The Price of Gas

  First of all, so sorry for the delay in posting; a few technical difficulties cascaded into a tidal wave and ended in my having to cough up for a new computer.

  This morning as I drove up to the gas station with an empty tank, I was a little perturbed to see that gas has hit $3.74 here in Minnesota, with the summer driving season still ahead of us. Unless things change, gas go above $4.00 per gallon here in the MidWest. If the situation in Iran blows up, we'll see $5.00 in short order. With an election coming up, President Obama knows that nothing makes Americans angrier than a bad economy and soaring gas prices. There has been talk of releasing some oil from the SPR {Strategic Petroleum Reserve}, a 60 day reserve of oil our nation keeps in case of an emergency. Obama's re-election is not an emergency.

  But we do need to ask ourselves why this is happening and will it continue. Simple question, complex answer. The first part is that the world's production of petroleum is plateauing and as time goes by will begin to decline. There is already some serious doubt whether Saudi Arabia can supply the additional 2 million barrels per day {bpd} they say they can and if so for how long. The oilfields in other nations like Mexico and the UK's North Sea are in a steep decline. Both Canada and the US are ramping up production via oil sands, but producing oil in this fashion is very expensive. Worse, environmentalists are upset at how this is produced and the EU is threatening sanctions against Canadian oil sand production.

  The situation in Iran and the Gulf of Hormuz is another concern-- and while a number of people are just blowing this one off, my opinion is that Israel's PM Netanyahu will not sit idly by as Iran obtains a nuclear weapon. In Israel there is a saying-- "Never Again" and it refers to the Holocaust. A war is coming folks-- bet on it. Obama knows it's coming-- and is trying to delay it until after the election. He might well do it. Looks like the Mayans might've got the date of Armageddon right after all.

  There's more to this story. In the emerging nations of Asia, oil comsumption is growing by leaps and bounds, especially in China and India. In an article recently posted by Ambrose Pritchard, he relates that China will have an additional 125 million cars on the road within 5 years. India will put another 35 million. Then we come to the other rising economies like Indonesia, Malaysia & Vietnam. It's not only cars either-- the average peasant in China and Vietnam are switching from bicycles to scooters. Water buffalo are giving way to gas powered tractors. The implications of this are mind boggling. If these numbers are even close to the truth, the globe is looking at a rise in crude consumption of nearly 20% by 2020. And the world's non oil sand production is going to begin declining next year. Rock. Hard Place. Here in the States, that Rock will be when gasoline goes above $4.50 for an extended period of time. That's when the US economy will blow another piston.

 Is it within the Wit of Man to avoid this ? Yes it is. But it'd take a global effort and coordination that simply does'nt exist today. For example we can all agree not to produce consumer goods like toys and plastic bags. If we get really ambitious, we can limit car engines to 800 cc on a global scale-- which would leave us with only having very small mini cars available, but would dramatically reduce oil consumption. Will any of these things really happen ? No. What is far, far more likely is a war for control of those resources. That and $5.00/gal gas when the shooting starts. 

Video: The Future of Energy & Community Solutions

This morning I came across a video of Nicole Foss {aka Stoneleigh of the Automaticearth blog} in regards to how Peak Oil and economic collapse will affect us and talks about some community based solutions. It's an hour long-- get a cup of strong java-- but it's a must see.

Community Currencies

    According to the US Constitution, only the Federal Government has the power to issue currency. States may "make silver and gold coin a tender in payment of debts" if they so choose, so long as they are from the US Mint. It also allows communities the ability to issue a form of currency. Until recently, only a few communities and no states have done so. This, however, looks to be changing.

  In March of 2011, Utah became the first state to accept US Mint silver and gold coins as payment of debts in their state. South Carolina has proposed a bill which would accept silver and gold coins minted anywhere such as the Kruggerand. Lawmakers from 13 states this year-- including my own state of Minnesota-- have explored or have actual bills in place to issue their own currency.

  On a local level, a dozen or so communities have issued some form of currency, including the Washington DC area, where the "Potomac" is accepted in exchange for goods and services. The largest and oldest of these locals is the CHE {Cascadia Hour Exchange} which is issued in the Portland,OR area. There are now over twenty communities in the US doing this.

  Why is all this happening ?: Ben Bernanke is hell bent on printing our way into either a recovery or hyperinflation. In a word, fear. Should serious inflation {or deflation} take place in the US, I look for these community currencies to become commonplace.