A crude remark

The word addiction has been thrown around a lot concerning America's dependence on imported oil and it's a word I take umbrage with. The idea/philosophy behind this word comes directly from the environmentalist camp and it is used as yet another way to disparage 'merica and capitalism. Let's examine the word a little more closely.

When someone is addicted to something, they are at the point where continued use of the substance has gone beyond whatever perceived value they ever received from it and it is now detrimental to their health. Although we depend upon foreign oil to an astounding degree, we are still getting at least incremental benefit from it in the form of a relatively productive economy (at least until fairly recently). That's not to say there isn't a LOT of waste, for there surely is, but using the word addiction smacks of gross, not to mention intentional, hyperbole.

One thing I'd like to ask the know-it-all experts and environmentalists is this: Could you send me tonight's lotto numbers? I mean, you pontificate (always in retrospect) on how the world should have known better than to become dependent on the single most powerful fuel source man has ever discovered that's also relatively safe and easy to use, one that saves thousands of man-hours per gallon, so you should have an inside track on the seeing future, right? You can't? Bummer.

Look, the point of all this is not to fall for the semantic infiltration of the environmentalist movement. Just like the misnomer "assault weapon" the anti-gunners have successfully insinuated into everyday parlance, environmentalists are using the word addiction to subtly skew the argument away from honest intellectual discussion and towards their bailiwick, obfuscation and emotionalism. Since no right-thinking person wants to be fingered as an addict, they will of course listen to environmentalism's pitch, and perhaps more than a few will be swayed.

In and of itself, this probably wouldn't be that big a deal, especially if it was confined to a small segment of the population. The problem is, it's not. The reason I am even posting on this is because I heard a snippet of some speech Obama gave recently where he was apparently chiding America's "addiction" to imported crude. This means that environmentalism's philosophy has reached, and been internalized by, the very person who could well be the next president of the United States. That means environmentalism would have a big, fat thumb on the delicate scale that balances individual rights and governmental abuse of those rights, and you can bet that thumb won't be on the side of the former.

Incidentally, I have no big love or hate of petroleum. It's a commodity that helped pull and propel the world world into the modern era, but if its heyday or peak has been reached, so be it. It was a hell of a ride while it lasted.

Take care.
DAL357

A different kind of performance

What seems to be the one word you most often hear associated with cars? If you guessed style, luxury, comfort, or even affordability, you guessed wrong. No, it’s performance.* This is the overriding consideration, or so we’ve been told, of a car’s worthiness. Performance today still means how fast can you accelerate from a dead stop to 60 mph, or how much cargo (usually a boat or gargantuan travel trailer) you can haul. With the new paradigm of ever-higher fuel costs, though, performance will shortly take on a new meaning: How far can you get on a gallon of gasoline/diesel?

I’ll be the first to admit that the new definition of performance is not nearly as sexy as the old, but things change. Shift a few years into the future and I can see a scenario where a young Lothario is bragging to his intended conquest of how little he has under his hood and how far it gets him. She, being duly impressed, decides to give him a spin.

Crazy? Science fiction? Preposterous? Perhaps. But politicians aren’t the only ones who can flip-flop; entire methods of living can too. Only those ignorant of history can argue the point.

The attitudes amongst the masses towards what performance means in an automobile are changing, but they are doing so slowly and grudgingly. Slap a couple of more bucks on the price of a gallon of gas and watch how quickly juvenile notions of speedy, fire-breathing performance evaporate. Even true juveniles, as opposed to those who are still in adolescence at 30, 40, 50, 60, etc., will not be able to evade reality for long owning a car that may zoom from 0 to 60 in an amount of seconds equal to the fingers on one hand, or have the ability to pull double duty as a barge tug, but that gets only a pathetic 21 mpg/city (with a tailwind) and costs $100-$150 to fill. When we get to the point where the choice is either walking or taking a car that chugs along steadily, but slowly and economically, we will have reached the era when the old definition of performance is quaint and outdated.

Take care.
DAL357

*Or so it seems to me.

Can this be far away?

Are you old enough to remember the 55 mph speed limit of the 1970s and 1980s? I suspect that somewhere, and probably not too far, down the line, those old speed limit signs are going to get dusted off and reinstalled nationwide. If this doesn't happen within the next three years or so, I'll be extremely surprised.

Take care.
DAL357

Don't be a dipstick: it's supply and demand

To those woefully ignorant of basic economics, please read the excerpts of the following essay with as open a mind as you can muster. In fact, you should probably read it in its entirety.

*****

Wishful Thinking, Speculation and Oil (May 30, 2008) by Charles Hugh Smith


Everyone and their sister seems to have jumped on the "oil prices are being driven by speculation" bandwagon, but perhaps that is nothing but wishful thinking. From the very beginning of futures trading--back in the 1600s when traders in Antwerp would buy and sell contracts on the cargo coming from the East Indies--the easiest game in town has been to blame speculators for price movements.

If the price of a commodity is rising, then the villains are speculators. If the price is dropping, it's the short sellers' fault.

Speculators are active wherever and whenever speculation is allowed. It's wishful thinking to expect oil will fall from $130/barrel back to $70/barrel if only those darned speculators would leave the market alone.

Note to hand-wringing, finger-pointing pundits: those darned speculators are the market.

*

As for the "solutions" to supply:

1. The Iranians have 20 supertankers filled with oil floating around somewhere. Nice, but it's heavy crude, and the few refineries able to process it are already running flat out. Also, 20 supertankers is a drop in the bucket of global demand.

2. Deep abiotic oil is abundant. The Russian have the technology. If the Russians have the technology, why is their production declining so rapidly? Where are the pipelines from their deep wells?

3. It's all the weak dollar. Once the dollar starts rising, the bubble in oil prices will pop. Then how come oil is rising in all currencies and even when priced in gold?

4. Canada and the U.S. have nearly unlimited supplies of shale oil and tar sands. Great, but real-world production will top out at 2.5 million barrels a day, about 10% of North America's consumption, and the process uses vast quantities of natural gas.

5. If only the tree-huggers would let us drill in the Alaska Wilderness. The U.S. consumes 22 million barrels a day or 8 billion barrels a year. The Alaskan North Slope everyone talks about contains about a billion barrels--a whopping 45 days' supply for the U.S. Whoopie.

In other words--it's all wishful thinking, folks: that it's all the speculators' fault, that new supplies will magically come on line and save us--there is simply no credible evidence for either supposition. It's supply and demand. Prices are set on the margin, and as a result a shortfall of a few percent has an amazing leverage on price.

Go ahead and ban speculation, and see what happens then. Prices will not drop, they will simply become more disorderly/chaotic.

As for demand destruction--let me know when China, India, Indonesia, Iran, Venezuela, Nigeria, Mexico et al. stop subsidizing the price of fossil fuels for their hundreds of millions of consumers.

And as for supply, let me know when global production of oil from any source exceeds 90 million barrels and day and keeps climbing as producers take advantage of the high prices.

*****

Those same people who believe this is a contrived crisis for the purposes of extracting the maximum amount of moola from the pockets of Americans often are also the ones who simultaneously detest government intervention and yet want government to do something so that they can continue living their cheap-oil lifestyle. One thing to remember is that "Big Oil" companies actually control a relatively small share of the marketplace relative to several decades ago, approx. <20%. The real players in the market are national oil companies where countries own the oil wealth: Russia, Saudi Arabia, Venezuela, etc. They don't answer to shareholders, so they can do as they please, even if their actions contradict rational economic principles. Couple this with the apparent fact that there just isn't that much easily-pumped crude to meet demand (that's WORLDWIDE demand, not just American demand, which may see demand destruction due to a faltering economy, but there are a lot of folks in India and China who are becoming first-time car owners and each vehicle will need fuel) and you have a recipe for upward-spiraling prices. Don't look for this to change anytime soon, if ever.

Take care.
DAL357

The blue collar/poor getting bent over an oil barrel

Aside from the fact that this piece could benefit from the attention of a good editor (it tends to wander and it should be more concise), its author does have some excellent points about the reaction of the masses to ever-increasing fuel prices. I also think he nailed the intelligence, or lack thereof, and mindset of blue collar/poor folk. (The blue collar/poor live on a perceptual versus a conceptual level; they always have and always will. That's a big part of the reason why they are blue collar/poor. They're not bad people when compared to, say, criminals, but after having supervised them for eleven years, I view most of them as little more than bipedal organisms devoid of any interests beyond sports, alcohol/drugs, junk food, empty sex, gossip, and goldbricking. Hey, I come from that background, although I've tried to lift myself a bit higher than it, so if you don't like my criticism, tough.)

Here's the link to the piece, followed by a few excerpts from it. How Will Gas Prices affect the Blue Collar/Poor.

*****

There is a lot of talk about how gas prices affect stock brokers, middle-class homeowners, corporations, and people who can afford Hummers. But how much can the blue collar/poor take? Where do they stand in all this? What are their views on the gas prices? Will they eventually start rioting? What will make them riot?

Now we must not take into consideration the science, the geology of Peak Oil nor take into account the price of a barrel of oil when discussing blue collar/poor people's view on oil. The only thing that affects them is price. They have been trained to be consumers, they view themselves as consumers. They view this problem in terms of consumption. All they see and feel with their hands empirically is that they are having less money to spend on things they want like vacations, four-wheelers, new car stereos, and intoxicants. They see that their raises have stopped coming or not being as large. They can see that their employers are trying to get by with less employees.

They do not concern themselves with stocks or geology. This is not because of America's education system or even because of apathy particular to the American character. There is no point in history where the workers and peasants were intellectual geniuses. [Emphasis DAL357.] The fact that they know how to read is a first in human history. If we had a limitless supply of resources perhaps in two hundred years they could have advanced to the point of being rational, empirical and logical. (Probably not though, if there were limitless or alternative resources for 200 years the world would probably end up being completely owned by Wal-Mart.)...also...20 percent of American adults do not know how to read above a fifth grade level.

The Blue Collar/Poor View: There are three main views.

1. Gas prices are so high because corporations are doing it to make a profit. They do not understand economics and that the ways to make a profit are through cheaper machinery, cheaper labor, advertising, and coupons. It is absurd to raise the price of a product by 100 percent in one year. That will only cause a decrease in sales. Most blue collar/poor have no idea how capitalism works.

2. There is oil in Alaska and in the gulf and “tree-huggers” will not let us use it. Even though the science shows that there isn't that much oil there and it is expensive to get it out and refine.

3. I have heard many white males say that it is because of the blacks in Nigeria and the Arabs who hate American freedom. (The racist theory of oil prices.)

*

Why gas prices are so high is abstract, too distant. Blue collar/poor people live small lives, very empirical lives. They are trained since they are little by their blue collar/poor parents to only care about what is around them. It must be noted that that the blue collar/poor way of life does not require thought or truth. They grow up in public school getting told what to do, their parents tell them what to do, then they get a job where they are told what to do. It is not a necessity to read above a fifth grade reading level. If there is any reading at the blue collar job it is usually in one or two word phrases. A trucker looks at the address, the cook looks at the food ordered. There are no paragraphs to be understood, no three page memos to be read. We have to recognize that reading a single word is different than reading a sentence. A single word is an object. A sentence is a thought. Their jobs do not require thought. Why they are not a thinking/analyzing people comes directly from their environment.

*

Blue collar/poor rely on television like 1250 A.D. Europeans relied on the church. The television tells them what to do, what to think, what to purchase. They go to the television seeking answers on love, relationships, family, work, what kind of hand soap to use, what shoes to wear, where to buy lumber, what outfits look the best, how to cut their hair. We have to view the television's influence on blue collar/poor people's lives like Islam is to the Arab. The television completely engulfs their existence. We know from Communist countries that people do not react well when their religion is taken away. But unlike religion television can't be practiced in secret locations.

*****

Although some of his facts seem a bit off, he does have an excellent grasp of the psychology/incomplete thinking of the blue collar/poor.

Take care.
DAL357

We, the oblivious

Wouldn't it be something if the candidates displayed this much insight into the massive problems now battering America and addressed the following points squarely and honestly while campaigning? Please read the following op/ed piece to reference what I'm talking about.

*****

Wake Up, America. We're Driving Toward Disaster.
By James Howard Kunstler
Washington Post, Sunday, May 25, 2008

Everywhere I go these days, talking about the global energy predicament on the college lecture circuit or at environmental conferences, I hear an increasingly shrill cry for "solutions." This is just another symptom of the delusional thinking that now grips the nation, especially among the educated and well-intentioned.

I say this because I detect in this strident plea the desperate wish to keep our "Happy Motoring" utopia running by means other than oil and its byproducts. But the truth is that no combination of solar, wind and nuclear power, ethanol, biodiesel, tar sands and used French-fry oil will allow us to power Wal-Mart, Disney World and the interstate highway system -- or even a fraction of these things -- in the future. We have to make other arrangements.

The public, and especially the mainstream media, misunderstands the "peak oil" story. It's not about running out of oil. It's about the instabilities that will shake the complex systems of daily life as soon as the global demand for oil exceeds the global supply. These systems can be listed concisely:

The way we produce food

The way we conduct commerce and trade

The way we travel

The way we occupy the land

The way we acquire and spend capital

And there are others: governance, health care, education and more.

As the world passes the all-time oil production high and watches as the price of a barrel of oil busts another record, as it did last week, these systems will run into trouble. Instability in one sector will bleed into another. Shocks to the oil markets will hurt trucking, which will slow commerce and food distribution, manufacturing and the tourist industry in a chain of cascading effects. Problems in finance will squeeze any enterprise that requires capital, including oil exploration and production, as well as government spending. These systems are all interrelated. They all face a crisis. What's more, the stress induced by the failure of these systems will only increase the wishful thinking across our nation.

And that's the worst part of our quandary: the American public's narrow focus on keeping all our cars running at any cost. Even the environmental community is hung up on this. The Rocky Mountain Institute has been pushing for the development of a "Hypercar" for years -- inadvertently promoting the idea that we really don't need to change.

Years ago, U.S. negotiators at a U.N. environmental conference told their interlocutors that the American lifestyle is "not up for negotiation." This stance is, unfortunately, related to two pernicious beliefs that have become common in the United States in recent decades. The first is the idea that when you wish upon a star, your dreams come true. (Oprah Winfrey advanced this notion last year with her promotion of a pop book called "The Secret," which said, in effect, that if you wish hard enough for something, it will come to you.) One of the basic differences between a child and an adult is the ability to know the difference between wishing for things and actually making them happen through earnest effort.

The companion belief to "wishing upon a star" is the idea that one can get something for nothing. This derives from America's new favorite religion: not evangelical Christianity but the worship of unearned riches. (The holy shrine to this tragic belief is Las Vegas.) When you combine these two beliefs, the result is the notion that when you wish upon a star, you'll get something for nothing. This is what underlies our current fantasy, as well as our inability to respond intelligently to the energy crisis.

These beliefs also explain why the presidential campaign is devoid of meaningful discussion about our energy predicament and its implications. The idea that we can become "energy independent" and maintain our current lifestyle is absurd. So is the gas-tax holiday. (Which politician wants to tell voters on Labor Day that the holiday is over?) The pie-in-the-sky plan to turn grain into fuel came to grief, too, when we saw its disruptive effect on global grain prices and the food shortages around the world, even in the United States. In recent weeks, the rice and cooking-oil shelves in my upstate New York supermarket have been stripped clean.

So what are intelligent responses to our predicament? First, we'll have to dramatically reorganize the everyday activities of American life. We'll have to grow our food closer to home, in a manner that will require more human attention. In fact, agriculture needs to return to the center of economic life. We'll have to restore local economic networks -- the very networks that the big-box stores systematically destroyed -- made of fine-grained layers of wholesalers, middlemen and retailers.

We'll also have to occupy the landscape differently, in traditional towns, villages and small cities. Our giant metroplexes are not going to make it, and the successful places will be ones that encourage local farming.

Fixing the U.S. passenger railroad system is probably the one project we could undertake right away that would have the greatest impact on the country's oil consumption. The fact that we're not talking about it -- especially in the presidential campaign -- shows how confused we are. The airline industry is disintegrating under the enormous pressure of fuel costs. Airlines cannot fire any more employees and have already offloaded their pension obligations and outsourced their repairs. At least five small airlines have filed for bankruptcy protection in the past two months. If we don't get the passenger trains running again, Americans will be going nowhere five years from now.

We don't have time to be crybabies about this. The talk on the presidential campaign trail about "hope" has its purpose. We cannot afford to remain befuddled and demoralized. But we must understand that hope is not something applied externally. Real hope resides within us. We generate it -- by proving that we are competent, earnest individuals who can discern between wishing and doing, who don't figure on getting something for nothing and who can be honest about the way the universe really works.

James Howard Kunstler is the author, most recently, of "World Made by Hand," a novel about America's post-oil future.

*****

I can't say I'm totally convinced about the Peak Oil Theory just yet, but it is something that bears serious, substantive discussion. All I know is that current oil production is not meeting (and perhaps cannot meet) demand and that's cause for great concern.

Take care.
DAL357