Peak oil: BP, Conoco CEOs say it's here - also IEA's Fatih Birol really freaks out

After the CEO of Total (the French oil major) last week, two more CEOs of an oil major came out this Thursday to give stark warnings that mean that peak oil is happening right now. In addition, the chief economist of the International Energy Agency (the IEA), one of the main cheerleaders of the "there's more than enough oil" camp until now, is giving an extraordinarily pessimistic interview in the Financial Times, following the recent publication of their latest World Energy Outlook.

Let me take you through all their affirmations.

Big Oil CEOs Point To Constraints On Supply Growth

HOUSTON -(Dow Jones)- Pointing to a variety of political and technological constraints on energy investment, chief executives at two oil giants Thursday highlighted systemic limitations on the growth of the supply of oil, implying that there will be high oil prices for at least the medium term.

The fact that two CEOs spoke separately, but at the same conference, on this topic, is, in itself, significant. We've already had various "worried" messages coming from executives or senior analysts of the oil world with bearish messages, but they could be reported in isolation, and safely ignored the next day. This time, very similar messages came from 2 sources, making it harder to ignore (and, of course, the proximity of the symbolic $100 barrel makes it all the more newsworthy).

But let's get to the gist of it:

ConocoPhillips (COP) Chief Executive James Mulva had earlier told a New York financial conference that he doubted that world oil producers would be able to meet forecast long-term energy demand growth. The International Energy Agency, the energy watchdog for western economies, has projected 2030 world oil demand of 116 million barrels a day. But Mulva said he doesn't believe oil supply will ever exceed 100 million barrels a day. He didn't offer a price forecast.

"Demand will be going up, but it will be constrained by supply," Mulva said. " I don't think we are going to see the supply going over 100 million barrels a day and the reason is: Where is all that going to come from?"

"Where is the oil going to come from?" This is the CEO of the third biggest oil major in the USA, admitting that we no longer know where we can get access to oil. And he's repeating exactly what Christophe de Margerie, the boss of energy giant Total said a few days before: that IEA's projections, that everybody uses, are completely absurd (and, as you'll see in second, the chief economist of the very same IEA is, very schizophrenically, essentially saying the same thing...)

Given that demand is set to be way above 100mb/d within a few years (it's at around 86-88mb/d right now), we have a problem - if the supply's not there, we'll need demand destruction, ie people and economies that wanted oil and will be doing without instead. Will that happen in a controlled way, or be imposed on us/them? The question is still not asked enough by and to politicians...

But moving on to CEO n°2, that of BP, the British oil giant:

[BP plc (BP) Chief Executive Tony] Hayward said "about half" the world's oil has been recovered, but he implied that significant improvement is possible on a broader scale. "The biggest source of new oil will come from increasing recovery," he said.

Although BP has increased the oil price it uses to test whether energy investments are economical, Hayward rejected the idea that oil prices have shifted permanently into a higher trading range - along with the notion that the world has hit peak oil production.

Despite "rejecting the notion" of a peak in production, he is nevertheless the first senior oil executive, to my knowledge, to say that "half the oil" being gone - something which is usually considered to happen at pretty much the same time as peak production (although the two are not necessarily simultaneous). Even with enhanced recovery techniques, no country has been able to increase its maximum production once the peak had been reached - starting with the US and the North Sea region, where oil companies have had all the liberty to use all the most sophisticated techniques.

So yes, it is a pretty huge deal that the BP CEO says that half the oil is gone.

But, in a way, this is almost small beer compared to the various bombs dropped by IEA chief economist Fatih Birol in his interview with the FT. The interview is very long, but well worth reading in its entirety. I'm providing a few quotes below, but for those of you that arre finding this diary long already, here's the quick summary:

  • we are beyond peak oil in the non-OPEC world;
  • OPEC officially has lots of reserves - but we don't really know;
  • even if they make all the investment plans announced are made and are on time, we'll still have a gap of 12.5mb/d (more than 10% of overall demand) by 2015; we now officially need to beg OPEC to invest more;
  • oh, and by the way, that's the smaller of the two energy-related problems we have: climate change is a lot worse.

:: ::

Here are a few quotes:

FATIH BIROL: There are two major messages I was getting from the book. The first one is exactly what you say. The energy security risks are so strong, and probably increasing, for an upward event in the markets, and the second is on the climate change, on the CO2 emissions, the levels are reaching a certain level that we are [getting to] an irreversible trend for our planet.


my message is that, if we don’t do anything very quickly, and in a bold manner, the wheels may fall off.


FB: On the energy security, oil prices part, the numbers, one doesn’t need to be a big energy expert or anything: it’s just mathematics. I can tell you that we, in the next seven to eight years, need to bring about 37.5 million barrels per day of oil into the markets, for two reasons. One, the increase in the demand, about one third of it, and two thirds, there is a decline in the existing fields [and there is a need] to compensate for the decline. (...) [what] we expect [to be put in production] is 25 million barrels per day, and this is in the case of no slippages, no delays in the projects, and everything goes on time, which is very rare. So, there is a gap of 13.5 [sic] million barrels per day. (...) Within the next seven years.

What needs to be underlined here is that we already know, to a large extent, what oil fields will be put in production over the next 5-7 years. It takes several years to put a field online, and thus most of that medium term future capacity is already in the planning stage or in the construction phase, and is known to the industry and to institutions like the IEA which can have access to confidential company or national data.

And they are telling us we have this HUGE gap - just to give you an idea, it's almost equal to US imports... unless OPEC suddenly decides to invest more.

There are three major demand centres now, China, India and the Middle East.


So, demand will grow, and I think, if the governments of OECD, China and India, leave everything to the markets, in terms of slowing down the demand, they will make a historical mistake. In addition to the price related adjustments on demand, we need regulatory measures, such as efficiency improvements in the markets.

He notes the various reasons that push demand up, starting with demand growth in countries that are in an economic boom and thus not very sensitive to price - or willing tpo pay higher prices, and compounded by the fact that energy is subsidized in many countries, including India and China, but also the Middle East - as has been noted before, oil producing countries are those where demand is growing fastest, on the hell of oil income prosperity and subsidized gasoline, a phenomenon that cuts into export availability.

and that unavoidable message: market solutions will not work. We need collective, government-driven action. (In other words, we need Democrats in the USA - no surprise there).

we think that, in the Opec countries, there are enough reserves. We are not sure if there is a political will to make something out of those reserves, but there are enough reserves as officially reported. However, as you rightly say, we are getting more pessimistic about non-Opec production.

Ah... the little matter that nobody knows what the real reserves of OPEC countries are - they were pushed artificially in the 80s in the quotas wars: export quotas being proportional to reserves, all countries 'unveiled' new reserves... Kuwait has recently admitted that its reserves were only half their previous claims, and there is wide suspicion that it's the same for others. But the IEA has been using official OPEC numbers for years without ever rising the issue so, again, that small proviso in Birol's words is noticeable...

we think there are some geological problems in the non-Opec areas. This is not an investment issue, not a political issue, but it is more geology, because of a huge decline in the non-Opec countries.

Again, peak oil with another name.

Fatih Birol has more words about the low impact of Canadian tar sands, about Iran's production decline (compounded by the current tensions, which are not conducive to investment...), and flags the low efficiency of China and India's energy use, and the fact that unless they change behavior right now (simple things like using higher energy standards for fridges and other appliances, and modern technology for their power plants), they will be stuck for decades with inefficient - and carbon spewing - energy gobblers.

All in all, these declarations and this interview underpin the gravity of our energy crisis. One would think that $100 oil would be a wake up call, but alas, we still seem to be in full demagogic, declarative mode. Will we have to wait for actual shortages and lines to do something?

No poll, the answer is Yes.

Fatih Birol is reported as saying that "this is not Peak". The IEA also project oil supplies rising to 2030. So however much you would like to think he is admitting to a peak, he is not.

My favorite part is this:

"On the energy security, oil prices part, the numbers, one doesn’t need to be a big energy expert or anything: it’s just mathematics."

If I interpret this correctly, it matches up to my personally held belief. I think many of us amateur oil depletion sleuths have no special knowledge about geology and fossil fuels. However, we do know bean counting, have lots of knowledge about statistics, and possess some ability to logically state premises and make inferences.

As Bill Clinton would say: "It's the math, stupid"

Fatih Birol is reported as saying that "this is not Peak". The IEA also project oil supplies rising to 2030. So however much you would like to think he is admitting to a peak, he is not.

Well, yes, formally, that is true - they use words like "we're not at peak" and "we don't think there will be a peak", except that they say essentially the same thing using different words

Call it "the wheels will fall off" if you will, it's still the same thing: less oil than we'd like to have, and the very real consequences that follow as someone's oil demand will need to be denied, either by higher prices, shortages or else.

Like many people you confuse PO with the effects of PO. At TOD we really should try to be precise with terms.

Strictly speaking Peak Oil means peak of production, you are talking about consequences of PO. You are referring to what Roger Rapier calls Peak Oil Lite - even if production has not peaked, it will have effects similar to an actual peak.

I would concede they are saying the same thing as Peak Oil Lite, a shortfall will cause high prices. But they haven't admitted that oil supply will go into terminal decline - not yet.

I think there is an important difference. The message that IEA gives is that while the consumers will have a rough ride for a bit, the onus is on the suppliers to get their act together. This allows consumers to remain complacent.

The message we would like to give, is that consumers must not wait for suppliers to increase supplies (we believe they can't), but must be proactive in developing alternative sources and promoting conservation. If IEA said forget about oil, develop renewables, it would be quite a different outlook.

Even with the IEA's fairly stern warning, I expect we will have several more rounds of calls on OPEC to increase output, and OPEC saying they are not going to. OPEC play a dangerous game with that.


I understand what you say, but I think that what you are describing was the IEA's earlier position - flag the potential effect and urge OPEC to produce more. Now, they are saying that non-OPEC is in decline ("geological" fact), and that overall production is likely to be 12.5mb/d less than we expect it to be - in 7 years!, i.e. that it will be lower than today, unless some sort of miracle happens (ie Iran and Iraq investing massively; and SA pushing its production up).

It's even more negative than the CEOs, in my view, and pretty damn close to real PO.

Did they use the word miracle? No.

You are still reading what you want to hear, not what they said.

Well, he does say that existing production will decline by 25mb/d by 2015, and will be replaced by 25 mb/d if all goes well:

And these are projects which are financially sanctioned projects. *If* they all see the light of the day *in a timely manner*, they will come up about 25 million barrels per day. So, 37.5 mlillion on the one hand, what is needed, and what we expect is 25 million barrels per day, and this is *in the case of no slippages, no delays in the projects*, and *everything goes on time, which is very rare*.

Lots of conditions for production just to remain flat... Fine, I said "miracle", but it's not really a stretch from his words.

The way I read it, he foresees declines of 25 mbd from existing fields (2/3 of 37.5), offset by anticipated additions of 25 mbd. So he sees a supply plateau, not an actual decline. But also no growth to meet growing demand (i.e. a shift in the demand curve) unless OPEC does something surprising. Peak Lite, high prices.

The long-term numbers are pure fantasy. I expect he knows that, but can't speak to it until it becomes internal consensus at IEA, so he's putting the warning into the medium-term scenarios. It's pretty easy to extrapolate from questions about OPEC's medium-term capabilities, to even bigger questions about the even bigger increases that would be required in the long term, as non-OPEC continues to decline "geologically".


Good job BobCousins, and likewise De Marjarie of Total. If we read only a bit further into the EuroTrib article linked right here on TOD Europe, we read:

"It's quite simple in fact. Supply is constrained by lack of production capacity (whether this is because of depleted resources or, like Margeris proposes, voluntary limitation of investment by oil-rich countries, is irrelevant)."
There is a lot of "selective quoting" going on.

De Marjarie says it exactly right....some claim the OPEC nations are "holding back" on oil production. That I think, is false....but they are, as I have said in many posts, either holding back, or being very indecisive concerning investment to maintain surplus production, which does not benefit them, but simply protects the West from the risk of major oil shocks.


Roger Conners

You've put your finger on the problem. The strategy of the powers that be has shifted to maintain the status quo as long as possible, rather than outright denial. If the gurus and talking heads get honest the handwriting is on the wall for multinational oil companies, and the multinationals don't want to go out of business or change their paradigm so that their personal power and positions change for good.

Think about this for a bit: Everything changed with the first oil crisis in 1972

Before 1972
-major oil companies produce nearly
100% of the non-communist oil
-Only Majors have technology to drill and produce
Major oil companies can drill virtually all of the non communist world
-Russians and majors boycott each other, so markets are safe
-Majors control prices through swing capability of Texas

-Multi-nationals produce less than 12% of the world production
-almost all prodction and new exploration technology controlled by geophysical and engineering firms with no interest in production (Schlumerger, Baker-Hughes Haliburton ect)
-Multinationals are restricted to less than 1/8th the potentially productive areas for E&P
-National oil companies control the products markets by petrochemical and refinery building decisions being made for political as well as profit motive
-prices controlled by demand and by investment decisions made by national companies

In other words, I'm saying the whole nature of the international oil business has changed and the former major oil companies don't control the oil business anymore. Yet our national governments in the OECD are buffaloed into believing that its true. Do you really think that the Neocons would have started the attempted conquest of Iraq if they'd thought about how the real power has shifted in the international oil business.

I might add that I started reading The Oil Drum 1 year and 27 weeks ago. I've studied the situation now for about a year and a half, but I believed like most people on the planet that the Multinationals were still people controlling the oil business. But, as I've read and thought about the problem my perception and conclusions have changed.

I think the multi-nationals are quickly accelerating on a downhill slide, and the whole integrated oil business is fixing to morph out of existance. There's a place for large independents in both the production and petrochemical/refining business and in the marketing business. So I'm fixing to sell my major company stock while the gettings good, I think CNBC noticing that the liquids production is down at ExxonMobil and ChevronTexaco is the start of the crack in the dam thats going to bring it all down.

So, ladies and gentlemen, please argue with me about this, or add your own supporting observations. My conclusion is just too extreme for me to be comfortable with, yet, there it is-the multinationals will be out of business within 10 years and the oil business so changed as to be unrecognisable.
Bob Ebersole

You appear to consider all the fancy exploration and production techniques to the province of Schlumberger et al. What about Chinese companies? They seem to be pretty capable and I wouldn't be certain they aren't or won't soon be on a pretty equal footing with the traditional big players.

Any thoughts on that? It almost seems like the usual American exceptionalism to think that you need these guys to drill sideways in 2007, but maybe so. ??

These are great charts Jerome - it would be good to see them updated to 2007. These are the guys who promise us there is plenty oil and that increased recovery factors will save the day.

Its worth noting that the production boost that bp has comes from TNK - where BP's earnings are pegged to a relatively low $ / bbl - somewhere in the 20s I believe - so they don't get much benefit from high price from this part of there production. But the fact this is a very favourable deal for Russia means that BP may get to keep it. Production growth since 04 has come from improved reservoir management and de-bottlenecking. This is one reason why Exxon are still a larger company than BP by cap.


To use your exact words, "You've put your finger on the problem."

I think your exactly right about the decline of the oil majors, and I think you are right to take the history of the changing situation back to the early 1970's, at the American peak. So whether or not we are at Peak oil production in the world, we seem to surely be at what I have called "Peak 7 sisters productions", referencing the famous old book of the title "The 7 Sisters", a reference to the old oil majors. And no, I don't now own a single share of any of them, anymore than I own shares in the old "big 3" automakers. I think the future for both industries is now one of gradual but advancing decline, and finally, diversification out of their primary industries.

Does that mean that cars will not be built? Of course not. Does that mean that oil and gas will not be drilled? Of course not. What we are seeing is a long running process of decentralization in all industry, and it looks very much like a "great collapse". Instead, it may be a "great opportunity".



Tonite's OSU KU football game on ABC Brent Musberger asked Boone Pickens flat out are we at peak oil. Boone's answer was Yes the world is consuming 88 mbls a day and producing 85.

I hope Brent Musberger will join Keith Olberman as a former sports guy that knows how to ask the pointed questions that the regular media won't go near.

I think he was fishing for investment advice because he also asked about water which Pickens is also investing in water pipeline projects.

Then he should stick to sports after all.

I beg to differ. Water is one of the smartest (and least appreciated) investment opportunities out there. In some ways, it's even more critical that peak oil or climate change. Naturally, guys like Boone are a bit ahead of the pack.

Here is an article on the subject by one of my colleagues. He has a slide deck you really should see (not available online unfortunately) about the global water situation. It knocked me off my feet.

Energy consultant, writer, blogger

Yes but he is planning on depleting the Ogalala Aquifer in the process.

From the water encyclopedia:
"The Ogallala Aquifer occupies the High Plains of the United States, extending northward from western Texas to South Dakota. The Ogallala is the leading geologic formation in what is known as the High Plains Aquifer System. The entire system underlies about 450,000 square kilometers (174,000 square miles) of eight states. Although there are several other minor geologic formations in the High Plains Aquifer System, such as the Tertiary Brule and Arikaree and the Dakota formations of the Cretaceous, these several units are often referred to as the Ogallala Aquifer.

The Ogallala Aquifer is being both depleted and polluted. Irrigation withdraws much groundwater, yet little of it is replaced by recharge. Since large-scale irrigation began in the 1940s, water levels have declined more than 30 meters (100 feet) in parts of Kansas, New Mexico, Oklahoma, and Texas. In the 1980s and 1990s, the rate of groundwater mining, or overdraft, lessened, but still averaged approximately 82 centimeters (2.7 feet) per year."

I didn't realize that Brent Musberger was planning on draining an aquifer.

Pickens was building that water line to Dallas maybe this is the reason.

You're right of course. In the long run, depleting Ogallala isn't going to do anybody any good. But that's a survival/long term strategy. From a short term investing strategy, which is what this comment was about, water is going to make some serious bank.
Energy consultant, writer, blogger

The Ogallala also sets on top of some pretty nasty shale full of all kinds of crap.

I did trace mineral analysis on water from this aquifer.

Some of its pretty bad I would not drink it.

There appears to be a bandwagon effect now that it becomes clear that we are past peak: 2005 for crude and 2006 for liquids. I will be interesting to see what CERA says now. They still have have their "Peak Oil Theory Flawed" advertisement when Googling "Peak Oil."

so it's obvious we're in some big ass 'effin trouble, if it wasn't before. the fact these jabronis all got together and admitted it means ship is going down damn fast. How many TODers have even a 2-week supply of food on hand? My guess is less than 5%.

2+ weeks, plus the woodstove and fuel to keep warm and cook, plus water, plus a garden, plus a bit of farmland outside of the village.

Plus the local farmers, plus the local forest, plus a regional agricultural structure (that is, stores filled with local produce), plus a society which seems to have been concerned about such things for a long time.

Of all the things I have listed, the last is the most critical.

Though my fear of how humans act in groups is almost unbounded (being recently marginally involved in a tiny-teeny net incident only reinforced the idea of how, as one of the people calling me sociopathic noted, 'crazy is catching'), the fact remains we are social animals.

Though personal responsibility and preparation are certainly necessary, it is society which is of overriding importance.

To put it bluntly - for decades, the U.S. has been cutting down orchards, ripping up pasture, and replacing farmland with suburbia. In Germany, people have been planting orchards, stopped using pesticides on pastures, and building windmills on farmland.

Does this mean that Germany will likely face coming challenges better than the U.S.? Certainly. Does this mean that after only 1/3 of the U.S. nuclear arsenal is expended in a desperate attempt to 'defend the fuel' the future will be so bright we will all need to wear shades? Maybe.

In a way, this where we actually agree - I think the U.S. is going insane, and will not be able to survive long in its present form. However, the U.S. is not the world.

2-3years food,140 fruit trees,BIG garden,spring,1000gal propane,seed,and spring for water.I have made "emergency"prep one of the main goals..{some people race cars,some people do football,wear top end clothing and eat at fine dining,I prepare for a existence as a prosperous peasant ....I think maybe more folks here do more than they may say....I just got a shock from a co-worker who has gotten on the "prep" bandwagon.You would never expect it from his public persona...

You left out guns and ammo from your list. How will you defend your crop from the starving masses?

When humans invented agriculture they had to get an army to guard the crop and the harvest. Remember, war is theft.

This is part of what I meant about society. Speaking broadly (very broadly, and ignoring lots of very bloody history), the farmers and gardeners that I know of around this region of Germany are not planning on arming themselves to deal with the starving masses.

Maybe because most people around here assume that food will be fairly distributed enough that there won't be any starving masses. Or because the last time the starving masses left the city (as described by people who actually experienced this in the mid-1940s), they politely knocked on the house door, and offered whatever they had in return for food. Which generally didn't help that much, as the villagers had pretty much only enough for themselves. The same was true in many parts of Europe. Of course the places food was stored were guarded, rationing was imposed, black markets flourished, riots occurred, and so on - but that strangely American vision of people roaming the streets with guns (keep in mind, in Europe of the mid 1940s, guns were not exactly hard to acquire - they just didn't seem to have much value) did not occur.

America is going to fracture remains my refrain - in part because of some very basic assumptions, such as weapons are a necessary part of social interaction in a world where the shopping mall is empty. Or that having a weapon is your best defense. Strangely, I think having a weapon is a statistical marker of being likely to die from gunfire, but that is only because I believe summaries of data concerning weapon ownership in the U.S. over the past couple of decades.

I feel much safer without a gun than with one - and if I am ever in a situation where a weapon is preferable, then the situation is already really, really bad - and one I have never encountered in my life till now.

Expat, I'm in a different part of the world but draw the same conclusions about both the culture and fate of the US and the culture and fate of the society here. There is a very strong sense of community here. People work hard, they don't have much money, but they pull together to help their neighbors when they need it.

Everything we eat is grown withing 50km of us, and a lot of it is organic and produced within 10km including our coffee.

Ditto...from a neighbor to the east.

Thank you for the voice of sanity expat. Likewise, I'm preparing for a life without much energy and doing it without a gun.

Here's my prediction. The distances are pretty large in the U.S compared to Europe. With gas there will be plenty of looting opportunities but the hordes won't be able to get a few blocks at most -- five to ten miles -- at most -- on foot. The poor will just sit in their houses and wait for the government to bail them out. Like they did with Katrina. After the initial walking-distance looting spree is over then things will start to get interesting. The looting spree will only be short term. Not more than a couple of weeks. After that I guess people will move out to farms to be sharecroppers or something like that. Anything they can do to get food.

Wide availability of oil pre-supposes a very complicated oil-delivery infrastructure. A very complicated operating delivery infrastructure forbids roving gangs. Cities will become very dangerous places though as the inhabitants will fight for the scraps of whats left and the upper and middle classes pretend to continue as if it was business as usual.

and your Address , Please Sir

Now THAT was funny, sleepingbear.

Let your views be known:

In general you need 1-2 months food on hand, plus water and the ability to heat things.

Most people can survive for 3-7 days on what they have around, but given the evolution of most possible events you need more to allow you the option to plan and adapt. If you think in terms of staples and canned food then 1 box of goods should suffice one person for one month. Simply multiply up and add as much water as you can store. Adding some cheap cans to the shopping is an easy way to grow your supplies.

Its a measure of how dependent our society has become that most people don't think about where their supplies come from and would look to outside help if anything happened. Your grandmother wouldn't, partly because she's lived through hard times, and partly because they prided themselves on self-reliance.

Being adult enough to look after yourself is a lesson we all need to relearn.

For us flesh-eating zombies, there is plenty of food at hand.


There is apparently a shortage of brains in the world, however :-).

Yeah, I noticed.

What do you do after 2 days/2 weeks/2 months, whatever, when your stored food and supplies run out? I have never understood this scenario.

It buys you time to develop alternatives without trying to do so while starving.

Also, if SHTF, it puts you a step ahead when people start the hoarding mentality. Like if snow is predicted around here, the stores typically run out of milk, bread and TP within hours.

Hopefully, an emergency food supply will get you through while the dust settles.

Sure, I get that, and I think even Joe Sixpack, who has a flashlight and tire chains in the back of his pickup, gets the idea of emergency preparedness...even if they haven't done much yet. [More prep in this limited sense definitely advisable.] But sooner rather than later, some semblance of supply chains has to resume in some fashion. Otherwise, it's general collapse (the marauding gangs scenario) and you can't possibly have stored enough to get you through that.

Exactly loveoregon

It's called the bottleneck.

This peroid of undetermined length after tshtf and before things settle down just a bit.

Thats when things get real weird.

I looked into the alternatives, and they don't at all look promising. See pages 16 to 40 in this report:

It appears that we've reached the tipping point for rcognition of peak oil. Just six months ago the people posting on TOD were subject to personal attack as cultists. Now,with Hilary's new energy program and support from some of the multinational oil companies officers we've become mainstream.

Dude I don't think I'll ever be allowed into the mainstream.

Sometimes, I know exactly what you mean.

Which is one of the ever varying number of reasons I don't live in the U.S. any longer.

Because once out of the U.S., you realize that the U.S. isn't the mainstream, either.

This reality will become a lot more apparent in the future, I think, as a lot of people worldwide start really looking at the U.S.'s dynamic economy, while asking for their money back.

There is a funny story from the region I live in concerning a company called Flowtex ( - German only ), which pulled off the largest economic crime in West German history. The scam basically involved leasing horizontal drilling machines (for water, gas, telephone lines) which didn't exist. The story concerned a bank employee who was looking for 'his' tens of millions of marks in machinery, frantically running around the parking lot of the company, checking the serial numbers of the few drills there (a company employee used to stamp out the serial number plates, actually, sometimes multiple times in a busy day of leasing the same few machines over and over). He refused to believe that the entire company was a scam, and his refusal to believe was in part because of his failure to actually check to see if what he was financing even actually existed or was worth what he paid for it - the money, of course, being long gone in the company owner's villa, helicopter, lavish parties, etc.

The U.S. is Flowtex, on a grand scale. It doesn't bother me in the least not to be part of the mainstream.

check out "# Zuckoff, Mitchell. Ponzi's Scheme: The True Story of a Financial Legend. Random House: New York, 2005. (ISBN 1-4000-6039-7)"

The U.S. was a Ponzi scheme from the very beginning -- papered over with real resources, real coal, timber, water,oil, uranium... And that's pretty much gone now.

At the moment we have "real" CDO's, commercial paper of various stripes, the Federal Reserve, Structured Investment Vehicles -- and the worldwide greedy are still snapping them up -- but not for much longer.

The future is grim here in the USA. We might actually have to go to work.

Here is an extract, in English, from TimesOnline

There are exceptions, such as the Stuttgart businessman Manfred Schmider. Known as Big Manni, he amassed a fortune of almost €1 billion in a scam that lasted 10 years. He bought a jet and an art collection while lavishing gifts on those who lent him the money for his company, FlowTex.

Big Manni ran what seemed to be a highly successful leasing company specialising in tunnel borers. He rigged his accounts to show he had 3,000 machines. In reality he had only one machine sitting in his yard — unwanted.

Sentencing him to 12 years in jail, the judge said it was the “worst case of company fraud in modern times”.

The scale was huge, but at least the information about one machine is wrong. FlowTex actually owned a number of machines (their parking lot is next door to one of my employer's locations, and easily seen driving between Karlsruhe and points south), and some of their machines actually did do some of the installation of gas pipelines where I work.

However, a couple of machines did come to represent hundreds of machines out in the field - the stupidity of the investors (not counting bribery and 'favors,' of course) was hard to grasp.

I, too, am uncomfortable in the mainstream as anyone who supports ethanol and still posts at TOD must be. As the mainstream acknowledges what we've know at TOD for a couple of years i.e. that we are past peak, it will be like when I first found out about peak oil. Shock at the realization and amazement that few, especially the powers that be, know or care. But as time goes by and the world does not come to an end and PO turns out to be a slow developing process measured in years and imperceptible except in short spurts of panic, you learn to deal with it. I bought corn stoves to heat my house and a flex fuel Ford Ranger to burn E85 which was a mistake because E85 is priced too high for its energy content. I think the mainstream will go though the same process. Right now gas prices are slow to follow crude to new highs. I think this is because the effects of the economic slow down, conservation due to higher prices, tar sands production, ethanol, and biodiesel together are mitigating the early stages of PO. There are still big savings to be had in oil use that will be forced on the U.S. as the decline unfolds. None of them are yet life threatening and will be slowly accepted by the mainstream just as the PO idea is finally being accepted, although it's been obvious for years.

Sorry, keep doing research. Ethanol is a net energy
loser. Six times over.

Peak Oil is indeed life threatening.

Tar sands--that would translate into $20/gallon gas.

The price doesn't have to go up to have immediate
shortages. Review what happened in the 70s.

A grocery store can be stripped clean in 24 hours.

"Sorry, keep doing research. Ethanol is a net energy
loser. Six times over." If it is made from corn in Iowa, maybe.
Brazil currently has a surplus of ethanol and is about to become a net exporter of fuels.
check out the PDF file. Maybe the US should make some deals why they still can to import Brazilian ethanol. The window of opportunity may not stay open for long.

The US already produces more ethanol than Brazil. If they exported all their ethanol to us it wouldn't make a rat's ass difference for very long in the market of unending automobile dreams here.

Myths of Biofuels

True enough if we want to keep being two Hummer families. I myself drive a compact which does the job of getting me from point A to point B when it is necessary. I also roller blade and easily bike distances of 15 to 20 miles and I'm past the half century mark.

The US does currently produce slightly more ethanol than Brazil at around 4.9 billion gallons a year.
Brazil is the world's largest producer of sugarcane-based ethanol, producing about 18 billion litres (about 4.8 billion gallons) a year. However it is going to seriously increase that production soon and sugarcane ethanol production is economically viable there without government subsidies.

Meanwhile, the land to grow sugarcane forces farmers of other crops further into the rain forest.

Have you ever done the math to see how much farmland would be needed to bring biofuels into any sort of replacement for what it is that we have now?

While you're at it, take a look at total acreage, too. Then figure out what makes more sense, growing food to mitigate a peak oil scenario or growing food to continue driving in the manner to which you are accustomed. And scale it above one personal family. Because you rollerblade and bike, is that what everybody will see is right and do?

(OK, and I haven't done the math myself, but have scientist friends who have.)

If Brazil is becoming an exporter of sugarcane ethanol, the U.S. will probably not buy much any of it. How much lobby power does Brazil have relative to our domestic and useless corn ethanol?

In a business as usual scenario not a whole lot. BTW just for the record I'm neither an unmitigated fan of ethanol be it produced from sugarcane or other sources nor do I expect it to be the only solution to the global energy crisis. I'm only suggesting that it has a place in it and that the business as usual mode is becoming very ripe for change. No, I'm not holding my breath either. I also hold dual citizenship USA/Brazil so I'm not an impartial bystander either. However if I'm given the option of starving in the USA vs living on a farm somewhere in Brazil what do you think I should opt for.

Should we consider this from an energy/resource standpoint or a personal standpoint? :)

If you are right that Peak Oil is now generally accepted (I am not so sure), this would be a good psychological moment to beat the Drum on the equally threatening Peak Gas scenario.
Julian Darley and others have done some good ground work on realistic demand / supply scenarios.

Even though Peak Gas isn't upon us yet, the dates being thrown around are almost within the political time-horizon.

Attack is the best form of defence.

While a period of Democrats in control in the US would be a marked improvement over the disaster currently in charge, I think you overestimate the Democrats' willingness to take action on the impending energy crisis. Hell, I think you overestimate the ability of any US politician to even understand the issue and its ramifications for the coming decades. The problem as far as the US is concerned is intractable. Implementing a $1 per gallon tax on gasoline is anathema even to the Democrats. Even proposing such a thing is unthinkable. My prediction is that if the Democrats take control of the White House and keep control of Congress next year, they will spend at least a year investigating the oil companies who, according to the public, will be accused of holding back the oil. Rather than tell the people the truth (and 1/3 of American school children can't even find America on a world map) and implement harsh measures sooner to head off absolute disaster later, they will beat around the bush without doing anything constructive. Then, after 2 or 4 years, the public will be so fed up with the Democrats' inablility to "do something" about the price of gas, and they'll be out and the Republicans will be back in. Also with no plan to deal with the energy crisis. And on it goes. Interesting times.

Yes, sorry.

I should have been clearer with that "we need Democrats" sentence. I was referring to an idealised version of Democrats, or maybe to an obsolete version - the kind that did believe in regulation of the economy, and did not shy from getting the government involved when the stakes warranted it ( à la New Deal).

Too many of today's Dems are almost in the same "government is bad, taxes are evil, corporate profits are the only thing that matters " mindset as the Republicans.

An idealized Republican, say Eisenhower, would do as well in dealing with post-Peak Oil. IMHO, I would rather have Eisenhower than FDR in charge, if we could recreate historical figures. Eisenhower was more effective with *FAR* less wheel spinning in his major initiatives than FDR, and much more incisive in analyzing the problem.

Your faith in the Democrats is misplaced,


I understand and basically agree with your point, but Roosevelt was the one that created enough change (with numerous mistakes) to actually allow the U.S. to continue as a constitutional society until the point when Eisenhower became president.

This is a point that I think is too easily ignored in Kunstler's various predictions - the U.S. will turn to someone that promises no changes, someone that will keep those Kunstler so nastily dismisses in line.

Roosevelt was yet another one of those lucky figures in American history (Washington, Lincoln, and yes, Kennedy in terms of the Cuban Missile Crisis), and we are now watching what happens when that string of luck craps out with Bush.

2004 or 2005 or 2006 - set your own point for America's slide down the peak.

Might as well hold out for a Whig. Ike would be a lefty Democrat in today's world.

No, no - Eisenhower was an extreme leftist who hated America from the bottom of objectively pro-terrorist heart. For example, Eisenhower did not support torture, taxed the rich mercilessly, and even had the temerity to point out that the military-industrial complex would impoverish his nation.

But luckily, Eisenhower did manage to at least pick a more typical Republican for vice president - except for his lapse into establishing the EPA and implementing price controls, Nixon was the sort of man that anyone working for Bush today would be proud to be associated with. Enemy lists, a peace plan that involved a 'secret invasion' and lots of oil money.

The worst "crime" that Eisenhower did was to let the Israeli's know that they could not expand their territory from the Litani River (in Lebanon) all the way to the Suez Canal (in Egypt) and East to the River Jordan. That had been the objective of the European and American founders of Israel. Ben Gurion. Before I get blasted, let me point out that Ben Gurion was born in what was then a part of Poland (now in Russia) and Golda Meir who was born in the Ukraine and brought up in Wisconsin.

In a round table secret conference with the French and the British at the Sévres on 21 October 1956, Ben-Gurion proposed elimination of Nasser in Egypt; partition of Jordan, with the West Bank going to Israel and the East Bank to Iraq who would have to sign a peace treaty with Israel and undertake to absorb the Palestinian refugees; Israel would annex southern Lebanon up to the Litani River, with a Christian state established in the rest of the country; create a pro-Western stooge who would stabilize the Syrian regime; and create an international status for the Suez Canal while the Straits of Tiran would be placed under Israeli control.

A tri-partite military operation against Egypt was agreed upon and the final agreement to this effect was signed on 25 October. Official confirmation of the Sévres protocol was received by Ben-Gurion on 26 October and was warmly congratulated by Menachem Begin. (Bar-Zohar, Ben-Gurion: A Biography, New York: Delacorte Press, 1977, pp. 224-244)

IMHO, Eisenhower and people who think like him are not electable in today's USA as they are filtered out at a very low level by both major political parties - a duopoly.

The political colour of the Government is irrelevant, none of them can do anything to mitigate what is coming. Government (of any colour) is constrained by a rationale that will not allow it to do what needs to be done, in fact the actions of Government will only make things worse (failing governments usually turn on their own people).

Eventually, a new type of rule will develop governed by a different rationale that would seem totally unacceptable by today's standards. Crises will be the agent of change, but in the meantime, people will have to rely upon themselves and community.

I sometimes get the impression that people think changing one lot of political ass's for another will somehow get them through the coming chaos. It won't IMO. Only peoples' own individual actions will and the first action is to dump any notion that Government will save them. The second is to disengage their lives from and dependency upon the national economy.

Hi Burgundy,

re: "The second is to disengage their lives from and dependency upon the national economy."

Do you mean as a group? Somehow? i.e., collectively and/or community? What do yo mean by "national economy" as you use it here? And could you give an illustration of what you mean, were someone(s) to do this?

Too many of today's Dems are almost in the same "government is bad, taxes are evil, corporate profits are the only thing that matters " mindset as the Republicans.

AKA "I take money from the same corporations that they do, because without the money we all take, we can't be considered 'serious' nor can we 'win.'"

Pretty much, it would seem.

I do hold out one hope here if the Democrats get a President in 2008. You must remember the words that get politicians elected are sometimes MUCH, MUCH different than the actions they take once they become president.

In a alternate reality to what we have seen with the Bush presidency, perhaps some Democrats are not openly touting the ideas that would cause panic while running their campaigns, but once elected could initiate some fairly radical mitigation plans on the energy front.

It is an idealistic hope, but a hope nonetheless.

NOTE: I could say the same thing about a moderate Republican or a decent Independent if such prospects existed.

It is very difficult for anyone not supported by the corporatocracy to get elected in the US. Most congresscritters are owned lock, stock, & barrel by big business. As long as peak oil (or climate change) denial is (perceived to be) in the interests of large corporations, we're unlikely to see anything but business as usual. Large corporations are VERY conservative entities. They got where they are through the status quo, and they will cling to the status quo beyond all reason.

That having been said, politicians sometimes rise to the occasion, if the emergency is well-timed. In that regard I think it is important that the crisis become obvious while Bush is still president, or immediately after the next president takes office (assuming it is a Democrat).

If TSHTF a year or two into a Democratic president's term, he/she will take the blame, and the next president will be a Republican. That is my nightmare scenario, a kind of anti-FDR who, faced with a transcendent crisis, screws it up royally. If the crisis waits till then, it's probably better that a Republican win in '08, as dangerous as that for other reasons.

If TSHTF a year or two into a Democratic president's term, he/she will take the blame, and the next president will be a Republican. That is my nightmare scenario, a kind of anti-FDR who, faced with a transcendent crisis, screws it up royally. If the crisis waits till then, it's probably better that a Republican win in '08, as dangerous as that for other reasons.

This is essentially an indictment of how the whole process works (or rather doesn't work or won't work). The hope that somehow either group (pick the party your own bias prefers) will act rationally in a situation they're not geared to understand is, I'm afraid, pretty delusional. The vast majority of them have led terribly privileged lives, after all, even when compared to the average level of privilege in the U.S. These folks grew up at the pinnacle of the pissing contest. Almost everything they ever do to help the 'poor' or 'unfortunate' is really nothing more than tasteful window dressing that helps their own caste of friends more than anyone not 'connected in' to the whole farce. I am not optimistic anything short of a high dose of personal misfortune will get clear thinking out of these people. Even that isn't a given.

Yes, any newly elected government within the next year or so, will be drinking from the proverbial poisoned chalice.

I think listening to politicians is a waste of time. It's not a capital offense to lie to the people, even though it should be! It is a little better to watch what they do, but it is too late then, as they are already in power and deeply indebted to the 'Iron Triangle.' I'd highly recommend reading Dmitry Orlov's 'Closing the Collapse Gap' and some of his other articles (if you haven't already), as he is an excellent writer. His webiste is

'Closing the Collapse Gap' can be found here, as the link on his website is broken:

Peak oil schizophrenia at the IEA

World oil resources are judged to be sufficient to meet the projected growth in demand to 2030, with output becoming more concentrated in OPEC countries – on the assumption that the necessary investment is forthcoming.Their collective output of conventional crude oil, natural gas liquids and non-conventional oil (mainly gas-to-liquids) is projected to climb from 36 mb/d in 2006 to 46 mb/d in 2015 and 61 mb/d in 2030 in the Reference Scenario. As a result, OPEC’s share of world oil supply jumps from 42% now to 52% by the end of the projection period. Non-OPEC production rises only slowly to 2030, with most of the increase coming from non- conventional sources – mainly Canadian oil sands – as conventional output levels off at around 47 mb/d by the middle of the 2010s. These projections are based on the assumption that the average IEA crude oil import price falls back from recent highs of over $75 per barrel to around $60 (in year-2006 dollars) by 2015 and then recovers slowly, reaching $62 (or $108 in nominal terms) by 2030.

Time to party on, go short on oil and oil stocks and order a new Porsche?

But then in the same paragraph...

Although new oil-production capacity additions from greenfield projects are expected to increase over the next five years, it is very uncertain whether they will be sufficient to compensate for the decline in output at existing fields and keep pace with the projected increase in demand. A supply-side crunch in the period to 2015, involving an abrupt escalation in oil prices, cannot be ruled out.

JC we have TEOTWAKI now, time to sell the Porsche and buy a bicycle, stock up on food (futures), Brent futures and oil stocks.

"price falls back from recent highs of over $75 per barrel"


from this report circulated by Stuart.

My current favourite is from that very FT interview with Mr. Birol

FB: I think the Opec countries should understand that the high oil prices will hit Opec, perhaps with a time lag, compared to OECD countries, but they will hit Opec and Opec’s economic interest as well. If we do not see enough oil in the markets, if Opec does not increase its production levels, the high prices will stay like this, and I can tell you that high oil prices only give an impetus for alternative policy decisions in the OECD countries. I think for Opec, the main challenge is to have a price level which brings good profits to them, good incentives for the investments, but at the same time, to prevent prices going to very high levels.

Immediately followed by:

FB: In an alternative policy scenario, which looks at the policies and measures in the OECD countries, China and India, all the policies under efficiency, biofuels, nuclear and all of these things, if they were to be implemented as of tomorrow – all these efficiency policies, renewable policies, everything – still Opec’s market share and Opec oil demand will go up. So, the call on Opec, whatever the policy the countries have, will increase. Therefore I do not see any problem from the security of demand point of view. (my emphasis)

So, OPEC need to keep oil prices from getting too high and stimulating policy-driven demand reduction in the consuming countries. But no matter how high prices get or what policy decisions are made in the consuming countries demand will still go up. Got that?

The second perspective is certainly closer to my own. Or does this imply that Birol feels there are deeper reasons why sustained high oil prices will be bad for OPEC..

Funny that these guys predict a barrel of oil will cost $108 in 2030 when it is reasonable to expect a gallon of gasoline will cost $108 in 2030.

Yeah - maybe they meany by 20:30 this evening:-)

You never learn, do you, Jerome?

Maybe you can get an endorsement from your co-contributor, Engineer-Poet.

I have tried so many ways over the years, but you and Staniford just refuse it. You are both smart guys so why do you do this? You refuse it. You want to chance it. Maybe you can crank Paris Hilton rubber.

What exactly does your experience and your position have to do with what you were just saying?

I've studied your counterattack. Don't even bother.

You're smart and talented. If you wanna make more money I'd try another line of work. If you wanna provide for your family - back off, you're doing fine.


Echelon - what a bunch of unintelligible nonsense! Did you actually have a point to make????

Is that you?

It's me. Hardcore, huh? You gonna write me or what? I've been looking for you.

Deep offshore basins, extra heavy oil/bitumen, West Africa, Brazil, unexplored OPEC blocks, Central Asia, the Arctic, and low permiable tight sands/siltstone are are some of the areas were oil might come from.

Diesel cars, hybrids, lightweight vehicles, public transportation, and residing close to work are ways to eleviate the financial burdens of higher cost oil. Society was increasing in technological acheivement during the era of trains, steamship, and horse and buggy without any oil driven transport. People have always worried about what will happen when the population grows larger than the food supply. In times of crop failure people died young of malnourishment and vitamin deficiencies. For some it was easier to have babies than to produce more food and clothing. It might be argued there was never enough oil, but it sure was cheaper in 1996.

Great summary Jerome.

I think there is only one point where I would tread with caution.

Supply crunch (i.e. temporal) vs oil peak (i.e. global production max)

Birol is still saying this is temporal crunch (2012-2015ish) with unforeseen terrain after 201X, but a firm NO on geological peak per se. Growth can continue up to 2030 according to Birol.

Whether he really believes that and whether you or me believe that, is of course up for debate. However, IEA has been now saying 'crunch' for over a half a year (i.e. temporal supply issue). Now Fatih is specifically denying it is a global peak.

As for Total (de Margerie), he's saying 100 Mbpd max with his sub-ordinates (namely Louis Heuze) estimating a peak at 2025-2035 time frame.

Of course, it's easy to argue and quite valid, imho, that this is all quite irrelevant. What happens is the supply/demand gap, regardless of how it is formed: above ground or below ground.

And almost everybody seems to agree that the coming years will be very tough.

What there is disagreement is as to why (politics, refining, geology, capping production, insufficient prod. capacity, insufficient investments, too tight margin for unexpected setbacks, etc).

What there still isn't full agreement, whether we are at or near geological peak.

And thus, the discussion continues and more time is lost to do any sort of big mitigation planning, not to mention action.

And thus, the discussion continues and more time is lost to do any sort of big mitigation planning, not to mention action.

That's the most frustrating part. Even in the optimistic versions we would benefit from big plans to move away form oil, given the timeframes involved in the industry nd in energy use patterns. But no - the worriers are just extremists that can be safely ignored, and we do nothing.


Hi Jerome;
I have to say it can be tough to pull away from this series of electric conversations and news (eg, TOD) and get back into my workshop and actually do some mitigation at the Homeowner level.. but I have some new nicks in my fingertips from building my new solar heat collectors to start to 'divest' my heating system away from #2 Oil.. with a bunch more hack-sawing, I'll have the pulley-rig on the roof today, and start hoisting.

I have a stockpile of glass to make a bunch more.. and I never walk past a dumpster that has mirrors, 2x4 or insulation in it, without seeing if any of it is ready for it's next assignment.

If this comes off as a Nyah, Nyah to others who would want to be doing this, it's less that than a reminder that this is an option you should consider when weighing all the things you can do today to honor those soldiers who are over there trying to protect 'Freedom, Liberty and Pipelines' (Not necessarily in that order). You probably need family time, probably need the rest day.. Just remind yourself that any project you could be doing to address this issue IS IMPORTANT. It's as important as Vacuuming the Car, Taking the kids to the Pool, and even going to work. Getting your family's energy profile reduced, and increasing your home's resiliency in case of outages and price hikes IS PROVIDING FOR YOUR FAMILY, and it IS SUPPORTING YOUR COUNTRY and WORLD.

Best of luck,
Bob Fiske

I well appreciate the severe financial hardship facing many families as the cost of heating oil moves sharply higher, but I'm growing increasingly frustrated by the lack of any forethought and willingness to take action. Friends often grumble about their high heating costs but when I ask them what they've done to reduce their consumption, they either fall uncharacteristically silent or look at me as if I've just asked them to torture a new borne puppy. Good grief people, think!

I recently read a news item about a family worried about how they were going to heat their "drafty" farmhouse. My first thought was well, yes, you could spend $300.00 on a 100 gallons of fuel oil which you'd likely burn through in one to two weeks or, alternatively, $30.00 on a caulking gun and some tubes of sealant. How about a few 3M window kits or foam gaskets for the wall plugs and switches? Any attic insulation up there? These are not expensive items and the pay back in reduced fuel consumption is immediate and the improvement in comfort tremendous.

I know there are people who must literally choose between food and fuel and who would be hard pressed to scrape together $30.00 for even basic home improvement supplies. Those in genuine need certainly deserve our support and I would encourage those who can to make a donation to a local food bank, charity or utility assistance plan, if so available. But for those who drive to cocktail parties in their Yukons and Explorers and complain about the "outrageous" cost of fuel oil while they slug back on their martinis can twirl on their swizzle sticks for all I care.


thank you for your support. (newly submitted 11a EST)

My local gas station has bags on the pumps today. My mother and brother just returned from a visit to North Dakota and they saw the same thing there. T. Boone Pickens just did an interview with Brent Musburger during ABC's Saturday's college football on peak oil.

I'm an Iowa resident and we have a good bit of say in who gets to be the next president. Later this evening I will have Hillary Clinton, Barack Obama, John Edwards, Bill Richardson, Chris Dodd, and some of the other Democratic presidential candidates available to me. I am photogenic, articulate, and much less inappropriate in person than I am here on TOD :-) I've already managed a brief personal audience with one of them (Richardson) this year, but sadly this was before I was peak oil aware.

Assuming I managed to get close to any of them this evening how shall I proceed?

Speak freely and I will return later this afternoon to see what was said before I attend the five county democratic party rally at the Wild Rose in Emmetsburg, Iowa.

A great opportunity. I wouldn't mention "peak oil"; I'd ask point blank "As President, when lines begin forming at gasoline stations, how would you deal with a situation in which people start to realize that this time there's not cheaper oil in the future...that prices won't be coming down?" This might open up their heretofore somewhat less public ideas about preventive steps they are contemplating/could contemplate - if any.

I'll be in a room full of corn farmers - can't touch the ethanol EROI problem.

I was thinking something along these lines:

"Today on the way here I had to wait to fill my tank in Emmetsburg because the pumps in Graettinger are dry. Last month my mother and brother went to North Dakota and they saw the same thing up there. We see articles in the paper about tankers having to wait overnight to be sure they get a load of fuel. Do we have a problem here? If so, what will you do during your first four years in office to ensure we can produce the energy we consume within our own borders?"

Why don't you just say "Last night on ABC Saturday night football, T. Boone Pickens was talking to Brent Musberger discussing the fact oil production worldwide seems to have peaked. Pickens said the world is presently using more oil than the physical constraints of the planet can actually produce. This seems to indicate our energy problems run a lot deeper than most people realize, and it gave me pause. Do you have any information about this, and if it were proven to be true, how we might plan for something that would be a larger constraint on our energy future than we generally are hearing about?" ?

Of course if you're so lucky to be heard, you'll get nothing more than pre-packaged messages in return, but who knows, even with the chances small, if you could get any sort of light bulb to glimmer, even dimly, they might send an aide to do a little homework, 'cause they might hear the same question later and they'd need to figure out how to answer.

Maybe it would get a few others in the audience interested, too. Go for it.

Would you support building a Non-Oil Transportation system in Parallel to our existing Oil Based Transportation System ? Like the French have been doing for the last 25 years ?

By this I mean, electrify the freight railroads (we could save up to 2.5 million b/day by shifting freight from trucks to electrified railroads), building LOTS of Urban and Regional Rail (the French build trams of towns with 100,000 people, the size of (insert Iowa city of 100K), and even promoting bicycles wherever feasible.

If an oil shortage hit, many Americans could shift over to this non-oil transportation system and save oil for essential uses, like farming and garbage collection.

If the French can do it, why can't we do it ?

I think the way to pose this is to start with the diesel shortages, then segue into talk of using wind power in Iowa to drive trains. I'll do this if the opportunity arises.

I must be mindful - they already know. I have some hope that given the beginnings of coverage within the MSM I can get the discussion started. I'm just a catalyst in this - I don't expect any 'real' progress, just trying to get people talking at this point.

I think one key phrase is "Non-Oil Transportation" add system and include the range from cross-country to local. Add wind powered as a supplement such as "Non-Oil, which could be Wind Powered, Transportation System".

I do *NOT* think that they know (this is a teaching moment) that 1) a Non-oil transportation system is even feasible with mature tech and 2) that the French have been steadily building such a "soup to nuts" non-oil system for the last 25 years.

I REALLY think this could be a "light bulb" moment for at least one of them !

The issue is not just Iowa, it is introducing a meme for the nation. If one of them DOES have a "light bulb" moment (my highest hope), they will *NOT* say a word till it has been discussed with advisers, etc. You will never, ever know that you had an impact.

I agree that they, at least vaguely, know that there is a problem. I suspect that they do not talk much about it because there appears to be no solution except to wait for the JIT Technology Fairy. You can tell them that THERE IS A SOLUTION (and the G*D DAMM French are doing it, so it must be real).

Best Hopes,


I do *NOT* think that they know (this is a teaching moment) that 1) a Non-oil transportation system is even feasible with mature tech and 2) that the French have been steadily building such a "soup to nuts" non-oil system for the last 25 years.

In regards to the "teaching moment", there is a publishing house (of which you are probably aware)
that specializes in local US history. It has some books on Iowa, and even Iowa rail. Perhaps Iowans (and others) would benefit from learning about their history.

Secondly, what you may not be aware of are the demographics of the area in which s.c.t. resides. Compared to France, that area has very low population density. And, this is important, most of the area is aging. For many years the younger folk have left the rural areas. There is both a depopulation process undergoing, as well as an aging process. While s.c.t himself may reside in a resort-ish type of locale (Okoboji), most of the surrounding counties of northern Iowa and southern Minnesota are very sparsely populated compared to most of Europe.

I wonder about the feasibility of implementing electric rail in these types of areas. Certainly there are plenty of old ROW scattered throughout the central US... However, the day to day operations in rural areas would have such low rider-ship (due to the low pop density) that I wonder about how electric rail could be maintained economically.

My opinion would be that if the problem isn't first defined (somehow oil depletion, whether or not the scary word "peak" is used) it wouldn't be very useful to go immediately into a "solution" - i.e. public transport. That's putting the buggy before the horse.

Here's a he said/she said/they said: I just spoke to a local geologist friend who sent off a peak oil question to a friend of his in Las Vegas whose father-in-law is a (state or national?) senator, apparently as a potential question for this demo shindig in Iowa tonight as well (they're reading questions from abroad?). His question was very blunt (ergo very unlikely to get read, but since he holds no faith in either party or the entire system as structured, he isn't worried).

But if he and you both get heard tonight, I'll re-examine my disdain of faith. The Musburger Mainstream 'Miracle' twice in two days? That'd be as surprising as having them actually do something to mitigate it.

If the French can do it, why can't we do it ?

Thats because they are french and you are americans. French (and all europeans) have a long history, art, culture, economy and identity before the oil age. They really know how to exist, prosper and manager their resources in a low energy world. That is something americans, which are a new nation in the world have yet to learn.

Since its existence, that is since whites settled there and it got a political identity and unity, americans are used to of using enormous resources, starting with virgin lands for agriculture, abundant resources of precious metals, coal, oil, gas etc that they have specialized in a fast use of resources to gain power with no knowledge about proper and sensible maintenance of resources.

Europeans knew how to manage their agricultural lands, using three field systems, centuries before whites settled in america. Europeans also have a much kinder, reasonable and sensible attitude towards nature than americans do.

To be fair, I'd note that Europe was running out of forests in the 17th century, and was saved from really big problems by the discovery of how to use coal more efficiently.

I'm not sure we can give any lessons on sustainability.

To be really , really fair, the discovery of North and South America, Australia, New Zealand and the interior of Africa, plus the colonisation of India, sort of got us off the Malthusian hook.

America didn't get the world off the Malthusian hook. It was the death of 99% of the native American population and it's subsequent pruning by disease that let the world invest enough in research and development to get us temporarily off the Malthusian hook.
It is within the capability of a quite small biotech company to repeat this procedure.

Let's not forget that Europeans have an older and wiser attitude in part because they made all the same mistakes America is making, only a thousand years or more earlier. It's just the benefit of experience and knowing history (which, for most Americans, begins in 1776, no earlier!)

The French also have no compunctions about declaring eminent domain to take lands and put in rail, apply unpopular taxes on energy, and many other policy measures that American politicians don't seem to have the stomach for, except when under severe duress (e.g., FDR).


Energy consultant, writer, blogger

What you say is true to a point. We also happen to be one of the greatest cultural melting pots of all time. It would be premature to discount all of the human capital in the USA.
There are plenty of people here who hail from parts of the world where they are still directly connected to the land.
I myself am a Hungarian, Brazilian US citizen. My extended global family incorporates members from just about every ethnic and cultural group from the world. Necessity is and always will be the mother of invention. Yeah, the USA is in for a very rough ride in the near term but I wouldn't discount the people here for a microsecond, that would be a very big mistake.

Ask them how urgent is it to US National Security to transform the US military into the Post Oil world and how they plan to accomplish this as quickly as possible.

National Security makes everyones ears perk up.

I did a graphic to illustrate the 12,5 mbd gap that Birol sees through 2015 (it is an English version of the same graphic that I used to report the FT interview in Crisis Energética). It's a simplification, but it can be of help (feel free to use it):

Overall decline is acknowledged to be accelerating. Chris thinks 4% now, some think this is too low, IMO the number must be at least 4.5% or around 4Mb/d/y to explain why we did not meet Chris' target for world production this year. By 2015 this might be up to 5Mb/d/y, particularly considering that both the large number of on and off shore projects using horizontals and the fact that all giant fields are already showing signs of advanced ageing... these boomers will be retiring soon. Meanwhile, 2015 is eight years away... IMO the 25 shown in the figure should be at least 35, or half of all today's c+c.

Meanwhile, Chris' mega projects show nothing much planned after 2012, and projects require at least six years to bring on line following decision (and announcement) to invest... And, the lag time is increasing as rig/casing/manpower shortages worsen; by 2015 the experienced boomers will be streaming out the door, many will have left these hard jobs in dangerous, unpleasant and far away places long before then. So, there is at least a gap of new projects in 2013, maybe 2014 too because this year is nearly over.

As an aside, current tar sands costs of 100k/b/d means 100 billion for a new 1Mb/d facility. IEA is complaining about the lack of investment in opec... tar sands are bringing in new investment, but now we're talking real money just as capital markets are contracting. WIll big oil divert funds now going to stock buy backs, dividends, options and obscene bonuses to take large positions in canada when many pundits are still calling for a glut coming soon on account of high prices/substitutes?

98.5 in 2015 is a fantasy, even 85 IMO highly unlikely.

This pretty much matches what I've come up with but we have generally offset declines by using new technology the increases the depletion rate. Acceleration in the percentage decline just means we are loosing a fixed or increasing amount of production regardless of the based production. In effect the decline is pretty much a independent variable and not tied to the base production rate. The amount produced is of course tied to the geology but how the fields decline is tied to technology. But overall your simply losing X amount of wells each year regardless of field.

This means a VERY interesting number is the number of wells taken offline each year. Its wells drilled/wells removed.

What I think is happening is that technical advances such as horizontal wells has allowed us to keep the per well flow rates constant or even increasing but the lifetime of a well has dropped considerably over the last 30 years.

We have reached the point that two things are taking place.
1.) We can't really drill any more wells since we have run out of places to drill.
2.) The lifetime of a modern well has dropped from say twenty years to ten.

However in this case its given as 7-10 years.

You would have to find the right info to confirm this but
I'm pretty confident you will find that the lifespan of modern wells is on average half that of wells drilled 30 years ago.

This link gives a lifespan of 3-5 years.

So looking at how long wells last and how many of the older wells are being capped I think that my prediction of a steep drop in production in the near future is well founded.
And not only are the life times shorter but the production rate is increasing per well. This has allowed us to increase production rates well past 50% URR.

We are in a lot deeper $%&@ then most people realize.

Hello memmel,

Any chance you could write this up (perhaps expand) and post it as an article? (I'm sure volunteers could be found to aid in the punctuation detail.)

re: "I think that my prediction of a steep drop in production in the near future is well founded."

I'd like to see this filled out a bit and posted, if possible.

re: "You would have to find the right info to confirm"

Do you know where to look for this info and/or could one of the other illustrious contributors here help out?

That said (and I please hope you will do this!) I'd like you to expand so it's a little more clear to me:
re: "In effect the decline is pretty much a independent variable and not tied to the base production rate." *because* of the "new technology decreases the depletion rate"? I assume yes, but it would be nice to have this kind of filled out. (I know it's been discussed previously - eg. to what extent, if any, technological advance increase total possible output. In fact, didn't I read that it may, in fact, do the opposite? Anyway...all I'm saying is...w. a prediction like this, it would make an important article, even if short.) Just my two cents.

jkissing said
"98.5 in 2015 is a fantasy, even 85 IMO highly unlikely."

That might be true, but equally a fantasy is 98.5 milion barrels of demand per day in 2015.

To accept that, one would have to believe that (a) All the developed world economies will roar along at full steam, (b) that China and India will continue every year at what has been exceptional, even dare I say, "bubble" making growth rates, and (c) that NONE of the rapidly developing technology in efficiency in transport will work or catch hold.

I simply don't buy it. And niether do the Saudi's or many of the major oil companies. They are much more frightened by a possible fast decline, or at least complete lack of growth in demand than they are by the so called "peak oil" lack of supply problem, thus, the needed investments in P/E are late and too small. Thus, the oil companies, both national and private, are in some creating a self fullfilling prophecy. Due to their lack of investment, projects are delayed or not started at all, Thus, as jkissng says, " Chris' mega projects show nothing much planned after 2012, and projects require at least six years to bring on line following decision (and announcement) to invest..."

The result of this of course is rising prices for oil, and the result of that {of course) is that efficiency technology is funded and gets better, and economies slow, and the result of that is (of course) that demand slows, depending on how fast recession takes hold, and the efficiency technology takes hold, especially in transportation.

De Marjorie and others say, "100 million barrels per day, never" in relation to oil production. I think they are right.

I say, "100 million barrels per day demand, never"....or well, damm close to never, which I never like to say. :-)


I think Birol and the IEA just admitted peak oil. Here's why:

He says we need 37.5 million barrels of new capacity by 2015, and two-thirds of that is just to offset declines in existing fields. Two-thirds of 37.5 million barrels is 25.125 million barrels.

He then says if you add up all 230 oil projects in development at the moment (and they all meet expected production rates and they all come in on time) you get 25 million barrels of new capacity by 2015.

Decline by 2015 = 25.125 million barrels
New capacity by 2015 = 25 million barrels.

Ergo global oil production will be 125 thousand barrels lower than it is today, even if everything goes really, really well.

Isn't that just a roundabout way of admitting peak oil?

Despite "rejecting the notion" of a peak in production, he is nevertheless the first senior oil executive, to my knowledge, to say that "half the oil" being gone - something which is usually considered to happen at pretty much the same time as peak production (although the two are not necessarily simultaneous). Even with enhanced recovery techniques, no country has been able to increase its maximum production once the peak had been reached - starting with the US and the North Sea region, where oil companies have had all the liberty to use all the most sophisticated techniques.

This is a tautology. If they were able to increase production numbers beyond "the peak," you wouldn't be calling it "the peak."

To put the whole Global Warming issue into perspective vis-a-vis Peak Oil, everyone needs to ask themselves and their associates, "What is more threatening in both the long and short terms, a beneficial 1 degree F rise in average world temperatures over the past 100 years, or a 1 percent decline in world oil production over the last 100 weeks - with steepening declines forecast? Furthermore, can economies better deal with declining fuel inventories in an environment of persistent warming, or in an environment of declining average temperatures over the next serveral decades, the most likely scenario given the highly reliable solar inertial motion (SIM) model forecasts?

a beneficial 1 degree F rise in average world temperatures over the past 100 years

Ain't no such thing.  The Greenland ice cap is already going as it is, the US south and southwest are in a really bad drought, and more heating will do both our shorelines and the seas which wash them a lot more damage.