In 2009, more cars were sold in China than in the United States, something most analysts did not expect to see before 2018 or 2020, said Mr. Yergin. If China continues at its current pace, he said, it will be consuming more oil than the United States by the end of the decade.
The United States consumes about 19 million barrels-per-day now. China consumes about 8. The difference is 11. Thanks to the slowdown in energy consumption, OPEC producers now hold an estimated (highly unlikely given decline rates and overstated reserves) six million barrels a day of spare capacity, equal to roughly 7 percent of current demand, much of it in Saudi Arabia alone.
Here’s the deal. Once we run through the current spare capacity, the oil supply then and for the rest of your life is essentially a Zero Sum Game. If China uses more, someone else must use less.

zero-sum describes a situation in which a participant’s gain or loss is exactly balanced by the losses or gains of the other participant(s). If the total gains of the participants are added up, and the total losses are subtracted, they will sum to zero.

Saudi Arabia is gradually reducing crude oil exports to the US as it is pushing deeper into China and other fast-growing Asian markets. Exports to the US fell to 837,000 b/d in November, the lowest level in 21 years.

Bank of America and Barclays Capital, two leading oil traders, have told clients to brace for crude above $100 (£64) a barrel by next year, before it pushes relentlessly higher over the decade.

If they are right, (and based on simple mathematics they are) we can kiss goodbye to any recovery until things get really bad again, at which point the price will most likely drop again, and the talking heads will start talking about green shoots again, and the price will rise again.

Rinse and repeat.

Really who knows what will happen, but some or all of this future is hard to rule out as a likely possibility.

This is one part of an 8 part video which everyone should see. If you want to really understand it, your best bet is to start at the beginning here. You might find it boring to start with, but the information is invaluable. I watched it a few years back and just rediscovered it last night and the 2nd watch was even more rewarding.
Hat tip TAEC.

Meanwhile, following up on the post a few down:

WSJ Reports, “The Next Crisis: Prepare for Peak Oil”
The Wall Street Journal today has an article about the work of Britain’s Industry Taskforce on Peak Oil and Energy Security that goes well beyond summarizing what the task force said in its report. The article starts out:

The Next Crisis: Prepare for Peak Oil

As Europe’s leaders gather in Brussels today, they have only one crisis in mind: the debts that threaten the stability of the European Union. They are unlikely to be in any mood to listen to warnings about a different crisis that is looming and that could cause massive disruption.

A shortage of oil could be a real problem for the world within a fairly short period of time.

From the oil drum…

The report, titled “The Oil Crunch – a wake-up call for the UK economy”, finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years. (Note: It already has, but it is good to hear important companies finally acknowledging it)

Having assessed the systemic changes caused by the global economic recession, coupled with the projected growth from non-OECD countries, ITPOES predicts Peak Oil will occur within the next decade, potentially by 2015 at less than 95 million barrels per day. (In 2008, production levels were 85 million barrels per day.) The study finds that the recession has delayed the oil crunch by two years. This provides invaluable time to plan for a future which will see structural increases in oil prices coupled with shortages and increased market volatility.

Q: What is different in this analysis of peak oil – I’ve read hundreds?
A: This is the first time leading businesses have warned that a peak in cheap, easily available oil production is likely to hit by 2013, posing a grave risk to the UK and world economy. The warning comes from a broad spectrum of industry (Arup, Foster + Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group, Virgin Group).

Download the full report here.

I got into a back and forth with a friend of mine who was saying we will likely find some more oil. Whilst it is quite possible, the likelihood of discovering any more (easily accessible and cost effective) super-giant oil fields is fairly remote after searching for so long.

Based on the graphic below from the oil megaprojects page, how many discoveries producing greater than 1 million barrels a day of oil have been found since the 70’s?

The answer is 0.

From time to time they would report some good news such as “billions of barrels found 25,000 ft under the Gulf” or “steaming out sticky oil will save us.” However, they never got around to asking what is involved in extracting oil from deepwater wells or just where all that tar melting steam was coming from. Anyone who questioned that oil production could keep on growing for the foreseeable future was castigated as lunatic fringe.

This make believe world finally came crashing down on Monday when the Wall Street Journal published a front page story admitting there was a big, big problem with oil production just ahead. Now the flagship of economic journalism does not come to such a decision lightly. To admit that you have been dead wrong in ignoring the most important economic issue the world is likely to face in the next century certainly strains your journalistic credibility”.

Continue reading…

While Oil imports are down 10.4% this year from 2008, imports during the most recent 4 week period are down 19.3% when compared to the same 4 week period from last year.

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

Now the “peak oil” theory is gaining support at the heart of the global energy establishment. “The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

“Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

But as far back as 2004 there have been people making similar warnings. Colin Campbell, a former executive with Total of France told a conference: “If the real [oil reserve] figures were to come out there would be panic on the stock markets … in the end that would suit no one.”

Read the full article here……
And this publishd in Paris earlier today. IEA World Energy Outlook Executive Summary

As conventional oil production in countries not belonging to the Organization of the Petroleum Exporting Countries (OPEC) peaks around 2010, most of the increase in output would need to come from OPEC countries, which hold the bulk of remaining recoverable conventional oil resources…

They also posted this on their site today:
With respect to recent discussion about oil decline rates, we are exceptionally making available the respective chapter of last year’s WEO 2008. FIELD-BY-FIELD ANALYSIS OF OIL PRODUCTION.
Is decline accelerating?

Small write up and some insightful comments over on theoildrum.

Been reading and learning from Michael Ruppert for years.

Check him out reaching the mainstream in this Wall Street Journal interview,

“Money is useless without energy and money has no respect for power or ideology. We have to reconnect with the requirements that we’re living on a planet that’s falling apart. And we have to maintain some relationship that’s separate from the illusory power of money. Clearly, the power in this country is not in Washington, it’s in New York, with the Fed and with Wall Street. . . . Until you change the way money works, you change nothing. The current economic paradigm calls for infinite growth, from fractional reserve banking to compact interest. So Wall Street needs to somehow help us find an economy that works without requiring more and more consumption” (“Sounding an Alarm on Oil,” Nov. 4).

Nice write up here on it…

I was thinking about the post I put up on growth, and the effects of Peak Oil and overpopulation on food production and distribution, and came across this:

How far does an average piece of food travel before it goes in your mouth?

Apparently between 1,500 and 2,500 miles (2,500 and 4,000 kilometers) from farm to table. A new study by the Worldwatch Institute details the lengthy journeys that much of the nation’s food supply now takes, finding a growing separation between the sources and destinations of American food.

The distance that food travels has grown by as much as 25 percent, according to the report by the Worldwatch Institute, an environmental and social policy research institute based in Washington DC. The nation’s reliance on a complex network of food shipments leaves the United States vulnerable to supply disruptions, the group argues.

“The farther we ship food, the more vulnerable our food system becomes,” said Worldwatch research associate Brian Halweil, author of “Home Grown: The Case for Local Food in a Global Market.”

“Many major cities in the U.S. have a limited supply of food on hand,” Halweil added. “That makes those cities highly vulnerable to anything that suddenly restricts transportation, such as oil shortages or acts of terrorism.”

This vulnerability is not limited to the United States. The tonnage of food shipped between countries has grown fourfold over the last four decades, while the world’s population has doubled. In the United Kingdom, for example, food travels 50 percent farther than it did two decades ago.

This reliance on long distance food damages rural economies, as farmers and small food businesses become the most marginal link in the sprawling food chain, says the Worldwatch report. Long distance travel also creates numerous opportunities along the way for food contamination, and requires the use of artificial additives and preservatives to keep food from spoiling.

Food transportation also contributes to global warming, because of the huge quantities of fuel used for transportation. A typical meal bought from a conventional supermarket chain – including some meat, grains, fruit and vegetables – consumes four to 17 times more petroleum for transport than the same meal using local ingredients.

“We are spending far more energy to get food to the table than the energy we get from eating the food. A head of lettuce grown in the Salinas Valley of California and shipped nearly 3,000 miles to Washington, D.C., requires about 36 times as much fossil fuel energy in transport as it provides in food energy when it arrives,” Halweil said.

While most economists believe that long distance food trade is efficient because communities and nations can buy their food from the lowest cost provider, studies from North America, Asia, and Africa show that farm communities reap little benefit from their crops, and often suffer as a result of freer trade in agricultural goods.

“The economic benefits of food trade are a myth,” said Halweil. “The big winners are agribusiness monopolies that ship, trade, and process food. Agricultural policies, including the new [Bush administration backed] farm bill, tend to favor factory farms, giant supermarkets, and long distance trade, and cheap, subsidized fossil fuels encourage long distance shipping. The big losers are the world’s poor.”

The media hologram shows countries in recession or achieving positive growth, depending on how the data has been massaged. Consumer confidence is often closely related to the particular position of any given state. As a result all governments claim their economies will return to positive growth in the “near” future. None would dare state that in fact the economies of the world have over extended themselves and the debt fueled growth of past decades will never been seen again, despite the likelihood of this as a stark reality of our future due to debt, Peak Oil and over population.

This September/October is setting up to be a very interesting period for the worlds economy.

Meanwhile, we should take faith from the fact that in the real world growth of some kind or other can always exist, even in the most improbable places…

Economic growth can either be positive or negative. Negative growth can also be referred to by saying that the economy is shrinking. Negative growth is associated with economic recession and economic depression.

Five major critical arguments raised against economic growth include:

1. Growth has negative effects on the quality of life such as crime, prisons, or pollution.
2. Many aspects of economic growth that affect the quality of life, such as the environment are not traded or accounted in the market.
3. Growth encourages the creation of artificial needs: Industry cause consumers to develop new tastes, and preferences for growth to occur. Consequently, “wants are created, and consumers have become the servants, instead of the masters, of the economy.”
4. Resources: The 2007 United Nations GEO-4 report warns that we are living far beyond our means. The human population is now larger and that the amount of resources it consumes takes up a lot of those resources available. Humanity’s environmental demand is purported to be 21.9 hectares per person while the Earth’s biological capacity is purported to be 15.7 ha/person.
5. Distribution of income: The gap between the poorest and richest countries in the world has been growing. Although mean and median wealth has increased globally, it adds to the inequality of wealth.

Some critics argue that a narrow view of economic growth, combined with globalization, is creating a scenario where we could see a systemic collapse of our planet’s natural resources^. Other critics draw on archaeology to cite examples of cultures they claim have disappeared because they grew beyond the ability of their ecosystems to support them. Concerns about possible negative effects of growth on the environment and society led some to advocate lower levels of growth, from which comes the ideas of uneconomic growth and de-growth, and Green parties which argue that economies are part of a global society and a global ecology and cannot outstrip their natural growth without damaging them.

Growth refers to an increase in some quantity over time. The quantity can be physical (e.g., growth in height, growth in an amount of money) or abstract (e.g., a system becoming more complex, an organism becoming more mature). It can also refer to the mode of growth, i.e. numeric models for describing how much a particular quantity grows over time.

Economic growth is an increase in activity in an economy. It is often measured as the rate of change of gross domestic product (GDP). Economic growth refers only to the quantity of goods and services produced; it says nothing about the way in which they are produced. Economic development, a related term, refers to change in the way goods and services are produced; positive economic development involves the introduction of more efficient or “productive” technologies or forms of social organisation.

I think it is very important to understand social inertia for the awesome force that it is. I have found that many people are almost genetically predisposed to not want to understand what I have been saying, and many others understand it on some level but refuse to act on it.

Back to what is actually happening right now. There seems to be a wide range of opinion on how to characterise it, from recession to depression to collapse. The press has recently been filled with stories about “green shoots” and the economists are discussing the exact timing of economic recovery. Mainstream opinion ranges from “later this year” to “sometime next year.” None of them dares to say that global economic growth might be finished for good, or that it will be over in “the not-too-distant future” — a vague term they seem to like a whole lot.

There does seem to be a consensus forming that last year’s financial crash was precipitated by the spike in oil prices last summer, when oil briefly touched $147/bbl. Why this should have happened seems rather obvious. Since most things in a fully developed, industrialised economy run on oil, it is not an optional purchase: for a given level of economic activity, a certain level of oil consumption is required, and so one simply pays the price for as long as access to credit is maintained, and after that suddenly it’s game over.

We continue to listen to economists because we love their lies. Yes, of course, the economy will recover later this year, maybe the next. Yes, as soon as the economy recovers, all these toxic assets will be valuable again. Yes, this is just a financial problem; we just need to shore up the financial system by injecting taxpayer funds. These are all lies, but they make us feel all right. They are lying, and we are buying every word of it.

Another brilliant talk from Dmitri Orlov that everyone needs to read..

But Fridley is hardly a homegrown hippie who spends his leisure time gardening. He spent 12 years consulting for the oil industry in Asia. He is now a staff scientist at Lawrence Berkeley National Laboratory and a fellow of the Post Carbon Institute in Sebastopol, where members discuss the problems inherent to fossil-fuel dependency.

Fridley has his doubts about renewable energies, and he has grave doubts about the future of crude oil. In fact, he believes to a certainty that society is literally running out of gas and that, perhaps within years, the trucks will stop rolling into Safeway and the only reliable food available will be that grown in our backyards.

Fridley, like a few other thinkers, activists and pessimists, could talk all night about “peak oil.” This catch phrase describes a scenario, perhaps already unfurling, in which the easy days of oil-based society are over, a scenario in which global oil production has peaked and in which every barrel of crude oil drawn from the earth from that point forth is more difficult to extract than the barrel before it. According to peak oil theory, the time is approaching when the effort and cost of extraction will no longer be worth the oil itself, leaving us without the fuel to power our transportation, factories, farms, society and the very essence of our oil-dependent lives. Fridley believes the change will be very unpleasant for many people.

“If you are a typical American and have expectations of increasing income, cheap food, nondiscretionary spending, leisure time and vacations in Hawaii, then the change we expect soon could be what you would consider ‘doom,’” he says soberly, “because your life is going to fall apart.”

Read the full article here…

Fridley says too many Americans believe in solutions to all problems, but peak oil is a terrible anomaly among crises, he explains, because there is no solution. Fridley doesn’t even see any hope in solar, wind, water and other renewable energy sources. Even nuclear power creates only electricity, while crude oil is the basis for thousands of synthetic products.

“There is nothing that can replace oil and allow us to maintain life at the pace we’ve been living,” he says. “Crude oil is hundreds of millions of years of stored sunlight, and we’re using it all up in a few generations. It’s like living off of a savings account, whereas solar energy is like working and living off your daily wages.”

The sheer cost-efficiency of oil eclipses all supposed alternatives. Removed from the ground and burned, oil makes things move almost miraculously. A tank of gasoline in a sedan holds enough energy to equal approximately five years of one person’s rigorous manual labor.

Henry’s comments on the Le Mans post below got me thinking. It’s not a new problem, dealing with the difference between what we would like to happen and what will happen. Between reality and fantasy. Between our everyday lives and our dreams. Finding balance.

As anyone who has been following this site for a while now knows, I think we are heading for a long, long period of irreversible decline, due largely to Peak oil and it’s multitude of effects.

We are in the dawn of the second half of the oil age when production and everything that depends on it declines. We have used up half of 2 billions years worth of accumulated energy reserves in only 150 years, which has allowed the rapid expansion of almost everything, fueled by cheap energy flowing from the ground.

There will be times when it looks like things are getting better, but as the worlds resources fail to keep up with the needs of people and the demands of economies designed only to grow, we will head into a long term downtrend.

Eventually there will be complete paralysis in this fragile modern system we have built up, as the oil supply to run it declines below what is needed.  We are in the first stage of this now, as the oil supply failed to keep up with demand last summer and the oil price spiked, (also due to speculators like GS) breaking the back of the already over indebted consumers (man, I hate that word for people) of the world. Exponential growth is an Impossibility on a finite planet.

Now the dilemma is that I obviously don’t wish for this to happen, I love Motorsports and I love driving cars. I love almost everything about cars and Motorcycles, always have done, but after years of research I cant see anyway out of the predicament we are in save for some miracle invention.

So whilst I think the remaining oil would be better saved for essential services and use in medicine, fertiliser, petro agriculture and even plastics, than being burned and sent into the atmosphere, I cant help but retain my love of motocycles, cars and motorsports. Just because there is a difference between what will happen and what I would like to happen doesn’t mean the two have to be mutually exclusive. I accept both.

Whatever happens, whatever the speed of decline over the coming decades, the world will keep spinning on it’s axis. Until it doesn’t.

Change is inevitable.

http://www.withouthotair.com/

World oil production peaked in July 2008 at 74.82 million barrels/day (mbd) and now has fallen to about 71 mbd. It is expected that oil production will decline slowly to about December 2010 as OPEC production increases while non-OPEC production decreases. After 2010 the resulting annual production decline rate increases to 3.4% as OPEC production is unable to offset cumulative non-OPEC declines. The forecast from the IEA WEO 2008 is also shown for comparison.

The US Energy Information Administration (EIA) and the International Energy Agency (IEA) should make official statements about declining world oil production now to renew the focus on oil conservation and alternative renewable energy sources.

Full article here..

U.S. public health community begins discussing peak oil

• Awareness: Our federal officials to this day do not seem to comprehend that the world is at the end of the era of oil.
• Scope: Solid evidence demands that we stop our denial about the seriousness of the energy problems ahead: global peak oil represents an unprecedented risk management problem.
• Disruption Potential: Peak oil is likely to have significant impact on our most important existing systems, including transportation, building operations, and industrial agriculture.
• Regional Vulnerability: The United States is highly vulnerable because of our import-dependence and our spread-out infrastructure, with some regions more at risk than others, including cities with urban sprawl.
• Trend: However bad our economic problems are today, it is likely we will experience greater problems in the near future as oil supplies decline.
• Sector-specific Impacts: We are likely to experience peak oil first as a liquid fuels crisis and to feel its impact primarily in the transportation sector, where there is no ready liquid fuel substitute for oil.
• Limited Mitigation Options: There are no “silver bullets” that can substitute for oil (“Maybe there are a few rusty bb’s” Congressman Bartlett joked).
• Scarce-resource Allocation: We should begin to devote the remaining oil to ramping up a transfer to renewable energy infrastructures.
• Triage: Meanwhile prudence requires us to begin planning for shortages by developing protocols for rationing oil, by means other than price, to key sectors and priorities.

First, we need to acknowledge what Mike establishes in the first pages: “…oil price spikes in June and July of 2008 broke the backs of over-extended consumers who could no longer meet their (sub-prime) mortgage payments and that this-and this alone-triggered the great economic crash which began in September and October. Energy and money are inextricably connected in very profound ways….” Furthermore he notes, “The current economic implosion will and can only result in the greatest-and longest lasting-economic depression in human history-a new Dark Age.”

Sound farfetched? Even the wallstreet Journal has now acknowledged the link between the oil price and recessions.
If you like graphs, this article on the oil drum lays it out pretty clearly too.

We have been lied to about the stock market, AIG, Citigroup, hedge funds, mortgages, Ponzi-schemes, 401(k)s, the invasion of Iraq… even steroids in baseball. Why accept everything we have been told about energy? Our energy “information” comes from the same corporate entities that have misled us about everything else. A Presidential Energy Policy exposes the lies told about energy to protect a collapsing monetary system which now threatens all of industrial civilization. It also provides real, positive and immediate steps that can be taken at the individual, local, federal and global levels that can avert a potential extinction event for our species.

A Presidential Energy Policy says what an American president cannot, that energy and money (the economy) are Siamese twins. Energy is depleting faster than it can be replaced and there is no combination of alternative energies that can or will ever sustain an edifice of human civilization built by oil. If energy gets sick, money must be treated simultaneously and vice versa often in ways that threaten the other. Separating the twins in a way that saves and preserves life cannot take place without killing one or both under the present monetary regime. Of the two, energy is more important to human life. Energy can do work. Energy grows food and pumps water. Energy moves goods and services. Energy sustains life. Money is useless without energy.

A world-recognized expert who saw today’s crisis coming and started warning in amazingly precise detail in 2000 now gives us the biggest exposé of all time. Refined in chilling detail in “Prezpol”, the “map” Ruppert has been making for thirty years has already saved thousands of families from the current economic meltdown.

Review of A Presidential Energy Policy by Mike Ruppert

Reading this extremely interesting and inspirational book at the moment.