Tuesday, June 24, 2008

Drill Everywhere! Then Embrace Extinction.

Oil production is falling (because the great existing fields are drying up... forever) while demand is increasing as the world continues to industrialize in leaps and bounds. Twenty years ago there were only a couple hundred million U.S. yahoos burning a barrel or so of oil every week or so in their foolishly megalopolitan arrangement. Now that many people in China and India each are upping the ante and expecting to burn as much, too, for their 50-mile commutes, skyscraper construction and air conditioners. (They also expect fossil fuel-based fertilizers to grow more crops to raise more beef.) The world is pumping as much oil as it can and suddenly about three times as many people are lining up for the daily allowance. And it turns out the amount we can get out of the ground daily is actually falling. But the demand is still growing because there are ever more people who expect to be able to drive and adjust the temperatures in their homes and to eat well. This is why prices are skyrocketing.

The falling dollar, the "speculators" (new scapegoating buzzword), and the greedy oil companies all play a part, but in the end demand is growing and supply is falling and that is that. More people want what is forever dwindling in availability. The dollar is always falling because it is every government's mission to destroy its currency over time; That a fiat currency will lose value at varying speeds till it is worthless should be taken as a given. The speculators can run the price up quite a bit, but they're making money because they bet on a sure thing: that oil would skyrocket in price because of the tragic supply/demand scenario that will bring industrial civilization to its knees before administering the coup de grace. And without the "greedy oil companies" and their investments, the people who love to hate these companies wouldn't have any oil at all. People seem to forget that the free market, profit motive, investment and risk are the things that get them the goodies they take for granted. I don't see any of the workaday suburbanites who complain so loudly about the price of oil doing any exploring and drilling. They just love to bash the people who actually find the oil, drag it out of the ground and bring it to market. If one wants to be less beholden to the oil companies, one should adjust one's lifestyle to require less of the stuff their selling. Of course the advice to move to a walkable neighborhood and take mass transit for long trips probably won't do much good as we slide into a permanent neolithic age.

In any case I am all for the drilling in every last patch of earth where we so much as suspect there may be a dram of oil. I can say with a pundit's arrogant certainty that there is not enough oil left outside of the already exploited giant fields to make much of a difference at this point. So we should go ahead and get it out of our systems. Look everywhere and take what can be found. When it proves not to be enough to continue the industrial experiment with 6 billion bipeds, then we can get to the next stage of loss: scapegoating. This will be the time for the frustrated peasantry to behead a few "speculators" and oil company CEO's. I image a war or two between the world's largest industrialized nations will start.

But don't fret. Rather embrace the loss of suburbia along with an unimaginably large chunk of the human population for we have fulfilled our thermodynamic obligation.

The universe is really just a vast collection of hotspots that are all seeking to give off all their energy till the entire cosmos is the same density and the same temperature throughout. The oil, coal and natural gas we've come to know and love are essentially just trapped energy from the sun condensed into physical form; just the remains of the microscopic flora that trapped the sunlight striking the biosphere over a long period of time. Our great task as a species is to free that energy from beneath the earth. That's what we're here for! The universe doesn't care that we fret about the ultimate survival of our descendants, the same way the winemaker doesn't care when countless bacteria drown in their own feces in order for fermentation to take place. We have fulfilled our cosmic onus admirably. That our fortunes as a species reverse afterward really doesn't matter a whit to the universe.

Thursday, June 12, 2008

Weird, Wild Stuff

How I shall miss the internet when it is gone. I just got to watch a news video of naked man being arrested and carted off in an ambulance.

In Georgia a naked black man drove to a gas station and started dancing atop his car. He then got back into his car and rammed the pumps. The car caught fire and the man ran away. Fire fighters were able to extinguish the blaze before other cars caught fire and the police were able to taze and apprehend the naked Negro. The news announcer commented that police have no idea what would drive someone to do this sort of thing. Allow me to put forth a theory. This man was a super-commuter, just like the coworker I've written about in previous postings. He bought a house with an ARM about 80 miles from his job in downtown Atlanta. His home's value has fallen off a cliff and he can't unload it. Meanwhile he is spending about $500/month-- between a quarter and a third of his take-home pay-- on gasoline. He is upside down on his mortgage so can't afford to sell and neither can he find another job closer to his exurban home that pays remotely well enough to offset the savings in gas and is thus forced to keep driving the 80 miles to employment. Maybe he has some other financial and emotional stressors like alimony and child support payments. The tripling of gas prices in just a few years might have done the poor guy in. He no doubt sees this all as grossly unfair. Wasn't he supposed to leverage a big house out in the middle of nowhere and heroically commute for over 90 minutes? Wasn't this the goal of every American? How could everything get so expensive all of a sudden? How could his pay fail to increase while the costs of everything he needed to live suddenly surged so much? A couple hundred million Anglophones are surely asking themselves the same questions. A few of them are likely to snap in similarly spectacular, but possibly much more tragic and gruesome ways.

I don't claim to be omniscient-- at least not out loud-- and I could be way off base about this man and his motives. The interpretations are so blatant, however: Nakedness symbolizing poverty, striking the source of the pain (the gas) with the tool that makes the gas necessary... The man's message seems pretty damned clear to me.

(Here's a link to the news clip on Youtube: http://youtube.com/watch?v=tb5-_kwRQMM )

Tuesday, June 10, 2008

What Did They Expect?

I happen to know a super-commuter. I've mentioned him before. He is one of those late-stage ultra-exurbanites who bought a home roughly 100 miles from his workplace back when getting a big house out in the cornfields with an ARM was all the rage. Gas has tripled in price since he fixed his residence and his job at 100 miles apart. I dare not ask him what's going on with the interest rates on his mortgage. The poor man seems pretty frantic as it is. His behavior is telling; he takes every chance to drum up a conversation with me about all the solutions that the new administration will usher in to cure the headache of high oil prices. And of course to his mind it's all the fault of politics and greedy traders.

I try to explain in the simplest terms that I know that the price is the collective result of billions of bipeds insisting on living as far from their daily destinations as possible then expecting to be able to use oil to power machines to ferry them these absurd distances. I also mention that oil is used to sustain ever-growing numbers of these two-legged locust-bunnies by means of the artificial petro-fertilizers that boost the planet's caloric carrying capacity. Of course this fellow and the 200 odd million lumpenproletariat like him will not let logic get in the way now. They've invested too much psychologically and financially in a way of life that is (was) glaringly unsustainable. I don't like to be so hard on them, however. The traditional city was quickly obliterated by the industrial tumor back when America was young and cities in the New World have spent most of their lives being ugly, dehumanizing places. No wonder the working class fled them as soon as the car and cheap gas made it possible to do so every day after work. And which species doesn't reproduce as much as possible given the chance? The individual bad choices that led us to this endgame were as innumerable as the stars, but here we are in any case.

The times they will be very hard. I, however, am relatively comfortable despite it all. My fanny will feel the flames, too, no doubt, but I moved to an old urban center in a small, but tastefully prewar apartment; I remain blissfully childless. I have no gas tank to fill up, nor child to feed, nor mortgage to service. I have a monthly transit card to buy for the short bus ride to work, but otherwise can walk to what I need. I have to pay higher food prices and home heating and cooling energy costs like everyone else, but not having to pay for gas leaves a lot of money free for food and not having a large place means the energy bills just don't get that bad. Those of you who have bought a parcel of land in the middle of nowhere and who are growing your own food organically and learning to sew up your own wounds as well as your own clothes will shake your heads and say I haven't done enough. You're probably right, but the theme of this blog has always been that it's better than being stuck in the suburbs...for now at least.

I admit to wry smiling and the occasional chuckling out loud when I think of the same people who laughed at my dire predictions and lifestyle changes and who are now trying to decide between feeding the kids or the family car. The super-commuter acquaintance is hoping that the guv'ment will lay down high speed rail lines like they have crisscrossing Europe or that he will get a transfer closer to home even if the geopolitics that have inflated the price aren't worked out. I humbly submit that it was folly to move 100 miles from work then hope that it would somehow all work out, that energy prices would stay low even though the number of people in the world trying the same type of exurbanist stunt was set to double and triple. Moving 100 miles from work in order to buy the most house possible only makes sense when oil is under $20/barrel. It's a precarious way to live, especially with all the clear signs that our party with the non-renewable stuff that makes multi-mile daily commutes possible is about to wind down. Of course, then one couldn't spare the techno-faerie tale pimps some blame. These folks kept telling us that renewable sources of energy could replace non-renewable oil and allow us to keep partying just the same. Never mind that solar panels, metal windmills, et alia need a fossil fuel infrastructure to make their mass production possible; these alternatives could never offer the energy density necessary to justify their existence long-term, but it's easier to listen to the soft cooings of pundits that tell you your lifestyle is non-negotiable and deserved rather than the physicists who tell you it is impossible to maintain and likely coming to a swift, messy end.

So my acquaintance and millions like him are trapped in homes that have suddenly become very hard to sell or afford to keep and with commutes they simply can no longer afford. How much longer can he keep putting the gas on the credit card before he is tapped out? But I mean; what was this man thinking? There will come a time when those of us who survive the unwinding of the world we've come to know will tell our grandchildren and great grandchildren stories of when energy was so abundant and cheap that we all lived "out in the country" where we could afford manses and daily travel dozens of miles to cities full of skyscrapers. Our little descendants will stare at us with saucer-big eyes and will not quite believe the world we describe was ever real, the way the other world of dragons and faeries isn't real either.

Monday, June 9, 2008

First Comes Oil, Then Comes Famine (or "What's A Few Billion Lives Between Friends?")

Latest AP story on the Yahoo page tells of the impending troubles in the world food supply due to rising costs of non-organic fertilizers. The mainstream media has let the cat out of the bag; The "Green Revolution" was a hoax. Oh sure, it happened, but it happened because farmers stopped using what are now called "organic" methods like laying manure as fertilizer and started using the whiz bang stuff the science boys made out of petroleum: a petroleum Ponzi scheme of global proportion. India was thus saved from famine in the 40's the article tells us...by introducing a rapidly depleting, non-renewable resource to increase (very temporarily) the planet's agricultural output and carrying capacity. The inevitable costs of overpopulation were deferred a bit, but now there are that many more people at the end of the chain who will have to pay the bill. Famine has been waiting patiently to perform the wonders as laid out by her prophet Mr. Malthus. And how delighted she must be; there are twice as many people to cull now as there would have been if she'd been called onstage half a century ago.

The suffering does its worst work among the most vulnerable in the Third World first, but it will reach us here. Oil feeds our bellies as well as our machines and we will give up the extreme machine dependence of hypertrophied suburban industrialism by necessity, mainly so we can afford to eat. Trust us to do the right thing when we're left with no choice. Alas it is far too late to do much good. Iacta alea est, as they say. Our suburbanism will unwind as the world's poorest starve, but at some point we'll find it hard to afford a meal, too. The Chinese and the Indians are replicating our mistakes by industrializing (adding machines as necessities to daily life) in overdrive. I wonder how long before someone invades somewhere to get something that someone else wants really bad. Does McCain (let's not kid ourselves about that) lob missiles at Beijing when a few million Chinese foot soldier march into Russia to secure the oil supplies for the world's largest People's Republic? I don't pretend to know what will happen in the geopolitical sense, but I do know that wars start over resources.

In any case, expect food prices to start to climb an awful lot more than most people are willing to believe possible. I've read of experts saying that food prices tend to move cyclically and that they stabilize after a few years. I really wouldn't count on that. I also wouldn't count on the dollar as a vehicle of savings. I've purposefully left any financial considerations or advice out of these musings so far, but that's becoming increasingly hard to avoid. I'll just say that there are certain forms of money that tend to hold their value against commodity prices (food and fuel) in times of extreme price inflation. More on that later.

Tuesday, June 3, 2008

Demand Destruction And Price Pullbacks

Oil powers the modern industrial world and every single moment there is less oil than there was the moment before. The supply is headed effectively to zero. Discoveries of new fields or better drilling technology to better exploit existing ones don't change the overall picture. Fields do not fill back in. Even if demand weren't increasing, this would mean an eventual shift to a pre-industrial world. That demand is increasing rapidly thanks to a couple billion people in India and China buying cars and building skyscraper metroplexes just means that the eventual shift will come that much sooner.

Markets allow for speculation and this does run up the price of oil a bit. This also means that the price will pull back-- maybe even considerably-- when speculators take their profits. I wouldn't be surprised if oil fell ten or twenty dollars per barrel in the near future, but I also expect the price to run right back up toward $200. At that point, however, there will be a great deal of demand destruction. U.S. Americans in particular will have had to abandon the "American (read: suburban) Dream" and therefore will simply not be using nearly as much oil per capita. They will be out of the bidding. Prices will remain high enough to force people to keep living in walkable urban environments. Recall that the supply will still be heading toward effective zero while the Chinese and Indians will be using their new wealth (remember all the factories that got built in these places while factories were being dismantled here and all the jobs that disappeared from these shores and reappeared in Asia?) to live like we used to here. Don't be too upset by this, however; it won't last long in India and China either, certainly not nearly as long as it lasted in the U.S.