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Future Chaos: There Is No "Plan B"

Wednesday, October 13, 2010, 11:26 PM

Note:  This article builds on my recent report, Prediction: Things Will Unravel Faster Than You Think.  It explores the coming energy crunch in more detail by looking at existing government planning and awareness, and the implications of what international recognition of Peak Oil as early as 2012 might mean.

The hard news is that there is no "Plan B."  The future is likely to be more chaotic than you probably think.  This was the primary conclusion that I came to after attending the most recent Association for the Study of Peak Oil & Gas (ASPO) in Washington, DC in October, 2010.

The impact of Peak Oil on markets, lifestyles, and even national solvency deserves our very highest attention - but, it turns out, some important players seem to be paying no attention at all.

ASPO conferences tend to start early, end late, and be packed with more data and information than should be consumed in one sitting.  Despite all this, I was riveted to my seat.  This year's usual constellation of excellent region-by-region analyses confirmed what past participants already knew:  Peak Conventional Oil arrived a few years ago, and new fields, enhanced recovery techniques, and unconventional oil plays are barely going to keep up with demand over the next few years. 

But there were two reports that really stood out for me.  The first was given by Rear Admiral Lawrence Rice, who presented the findings of the 2010 Joint Operating Environment (a forward-looking document examining the trends, contexts, and implications for future joint force commanders in the US military), which spends 76 pages summarizing the key trends and threats of the world.  "Energy" occupies six of those pages, and Peak Oil dominates the discussion.  Among the conclusions (on page 29), we find this hidden gem, which uses numbers and timing that are eerily similar to those that I put forth in my April 2009 report, Oil - The Coming Supply Crunch:

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.

(Source)

While there are two "coulds" in that statement, the mere possibility that such an imminent arrival and massive shortfall could be true should give every prudent adult a few second thoughts about what the future may hold.  If surplus production capacity disappears in just a couple of years, there is an entire world of planning that should take place beforehand at the international, national, community, and personal levels. 

More on the JOE report in a minute.  Next I want to turn to a presentation given by Rick Munroe, who did his best to discover where within the civilian governmental departments lie the plans for what to do in a liquid-fuel-starved future. 

To cut to the chase, it turns out that virtually every department that he contacted in both the US and Canada denied having any such reports.  In one humorous exchange by email, Natural Resources Canada stated two things in the same email:

  • “At this time the Department has no views on [Peak Oil].
  • "There is no imminent Peak Oil challenge…."

It will be interesting to see how NRCan words their emails once they do develop a point of view. 

The main conclusion from Rick's presentation was that Peak Oil is being examined closely and taken seriously by military analysts, but not civilian authorities.  The few plans that do exist on the civilian side are decades old.

The implications of this are that North America "remains highly vulnerable to a liquid fuel emergency disruption" and, since because there are only a few dusty plans lying around, there will be greater chaos than necessary.

Now back to the JOE report. 

OPEC:  To meet climbing global requirements, OPEC will have to increase its output from 30 MBD to at least 50 MBD. Significantly, no OPEC nation, except perhaps Saudi Arabia, is investing sufficient sums in new technologies and recovery methods to achieve such growth. Some, like Venezuela and Russia, are actually exhausting their fields to cash in on the bonanza created by rapidly rising oil prices. (p. 26)

A severe energy crunch is inevitable without a massive expansion of production and refining capacity.  While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. (p. 28)

Well, the amounts needed from OPEC are quite, shall we say, 'ambitious,' as they amount to an additional two Saudia Arabias coming on line in order to make up the shortfall.  A massive crunch is not otherwise avoidable.  Let's be honest; there are no more Saudia Arabias to be found.  Perhaps we could cobble one together out of thousands of smaller, less productive fields, but the likelihood of a few massive fields waiting to be found 1,100 feet underground  is extremely remote.  People in the business of actually producing oil know that producing from smaller wells takes more time, equipment, and manpower. 

Meanwhile, I also happen to agree with their assessment that the details of the effects are difficult to predict but that the general theme will be one of reduced growth, and that's under the best of circumstances.  More likely we'll have to figure out how to operate on zero or even negative growth.

So I came away from the ASPO conference pondering two completely polar trends that combine to create lasting discomfort.  On the one hand, we have more and more private and military organizations coming to the conclusion that Peak Oil is imminent and will change everything, possibly disruptively.  On the other hand, there appear to be no plans within the civilian government to deal with a liquid fuels emergency.

While we can expect that such plans will be tossed together when necessary, I would hope that Katrina taught us a few lessons about developing plans on the fly after the disaster has already arrived.  Sure, things got done, but they were certainly suboptimal and led to more confusion and more chaos than if they had been carefully developed, practiced, and debugged.

The way that I understand the lack of planning on the part of the civilian side is that Peak Oil does not present any easy political wins, if any at all.  Given the two-year planning cycle in DC, it's never a good time to bring up such an unpleasant subject.  Politics trump necessity. 

What can be rather easily predicted here is that when the next fuel crisis arrives, there will be more chaos than necessary.  Some areas will get completely stiffed on their fuel allotments, while other areas will be reasonably well supplied.  The reason that this can be easily predicted is because it more or less already happened in Europe during a protest by French fishermen inspired by high fuel prices.  They blockaded ports in late May of 2008, and by early June, the action had spread across Europe.  Shelves were quickly stripped bare of essential goods, tensions mounted, and petrol stations ran dry in a hurry.   

And these were just the effects of a port blockade and tanker truck strike.  What would happen with a real and persistent shortage of fuel?  Well, if it were perceived to be due to a structural and permanent inability of the global oil market to meet demand, prices would rise stratospherically until demand was cut off.  The only problem is, letting prices determine which industries idle back may not be the best plan. 

Consider the case of agriculture.  If full 'pass-through pricing' is the mechanism of rationing, which it currently is, then less food will be grown.  With world grain stocks at historic lows, this is one area where we might not want to let Mr. Market dictate the activities of farmers based on fuel price.  To do otherwise would require a plan of some sort, and none appear to be in effect.

That's the source of my discomfort.  It's not necessarily that large organizations are beginning to share my sense of timing and impact of Peak Oil, although that will hasten the tipping point of awareness.  It's that somehow I always thought that because Admiral Hyman Rickover knew well that this day would come (in the 1950's!), 60 years would have been sufficient lead time to assemble some credible plans.

No plans = unnecessary chaos.

The lack of planning also betrays a very common attitude, which might be summarized as, “We’ll deal with that when we get there.”  I detect this attitude in a wide range of individuals and market participants, so it’s not at all uncommon.  However, I think it's a mistake to hold this view.  When (not if, but when) full awareness of Peak Oil arrives on the international stock, bond, and commodity markets we will discover just how narrow the doorways really are.  Only a few will manage to preserve their wealth by squeezing through the doorway early; most will not make it through.  As mentioned frequently on this site, our What Should I Do? guide for developing personal resiliency against a Post-Peak future offers a valuable resource for those just getting started in their preparations.

This thinking is explored in greater depth in Part 2 of this report (enrollment required), in which I discuss strategies to fill the official vacuum by developing our own plans for what we should do in response.

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54 Comments

cookstove's picture
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Re: Future Chaos: There Is No "Plan B"

Great points, Chris. 

My personal takeaway: continue (or even accelerate) my preparations leading to familial and community resiliance, which activities are now entering their fourth year.  Much progress has been made; and, much work is left to do.

Thanks for your work!  I consider my subscription to be well worth the money.

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No "Plan B?" Look again.

A civilian-controlled military planning effort IS a civilian government response to the looming situation.

The reality of an exponential decline in baseline liquid energy has no social or political upside for anyone, including those who are aware of the potential situation, since we are all trapped in the same fossil fuel house of cards. If one's a member of the elite class that now controls 90% of the real wealth and most governments worldwide, a considered choice to publicly ignore peak oil while the military plans for its consequences makes sense; a military response and a system of government based upon the military's response will preserve the elite's power and wealth.

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Re: Future Chaos: There Is No "Plan B"

Chris,

Check out this company.  Their technology is increasing production in mature fields by 50-100%, decreasing decline rates from 2%/month to .1%/month, and increasing oil cuts by magnitudes.

www.onthewavefront.com

http://eori.uwyo.edu/downloads/EOR_IOR_Jackson2010/Powerwave_PTTC%28081810%29.pdf

It is estimated that the technology will increase recovery of fields to 50%.

I know technologies like this will only accelerate exponential growth.  But in the short term, things could continue to coast along.

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Re: Future Chaos: There Is No "Plan B"

After having lived in the military (shoot to kill curfew) after Hurricane Camille in the last century and seeing the presence of military in New Orleans after Katrina it is very conceivable that the military's interest may go beyond strategic planning for their own supplies.  If a rationing plan, with allocations to certain essential industries for medical products, etc is implemented, a strong arm will be needed to enforce compliance.   Resiliance will be the key.  I think it's time to plan to reopen my bicycle shop!  :)

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Re: Future Chaos: There Is No "Plan B"

The main conclusion from Rick's presentation was that Peak Oil is being examined closely and taken seriously by military analysts, but not civilian authorities.  The few plans that do exist on the civilian side are decades old.

Some of those older plans are cited and discussed here.

As Robert Hirsch discussed in a recent interview, there are people inside the government that understand the problem. 

My hunch is that there are updated plans in place, but they would not see the light of day until an emergency situation manifests. It is just not politically expedient to take action now, or even admit to having a plan to take action in the future. 

Some further suggestions on what you can do on a personal level to prepare for gas rationing, whether it be by a "pass-through pricing" mechanism, or, government imposed controls are presented here and here.

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Re: Future Chaos: There Is No "Plan B"

"The only problem is, letting prices determine which industries idle back may not be the best plan."

Chris, as unplesant and disruptive as peak oil is, price controls and government intervention will surely make things much worse.  Please, Please, Please don't advocate for any government control and rationing of  oil supplies.  Unintended consequenses are horrific.  directing oil to agricultural uses sounds good in theory, but these things have a way of turning out ugly. I can guarantee more people will suffer and die if price and commodity controls are put in place than otherwise. 

I recommend a deep dive into F.A. Hayek, Popper, and Mises for more evidence.

A market discovery of price is the least evil way for us to wade through a crisis of peak oil.  If you want to help people, keep beating the drum of preparedness, self sufficiency, intelligence, liberty and community.  Market price discovery is a self healing mechanism in cases such as this.  Let it do it's work.  Let's keep liberty alive.

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Re: No "Plan B?" Look again.

sepmeier wrote:
A civilian-controlled military planning effort IS a civilian government response to the looming situation. The reality of an exponential decline in baseline liquid energy has no social or political upside for anyone, including those who are aware of the potential situation, since we are all trapped in the same fossil fuel house of cards. If one's a member of the elite class that now controls 90% of the real wealth and most governments worldwide, a considered choice to publicly ignore peak oil while the military plans for its consequences makes sense; a military response and a system of government based upon the military's response will preserve the elite's power and wealth.

This is a very intriguing perspective, and very ominous.  Unfortunately it makes a lot of sense.

Travlin 

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Re: Future Chaos: There Is No "Plan B"

skynet1 wrote:

"The only problem is, letting prices determine which industries idle back may not be the best plan."

Chris, as unplesant and disruptive as peak oil is, price controls and government intervention will surely make things much worse.  Please, Please, Please don't advocate for any government control and rationing of  oil supplies.  Unintended consequenses are horrific.  directing oil to agricultural uses sounds good in theory, but these things have a way of turning out ugly. I can guarantee more people will suffer and die if price and commodity controls are put in place than otherwise. 

I recommend a deep dive into F.A. Hayek, Popper, and Mises for more evidence.

A market discovery of price is the least evil way for us to wade through a crisis of peak oil.  If you want to help people, keep beating the drum of preparedness, self sufficiency, intelligence, liberty and community.  Market price discovery is a self healing mechanism in cases such as this.  Let it do it's work.  Let's keep liberty alive.

I agree with you philosophically Skynet1, but keep in mind that corporations have huge amounts of money to pay higher fuel costs and farmers don't.  What good are stores stocked with new funiture when there is not enough food?

Travlin 

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Re: Future Chaos: There Is No "Plan B"

Not to worry-By 2012 the depression will be so deep and it will last so long that there will be plenty of oil for a long, long time.

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Re: Future Chaos: There Is No "Plan B"

skynet1 wrote:

A market discovery of price is the least evil way for us to wade through a crisis of peak oil.  If you want to help people, keep beating the drum of preparedness, self sufficiency, intelligence, liberty and community.  Market price discovery is a self healing mechanism in cases such as this.  Let it do it's work.  Let's keep liberty alive.

I agree. There is no problem that is so bad that government can't make worse!

As to food production, I would imagine that politicians might be compelled to allocate fuel through the agribusiness industry, rather than directly to farmers. Monsanto might then tell farmers that they'll provide the fuel, if they'll only plant their GM seeds. It might not play out that way, but I wouldn't bet against such a scenario.

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Re: Future Chaos: There Is No "Plan B"

skynet1 wrote:
I can guarantee more people will suffer and die if price and commodity controls are put in place than otherwise.

I can guarantee "people will suffer and die" no matter what happens!

Mike

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Re: Future Chaos: There Is No "Plan B"

Damnthematrix wrote:

skynet1 wrote:
I can guarantee more people will suffer and die if price and commodity controls are put in place than otherwise.

I can guarantee "people will suffer and die" no matter what happens!

Mike

And I can guarantee that governments will be causing the suffering and death.

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Re: Future Chaos: There Is No "Plan B"

Another video on the new EOR method.  This will revolutionize the oil industry.

http://www.b-tv.com/features/watch-now.html?clip=WavefrontOct10.wmv

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Re: Future Chaos: There Is No "Plan B"

ccpetersmd wrote:

I agree. There is no problem that is so bad that government can't make worse!

As to food production, I would imagine that politicians might be compelled to allocate fuel through the agribusiness industry, rather than directly to farmers. Monsanto might then tell farmers that they'll provide the fuel, if they'll only plant their GM seeds. It might not play out that way, but I wouldn't bet against such a scenario.

I wouldn't bet against it either.

Travlin 

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Re: Future Chaos: There Is No "Plan B"

leo0648 wrote:

Another video on the new EOR method.  This will revolutionize the oil industry.

http://www.b-tv.com/features/watch-now.html?clip=WavefrontOct10.wmv

Anyone who waits for this technology to produce any significant oil recovery is in for a long, long, boring time. It is true more than half the original oil in place is left when fields are abandoned, but engineers have been working for half a century  on technologies to recover additional oil. This one isn't it.

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Re: Future Chaos: There Is No "Plan B"

Monsantos, is playing hard ball .  They are giving young future farmers large grants .  Our 4-H groups have been asked to apply for them .  They also can get grants for a large $8000 hoop houses if they jump through the right hoops .

I am sure that all of it will have strings attached .

FM

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Re: Future Chaos: There Is No "Plan B"

Obviously, you didn't read my first link...

http://eori.uwyo.edu/downloads/EOR_IOR_Jackson2010/Powerwave_PTTC%28081810%29.pdf

See pg. 17.  Oil production was increased 50% in just one field across 3 waterflood patterns.  The decline of the field went from 2%/month to 1/10 %/month.  This field would currently be uneconomical if oil production continued to decline at the rates back in 2007.

These results have been seen in many different fields and formations. 

Also, this technology requires no large amount of energy/resources to get this oil, unlike fracturing/drilling.

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Re: Future Chaos: There Is No "Plan B"

50% of a little number is a little number. It is great if the technology results in improved oil recovery, but it will not produce a significant amount of oil compared to the rate of consumption in the U.S, or North America or the world.

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Preparing for Peak Oil....

I've been preparing my family for peak oil for 4 years now and I'm sharing what we have done to help others insure themsevlves against the negative consequences of Peak Oil.  I made some short videos showing what we have done and attached one of them here.....

MrEnergyCzar

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Re: Future Chaos: There Is No "Plan B"

They increased production by 50% initially.  Over time, it is about 175% when you consider the new decline of .1%/month to the original 2%/month decline.  Compounding tells us that over time, the difference becomes very big.

In 3 waterflood patterns alone, they increased recovery by 450,000 bbl.  That is not a small number, and that is only 3 waterflood patterns.  There are 10,000 waterfloods in west Texas alone.  The company that purchased the original 3 units recently purchased 60 more for additional waterfloods. 

I believe in peak oil.  But some people are too locked into the belief that they can't see groundbreaking technologies that could offset it for a while longer. 

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Re: Future Chaos: There Is No "Plan B"

leo0648 wrote:

Chris,

Check out this company.  Their technology is increasing production in mature fields by 50-100%, decreasing decline rates from 2%/month to .1%/month, and increasing oil cuts by magnitudes.

www.onthewavefront.com

http://eori.uwyo.edu/downloads/EOR_IOR_Jackson2010/Powerwave_PTTC%28081810%29.pdf

It is estimated that the technology will increase recovery of fields to 50%.

I know technologies like this will only accelerate exponential growth.  But in the short term, things could continue to coast along.

Their "Case History" just show little bumps up in the general declining trends.. I don't see anything impressive there, sorry

leo0648 wrote:

They increased production by 50% initially.  Over time, it is about 175% when you consider the new decline of .1%/month to the original 2%/month decline.  Compounding tells us that over time, the difference becomes very big.

And how long is it supposed to decline by 0.1%? They don't tell you do they. Maybe in a couple of years it will fall down a cliff of inifinite slope, go negative and start sucking oil right out from your tank for all we know. :)

Samuel

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Re: Future Chaos: There Is No "Plan B"

What are you talking about?  Little bumps?  Did you see pg. 17 and pg.10?

On pg. 17, production went from 120 bbls/d to 175 bbls/d in about 6 months.  With the original decline of the field, the field would only be producing 50 bbls/d after 2 years.  But after installing the units, the field is still producing 140 bbls/d.  This field would be uneconomical had the devices not been installed.  The watercut was approaching a point where your costs are just too high to operate the field.

If you have ever worked in the oil industry, that extra boost in production is big.  40bbls/d is about $3000/d.  When a company owns 5000 wells, it starts to add up.

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Re: Future Chaos: There Is No "Plan B"

"Peak Oil" is not a problem. Post-systemic collapse, demand for oil - or anything else coming from non-locality - is going to decrease sharply.

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Re: Future Chaos: There Is No "Plan B"

leo0648 wrote:

What are you talking about?  Little bumps?  Did you see pg. 17 and pg.10

Yep.......  they ARE little bumbs alright...

All they did was postpone the inevitable by six monthgs.  Sorry but I concur, this is no solution at all, in fact it just looks like common garden variety water injection, which water has to to be removed from the extracted oil (Saudi Oil is now 50+% water when it reaches the surface!) adding energy investment for zero energy return... in other words a lower ERoEI, which is what always happens when PO gets you!

Mike

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Re: Future Chaos: There Is No "Plan B"

Thank you, Chris, for your deep research, objective information, and clear presentations.  We are very appreciative.

The CM community may be interested to know that since learning of your web site about three months ago and in response to your comments about the importance of community development, we have begun planning with our family (in-depth resilience review), a group of friends with common concerns (the 45-min Crash Course), and our neighbors (a meet-and-greet event).  We agree that development of our community(ies) is foundational to resilience.

The CM community may also wish to know of two additional resilience resources: (1) The Power of Community: How Cuba Survived Peak Oil is a DVD produced in 2006 by Community Service, Inc., (available at Amazon.com, Barnes & Noble, etc.).  It is about Cuba's economic crash when the USSR collapsed and the flow of oil to this island stopped.  Without political comment, this DVD portrays the reorganization of transportation, health care, and the spontaneous development of small organic gardening operations in becoming more self-reliant. This DVD mirrors your recommendations in several ways. (2) Positivity by Barbara Fredrickson, Ph.D.  is a lucid explanation of 20 years of psychological research and a straightforward description of simple strategies by which individuals and organizations can (and have) increase their emotional resilience and flourish even in times of crisis.  It's an interesting read with practical techniques for increasing peace and productivity.

The next 20 years will indeed be exciting, especially for those who are prepared.

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Re: Future Chaos: There Is No "Plan B"

most important part here:http://mises.org/media/5418

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Re: Future Chaos: There Is No "Plan B"

skynet1 wrote:

Market price discovery is a self healing mechanism in cases such as this.  Let it do it's work.  Let's keep liberty alive.

From what I can see, market price discovery has in too many places already gone the way of the dodo.

Just one man's opinion -- and welcome aboard, skynet!

Viva -- Sager

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Re: Future Chaos: There Is No "Plan B"

leo0648 wrote:

If you have ever worked in the oil industry, that extra boost in production is big.  40bbls/d is about $3000/d.  When a company owns 5000 wells, it starts to add up.

So now, if we took that extra money and were feverishly investing in ways to produce energy *after* the oil gets too expensive to bring up (whenever that might be -- next week, next year, 2016, whatever), I'd feel better.  But I imagine that money just goes out to the stockholders/owners and they're buying some more of whatever they're buying now.  

Every dollar not spent on resilience/changing the way we engage our energy dilemma is an opportunity lost.  As long as we're all Super Psyched about how we can keep those fields pumping another X months as opposed to Holy Cr@p What About "After", it's just a slower way of losing the struggle.  

One man's opinion -- YMMV.

Viva -- Sager

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Re: Preparing for Peak Oil....

MrEnergyCzar wrote:

I've been preparing my family for peak oil for 4 years now and I'm sharing what we have done to help others insure themsevlves against the negative consequences of Peak Oil.  I made some short videos showing what we have done and attached one of them here.....

MrEnergyCzar

MrEnergyCzar,

Welcome.  What an excellent first post!  I watched your videos and got some great ideas for our present home and one I'm planning for the future.  Thanks!

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Re: Future Chaos: There Is No "Plan B"

Thanks, AO, I missed MrEnergyCzar's first post, so I'm glad you commented. I've only watched the first video, as I'd like to watch it and the rest with my wife, but this is a great contribution! Thanks, and welcome, Czar!

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Re: Future Chaos: There Is No "Plan B"

guardia wrote:

leo0648 wrote:

They increased production by 50% initially.  Over time, it is about 175% when you consider the new decline of .1%/month to the original 2%/month decline.  Compounding tells us that over time, the difference becomes very big.

And how long is it supposed to decline by 0.1%? They don't tell you do they. Maybe in a couple of years it will fall down a cliff of inifinite slope, go negative and start sucking oil right out from your tank for all we know. :)

Ok, let's be a bit more accurate. EOR is nothing new, and these guys are doing it with CO2:

http://www.ptrc.ca/weyburn_statistics.php

Their graphs are a lot nicer and clearer than the one you referred to. This is from 2005 and they expected to extend the life of the field by 25 years, but maybe in 2 years we will find out that we should have expected 2 years :) Would love to see more recent data on this...

In any case, it's not going to get us back where we were. Things are going down, and these data have been accounted for in reports exploring global peak oil.

Samuel

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Re: Preparing for Peak Oil....

I missed that as well!  Watched the first one....awesome!

Welcome and I hope to hear more from you soon!

ao wrote:

MrEnergyCzar wrote:

I've been preparing my family for peak oil for 4 years now and I'm sharing what we have done to help others insure themsevlves against the negative consequences of Peak Oil.  I made some short videos showing what we have done and attached one of them here.....

MrEnergyCzar

MrEnergyCzar,

Welcome.  What an excellent first post!  I watched your videos and got some great ideas for our present home and one I'm planning for the future.  Thanks!

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Re: Future Chaos: There Is No "Plan B"

All,

While I am a CM fan and have been tracking peak oil for about 18 months now, I am curious about the concept of deep oil. Is anyone aware of a thoughtful researched analysis of deep oil and its potential to alter the peak oil trajectory?

While I am impressed by the point that the military industrial complex and geo-political entities are acting like peak oil is real, I am also inherently skeptical of meta-narratives that provide a rhetorical basis for worldwide governance. Much of the so called scientific consensus behind global warming turned out to be either falsified, co-erced.

The theory of exponential growth based on finite resources is clear and logical to me. So is malthusian collapse. But in attempting to understand the near to mid-term risk, I feel it is important to understand deep oil. Am grateful to thoughts on the subject from such an educated and interested peer-group.

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Re: Future Chaos: There Is No "Plan B"

Well, Chris, I don't know what it was about this thread, but it seems to have brought out the true believers of every stripe.  I think everybody needs to take a deep breath and step back for a second and ask yourself as honestly as possible whether the opinions you're expressing are based on facts or ideologies.  Because ideologies can get you in big trouble.

Chris suggests that the wicked ol gubmint might have a role to play in helping to get through the crisis, and the chorus that believes that it can do nothing good comes in on cue.  Someone suggests there might be a promising technology to mitigate the decline, and the knee-jerk response from many is, "no way." 

Next thing you know, someone will suggest climate change is a one-world gubmint conspiracy... ;)

Now, folks, we live in a country that has a government.  Thank God.  And if you believe government will play no role when this crisis starts to have its effects, I have some great beachfront property in Somalia you might want to check out.  And I very seriously doubt that whatever party's in charge of the government will get it exactly right.  But we can try to work with national leaders so that when they do finally decide that action is needed, they have some sort of rational guidance available.  I think that's what Chris is trying to do here, and ASPO for that matter.  If you just decide government has no role to play because of your quasi-religious beliefs, you're going to be left paddling off by yourself when the battleship finally begins it's slow turn.

I think a lot of people have such a fervent belief that government can't do anything right, that they want it to fail.  For it to do anything else would greatly challenge their most cherished beliefs about reality, about who they are.

Now, with new technology, I have to admit I'm just as skeptical as anyone who's commented so far.  But I also have to ask myself if my reaction is because I've already made up my mind about things and don't want to hear anything else.  After all, I've made concrete changes to my life based on what I believe about the future.  A change in just a few percentages in the overall oil depletion rate could drastically change how the next 20-30 years is going to play out.  For me, that pretty much means the rest of my useful life.  So, yeah, it's an existential threat to my psyche on some level.  On some level, I don't want any of the new technologies to work, so I refuse to believe they could work.  But reality is going to be what reality is going to be.

A lot of people in the 1970s read the Club of Rome Report and folks like Paul Erlich and decided that the end was nigh.  Well, it turns out that the former was pretty much right on, but interpreted incorrectly by the media, and the latter were highly inaccurate due to a poor understanding of basic market economics.  Oops.  Hey, what's 50 years on the vast chart of history?  How about for your lifetime?

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Re: Future Chaos: There Is No "Plan B"

The field was already on water injection for years.  This device was installed long after the original water inejection.

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Re: Future Chaos: There Is No "Plan B"

green_achers wrote:
I think everybody needs to take a deep breath and step back for a second and ask yourself as honestly as possible whether the opinions you're expressing are based on facts or ideologies.  Because ideologies can get you in big trouble.

Hmm, you might look at the rest of your comment there and decide if your following your own advice.  You ridicule those of us who happen to believe that large government is not the answer.  Is that working on facts or ideology?  You even poked fun at those who happen to question if the climate change and the rapid legislation/cap-n-trade schemes are really about climate change or simply a way for someone to make a buck.

green_achers wrote:
If you just decide government has no role to play because of your quasi-religious beliefs, you're going to be left paddling off by yourself when the battleship finally begins it's slow turn.

Government does have a role to play, but in my opinion only a very minimal role at the national/international level.  You increase government as you get more local.  Large bureaucracies try to push grandiose, generally unworkable, one size fits all solutions.  Where what we need in a society with less energy and the subsequent less complexity is smaller localized solutions.

green_achers wrote:
On some level, I don't want any of the new technologies to work, so I refuse to believe they could work.

Really?  I think most of us, and Chris included want to see advances in technology that improves our lives, helps with energy issues, etc.  I'm a complete believer that technology will play a vital role.  The only issue is realistic expectations about how big a role that will be in the coming very large problem.  As far as goverment roll, we need to keep them out of the way of those that may develop new methods, quit subsidizing methods that are not economically feasible or sustainable (corn based ethanol anyone?).

green_achers wrote:
I think a lot of people have such a fervent belief that government can't do anything right, that they want it to fail.  For it to do anything else would greatly challenge their most cherished beliefs about reality, about who they are.

Really?  I don't think I need government to fail to justify my beliefs.  In fact I don't even think I have to call them beliefs, facts seem more appropriate.  After all who is pushing to keep the status quo?  Look at the regulations to keep individuals from local farming, mandating one-size fits all health care, pumping up a fiat currency, penalizing those who want sound money.  None of the past  failures matter however, as fiscal reality sets in, all the grandiose schemes will fail since there are simply not enough resources (never have been) to support large government and it's programs for the long run.

green_achers wrote:
gubmint

Cute once, maybe twice - 100th time - not so much.  Besides, is this really a way to carry on a dialog when you use slurs like this to indicate those who question the role of government are just dumb hicks? 

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Re: Future Chaos: There Is No "Plan B"

Something struck me as I was reading this item.

I am in general agreement with and share the concerns regarding peak oil. Language, however, can easily obfuscate things and sometimes lead down meaningless pathways.

The example from this blog post is the quote taken from the 2010 Joint Operating Environment:

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD."

I believe that there will not be and cannot be a "shortfall in output," regardless of how much or how little oil finds its way to market; it is a conceptual invention. Let me try and explain why in two variants: V1 and V2 (V2 is much shorter).

V1 ============

Let's take my personal bank account as an analogy of the oil in the ground. I'm also going to ignore the notions of interest/inflation/deflation/financial monkey business so that my financial capital does not shrink unless I withdraw some capital. Let me also say that the account magically began with X dollars in it and has never nor will it ever have any subsequent deposits. I must also add a maximum daily withdrawal limit on my account toi mimic the max (reasonably) possible daily oil output but instead of an absolute $$ amount, let's cap the daily withdrawal at a percent of the account balance.

My thesis, in terms of the given analogy, is that I cannot have a "shortfall" in withdrawals from my bank account.

Let's immediately go to the "my yacht is bigger than your yacht" contest that apparently continues within a very small circle of the uber-rich.

Sadly, my modest bank account does not have the wherewithall to be a contestant, even on agreeable terms that would saddle many generations hence with a mortgage on such a tub. Does that mean that I have a shortfall?

I could also try and use my bank account to fund the first manned mission to Mars. Sadly, it comes up short on that quest as well. Is this a shortfall?

Clearly there are things or activities that my bank account is not able to fund.

It can be pointed out that this is merely semantics however the view one takes on an issue is indicative of how one will approach a search for a solution.

In conclusion, rather than calling these cases "shortfall," let's call it by what it really is: living beyond the limits.

V2 ===========

Allowing for the notion of a shortfall, how can one possibly say that we face a 10% shortfall or a 10 mbd shortfall? It is impossible to make such conjectures because demand patterns must shift when supply is 100% utilized and cannot increase. Further, I believe it is impossible to predict how demand patterns will shift.

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Re: Future Chaos: There Is No "Plan B"

martensonyak wrote:
Allowing for the notion of a shortfall, how can one possibly say that we face a 10% shortfall or a 10 mbd shortfall? It is impossible to make such conjectures because demand patterns must shift when supply is 100% utilized and cannot increase. Further, I believe it is impossible to predict how demand patterns will shift.

I believe what they are saying is that to continue on the current path would take X amount of oil - this is based on current growth patterns in usage of oil.  Since we don't expect to have X amount of oil, we can say we expect we can not meet that expected growth.  So yes, what they are saying is that the demand patterns are going to shift to accomodate the "shortage". 

I do agree with you that the language probably leads people to say, "well, we just have to find it somewhere else".  We have been taught for a long time that if you don't have it, you can simply borrow to make up the difference.  Works well with fiat currencies but not so well with hard assets and that multi-generational lack of hard limits means much of the population can't comprehend what is coming.  It's kind of like the child that has never been told "no".  The thing that really worries me, as Chris has pointed out, is that oil is very in-elastic.  A very small shortage in supply means big changes.  I think in one of his posts he said the total change during the recession in oil demand is only 2-3%.  10% is huge, and if the dollar falls as the reserve currency, it's going to make the "shortage" much much worse for America.

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Re: Future Chaos: There Is No "Plan B"

R, I'm not going to get into another whizzing match with you over this, especially if you won't read my post with enough care to make an intelligent interpretation of what I said. You have a remarkable ability to read volumes more into a statement than was said.  Ridiculing those who "believe that large government is not the answer?"  "Cap-n-trade?"  Where did that come from?  Sounds a lot like someone whose ideology has been called into question to me.  The statement that you consider your ideology to be "facts" speaks volumes.

And because I seem to need to spell things out for you in very simple terms, I was not saying I actually want technological solutions to fail.  I was stating that they are either going to succeed of fail based on realities I have no control over, but a person who has a concrete or even psychological investment in there being no technological solution had better keep an open mind.  I was using myself as an example of the sort of thought process that might lead someone from an educated assessment of the way things might be, to a belief system.  I'm mainly writing this for the benefit of anyone else that might have read my words with the same mistake, I consider you quite past reason in this matter.

Now I'm going back to work on my tractor some more.

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Re: Future Chaos: There Is No "Plan B"

guardia wrote:

guardia wrote:

leo0648 wrote:

They increased production by 50% initially.  Over time, it is about 175% when you consider the new decline of .1%/month to the original 2%/month decline.  Compounding tells us that over time, the difference becomes very big.

And how long is it supposed to decline by 0.1%? They don't tell you do they. Maybe in a couple of years it will fall down a cliff of inifinite slope, go negative and start sucking oil right out from your tank for all we know. :)

Ok, let's be a bit more accurate. EOR is nothing new, and these guys are doing it with CO2:

http://www.ptrc.ca/weyburn_statistics.php

Their graphs are a lot nicer and clearer than the one you referred to. This is from 2005 and they expected to extend the life of the field by 25 years, but maybe in 2 years we will find out that we should have expected 2 years :) Would love to see more recent data on this...

In any case, it's not going to get us back where we were. Things are going down, and these data have been accounted for in reports exploring global peak oil.

Samuel

The company is using their device along with polymer flooding and CO2 and seeing even greater gains in production.  The device doesn't limit your flooding fluid, it only increases the spread of the fluid in the reservoir. 

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Re: Future Chaos: There Is No "Plan B"

I too, was fascinated to watch MrEnergyCzar's videos; I watched all four and got some excellent ideas from them.  Thank you very much for taking the time to make and post them to youtube.

And I thought Green_Achers made some very thoughtful and accurate psychological points. There's a raft of excellent writing and research out there about cognitive errors and biases and it's valuable to be reminded of the mind's very strong tendencies to make them.

Fwiw,

Sue

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Re: Future Chaos: There Is No "Plan B"

green achers wrote:  "A lot of people in the 1970s read the Club of Rome Report and folks like Paul Erlich and decided that the end was nigh.  Well, it turns out that the former was pretty much right on, but interpreted incorrectly by the media, and the latter were highly inaccurate due to a poor understanding of basic market economics."

I'm still trying to work out whether it was Ehrlich or the CoR who were "inaccurate" or "misinterpreted"...  however, anyone who decided "the end was nigh" in 1970 was totally wrong.  They couldn't have read "Limits to Growth" because it stated that there would be collapse within  about 100 years from that time.  It turns out they may well have been optimistic!

The other thing I'd challenge here is that it wasn't "a poor understanding of basic market economics" that wrecked Ehrlich's credibility, it was his lack of understanding that vast amounts of cheap and abundant fossil fuels could be turned into vast amounts of cheap and abundant FOOD!

Now, regarding my skepticism of "the new technology", look at this chart...

They basically claim to be able to increase total output from 100,000 barrels to almost 450,000 barrels.  Impressive.  However, they make some very very big assumptions here...  they rely on the slope of that red line to remain on the same current trajectory for a very long time... and I can't see how they can claim anything of the sort, because experience shows that hi tech extraction methods actually speed up depletion rates.  Change that slope by a mere couple of degrees even, and the result is totally different.  In fact, just look at the last few blue spots that the curve is extrapolated from....  they point to just under 250,000 barrels!  Who's to say the trend will actually be worse than that?

Don't forget this presentation is designed to SELL the idea (and technology, worth heaps I'll bet), and they're going to try to make it look as good as possible...

Mike

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Re: Future Chaos: There Is No "Plan B"

rhare wrote:

green_achers wrote:
If you just decide government has no role to play because of your quasi-religious beliefs, you're going to be left paddling off by yourself when the battleship finally begins it's slow turn.

Government does have a role to play, but in my opinion only a very minimal role at the national/international level.  You increase government as you get more local.  Large bureaucracies try to push grandiose, generally unworkable, one size fits all solutions.  Where what we need in a society with less energy and the subsequent less complexity is smaller localized solutions.

I think you may have misunderstood the point of greenacher's post, but nevertheless this is something I can get with. The issue isn't whether governments have any role to play, its what the nature of that role will be. Big central government policies tend to do "one size fits all" policies as you say, and regulations/mandates which add even more complexity and create unintended consequences. It is designed to maintain economic complexity and this can only be done by concetrating energy and wealth. Local governments can better tailor policies to their specific populations, and work towards transitioning to a less complex society using incentives rather than strict mandates.

If anyone's interested, here is a piece about how state/local governments can use competitive "choice architecture" (not mandates) to increase the food, energy and financial resilience of their populations in the face of decreasing net energy and complexity: http://peakcomplexity.blogspot.com/2010/10/choice-architecture-capitalizing-on.html

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Re: Future Chaos: There Is No "Plan B"

The point I was trying to make wasn't that we shouldn't be skeptical about these technlogical claims, but that it's a good idea to examine our motives when we find ourselves having a visceral reaction against any "good news."

Yeah, that chart is really fishy.  I don't like the way they zeroed the x axis at the point they began injecting.  I can see why they did, but we really don't know enough about the production curve of the well to tell how big a fraction of the overall production their improvement represents, just how much after they began.  The max they show was about 150k bbl before the zero point at which time they were producing about 280 bbl/d.  We don't know what happened before that, or how many bbl were produced by that time.

The reason that curve looks very linear is that they're plotting bbl/d vs cumulative production.  If they were plotting it against time, it would look a lot different.  It would be very concave-up (have a long "tail")  and that's just not realistic.

The first 50k bbl after they started injecting were produced at an average of about 150 bbl/d, it looks like to me.  OK, that works out to 333 days, call it a year with down time.  It looks like the last 40k or so bbl is produced at a rate of about 10 bbl/d, about 4000 days, or about 11 years.  EROEI kicks in a long ways before that.  So yeah, the curve in that chart would have to drop off a lot more steeply.

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Re: Future Chaos: There Is No "Plan B"

Damnthematrix wrote:

green achers wrote:  "A lot of people in the 1970s read the Club of Rome Report and folks like Paul Erlich and decided that the end was nigh.  Well, it turns out that the former was pretty much right on, but interpreted incorrectly by the media, and the latter were highly inaccurate due to a poor understanding of basic market economics."

I'm still trying to work out whether it was Ehrlich or the CoR who were "inaccurate" or "misinterpreted"...  however, anyone who decided "the end was nigh" in 1970 was totally wrong.  They couldn't have read "Limits to Growth" because it stated that there would be collapse within  about 100 years from that time.  It turns out they may well have been optimistic!

The other thing I'd challenge here is that it wasn't "a poor understanding of basic market economics" that wrecked Ehrlich's credibility, it was his lack of understanding that vast amounts of cheap and abundant fossil fuels could be turned into vast amounts of cheap and abundant FOOD!

Now, regarding my skepticism of "the new technology", look at this chart...

They basically claim to be able to increase total output from 100,000 barrels to almost 450,000 barrels.  Impressive.  However, they make some very very big assumptions here...  they rely on the slope of that red line to remain on the same current trajectory for a very long time... and I can't see how they can claim anything of the sort, because experience shows that hi tech extraction methods actually speed up depletion rates.  Change that slope by a mere couple of degrees even, and the result is totally different.  In fact, just look at the last few blue spots that the curve is extrapolated from....  they point to just under 250,000 barrels!  Who's to say the trend will actually be worse than that?

Don't forget this presentation is designed to SELL the idea (and technology, worth heaps I'll bet), and they're going to try to make it look as good as possible...

Mike

Well, considering the decline rate dropped to .1%/month from 2%/month, I don't see why that red line would change very much.  The red line is assuming the decline stays at the current .1%/month.  .1%/month is much better than the usual 1-3%/month we see in most fields.

The tool costs $5000/month and $2000 to install.  The added production at $70/bbl is worth $150,000/month.  Even if they only recover an extra 100k bbl, that is a 100k barrels that require no hydraulic fracturing and no drilling.  Also, the eroei is very low on this device. 

The company that installed these original 3 in 2007, purchased 30 more in 2009 and 30 more this year, with more budgeted for 2011.  That chart also doesn't show the upgraded tool installed mid-2010, which apparently increased production even more. 

I am not saying this technology is going to end peak oil.  I am just saying that those with narrow views of peak oil may be disappointed to find out that certain technologies could push peak back a few years.  Humans will exploit every resource possible, especially if economics allow for it.

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Re: Future Chaos: There Is No "Plan B"
NZ Govt Report confirms 2012
 
 

Dwindling oil supplies threaten economies

By MARTIN KAY

Last updated 13:39 13/10/2010

http://www.stuff.co.nz/business/4228359/Dwindling-oil-supplies-threaten-economies


PUMP PAIN: The world faces decades of economic turmoil and a vicious cycle of recessions as oil supplies run low and prices spike, according to new research.

The world faces decades of economic turmoil and a vicious cycle of recessions as oil supplies run low and prices spike, according to a Parliamentary research paper.

The paper, The Next Oil Shock, says that known oil reserves would last for another 25 to 32 years, but an oil ''supply crunch'' could occur in 2012 or shortly afterwards as demand rises and supplies fail to keep pace.

It was likely to be followed by a pattern of supply and demand crises.

''While the world will not run out of oil reserves for decades to come, it cannot indefinitely continue to produce oil at an increasing rate from the remaining reserves. Forecasts indicate that world oil production capacity will not grow or fall in the next five years while demand will continue to rise.
''There is a risk that the world economy may be at the start of a cycle of supply crunches leading to price spikes and recessions, followed by recoveries leading to supply crunches.''

The paper, by Parliamentary Library economics and industry research analyst Clint Smith, is based on international research, reports and data.

It says the present world demand for oil of 86 million barrels a day was predicted to rise to more than 87 million barrels per day next year and continue to increase.

Greens co-leader Russel Norman said the report showed that the Government's $11 billion road-building programme was ''shortsighted and irresponsible''.

''This report makes it clear that the Government's decision to spend over $11 billion on horrendously expensive new expressways is short-sighted and irresponsible.

''Continuing to spend the vast majority of the transport budget on roads will only make us more dependent on oil, and more vulnerable to high prices. The idea that New Zealanders will be able to switch to electric vehicles in a short period of time is unworkable - it would cost us a fortune.''

He said the Government should focus on investing in rail, buses, walking and cycling.

''We need to future proof our transport system now. The Government has the means, there's no excuse not to act.''

The report can be found at http://www.parliament.nz

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Re: Future Chaos: There Is No "Plan B"

I agree that Peak Oil will come but I think the analogy with Katrina is misleading.  Sure, there may be dramatic oil price increases, but these will probably occur over a period of weeks and months, not days.

I'm not sure what kind of government plan you have in mind.  I watched the 1970 movie "Tora! Tora! Tora!" last night, which is the story of the events leading up to Pearl Harbor.  It was quite instructive.  It clearly shows that government bureaucrats (military or civilian) typically ignore important data and don't know what to do about the data they don't ignore.  There is a significant possibility that Plan B would only make the situation worse.

I think that government just needs to get out of the way (with reasonable environmental protections), so that the free market forces can adjust.  In 1973, the price of oil quadrupled.  That would be equivalent to an increase to $320 today.  Yet the market adjusted.  You can bet the if the oil price increases to $320 (and the market thinks the increase is permanent), a lot of hydrocarbon and alternative energy projects would suddenly become economically viable.  Give the profit motive full rein!

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Re: Future Chaos: There Is No "Plan B"

I have seen a new green technology which is in the very near horizon that will be exceedingly good for planet Earth. It is part solution to a environmental nightmare, will work under the capitalist model (profits & jobsLaughing). The company has a goal to provide 100 million barrels of diesel fuel per year by 2020 from plastic waste. A handful of companies like this could ease our dependence on OIL and be game changer on how plastic will be handled in the future. Nominated for the 2011 ZAYED FUTURE ENERGY PRIZE "Turning today's ideas into tomorrow's energy.

http://www.plastic2oil.com

http://www.zayedfutureenergyprize.com/

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Re: Future Chaos: There Is No "Plan B"

DavidS wrote:

I think that government just needs to get out of the way (with reasonable environmental protections), so that the free market forces can adjust.  In 1973, the price of oil quadrupled.  That would be equivalent to an increase to $320 today.  Yet the market adjusted.  You can bet the if the oil price increases to $320 (and the market thinks the increase is permanent), a lot of hydrocarbon and alternative energy projects would suddenly become economically viable.  Give the profit motive full rein!

There are some people who believe that, if Volcker hadn't raised rates in the 70s, we would have had hyperinflation. (http://www.zerohedge.com/article/guest-post-was-stagflation-79-really-hyperinflation)

I'm not so sure about that, but I do think it's very likely to happen this time around when oil prices permanently spike. We obviously can't "kill it" by raising rates because the level of private/public debt oustanding and also because oil production is terminally declining. Alt energy projects won't really be "economically" viable when we are dealing with either a currency crisis, deflationary break down, and/or periods of both. At least not until the fiat debt-based economy is finally brought down and restructured down the line.

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Re: Future Chaos: There Is No "Plan B"

P20Man wrote:

I have seen a new green technology which is in the very near horizon that will be exceedingly good for planet Earth. It is part solution to a environmental nightmare, will work under the capitalist model (profits & jobsLaughing). The company has a goal to provide 100 million barrels of diesel fuel per year by 2020 from plastic waste. A handful of companies like this could ease our dependence on OIL and be game changer on how plastic will be handled in the future. Nominated for the 2011 ZAYED FUTURE ENERGY PRIZE "Turning today's ideas into tomorrow's energy.

http://www.plastic2oil.com

http://www.zayedfutureenergyprize.com/

Are you aware that the US alone consumes something like 7.5 BILLION barrels of oil a year?  That's 7,500 million barrels.  100 million barrel is 1.3% of current US consumption.  Oh and ALL the plastic you need to convert to oil is MADE OF OIL..... and the entire process is almost certainly energy negative.

Mike

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