Big Carrot, Bigger Stick: Peak Oil

JPods can create self-reliance. There is a huge carrot, 85 cents of every dollar spent on oil can be recovered as profits or to pay for the jobs and materials to build the infrastructure. Millions of jobs, vast innovation, better service and at lower costs.

There is a huge carrot and a bigger stick. By 2012 we will fix a choice that will play out over the next 20 years. We will reduce energy per passenger mile by 85% or nature will reduce the number of passengers by 85%. This is a fact, brutal if we fail to face it in time to ramp solutions.

Peak Oil is not about running out of oil. The problem is that the second half of oil fields are much slower to extract and require more energy to extract the oil; the size of the spigot and net energy shrink.

There is still plenty of oil and if you could power your car with oil that is in the ground you would have no problem. But if you must get your gasoline from a gas station, then you face unstable prices and uncertain supply.

Peak Oil was in 2005. Economic growth based on oil supply growth will never return. We can grow the economy but it will have to come from efficiency gains such as JPods networks ability to increase transport of people and cargo in cities at 10 times great efficiency that cars and trucks.

Joint Forces Command (all US military services) just released the Joint Operating Environment 2010 with the energy comment:

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day." "A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest." "Energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity." "The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields." Foward by General James N Mattis Eight Presidents delclared dependence on imported oil a threat to national security. In that period oil imports have increased from 20% to 65%. JPods' intent is to break the institutional barriers that have created this Potato Famine potential. The Daily Show With Jon Stewart Mon - Thurs 11p / 10c An Energy-Independent Future www.thedailyshow.com Daily Show Full Episodes Political Humor Tea Party

Following is a summary of Peak Oil. Peak Oil is a civilization killer.

1. Economic Growth = Energy Growth time Efficiency Growth.
Per Capita energy peaked in 1979. Setting in motion a Mathusian collapse of the economy known as the Olduvai Gorge Theory. Our monolithic dependence on oil is similar to the Ireland's 1840 dependence on a single potato strain.

We have a choice, illustrated in the following two graphs:

• Left Graph: 80-90% die-off and a post-industrial agrarian world.
• Right Graph: Re-tool infrastructure for transportation, power generation and food production. Change the lifeblood of our economy from oil to ingenuity. Repeat the successful re-tooling of communications infrastructure, allow personal responsibility, free markets and small businesses to innovate:
• Victory Gardens - personal responsibility for self-reliance.
• JPods and other Performance Standards transportation systems to increase efficiency 10 to 100 times.
• Feed-in Tariffs - allowing small businesses to generate and sell electricity to increase efficiency 10 to 100 times.

We can live within a solar budget. We will have twice the per capita energy of the World War II generation and manage it with tooling that is 10 to 100 times more efficient than current centrally planned infrastructure. Consider power and low cost of the Internet and cell phones. No one guessed these improvements would progress so quickly when AT&T was de-monopolized in 1984.

World Oil Production stopped growing in 2005 so economic growth stopped and momentum began to decay. Production peaked in 2008 and will raggedly decline forever in the future; existing oil field depletion rates are greater than planned new oil field developments. Perhaps we are blind to geologically slow moving events, creating a monolithic dependence on a single source of energy such as a variety of potatoes in 1840 Ireland, failure to load lifeboats immediately after the Titanic hit the iceberg and oil today.

Our economy is based on five assumptions that are no longer valid:

• Volume: Oil availabiity expanding faster than demand.
• Price: Oil priced at $30 a barrel, gas at $1.45 a gallon.
• Quality: Net Energy of 20:1, 20 barrels available for every barrel used to get more oil.
• Growth: Oil supply will grow to support economic growth.
• Debt: What we cannot afford to pay for, we can borrow from the future.

Quality or Net Enery is deteriorating badly. These graphs show the energy available relative to how much energy it takes to get more energy. Please watch Chris Martenson's presentation on Net Energy. Surplus Energy Economic's Importance

Energy stopped growing in May 2005 and the economy started losing momentum. Shortly thereafter, gas prices started climbing. More and more people were forced to choose between paying for their commute and the home. This DOE graph (not updated since 2004) is a great illustration of interaction between oil and paychecks. The dark blue line is steadily increasing disposable income. The red line is oil prices. The gap in the 1990's allowed people to risk their life's savings to buy a house. Since oil supplies stopped growing in May 2005, prices shot up to squeeze more and more people into foreclosure. The $2,000 a year decrease in disposable income between 2000-2006 matches climbing foreclosures. Click on graphic to right to see cost by city.

It is vital to convert the base of our transportation economy from oil to ingenuity. Before the economy slows to far, it is critical to understand that Demand Destruction equates to Economic Destruction

Jeff Rubin, Chief Economist at CIBC World Markets, recently reported on this decay of economic momentum: Four of the last five global recessions were caused by huge spikes in oil prices and the world economy is coming off the mother of all spikes. Over the past expansion, real oil prices rose over 500%, twice the climb in real oil prices that produced the two biggest recessions in the post-war era: the 1974 recession and the double-dip recession in 1980 and 1982. If oil shocks half the size of the recent one caused the worst recessions in the last fifty years, they're a pretty obvious explanation for the recessions in oil-dependent Japan and Euroland earlier in the year. From where the US economy currently stands, vehicle sales have a much bigger downside than housing starts.

2. Available Exports, Worse than 1973 Oil Embargo

Most of the world's major economies are importers. World Oil Exports measure energy available to drive economies:

• 2005 were 46.342 mbpd
• 2006 were 45.838 mbpd, down 1.10%, 504 mbpd or 184 million barrels below 2005
• 2007 were 44.832 mbpd, down 2.24%, 1,509.7 mbpd or 551 million barrels below 2005
• 2008 looks like 43.8 mbpd, looking like a drop of at least 8% per year after 2010.
• 735 million barrels deficit in 2006-2007 and growing
• 604 million barrels deficit (about) was caused by the 1973 Oil Embargo
• Efficiency must gain at least three times per year to counter oil price / supply decrease per year; fortunately that is possible. PRT and Advanced Renewable Tariffs are a start in the process of changing the lifeblood of our economy from oil to ingenuity.

4. We have known this would happen for half a century, but central planning and subsidies distorted people's perception and how we cause markets to adapt. Aware of daily feedings, the turkey is comfortably unaware of Thanksgiving; people are unaware Peak Oil. Unstable oil prices were our last warning. Oil will be back to $100 by summer. By 2012 our third largest supplier, Mexico will deplete below their domestic consumption. Mexico's fields are depleting at 8.9% per year.

5. Documentary on Peak Oil.

This is very well presented documentary on Peak Oil was first aired in 2006. Before the 2005 Peak Oil was clear.

Note governments' complete denial of the need to prepare.

• Crude oil - All time high crude oil production of 74.30 million b/d reached in May 2005 (EIA)
• Total liquids - All time maximum liquids production of 86.13 million b/d reached in July 2006 (EIA & IEA)
• Status of the production plateau - Plateau of production for over 2 years, since mid-2005.

This paradigm shift exhibited in Sept 2007 when the normally yearly cyclical pricing of gas and oil ruptured from normal and inventories plunged in an effort to compensate. The drop in stock will make the system more susceptible to price shocks. Gas prices lag oil but will likely catch-up at spring planting.

It has taken 37 years to build the Internet to current level of access. It will take at least as long to re-tool transportation away from oil. By the most optimistic estimate we have 26 years. Peak Oil presentation.

We are not going to run out of oil. We did not run out of oil in the last six years, but it did tripled in price. We are running out of oil that can make gas for less than $6 per gallon.

Pollution indicates poor use of a resource. Economic and environmental stress are synonyms

• Road rage, pot holes, air pollution, higher oil prices.
• There is a profit in preempting waste.

Existence depends on nature and the grace from which life struggles.

• We are responsible to not be the locus of our own demise.
• Stewarding the earth is like driving a barge with a 200 year turning radius
  • What we do today may seem insignificant.
  • Events accumulate.
  • Consequences follow.

9. Background

GAO report from March 2007 confirms we are in the midst of Peak Oil or will be before we can completely re-tool transportation.

For current information on energy review Energy Information Agency, the Association for the Study of Peak Oil and The Oil Drum. Cost for planning and building the disaster.

The October edition of Oilwatch Monthly can be downloaded at this weblink (PDF, 1.48 MB, 21 pp).

• CNBC: Matt Simmons, Nov 2, 2007
• CNBC: T Boon Pickens, Oct 18, 2007
• Bloomberg: Matt Simmons, Feb 1, 2007
• GAO Peak Oil Report. See charts below, Peak Crude in May 2005 and Peak all liquids June 2006
• Peak Oil Survival
• Total's CEO, Financial Times, Oct 31, 2007 "The world's capacity to produce oil will fall well short of official forecasts, the chief executive of Total warned on Wednesday. In an unusually stark prediction for the head of one of the world's biggest oil companies, Christophe de Margerie, CEO of the French group, said it would be difficult to reach even 100m barrels a day."
• Connecticut Legislature
• Electrical Grid is vulnerable. Design life of transformers is 40 years, average age is 40 years. Lifeboats, Feed-in Tariffs are critically      important.
• Brutal Facts
• Supply Chain Management
• ABC Peak Oil
• Peak Minerals

• Pentagon Study
• Synapses and details
• End of Oil
• Oil Experts on Need
• Lack of Political Will

11. Food Distribution System is at Risk

• Farmers are unprepared for unstable fuel prices.
• Ethanol is building a false and unsustainable false farm economy.
• Most people do not know how to grow a substantial part of their food needs.
• Zoning laws prohibit food growth in suburbia.

• Grow 1/3rd of your own food. It will take three to five years to get 50% of people to be competent gardeners to reach that level. This will not save the world but it will
• lighten the logistical load
• provide a sense that we can save ourselves
• provide a sense of community and mutual protection of gardens
• provide starvation rations
• Feed-in Tariffs. Reliable electricity five hours a day provides hope.
• Personal Rapid Transit, PRT. Allow the success of Morgantown to propagate.
• Universal state militia service. Secure your community, individuals cannot survive by themselves. Peak Oil is going to be great for world peace and hell on local peace. Competition is the natural state; peace is the enforced absence of war.
• Government charge for non-commercial costs of carbon, other emissions, unclean water, etc....