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Clusterfuck Nation Archives April 9, 2007 Spring Break Last week, I was in Illinois walking the majestic Beaux Arts-vintage main quad of the State U in Champaign-Urbana. The flowering trees were in full bloom, the grass was green and speckled with dandelions, and the leaves on the privet hedges were unfurling. Then I came home to upstate New York where everything is brown, gray, and dead-looking, and humps of snow still remain on the north side of every building. I called the heating oil man to get 100 gallons because our tank was close to running on fumes and the daily high temperature lingered in the 30s. This is the flip side of the abnormally warm early winter we had. The jet stream, for whatever reason, has pulled a flag of frigid air over the northeast US, the region which proportionately uses the most oil for home heating, as opposed to natural gas. The weather forecast says they see frigid days and nights as far ahead as they dare to look. Gasoline use typically shoots up around this time of year as spring breakers hit the road. Meanwhile, US Department of Energy's EIA reports that US refinery inputs are115,000-barrels-a-day short of their 15-million-barrel-a-day "threshold" (which I take to mean their required capacity to keep things humming), while imported gasoline supplies (we get some of that, too) also fell short. consequently, as gasoline demand began to grow in earnest in April, gasoline supply has failed to keep pace, resulting in continued significant stock declines and sharp upward pressure on gasoline prices in recent weeks." The EIA has to be more reality-based about current activity than their future projections, because the current import-export and refinery figures are out there for other people and other data-gathering organizations to see. They are based on the fantasy that everything will be okay despite what we see happening now. The EIA projects that all the world's oil producers will increase their oil production hugely by 2030. They see Mexico shooting way up, despite the announcement last year by Pemex that the Cantarell field (60 percent of Mexico's total production) is crashing at a minimum rate of 15 percent a year. They see Russia zooming way up, despite the fact that Russia is probably past the 70 percent mark of its original total reserves.
EIA chart, you'll see practically everybody's production shooting way up in the decades ahead, even the US, which, in reality, has seen nothing but steady annual decline for more than thirty years (we produce half now of what we did in 1970). The EIA is a perfect reflection of the public it serves. It appears to conduct daily business in a responsible way while it resolutely refuses to face the obvious realities of the future. My own town is a good example of non-reality-based planning. Our mayor announced last week that we are going to construct a 1500-space parking structure to go along with an expansion of our minor-league convention center, all based on money raised through bonds. The last thing this town will see in the years ahead is an increase in motor-oriented tourism. And the last thing that business organizations will spend their money on in a future of energy scarcity and diminished revenues will be trade shows. The price of gasoline seems to be the only signal that the American public receives on its collective walkie-talkie. It looks to me as though gasoline prices will head close to the $4-a-gallon range in some parts of the country this summer. When that happens, the US government, as represented by the DOE's reporting agency (EIA) will not have a coherent story for the public. I imagine as this occurs, the new Democratic-controlled congress will call for hearings to investigate US oil companies. They'll haul in the executives from Exxon-Mobil and the rest of the bunch and threaten them with a punishing windfall profits tax. I wonder if the oil company chieftains will tell the politicians the truth: that peak oil is for real and it's here. April 2, 2007 In the Zone The fiasco in real estate and mortgage lending seems finally to be breaking through the reality shield of the mainstream media. Last week, for example, NPR's nightly Marketplace show actually ran a segment saying that the production homebuilders were choking on unsold houses and that (as if NPR had just discovered this) the mortgage industry was rife with irregularities in lending standards! And that it may actually have repercussions throughout the financial sector and maybe even the economy in general! It's been a long slog for the dullards at NPR, and elsewhere in the mainstream media. Meanwhile, also last week, the General Accounting Office came out with a report last week that acknowledges some problems ahead on the world energy scene -- oil in particular -- with possible adverse implications for the US. The poor grinds in the GAO didn't want to stick their necks out too far on that one. Independent researchers studying the global oil situation -- including retired geologists for major oil companies -- have established a pretty firm consensus that we are already in the zone of the global oil production peak -- meaning that whether we are just past, passing now, or passing imminently, the effects are already thundering through the complex systems we depend on to maintain advanced industrial societies. For instance, the crashing of Mexico's Cantarell oil field (60 percent of Mexico's production) means that inside of five years the US will receive no more imports from what has been its third leading source. Being in the zone means that the world's oil exporters in the aggregate will see their exports drop seven to eight percent this year -- because nations like Saudi Arabia, Iran, Venezuela, and even Norway are using more of their own oil and have less to send out. Being in the zone means that new pricing arrangements will be made, taking the power away from the spot futures markets in New York and London, and shifting that power to long-term deals made by nationalized producers like Russia and Iran, who may decide to embargo consuming nations who don't dance to their tune. Being in the zone means that people in poorer nations will starve because so much of the corn grown in North America will go to ethanol distilleries instead of the dirt-floor kitchens in the Third World. The more interesting point in all this, for the moment, is that the media has still not put together the collapse of the housing bubble and the permanent oil crisis. The housing industry, so-called, will never recover because the oil crisis spells the end of the suburban build out. The big production homebuilders will go down and never come back. We won't be building anymore WalMarts and Target stores, and the thousands now running will die off just as the giant Baluchitherium of the Asian steppes crapped out in the early Miocene epoch. The end of the suburban build-out will be a stupendous trauma for the United States because, unfortunately, we have made it the basis of our economy for a generation, as well as our living arrangement. Not only will incomes and livelihoods be lost on the grand scale, and never come back, but, as the global oil predicament deepens, the existing fabric of our vast suburbs will become increasingly useless and worthless. The people stuck in them will lose whatever wealth they have accumulated and our arrangements for daily life will become increasingly nightmarish. This is the part of the story that the mainstream media still can't put together. Peak oil and the housing bust are a mutually-reinforcing clusterfuck. March 26, 2007 Zowie For all of you out there disposed to twang on me for riding a jet airplane all the way to Maui, please consider that United flight 35 would have flown from San Francisco to Maui with or without me on it. Here's the deal: I had to go to San Fran to give a talk at the Commonwealth Club. I stayed three extra days and nights -- since I'd come all that way. Now, to the business at hand, which is my impressions of Maui. Beautiful as much of it may be, it is hard not to view it through a tragic lens. Most of the damage on Maui has been inflicted over the past ...
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