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By Robert Rapier on Sep 13, 2010 with 99 responses

Maxwell Forecasts Peak Oil in Seven Years

Respected oil analyst and oil industry veteran Charles Maxwell (nicknamed the “Dean of Oil Analysts”) has forecast peak oil by 2017 or 2018:

Bracing For Peak Oil Production By Decade’s End

His prediction is not so remarkable, as is where he made his prediction. The prediction was in Forbes, which has often scoffed at the notion of a near-term peak. Some of Maxwell’s comments:

A bind is clearly coming. We think that the peak in production will actually occur in the period 2015 to 2020. And if I had to pick a particular year, I might use 2017 or 2018. That would suggest that around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today.

As far as the impact, you can put Maxwell down as a Long Recession believer. In a 2008 interview, he predicted:

“[Maxwell] expects an oil-induced financial crisis to start somewhere in the 2010 to 2015 timeframe,” Energytechstocks.com reported. “He said that, unlike the recession the U.S. appears to be in today, ‘This will not be six months of hell and then we come out of it.’ Rather, Maxwell expects this financial crisis to last at least 10 or 12 years, as the world goes through a prolonged period of price-induced rationing (eg, oil up to $300 a barrel and U.S. pump prices up to $15 a gallon).”

Maxwell and I are also on the same page regarding what will happen with the oil companies. Some people think that as oil declines, the oil companies will go out of business. I have a different view. I think that the rise in oil prices will be faster than the decline in production for most oil companies. Thus, they will make more money on less production. This will infuriate the public and the politicians, who will see sky-high pump prices at the same time the oil companies are raking in record profits (reminiscent of 2007-2008). Thus, there will be many calls for additional windfall profits taxes, and more calls for nationalizing the oil companies. Maxwell’s take:

In this case, “allow” means to allow the profits to flow through to the shareholders. What they will do is to put in excess profit taxes or windfall profit taxes on oil. That is the main problem that the oil industry will be dealing with in those future days. But even so, it looks like profits will rise significantly.

While there are some differences in the details, what Maxwell articulated approximates my own views.

  • I view a global oil production peak within the decade as a near-certainty.
  • I think there is a small probability that the peak has already occurred, but we won’t know that until several years after the fact.
  • I don’t believe that there is anything in the technology pipeline that can prevent a growing gap between supply and today’s demand.
  • I believe that gap will be closed by price-induced rationing, which will be very hard on businesses and individuals.

Higher prices will result in a very difficult transition period in which we are forced to use less because we simply don’t have the money to use the oil that we have historically used. This will be a period of great economic difficulty, lasting for years. At the same time that the economy is in great difficulty, oil companies will continue to reap big profits, causing an enormous amount of resentment and calls for higher taxation and greater regulation of the oil industry.

However, I also believe that humans are very resilient, and that we will eventually come through this. This is why I do not characterize myself as a ‘doomer.’ We do use a lot more energy than we absolutely have to use. I would bet that most people – if they really had to – could cut their fuel consumption by 50%. It wouldn’t necessarily be convenient or easy, but it could be done. But it takes planning to do this, and it is our collective failure to plan that is going to lead to the difficult period. It is during the difficult period that we will get serious about planning, and the subsequent modifications in our energy usage pattern will ultimately lead to recovery on the other side of the crisis. Energy transitions take time, but our energy consumption patterns will be forever altered relative to what they are today. I simply do not believe it will ever be possible to replace major shortfalls in oil production with renewables. It may be possible to replace 20% of today’s oil production, but beyond that there will be increasing competition with arable land for food production — and pressure to turn forested land into arable land.

  1. By Jerry Unruh on September 13, 2010 at 4:35 pm

    It will be painful but clearly doable for the U.S. to half energy consumption. After all, that is essentially where Japan and most of Western Europe are now. I assert that the U.S. will need to reduce energy consumption to about 1/4 of what it is now (Europe will have to halve consumption). At that level I think renewables can eventually meet the world’s energy needs and allow other countries to catch up. However, if we deforest as you suggest might happen, I assert that we will not recover due to climate change issues and loss of nature’s free environmental services. For example, tropical forests produce their own weather. Many projections suggest that loss of amazon forests will lead to desertification since rain will fall much closer to the coast rather than being moved inland by transpiration. I truly hope you are wrong and we don’t take that path.

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  2. By Rufus on September 13, 2010 at 5:10 pm

    No need to cut down any forests. We just plant the fields that are now lying fallow with switchgrass, and miscanthus. Maybe, do some agave out in the SW. Do the MSW thing.

    35 mpg in 2022(?) is already the law.

    They built 5,000 Electric Power Stations the year after Edison invented the light bulb. 127,000 more in the next five years. And, that was in the 1800′s.

    Once the problem is “Recognized,” the problem is “Solved.”

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  3. By rrapier on September 13, 2010 at 5:21 pm

    Rufus said:

    No need to cut down any forests. We just plant the fields that are now lying fallow with switchgrass, and miscanthus. Maybe, do some agave out in the SW. Do the MSW thing.


     

    Wishful thinking. Despite the glowing press releases, the technology to convert switchgrass into ethanol in an economical and efficient manner does not exist. This is why you don’t see any commercial plants being built, despite the availability of state and federal money, and mandates. As I have said many times, I don’t believe the technology will ever be commercially available in anything more than niche situations. It is just too inefficient to turn a 4% beer (which is what cellulosic gives you) into fuel grade ethanol. Imagine turning the beer you drink into fuel, and you start to get the picture.

    RR

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  4. By Wendell Mercantile on September 13, 2010 at 6:06 pm

    It is just too inefficient to turn a 4% beer (which is what cellulosic gives you) into fuel grade ethanol.

    RR,

    Face it Robert, Rufus just won’t acknowledge that we will also be facing Peak Ethanol.

    Oh, and of course there will also be something called Peak Water. One can’t just cast switchgrass, miscanthus, and agave seeds on the ground — even fallow ground — and expect them to flourish without water.

    The real problem of course is the continued increase of the earth’s population. The U.S. now has about 5% of the world’s population, yet consume roughly 25% of the energy.

    It should be intuitively obvious to even the most casual observer that there will never be enough resources and energy to lift all of the other 95%* of the earth’s population to our lifestyle.
    ____________________
    * And actually, much of Western Europe already lives better than we do and consumes less energy doing it.

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  5. By Mark Goldes on September 13, 2010 at 6:43 pm

    Revolutionary new technologies are being born that will dramatically change the energy picture.

    See Moving Beyong Oil and Running on Water on the Aesop Institute website.

    The latter is based on fractional Hydrogen. See blacklightpower.com for a competitor that is close to creating power plants that will run on small amounts of ordinary water. See the Motive Power paper on their website and note the CIHT which they estimate will allow an ordinary car to travel 5,000 miles on a gallon of water. Most scientists will ridicule their work, but as National and indpendent laboratories validate it and they finally demonstrate a working prototype that is bound to change. Possibly before this year is over.

    Our own work is based on using fractional Hydrogen with engines. A hybrid car is estimated to travel 1,000 miles with such an engine.

    We do not fully agree with their theory, but both firms maintain that one barrel of water becomes the energy equivalent of 200 barrels of oil.

    Magnetic systems are even more difficult to believe. These require no fuel and are likely to begin appearing in products in several countries within a year or so. They will only be taken seriously when independent laboratories validate the new science involved and products are difficult to disbelieve.

    The economy will change in ways that are dramatically different from these projections, as it sowly becomes obvious that these technologies will be recognized as very real.

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  6. By Rufus on September 13, 2010 at 6:55 pm

    More and more serious players say there is, Robert.

    Inbicon, Novozymes, Dupont Danisco, Poet, Genera, Fiberight – they’re all producing cellulosic ethanol, and projecting “all-in” costs of $2.00/gal. They are, also, saying that there is NO Federal Money available for a “Commercial-sized” plant.

    Anyways, if you’ll stipulate that I might be right about this, I’ll stipulate that I might be a wee bit optimistic on price. That brings us to part 2 – do we have enough land?

    A hundred years ago, or thereabouts, we were rowcropping 400 Million Acres in this country. Today, we’re rowcropping a little less than 250 Million Acres. So, what happened to that other 150 Million Acres? Did it run away, and join the circus? Join the Foreign Legion? Retire to Florida?

    No. It’s still there, growing weeds, and bushes; and, sometimes, you’ll see a field of it planted in rye grass, and supporting someone’s l’l tax dodge, . . . . er, Cow. We’re paying farmers not to plant 32 Million Acres of it.

    So 150 Million previously rowcropped land planted in switchgrass at, let’s say. 6 Tons/acre, and 80 gal/ton = 72 Billion Gallons/Yr. Added to the 25 Billion gallons from Corn, Corn Cobs, and Stover, and another 10 Billion Gallons from MSW, and, hell, we’re awash in the 200 proof stuff.

    Easy

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  7. By Perry on September 13, 2010 at 7:33 pm

    I’m beginning to wonder if biofuels are more of a distraction than a help. A ton of switchgrass can make 79 gallons of ethanol, roughly 6.6M btu’s of liquid energy. The same ton of switchgrass can produce 15M btu’s when burned. Burning it produces more than twice the btu’s and an electric motor is 6X as efficient as the ICE. Unless ethanol can be used in airplanes or big rigs, it makes more sense to burn the biomass imo.

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  8. By Perry on September 13, 2010 at 7:48 pm

    To put it in better context, a ton of switchgrass will take the Leaf 6000 miles. At 20 MPG, ethanol from a ton of switchgrass will take you 1600 miles. Obviously, we’re making better use of resources by burning the biomass.

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  9. By Rufus on September 13, 2010 at 9:23 pm

    Yeah, Perry, but it doesn’t take the ethanol-powered car 30 days to get there.

    :)

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  10. By Wendell Mercantile on September 13, 2010 at 10:23 pm

    So, what happened to that other 150 Million Acres? Did it run away, and join the circus? Join the Foreign Legion? Retire to Florida?

    Rufus~

    First example: A hundred years ago driving into Chicago you would have seen cornfields until about five miles from the Loop. Today, from 40 miles outside the Loop until downtown Chicago it’s nothing but housing developments, big box stores, strip malls, and and light industrial buildings. Nary a farmer’s field to be seen, except a few truck farms growing vegetables for upscale urban farmer’s markets.

    The same is true around almost every other large urban center. (But probably not in Tunica — except for the casinos.)

    The build up around cities doesn’t account for all of the 150 million acres not under cultivation, but it’s significant.

    Second example: One hundred years ago there were farms under cultivation and small towns all over Montana, eastern Wyoming, western Kansas and Nebraska, eastern Colorado, and the Dakotas. Then along came something called the Dust Bowl, and all those farmers realized that just maybe much of that acreage west of the 100th Meridian wasn’t really that great for growing crops. In fact, those parts of the country have been slowly emptying, and there have even been proposals to return it to the buffalo (or bison to be correct) in the form of a vast nature preserve. Buffalo Commons

    Have you ever driven across western Kansas, eastern Colorado, eastern Wyoming, or western Nebraska? If you had, you’d know that much of those 150 million acres you talk about aren’t all that useful, and that without the Ogallala Aquifer* they would produce nothing at all.

    Third example: The Mississippi RIver annually carries ~230 million tons of soil into the Gulf of Mexico — much o that from corn fields in Iowa, Illinois, and Missouri. I don’t know what that translate to in terms of cropland acreage, but over 100 years, it would be significant.
    __________
    * An aquifer that Great Plains farmers are drawing down faster than it can recharge.

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  11. By Perry on September 13, 2010 at 11:37 pm

    Rufus said:

    So 150 Million previously rowcropped land planted in switchgrass at, let’s say. 6 Tons/acre, and 80 gal/ton = 72 Billion Gallons/Yr. Added to the 25 Billion gallons from Corn, Corn Cobs, and Stover, and another 10 Billion Gallons from MSW, and, hell, we’re awash in the 200 proof stuff.


     

    Why not do the same job with just 35 Million acres Rufus? There’s no good reason to stay wedded to ICE’s. Electric is faster, more efficient, and much cleaner. And, we probably should convert those ethanol stills to butanol. Butanol can be modified for use in diesel and jet engines. Ethanol can’t.

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  12. By OD on September 14, 2010 at 12:44 am

    Robert,
    Did he say what the decline rate would be?

    Also, I do not see how you can not be a doomer since you believe there is nothing that can replace but a fraction of oil we currently use.

    Is LNG going to play a role? What if Japan does figure outa way to mine the methane cathrates on the ocean floor, like they are set on doing in 2012.

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  13. By OD on September 14, 2010 at 12:52 am

    I assert that the U.S. will need to reduce energy consumption to about 1/4 of what it is now (Europe will have to halve consumption).

    How did you come to that conclusion? Europe production is far lower than that of the US and they import more oil than the US.

    If you ask me, North America as a whole looks far better off than Europe. It’s also important not to forget the natural gas situation they are facing.

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  14. By rrapier on September 14, 2010 at 1:35 am

    OD said:

    Robert,

    Did he say what the decline rate would be?

    Also, I do not see how you can not be a doomer since you believe there is nothing that can replace but a fraction of oil we currently use.

    Is LNG going to play a role? What if Japan does figure outa way to mine the methane cathrates on the ocean floor, like they are set on doing in 2012.


     

    LNG, coal, biomass, nuclear, etc. will all play a role. They just won’t be able to replace today’s consumption of oil. Price-induced conservation will have to fill the gap.

    He didn’t specify a decline rate. Doomers believe that civilization is going to collapse; I don’t believe that.

     

    “Europe production is far lower than that of the US and they import more oil than the US.”

     

    On a per capita basis, several European have higher per capita GDP and almost all Western European countries have a higher GDP per barrel of oil used than the U.S.

    http://en.wikipedia.org/wiki/L…..per_capita

    http://en.wikipedia.org/wiki/G…..per_barrel

    RR

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  15. By paul-n on September 14, 2010 at 1:38 am

    I do not see how you can not be a doomer since you believe there is nothing that can replace but a fraction of oil we currently use.

    But that doesn’t mean we have to replace all of it, we just have to use a lot less.

    If you ask me, North America as a whole looks far better off than Europe. It’s also important not to forget the natural gas situation they are facing.

    OD, I would agree with that.  All North America has to do is bring it oil use down to what Europe is today (per capita basis) and North America will be oil independent.

    Europe, having already done all the easy stuff on oil conservation, has to work much harder, and reduce  consumption more than 3/4, to become oil independent.

    So all we have to do is get our oil usage to Euro levels, which can be done with all of todays’s technology (efficient cars, transit, even ethanol) and a bit of willpower, and we have energy independence with Euro type transportation – I think that’s a pretty good trade.  In fact, that’s a better trade than almost any other oil importing place can make.

     

     

     

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  16. By paul-n on September 14, 2010 at 2:17 am

    Perry wrote;

    And, we probably should convert those ethanol stills to butanol. Butanol can be modified for use in diesel and jet engines. Ethanol can’t.

    Before you do that, you might first want to find an energy efficient way to produce butanol from biomass – so far, no one has

    Second thing is that ethanol can absolutely be used in diesel engines, either as a co-fuel, or convert the engine to ethanol only, either spark or compression ignition.  For co-fuelling, the diesel racers prefer methanol, but ethanol will work too.  Ethanol only is proven technology, just not widely used (yet).

    Of course, we can also run any engines directly (sort of) on woodgas, using any (dry) biomass as the fuel and gasifying it  The  ”field to wheels” efficiency is actually better using a vehicle mounted gasifier than using the biomass to make either ethanol or electricity first, but the ethanol and electrical routes are much more convenient, especially for cars.  

     

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  17. By Perry on September 14, 2010 at 2:46 am

    “I don’t believe that there is anything in the technology pipeline that can prevent a growing gap between supply and today’s demand.”

    I can’t believe you let that one slide Robert. Cheap oil is the only reason gas guzzlers won out over electric carriages 100 years ago. If alien beings swiped our remaining petroleum reserves tomorrow, we could transition to electric transportation pretty damned quickly. Not in a day or a week, but seven years is more than enough time. I plan to be laughing my way past gas stations seven years from now. Don’t know yet whether I’ll be in an EV or PHEV, but I do know I won’t be stuck with an ICE.

    Btw, when lithium-air batteries get the kinks worked out, we can say good-bye to range anxiety. A Leaf might travel 900 miles on a charge, instead of 90. And yeah, that’s in the technology pipeline today.

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  18. By Perry on September 14, 2010 at 3:24 am

    Paul N said:

     

    Before you do that, you might first want to find an energy efficient way to produce butanol from biomass – so far, no one has

     


     

    Here are a couple of companies who claim they have Paul. Each is in the business of converting ethanol plants to butanol production.

     

    http://www.gevo.com/

    http://www.greenbiologics.com/

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  19. By moiety on September 14, 2010 at 4:47 am

    Robert Rapier said:

    It is just too inefficient to turn a 4% beer (which is what cellulosic gives you) into fuel grade ethanol. 


     

    In that regard the only technology I can see is some pervaporation membrane being able to concentrate in one step from 4/5% ethanol to say 95% ethanol with a final purification step (or use of the 95% ethanol as fuel = modified engine). That sort of performance has probably a 5% chance in the next 10 years after which it still has to break into the market (i.e. 20 years to adoption minimum). If that could be achieved a tentative 50% energy reduction based on cost maybe possible. By which stage we will already be well into the peak decline.

     

    Wendell Mercantile said:

    Peak Water. 


     

    That is something that always worries me. Hopefully we might learn from the Austrian experiences of direct water reuse sooner rather than water. Google has plenty of info on that.

    Rufus said:

    Inbicon, Novozymes, Dupont Danisco, Poet, Genera, Fiberight – they’re all producing cellulosic ethanol, and projecting “all-in” costs of $2.00/gal. They are, also, saying that there is NO Federal Money available for a “Commercial-sized” plant.


     

     

    Maybe. However is a link from an ethanol supporter no less from the ethanol producer magazine. We have one small producer on a worldwide scale.

    “The conclusion? Although many are claiming breakthroughs and begun operating demo plants, few have actually made enough ethanol to supply even just 1,000 gallons for a race or two.”

    http://www.ethanolproducer.com…..gPostID=99

     

     

     

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  20. By moiety on September 14, 2010 at 4:52 am

    Paul N said:

    OD, I would agree with that.  All North America has to do is bring it oil use down to what Europe is today (per capita basis) and North America will be oil independent.


     

    Completely disagree. The economies and consuimer base of Europes and America are not all that different so the supply chain of oil or consumer goods will mirror each other on a macro scale. What it shows is that even with Europes decreases, oil independance is not achieved.

    I do believe that Europe is is a worse of state than America long term but with a sever economic depression possible, I doubt it will make too much difference in the long term. America maybe able to soften the blow if it can tap its unconventional gas but no more than that.

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  21. By Joost [Amsterdam] on September 14, 2010 at 8:57 am

    While I agree that peak oil will be coming somewhere in the future I expect humankind to be able to change their behaviour accordingly and to transition our transportation systems over to a mix of renewable fuels, electrical power and many combinations of them both. What the US needs to realize is that they are the biggest wasters of oil at this moment. With China of course being hot on their heels to overtake them eventually. Europe does have a severe problem in that our energy reserves are nowhere near a large as the US but we still have reserves. Japan hasn’t had any EVER and look at how they have created a very affluent society and industry. But they are willing to change their behaviour, become more efficient, use mass-transit and I don’t see the US doing that anytime soon. And good luck trying to build a proper infrastructure when prizes for fuel have reached that inevitable high. Then it will be too late. Start building proper mass-transit now and stop driving 5 Liter engines for a towncar and we’ll all be alright.

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  22. By Wendell Mercantile on September 14, 2010 at 12:54 pm

    With many more flexfuel cars on the road by next year, you can look for a large increase in E85 sales when Gasoline crosses the $3.00 mark.

    Rufus~

    What will stop the ethanol industry from raising the price of E85 parallel to the rise of gasoline? That’s what they did in 2008 when increases in the price of ethanol and E85 had a nearly 1:1 correlation with increases in the price of oil and gasoline.

    That could have meant either the cost of production of ethanol and E85 is closely tied to the cost of oil, gasoline, and diesel; or that the ethanol industry was gouging us.

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  23. By Benny BND Cole on September 14, 2010 at 1:16 pm

    This talk of a “long recession” based on potentially higher oil prices comes close to old-fashioned doom-mongering. Oil analysts are prone to visions in which oil becomes fantastically valuable–and their services and commentary tremendously in demand.

    We could just as easily construct a compelling argument that OPEC faces several financial daggers, from the PHEV and resurgent production in Venezuela and Iraq. Libya, long a pariah nation, is now boosting production–what if Iran and Iraq follow suit?

    In the United States, we have several options that promise both higher living standards and cleaner air, the PHEV being the best example. But we already have CNG vehicles in use, and perhaps straight-out BEVs will work (commercially speaking). All of these options mean less imported oil, and thus higher domestic living standards, and cleaner air. Bring to me a “long recession.”

    The price signal is our friend. Long before oil hits $300 a barrel, businesses and consumers will switch to alternatives.
    We may, in fact, be watching the end of the liquid fossil fuel era, and it will end with a whimper, not a bang.

    Remember, while one analyst today predicts $300 a barrel, another recently predicted $10 a barrel. I would not put too much faith in either prediction, but I would put a lot of faith in the long-term results of the price signal.

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  24. By Wendell Mercantile on September 14, 2010 at 9:49 am

    No need to cut down any forests. We just plant the fields that are now lying fallow with switchgrass, and miscanthus.

    Rufus~

    Don’t gloss over the fact that without oil, both the corn and cellulosic ethanol businesses would have trouble operating. Cheap and easy oil is a key part of their business models. Neither has ever proved they can operate using some of the fuel they make.

    How would a cellulosic operation haul the immense amount of biomass they need from a 30 mile or more radius without trucks powered by diesel fuel? Are they ready to go back to these days: Charcoal Burning Truck Or these days: Draft Horses

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  25. By OD on September 14, 2010 at 11:02 am

    On a per capita basis, several European have higher per capita GDP and almost all Western European countries have a higher GDP per barrel of oil used than the U.S.

    http://en.wikipedia.org/wiki/L…..per_capita

    http://en.wikipedia.org/wiki/G…..per_barrel

    Those are some interesting links Robert, but I’m not entirely sure what your point is. They show Saudi Arabia being dead last in GDP per barrels of oil and Russia being 2nd to last. All that says to me is the US, Saudi, Russia, are currently energy pigs and have a long ways to go in efficiency. It offers no evidece that the US will have to cut its consumption by 75%, in which case the US would not be using all of its own production and getting NO imports.

    In fact, it could support the view that EU has already trimmed their ‘fat’ and it will be a much harder adjusment going foward.

    Can you offer some link that will provide evidence that the US will have to cut its energy use by 75% while EU only 50%?

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  26. By OD on September 14, 2010 at 11:16 am

    Now that I have read the interview with Mr Maxwell, I have to take his precition with a grain of salt. The method he used to come to his peak date, is less than scientific it would seem. For those that haven’t read the interview, he took his best estimate of when oil ‘finds’ peaked and added 50 years to that. Yep that’s it, according to this interview at least. No assement of current oil fields and their decline rate paired against new production set to come online.

    I’m not an oil expert, but that doesn’t seem like a very good what to guess the peak. Maybe i’m wrong.

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  27. By OD on September 14, 2010 at 11:20 am

    Japan hasn’t had any EVER and look at how they have created a very affluent society and industry.

    Japan is the ultimate canary in the coal mine. No wonder they are trying something as radical as mining the ocean floor.

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  28. By Rufus on September 14, 2010 at 11:22 am

    Well, Wendell, I guess they’ll haul that biomass with the cheapest, most efficient fuel available. If they have an “old” diesel tractor they might use biodiesel. If they have a newer tractor they might use ethanol. Or, they might use biogas from the anaerobic digester.

    I think the “Johnny come latelies” to the story often concentrate on “supplies,” and overlook the Greatly Increasing Demand from Chindia, and the rest of the “developing” world. I don’t think Any of them expects Supply to increase by 5 Million bbl/day in the next 3 years, and yet, it’s hard to see why demand growth would slow in the Non-OECD universe.

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  29. By Wendell Mercantile on September 14, 2010 at 12:01 pm

    Japan is the ultimate canary in the coal mine. No wonder they are trying something as radical as mining the ocean floor.

    Japan is making a dedicated and serious effort to tap into the huge deposits of methane clathrates at the bottom of the oceans off its shores. Should Japan figure out how to do that, they will have a leg up on everyone else.

    Developing the technology to tap into the huge deposits* of methane clathrates deep in the oceans has to be a huge part of solving our future energy problems, yet we hear very little about it. It’s deep and cold down there — as we saw during the Gulf oil well blowout — and not easy to work down there, but there is a vast amount of energy waiting to be tapped into.

    Perhaps RR can someday write an essay on the potential of methane clathrates.
    _________________
    * Some estimates say as much as 5,000,000 cubic kilometers may exist under the oceans.

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  30. By mcain6925 on September 14, 2010 at 12:07 pm

    I believe that gap will be closed by price-induced rationing, which will be very hard on businesses and individuals.

     

    There will be political limits to how much rationing-by-price will be tolerated.  If that form of rationing is too hard on too many individuals, Congress will act and we’ll see coupons or something similar.  I suspect that the price point at which Congress would act is significantly lower than many believe; my guess would be that a quick increase to the $7-8 range would be sufficient.  The US still produces more than 6.5 million bbl/day (all liquids) which Congress can pretty much allocate as they wish and at prices that they wish.  “Failure to produce” can be made a crime for well owners.  We can all envision the kinds of things that Congress would do.  Farmers would get guaranteed amounts of diesel at moderate prices.  Overnight air delivery would probably disappear (or become hideously expensive as people bid for the space on the limited number of flights possible).  Most recreational uses of gasoline would be banned.

    Just out of curiosity, how might such an allocation work out?  6.5 million bbl/day works out to roughly 866 gals/household/year.  Not all of that is gasoline and diesel, of course, only about 70%, so 606 gals/household/year in transportation fuels (ignoring kerosene).  If half of that is reserved for commercial uses, then 303 gals/household/year, or 5.8 gals/household/week.  Just for comparison, a WWII “A” sticker allowed you to have 4 gals/week.  The people in the exurbs who commute downtown are totally screwed; inner suburbs, not so much, particularly with car-pooling and work-at-home.  Some of those households don’t have cars and don’t need fuel.  Allowing them to resell their coupons in an organized market lets the rich get more fuel (at a much higher price) while everyone gets some fuel at a moderate price.

    Think it can’t happen?  Following the 1973 oil crisis, the federal government printed (but did not use) gasoline rationing stamps.

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  31. By Rufus on September 14, 2010 at 12:28 pm

    I see thousands of County, and City Governments passing Bond Issues to build their own ethanol facilities. Sourcing local feedstocks to provide fuel, Locally. This is an incredible No-Brainer.

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  32. By Wendell Mercantile on September 14, 2010 at 12:36 pm

    I see thousands of County, and City Governments passing Bond Issues to build their own ethanol facilities.

    Rufus~

    Thousands? Be specific please. Give us just a few of the names of these “thousands” of cities and counties. I live in the Corn Belt and that’s not happening here. All the corn ethanol distilleries around here are private or farmer co-ops. I haven’t seen any funded by a city or county bond.

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  33. By Wendell Mercantile on September 14, 2010 at 12:41 pm

    a WWII “A” sticker allowed you to have 4 gals/week.

    That would stop the people who own SUVs dead in their tracks, wouldn’t it?

    I wonder how that would work for flex-fuel vehicles, and how they would ration E85? I note a new hybrid, flex-fuel Chevy Tahoe gets all of 11 mpg city and 16 mpg highway burning E85.

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  34. By Rufus on September 14, 2010 at 12:42 pm

    About 1/3 of the cars/trucks from the Detroit 3 will be flexfuel this year. They are committed to making half of their vehicles flexfuel in 2012. Those start arriving on the market next fall.

    Valero is putting E85 in their New Stores, and Murphy (Walmart Stores) is buying another ethanol plant (Panda, in Tx.)

    Remember, half of the fuel used is used by vehicles six years old, or newer.

    Paul N., you asked about E85, and gasoline. If you will remember, the price of gas was fairly low up until this Spring – the recession, the glut, and all. The spread was pretty narrow between E85, and gasoline. However, Cenex (the U.S.’s largest retailer of E85 reports that E85 purchases have jumped 20% this summer with the widening out of the E85/Gasoline spread.

    With many more flexfuel cars on the road by next year, you can look for a large increase in E85 sales when Gasoline crosses the $3.00 mark. Perhaps as soon as next Spring, I think.

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  35. By Rufus on September 14, 2010 at 12:51 pm

    Wendell, you won’t see the City/County Bond Issue Model until it becomes obvious that we’re “In It.” Right now, everyone believes the Big Oil/OPEC “World of Plenty” hype.

    One of these days when gazzoline hits $5.00/gal, and OPEC admits “we ain’t got no more,” all those County Chairmen are going to look around at all those “ethanol-ready” vehicles running up and down the street, and go, “hey, wait a minute . . . . “

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  36. By Rufus on September 14, 2010 at 2:00 pm

    Wendell, you live in Iowa, and you ask me That question? The Spring of 2008 the upper Midwest had their peiodic (15 yr.) 500 Yr floods. All the Wall Streeters were hyping about how they would never get a crop in, and the world would be out of corn by winter.

    I was one of those that wrote, “Hogwash, we’re liable to end up with a pretty good crop.” (which we did.)

    Anyway, DTN, and the bunch ran the price of corn up to $8.67/bu (with, btw, Verasun shorting the market all the way up, and then “locking in” at the top) before it became apparent that the crop would get planted, and the yield might end up being fairly decent, after all.

    Anyway, it was, of course, coincidence that the 500 yr flood (which we get about every 15 years) happened in the same year as the wild run-up in energy prices, and the speculators went corn, and bean-crazy, at the same time they were going oil, and gas-crazy. Jest one a them nutty things, I guess.

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  37. By rrapier on September 14, 2010 at 2:04 pm

    OD said:

    Those are some interesting links Robert, but I’m not entirely sure what your point is. They show Saudi Arabia being dead last in GDP per barrels of oil and Russia being 2nd to last. All that says to me is the US, Saudi, Russia, are currently energy pigs and have a long ways to go in efficiency. It offers no evidece that the US will have to cut its consumption by 75%, in which case the US would not be using all of its own production and getting NO imports.

    In fact, it could support the view that EU has already trimmed their ‘fat’ and it will be a much harder adjusment going foward.

    Can you offer some link that will provide evidence that the US will have to cut its energy use by 75% while EU only 50%?


     

    My point is that we can cut a lot of fat and still have decent GDP, because pleny of others have done it. Further, you are confusing what I said. In the essay, I said I thought that that most Americans could cut energy consumption by 50%, albeit with some pain. My point again is to show that there is fat to be trimmed, hence one reason I am not a doomer.

    I am not sure where you are coming up with the request to “provide evidence that the US will have to cut its energy use by 75% while EU only 50%.” I did not make that argument, so please clarify. I think you are confusing things different people said, and even confusing things I said. When I say that biofuels can’t replace more than 20% of the oil we use, that doesn’t mean I am saying we have to cut consumption by 80%. There are other things that can help fill the gap. On the other hand, I do assert that there will be a gap; hence nothing in the pipeline can completely fill the gap.

    RR

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  38. By rrapier on September 14, 2010 at 2:11 pm

    Rufus said:

    I see thousands of County, and City Governments passing Bond Issues to build their own ethanol facilities. Sourcing local feedstocks to provide fuel, Locally. This is an incredible No-Brainer.


     

    Be a lot cheaper for them to plant corn and have a conventional ethanol plant, rather than spend a lot more capital to make a cellulosic one. If they aren’t doing the former, what makes you think they are going to spend over $100 million to build the latter?

    RR

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  39. By rrapier on September 14, 2010 at 2:15 pm

    Michael Cain said:

    I believe that gap will be closed by price-induced rationing, which will be very hard on businesses and individuals.

     

    There will be political limits to how much rationing-by-price will be tolerated.  If that form of rationing is too hard on too many individuals, Congress will act and we’ll see coupons or something similar. 


     

    Which is my point about government getting involved. As the price starts to really bite, governments will be pressured to get involved in many ways. And I expect the rationing issue to be hotly debated. There will be those who say “Look, I don’t care how much it costs, just don’t limit how much gasoline I can get. I have to drive 40 miles every day.” And there will be others who will say “I can adjust; just give me some price relief even if you limit how much I can have.”

    RR

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  40. By Wendell Mercantile on September 14, 2010 at 2:17 pm

    I see thousands of County, and City Governments passing Bond Issues to build their own ethanol facilities.

    Rufus~

    Ah, I think I get it. You mean you envision thousands doing that in the future. I thought you meant you’ve were seeing thousands of them doing it now. ;-)

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  41. By OD on September 14, 2010 at 2:29 pm

    Robert Rapier said:

     My point is that we can cut a lot of fat and still have decent GDP, because pleny of others have done it. Further, you are confusing what I said. In the essay, I said I thought that that most Americans could cut energy consumption by 50%, albeit with some pain. My point again is to show that there is fat to be trimmed, hence one reason I am not a doomer.
    I am not sure where you are coming up with the request to “provide evidence that the US will have to cut its energy use by 75% while EU only 50%.” I did not make that argument, so please clarify. I think you are confusing things different people said, and even confusing things I said. When I say that biofuels can’t replace more than 20% of the oil we use, that doesn’t mean I am saying we have to cut consumption by 80%. There are other things that can help fill the gap. On the other hand, I do assert that there will be a gap; hence nothing in the pipeline can completely fill the gap.

    RR


     

    We are having a misunderstanding.

    My orginal post was a direct reply to the 1st poster to your article, Jerry. I was offering a rebuttal on his claim that the US will have to cut consumption to 1/4 of its current use while EU will need to halve theirs. You then quoted my text with the gdp links, so in my mind you were agreeing with Jerry’s assessment and that is why I replied the way I did.

    I actually agree with what you’re saying, now that it is in the correct context. Have to love misunderstandings on the internet :p

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  42. By OD on September 14, 2010 at 2:35 pm

    Wendell Mercantile said:

    Japan is the ultimate canary in the coal mine. No wonder they are trying something as radical as mining the ocean floor.

    Japan is making a dedicated and serious effort to tap into the huge deposits of methane clathrates at the bottom of the oceans off its shores. Should Japan figure out how to do that, they will have a leg up on everyone else.

    _________________
    * Some estimates say as much as 5,000,000 cubic kilometers may exist under the oceans.


     

    Absolutely! If they are successful, it could be the panacea we need, depending on how fast it can scale. If they have an OOPS however, I shudder to think what the results of that would be.  

    I would also love to have Robert do an essay about this. Interesting stuff.

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  43. By Perry on September 14, 2010 at 3:20 pm

    Wendell Mercantile said:

     I note a new hybrid, flex-fuel Chevy Tahoe gets all of 11 mpg city and 16 mpg highway burning E85.


     

    Maybe those tires are flat Wendell. A 50% energy penalty is a bit much, even for E85. These new hybrids are the reason I keep harping on the gas guzzler exemptions. The potential is there to save tons of oil. Maybe it’s time to petition Congress.

     

    “For a Tahoe going from 16 mpg to 21 mpg, driving 15,000 miles a year will save 223 gallons. Going from 30 mpg to 39 mpg only saves 121 gallons annually. Admittedly, the Tahoe still uses a lot more fuel overall, but the savings are impressive nonetheless.”
    The numbers work out—drivers who absolutely must have all of that the seating, storage and towing capacity are actually doing more to cut their annual fuel consumption by buying a hybrid full-size SUV, than drivers who are upgrading from a standard Toyota Corolla to a Corolla Hybrid. ”

     

    http://www.hybridcars.com/suvs…..ybrid.html

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  44. By Rufus on September 14, 2010 at 3:32 pm

    The little town closest to me has about 2,000 residents. They have the expense of Police Cruisers, City Vehicles, Waste/Trash Disposal (includes, along with garbage, grass, tree limbs, etc.)

    A 1.5 to 2.0 Million Gallon/Yr. biorefinery would be perfect for them.

    If, as I suspect, it will “shake out” that a cellulosic plant of that size can be built for somewhere around $6 or $7 Million I imagine they’d want to go cellulosic, and utilize some of their “waste” productls. Of course, if I’m wrong, they Might end up going with corn, and sorghum, or somesuch.

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  45. By Wendell Mercantile on September 14, 2010 at 3:47 pm

    Maybe those tires are flat Wendell. A 50% energy penalty is a bit much, even for E85.

    Perry~

    Those numbers are directly from GM’s Chevrolet website. If anything, I’d suspect they’d use numbers that would put them in the best light possible and that the real-world numbers would be even worse.

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  46. By Perry on September 14, 2010 at 4:05 pm

    Those numbers aren’t for the hybrid Wendell. They show 15/21 for gas in the V8, and 11/16 for E85. That’s a little less than 30%, which is about right.

     

    http://www.kbb.com/chevrolet/tahoe

     

     

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  47. By Perry on September 14, 2010 at 4:45 pm

    It doesn’t look like the 6.0 V8 used in the Tahoe hybrid is flexfuel. I don’t know why mileage on corn alcahol is a concern anyway. We don’t import any of it. Ethanol producers will use about 2% of our natural gas output to make close to 1,000,000 bpd next year. That will displace about 700,000 bpd of imports. A drop in the bucket, but enough to refuel 730,000,000 Tahoes.

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  48. By Rufus on September 14, 2010 at 5:29 pm

    Uh, Perry, I could go with ten, or twelve million Tahoes. Maybe, even, 15 million; but, seven hundred and thirty million seems a bit much. Might want to check the old math, there, hoss. (otherwise, I’m sure some of our “buds” will do it for ya. :)

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  49. By Wendell Mercantile on September 14, 2010 at 5:30 pm

    Perry~

    Direct from http://www.chevrolet.com/tahoe…..ures-specs

    E85 is a combination of 85% ethanol and 15% gasoline. Go to chevy.com/biofuels to see if there is an E85 fuel station near you. When running on E85, Tahoe offers EPA estimated MPG 11 city, 16 highway.

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  50. By Rufus on September 14, 2010 at 5:34 pm

    On the other hand, take a guy that’s driving a flexfuel Volt. Let’s say 100 mpg @ 10,000 miles/yr. That’d be about 150 Million of them little suckahs.

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  51. By Perry on September 14, 2010 at 5:38 pm

    Where does it say Tahoe “hybrid” gets 11/16 Wendell? I don’t think the hybrid can even use E85.

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  52. By Rufus on September 14, 2010 at 5:38 pm

    Nobody’s disputing that, Wendell. You referred to it as a Hybrid flexfuel Tahoe. Perry’s just saying those aren’t figures for a Hybrid Tahoe.

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  53. By Wendell Mercantile on September 14, 2010 at 5:39 pm

    That’d be about 150 Million of them little suckahs.

     

    Rufus~

     

    GM is only building 10,000 Volts the first year.  When do you think there will be 150 million of those on the road? After year one there’d still be 149,9990,000 to go.

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  54. By Rufus on September 14, 2010 at 5:41 pm

    I wuz just doin “what-ifs?” Wendell. Nothing serial. :)

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  55. By Perry on September 14, 2010 at 5:46 pm

    I’m pretty sure about the math Rufus. 1,000,000 barrels of ethanol will fill up 2,000,000 Tahoes. There are 365 days in a year. That means 730,000,000 Tahoes can be filled up once each year with corn ethanol alone. Of course, we don’t have that many people. Still, every man, woman, and child in the US could conceivably drive a Tahoe and fill it up twice a year…..on something we don’t have to import or suck out of deep Gulf waters.

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  56. By Wendell Mercantile on September 14, 2010 at 5:56 pm

    Rufus, Perry ~

    My reference to the Tahoe hybrid would have been a mistake.   Embarassed

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  57. By Rufus on September 14, 2010 at 6:26 pm

    Gotcha, Perry. I misunderstood.

    (nothing new, there.)

    :)

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  58. By Perry on September 14, 2010 at 6:31 pm

    Hybrid or not, it’s true ethanol has a large energy penalty Wendell. We can’t make a drop-in replacement for gasoline yet. Butanol comes close. The energy penalty is more like 3%. Here’s hoping BP gets somewhere with their butanol efforts someday. Until then, we’re stuck with ethanol. The Tahoe example was a bit extreme, but it illustrates the point that ethanol is helping somewhat. Every adult in the US could fill up with ethanol alone 7 times a year if they drove compacts. Energy penalty or not, that’s a substantial amount of fuel.

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  59. By Rufus on September 14, 2010 at 7:08 pm

    OR, you could say that ethanol delivers a very strong Octane Bonus, Perry, but that until the Buick Regal came along none of the available engines were capable of “Collecting the Bonus.”

    You guys have got to understand, this Buick engine isn’t a “One-Off.” All of these little Eco-Boosts, and whatnot are designed with this next step in mind. You’ll see scads of these engines over the next couple of years.

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  60. By Perry on September 14, 2010 at 7:27 pm

    Peak oil couldn’t touch us if E85 PHEV’s were the only thing available at dealerships. Ford had such a vehicle. The Escape E85 PHEV went 30 miles in EV mode. Those who drove it, loved it. Ford didn’t just kill the PHEV model. They killed the Escape altogether. The Escape hybrid was the highest mileage SUV on the road. Henry Ford must be turning over in his grave.

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  61. By Perry on September 14, 2010 at 7:40 pm

    Ford E85 Plug-In Hybrid is Hot!

     

    http://www.greencar.com/articl…..id-hot.php

     

     

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  62. By OD on September 14, 2010 at 9:45 pm

    How does every post on here end up devovling into a discussion about ethanol?

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  63. By Wendell Mercantile on September 14, 2010 at 10:45 pm

    …but that until the Buick Regal came along none of the available engines were capable of “Collecting the Bonus.

    Pshaw, Rufus~

    Scania of Sweden developed a diesel engine that used ethanol (E95) years ago, and busses with that engine have been running in Sweden for more than 20 years. That high-compression diesel engine certainly took advantage of the high-octane of ethanol.

    We could have also been running the same kind of diesels on ethanol. I’d like to know why our Iowa corn farmers haven’t asked the farm implement companies to put those diesels in tractors and corn pickers.

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  64. By Wendell Mercantile on September 14, 2010 at 11:07 pm

    Peak oil couldn’t touch us if E85 PHEV’s were the only thing available at dealerships.

    Perry~

    You do realize I hope that if everyone in the U.S. owned a flex-fuel vehicle (PHEV or not), and that if everyone wanted to fill their tanks with E85, that we do not produce enough ethanol to make that possible.

    We are likely to hit Peak Ethanol before we hit Peak Oil.

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  65. By savro on September 15, 2010 at 12:35 am

    OD said:

    How does every post on here end up devovling into a discussion about ethanol?


     

    The honor of having an ex-insurance salesman in attendance comes at a price. Wink

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  66. By Perry on September 15, 2010 at 1:43 am

    How can we know that Wendell? If GM is right that 78% of Americans drive less than 40 miles per day, then only 22% of drivers on a typical day would use ANY E85. How much they would use is anyone’s guess.

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  67. By savro on September 15, 2010 at 1:51 am

    Perry said:

    How can we know that Wendell? If GM is right that 78% of Americans drive less than 40 miles per day, then only 22% of drivers on a typical day would use ANY E85. How much they would use is anyone’s guess.


     

    Perry, not to dispute the point you’re making, but you do realize that those 22% rack up a lot more mileage than the other 78%?

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  68. By Perry on September 15, 2010 at 2:19 am

    It’s all hypothetical Samuel, but assuming all US adults are drivers, we’re talking 50M cars that would use some amount of E85 on a given day. We can fill 28M Volts with E85 on a weekly basis today. When and if cellulosic targets are met, we can re-fuel 56M.

    Of course, I know the US fleet won’t have that capability in seven years, if ever. But, a lot of folks will be flipping the corner gas station the bird when peak oil hits. We have choices we didn’t have just a few years ago.

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  69. By rrapier on September 15, 2010 at 2:24 am

    Bob Hirsch is weighing in now with the same sentiments described by Maxwell. This is probably worth a post, but here are some excerpts:

    Hirsch Interviewed for His New Book

     

    Andrews: In your earlier work dating
    back at least five years, you resisted forecasting a time frame for peak
    oil. There seems to be a bit of a change on that front in your book.
    Care to comment on that?

    Bob Hirsch: In years past, there was considerable
    uncertainty in my mind about when the decline of world oil production
    might begin. Recently it became clear to me that it’s going to be sooner
    rather than later. I believe that the onset of the decline of world oil
    production is likely in the next two to five years. And when I say
    “oil,” I mean all liquid fuels.

    Andrews: You say that once declining
    oil supplies hits, we’re likely to experience deepening worldwide
    economic damage. How is that likely to unfold? What is your most likely
    scenario?

    Hirsch: Our thinking is that what happened in the
    two sudden oil shocks of 1973 and 1979 is very likely to be repeated
    when oil decline sets in. Those were two real world examples of oil
    shocks surprising people and causing panic. We believe that the same
    kind of thing is going to happen again, except that the problem is going
    to last much, much longer because, unlike before, there will be no
    unused oil supply valves to turn on this time.

    While economies have changed since the 1970s, the dependence on and
    importance of liquid fuels has not. And human nature hasn’t changed.
    People panic when they get suddenly frightened. Even though -peak oil‖
    is recognized by a number of people, it is yet to be realized on a wide
    scale.

    In the book we avoided consideration of such things as anarchy, wars,
    and other catastrophes that are conceivable. We see very little chance
    that things will be any better than what we describe, but things could
    easily be worse.

    By the same token, we have faith that humankind is not going to
    collapse because of the oil decline problem. The world is in for
    considerable pain for a long time. Nevertheless, we have great faith in
    human resilience. People will come around, get very pragmatic, dig in
    and do what’s necessary to meet the challenges. As a result, when we get
    through all of this-which is going to take longer than a decade-the
    societies that emerge are going to be much stronger and much more
    pragmatic than they are today.

     

     

     

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  70. By Kit P on September 15, 2010 at 9:52 am

    Perry post this headline from a two old
    article,

     

    Ford E85 Plug-In Hybrid is Hot!

     

    Where can I buy one and how much will
    it set me back?

     

    Ford has a unique two year partnership
    with Southern California Edison that will eventually field a total of
    20 Escape PHEVs in a study and demonstration fleet.

     

    I can not buy one but I can estimate what it would  cost.  I was reading recent edition of
    CONSUMERS REPORTS and they said the battery cost were $10k for the
    Volt and $18k for the Leaf. Both had 8 year warrnety.

     

    Perry says,

     

    We have choices we didn’t have just a
    few years ago.

     

    I have the choice of buying or not
    buying E10. I have been hearing from folks in Southern California
    talk about BEV solving problems for 20 years now. There is an
    inescapable conclusion:

     

    BEV are MIA, PHEV are DOA

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  71. By Wendell Mercantile on September 15, 2010 at 12:48 pm

    How does every post on here end up devolving into a discussion about ethanol?

    OD,

    I tried to take us in the direction of talking about methane clathrates, but hardly anyone bit. Really, if we ever figure out how to tap into those deposits of methane clathrates under the oceans, most of our energy problems will disappear. We can then worry about Peak Methane, but that will be tens of decades in the future — or at least until after we are all gone. (And who knows, perhaps by then fusion power will actually have arrived.)

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  72. By Perry on September 15, 2010 at 2:34 pm

    I don’t get the appeal of methane clathrates Wendell. I certainly don’t see how it could help with peak oil. We could convert cars to NG today. Not happening. Maybe if we were in Japan’s position, with zero fossil fuels of their own, and large deposits on their doorstep. Even then it would be a tough sell. Most of the stuff has low concentrations of methane and wouldn’t be commercially viable anyway.

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  73. By Rufus on September 15, 2010 at 2:41 pm

    I were going to “pick a nit” with Charlie Maxwell it would be that I think he may be underestimating, for whatever reason, the rate of growth of demand. He referred seveal times to 1.25% annual growth in demand.

    Here’s what I’m seeing (I think.) The Non-OECD World consumes about half the oil. It is generating GDP Growth of about 7.5%. Most models would predict that that GDP growth would call for a 5% growth in oil demand.

    So, to keep the numbers simple: If they are using 40 Million Barrels/Day, and will see a 5% growth in oil demand that means they will be looking for about 2 Million Barrels/Day more oil every year. (This, btw, pretty much matches up with the recent past few years.)

    Now, this has been mitigated the last 3 years by an off-setting “Decline” in Demand from the OECD Countries. But, Here’s the Kicker: The OECD Countries really can’t cut demand much more. Europe is already driving itty-bitty diesels; Japan is driving small cars, and riding on trains to about as great an extent as is possible, and, although, the U.S. still has some low-hanging fruit, it’s going to take a while to get it harvested. It would be hard to imagine the U.S. using much less petroleum next year unless we go back into another Full-Blown Recession – and stay there.

    So, it just seems like we’re going to have to come up with another Two Million BBl/Day next year, and every year on out, or go into a deep, deep recession, or face steadily rising oil/gasoline prices starting pretty soon.

    How soon? Well, a lot of people think that Saudi can come up with 1.5 to 2.0 million bbl/day. That, then, might take us through “next” year. What about 2012? Beuhler? BEUHLER?!?

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  74. By Perry on September 15, 2010 at 2:45 pm

    Kit P said:

     

    Where can I buy one and how much will
    it set me back?

     

     


     You can’t buy one Kit. Ford killed the Escape PHEV, along with the Escape Hybrid. The Escape Hybrid was the highest mileage SUV on the road. The PHEV was a simple matter of inserting a lithium-ion battery and giving the thing a plug. It went 30 miles on electricity. It worked great. I’ve seen clips of people test driving it. Ford could have beat the Volt to market. Instead, they killed the entire brand. You can still buy a retro-styled Mustang with a V8 though. Good luck filling it up 5 years down the road. 

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  75. By Wendell Mercantile on September 15, 2010 at 2:57 pm

    I don’t get the appeal of methane clathrates

    The appeal is that there is a nearly inexhaustible supply of the stuff. Once we figure out how to get at it, we can thumb our noses at all the oil-producing countries of the world.

    And yes, we could (and should) be moving towards cars burning natural gas now. That is one immediate step that would delay Peak Oil and its effects — we should be pursuing natural gas-powered cars aggressively, and making methanol and dimethyl ether from natural gas.

    Most of the stuff has low concentrations of methane and wouldn’t be commercially viable anyway.

    Not true, methane clathrates are almost pure, frozen methane. Very little refining is needed, the technical problem — and it’s a huge problem — is getting to the stuff and bringing it up to the surface.

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  76. By Perry on September 15, 2010 at 3:01 pm

    These modern estimates are notably smaller than the 10,000 to 11,000 Gt C (2 × 1016 m³) proposed by previous workers as a motivation considering clathrates as a fossil fuel resource (MacDonald 1990, Kvenvolden 1998). Lower abundances of clathrates do not rule out their economic potential, but a lower total volume and apparently low concentration at most sites does suggest that only a limited percentage of clathrates deposits may provide an economically viable resource.

     

    http://en.wikipedia.org/wiki/M….._clathrate

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  77. By Wendell Mercantile on September 15, 2010 at 3:33 pm

    Perry~

    We won’t know for sure until we go after it. Ten years ago we thought we were running out of natural gas and few anticipated the potential of hydrofracking shale.

    Who’s to say for sure what will come out of a methane clathrate play? It would be technically challenging, but the potential is definitely there.

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  78. By Herm on September 15, 2010 at 4:12 pm

    Michael Cain said:

    There will be political limits to how much rationing-by-price will be tolerated.  If that form of rationing is too hard on too many individuals, Congress will act and we’ll see coupons or something similar. …

    Just out of curiosity, how might such an allocation work out?  6.5 million bbl/day works out to roughly 866 gals/household/year.  Not all of that is gasoline and diesel, of course, only about 70%, so 606 gals/household/year in transportation fuels (ignoring kerosene).  If half of that is reserved for commercial uses, then 303 gals/household/year, or 5.8 gals/household/week.  Just for comparison, a WWII “A” sticker allowed you to have 4 gals/week.

    5.8 gallons per week would take you 15k miles per year in a Prius, and you can improve on that with some simple hypermiling techniques. A Chevy Volt would quickly pay for itself under those conditions.
     

    Very interesting post on coupons, thanks.

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  79. By Perry on September 15, 2010 at 4:40 pm

    No doubt it’ll be tried Wendell. If successful, we’ll probably use it to generate electricity. That’s pretty much all we do with methane and NG. We’ve got a dozen ways to generate electricity already. We won’t be hearing about peak electricity anytime soon. Electric cars would still be ruling the roads if cheap, abundant supplies of oil hadn’t been found in Texas. 25 cents a barrel oil did electric cars in. $250 oil will bring them back. I don’t buy that stuff from Bob Hirsch about taking longer than a decade to deal with peak oil, and stronger societies emerging as a result. No reason to go Mad Max about it. We make enough electric cars to stay ahead of depletion rates of 3 or 4% a year. Simple enough. We can alleviate shortages in other ways too. Biofuels will help. Cars can be converted to NG or propane. People get creative when they have to.

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  80. By mac on September 15, 2010 at 6:21 pm

    Perry

    I think operators can amortize their vehicles on their taxes. The old amortization schedule used to be 5 years. In other words, even without current tax rebates companies could afford to go electric because the extra battery expense is amortized under capital depreciation. Businesses can also deduct actual mileage (I think it’s ,42 cents a mile now). This is money the bank for companies running electric vehicles because the cost per mile for electricity is so low. (12.5 cents per mile ICE vs 2.5 cents per mile Electric). The difference should just be money in the pocket for all-electric fleet operators.

    Frito Lay just bought 167 large all-electric delivery vans from Smith Electric.

    http://green.autoblog.com/page/3/

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  81. By Kit P on September 15, 2010 at 6:30 pm

    “You can’t buy
    one Kit.”

     

    So why did you
    post a link?

     

    “I don’t get the
    appeal of methane clathrates Wendell.”

     

    It is the same
    appeal as fusion.

     

    “The appeal is that there is a nearly
    inexhaustible supply of the stuff.”

     

    It is the love of the underdog. If
    something is really, really impractical then it is more interesting.
    Since such sources are years away, no consideration is given to the
    possible negative aspects.

     

    On the other hand things that we are
    doing like fission and corn ethanol are subject to criticism because
    negative aspects are unknown. Of course the bad guys are coal and
    oil because they are top dogs.

     

    Progress in real
    life is usually a series of boring improvements that can not compete
    with predictions of doom.

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  82. By mac on September 15, 2010 at 6:53 pm

    Perry,

    Sorry my last post was a bit confusing. What it boils down to is simply this — fleet operators can write off the extra battery expense for electric vehicles on their capital depreciation schedule, Also, with a 42 cents a mile tax deduction for operating expenses, electric fleet operators should come out way ahead because electricity is far cheaper than gasoline. It has also been claimed that maintenance on electric vehicles is far less than on ICE vehicles, This should all be money in the pocket for electric fleet operators.

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  83. By OD on September 15, 2010 at 8:34 pm

    I’m still confused on the demand side of the peak oil equation. How is demand going to continue increasing in China and India when the rest of the world is in a peak oil panic? My spidey sense tells me, that just isn’t going to happen. I tend to agree with Campbell that prices can not skyrocket because it will not only ruin the US economy, but also the world economy.

    Can someone explain to me why this way of thinking is wrong?

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  84. By OD on September 15, 2010 at 9:01 pm

    Robert,
    Now that you have posted a few peak oil timeframe articles and freaked me out, can you possibly tell us what you are personally doing to prepare?

    I know you are not a doomer, but are you for example, keeping a food supply? Paying down debt?

    I feel like a deer caught in the headlights. I am finding less and less reasons to be optimistic, which is a horrible position to be in for someone with 2 children under the age of 6.

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  85. By Wendell Mercantile on September 15, 2010 at 11:39 pm

    How is demand going to continue increasing in China and India when the rest of the world is in a peak oil panic

    OD~

    Demand will certainly increase — the question will be, “Is the supply sufficient to meet that demand?” When the supply can no longer meet the demand, we will have run plum smack head-on into Peak Oil.

    There will be lots of “unmet demand” out there. And that will mean a sharp spike in prices, possibly wars to control the direction in which the remaining oil flows, and always the chance of social turmoil among those who watch their quality of life plummet when they can’t afford the oil they need.

    The Chinese and Asian Indians aren’t about to sit there slogging around their rice paddies and using pit toilets while the 5% of the world’s population in the United States continues to use 25% of the world’s oil*.

    ______________________
    * All I’ve got to say is we had better figure out soon how to tap those huge deposits of methane clathrates at the bottoms of the oceans and get controlled fusion working.

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  86. By Wendell Mercantile on September 15, 2010 at 11:44 pm

    I think operators can amortize their vehicles on their taxes. The old amortization schedule used to be 5 years. In other words, even without current tax rebates companies could afford to go electric because the extra battery expense is amortized under capital depreciation.

    Mac,

    Write-offs and tax rebates are a lot like subsidies.  When someone takes a write-off, tax rebate, or subsidy, that means they’ve shifted the tax load to someone else.  “Government cannot give something to someone without taking it from someone else.”

    That’s why politicians have so much power — they decide who gets taxed and who gets the write-offs, rebates, and subsidies.

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  87. By rrapier on September 16, 2010 at 12:38 am

    OD said:

    Robert,

    Now that you have posted a few peak oil timeframe articles and freaked me out, can you possibly tell us what you are personally doing to prepare?

    I know you are not a doomer, but are you for example, keeping a food supply? Paying down debt?

    I feel like a deer caught in the headlights. I am finding less and less reasons to be optimistic, which is a horrible position to be in for someone with 2 children under the age of 6.


     

    Hi OD,

    I was told that I missed a question of yours, and I suppose this must be it. Believe it or not, it isn’t my intention to panic people. It is my intention to have people come to the realization that we are facing a potentially very serious issue, and that we need to get serious about solving it. So this is outreach, trying to warn people that we collectively have to think about the potential implications on future generations so we can make possibly tough decisions.

    The biggest thing I have done in my personal life is choose a job where I can actually implement mitigation options. Our motto around here is “enabling a post-oil economy.” But that involves a lot of sorting out of myths from reality, and an understanding of what different mitigation options can actually offer. It involves making the choice to pursue A and not B. One focus in my company is to develop technical solutions that allow local communities — especially those is remote locations — to produce electricity and fuel for local use.

    In my personal life, I have very little debt. Never had any credit card debt. I do grow some of my own food (just finished off dinner that was mostly from my garden). I have a fuel efficient car and live close to work. My personal carbon footprint is quite low (while my business footprint has me flying around the globe – but for the purpose of developing peak oil mitigation solutions).

    My advice to people is to make choices that will minimize your long-term energy consumption. Even if we have many years until peak oil, getting in the habit of walking places instead of driving will save you money and improve your health. (In many places in the U.S., there is an unfortunate stereotype of people walking: They can’t afford a car). If you have a car that you only have to fill up once a month, you will be in a better position than someone who has to fill theirs up every week.

    A few years ago someone told me that they were thinking of not having kids because of peak oil. My advice to that person was to have kids, live their lives, and just work through things as they come along. After all, none of us knows the future. All we can do is make projections and plan accordingly. I think the best news is that there is a lot of low hanging fruit in the U.S., and that we could use far less energy than we do now and still enjoy a good standard of living. After all, Europe does use half the energy we use, and their standard of living is good.

    RR 

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  88. By Optimist on September 16, 2010 at 2:15 pm

    I feel like a deer caught in the headlights. I am finding less and less reasons to be optimistic, which is a horrible position to be in for someone with 2 children under the age of 6.

    Get a grip, OD: Civilization is NOT coming to an end. Sure, Peak Oil (aka Expensive Oil) would be inconvenient, and your children may not get to the beach as often as they might have done otherwise. But the Mad Max life is NOT coming to your city.

     

    Besides, your elected officials are doing their level best to prepare you for the coming disaster: at this rate they will have the US economy destroyed LONG BEFORE Peak Oil affects us. Maybe it is a secret plan to get us energy-independent…

     

    Enjoy the children: they grow up fast!

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  89. By Laura on September 16, 2010 at 4:19 pm

    (off-topic)RR wrote:

    I do grow some of my own food (just finished off dinner that was mostly from my garden).

    Have you managed to grow okra in Hawaii? :)

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  90. By rrapier on September 16, 2010 at 4:51 pm

    Laura said:

    (off-topic)RR wrote:

    I do grow some of my own food (just finished off dinner that was mostly from my garden).
     

    Have you managed to grow okra in Hawaii? :)


     

    Interesting that you asked that, Laura. I have been meaning to put an update on my gardening blog. Last month I moved across town. Believe it or not, by moving 4 miles away I am in a dramatically different climate. I was in a rain forest before, and it was very tough to grow things there (so many bugs, and it was too cool and damp for okra). At my new house, it is warmer and drier. I was just looking at my okra this morning and noticing that buds are forming. So it is too early to tell whether it will do well, but it does seem to be coming along. The only problem I see is that I didn’t get it planted in a location that gets enough sun. It has good sunlight throughout the morning, but not afternoon. So I will be somewhat limited by that.

    RR

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  91. By OD on September 16, 2010 at 9:24 pm

    Get a grip, OD: Civilization is NOT coming to an end. Sure, Peak Oil (aka Expensive Oil) would be inconvenient, and your children may not get to the beach as often as they might have done otherwise. But the Mad Max life is NOT coming to your city

    I agree with that Optimist. I don’t personally believe in a dieoff, at least for developed countries, sans nuclear war. However, I don’t think it is that big of a stretch to believe a good chunk of Americans could be living more like those in Appalachia in 10-20 years. To many, that would probably feel like mad max.

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  92. By Chris de Vidal on September 18, 2010 at 10:54 am

    “I would bet that most people – if they really had to – could cut their fuel consumption by 50%.”

    I agree, but expensive oil isn’t just gasoline. It affects plastic, fertilizer, etc. The problem is compounded.

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  93. By John Caulfield on September 19, 2010 at 1:24 pm

    Dear Robert,

    I have followed your blog for quite some time now and I am always impressed with your analysis of energy issues. I also read the Oil Drum but am dismayed that it seems to be bogged down in doomerism, with Malthusian predictions of dieoff taking centre stage most of the time. I am not saying that these predictions are completely wrong, but being a Historian, I know that all predictions of apocalypse so far have not come to pass. Reality is not linear, and I think that doomerism takes a far too simplistic look at the world.

    Anyway, I wondered what your thoughts were on Europe and the UK in particular (I am aware you lived in the UK for a while). Do you think that the UK may come off worse than other countries, on account of overpopulation etc, or do you think that its chances are no better or worse than others. I have become increasingly concerned about resource depletion etc since the birth of my son. He is only four months old and I would like to think that he will have some sort of a life.

    Your thoughts would be welcomed!

    John

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  94. By jcsr on September 19, 2010 at 2:15 pm

    There is a guy here in Connecticut who is running for the U.S. House of Representatives . At least a couple of weeks ago he started running an ad claiming if you vote for the incumbent instead of him gas will rise in price by sixty eight cents. Is that inside information or what. That is within the next two years.
    Our Governor, Jodi Rell has set a pretty good initiative on mass transportation.
    She has been instrumental In ordering new cars for our New York to Boston line although traffic has slowed some during the present recession. She has also boosted the New Haven to Springfield line to get it back in good running order. All this should be a help in the impending oil shock.
    I remember the WWII rationing. It wasn’t that much of a hard ship at all. We had a good bus and train system that got us back and forth to work and school. After the war people could afford the luxury to buy a car. Because of the abundance and cheapness of gas they realized they could use their cars to commute. This was such a comfort. There was an actual competition for labor that actually caused industries to move out of the cities so as to provide parking spaces for their car commuting employees.
    JD at Peakoildebunked has the right motto. Electrification and conservation. It’s not going to hurt that much.

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  95. By rrapier on September 19, 2010 at 4:10 pm

    John Caulfield said:

    Reality is not linear, and I think that doomerism takes a far too simplistic look at the world.


     

    Couldn’t agree more, John. I think doomerism fails to take into account that humans do adapt to new circumstances. That isn’t to say that they might not have some points that are correct (and I don’t think things will be easy), but there will be a lot of adjustments that are made that I don’t think they factor in.

    Anyway, I wondered what your thoughts were on Europe and the UK in
    particular (I am aware you lived in the UK for a while). Do you think
    that the UK may come off worse than other countries, on account of
    overpopulation etc, or do you think that its chances are no better or
    worse than others.

     

    I thought a lot about the future of the UK when I lived in Scotland. I felt like the UK should probably be building new nuclear plants as fast as they possibly could. Your gas supplies are depleting, but you do have some LNG terminals that will allow gas to be imported in (and some countries are flush with gas supplies). I don’t know that your situation is any better or worse on average than others in the Western World. You are probably better off than the U.S. because your per capita energy consumption is lower and you do have a good rail system (which I have used many times to criss-cross the country). On the other hand, I don’t think the public transportation systems are as comprehensive as in some Western European countries. I was able to live without a car for 18 months in the Netherlands; I would not have been able to do that in my particular situation in rural Scotland. 

    I think the best you can do is just make sure that you personally minimize the havoc that higher energy prices might cause on you, and then work to educate others so that the system can make the adjustments needed to cope with lower energy supplies. My crystal ball is pretty cloudy, but I try not to let fear dictate my decisions. Just do what you can to control your personal situation, and let’s hope that the doomers have grossly missed the mark.

    RR

     

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  96. By Optimist on September 20, 2010 at 6:04 pm

    I agree, but expensive oil isn’t just gasoline. It affects plastic, fertilizer, etc. The problem is compounded.

    Natural gas, or coal, could replace oil in ALL applications, including liquid fuels. And it will, once the markets agree that oil is becoming a scarce resource, and price it accordingly.

    Until then its just background noise.

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  97. By Tim on October 19, 2010 at 10:12 pm

    Optimist you need to learn what oil is actually invovled in, the problem is the uneducated aspect of energy and the difference of fuel liquid and the cheap density of oil, compared to natural gas , etc. Transportation is 95% Petro and oil based and that’s the problem. Everything from roads to tires to natural gas plants are made from oil because it is the most incredible resource known to man. Try to replace the billion petro cars and truck fleets with hydrorgen or natural gas. We have built an oil civilization, party’s over!
    And don’t be so easy to dismiss a dieoff. How many americans are ready to throw away their Sam’s club card for a shovel, how many know how? The governemnts that are preparing (germany and our military for one and england and australia) are do so in very selective word or even hidden documents. Prepare, you won’t regret.

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  98. By paul-n on October 20, 2010 at 2:08 am

    Try to replace the billion petro cars and truck fleets with hydrorgen or natural gas.

    Well, some vehicles like trains and heavy trucks can quite easily be fueled, or co fueled, with natural gas.  

    Or we could use the NG and coal to make as much methanol as we want, and run them on that.  On a BTU basis, methanol (from NG) is cheaper today than gasoline, and both gasoline and diesel engines can getter better miles/btu on methanol than on their native fuels.

    Of course, hopefully we won’t replace/convert ALL the vehicles, we have many more than we need, and much larger than we need.  

     

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  99. By Doomer on November 6, 2011 at 2:01 am

    To the optimists. The human population has gone backwards in the past. This will not be the first time nor the last. Peak oil does not represent the end of the world. But, to say it will not cause starvation and population decline… well frankly that’s a bit naïve. It is almost as if there are two polarized competing camps. On one side it’s the end of the world on the other it’s a problem but we’ll get through it. It is interesting how timid intelligent people are when staring at the face of DEFINITE POPULATION DECLINE. Am I suggesting in some of the most advanced parts of the world people will die of starvation? Well, yes that is precisely what will happen. It happened at the fall of the Roman Empire, who by the way were the most advanced civilization of their time. Four hundred years later their ancestors were building grass huts next to these magnificent buildings with no running water and no bathrooms. They must have marveled and wondered where these advanced civilizations had gone. It took the human race 800 yrs to catch back up to where the Romans stood technologically speaking. I suspect there were many among the Roman populous who saw their impending doom. It is more likely that peak oil will strangle advanced civilizations rather than agricultural nations. The average farmer in Kenya’s life will change little. The New Yorker who has never consumed anything that didn’t come from a store will rely solely on the system for food. If the system cannot provide that food the New Yorker will die of starvation. I agree that we could save are selves with technology and conservation. But, none of that has occurred even with the worst recession since the great depression. Not to say Americans haven’t cut back. I know many Americans who now only eat out 15 times a week instead of 18. I know that seems extreme… how did this miraculous reduction occur. They simply couldn’t afford to eat out more than that. There are 7 billion consumers ( give or take a billion) on the planet. It’s just going to be tough? Are you saying that America will transition to a sustainable lifestyle without reducing the population? I am not suggesting it is the end of human civilization, but it will definitely be a large step back for many parts of the world. And yes many people, including American citizens, will die because of a simple lack of food. Disagree if you want, it matters little as this will be upon us soon enough. 2025 will be soon enough for most us.

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