Too Late...

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Pops
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Too Late...

I've wondered since first reading about PO and considering the ramifications, at what point will the cost of successfully transitioning to an expensive energy world become unaffordable - because of expensive energy. Usually this is where we all start dreaming up boogiemen and predicting the future, which is never very productive because it's just our speculation stacked against the spiel of all the market-fluffers.

So this time lets do something different; what things of value or opportunities for transitioning have already become too expensive or unavailable to the average person?

My first thought is that the possibility of relocation has been significantly reduced, perhaps for a rather long period, for a lot of people, by the real estate boomdoggle. The typical real estate cycle - and we've had cycles since mortgages - was about 7 years top-top since WWII and always saw over-appreciation then a drop back, more or less, to the mean, which was usually somewhere around the inflation rate. This time it appears home values will continue declining past the mean, erasing not only the imaginary appreciation from the fraudulent-mortgage-subdivision-explosion-scam but much of the "normal" underlying inflation driven appreciation as well.

This is bad on many levels. First of course is that relocation for better job opportunities is hampered, but maybe more importantly, without access to that equity it is nearly impossible to make a large change in lifestyle, whether to downsize or otherwise improve energy efficiency or other effort at personal mitigation. Baby boomers imagined they had a lot of equiy in their homes, which was a mistake to begin with because they are a "bulge" in the population, so the fewer numbers in the next generation to buy the Boomers out, automatically erases some of that imagined equity. But now, the over supply of homes caused by overbuilding and foreclosures, not to mention homeowners who would like to sell but are waiting for a better environment, could undercut the market for years. And if you think there could be a near term peak in net energy and/or continuing decline in our overall economy, the RE market just might not rebound at all – ever.

So what do you think? Is this valid?

What other things or options have already passed into history?

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Re: Too Late...

Another "thing" more and more of us are running out of are jobs.

Here is labor participation rate from Calculated Risk:

http://www.calculatedriskblog.com/2011/01/employment-declining-participa...

People my age (50+) unemployed 12+ months are probably not going to get a job anywhere near their old salary - if they can get one at all. So just like their imagined nestegg of home equity has disappeared, so has their possible future income. I imagine they are using up their retirement savings, probably staying optimistic that they'll come roaring back like in the old days, maybe starting consulting businesses, running up what's left of their credit limits on business cards and iphones and Grecian Formula 44.

Almost every recession since whenever was proceeded by a spike in oil price and almost every spike in oil price was proceeded by demand exceeding available supply, the current warming of the economy will lead to another recession and this time I don't think it will take long. Our current oil supply has little excess available and all our "new" oil is very expensive - deep, remote and some isn't oil at all.

And don't fool yourself that liquids have peaked, they haven't, this is from Stuart Staniford's Early Warning Blog today:

http://earlywarn.blogspot.com/2011/01/december-liquid-fuel-production.html

So over the last decade we've finished up killing off the few remaining manufacturing jobs we had left, the last couple of years we ditched a bunch of construction workers and real estate schleppers, who do you think will go down this time? 

Are you betting it won't be you?

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Stuart Staniford's Early Warning Blog

You have to remember a few things:  Firstly data published for December in mid-January is not real data, only rough estimates and will be revised as real data (faked, but real) trickles in over the coming year.



 
Secondly, "liquid fuel" is  ( Crude Oil + Lease Condensate + Natural Gas Plant Liquids + Shale Oil + Tar Sands +
Coal-to-liquids + Gas-to-liquids + Ethanol + Biofuel ) of which about 86% is Crude + Condensate (from gas fields).
Simple Crude figures are not available (why? - too embarrassing).


 
Thirdly, the IEA data is always about 1 Mb/d more than the EIA data (why?) and OPEC data for the world is a joke.


 
Fourthly, Stuart uses moving averages to smooth the obviously jittery data, but he is using the average of the last 3 months, not the current 3 months, ( 1 of which hasn't happened yet) which makes the MA respond slowly.


 
Fifthly, that pink ellipse in the third chart is, as he says, just fitted by eye and is therefore utterly meaningless. Moreover he is plotting volume of all liquids against the price of WTI Crude which is a variable part of all liquids and therefore meaningless and I really don't think he should do that. What's he trying to prove anyway ?  Production doesn't/cannot follow the price, which is set by auction bidding.


 
The EIA monthly data for Crude + Condensate latest is August 2010 and shows 73.349 Mb/d - smack in the middle of the bumpy plateau range and where we were in June 2004.

 

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Re: Too Late...

http://www.financialpost.com/news/business-insider/Alaska+pipeline+breakdown+peak+problem/4096785/story.html

Why the Alaska pipeline breakdown is a peak oil problem

Joe Weisenthal, Business Insider

Wednesday, Jan. 12, 2011

You know that the Alaska oil pipeline is currently shut down due to a leak, but one thing that's getting lost in this story is that this is not just an unpredictable mechanical problem.

This situation has been foreseen for years as Alaska oil production dwindles. Dwindling oil production means lower pressure inside the pipeline -- lower pressure than what was anticipated when it was built -- and thus more opportunity for structural breaks such as this one.

Thus the solution involves lots more exploration and oil production in Alaska, and it's not obvious that that's possible, at least anytime soon, or at current prices.

For now it's likely that this will be fixed soon -- though in his morning letter Dennis Gartman talks a lot about how difficult this will be to due in current climate conditions -- but expect more and more ruptures of this key artery going forward.

 

Click here to see a former BP exec's presentation on why peak oil is real >

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Re: Too Late...

http://www.reuters.com/article/idUSN1222596420110112

Canadian Natural declares force majeure after fire

 

Wed Jan 12, 2011 2:42pm EST

CALGARY, Alberta, Jan 12 (Reuters) - Canadian Natural Resources Ltd (CNQ.TO) has declared force majeure on January shipments of synthetic crude from its Horizon oil sands plant after a fire last week and is still waiting to assess damage from the blaze, company officials said on Wednesday.

 

The declaration allows the company to be released from its contractual obligations because of an event outside its control.

 

The 110,000 barrel per day Horizon plant produces around 10 percent of Canada's synthetic crude. However output was suspended last week after a fire broke out in the plant's coker, a key part of the upgrading facility that converts tarry bitumen stripped from the oil sands into refinery ready synthetic crude.

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Re: Too Late...

I'm not sure I understand your point DTM - I'm not sure either what is quote and what is comment, sorry :^)

If you are saying liquids have peaked I don't believe that's clear yet. However I won't argue because I also don't think it matters as much as the price the economy is able to bear without falling back into recession.

I posted Staniford's graph to illustrate that demand probably hasn't peaked like the folks a CERA want us to believe and even if OCED demand is down, oil is a global commodity priced at the margin so increasing demand will increase price and again divert enough consumer spending to trigger "another" recession...

...making it too late for the next tier of 99ers who'll hit the street.

 

What am I missing?

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Re: Too Late...

 

First of all, Pops, I don't believe this economy has come out of recession since the '08 event. This current  (false) economy is based on shifting numbers around, and not the creation of real wealth. As to your point on real estate, you may be right, most will never rebound. On the lower side, I would count the energy intensive McMansions - in the far from potential work countryside - as fading lower in price until they are dismantled and the glued pieces burned for heat (hopefully they tear 'em apart before the roof leaks and the house goes "poof"). I do think there is room for upside on well insulated - and properly outfitted with renewable energy devices - rental properties, located in small towns with local access to the essentials for simple life.

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Re: Too Late...

sevenmm I'd not call it recovered either but on the other hand I'm not sure it will recover much more before the next leg down considering gas prices, so I'm guessing it's as recovered as it's gonna get.  :^)

Did you see Greer's article today? He talked about timelines and perception and what will be seen as a big event somewhere down the line and what will be forgotten.

I agree with you about location.

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Re: Too Late...

Pops

Quote:

Did you see Greer's article today? He talked about timelines and perception and what will be seen as a big event somewhere down the line and what will be forgotten.

Do you have a link or citation for that?

Thanx

Doug

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Re: Too Late...
Doug wrote:

Pops

Quote:

Did you see Greer's article today? He talked about timelines and perception and what will be seen as a big event somewhere down the line and what will be forgotten.

Do you have a link or citation for that?

Thanx

Doug

Doug,

I think this is what Pops is referring to from today's Daily Digest:

John Michael Greer, author of The Long Descent, names the date at which the first wave of catabolic collapse in the United States occurs. Long, but worth reading for the depth:

"...The foreshortening of history cuts both ways; it makes small but sudden events look more important than they are, and it also helps hide slow but massive shifts that will play a much greater role in shaping the future."

"As societies expand and start to depend on complex infrastructure to support the daily activities of their inhabitants, though, it becomes harder and less popular to do this, and so the maintenance needs of the infrastructure and the rest of the society’s stuff gradually build up until they reach a level that can’t be covered by the resources on hand."

"...The first wave of catabolism in America - the point at which crises bring a temporary end to business as usual, access to real wealth becomes a much more challenging thing for a large fraction of the population, and significant amounts of the national infrastructure are abandoned or stripped for salvage. It’s not a difficult question to answer, either."

The Onset of Catabolic Collapse
http://thearchdruidreport.blogspot.com/2...

Poet

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Re: Too Late...

Thanks Earthwise, I should have caught that.

Doug

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Re: Too Late...

Yeah Pops, just finished it. This blog was certainly economic encompassing.  I also liked the few blogs before this one where he discussed taking measures that lowered one's life cost.

 

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Re: Too Late...

Here is another article pertinent to the discussion:

http://www.silverbearcafe.com/private/01.11/theforth.html

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Re: Too Late...
sevenmmm wrote:

Here is another article pertinent to the discussion:

http://www.silverbearcafe.com/private/01.11/theforth.html

"All of us who were engaged in the struggle must have observed frequent instances of superintending providence in our favor. To that kind providence we owe this happy opportunity of consulting in peace on the means of establishing our future national felicity. And have we now forgotten that powerful friend? Or do we imagine that we no longer need his assistance? I have lived, Sir, a long time, and the longer I live, the more convincing proofs I see of this truth-that God governs in the affairs of men. And if a sparrow cannot fall to the Ground without his Notice, is it probable that an Empire can rise without his Aid?" - Benjamin Franklin, To Colleagues at the Constitutional Convention

Ole Ben's momma didn't raise a fool.

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