This is the truth, nothing but the truth, and the whole truth, with a waterboard as my witness!

Sunday, February 17, 2008

End of "Easy Oil" and Implications Thereof

“Easy oil” will not keep up with demand. While we do not subscribe to the peak oil theory, the truth is that, particularly outside the Middle East, the readily accessible sources of conventional oil are being depleted. Was the conclusion of A National Dialogue on Energy Security: The Shell Final Report released Feb. 14th 2008. The above assertion within the report was cited from the International Energy Agency, “World Energy Outlook 2004,” cited in “Facing the Hard Truths about Energy.” Summarized here in Feb. 2007 the GAO report that was requested by Congress.

This was the same GAO who was also in the news this week when David M. Walker resigned as Comptroller of the United States. That is the same David M. Walker who gave the 6o minutes interview and has been a truth teller of sorts as to the condition of the United States economic condition.

Elizabeth Williamson Washington Post Staff Writer Saturday, February 16, 2008 calls Walker an "outspoken gadfly" and informs the reader:

Walker's resignation takes effect March 12. He will lead the Peter G. Peterson Foundation, a new think tank whose mission, according to its Web site is "to enhance public understanding of the nature and urgency of selected key sustainability challenges that threaten America's future," including "unsustainable" growth in entitlement spending, and energy consumption.

The Walker-era GAO filed, but then declined to appeal, legal action to force Vice President Cheney to provide notes and information about meetings he held with energy companies while developing U.S. energy policy. A related suit wound up before the Supreme Court, which upheld the vice president's refusal to make the information public.

And then we have the Blackstone Group LP co-founder Peter G. Peterson on Friday said he wants to address environmental, economic and social problems through a foundation funded with $1 billion of his money. The Peter G. Peterson Foundation will fund initiatives to address myriad problems, such as budget deficits, Federal entitlement programs and consumer education about savings. Before a career on Wall Street, Peterson was Secretary of Commerce for President Nixon in 1972.

Now let me tie this together:

John Hofmeister
and Jeroen van der Veer both Executive officers of Shell and all the brighter people in the room can make the connection between the “easy oil” and the conditions in the economy. And as you can see by the speech by Jeroen van der Veer there are two scenarios that are being played out at roughly the same time. I guess one could summarize the scenarios as the scramble scenario and the blueprint scenario but what strikes me from following this closely is the reluctance to admit that the end of easy oil is peak oil! You really need to follow these reports and listen to the C-span interview.

Let me say that again to be emphatic, the end of easy oil is peak oil! In the C-Span interview John Hofmeister makes the statement, “I don’t believe that we are in peak oil, there is still allot of known oil out there, it is just costing more to extract it and the demand is growing” John went further on C-span to say: That whatever you do lets not consider the scramble: I paraphrase that, but he states that the private sector is more efficient in producing energy and characterizes the nationalized energy programs as ‘job creation programs’ he insists that Oil companies are agnostic politically, that Oil is a ubiquitous commodity, and that the best thing is for people to allow Shell to drill offshore of the continental US as to put more reserves on the market for global consumption.

But said succinctly, there is no ‘peak oil’ or need for a scramble, the circumstances are clear according to Shell Oil, you will pay increasingly higher prices for energy as far as any reasonable forecast can be made by shell, and in fact according to Shell that is precisely what the reports state!

Now if wealth in practical terms equates with having an adequate amount of food, heat, medical care, and transportation then what the Oil executives are telling the consumer and the Americans in particular has genuine impact. I would say that the ability to grow any economy based on the end of “easy oil” is a challenged proposition. In particular I would say that the end of easy credit was the end of easy oil, if the static cost of borrowing the wealth created from easy oil was equal to the cost of repayment, and that as we know is not the case.

In effect we have different approaches to the same challenge, and the idea that secret meetings with Oil executives is the answer in and of itself, that the idea that in the age of no easy oil, we can spend our way out of recession, that we can have a war on terror and an effort to secure national security objectives internationally while cutting taxes, spending to spur growth, and passing this cost on to a generations where that repayment must be performed in the absence of easy oil is frankly laughable. And even the Oil companies don’t buy the proposition and have started publicly managing these issues themselves in the absence of a coherent game plan on the part of the US government in particular.

The point in taking the time to organize and present this information is to start asking the tough questions, does the end of easy oil equal the end of easy credit? Should we give student loans for degrees in engineering at a lower interest if they have a concentration in energy and pollution than say, a MBA in consumer marketing under a rational that the education in energy and pollution will create more real wealth in the age of peak oil than say supply side economics? Should there be more education focused on renewable technology? And what role in capitalization should there be for existing energy companies in wind and solar energy creation? I guess the tough question would be if you derived 50% of total profits from say country A, should not country A receive 50% of a mandatory investment in clean technology? I would propose that Shell invest allot more in wind turbines than they have to date in the US and stop pretending that they are as agnostic in politics as they state, and remember that it would be US and UK troops that would enforce any freeze of assets if they were nationalized!

In a article "Lord of the Gadflies"

Those days are gone, and the truly contrary members of each party in Congress can be counted on two hands. The efforts to beat Paul, Kucinich, and Gilchrest are, effectively, efforts to make the parties completely monochromatic. Since the start of this Congress, only eight members have voted with their party less than 80 percent of the time, and two of them are Paul and Gilchrest. Republicans in Washington publicly say good things about Paul, but activists believe that their party should stand foursquare behind the War on Terror, behind the current GOP leadership in the House in Senate, and against the Democrats. There is no room for people like Gilchrest, who bucks the party on spending and environmental issues. On the other side of the aisle, there is no patience among Democrats for Kucinich, who holds his head up and votes down war bills he finds too milquetoast. Being "Dr. No" is no longer being conservative. Now, it's hurting the team.

I would argue that those who are being labeled gadfly are an inconvenient truth. I will ask you as the reader to ask yourself, can the status quo really cling to the rhetoric of pre easy oil and provide solutions?

I doubt that lumping all of the gadflies into one group seems like a rational thing to do considering how the narrative of politics is conducted in the Main Stream Media, but the positions of debt, foreign policy, war, and environment all have direct consequential impacts on energy policy. And when you stop and consider the lack of an energy policy, why there isn't more gadflies?

Well the truth of the matter is that it is an inconvenient truth that these gadflies hold up to the increasingly smaller group of beneficiaries of the status quo. Even well paid mercenaries are feeling the pinch at the pump; the Praetorian Guard feeling the pinch at the super market, and irrespective of what the Fed Chairman states, the end of easy oil is over. I would imagine that every dollar spent avoiding pollution in the Chesapeake Bay would provide a ROI down the road when in real dollars, after the end of easy oil, that cost is prohibitive. I would imagine that the debt concerns of Ron Paul and David Walker are both valid concerns, but coming to commonality as to how to address these concerns are lacking in our political discourse. The fact of the matter is this, that in order to address the issues of peak oil, currently in the clear message by the establishment or Oil companies themselves, that they do not endorse the term, that side bar efforts are made on policy and media to address the challenge. The saddest commentary is that there aren't more Gadflies, that there is not more discussion, and not more blueprints instead of scramble.

I guess I can close by saying I promote blueprints more than the CEO's at Shell are willing to do so, similar to the Saudi princes, there seems to be a practiced plan to employ both nationalistic and populist appeals, when either is more expedient to avoiding any real discussion of reality. The fact of the matter is this, is that the scramble is on, and that proof is in the lack of any real discussion on the topic. The scramble is on, as evident in the energy task force being in secret in the VP's office and the public not invited. The scramble is on as the men of good will are marginalized across the political spectrum as "gadflies" for looking out upon the event horizon and saying, the age of easy oil is over and peak oil is upon us.

Count me as a gadfly as I remind you:

Then you will see the rise of the men of the double standard--the men who live by force, yet count on those who live by trade to create the value of their looted money--the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law--men who use force to seize the wealth of disarmed victims--then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

My point is this, that the end of easy oil and the lack of any substantial discussion concerning it is setting the stage for the poor eating the rich, nowhere to run, a global South Africa pre apartheid with nowhere to run!

The irony in all of this was the inconvenient truths, the gadflies, and the certain results of a globe with no easy oil, no easy water, and no easy solutions. And despite the tipping point of the obvious, no changes in the status quo or political leadership to address the challenges in our economy and society. I would imagine that Walker and Gilchrest are more capable of evoking change outside the group that rejected them to meet the actual challenges. And I think that there are two political propositions before us, one is to meet this challenge by conservation and a New Deal Apollo project for US with wind and solar, and the other is to go the route of POL POT and a return to Fuedalism.

I know where the Gadflies stand, how about you? Where do you stand in a world of no easy oil? I know where the Energy Companies stand, they all have public statements on the topic, but where does the Republicans and Democrats stand?? I think unfortunately they stand in the past with tired sound bites and discredited ideas. I think the empirical facts, the truths that they're confronted with, leaves them by definition incapable of meeting the challenges and that as a result of this that only ruin and slaughter is assured.

Unsustainable and gluttonous energy consumption - and its first cousin, global warming. With less than five percent of the world’s population, America accounts for 25 percent of the world’s consumption of oil. This gluttonous consumption leaves America dangerously dependent on unfriendly and unstable foreign sources of oil and, in some cases, fuels terrorist activities. Most energy experts agree that, of course, over the longer term, building alternative energy sources is important, but if the energy challenge is to be resolved over the near-to-mid term, it must be resolved, basically, on the demand side through conservation and not the supply side.

The undeniable, transcendent threat to our collective future: The potential for nuclear and biological warfare materials falling into the hands of terrorists.

Unsustainable competitive gaps in our educational system. America’s economic leadership in an increasing competitive global economy is not sustainable when half of the young in our urban areas and 30 percent of all young Americans do not graduate from high school. Nor is it sustainable in an increasingly technological world where the capacity to do basic research and to invent the next big technologies is crucial and where Asian countries are now producing more master degree and PhD technology graduates than the United States. Furthermore, America's education system is not doing an adequate job in the areas of financial literacy and civics.

Unsustainable entitlement benefits. As 78 million baby boomers retire, America’s unfunded entitlement promises (i.e., Medicare and Social Security) exceed three times the annual GDP of the country.

Unsustainable current account deficits, primarily accounted for by unprecedented trade deficits. Now at twice previous record levels, these leave America dangerously dependent on foreign capital and require America to save much more both at the national and personal levels.

Unsustainable and ballooning healthcare costs. These costs are now more than twice as high per capita as the rest of the developed world with no appreciable differences in health outcomes or longevity. And, this healthcare system leaves 47 million Americans uninsured.

The greatest challenge to any thinker is stating the problem in a way that will allow a solution.
Bertrand Russell

We can’t solve problems by using the same kind of thinking we used when we created them.Albert Einstein

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