J on CERA/Yergins and the When? of Peak Oil

Since J puts all of his good stuff in the comments, I am going to move some of J's ideas up front for us, with J's blessing of course.

I consider J to have a uniquely informed and provocative point of view (since he is so old and "experienced"...ah, he deserves that, I've been asking him for a post for months, damn it.) So, here's his first guest post.

First on the topic of CERA and Yergins:

Lots of squabbling about this paper and that paper (referring to the CERA/Yergins article of yesterday), who to believe, etc. has been talked about. This comes back to doing your PO homework, which you get every time some pundit, think-tank or talking head trots out "new" facts via MSM.

I have a very healthy dose of skepticism because I have: a) worked for Halliburton, b) been to every continent except Antarctica, c) lived in various 3rd world countries, d) I read foreign periodicals, e) I read spanish, f) worked for BP, f) been shot at, g) been held at gunpoint, h) I am NOT stupid. All of these things have developed in me a very healthy ability to question ANY source which seems contrary to my world view or that sems entirely too "convenient" for one reason or another. I am especially wary of anything issued by our government, as they lie or obfuscate 70% of the time based on what I know. That percentage may be higher since the corruption of the MSM.

This makes me dig to find who wrote it, their background and affiliations, who PAID for it (I always follow the money - it drives each of us), and where/when it is published. When you begin to process technical papers and "news sources" in this fashion, your reality changes. It can make the average person paranoid or at least highly disillusioned. Thus many of them simply quit, as continuing will require them to repudiate many of the truths they have always thought to be self-evident.
I picked on someone (snip) yesterday simply because I already knew who funds CERA and who writes Yergins checks, and he was accepting their line as at least a possibility simply because of WHO wrote it. Please, everyone learn to FOLLOW THE MONEY.

Even in this free media, people are paid to go out and blog positions or throw doubt on ideas and assumptions that are too close to the bone for their sponsors. Yes sponsors - follow the money, follow the money, follow the money!

In Response to Ianqui on then the "peak" will occur:
Picking a time frame is moot - we are there, the idea is in play, and people are actively trying to refute or quash it. If oil jumps too high too fast, the economy stalls and we enter Depression II because of oil. If the housing bubble pops, and the GSA or banks have to be bailed out, we enter Depression II because of defaults. If we piss off China or others and they begin to sell dollars, we enter Depression II because Condi and the neocons acted stupidly. If oil begins to trade for Euros or Dinars, we enter Depression II due to lack of faith in the dollar. If Account 990N stops buying to support the US markets, we enter Depression II because the false economy is revealed. Does that give you some idea of the knife point we are perched upon?

I use Depression rather than recession because entering a major recession with the current trade, budget and personal deficits we are running has simply never happened, but that does not mean I cannot imagine the consequences. The government and the banking system know - that is the sole reason for the new bankruptcy laws - to allow them to recover their assets. Why are our markets unregulated (they don't enforce anything of consequence - i.e., Martha Stewart, who is inniocent anyway)? Because this allows money from ANYWHERE to come into play and keep the machine going. Why are they asking new recruits if they would be willing to fire on their contrymen? Why are we using non-Americans in our armed forces? Why does Homeland Security want to monitor all domestic communications? If you deny the answer the government provides, what are you left with as an answer to these questions?

When we enter Depression II, oil demand drops. This means drilling and exploration slows, and we go into a holding pattern where we are continuing depletion at a lower rate, but not bringing new sources online. We will not be able to respond to any increase in demand later. When you finally see one of the remaining oil majors merge with or buy another, you will know that the end of oil travelling across the world is near(years or a decade - who knows?).

The problem with trying to predict anything is that there are so many ways the dime can drop. This multiplicity of vulnerabilities has never occurred in history - Greenspan, Nixon, many others share in the blame for where we are. But each of us must accept blame for buying what they sold us blindly and quietly, while we all tried to build the American financial dream.

I personally think the housing bubble will pop sometime in the next 12 months. This will throw a lot of people and finance companies into trouble financially, and bankruptcy is no longer an answer. That doesn't mean these people will not simply walk away and live on cash - it has happened before. But is this shock going to be enough to start the dominoes? I don't know, the government will assuredly print more money to bail the big losers out. That means soaring inflation, which is already a problem. This may make the dollar hegemony much less attractive as well. All of this is a swirl of possibilities, which only time will sort out. Like I said earlier - we have to surf the wave and be ready. I am, mostly, ready.

Read the archives from the last year at urbansurvival.com - George covers these issues very well, and links to other reliable sites are all over his daily updates.

Go to the postings for today

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Two other links many might want to read:



Both of these guys make a lot of sense, and though they are literally a world apart physically and in terms of literary style, they agree on a surprisingly high number of issues.

I haven't seen one line, in CERA news release, about the development of alternatives that could free us from our fossil fuel addiction, zero, nada... or maybe it's too far in the future to be concerned about energy alternatives. They would rather push the development of these nasty Tar sands instead. So we should trust them and put all our eggs in the same oily basket. irresponsible.

anon: the development of alternatives is a great, wonderful idea...but it's gonna have to happen pretty darned quickly if anything's going to be in place to soften the landing...nothing's ready, nothing's scaleable.

oh yeah, and I forgot about the fact that the oil lobby owns both political parties and no government initiative will put into place in time to help support R&D&I...probably the biggest part.

I know, I know! alternatives are just mere prototypes. These guys are supposed to stir decision makers in the right direction. But I guess the right direction for them is where status quo and money are.

I've been around survivalists for most of my adult life, 30+ years. They've never been right. Back in the 70s it was hyperinflation. In the 80s it was bank failures. In the 90s it was Y2K. Disaster is always just around the corner, but it never quite seems to come. The kind of cynicism J displays has never been successful in making predictions about the future.

It's fun to entertain conspiracy theories and pretend that you see truths that the average person is just to dull to perceive, that only you are savvy enough to see through the lies and pierce to the truth. But the bottom line remains, what successes has this point of view allowed you to achieve in the past?

I like your remarks J (always do), but your possible scenarios do not include terrorism incidents that might affect supply, political upheavals in oil-producing nations, the ongoing Iraq fiasco or China's implicit promise to its people to keep the oil flowing. For example, oil prices and futures were influenced this week by a possible strike by Norwegian oil workers. That's a very mild example and shows just how volatile the market is. Even that jerk Yergin admitted that he's never seen demand so tight.

It's sad and scary that shit happens and can happen fast. The "ground" is fertile, what with the US involved in two land wars in Asia and the PO wolf at the door. Globalization has not brought about a free enterprise utopia. Instead we have geopolitical chaos which both affects the energy crisis and stems from it in a positive feedback loop.

As you say, the dime can drop a lot of ways. best....

"The kind of cynicism J displays has never been successful in making predictions about the future." Don't know about the cynicism, but the assertion that such predictions have NEVER been successful is a bit of a stretch. Try reading Jared Diamond's Collapse. Perhaps no one in any of the failed societies he describes foresaw problems ahead, but that seems unlikely. Societies do collapse and their collapses are frequently been triggered by resource depletion.

Halfin -

You assume I am a survivalist - wrong. Just because I know how to survive, that I am prepared from my travels for lots of things - doesn't mean I freaked out at Y2K. I did nothing in fact, but go to a party and then go to work.

Bank failures? I noted that possibility, but also what the obvious solution would be - exactly like it was last time. But that too, has consequences. And FYI - I did nothing then (1980's) except move some investments around.

Hyperinflation? Maybe.. we handled that with interest rates. That option is not on the board today as it was then. Again FYI, I was working my way through college then, not out screaming "The End is Near".

You might want to note that each of the doomsday things you reference is a singular event in a decade. What I am saying here is that we are looking at a lot more than that today. I do not know how it is going to turn out - nor do you. What I advocate is to be ready for trouble in many forms, and get active in making local, pre-emptive and sustainable solutions, as the federal government is too slow, corrupt and unwieldy to do anything until it is too late. Even if there were not any of these issues, living sustainably is something I think is right.

You might have noted that I did not try to predict the future - I avoided it. What I laid out was the many poinards we have pointed at us today. And I left out quite a few, as others have noted. I take no credit for scheming out the various ways things could fall apart - anybody willing to read and think might do that, and many have!

Cynicism? I am one of the most positive people I know - even my wife hates me for it sometimes. I believe that we will all muddle through this, but if it gets bad, people may be hurt or worse. I want the Star Trek society, like everyone else who understands Roddenberry. I am a huge believer in technology, and I find the lining in every rain cloud, because it is how I choose to see things. But I have also owned businesses and worked for fortune 500 companies - you learn skepticism and pragmatism in those arenas. As a pragmatist, I cannot just ignore what I know or suspect.

Success? If you are after that, you are doomed to be disappointed. It is always fun, but very fleeting. What this knowledge did do is allow me and 2 others to survive being in the jungle for 6 weeks without provisions in Ecuador. It kept me and 3 friends from getting lost in the Beartooth mountains during a long hiking trip. It allowed me to help others in 3 different hurricanes, 6 floods and various other problematic natural events. It kept me alive in a 40-below blizzard in Saskatchewan in 1981. And it has definitely made money for me in the investment arena.

But more than any singular thing, learning all I have has given me confidence in myself no matter the situation, and made me an asset in tough situations rather than a liability. I don't cry and moan - I do, even if the best thing is doing only a little.

Mr. Halfin-dude, I have references galore for all of this. Those references have let me earn a hell of a living, and do most everything I ever dreamed of doing, both personally and professionally. From skydiving at Ayers Rock to giving jungle kids their first taste of ice cream to receiving my first engineering patent.

If things such as these are worth little in your book, then so it is.

For me, they are priceless.


Hehehe, you know you'll get a lot of response by posting such a comment :)

So here's mine. You state: "Disaster is always just around the corner, but it never quite seems to come.". On the larger scale of things this is not true. In the fourteenth century there were quite a lot of doomsday cults that predicted the end of the world, and as it turned out the world *did* collaps during that centruy. The Black Death. famine and war reduced population by at least a third.
Now, I wholly agree with you that predictions on the way societies develop almost always turn out to be wrong, but that fact in itself isn't a guarantee that things will turn out fine.

I think I missed something somewhere. So who does write the cheques for CERA/Yergins?

Two interesting pieces from Bill Totten's weblog

The first is a discussion that took place at the offices of The Blackstone Group, in New York City. Lewis H Lapham served as moderator.

LEWIS H LAPHAM is editor of Harper's Magazine.

The second is a column by Charley Reese

Roland, go down to the comment box in the Pollyannas post about four posts back...

It's interesting that CERA claims, on its website (www.cera.com) that it has conducted a "rigorous" field-by-field analysis. I guess we can see their data in a week or so when they present at the "East Meets West" conference in Istanbul a week from now.

Before examining CERA's claims, it might be a good idea to investigate Chris Skrebowski, who has published several recent production-based analyses. His conclusion is that we reach peak oil 2008 +/- 2 years.

See his abstracts, "When Reality Meets Theory" at

(It is, incidentally, unfortunate that ASPO, a group of renowned scientists, cannot seem to find a way to link audio to their annual presentations, so that we might hear the contributors.)

Skrebowski also participated in the "Depletion Scotland" workshop, and if you go to this link:


you will be able to actually listen to as well as study his presentation. Audio is preferable at these conferences because you can hear the questions from the audience and the answers from the contributors.


Conversely, while doomsday predictors have frequently been wrong, optimists don't have a much better record. Before WWI the conventional wisdom was that Europe would never have a war again because the economies were too integrated for it to make any sense. They were right that it didn't make any sense, but it happened anyway. As a result, we got World War I, the Treaty of Versailles, Communism in Russia, Hitler, World War II, the Holocaust, and the ultimately the Cold War.

Distilling my last point a bit, the doomsday predictors may all be wrong about their scenarios, but doomsday is still a distinct possibility, and it may happen out of something nobody predicted.