A Scenario from 2009

Thanks to commenter Dave, for telling us about this interesting Denver Post column about what it might look like when "the rest" of America realizes how petroleum-dependent we really are. (If you can't read the link for whatever reason, Dave was nice enough to reprint the column in a previous post's comments. But please come back here to post new comments!)

I only hope that the future looks this civilized and cooperative.

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Just to get things going.... Thanks, Ianqui, for noticing that article I posted. I think the author Dave Wann did a nice job. That's the kind of stuff I like where the reader might imagine how it would be in a real situation dealing with real privation based on energy cost and scarcity. Not abstract, as so many TOD discussions are.

Brings it home, doesn't it?

I got this in via e-mail last month as part of newsletter Tobin Smith (you may have seen him on Bulls and Bears) sends out. Like someone commented in the open thread the world as we know it may come to an end but someomne is bound to find a way to make money of of it. At least it shows that the message is reaching people other than the enviromentalists who seem to be the main group pushing it.


My buddy Christian from Monroe, La., sent me an article over the
weekend that ran in his hometown newspaper, The News-Star. It
featured one of my favorite petroleum geologists who has been
immeasurably helpful to me in my own personal education on the
fossil fuel supply/demand imbalance I have been forecasting for
the last few years.

His analysis has also helped our subscribers make profits easily
in excess of $1 billion over the last three years in our various
energy and infrastructure investments.

Kenneth S. Deffeyes is a geologist who worked with M. King Hubbert
of Hubbert's Peak fame, at the Shell Oil research laboratory in
Houston. In 1967, he began teaching at Princeton University where
he is now professor emeritus.

I just finished his book “Beyond Oil -- The View from Hubbert's
Peak,” and I think EVERY investor -- not just energy investors --
should read it. Here’s why.

First off, he does not need to be exactly right for his main
forecasts to make us HUGE profits. Whether we peak in 2008-2010 or
2015, demand growth outstrips supply UNLESS we hit $100 oil and
$5.20 gas at the pump before the peak.

Second, when you analyze the energy bill that will come out of the
Senate this week and simply forecast what the combined
House/Senate bill will look like, you will want to be with us in
alternative energy investments like:

* Nuclear energy
* Cost-effective solar energy (Our Microcap Investor service just
had a 100% move in one of our favorites in the space)
* Fuel cells -- finally they will become cost efficient
* Clean coal

As Scientific American noted in a review of Deffeyes' book, “You
have to wonder about the judgment of a man who writes, ‘As I drive
by those smelly refineries on the New Jersey Turnpike, I want to
roll the windows down and inhale deeply.’

But in Hubbert's Peak, Deffeyes "delivers a sobering message that
the 100-year petroleum era is nearly over. Global oil production
will peak sometime between 2004 and 2008, and the world's
production of crude oil 'will fall, never to rise again.'

"If Deffeyes is right -- and if nothing is done to significantly
reduce the increasing global use of oil -- energy prices will soar
and economies will ultimately be plunged into recession as
alternatives to oil arrive too late to undo the disastrous effects
of $5 gas in the U.S. and $10 diesel in Europe."


The Hubbert energy forecast was based on a simple fact that oil
production in any region follows a bell-shaped curve. Production
rises rapidly as the easy oil is pumped, then declines as
extraction becomes more expensive before the inevitable decline
begins. Deffeyes’ more sophisticated version of the Hubbert method
pointed to 2003 as the year of peak production, but he settled on
a range from 2004 to 2008 since estimates of global reserves are

But there are three things that could upset Deffeyes' prediction:

One would be the discovery of huge new oil deposits. That has not
happened and remains very, very remote. Bear in mind he has
included the 186 billion barrels of oil from the Canadian Oil
Sands region in his numbers.

The second would be the development of drilling technology that
could squeeze more oil from known reserves. Again, there is
nothing on the near horizon that significantly improves on today's
fractured drilling (i.e., fracking) and enhanced oil recovery
techniques (i.e., CO2 steam or water injection).

And a third would be a steep rise in oil prices, which would make
it profitable to recover even the most stubbornly buried oil.

But the problem is not finding the most stubbornly buried oil --
it's recovering it in a great enough quantity to make a dent in
the depletion rates of the relatively easy to find and extract

Deffeyes writes that "No initiative put in place starting today
can have a substantial effect on the peak production year. No
Caspian Sea exploration, no drilling in the South China Sea, no
SUV replacements, no renewable energy projects can be brought on
at a sufficient rate to avoid a bidding war for the remaining

His solution: alternative fuels -- including natural gas, nuclear
power and solar energy, among others. Then we just have to get
over our addiction to crude oil.

Maybe W will get us started on that path. For America’s sake, I
hope he does.


But my job is to help you make as much money in the stock market
as possible. And during the next 10 years, or until we hit the
super spike to $100-plus in oil that I KNOW we will see in the
next two to five years, you had better not ignore Ken Deffeyes Â…
or me, for that matter.

(And the day oil hits $100 will be the one that we'll recommend
SELLING our energy investments in an orgy of speculative fever --
and then SHORT the soon-to-be cratering equity markets and make
another fortune.)

Think of it this way -- when your kid/grandkid asks you “Did YOU
make a fortune in the Great Energy/Alternative Energy Bull Market
of 2005-2015,” what will you say?


[cough] spam! [/cough]

I know that there was a discussion regarding ways to inform the public about peak oil. One idea that I had is similar to this editorial piece. What about a public blog or forum space where we could pick a date in the near future (like he did in this piece - 2009) and writer's and bloggers could submit short stories/posts on what they believed the future could or would look like at that point. Sure some posts would be negative, and some more optimistic, but it would sure be interesting to read people's opinions. That page could also provide links to primers, for people new to the subject.

If not only informative, it would be interesting to me to see where people truly feel this country is going in the future, in the face of diminishing energy supplies. And like a "reverse time-capsule" it would be great to go back and see how right (or wrong we were).

OK, that is essential an advertisement for his service. The point I was trying to make was if you want something done to reduce the effects of peak oil you need to convince the powers that be that there is money to be made from it, not just for speculators but the people who will be building all the windmills, solar cells, nuclear plants. Producing fuels and other chemicals from something other than oil will require retooling the chemical industry. Yes it will be a huge expense but for some it will be a huge opportunity. Opportunity and profit are much easier to sell than conservation, sacrifice and a future depression. This site has the best discussions I've seen about peak oil, but I found it via a link from peakoil.com. The forum over there has survivalists, doomers, racists, anti-americans, anti-capitalists, and people that want a crash. Not everyone but enough to drive people away. With allies like that no wonder your having trouble convincing the general public to see there is a problem.

Alan:  You won't have to retool a refinery to use the output of thermal depolymerization.

What we need most of all is flexibility.  I've been promoting electricity as the "standard currency", because most things which require energy as work (rather than as chemicals) do just fine with electricity.  If your vehicle can pinch-hit on electricity or gasoline, you can deal with a shortage of liquid fuel by putting a solar panel on your roof or cogenerating with your furnace and water heater.

You can call that conservation.  I call it thermodynamic jiu-jitsu.