We seem to finally have reached the oil industry’s Hubbert Energy Peak. That is, it is more expensive and much harder as well as much more dangerous, exploring for and extracting oil. Known reserves are drying up while new ones are unable to make up for this drop in production from existing, older fields.
Louisiana Oil Spill Gets Worse: New Leak Increases Estimated Spill By Five Times
The oil slick could become the nation’s worst environmental disaster in decades, threatening hundreds of species of fish, birds and other wildlife along the Gulf Coast, one of the world’s richest seafood grounds, teeming with shrimp, oysters and other marine life. Thicker oil was in waters south and east of the Mississippi delta about five miles offshore.
The leak from the ocean floor proved to be far bigger than initially reported, contributing to a growing sense among many in Louisiana that the government failed them again, just as it did during Hurricane Katrina. President Barack Obama dispatched Cabinet officials to deal with the crisis.
ΩΩRight on the heels of Obama green lighting many more offshore rigs, one of these blows up, burns and then collapses. We are now in a major pollution crisis for these oil rigs tend to be in the same areas where we have teeming wildlife including, of course, sea life which we depend on for food. Also, several more coal miners were buried alive instead of blown up this week.
ΩΩThe Hubbert Oil Peak is just one of several Commodity Peaks which ride one after the other, over time, on our very limited planet. Our sole escape from these many commodity traps is to limit our population, limit our consumption or find other natural sources for various things, that is, go to the moon, the asteroids and other planets. And there is great commodity wealth in these places but they are constrained by our gravitational pool: it takes energy to move into these new venues for exploitation.
ΩΩBP Oil Spill: Company Loses $25 Billion In Market Value: the stock market continues to hammer the corporation and its holders. The value of this stock had been rising rapidly as prices for energy climb relentlessly. All of this tangles up in the climate change business: the looming energy tax which banks want to impose internationally on energy is a key capitalization item on their agenda.
ΩΩSince this tax will hammer consumers even further in a time of rapidly rising energy costs, it is time to review our own government’s own report about this dreadful Hubbert Oil Peak. In it are some pretty damning graphs that I assure everyone, the Pentagon understands: Department of Energy: http://www.eia.doe.gov/conference/2009/session3/Sweetnam.pdf
ΩΩThe relentless climb in oil prices since 1999 didn’t hammer our economy right away because this was dealt with via ZIRP lending systems. The flood of easy, easy credit kept things flowing nicely, it was so rich an octane gas that our economy soared even in the teeth of rising oil prices. Normally, even slight hikes in oil prices translates into economic woes. But this time, a drastic climb seemed to do nothing.
ΩΩBut we are done being able to capitalize our oil-hungry economy with cheap credit. Like we see in the graph above, the price of oil was very high in 1980. And so was interest rates. People were hurting immediately in 1980 whereas, today, the pain was muffled by the narcotic of ZIRP pills. The brief and sudden collapse in oil prices was due to two things: the end of the Japanese carry trade which squeezed oil speculators working within hedge funds and the top investment banks and the global depression was so severe, shipping nearly halted and so oil consumption fell dramatically.
ΩΩNow, with things resuming a little more like ‘normal’, oil consumption is rising while at the same time, Chinese consumers surpassed the US in car sales. As China rises as a major oil consuming power, the days whereby the US economy dictated oil use is rapidly fading. The three lines in the future on this graph are hilarious to me: the blue line is ‘most likely’ which presumes the past will be the future. The orange line is the ‘Chinese corner world oil markets’ line and this is when our fiat trade dollars will fade as a tool for buying oil from hostile powers. Instead, the value will probably be in yuan. That is, this projection line is the same the 50 Year Plan of China is operational, that is, by 2025, we will not be able to afford to drive our cars unless we are wealthy. Note the scale of this rise: it is steep and sudden. Doubling in price every five years, the steepest rise in the first five years from 2012-2017.
ΩΩYIKES. Look at this graph! First, the red and blue parts are the older fields that pump oil the old way. They are going down, down, down. The non-OPEC is going down faster than the OPEC but this is mostly due to Iraq and Iran being basically shut down or restrained over the years due to wars and US/Israel boycotts. The more years we shut down Iranian production, the more powerful Iran will be in the future, if it can remain free of US military occupation. But the Pentagon knows this and is terrified by this and plans to try to gain control of this oil somehow and thus, also control Iraqi oil which the Iraqis sold to…the Chinese, for example!
ΩΩBy 2030, the ‘unidentified’ (aka, Pie-in-the-sky) projects will have to supply more than HALF of our energy needs! This, without taking into account, China consuming more oil than the US. The recent oil spill is the ‘saving our economy’ sort of oil well. That is, it is in a very dangerous place with dire consequences when they fail. The latest oil rig disaster wasn’t due to a hurricane or tornado. It just happened. Frankly, I don’t believe we can fill in this widening gap we see in this graph. This is a one-way street downwards.
ΩΩI found an offshore oil rig publication: Growth of the NOC – Offshore Technology
Major investment programmes from national oil companies (NOCs) are likely to have strong implications for the global oil and gas sector over the next five years. During this period, six of the leading players – Petrobras, PDVSA, Kuwait Petroleum Corporation, Sonatrach, Saudi Aramco and National Oil Corporation – will alone invest a combined $540bn in the energy sector.
The US and UK both invested over $2 trillion to bail out the ZIRP banking houses that wrecked our entire economy with too much easy credit. The fact that these OPEC nations are all being forced to invest vast sums in further exploration and development is another sign we are at the Hubbert Oil Peak: it is harder and more expensive to get oil out of the increasingly stubborn earth.
The move follows the trend that 2009, despite the global financial crisis, saw continued investment and commitment from NOCs. A study from market analysis firm GlobalData shows that in addition to investing in the development of the country’s domestic upstream sector, NOCs are also increasingly investing across the crude oil and natural gas value chain. Almost all leading national oil companies are looking to expand their refining operations and have major plans for refineries in both the domestic sector and abroad….
The US/Israel alliance is terrified that Iran will expand refining operations. The rebels who filter around Muslim lands also watch this with greatest interest. These facilities are a #1 target of future attacks. Israel also has great interest in destroying this refineries, too. The key for these sovereign oil powers is to make the punishing end effects of bombing their facilities as painful as possible. But this increases their attraction for al Qeada and other future Muslim rebels.
…Reserve possessors are major NOCs, such as Saudi Aramco and Gazprom, which are looking to expand into international markets. These companies generate huge profits from domestic oil and gas production and reinvest these profits in both the development of the domestic oil and gas industry and international projects….
Saudi Arabia was played against Russia after the fall of Communism. Now, they are growing closer and closer since they will benefit more by forming a new OPEC alliance. The is being pushed further by hostility to the US which seems totally unable to even slightly curb Jewish expansionist oppressions in Palestine. Quite the contrary.
So it makes both political and economic sense to form a special Arab/Russian oil consortium. Since Europe and the US decided to surround Russia with missiles and enable sneak attacks and hobble Russia’s economic rise, Russia has a thousand reasons for forming a very strong alliance with the Arabs. This is now inevitable.
…Reserve seekers, on the other hand, are looking to acquire international upstream oil and gas assets in order to satisfy domestic energy needs. These companies – for example China National Petroleum Corporation (CNPC), Malaysia’s Petroliam Nasional Berhad (Petronas) and India’s Oil and Natural Gas Corporation (ONGC) – are willing to invest across the value chain for diversification. They also tend to buy oversees assets with the aim of reducing their country’s vulnerability to supply disruptions or price rises by exporting countries.
ΩΩThe US isn’t buying anything much because we have no money, so to speak. Most of our capital flowed into the maws of six major psychopathic investment banks which used it to destroy our economy. So here we sit, watching helplessly as other sovereign wealth nations outbid us for natural resources. All we can do is menace everyone with our arms.
ΩΩHere is another important graph in our government report. It shows how SOVEREIGN NATIONS have taken over most oil production systems unlike the heyday of US post-WWII private enterprise oil free-for-all when 85% of oil produced was done by private corporations: http://www.eia.doe.gov/conference/2009/session3/Sweetnam.pdf
ΩΩFrom 85% to just 8%, the fall of private oil shares was about 90%. I often talk about sovereign powers and how states must take actions collectively in order to grow or serve the people living there, the ideal situation being ‘citizenship’. When we look at the world, we have to understand we can’t just do as we please, we are in a competition for resources, for power, for food, all things we like to have. Wishful thinking for a world where we don’t have to struggle for anything and we can do as we please is a sickness. We are in a dog-eat-dog world where we compete for everything including the right to breathe the air, drink the water.
ΩΩCollective power ALWAYS beats individual power. Throughout the entire long history of humanity, this has been abundantly proven to be true. Even the strongest man cannot stand alone for he can be popped off by a hidden sniper. Any gang can overwhelm any individual. Eventually, you have to sleep. This is why any system based on non-organization, none-government, non-socialist systems is doomed. The only real question is, what degree of organization, government and socialism a nation has. And all of these depend on…what resources, what opportunities there are for the population to grow.
ΩΩOil will increasingly be this substance since those who have it will see their power grow as oil gets less while at the same time, producers of goods that use or need oil will have to come to terms, what this power means. The US/Israel response has been pretty obvious: we plan to use military force. The problem here is, this is immensely expensive. The Chinese model, to buy oil via selling goods and doing normal, civilized business, is the alternative model and guess which one is sane? Ours or China’s?
ΩΩSpain has been a pioneer in the alternative energy business. That is, instead of lending to homeowners to buy solar power systems to own and keep, Spain tried to use the big production center system where solar energy is channeled to distant parts of the state. Almost all my life, I totally support making solar energy production as a private affair whereby homeowners get to decide how much solar energy they wish to produce and of course, by 2020, if a house doesn’t have solar cells for running air conditioners, etc. on sunny days, they will have to pay immense amounts of income for the privilege of being comfortable. The Spanish system is bankrupting Spain:
Spain Pricks Solar Power Bubble as Greek Fate Looms (Update1) – Bloomberg.com
Spain is battling on several fronts to revive its economy and convince government bondholders it can avoid getting dragged into a Greek-style debt spiral after Standard & Poor’s cut its credit rating April 28. Solar-plant owners including General Electric Co. earn about 12 times what’s paid for power from fossil fuels. Most of that is a subsidy charged to customers.
Now that is totally insane. Instead of providing ‘Solar Loans’ at an attractive rate and maybe, having building codes which force property developers to install home-owned systems on the roofs of new houses, they did it this backwards way.
Prime Minister Jose Luis Rodriguez Zapatero’s government last cut solar rates in 2008, hitting plants not built at the time. Now it’s weighing reductions for the thousands of installations already making power from the sun, wind and biomass….
According to the Department of Energy graphs, the main change in energy production has been in coal, it shot upwards tremendously since 2000 when oil begin its relentless rise. This shows nuclear and renewables to be basically flat. With nuclear barely moving upwards while coal goes from 23% to 29%.
. ….Spain’s fixed-price system for renewable power, which attracted more investment in solar panels in 2008 than the rest of the world put together, boosts the state’s liabilities even though they don’t show up on its balance sheet.
What a mess. What a setback for alternative energy! And yet, we need to continue to move towards more and more alternative energy because it is the only way to prevent the ‘off the cliff’ fall when the PRICE of energy shoots upwards in the next 10 years! This is why it makes sense for governments to lend money to buying private solar/wind systems while at the same time, we pay off this purchase over 10-20 years so when the crunch hits, many of us will have paid off our solar/wind systems and thus, will be getting it ‘for free’ so long as the systems are operational.
That’s because the Spanish system delays payments by consumers for part of their electric bills for years. The government guarantees repayment to power suppliers such as Endesa SA and Gas Natural SDG SA. The cost of those unpaid bills rose last year by about 4 billion euros to 16 billion euros.
ΩΩThese ‘balloon payments’ seem to be a plague of all systems that are illogical. The US housing collapse was fueled by a balloon-final payment illusion. The entire culture of the nonproductive systems set up by the US economic culture is based on ‘we will figure out how to pay that balloon payment when it is due’…that is, go insane and then become violent when asked to pay up.
ΩΩWe showered world energy systems with US dollars created via debt promises. This is the basis of the costs of energy purchases. The more money we create, the higher the price of energy. Energy is very finite while money is infinite. In the race to pay for energy with increasingly worthless dollars, we print money and this is not keeping up with the squeeze in energy markets which suck down more and more dollars which in turn, creates inflation here at home.
ΩΩThis home inflation is a very bad problem as we saw from 1974-1982. Stagflation is worse than mere inflation. Wages not keeping up with money printing=social and economic chaos. The US sails onwards, despite the news in these graphs. Even as the government borrows money to run our very huge and expensive military apparatus, the money spent this way can’t keep up with rising oil costs. The military is a huge consumer of oil, after all.
Afghanistan forces face four more years of combat, warns Nato official | World news | The Guardian
Mark Sedwill, a former UK ambassador to Afghanistan, warned of further troop deaths in the region, saying: “We cannot allow judgment of success to be the absence of casualties.”… . …The stability of Pakistan was also at stake, he said, as was that of other places vulnerable to al-Qaida-inspired extremists. The message to these countries had to be: “We stand by you.”
ΩΩThe message to these Muslim populations actually is, ‘We stand ON you.’ Supporting evil dictators do no favors to the victims. This Afghan war against basically poorly armed peasants who have no army, navy or air force, seems endless and it is endless…and there is no oil there. This is a place where bringing in oil is very expensive and so the bill for running our empire climbs dramatically the longer we stay there.
ΩΩPentagon Report: Still Not Enough Troops in Afghanistan — News from Antiwar.com: the quagmire grows. There has ceased to be even the pretense of this ending or slowing down. All attempts at putting up a ‘due date’ have failed and now, fatalistically, the military marched into the quagmire and will end up killing what remains of our empire. They read the above charts and graphs and see absolutely nothing. Instead of pulling out of these places and concentrating on renewing our system just as Spain has to figure out to get out of the solar energy balloon payments, we have to get out of our many military balloon payments.
Clinton Warns Iran Against ‘Disrupting’ NPT Conference — News from Antiwar.com
Clinton warned that Ahmadinejad had better not try to “cause confusion that might possibly throw into doubt what Iran has been up to,” insisting that it was “indisputable” that they are in violation of the NPT.
Despite repeated claims by the Obama Administration to that effect, neither the US nor any other nation has ever presented any evidence that Iran was in violation of the NPT, and the IAEA’s claims have strictly been limited to the additional demands imposed upon Iran through the UN Security Council, and not the treaty itself.
ΩΩIran is smart to push for nuclear energy. Saudi Arabia is now talking about doing this, too. Israel has done this. There is one non-nuclear power here: the US. We haven’t built a nuclear plant for many years now! We are falling behind! Oops. We don’t have solar energy plants to the degree Spain has them. We don’t have offshore wind farms though one finally made it through the hearings process for Cape Cod!
ΩΩWe prefer to consume oil and coal. While scolding China about doing the same. The US is a major energy producer. But we are even more an energy consumer nation! Much more than we make. All we have to do is learn to live within our means! This means taxing energy to prevent importing energy. That is, the last thing we need is an international CO2 derivatives tax system that sucks even more wealth out of our nation. We need a SOVEREIGN tax which stays at home and which moves money from coal and oil into other systems that benefit our society and culture.
10 responses to “Department of Energy Acknowledges Hubbert Oil Peak Is Here”
At least you finally decided to cover the nightmare in the Gulf that I have been pointing out without any response. Where do I start? Let’s talk about the correlation of food and oil. Oil in isolation, as you treat it, is not vital. Food is vital. There has been no correlation since the Woe street piggies latched to the Fed teat last Spring. And that is startling. You think fuel is inelastic? Try food. There is nothing more that Goldcrap wants than to bid the hell out of the grains. Fuck you, pay us is their favorite business model, and where better than food? But by some miracle, USDA dumping or whatever, the grains have been calm. That appears to be ending. You can not triple fuel and have grains flat. The fake stock prices are taking a beating today, however, the food commodities are not following. This is different. Actually DBA looks like it wants to break out from whatever unnatural weight held it back.
ELAINE: I wonder if there will come a day when you actually read my blog.
shoot fun stuff dude.
The Lizards have plans for you.
Look into the crystal ball:
I’m surprised that there isn’t more of an attempt by BP to blame the oil disaster on terrorists.
There’s an interesting, diary-style piece in The Atlantic today about China’s involvement in obtaining the resources of Africa, including fossil fuels and minerals. There’s nothing in it that you and most of your readers don’t already know, but the layman’s perspective while riding a train in Africa makes for interesting reading:
And oilprice.com has an article about some tentative moves by ME countries toward alternative energies because (1) their oil reserves are dwindling and (2) alternative energy at home frees up oil as a lucrative export:
Actually, when my father was stationed in Saudi Arabia back in 1974, he talked a lot with King Faisal about solar energy systems. Interest in this field has been ongoing since day one. The kings of Saudi Arabia wanted productive systems set up but the culture is anti-productive so this has been a failure…only by importing foreign labor can this happen and the Kingdom is very paranoid that foreigners might revolt and take over (a very real possibility).
Iran is smart to push for nuclear energy. …………………………………
I have heard that one over and over again coupled with a complaint that there are too many people in the world consuming limited resources.
Nuclear energy simply pushes ever wider the too many people envelope, until as 95-year-old Lovelock said in a recent interview only a billion people will remain on the planet.
I suggest that the answer is to be looked for in creating a cloned society, because no clone will wish to be born in a world all set up for a meltdown with all our nuclear families in tow.
Re: There’s an interesting, diary-style piece in The Atlantic today about China’s involvement
Re: The kings of Saudi Arabia wanted productive systems set up but the culture is anti-productive so this has been a failure…
Thank you for providing the link to “The Next Empire”.
The China decades old investment strategy is largely modelled on their experience with the Japanese State Developmental FDI.
Most of their Africa deals are on commercial term and direct aid is a minor component of the total.
Their earlier investments in turnkey factories and agriculture, including China style paddy fields, were profitable until it was run by the Africans.
The African governments then invited them back to recapitalise the operations and run them again as a Joint Venture.
Basically, the Chinese are experimenting with successive models to achieve long term viability under local management.
Not all African enterprises fail.
Uganda has a viable auto parts and assembly operations initiated by Ugandan entrepreneurs in partnership with Chinese partners.
Elaine’s above “culture is anti-productive” also applies to much of Africa.
China assumed their factories in Africa would create ‘overspill” whereby local technicians and managers become familiar with the required skill sets and generate local clones as well as manufacture inputs for the factories.
The agribusinesses failed because of corruption and bad work culture.
From my experience, the cultural problem is the major challenge and can be overcome despite Africa not being a “China”.
The issue is to identify the local cultural traits that can be used to improve productivity instead of blindly using a business and process system designed to work in Australia or China.
Africa has no industrial and “corporate” business tradition and culture so how can we expect a person living 24/7 in a pre-industrial culture with a different reward and kinship value system to suddenly adapt to a 9-5 modern enterprise?
The reason many Western corporations fail to compete in the domestic Chinese market is because of the very same cultural mismatch.
Nigeria (not Uganda) has a viable auto parts and assembly operations initiated by Ugandan entrepreneurs in partnership with Chinese partners.
Africa’s cultures have been totally ravaged for hundreds of years. Most slaves taken by Europeans were the most civilized of the Africans, that is, the farmers and village builders of Central Africa.
China, on the other hand, was the world’s biggest manufacturing power for hundreds and hundreds of years which was attacked by Europe relentlessly for 200 years but after the psychological and economic mental collapse of the Mao years, has resumed its former prominence. When I was supposed to ‘teach’ the former Mao cadres about ‘capitalism’ I was stunned at how swiftly they took to it all.
I even said, ‘They are like ducks who finally were allowed to swim again!’ They took to this totally fast! Whereas, trying to explain labor/manufacturing and civilized systems working together to create wealth is like pulling teeth with many other ethnic groups. Indeed, in the US, we see lots of resistance to this concept of the need of systems, rules, controls as well as coordination of governments with labor as the solution to our economic problems.
An astonishing number of people think a free for all system will do just fine! That is crazy. No civilization has been such a system. And the ‘Wild West’ is no example. This fabulous place was a MILITARY DICTATORSHIP run strictly out of DC. One of my ancestors was a calvary officer who worked in the Arizona territories.
Re: Africa’s cultures have been totally ravaged for hundreds of years.
Brilliant perspective on both Africa and China.
Yes, I agree and forgot to include the historical perspective.