Peak Oil News: The party is over By Jeff Berg

Tuesday, October 04, 2005

The party is over By Jeff Berg

By Jeff Berg

"In 1950, oil demand was 10 million barrels a day globally. By 1970, it was 50 mbd, but while demand grew five-fold, price stayed constant; oil was still selling at $1 a barrel. When U.S. production peaked in 1970, Saudi oil prices soared 18-fold between Jan. 1, 1970 and mid-June 1979, as demand grew another 15 mbd. "So for the concept that high prices quickly killed demand, there was never any supporting data," said Simmons. Iran's and Kuwait's oil production peaked in 1972, but no one noticed. "People continued to have this concept that there's oil in the Middle East and it's going to last forever," Simmons said. The second oil shock hit in 1979, when prices suddenly shot up from $18 to $40 a barrel, or about $105 per barrel in 2005 dollars. As a result, the U.S. finally curbed oil demand for about four years, Simmons said. Between 1979-1985, "We rolled out nuclear power and our coal plants got upgraded so they could operate at 100 percent," Simmons said. "To produce electricity from coal was vastly cheaper than using oil. In one short period of time we backed out oil as a feed stock for boiler fuel and electricity once and for all." At the same time, the U.S. exported "a big chunk of heavy manufacturing to Europe and Japan." The combination above resulted in four years when world demand actually fell, "prompting a great many people to say, 'Whoops, it just goes to show that if prices ever get high, demand just gets cannibalized,' " Simmons said. "Yet there was never any data for that." (Jeanne Kobnak Ball- We could be looking at $10 gas this winter)

False assumption after false assumption has been central to the public policy and economic infrastructure mistakes we have made over the last three decades. Assumptions that have led us to orient our economy to an ever greater degree around fossil fuels and energy consumption. A great many scientists, geologists, climatologists, and researchers and writers of all stripes have amply demonstrated the flaws inherent in these assumptions for over THIRTY YEARS and yet less than nothing has changed. In point of fact in opposition to the fundamental realities with which we are faced we have in defiance of all logic and wisdom become even greater consumers of energy; to the point that North Americans now consume on the order of 8000 kilos of the stuff per capita. This defiance of geological and environmental reality has of course very well served those who own the 12 trillion or so dollars worth of assets that serve the current energy order. One of the ugliest bits of irony about our situation is that the very same people who are responsible for industries intransigence are the very same ones who will not have their lives very greatly impacted by much higher energy prices. No the car industry moguls and their destruction of CAFE standards and their creation of an SUV fleet when the very opposite was crucial to collective prosperity will be very little impacted by their colossally short-sighted greed. The Reaganites like Cheney, Bush Sr. and James Baker who created the "Morning in America" myth and tore the solar panels off the roof of the White House when they should have been putting a windmill on its lawn will feel virtually no difference in their lives when environmental degradation and resource depletion come calling for the debt they are long overdue to be paid. The captains and titans of our corporate monoliths and those who have been the pilots of our ship of state have salted away literally hundreds of millions into their personal fortunes ensuring that they and theirs feel no pain when the payment comes due for the last thirty years of misspent investment capital.

As Paul Krugman wrote in the Great Unravelling, as Jane Jacobs writes in Dark Ages Ahead as Seymour Melman wrote for the whole of his professional life, we in North America have been robbing the future to pay for a profligate present. These thinkers reveal to us the degree to which we have allowed our public institutions and infrastructure to decay for the sake of corporate tax cuts and literally insane levels of corporate welfare via massive military spending. They are talking about the ways in which we have failed to properly invest scarce financial capital in areas that would provide the greatest multiplier effect. When this reality is combined with the several orders of magnitude higher costs inherent in the massive economic dislocation that will arise as a result of hydrocarbon energy depletion one begins to get a sense of the problems that our leadership has created for us all. A problem, again, that they and theirs will be largely immune from and a problem that will cruelly and disproportionately strike those who have been least responsible for its creation.

The obstruction of the essential bridges we will need to cross over into the promised land of tomorrows energy future is the very same intransigence that made vast sums of money for the 1/100 of 1% that controls 50% of North Americas wealth and virtually 100% of its decision making power. As a result of their cashing in on an asset inertia that has served to cripple the future of our children and our children's children they will have no trouble avoiding the enormous economic pain that will visit us here as a result of global oil scarcity and North America's natural gas shortages. (home heating prices will very likely rocket up this winter)

The essence of democracy is the impact of public opinion on public policy. This impact has been sorely lacking for the last 25 years and the fissures in the social compact that have resulted from this lack are now sufficient to rupture our societies in ways that will be almost impossible to repair. The war in Iraq and the hurricane in New Orleans have laid bare the moral and fiscal nightmare that America's citizens have sleepwalked into. We the citizens of North America have been somnambulant and content for so long that we have lost control of our institutions. Our elite on the other hand, as always, never tired and never slept and as a result of their untrammelled successes over the last twenty five years in subverting social equity and concentrating wealth and power they have fallen prey to fatal arrogance. Where they saw boldness the citizenry if they had been awake would have seen hubris. Where they saw the natural order of things we if we had been awake would have seen the preying of the strong on the weak. Where they saw the ineluctable laws of the marketplace and the inevitability of the status quo we should have seen self-serving short-sightedness and a system that was failing the first test of survival; adaptation to changing circumstances.

The final expression of this arrogance and its inability to face up to physical limits and the laws of nature and physics has come at the hands of the leadership of the neocon cabal that has led America to its current state of moral and fiscal imbalance. They believed themselves uniquely capable of using America's military pre-eminence in such a way as to shape Middle Eastern society so that its elite would see it as being in its own interest to continue to suit American interests for the next fifty years. They believed that as the leaders of the sole remaining superpower, as the operators of the worlds largest economy and as the controllers of the printing presses to the foreign currency reserve for the world that they had every lever needed to force the elites of the Middle East to kowtow to America's power and to align their interests with the needs of America's business class. They believed as the country that controls the World Bank (51% owned by the Fed) and as the country that along with Europe effectively controls the IMF and the WTO, that they had every carrot needed once their stick had its say. As Straussians and elitists these recycled Reaganites believed themselves obligated by the duty of unique ability to take advantage of America's relative strengths to establish an American hegemony that could weather the resource and ecological storms that are sure to beset this century.

What they failed to see and why their project has ended before this century has really had a chance to get started is that cooperation not competition is the vanguard of the future. Cooperation not competition must define a future that combines nuclear warheads and strict environmental and resource constraints. Cooperation not competition is the essence of democracy and justice and cooperation not competition is the spirit that we as humans desire to see venerated and expressed by our public policy.

As elitists who are immune to paying for their mistakes, who like the CEO's of so many of today's failed corporations are guaranteed the most golden of parachutes, they have become divorced from the reality that governs the life of 99+% of the human animals that will breathe the air today on this tiny sphere of ours as it hurtles through the eternal night of space. As a result of their alienation from the vulnerability that guides the actions of the rest of us they have slipped into seeing themselves as larger than life actors whose 'real' life takes place on the metaphysical stage of history. A stage of grandeur and conquest populated by "great men" who become great because they have the "vision" that allows them to know when to seize those moments in history that allow empires and the very reality of the future of whole societies to be shaped. These men, these men of yesterday and yesteryear, are steeped in a history that has been overtaken by a modernity that disallows international aggression. A modernity that understands that the very planet upon which we stand is incapable of withstanding the blows we are now capable of dealing it. These men, these classic men, long to return us to the classicism of empire and the "nobility" of conquest and "great civilizations" and elites. As such they completely fail to understand the reality of our situation, they completely fail to understand the reality of the limits with which we are faced.

There was a time only a few decades ago that the inevitability of progress was seemingly assured. We had left the Second World War behind us and the prosperity of the 50's seemed guaranteed to continue forever. Nuclear power would give us power so cheaply that it would be unmetered. The kittyhawk had given way to supersonic jets and space was to be the next and final frontier. If one looks back charitably and honestly on this era one can perhaps understand their exuberance as irrational as it was. But it is now fifty years later. The Club of Rome and the Spirit of 72 were over thirty years ago. Empiricism allows us to know the limits to growth. We have been warned, we know what needs to be done and our leadership is not doing it. The reality of today and the future of tomorrow is not limitless but bounded. Bounded by geology, hydrology, emissions and sinks. Bounded by soil salination, population, desertification and we had better not blink. It is time for us to put our eyes back on the ball. (one will no longer do) The party is over, our leadership has failed us, it is past time to put public opinion back into public policy.

For now I leave you with the double edged sword left to us by America's granddaddy of geophysics and the father of the study of oil depletion M. King Hubbert; "Our ignorance is not so vast as our failure to use what we know."

ton confrere,

Jeff Berg


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