Oil, how I love thee...

Hi. My name is Derick. I'm addicted to oil.

Crude oil is a wonderful substance, like no other. It provides fuels, like gasoline, that contain huge amounts of energy in a fairly safe, transportable form which allows us to do tremendous amounts of work at a very low cost. Gas at $4 per gallon is still a fantastic bargain.

Consider what it was like before we learned to harness crude oil's power with the internal combustion engine. The best means of transportation were horses, boats and eventually bicycles and trains.

Today, you can own a car with the power of a huge team of horses which can go faster than any horse could dream of going, can keep going hour after hour with only brief stops for “feeding” and at a very low cost per mile covered and you can cross the country from coast to coast in three days. You can go anywhere you want, whenever you want.

Once we figured out how to harness crude oil, air travel became possible and most boats and trains went over to crude oil simply because it was far more efficient than the next best alternative.

And the next best alternative is the real issue. What is the next best alternative? We don't have a good answer to this question yet, and this is the crux of our problem. We are used to a cheap form of easily accessible energy. The alternatives suffer from significant disadvantages such as higher costs of production, inability to produce sufficient quantities, lower energy capacity by volume and weight, greater pollution, insufficiently developed technologies, etc.

For example, nuclear energy is more dangerous. There is the direct risk of an incident like Chernobyle (or Mayak, or Windscale, or Three Mile Island), but even setting aside accidents, there is all the nuclear waste -- we still have not figured out how to deal with nuclear waste in a reasonable and sustainable way. Dropping it into the depths of the ocean or burying it on Indian reservations is neither reasonable nor sustainable.

I'm not saying that we should not develop alternative sources of energy. To the contrary, developing alternatives should be our highest priority. But we need to understand why crude oil is such a great addiction.

Crude oil is like crack. It is the quickest way to get you where you want to go with the least investment. And once you are hooked on the quick high of crack, it's hard to go back.

My name is Derick. I'm addicted to Crude Oil. But I'm worried that going to meetings isn't going to be enough. I need an alternative place to fix my need. Please help.

And for those who asked, I prefer my crude bitter, not sweet....

-Derick for Crudeawakening.org

Goodbye Airlines

I've been thinking about this for a while, and I've been talking to my friends about it. Most of them think in terms of straight supply/demand equation: if the demand for air travel keeps rising, then so will supply, thereby determining price. That is assuming of course a fixed cost for jet fuel. Which is simply not the case. Jet fuel has risen quite dramatically in price.

Indeed the demise of the airline industry has been written about quite a bit, so I don't feel the need to address it too much in depth, other than to briefly point out some of the smaller airlines have been failing, and the larger ones have been trying to merge to cut costs.

Of course if jet fuel is rising, then there is nothing that can be done...despite mergers, cost cutting measures, layoffs and the like at some point someone has to fly the damn plane, and jet fuel has to be burned to propel the thing through space. Maybe passengers should be charged by weight (bad joke)

But the truth of the matter is that airlines won't be around forever in their current form because most people won't be able to afford to fly. Thats just the reality, hard as it may be for people to accept.

Of course at this point, a certain amount of denial is to be expected, but I hope no one is surprised when the government attempts to bail out, then takeover the ailing airlines industry...and I would assume after a few years of failing to make any money, will give up the enterprise all together.

From CNNmoney.com:

"High fuel prices have caused airfares to skyrocket. And the economy has caused some Americans to postpone or downsize their travel plans. Fewer tourists are coming to Hawaii, and some think the problems are only beginning.

ATA and Aloha Airlines have already gone bust. And starting next week, two Japanese airlines will increase fuel surcharges on flights to Hawaii by 43%. American Airlines just announced plans to eliminate its Chicago-Honolulu route at the end of the year."

the article is here

The Future of Design (ers)

I was combing through the Energy Bulletin's newly redesigned Drupal site and I came across a link to a really interesting New York Times blog about fashion and design post peak-oil (the new york times mentioned peak oil! Imagine that!)

Anyways the blog is Called the moment, and its not specifically about design post-peak but this blog entry was done by a European correspondent.

The post itself is kind of short and talks about 3 designs from the past that seem interesting or useful...but the concept caught my attention, its always amazing how many facets there are to the peaking of energy supplies, but also to the myriad ways that humanity has responded to low-energy conditions in the past and what hints and clues that will give us to any future response.

If perhaps art and design seem to have lost their primacy due to the multitudes of diversions in the modern world, I expect the hand-made to take a much larger role in our lives even in the next 3-5 years. Already the DIY (Do-it Yourself) culture is in the middle of a bloom and gasoline is only 4 dollars a gallon.

Imagine the beautiful things 10-dollar-a-gallon gasoline will necessitate. But not just beautiful, because at the moment I feel we are surrounded by so much visual clutter that beauty has a difficult time breaking through. Of course much of that has to do with the spaces that we cultivate in our own lives, giving ourselves time and space to appreciate whats truly amazing...

The peak oil movement needs to continue to incorporate artists, designers, writers...these people will realize a primacy in our culture that has been missing for at 50 years.

MSNBC: fuel costs shape Suburbs

In the past two days I've read an article each on CNN.com and MSNBC.com about how gas prices are affecting the 'American Dream' aka the alleged desire that every American has to live in a far-flung suburb and spend the better part of two hours ferrying from home to job to social outings.

Its never been my dream, and even people I talk to who live in the suburbs rarely express some fondness for spending so much time locked in automobiles. More often then not, it was about economics, plain and simple. The inexpensive houses were located far from the city center, and driving 20 miles one way to commute was not a big deal when gas was less than a dollar a gallon. Even now, such commutes are pinching consumer spending but have yet to force many people out of their homes.

Yet the economics are changing, and so are the behaviors of those looking to buy homes. From MSNBC.com:

Real estate agents, transportation officials and industry surveys indicate that home buyers are placing more importance on cutting their gas bills and commute times than they have since the oil shocks of the 1970s.

Full article here

Honestly I've been praying for the death of the suburbs for as long as I can remember. I realize a need still exists for affordable housing, and that much investment will be lost due to the devaluation of inexcusably far-flung suburbs, but honestly, isn't it about time that people start concentrating around downtowns and around rail stations. Unfortunately most of the homeowners who will be hurt by the suburban housing downturn were part of a system that was bigger than them: that was designed to grant risky loans in exchange for the illusion of infinite growth and ever-growing housing values.

It will certainly be interesting as it dawns on Americans that endless freeways, sprawling suburbs and 2 hour commutes are a piss poor investment at best, and at worst a ruinous mal-appropriation of resources. James Howard Kunstler calls the American suburbs "the biggest misallocation of resources in human history".

Statesman: Mexican Oil...

Just finished reading an article in the Austin American Statesman on the state of the Mexican oil industry. The article examined the state of Petroleos Mexicanos (Pemex), the nationalized Mexican oil company in relation to American companies that are drilling in the Gulf of Mexico. Apparently Pemex doesn't have the money or the know-how to develop deep sea oil fields and American companies do. There is a potential dispute in the works since it appears that Shell oil is developing oil fields that may or may not cross the international border, something the Statesman dubbed the "drinking straw effect" whereby oil platforms tap into a well that spans two countries or regions.

The subtext of course is that Mexico's oil production is collapsing, down 9 percent to 2.87 million barrels a day in the first 4 months of 2008, according to an article in the International Herald Tribune. And so Mexico is searching for ways to improve its oil output. The platform in discussion in the article would only be good for 100,000 barrels of oil per day, less than 1/10th of 1 percent of world demand, and about 4/10ths of 1 percent of current US demand.

Of course the article ends thusly: " 'The easy oil is gone' said Russ Ford, Shell's technical vice president for the Americas." Unfortunately the phrase 'peak oil' wasn't mentioned at all in the article, but the undercurrent of the article is clear: oil is becoming more scarce, and so more developed industries are looking to whatever fields they can, especially to those in countries where the oil industry has been nationalized -- such countries being typically less technologically savvy and geared more towards providing inexpensive oil for its citizens.

Allowing foreign companies to develop Mexico's oil fields would be a change of course for Mexico, who has traditionally protected its oil reserves from outside according to the article in the Statesman.

Look for such trends to continue in the coming years, with the requisite concern in the host country about allowing foreign intervention. Wars have started this way, but the article pointed to interest in changing Mexican law to allow foreign companies to develop Mexican-owned oil fields.

--Jon

Subprime

Hopefully, everyone who’s reading this has heard of “sub-prime”...whether it be followed with “crisis”, “loans”, or whatever. it’s long been used to describe a loan to someone who has less-than-stellar credit. for the rest of us, it means a loan that looks more like a blackjack bet than an extension of credit.

a good friend who knows i was a financial planner a while back put to me an excellent question: if a client were to come to you and lay out their finances and those finances showed the client to be $100,000 in credit card debt, $250,000 in mortgage debt, $0 in savings, a monthly budget that exceeded the client’s monthly after-tax income of $4,000, two car notes that take up $1,200 per month, the client’s kids are scheduled to go to college (and have the client foot the bill) within a few years, the client’s parents were counting on the client to help support them in their old age, and the client had no retirement savings...what would you say to that client?

when he put it that way it was easy to answer. i’d actually spoken with several would-be clients who were in similar circumstances. as a financial planner, you can’t advise a person to declare bankruptcy. you can sure-as-heck tell them to seek the counsel of a good bankruptcy lawyer, though. these would be classic “sub-prime” clients.

what’s the u.s.’ credit score?

if the u.s. were to come to me seeking financial planning advice -- back when i was a planner -- i would have told it the same thing: go seek a good bankruptcy attorney. why? well, we have credit debt that can’t be paid back in one lifetime. we have social obligations through medicare and social security that compound the inability to re-pay any debt. we continue to spend billions of dollars per day in interest yet take out more loans from other countries to fund our overspending. our ability to take care of our kids through smart fiscal management and resource allocation is absolutely nil. the u.s.’ gasoline bill is devouring any personal, state, or federal incomes we eagerly hope we can maintain. and our plans for getting out of this mile-deep hole we’ve dug ourselves into involve griping about our situation without looking at what brought us here in the first place.

who’s the scapegoat?

in the sub-prime crisis -- quickly turning into the prime crisis, as well -- there are all sorts of culprits. greedy banks took advantage of duped customers. greedy credit card companies took advantage of unknowledgeable over-consumers. greedy mortgage-holders took advantage of easy credit. greedy things got greedy.

in the oil market, the list of culprits is getting longer by the day. greedy speculators are trying to turn illicit profits. greedy oil companies are making too much off of our poor, hapless citizenry. greedy convenience stores are trying to get more money out of our pockets. greedy OPEC members won’t turn on the spigots for us greedy drivers. greedy SUV owners are getting what’s coming to them. greedy things got greedy.

in the food markets, the list of culprits is about tapped out. greedy speculators, again. greedy hoarders keeping in warehouses what’s rightfully the “people’s” grain. greedy ethanol producers using all of the corn for fuel rather than food. greedy americans eat too much, get fat, and the rest of the world is paying for it.

this is classic avoidance. no one wants to look at what’s behind all of this -- the behaviors that brought us here in the first place. it’s so much easier to blame one person or organization than to look into the mirror and fess up that the person looking back is the culprit. we, ourselves, are to blame for this. we’ve elected ineptitude (if we voted), counted on it to run things so that we wouldn’t need to learn how to manage our civic responsibilities, and we’re getting what we deserve. as the saying goes, “people get the government they deserve”. i’m not pointing fingers at you. i’m pointing fingers at me AND you. i’m just as much to blame as anyone reading this.

where’s a good lawyer when you need one

here’s the kicker, folks: there is no way to get out of this mess except to admit our ridiculous nature, take our lumps, and climb out of the hole. we have to start saying to future social security beneficiaries, “sorry, if i help you with your bills i will never, ever see the light of day.” we have to own up to our kids that we’re horrible at managing money, that we can’t help them pay for college, but we’ll try our best from now on to make sure we’re not leaving them a burden to carry. we have to get our expenses down enough to where we’re saving money...not spending credit. we need to take a hit on our house and move into something we can afford. we need to cut up our credit cards. we need to go into the credit hibernation-period, pay back to the extent we took out on future expectations, and begin the long, hard road to a better country.

there’s no “lawyer” in this, folks.

or, we can lament our bad luck, find more scapegoats, and prolong the agony until our house is foreclosed on, our cars repossessed, our parents are left to the salvation army, our kids fall into the same hole, our jobs are lost, we’re fighting with our fellow citizens over food and water, and on and on.

we have to stop looking to others for some negotiated solution. we have to begin negotiating with ourselves.

-Bob Hall for Crudeawakening.org