wrong side of peak

WRONG SIDE OF PEAK


I’m sure most of you are simply sick to death of my harping on Peak Oil. I don’t know why, since if you’ve stuck around for any length of time, long enough to be eligible to proudly wear the super secret Bison decoder ring available for $3.99 plus five box tops of whole wheat cereal, you must at least in general agree with the basic philosophy of super paranoia tempered with burning all consuming hate of ex wife #2. Oil IS the economy, and with a shrinking economy you have to say so long and thanks for all the fish to such things as a pension, property values, basic infrastructure deliveries like water and food, law enforcement protection and etcetera. We might not be able to forecast the timing of such failures but we sure as rabbits crap out little round pellets can predict they will happen in our pathetic lifetimes. I’m not digging on other survivalist writers for minimizing or ignoring Peak Oil. I understand that they must eat and pay the bills and the first casualty of pleasing your readers is the honest hard truth. I’m not saying they purposely do this. They might honestly think nothing of the problem. Or, their subconscious desire to eat directs them to minimize the issue. I do not have any malice towards this natural inclination. I don’t really hate women ( or Seniors on SS, or lawyers or politicians ) who act within their nature, even if it sounds like I hate them on general principles. And I don’t despise other writers for their soft sell of Peak Oil. They must eat from their writing while I hold a day job and write for a hobby. My writing income is just mad money, not eating money. Which is why most likely I’ll never stop working a regular job. I love to piss people off and the best way to do this seems to be to rub their furry little noses in reality.

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What prompts me to write today on Peak Oil is not lack of other subjects as has been the case previously and most likely will be the case time and again in the future. Rather, I hope against hope, knowing full well I’m tapping my heels together three times and expecting a magical event to transpire, that you will take heed to the latest and newest information and realize that where before I’ve mostly written about a future danger measured in years, right now we most likely only have months. We are already on the wrong side of Hubbert’s Peak ( the correct side is the left side, increasing production, and the wrong side is the right side, decreasing production ). I think we all realize this. But are you willing to consciously accept this fact, PLUS what it really means? Before the 1970’s oil troubles, we had a historical average INCREASE of oil supply of 7%. This was what the US economy was based on. After the 70’s that average INCREASE dropped to 2%. Our oil rate of increase dropped 2/3’s. We were still increasing production annually but just that decrease in the rate of increase accounted for all our economic woes ( real rate of decline in wages, two income families replacing a sole breadwinner, huge increases in inflation, our factories moving overseas to be replaced by paper shuffling ). Now however we are faced with annual DECREASES.

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Can I underline this again, in case you were snoozing at your monitor, your chocolate Ho-Ho melting down your wrist? We experienced an economic contraction in some ways worse than the 1930’s forty years ago when our oil supply saw less growth. In the last few years, roughly 2007-2010, we saw an actual decrease in oil supplies while the world had a zero growth in production. In essence, Hubbert’s Peak plateau, the rate of production holding steady. Think of the last few years and all the economic issues. Doubling of unemployment. Doubling of our national debt. Social Security for the first time is in deficit ( previously the SS surplus had kept our borrowing lowered ). The government has to buy its own debt as no more foreign governments wish to. We are just lucky they don’t dump what they already have. Local and county and even state governments are increasing their race towards bankruptcy. I could go on and on, but just think of the last few years, the new and novel financial woes, and you get my point. Now, while the US has been seeing a decline in oil imports, the rest of the world was pretty much on hold. The Chinese continued their extreme growth, but seeing all the new and empty cities in worthless locations one imagines they are only one step behind us in the collapse. We PLAY at government stimulus compared to those boys.

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This was all prior to 2011. In 2011, in just three months, we see precious metals nearly double ( okay, just silver, gold is still fully manipulated ). Gasoline is nearly up a third. All foodstuffs have doubled in price. The middle east exploded overnight and shows no signs of stabilizing. We lost two percent of global oil production overnight from Libya. Even a fleet of US warships and drone attacks aren’t bringing production back, which is a death blow to Europe which puts a huge amount of pressure on the US economy. And Saudi Arabia saw a one month TEN PERCENT DECLINE!!!! Granted, we don’t know if this is a long term trend. I can’t see why not, since with oil at $110 the Saudi’s are making a killing financially. If they are dropping the dollar as payment, it makes sense. Otherwise, their production is dropping off a cliff. Remember, the Saudi super giant fields have already seen forty years of production. This is it for any oil field before decline. But wait! There’s more! If you order in the next ten minutes, you get a much faster decline in production. The Saudis have used advance drilling techniques, horizontal rather than vertical pumping. This allowed them to pump out 60% of the oil verses 50%, but what that means is that the remaining oil is not as accessible. More importantly, it means the second half of the oil doesn’t decline at two or three percent, but at much higher rates of depletion. In theory, the wells could be only marginal producers in as little as five years. Look at the rapid declines of the Mexican wells for comparison. They didn’t gently slope down, they fell off a cliff.

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There is no more oil in super sized quantities. The last giant fields were found forty years ago. Everything since has been baby fields. In the early 2000’s when oil prices increased, oil companies ramped up exploration. And lost their asses financially. There simply isn’t enough oil left to be found even to keep production steady. We are in decline. And this year alone, three months, production is falling like a rock. Granted, production in Libya was due to civil war. And the Saudi decline hasn’t been proven yet. And the US dollar being flushed down the toilet is an influence on prices probably more than supply decreases have been. But we are still on the wrong side of the curve. Before, any economic consequences were mere warm ups. The real fun began this year. I’ll wager that Japan won’t be able to replace its lost energy from nuclear meltdown with oil. Their economy is done. Along with any company that needs its parts production such as flash drives or auto parts ( drive a rice burner motorcycle? A Toyota? Its days are numbered ). I’ll wager that oil will see close to $200 before the year is out ( if the Saudi decline is permanent, that figure will be optimistic ). I’ll wager that before the year is done, grain prices will double again. Yes, this is all super paranoia. But I can be sure of one thing. The globe will NOT see a gentle 2% decline in oil for decades. We will see a fall off the cliff.

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You can’t just shrug off Peak Oil, assume a gentle decline, proclaim our economy is safe for awhile more. The economy went into the toilet with a decline in the annual increase. The actual amount of available oil rose, but since it didn’t rise to the old rate of increase, we contracted financially. Then, when oil availability actually fell, our economy went into a nosedive. Unrestricted printing of money ( or actually creation of credit ) put the straight down dive into a more gentle rate of descent, but we are still going down. And that was just with a global leveling of oil production. Now that global production is declining, our economy will get much worse. Much, much worse. Bank on it.

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My e-mail is jimd303@netzero.com
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