Clusterfuck Nation
by Jim Kunstler
Comment on current events by the author of The Long Emergency (Atlantic Monthly Press, 2005)
Land of Make Believe (October 10 2005)
For the moment, it's back to business-as-usual for Easy-motoring Nation.
Yet 73 percent of oil from the Gulf of Mexico remains "shut in" or unavailable because of hurricane damage, and about 63 percent of natural gas production. Prior to the hurricanes, 24 percent of the nation's non-imported supply of crude came from the gulf. There are also eight refineries still shut down representing 2.1 million barrels a day of refined product capacity (900,000 barrels a day of gasoline, 500,000 of diesel and heating fuel, and 200,000 of jet fuel).
For the past month, the European Union has been sending two million barrels of crude a day to the US out of its own emergency reserves. The original deal was made in the brief lull between Katrina and Rita. It took a while for those tankers to get here. The EU imports over fifteen million barrels of oil a day itself, somewhat more than the US did in pre-hurricane times.
The Federal government has loaned the oil companies crude from the Strategic Petroleum Reserve. The SPR contained 700 million barrels of crude when the hurricanes hit. The US uses twenty million barrels of oil a day, of which we produce altogether about seven million barrels ourselves. It is unclear how much oil is coming out of it now, but the last time a president (Clinton) tapped the SPR one million barrels a day were released.
These actions have beaten down the price of crude oil on the various futures markets. At the same time, gasoline pump prices have leveled off from the refinery squeeze. I doubt that the motoring public is driving a whole lot less. The commutes haven't magically gotten any shorter out in Dallas and Denver over the past month. The national fleet of SUVs has not been changed out either.
What's happening, therefore is that we have entered an eerie hiatus. Some band-aids have been applied to our oil and natural gas supply injuries and the bleeding seems to have stopped. But the truth is that our energy supplies are badly compromised and at the worst time of the year - just as we slide into the home heating season. Here in the northeast, we have barely had to turn on the furnaces yet, but that will change in a week or two.
In the background of this scene, the global oil production peak lurks - meaning that there does not seem to be any surplus production capacity anywhere in the world, including OPEC's big gun, Saudi Arabia. So all we have here in America is a temporary appearance of normality. When the furnaces go on, the WalMart aisles will be empty. If there is any reduction in car trips, it will be because Americans are making fewer visits to the Big Box stores. There will also be fewer trips out to visit the model homes in the new subdivisions.
Another unpleasant truth about the situation is that the US public wants to pretend that everything is okay as much as its leaders do. The public is not so much being misled as demanding that its leaders in government, business, and the news media continue a game of make-believe - that we can still run a cheap oil economy without cheap oil.
Calgary (October 03 2005)
I was way out in Calgary, Alberta, last week, the tar sands capital of western Canada. I was there to yak on camera for a CBC-sponsored documentary about suburbia, and the city itself proved to be a strange and interesting case of immersive delusional behavior.
Calgary started out, of course, as the railhead for western ranching and a jump-off for various gold rushes in the late 19th century. Now it has become an archetypal city of immense glass boxes in a sterilized center surrounded by an asteroid belt of beige residential subdivisions - sort of what Rochester, New York, would be like if it had an economy. The vast suburbs ooze out onto the prairie to the east, along with their complements of strip malls, power centers, car dealerships, and fry-pits, and on the west they bump up against the foothills of the Rockies.
The real estate scene in Calgary is rip-roaring because newcomers are flooding in to work the tar sand angles. No doubt the tar sands will generate a lot of wealth in the years ahead. But those who think they will save western civilization from a Peak Oil clusterfuck are going to be very disappointed. We are not going to run the interstate highway system, Walt Disney World, and WalMart on the Canadian tar sands.
These days, a lot of people (including news reporters) are saying that the tar sands contain the equivalent of a trillion barrels of oil, which is just plain nonsense. It's more like the equivalent of 180 billion barrels - with world consumption at thirty billion annually (do the math). But the word equivalent is tricky, too, because it's only the equivalent in volume, not in the cost of recovery, since the stuff does not flow out of the ground at room temperature like Texas sweet light crude. The process requires a huge up-front mining operation on top of everything else, conducted in a climate so cold that the thirteen-foot-diameter tires of giant dump trucks crack regularly. The Achilles heel of the operation is that it requires hundreds of millions of dollars a year worth of natural gas to melt the stiff goop out of the sand, and that Canada's natural gas supply is verging on depletion just as ours is. They'll have a gnarly choice in a few years: either heat their homes or power the tar sands operation.
Another catch is that even in the short term, the petroleum that is recovered is not going exclusively to the United States or even Canada. The Chinese have been very busily inking contracts for substantial gobs of it. Is George Bush going to send the 82nd airborne into Alberta to secure access to the tar sands?
But this blog entry is not really about the tar sands, it's about the expectations of the people working off of them, which is that they assume the easy motoring utopia will continue indefinitely and are madly busy building a suburban infrastructure for it to dwell in, even while Canadians themselves are now paying the equivalent of $4 US a gallon for the privilege to commute forty miles a day.
What's going on in Calgary, with new subdivisions of half-million dollar houses opening every month, is the North American tragedy in microcosm. Because every new suburban house built, every new Target store opened, every new parking lot paved, every highway widened will be a project in the service of a living arrangement with no future. It is a true madness that beats a path to historic tragedy.
And this is what you have to think about, wherever you live in the US or Canada: what kind of projects and proposals are moving right now in the permitting pipeline of your own municipal planning boards? Things waiting to be built in the next year or two. Chances are they're the same suburban furnishings we've been getting for half a century, in the latest state-of-the-art releases. Each one is a tragedy. Each one will carry us further into darkness.
How do you stop such suicidal behavior? Probably not by persuasion or exhortation. People change what they are doing when circumstances compel them to and not before. The American public barely even thinks about these things. The Sunday New York Times news section contained not one story this week about the current state of oil-and-gas operations in the Gulf of Mexico. The fact is that Hurricanes Katrina and Rita destroyed more than ninety production platforms as well as pipelines and drilling rigs. The implications are so obvious and we are not getting them.
The Vicious Pincer (September 26 2005)
Shouts of deliverance rang through the gallerias and subdivisions of Houston, while the picture of what happened off-shore remains murky. Rita might have spared the nation's fourth biggest metroplex, and most of the chemical-cracking infrastructure on-shore around it. But clawing up between Beaumont and Lake Charles, she cut a path through the densest concentration of offshore oil and gas rigs in the whole Gulf of Mexico. We don't know they all came through yet, or how the pipelines below the surface fared.
What happens next on the oil and gas markets - and up-close in pump prices and home furnaces around the land - will be an interesting story.
The combined fury of Katrina and Rita has obviously flattened whole communities in a large area. One outcome will be what is called "demand destruction", which means that the people who owned all those shredded homes, crushed cars, and flattened businesses will be using less oil in the months ahead. The catch is natural gas: the Gulf coastline is very temperate, even subtropical, and does not require much home heating. So, little demand for heating will have been affected, while the supply of natural gas has been cut twice in a month.
Half the houses in America are heated with natural gas and most of them are elsewhere than the Gulf Coast. On the markets, the price of gas is now heading north of $15 a unit (1000 cubic feet). It could easily hit $20 by Christmas, which would be about 700 percent higher than the price in 2002. Everyone in the non-Sunbelt is going to feel the pain this winter, and quite a few of the poor and infirm may freeze to death.
This is going to be a whole new kind of crisis for America and will set off a new kind of political fury. Both parties will get it in the neck but, of course, the Republicans led by the Bush White House will get it worse, because they are nominally in charge of things. There will be nothing they can do about the natural gas crisis. You can't get any significant amount more of it from overseas because it requires special tankers and terminals to receive it, and those terminals will not be built before the robins come back to Kalamazoo. The Democrats will have to prove that they don't deserve to join the Whigs in the Hall of Extinct Parties.
The political allegiance of the American public will be fully in play. Politics, like nature, abhors a vacuum, and we are likely to see the emergence of something new, perhaps something like the British National Party (BNP) which combines a very aggressive agenda on energy policy with overt fascism. The American people will be starved for action, too, and will be waiting for a man of action to embody their desperation. Let's hope that the characters who percolate out of this mess are not maniacs. The outrageously wealthy had better duck-and-cover - the half-billion-dollar-CEOs, the $20-million-a-picture movie stars, perhaps even the relatively humble drivers of Hummers and Beemers. The sinking middle class will want to eat them.
Oil prices may hang back in the low $60s for a little while - a combination of less driving, relief over the refinery situation in Houston, and some financial monkeyshines like shorting in the markets (perhaps by government-connected entities seeking to soften up futures prices). But the basic fact is that global oil supply and global demand are now so close that any loss of crude inputs anywhere is going to result in both spot shortages and higher prices. Right now, the supply crunch is being borne by third world countries. The catch there is that some of these third world countries are also oil-producing countries, like Indonesia and Nigeria, and the latter is in the process of falling into social anarchy, which will further impact the global supply. In any case, I don't expect oil prices in America to lay low for long. By Christmas, gasoline pump prices will have joined home heating prices in a vicious pincer around the neck of the non-rich classes.
The serious public conversation of our energy predicament has not begun, and when it does it will be too late. In the background of all this, an economy based on suburban sprawl and easy motoring is going to absolutely fall on its ass, and that means a much quicker end to the housing bubble than we might have expected a month ago. It might also lead to both the demise of the airline industry and the nationalization of what remains of it. It will certainly quash any remaining faith that such an economy can produce wealth, which is what the financial markets are based on, so look out below on Wall Street.
Another Country (September 19 2005)
Take a good look at America around you now, because when we emerge from the winter of 2005 - 2006, we're going to be another country. The reality-oblivious nation of mall hounds, bargain shoppers, happy motorists, Nascar fans, Red State war hawks, and born-again Krispy Kremers is headed into a werewolf-like transformation that will reveal to all the tragic monster we have become.
What we will leave behind is the certainty that we have made the right choices. Was it a good thing to buy a 3,600 square foot house 32 miles outside Minneapolis with an interest-only adjustable rate mortgage - with natural gas for home heating running at $12 a unit and gasoline over $3 a gallon? Was it the right choice to run three credit cards up to their $5000 limit? Was I chump to think my pension from Acme Airlines would really be there for me? Do I really owe the Middletown Hospital $17,678 for a gall bladder operation that took forty-five minutes? And why did they charge me $238 for a plastic catheter?
All kinds of assumptions about the okay-ness of our recent collective behavior are headed out the window. This naturally beats a straight path to politics, since that is the theater in which our collective choices are dramatized. It really won't take another jolting event like a major hurricane or a terror incident or an H4N5 flu outbreak to take things over the edge - though it is very likely that something else will happen. George W Bush, and the party he represents, are headed into full Hooverization mode. After Katrina, nobody will take claims of governmental competence seriously.
The new assumption will be that when shit happens you are on your own. In this remarkable three weeks since New Orleans was shredded, no Democrat has stepped into the vacuum of leadership, either, with a different vision of what we might do now, and who we might become. This is the kind of medium that political maniacs spawn in. Something is out there right now, feeding on the astonishment and grievance of a whipsawed middle class, and it will have a lot more nourishment in the months ahead.
There are two things that the newspapers and TV Cable News outfits are not covering very well. One is that the Port of New Orleans is not functioning, with poor prospects for a quick recovery, and with it will go much of the Midwestern grain harvest. Another thing that has fallen off the radar screen is the damage done to the oil and gas infrastructure around the Gulf Coast, especially the onshore facilities for storing and transporting stuff, and for marshaling the crews and equipment to fix stuff. The US is going to run short of its customary supplies for a long time. The idea that these things will not affect an economy of ceaseless mobility is not realistic.
These serious problems on-the-ground are going to affect the more ephemeral elements floating around in the financial ether: the value of the dollar, the hazard in hedge funds, the credibility of institutions. By October, the hurricane season will be ending and the stock market crash season will be underway. It is hard to imagine that companies like WalMart really believe they will keep their profits up when their customers are paying twice as much as they did a year ago to heat their houses and fill their gas tanks.
Meanwhile, does anybody remember a place called Iraq? A bomb that killed thirty people was reported on page twelve of the Sunday New York Times. That's how important Iraq has become. But, I guess, a nation can hardly pay attention to a bullet in the foot when it has a sucking chest wound.
http://www.kunstler.com/mags_diary15.html
Bill Totten http://www.ashisuto.co.jp/english/
Comment on current events by the author of The Long Emergency (Atlantic Monthly Press, 2005)
Land of Make Believe (October 10 2005)
For the moment, it's back to business-as-usual for Easy-motoring Nation.
Yet 73 percent of oil from the Gulf of Mexico remains "shut in" or unavailable because of hurricane damage, and about 63 percent of natural gas production. Prior to the hurricanes, 24 percent of the nation's non-imported supply of crude came from the gulf. There are also eight refineries still shut down representing 2.1 million barrels a day of refined product capacity (900,000 barrels a day of gasoline, 500,000 of diesel and heating fuel, and 200,000 of jet fuel).
For the past month, the European Union has been sending two million barrels of crude a day to the US out of its own emergency reserves. The original deal was made in the brief lull between Katrina and Rita. It took a while for those tankers to get here. The EU imports over fifteen million barrels of oil a day itself, somewhat more than the US did in pre-hurricane times.
The Federal government has loaned the oil companies crude from the Strategic Petroleum Reserve. The SPR contained 700 million barrels of crude when the hurricanes hit. The US uses twenty million barrels of oil a day, of which we produce altogether about seven million barrels ourselves. It is unclear how much oil is coming out of it now, but the last time a president (Clinton) tapped the SPR one million barrels a day were released.
These actions have beaten down the price of crude oil on the various futures markets. At the same time, gasoline pump prices have leveled off from the refinery squeeze. I doubt that the motoring public is driving a whole lot less. The commutes haven't magically gotten any shorter out in Dallas and Denver over the past month. The national fleet of SUVs has not been changed out either.
What's happening, therefore is that we have entered an eerie hiatus. Some band-aids have been applied to our oil and natural gas supply injuries and the bleeding seems to have stopped. But the truth is that our energy supplies are badly compromised and at the worst time of the year - just as we slide into the home heating season. Here in the northeast, we have barely had to turn on the furnaces yet, but that will change in a week or two.
In the background of this scene, the global oil production peak lurks - meaning that there does not seem to be any surplus production capacity anywhere in the world, including OPEC's big gun, Saudi Arabia. So all we have here in America is a temporary appearance of normality. When the furnaces go on, the WalMart aisles will be empty. If there is any reduction in car trips, it will be because Americans are making fewer visits to the Big Box stores. There will also be fewer trips out to visit the model homes in the new subdivisions.
Another unpleasant truth about the situation is that the US public wants to pretend that everything is okay as much as its leaders do. The public is not so much being misled as demanding that its leaders in government, business, and the news media continue a game of make-believe - that we can still run a cheap oil economy without cheap oil.
Calgary (October 03 2005)
I was way out in Calgary, Alberta, last week, the tar sands capital of western Canada. I was there to yak on camera for a CBC-sponsored documentary about suburbia, and the city itself proved to be a strange and interesting case of immersive delusional behavior.
Calgary started out, of course, as the railhead for western ranching and a jump-off for various gold rushes in the late 19th century. Now it has become an archetypal city of immense glass boxes in a sterilized center surrounded by an asteroid belt of beige residential subdivisions - sort of what Rochester, New York, would be like if it had an economy. The vast suburbs ooze out onto the prairie to the east, along with their complements of strip malls, power centers, car dealerships, and fry-pits, and on the west they bump up against the foothills of the Rockies.
The real estate scene in Calgary is rip-roaring because newcomers are flooding in to work the tar sand angles. No doubt the tar sands will generate a lot of wealth in the years ahead. But those who think they will save western civilization from a Peak Oil clusterfuck are going to be very disappointed. We are not going to run the interstate highway system, Walt Disney World, and WalMart on the Canadian tar sands.
These days, a lot of people (including news reporters) are saying that the tar sands contain the equivalent of a trillion barrels of oil, which is just plain nonsense. It's more like the equivalent of 180 billion barrels - with world consumption at thirty billion annually (do the math). But the word equivalent is tricky, too, because it's only the equivalent in volume, not in the cost of recovery, since the stuff does not flow out of the ground at room temperature like Texas sweet light crude. The process requires a huge up-front mining operation on top of everything else, conducted in a climate so cold that the thirteen-foot-diameter tires of giant dump trucks crack regularly. The Achilles heel of the operation is that it requires hundreds of millions of dollars a year worth of natural gas to melt the stiff goop out of the sand, and that Canada's natural gas supply is verging on depletion just as ours is. They'll have a gnarly choice in a few years: either heat their homes or power the tar sands operation.
Another catch is that even in the short term, the petroleum that is recovered is not going exclusively to the United States or even Canada. The Chinese have been very busily inking contracts for substantial gobs of it. Is George Bush going to send the 82nd airborne into Alberta to secure access to the tar sands?
But this blog entry is not really about the tar sands, it's about the expectations of the people working off of them, which is that they assume the easy motoring utopia will continue indefinitely and are madly busy building a suburban infrastructure for it to dwell in, even while Canadians themselves are now paying the equivalent of $4 US a gallon for the privilege to commute forty miles a day.
What's going on in Calgary, with new subdivisions of half-million dollar houses opening every month, is the North American tragedy in microcosm. Because every new suburban house built, every new Target store opened, every new parking lot paved, every highway widened will be a project in the service of a living arrangement with no future. It is a true madness that beats a path to historic tragedy.
And this is what you have to think about, wherever you live in the US or Canada: what kind of projects and proposals are moving right now in the permitting pipeline of your own municipal planning boards? Things waiting to be built in the next year or two. Chances are they're the same suburban furnishings we've been getting for half a century, in the latest state-of-the-art releases. Each one is a tragedy. Each one will carry us further into darkness.
How do you stop such suicidal behavior? Probably not by persuasion or exhortation. People change what they are doing when circumstances compel them to and not before. The American public barely even thinks about these things. The Sunday New York Times news section contained not one story this week about the current state of oil-and-gas operations in the Gulf of Mexico. The fact is that Hurricanes Katrina and Rita destroyed more than ninety production platforms as well as pipelines and drilling rigs. The implications are so obvious and we are not getting them.
The Vicious Pincer (September 26 2005)
Shouts of deliverance rang through the gallerias and subdivisions of Houston, while the picture of what happened off-shore remains murky. Rita might have spared the nation's fourth biggest metroplex, and most of the chemical-cracking infrastructure on-shore around it. But clawing up between Beaumont and Lake Charles, she cut a path through the densest concentration of offshore oil and gas rigs in the whole Gulf of Mexico. We don't know they all came through yet, or how the pipelines below the surface fared.
What happens next on the oil and gas markets - and up-close in pump prices and home furnaces around the land - will be an interesting story.
The combined fury of Katrina and Rita has obviously flattened whole communities in a large area. One outcome will be what is called "demand destruction", which means that the people who owned all those shredded homes, crushed cars, and flattened businesses will be using less oil in the months ahead. The catch is natural gas: the Gulf coastline is very temperate, even subtropical, and does not require much home heating. So, little demand for heating will have been affected, while the supply of natural gas has been cut twice in a month.
Half the houses in America are heated with natural gas and most of them are elsewhere than the Gulf Coast. On the markets, the price of gas is now heading north of $15 a unit (1000 cubic feet). It could easily hit $20 by Christmas, which would be about 700 percent higher than the price in 2002. Everyone in the non-Sunbelt is going to feel the pain this winter, and quite a few of the poor and infirm may freeze to death.
This is going to be a whole new kind of crisis for America and will set off a new kind of political fury. Both parties will get it in the neck but, of course, the Republicans led by the Bush White House will get it worse, because they are nominally in charge of things. There will be nothing they can do about the natural gas crisis. You can't get any significant amount more of it from overseas because it requires special tankers and terminals to receive it, and those terminals will not be built before the robins come back to Kalamazoo. The Democrats will have to prove that they don't deserve to join the Whigs in the Hall of Extinct Parties.
The political allegiance of the American public will be fully in play. Politics, like nature, abhors a vacuum, and we are likely to see the emergence of something new, perhaps something like the British National Party (BNP) which combines a very aggressive agenda on energy policy with overt fascism. The American people will be starved for action, too, and will be waiting for a man of action to embody their desperation. Let's hope that the characters who percolate out of this mess are not maniacs. The outrageously wealthy had better duck-and-cover - the half-billion-dollar-CEOs, the $20-million-a-picture movie stars, perhaps even the relatively humble drivers of Hummers and Beemers. The sinking middle class will want to eat them.
Oil prices may hang back in the low $60s for a little while - a combination of less driving, relief over the refinery situation in Houston, and some financial monkeyshines like shorting in the markets (perhaps by government-connected entities seeking to soften up futures prices). But the basic fact is that global oil supply and global demand are now so close that any loss of crude inputs anywhere is going to result in both spot shortages and higher prices. Right now, the supply crunch is being borne by third world countries. The catch there is that some of these third world countries are also oil-producing countries, like Indonesia and Nigeria, and the latter is in the process of falling into social anarchy, which will further impact the global supply. In any case, I don't expect oil prices in America to lay low for long. By Christmas, gasoline pump prices will have joined home heating prices in a vicious pincer around the neck of the non-rich classes.
The serious public conversation of our energy predicament has not begun, and when it does it will be too late. In the background of all this, an economy based on suburban sprawl and easy motoring is going to absolutely fall on its ass, and that means a much quicker end to the housing bubble than we might have expected a month ago. It might also lead to both the demise of the airline industry and the nationalization of what remains of it. It will certainly quash any remaining faith that such an economy can produce wealth, which is what the financial markets are based on, so look out below on Wall Street.
Another Country (September 19 2005)
Take a good look at America around you now, because when we emerge from the winter of 2005 - 2006, we're going to be another country. The reality-oblivious nation of mall hounds, bargain shoppers, happy motorists, Nascar fans, Red State war hawks, and born-again Krispy Kremers is headed into a werewolf-like transformation that will reveal to all the tragic monster we have become.
What we will leave behind is the certainty that we have made the right choices. Was it a good thing to buy a 3,600 square foot house 32 miles outside Minneapolis with an interest-only adjustable rate mortgage - with natural gas for home heating running at $12 a unit and gasoline over $3 a gallon? Was it the right choice to run three credit cards up to their $5000 limit? Was I chump to think my pension from Acme Airlines would really be there for me? Do I really owe the Middletown Hospital $17,678 for a gall bladder operation that took forty-five minutes? And why did they charge me $238 for a plastic catheter?
All kinds of assumptions about the okay-ness of our recent collective behavior are headed out the window. This naturally beats a straight path to politics, since that is the theater in which our collective choices are dramatized. It really won't take another jolting event like a major hurricane or a terror incident or an H4N5 flu outbreak to take things over the edge - though it is very likely that something else will happen. George W Bush, and the party he represents, are headed into full Hooverization mode. After Katrina, nobody will take claims of governmental competence seriously.
The new assumption will be that when shit happens you are on your own. In this remarkable three weeks since New Orleans was shredded, no Democrat has stepped into the vacuum of leadership, either, with a different vision of what we might do now, and who we might become. This is the kind of medium that political maniacs spawn in. Something is out there right now, feeding on the astonishment and grievance of a whipsawed middle class, and it will have a lot more nourishment in the months ahead.
There are two things that the newspapers and TV Cable News outfits are not covering very well. One is that the Port of New Orleans is not functioning, with poor prospects for a quick recovery, and with it will go much of the Midwestern grain harvest. Another thing that has fallen off the radar screen is the damage done to the oil and gas infrastructure around the Gulf Coast, especially the onshore facilities for storing and transporting stuff, and for marshaling the crews and equipment to fix stuff. The US is going to run short of its customary supplies for a long time. The idea that these things will not affect an economy of ceaseless mobility is not realistic.
These serious problems on-the-ground are going to affect the more ephemeral elements floating around in the financial ether: the value of the dollar, the hazard in hedge funds, the credibility of institutions. By October, the hurricane season will be ending and the stock market crash season will be underway. It is hard to imagine that companies like WalMart really believe they will keep their profits up when their customers are paying twice as much as they did a year ago to heat their houses and fill their gas tanks.
Meanwhile, does anybody remember a place called Iraq? A bomb that killed thirty people was reported on page twelve of the Sunday New York Times. That's how important Iraq has become. But, I guess, a nation can hardly pay attention to a bullet in the foot when it has a sucking chest wound.
http://www.kunstler.com/mags_diary15.html
Bill Totten http://www.ashisuto.co.jp/english/
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