per KWHr does that add? Remember the losses putting it into storage and the losses taking it out of storage. For the first I think we can get to 20 cents per KWHr adder for 18 hours of storage. For the two weeks that would cost a huge amount 800 cents per KWHr adder.

      • edpell says:

        Also remember to have 1KWHr per hour all day we will need 4KWHr per hour installed so 5 cents goes to capital and land cost of 20 cents per KWHr just for the PV. Total for 24 hours coverage 40 cents per KWHr when the sun shines.

        I imagine there will be a market for electric just as there is now. As the weather heads into gray November in New York rate will move from 40 cents to 840 cents. If there are four cloudy weeks the rates will go higher allowing rationing to government enforcers and the rich. The first paid by our taxes. The second paid for by the money we pay for produces that sell well above cost.

        • edpell says:

          Will NYC really choose to shutdown Indian Point (nuclear reactor)?

        • There is no way we can maintain the grid, just using solar PV. There won’t be a market. It will be each person on his own, with his own panels and whatever backup he can cobble together. If he has to move, he will have to unhook the mechanism and reinstall it elsewhere, using whatever tools he has. Inverters will also be the owner’s responsibility.

    • Paul says:

      In ten years from now — solar will not exist as an industry:

      Ten Reasons Intermittent Renewables (Wind and Solar PV) are a Problem

      Solar – After Hundreds of Billions of Dollars of Subsidies and R&D and this is what we get?

      The German Solar Disaster: 21 Billion Euros Burned

      Spain’s disastrous attempt to replace fossil fuels with Solar Photovoltaics

      • It is hard to see how international trade will exist in its current form in 10 years. Solar is dependent on international trade. This by itself will put an end to solar manufacturing.

        • Dan says:

          Well it seems China is planning on transporting oil via super tankers and international trade ramping up. Maybe it’s just more money into the rabbit hole of smoke and mirrors.

          • Thanks for the link. The project sounds amazing. If the world economy could grow forever, and impacts on the Nicaraguan ecosystem were minimal, it might make sense. It is hard to see that we will be using it very much for very long, though.

          • Christian says:

            This project is really incredible, beyond everything.

            Steph, there is a french song, “tout va bien madame la Marquise”, you know that one?

            • Paul says:

              Well …. when you’ve done this you really have to go big in terms of an encore…

              But bravo China — bravo — you keep the hamster running a little longer with this latest stimulus initiative….

              But what next? I would suggest a subway tunnel from Beijing to New York — another to London — and one more to Auckland… use men with tea spoons to dig it to stimulate employment — line the walls with one foot of steel to stimulate the mining industry — leather seats on the trains to help the farmers — and of course have the big banks finance all this using more fairy money courtesy of the Fed — lord know the bankers – who are doing god’s work — need to eat.

              Paul Krugman must be feeling pretty good today. Elusive recovery is finally here— I can see the green shoots sprouting…

    • James says:

      And just as inefficient and non-renewable for the long term; i.e., we won’t have the energy available to continue to manufacturing its hi-tech components.

      • Christian says:

        Nor the plastics to build and package

      • tfouto says:

        do you really believe that?

        • Christian says:

          Why not? I have an uncle who worked for Bayer many years. He was the first person I’ve heard talking on petroleum scarcity. At first I thought he was going senile, unitl I heard of peak oil.

        • CTG says:

          tfouto, have you visited a oil refinery, cracking facility or a chemical plant making the raw/base material for plastics, fertilizers, drugs, etc? There are hundreds of miles or tubing, ducting, pipes and wires/cables. There are thousands or valves, connectors and other liquid-diverting/controlling devices. There are hundreds of PLCs (progammable logic controllers), PCs, SCADA and other types of controllers controlling the temperature, flow, viscosity and other parameters.

          They have a very large number of chemists, electrical engineers, mechanical and material engineers. Do you think overnight, I can go in and do their work if something big happen (like a pandemic wiping out a large number of workers?). I may have the knowledge but I will never be able to repair them. Unlike in movies, engineers are too specialized now and they are NOT substitutable. In olden times, things are very much simpler and by looking at one item, you can guess how it works. Now, by looking at a circuit, one cannot even tell what the function of the circuit is !

          If there is no enough raw materials (in this case petroleum based raw materials), the whole plant will shutdown. They are designed to produces hundreds or thousands of tons per day/week/month. So, it is a binary world. If the amount of raw materials is too small, the plant shutdowns. e.g. : their main inflow pipe is 1-foot in diameter and the distillation column must have a flowrate of 10m3/minute in order for it to work. So, if you have only a 100 barrels of oil coming out from your local oil wells, it will not be refined. You will have no fertilizer nor airplane fuel.

      • Paul says:

        timF – I would take that bet – but it’s unlikely either of us will be around to collect — because it is unlikely either of us will be alive in 30 years — although I am hoping I have a winning ticket that exempts me from the multi billion person die-off

  21. Pingback: Making Sense of the US Oil Story | Inequality, ...

  22. edpell says:

    I just got a job posting I think you may get a chuckle out of it.

    From Saudi Aramco
    “We are seeking an experienced Petroleum Engineer data manager (PE System Analyst/Specialist) to join Reservoir Description & Simulation Department under Petroleum Engineering and Development administration area.”

  23. Stefeun says:

    Thank you for this nice post. The US situation is really strange, the dynamics of a downward trend seems quite different compared to the upwards we got so far.
    Your statement “Energy growth is needed for economic growth” is not too strong, IMHO. Our French think-tank “The shift Project” (founded and managed by Jean-Marc Jancovoci) had a project aiming to analyze the relationship between GDP and primary energy consumption (in energy units), see:

    The economist Gaël Giraud, with help of Mrs Zeynep Kahraman (member of The Shift Project) have made a statistical analysis on hard data from 50 countries representing 90% of world-GDP and found that:
    – the increase in efficiency is in the range of 1% per year,
    – the elasticity of energy in GDP is ca 60% (world average) and not 8 to 9% as standard economists consider (cost-share). By the way, elasticity of capital is 12% (and not 30%),
    – more than a correlation GDP-Energy, it’s a co-integration, which means the two series tend to converge again after a shock or a perturbation (eg. 2008 crisis), and this within a period of 18 months maximum, which is very short,
    – the causality is univocal, it’s always the change in energy consumption that precedes the change in GDP.

    I found only this presentation (from a conference at Momentum Institut) which doesn’t clearly show all findings above, and contains a last part about volatility, which purpose was to show that the stock indexes are not good indicators at all of the health of an economy (different topic):

    • Stefeun says:

      I found a more complete presentation where you can see all above points in parts I & II (forget about the part III):
      (this one was made before and the study was made on 20 countries only, at that moment-March-, and then completed to 50 countries in June, that’s why I didn’t find at once)

      • Thanks! That presentation is better. I like the observations

        1965 – 1981 , world average growth 3.5% per year. This is equal to 2.5% growth related to more energy use, and 1% efficiency gain.

        1981 to 2013, world average growth 1.5% per year. This is equal to 0.5% growth related to more energy use, and 1% efficiency gain.

        For Japan from 2000 to 2013, the 0% average economic growth rate is equal to equal to 0.0% growth related to more energy use, and 0% efficiency gain.

        • I think that, given efficiency improvements, in total, are most unlikely to be higher than growth, then it’s not too strong a statement to say that economic growth requires energy growth. Some may quibble with hypotheticals but in the real world it must be a true statement (IMHO). However, I don’t think we have a reliable way to measure real economic growth. Different countries use slightly different methods of calculating GDP (and of calculating inflation, which affect the growth figure). I would think all government try to make the figures look better than they are. ShadowStats, in the US, tries to adjust for such manipulations, though I don’t know if they get it right.

          I think it’s fair to say that real economic activity is less than official figures and, given low efficiency improvements, will follow energy consumption fairly well. Don’t be taken in by some who point to this country or that country achieving growth with falling consumption, as the total picture can’t be gleaned purely from a country’s internal figures, given that the economy is global (and the energy consumption may be accounted for elsewhere). Once total energy starts to fall globally, we will have global economic contraction.

          The BP statistical review of world energy, last year, showed the OECD countries, as a whole, used less primary energy in 2012 than in 2004, but their economies were, supposedly, larger. Total world primary energy only grew 1.8% in 2012, compared with 2011. I don’t know the official world GDP growth then but I’ll bet it’s a lot higher than 1.8%, which, I think, casts the figure into doubt.

          • Of course, the other issue is that the OECD countries have pushed much of the manufacturing offshore, primarily to coal-using countries. We them import the goods, and feel very virtuous in not having used fossil fuels in producing the goods. If we had produced them at home, the world CO2 emissions would be less bad, and the jobs would stay at home. But that is not the low cost way. Shipping the jobs overseas is the low cost way.

    • Thanks for the information and links. I agree that the increase in efficiency tends to be very low. The shift away from oil tends to be quite slow as well, even though oil has been higher priced than other fuels for a long time. I notice that Michael Kumhof has a quote on the site of the Shift Project.

      It seems like Robert Ayres has been trying to show something similar for selected economies.

    • yoananda says:

      Stepheun, there cannot be co-integration AND causation between GDP/Enery at both time. You have to choose one. Causality is Jancovici, co-integration is Giraud. Causality is not proved since it’s more complicated than just say “we can see it on the graph”; since there are many delays in economy (GDP typically summed at the end of the year, budgets vote the preceding year, etc…)
      In french counter arguments :

      • Stefeun says:

        I suggest you to listen to Gaël Giraud’s explanation about that. You can find an audio for the June conf. at Momentum, and a video for March at the Shift Project (available on Youtube as well).
        Gaël Giraud says the only way to define causality is to determine which one happens before the other; he says there’s no doubt in this case, and it’s one way exclusively.
        (I’ll have a look at your link later, I can’t right now)

        • yoananda says:

          Maybe I misunderstood, but it seems to me that Giraud explained that GDP/Energy is co-integration and hence, not causality …
          It cannot be not both of them : if it’s cointegration it’s not causality that is stronger.
          I have listened (and readed) a conference of Giraud (and many of Jancovici), I’m well aware of their statements.

  24. Pingback: Making Sense of the US Oil Story | Sustain Our ...

  25. gerryhiles says:

    Another fine article Gail and, as usual, I have nothing to add that you haven’t covered here, or in previous articles … just thought you’d like to know.

  26. John D says:

    Seems like the investment costs and slim to negative ROI dilemma in the major producers will push private oil to the side and force the re-nationalization of the oil discovery/recovery business anywhere it is not already. I think the Feds will eat the cost of keeping the oil flowing if need be, unless or until the energy in becomes = to the energy out, at which time it is adios, oil era.

    Personal opinion based on nothing is that nationalization of oil recovery and refining will be a militarization as well, with rationing and some options for martial law put in place ahead of the event.

    I am sure the shadow-state is very much on the case with these preps.


    • The issue I am concerned about is the fact that governments are funded by the surpluses of an economy. If we hit recession again, governments will be hard-put to collect enough taxes, to fund broken banks and pay unemployment to workers. Oil companies will need a lot of support as well. So will all of the renewables. Governments are what are likely to fail, making the plan of having them run the oil companies not work.

      Also, government run oil companies are not doing well now. (They worked well, when new oil extraction was easy to get.) Mexico has had a hard time getting enough of a return from Pemex, so now it is trying to get other companies to come in and supply the capital to develop oil that theoretically is available. Brazil was also having a problem with getting enough money from Petrobas. It asked for bids for extraction, and it got only one, for the minimum amount. Venezuela has been having a terrible time paying its bills. It got a big loan from China, to help it develop some of its heavy oil.

  27. Connorhus says:

    Thank you for breaking that down and putting up the charts. I been seeing a number of claims across the net that the US has managed to produce more oil than any of the other nations and it just didn’t make sense until now how they were coming to that conclusion.

    • We have so many different definitions of “oil” that if you pick the right one, things tend to come out the way you want them to. Of course, substitutability among the various products isn’t very good. If a car is designed to use no more than 10% ethanol in its fuel mix, and the amount of oil available drops, then the amount of ethanol used as an extender is likely to drop as well.

  28. John Drake says:

    The negative cash flow of major energy company is a clear indicator of a rapidly declining average EROEI that is however temporarily masked by the financial system acting as a buffer.

    The consequences of a falling EROEI are deadly for a high tech complex society, once you get below a criticl threshold.

    In addition to the falling EROEI the following problems have to be somehow dealt with:

    1) The varying composition of the liquid fuel mix, which represents a major problem for the refiners because they still need to supply the markets with the variety of refined products that the maket can use (ex. most car engines can only use a very limited liquid fuel mix) ;

    2) The energy content of the liquid fuels delivered to the market.

    • In theory, if costs are very front-ended, there could be a debt run-up, but this is getting out of hand. In fact, everyone from the majors to some of the national oil companies to the US independent oil companies are running into difficulties.

      I agree that the mix of fuels is an issue. I know that when Bakken oil production first started, there was discussion of whether it would make sense to build a refinery nearby. One issue was that farming equipment tends to run on diesel, but Bakken oil produces little diesel. Instead, its production is skewed toward the very light end.

      Everything we own is designed for a particular fuel. In some ways, I don’t think the issue is as much the total quantity of fuels as it is having an adequate supply of all of the particular fuels/lubricating oils/ inputs for manufacturing that are needed. Substitutability is very low.

  29. Degar7 says:

    The misinformation propaganda out there has reached mind numbing proportion. Thank you for explaining the situation in plain English time and time again.

    Any thoughts of the recent downturn in WTI? I wonder how fast our situation will evolve if we “need” $100 oil but the “price” slips to $95…$90…and below. I assume at some point delivery may be an issue.

    • My concern is that the price of oil will drop too low. Right now, the same forces that are holding up the stock market (or not holding it up) are also holding up the price of oil. It looks now like the stock market is stumbling. If this happens, the price of oil will likely drop too.

      People’s wages really aren’t high enough to support current oil prices, without continually adding more debt, at practically zero interest rates. This can’t really continue.

      • Paul says:

        I suspect the Fed will not allow the markets to drop much — they have demonstrated their willingness to make the market

        • James says:

          But for how long? Contrary to popular delusion, their ammunition belt ain’t limitless, nor are the knock on effects of monetary insanity.

          • Paul says:

            Yes difficult to say — I am sure there will not be another Lehman moment i.e. where the Fed stands aside and lets a key institution or economy fail.

            And I don’t see any of the institutional money wanting to fight the Fed — no point in doing that because the Fed has the printing press — and it will always kick the ass of even the biggest whale.

            So if I am running money I am not going contrarian — I am riding the coat tails. some of the smartest biggest guys in the business (including Hugh Hendry) finally realized that the Fed was in basically till the end — and they came off their negative positions and joined the fray… (even stating that it was madness but that they had no choice – only fools or dummies fight the Fed)

            So I am not sure how long this can go on — if nobody makes a move then this twilight situation could continue indefinitely.

            That is why I suspect that the foundation of the system must bust for this to tip over… the foundation is cheap energy — when total supply drops (it is still growing due mainly to fracking and tar sands) then the Fed can not paper over that with cash…

            And the day of reckoning arrives.

            Of course I could be wrong — there are so many moving parts in the global economy — one hub busts and the Fed can’t soothe the markets — and it’s game over

            • Harry says:

              The Fed can do nothing about a Minsky Moment and once panic sets in there can be no way back.

            • Paul says:

              No doubt about that…. and that is why the MSM is working on overdrive to convince the masses that green shoots are imminent … always imminent … just a little more stimulus and we will turn the corner…

              And the masses want to believe this so badly — that the CON game can continue when by all rights this should have blown to pieces long ago

      • Stilgar Wilcox says:

        Interesting points linking the bull market with high oil prices, as one goes higher so goes the other, as well as on the way down. Just recently the Dow has dropped from plus 17100 to around 16400 while oil has simultaneously dropped several dollars. When the 08 debacle occurred the stock market and oil price tanked together. Should be very interesting to watch as we move forward from here, because as QE tapers to zero in Oct. the estimate is the Fed will begin selling the 4.5 trillion accumulated in early 2015, which will drive interest rates up. Stocks always move ahead of events, so this is probably why the market is starting to drop now. Our good times brought to us by Fed stimulus appear to be coming to a close. What the heck will happen once an economic contraction, another major step down occurs to avert complete collapse?

        • I have a hard time seeing how complete collapse can be averted.

          Selling of the 4.5 trillion can’t really happen. It is sort of an “oops” situation.

          • Rodster says:

            Hugo Salinas Price, puts a dire warning on the entire Global financial system. He says even after a global economic collapse, he doesn’t see a gold backed currency rising from the ashes. He also doesn’t see how either the Russians or Chinese can change the current system in the future because they are so ingrained in the financial system of the West, that’s all the know from a financial point of view. So it would basically be more of the same.

            His forecast: “Welcome To The NEW DARK AGE”


            • Ghung says:

              “Welcome To The NEW DARK AGE” indeed. Whatever tools central banks and policy makers had in their tool boxes have been largely used up minimizing the crisis since 2008. In short, the Fed has shot its wad (and knows it). No more cash for clunkers, no more ‘shovel ready’ stimuli (which did little to stimulate much), etc., and it’s hard to imagine that governments can absorb and service much more debt. State and local governments “tweaking” expenditures (cutting education funding, modifying tax rates….) have very real consequences looming in the shadows, many which haven’t been really felt yet. The wave of QE we’ve been riding will break upon a rocky shore at some point. Whatever modest margins the energy and agricultural sectors my have enjoyed will reveal themselves as inadequate to weather the next storm, and the middle class simply won’t tolerate being squeezed much harder. Social safety nets have been tested to their limit, and all of these attempts to increase the velocity of capital in the system have been stop-gap at best. Meanwhile, divisions between haves and have-nots continue to increase at rates rarely seen.

              Big reset ahead. I have my doubts about how well society-at-large will handle things this time around; the blame game seems to be a national sport and does little more than to further the cause of contraction. Westerners, especially in the US, simply aren’t progammed for this sort of thing. No memory of harder times, it seems.

            • Thanks for the link. I think that Hugo Price is right, although I am not entirely sure he has his reason right. We really need our debt based system to extract resources from the ground. If we are going to continue to extract resources, we will need another one. The “catch” is that as our return drops, we are no longer able to repay debt plus interest. In fact, there are a lot of other things that go wrong as well–inability to fund governments, for example. With our networked system, any new system has to be very much like the old one. We end up with debt to finance “growth” in developing countries, from one agency or another. The gold-based system did not provide enough debt flexibility, and we are too far away from it now. I expect we will end up with hundreds of local currencies, of one form or another, generally not based on gold and silver. They may not even involve currencies at all–just a general store, where a person runs a tab. Whatever he/she brings in can be exchanged for other things that others have brought in.

            • James says:

              Or at least the new local age. Although, 7B+ people ain’t gonna survive living locally well or for long, especially with climate change and environmental degradation just getting barely getting acquainted with many of us. We’re about to experience the perfect storm of perfect storms.

            • Christian says:

              Gail, glad to know your kid is doing well.

              Gold will not work so much as Salinas believe, and one of the reasons is because it is too much concentrated in very few hands (just a couple of governments). Upon international trade, perhaps OPEP (or OPEP + Russia) could set up a new currency to trade oil, NG and whatever fits in.

              Or we can set up the currency ourselves. Why not? We can print 7.5 trillions of it and send a thousand per capita to each government of the world. When TSHF and there is no more valuable USD and nobody has a clue of what to do they will end up using our currency. OPEP should set the price for their stuff and the rest would adjust to this parameter.

              Of course none of this solutions would avoid some brakeup in supply chains and economic collapse (and some million dead people). Finances would disappear… They will do anyway. Gail, why are you so sure we need interests to get the easy FF still remaining? What is really needed are some materials and workforce; suppliers and employees don’t care if we take a loan to paid them or not. And after TSHF nobody will be very hard to please.

            • We need the whole financial and international trade system we have in place to keep prices of oil and natural gas high enough to make it economic for companies to extract them. Perhaps a few countries could drop out (or be kicked out) of the system, but we somehow need a situation close to today, to enable continued extraction. Somehow, the things people expect to buy with their money need to continue to be available as well, and governments need to remain in place. Printing money doesn’t really fix the situation. Supply chains need to continue to “work.”

            • Paul says:

              I always wondered why countries needed central banks to print and control their currency… lending it out and reaping the interest… why don’t the countries themselves handle that… (rhetorical question — follow the money — who owns the central banks)

            • Christian says:

              Gail, perhaps “we need more debt” is somewhat misleading. “Capitalism (or current economical system or such) needs” could be less subjective and more acurate. Of course, it’s your writing and your choice.

            • Christian says:

              I don’t know if this time it would work, but printing money is indeed very useful when you have a financial crash (here we have some experiencie on theese). I somewhat stand between Don and Gail: there will be no more electronics but some oil will probably still be pumped for some 10-20 years after TSHF

            • A drop off over 10 to 20 years is still a very rapid drop off compared to say, a Hubbert curve. It is more like what I have been talking about. The oil that is produced during this period may not be traded as widely as today. There may be “pockets” with oil that continue. For example, China may have enough of resource chains in place that at least parts of China can continue with its coal-based system (plus a bit of oil) for a while longer.

    • dorji yangka says:

      How does it compare with the groupings and energy statistics reported by IEA? A uniform and consistent data is required to make a sensible comparison.

  30. interguru says:


    I wish you and your family strength in these hard times.

    • Thank you. Hopefully my son will get out of the hospital tomorrow. If he gets out then, it will have been seven days.

      • VPK says:

        Glad to hear of the news.
        Had a scare myself. Mother (92!) had to go in the other day for a stomach virus and expect her to be out maybe today. Count our blessings now we still have the medical means to help them. Hope you son recovers 100% soon. God Bless

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