Von Hoffman: Honey, We Killed the Planet

August 31, 2006


This guy is in the same ranks as Kunstler when it comes to turning a phrase.


Quick Roundup of News

August 29, 2006

Here’s a few things I thought readers might be interested that I’ve picked up on my web wanderings recently…

  • The Strib ran an article today laying out what many of us already know: wages are falling behind inflation. Even if you get a small raise every year, you’re still losing money. No wonder, then that consumer confidence took a hit in August as well.
  • For another reason why consumer confidence is shaky, I would refer you to the housing market. The NY Times has a nice graph showing how home values have exploded in the last decade. When things revert to the mean, it’ll be ugly for a lot of homeowners, including myself. Hat tip: Ran Prieur
  • If that hasn’t ruined your day, Mr. Chris Skrebowski, editor of the respected industry journal Petroleum Review, spoke at the ASPO 2006 conference in Lisbon last month. His message? We’ve got approximately 1500 days until the peak in global oil production. So,we’ll be in the throes of the oil price whipsaw for another 3/4 years until production flows of oil will fall permanently behind demand. Then we’ll move from the economic slow squeeze we’re starting to feel now and into a situation where declining oil production cannot be denied. If we will end up being lucky enough to hold off economic crisis and resource wars until then, we should count ourselves as having been lucky. All bets are off at that point.
  • I keep hearing reports that drought conditions across much of the US mean that ranchers will be taking their cattle herds to market early this year to avoid them dropping dead from lack of food and water in the field. If this comes to pass, expect a glut of meat products this fall, followed by rising prices next year. If you have a chest freezer, and you like beef, I would stock up soon.
  • Both Mark Kennedy and Amy Klobuchar are coming out with ads attacking big oil. Interstingly, Kennedy has been the recipient of over $80,000 worth of campaign contributions from big oil… I wonder how they like how their money is being spent? On the off-chance he does win the senate seat, I’m sure his anti-oil campaign rhetoric will be quickly and quietly dropped. Based on recent polling numbers, though, it looks like he’ll be back to his accountant job soon enough. I’m not a huge fan of Klobuchar or the Democratic party in general, but things seem to function better when there’s gridlock at the national level.
  • In a rare breach of professional ettiquette, Jimmy Carter has ripped Tony Blair a new orifice, more or less calling him Bush’s lap dog. I can’t wait to see if he’ll take the next logical step and go after Bush.
  • It’s been a year since hurricane Katrina devastated New Orleans. Most of the affected homeowners there still have not gotten much if anything in the way of the promised relief from the government. Administration officials have noted that it may cost upwards of $200 Billion to put the Gulf Coast back together. There’s only been a trickle of money getting into the area, and more hurricanes will be hitting the USA this year and beyond. Add the $200 Billion figure to the over $300 Billion we’ve spent on our Iraq adventure, and it’s becoming easier to see that the people in charge are either spending wildly since they know the game is coming to an end sooner or later, or they’re simply lying about the aid, and it will never get to the people who need it. The new FEMA reconstruction plan for New Orleans seems simple: plan on living somewhere else. With more and more coastal development going on throughout the gulf region, you can’t help but think that this same scenario is going to get played out over and over and over again in coming years.

Russia Surpasses Saudi Arabia as World’s Top Oil Producer

August 25, 2006

Ever since the US went into terminal decline for oil production in 1972, Saudi Arabia has been the world’s “swing producer,” able to ratchet up production at any point to stem rising oil prices if need be. Their massive stated reserves and historical production levels over the last few decades have backed their claims up time after time. Times are changing, apparently, for Russia produced more oil than Saudi Arabia in June 2006.

Even considering the news source (not exactly unbiased), this is big news. Yes, Saudi Arabia is subject to oil production quotas via OPEC that Russia isn’t. Saudi oil minister Ali Naimi has stated this summer that Saudi Arabia has backed off oil production due to a perceived lack of demand. Since Russia is apparently pumping full-bore and oil prices stay at historically high prices, this seems to be complete BS. If Saudi Arabia does have any reserves, it’s probably the gunky, heavy stuff polluted with Sulfur and/or vanadium, which is costly and difficult to remove. Considering oil experts have been accusing the Saudis of trying to hide declining production in their old supergiant fields, I’m guessing that there’s more to this than what Mr. Naimi is telling us.

Surging demand for oil means that pretty much any country will produce as much of the stuff as they can without damaging their fields. There’s a tricky balance between limiting production to keep prices high, and letting prices rise too high and damage the economies of the consumer nations, killing the goose that lays the golden egg, as it were.

Russia becoming the swing producer will mean a number of things to the USA. First, Russia is using it’s new-found oil wealth to pay off it’s international debts, and start building up it’s precious metals reserves. This takes away a lot of the leverage that the western countries have been using on Russia over the last decade or so.

Second, being both free of the shackles of international debt, and still possessing a strong military (and nuclear) arsenal, Russia is beginning to flex her muscles on the international stage once again. Vladimir Putin is no pushover, and he has shown a willingness to be even more ruthless than the USA when it comes to pursuing his geopolitical goals. Putin will not tolerate the west interfering in the operation of Russia, unlike most other oil producers, which are both economically and militarily weak. In fact, Russia is showing more willingness to interfere with the west, as her natural gas shutoff in the Ukraine last winter showed.

Finally, Russia is talking about selling oil in rubles. The hegemony of the American Dollar is based it being the only currency accepted in oil transactions around the world. If the new number one producer of oil will require buyers to acquire rubles to buy their oil, the dollar’s demise will be hastened. If this comes to pass, I would expect to see more anti-Russian rhetoric coming out of the mouths of Cheney and his cronies. Putin has shown himself to be an autocrat in the old Soviet tradition, and I’m sure he’d like nothing more than to put the US in its place. Reducing oil exports and forcing oil purchases to be conducted in rubles would put a double-whammy on the US economy that could be fatal.

Matthew Simmons has said that when Saudi Arabia goes into decline, the world will go with it. We’ll see about that soon enough. The more pressing concern for now is a resurgent Russian bear now in possession of the the greatest weapon in the world: oil.

Paradigm Shift

August 23, 2006

On the occasions when major media outlets choose to address the subject of oil depletion, they invariably pull their punches. No matter how well they cover the issues of oil extraction and the effect it may have on the economy and life in general, they never seem to address the real solution: powering down. If they offer solutions of any sort at all, it’s the usual techno-fix hopes of hydrogen, ethanol, biomass, etc. Well, one publication has finally broken that barrier, sort of. The Nation, a left-leaning political magazine has publsihed articles about oil depletion in the past, but they recently have published two columns in their online edtions that are addressing the need to totally rethink the American way of life.

Columnist Nicholas Von Hoffman has two columns, “Life in a Post-Carbon World” and “Cuba’s Path-Breaking Energy Policies,” that look at the real solutions to peak oil without flinching from the real solution. In his column on Cuba, he notes the routes taken by both North Korea and Cuba after the fall of the Soviet Union, which was supplying both with a market for their good as well as a steady flow of cheap oil. The two countries chose different paths, with contrasting results. North Korea’s attempt to keep adhering to the old way of doing things has led to the collapse of that state for all intents and purposes. Cuba, on the other hand, chose to drastically reorganize the nations food production and energy usage, resulting in a standard of living that is, while low by US standards, able to keep the population fed and the state alive. Von Hoffman points out that the USA will be at a similar crossraods soon enough, and the choice we make at that point in time will make or break the country’s prospects for survival into the 21st century.

His other column, “Life in a Post-Carbon World,” covers a wide variety of subjects such as food production, overpopulation, economic woes, and the ability of companies such as BP to continue to thrive right up until the point that they shut down due to lack of produceable oil. This quote sums it up for me quite well:

If we are to survive, much less prosper, in a time when oil will vie in price with Cristal, we must not only think outside the box; we must get rid of the box. We must do something Americans have never imagined: Give up on economic growth. We must abandon the long-held idea that we can grow our way out of every problem, that growth is the path to achieve every national goal.

He’s absolutely right about that. Everything about our country is geared around the growth paradigm. Without increasing housing prices, we’d be fools to take on a mortgage. Without increasing stock prices, we’d be fools to invest in the stock market. Without increasing numbers of people (aka consumers), companies couldn’t sell more product and grow their profits.

We will be forced to adapt to a world that cannot grow it’s energy supply, and that will send shock waves throughout the world. There’s no place we can run to to avoid it. Some places may be better adapted to handle the transition than others, but we really don’t know, so moving to another locale is a real crap shoot.

I read an article about housing the other day, that stated that each person needs only around 100 square feet of house to live in; anything more than that is a luxury whether we realize that or not. That would mean a house of around 400 quare feet for my family, maybe 800 square feet if we were really feeling decadent. Consider how much stuff you own right now, and how you’d squeeze it into a much-reduced footprint like that. You start to gain an appreciation for just how much crap we have compared to our ancestors. I can imagine the boxes of books, clothes, unnecessary kitchen items, furniture, games, tools and other stuff I’d have to get rid of. The time may be coming where I’ll have to do more than just think about that, so I’m trying hard to make smarter choices about things I choose to purchase, regardless of the category.

Von Hoffman is the first columnist outside of the peak oil intelligentsia I’ve seen that has addressed this issue. Kudos to him for doing so, and hopefully he and others will expand on this idea in the months ahead.

How Far Down the Rabbit Hole do You Go?

August 21, 2006

I finished G. Edward Griffin’s “The Creature from Jekyll Island” over the weekend, and my head is still spinning a bit. As I’d mentioned earlier, it’s a tough read. In addition to giving the reader a history lesson regarding central banking in the United States, it also gives a short history of fiat money and fractional reserve banking, and paints several scenarios for the future. Griffin’s bias is easy to see throughout the whole text, since he’s up front about his opposition to socialism, collectivism, the new world order, or whatever you wish to call it. If you believe his writing, the whole concept of central banking is a series of long conspiracies by the wealthy to subjugate the masses and control the political destiny of the world by secretly pulling the strings of power.

The whole issue of conspiracy is problematic to those of us in the peak oil crowd. It’s very easy to be painted as a tinfoil-hat wearing nut job, especially since most people refuse to believe anything that smacks of secret societies, deep politics, and the like. It’s something that needs to be addressed head-on, though, since everything we like to talk about seems to tie back to one conspiracy or another. It’s a matter of degrees, if you ask me.

Is there a group of people who hole a vast amount of the world’s wealth? Absolutely. Are they planning a slow takeover of the world through control of the national banks? Possibly. There’s enough evidence out there to show that the heads of these banks communicate regularly, and it’s common knowledge that they meet regularly to help normalize global business and cash flow. Writers like Griffin are willing to take the next step and assert that these people have more or less held the reins of power for the last few centuries, and that they actively set nation against nation for purposes of enriching themselves. It sounds diabolical, perhaps even unthinkable. There’s enough evidence out there, though, to make you wonder about how the world really works, since there’s a large amount of evidence to indicate that it’s not the way the civics books depict.

When you start talking about the new world order and socialist plots to establish a new feudalism through monetary policy and government surveillance, you’re crossing a line from the plausible into the implausible, at least in the minds of many people out there. Many peak oilers trample across this line on a regular basis, and it’s used to attack their credibility on a wide variety of issues. This makes discussion about all sorts of weirdness dangerous.

It’s a given with most people that our government lies to us on a regular basis. We accept that we were misled about WMD’s in Iraq as a casus belli in 2003. We get nothing but happy talk about the economy and don’t bat an eye at government numbers that claim we have low inflation and a strong economy, even though most of us seem to have less and less money left over at the end of the month after we pay for gas, power, food and housing. The government claims no foreknowledge of 9/11 even after the Clarke memo has been in the public domain for years now. Going back in history, it’s becoming a more accepted fact that Franklin Roosevelt got the US into World War II by ignoring forewarning of the Pearl Harbor attack. Winston Churchill, that icon of the 20th century, seems to have pulled all the necessary strings that allowed the Lusitania to be intentionally sunk which dragged the US into World War I, with collusion from people in the US government.

We see all of these issues, realize that we have been lied to on a regular basis, yet we don’t ever do anything about it. It’s said that we get the officials we deserve, and George Bush has been regularly documented as being one of the most ‘uncurious’ elected officials ever. He seems disinterested in anything the conflicts with his worldview. In a simlar vein, Americans these days seem to have little to no interest in understanding how the world works these days. How many people understand the economy, or how gasoline makes it into our gas tanks, or where our food comes from? As long as the shelves at the boxmart are full, most people couldn’t care where the stuff comes from, who made it at dirt-cheap wages, or where we’d find the goods in question if the stores stopped selling them.

This lack of curiosity extends to our media consumption. International news is conveniently fitted into a 3 minute window during the nightly local news, and that’s about all that many people know about the world. It’s the same thing with politics, the economy and pretty much everything else other than sports & entertainment. Knowing that, why would it be hard to believe that there is a class of people in the world that takes advantage of this? Most of the major media is concentrated in the hands of a few large coporations, and the ‘hard news reporting’ they do almost never upsets a major advertiser of theirs.

With that in mind, I return to the idea of conspiracies. You need to believe in them to a certain degree just to follow peak oil. The idea that we’ll soon be reaching the point where we can’t suck oil out of the ground any faster, and that that fact is being ignored by most governments and the media, can be seen as a classic conspiracy all on it’s own. And from there, it’s easy to see others… the question is, how far do you go? What do you believe, and what don’t you believe?

Do you believe that the media controls what we see to shape public opinion?

Do you believe that the war in Iraq is all about oil?

Do you believe that the World Bank is a tool for the the major powers to more or less enslave the third world with their ‘loans?’

Do you believe Oswald acted alone? Or did the Warren Commission lie to us?

Do you believe that there’s something fishy about 9/11? That the government isn’t telling us the whole truth? This is a particularly sticky wicket for us, since many peak oilers are also heavily into the ‘9/11 Truth’ movement. While this whole line of reasoning is hard for me to accept, consider the words of a former assistant secretary of the Treasury from the Reagan years, and a former opinion editor for the Wall Street Journal.

Do you believe that the elite and our government are heavily involved in secret societies, pedophilia/ritual abuse, and/or dealings with space aliens?

Moving from one step to the next requires only a short leap of faith, but by the time you’re done, you’ve traveled quite a way out of the ordinary, and most people will think you’re totally crazy. The issue is that there’s just enough tantalizing facts floating around in the memesphere that it’s hard to totally discount everything based purely on hard evidence.

So, where do you stop? Answering this question is a something very personal, and difficult for all of us to do. If we’re going to be effective advocates for sustainability, you’ve got to figure out where you stand on a wide range of subjects, since the some of the people who’ll be attracted to the issues at hand will have strong, sometimes incoherent theories about all of these things and more.

Griffin’s book made me convinced for a while that there was a massive, sinister movement that’s been running for decades to make us all slaves of the moneyed elite. I’ve backed off that now that I’ve had some time to digest the facts a bit more, but there’s still enough evidence of something going on behind the scenes to make we wonder. To use a cliché, it’s like that scene from the Matrix… do you take the red pill, or the blue one? It’s become obvious to me that the real ways the world works are different from what we’re told on TV. The question that remains before me is in figuring out what is disinformation, and what’s not. The more I think I’ve figured things out, the more I realize that my quest for knowledge has just begun. Negotiating the minefield of secrets, half-truths, crackpot theories and disinformation will just make the journey longer and more difficult, which is probably why most people give up.

Cargill: Food and Feed are Higher Priorities for Corn than Ethanol for Fuel.

August 18, 2006

The Strib has an short article about an interview with Cargill CFO William Veazey today. As one of the nation’s largest food processors as well as being a player in the energy markets, Cargill is well positioned to both understand the nature of the ethanol production as well as understand how it affects food production. Cargill appears to be coming out strongly on the side of using corn for food:

The company continues to push for a national debate about the role of corn in energy markets, saying food and feed are higher priorities for corn than ethanol for fuel.

“We’re not sure whether it’s economic development policy, or energy policy or farm policy, or exactly what’s driving it, and we don’t think there’s necessarily clarity of objectives,” Veazey said.

He’s absolutely correct. The blending of food and fuel policies has muddied things up such that it’s hard to say which of the two is in the driver’s seat at any given moment. Currently, rising gas prices mean that the fuel side probably has more importance in the mind of many politicians, economists and businesspeople. That may not stay that way for long, though.


One story that’s slowly gaining some legs throughout the global media is the spectre of a global grain shortage. The Earth Policy Institute has released a statement indicating that the Earth currently has global grain stocks equal to only 57 days worth of consumption. This is bound to mean prices rising for grains, and all of hte food stuffs that directly or indirectly use them. George Ure at Urban Survival has been predicting a protein shortage some time in the next year due to rising feed prices. Also, anything that uses high-fructose corn syrup as a major ingredient (like pretty much any soda, for example) will also be hard-pressed to put off a price rise to make up for rising ingredient costs.


Consider these facts:

  • one tankful of ethanol could feed a person for a year

  • The EROEI for ethanol is quite low, even possibly less than 1 (i.e. it takes more than 1 unit of energy to make the same unit of ethanol). Oil wells in their early days had EROEI ratios better than 100. Nowdays it’s lower, but on average it’s still better than 8 or so unless the wells are played out, or the oil is the heavy, nasty stuff that needs a lot of refinement.

Both of these things combined with dwindling grain supplies mean that production of ethanol will be limited by market factors or political factors long before it could even come close to replacing oil as our motor fuel of choice. Another potential “Silver Bullet” bites the dust.

Again, the long-term answer is to cut back on our use of all motor fuels. Cargill’s position is interesting, since they would stand to profit either way the decision goes. They must be deciding that starving masses around the globe is worse for business than pedestrian masses.

Make Money Fast!

August 17, 2006

Want a quick way to double your money? Hoard old coins. With rising commodity costs for metals, it’s turning out that a lot of US coinage is currently worth more than it’s face value.

One quick example: US Pennies minted between 1959 and 1982 are almost pure copper. Currently, the metal in one of those pennies is worth $.023. Likewise, soaring nickel costs mean that current nickels are worth $.068 each. Current dimes and quarters are still worth more than their metal, and will be for a while due to the fact that they’re mostly zinc.

If you’re lucky enough to have pre-1964 dimes, quarters and half-dollars, you’re sitting on a silver mine of sorts, since all of these coins were 90% silver. You’ll occasionally pull one of these out of everyday circulation, and I personally keep them when I do. A pre-1964 quarter is worth over $2 just for it’s metal these days.

For more information, check out Coinflation.

Whipple: Rethinking America’s Cars

August 17, 2006

Courtesy of Energy Bulletin

Tom Whipple weighs in with another incisive column about the crisis-in-slow-motion that is peak oil. He raises some interesting points about what to do regarding the millions of inefficient motor vehicles that are currently being used here in the USA. We’ll phase out the worst offenders through the mechanisms of the ‘free market,’ but will that be enough?

He closes with some thoughts about attitude adjustment. He raises the point about the inevitable clashes that will occur when average motorists, driving small, fuel-efficient cars at the optimal speed for conserving gasoline (think 30-40 mph on the highway) run afoul of the wealthy still driving their Hummers fast all around them. Even worse, imagine when it’s the kids of the wealthy( acting like complete assholes as they usually do, being both privileged and teenagers ), run afoul of the angry formerly-middle-class. I would expect child abuse charges to rise significantly.

This ties in with my earlier thoughts about the wheelage taxes being implemented around here. As gas becomes harder to get ahold of and more expensive, driving will cease to be a right granted to all adults, and move to a prerogative of the rich. I would expect more and more citizens to start complaining, and hopefully getting involved in fighting road appropriations bills, tax cuts for oil companies and the like. We’ll likely find out sometime in the next five years or so, depending on world events and mother nature.

I for one am glad I’m leasing my vehicles right now. It’s more expensive, yes, but I’m only paying to rent them for a few years, and then they become the car manufacturer’s problem again.

Slow Posting Week

August 17, 2006

Apologies for the relatively light posting this week. I’m still carving my way through Edward Griffin’s “The Creature from Jekyll Island,” and I’ve got some more things I want to write about it, but it will take me some time to get my thoughts in order.

In the meantime, I’ll hopefully post some smaller articles of note. If nothing else, relative peace in the Middle East combined with a lax start to hurricane season and resumption of some flow from Pruhoe Bay have resulted in gas falling to the ‘bargain’ price of $2.84 or so around here. I can’t help but thinking this is a bargain when I see it, even though I realize how the price has gone steadily up since early 2005. Everything we’re seeing indicates that we’re in the ‘plateau’ of peak oil production. Production may rise a bit, then fall as some fields decline or come online. The price of oil (and everything that depends on it) will move accordingly.

As a piece of advice, if you have a desire for any durable goods from overseas, I’d buy yourself a Christmas present or two this year. The next few years will be the end of the window for getting goods from overseas cheaply, I think, so do yourself a favor and get the good stuff now while it’s still reasonable.

It Ain’t Easy Being Green

August 15, 2006

The Green Party in Minnesota took a major hit this week when one of their few elected officials, Dean Zimmerman, was convicted in Federal Court of taking bribes. The severity of his crimes are relatively unimportant, but his conviction will probably torpedo any hopes the Greens had of expanding their base significantly during this election campaign.

One step forward, two steps back…

If anyone reading this blog is affiliated with the party, I’d love to hear your views on how this event hurts the party, or if it doesn’t hurt them much at all. They way they are rallying around him is very loyal, but probably political folly. Ah well, it’s not like they had a snowball’s chance of winning any of the big offices anyway…