Sunday, June 24, 2007

An "I told you so" in the making.

I want to bring to your attention an article in Mother Jones online:

The Pentagon v. Peak Oil

Commentary: The wars of the future may be fought just to run the machines that fight them. By Michael Klare June 14, 2007

"...For anyone who drives a motor vehicle these days, this has ominous implications. With the price of gasoline now 75 cents to a dollar more than it was just six months ago, it's obvious that the Pentagon is facing a potentially serious budgetary crunch. Just like any ordinary American family, the DoD has to make some hard choices: It can use its normal amount of petroleum and pay more at the Pentagon's equivalent of the pump, while cutting back on other basic expenses; or it can cut back on its gas use in order to protect favored weapons systems under development. Of course, the DoD has a third option: It can go before Congress and plead for yet another supplemental budget hike, but this is sure to provoke renewed calls for a timetable for an American troop withdrawal from Iraq, and so is an unlikely prospect at this time.

Nor is this destined to prove a temporary issue. As recently as two years ago, the U.S. Department of Energy (DoE) was confidently predicting that the price of crude oil would hover in the $30 per barrel range for another quarter century or so, leading to gasoline prices of about $2 per gallon. But then came Hurricane Katrina, the crisis in Iran, the insurgency in southern Nigeria, and a host of other problems that tightened the oil market, prompting the DoE to raise its long-range price projection into the $50 per barrel range. This is the amount that figures in many current governmental budgetary forecasts -- including, presumably, those of the Department of Defense. But just how realistic is this? The price of a barrel of crude oil today is hovering in the $66 range. Many energy analysts now say that a price range of $70-$80 per barrel (or possibly even significantly more) is far more likely to be our fate for the foreseeable future..."

What this means in real life is that the US government will confiscate or otherwise allocate for itself and itself alone all diesel and gasoline production long before there is any real danger of actually running out of oil. The government cannot afford to keep paying for it, and won't. Neither can they run tanks, planes, fire engines on the ethanol fantasy (even presuming we could actually devote every square inch of farmable soil in the nation to producing biofuels, which is what would be necessary just to fuel personal automobiles, much less the police, fire, ambulances, and the military - and presuming the problem of having to use petrochemicals to actually produce biofuels could be solved, which it can't.).

So those who think "peak oil" is something out there for the far future are not being realistic. The government has to have the petro-resources available to get it's own work done, and the point is fast approaching where sharing with the public is not an economically viable option.

You need to understand this - gasoline for your personal cars will soon not be available at any price. Driving your car to work or to get groceries will not even be an option for you. That is the reality, class. It's ugly but there it is.

They may cut some sort of deal with the oil company executives concerning ownership and end-prices, but that deal will absolutely not include gas for private citizens.

It can't, class.

When it's them or us, they're going to chose "them."

As would you.


Garnel Ironheart said...

There are some flaws in your article.

One is that the current price of oil at $65 a barrel is the unadjusted price. If one takes the price of oil at its peak in the mid 70's when the embargo was on and people were lining up for rationed supplies and adjust it for all the inflation that's happened since, the current price of oil is still way below what it was back then.

Secondly, the world is in no danger of running out of oil. New sources are being found on a yearly basis and by some estimates, we haven't tapped a third of the oil hidden around the Earth. So, no danger of petro-resources running out. The price is high because (a) regional instability and weather related damages cause supply worries and (b) because the damned oil companies know that they will get whatever they ask for so why not ask for the moon?

Third, there are ways around expensive oil and gas but because of the cheapness of those commodities in North America, there's been no incentive to develop them. Why do Europeans enjoy a transit and train system far superior to any in North America? Because their gas is three times the price of ours, forcing a higher reliance on public transit. More riders = more funds to build up the system.

That just might happen here if the price of gas ever rises to where it should be

Ahavah bat Sarah said...

You're right about the current price not being "as high" relatively speaking as during the embargo. The point, exactly, is that the "real" price for oil has nowhere to go but up. This article simply shows that the estimates that the government (and many businesses, too) are entirely unrealistic.

And I'm wondering who thinks we are "running out" of oil - what we're "running out" of is light sweet crude and other easily and economically accessible forms of petroleum. If you haven't been to the Oil Drum website lately, I can tell you that the Saudis are pumping seawater into the wells and drilling more wells as fast as they can, and production still fell 6-8% from last year, and will continue to do so every year. Ditto for Mexico, etc. With the increase in demand from China, especially, and to a somewhat lesser extent India and other "third world" nations, the price has nowhere to go but up. That's simple supply and demand.

This particular article about the pentagon and military use of oil should disturb people precisely because of the above facts. We NEED oil to run the military, to run police and fire and ambulances, not to mention air travel, which I'm pretty sure Congress isn't going to give up. In the great scheme of things it DOESN'T MATTER if there are lesser grades of crude or petroleum derivatives that can be processes if the government (or we) can't afford to buy the end products at that price.

And that is the edge that we are now crossing.

So what would you do if you were Congress or the President - give up your planes and limos, give up all safety and military capabilities - or say to yourself, "Self, there's not enough to go around, and in order to reduce the price, we have to reduce demand. It's them (the public) or us."

The only way to significantly reduce petroleum usage in this country is to ration/ban gasoline for personal use. That is, in truth, the ONLY way the government has to make sure that IT will have oil available to it indefinately.

At what point do they make this decision? $100 a barrel? More? We can only guess. But that day will most certainly arrive, sooner or later.

As for mass transit, I mentioned in a much earlier blog that I gave a presentation to our urban county council just this past February in order to TRY and get them to take the future seriously and invest in electric streetcars, trolleys, and light rail for our metro area. I urged them to push for more European style family-friendly flats and to put a moratorium on big box retail development, etc.

No dice.

And I think they are typical of American mid and small cities - they won't act until they absolutely have to, and by then it will basically be too late.

They cannot or will not imagine a European style of life. So by the time gas rises to the price where it "should be" or will be, so much economic disruption will have taken place that it simply can't be done at that point. (see also James Howard Kunstler)