May 29, 2008
The original article is buried behind the paywall… but here’s a link to the story.
Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world’s top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.
There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn’t move to boost supplies again until last fall.
The WSJ isn’t quite coming out and stating that we’ve hit the ceiling for how much oil we can produce at any given moment, but this is probably about as close as they will come to doing so until it’s blatantly obvious to all.
I believe we are close to reaching a tipping point here, folks. How close is hard to say, and I won’t embarrass myself by making a wild-ass prediction as to the date of when we start downhill. There are too many variables in play, and in the end it doesn’t make that much of a difference if we start to decline now or in five years’ time. The important lesson here is that demand is at an all-time high and oil exports are dropping. No one else is stepping up to profit by putting more oil on the market, and if prices get too high it will hurt the global economy and slash world demand accordingly.
The time to sell your SUV or your exurban McMansion was several years ago. We have friends who live in the outer twin cities that are upside down on their mortgage now. I don’t know that they will ever get out from underneath it except through hyperinflation or foreclosure/bankruptcy. They will not be alone, as more & more Americans figure out they built too much, too far from work, and borrowed too much to do it. Those that made better choices can laugh at them if they like, but they should do so knowing that those over-extended Americans could easily bring down the house of cards known as the US economy. Their pain will eventually affect us all.
HT: The Oil Drum
May 29, 2008
Not more hyperbole from me… this is the title of a speech given yesterday at the Commonwealth Club of California by Richard Fisher, president of the Dallas Federal Reserve Bank. There have been a number of doom-mongers out there in recent years warning of trouble, along with Comptroller David Walker, who’s been ranting on this subject for a few years now. When one of the big-wigs at the Fed pipes up, you’d hope more of the sheep raise their heads and listen.
Tonight, I want to talk about a different matter. In keeping with Bill Martin’s advice, I have been scanning the horizon for danger signals even as we continue working to recover from the recent turmoil. In the distance, I see a frightful storm brewing in the form of untethered government debt. I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct.
The whole speech is worth your time, and when you next debate someone about the relative health of the economy, pass this link on. It’s hard to write off someone as a Chicken Little whack-job when he’s helping run the monetary policy of the United States.
This speech probably won’t make much of a dent in the mainstream media, which is sad, since as Mr. Fisher points out, bad debt management on the part of the US could very easily wipe our economy out. Keep your eyes open, and stay vigilant.
May 29, 2008
It’s been a busy spring, so my bike has been sitting in the garage since winter. I finally dug it out last night and was filling the tires when a question popped up in my mind that I don’t know the answer to. I’ve got an old Schwinn Searcher that I picked up from the good folks at the Sibley Bike Depot a few years back, and the tires on it (700 x 38c) are rated at between 50 and 85 psi. I punted and filled them up to about 65-68, since I wasn’t sure what the effects of low-end or high-end pressure would be. I’m assuming that lower pressure equals a squishier, possibly slower ride whereas higher pressure means the opposite. I’m a larger fellow ( 6’2″/250) so I’m guessing that higher pressure would be a better choice for me.
Any opinons? Enquiring minds want to know…
May 28, 2008
Apparently you have to actually export oil to belong to the Organization of Petroleum Exporting Countries…
The fact that Indonesia no longer qualifies should concern all of us, since there will be just 12 members left after Indonesia exits at the end of the year. The article mentions production declining while domestic consumption is rising… a perfect example of Jeffrey Brown’s Export Land Model in action. I first saw mention of Indonesia’s problems a few years ago… and now that prediction has come true.
(click on the picture to see the whole thing)
On the same business page, CNN is mentioning that oil prices keep rising even though demand is slackening… while I’ll admit that speculation has helped drive prices to where they are today, I also think it’s getting harder to ignore the fact that something else is going on here as well.
Which reminds me… I need to get a set of grocery bag panniers for my old Schwinn… no point in burning gas for a quick trip to the store anymore.
May 26, 2008
Someone line this young man up with a gold star and a full ride to the university of his choice:
Getting ordinary plastic bags to rot away like banana peels would be an environmental dream come true.
After all, we produce 500 billion a year worldwide and they take up to 1,000 years to decompose. They take up space in landfills, litter our streets and parks, pollute the oceans and kill the animals that eat them.
Now a Waterloo teenager has found a way to make plastic bags degrade faster — in three months, he figures.
May 26, 2008
Another good article from Mr. Kunstler. Based on the webpage, it appears to have been published in the religion section instead of op-ed, which would be a shame.
May 26, 2008
I think I found this via The Oil Drum… I can’t remember right now. Anyway, if you need a reminder of what we are going to be facing in coming years, or perhaps you have a friend or family member that needs some convincing, here’s a site that will give them a decent intro to peak oil, with links to follow for more research.
Evolutionary Psychology and peak oil: A Malthusian inspired “heads up” for humanity.
One of my favorite parts of Professor Mills’ presentation is his discussion of the race between Malthus and Kurzweil. The idea of two exponential trends in a race to decide the future of humanity is an interesting one, especially considering that regardless of which of these trends wins, we all could end up in one type of hell on earth or another.
The tie-in of evolutionary psychology would make Jay Hanson smile. More proof that the dominant response to a negative sum game like the one we’re starting to play now will likely not be one that involves a lot of sharing and a community effort.