Meltdown

[Sean]

As Kunstler says on vid4 of The Long emergency, governments' decision not to discuss these issues is itself a key sign of instability. And he doesn't really blame them, as indeed they can't be blamed in democracies, where they reflect the masses- who don't want to know because they're not the kind of people who could have any answers and should never have had any power in the first place.

[Sean]

http://www.youtube.com/watch?v=-uNkhUK9-KE&feature=related

What he's saying here is so right: the problem is outside of the context of most people's understanding of the world, so they just don't/ can't address it. People who even begin to think outside the paradigm are therefore conspiracists.

[BachQ]

Hi, Sean!

[BachQ]

Dm, I've had another read and listen today on this subject. Do you come across any other concrete forcasts for the present oil price surge? It's obviously volatile, but how volatile? I hardly believe in the world at all and know that the more serious something is the less people will really talk about it: is this the steep edge on the other side of the peak or just the start of a gentle slope?

Sean, the debate of whether post-peak scenarios will be represented by a "fast crash" versus a "slow decline" was discussed

here:

http://www.energybulletin.net/43111.html

The conclusion? "Fast crash wins. And we're in it now."  But no one really knows if it will be a fast crash.

BTW, "fast crash" doesn't mean on Monday things are great, and on Tuesday we're in the midst of doomsday.  Rather, it means that "things simply fall apart at an astounding rate, faster than anyone could have predicted"

[BachQ]

http://www.youtube.com/watch?v=-uNkhUK9-KE&feature=related

What he's saying here is so right: the problem is outside of the context of most people's understanding of the world, so they just don't/ can't address it. People who even begin to think outside the paradigm are therefore conspiracists.

Sean, that's way too much truth for the vast majority of the population to accept ....... People have defense mechanisms in place that will allow them to deny this until they are bitchslapped into reality ........ This is the "Outside Context Problem" (people cannot process this information and cannot conceive of any other way of life).

The American public is stuck in "the psychology of previous investment" (we have invested our national wealth in a deeply oil dependent economy "that has no future") .......  Our current oil-oriented regime represents "the greatest misallocation of resources in the history of the world."

[BachQ]

Oil is expensive because oil is scarce

By David Strahan

Last Updated: 12:01pm BST 03/05/2008

***All the evidence now suggests the world is rapidly approaching "peak oil", the point when global oil production goes into terminal decline for fundamental geological reasons. Annual discovery of oil has been falling for over forty years, and now for every barrel we find we consume three. Oil production is already shrinking in 60 of the world's 98 oil producing countries – including Britain, where output peaked in 1999 and has already plunged by more than half. When an individual country peaks it only matters for that country – Britain became a net importer of oil in 2006 – but when global supply starts to shrink the effects could be ruinous for everybody.

Analysts divide the oil producing world into two halves: OPEC and the rest. There is broad agreement that non-OPEC oil production will peak or at least plateau by about 2010. ExxonMobil chief executive Rex Tillerson said last year that non-OPEC production growth would be all over in "two to three years". That judgment now seems even more certain.

Since the turn of the century non-OPEC oil production has been sustained only by big increases in Russia, the world's largest producer, as the oligarchs that control the industry invested billions refurbishing fields that had been allowed to deteriorate after the collapse of communism. But now the easy gains have gone and growth rates have slumped. This month Leonid Fedun, a senior executive with Lukoil, Russia's second largest oil company, said the country's output had peaked and would never exceed current levels "in his lifetime".

So we now depend on OPEC as never before, and this explains the increasingly shrill pleas from Western officials for the cartel to raise production. But many suspect OPEC could not increase output even if it wanted to – at least not by much – and may also peak soon. There have long been doubts about the true size of OPEC's claimed reserves, which seem to have been falsely – and massively - inflated during the 1980s when members were vying for larger shares in the new quota system. And now there are growing concerns about some of OPEC's most significant producers.

Just last week Saudi Arabia, the world's largest oil exporter, announced that all plans to expand oil production capacity beyond 2009 had been shelved. The oil minister justified the decision by claiming that, given the economic outlook, there would be no demand for the additional oil – which is arguable but unlikely. Even the mildly skeptical will suspect the move was not entirely voluntary.

In Nigeria, Africa's biggest oil producer, output has already fallen 20% because of repeated attacks by militants in the Niger delta. But now a recent report by the government's energy advisers has concluded that even if investment is maintained at current levels "total oil and gas production will decline by 30 per cent from its current level by 2015".

The one OPEC member which undoubtedly has large untapped oil resources is Iraq, but here the continuing butchery and failure to agree a new law governing oil and gas production makes any early increase highly unlikely.

In these circumstances it is no surprise that the oil price has soared to record levels – almost $120 earlier this week – nor that many now predict a further pole-vault to $200, including the EU's Energy Commissioner, the President of OPEC, and city analysts Goldman Sachs. What is surprising is the number of apparently intelligent people who cleave to fanciful explanations for the oil price rise, such as speculation and the weakness of the dollar.

No doubt these factors play a part, but the simple fact is that global oil production – including non-conventional sources, biofuels and the kitchen sink - has remained essentially flat since early 2005. For three years the oil supply has been a zero sum game in which if one country consumes more, another has to consume less. Since so much of the demand growth comes from the developing world or OPEC members themselves, oil demand will probably continue to grow despite the gathering recession in the West. It is shortage that makes oil futures so attractive to investors.

And yet the British government's central forecast is that oil will cost $57 per barrel in 2010 and fall to $53 by 2020. This absurd prediction is incomprehensible until you consider the political realities: even more than climate change, peak oil demands that governments confront voters with uncomfortable truths that will impact living standards. In Whitehall, legs will remain crossed and buttocks clenched as politicians and officials pray it doesn't happen in their term of office, or before they draw their inflation-linked pension.

So Gordon Brown's website blithely proclaims "...the world's oil and gas resources are sufficient to sustain economic growth for the foreseeable future", despite all evidence to the contrary. Still, perhaps he can say this with some confidence; the way things are going, his foreseeable future is not all that long.

[BachQ]

The Real Reason Why Bush Wants to Attack Iran

[BachQ]

James Howard Kunstler

[BachQ]

Ethanol loses halo but still has U.S. support
Fri May 2, 2008 2:07pm EDT
By Chris Baltimore

WASHINGTON (Reuters) - Soaring food prices have shaken U.S. politicians' love affair with ethanol, but lawmakers are unlikely to adjust mandates for a five-fold boost in biofuel until after the November presidential election.

Renewable fuels made from corn and other crops were once seen as the panacea for an impending U.S. energy crunch, both in Congress and the White House.

But cattle, hog and chicken farmers who have seen feed prices skyrocket, as well as grocery store chains and restaurants, have sought to cast the fuel as the political boogeyman for soaring prices at the supermarket.

Some U.S. politicians are now calling for Congress to rethink legislation it passed last year that would require U.S. gasoline supply to include 36 billion gallons of renewable fuels by 2022.
At least one U.S. senator, Kay Bailey Hutchison (R-Texas), is seeking to freeze the mandate at 2008 levels of 9 billion gallons.

That's after the governor of Texas -- whose state is the biggest U.S. cattle producer -- asked the federal government to waive half of its mandated ethanol requirement for 2008.

THE THIRD RAIL

After the election, lawmakers could become braver and water down the renewable fuel use mandates, analysts said. The Environmental Protection Agency, which has jurisdiction over the rules, could also exercise authority to waive requirements or even write new, less stringent rules.

But ethanol has become the "third rail" of U.S. election-year energy policy, and Congress is unlikely to fiddle with ethanol mandates during a presidential election year.  Lawmakers are loath to alienate the 10 Corn Belt states that together control about one quarter of Electoral College votes.  "The political support base for ethanol is a numbers game and it's one that no right-thinking national party planner can ignore," said Kevin Book, senior analyst at Friedman, Billings, Ramsey and Co Inc. And President George W. Bush, who has described himself as "an ethanol person," is unlikely to move much from his long-standing support for home-grown fuel supplies, analysts said. Bush sees ethanol as a welcome alternative to the oil imports that satisfy over 60 percent of daily U.S. consumption. "It makes sense for America to be growing energy," Bush told a crowd in St. Louis on Friday.  Though the ethanol mandate has contributed to rising food prices, "I simply do not subscribe to the notion that it is the main cost driver for your food going up," he said.

INCREASED DISILLUSIONMENT

Powerful Corn Belt lawmakers are sure to fight vociferously to defend the so-called Renewable Fuels Standard, a boon to their farmers and big agribusiness concerns like Archer Daniels Midland (ADM.N: Quote, Profile, Research), Cargill Inc and Bunge Ltd (BG.N: Quote, Profile, Research).
But a growing coalition of anti-ethanol interests, including cattlemen, restaurateurs, grocery sellers and big poultry concerns like Perdue, could be enough to eventually tip the balance toward watering down the requirements, analysts say.

Analysts at Bernstein Research this week pointed to "increased disillusionment" with U.S. biofuel use and predicted that lawmakers will tweak the requirements before 2022.  A more likely scenario would be for the EPA to issue a waiver of the rules, Bernstein said.  Meanwhile, big ethanol producers pin the blame for soaring food prices squarely on the OPEC oil cartel and crude oil prices, which hit a record near $120 a barrel this week. "Attempts to jettison the still-growing biofuel industry because of misplaced blame would relegate America and the world to more of the same," said Bob Dinneen, president of the Renewable Fuels Association, which lobbies for big U.S. ethanol producers.

THE CORN FLAKES KID

At a news conference on Thursday, Republican Sen. Chuck Grassley of Iowa, the biggest U.S. corn-growing state, showed up armed with an ear of corn and a family-sized box of Corn Flakes which he said he had bought that morning for $5.  Grassley, one of the primary authors of the renewable fuels plan, said farmers would only reap about a dime in profit from a box of cereal. "Don't be blaming the farmer and ethanol for the high price of food," Grassley said.

[BachQ]

Bush says food prices high because of energy
Fri May 2, 2008 1:19pm EDT

ST. LOUIS (Reuters) - Food prices have been rising as a result of soaring energy prices but the use of corn-based ethanol is not the main driver behind rising prices at the supermarket, U.S. President George W. Bush said on Friday.  "The reason why food prices are high now is because, one, energy costs are high and if you're a farmer you're going to pass on your costs of energy in the products you sell otherwise you go broke," Bush said in response to a question after a speech to employees at a technology company.

[BachQ]

Families suffer as food prices jump: lawmakers
Thu May 1, 2008 5:44pm EDT
By Christopher Doering

WASHINGTON (Reuters) - Soaring food prices have forced U.S. families to cut back on fruits, vegetables and other items, as the poor and middle class spend more of their budgets at the grocery store, lawmakers said on Thursday.  "Everywhere you go food prices are higher and higher and higher," Sen. Charles Schumer said at what has been billed as the first Congressional hearing with House and Senate lawmakers to discuss the impact of high food prices.

[BachQ]

When Oil Prices Rise, So Does Just About Everything Else

The Dallas Morning News reports it simply for consumers: Higher oil prices are affecting the things we buy.
"When oil gets expensive, everything gets expensive. Everything.

Think about it: Almost everything we consume must be transported in boats, planes, trains or trucks that run on petroleum-based fuel. And a lot of consumer goods – and their packaging – are made of petroleum-based plastics or chemicals."  Maybe tomorrow they'll report the sky is blue, the grass is green and the ocean is big.

But it's unusual that deep in oil country, a Texas paper is reporting such an easy-to-understand concept that the rest of America already understands. From the recent remarks by the US Ag Secretary to economic analysis, higher energy costs will continue to cause trouble for our economy. And its not just our food prices that are climbing due to higher energy costs.

So perhaps the ominous warning from the former CIA director that foreign oil poses our greatest threat to our security will help policymakers move us towards renewable fuels grown here in the USA.

[BachQ]

May 2, 2008
As Gas Costs Soar, Buyers Flock to Small Cars
By BILL VLASIC




DETROIT — Soaring gas prices have turned the steady migration by Americans to smaller cars into a stampede. In what industry analysts are calling a first, about one in five vehicles sold in the United States was a compact or subcompact car during April, based on monthly sales data released Thursday. Almost a decade ago, when sport utility vehicles were at their peak of popularity, only one in every eight vehicles sold was a small car.  The switch to smaller, more fuel-efficient vehicles has been building in recent years, but has accelerated recently with the advent of $3.50-a-gallon gas. At the same time, sales of pickup trucks and large sport utility vehicles have dropped sharply. In another first, fuel-sipping four-cylinder engines surpassed six-cylinder models in popularity in April.

[BachQ]

Housing Bubble Popped by Spike in Fuel Costs, New Analysis Shows Outlying Suburbs Hardest Hit With Devalued Real Estate

CHICAGO, May 2 /PRNewswire/ -- While predatory lending and sub-prime mortgages have taken the blame for the dramatic decrease in housing prices and the glut of foreclosures nationwide, a new analysis shows that rising fuel costs played a significant role in the collapse of America's housing bubble.

That's according to a new report released today by CEOs for Cities titled "Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs," by economist Joseph Cortright.
"The popular narrative on the collapse of housing prices has only blamed exotic lending practices," said Cortright, "but the much more important story is about how higher gas prices have re-drawn the map of urban real estate values. Vibrant central cities just got a whole lot more valuable."

The analysis found that while there is overall weakness in housing prices, price declines are generally far more severe in far-flung suburbs and metropolitan areas with weak central cities. The reason for this shift is rooted in the dramatic increase in gas prices over the past five years. Cities and neighborhoods that require lengthy commutes and provide few transportation alternatives to the private vehicle are falling in value more precipitously than more central, compact and accessible places, the study shows.

In fact, growth in housing prices was fueled by low and stable gas prices from 1990 through 2004. The rise in gas prices from less than $1.10 in early 2002 to more than $3 today has dealt a major blow to consumer purchasing power and weighs most heavily on those metropolitan areas and those suburbs where people have to drive the farthest. The decline in housing markets is strongly correlated with auto dependence.

As measured by the change in housing prices over the last year, distant suburbs have seen the largest declines, while values in close-in neighborhoods have held up better, and in some cases continued to increase.

The study looked at housing values in five cities in both close-in and distant neighborhoods and found that in each case, housing prices fared worse in the more distant neighborhood. For example, the average house in the 60618 zip code in Chicago (5.6 miles from the downtown loop) appreciated from $374,000 to $410,000 (an increase of $36,000) between the fourth quarter of 2006 and the fourth quarter of 2007. A house in suburban Buffalo Grove (60089) that sold for the same price in 2006, declined by $30,000 over the course of the year.

The run-up in gasoline prices has re-written the calculus of suburban housing economics in two key ways. First, there has been an income effect: suburban households spend more of their income on transportation and gas and have therefore taken the biggest hit to their budgets. As a result, they have less income to spend on housing. Second, there has been a price effect: because living in distant suburbs requires more driving, potential buyers are now willing to bid less for houses at the suburban fringe.

"These changes will not be short-lived, and they can't be addressed with short-term fixes," said Carol Coletta, President and CEO of CEOs for Cities, a national network of urban leaders, which commissioned the study. "Public policy must recognize the new realities by changing land use planning and investment to encourage re-use of existing urban land and less driving. In this new world of high gas prices, strengthening the urban core is not only a matter of civic pride. It makes financial sense for America's families."

    The report concludes with five policy implications:

    -- The relative decline in prices in sprawling suburbs is likely to
       persist because of the continued high price of gas, and governments
       should plan accordingly.

    -- The market for higher density and redevelopment in close-in
       neighborhoods is likely to grow stronger, and local land use plans
       should accommodate this shift.

    -- Government can help families save money by making it easy and
       convenient to live in mixed-use, close-in neighborhoods served by
       transit.

    -- Reducing vehicle miles traveled not only saves families money,
       households that drive less have more to spend on other things,
       stimulating the local economy.  Additionally, reducing oil consumption
       not only cuts greenhouse gas emissions but lowers the trade deficit.

    -- Many distant exurban developments may no longer be economical, and
       propping up building and homeownership in these areas encourages
       unsustainable settlement that makes families even more vulnerable to
       future gas price increases.

[Sean]

Thanks for those links Dm; I also though these were memorable lines-

The American public is stuck in "the psychology of previous investment" (we have invested our national wealth in a deeply oil dependent economy "that has no future") .......  Our current oil-oriented regime represents "the greatest misallocation of resources in the history of the world."

[BachQ]

Who Really Pulled Off 9/11? - Watch both parts

1/2http://www.youtube.com/v/LLwBD59WTNY

2/2http://www.youtube.com/v/YlEpEqsH-v0&feature=related

[Lethevich]

Who Really Pulled Off 9/11? - Watch both parts

This informative website details the information in a clear and unbiased manner.

[Daverz]

Virtually anything organized on a grand scale is liable to fall into trouble—government, finance, corporate enterprise, agribusiness, schools. Our gigantic metroplex cities will prove to be inconsistent with the energy diet of our future. I think our smaller cities and towns will be reactivated. We are going to be a far less affluent society.

I still don't get this thing Kunstler has about small towns.  Why wouldn't fewer highly dense cities be more energy efficient?  It does have to be the right kind of density (not L.A. kind of density).

I wonder how things are going to play out in my area (San Diego County), which is highly ex-urban.  There's no way to make mass transit work here without changing the way everything is laid out.

[BachQ]

Sean, if you haven't already watched this ......... well ......... here it is:

Mega Disasters: Oil Apocalypse

http://www.youtube.com/v/nbWGoPEN9l8

MEGA DISASTERS explores the worst of what could happen.

"The oil that runs our world won't last forever. The gap between supply and demand is ever-growing. Even without increasing our current rate of consumption we will empty the Earth's large but finite reservoirs in a relatively short time. Will alternative energy save us or is it already too late? What would happen to the world as we know it when our oil dependent industries come to a grinding halt? A worldwide depression is a certainty but a power struggle for the basic necessities of life would be complete chaos."

-- Mega Disasters: Oil Apocalypse DVD available at History.com

[BachQ]

Gas spikes 15 cents in 2 weeks - survey

Retail gasoline prices climb to national average of $3.62 a gallon, according to Lundberg survey.