This ain't Ragnarok

When is news not news?

The ABC news tonight began with a story on the rising price of gasoline. But when I scan the headlines of the papers, the fact that we hit $66 to day is barely mentioned, And in the ABC piece, the villain seemed to be the oil companies, with nary a mention of the possibility of there being an imbalance between supply and demand. We talk about the public awareness of this problem among ourselves, and yet the perception we have is not getting through to the media. Earlier this week I complained about the opinion of a British politician – but, with the exception of the occasional Congressman or MP, almost none of them are realistically aware of the rising problem.

But, to be almost fatalistic about this, very few people are. There is, as yet, very little public knowledge of the evidence, apart from the price rise, of the underlying problems that this, and other sites, are now bringing to the fore. Sure there is media coverage of the truckers protest in Florida – and other media-genic events, but almost none of the reporters than I have seen or read, goes to the underlying cause of the problem that is now starting to come to pass. Those that comment are often not that well informed (see this comment from an economics prof who has some knowledge).

But, that wasn't what I wanted to talk about. Because as I look at the price of oil, and the market explanation as why it is there, I have to demur. Our gasoline supplies are being drawn down! Gasp! Gasp! - Excuse me, but that is exactly why they were put there, and this happens every year and it is not a surprise. Go back 6 months (which you almost can with this site) and you would find people concerned about whether the reserve, this year would be large enough (on which the jury is still out) but there was never any doubt but that we would be building a reserve and then using it. It was much larger this year, and (though a quick search tells me I lost the site that showed this morning) we are depleting at about the same rate as usual, but from a larger stockpile so that the underlying reserve remains above normal.

Refineries are having problems – hmm – go back and look, virtually every year refineries have problems, most are relatively rapidly solved, but when you have an ageing plant you find that it becomes very difficult to run at almost 100% throughput without having issues. (Those that think otherwise have never tried it, since it holds true in every industry that relies on heavy equipment use).

But that isn't the worry either. The worry comes from the cyclic nature of this business and that, in the first quarter of next year, demand goes down (winter is over and we haven't started driving yet). At which point the price usually goes down (though not this year). Should that happen at the beginning of next year, then my worry is that the "public media cognoscenti" will start running around again assuring us that this was just another "Peak Oil Nutter fantasy" and further failing to prepare the public for what is, very obviously, coming down the pike. Further, of all the years into the future, next year is the last where there will be a significant boost from projects underway that will come to fruition. It is the last year where we have a reasonable chance at matching supply with my defined definition of demand (which I give in obeisance to Econbrowser) – that is the amount of oil required to maintain current standards of living and lifestyle, at a reasonable price. As Hirsch and numerous others have pointed out, if we don't start looking for new answers soon, it will only prolong the Fimbulvetr.

Just a small personal comment. There was a note today in the comments that the quality of the site has recently gone down. Sigh! Since I have been the major poster during the past couple of weeks, I suppose that should mean that I apologize to my co-authors. But, I have the balloon ego that goes with my rank ( very thin skinned, full of hot air, and over inflated) something that gets worse as you rise in academia, and the qualifying adjective to my rank does not begin with "a", so you may assume I have this in Spades. No! We in academia believe that if we give you the facts, and an explanation of some of the underlying reasons for them, that you are adult enough to make up your own mind. It's why I'm here, I passionately believe in an informed electorate. If I have offended there is little more I can say. But I am not going to stop trying to tell you what I believe to be the facts, nor what they mean, and for that I make no apology. (You might want to skip reading on Saturdays, however).

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I have been very happy with the quality of this blog and your posts. Keep up the great work.

In defense of CNN (gah! that's not easy to write) they had a headline on their web page all afternoon screaming about the $66 price of oil.

They also noted that stocks went up and Tiger Woods had a bad day, just to keep it in perspective.

Thanks for the kind words - if we knew what was missing we could do better.

I just dropped by the CNN web site and it appears to have disappeared already. Did they mention why the price was up? As with ABC there is usually some villain identified - who was it ? ( Or is it still some nefarious unknown?)

The vice president of the company I work for hasn't heard of PO and is clueless about the subject. The company is a major oilfield supplier of gas turbines. Not surprised that the public clueless also.

I don't know about anyone else, but I remain quite impressed with this site. I discovered it a few months ago, and have returned regularly ever since thanks to its excellent content. In my time here, I haven't noticed a drop in overall quality from any contributor.

This site is outstanding. It's become my first port of call even ahead of Energy Bulletin (and I don't like the Flyingtalkingdonkey since they removed the Easter Island statue - sort of helped to remind you just how serious this subject is)

Keep up the good work.

HO, you have become my first choice source for new and original oil information. Its extremely useful to have someone of your knowledge take those who are interested beyond a superficial understanding of Peak Oil. I recently finished Simmon's book, and you are in the same caliber of proving your thoughts with DATA.

Keep up the excellent work!


uhhh, whoever thinks the quality is going down is a big poopypants. This site has shot to the top of my daily reading list not only for its core group of contributors but also for its amazingly deep and knowledgable team of commenters. The fact that it is almost totally troll free at this point is a refreshing bonus!

Keep up the good work!

on topic: you're right. and that cassandra effect will continue even as people whistle past the gas stations. politicians think only in the shortest terms possible and their constituents think in even shorter terms. i believe that civilization as it exists now is uncapable of solving a problem this complex and far reaching. even the most informed (that would be us, the PO aware) are still in bicker and triangulate mode. If we are still so far from solutions...ugh, im scared of the future....

And as for Saturdays - the best info then - if we really want to understand the problems in production, we need to know those nuts 'n' bolts.

Illegitimis non carborundum!

nice, comfy place you got here :)..

The content on this site is excellent...

This week the Austin Chronicle ran a small article on peak oil; in it they describe how a recent survey found that nearly 98% of the population had never even heard of the subject....

Oil depletion is an issue that smacks into a human filter that will be hard to break through in the USA especially. Not just in the media, but with our friends and neighbors. We have evolved a culture with a deep faith in the status-quo. We do not instill stewardship nor teach that improving the human condition is a core value let alone within our ability to actually advance. The proactive response muscle has atrophied (hence a peak oil crises presents a growth opportunity for our culture). Our faith in the status-quo is aptly characterized as arrogance and it had become a defining aspect of the national character. This means that relatively bright and engaged people cannot fathom the kind of change a supply problem represents. We've based too much of our reality on the assumption that cheap plentiful oil is a given. It follows that and shortage concerns and transition plans will be debated and remediated decades prior to any potential crisis. We can't imagine systematic incompetence in public policy and decision-making even though we know that politicians pander. This means that we are quick to filter initial concerns or talk of terminal oil decline as too preliminary for serious consideration in our lifetime.

I'm sure many of us have observed how the mind starts to process the implication of any sort of decline when it is introduced to an acquaintance. You can actually watch the mind shut down in an instant as a person evaluates if the topic has merit and should compete with their more pressing day-to-day concerns. I think Peak Oil is all too easily dismissed in this context as a problem for others to solve --in the future and as a matter of policy. That's why we vote and pay taxes and place faith in the system. If Americans wanted to have to contemplate such issues and weigh in on appropriate policies and actions, we would be more engaged in the world around us. We would strive to think for ourselves and place a priority on institutions and process that facilitated such thought. We'd have a vastly different educational system. Today's media coverage does nothing to correct our misperception because it is still in pandering mode on this issue and will continue to until pandering becomes a liability.

IMHO the quality of the site remains top-draw. As the discussion (and depletion status) advances, nuances and details will continue to be a bigger part of the discussion and topics may not always have the same kind of appeal that the introductory dialogue always does. Also, the quality of the underlying community is always a defining factor for the perceived quality of sites like these. As the audience grows and the topic gains visibility, it is almost inevitable that the quality of the posts will have an inverse relationship with the quantity of posts. The gang here set a fine tone that is sure to minimize adverse impact on quality that often accompanies mainstream success.

Content and discussion here is excellent. Always my first stop for PO news.

The frustration of posters in not getting the message out is understandable. This is a complex, interrelated problem involving large numbers and lots of error. In my experience most people are not trained in assimilating this kind of information in order to grasp the overall direction of events. Their jobs don't require them to. They don't have enough practice in forming independant summaries from lots of individual pieces.

My background is biology as oppossed to the engineers and math types dominating this site. I liken peak oil to food webs or biochemical processes in living systems. Everything is inter connected. You can't disturb one part of these systems without creating changes everywhere. Balance is required at all times. These processes, like peak oil, are not easily understood by most people, so there is not much concern about loss of species or pollution effects or even bad diet because they don't have immediate effects on individual people. The negative events to individuals are not linked to the causes in a short time frame. Too many other events muddy the waters.

Not delivering oil at expected amount and cost will change the system in unpredictable ways. But my guess is most people won't connect the dots or care until it impacts them directly in some way other than financially. Even when there is direct cause and effect there will be a lot of other world events clouding the issue.

The side issues and rants covered here are as important as the hard data in trying craft a message to the populace. I love the interplay between the skeptics and the converted.

Keep it up. I'll just go back to listening.

It's wide spread panic here! $66/barrel and rising $1/a day.

Apparently, you did not see my remarks here that according to the latest IEA report that both Trinidad and Sudan are going to bolster 2005 supply numbers.

Personally, I see little to worry about....

Firstly on the site - it's very good, and very informative.

On public understanding, it amazes me. Every night I stay up late digging deeper into charts and spreadsheets of statistics and news stories and getting more and more worried. Every morning, I go out and the world continues as though nothing is wrong at all. If an asteroid was going to hit the planet, we'd get more warning.

I think there is the start of a shift. The Wall St Journal had a pretty thoughtful piece on the front page yesterday, that was about $65 oil, but did a good job of setting it in the context of peak oil - mentioned Matt Simmons etc.

When business associates of mine find out I've shifted to spending a large fraction of my time on energy stuff, about half roll their eyes (as politely as they can manage). The other half say something along the lines of "Yeah, I've been getting worried about that". Today, I met for the first time an executive who's first words were, "So, are we hosed?"


There are always people who don't agree. I bet you can find somebody who complains about the grass being green.

Anyhow, for P.O I read The Oil Drum and Econbrowser.

One more small thing: The DJ is rising, the economy seems to be picking up speed, all is well. However: To start the terminal decline, you must be at the peak. Remember what they said about King Hubbart in 1970? "We never produced so much oil as we do now!"

Two post within 5 minutes. Man, I am busy!

There's rather a high level of groupthink going on at this site. Most of the commenters here seem to have already decided that peak is imminent and apparently are less than enthusiastic about critically examining all sides of the issue. Has there been any serious discussion of Michael Lynch's criticisms of recent peak oil predictions? I don't remember having seen it.

Where's the hard evidence for an imminent oil peak? How do we know that next year is the last year of increasing production, as HO seems to imply?
Skrebowski predicts a production increase in five years, and he doesn't ignore depletion as the CERA report allegedly does.

So far, the only global analyses predicting a peak occurring soon have been done by Deffeyes, Campbell and Laherrere, none of whom have a track record of successful predictions as far as I know. Why does everybody take them so seriously?

Maybe Simmons has made an unassailable case for a catastrophic production decline in SA, I don't know. But I don't see where the proof is for the onset of lasting global decline in the very near term.

"Since I have been the major poster during the past couple of weeks, I suppose that should mean that I apologize to my co-authors."

No way! Personally, I think your stuff is the best on Oil Drum. More geeky, more better.

Lower quality?! No way. The posts vary in topic and some may be less interesting to me than others, but the info is good. As an erstwhile driller's helper on a core rig, I appreciate the technology/techniques stuff. I wish I had known some of that stuff way back when. I learned the what but not always the why.


Always good to hear somebody pointing in the other direction.

However, I think you miss the point (pardon my french):

Don't care if P.O. is last year, this year, next year or any year before 2010. It is irrelevent. Because to mitigate the consequences on a serious level, we need some 25 years. Ok, maybe 20, don't nail me on that. But a few years: what's the difference, especially when we are currently in the stage of discussing wether PO will happen last year, this year, next year or before 2010?

We need to fire up some action!

So tell me: what are YOU going to do about it?

I saw your post, but since I don't think I can explain a 500,000 bd drop in production in the North Sea as being due to seasonal maintenance, had set it aside for further thought.

I have been planning on going back into the source of some of this data, and more particularly the optimism being shown, just ain't there yet.

Oh, Richard, for job-related reasons I can't tell you what I am doing about this, but be assured that it is not nothing. Though I think you will find, if you go back through earlier posts, that most of us have done a number of things on a personal scale that reduce the demand we impose. Balogh's light bulb challenge, on a very small scale, comes to mind as an example.

And gentle folks, thanks for the kind words again, 'twas just a grumpy night, and all of us sincerely appreciate the support.

I'm not sure everyone here expects 2005 or '06 to be the peak year, though I doubt that many expect it to be beyond 2007 when Skrebowski and Campbell have called it.

What you are seeing here is more of an emerging consensus among people who have studied this issue closely, not group think. There's plenty of debate in the comments on this blog.

If you would like to argue the positions of Lynch or Yergin,
you could enrich the discussion here by doing so.


Michael Lynch is in a discussion over at the site He's been treated courteously over there, btw. From what I've read Michael Lynch is nice as well. You might want to take a look.

Michael's main two arguments are that productioncurves are a function of politics rather then of geology, and modern technical development will boost production from old wells. He then shows that for instance Russia's production curve is highly political. It is my view that political influences *typically* show up in nations production curves, yet are mitigated by other nations production hikes on a global scale. To put it in different words: By using nations production curves you see an overrepresentation of political influence.

The second argument has been talked about here quite a lot.

Gah, I'm late (again).

CNN blamed the $66 price on tight gasoline supplies.

Yeah, that's the ticket.


Y'all keep up the good work. It is GOOD to be skeptical. Question EVERYTHING. I agree that there is a little groupthink here, but I don't see that as a negative -- it's like a football team that is focused on a common goal. Nothing wrong with that. I think folks here continually question, seek hard data, look for patterns, look for explanations. And that is much better than 90% of the general public will do.

I was telling my wife about the recent Simmons interview and his thoughts that this winter could be 'crunch time' and possible very very expensive oil. She basically rolled her eyes. She thinks it is mostly conspiracy theory, that there will be "something" that changes in the equation and things will go 'back to normal.'

What did Yoda say? "Always in motion, the future is."

HO, AK600

Although it's my 4th post in this threat (never miss a good opportunity to shut up as the saying goes), my question is still valid: What are you doing about it?

We're talking about PO, a life-changing event. Everybody with a full deck should pick up the pieces and commit: What should I do? None of that freewheeling stuff, you know.

Personally, I think about things like: "I commit to making the town I live in installing at least one wind generator", or "I will organize a local car-pool website for our industrial zone" or "I will make sure our county installs 100 miles of bicycle paths" or stuff like that. Personal commitments.

Best of coarse would be "I commit to becoming the president of the good ol' US of A", but that will be kind of hard ... ;-)

Just my rant but you get my point,

Here's what one town in California is doing:

"The long-term conservation goal, the report contends, should be a 50 percent reduction in current usage, which could be facilitated by appointing a local "energy czar." The short-term goal is much bolder: complete energy independence by 2010. That's just five years from now."

I agree that now is the time to start using less fossil fuels, if only because of the threat of global warming. So maybe a bit of panic mongering is good. But it can hurt the credibility of peakoilers if it turns out to be another false alarm.

This will probably piss a lot of people off .. but as to what to do ... What can we do? Very little. Some people will never be convinced. They'll stay in their homes with no power, once in a while venturing out to see if theres food to buy, finding no food, and nobody wants fiat-bank-notes anymore anyways. Eventually they'll starve. Then there will be people who understand theres a REAL problem, and will have stocked up on canned goods and seeds, and gotten the hell out of town with them. When the REAL problems start hitting, and I mean when the power goes out for a week straight and the grocery stores are in a bad way, that is the time to LEAVE. That is the time where observing the collapse of modern civilization is best observed from a DISTANCE.

The _only_ way to stave off collapse is to abandon the exponential-growth paradigm NOW. And that is NOT going to happen. Who are you going to convince that the way this oddly contrived implementation of capitalism that us little people have ZERO control over, that this implementation is the problem and if we dont stop it NOW then we are definitely going over that cliff? You can't even talk to the people who make the decisions so what is the point. People can't just walk away from the money system right now, not if they like having a place to live or food to eat. So screw it, let it collapse.

What to do about peak oil? Without solid evidence (something better than what ASPO has presented) that it's closer than 15-20 years away, it may be hard to convince people to do much at all. One thing that should be doable is more funding for research into solar and battery technology. Well, I don't know how I can personally advance that cause except by preaching on message boards.

Lynch points out that Campbell & Laherrere have been wrong in their earlier forecasts, and claims that they haven't given a clear explanation as to why. Was there some fundamental flaw in their methods that produced the errors, and if so, have they changed their methods, or just updated their numbers? I sort of get the impression that this question hasn't been clearly answered, and if it hasn't, what reason is there to believe that the current predictions are correct?

AK600 well, feel free to post some links. Yeah, I know google is one's friend, but for the sake of conversation, and people being able to reply to the same thing (I'll look later, but I assume that the people you've mentioned have each more than one article). As many have mentioned, contrarian views are welcomed to be discussed (well, constructive contrarian views).

Ben, I have a similar issue with my wife, except rather than her either believing or disbelieving peak oil concepts, her mind kind of shuts down in fear. She likens it to thinking about death; it's something that is something to contemplate, but it's not comfortable at all.

I almost had a moment like that myself yesterday when I was reading the atricle regarding the difficulty and expense with oil sands, especially when I started thinking back to the articles that I've read talking about how oil sands will allow us to have oil forever. And they're right, there will be oil forever, just not in any large volumes per day, and certainly not for free.

I'd recommend "Square Foot Gardening" for anyone with either some small land, or even a balcony that they could put some decent containers in. Free vegetables are a good thing, and it's much easier than the planting in rows my parents taught me.

Do we have data on reserve stocks that I could graph against prices?

I'd be happy to do it.

The DoE simply has an annual number but its obvious we need monthly or better to illustrate the truth of your remarks.

I was home for (summer?) vacation from college in the early 1990s and I was watching the BRAC hearings (that was the first round, iirc, and BRAC is Base Realignment And Closure).

One of the civilians on the panel said something like. "Well, you can get a consultant to say anything, but some have better charts and graphs."

I need to save it more for the next open thread, but one thing I have trouble with (and my wife, too) is just what the implications of all of this really are, in terms of day-to-day life.

Short example: $5 gasoline. For me, personally, it won't be that bad, I have a very short commute and our town is smallish so errands can be consolidated (we do some of this already). HOWEVER who knows what would happen to the price of goods trucked in, walking to the grocery store will save me gas money but $10 lettuce will kinda negate that.

That's all for now, I gotta go work, this whole deal is like a huge black cloud that hurts to think about.

You guys that are worried might want to check out some of J's stuff. For those who don't know, he is an oil driller:

I sure hope we are all blogging this time next year....

Talking about wives and fear, mine found Savinar's site and the End of Suburbia very frightening.

I guess I block it out, but watching the Bartlett .mov file last night made me hold my head and wonder again. I think of Levene the Machine (Jack Lemmon) whining about his daughter in Glengarry Glen Ross, and the response he got: FU!.

Re: Michael Lynch

Not knowing much about him, I decided to have look. You will want to look here for his papers and presentations. Rather than look at the one titled "The New Pessimism about Petroleum Resources: Debunking the Hubbert Model (and Hubbert Modelers)", I decided instead to see what he had to say in a slide presentation entitled Unconventional Oil: Filling in the Gap or Flooding the Market?.

We are an urban legend -- here's his list.


At least he's got a sense of humor. I will talk about shale oil below. You can obviously evaluate that list, I have no comments except on ethanol. EROEI on ethanol is not negative if you don't count the cost of growing the corn. By the way, on this point, Brazil is having some success with using sugar cane as the plant feedstock. Brazil provides indirect subsidies mandating ethanol usage by Brazilians. By the way, to replace a significant part (say, 50%) of our current gasoline usage with corn-based ethanol, we would probably require another area the size of the continental US to grow the corn. Perhaps we could terraform Mars.

The unconventional sources are the usual suspects -- Canadian tar sands, Venezuelan heavy oil, ethanol, GTL, shale oil. Let's look at SHALE OIL. Here's what Lynch says:

– “CRUDE OIL +$5/BBL” (i.e., Manana)

and later


and later


First, it is important to note that shale oil does not exist. Yet we see that it is an urban legend that this non-existent liquid will always be more expensive than conventional oil. Assuming that shale oil can actually be brought into existence, I suppose it is correct that when conventional oil is nearing its actual end (not its peak, its end) and the price is $10000/barrel, then shale oil will be competitive. I think that the year 2015 (ten years out) is a little -- uhhh -- optimistic. It might also be a little premature to speculate on shale oil cost models until we have seen some actual oil.

If you look at the presentation, two things stand out. First, other than the shale oil debacle noted here, his conclusions about unconventional sources are really no different than what has been discussed on TOD and not even as optimistic as those of CERA/Daniel Yergin. Second, he includes a slide with a picture of the Microsoft engineering team circa 1978 with the caption "Okay, they [engineers] are geeks, but don’t undersell them".

I conclude that there is nothing really going on here. The magic of costs and pricing in the energy market in combination with that "can-do" technology spirit will lift all currently sinking boats. Geology versus Economy again.

RE: What to do

I don't think "heading for the hills" is a sensible way to respond to this. I'd prefer to continue on as a productive member of society--we're all in this together, one way or another.

What I've actually done:

I've replace my wife's car with a new Prius and my care with a used Toyota Echo (41/35 mpg). I don't look very cool in the Echo--it's a big step down from my last car--but I figure I'll look like a genius when gas goes north of $3.

My wife and I are moving to a location that is closer to both of our jobs.

Replaced all light bulbs with compact florescents.

Overhauled my 401k to make it less vulnerable -- and perhaps more lucrative -- based on what I see coming.

Finally, as a part-time doctoral student, I'm changing my dissertation topic to see if I can contribute something to the long term solution.

amen JLA, amen. oil policy wasn't (and still isn't really) my main research area, but I am moving into it, just because I have a lot more to say about it now after learning so much about this...

Actually, heading for the hills would be backwards.

Big cities have the lowest oil costs per citizen.

Although I have no data on which city might be the greenest in that regard.

When Ianqui gets back from vacation...I think she was working on something like that a while back, Josh...

Thanks, Profe Goose.

Howabout month-by-month oil reserves stats, so I can illustrate your summer drawdown for the masses?


Josh: Regarding heading for the hils and the oil costs per person, it depends what one is doing in the hills. If one gets an acreage and sets up a wind turbine, or brings some solar panels and batteries for themselves, they could live off the grid. By growing food/animals, and making good use of recycling waste via composting/vermicomposting, one could have no oil use. The only problem really if one has enough to outright buy the land and house would be firstly, finding an area with good neighbors, and then getting money for taxes.

Possibly taxes could by covered by living minimally on the grid, and telecommuting. Alternately, once food becomes expensive because of transporation/fertilizer costs one could actually sell food and make money. However, selling the products of the land will eventually deplete the land, even if you do save the parts of the plant not directly worth money. But I guess one could hope to make enough from the selling of food to buy good compost to replenish the land.

However, I remember from one of the articles that they don't even make horse powered hay bailers anymore. We'll have to reclaim that technology.

But yes, flat out I'd imagine that so long as there is enough food to keep the population fed that the cities would be a better location than the suburbs.

coffee17 - that's assuming everyone stays civil. There may be safety in numbers, or there may be a mob problem.

I'm thinking if gas hits $5 a gallon, that little locking gas cap on my car won't do much good. Maybe I better clean out the garage...

coffee17 - if the infrastructure goes with the oil then there will not be food reaching the cities. That would make the cities a very bad place to be.

paying taxes on land might not be a problem if the tax collector is powerless to stop you from living there anyways. It depends how it all works out for the viabliity of nation states and national currencies as they exist now.

also, there are methods of organic farming where you can have a surplus and also improve the quality of the soil.

as far as attempting to actually have a car driving around with $5-$10/gallon gas, I would probably install a hidden fuel tank ;)

Interesting report from Interfax/China:

China's oil to be exhausted within 14 years - research report

Regarding the quality of this site, I think it is top notch. It certainly does a much better job of explaining the peak oil problem in technical terms than any other site I've been on. If you don't know about all the technical difficulties of oil exploration and drilling, it's easy to believe, like economists do, that the market will just wave a magic wand and everything will be solved.


Let's pretend you are a good farmer. You can save your seeds and rebuy them.

1. everyone can't do that. You might think something like "Well, serves 'em right for being dupes of the man!" but, well, that's not going to get anyone very far.

2. security. You won't be able to protect yourself out there.

Living in cities BEFORE any crisis lowers the total oil demand.

Heading to the hills BEFORE then increases total oil demand (while you regularly drive 20-50 miles to pick up supplies)