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The Looming Energy Shock

The next oil crisis will arrive in 3 years or less
Friday, June 30, 2017, 9:10 PM
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There will be an extremely painful oil supply shortfall sometime between 2018 and 2020. It will be highly disruptive to our over-leveraged global financial system, given how saddled it is with record debts and unfunded IOUs.

Due to a massive reduction in capital spending in the global oil business over 2014-2016 and continuing into 2017, the world will soon find less oil coming out of the ground beginning somewhere between 2018-2020.

Because oil is the lifeblood of today's economy, if there’s less oil to go around, price shocks are inevitable. It's very likely we'll see prices climb back over $100 per barrel. Possibly well over.

The only way to avoid such a supply driven price-shock is if the world economy collapses first, dragging demand downwards.

Not exactly a great "solution" to hope for.

Pick Your Poison

This is why our view is that either

  1. the world economy outgrows available oil somewhere in the 2018 – 2020 timeframe, or
  2. the world economy collapses first, thus pushing off an oil price shock by a few years (or longer, given the severity of the collapse)

If (1) happens, the resulting oil price spike will kneecap a world economy already weighted down by the highest levels of debt ever recorded, currently totaling some 327% of GDP:

(Source)

Remember, in 2008, oil spiked to $147 a barrel. The rest is history -- a massive credit crisis ensued.  While there was a mountain of dodgy debt centered around subprime loans in the US, what brought Greece to its knees wasn’t US housing debt, but its own unsustainable pile of debt coupled to a 100% dependence on imported oil --  which, figuratively and literally, broke the bank.

If (2) happens, then the price of oil declines, if not collapses. Demand withers away, the oil business cuts back on its exploration/extraction investments even further, so that much later, when the global economy is trying to recover, it then runs into an even more severe supply shortfall. It becomes extremely hard to get sustained GDP growth back online.

If you really want to understand why I hold these views, you need to fully understand and digest this next chart. It shows the amazingly tightly-coupled linear relationship between economic growth and energy consumption:

(Source)

This chart above says, if you want an extra incremental unit of economic growth you're going to need to have an extra incremental unit of energy.  More growth means more energy consumed.

And today, oil is still THE most important source of energy. It's the dominant energy source for transportation, by far.  A global economy, after all, is nothing more than things being made and then moved, often very far distances. Despite what you might read about developments in alternative and other forms of energy, our dependency on oil is still massive.

Plunging Investment

Resulting from the start of oil's price decline in 2014, the world saw a historic plunge in oil investments (exploration, development, CAPEX, etc) as companies the world over retracted, delayed or outright canceled oil projects:

(Source)

In the chart above, note the two successive drops in oil investment from 2014-2015 and then again into 2016.  So far 2017 is shaping up for another successive decline, which will mark the only three-year decline in investment in oil's entire history.  So what's happening here is actually quite unusual.

This isn’t just a slump. It’s an historic slump.

We don’t yet know by how much oil investment will decline in 2017, but it’s probably pretty close to the rates seen in the prior two years.

Next, take note of the dotted blue arrow in the chart.  See how far oil investment climbed during the years from 2009-2014?  Not quite a doubling, but not far off from one either.  Remember those years, I’ll return to them in a moment.

The key question to ask about the 2009-2014 period is: How much new oil was discovered for all that spending?

Turns out: Not a lot.

Practically No Discoveries

There is one hard and fast rule in the oil business: Before you can pump it, you have to find it.

The growing problem here is that oil discoveries were horrible in 2016, really bad in 2015, and terrible in 2014. That recent three year stretch is the worst in the data series:

(Source)

Again: you have to find it before you can pump it. And around the world, oil companies are just not finding as much as they used to.  

Remember that blue dotted line on the oil investment chart above?  Here’s its counterpart, showing discoveries over the same time frame -- it’s just a straight slump downwards:

Global oil discoveries fell to a record low in 2016 as companies continued to cut spending and conventional oil projects sanctioned were at the lowest level in more than 70 years, according to the International Energy Agency, which warned that both trends could continue this year.

Oil discoveries declined to 2.4 billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years. Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion barrels, 30% lower than the previous year as the number of projects that received a final investment decision dropped to the lowest level since the 1940s.

(Source)

Now it's clear why the oil companies pulled back their investment dollars so rapidly when prices slumped:  They were spending more and finding less throughout the 2009-2014 period, so they were already feeling the pain of diminishing returns. When the price of oil cracked below $100 a barrel, they wasted no time reining in their investment dollars.

Should we be concerned about this record lowest level of oil project funding in 70 years?  Why, yes, we should.  Everyone should:

"Our analysis shows we are entering a period of greater oil price volatility (partly) as a result of three years in a row of global oil investments in decline: in 2015, 2016 and most likely 2017," IEA director general Fatih Birol said, speaking at an energy conference in Tokyo.

"This is the first time in the history of oil that investments are declining three years in a row," he said, adding that this would cause "difficulties" in global oil markets in a few years.

(Source)

To give you a visual of the process, here’s a chart to help you understand why it takes years between making an initial find and maximum production:

(Source)

This bears repeating: Oil is the most important substance for our economy, we’re burning more of it on a yearly basis than ever before, and we just found the lowest amount since the world economy was several times smaller than it is now. And all this is happening while we're reducing our efforts to find more at an unprecedented rate.

There’s no way to speed up the process of oil discovery and extraction meaningfully, no matter how much money and manpower you throw at it.  It simply requires many years to go from a positive test bore to a fully functioning extraction and distribution/transportation program operating at maximum. 

In Part 2: Preparing For The Coming Shock we provide the evidence that shows why by 2019, or 2020, oil prices will have forced a new crisis upon the world.

More economic growth requires more energy. Always has and it always will. Oil is the most important form of energy of them all. But everyone assumes -- especially today when it appears as if we're "awash" in it given the current supply glut -- that we will always have access to as much as we need.

That's not going to be the case soon. And you are one of the few to understand why.

You get to use that awareness to make conscious decisions about your own life right here and right now. You can position yourself for safety, as well as to take advantage of what are likely to be once-in-a-lifetime investment opportunities.

But you also need to prepare for those in your life, like most other people today, who lack the ability, insight, or capability to join you at this early stage.

Click here to read the report (free executive summary, enrollment required for full access)

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37 Comments

LesPhelps's picture
LesPhelps
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WAG

It's a tight race, but I'd place my money on the debt bubble popping before the oil crisis.  

Another race in progress, is whether Washington manages to start a war in Syria or in the Pacific Ocean first.  Can you imagine the US pitted against Russia and China in the next world war.  Who would our allies be?

 

Uncletommy's picture
Uncletommy
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Know your limits

"More economic growth requires more energy. Always has and it always will. Oil is the most important form of energy of them all. But everyone assumes -- especially today when it appears as if we're "awash" in it given the current supply glut -- that we will always have access to as much as we need."

This applies to everything in life. Even in my advancing years, I continue to think "I can have it all, do it all and have enough in the bank and enough energy to enjoy my remaining years". Sound familiar? Chris is only pointing to the inevitable conundrum we all face as we suffer through "affluen-za". Review PP's basic tenets and identify what is realistically do-able and attain-able. Enjoy the day, work hard and be thankful you live in a time when we have it as good as it can be. The chickens will eventually come home to roost, unless they're eaten by a fox. Independence Day is every day.

pgp's picture
pgp
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Don't Discount the Possibility of World War.

This article is essential reading and very well written as usual, with the appropriate evidence succinctly included.

I would only add that by 2020 the world could just as easily be locked in a US led (along side its subjugated allies) world war with its epicenter in the middle east but spreading to the South China sea and West Russia.

I would agree however that the future, invisible to most denialists and optimists alike, has to be a grim one based on the "man-in-the-street" trends in incomes, cost of living, asset and job opportunity. This is not a natural decline however, it's a manipulated one so it's difficult to predict just exactly when or how policy makers will fumble and fall on their faces.

macro2682's picture
macro2682
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A battery company...

Seems like someone who can produce more batteries, cheaper, and faster than anyone else would be a good long term investment in the face of this thinking.  

nigel's picture
nigel
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Abenomics

I've heard it said that the fed doesn't have any more cures. However the example set by the Japanese could extend and pretend for a long time to come. They just buy the shares that are dropping as they drop with money they created. The fed could follow the Japanese example and get more time.

Once that bullet no longer works they could try helicopter money.

There are options, however horrible, the only variable is the time line, whereas with oil consumption, it's more a factor of rising population and consumption, who knows which will come 1st.

chipshot's picture
chipshot
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Scooters, Mopeds and E-bikes

Wonder how much time it would buy if the country made a concerted effort to switch from commuting in cars to scooters, mopeds and e-bikes?  Know the logistics are tricky and there would be all kinds of resistance from the auto and oil industries to citizens and politicians, but the benefits of doing so go well beyond a reduction in oil consumption/dependence.

Don't expect this to actually happen on a national level, but wouldn't forward thinking communities that go in such a direction fair much better economically in the event of oil price spikes and supply shortages?

SagerXX's picture
SagerXX
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Yeah, a world war...

...is the "solution" I've been waiting to see arrive.  They've been trying to roll WW3.0 out for several years now (but that first attempt to go all-in in Syria under Obama's watch fizzled).  They just keep adding more tinder to the fire (North Korea lately, in addition to Boogieman of the Year 2017, Russia) and I suppose they are just waiting to see where and when the conflagration gets going.  

I suppose they could just crash the economy and blame Trump, but WW3.0 has a number of additional features that a simple economic crash does not, such as:

1.  allowing the gov to curtail further our civil liberties ("only for the duration of the conflict") -- you know, curfews, outlawing certain types of speech, and not allowing public gatherings of more than, say, 5 people, all in the name of "national"  "security".

2.  rationing certain items (obviously, fuels, but also some food items and certainly all firearms and ammo production would have to be diverted to use for the armed forces alone), which gets us even further into a two-tier society (the wealthy and connected will be able to evade rationing and restrictions).

3.  the surveillance state can stop namby-pambying around and just go collect all information without warrants etc. -- ie the end of privacy.  This may already have occurred.

4.  the economic mayhem shifts the blame over onto whoever it is we end up dancing with in WW3.0 -- "we had the economy on the comeback until [Russia/China/North Korea/whoever] started a war and screwed everything up."  Pensions can be cancelled, 401-k accounts nationalized and forced to purchase war bonds (a nice, patriotic form of bail in), and so forth.  

Of course, if the above comes to pass I would expect the gov to decline to roll back these oppressive moves once the war was over.  Assuming it would be "over" at some points.  After all, we're well into our second decade of the War of Terrorism, and sheeeit, most of my lifetime we've been having that charming little War on (Some) Drugs.  No end in sight for either of those mighty conflicts.

So, the bad news is that we may see the death of the USA as I grew up understanding it (it's been in shaky health for decades now).  The good news is that a proper war could actually spell the end of the federal government and lead to a decentralization/localization that I bet we and our descendants would find more workable, practical and enjoyable.  

That's assuming we could survive the first several years (probably be some issues around the procurement of enough food).

And with that, it's time to feed the baby.  

VIVA -- Sager

the five's picture
the five
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energy

That and conversion to gas is in fact the future

No none gives a damn - thats the story - or so I hear...

cmartenson's picture
cmartenson
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On Scooters and Mopeds
chipshot wrote:

Wonder how much time it would buy if the country made a concerted effort to switch from commuting in cars to scooters, mopeds and e-bikes?  Know the logistics are tricky and there would be all kinds of resistance from the auto and oil industries to citizens and politicians, but the benefits of doing so go well beyond a reduction in oil consumption/dependence.

Don't expect this to actually happen on a national level, but wouldn't forward thinking communities that go in such a direction fair much better economically in the event of oil price spikes and supply shortages?

The answer is Yes and No.

Yes, individuals would benefit economically from spending far less on transportation.  A few, perhaps not an insignificant number, would not benefit from a health perspective as scooters have a much higher rate of personal injury than autos I would imagine.

No the community would not necessarily benefit economically.  The winners and losers should offset pretty equally.  Winners would be the scooter and moped sales and repair shops, and the insurance companies involved.  I'm not sure about personal injury lawyers as they'd lose the auto cases but pick up the scooter cases.  Other winners are the businesses that gain the spending redirected from the lower spending on transportation.

The losers are the auto sales and repair shops, gas stations, loan originators, car washes, detailers, etc.  

From a big picture standpoint I think it's a clear win if people are using a lot less fuel to get around, of course, and individually it's a probably healthy reprioritization of spending.  but from a community economics standpoint I think it helps only to the degree that money can stay in the community by not flowing out to distant oil and auto companies.  

chipshot's picture
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Reply to Chris

"Other winners are the businesses that gain the spending redirected from the lower spending on transportation."

Which would be all other businesses in the community.  Eliminating car ownership would be equivalent to a $3K-$8K pay raise  (cost of car ownership minus additional taxi, uber, bus, car rental expenses).  If a significant number of residents gained a few thousand $ every year, how could a region not see a boost in its local economy?  

"The losers are the auto sales and repair shops, gas stations, loan originators, car washes, detailers, etc."​  

They are destined to be losers anyway, as cars are becoming unaffordable for the majority of Americans. The longer we stay addicted to cars, the poorer people will end up.  The repo business may be the only aspect of the auto related industry facing a bright future.

 
Hotrod's picture
Hotrod
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Using a crisis to profit

Naomi Klein on what will likely happen in the next crisis if we don't resist.

David Janga's picture
David Janga
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What happens to OPEC countries Economy when cost goes up?

Whats gonna happen to the economies of the oil producing countries when the price of oil goes up?

macro2682's picture
macro2682
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Another winner...

Another winner is anyone waiting for an organ transplant donor. 

mntnhousepermi's picture
mntnhousepermi
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chipshot wrote: Wonder how
chipshot wrote:

Wonder how much time it would buy if the country made a concerted effort to switch from commuting in cars to scooters, mopeds and e-bikes?  Know the logistics are tricky and there would be all kinds of resistance from the auto and oil industries to citizens and politicians, but the benefits of doing so go well beyond a reduction in oil consumption/dependence.

Don't expect this to actually happen on a national level, but wouldn't forward thinking communities that go in such a direction fair much better economically in the event of oil price spikes and supply shortages?

 

Maybe it is different where you live, but out here, people are driving very long commutes on Freeways -- You cannot used a scooter, moped or ebike on the freeway ! And, alot of other drivers are moving children around ! You cannot get children to daycare or school on a moped, not even one, let alone 2 or 3....

rhare's picture
rhare
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A lot of people in countries other than the US would disagree

 

mntnhousepermi wrote:

You cannot get children to daycare or school on a moped, not even one, let alone 2 or 3....

 

And my personal favorite:

AKGrannyWGrit's picture
AKGrannyWGrit
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Yikes?

Gail Tverberg of Ourfiniteworld.com has a new article out which complements Chris's article.

https://ourfiniteworld.com/2017/07/02/the-next-financial-crisis-is-not-f...

I suggest that there are very few people who understand and connect the energy situation and our economy and Dr. Martenson and Ms Tverberg are two who do.

AKGrannyWGrit

luckymortal's picture
luckymortal
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Housing crash all over again

How do you feel about the crazy housing prices? I can't imagine this is sustainable for long. I know someone who just got offered $5k over the asking price on a small home in a midwest suburb with almost certain negative predicted population growth. THe price of my midwestern house has risen (according to online estimates like Zillow) by nearly 80-90% in just the last year and a half, and suddenly everyone seems to be rushing to buy up these drastically over-priced houses. 

mntnhousepermi's picture
mntnhousepermi
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rhare wrote: mntnhousepermi
rhare wrote:

 

mntnhousepermi wrote:

You cannot get children to daycare or school on a moped, not even one, let alone 2 or 3....

 

And my personal favorite:

 

Cute photos -- not sure how you think this translates to here. Not one of those is safe or humane and certainly wouldnt work on freeways we have ! Completely illegal and unsafe ideas are not viable alternatives

 

mntnhousepermi's picture
mntnhousepermi
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commutes

And, I make these comments as a long time environmentalist, and mother. Around here, the bicycle advocates rally AGAINST any local rail commute solutions, while saying everyone should just ride a bike. The families look at this and think 2 young children, groceries, 110inches of rain, 12 miles, 2000ft elevation gain --- and, having them motorized isnt going to change that equation FOR CURRENT TIMES

sand_puppy's picture
sand_puppy
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Moving refrigerators on bicycles

This discussion reminded me of a brief video of a guy moving a refrigerator on his bicycle...

I cannot recommend this mode of transportation for heavy appliances, however, unless one's medical insurance is paid up.

https://www.facebook.com/tastethelemon/videos/260959977691712/?pnref=story

------------------------------------

Dimitri Orlov pointed out that the most fuel efficient vehicle on a miles per gallon per capita, is actually a pickup truck full of people standing in the back, commonly used in rural Mexico.

Again.  Not a recommendation.

 

rhare's picture
rhare
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Illusions abound
mntnhousepermi wrote:

Cute photos -- not sure how you think this translates to here. Not one of those is safe or humane and certainly wouldnt work on freeways we have ! Completely illegal and unsafe ideas are not viable alternatives

When energy becomes scarce, safety, illegality, and the definition of humane will become much more fluid.  What you see now with modern cars zipping around on a freeway is just a temporary illusion of prosperity brought on by cheap oil as is the illusion of government provided safety via laws and regulation.

aggrivated's picture
aggrivated
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What a can do attitude gets done

My city has been for years a happy motoring place and a bane to cyclists. When gas prices spiked about 10 years ago the city decided to change. They created a bike access planner for the traffic and streets division. Now we have over 300 miles of paths and lanes. There was some resistance to losing traffic lanes but not enough to slow down the relentless reworking of our streets and abandoned rail lines. There is now a direct dedicated run across the county connecting 2 major bedroom communities with the city and a dedicated 3 mile path over a major river. Bike trailers are great for kids and groceries. Electrics are popping up-28mph is decent speed on two wheels. The best part is the number of disability electric scooters I see on the way to the grocery. All our buses can carry 3 or 4 bikes on front mounted racks.

This city has never been wealthy, but it has a future. It's assets are lots of water, both potable and for freight. Plenty of rail lines for freight which have yet to be utilized for personal travel. Lots of cheap housing and now a decent bike access system. A gas fired electric plant and good weather and land for local agriculture top off the list. I'm hoping that we can support more than our current 10 or so farmer's markets as things progress.

This place was founded before cars and will be able to function at some smaller and slower level after cars.

Mark_BC's picture
Mark_BC
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You can tow a trailer behind

You can tow a trailer behind an electric bike.

So much for the economic polyanas' argument that increases in efficiency will offset declines in available energy...

I'd place my bets on a global collapse before an oil shock. The last 16 years of false flag Muslim "terrorist attack" hoaxes have been done for a reason, to incite anti-Muslim phobia and condition the public to support a war against the Middle East.

For years analysts have been pointing out the supply / demand imbalance of gold and that it will at some point run out. It's a mystery how it's lasted so long.

We have an historic debt and financial bubble that will in some way need to pop.

We have had our constitutional rights taken away from us. We don't notice it yet because it isn't really being exercised. Just wait until it IS exercised...

All of these things would be nicely dealt with by a good war.

Expect a major 9/11-type false flag event to justify a real war centered around the Middle East, which will then provide the cover to take down the financial system along with what remains of our democracies and constitutions, and freedom of speech. Already Youtubers who expose the "terrorist attack" hoaxes are being deleted; Peekay Truth was a good one and he has been banned.

mntnhousepermi's picture
mntnhousepermi
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yes, puttingmore people in a vehicle
sand_puppy wrote:

This discussion reminded me of a brief video of a guy moving a refrigerator on his bicycle...

I cannot recommend this mode of transportation for heavy appliances, however, unless one's medical insurance is paid up.

https://www.facebook.com/tastethelemon/videos/260959977691712/?pnref=story

------------------------------------

Dimitri Orlov pointed out that the most fuel efficient vehicle on a miles per gallon per capita, is actually a pickup truck full of people standing in the back, commonly used in rural Mexico.

Again.  Not a recommendation.

 

 

Yes, putting more people in a vehicle works better for hauling children, groceries, long distance and hills !

 

And, I thought we were talking NOW not post cllapse ! Right NOW people cannot go use a moped, at least not around here. POST COLLAPSE anyone living where I do will not commute anywhere daily, period.

mntnhousepermi's picture
mntnhousepermi
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sand_puppy wrote: This
sand_puppy wrote:

This discussion reminded me of a brief video of a guy moving a refrigerator on his bicycle...

I cannot recommend this mode of transportation for heavy appliances, however, unless one's medical insurance is paid up.

https://www.facebook.com/tastethelemon/videos/260959977691712/?pnref=story

------------------------------------

Dimitri Orlov pointed out that the most fuel efficient vehicle on a miles per gallon per capita, is actually a pickup truck full of people standing in the back, commonly used in rural Mexico.

Again.  Not a recommendation.

 

 

The moped examples shown earlier where India, indonesia, philipines or similar. Your example of the truck is more like what could work where I am, Hills and Mountains, longer distances, there is a reason all these people are in the Truck and not on a bunch of mopeds !

 

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Scooters!

Back in 2008 I was living in a rural area where I had to put 18000 miles a year on my car just to commute back and forth to work and to get to a grocery store.  I was also PO aware at the time, and like most other POers, expecting gas to go to 5$ a gallon, and expecting oil to start becoming cripplingly scarce. 

To increase my situational resilience, I purchased a used 250cc honda scooter, got a motorcycle driver’s license endorsement so I could legally drive the thing, and outfitted the scooter with storage boxes.  By some means the experiment was a success – with cold weather gear I was able to use it about 7.5 months for about 10-12k miles a year, and was able to get about 75MPG.  When gas shot up to $3.50 a gallon more often than not I would get into scooter conversations with envious car drivers when re-filling at gas stations.  The main state-wide paper even put me on the front page of a Sunday edition during the height of gas spike, as an example of how one person worked to reduce gas expenses/carbon footprint.

I used the scooter for groceries, commuting, and even laundry on one occasion.  I could strap a guitar on back and ride to musical social occasions.  I could even operate it reasonably safely on freeways, as it maxed out at about 70MPH.

There were tradeoffs:  Scooters need more maintenance, and there were no nearby mechanics who knew my scooter, so I had to learn to do a lot of the maintenance myself, which took time, money and effort.  While my experiment lasted for a little over 3 years, I never crashed while on it, but I did experience a close call or two.  The things are dangerous even if you are careful in your riding habits.

My ultimate resilience-building action however was to move to a small walkable city, where I can make do using my bicycle, and driving my car 2-3k per year if need be (or even less).  I sold my scooter because its benefits were not worth the effort/costs/risks in my new location.   I don’t miss it at all.  My conclusion was that scooters are potentially useful but limited resilience tools for individuals.

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coping strategies

If you go to an emerging nation and see how they live, you'll get a laundry list of coping strategies for a lower energy lifestyle.

On the surface, in the city it doesn't look remarkably different, but - pickup trucks full of people as short-distance transport, 125cc scooters carrying entire families as short-distance transport, a shared pickup truck among a group of families in a village to support the farming group, etc.  It all adds up to about 33% of current US per capita fuel use.  People also do a lot more things in groups.

I agree with rhare.  As we slide down the curve, the cops will be a lot more relaxed about such things.  That's because they'll have to be.

That too will be part of the coping strategy.  Places that don't do that will have lower effective standards of living.  So change your local ordinances and that will help solve the problem.

You can buy your scooter in advance...  :)

People in the country far apart from their neighbors will have more difficulty, of course; maybe people will end up moving closer together to share transport resources.

And of course the move to a "small walkable city" is probably the best solution.  I'd still add in a scooter though, but that's because I enjoy riding them...

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Post collapse vulnerabilities

Before collapse, there are a lot of options for us to reduce our carbon footprints.  But after the collapse, you must adjust your thinking to include the new level of danger you will face while out in public and traveling.  All forms of transportation are dangerous in a situation in which the economy has collapsed because the rule of law will generally collapse with it (albeit with a small time delay). Here are some of my plans, which you'd be wise to factor into your thinking/planning for post-collapse commuting and traveling.

And my favorite:

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Thoughts on Manufacturing in Oil producing countries

Hi Granny I'm new on the site.

I was just wondering what do you think are the likely scenarios thats going to play out for the Oil producing countries.

I had a read on Gails piece.

It said that Oil importers are likelt going to suffer badly.

& since those oil importers are going to suffer badly is it likely that the oil producing countries will suddenly become a more viable option to set up Manufacturing industries because it makes more sense from a cost perspective?

Higher Oil prices mean more profits for Oil companies but what happens to the economy of the Oil producing countries?

Will the citizens of oil producing nations be better off or will their cost of living go up substantially as well because the cost of their imports increase?

 

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mntnhousepermi
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PaulJam wrote: Back in 2008 I
PaulJam wrote:

Back in 2008 I was living in a rural area where I had to put 18000 miles a year on my car just to commute back and forth to work and to get to a grocery store.  I was also PO aware at the time, and like most other POers, expecting gas to go to 5$ a gallon, and expecting oil to start becoming cripplingly scarce. 

To increase my situational resilience, I purchased a used 250cc honda scooter, got a motorcycle driver’s license endorsement so I could legally drive the thing, and outfitted the scooter with storage boxes.  By some means the experiment was a success – with cold weather gear I was able to use it about 7.5 months for about 10-12k miles a year, and was able to get about 75MPG.  When gas shot up to $3.50 a gallon more often than not I would get into scooter conversations with envious car drivers when re-filling at gas stations.  The main state-wide paper even put me on the front page of a Sunday edition during the height of gas spike, as an example of how one person worked to reduce gas expenses/carbon footprint.

I used the scooter for groceries, commuting, and even laundry on one occasion.  I could strap a guitar on back and ride to musical social occasions.  I could even operate it reasonably safely on freeways, as it maxed out at about 70MPH.

There were tradeoffs:  Scooters need more maintenance, and there were no nearby mechanics who knew my scooter, so I had to learn to do a lot of the maintenance myself, which took time, money and effort.  While my experiment lasted for a little over 3 years, I never crashed while on it, but I did experience a close call or two.  The things are dangerous even if you are careful in your riding habits.

My ultimate resilience-building action however was to move to a small walkable city, where I can make do using my bicycle, and driving my car 2-3k per year if need be (or even less).  I sold my scooter because its benefits were not worth the effort/costs/risks in my new location.   I don’t miss it at all.  My conclusion was that scooters are potentially useful but limited resilience tools for individuals.

 

Thanks for sharing your experience ! I looked into many things, and the solution we came up with was a diesel jetta that gets close to 50mph hwy and actually does get 45mpg rural mountain roads, while carrying quite a few people, stuff, etc... up the mountain, in the rain... 45mpg for 4 people is good averaged out. If I have to, I could walk to a store, it would take all day and I could bring much back with me, but it is doable in an emergency or changed times, but more likely is ride sharing.

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Mr. Fri
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Existing Oil Reserves?

As always, a good article with good data.

One thing which isn't clear to me is how much of the oil discovered (in the chart that begins in 1950) has already been used up? I'm sure most of it is gone but of the pool that's left, how significant are the low discovery numbers of the last three years? Chris points out that low discovery means low production. But we should also take into account the amount that may already be available to pump. Will it last for a year or two? Or, will it last for 10-20 years even if we don't discover more oil. This would be important data to include with this article.

 

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TechGuy
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Posts: 351
:Re: Transportation decline

Yes, individuals would benefit economically from spending far less on transportation. A few, perhaps not an insignificant number, would not benefit from a health perspective as scooters have a much higher rate of personal injury than autos I would imagine."

 

Its very likely that americans and probably all westerns will be reducing there transportation whether they like or not.

1. Lack on long term Oil discovery & development. New OIl Discoveries fell off a cliff, and CapEx for the Oil majors has been declining since 2012

2. People are reaching into credit limits to borrow money to buy new vehicles. The average loan duration is now at 70 months, and continues to rise. Its likely that with in the next 10 years few americans will be able to afford new vehicles.

3. Technology is change business production. Automation is likely to replace 1/3 of US workers over the next 10 years. knowledge workers can work remotely or from home. Meetings can be conducted over the Web. Fewer jobs and more people working from home means less commuters.

 

I don't think scooters and electric vehicles will be widely adopted. I think most americans would be incapable of driving a bike. Most americans can't even drive a car with a manual transmission. People in the north are not going to be too keen on driving a bike in freezing weather, and people in the south (such as Nevada, Arizona) are not going to be driving a bike in 100F temperatures. Not sure how families are going handle young children or transporitng a weeks worth of groceries on a e-bike.  Considering that non-electric vehicles are quickly become unaffordable, its unlikely that they would be able to afford electric cars either. By the time Americans are forced to drive bikes instead of cars, the economy would have collapses. I am sure well before that point happens the US will be facing the same problems as the poorest regions like Venzuela, Argentina, Africa, etc. 

As far as WW3 happening, I am in that camp. The world is getting increasing unstable and belligerent. Western Europe is under increasing strain from the millions of refugees pooring in, caused by the wars Westerns gov't created in the Middle East. Many parts of the world are become increasing unsafe as violence increases and the lack of law enforcement to contain violence. Debt and over population is creating a situation of packing a group of angry rates in a cage. The World was safer during the Cuban missle crisis than it is today. Even the Doomsday clock is near its closest point:

http://thebulletin.org/timeline

2017: IT IS TWO AND A HALF MINUTES TO MIDNIGHT

Before there is a major economic collapse/depression, There will be a third world war. The rich countries will battle out for control of the worlds dwindling resources.

 

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AKGrannyWGrit
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Posts: 390
David Janga

Hi David, hey thanks for asking my opinion on oil and oil producing countries.  My answers to your questions would be this. Firstly I am not qualified or knowledgeable enough to answer with authority but my opinion would be "it depends".  For instance take the state I live in, Alaska, we are an oil producing state.  However, yesterday when I filled up my car with gas I was acquately aware that the fuel showed up to the gas station via this route.

  • Crude oil was pumped out of the ground on the North Slope Oil Field
  • It traveled down the Trans-Alaska Pipeline to its terminus - Valdez
  • Pumped into a barge
  • Traveled to a refinery somewhere in the Lower 48
  • Refined
  • Refined gas was either put in a truck and driven up the Alaskan Highway or Barged BACK to Alaska where it was pumped into the tanks at a gas station so I could fill my car with gas.
  • So it would seem that there really isnt a benefit for manufacturing by being located in an oil producing state.  Perhaps this scenario plays out in oil producing countries as well I don't know.
  • In my opinion few will benefit in a world with with dwindling resources the best we can do is try to make the lives of our children easier by teaching them numerous skills so they are a " Jack of All Trades", creativity will be an asset.

Edwin Black wrote a book called "The Plan"  which explains the plan our government has for us when there is an oil crisis.  Hint, it's not a very good plan.

My 2 cents

Thanks -AK Granny

 

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AKGrannyWGrit
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Posts: 390
Oil Addiction

Edwin Black author of The Plan

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ToddK
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Article seems focused on conventional oil only

The text and last two graphs presented in this article, cover "conventional oil" discoveries without mentioning "tight oil" (oil from shale and sandstone).  As such, the author of this article creates a rather alarmist scenario.

"Tight oil"  now provides roughly half of US oil production.  Yes, oil is a finite resource and we need to be concerned, but let's not panic.

A more objective  view is provided by the US Energy Information Administration:

https://www.eia.gov/todayinenergy/detail.php?id=29932

In summary, to contradict the author....a major oil supply shortfall (at least within the US) seems very unlikely before 2020.

 

 

 

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thc0655
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Joined: Apr 27 2010
Posts: 1465
We already know what parts of our energy future will look like

The 40th anniversary of the NYC blackout in 1977 just passed (July 13).  We can expect similar events in our energy future, and worse.  My personal interest is attracted to how thin the veneer of civilization is when our energy supplies are disrupted.

http://www.dailymail.co.uk/news/article-4699834/Chaotic-aftermath-1977-New-York-City-blackout-pictured.html

The blackout that hit New York on July 13, 1977, was emblematic of the crippling times that had grasped the city. 

A steep economic decline along with rising crime rates and the war on drugs made for an already gloomy Big Apple that was just further darkened by the Son of Sam murders that gripped the city.

Lightning strikes wiped out a power line in Westchester causing the Indian Point generating station that lit most of the city to crash as well. 

And the damage during the 25 hour blackout was vast -  the New York Times reported that 1,000 fires had been set by arsonist and 1,600 stores ransacked. 

A reported 3,373 people were also arrested for looting and vandalism. 

Everything was up for grabs to be stolen as well as cars, jewelry, televisions and even large pieces of furniture.

 
thc0655's picture
thc0655
Status: Diamond Member (Offline)
Joined: Apr 27 2010
Posts: 1465
We already know what parts of our energy future will look like

The 40th anniversary of the NYC blackout in 1977 just passed (July 13).  We can expect similar events in our energy future, and worse.  My personal interest is attracted to how thin the veneer of civilization is when our energy supplies are disrupted.

http://www.dailymail.co.uk/news/article-4699834/Chaotic-aftermath-1977-New-York-City-blackout-pictured.html

The blackout that hit New York on July 13, 1977, was emblematic of the crippling times that had grasped the city. 

A steep economic decline along with rising crime rates and the war on drugs made for an already gloomy Big Apple that was just further darkened by the Son of Sam murders that gripped the city.

Lightning strikes wiped out a power line in Westchester causing the Indian Point generating station that lit most of the city to crash as well. 

And the damage during the 25 hour blackout was vast -  the New York Times reported that 1,000 fires had been set by arsonist and 1,600 stores ransacked. 

A reported 3,373 people were also arrested for looting and vandalism. 

Everything was up for grabs to be stolen as well as cars, jewelry, televisions and even large pieces of furniture.

 

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