[MonteQuest]

A few Sundays ago, "60 Minutes'" Steve Kroft asked President-elect Barack Obama if the astonishing drop in gas and oil prices made dealing with energy issues "less important." Obama responded forcefully: "It makes it more important."

Like a passing hurricane, this “eye of the storm” in gas and oil prices is setting us up for an even more painful energy crisis in the very near future. We must consider that, should oil prices and demand remain low for an extended period, new investment in oil production — not to mention renewables — will fall to such an extent that, with worldwide depletion of existing fields at 6.7 percent a year, there simply will not be enough new oil, or oil replacement energy, to power an economic recovery.

An excerpt from the recently released International Energy Associations’(IEA) World Energy Outlook 2008:

“The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially. But that can — and must — be altered; there’s still time to change the road we’re on. It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply. What is needed is nothing short of an energy revolution. This World Energy Outlook demonstrates how that might be achieved through decisive policy action and at what cost. It also describes the consequences of failure.”

The lower oil prices go and the longer they stay below $80-$100 per barrel (the current cost to bring new production on–line), the steeper the fall off of the crude oil plateau will be. Due to this 6.7% decline rate and the lack of adequate investment, coupled with the delay of much-needed changes in consumption and efficiency, by the time the global economy recovers enough to demand more than the 87 mbpd peak in July 2008, it'll be prohibitively expensive, and more than likely, technically impossible to deliver that much oil ever again.

The true costs of cheap oil and the consequences of its’ use, have historically always been externalized — our military presence in the Middle East to ensure the flow of oil; environmental damage such as global climate change; the declining health of all living things – and have never been paid by consumers at the pump.

They soon will be…

[MD]

Welcome back!

[Ferretlover]

The true costs of cheap oil and the consequences of its’ use, have historically always been externalized — our military presence in the Middle East to ensure the flow of oil; environmental damage such as global climate change; the declining health of all living things – have never been paid by consumers at the pump. They soon will be…

I agree. There aren't enough resources to pay the bills that humans have incurred.

[vision-master]

Welcome back!

+1

[hardtootell]

I agree and

Welcome back!

[MonteQuest]

Shortly after posting The Peak Oil Perfect Storm in Sept 2004, Jato asked me. "What will be effected first and what are you doing to prepare?

I replied, "I think the first thing is the inability to grow the economy." I went on later to add, "Without a relatively stable economy, the capital investment required to make a soft landing seems beyond our reach.

As to what my priorities were for preparation:

1. Get out of debt.
2. Get out of the city. ( I just moved from San Diego)
3. Put your money in precious metals.
4. Sell your house and get someplace smaller and cheaper while you have the equity. Housing prices are going to collapse big time.
5. Upgrade your disaster preparedness kit.
6. Try to find work where you don't need a car to commute.
7. Make capital investments to improve your energy efficiency.
8. Stay away from "leisure activities" jobs. Luxury fuel use vehicles, boats, RV's, although RV's may be the home for a lot of people.
9. Surround yourself with people who you can count on. Not just trust, but who have abilities..MacGyver types.
10. Join peak oil.com

My brother listened. He quit his job in Washington State, sold his home and moved back to our 212 acre farm in Missouri. He put up a manufactured home with a wood-burning stove that pipes heat into the house via an underground tube. In the spring, he is liquidating some of his 401k to buy two wind turbines.

Myself, I have continued to buy tools...and this should make JD grin...and bought a scooter! I am working on turn-key planter beds for people who wish to start growing more of their food.

[eastbay]

Welcome back!

+1

+2

[eXpat]

Welcome back!

+1

+2

+3 you were missed!

[Revi]

I like your analogy to the eye of the storm. I feel like that's where we are now. We are in a couple of months of calm before it all starts up again.

The financial collapse is part of the storm.

The world's economic system came down just after the peak. Is it a coincidence?

[MonteQuest]

The world's economic system came down just after the peak. Is it a coincidence?

No, a market continuing to function under a business model designed for cheaper resources was doomed to hit recession.

[outcast]

The world's economic system came down just after the peak. Is it a coincidence?

No, a market continuing to function under a business model designed for cheaper [s]resources[/s]credit&debt was doomed to hit recession.

Fixed.

[eastbay]

The world's economic system came down just after the peak. Is it a coincidence?

No, a market continuing to function under a business model designed for cheaper resources was doomed to hit recession.

Fixed.

Fixed it back. It was just perfect and I can prove it:

[Laurasia]

Hello Monte: Good to 'see' you again; congrats on the scooter - I'm too chicken to fight the city traffic on one, but I drive a small car. The turnkey planter beds sound interesting - is this a business venture? If so it is probably a well-timed one, given the state of things now.

Regards,

L.

[PrairieMule]

No need to tell me about the effects of cheap oil! My company was supposed to start wind turbine production in January, part of the "boone Pickens Plan". Instead the facility is being moth-balled, and possibly sold to a local railroad outfit, due to pickens putting the plan on hold because of "cheap oil".
And our facility in Tulsa Oklahoma is also being moth-balled. About 500 people being put out in the cold because of cheap oil.
Ohh the irony of it all.

I would see lots turbine fan blades being moved north on I-75. Not so much these days. I assume they were heading to Tulsa?

What a shame.

[MonteQuest]

The world's economic system came down just after the peak. Is it a coincidence?

No, a market continuing to function under a business model designed for cheaper [s]resources[/s]credit&debt was doomed to hit recession.

Fixed.

Huh?

The "cheap credit" and debt caused demand to push up the price of a flat energy supply.

[seahorse]

Same discussion here:

IEA worse case scenario coming true

But, this can't be discussed enough.

[MonteQuest]

The turnkey planter beds sound interesting - is this a business venture? If so it is probably a well-timed one, given the state of things now.

Yes, I already have a waiting list.

[yesplease]

The true costs of cheap oil and the consequences of its’ use, have historically always been externalized — our military presence in the Middle East to ensure the flow of oil; environmental damage such as global climate change; the declining health of all living things – have never been paid by consumers at the pump. They soon will be…

I agree. There aren't enough resources to pay the bills that humans have incurred.

I disagree. Pollution, health issues, traffvck, etc... Are all costs people pay now and have paid for decades if not centuries, but they don't seem to care for the most part since they've become used to them. That said, now that we're putting pen to paper these costs are becoming less acceptable to some.

[shortonsense]

An excerpt from the recently released International Energy Associations’(IEA) World Energy Outlook 2008:
“The world’s energy system is at a crossroads. Current global trends in energy supply and consumption are patently unsustainable — environmentally, economically, socially.

Another quote from the IEA World Energy Outlook 2008:

Page 7, Executive Summary under the title, "The World Is Not Running Short Of Oil Or Gas Just Yet".

"The worlds total endowment of oil is large enough to support the projected rise in production BEYOND 2030 in the Reference Scenario."

WOW!!! So we're at a crossroads, with plenty of time to do something about it, and plenty left to do something with, in the reference scenario. Sounds like plenty of time to BECOME sustainable to me, even Hirsch doesn't object to a 25 year time frame to prepare, whats he require, maybe 10 years? So we've got another 15 to argue about it!

[IslandCrow]

My employer mainly uses oil for heating numerous buildings. I keep an informal list of risks likely to bankrupt my employer. Earlier in the year high energy costs (including transport as everything is in a remote rural area) as a cause of problems rose to number three place.

High oil prices helped to make a case for replacing oil heating with something more sustainable (hint: they are surrounded by forests they own). The problem is that some of these other systems would cause more work (a wood chip system would need to have the boiler cleaned regularly), and salary costs are high compared to energy costs. But now with the falling oil prices and economic problems hitting it seems that any move towards sustainability will be delayed. In the short term the energy risk factor has gone down, but it has caused the long term risk factor to rise.

The image of the eye of the storm seems to be an apt one in this situation (Thanks), everything seems to have calmed down regarding energy but I still have a bad feeling about when the next part or the energy storm will hit.