Investing in Precious Metals 101 Ad

The Peak Oil Economic Depression Has Arrived

Login or register to post comments Last Post 9228 reads   47 posts
Viewing 10 posts - 1 through 10 (of 47 total)
  • Sun, Mar 08, 2009 - 06:22am

    #1

    Damnthematrix

    Status Diamond Member (Offline)

    Joined: Aug 09 2008

    Posts: 1132

    count placeholder

    The Peak Oil Economic Depression Has Arrived

from ASPO-USA PO News

THE PEAK OIL ECONOMIC DEPRESSION HAS ARRIVED

By Clifford J. Wirth, Ph.D. 
Surviving Peak Oil

A headline from Chicagotribune.com states: "Jobless rate bolts to 8.1 percent, 651K jobs lost in
February." 

"The net loss of 651,000 jobs in February came after even deeper payroll reductions in the prior two
months, according to revised figures. The economy lost 681,000 jobs in December and another 655,000
in January," based on U.S. Department of Labor statistics."

But the real unemployment rate is now more like 12 or 13 percent, according to analyst Lee Adler, writing
in "The Wall Street Examiner." Adler concludes that, "today’s deterioration is at least as rapid, and
probably more rapid, than the beginning of the Great Depression."

Dow Jones concludes that today’s stock market decline mimics the Great Depression.

Thus, both increasing unemployment and declining stock values indicate that we are entering an
economic depression similar to the Great Depression.

Although it is difficult to determine how much of this economic depression is caused by Peak Oil impacts
and how much stems from mismanagement of the economy as well as from business and government
corruption, ASPO-Ireland explains that Peak Oil plays a major role.

But the current economic depression is permanent, due to declining global oil production, according to a
recent post on EnergyBulletin.net.

We are entering the "Greatest Depression."

In the Great Depression of the 1930s, government programs and the build up for World War II stimulated
the economy. The East Texas oil boom powered the factories, highways, trucks, tractors, trains,
transportation, and infrastructure to make it possible.

Now, the problem is declining oil production, and there is no energy boom to help us pull ourselves up by
the bootstraps. 

There is no plan for developing energy alternatives that will power trucks, trains, ships, tractors, and
combines, nor is there time or capital to develop alternatives. Capital is scarce due to declining oil
production. Chris Shaw explains that energy is the source of capital, and hence, as capital declines as oil
production drops.

A review of government and scientific studies indicates that regardless of the time or capital available, no
alternatives will begin to make up for declining global oil production.

Whatever alternative energy we attempt to develop will consume valuable oil (mining, manufacturing, and
transportation) and not deliver the liquid fuels that we need. Chris Shaw call this the "quicksand effect."

The Congress and president will be at a loss of how to manage this ever-worsening economic collapse.
They would be wise to commission the National Academy of Sciences (NAS) to provide the nation with
advice. Chaos will result from the advice of contradictory interest groups, organizations, bloggers, and
individuals. The NAS is the most credible source for such advice. The NAS and other scientific sources
have already undertaken the basic research needed for a policy study to advise the nation. The NAS
could provide an energy policy study within a year and could then provide advice on a continuing basis.

The best advice for individuals and organization is to prepare for Peak Oil impacts. No federal or state
agencies are studying Peak Oil impacts and contingency planning. A few local governments and
organizations are beginning to make plans.

This is what we must plan for. With increasing costs for gasoline and diesel, along with declining taxes
and declining gasoline tax revenues, states and local governments will eventually have to cut staff and
curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers
won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and
gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing,
and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the
parts, large transformers, steel for pylons, and high tension cables from great distances. With the
highways out, there will be no food coming from far away, and without the power grid virtually nothing
modern works, including home heating, pumping of gasoline and diesel, airports, communications, water
distribution systems, waster water treatment, and automated building systems.

My Photo

Clifford Wirth
Small Town, State of Veracruz, Mexico
Cliff Wirth is a policy analyst who
writes, speaks, and advises individuals and organizations about Peak
Oil impacts, alternatives, survival, preparations, and relocation. He
holds a Ph.D. in Policy Analysis and a Master of Public Administration
(MPA) degree and taught policy analysis, energy policy, public
administration, global urban politics, and Mexican politics at the
University of New Hampshire for 27 years. Consider relocating here.
Email: clifford dot wirth at yahoo dot com.

 

  • Sun, Mar 08, 2009 - 09:23am

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

Yeah… but Mike;

The reduction in oil production is reflected by the economy because the reduction in demand.  If/once the demand picks back up, so too will the production.

Since no one really knows the extent to which extractable oil exists, I don’t think we should worry about the production but rather the limitations of production, no?

  • Sun, Mar 08, 2009 - 03:35pm

    #3
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

Yeah sure oil is peaking. That explains why prices have been dropping so fast and the industry is laying off people. Keep the faith Mike. Maybe in some other life, you’ll be right.

  • Sun, Mar 08, 2009 - 03:45pm

    #4
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

Peak Oil arguments aside, the price of oil will spike in the next year or so.  That’s a natural consequence of production declining in response to lower prices. 

Eventually, the diminished amount produced will match demand, and upward pressure on prices will return.  The problem is that if we are still in a depression, which I think is so likely I consider it a "given", capital will be scarce and will only be invested on production activities once prices get so high that such an investment is a "no-brainer". 

That bodes ill for an economy already in the gutter.  Add the peak oil scenario on top of this, and things only get worse.  

  • Sun, Mar 08, 2009 - 05:06pm

    #5
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

I can ensivage a long and sustained depression broken up by some mini "booms" as we butt up against oil price spikes and dives.  Maybe this is the start of the final show, but perhaps not the curtain call

  • Sun, Mar 08, 2009 - 05:16pm

    #6
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

Hey Ray –

I think I’ve tried to explain this before: Prices are down artifically so big oil can buy little oil at a reduced rate. It’s cheaper for them to buy out small companies than go drilling new wells. Demand is up 1.?% from last year. To think the prices are actually market driven is nieve. 

As for peak production – theoildrum.com indicates Mexico & Venezula  peaked around 2004 – 2005 mark. Correct me if I’m wrong butthis is where the U.S. gets about 1/3 of its imported gas/oil. I set my "impact" date at about 2012 for when the supply will be reduced -if a politican, hurricane or other form of disruption didn’t happen first. Big oil (in my mind) will want complete control by then so they can control the price & flow.

That said, as we saw with US wells, they can be left to "rest" and oil refills the well – but only to the point the "oil line" levels out. The "rest period" in was about 15 years for the US wells (maybe longer?).  So this creates a gap either way you look at it  . . . regardless of demand. 

Best use of energy now is to use it to reduce the need for future use

EGP

 

  • Sun, Mar 08, 2009 - 06:04pm

    #7
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

[quote=Ray Hewitt]

Yeah sure oil is peaking. That explains why prices have been dropping so fast and the industry is laying off people. Keep the faith Mike. Maybe in some other life, you’ll be right.

[/quote]

The only "faith" on the table here, Ray, is yours in orthodox economic theories and the idea that "markets" are "free" enough to produce anything remotely like legitimate economic information, in this case, in the form of "price signals," though Mandelbrot long ago debunked this. Of course, you’ll typically claim that markets aren’t free because of the meddling governemnt but your above statement only makes sense if you believe them to be free; otherwise, why would you reference the recent plunge in prices as somehow being indicative or reflective of total supply. Your desperate fear of the human race being up against resource depletion/scarcity — and the responsibility that entails — is palpable and actually beneath someone of your intellectual capacity.

  • Sun, Mar 08, 2009 - 07:48pm

    #8
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

No Caroline, read the links….  oil is now so cheap, dozens of now unviable oil wells are being capped, waiting for the price to go back up.  Production is now falling faster than the economy.

I recently posted the item below from the Oil Drum.  Hardly anyone seems to have noticed the implication of this scenario, which I happen to believe is highly likely.  Have a look at the chart – it shows oil production falling by 2/3 in two years…… 

http://www.theoildrum.com/node/5160

I obviously don’t know precisely what would happen to world crude
oil production if the world’s financial system crashes, but here is one
possibility:


Figure 2. One view of expected future crude oil production, after a world financial crash.

Hubbert’s curve gives us an idea of what maximum oil production
might be, given geologic constraints. My forecast is more at the
opposite end of the range–what the worst case might look like, if the
current debt unwind results in a major world-wide financial collapse.
It is impossible to assign a probability to this type of event
happening, but even if the probability is very low–say 1%–it would
affect planning models that consider a range of outcomes.

  • Sun, Mar 08, 2009 - 08:11pm

    #10
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

In fact Ray, it DOES!

When demand could not be met last year, the price skyrocketed, and I was one who fully expected it to go to $200.  But the economy could not even afford $147, and Peak Oil broke the economy.  Sure there were other issues, but PO was the trigger that broke the camel’s back…. 

Now ther economy is going to break the oil companies.  The ultimate irony methinks..

Mike 

  • Sun, Mar 08, 2009 - 09:08pm

    #11
    Peak Prosperity Admin

    Peak Prosperity Admin

    Status Bronze Member (Offline)

    Joined: Oct 31 2017

    Posts: 1613

    count placeholder

    Re: The Peak Oil Economic Depression Has Arrived

Hey Mike,

Was just reading that article last night at the Drum myself. Now that chart you post represents an extreme turn of events that would more or less spell endgame. However, a downturn even at a rate of one-quarter of that would still be devastating. It seems like some kind of chain of over reactions could be in play. Meaning, growth and oil production were going bonkers with no thought to a period of slowing down or, more importantly, how to deal with a slow down. Then things hit a wall and are now over reacting in the opposite way with production and manufacturing in some places and in some industries dropping by over half, which — as is the point of this Oil Drum article — could result in a crash of oil production irrespective of remaining reserves.

Of course, as reality unfolds the energy crisis is only exacerbated by the utter house of cards the global economy and financial system has been revealed to be along with the jellyfish will of all of the world’s so-called leaders.

Viewing 10 posts - 1 through 10 (of 47 total)

Login or Register to post comments