Friday, October 1, 2010

Peak Oil

One of the most important {if not the most important} issue facing not only the world's economy but it's ability to feed itself is the issue of Peak Oil. Oil is not a renewable resource; there is a finite supply of the black gold. Peak Oil is a theory whereby the demand for oil begins to outstrip the supply. It's not a question of if; everyone knows this day is coming. The question is when, and what we're going to do about it.

A video produced last year by Michael Ruppert called "Collapse" brought this issue to my attention; it was a deeply disturbing movie with apocalyptic predictions regarding the end of what he calls The Age of Oil. But is it really all that bad and how soon will it actually hit ? Recent studies by the German military, the US military, Honda, Lloyds of London and a host of others are suggesting that at current rates, this inflection point will be reached in 5-10 years.

Why so serious ? Simply put, oil is used for nearly everything. All grains produced in the US {and most of the world} are planted, sown and harvested with gasoline engine machines, riding on tires made partly of oil, using gasoline powered airplanes which spray oil based pesticides on the crops. It's then trucked from destination to destination by diesel rigs and perhaps to other nations using gasoline propelled ships. Plastic is an oil based material.

In my opinion, a large part of the reason the US invaded Iraq was for the oil; there was a task force set up by then VP Dick Cheney which detailed all of Iraq's oil facilities and possible new oilfields months before the troops were sent in. China today is entering into production arrangements with a number of African nations to secure their future supply.

How bad and serious is this ? Is it as bad as Ruppert suggests ? While I think the change will be drastic and difficult, I do believe it's something that can indeed be overcome.. if wars over the stuff don't destroy us all.

First off, much of it is being used wastefully; all the plastic bags we now use could be scratched. We import grapes and other needless luxuries from all over the world, which must be shipped and transported to market. Things like plastic plates and other toys are not needed. The list is endless; I believe that this wasteful usage will come to an end; wooden plate sets, paper bags and other such things will replace them, eliminating perhaps 10%-15% of all oil usage.

The biggest single use of oil today is for engines, car engines in particular. But this year.. in fact this month I believe.. Nissan is introducing the Leaf, an electric car. GM is countering this with the Volt. I believe that these are just the beginning, though these advanced batteries use rare metals in their production. The Prius and other hybrid cars will further the cause. I believe that between ending these needless luxuries and the advances made in electric cars will cushion the impact of Peak Oil long before we are forced to curb food production.

Ruppert's video also made mention of the two most recent examples we have of when the oil stops flowing: Cuba and North Korea. With the collapse of the Soviet Union, these two nations, utterly dependent on the Russians for oil, had to learn to live without the black gold. North Korea, as we have seen, was utterly unable to make the adjustment; millions perished in famines. But Cuba did not.. they began a program encouraging all citizens to plant vegetables and other crops anywhere they could.. even rooftops. After a few lean years, Cuba survived and even prospered. Of all of Fidel's actions, it was this single program that saved his nation from becoming Ethiopia. In showing us the way forward, Fidel might unknowingly have given us hope for our own future.
Unfortunately, in a world competing for a decreasing resource, my fear is that countries like the US and China that have the financial might will use it to force poorer nations to simply do without. We might have a situation whereby we here still buy plastic toys for our kids but simple farmers in Africa are forced to give up their gas powered plows and shackle oxen once more. Not all nations are blessed with abundant farming lands.. not all nations can become Cuba; the transportation and production of food might become more expensive.. too expensive for some nations. In short, we might see a situation whereby large areas of the globe are literally starving in order to supply the richer nations with toys. I hope to never see such a day, but as I take a look at our current state of affairs, I fear this gruesome day nears.


  1. Thanks, Mr. K.

    I'm wondering... what percentage of our oil use is used for commercial air travel? Seems you never hear of it in the oil usage equation.


  2. Y'know Mr. K, I sent my daughter a copy of Ruppert's video for her birthday in August. She turned 21, is attending university in Florida, and was politically tuned-in when Hopeybama was running for Preznit in 2008. My ex-wife and I are both political junkies, so she got that trait from us. While I don't want to scare the kid, I consider it a parental duty to educate her about what is looming.

    So here it is October, and she still hasn't watched the thing. Nor has she read Jim Kunstler's "The Long Emergency" book that I sent her last Christmas. (I send her fun things too, not just doom.) She's so disappointed in what a lame sack Obama turned out to be (so am I) that she doesn't even follow the news any more. Kids these days! To go from involved to apathetic so quickly... You can show a person the light, but you can't make them open their eyes.

    As for me, I first heard of the Peak Oil theory from a film titled "Crude Awakening" that I saw at the Melbourne International Film Festival in Australia in mid-2006. I was politically and economically savvy before that (otherwise we never would have bailed out of the U.S.) but even for me, it was a depressing eye-opener. Yet no one in the mass media is talking about this massive circumstance that will transform civilization a we know it. Amazing...

  3. Bukko: Given that QEII will certainly happen the day after election day {it's already baked into the currency markets} the price of a stagnating supply of crude versus a rapidly increasing supply of dollars will see $120/bbl crude next year, or about $3.75/gal. Us serfs will then be forced to choose between gas/food and our credit card bills.. an easy choice.

    Anonymous: The figures I looked at only listed "transportation", "agricultural" and "industrial"; it was not broken down further.

    Bukko: As for Obama, it was a hopeless task from Day One. I truly believe that STILL has no real idea how bad things really are. When gas approaches $4/gal next summer, the people will scream bloody murder at the same time that the banks will begin to cry uncle. Then we come to the currency market wars that QE2 will unleash. Someone, somewhere will have to lose this most dangerous of games. Mark your calender: Nov 3rd Ben is unleashed.