Could $20-Per-Gallon Gasoline Make Us Happier?

NPR

When it's time to fill up the gas tank, many fear the price of gas will return to the $4-a-gallon days of last summer. But according to author Chris Steiner, our lives would be a lot happier and healthier if gas prices rose into the double digits. Steiner explains himself, and the title of his book: $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better.

Amazon.com Review
Imagine an everyday world in which the price of gasoline (and oil) continues to go up, and up, and up. Think about the immediate impact that would have on our lives. Of course, everybody already knows how about gasoline has affected our driving habits. People can't wait to junk their gas-guzzling SUVs for a new Prius. But there are more, not-so-obvious changes on the horizon that Chris Steiner tracks brilliantly in this provocative work. Consider the following societal changes: people who own homes in far-off suburbs will soon realize that there's no longer any market for their houses (reason: nobody wants to live too far away because it's too expensive to commute to work). Telecommuting will begin to expand rapidly. Trains will become the mode of national transportation (as it used to be) as the price of flying becomes prohibitive. Families will begin to migrate southward as the price of heating northern homes in the winter is too pricey. Cheap everyday items that are comprised of plastic will go away because of the rising price to produce them (plastic is derived from oil). And this is just the beginning of a huge and overwhelming domino effect that our way of life will undergo in the years to come. Steiner, an engineer by training before turning to journalism, sees how this simple but constant rise in oil and gas prices will totally re-structure our lifestyle. But what may be surprising to readers is that all of these changes may not be negative--but actually will usher in some new and very promising aspects of our society. Steiner will probe how the liberation of technology and innovation, triggered by climbing gas prices, will change our lives. The book may start as an alarmist's exercise.... but don't be misled. The future will be exhilarating.

Amazon.com Review
Q&A with Christoper Steiner, the author of $20 per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better

Steiner, an engineer-turn-journalist, explains how the simple but constant rise in oil and gas prices will change our lifestyle, but not necessarily for the worse. Read this Q&A to find out more about this revolutionary theory.

Gas prices are going up again this summer, but are you really suggesting prices might rise to $20 a gallon?

That figure lies far ahead in the future; it's hardly an imminent thing. But most people don't require much convincing to know that $2 gas isn't sustainable for the long term. Oil is a finite resource that the whole world demands--a world that grows more gasoline consumers every day. It's important to understand that this book isn't about oil statistics, it's about our lives and the ways in which we live will change.

What do you hope readers will gain from reading your book?

Readers should gain an appreciation for the kind of change that lies behind the growing price of gas. Weaning ourselves from gasoline isn't a scary thing, it's an exciting thing. We're talking about cleaner environments, more walkable lives, better public transportation and more vibrant cities.

What are some of the surprising ways you think rising gas prices will change our everyday lives?

I don't think people realize how close our airline industry is to an all-out collapse. The book details a massive airline extinction at $8 per gallon, and in fact, serious change could take place even before then. It's certainly not something that should be celebrated, but the collapse of that industry will open the door to new ones, such as widespread high-speed trains in America, a phenomenon that won't take serious root until plane tickets become luxuries rather than conveniences. Beyond the airlines, I think people might be surprised to think that their future may not include Wal-Mart, and that their food world may condense, ruling out things such as sushi, but introducing things such as local organic fruit, vegetables and meat.

Is this pure speculation and fantasy or what kind of research did you do?

I consulted experts in a bevy of industries throughout the whole book, so this is not a random exercise, far from it. That said, it can be hard to forecast exactly at what gas price each change will happen. There are many unforeseen factors that can accelerate or forestall a certain change, such as government involvement in building high-speed train networks. If the government funds trains aggressively, change will be effected quicker, obviously. But I do feel that all of the changes represented in the book will happen eventually, whether they take place at gas prices of $10 per gallon or $12 per gallon.

So how scared should we be of the changes to come?

There is little to be scared of. The rising price of gas will unlock countless doors to innovation, opportunity and change.

Why does your book's subtitle say rising gas prices will change our lives "for the better"? How so?

We've grown used to engorging ourselves on the back of cheap oil and it has lead to all manners of problems. As the price of gas goes up, we'll live closer to work, school, eat healthier foods and even be skinnier and safer. The book profiles research that connects cheap oil to America's obesity rate and to the daunting numbers of people that die on our roadways. As the price of gas goes up to, say, $6, we'll save more than $30 billion on obesity-related diseases, 10,000 fewer people will die in car crashes and thousands of people will be spared heart attack deaths related to air pollution. Those kinds of effects will only be magnified as the price of gas rises further. And that's just a sampling of the benefits.

In what ways will rising gas prices improve our economy and job market?

America has lost much of its manufacturing mojo during the last 20 years. A green revolution, fueled by a search for alternative energies and technologies, could change that. Not only will there be need to produce things such as solar panels, electric cars, and new city infrastructure, but the power of globalization will be blunted by higher gasoline prices. The advantages of, say, making a computer in China decrease as the cost of fuel increases and the cost of transporting things all over the earth rises-that will lead to manufacturing jobs returning here, to home soil.

In what ways will the rising cost of gasoline boost innovation?

The innovation game is one that many people anticipate as oil's grip on the world ebbs. New technologies will be needed in all arenas that oil touches, including cars, trains, our homes, the plastic we use and the roads we drive on-and those are just a few examples. The opportunities for inventors in a world with less oil will be prolific.

What kind of places did you visit for your research and why was it necessary to visit them?

Good books need good stories, and it's hard to tell a good story from just talking to people over the phone, so I got out there and did things. I worked on an electric UPS truck in Manhattan for a day; I spent some time on a fishing boat hauling in Asian carp; I descended into one of New York's new train tunnels currently under construction; I rode our nation's fastest train to meet the Amtrak CEO in Washington. I'm not anointing my book or my stories as good--that's up to the reader--but creating an enriching storyline within a nonfiction book was my goal, so I'm hopeful I did that.

So now that we know this, what should we do in the here and now?

Preparing for the future isn't about buying the latest gadgets or the car with the best mileage. Those things help, of course, but they're mere pings in a coming cacophony. People who will do the least amount of adjusting in the future are those who already live more sustainable lives. Where you live largely determines how you live. Buying solar panels for a house at the far edge of the suburbs, for instance, won't alter how the future affects you. Moving to a walkable neighborhood where groceries, your kids' schools, your office or a train are all within several blocks-that's a change you'll profit from and a place where the future will be kinder.

Peak Oil Day

Richard Heinberg's Museletter

By Richard Heinberg

On July 11, 2008, the price of a barrel of oil hit a record $147.27 in daily trading. That same month, world crude oil production achieved a record 74.8 million barrels per day.

For years prior to this, a growing legion of analysts had been arguing that world oil production would max out around the year 2010 and begin to decline for reasons having to do with geology (we have found and picked the world’s “low-hanging fruit” in terms of giant oilfields), as well as lack of drilling rigs and trained exploration geologists and engineers. “Peak Oil,” they insisted, would mark the end of the growth phase of industrial civilization, because economic expansion requires increasing amounts of high-quality energy.

During the period from 2005 to 2008, as oil’s price steadily rose, production remained stagnant. Though new sources of oil were coming on line, they barely made up for production declines in existing fields due to depletion. By mid-2008, as oil prices wafted to the stratosphere, every petroleum producer responded to the obvious incentive to pump every possible barrel. Production rates nudged upward for a couple of months, but then both prices and production fell as demand for oil collapsed.

Since then, with oil prices much lower, and with credit tight to unavailable, up to $150 billion of investments in the development of future petroleum production capacity have evaporated. This means that if a new record production level is to be achieved, further declines in production from existing fields have to be overcome, meaning that all of those canceled production projects, and many more in addition, will have to be quickly brought on-stream. It may not be physically possible to turn the tide at this point, given the fact that the new “plays” are technically demanding and therefore expensive to develop, and have limited productive potential.

On May 4 of this year, Raymond James Associates, a prominent brokerage specializing in energy investments, issued a report stating, “With OPEC oil production apparently having peaked in 1Q08, and non-OPEC even earlier in 2007, peak oil on a worldwide basis seems to have taken place in early 2008.” This conclusion is being echoed by a cadre of other analysts.

Maybe it’s a stretch to say that the production peak occurred at one identifiable moment, but attributing it to the day oil prices reached their high-water mark may be a useful way of fixing the event in our minds. So I suggest that we remember July 11, 2008 as Peak Oil Day.

We are now approaching the first-year anniversary of Peak Oil Day. Where are we now? The global economy is in tatters, yet oil prices have recovered somewhat (they’re now about half what they were in July 2008). World energy consumption is down, world trade is down, the airline industry is shrinking, and most of the world’s automakers are on life support.

It is too late to prepare for Peak Oil–a year too late, in fact. Now the name of the game is adaptation. We are in an entirely new economic environment, in which old assumptions about the inevitability of perpetual growth, and the usefulness of leveraging investments based on expectations of future growth, are crashing in flames. Even if economic activity picks up somewhat, this will occur in the context of an economy significantly smaller than the one that existed in July 2008, and energy scarcity will quickly cause most green shoots to wither.

It is impossible to say what will happen in the future with regard to oil prices. Clearly, very high prices kill demand by undercutting economic activity. Thus it is possible that the barrel price of petroleum may never break last year’s record. On the other hand, if the value of the dollar were to collapse, then the sky’s the limit for prices in dollars per barrel.

It is easier to forecast the oil supply trend: though we’ll see level-to-rising production temporarily from time to time, in general it’s down, down, downhill from now on.

Even though Peak Oil is now in the past, its annual commemoration on Peak Oil Day may serve an important purpose by reminding us why our economy is shrinking, and by focusing our thoughts on ways to facilitate the transition to a post-petroleum world.

What are some appropriate ways to commemorate
Mark your calendar. What will you be doing on July 11?

Help us “celebrate” Peak Oil Day by signing our petition.

Spectre of peak oil prices loom

canada.com

By Barbara Yaffe

Oil at $200 a barrel is not far off and with it a new world order that will see the demise of globalization.

That prediction is put forward in a new book by well-known Canadian economist Jeff Rubin: Why Your World Is About To Get A Whole Lot Smaller.

Money, of course, makes the world go round and when transportation costs become punishing people start looking to buy local.

The author reasons that the price advantage currently held by low-wage countries will simply disappear.

And Rubin cites a second factor that substantiates his theory -- the introduction of carbon pricing.

The U.S. -- and Canada and presumably other developed countries -- soon will mandate a cap-and-trade scheme that would impose tariffs on goods deriving from nations that don't similarly restrict carbon emissions.

What this would mean is extra duties, or a pollution tax, on imports coming from places like China. Such tariffs again would negate the cost advantage of imports from low-wage countries.

All of which explains why North American labour unions are starting to find common cause with environmentalists, one example being the Blue Green Alliance, bringing together the Sierra Club and the United Steelworkers of America.

Here's the sort of calculation that's not lost on the three-year-old alliance: Higher transport costs flowing from $200-a-barrel oil would impose the equivalent of a 25 per cent tariff on Chinese imports, while a carbon tariff would be about 17 per cent. Presto -- a 42 per cent duty on Chinese goods.

The result? The potential revitalization of industrial sectors in Western countries that in recent years have bled jobs to foreign lands. Don't write off the American Rust Belt quite yet.

"At the same time as North American and European markets return to local sourcing," writes Rubin, "they will sever their trade links with the developing world and force that world to find another way to grow.

"As our world becomes smaller, their world becomes poorer."

This will cause economic havoc in the developing world, a situation that, predicts Rubin, will be further aggravated by the shutting off of a critical safety valve, migration.

Higher oil prices, after all, will mean more unemployment and fewer job openings in the developed world.

These predictions may seem a bit fanciful with oil at $60 a barrel, as it is now.

But Rubin, and most others, believe recent low oil prices are directly related to the ongoing recession and will surge again once economies start bouncing back.

The book, besides predicting a return of robust manufacturing and agricultural sectors in the developed world, is not a bearer of much good news.

The economist believes we are in for an era of repeated recessions, caused by ballooning oil prices that are inevitable given that oil reserves are in decline.

The only way to avoid such a fate is to wean ourselves off our debilitating addiction to petroleum.

Rubin's is one of a raft of books published in recent years warning of crisis and devastation if we fail to adapt to the fact that the aggressive burning of fossil fuels no longer is viable.

In view of all these dire warnings, citizens would be correct to wonder what exactly is on the reading lists of their politicians, who in their legislative priorities seem all but oblivious to the pending doom.

byaffe@vancouversun.com

Spectre of peak oil prices loom

canada.com

By Barbara Yaffe

Oil at $200 a barrel is not far off and with it a new world order that will see the demise of globalization.

That prediction is put forward in a new book by well-known Canadian economist Jeff Rubin: Why Your World Is About To Get A Whole Lot Smaller.

Money, of course, makes the world go round and when transportation costs become punishing people start looking to buy local.

The author reasons that the price advantage currently held by low-wage countries will simply disappear.

And Rubin cites a second factor that substantiates his theory -- the introduction of carbon pricing.

The U.S. -- and Canada and presumably other developed countries -- soon will mandate a cap-and-trade scheme that would impose tariffs on goods deriving from nations that don't similarly restrict carbon emissions.

What this would mean is extra duties, or a pollution tax, on imports coming from places like China. Such tariffs again would negate the cost advantage of imports from low-wage countries.

All of which explains why North American labour unions are starting to find common cause with environmentalists, one example being the Blue Green Alliance, bringing together the Sierra Club and the United Steelworkers of America.

Here's the sort of calculation that's not lost on the three-year-old alliance: Higher transport costs flowing from $200-a-barrel oil would impose the equivalent of a 25 per cent tariff on Chinese imports, while a carbon tariff would be about 17 per cent. Presto -- a 42 per cent duty on Chinese goods.

The result? The potential revitalization of industrial sectors in Western countries that in recent years have bled jobs to foreign lands. Don't write off the American Rust Belt quite yet.

"At the same time as North American and European markets return to local sourcing," writes Rubin, "they will sever their trade links with the developing world and force that world to find another way to grow.

"As our world becomes smaller, their world becomes poorer."

This will cause economic havoc in the developing world, a situation that, predicts Rubin, will be further aggravated by the shutting off of a critical safety valve, migration.

Higher oil prices, after all, will mean more unemployment and fewer job openings in the developed world.

These predictions may seem a bit fanciful with oil at $60 a barrel, as it is now.

But Rubin, and most others, believe recent low oil prices are directly related to the ongoing recession and will surge again once economies start bouncing back.

The book, besides predicting a return of robust manufacturing and agricultural sectors in the developed world, is not a bearer of much good news.

The economist believes we are in for an era of repeated recessions, caused by ballooning oil prices that are inevitable given that oil reserves are in decline.

The only way to avoid such a fate is to wean ourselves off our debilitating addiction to petroleum.

Rubin's is one of a raft of books published in recent years warning of crisis and devastation if we fail to adapt to the fact that the aggressive burning of fossil fuels no longer is viable.

In view of all these dire warnings, citizens would be correct to wonder what exactly is on the reading lists of their politicians, who in their legislative priorities seem all but oblivious to the pending doom.

byaffe@vancouversun.com

Book Review: Blackout

Domestic Fuel

By Joanna Schroeder

Under the surface we seem to have a lot of it. It’s fairly inexpensive but this is changing as demand rises to meet increased energy needs especially in countries like China. So we have a lot, its cheap, let’s use it, what’s the problem? Right? Wrong!

Author Richard Heinberg writes in Blackout: Coal, Climate and the Last Energy Crisis, “In short: two of the defining trends of the emerging century–the development of the Asian economies and climate change–both center on coal. But coal is finite non-renewable resource. Thus, a discussion of the future of coal must also intersect with a third great trend of the new century: resource depletion.”

In the first part of the book, Heinberg takes the reader through a deep analysis of just how much coal is available throughout the world. Keep in mind, forecasts assume that current energy use stays the same, but it is increasing each year, making coal available for a shorter amount of time. Best estimates are that the world will see Peak Coal by 2025 and many believe that the world has already witnessed Peak Oil.

Now, you’re just waiting for me to say there is no such thing as clean coal. So there, it’s out in the open. In the second section of the book, Heinberg talks about the link between coal and greenhouse gas emissions and discusses the technologies to create “clean coal”. They are all challenged to say the least.

At the end of Blackout, Heinberg details three scenarios that involve coal, climate and energy. They are all very disturbing, but Heinberg has a way of tackling issues head on.

“For strategic purposes, it is important to understand our human tendency to discount future problems. We must assess which threats will come soonest, and make sure that out sometimes frantic efforts to respond to these immediate necessities do not exacerbate problems that will show up later. Peak Oil is clearly the most immediate energy and resource supply threat the policy makers must deal with….”

He continues, “If energy scarcity forces policy changes before climate fears can do so, then perhaps world leaders will find that it makes more sense to ration fuel themselves, rather than the emissions they produce.”

rhshovelHeinberg continues by warning if we don’t get a grip on the real amount of fossil fuels supplies we have left as well as a deeper understanding of the environmental and economic consequences of burning fossil fuels..hello Blackout.

Wow, conservation…what a novel concept…good thing the fuel economy standards (aka CAFE standards) were finally improved.

“…Otherwise, the policies pursued are likely to be ineffective, counterproductive, and inconsistent.” Can you say proposed Climate Bill?

I’m a huge fan of Heinberg and he doesn’t disappoint with Blackout. You can buy this book or any book I review by clicking here.

BTW - Richard Heinberg is going to be a guest on the premier of national radio program Pure Energy, hosted by Sean O’Hanlon. The show debuts on July 13, 2009 at 6:00 p.m. EST on 880 The Biz and can also be heard live on www.PureEnergyShow.com.

Peak Oil Blues

Peak Oil Blues

Are you 'coping' or 'freaking out' about Peak Oil?

What's a 'normal' reaction to learning about a post-oil world?

Fear? Anxiety? Shock? Depression?

No one really knows.

Many people say preparation is "90% mental," but how do you separate out what's "mental preparation" from what's just "acting mental?"

Here we explore what we've learned about various emotional reactions.

Our goal is to help you build the kind of world you want to live in. Sanely.

The Peak Oil Crisis: Stifling a Rebound

Falls Church News-Press Online

By Tom Whipple

Since the beginning of the economic troubles some 18 months ago, the question on nearly everyone's mind was; "When will the recovery begin?"

A lot of water has gone over the dam in the last 18 months. An official recession has been declared, millions have lost their jobs, much of Detroit has gone bankrupt and the government has spent trillions on bailouts and stimuli. Three months ago the collective wisdom of investors concluded that the recession was nearly over. This resulted in one of the faster rebounds the stock markets have ever known --- based on the flimsiest of evidence and much wishful thinking.

In the last six months the demand for oil has fallen and stockpiles grew while, oddly enough, prices rose. Part of this increase was caused by speculators hedging against the falling dollar, and part was caused by still more wishful thinking that the demand for oil would soon recover.

A year ago prices rose to the previously unimaginable high of almost $150 a barrel. Oil producers made one last effort to keep up with demand and in doing so may have pushed world oil production to an all time high - the "peak" in peak oil. While it took six years for oil prices to climb, it only took six months for them to plunge into the $30's causing panic amongst the exporters of OPEC.

This led to a series of OPEC production cutbacks which were supposed to reach 4.2 million barrels a day (b/d) but petered out around 3 million due to quota-cheating by several of the more desperate and less honorable OPEC members. In the world outside of OPEC oil production has been steady in the last year with some notable drops in production. In Mexico, output from its largest oil field has been dropping much faster than expected due to depletion. In Nigeria insurgent attacks on oil facilities have brought production down to about 1 million b/d when the country should be producing closer to 3 million. In Venezuela, President Chavez has been busy expropriating the remaining pieces of the oil industry still owned by foreigners. Drops in production can be expected soon.

The net result of all these voluntary and involuntary cuts is that world oil production has dropped significantly since reaching an all-time high last year. This drop in production when coupled with the normal declines in output from aging oil fields and the prospects that less oil will be coming into production from new fields than expected, has led many to declare that the all time peak in world oil production took place last year. While it will take several years to verify that this was indeed the case, inability of the world's oil industries to ever again increase production has unfathomable implications which are not as yet widely recognized.

A corollary of the low oil prices and the lack of easy credit have led to a slowdown in the investment going into new oil production projects. While this has little immediate impact on the availability of oil, some years down the line it means that all of the new oil needed to offset depletion will simply not be there and that world production will decline faster than expected.

One can conjure up numerous scenarios of how oil, which at least currently is indispensible for economic growth, may or may not play a part in an economic rebound.

One scenario could be that the credit and financial markets are so far beyond redemption that the world economy will continue to decline indefinitely without reference to how much oil is available. The demand for oil would continue to decline and prices would remain relatively low so that there will continue to be sufficient oil available to support the deteriorating world economy. This scenario, of course, is one that few are willing to entertain, especially in light of the trillions being spent by governments all over the world to revive their economies.

While the notion of a quick recovery this year or early next year seems to be fading, most now believe that while a recovery may be slower than we would like, it will come eventually - it always has, particularly in the experiences of most living today.

The latest estimates from the International Monetary Fund say that world-wide GDP will be down about 2.7 percent this year. The world's spare oil production capacity currently is around six million b/d. This, however, is not a static number as the world's capacity to produce oil from existing sources is withering away at 3 or 4 million b/d each year and unless this much new supply is opened, then total world supply must inevitably shrink.

Now there is no question that very high oil prices would quickly choke off economic growth. Every dollar per gallon increase in the price of oil products drains about $800 million each day from the pockets of consumers in America. Worldwide it drains about $3.5 billion each day. Most observers believe that as soon as worldwide demand for oil gets ahead of supply there will be multi-dollar per gallon increases in the prices of oil products.

There seems to be little doubt that over the next few years, the world's oil supply will be forced into irretrievable decline from a combination of geologic and geopolitical reasons coupled with a lack of adequate investment. Should the demand for oil increase in the next year or so, there will still be some room for increased production without unacceptable prices increases for a while. The longer a recovery is delayed, however, the better the chances that oil prices will quickly surge to recovery-choking levels. While there are long-term solutions to this problem they will take decades to implement.

At last some governments are worried about the slowly emerging situation. Last week the British Prime Minister ordered his cabinet to start working on emergency plans to prevent rising oil prices from destroying the prospects that there will ever be an economic recovery.

Do you believe in 'peak oil'?

Investors Chronicle

By Jonathan Eley

Debate has raged about 'peak oil' ever since Shell geologist M. King Hubbert first outlined the theory in 1956. It's the idea that once around half the world's reserves of oil have been extracted, production enters a slow and inevitable decline that no amount of investment can reverse. Believers in peak oil argue that once it becomes apparent that the peak is near, or even past, prices will rise sharply, and permanently. Detractors say the theory ignores geology and technological progress.

YES, says Matthew R. Simmons, founder of Simmons International:

"Many supposed energy experts refute peak oil, and mistakenly think the term means that we are running out of oil. Peak Oil does not mean "running out of oil". The world will likely never run out of oil, but the flow of usable oil has almost certainly already passed its high-water mark. Over the next five to ten years, our current oil supply will likely decline by as much as 15 to 25 per cent. In the meantime, despite the recent recession fears, the world's planned use of more oil is staggering.

The factors propelling growth in world demand for oil are simple. We have an expanding global population. There is no logical reason to assume that oil demand has peaked, or is even slowing down.

Oil consumption can never exceed available supply. So if supply dwindles, then demand must also stop growing, a task not easy to even contemplate. If demand grows while supply shrinks, shortages will occur. Human nature will create hoarding and oil consumers will begin "topping off their tanks". The risk of this occurring is far higher than most think.

The data proving that oil supply peaked in 2005 is not perfect, but it is solid enough for a jury to "convict with reasonable certainty." Just look at just the production declines from key producing countries like Mexico, Norway, the UK, Indonesia, Argentina, and many others in the past four years.

All that is needed to end the Peak Oil debate once and for all is an independent audit of the world's 300 largest producing oil fields. Sadly, too many of these fields, owned primarily by Opec countries, still guard their production and reserve numbers as "state secret." But the time is fast approaching when world leaders will demand honest facts about the flow rates of these key fields. When this happens, the proof that oil has already peaked will be air-tight. "

Simmons is an US investment bank specialising in services to energy companies. www.simmonsco-intl.com

NO, says Peter Odell, professor-emeritus of international energy studies, Erasmus University:

"Claimants for a near future peak in global oil production fail to recognise the processes whereby reserves and production evolve. They equally avoid the central role played by both economics and politics in equilibriating the markets.

The world's currently proven and potential reserves of oil - both conventional and non-conventional - eliminate any significant up-side restraints on the growth of production . On the contrary, near future constraints on oil supplies will be imposed by slow demand growth (of no more than 1.5% per annum).Thereafter, the eventual continuation of a steadily increasing supply of oil for global use will be based on the present creation and future maintenance of a 40-plus years' reserves-to-production ratio.

Peak-oilers, however, argue that annual additions to reserves which comprise both new discoveries and reserves' appreciation in previously-discovered fields should not be taken to indicate the replacement or replenishment of reserves' stock. Additions to reserves in previously found fields must be dated back to the year of initial discovery.

Backdating reserves with hindsight - in the context of newly developed technologies of reserves' assessments and recoverability - is simply inappropriate to the continuing economic evaluation of oil exploitation. It makes the past look more attractive than it really was, while the present is unjustly made to appear inadequate.

The current declaration of proven reserves of 1400 billion barrels will likely rise to 1750 billion barrels or more by 2020 so providing continuity for the future of the oil industry for decades ahead.

Even without any further discoveries peak oil production will not occur over this period. Unless, that is, the price of oil collapses so undermining profitable investments in the industry. Or as a consequence of a consistent fall in demand because of renewable energies' expansion. Only then, will peak global oil production necessarily occur."

The Coming Oil Crisis

Newsweek.com

By Mohammed J. Herzallah

Canadian economist Jeff Rubin has a somewhat oracular reputation. Since 2000, he has predicted a massive oil-price spike, and he was among the first in 2007 to prophesy that oil would soar over $100 per barrel (a few months later, he said $150 a barrel and was basically proved right again). Now, even though oil has dropped considerably from its peak, Rubin warns that it's bound to skyrocket once more and cause another, even greater economic crisis. In his new book, Why Your World Is About to Get a Whole Lot Smaller, he lays out how this energy crunch will occur—and why it will spell the end of globalization.

The scenario goes something like this: the ongoing depletion of the world's oil resources, coupled with soaring demand from emerging economies like India and China, will send the price of crude through the roof, Rubin says. This will seriously escalate transportation costs, which in turn will cripple international trade, reverse commercial interdependence and disable the global economy. The resulting age will be one in which nations are isolated, technological progress is sluggish and travel is infrequent. The Middle East will be less relevant than it is today, and food scarcity will emerge as the foremost international problem. Countries with a shortage of arable land will scramble and compete to buy agricultural real estate from other nations (for example, as Saudi Arabia is already now doing in Sudan) to alleviate their ever-worsening food crises.

Rubin's future isn't all bad. To offset the effects of the energy crisis, governments will have to invest heavily in national infrastructure (especially public-transportation systems); national industries once hurt by outsourcing and foreign competition will thrive; and the environment will become cleaner as people are forced to use less fossil fuel and as cars disappear from the streets. But Rubin warns that governments can do only so much—successful adaptation to an energy-starved world will largely depend on individuals altering their energy-consumption norms. Still, he is willing to bet that people will make the right choices. All in all, he says, "don't be surprised if the new, smaller world that emerges isn't a lot more liveable and enjoyable than the one we are about to leave behind."

Rubin's argument is powerful. There's no denying that the international economy has become critically dependent on oil as its main source for energy. Yet, like other believers in the "peak oil" theory, he falls into the trap of underestimating society's capacity to meet future fuel challenges through innovation and conservation. The story of energy over the past century has been one of breakthroughs, not retreat—so although the energy problems we face today should be a cause for concern, global integration will continue to deepen and the world is not likely to get smaller any time soon.

The Peak Oil Crisis: A Letter From Baghdad

Falls Church News-Press Online

By Tom Whipple

A couple of weeks back the peak oil community received a letter from an officer serving with our forces in Iraq.

Despite numerous distractions in Iraq these days, this officer is so concerned that peaking world oil production will soon become a serious problem that he began discussing the future of America's energy supply with soldiers in his unit. What he concluded has a message for us all.

He found that most people have no trouble accepting the premises of peak oil- that there is a finite amount of crude underground, that the easy and cheap to extract oil is nearly gone and that world production will go into an unstoppable decline. The disconnect from reality, however, comes when contemplating the consequences of this event, for nearly all believe there are many obvious alternatives to oil. We know what they are: nuclear, solar, wind, waves, tides, shale, oil sands, coal-to-liquid, biomass, etc., etc. In the mind of most, it is a rather simple matter of switching from oil to any or all of the alternatives so that life-as-we-know-it can continue without missing a beat.

The more likely consequence, that peaking of world oil production will cause severe economic hardships that will take decades to mitigate is simply not a future that most are willing to entertain. Arguments that oil consumption has grown so large in the last 100 years that once depletion starts the development of similar amounts of alternative energy will take a very long time are simply not believed. This micro-survey makes an important point because it mirrors the common sentiment across the land as reflected by the media and political leaders. Even if oil should go into depletion someday --- there is simply not a problem.

Our letter-writer believes the reason for this commonly held opinion is the saturation of TV and the print media with the message that our oil companies are hard at work getting ready for the next generation of energy sources. Should we ever need alternatives to oil, all will be in readiness. Millions are spent on a continual drumbeat of such ads each month. They are impossible to avoid and have left most with the impression that all will be well - your oil industry is on the job.

This all-will-be-well message is always bereft of detail. Nowhere is there mention, of the vast amount of oil being consumed around the world each day, anticipated rates of depletion from existing oil fields, nor of the trillions of dollars that will be required to finance the next round of exploiting increasingly more difficult to recover oil. From time to time, the message is punctuated with the word "technology". Not any particular technology, just the implication that the technology which has brought our civilization this far will be there when we need it.

It comes as no great surprise to discover that American's perceptions are shaped by advertising and the mainstream media. In most cases, no great harm is done. A lot of advertising may elect a less than optimal candidate to public office or convince people that they really need to buy something. Usually, there is little harm done although from time to time concerted, successful efforts to set public opinion can have lasting and serious repercussions.

The current issue of the Columbia Review of Journalism contains a post mortem of how well the financial press covered the mortgage meltdown which triggered what could be turn out to be a very memorable recession. After reviewing 730 stories written between 2000 and 2007 pertaining to the mortgage industry, the authors concluded that in the main the financial press missed the run-up to the meltdown until it was too late. This left government convinced that it had to step in with trillions of dollars to stem a complete breakdown of the financial system. Although a few lonesome voices saw what was coming, as a society we were clueless until the banks started going under.

Just as millions were lulled by ever increasing home values that could make people rich, the same millions are being lulled by perceptions of a seemingly endless supply of cheap energy that will continue in some form so far into the future that we need not worry.

The heart of the peak oil question today is not whether oil is going to peak sometime soon - it probably already has. The issue is how soon people and their governments recognize that we are going to have to make substantial changes in our lifestyles and bear unprecedented costs in order to hold our civilization together in some recognizable fashion. Changes of this magnitude do not come easily.

Some hint of what is to come was seen last summer when a combination of factors drove gasoline prices in the U.S. to $4-5 a gallon. The initial political reaction was to denounce scapegoats - Arab oil producers, speculators, environmentalists. Fortunately or not our global recession intervened, forcing the demand for oil down by several million barrels per day taking the pressure off prices and delaying important decisions to another day.

For now, the matter rests. The new U.S. administration and congressional majority clearly is dedicated to reducing carbon emissions in a timely fashion and is taking many other steps that eventually could have an impact on oil consumption. However, there is still no official acknowledgement that adequate oil supplies are going to be a major problem in the near future and that hopes for a smooth transition to alternative forms of energy without sacrifices and expense is simply not going to happen.

Like the soldiers surveyed in Baghdad, a critical mass of Americans and their political leaders are simply not ready to accept the consequences of what is about to befall us. We were a lot closer to understanding during the price spike last summer. Now It seems clear that it is going to take much higher energy prices before we as a nation understand the consequences of peak oil.