Peak Oil Demand is Already a Huge Problem

We in the United States, the Euro-zone, and Japan are already past peak oil demand. Oil demand has to do with how much oil we can afford. Many of the developed nations are not able to outbid the developing nations when it comes to the world’s limited oil supply. A chart of oil consumption shows that oil consumption peaked for the combination of the United States, EU-27, and Japan in 2005 (Figure 1).

Figure 1. Oil consumption by part of the world, based on EIA data. 2012 world consumption data estimated based on world "all liquids" production amounts.

Figure 1. Oil consumption by part of the world, based on EIA data. 2012 world consumption data estimated based on world “all liquids” production amounts.

We can see an even more pronounced version of this pattern if we look at the oil consumption of the five countries known as the PIIGS in Europe: Portugal, Italy, Ireland, Greece, and Spain. All of these countries have had serious declines in oil consumption in recent years, as high oil prices have impeded their economies.

Figure 2. Oil consumption for Portugal, Italy, Ireland, Greece, and Spain, based on EIA data.

Figure 2. Oil consumption for Portugal, Italy, Ireland, Greece, and Spain, based on EIA data.

Oil consumption for the PIIGS in total hit its highest level in 2004, before the decline began. Peak oil consumption by country varied a bit: Portugal, 2002; Italy, declining since 1995; Ireland, peak in 2007; Spain, peak in 2007; Greece, peak in 2006.

Peak demand is very much related to jobs. Peak oil demand occurs when a country is not competitive in the world market-place, and because of this, loses industry and jobs. One reason this happens is because the country’s energy cost structure is not competitive in the world market-place. According to, with the run-up in oil prices starting about 2003, oil is by far the most expensive of the traditional energy sources we have available today. Countries that use a large percentage of oil in their energy mix can be expected to have a hard time competing, because of oil’s higher cost.

Figure 3. Oil consumption as percentage of energy consumption for selected countries, based on BP's 2012 Statistical Review of World Energy.

Figure 3. Oil consumption as percentage of energy consumption for selected countries, based on BP’s 2012 Statistical Review of World Energy.

Anything else that is done which raises costs for businesses will also have an impact. This would include “carbon taxes,” if competitors do not have them, and if there is no tariff on imported goods to reflect carbon inputs.

High-cost renewables can also have an adverse impact, regardless of whether the cost is borne by businesses, consumers or the government.

  • If the cost is borne by businesses, those businesses must raise their prices to keep the same profit margins, and because of this become less competitive.
  • If the cost is borne by consumers, those consumers will cut back on discretionary expenditures, in order to balance their budgets. This is likely to mean  a cutback in demand for discretionary goods by local consumers.
  • If the government bears the cost, it still must pass the cost back to businesses or consumers, and thus reduce competitiveness because of higher tax costs.

This importance of competitiveness holds, no matter how worthy a given approach is. If costs were “externalized” before, and are now borne by the local system, it makes the local system less competitive. For example, putting in proper pollution controls will make local industry less competitive, if the competition is Chinese industry, acting without such  controls.

One issue in competitiveness is wage levels. Wages in turn are related to standards of living. In a global economy, countries with higher wage levels for workers, and higher benefit levels for workers (such as health insurance and pensions) will be at a competitive disadvantage. Countries that use coal as their prime source of energy will be at an advantage, because workers’ wages will tend to “go farther” in heating their homes and buying electricity.

Countries that are warm in the winter will be at a competitive advantage, because homes don’t have to be built as sturdily, and don’t have to be heated in winter. Workers can commute by bicycle even in the coldest weather.

Energy usage (all types combined, not just oil) is far higher in cold countries than it is in warm wet countries. Countries that extract oil also tend to be high users of energy.

Figure 4. Per capita energy consumption for selected countries for the year 2010, based on EIA data.

Figure 4. Per capita energy consumption for selected countries for the year 2010, based on EIA data.

The difference in per capita energy usage among the various countries is truly astounding. For example, Bangladesh’s per capita energy consumption is slightly less than 2% of US energy consumption. This difference in energy consumption means that salaries can be much lower, and thus products made in Bangladesh can be much cheaper, than those made in the United States. This is part of our competitiveness problem, even apart from the energy mix problem mentioned earlier.

In my view, globalization brought on many of our current problems. Perhaps globalization could not be avoided, but we should have foreseen the problems. We could have put tariffs in place to make a more level playing field.  See my post, Twelve Reasons Why Globalization is a Huge Problem.

Inadequate world oil supply isn’t exactly the problem. The issue is far more that the price of oil extraction is rising.  The price of oil extraction is rising for a variety of reasons, an important one being that we extracted the easy to extract oil first, and what is left is more expensive to extract. Another issue is that oil exporters now have large populations that need to be kept fed and clothed, so they don’t revolt. This is a separate issue, that raises costs, even above the direct cost of extraction. There is no reason to believe that these costs will level off or fall, no matter how much oil the US produces using high-priced methods, such as fracking.

When oil prices rise, wages don’t rise at the same time. In fact, in the US there is evidence  that wages stagnate when oil prices are high, partly because fewer are employed, and partly because the wages of those employed flatten.

Figure 5. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

Figure 5. High oil prices are associated with depressed wages. Oil price through 2011 from BP’s 2012 Statistical Review of World Energy, updated to 2012 using EIA data and CPI-Urban from BLS. Average wages calculated by dividing Private Industry wages from US BEA Table 2.1 by US population, and bringing to 2012 cost level using CPI-Urban.

The countries that are most affected by rising oil prices are the countries that use oil to the greatest extent in their mix of energy products. In Figure 3, that would be the PIIGS. The rest of the US, EU-27, and Japan would be next in line.

When oil prices rise, consumers need to balance their budgets. The price of oil products and food rises, so they cut back on discretionary items.  Their smaller purchases of discretionary goods and services means that workers in discretionary sectors get laid off.

Businesses find that the price of oil used in manufacturing and shipping their products has risen. If they raise the sales price of the goods to reflect their higher costs, it means that fewer people can afford their products. This too, leads to cutbacks in sales, and layoffs of workers. Sometimes businesses decide to outsource production to a cheaper country, or use more automation, as a way of mitigating the cost increases that higher oil prices add, but automation or outsourcing also tends to reduce US wages.

The net effect of all of these changes is that there are fewer workers with jobs in the countries with high oil usage. This reduces the demand for oil in the high oil usage countries, both from business owners making goods and from the consumers who might use gasoline to drive their cars. This price mechanism is part of what leads to the oil consumption shift we see in Figure 1.

We are dealing with is close to a zero-sum game, when it comes to oil supply. The amount of oil that is extracted from the ground is almost constant (very slightly increasing for the world in total). If prices stayed at the low level they were in the past (say $20 barrel), there would not be enough to go around. Instead, higher prices redistribute oil to countries that can use it manufacture goods at low overall cost. Workers in factories making these goods are then able to afford to buy goods that use oil, such as a motor scooter.

Citigroup recently released a report titled, “Global Oil Demand Growth, – the End is Nigh.” Its subtitle says,

The substitution of natural gas for oil combined with increasing fuel economy means oil demand is approaching a tipping point.

This is out-and-out baloney, for a number of reasons:

1. There are way too many of “them” compared to the number of “us,” for energy efficiency to make even a dent in our problem.

2. When we look at past oil consumption, changes in vehicle energy efficiency did not make a big difference.

3. Substituting natural gas for oil still leaves cost levels for the US, Europe, and Japan very high, compared to those for the rest of the world, where little energy is used.

4. There are really separate markets in many parts of the globe. Our market is collapsing because of high price. Perhaps increased efficiency and natural gas substitution will help low-cost producers until they reach a different limit of some sort.

Let’s look at these issues separately.

There are way too many of “them” relative to us, for energy efficiency to even make a dent in our problem.

If we look at world population, this is what we see:

Figure 6. World population split between US, EU-27, and Japan, and the Rest of the World.

Figure 6. World population split between US, EU-27, and Japan, and the Rest of the World.

Using a ruler, we could probably make fairly reasonable projections of future population for each of these groups.

If we look at per capita oil consumption for the two groups separately, there is a huge disparity:

Figure 7. Per capita oil consumption separately for the group US, EU-27, plus Japan, and for the rest of the world, based on BP's 2102 Statistical Review of World Energy, and population statistics from EIA (since 1980) and Angus Maddison data. (earlier dates).

Figure 7. Per capita oil consumption separately for the group US, EU-27, plus Japan, and for the rest of the world, based on BP’s 2102 Statistical Review of World Energy, and population statistics from EIA (since 1980) and Angus Maddison data. (earlier dates).

Per capita oil consumption for the EU, US, and Japan group peaked in 1973–a very long time ago. In recent years, it has been drifting down fairly rapidly, just to keep up with a slight per capita rise in oil consumption of the Rest of the World. Even with recent changes, per capita oil consumption of the EU, US and Japan group is more than 4.5 times that of the rest of the world.

If cars were made more efficient, more people could afford them. The market for cars is unbelievably huge, compared to today’s market, if costs could be brought down. Furthermore, gasoline accounts for less than half of US oil consumption. Even if efficiency were improved to allow cars to use half as much fuel, it would save a little less than one-fourth of current oil consumption. How far would this oil go in satisfying the needs of 6 billion other people–and growing every year?

When we look at past oil consumption, changes in vehicle energy efficiency did not make a big difference.

If we look at per capita oil consumption in the US, split between gasoline and other oil products, we see that the big drop in oil consumption came from the drop in other oil products–that is the commercial and industrial part of US oil consumption.

Figure 8. US per capita consumption of oil products, split between gasoline and other. Total consumption from BP's 2012 Statistical Review of  World Energy. Gasoline consumption from EIA. (Amounts include biofuels.)

Figure 8. US per capita consumption of oil products, split between gasoline and other. Total consumption from BP’s 2012 Statistical Review of World Energy. Gasoline consumption from EIA. (Amounts include biofuels.) Difference by subtraction.

The amount of fuel used for gasoline has stayed in the 10 to 12 barrels a year per capita band, since 1970, in spite of huge improvements in vehicle efficiency.

I recently wrote a post called Why is US Oil Consumption Lower? Better Gasoline Mileage? In it, I looked at the decrease in US oil consumption between 2005 and 2012. I concluded that the majority of the decrease in consumption was due to a drop in commercial use. Only 7% was due to an improvement in miles per gallon for gasoline powered vehicles.

Substituting natural gas for oil still leaves the US (as well as Europe and Japan) very high priced, compared to the rest of the world, that doesn’t use much energy.

Living in the US, Europe or Japan, it is  hard to get an idea of the cost structure of the rest of the world. We are so far above the cost structure of the rest of the world that substituting natural gas for oil would do little to fix the situation.

Figure 9. Photo I took of an auto-rickshaw while visiting India in October 2012. A total of 10 of us (including driver) traveled for several miles in a three-seated version of one of these. Those of us on the edges held on tightly to the frame, because there was not room for all of us.

Figure 9. Photo of an auto-rickshaw I took while visiting India in October 2012. A total of 10 of us (including driver) traveled for several miles in a three-seated version of one of these. Those of us on the edges held on tightly to the frame, because there was not room for all of us.

We can also debate how much substitution of natural gas will actually do, and in what timeframe. In the US, natural gas is temporarily very cheap. But it costs more to extract shale gas than the market currently pays, in many areas. Also, a recently University of Texas study showed that Barnett Shale was past peak production, if prices do not rise.

There are really separate markets in many parts of the globe. Our market is collapsing because of high price. Perhaps increased efficiency and natural gas substitution will help low-cost producers, until they reach a different limit of some sort.

When a country is not competitive, it is not just oil consumption that drops, but consumption of other energy products as well.  If we look at the per capita energy consumption of the US, EU-27, and Japan combined, we see that non-oil energy consumption per capita reached its peak in 2004, and is now declining (Figure 10, below).  If consumers are too poor to buy oil products, they are also too poor to buy products made with other types of energy.

Figure 10. Per capita consumption for the sum of the EU-27, US, and Japan, based on BP's 2012 Statistical Review of  World Energy.

Figure 10. Per capita consumption for the sum of the EU-27, US, and Japan, based on BP’s 2012 Statistical Review of World Energy.

The Rest of the World followed a very different pattern of energy consumption. Non-oil consumption soared, on a per capita basis. Oil consumption also increased on a per capita basis.

Figure 11. Per capita energy consumption for the Rest of the World, based on BP's 2012 Statistical Review of World Energy.

Figure 11. Per capita energy consumption for the Rest of the World, based on BP’s 2012 Statistical Review of World Energy.

More detailed data shows that the big increase in non-oil consumption was a huge rise in coal consumption, after China was admitted to the World Trade Organization in December 2001.

How does peak oil demand work out in the end?

I would argue that lack of competitiveness in world markets is a limit that the US, EU-27 and Japan are hitting right now, but at slightly different rates. EU-27 now seems to be ahead in the race to the bottom, partly because its combined currency. I wrote a post in March 2012 called Why High Oil Prices Are Now Affecting Europe More Than the US, explaining the situation.

It seems to me, though, that a big piece of the problem with lack of competitiveness gets transferred to the governments of the affected countries. This happens because collection of tax revenue lags, because not enough people are working, and those who are working are earning lower wages. At the same time increased payouts are needed to stimulate the economy, and to provide benefits to the many without jobs.

Governments increase their debt to meet the revenue shortfall. They reduce interest rates to record-low levels, to stimulate the economy.  They also use Quantitative Easing, or “printing money” to try to lower long-term interest rates, and to try to make their exports more competitive. Unfortunately, these actions do not solve the basic structural problem of high and rising world oil prices, and the fact that these rising prices make their economies increasingly less competitive in the world marketplace.

One possible way I see of the current situation working out is that the total energy consumption (including all types of energy products, not just oil) of the EU, US and Japan will continue to fall, as high-priced oil continues to erode our competitive position in the world marketplace.

Figure 12. One view of future energy consumption for the EU-27, US, and Japan. Historical is based on BP's 2012 Statistical Review of World Energy.

Figure 12. One view of future energy consumption for the EU-27, US, and Japan. Historical is based on BP’s 2012 Statistical Review of World Energy.

The slope of the decline is based on the type of decline experienced by the Former Soviet Union, in the years immediately following its collapse. This pattern might reflect a combination of different patterns for different countries. Greece and Spain, for example might continue to fall quite quickly. The US might lag the EU in the speed at which problems take place. The likely path seems downward, because any action taken to fix the government gap between income and expense can be expected to have a recessionary impact, and thus have an adverse impact on energy consumption.

The Rest of the World is now growing rapidly, but at some point they will start reaching limits. One of these limits will be lack of an export market. Another will be lack of spare parts, because businesses in the US, Europe and Japan are failing for financial reasons. Some of these limits will relate to pollution and lack of fresh water. The effect of these limits will also be to raise costs. For example, a shortage of water can be worked around through desalination, but this raises costs. Lack of spare parts can be worked around by building a new plant to make the spare part. Pollution problems can be mitigated by pollution controls, but these add costs. These higher costs, when passed on to consumers will also lead to a cutback in demand for discretionary goods, and the same kinds of problems experienced in oil exporting nations. Thus, these countries will also have “Peak Demand” problems, because of rising prices, related to limits they are reaching.

I don’t know exactly how soon the Rest of the World will hit limits, but given the interconnectedness of the world system, it would seem to be within the next few years. Figure 13 shows one estimate of how this may occur.

Figure 13. One view of energy consumption for the Rest of the World. Historical data is based on BP's 2012 Statistical Review of World Energy.

Figure 13. One view of energy consumption for the Rest of the World. Historical data are based on BP’s 2012 Statistical Review of World Energy.

Here again, individual countries may do better than others. Countries with little connectedness to the world system (for example, countries in central Africa) may have fewer problems than others. Of course, their energy consumption (of the type measured by the EIA or BP) is very low now. They may use cow dung and fallen branches for fuel, but these are not counted in international data.

Figure 14, below, shows the sum of the amounts from Figures 12 and 13. Thus, it gives one estimate of  future world energy consumption based on Peak Demand considerations.

Figure 14. One view of future energy consumption for the world as a whole. History is based on BP's 2012 Statistical Review of World Energy.

Figure 14. One view of future energy consumption for the world as a whole. History is based on BP’s 2012 Statistical Review of World Energy.

If there is a silver lining to all of this, it is that world CO2 emissions are likely to start falling quite rapidly, because of Peak Oil Demand. World CO2 emissions could quite possibly drop below 20% of current levels before 2050. In the scenario I show, energy consumption drops faster than forecasts such as those put out by the Energy Watch Group. Such forecasts do not take into account financial considerations, so are likely overstated.

The downside of Peak Oil Demand is that the world we live in will be very much changed. Population levels will likely drop, indirectly because of serious recession, job loss, and cutbacks in government benefits. The financial system will need to be completely revised, because debt financing will make sense much less often than today. In fact, in a shrinking world economy, money can no longer act as a store of value. There no doubt will be some people who survive and prosper, but their lives will likely be very different from what they are today.

198 thoughts on “Peak Oil Demand is Already a Huge Problem

    • One reason its not a sustainable system has to do with resource needs–ever increasing, as pollution is also ever increasing, in a finite world. This is not Ponzi Scheme, but it is another very real reason it isn’t sustainable.

      But there is also the point that we are planning on ever more people to keep the system growing, also in a finite world.

      • The word ‘planning’ applied to the policies of our ‘leaders’ – in willful ignorance of resource constraints – seems ever-more delusional, does it not?

        Debate is still – in order to satisfy vested interests, rich or poor – mostly about distribution of wealth (essentially a 19thc concept) without any reference to the real basis of that wealth, in resources and energy! It is notable, I think, that an assumption of constant growth and ignorance of resource constraints largely informs progressive/socialist programmes, just as much as it does right-leaning thinking. One would have hoped for better from progressive groups, but their needle is stuck in the same old channel of 80 years ago………

        It is why I cannot see any planned transition to a lower level (in fact a much saner if harder way of living) coming from our ‘elites.’ It’s for the individual, and the individual alone, to take the first steps, within a decaying and antagonistic economic structure. And then carry other people with them……maybe the politicians will catch up later?

  1. Gail, Your comment about the lack of solutions from left and right is telling. I’m not sure there can be an utterable political solution, for one simple reason: the politician who starts crying ‘the sky is falling’ will have to start looking for another line of work. On the other hand, why should we expect some political animal to solve this anyway?

    If the biggest problem is the human addiction to automobiles, which it is, I believe, then the only solution we can seriously provide is a) alternative fuels, and b) electric vehicles. The first has stricter practical limitations than the second, and significant progress is being made on electric, hybrid and even hydrogen power vehicles.

    I invite you and anyone who’s interested to google ‘electric vehicle batteries progress’ or anything close to that phrase. Over the last few years there’s been good progress, and the experts in the field all expect electric vehicle sales to begin growing in the next several years. It’s not beyond conception that within 10 years approximately 15% of new car sales will be non-ICE, and growing. That should relieve some of the demand for liquid fuels, and continuing expansion of EVs in the following years will continue the positive effect. Do we have enough time? Well, maybe, and maybe not, but it’s the best I can do this evening.

    Besides asphalt, fertilizer and fuel, what else do we need petroleum for?

    • By, “do we have enough time”, are you inferring that a switch to electric vehicles is all that’s needed to solve the multiple predicaments bearing down on our industrial civilisation? Even the transport predicament is unlikely to be “solved” with electric vehicles (assuming the other predicaments don’t get us in the meantime); as vehicle numbers continue to increase, and because oil plays such a crucial part in the manufacture of vehicles, I can’t see other limits (perhaps with battery materials, perhaps resource extraction and manufacturing limits) not kicking in before the take up of electric vehicles gets much beyond significant. Then there is the problem of air travel/freight and shipping.

      Any approach to our predicaments will have to involve serious lifestyle changes and probably ones that don’t require the use of non-human-powered vehicles for the most part.

      • Hi Tony:
        In previous discussions Gail stated that she anticipates increasing financial distress (global or regional discombobulation? single or serial partial collapse(s)? etc, TBD) to arrive in the next 10 to 20 years. I’m not overly confident of my understanding of the potential scenarios or their causes or sustainers, but I am convinced that our century-long affair with liquid fuels is at the root of it all. If you haven’t read all the other blog discussions, then I welcome you to some enjoyable reads.
        BTW, a recent news report from China makes the point: While China’s GDP increased by less than 8% in Jan-Mar, automobile sales climbed 22%. And it’s not just China, of course, it’s wherever humans congregate. We are addicted to our cars, and every developing economy demonstrates its addiction to automobiles as fast as it can.
        If apocalypse can be averted by switching from petroleum-fueled vehicles to battery powered ones, then why shouldn’t we try to do so as a matter of first order, rather than compiling lists of actions that might offend a faint-hearted humanist democrat, not to mention a devout religious.
        There is a principle of engineering, I believe, that emphasizes using the simplest solution that can achieve the desired results. And if a second or third step is required, then take them.
        Regarding your suggestion regarding ‘non human powered vehicles, I would respectfully direct your attention to the rail, ship and airborne freight and human traffic that these carry. Yes, we complain about tractor-trailelrs, but trains carry about 50% of freight in the USA.
        Do we think that all trade will cease? That mining and manufacturing and all those ‘pre-post-industrial’ boring things that sustained human economics before computers will magically disappear because we’re all going to be weeding our vegetable patches?
        Please give us a few generations to shed some of the excess population that a bunch of wannabe Pol Pots have already complained about. If such ideas continue coming to the fore I think I might just go into the concrete business and specialize in bunkers.
        Cheers, Chris

        • “If apocalypse can be averted by switching from petroleum-fueled vehicles to battery powered ones, then why shouldn’t we try to do so as a matter of first order”

          Well, I’ve yet to be convinced that it can be so averted. Yes, fossil fuels have been responsible for allowing us to get into this mess but getting rid of fossil fuels (even if that were possible) will not correct that mess. I don’t believe it is possible to run our society on other kinds of energy, so it will collapse with energy scarcity alone. However, energy scarcity is just one of many predicaments we have so apocalypse will not be averted by trying to address one of our predicaments.

          I’m sure that, while extend and pretend mentality prevails, some “progress” will be made with electric vehicles and alternative energy infrastructures but delaying collapse for longer may just increase the numbers of people who suffer and may make it worse for everyone living them. We will need to live very differently in the future so I’d rather we started to do that than try to keep BAU going a bit longer, to destroy even more of the planet than we’ve already done.

    • Oil is needed to keep the whole system together. Electricity wouldn’t be produced, without oil at crucial stages–for greasing parts that need it in electric power plants, for vehicles repairing transmission lines, for helicopters helping repair transmission lines and repairing wind turbines (especially off-shore). Our water and sewer systems in turn depend on electricity, so in a way, oil is needed to keep all of these going.

      Oil is used as a raw material in producing all kinds of stuff, from medicines, to dyes, to building materials, to fabrics, to herbicides and pesticides.

      Without oil, we are in a heap of trouble.

      • When I was working at the tax office one time I met an oil man and old guy that seemed seasoned and to the business and I asked him about how much oil was still out there and he commented something like the whole USA is punched full a bunch of holes like a pin cushion.

        Sounds like Gail sees things going to a tipping point in the next couple of years, it would not take much to upset things, I worked at Union 76 in the 1970’s when we had the Iran issue that they said started shortages and I remember the angry customers lined up around the block waiting to get only I think we were allowed to give each car 6 gallons and on odd and even days depending on the first letter or number in the license place. So how it starts.

      • Concur with your description of the essential nature of petroleum products in a modern industrial society, for lubrication and lots more. Notwithstanding, if we could gradually transition from and ICE powered personal vehicle system to an electric one that was cheaper and better and avoided the traps of the petroleum based method, what would be the effects? Positive as well as negative? A subsidiary question would focus on the transition period: what ‘relief’ would be provided if 5% of personal vehicles sold in, say 2022, were EVs rather ICE powered? Same for 10% a few years later? Etc.
        Figgerin’ all that out might take awhile, and surely it’s a GIGO project, but t’would probably be worth the effort. Isn’t that why God made economists? Would you believe engineers?

    • Too true. The politician can only say ‘The sky’s falling!’ if he adds: ‘But vote for us, and were back to the land of milk and honey!’

      Some people say this is partly a problem of a very poorly-educated, universally franchised electorate, but I find that both highly educated and uneducated people often display the same reluctance to face reality: there is surely a biological, evolutionary factor at work here? As Doris Lessing said, the Earth is both very beautiful, and also violent and terrifyingly dangerous for us: if we hadn’t as a species developed the capacity to ignore overwhelming-seeming threats, as well as reacting to the the lesser ones, we’d probably all just lie down and die, or go mad!

      My dog is happy because he can’t see tomorrow, and he eats everything he can get his paws on…..

  2. I did not mean to change the tune of our discussion, but If you do not believe in the chemtrails
    then you must understand the scope of the military industrial complex and and its energy use.
    I have not seen a chart on the stated use of energy, but I can only imagine the amount that is used in secret and military type operations, it must be massive.

    Although we are concerned about secret programs that we did not authorize or vote for that are underway, they do have control over the last remaining resources for the most part and these resources may not be used in our best interest.

    Like Gail said about China, they have been so busy securing the best of the last big sources of oil, gas and anything of value.

    Are we fighting a secret war already lost? Due to the secret operations? Much money is missing and it appears the financial collapse will come first.
    Too much secrecy surrounds our world and the USA these days which lead me to believe that trouble is ahead.

    • Hi Scott, I have friends who believe in a wide range of conspiracies and concerns although chemtrail is a bit out there even for them. But, HARRP and other issues still preoccupy them and I think the science pretty well dismisses most exotic claims.

      In my limited experience there are plenty of secrets and agendas and covert actions, the US, the UK, France- the old powers have been busy undermining governments to keep their hands on resources. Once we just invaded, let me rephrase that, invasion was the old policy now we have tried to be more subtle.

      The biggest secret in my view is what is really going on behind the profit sheets and future projections. Boring old conspiracies like Enron, RBS in the UK, the whole subprime market, all looked great until it fell a part. I don’t think the gas frackers are telling the truth, I don’t think BP is telling the truth, or Saudi or China concerning their coal reserves.

      The secret world of the US is out in the open, the amounts spent by the whole arms industry and how much influence the arms, oil, wealthy industries have over government. What was spent in the last election $6 billion?

      the biggest trick is how the 1% have recruited half the population to defend their way of life. Conspiracies happen, I believe the automotive industry bought out tram companies in the US in the 30s to shut them down and get people to buy cars. People didn’t want a car, just as most of the worlds poor do not want to live in city slums and work in polluted factory environments. Often, just like in Victorian Britain they were driven from their rural lives into the city.

      • Hi,

        Yeah, I hear you man! That was a refreshing post you put up. You know these are relevant to what we are dealing with here because they are standing in the way and blocking us from doing what we should be doing to make things better with all this secrecy.

        If our precious resources are being wasted on covert programs and draining us financially it surely paralyzes all of us and brings trouble sooner than later. And, I think we can really see that in the last say couple of decades.

        No one wants a government full of secret activities and afraid that we have and many of us may work for them in ways we do not fully understand. Just doing our little jobs. So now things are going on outside our power to control or vote on.

        I and retired now and was a government employee for nearly 30 years a local tax authority and I worked with business taxes and over nearly thirty years things really changed so fast and not in a good way, my employer became authoritative and putting cameras on staff and I was a manager and expected to monitor the screens etc. I was used to the old way of trusting my employees and working with them, Because of the change in working environment I retired a bit early, but I had planned to work for five years longer but I retired at 50 and moved to Oregon where I work to make my life as self sufficient as I can, but still I get a pension and I sure need that check to get things in town you know. Up here in Oregon it is harder to grow food that really feeds you through the year as most things all come into harvest the fall. But each year we have been doing a bit better, drying foods and putting them in jars to make soups in the winter, but my point is that I think it is pretty hard to grow enough food to feed my self for a year on an even my little acre.

        These authoritative and secretive governments stand in the way, how many new needless agencies have been created in recent years? One has to wonder why we are so many trillions in debt, perhaps these secret programs that you or I may not have voted for.

        There are things going on behind our backs, just look at the bail outs of the banks in 2008

        If we cannot get the crooks out and get things under our control again we have a problem Houston!

        But you know it starts early on and it is now in our education system and many people have been taught to believe that is okay what they see happening today.

        • I once worked for the Guardian Group in London, a very ‘liberal’, super-progessive media group: but I can tell you, for the staff the level of secret monitoring was like being in East Germany! Secret phone taps, informers, false accusations, the lot. This terrible poison has spread everywhere in the last two decades. And the participants are just ordinary people (this shocked me the most).

          It’s good to be out of that world now, and working for myself. Even when orders fall, and with less money, there’s more dignity in it

  3. HYDROGEN! Could this save us?

    I saw what Chris Johnson wrote on our progress with electric vehicles. There is hope especially with Hydrogen power I think.

    Chris you mentioned Hydrogen and when I studied solar in the 1980’s, I became interested in that and I believe that Hydrogen that can be stored in hydride metals and that could be one of those secret shelved sources of energy could be still sitting on the so called shelf.

    Solar can be converted to hydrogen, but trouble with it is the gas molecules are so small they cannot be easily contained as even our modern day propane tanks will not have good enough seals to contain the small molecule but powerful gas. Our engines and tanks will need new super tight seals to hold Hydrogen gas to operate safely. The stuff is powerful and is very small in atoms and easily escapes a traditional propane tanks seals I have read.

    When I studied solar in the 1980’s and 1990’s I have studied the hydride metals, I had a vision back then that solar could make a lot of hydrogen power in the deserts using large fields of solar panels and the energy could be stored in these hydride metals which is like sand and could be safely moved around. So we could transport the stuff as kind like sand and keep it cool and then heat it to release a huge amount of Hydrogen Gas.

    When these Hydrogen charged metals are heated they they release their power, I envisioned only the heat needed from an exhaust pipe needed to induce the process to provide heat if the metals were used instead of the gas in a car but I thought, but I still do not know know the cost and what would be feasible. Just some thoughts I came up with long ago that never went anywhere.

    I was excited about this because burning Hydrogen only generates water vapor and problem solved, No green house gases.

    Is it too late to reverse the damage? Perhaps, are things being hidden from us, perhaps?

    You know talking about shelved things that can help this could be one.


    • As you point out, hydrogen is a storage method, and I remember a BBC2 Horizon program in the 80s which looked at storing in metal. The issue is the cost of converting solar to hydrogen and moving it. We do have some co2 credits [although I join those who feel we have peaked and it is a low carbon future anyway] so mixed with gas it could extend our fossil fuel use. The problem at the moment is that the US uses less coal and it is exported to China, and likewise our reduction in petrol/gas is soaked up elsewhere.

      • I cheerfully acknowledge my limitations, one of which may well be a lack of appreciation for hydrogen as a motor vehicle fuel. All the money and apparatus needed to separate the single electron from the nucleus, and our lack of success at doing so after more than two decades of R&D, make one question why we’re even trying if the stuff just won’t cooperate. Far better to just use the already separated electrons, and then we wouldn’t have to worry about explosiveness either.

        • I had envisioned long ago these huge Hydrogen Production Centers in the Desert with huge solar voltaic panels for miles and miles, if we could find a way to transport it safely, it is such a small atom and leaks past most tanks today, That is why I brought up Hydride metals, you could perhaps use it like a sand box gas tank in a car. I am not sure about the availability of these and how much they cost, I think I will look into that later tonight. Are they widely cheaper means to store the Hydrogen, I do not know yet,

          There are so many of us now and the size anything would be huge. A combination of things could buy us time.

          I also saw a device that makes a small amount of hydrogen and injects it into your engine from excess electric power, I think it cost like a 100 bucks or something. But that idea is interesting, we need to use what is left more wisely and may there be time? Or a bit more time stave off total collapse that no one wants to see?

          • When the Germans put their political and industrial minds to it they seem to have settled on hydrogen as a storage medium for excess solar/wind. It makes some sense and you can mix it with natural gas. As for danger hydrogen is safer than petrol/gas, but it comes down to cost. This blog has been an eye opener for me in that I had no real idea just how cheap oil has been. Sure coming generations will pay the real cost, and ours will start seeing it as comparable to other alternative energy.

            It is interesting times- from a historian pov, now is historical in human history [if that makes sense!?] Will the future be terminal? will China lead the way or will it be the free market as investors switch horses? Or will it be a kind of Euro third way?

            A hydrogen economy? a fuel cell one? or batteries? If it wasn’t so scary it would be exciting times. In the UK we had a tv show from the 60s to a decade or so ago called Tomorrow’s World, and in the 70s the oil crisis looked ahead to future without oil- it was exciting then but 35 years on I’m waiting.

            • It does seem that Hydrogen is the best thing out there I have seen if we can store it and make it less volatile. It would really be extra special nice if there was way we could mix it with a water like substance and turn it into gas and use our existing supply lines without a corrosion problem, no polluting cars everywhere!

              I have been saying these things may be possible and may exist and be shelved right now until the Oil Energy and Gas is played out and all the money can be extracted by those that are greedy.

              If they were not so greedy they would see we need to make this change and save oil for things like making plastic things and needed items and not burn it all up for profits.

              But it sadly looks like if there these alternatives it may be past the time, as we should have really got going on these 20 or more years ago. We may have come to far, and as Gail said and I agree our financial system in not in a place that afford to fund these multi billion or even Trillion dollar projects that would be needed to move to Hydrogen.

              We will see, but it can be made many ways with solar, nuclear, cold fusion? wave, hydro, geothermal etc. It takes electricity. But there may be another process to make hyrdogen, a way to splite the H20 molecule that we do not yet know of publicly. A very powerful energy as in the sun. Greed may be our demise as they likely will continue until they can no longer profit.

              The 1970’s would have been a great time to start this and I believe we had the means then, but it did not happen.

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  5. thanks Gail for another stimulating post and to the contributors – you certainly get a high level of debate in your posts which is commendable.

    I think there are historic examples of where higher standards lead to market advantage, like Robert Owen [a local hero my way- although not many people know that locally!] where fellow industrialist were dismissive of looking after their workforce despite Owen’s success.
    The optimist in me believes we could have a sustainable economy in the EU- not necessarily the world- but we would spend more on energy and food and less on new iphones and holidays but still have a good standard of living- good health- good environment and good education which are not measured in GDP terms. Possible but we will see if we are stupid or bright as a species.

    Gail- your posts have stimulated much curiosity so I have a request either for a link or possible a new post.

    I have a suspicious nature not helped by recent posts and the state of the fossil fuel industry. The $1 trillion capital expenditure per year raises my interest, I was trying to find a graph that relates to discoveries, the cost of finding them, yearly inflation and how much they really add to the oil pool. Not the confusion between resource or reserves just the actual amount. Very few companies would be able to sell such continued rising in costs with less production.

    It occurs to me that there is a ratio to the amount of PR and what is being covered up.

    I wonder if the road to doom- the decline, is being spun in such a way as to hide the decline as much for the shareholders who would switch to solar if they thought their pension would be at risk in BP say. As for Saudi, exports are down and home consumption is up- either way it is a decline but I wonder if it is just a means to hide decline. I tried finding data on the number of new power stations and new demand [i.e. increased consumption] and car sales but neither seem to be available. [apparently the place still suffers electricity shortages].

    • We should all try to remember that a decent life was lead many parts of Europe before the crazy cheap-fuel civilization developed.

      I like to read books of travel by British travellers in the 1830’s, before Europe industrialized and when they were very proud of their new-found wealth, power and modernity. Poor plumbing figures highly in their criticisms of European countries (but ignoring the superior nature of heating systems in Germany, etc) Most of the comments are insufferable.

      But what really stood out in one author (and can be detected in others) is what he said about Swiss peasants (I paraphrase): ‘By our modern standards they are poor and lack luxuries, and their life is one of constant labour, but it is labour on their own account, and when they return at night to enjoy the protection of well-built, substantial, houses, for which they owe no-one any debt, have ample supplies of good food, firewood, blankets and linen, can we really call them poor?’

      It all went wrong about then……….how many of us now in the aftermath of the cheap-energy Utopia live in substantial houses for which we owe nothing, inherited from our forebears,are so securely set-up in life, so free of any fear except disease which would prevent one labouring?

  6. First of all I would like to say thank for an Insight full and a well written article.

    I am quite fascinated about energy mysel and regularly publish reviews and articles.

    I think consumption per capita in developed world will either stay or go down, as they have no manufacturing power ( apart from Germany and Russia). So it is only comuting and heating.

  7. There has been quite a bit of discussion about whether the preponderance of opinion on this blog is right wing. That requires distinguishing between ‘right’ and ‘left’. But there is another alternative: Anarchic. Dmitry Orlov writes about this pretty frequently. Charles Hugh Smith also upholds a pretty anarchic position pretty frequently.

    Consider this from Rob Hopkins post today:

    a very interesting discussion about the balance between communities coming together and self-organising to make things happen, a la Transition, and governments, local and national, using the cloak of Austerity to divest themselves of their responsibilities. This was Lightbulb Moment 5, reinforcing the importance of this discussion. Should communities fill holes and services left by budget cuts, or does doing so somehow legitimise and lessen the impact of those cuts? There was a sense that this was a real tension at the heart of the community resilience debate, and increasingly so as Austerity continues to bite.
    It echoed something I had read in a recent interview with Noam Chomsky, where he had said, in a discussion about how Occupy had stepped in to help communities following Hurricane Sandy:
    “The wealthy and the corporate sector are delighted to have government back off, because then they get more power. Suppose you were to develop a voluntary system, a community type, a mutual support system that takes care of social security – the wealthy sectors would be delighted”.

    Back to me:
    An Anarchic position would be that dependence on some greater authority is the problem. It really doesn’t matter whether the dependency is to the State, the Corporation, or the Community. The legitimate role of government is to establish the conditions of law such that each individual or family can ‘pursue happiness’ as they see fit. If the individual or family is smart, they will cultivate personal relationships with people around them such that help is likely to be offered when it is sorely needed.

    Conside my State…North Carolina. The idiots in the legislature are trying to pass laws forbidding the seas to rise. When all those people who have built houses on barrier islands are flooded, they expect the US government and the State government to help. If they knew that no help was going to be forthcoming, except perhaps for what they could get from neighbors, then the behavior of insurance companies and the behaviors of people building houses would most certainly change.

    In the real world of politics, if you have built a million dollar house on the sand, you can probably get the Governor to answer the telephone and listen to your plea.

    The great wrong turning was when we decided to try to make some organization (which cannot love us) obligated to help us in our hour of need. If ‘the community’ is understood to be those people with whom bonds have been forged over the years through mutual assistance, then that is one thing. If, by ‘community’, we attempt to get the same thing out of a politically delineated piece of geography…well…good luck with that unless we are rich enough to matter politically.

    An intelligent Anarchist will starve the State for money so that it cannot get its citizens in hock and cannot bail out the wealthy.

    Don Stewart

    • Don

      Well said: ‘an entity that is obligated to help us, but which cannot love us’ – I’ve never seen it put better! That is the moral horror of the welfare state, centralized societies which have developed post-WW2, and which seemed so affordable, just and benign while we had cheap energy.

      The authorities are divesting themselves of responsibilities – and good riddance to them.

      But they’ll still trample across my vegetable patch and come banging on my door for their taxes, ever higher taxes, of that we can all be sure.

      But the Corporations won’t hear anyone at their door……

      • Here is a concrete example of Anarchic thinking in action which just happened.

        I work at a farm for food. A neighbor buys a CSA share. Each week, I pick up his share and take it to his house. Next week, he will be gone. The CSA deal is that if you don’t show up to get your food, you don’t get any money back.

        The neighbor could give the food to me…but I don’t need it. I gave him two options. First, I can take it to the local food bank. Second, we have a woman with four childen who has recently been working at the farm for food. I can give it to her. I know she will appreciate it, because we have talked about how much health-giving greens cost in grocery stores and how hard it is to afford to feed them to four children.

        The food is going to the woman. Not that the food bank is terrible. But it is a bureaucracy like any other. Everything is impersonal. But this gift is going to work because the farmer has gotten to know the woman, the woman is willing to work, I work at the farm, I do a little good deed for the neighbor every week, and all of us are thinking about hungry children.

        The community garden I belong to is participating in a ‘compost to food’ initiative which links businesses that generate waste (such as restaurants) with people who know how to make compost with community gardens who need compost and are willing to give some of their bounty to food banks. This is a good idea and could never come out of the Dept of Ag in DC.

        No…the compost idea is not perfect. Ideally, compost should be made on site to avoid hauling it around. And I would prefer that compost be given to community gardens who are willing to designate allotments for poor people to use rather than make them dependent on our largesse. I’d rather teach them to fish than give them fish. But it is so much better than Food Stamps that there is simply no comparison.

        Don Stewart

    • Left or Right? I suppose if I were to label my politics it would be anarcho-syndiclist – but don’t hold me to the detail. I am a socialist in the sense of ‘freedom through equality’. Even stances like the size of government is a fuzzy issue for me- somethings government well equipped to do like planning road systems, and healthcare [but there always room for improvement] defence and climate change mitigation. Science and technology have in recent years been government projects- sure you can look at say the iPhone but each component from internet to chip to screen was publicly funded.

      Left and right does pale when it comes to politicians and the voters with one offering expectations to other. At the moment it is a pretty destructive symbiosis.

      The issue of state versus private as to who is best will be played out in the coming decade when it comes to energy and climate. Perhaps the real issue is if the contributors on this blog are optimistic or pessimistic.

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