Peak Oil News: 04/01/2007 - 05/01/2007

Monday, April 30, 2007

Save Internet Radio - Act now or it will be over May 15

The future of Internet radio is in immediate danger. Royalty rates for webcasters have been drastically increased by a recent ruling and are due to go into effect on May 15 (retroactive to Jan 1, 2006!). If the increased rates remain unchanged, the majority of webcasters will go bankrupt and silent on this date. Internet radio needs your help! H.R. 2060, The Internet Radio Equality Act was introduced by Representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL ) to save the Internet radio industry. Please call your congressperson to ask them to co-sponsor H.R. 2060 by clicking below.

Call Your Congressional Representative

Saturday, April 28, 2007

Peak Oil Crisis: By Order of the Governor

Falls Church News-Press

By Tom Whipple

Earlier this month, the Governor of Virginia issued what is sure to be one of many orders, laws and regulations mandating greater efficiency in the use of energy. Although justified in terms of saving taxpayer money, wise use of natural resources and reducing greenhouse gases, the order serves equally well as a preemptory strike against the consequences of peak oil.

The order directs all state government agencies and institutions to reduce energy expenditures by 20 percent from FY 2006 levels within three years. Energy saving devices that can recover acquisition costs within one year, such as compact fluorescent light bulbs, are to be installed immediately. All new and renovated buildings are to be constructed to modern energy-efficient standards. The roofs of all buildings over 5,000 square feet are to be periodically evaluated to see if the costs of installing photo-voltaic or other energy-collecting system will be paid back within 15 years.

All state-leased buildings shall be within one quarter mile of a public transit stop, where such transit is available. All agencies shall maximize the use of biofuels wherever reasonably possible.

All agencies and institutions are to minimize vehicle miles traveled related to state operations. All agencies and institutions are to implement transit and ridesharing incentive programs, and maximize the use of telecommuting.

Commonwealth agencies and institutions shall purchase or lease Energy Star rated appliances and equipment for all classifications for which an Energy Star designation is available. All new copiers, faxes, printers, and other such office equipment purchased or leased by the Commonwealth that uses paper shall be recycled paper-compatible. The Commonwealth shall purchase only recycled paper.

From the perspective of preparing for peak oil, all this sounds great. At the stroke of a pen, the Governor has made a great start. But the writ only extends as far as the extent of the governor’s powers.

As the executive order says, “By the power vested in me by Article V of the Constitution of Virginia, and Section 2.2-103 of the Code of Virginia, and subject always to my continuing and ultimate authority and responsibility to act in such matters, I hereby direct the Governor’s Secretaries and all executive branch agencies and institutions to reduce energy consumption.”

As it stands, the order does not apply to local governments, business, or individuals. To mandate similar energy conservation measures on these folks would require either state or federal legislation, or possibly changes to the state and federal constitutions. Such is democracy and the right to waste as much as you can afford.

Many recent efforts to mandate more efficient use of our natural resources have run into trouble. The current American system of legislating is monitored by legions of lobbyists all dedicated to maintaining or enhancing their clients’ piece of the great economic pie. Except for non-profits, there rarely is a thought about the common good. Try to save electricity and the electric companies lobbyist will be all over you. Try to save gasoline and you hear from the oil lobbyists. Smaller or cleaner cars? Detroit will grind you into the ground!

My favorite example occurred last winter during an effort to pass a “renewable portfolio standards” bill which is a fancy way of saying the utilities must use at least a smidgeon of renewable fuel to generate electricity. At the last minute, the lobbyists for, of all people, the furniture makers showed up to do battle against renewable energy on the grounds that the big, rich utilities would buy up all the wood to feed their boilers and there would be none left to make furniture.

Such fears are typical of what we will soon be facing as the consequences of peak oil settle into the economy. Many new forms of economic relationships will have to be established as oil and its products become simply too scarce and expensive to be used as it is currently. Some will win and some will lose in the great upheavals ahead.

Until very recently governments have been stymied in efforts to mandate more efficient use of energy. One need look no further than automobile efficiency standards to appreciate that, for decades, the majority of people saw no pressing need for them. The same could have been said for carbon emissions.

Another classic case was closing outdated military bases. This was an intractable political problem until they came up with the idea of having an independent commission make the decisions that congressmen, for a variety of reasons, couldn’t.

All this leads back to the manifold decisions that will soon be needed to cope with diminishing oil supplies. Take the simple case of cutting and draconically enforcing speed limits which would quickly and inexpensively save major quantities of gasoline each day. Thirty years ago this was easy to impose because there were shortages and long lines at the gas pumps. People quickly perceived that slowing down would reduce the hours they would have to spend sitting in gas lines and quickly acquiesced in the new limits.

But without the gas lines, it would take an incredibly brave member of Congress to introduce a bill reducing the national speed limit to 55 mph again no matter how much sense it might make.

All this is saying that we are really going to have to hurt badly before a consensus will form around decisive action that will upset the status quo. The pundits are fond of pointing out that gasoline prices in the US will have to go beyond $6 a gallon before gasoline is consuming a bigger share of the of the family budget than it was during the energy crises of the 1970’s.

If it takes $6 gasoline to forge a consensus for decisive action, then so be it. It may take more. It may take less. I suspect we will find out before too many months have passed. When the consensus forms, Congress and legislature will pass sweeping bills mandating all sorts of changes in the way we use energy. Maybe even for the common good.

Thursday, April 19, 2007

The Peak Oil Crisis: Have the Troubles Begun?

Falls Church News-Press

By Tom Whipple

In recent years, numerous books have been written about life after world oil production peaks. Most depict radical change, as oil-powered transportation, suburban living, and large-scale food production and distribution wither. The truth is nobody really has a good idea about what is going to happen. The world has never been to peak oil before. There are many complicating factors -- rates of oil depletion and production, the state of the world’s economy, and the gap between rich and poor nations to name a few. Making a meaningful projection of what life will be like five, ten, or 20 years from now is, as usual, fraught with uncertainties.

The one thing everybody agrees on is that all sorts of “bad” things are bound to happen as we transition from plentiful oil to scarcity. For the sake of a better term, let’s call these bad things “the troubles.”

For each of us the troubles will begin differently. If you had spent the last 30 years building Fords and your factory closed recently, you know just when the troubles began. If you are one of the tens of millions in the underdeveloped world that are already suffering from power outages and planned power cuts (euphemistically termed “load-shedding”), then you too have already experienced the first of the troubles. For most of us in the developed world however, nothing much has happened, as yet, that unambiguously marks the beginning of troubled times.

For the last two years, we have seen gasoline prices spike to over $3 a gallon, but these were caused by transitory events and gasoline soon settled to what has become “acceptable levels.” We are now approaching a national average of $3 a gallon again, only this time it is happening in April with only the normal level price-inflating geopolitical threats out there and the hurricanes, if they come, are still four months away.

This time the problem seems to be more systemic and is based on the fact that we here in America simply can’t quite produce or import enough gasoline to keep up with even late winter, much less summer, demand. For the last couple of months, gasoline stockpiles have been dropping at unprecedented rates. If gasoline stockpile depletion continues much longer, could it be the unmistakable beginning of mass troubles for everyone?

Now, our current gasoline problems could go away in the next few weeks. Our refineries could recover from fires and other unplanned outages and start producing all the gasoline we need for a while. Our imports of gasoline could increase. We could even cut back on driving a bit or stop diluting our gasoline with mileage-robbing ethanol. Before you know it supply and demand would be back in balance and we could all have a great 4th of July.

However, it is looking doubtful that all the ingredients necessary to a normal summer driving season are going to come together this year. As we are becoming more accustomed to $3 gasoline, most observers believe it is going to take a substantial jump in prices to somewhere north of $5 a gallon before gasoline consumption slows substantially.

While US refinery utilization is now back up above 90 percent of capacity, a question remains as to how much longer the US can import sufficient quantities of finished gasoline and the proper grades of crude that enable our refineries to produce the optimum amount of gasoline in their current configuration. Two weeks ago, as a number of observers pointed out, refinery utilization increased while gasoline production dropped. This may be a one-time glitch, or it could mean that sufficient quantities of light, sweet crude, that are optimal for making gasoline, are becoming difficult to find. If this is indeed the case, then the US has a problem of major proportions.

Last week US gasoline inventories dropped for the 10th straight week by another 2.7 million barrels. While this is better than the previous two weeks when stockpiles dropped by over 5 million barrels a week, it should be noted that refinery utilization is getting back close to normal. Gasoline stockpiles, however, are dropping due to increased consumption (still running 2.5 percent over last year) and insufficient imports.

As an EIA spokesman said last week, “It’s too early to panic. There is still plenty of time to rebuild inventories.” Let’s hope so, for unless those imports start picking up soon, it’s going to be a long and perhaps troubled summer.

Wednesday, April 18, 2007

Global oil production to peak soon

By Melinda Wenner

Global oil production will peak sometime between next year and 2018 and then decline, according to a controversial new model developed by a Swedish physicist.

Since 1956, when American geophysicist M. King Hubbert correctly predicted that U.S. oil reserves would hit a peak within 20 years, experts have debated when the same might occur globally. Some oil companies and consultancy firms such as Cambridge Energy Research Associates speculate that oil will peak sometime after 2020, but a number of oil geologists and executives predict it will happen much sooner.

And once production starts declining, there could be major supply problems, analysts say, especially when it comes to transportation—cars, aircraft, trains and boats are today without a ready alternative to petroleum-based liquid fuels.

Reaction to the latest prediction is as polarized as the debate has been on this issue for decades.

New approach
Previous oil-peak models have used a “top-down” approach to estimate future production based on three factors—past rates of total production, estimates of how much oil is left and a steady decline rate.

The new model, developed by Fredrik Robelius, a physicist and petroleum engineer at the University of Uppsala in Sweden, uses a “bottom-up” approach based on field-by-field analyses of the 333 giant oil fields in use today. These together account for more than 60 percent of today’s oil production. He pooled the contributions from all the smaller fields together, treating them as an additional giant field.

Robelius built his model, which serves as his doctoral dissertation, after analyzing the fields’ past production rates and their ultimate recoverable reserves. Then he predicted how production will decline after peaking by incorporating rates of drop-off observed at other fields, ranging from six percent in a best-case scenario to 16 percent in a worst-case scenario. Finally, he combined his results with estimated forecasts for new field developments from sources such as the deep ocean and oil sands in Canada, but he says that these are unlikely to offset the upcoming declines from the giant fields—and there is little chance that new giant fields will be discovered in the future.

Caltech physicist David Goodstein agrees.

“Oil geologists have gone to the ends of the Earth to search out big fields, and it’s very unlikely that another big one will be found,” Goodstein told LiveScience, adding that Robelius’ methodology appears to be sound. “Even if another huge one is found, it would only put off the peak by a year or so.”

Although there are other potential sources of oil, they are not only smaller, but also frequently have low production rates because of geological constraints, said Robelius. In Canada’s oil sands, for instance, the oil is so heavy that it must be heated up before it starts to flow, he said, and this is a slow and expensive process.

Perceptual problem
Others disagree. Not much can be said about additional oil resources because we haven’t really started looking for them yet, said Michael Lynch, president of Strategic Energy & Economic Research, an energy consultancy firm in Massachusetts. Lynch thinks that the oil peak lies farther into the future, partially because there’s likely to be a lot of oil in as-yet undiscovered smaller fields.

“You don’t go looking for them until you run out of the giant fields,” Lynch said in a telephone interview. Robelius, and others like him, he said, suffer from a “perceptual problem—‘if I don’t see it, it must not be there.’”

And new technologies could help solve extraction problems, said Sam Kazman of the Competitive Enterprise Institute, a non-profit public policy think tank in Washington, D.C.

“New technologies have turned fields that once seemed to be dormant into steady supplies of oil,” said Kazman, who is also of the belief that the oil peak is not necessarily right around the corner. Just because giant oil fields have been important for oil production in the past, he said, “does not mean that they’re going to stay important in the future.”

Robelius says that these kinds of approaches rely on resources and technologies that haven’t yet been developed or even discovered, which isn’t practical. People assume that new resources will be able to produce oil quickly, he said, “without having any evidence whatsoever that that’s the case.”

Friday, April 13, 2007

Oil Executive Predicts Future Energy Crisis

The Cornell Daily Sun

By Lauren Kramer

“I would submit to you that your lifestyle, your career, will depend upon energy security. Not just now, not just in a few years, but as we look out ahead over the decades: your career, your economic wellbeing, whatever course you may take in life … Energy security will touch you,” began John Hofmeister, president of Shell Oil Company, at his on-campus lecture yesterday.

Entitled “How the U.S. Can Ensure Energy Supply for the Future,” Hofmeister’s presentation addressed the role of American public policy in attaining energy security amid an impending energy crisis. Shell Oil Company, a longtime world leader in gasoline and oil retailing and production technology, is actively pursuing a solution to the world’s forthcoming depletion of energy resources.

Hofmeister said that an example of how “marginal the supply-demand relationship is on something as fundamental as gasoline” is the hurricane season of 2005. Devastated by Hurricanes Katrina and Rita, the entire southeast coast of the United States nearly experienced power outage when refinery production came to a halt. With twelve hours to spare before coastal energy shortage, emergency power sources saved production.

What separates people around the world “from available and affordable energy,” Hofmeister said, “is public policy.” Following his claim that individual lifestyle, in addition to modern economy, is dependent on energy availability, Hofmeister’s vision for Shell and for the world is both gradual transition to new and different energy sources and a change of heart within political arena.

While Shell has already begun investigation into alternate energy sources ranging from coal gasification and thin-film technology to wind power and hydrogen fuel cells, Hofmeister acknowledged the decades it will realistically take to alter such a fossil-fuel-ingrained existence. Not only does new technology remain in its infancy, but markets are not developed to pay for such technologies — particularly when many alternate sources of energy are not abundantly available.

Defining energy security as “reliable and affordable energy to met the needs of society from now until every generation that we can conceive of in our imagination,” Hofmeister recommended a solution to the lack of alternate energy sources in the form of policy change.

“We have now faced two years of, frankly, unacceptable high price and unnecessary high price because energy demand continues to exceed energy supply … We can get angry, or we can change public policy,” Hofmeister said.

Functioning as an oppositional force in making more energy available, Hofmeister said that policy is what prohibits energy companies from accessing some of the continent’s lesser-known sources. Unconventional solid forms of gas and oil, for instance, are available but not accessible in the massive rocks of Colorado and mid-western America. There exist 110 billion barrels of ready-to-produce oil and gas in the United States alone — enough for over thirty years of oil and gas production — that are banned from industrial use.

Regardless of the outcome of the energy issue at hand, Hofmeister said that the Shell Oil Company foresees two major changes: energy efficiency and energy education. With hope for the technologists of tomorrow, the company aims to “extract greater energy” from existing sources using “less per unit of input per unit of output of energy.” In addition, Hofmeister stresses reaching out and teaching consumers, students and society as a whole. In his eyes, “there is no silver bullet for energy security.”

Peak oil: Get ready for it, says GAO

Previously the worry of obscure engineers in technical reports, now the prospect of declining global production of oil is front and centre on the desks of all policy makers.

By Kevin Potvin

The US Government Accountability Office in late February issued a report called "Crude Oil: Uncertainty about future oil supply makes it important to develop a strategy for addressing a peak and decline in oil production." It is to date the most strongly-worded and unflinching view of the state of the global oil supply ever to have been issued by any of the western nations. Importantly, the US Departments of Energy and the Interior both "generally agreed with our message and recommendations," the report says. The 82-page report is no hysterical book about peak oil by a retired technician published by a fringe imprint. It is a guiding document for US lawmakers researched and written by one of the most highly revered federal agencies in that country. What it contains should be required reading for every Canadian lawmaker as well, and if it’s read closely by them, it ought to stand the hair up on the backs of their necks.

"The prospect of a peak in oil production," the report says, "presents problems of global proportion whose consequences will depend critically on our preparedness." In rough brush-stroke fashion, the report leaves the reader with no doubt that global production of oil will definitely peak sometime in the next 30 years and that it is likely to peak and begin declining much sooner than that, and it even raises the suspicion that global production might already have reached its peak.

The reports’ authors go on to review all potential sources of new oil, all potential technologies to extract harder-to-surface oil in known reserves, and all potential unconventional sources of oil, and concludes that even with a best case scenario in all three arenas, future projected demand won’t be met, and that higher prices will alone determine the distribution of declining oil supplies. "If the decline in oil production exceeds the ability of alternative technologies to displace oil," the report says, "energy consumption [will] be constricted, and as consumers compete for increasingly scarce oil resources, oil prices [will] sharply increase." The report compares the expected economic results of sharply increased oil prices to the two periods of oil supply shocks in 1973 and in 1980, then points out that in the two previous cases, the causes of reduced supply of oil were political and temporary, and were also short-lived. The coming oil shortage will be for technical reasons and therefore not so easily solved, and will not only be permanent, but will increase year over year, in essence, providing a fresh 1973-like oil supply shock every year from now on into the future.

The report describes how the economies of the western oil-dependent nations contracted in recession and how the pubic made adjustments by driving smaller cars less often and at slower speeds, for example. It adds that with the dawn of peak oil, those kinds of adjustments "recession and consumer behavior changes" will only work initially. The following year after peak oil, global oil production will contract again by yet a few more percentage points, causing continued recession and more adjustments by consumers. And then again, the next year after that, and so on. It’s easy to see what has the US Government Accounting Office worried, and why Canadian policy makers in Ottawa as well as the provinces and in the cities, should also be worried. Sustained economic recession, that is, a depression, and mounting forced changes in behavior of consumers can only be borne by any society for a limited period of time before massive economic and social damage is done.

What is striking about this report is that its authors don’t consider any scenarios in which the United States, and by implication Canada, can fully escape the economic effects of peak oil, because they don’t see any possibility of doing so. The report instead recommends that the US Secretary of Energy redirect its resources toward accurately assessing the state of oil reserves in the world and developing reliable predictions of global supply limits, starting with the peak and moving forward in the years following with predictions of the rate of decline. This is the best the office says can be done so that other governments and agencies can at least prepare to mitigate just some of only the worst effects.

Obviously, when peak oil hits, mitigating the wide-ranging economic and social effects will become not only the preoccupation of all governments at all levels, but it will likely become the sole occupation for all of them. As the report recounts, the kind of massive efforts at conservation undertaken after the oil supply shock of 1973 will, this time, be required to be doubled every year just to maintain pace with declining availability of oil. But of course, consumers cannot every year buy yet a smaller and more fuel-efficient vehicle, and cannot easily cut back on their driving by a certain percentage year after year, once essential driving is all that is left. And most worrying, the economy certainly cannot sustain a 1973-type recession year after year, yet the report notes that the likely depth of recession will be more severe yet on each following year as oil production continues to decline.

There may not be any solutions for Canadian policy makers to help this country’s people and companies avoid the ravages of year-on-year declines in available oil, and the consequent ever-steeper rise in oil’s prices. But there are options available to help the public, their cities, and the nation’s public and private sectors absorb and mitigate some of the worst effects. For starters, electric-based public transportation systems between Vancouver and suburban cities is required now to ensure citizens, as workers and consumers, can still get around after the price of gasoline for their private cars goes through the roof. The Gateway project, involving oil-driven car and truck-carrying highway schemes lacing the Lower Mainland, to be installed at a cost of $3 to $5 billion, should be shelved. A new infrastructure plan predicated on moving people and goods around, instead of cars and trucks, should be urgently developed.

And national schemes to begin voluntary reductions in national oil consumption in smaller, more steady, and totally predictable increments, should be developed and implemented now, rather than waiting a few years for the age of peak oil to cause huge, very unstable, and wildly unpredictable, and forced, amounts of reduction in the national oil consumption rate.

Thursday, April 12, 2007

Alternatives - Decentralized Power

Falls Church News-Press

By Tom Whipple

Something few of us are aware of is the massive waste built into the energy systems we have built over the last 100 years. This week, I am going to talk about electricity generation, but the same point can be made about the internal combustion engine which is a monument to inefficiency.

Most electricity is generated in massive remotely located plants – be they powered by coal, oil, natural gas, or nuclear reactors. These edifices, on average, waste two-thirds of the fuel that goes into them. Most energy is lost as waste heat that goes into the air or a local body of water, and the rest in line loses while bringing the power tens or hundreds of miles from the generator to the user.

In terms of green house gases, we could have the same lights, appliances, heating and air conditioning for half the carbon emissions if we simply switched from the current paradigm to decentralized power generation. If we toss some user conservation into the equation -- more efficient lights, appliances, insulation, and whatever – it just might be possible to stretch dwindling supplies of oil, natural gas, coal, and uranium far enough to allow time to replace fossil fuels with renewable sources of energy.

Combined heat and power (CHP), also known as cogeneration, is an efficient and reliable approach to generating power and thermal energy from a single fuel source. The fuel can be any of the traditional fossil fuels – coal, oil, natural gas or nuclear or even some renewables such as biomass. The main point is that the generating plant, most likely a smaller one, must be located close to the end user so that the excess heat can be used to heat and cool buildings or help power manufacturing facilities. The key point is that excess heat be piped to some useful purpose and not just wasted.

There is nothing new about cogeneration; it has been around for decades. Currently almost 8 percent of electricity in the US is generated at CHP plants. The problem, however, is that given the current economic and regulatory environment, cogeneration simply is not spreading fast enough to keep up with the need to reduce carbon emissions and the need to replace fossil fuels.

This is not pie in the sky. There are already cogeneration plants working in Denmark, Sweden and the Netherlands that, in some cases, are attaining 95 percent efficiency in their consumption of fuel. The EU has pronounced cogeneration as the best solution to reducing carbon emissions from electricity generation.

Although there are very impressive facilities running around Copenhagen, probably the most advanced project is in Malmo, Sweden where the goal is to produce electricity, and to heat and cool the town only with local, renewable fuel sources. The folks in Malmo probably have the formula for transitioning to the future about right.

They start with cogeneration plants with separate networks for electricity and heat transfer running around the town. Buildings on the network are not only highly energy efficient, but they also have solar panels for trapping heat and generating electricity and, in some cases, small wind turbines. When a building is generating more energy than it needs for its own use, it feeds the excess back into the appropriate network so that it can be used elsewhere in town. Thus, every building can be considered a mini renewable cogeneration plant.

The long run goal in such a plan is to switch the central cogeneration plant from fossil fuels to biomass, with wind, solar and sea power taking up the slack. With every building making a contribution to the collective effort, the whole plan seems elegant and feasible.

Now to the question of just how the folks in Europe have managed to get themselves closer to the renewable energy nirvana. I hate to say this, but it seems to have a lot to do with regulation and taxes, something we are currently adverse to here in America, preferring to let the markets sort things out. It seems the Swedes have some of the highest carbon emission taxes in the world, which is a good place to start. However, there are all sorts of other actions governments can take to encourage greater efficiency. These could range from forbidding the construction of non-cogeneration electric power plants to raising the taxes on coal and natural gas not used in cogeneration plants.

Another part of this is the regulatory/land use situation. Since cogeneration depends on building the generating station close to its customers so that the excess heat will have some place useful to go, you obviously will run into local opposition. I would suspect large increases in electricity costs will go a long way to overcoming such opposition. As coal may be the only affordable fossil fuel available a decade or two from now, the whole emissions and carbon sequestration issue also will be part of the equation.

How do we get to a world of cogeneration someday phasing into all renewables? Obviously it will be a lengthy process costing trillions of dollars, for it involves a fundamental reengineering of our energy delivery systems. I suspect rapidly increasing costs and shortages for the energy used to generate electricity and keep us warm will be the main driver. Oil-fired electricity generation will soon price itself nearly out of the market, soon to be followed by natural gas, soon thereafter leaving coal as the predominant fossil fuel.

Getting through the decades after oil, natural gas, coal, and uranium production goes into depletion will be one of the more difficult transitions the world has to make in this century. Conservation will be the first priority followed by maximizing the efficient use of non-renewable energy sources we have left. Cogeneration is too good an idea. Its time will come.

It's time to face reality of finite oil supply

By Bill Boyne

What will happen when the Age of Oil ends?

If you want to understand the ultimate effects, just visualize a crowded interstate highway with four lanes of traffic speeding in each direction. Then imagine what would happen if all the cars and trucks suddenly stopped -- not only on that highway but on roads all over the nation and all over the world.

Everything would stop -- trucks carrying oil and farm products, commuters going to work, travelers heading for vacation, state police cars, Greyhound buses -- everything.

Of course, in the real world that would not happen all at once. But when the Oil Peak arrives, that could be the ultimate result as gasoline and diesel oil became more and more scarce. The damage could be reduced if the world begins to recognize the problem and makes a transition to renewable fuels and plug-in electric cars, but as of now not enough people or public officials take the issue seriously.

The Oil Peak and its consequences were among the topics discussed by Norm Erickson in the first of a series of lectures at the University Center Rochester last Thursday. Erickson, an IBM employee for 32 years, has delved deeply into the Oil Peak, energy issues, and global warming. He is convinced that oil production throughout the world is already declining or will begin to do so in a short time.

It is not a new idea. The volume of oil produced in the United States peaked in 1970 and has declined ever since. That peak was predicted in 1956 by M. King Hubbert, an oil industry expert. Since there is a finite volume oil in the world and the world's consumption of oil has continued to increase, a worldwide shortage at some point is inevitable.

In his first lecture, Erickson quoted extensively from Matthew Simmons and Dr. Colin Campbell, international experts on the oil industry. Both are convinced that -- in a very short time -- the world supply of oil will begin to decline. Erickson said that the first step should be to do everything possible to conserve energy, including driving fewer miles and requiring auto manufacturers to increase the gas mileage in their products.

As the shortage becomes more apparent, the price of gasoline will rise to unaffordable heights with drastic effects on the economy.

Erickson will cover other aspects of the world energy crisis in his next two lectures, including global warming, the need to abandon fossil fuels and to build energy-saving houses and buildings.

His next lecture will be 6 p.m. Thursday in Room CF202 in the Coffman Building at the University Center. It will cover the consequences of worldwide energy shortages and what happened after Peak Oil hit Cuba after the collapse of the Soviet Union.

Since the Soviets had supplied Cuba with oil and gasoline, fertilizers for farming, and farm equipment, the island nation had to take immediate action to respond to the crisis without outside help. That action might serve as a model for what would happen in the world after the Oil Peak takes effect.

In his third lecture 6 p.m. Thursday, April 19, at the same site, Erickson will discuss what we can all do in our own communities to reduce energy use, adopt conservation methods, use solar heating and other strategies.

Information of this kind is badly needed. The city of Rochester is planning major construction projects including a new bioscience building, expansion of the Mayo Civic Center, a downtown residence for university students and other structures.

City officials could set an example for all of us by adopting "green" building practices in each case. The initial cost might be slightly higher, but this requirement could save millions of dollars in operating expenses in the next 50 years. This is especially true because, as Erickson predicts, extreme price increases for natural gas are inevitable in the next few years.

And, of course, all of these steps to conserve energy and avoid using fossil fuels will also help to combat global warming.

Everyone interested in these issues should try to attend Erickson's next two lectures. There is no charge and no reservation is required.

Bill Boyne is a former publisher and editor of the Post-Bulletin who writes a weekly column.

Thursday, April 05, 2007

The missing link in Mexico's declining oil production

By Andrew Leonard

In a miraculous feat of journalistic legerdemain this morning, a lengthy, detailed front-page article in the Wall Street Journal reports on declining production at Mexico's giant Cantarell oil field, without once ever mentioning the words "peak oil."

Reporter David Luhnow manages to achieve this while at the same time providing a textbook illustration of precisely why peak oilers are so worried that maximum production is nigh.

...the field that bears Mr. Cantarell's name is dying, and Pemex, as the state-owned company is known, is struggling to stave off the field's demise. From January 2006 though February 2007, Cantarell lost a staggering one-fifth of its production, with daily output falling to 1.6 million barrels from two million.

...The demise of Cantarell highlights a global issue: Nearly a quarter of the world's daily oil output of 85 million barrels is pumped from the biggest 20 fields, according to estimates from Wood Mackenzie, a Scotland-based oil consulting firm. And many of those fields, discovered decades ago, could soon follow in Cantarell's footsteps.

It's widely believed that the world's biggest oil fields have already been found. In the decades leading up to the 1970s, the world discovered eight big fields that produced between 500,000 to one million barrels a day, according to Matthew Simmons, a veteran oil industry banker. During the 1970s and 1980s, only two were found. Since then, only one -- the Kashagan field in Kazakhstan -- has the potential to easily top the 500,000 barrel-a-day mark.

It is instructive to compare this article with the happy-go-lucky piece written by Jad Mouwad in the New York Times exactly one month ago, which, on the one hand, dismissed peak oil as "still a minority view, held largely by a small band of retired petroleum geologists and some members of Congress, that oil production has peaked, but the theory has been fading."

Mouwad's contention was that new technology and investment, spurred by high oil prices, would allow older fields to keep producing for decades to come, and would enable hitherto uneconomic sources -- oil sands, oil shale -- to join the production lines. There is undoubtedly a good bit of truth to that theory -- the power of the price mechanism is a mighty thing -- but it certainly doesn't negate the premise that the era of cheap oil is over. But while the Journal makes some unkind comments as to how Pemex is far behind the state-of-the-art in terms of oil-recovery technology and has bungled its management of the fields in many ways, the unavoidable conclusion of the article is that the decline, even if it can be slowed, cannot be stopped.

Editorially speaking, the Journal is no friend to peak oil doomsayers -- last fall, it even headlined one recapitulation of Exxon propaganda as "Poking at peak oilers." But the Journal's editorial page juvenilia rarely infects its top-notch reporting. Cantarell's decline has been hailed as proof of the peak oil concept for at least a year -- the lack of so much as a mention of that fact is a bit inexplicable.

Experts: Energy security fears overblown

United Press International

U.S. fears over energy security are overblown and global oil supplies are not endangered, a report released Thursday says.

"Each of (the) fears about oil supplies is exaggerated, and none should be a focus of U.S. foreign or military policy," write professors Eugene Gholz and Daryl G. Press in the policy analysis from the libertarian Cato Institute in Washington.

Much of the fears are centered on the concepts of peak oil, instability among oil-producing nations, competition for a finite resource from countries such as China and India, and supply disruptions in producing countries. Those who back these theories, the writers say, support U.S. efforts to stabilize -- or, alternatively, democratize -- the politically tumultuous oil-producing regions or call for U.S. military presence to enhance stability in those regions.

"Our overarching message is simply that market forces, modified by the cartel behavior of OPEC determine most of the key factors that affect oil supply and prices," they say. "The United States does not need to be militarily active or confrontational to allow the oil market to function, to allow oil to get to consumers, or to ensure access in coming decades."

They dispel the models used to predict peak oil as "dubious" and say that in unstable regions "investment to reduce the costs of finding and extracting oil is a better response to that political instability than trying to fix the political problems of faraway countries.

"Furthermore, Chinese efforts to lock up supplies with long-term contracts will at worst be economically neutral for the United States and may even be advantageous."

They warn, however, that the main danger from China's energy policy is U.S. fears may become a self-fulfilling prophecy of conflict with China.

The writers say that political instability in the Persian Gulf region poses few dangers and the U.S. military presence there adds to the problems rather than solves them.

Gholz is assistant professor of public affairs at the LBJ School of Public Affairs at the University of Texas at Austin, and Press is associate professor of government at Dartmouth University.

Despite belief in peak oil, Pickens still believes in oil and gas

By Mella McEwen

T. Boone Pickens answers questions from Hoxie Smith, director of the College's Petroleum Professional Development Center,Wednesday evening at Chap Center.

After 56 years in the oil and gas business, T. Boone Pickens still believes in the business.

"All I can see is the future of the oil and gas industry as we know it is good," he said. "The biggest problem we have is finding oil and gas. I see a great future for energy and oil and gas will be there. We're all going to live in the hydrocarbon era."

But the native Oklahoman sees numerous changes in store for the industry, where he began his career with Phillips Petroleum in 1951.

In town to speak at Midland College's Chaparral Center Wednesday, Pickens told the audience he is convinced the world has reached its peak oil production.

"Yes, I believe in peak oil," he told moderator Hoxie Smith, director of the college's Petroleum Professional Development Center. "(Longtime peak oil predictor) Matt Simmons and I talked today and we're on the same team. If, as (oil analyst and author) Daniel Yergin believes, there's so much more oil left, why doesn't oil production move up instead of staying flat? Global demand is 85 million barrels, or 31 billion barrels a year. The world hasn't replaced the oil it's been producing since 1985. So if there's so much oil left, I don't understand why production hasn't gone up. All the big fields are declining and all the current drilling does no more than hold off the decline. So the next step is decline. We can't hold on to 85 million barrel a day production."

In fact, he predicts that by the fourth quarter of this year, oil demand will rise to 86 or 87 million barrels a day while production will stay flat, sending prices up to the record high near $80 a barrel seen last July. He declined to predict what oil prices would be in 2008 because he doesn't know what price level will begin to destroy demand -- and he pointed out that price is the only way to reduce demand.

That's not to say, he said, oil and gas won't have a future.

"We're going to need all the oil and gas we have available, and we're going to need more," he said. "With world demand at 85 million barrels a day, what are you going to do? The Saudis say they have another million barrels, but that's good for asphalt."

Consumers are becoming more supportive of alternative energy sources because they're becoming more sensitive about what's happening with the atmosphere. He pointed out that he addressed an alternative energy conference in Anaheim, Calif., this past Monday and told that audience "whatever energy you have a chance to get in, get in -- solar, wind, everything works at these prices. The price of oil goes up, alternative energy gets a chance. Our mix of energy will be different five years from now."

Another issue, he said, is that 75 percent of the world's oil reserve are owned by state-owned oil companies, with the two largest Saudi Arabia and Russia. Likewise, the two largest natural gas producers are Russia and Iran.

Just as he is a believer in peak oil, he believes the world is in the early stages of global warming, "and for a geologist, that's hard to swallow. But we've put so much emissions in the atmosphere; I'm intrigued by how much can be measured in Antarctica."

The nation's turn to ethanol as a clean alternative source of fuel isn't the answer, he said, pointing out that a significant chunk of the nation's Midwest would have to become a massive corn field to supply enough corn for the ethanol needed to replace gasoline. He added that ethanol isn't as economic as gasoline without government subsidies. So, he said, it won't be a major part of the nation's transportation picture.

Since the late 1980s, he said, he has been touting natural gas as a fuel source and predicted the nation will turn away from natural gas to fuel power generation and instead fuel automobiles.

"Will it happen Monday morning? Of course not. But it will move out of power generation." And, he said, the 20 percent gap in power generation left by natural gas will be filled by coal and nuclear power.

Texas has the second highest power costs in the nation, behind New York, he said, because so much of the state's electricity is gas-fired.

His first preference is nuclear power, he said, telling the audience he recently attended a meeting on a next-generation nuclear plant that disposed of its own waste internally and required no water. The public will be more supportive of new nuclear plants, he said, but permitting them will be a problem, as will be the fuel to run them. "No one's looked for uranium in 30 years. Now it's in short supply and the price has gone up 10 times."

Clean coal technology and gasification, as planned for the proposed FutureGen site that Permian Basin officials are trying to land, will work, he said, "but my question is the cost."

The Peak Oil Crisis: The GAO Report

Falls Church News-Press

By Tom Whipple

Last week the Government Accountability Office released its long-awaited report on peak oil. This report is clearly a milestone on our journey through the oil age for it is the first time the staff of a major government agency has looked at the issue and concluded that peak oil is real and, if it occurs soon, could cause a world-wide recession. Even more notable is that the Departments of Energy and Interior generally agreed with the conclusions.

There is little in the report those following the peak oil story do not already know:

* The US, as the world’s biggest consumer of oil, is the most vulnerable to the consequences of peaking;
* Sixty percent of the world’s oil reserves now are controlled by unstable countries;
* At best, the US could only hope to replace about 4 percent of its liquid fuel consumption with alternatives by 2015;
* A hydrogen-based economy is not in the immediate cards;
* And, most importantly, the US government had better get its act together soon to do something about all this.

Now we all know that the key question about peak oil is “when will it happen,” and its corollary, “when will the economic troubles begin?” For those of you who understand American football, the GAO simply punted by concluding that peak production come anywhere between now and 2040 thereby removing any sense of urgency from the issue. If it comes soon, peak oil could have serious consequences. If it comes later, things might not be so bad.

By adopting this rather ingenious position, the GAO staff saved themselves a lot of grief and a lot of controversy, but got everybody on board – the Departments of Energy and Interior, the EIA, the IAE, and maybe even ExxonMobil and its anti-peak oil friends over at Cambridge Energy Research.

Judging from the blogs, most people following and writing about peak oil are outraged at the preposterous judgment that the most that can be said about the timing of peak oil is “sometime in the next 33 years.” The evidence for an imminent peak is much better than the GAO makes out.

However, let’s turn the story around for a minute. Suppose the GAO staff really had studied and debated the evidence and concluded, as others have, that world oil production has already plateaued if not peaked. Suppose, they went on to say it is unlikely that world oil production will ever again increase significantly and that when you throw in all geopolitical factors – wars, insurgencies, expropriations, bad governments – the amount of oil available for importing countries is likely to drop sharply very soon.

If they were in a candid mood, the GAO could have added “and by the way, kiss any expectations of robust economic growth you might have goodbye.” It simply is not going to happen for a long, long while.

The GAO could make an even bigger splash by convincing the president to go on prime time tell the American people that all available evidence leads to the conclusion that, soon, gasoline will be too expensive for them to afford. They should immediately sell their gas guzzlers, put their over-mortgaged houses on the market, stop using credit cards, dump all their stocks, and plant a garden.

For obvious reasons no president will ever make such a speech. Despite quiet preparations for peak oil in many countries around the world, no national leader has as yet said anything similar – the consequences are simply too unpredictable.

For equally obvious reasons, no responsible government agency will ever officially conclude that serious economic problems are coming soon for the immediate consequences could be needlessly severe. Those who had hoped the GAO report would once and for all confirm that peak oil theory was right and that world oil production was hovering at the edge of a collapse were bound to be disappointed.

It is more likely that the world will muddle its way into the era of peak oil in much the way it has muddled into global warming. Various segments of the population will catch on to the problem at various times amidst much fussing, fuming, and denial.

Thus, the real dilemma of coping peak oil, for a while at least, is really quite simple. If the government should lay out the full ramifications of peaking in hopes of rallying the people to make preparations, the most immediate consequence is likely to be serious economic setback triggered by an unambiguous announcement itself.

The alternative is to remain silent. Leave the future a bit murky with room for hope. Don’t panic anybody into selling assets or husbanding their money with talk of an unaffordable future. Talk about reducing dependence of foreign oil instead. This carries the implication that the foreign oil will always be there in an emergency and that reducing dependence will be a matter of patriotic choice not necessity.

As no responsible government wants to see economic troubles start any sooner than absolutely necessary, there will probably never be a strong, clear, unambiguous, widely disseminated report on the timing of peak oil. The National Petroleum Council is poised to pronounce on the issue in the next few months. It would not be surprising if they come up with a formulation similar to the GAO’s. If governments have their way, we will stumble into peak oil over a period of years during which gasoline prices cycle inexorably upwards and various compensating actions are take.

So there you have it. The GAO did their job by warning the Congress that peak oil might just be a very serious problem very soon, and the DOW is still going up. Sometimes government agencies are not that dumb after all!

Wednesday, April 04, 2007

We Must Imagine a Future Without Cars


Kunstler argues that the coming age of energy scarcity will change everything about how we live in this country -- most of all our dependency on automobiles.

The following is James Howard Kunstler' recent speech to the
Commonwealth Club of California. An audio stream of the speech is available.

By James Howard Kunstler

Two years ago in my book The Long Emergency I wrote that our nation was sleepwalking into an era of unprecedented hardship and disorder -- largely due to the end of reliably cheap and abundant oil. We're still blindly following that path into a dangerous future, lost in dark raptures of infotainment, diverted by inane preoccupations with sex and celebrity, made frantic by incessant motoring.

The coming age of energy scarcity will change everything about how we live in this country. It will ignite more desperate contests between nations for the remaining oil and natural gas around the world. It will alter the fundamental terms of industrial economies. It will ramify and amplify many of the problems presented by climate change. It will require us to behave differently. But we are not paying attention.

As the American public continues sleepwalking into a future of energy scarcity, climate change, and geopolitical turmoil, we have also continued dreaming. Our collective dream is one of those super-vivid ones people have just before awakening, as the fantastic transports of the unconscious begin to merge with the demands of waking reality. The dream is a particularly American dream on an American theme: how to keep all the cars running by some other means than gasoline. We'll run them on ethanol! We'll run them on biodiesel, on synthesized coal liquids, on hydrogen, on methane gas, on electricity, on used French-fry oil... !

The dream goes around in fevered circles as each gasoline-replacement is examined and found to be inadequate. But the wish to keep the cars going is so powerful that round and round the dream goes. Ethanol! Biodiesel! Coal Liquids. ...

And a harsh reality indeed awaits us as the full scope of the permanent energy crisis unfolds. The global oil production peak is not a cult theory, it's a fact. The earth does not have a creamy nougat center of petroleum. The supply in finite, and we have ample evidence that all-time global production has peaked.

Of course, the issue is not about running out of oil, and never has been. There will always be some oil left underground -- it just might take more than a barrel-of-oil's worth of energy to pump each barrel out, so it won't be worth doing.

The issue is not about running out -- it's about what happens when you head over the all-time production peak down the slippery slope of depletion. And what happens is that the complex systems we depend on for everyday life in advanced societies begin to falter, wobble, and fail -- and the failures in each system will in turn weaken the others. By complex systems I mean the way we produce our food, the way we conduct manufacture and trade, the way we operate banking and finance, the way we move people and things from one place to another, and the way we inhabit the landscape.

I'll try not to dwell excessively on the statistics since I am more concerned here with the implications for everyday life in our nation. But it is probably helpful to understand a few of the numbers.

Oil production in the US peaked in 1970. We're now producing about half of what we did then, and our own production continues to run down steadily at the rate of a few percentage points of recoverable reserves each year. It adds up. In 1970, we were producing about 10 million barrels a day. Now we're down to less than five -- and we consume over 20 million barrels a day. We have compensated for that since 1970 by importing oil from other nations. Today we import about two-thirds of all the oil we use. Today, the world is consuming all the oil it can produce. As global production passes its own peak, the world will not be able to compensate for its shortfall by importing oil from other planets.

Nor is there any real likelihood that new discoveries will be adequate to compensate. Discovery precedes production, of course, because you can't pump oil that you haven't discovered. Discovery of oil in the US peaked in the 1930s -- and production started declining roughly 30 years later. Discovery of oil peaked worldwide in the 1960s, and now the signs suggest the world has peaked. Discovery of new oil worldwide in recent years has amounted to a tiny fraction of replacement levels. In fact, we may be burning more oil just in our exploration efforts than we will get from the oil we're discovering.

The oil industry has been dominated by what are called supergiant fields. The four reigning supergiant fields of oil our time were discovered decades ago and are now in decline. The Burgan field of Kuwait, the Daqing of China, Cantarell of Mexico, and Ghawar of Saudi Arabia. Together in recent decades they were responsible for 14 percent of the world's oil production, and they are now in decline. All except Ghawar of Saudi Arabia have been declared officially past peak by their own governments and Ghawar is showing clear signs of trouble -- though Aramco itself won't say so. Ghawar has provided 60 percent of Saudi Arabia's production. Saudi Arabia's total production is down 8 percent in the year past, despite a massive increase in drilling rigs, and the incentive of high prices.

Last year, the Mexican national oil company, Pemex, declared its supergiant field, Cantarell, to be officially past peak and in decline. As in the case with Ghawar and Saudi Arabia, Cantarell has been responsible for 60 percent of Mexico's oil production. Cantarell is now crashing at an official decline rate of at least 15 percent a year -- perhaps steeper. Mexico has been our No. 3 source of oil imports (after Canada and Saudi Arabia). The crash of Cantarell means in just a few years Mexico, our No. 3 source of imports, will have no surplus oil to sell to the US. It also means that the Mexican government will be strapped for operating revenue -- and you can draw your own conclusions about the political implications.

The North Sea and Alaska's North Slope were some of the last great discoveries of the oil era. Plentiful North Sea and Alaskan production took away OPEC's leverage over the oil markets. This led to the oil glut of the 1990s, driving oil prices down finally to $10 a barrel. It is also what induced the American public to fall asleep on energy issues. It seemed as if cheap oil was here to stay. Forever.

Both The North Sea and Alaska are now past peak and in depletion. Prudhoe Bay proved to be Alaska's only super giant oil field. Several other key fields were discovered. None were even 1/6th the size of Prudhoe Bay.

North Sea oil was produced using the latest-and-greatest new technology for drilling and guess what: it only allowed the region to be drained more rapidly and efficiently. Now 57 of Norway's 69 oil fields are past peak and the average post-peak decline rates average 17 percent a year. The UK's share of the North Sea has declined to the extent that England is now a net energy importer.

Russia, despite current high levels of post-Soviet-era production, peaked in the 1980s, and may now be past 70 percent of its ultimate recoverable reserves. Iran is past peak. Indonesia, an OPEC member, is so far past peak it became a net oil importer last year. Venezuela is past peak. Iraq and Nigeria are consumed by political insurrection. The companies developing Canada's tar sands have announced this past year that their costs will double original estimates -- in other words, whatever comes out of the ground there will be very expensive.

Meanwhile, in the background, completely ignored by the US media, an additional problem is developing on the oil scene. Net world production is going down by just under 3 percent a year, but total exports from the top ten exporters are going down at an even steeper rate. Geologist Jeffrey Brown, among the excellent technicians at website, writes that the top ten exporters are showing a net export decline rate of 7 percent the past year, trending toward a 50 percent export decline over the coming ten years. Why? Because on top of production decline rates, nations like Saudi Arabia, Iran, and Venezuela are using more of their own oil at home with rising populations and more automobiles.

A few additional background items. Most of the easy-to-get, light and sweet crude oil is gone. We got that out of the ground in the run-up to peak [oil]. We found that high quality oil in temperate places onshore, like Texas, where it was easy and pleasant to work, and the stuff was relatively close to the surface. The remaining oil is, each year, proportionally made up more of heavy and sour crudes that are hard to refine and yield less gasoline. Most of the refinery capacity in the world cannot process these heavy and sour crudes and there is no world-class industrial effort to build new ones -- and on top of that, existing world refinery infrastructure is old and rusty. Finally, most of the remaining oil in the world exists either in geographically forbidding places where it is extremely difficult and expensive to work, like deep water out in the ocean or in frozen regions, or else it belongs to people who are indisposed to be friendly to us.

The natural gas situation is at least equally ominous, with some differences in the technical details -- and by the way, I'm referring here not to gasoline but to methane gas (CH4), the stuff we run in kitchen stoves and home furnaces. Natural gas doesn't deplete slowly like oil, following a predictable bell curve pattern; it simply stops coming out of the ground very suddenly, and then that particular gas well is played out. You get your gas from the continent you're on. Natural gas is moved to customers in the US, Canada, and Mexico in an extensive pipeline network. To import natural gas from overseas, it has to be liquefied, loaded in a special kind of expensive-to-build-and-operate tanker ship, and then offloaded at specialized marine terminal, all adding layers of cost. The process also obviously affords us poor control over not-always-friendly foreign suppliers.

Half the homes in America are heated with gas furnaces and about 16 percent of our electricity is made with it. Industry uses natural gas as the main ingredient in fertilizer, plastics, ink, glue, paint, laundry detergent, insect repellents and many other common household necessities. Synthetic rubber and man-made fibers like nylon could not be made without the chemicals derived from natural gas. In North America, natural gas production peaked in 1973. We are drilling as fast as we can to keep the air conditioners and furnaces running.

That's the background on our energy predicament. Against this background is the whole question of how we live in the United States. I wrote three books previously about the fiasco of suburbia. There are many ways of describing it, but lately I refer to it as the greatest misallocation of resources in the history of the world. Why? Because it is a living arrangement with no future. Why doesn't it have a future? Because it was designed to run on cheap oil and gas, and in just a few years we won't have those things anymore.

Having made these choices, we are now hobbled by a tragic psychology of previous investment -- that is, having poured so much of our late-20th century wealth into this living arrangement -- this Happy Motoring utopia -- we can't imagine letting go of it, or substantially reforming it.

We have compounded the problem lately by making the building of suburban sprawl the basis of our economy. Insidiously, we have replaced America's manufacturing capacity with an economy based on building evermore suburban houses and the accessories and furnishings that go with them -- the highway strips, the big box shopping pods, et cetera -- meaning that our economy is now largely based on building more and more stuff with no future -- on a continued misallocation of resources. Roughly 40 percent of the new jobs created between 2001 last year were in housing bubble related fields -- the builders, the real estate agents, the mortgage brokers, the installers of granite countertops. If you subtracted the housing bubble from the rest of the economy in recent years, there wouldn't be much left besides hair-styling, fried chicken, and open heart surgery. Much of this housing bubble itself was promulgated by an equally unprecedented lapse in standards and norms of finance -- a tragedy-in-the-making that has now begun to unwind. What are we going to do about our extreme oil dependence and the living arrangement that goes with it?

There's a widespread wish across America these days that some combination of alternative fuels will rescue us; will allow us to continue enjoying by some other means what has been called "the non-negotiable American way of life." The wish is perhaps understandable given the psychology of previous investment.

But the truth is that no combination of alternative fuels or systems for using them will allow us to continue running America the way we have been, or even a substantial fraction of it. We are not going to run Wal Mart, Walt Disney World, Monsanto, and the interstate highway system on any combination of solar or wind energy, hydrogen, nuclear, ethanol, tar sands, oil shale, methane hydrates, thermal depolymerization, zero-point energy, used french-fry oil, or anything else you can name. We will desperately use many of these things in many ways, but we are likely to be disappointed by what they can actually do for us, particularly in terms of scale -- apart from the fact that most or all of them are probably net energy losers in economic terms.

For instance, we are much more likely to use wind power on a household or neighborhood basis rather than in deployments of Godzilla-sized turbines in so-called wind farms.

The key to understanding what we face is that we have to comprehensively make other arrangements for all the normal activities of everyday life. It is a long, detailed "to do" list that we can't afford to ignore. The public discussion of these issues is impressively incoherent. This failure of the collective imagination is reflected in the especially poor job being done by the mainstream media covering this story -- in particular, The New York Times, which does little besides publish feel-good press releases from Cambridge Energy Research Associates, the oil industry's chief public relations consultant.

These days, the only aspect of these issues that we are willing to talk about at all is how we might keep all our cars running by other means. We have to get beyond this obsession with running the cars by other means. The future is not just about motoring. We have to make other arrangements comprehensively for all the major activities of daily life in this nation.

We'll have to grow our food differently. The ADM/Monsanto/Cargill model of industrial-scale agribusiness will not survive the discontinuities of the Long Emergency -- the system of pouring oil-and-gas-based fertilizers and herbicides on the ground to grow all the cheez doodles and hamburgers. As oil and gas deplete, we will be left with sterile soils and farming organized at an unworkable scale. Many lives will depend on our ability to fix this.

We will find out the hard way that we can't afford to dedicate our crop lands to growing grains and soybeans for ethanol and biodiesel. A Pennsylvania farmer put it this way to me last month: "It looks like we're going to take the last six inches of Midwest topsoil and burn it in our gas tanks." The disruptions to world grain supplies by the ethanol mania are just beginning to thunder through the system. Last months there were riots in Mexico City because so much Mexican corn is now being already being diverted to American ethanol production that poor people living on the economic margins cannot afford to pay for their food staples.

You can see, by the way, how this is a tragic extension of our obsession with running all the cars.

In the years ahead, farming will come back much closer to the center of American economic life. It will necessarily have to be done more locally, at a smaller-and-finer scale, and will require more human attention. Many of the value-added activities associated with farming -- making products like cheese, wine, oils -- will also have to be done much more locally. This situation presents excellent business and vocational opportunities for America's young people. It also presents huge problems in land-use reform. Not to mention the fact that the knowledge and skill for doing these things has to be painstakingly retrieved from the dumpster of history.

We're going to have to move people and things from place to place differently. It is imperative that we restore the US passenger railroad system. No other project we could do right away would have such a positive impact on our oil consumption. We used to have a railroad system that was the envy of the world. Now we have a system that the Bulgarians would be ashamed of.

The infrastructure for this great task is lying out there rusting in the rain. This project would put scores of thousands of people to work at meaningful jobs, at every level, from labor to management. It would benefit all ranks of society. Fixing the US passenger rail system doesn't require any great technological leaps into the unknown. The technology is thoroughly understood. The fact that from end-to-end of the political spectrum there is no public discussion about fixing the US passenger rail system shows how un-serious we are.

There's another compelling reason we should undertake the great project of repairing the US passenger rail system: it is something that would restore our confidence, a way we could demonstrate to ourselves that we are competent and capable of meeting the difficult challenges of this energy-scarce future. ... And it might inspire us to get on with the other great tasks that we will have to face.

By the way, it is important that we electrify our railroad system. All the other advanced nations have electric rail systems which allow them to run on something other than fossil fuel or to control the source point of the carbon emissions and pollution in the case of coal-fired power generation. Electric motors are far simpler and way more efficient even than diesel engines. The US was well underway with the project of electrifying our railroad system, but we just gave up after the Second World War as we directed all our investment to the interstate highway system instead.

We're going to have to move things by boat. But we've just finished a 50-year effort in taking apart most of the infrastructure for maritime trade in America. Our harbors and riverfronts have been almost completely de-activated. The public now thinks that harbors and riverfronts should only be used for condo sites, parks, bikeways, band shells and festival marketplaces. Guess what: We're going to have to put back the piers and warehouses and even the crummy accommodations for sailors.

We're going to have to move a lot more stuff by water or our ability to do commerce will suffer. Meanwhile, if we use trucks, it will be for the very last local increment of the journey. Leaders in business and municipal politics will have to wrap their minds around this new reality.

We are probably in the twilight of Happy Motoring -- as we have known it. The automobile will be a diminished presence in our lives. I'm not saying that cars will disappear, but it will become self-evident that our extreme dependency will have to end. It is possible, but not likely, that affordable electric cars will come on the market before we get into serious trouble with oil. More likely, we'll be facing an entirely new political problem with cars as motoring becomes increasingly only something that the economic elite can enjoy.

For decades, motoring has been absolutely democratic. Everybody from the lowliest hamburger flipper to the richest Microsoft millionaire could participate in the American motoring program. Right now, let's say six percent of adults in this nation can't drive, for one reason or another: They're blind, too old, too poor, et cetera. What if that number rose to 13 percent, or 26 percent of Americans because either the price of fuel or the cost of a vehicle rose beyond their means. Do you suppose that a whole new mood of grievance and resentment might arise against those who were still driving cars? And how would the large new class of non-drivers feel about paying taxes to maintain the very expensive interstate highway systems?

Back to the task list:

We're going to have to make other arrangements for commerce and manufacturing. The national chain discount stores that took over American retail in recent decades will not survive the discontinuities of the Long Emergency. Their business equations and methods of operations will fail, in particular their remorseless cancer-like drive toward replication and expansion. They will lack the resilience to adapt due to their gigantic scale of operations -- a scale that will no longer be appropriate to the contracting available energy "nutrients."

The so-called "warehouse on wheels" composed of thousands of trucks circulating incessantly around the interstate highways will not work economically in a new era of scarcer and expensive oil. Not to mention the 12,000-mile supply line to the factories of Asia which we have tragically come to depend on for so many of our household goods.

We have to check all our assumptions at the door about how things will work in the years ahead. Lately, thanks to Tom Friedman and other cheerleaders for the global economy, we've adopted the notion that globalism is a permanent condition of life. I think we will be disappointed to learn the truth -- that globalism was a set of transient economic relations made possible at a particular time by very special conditions, namely half a century of cheap energy and half a century of relative peace between the great powers.

Those conditions are about to end, and with them, I predict, will go many of the far-flung economic relations that we've come to rely on. When the US and China are contesting for the world's remaining oil resources, do you think it's possible that our trade relations might be affected? These are things we had better be prepared to think about it. China has way outstripped its own dwindling oil supply. China has gone all over the world in recent years systematically making contracts for future delivery of oil with other nations, including Canada, as that nation ramps up production of the tar sands in Alberta.

I want to remind you that there is such a thing as the Monroe Doctrine, an American foreign policy position that essentially forbids nations outside the western hemisphere from intruding in or exploiting affairs in this part of the world. It may be an old and perhaps an arrogant policy -- but I predict the time will come when the United States will invoke it in order to preserve our access to Canadian oil supplies. And if-and-when that occurs, what do you suppose that will mean to our trade relations with China? How many plastic wading pools and salad shooters will Wal-Mart be ordering then?

These are the kinds of things we are not thinking about at all, and which leave us woefully unprepared to face a very uncertain future.

Getting back to retail trade in the US -- it is important to recognize the damage that the national discount chain stores have already done in systematically destroying local commercial economies. If you travel around the main street towns of this nation, as I do, you see places in Pennsylvania, and Michigan, and Alabama, and Oklahoma, and Connecticut, and in my region of the upper Hudson Valley in New York that look like former soviet backwaters. The destruction, the abandonment and desolation in the fabric of our towns is just out of this world.

This era of chain store supremacy will not continue far into the future, and as it wobbles and falls we will be faced with a tremendous task of rebuilding the fine-grained, multi-layered local networks of economic interdependency that the chain stores destroyed. As that rebuilding occurs we will restore social roles as well as economic roles that have long been absent in our home places.

In destroying local retail infrastructures, the chain stores wiped out a whole mercantile middle class. These were the people ran local businesses, who sat on the library and hospital boards, who sponsored the little league baseball, who employed their neighbors and had to behave decently toward them, as well as treating their neighbors decently in matters of trade. They were people who uniformly had to take care of at least two buildings in town -- the place where they did business and the place where they lived. These were the people who were the caretakers of our communities, and the extermination of this class of citizens has been devastating.

We don't know how we are going to make things again in America, for instance, ordinary household products. We're not going to re-live the 20th century, when the US was on a great upswing of energy resources and we made everything for ourselves from toasters to record players. Where I live, in the upper Hudson and Mohawk Valley region of New York, most of the factories have actually been knocked down in the past 20 years. The water power is still there in many of these places, but the buildings are gone. Among all our other wishes, there is a wish that we will innovate stunning new methods for making things, such as nanotechnology. I'd repeat that we'd better check all our assumptions at the door and that we are liable to be disappointed by what these wishes will eventually lead to.

I think the truth is, we are going to have fewer things to buy. The Blue-Light-Special retail orgy of recent decades will fade into history, and shopping will retreat into the background of daily life. Consuming things will not be our sole reason for living.

The role of finance as we know it today will be severely challenged by the Long Emergency. Declining energy supplies have one particular grave implication for industrial societies: that they can no longer take for granted the 3 to 7 percent annual growth in gross domestic product that has been assumed to be normal throughout recent history. In fact, the energy picture -- the dwindling of a particular, extraordinary, one-time, very special resource -- implies a general contraction of productive activity.

Our expectations for growth are vested in tradable paper certificates -- currencies, stocks, bonds, and other instruments that represent our confidence that society will produce more wealth, and that this increase can be enjoyed in the form of profits and dividends. What happens when that consensus about reliable increase falls apart? What happens to the entire edifice of finance when these abstract certificates are no longer backed by the faith of people who have been trading them?

We can see the beginning of this process right now in the unwinding of the home mortgage sector. This recent experiment in the abolition of moral hazard, in the suspension of norms-and-standards in lending, in the fobbing off of risk, is climaxing in one of the great debacles of modern economics. It was based on the idea that immense numbers of promises for future payment could be bundled into bonds, resold, and parlayed to leverage evermore abstract casino-like bets masquerading as investments. This is anything but investment in future productive activity.

It is now being discovered that at the foundation of all this jive-finance activity lie bundles of broken promises, "non-performing loans," as they're called. It remains to be seen how this mortgage-and-housing bubble fiasco will play out, but I think it will be one of the major events leading to an overall loss of presumed wealth for American society. And is likely, as well, to infect the jury-rigged structures of global finance to a disastrous degree.

The key to all our everyday activities in the future is scale. We will probably have to live more locally than has been the case in recent decades. I think we can state categorically that anything organized on the gigantic scale, whether it is an agricultural system, or a finance system, or a corporation, or a chain of stores, or a school, or a government, is going to run into trouble.

School is another item on our "to do" list of things that we have to make other arrangements for. The gigantic centralized public school systems all over America that depend on the massive fleets of yellow school buses for collecting the students every morning around the 50-mile-radius 'pupil sheds' -- this way of doing things will probably encounter failure. Not to mention that we used the same kind of sprawling, one-story, flat-roofed buildings in Florida as in Minnesota -- and given the situation with natural gas we'll have trouble heating these buildings in the colder states. Of course there are plenty of reasons to suspect that schools this large, designed like medium security prisons, are not optimum settings for learning even if oil and gas were plentiful.

Complicating the issue is the fact that our school systems are at the center of the psychology of previous investment. We have put so much of our collective wealth in these sprawling, oversized, vehicle-dependent institutions -- with all their fabulous amenities of swimming pools, video labs, and free parking -- that it will be very difficult for us to let go of them -- even after it is self-evident that they are no longer working. What will replace our giant centralized public schools? School districts will be starved for cash in the Long Emergency. I doubt that we will be able to replace the centralized schools with a whole new system of smaller buildings distributed more equitably around the places where people live. If anything, I suppose a replacement may arise out of home schooling, especially as home schools aggregate into larger neighborhood units so that every parent doesn't have to duplicate the vocational role of teacher (and of course not all parents would even be capable of acting in that role).

The destiny of higher education ought to be especially troubling. The giant universities are exactly the kinds of institutions that will prove unwieldy and unsupportable in the Long Emergency. College will cease to be the mass consumer activity it became in the cheap energy heyday. If it survives at all, it is likely to be -- as earlier in history -- an activity for a much smaller economic elite.

The question of class relations per se will be affected by our energy situation, since it is necessarily linked to our economy. The Long Emergency is going to produce a lot of economic losers -- a whole new group I call the formerly middle class. They will lose jobs, vocations, and incomes that they will never get back. They are going to be full of grievance, anger, resentment, and bewilderment at the loss of their entitlements to the "non-negotiable" American way of life, including home ownership and affordable happy motoring. They are likely to express these feelings politically. We will be lucky if they do not turn to demagogues who promise to mount one sort of campaign or another to restore the entitlements of suburbia.

Such a campaign would be an enormous exercise in futility and a gross waste of our scarce remaining resources. But it is the kind of thing that happens when a society comes under extreme stress, and we had better be prepared for it. Social friction may also be prompted as agriculture comes closer to the center of our economic life, and we're faced with conflict between those who retain wealth in productive land and those who must resort to working in agriculture to make a living. In history, this typically sets the stage for the radical redistribution of property, seizure of land, in short, for political revolution. It could happen here. We are certain to experience epochal demographic shifts in any case. The 200-year-long trend of people leaving the rural places and the small towns to go to the big cities will very likely go into reverse.

Our hyper-gigantic cities and so-called metroplexes are a pure product of the 200-year-long upward arc of cheap energy. Like other things of gigantic scale, our cities will get into trouble. They are going to contract substantially. The cities that are composed overwhelmingly of suburban fabric will be most susceptible to failure. Orlando, Houston, Atlanta. The cities that are overburdened with skyscrapers will face an additional layer of trouble -- the skyscraper, like the mega-city, was a product of cheap energy, and we are going to have trouble running them, especially heating them without cheap natural gas.

As our cities contract, I think they will re-densify at their centers and around their waterfronts, if they are located favorably on water, and depending on how (or if) rising ocean levels might affect them. The process of contraction in our cities is likely to be difficult, disorderly and unequal. Some cities will do better than others. In my opinion, Phoenix and Tucson will be substantially depopulated. They will face additional problems with their ability to produce food locally and with water.

In Las Vegas, the excitement will be over. That will be a good thing since it has become the holy shrine of America's new chief religion: the worship of unearned riches -- based on the belief that it is possible to get something for nothing -- a belief that underlies, by the way, a great deal of the delusional thinking abroad in this land about the ability of alternative fuels and energy schemes to rescue our current mode of living.

It is hard to be optimistic about the destiny of our suburbs. My referring to them as the greatest misallocation of resources in the history of the world pretty much says it all. There will be a wish to rescue them, of course, but it is unlikely to go beyond the wishing stage. We will be a less affluent society in the years ahead than we were when we built the suburbs in the first place, and we will have fewer resources to fix them or retrofit them. The Jolly Green Giant is not going to come and move the houses closer to the shopping -- to undo the vast absurdities of single-use-zoning.

We could reform our codes and regulations which have virtually mandated a suburban sprawl outcome in every American locality -- but it's a little late for that. The horse is out of the barn on that one. And anyway, I believe the mortgage-and-housing bubble fiasco will mark the end of the whole project of suburbanization per se. I don't believe the production home builders will ever recover from it in our lifetimes; we certainly don't need a single additional WalMart or fried food joint; and the energy problems we face will eventually overcome all our wishes to keep that system going, whether we like it or not.

Realistically, I think we will have to return to a set of traditional ways of inhabiting the terrain -- towns, smaller-scaled cities composed of walkable neighborhoods, and a productive rural landscape with more of a human presence than we see in today's countryside. We have thousands of smaller towns and cities waiting to be re-inhabited and re-activated. Most of them occupy geographically important or valuable sites, especially the ones near fresh running water.

For the past two decades I have been associated with the New Urbanist movement. The New Urbanists were architects, planners, and developers who recognized the tremendous weaknesses and liabilities of the suburban pattern and have been campaigning to reform the way we build things in this country. Their methods are consistent with what we are going to need in the decades ahead to refashion human habitats that have a future and which are worth caring about.

The great achievement of the New Urbanists was not in the projects and new towns that they designed and caused to get built in recent years, but in their heroic act of retrieving lost knowledge from the dumpster of history -- a whole body of principles, methods, and skills necessary to design places worth living in. This was knowledge and principle that we had thrown away in our mad rush to become a drive-in utopia. We threw it away thinking that we could replace urban design and artistry with mere traffic engineering and statistical analysis. The result of that is now visible for all to see in the tragic landscape of the highway strips and the single-income housing pods. What we managed to do was build a land full of scary places that turned us into a nation of scary people. But this was the final tragedy of suburbia: we put up thousands of places that aren't worth caring about, not understanding that when we had enough of them, we might be left with a nation not worth defending.

So there you have a comprehensive "to do" list of efforts we can make to meet the challenges of the permanent global energy crisis, things we can do to mount an intelligent response to these circumstances that reality is sending our way. Growing more of our food locally; restoring our railroads and other forms of public transit; rebuilding local networks of commerce and economic interdependency; reorganizing education at an appropriate scale for the future.

We cannot assume a seamless transition between where we are today and where we're going. It maybe turbulent and disorderly.

We cannot assume that technology alone will rescue us. In fact, one of the major obstacles to clear thinking these days is the mistaken belief that technology and energy are the same thing; that they are interchangeable; that if you run out of one, you can just plug in the other.

Energy and technology are related to each other but they are not the same. Technology may help us get energy resources, or use energy resources, but it is not an energy resource itself. We assume magical properties for technology largely because, in our lifetimes, the energy has always been there behind it, steady, dependable, and cheap.

What's more energy and technology both entail very insidious side effects. Energy throws off entropy, a protean force of disorder and loss that manifests in everything from the wasted heat coming out of an engine tailpipe to the immersive ugliness of the American commercial highway strip -- which is entropy-made-visible.

Technology throws off diminishing returns, in the sense that the more complex you make things, often the worse the effect on society as a whole. My favorite example is the telephone system. For more than two decades we have invested billions in computerizing every phone system in the land. The net result, after all that investment and effort, is that it is practically impossible to reach a live human being on a telephone -- not to mention the monumental ten-times-a-day aggravation of getting booted into a computerized phone menu leading to the purgatory of terminal "hold."

I hope we can overcome our tendencies to try to get something for nothing and to engage in wishful thinking. The subject of hope itself is an interesting one. College kids on the lecture circuit always ask me if I can give them some hope. Apparently, they find this view of the future to be discouraging. It may mean fewer hours playing Grand Theft Auto with a side order of Domino's pepperoni pizza, but there are many positive implications for our lives in the future. We may once again live in places worth caring about, where beauty and grace are considered everybody's birthright. We may work side-by-side with our neighbors, on things that are meaningful. Instead of canned entertainments, we may hear the sounds of our own voices making music, see the works of our own dramatists and dancers.

Hope is something we really have to supply for ourselves. We are our own generators of hope, and we do it by demonstrating to ourselves that we are capable of facing the circumstances of our time, of working competently to meet these challenges, and of learning the difference between wishing and doing. In fact, what we need is not so much hope, but confidence in our inherent abilities and the will to act.

We've got a lot to do. We've got to put down the iPods and get busy. There's no time for hand-wringing and whining. As Yogi Berra said, our whole future's ahead of us.

America 'unnecessarily at risk' by looming fall-off in petroleum

The nation has been put "unnecessarily at risk," according to the nonpartisan Government Accountability Office.

The reason: failure of federal agencies to have a "coordinated or well-defined strategy either to reduce uncertainty about the timing of a peak [in oil production] or to mitigate its consequences."

Peak oil is the point at which the production of "conventional" oil reaches the highest level it will ever achieve. After that, it will decline at a fairly rapid rate.

In the absence of alternative fuels, peak oil poses enormous conse quences for our way of life, which is heavily dependent on petroleum to move people and goods.

There is little public awareness of the phenomenon of peak oil and the gravity of its conse quences, potentially making it the sleep er issue of all time. There are, to be sure, any number of supposedly well-informed experts who portray peak-oil believers as alarmist. But as the GAO report points out, the consensus, even among informed skeptics, is that peak oil will occur sometime before 2040.

There are a few knowledgeable experts who believe peak oil already has been reached globally.

The endless calls by politicians for "energy independence" are perhaps the most striking example of how little this issue is understood by the people in charge.

Former oil men George W. Bush and Dick Cheney cannot be among those in the dark on this, though they clearly have chosen not to make it an issue for reasons we may not find out until they publish their memoirs. By then, they may have a lot of explaining to do.

Everyone in the industry knows that the United States cannot drill itself to energy independence. There simply is not enough oil left in the ground.

U.S. domestic oil production peaked in 1970. Not even the subsequent pumping of oil from the large North Slope fields of Alaska was sufficient to bring U.S. production back to where it had been.

Production in most oil producers outside the Middle East also has peaked, including Norway, Great Britain, Mexico and Indonesia.

Complicating the picture is that much of the remaining oil is in countries at high risk of political volatility. In addition, these countries' oil reserve calculations are not transparent or independently verified, and may not be as much as claimed. That may be particularly true for Saudi Arabia, which ostensibly presides over the world's largest oil reserves.

Major oil-producer Kuwait recently dramatically revised downward its remaining oil reserves.

For a variety of reasons, alternative fuels may not be sufficiently available to make up for any drop in petroleum. That's particularly true, the GAO report notes, if peak oil occurs in the next decade or so.

Alternative fuels currently provide only the equivalent of 1 percent of petroleum consumption in the U.S. and are projected to displace only 4 percent of petroleum by 2015. That's why the push for conservation and pumped up investment in alternative energy is so urgent. A transition away from oil can't be accomplished overnight.

U.S. Rep. Roscoe Bartlett, R-Md., one of the few individuals in Congress who has been sounding the alarm on peak oil, called the GAO report "a clarion call for leadership at the highest level of our country to avert an energy crisis unlike any the world has ever before experienced and one that we know could happen at any time."

But is anyone listening?