Energy, Energy Service, Natural Gas &amp; Oil Sectors

Top 1258. Sep 19, 2005 9:49 AM

» Normxxx - Re: OPEC is our enemy

In response to OPEC is our enemy posted by lcha:

Then there is the nuclear option. France produces 80 percent of its electrical energy from nuclear power plants and China plans to quintuple its nuclear energy production over the next 15 years (calling for some 40 new nuclear plants). We have not built a nuclear power plant since the 1970s. What is it that the French and Chinese know that we do not?

It's not so much what they know, as maybe that they care more for their kids and grandkids?

But recognize that Windscale, 3-mile Island, Chernobyl, and other similar, less-heralded, incidents (even in Japan) will no longer be so uncommon in a world populated by nuke power plants, even without the threat of terrorism. So we have to think very, very carefully about prevention, containment, and aftermath. All in all, I think the nuclear power cycle will claim far fewer lives than the coal or oil power cycles over their respective histories, but the lives claimed by nuclear will be very much more in concentrated bursts and will claim many more 'innocent bystanders' (people not involved in the energy source recovery, transportation, power generation, and waste disposal cycle).

Moreover, people (at least in the US) have become irrtionally sensitive to anything 'nuclear.' The medical profession had to change the name of Nuclear Magnetic Imaging to Magnetic Resonance Imaging because doctors used to have to spend many minutes of their precious time explaining to their patients that NMI (aka MRI) had nothing to do with "hard" radiation (aka radioactivity or 'nuclear radiation') and was actually safer than an X-ray.

Don't realy know what you do about irrational fears (especially when there is a solid basis for them). Off the top of my head, I know that both Sweden and Germany, at least, have stopped building nukes and plan to phase out the ones that they have before their useful life is up, and have promised never to build another. At least we have not gone that far.

Practical fusion is probably still about 50 years off, and is no panacea either. While there is no danger of the "China syndrome" and much less danger of radioactive "releases," a fusion plant will produce prodigious amounts of radioactive waste over the years (probably many times more than a fission plant).

-- posted by Normxxx

Top 1259. Sep 19, 2005 9:50 AM

» Normxxx -

-- posted by Normxxx

Top 1260. Sep 20, 2005 7:41 PM

» Normxxx - The Truth About Oil

The Truth About Oil

By Jon Birger | 20 September 2005

Pain at the pump has plenty of Americans ticked. Chances are, though, they are angry about the wrong things. Here are five myths many people believe about today's oil pinch-and what the real story is.

A fellow road warrior pulls up to the pumps at Fillup's Food Store in Panama City, Fla. He looks at the nearly $3-a-gallon price of unleaded, and then with one word sums up the feelings of drivers nationwide: "Crazy."

Crazy indeed. Not that long ago, though, it would have been madness to suggest that oil could go from $18 a barrel to $65 in four years—and even crazier to suggest that such a run-up wouldn't spark a painful recession, with consumers spurning trips to the shopping mall and businesses crippled by cost hikes. Conventional wisdom has held that there are price thresholds that can't be breached without affecting spending habits. In 2003, for instance, Republican pollster Frank Luntz spoke of $2-a-gallon gasoline as a "magic number" that, if crossed, would harm Republican reelection hopes. Well, gas passed $2 a gallon a month before the 2004 election, and the oil guy in the White House still won. Two bucks wasn't so magic after all.

A sustained run of $3 gas could be what finally kicks the legs out from under the U.S. consumer—already, Wal-Mart is blaming lackluster sales on high gas prices —but it's hard to know for sure. After all, so much of the conventional wisdom on oil has been wrong. That's a problem, because if the U.S. is ever to make progress on treating its oil addiction, it needs to understand its source.

MYTH NO. 1:
GAS STATIONS ARE GOUGING CONSUMERS.
REALITY: If consumers are getting gouged, then gas station owners are being impaled. When gasoline prices spike, as they have in the wake of Hurricane Katrina, windfall profits rarely accrue to gas station owners. Kim Do, owner of a Coast station in Pleasanton, Calif., reports that in the immediate aftermath of the storm, she lost 8 to 10 cents on every gallon of gas she sold. "Customers are very angry—they call my prices a rip-off," Do says. "I tell them, 'I'm just like you.'" In fact, because retail prices are stickier than wholesale ones, gas stations make the fattest profits when prices are falling—a point made in a recent study by Berkeley economist Severin Borenstein.

Pumping gasoline is a dog-eat-dog business even when prices are normal, especially with Costco and Wal-Mart now muscling in. Low profit margins on gas are why so many gas stations double as convenience stores. "The objective is to get you to fill up on coffee, not gasoline," quips Gene Guilford, director of the Independent Connecticut Petroleum Association (ICPA).

Those low margins can turn into no margins when there's a sudden rise in gas prices. Metropolitan service stations don't have much inventory stored in their underground tanks. That means they're buying gasoline from wholesalers at least once a day and are just as vulnerable as their customers to rising prices. What's more, most independent stations can't pass along all their costs because they compete with the likes of Chevron and Valero, which do have large inventories of lower-priced gasoline by virtue of being big refiners (see "The Soul of a Moneymaking Machine"). During price spikes, the majors use this advantage to underprice fuel, relatively speaking, in hope of gaining market share. In Connecticut, for instance, the ICPA figures the retail price of gasoline should have been $3.31 cents a gallon on Sept. 7, adding up all the taxes and costs. But the actual retail average was $3.08. No matter: On Sept. 8, Connecticut attorney general Richard Blumenthal announced he was looking into price gouging by gas stations.

What about Big Oil? Aren't the giants guzzling profits? Sure, but there is nothing sinister about that—no cabal of cigar-chomping oil barons plotting how to squeeze the world for their evil ends. Yes, a few crooked traders were able to game the California energy markets for a time in 2001. But in a market as big and wide-open as oil, there are thousands of traders all over the world making the action. Unlike California power prior to the crisis, oil is a freely traded commodity. The markets, not the magnates, set the price.

MYTH NO. 2:
HEDGE FUNDS ARE INFLATING THE PRICE OF OIL.
REALITY: No, it's the Trilateral Commission in cahoots with the World Bank. Just kidding. Still, even many sophisticated people believe that hedge funds are driving up prices. Sean Cota, a Vermont heating-oil dealer who sits on the executive committee of the Petroleum Marketers Association of America, points out that average daily trading volumes in NYMEX crude oil and heating oil futures have risen dramatically—61% and 36%, respectively—since 2000. When the trading volume of oil grossly exceeds consumption, he argues, that is a sign that hot money is firing up the market. "Prices are now being set by fear and greed, not by supply and demand," he concludes. His estimate: At least $20 of the current $65 price of oil is a byproduct of speculation by hedge funds and investment banks. Germany's Economy Minister, Wolfgang Clement, recently put the figure at $18, a sentiment echoed by Chancellor Gerhard Schröder.

That is not, however, an accurate reading of how financial markets operate. Take Cota's concerns about excessive trading volumes. Futures trading in all commodities far surpasses the amount consumed by end users. And according to NYMEX, hedge funds account for less than 3% of volume in oil futures (a figure Cota disputes). In any case, basic market theory states that high volume leads to more, not less, efficient pricing. That's why thinly traded stocks tend to be more volatile—and vulnerable to manipulation—than heavily traded names like Microsoft or GE.

"People make these kinds of arguments because they have their own ideas about where prices should be," says Stephen Figlewski, a finance professor at New York University's Stern School of Business and founding editor of the Journal of Derivatives. "Oil producers think prices should be high, and oil consumers think they should be low. But if the price isn't where they want it, the one thing they all agree on is that it must be someone else's fault." The truth is that emotion—fear of dwindling supply—drives oil prices harder than speculation ever will.

Even if speculators were dominating trading of oil and gas futures, it's still not clear that would lead to higher prices. Futures require two to tango. A hedge fund cannot purchase a contract to buy oil at $65 a barrel in November if someone else isn't prepared to take the bearish side of that bet. That someone else can be an oil company looking to offset some risk or another hedge fund looking to profit from falling fuel prices. Data from the Commodity Futures Trading Commission show that the week before Katrina sidelined much of the Gulf oil industry, 14% of all short, or bearish, positions on crude oil were held by "noncommercial traders"—a subset that includes hedge funds and banks. This same group held only a slightly larger share—16%—of long, or bullish, positions. "For every hedge fund that's made money, I know a lot that have lost money," says Morgan Stanley chief economist Stephen Roach.

Still dubious? Consider this: The average hedge fund has gained only 2.1% so far this year. The average managed futures fund (the type most likely to invest in oil) has actually lost money, dropping 6.6%. Why? Because many have been shorting oil, according to Merrill Lynch hedge fund analyst Mary Ann Bartels. So if hedge funds really are driving up oil prices, they're doing a lousy job of profiting from it.

MYTH NO. 3:
WE'RE RUNNING OUT OF OIL.
REALITY: This one is true. Sort of. Unlike wind or water, oil is not a renewable resource. So by definition we're using it up, in the same way that we are all dying all the time. The real question is, When will it become impossible (or impossibly expensive) to recover enough to meet demand? Answering that question is not easy. New discoveries and new drilling technologies have transformed the science of exploration, which is why global reserves have doubled since 1980 (to 1.3 trillion barrels) even as consumption has soared.

There's no shortage of oil experts, however, who say that the industry cannot keep up the pace, and that the age of ever-expanding reserves is over. These "peak oil" theorists argue that we need to prepare for an era in which supply trails demand, particularly given the fast-growing needs of China and India. The guru of the peak-oil set—and author of its latest manifesto—is Matt Simmons. A leading energy banker in Houston, Simmons spent years poring over oilfield engineering reports and concluded that some of the world's most important fields are thinning out. "I believe the Middle East has no spare capacity," he says. He's even more pessimistic about some newer fields like those in Russia and the deep waters of the Gulf of Mexico.

Simmons is no kook—his book on the subject, Twilight in the Desert, is a must-read in energy circles. But there is a Chicken Little aspect to the peak-oil viewpoint. There have been a dozen or so oil shocks over the past 60 years—all replete with handwringing over in-the-ground reserves—and cheaper oil has returned each time. "The one thing I've learned," says Roach, "is that oil is a mean-reverting commodity." This time around, Roach expects high fuel prices to dent consumption—he's predicting a downturn in travel and other discretionary spending—while spurring oil companies to dig deeper and farther afield for oil.

The analysts at Cambridge Energy Research Associates have done their own painstaking global survey of oil production, and they couldn't disagree with Simmons more. In their view, production could rise 16 million barrels a day by 2010, leaving a comfortable gap between supply and demand.

The real problem with the peak-oil argument has less to do with engineering than with philosophy. It lacks imagination. Thirty years ago few thought it would be possible to produce price-competitive oil from Canadian oil sands. Today the cost of producing that oil is about $20 a barrel and is still falling (see "The Dark Magic of Oil Sands"). Similarly, you can't rule out the idea that today's speculative energy technologies (see "Here Come the New Fuels") will become cost-efficient by the time Middle East oil production starts to wane. "The peak-oil argument underestimates the potential for technological progress," says Economy.com's Thorsten Fischer, who expects oil to fall to about $40 a barrel by next year. Simmons thinks prices could triple by 2010.

Peak-oil theory also overlooks alternative explanations for why oil exploration hasn't been terribly fruitful in recent years. It may be that there is oil to be found, but investors haven't given oil companies the requisite incentives to find it. Blame the dot-com boom. Having been burned by accounting cheats and profitless wonders, post-2000 investors demanded cash flow, dividends, and stock buybacks. So despite booming profits and revenues, Exxon Mobil spent less on capital and exploration in 2004 than in 2003. And the $11.7 billion figure for 2004 was $3 billion less than the company earmarked for dividends and buybacks. Of course, $65 oil has a way of changing priorities. After years of stagnation, drilling-rig counts have soared 36% since April 2004. There are 2,895 active rigs worldwide, according to Baker Hughes, the most since 1986.

MYTH NO. 4:
THE U.S. IS RUNNING OUT OF REFINING CAPACITY.
REALITY: So what? It's fair to say that in recent months supply has been straining to meet demand and that U.S. refineries had to work flat-out just to convert enough crude into gas to keep the pumps filled. Then Katrina came, knocking out 20% of the industry. But America's struggle to ramp up capacity—we haven't built a new refinery in 30 years, though many existing ones have expanded—does not mean doom. There are many products that the U.S. happily consumes in which we are not self-sufficient—think kiwi fruit or funny T-shirts.

The U.S. should easily be able to import gasoline and other refined petroleum products from India, the Caribbean, South America, and other places where labor costs, NIMBYism, and environmental regulations don't cripple new construction. The Department of Energy projects that worldwide refining capacity will increase 61% over the next 20 years. Says Fischer: "There's little reason to build a new refinery in the U.S. if you can do it faster and cheaper overseas." And while not all overseas refineries can produce gasoline that meets our environmental standards, who doesn't want to sell into the U.S. market? New plants will be, and already are, designed to meet American requirements. Finally, if oil companies don't want to build, their customers may beat them to it: In mid-September, Virgin Group founder Richard Branson announced plans for a $2 billion refinery that will help his airline defray the high cost of jet fuel.

MYTH NO. 5:
THE GOVERNMENT MUST INTERVENE TO BRING DOWN ENERGY PRICES.
REALITY: Nooooo! The last time the U.S. went down that road, in the 1970s, the end result was gas lines, shortages—and little change in prices. But evidently they don't teach much history in politician school anymore—a frightening number of elected officials seem ready to re-embrace price controls. U.S. Senators Carl Levin (D-Michigan) and Maria Cantwell (D-Washington) want to give President Bush the power to set gasoline prices. In Massachusetts, secretary of state William Galvin has proposed a moratorium on natural-gas price increases. Hawaii's Republican governor has signed a law imposing limited price controls on gas; it will be interesting to see how much gas is left for the state to control.

A confidence-boosting release of some crude from the Strategic Petroleum Reserve might help to calm tempers, but all in all, the best thing the U.S. can do to bring down oil prices is—nothing. Ask yourself, Which is more likely to deliver cheaper oil: bureaucratic controls or all those new drilling rigs that went up only because of the incentive provided by high prices?

Of course, "I did nothing!" won't fly as a campaign slogan. And in fact, there are things the U.S. could be doing to treat our oil addiction. Because here's another uncomfortable truth: The U.S. now imports almost 60% of the oil it consumes each year, and that figure will only grow. One unfortunate result: Prickly characters like Hugo Chavez have us over a metaphorical barrel .

For starters, Congress could raise fuel-efficiency standards for cars. Even a 10% improvement would save the equivalent of two million barrels a day by 2025—more than we now import from Saudi Arabia or Venezuela. We could reverse policies that encourage consumption, like the absurd tax incentives for small businesses to buy pickups and SUVs. We could ease some of the moratoriums on domestic oil and gas exploration. We could think harder about how to diversify supply; displace oil from uses not associated with transportation; and kick-start, through the wise use of market incentives, the journey toward a future beyond oil.

Years of relatively cheap oil—and low gasoline taxes—have allowed the U.S. to get away with being extraordinarily inefficient in our use of energy; we don't get nearly as much economic activity out of a barrel as our economic peers. The U.S. will never be self-sufficient in oil, even if we pave Alaska and drain the Gulf. But we can, and should, get more for our oil bucks. The U.S. is vulnerable to oil tremblors like the kind we are experiencing now because we have made a series of decisions—about taxes, subsidies, housing, transport, lifestyles—that have led precisely to this point. With the Gulf still damp from Katrina, it's time to ask if we can do it better.

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

The content of this message is not to be construed as constituting market or investment advice. It is intended for educational purposes only. Individuals should consult with their own advisors for specific investment advice.

-- posted by Normxxx

Top 1261. Sep 21, 2005 9:23 PM

» Normxxx - Rita could equal $5 gas

Rita could equal $5 gas

By Chris Isidore, CNN/Money | 22 September 2005

The timing and strength of the latest storm could cause worse spike at the pumps than Katrina did.

Hurricane Rita could cause a new gas price spike if as expected it hits the Texas Gulf Coast Friday or Saturday.

NEW YORK (CNN/Money) - Remember when gas spiked to $3-plus a gallon after Hurricane Katrina? By this time next week, that could seem like the good old days.

Weather and energy experts say that as bad as Hurricane Katrina hit the nation's supply of gasoline, Hurricane Rita could be worse.

Katrina damage was focused on offshore oil platforms and ports. Now the greater risk is to oil-refinery capacity, especially if Rita slams into Houston, Galveston and Port Arthur, Texas.

"We could be looking at gasoline lines and $4 gas, maybe even $5 gas, if this thing does the worst it could do," said energy analyst Peter Beutel of Cameron Hanover. "This storm is in the wrong place. And it's absolutely at the wrong time," said Beutel.

Michael Schlacter, chief meteorologist at Weather 2000, said Rita now appears most likely to hit between Port Arthur and Corpus Christi, Texas, sometime between Friday afternoon and Saturday morning.

Just about all of Texas's refinery capacity lies in that at-risk zone.

"There is no lucky 7-10 split scenario to use a bowling analogy," he said. "If you're [a refiner] within 200 miles, you're going to feel the effect."

Compounding Katrina's impact

When Katrina hit, 15 refineries, nearly all in Louisiana and Mississippi, with a combined capacity of about 3.3 million barrels a day were shut down or damaged, according to the Energy Department. That represented almost 20 percent of U.S. refining capacity.

Within a week, almost two-thirds of that damaged capacity had resumed some operations, according to the department. But four refineries with nearly 900,000 barrels a day of capacity are still basically shut down.

If Rita hits both the Houston-Galveston area, as well as the Port Arthur-Beaumont region near the Texas-Louisiana border, that could take out more than 3 million barrels of capacity a day, according to Bob Tippee, editor of the industry trade journal Oil & Gas Journal in Houston.

"Before Katrina, the system was already so tight that the worst-case scenario was for a disruption that took 250,000 barrels of capacity out of the picture. That would have been considered a major jolt," said Tippee.

"We're already in uncharted territory now. We can't project what happens from another shot the size of Katrina or worse."

Part of the problem is that skilled crews needed to make refinery repairs are already busy trying to fix the Katrina damage. That would extend recovery time from Rita.

"[Rita] could have a significant impact on supply and prices -- this really is a national disaster," Valero Energy (Research) CEO Bill Greehey in an interview with Reuters Tuesday evening.

Gas not the only concern

Problems could spread beyond the gas pumps.

Tippee said that natural-gas prices could see a further spike, since so many of the offshore platforms off of Texas produce natural gas, not crude oil.

And while gasoline imports have helped bring gas prices down from record highs, there isn't as much potential for heating-oil imports, he noted.

"Gasoline tends to obscure everything, especially since we aren't paying heating bills right now," said Tippee. "But we were already looking at a winter fuel problem. We're about to take another hit that will cause a lot of problems."

Schlacter said even the oil platforms off the Louisiana Gulf Coast, which are not likely to take a direct hit from Rita, could be affected by large waves churning up the Gulf of Mexico as the storm passes to the south. Waves of as much as 40 to 50 feet could hit the platforms off the Texas Coast, he estimated.

Tippee said that production across the Gulf is already being affected by oil companies pulling workers off platforms ahead of the storm. And it's not just domestic oil being interrupted.

The Louisiana Offshore Oil Port (LOOP), the nation's largest gateway for overseas oil, stopped accepting deliveries of its 1.2 million barrels of oil a day Wednesday afternoon due to high seas, LOOP spokeswoman Barb Hesterman told Reuters. She said the disruption was expected to be "for a short time."

But if Katrina is any guide, it could take several days after Rita passes for production to resume even at oil and gas platforms that escape damage.

"There were several days where if you could have gotten out to the platform, you could have started it back up, but you couldn't find the boats or helicopters you needed to get back to the platforms," he said.

______________

The contents of this letter/report does not necessarily reflect the opinions or viewpoint of normxxx. They are provided for informational/educational purposes only.

-- posted by Normxxx

Top 1262. Sep 22, 2005 6:33 AM

» lcha - Re: Rita could equal $5 gas

In response to Rita could equal $5 gas posted by Normxxx:

The latest path on Rita has it hitting the Houston refinery complex directly. This would impact not just gasoline but a whole range of chemicals that we didn't even know we depend on.

Houston doesn't mind having all these nasty refineries in it's backyard but for the nation is it a good idea to have so much so concentrated? Rita might help us answer that.

-- posted by lcha

Top 1263. Sep 22, 2005 7:04 AM

» lcha - Platforms

Here is a site that is tracking Hurricanes and shows the rigs and cities in its path
Hurricane Rita Interactive Map
http://gom.rigzone.com/rita.asp

The jog north that Rita has now taken puts it much closer to the major cluster of oil platforms off the north Texas coast. If those are impacted the oil/NG markets will reel. And once again the human element is the workers that would fix the platforms would be dealing with issues related to their own homes. I can tell you that if I am forced into a rebuilding mode on my house, my oil exploration productivity will be dramatically lower for an extended period of time.

-- posted by lcha

Top 1264. Sep 23, 2005 11:47 AM

» Normxxx - The 'Get-Ready Men'

The 'Get-Ready Men'

By Bryant Urstadt | 23 September 2005

We will run out of cheap oil, either now or later. The most pessimistic disciples of the late geologist M. King Hubbert believe that production will peak somewhere between 2000 and 2010. Others suggest that production may top out a few decades after that.

What will happen next is unknown, but an increasing number of the peak-oil handicappers share the dark beliefs of James Howard Kunstler, who predicts that alternative energy sources will never meet our needs and that we are in for a "rough ride through uncharted territory," which will take us "off the edge of a cliff" and thence into "an abyss of economic and political disorder on a scale that no one has ever seen before." The sprawl of metaphors is characteristic of Kunstler who, in

<img align="left" src="http://images.amazon.com/images/P/0871138883.01._PIdp-schmooS,TopRight,7,-26_SCMZZZZZZZ_.jpg" border="0"> The Long Emergency: Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes of the Twenty-first Century,
adds a relentless, scary, and entertaining voice to the rising alarm about life after the cheap oil is gone.

[Normxxx Here:

<img align="left" src="http://images.amazon.com/images/P/0671885286.01._PIdp-schmooS,TopRight,7,-26_SCMZZZZZZZ_.jpg" border="0"> The Great Reckoning: How the World Will Change in the Depression of the 1990's
by James D. Davidson, Lord William Rees-Mogg

The "Great Reckoning" is a great read, if you like truly scary stuff. Unfortunately, it was originally written around 1990 about the "depression of the '90s" (and later updated around 1994 for the paperback edition). But, who knows, they may only be off by a couple of decades or so... ]

Prophets have been warning Americans of the terrible things in store for decades, but Kunstler joins a fresh corps whose numbers seem to have been increasing as quickly as the price of gas. The past two years have seen books with titles like Paul Roberts's The End of Oil, Richard Heinberg's The Party's Over, Tom Mast's Over a Barrel, and David Goodstein's Out of Gas and a film called The End of Suburbia by Gregory Greene, to name a few, and to leave out their long and unsettling subtitles, most of which approximate Roberts's choice, which is On the Edge of a Perilous New World. These authors may someday join the ranks of the dated alarmists— Jeremy Rifkin, among countless others, issued similar warnings in Entropy in 1980— but then again, they may be right. One may demonstrate that the alarm rings too often and too soon, but that does not mean that the wolf will never come.

Kunstler's predictions may seem excessively dire to many, but a significant number of people are paying attention and getting ready.

[Normxxx Here: Just like Y2K! ]

His book has been hovering in the top 1,000 on Amazon.com for months, and the topic of peak oil has gained traction beyond the encouraging environment of the Internet. In the past 18 months, 82 groups with about 2,000 registered members in cities around the world have been organized through Meetup.com to discuss the issue. At a recent meeting of the 100-member New York forum, participants were quoting Kunstler repeatedly— during, for instance, a discussion of where to move after the crash.

Our particular problem, Kunstler and his colleagues continually remind us, is that we have built a world based on the ready availability of cheap energy. The apocalyptic catch, though, in their view, is that oil was a "one-shot deal," and there will never be another power source as easy to extract, as portable, and as powerful. When the oil dries up, writes Kunstler, "all bets are off against civilization's future."

The internal logic of the argument is persuasive, and one reads all of these books with white knuckles.

[Normxxx Here: But with gradually diminishing intensity over time! ]

Oil has seeped into every nook of our existence. At the most basic level, we need oil to grow our food, particularly as we have moved to large-scale, fertilizer-dependent agriculture, and we need oil to get that food to our communities.

Things might be simpler if our appetites were limited to food. But the range of our activities has broadened considerably, and oil supports almost all of them. We need oil to make most of the things we use every day— from plastic to the roads we drive on— and, more importantly, to get them from the hands of cheap laborers and into our big box stores, to which we drive in SUVs, of course. Oil now satisfies about 40 percent of our energy needs, and about two-thirds of it we burn in motors, going places and moving things or sitting in traffic.

Kunstler does not believe the United States will survive as we know it but will instead break down into autonomous, isolated regions. The fun is certainly over in the desert United States. According to Kunstler, cities like Las Vegas— dependent on cheap air conditioning, air travel, and good highways— will wither into dust.

[Normxxx Here: Will anyone notice? ]

Around the country, a trip to town will become a day's excursion, a trip to the nearest large city a journey of several days, and a trip across the country nearly unthinkable.

The suburbs— which Kunstler calls "the greatest misallocation of resources in the history of the world," and for which he seems to reserve a special contempt— will become particularly miserable places, devolving into wastelands of abandoned McMansions, empty Wal-Marts, and disintegrating asphalt. We will not be able to heat our 5,000-square-foot houses, if we can get to them, and we will not be able to fill the box stores with Chinese goods, or to resurface the roads, which we won't be using much in any case.

[Normxxx Here: What? No bicycles? No horses? ]

As for the rest of the world, Europe may fare slightly better, having to some extent preserved the small, agriculture-friendly, locally focused communities that Kunstler believes will dominate the post-oil world. But overall, the strife will be biblical: "Australia and New Zealand may fall victim to desperate Chinese adventuring....The coastlines of all nations may become prey to a new species of stateless freebooting raiders....The Pacific coast of North America will be especially vulnerable to raids emanating from the disintegrating nations of Asia." Poor nations will never develop but will seem unexceptional among "the hardship and chaos that will become common elsewhere."

These predictions of collapse all presuppose that we cannot be saved by alternative energy sources. Kunstler dismisses alternative energy as a "mirage" and belief in it as "a holdover from the techno-miracle cavalcade of the twentieth century." He does his best to demolish any hope for natural gas, solar and wind power, coal, hydroelectric power, biomass, or nuclear power. Though he succeeds in provoking thought, he does not quite convince the optimist that we are doomed.

He discounts natural gas as a long-term solution, and with good reason, for it suffers from most of the same reserve problems as oil, compounded by problems of getting it from the field to the user. But he does undervalue it as a "bridge" supply, a form of energy that might be used to help us make the transition to the next source. And the scarcity of bridge power

[Normxxx Here: Even shale oil, tar sands, biodiesel? ]

is crucial to many of his assumptions about whether we will have enough energy to build the next generation of sources.

He is doubtful about solar power, too, pointing out that the infrastructure to obtain it, as it exists today, relies on the petroleum economy in a number of ways, not least for the plastic that goes into batteries and photovoltaic-cell arrays. Ditto for wind turbines, which require a fair amount of machinery, currently petroleum based, for their installation. Objections like this— where Kunstler asks, could we survive on the output of this source alone?— are raised frequently and are certainly the weakest point in his argument.

Meanwhile, many knowledgeable optimists have yet to dismiss the potential of either solar or wind: companies like GE and Boeing have been making major investments in solar energies for years, even renewing interest in and work on once marginalized technologies like the Stirling engine, which could run on concentrated solar heat. Wind, too, has turned some corporate heads: Goldman Sachs, for instance, recently acquired Houston-based Zilkha Renewable Energy, which builds wind farms. Still, as Kunstler points out, solar and wind are very inefficient compared with burning petroleum products and possibly unsuited to running a public transportation network, much less the car-based system we have now.

Coal is already producing about half of our electricity, and though most agree that it is in good supply, Kunstler is dubious about the numbers. The environmental cost of burning it is also, as Kunstler notes, extreme: beyond coal's contribution to global warming and other, more local forms of air pollution, it is hard to dismiss the large-scale leveling of landscapes. As for synthesizing oil from coal or, for that matter, extracting it from shale and tar sands, it can happen; but the high cost

[Normxxx Here: Not so high anymore. ]

and the limited return on the energy invested are not likely to allow anything like the enormous economic expansion of the last century. Nor, given the likely outcome of continued global warming, should we be overly encourage coal conversion. But neither does this mean that the slow-moving work on clean coal will never bear fruit.

Kunstler is skeptical, too, about hydroelectric power— which is much cleaner— on the grounds that we will not be able to maintain the infrastructure for building dams without our cheap oil. And though hydroelectric power meets about 10 percent of our electricity needs today, Kunstler believes that room for growth is limited, as many of the best dam sites are already taken. Again, Kunstler is assuming the worst case. It is quite possible, for instance, that we will build and maintain dams with equipment that runs on expensive oil, if we can, or with some kind of coal-powered steam shovel, if we must.

[Normxxx Here: And, if we run out of good dam sites, how about geothermal? ]

Kunstler's argument against biomass is that making it in useful quantities requires massive industrial farming powered by...cheap oil. There is some truth here. But biomass advocates are more sanguine, arguing that fuel could be produced from naturally fecund prairie grasses, among other things. And as former assistant secretary of energy Dan Reicher has pointed out, biomass production inherently reduces the concentration of greenhouse gases in the atmosphere: plant life, after all, consumes carbon dioxide.

Kunstler is slightly bullish on the usefulness of one form of biomass, wood— with a chilling caveat. He expects it will heat our homes nicely in the absence of cheap oil and that, consequently, the "future deforestation of North America (and Europe) could be as rapid and dramatic as the extermination of the American bison in the decades after the Civil War."

That leaves nuclear, as Kunstler and so many others have been noticing lately. Still, Kunstler accepts nuclear power's ascension reluctantly, unsure as in other cases that we will be able to maintain a nuclear infrastructure using nuclear power alone and doubtful that we will be able to convert that power into a transportation system anywhere near as massive as the one we now have. But even if the large four-wheel-drive truck may someday be an obsolete method of picking up milk, that does not mean we will be back on horses: even the mass-transit-averse U.S. has had reasonable success with electric trains.

Overall, Kunstler's tapestry of destruction assumes a race of much more limited flexibility and creativity than history shows humanity to be. He could be right, of course; and given our behavior in the past hundred years, there may be a perverse satisfaction in agreeing with his assessments of our capabilities and our future. But more likely we will muddle through as we almost always have, flourishing here, waning there, and surprising ourselves, perhaps undeservedly.

It seems more realistic to assume that as the price of oil continues to rise, rather than focusing myopically on oil technology, we will try a number of other options at once, looking with our usual expediency for an easy solution that does not kill us, at least for the moment. We may end up with inefficient solar panels on our roofs, kicking electricity back in to the grid in a trickle; a somewhat more efficient biomass plant at the end of the block; and a transportation system running on fuel cells charged with electricity from nuclear plants. Las Vegas may even get off the hook, harnessing the geothermal resources of the West. And none of this takes into consideration improvements in how efficiently we consume energy.

Most of all, despite its urgency, Kunstler's book reminds us how modern man is scared by his own inventions. We've been expecting to die by our own hand at least since Hiroshima, and even younger readers may share relief at having somehow [so far] escaped the ravages of a nuclear winter, a homemade dirty bomb, and a world-destroying programming error on January 1, 2000.

In My Life and Hard Times, James Thurber describes a citizen in his childhood town of Columbus, OH: the Get-Ready Man. The Get-Ready Man drove a car with a door in the back and liked to shout at people as he drove, using a megaphone. His warning was always the same: "Get Ready! Get read-y...! The worllld is coming to an End!" Kunstler and the others may join the Get-Ready Man in the annals of doomsday prophets, and the Peak Oil Apocalypse may get filed along with Y2K under "false alarms and other diversions." Even now, it may be dismissed by some with laughter. But, for now, it ought to be nervous laughter.

Scary Stuff!!!

-- posted by Normxxx

Top 1265. Sep 23, 2005 2:51 PM

» Bill_Duffy - Re: The 'Get-Ready Men'

.
I'll admit, I haven't read the book, but I doubt that we'll just all freeze in the dark. These doom-and-gloomers fail to appreciate the creativity and resourcefullness of our engineers.

To me, this just seems like another challenge, rife with opportunity for invention.

A few ideas: Wind power (now costs 5 cents per kwh), nuclear power (technology now far surpasses Chernobyl)sea tides, sea thermal differential, satellite solar microwaved to earth, cold fusion.

Let the games begin!

-- posted by Bill_Duffy

Top 1266. Sep 24, 2005 6:24 AM

» axolotl - Oil Shale estimated to be 800 Billion barrels..............

..........recent article in IBD says $70 to $90 oil is the level for profit from shale oil in the American west. There is a process which may produce oil from shale for a $20 per barrel cost. I would investigate using solar heaters to heat mined shale rock and allow the oil to flow free.

-- posted by axolotl