Bill Totten's Weblog

Thursday, January 15, 2009

Peak Money and the Shambles from Peak Oil

by Jan Lundberg

Culture Change Letter (December 12 2008)

We've outgrown ourselves and we can't crawl back inside. The shell shatters inward as our economy and aggressive culture implodes.

After the peak, it's all down hill from here. Back in the summer, with record oil prices that meant some people somewhere were making a whole lotta money, one might have suspected the peak of funny-money and paper/electronic wealth would happen sometime. Turns out it was weeks away.

Now what? There's confusion about what's going on and what will happen, especially for those who trusted corporate media. After all, who could wrap their minds around a corporate bailout of a trillion dollars that, despite its absurd size, didn't even approach the size of the loss in derivatives' value of over $500 trillion on Wall Street?

As peaks go, such as with crude oil extraction of 86 million barrels a day globally, physical limits can be anticipated from a scientific basis. But money - what we love even more than petroleum products - was seemingly limitless and had become abstract in its infiniteness.

The former supplies of cheaply produced, abundant energy played a major role in inflating wealth over the years. Thus, peak oil brought about peak wealth and peak money. It is no coincidence that we find ourselves at post-peak money and see lower oil prices attained through demand destruction.

Astronomical figures for dollars that were exponentially expanded by modern digital finance are beyond comprehension. The unreality of trillions of dollars, that no one gets to see and that aren't used for the benefit of real people, has been an unspoken factor in eroded consumer confidence. So the fabulous wealth in the US since the housing-market bubble, enjoyed by the one percent of the population that possesses 38% of the wealth, has destroyed itself. No matter how much was shared with the average Joe, the greed has eaten itself. A new era is dawning, featuring cultural change much more than technological change.

Housing bubble boom for assphalt sprawl

The speculative investment on the housing boom fueled the recent wealth, but the housing boom could not have happened without cheap oil to build and maintain the urban sprawl constructed with "unlimited" asphalt for car-based living. As part of the petroleum feast, agricultural production through cheap petroleum fed suburbanites and almost everyone else.

With that under their noses, the major corporate media and even "progressive" media still disassociate energy from the house-of-cards economy. Although, if anyone stops to think, it's clear that higher prices for energy might have taken a huge toll on consumer demand. It's the failure to spend enough (through debt? Fine!) that economists and politicians blame for our troubles such as massive layoffs.

Now the Golden Goose of purchasing power has been cooked, over the coals of fossil fuels. Why not celebrate the end of the consumer economy? Eat the goose before it rots, however you choose, such as to get out of Dodge. Let us fortify ourselves for the awesome task of reorienting our lives for the "new" local-based survival strategy.

Really, no more money?

Living the future now means not relying on money. Not easy, but as people see their dollar wealth evaporating and the slave-labor option denied, people are already looking at local gardening, bartering, and more.

When and where is someone with no money respected as much as anyone else? I've witnessed it in Earth First! and other collectives. Young people are especially likely to value experiencing life and adventure rather than count future money. It's time we all compared notes, having turned off the television.

The demise of the economy is being treated as so tragic, when the far greater concern should be for Earth's changing climate. In fact, when we consider the economy's slowdown in shipping, manufacturing and travel, the only responsible stance is to want more economic collapse so that greenhouse gases continue to be slashed.

Some of the positive implications of a depression include a return to the most basic, hands-on economic reality. Until we actually get our hands in the soil, for example, the experience of barely surviving helps one to question the fantasy world of artificial plenty. A middle-class or very rich person might cling to the myth of ever-rising material prosperity only for the moment, as collapse unfolds.


Radical times have arrived: "Obama's ‘Secretary of Food’?" by Nicholas Kristof, New York Times (December 10 2008)

The market is worth more than $516 trillion, (GBP 303 trillion), roughly ten times the value of the entire world's output: it's been called the "ticking time-bomb." By Margareta Pagano and Simon Evans, The Independent (October 12 2008)


Before finalizing this posting, I decided to check whether "peak money" had already been used online. Voila, my friend Jim Kunstler had done so a month ago! I'd been thinking of peak money for a little while, but must confess I've been failing to check out the popular and fun Clusterfuck Nation column that Jim produces weekly. Check out "Peak Money" (November 12 2007), and I'll do the same:

Bill Totten


  • The Price of oil will rise again, soon.

    The top story of the year is that global crude oil production peaked in 2008.

    The media, governments, world leaders, and public should focus on this issue.

    Global crude oil production had been rising briskly until 2004, then plateaued for four years. Because oil producers were extracting at maximum effort to profit from high oil prices, this plateau is a clear indication of Peak Oil.

    Then in August and September of 2008 while oil prices were still very high, global crude oil production fell nearly one million barrels per day, clear evidence of Peak Oil (See Rembrandt Koppelaar, Editor of "Oil Watch Monthly," December 2008, page 1)

    Peak Oil is now.

    Credit for accurate Peak Oil predictions (within a few years) goes to the following (projected year for peak given in parentheses):

    * Association for the Study of Peak Oil (2007)

    * Rembrandt Koppelaar, Editor of “Oil Watch Monthly” (2008)

    * Tony Eriksen, Oil stock analyst; Samuel Foucher, oil analyst; and Stuart Staniford, Physicist [Wikipedia Oil Megaprojects] (2008)

    * Matthew Simmons, Energy investment banker, (2007)

    * T. Boone Pickens, Oil and gas investor (2007)

    * U.S. Army Corps of Engineers (2005)

    * Kenneth S. Deffeyes, Princeton professor and retired shell geologist (2005)

    * Sam Sam Bakhtiari, Retired Iranian National Oil Company geologist (2005)

    * Chris Skrebowski, Editor of “Petroleum Review” (2010)

    * Sadad Al Husseini, former head of production and exploration, Saudi Aramco (2008)

    * Energy Watch Group in Germany (2006)

    * Fredrik Robelius, Oil analyst and author of "Giant Oil Fields" (2008 to 2018)

    Oil production will now begin to decline terminally.

    Within a year or two, it is likely that oil prices will skyrocket as supply falls below demand. OPEC cuts could exacerbate the gap between supply and demand and drive prices even higher.

    Independent studies indicate that global crude oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time, demand will increase. Oil supplies will be even tighter for the U.S. As oil producing nations consume more and more oil domestically they will export less and less. Because demand is high in China, India, the Middle East, and other oil producing nations, once global oil production begins to decline, demand will always be higher than supply. And since the U.S. represents one fourth of global oil demand, whatever oil we conserve will be consumed elsewhere. Thus, conservation in the U.S. will not slow oil depletion rates significantly.

    Alternatives will not even begin to fill the gap. There is no plan nor capital for a so-called electric economy. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment. The independent scientists of the Energy Watch Group conclude in a 2007 report titled: “Peak Oil Could Trigger Meltdown of Society:”

    "By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame."

    With increasing costs for gasoline and diesel, along with declining taxes and declining gasoline tax revenues, states and local governments will eventually have to cut staff and curtail highway maintenance. Eventually, gasoline stations will close, and state and local highway workers won’t be able to get to work. We are facing the collapse of the highways that depend on diesel and gasoline powered trucks for bridge maintenance, culvert cleaning to avoid road washouts, snow plowing, and roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, large transformers, steel for pylons, and high tension cables from great distances. With the highways out, there will be no food coming from far away, and without the power grid virtually nothing modern works, including home heating, pumping of gasoline and diesel, airports, communications, and automated building systems.

    Documented here:

    By Blogger Clifford J. Wirth, Ph.D., Professor Emeritus, University of New Hampshire, at 9:46 PM, January 15, 2009  

  • Thanks, Clifford. I couldn't agree more!

    By Blogger Bill Totten, at 7:45 PM, January 17, 2009  

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    By Anonymous Anonymous, at 4:50 PM, February 11, 2009  

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