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Hirsch on CNBC: Peak oil problem "as massive as one can possibly imagine"
Posted by Super G on May 20, 2008 - 12:21pm
Robert Hirsch, author of Peaking of World Oil Production: Impacts, Mitigation, and Risk Management (a.k.a. the Hirsch Report), appeared on CNBC this morning. He said flat out that new technologies and new drilling won't solve the peak oil problem, and that we should expect $12-15/gallon gasoline followed by rationing.
You can also watch the video at CNBC or read the transcript below the fold.
[Update 1:30p EDT] And here's a follow-up with T. Boone Pickens.
Transcription and bolding by Super G.
HOST: ...Dr. Hirsch is a senior energy advisor at Management Information Services and Dr. Hirsch, thank you for joining us this morning.
HIRSCH: My pleasure.
HOST: You know, we've been talking all morning long about energy prices. Watching crude oil prices touch above $127 for the first time overnight leads a lot of people to start wondering about peak oil and the peak oil theory. You've been writing about peak oil for some time, so did you see this coming?
HIRSCH: Yes we did. Not quite the way it's turned out, but this is not a surprise.
HOST: You say, "not quite the way it's turned out". What's happened that's different from what you were predicting?
HIRSCH: Well, I wasn't particularly predicting. I'm a student of this and have focused on what we do about the problem after it really hits. Peak oil--the idea is that it would hit a sharp peak and then production in the world would hit a sharp peak then drop off. And what's happened is that we hit plateau in world oil production, and that plateau has been ongoing since about the middle of 2004.
HOST: Dr. Hirsch, there are a lot of people when we talk about peak oil who say there are going to be technologies that are always developed. There will be new ways to get oil, whether it's from coal, whether it's from the oil shales, and they say that means we will never actually hit peak oil. What do you say to those people?
HIRSCH: They're incorrect, and the reason that they're incorrect is that they don't understand the magnitude of the problem and how long it's going to take to bring substitute liquid fuels on and to introduce energy efficiency on a massive scale. That's something that we analyzed and it takes decades. And the reason, simply, is that the magnitude of the problem is enormous.
[McTeer says we should drill more.]
HOST: Dr. Hirsch, what do you say to that--the idea that we should be drilling in places like ANWR and drilling offshore. Would that solve this problem of a plateau in oil production?
HIRSCH: There's no single thing that's going to solve this problem because it's as massive as one can possibly imagine. And the prices that we're paying at the pump today I think are going to be the good old days because others who watch this very closely forecast that we are going to be hitting $12 and $15 per gallon. And then, after that, when world oil production goes into decline, we're going to talk about rationing. In other words, not only are we going to be paying high prices and have considerable economic problems, in addition to that, we're not going to be able to get the fuel when we want it.
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The United States will undoubtedly be forced to cut its oil consumption drastically over the next 10 to 20 years, perhaps by 50% or more.
In a free market economy, $12 to $15 per gallon gasoline is the mechanism to achieve that.
I don't think pricing mechanisms in a free market are designed to address the set of problems that peak oil presents. Pricing rations scarce resources by ability to pay, without resort to any other set of considerations.
What's going to happen however is that problems like defense and energy security and food security are going to ram up against free market mechanisms and overturn them.
The exigencies of food production and vital transportation and fueling a highly mechanized army will take precedence over free market rationing in ways that simply ratcheting up the price will not address. Certain uses will get subsidized, while others will be paying through the nose or will simply not get access.
so somehow the market can't price a scare resource? you've just overturned capitalism if you can prove that.
prices will rise and we'll squeeze oil out of our economy through demand destruction/conservation, electric vehicles and PHEVs in due time.
having driven through most of Penn. this weekend I can assure you there is PLENTY of land even in agricultural Penn. to plant more crops if needed. I saw many many plots of land with houses on them on land that used to probably be farm land and now is just a big lawn. we plenty of places to plant more crops! hundreds of miles in one state lining one highway.
I didn't say the market can't price a scarce resource. Economics is entirely about the allocation of scarce resources. But free market capitalism isn't designed, for example to feed everyone. It's just designed to turn a profit. Pricing Somalia out of the market for grain is a perfectly acceptable free market solution to scarce food resources.
I don't think free market capitalism can solve every conceivable challenge of resource allocation, nor has it ever done that in the past. And in the case of a catastrophic collapse in supply, I do believe that capitalism will be overturned, just as it is now being overturned by countries seeking to protect their food security.
the problem in most countries is not the market but it's gov't interference in the market. rarely do they report that gov't policies in most of the countries we read about are caused by subsidies and etc. what's the worst economy right now? it's zimbabwe. that is an gov't created problem through and through.
that is your example? a war torn region that probably doesn't have anything resembling a market economy? are you saying the ENTIRE country can't buy grain? I don't believe that. anyways, the wealth produced by the free market can make enough money available to send grain to places where starvation is a problem.
today mises had an article about the potato famine. someone on here said "just remember that the market said F-you to millions of starving people in Ireland" a few months ago. that is entirely wrong. the market was interfered with.
http://mises.org/story/2978
Regardless, we see national interest in food security overturning free market trade again and again. The U.S. and western Europe no less than Egypt or India or any other nation. Perhaps this is all caused by government intervention in the first place. But the one thing you can be sure of is that no government will ever resort to some kind of faith-based reliance on unregulated markets to sort out the problem. The same approach we've always seen for food will be increasingly applied to energy.
it's staggering how much contempt there is on TOD for faith-based markets. no wonder so many here just don't get it.
Tell me how faith based markets addressed the Irish potato famine. Oh they didn't, did they? Instead the British used the famine AND the market to strip the Irish of their ancestral lands and then worked them to death in near concentration camp conditions, burying them in mass unmarked graves.
Or how about those free, unregulated markets that have created the largest credit mess in the entire history of the world and have to have government bail out the likes of Bear Stearns and other financial institutions?
Your faith in free markets demonstrates a blindness in yourself, not in others. No one but a fool (or a libertarian anarchist) argues for totally free markets. Likewise, the collapse of the USSR demonstrates the folly of trying to plan the entire economy. So the answer lies (as usual) somewhere in between.
The question then is how much market activity can we hope for in the time before we reach critical supply problems. Now, since you are relatively new here at TOD, we can forgive your ignorance On Energy Transitions Past and Future. But if you bother to read that article, you discover that every other major transition took 50-80 years to occur without government intervention. Further, each transition was supported by the new energy source being as cheap as or cheaper than the source it replaced. And finally, each energy source was higher quality and higher energy density than the source it replaced.
Now, today, we face a different problem. We need to turn the energy ship around right now, not 80 years from now. And the alternatives are all more expensive than the fossil fuels they are replacing. Further, of the alternatives we have, most are not of the same quality or energy density as petroleum.
So, we have a unique set of problems that history clearly tells us that the "free market" has never, ever addressed before. Further, we have 6.7 billion lives dependent on the existing energy system.
I'll take my chances with a Manhattan style project rather than wait 50-80 years to see if the "free market" can pull its head out of its ass and do something constructive on a large scale. Childlike faith in free markets didn't help win WWII, did it? Sometimes the "free market" is not the right answer, except for a religious boob who knows no better than to chant a silly mantra.
Excellent rejoinder. I shall bookmark this forthwith.
May I add an example or two just because?
Medical care in the US: tens of millions not covered; injured and dying sometimes refused care.
Education in the US: Supposedly open and equal to all, but actually highly unequal in quality because it is funded dependent upon wealth of the neighborhood since education is paid for with property taxes. (Not a perfect example, but the financing is supported by an income dependent upon highly unstable market forces.)
Etc.
The "free" market does not address issues of the Commons well.
A simple thought test. If the market can and should be trusted to manage economies, and societies have generally become more "democratic", why is it that wealth distribution hasn't materially changed? Why does it still generally follow the 1/5/20/80 rule?
Why is it that societies based upon community ownership, therefore no economic classes, have higher rates of satisfaction with life?
Cheers
Free markets are a myth designed to oppress and rip off the subservient, the losers (countries, groups, etc.), the dependent, the poor, employees, etc. Free markets have never existed and never will. (See the US, a very controlled, protectionist, economy in the hands of...) The freedom is on the side of the powerful, those with the guns, nukes, and so on.
Trite tales of exchanges benefiting all (your coconuts or your daughter for my boat) are folklore erected to practically religious status, slathered in ideology and numbers that make no sense, far more powerful than Islam, Catholicism, or Soccer mom principles, for ex.
In a way, it is new religion. An organizing principle that nobody dares contest, everybody has to pay lip service to; making profits is wonderful, except that, on the ground, err -
the profits seem to be extracted from ppl /countries / groups who object; deplete natural resources, and create social strife, and lead to wars...Duh.
The experts (with guns and bombs in the background, and pay offs for the top officials) tell ppl they have to sell at ‘market value’ which is only what the rich will pay.
Russia lost the ‘cold war’, and was subjected to a heavy dose of ‘modernity’ and ‘free markets’ and now the US is going down the tubes for the same reason. The debt bubble (free market for the lenders, impunity in law) will plunge the US into deep recession, or even outright stark depression.
I basically do not care if free markets are an ideal theory, a halfway working reality, an illusion or a great conspiracy.
Regardless of wich I find it proven that competition driven by the full range of human feelings including opportunities for cooperation is very good for efficiency and change. Thus I find it good that my governmnet has market management and creation as one of the methods for leadership. I want the solutions to global warming and resource constraints to compete with each other, there is no singe winner for solving such a very large problem.
john15, you read mises.org and believe it. The point is that you are far, far out on a wing politically speaking. Even far-right governments rely on market interventions, or other things than markets entirely, to get such things as national security (which includes food security). That was not "staggering contempt" you saw there. I see more like "OK, I know I'm not going to reach through to you, but be aware that no politician in power sees things your way".
You make some very good points, but the fact is that there never has been and never will be a totally unfettered market. There will always be interests with the power and desire to distort markets, either by manipulating the information in the market (the Saudi's saying they are increasing production, IOC's production "forecasts"), by force of arms or implied force of arms (nationalization of resources such as Libya or Venezuela), or by subsidizing consumption.
In the real world these forces eventually have to balance out and we get a market price that reflects the consensus reality, but it is to a large degree a manufactured reality by the time it hits the futures market.
Austrian school economists tick me off. Talk about a discipline divorced from reality, they are actively hostile around the Mises site to any possibility of a reality check of their pet ideas.
Me too. I used to love to listen to Jim Puplava's podcasts about Peak Oil, but Puplava's brutish insistence on the market has put me off, and I'm also annoyed that he has taken on the Republican mantle of Global Warming Basher as well, constantly bleating how it will only be a problem "in 40 or more years, if ever".
Most Republicans just do not get the full picture. Some of 'em support the Peak Oil thesis because it means they can make money from energy stocks, gold and silver, but with Global Warming they just can't work out a profitable angle — yet.
Mark
I couldn't agree more. The market was interfered with. When this happens, the longer term negative consequences far outweigh any short term gains. The problem is simply that we have subsidized oil production and consumption. Will Hinton is correct here:
http://www.themarkettraders.com/content/foreign-oil-dependency-and-polit...
Andy
One can argue about this for ever, but I would contend that the 'free market' has not, is not and never will be 'free'. The 'market' is simply way too important to be allowed to function freely. This is actually supported by people who continually say, but the market is being 'interfered' with, if it was left alone it would function perfectly! This 'interference' is actually builty into the structure of the 'free market' because it isn't 'free' at all. The market is a controlled market system, not completely 'unfree' but nowhere near 'free', as in not being substantially controlled and steered and 'designed' to disproportionally favour the interests of minority who benefit from the 'free market'. This is of course very simplified, but I've deadline to meet for a manuscript!
Oh, and before I forget, we need to overthrow the current Capitalist economic and social paradigm, before it 'overthrows' us. This too is a mighty big problem to add to the growing list of mega problems we face, but I believe it may be the crucial one. This isn't because I personally haven't enjoyed the many fruits of Capitalism. I have, and over-indulged, yet I think the Capitalist system is doomed, at least the current version. I almost wrote the 'unbridled version', but this would imply that it was somehow 'free' which it simply is not.
Hear, hear.
There is not now- nor ever has been nor ever will be- any such fantasy as a free market economy.
It's rigged in favor of the big players and always will be. Any time the smaller players point this out, you can be sure some patsy for the big players will complain that the smaller players don't appreciate the [non-existing] free market economic system!
And even though there is no better system to efficiently allocate goods, capitalism still can't handle 1) externalities (eg pollution travelling from one property or jurisdiction to another), 2) public goods (eg, health and education), and 3) common property resource dilemmas (eg, fighting over fish in the sea). Thus, most countries have a combination of capitalism and socialism (even the USA has public schools).
This discussion about markets lacks nuance.
People who “believe in” free markets easily point to examples where market outcomes, compared to political outcomes, are superior (e.g. FedEx vs the Post Office). But more has to be said. Markets depend on secure property rights. But what makes property rights secure? In the end: morality and justice.
In a system of masters and slaves, both parties can be thought of as making all sorts of implicit trades (better food for more attentive work, etc) but nobody would argue that such trades make the system just, even if as a result of them all parties are better off. Considerations of justice and morality cannot be set aside.
So, yes, markets do some things well, but they fail in crucial ways. They also do not confront certain important problems having to do with justice, and what’s worse, they have a nasty habit of undermining the moral foundations on which they totally depend.
Is socialism the answer?
No, it is not, because it is not anything different. Socialists mistrust the selfish core of capitalism. What they refuse to see is that the problem of self-interest does not go away just because a man enters politics. In politics, as in markets, the same self-interested impulses are at work. The error of the socialist is to compare a flawed actuality (actually existing markets) with ideals that can only be implemented if men are angels. In such a comparison the actuality always ends up looking bad.
I think the present age could stand a big dose of humility. The ancients were more advanced. They understood that in politics there is no stability, that one arrangement is always degrading into something else: aristocracy to plutocracy to democracy to anarchy to tyranny.....
"I can assure you there is PLENTY of land even in agricultural Penn. to plant more crops if needed."
Go read David Stahan's book. He runs the numbers for how much land would be needed to "grow" our fuel. Even if we turned over all the land in the country to oil production, we would only make about 25%. So sure, there is plenty of land in Pennsylvania, it STILL isn't enough.
Yes, there will be the inevitable comment about switchgrass, sumpweed, algae..... things that might be. But things that might be, might also not be.
To use an analogy, think of the Titanic. No one should have died on the Titanic because rescue jetpacks could be invented. And because some of the richest men in the world were on the Titanic and had a great incentive (Death!) to develop an alternative to lifeboats, the freemarket should have filled the void in the numbers of lifeboats with rescue jetpacks.
My response:
Show me a working rescue jetpack that is useful.
Show me the factories making the jetpack.
Show me the vast numbers on the Titanic with a jetpack for everyone.
And then maybe I will trust you to wait for the rescue jetpack.
my comment was entirely about "peak food" nonsense.
as far as how much land to we need to grow our fuel, nobody really knows. I don't know what parameters stahan used so I can't speak to that. I do know that if you can tell me how much fuel in 2015 we'll need to grow to make up for the decline in oil production I'd ask you who is going to win the World Series then too. suppose by then we have a significant PHEVs that only need 50 gallons of gas a year because they have PVs on the roof? that kind of changes the equation, doesn't it?
Another analogy to the RMS Titanic, the expectation was that technology would not allow the ship to sink, and yet in the end it was the technology that killed so many people. Were it not for the watertight doors, the water would have flowed in evenly, settling at the bottom and the ship would have taken hours to sink, which would have allowed for a rescue ship to arrive.
The very technology that they thought would save them ended up killing most of them.
The hope of a future fueled by such things as switch grass is a false hope, that hope is delaying the hard choices that have to be made now, choices that if not made, will make things far worse than they otherwise would be.
In celebration of WTI selling for more than $130 on NYMEX, I'm feeling like sharing some quotations.
"The price of a thing does not reveal its quantity or its quality, particularly in the energy business." - Jay Hanson
"Just as there is no measurement of sexual love, of friendship and
sympathy, and of esthetic enjoyment, so there is no measurement of the
value of commodities." - Ludwig von Mises
"Prices simply measure states of mind. This means that economists issue
opinions on opinions. In short, economists are pollsters with an
attitude." - Jay Hanson
You can't say markets here!
I've got no problem with markets, but nothing is free.
TANSTAAFL
That's why we need a gas tax increase, ASAP. It should be big enough to do the trick, but not so big, nor done all at once, to shock the economy.
I recommend $1/gal, at 20 cents a year over 5 years.
Well, the least we can say is that Hirsch was pretty straight, no BS and did not try to soften his message.
Compare with this Jerk:
A modern-day Canute:
http://www.guardian.co.uk/business/2008/may/20/oil.gordonbrown?gusrc=rss...
Brown calls for end to the power of Opec
· World economy 'held back' by oil cartel
· PM signals new resolve to defend British consumers
· Patrick Wintour, political editor
· The Guardian,
· Tuesday May 20 2008
This article appeared in the Guardian on Tuesday May 20 2008 on p14 of the UK news section. It was last updated at 00:04 on May 20 2008.
Gordon Brown yesterday signalled a new determination to defend Britain's hard-pressed consumers and motorists when he denounced the oil cartel Opec as a scandal and called for the EU and the G8 to break down its control, saying it was holding back the development of the world economy.
It is the first time the prime minister has spoken in such stark terms about the causes of the tenfold rise in oil prices, and it follows a conscious decision to speak up on behalf of voters' sense of fairness.
Number 10 rejected the view that the huge oil price rise was due to speculation, saying that on the contrary the speculation was a function of signals by Opec, and the lack of balance between supply and demand.
Such is the concern at No 10 that some officials are proposing that Brown travel to Saudi Arabia for direct talks, probably when he goes to Israel for its 60th anniversary. No 10 stressed no decision had been taken.
Always good to see Dr. Hirsch on TV.
Compare him to the Fed Banker brain-farting his blog.
God I hate those idiots.
Yea drill more pay less, what a tool, he suggests we drill wherever, instead of working on the problem lets drill more and what then we spend billions for a few months supply instead of spending that money on alternative transportation methods, re-localization of food supply and rebuilding and retooling of essential industries that have been off shored or let degrade.
Thank goodness for Dr. Hirsch, hopefully we will start to hear more from him and less from Yergin et al, so that the country can awaken from its oil fueled slumber and get to work on fixing the problem, if we wait for the likes of this ex fed governor to waken to the problem we will be in a world of hurt.
The UK gov is a catastrophe.
ZERO acceptance or understanding of the Issue.
Boris
London
The UK gov is a catastrophe.
ZERO acceptance or understanding of
theany IssueWhat are UK'ers complaining about!! How would you like to live in the US?! The shame I have living here is profound. I came back from overseas in the early 1970's as an army soldier hoping never to see such a catastrophic mistake repeated and it began all over again in a country led by two draft dodgers of mediocre intelligence and incompoetent judgement who have vowed to maintain the US way of life. I saw this coming some years ago and have done my level best to spread the word and protect my friends and family for the changes ahead. We can have a better society in the future with lower energy but unless we plan pretty soon effectively, we are looking at a mad max scenario. Hirsch is one of the level headed intelligent figures who can lead us forward.
To top it off, our smirking chimp of a prez goes to oil-exporting Arab countries and tells them that their oil-export based economy will soon end!! Way to enforce the Export Land Model, chump!!
Maybe, though, he inadvertently has given us more time to "mitigate" the problem.
I wish Hirsh's otherwise excellent CNBC interview, included quantitative examples of the scale of the problem. E.g., if ANWR has about 10 billion barrels total, that represents 4 months worth of world consumption - spread out, of course, over many years. Or that 8-10 years from now the tar sands will be producing only about 5 million bpd, if that. Or, the world consumes slightly more than 1 CUBIC MILE of crude today. Etc.
Hey you Mud-Alien, just you mind how you address our esteemed Prime Criminal.
Actually, I being very harsh (on Canute).
The legend is that he tried to show his lackeys and lickspittles that he could NOT hold back the tide.
Perhaps we better start minding our p’s and q’s:
http://www.guardian.co.uk/politics/2008/may/20/justice.privacy
>>A government database holding details of every phone call made, email sent and minute spent on the internet by the public could be created as part of a centralised fight against crime and terrorism, it emerged today.
News of the proposal prompted alarm about the country's growing surveillance culture and raised fears of "data profiling" of citizens. It follows on from plans for databases for ID cards and NHS electronic patient records.
Telecoms companies and internet service providers would be compelled to hand over their records to the Home Office under proposals that could find their way into the new data communications bill.
The information would be stored for at least 12 months and police, security services and other agencies across Europe would be able to access the database with court permission.<<
Not that they will get this database any more super efficient that all the others.
I once heard from a German who lived through Nazism that:
'' It wasnt that the Nazis were highly ruthless and efficient, It is just that they managed to make everybody fear that they were''
When faced with problems at home politicians often turn to overseas trips. It feels great being in a motorcade with the traffic cleared and no awkward questions about domestic policies, why previously you said proposed Tory tax cuts were evil, selfish, unfunded and now they have suddenly become sensible, listening, responsive tax relief.
I laugh at "some officials are proposing that Brown travel to Saudi Arabia for direct talks, probably when he goes to Israel for its 60th anniversary" Yeah that's real smart link in Israel - should go down well. Maybe he can claim he is saving on his emissions.
Now if i was in charge, best hopes for benevolent dictatorship???
But also from the article (my emphasis)
Seems to suggest he knows most of OPEC is pumping flat out.
"Supply and Demand Question"code for Peak Oil?Thought he missed an opportunity to explain that other forms of oil, such as shale, ethanol, tar sands etc. will not be sufficiant to make up the shortfall of declining reserves as world demand continues to increase. His response to her question was absent of a clear explanation on that point, but otherwise some very clear language about the severity of the problem.
I kinda of liked that dismissive "I'm not even going to bother arguing with you" attitude
I'm so right about this and you are so wrong all I'm going to do is state this problem is beyond the huge...
he has natural gravitas that carries its own authority.
he needs to get public more
10/10
Boris
London
Hirsch was great at ASPO-Houston. I hope he, Matt Simmons and others can step up soon in this election cycle to force this issue into the coming debates (presumably McCain-Obama).
I was hoping The Oil Drum could have a writing contest for the next youtube presidential debate between McCain and Obama. The winner would receive money from donations for the contest and would have their transcript read in a video featuring Peak Oily Cassandra.
Hello LoveOregon,
I echo your sentiments. Recall that Simmons said he would cry if he was elected Prez and had to deal with Peak Everything.
After today: it seems that Peak Awareness is growing exponentially, and I hope we can goose further grassroots Peak Outreach to the huddled masses.
The Nov. election is still a long ways off. I wonder if one of the three main candidates, or the other candidates, will finally understand the true nature of the problems ahead, then pull their hat out of the political ring to do their best Richard Rainwater imitation instead.
Imagine the press frenzy if Obama, Hillary, or McCain suddenly announced that they did not want the job--then clearly explained Peak Everything, Olduvai, Themo/Gene Collision, etc-- that the Presidency is just not worth the postPeak hassle of the phone ringing EVERY NIGHT at 3am to deal with another disaster.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
are you familiar with the writing of bernard cloutier, a canadian retired from the oil/gas industry?
in 2002 he wrote the following
http://www.berclo.net/page02/02en-chessgame-2.html
Carola Hoyos, the Financial Times' Chief Energy Correspondent, who had a good piece on Peak Oil in the paper today, said in a recent speech to bankers:
"Despite all the protester's angry cries of no blood for oil, politicians still don't seem to realize what oil men know: That fighting for oil is like shagging for virginity."
Loved it. From Becky's subconcious downward glance and smirk as she mentioned PO to the green peacock watermark in the graphs which, by the way, made no sense whatsoever.
I certainly wasn't expecting the graphs, and the sound effect when they came in and out was distracting, but I think the purpose was to show what peaks in production look like, in well-known oil producing areas. It makes it a bit harder for someone to dismiss peak oil as a whacko theory when there's historical data that supports it.
Considering that the industry is drilling for natural gas in some of Texas' wealthiest suburbs, I doubt that the Mr. Pickens is being honest with us on that point.
You don't start mining for an abundant resource in the most expensive places, until it's no longer abundant.
they are drilling because it makes sense to drill. it doesn't matter how expensive the place is, it's all about recouping investment. I don't know the laws but I am sure a lot of people, even the wealthy, don't mind drilling if they get a cut.
Actually, in Texas the mineral estate takes precedence over the surface estate, so a surface owner, with no mineral rights, can't stop an oil company from drilling, if the company has a lease of the mineral rights. However, in cities there are special restrictions on drilling.
Same here in Michigan.
A fellow near my lifeboat who owned 7 acres next to thousands of acres of state land came home one day to find a drilling rig on his front lawn.
After doing, IMO, the only sensible thing, chasing the drill team off with a shotgun, he found himself under arrest for ADW, heard later he was convicted.
I've often wondered why the rig didn't just set up on the nearby state land.
Or was it just a set up?
Jeffrey is right that the mineral rights take precedence in TX, but the landowner is entitled to damages. There may disputes about whether the damages are sufficient, but that is another story.
I doubt that "the fellow near your lifeboat" first learned about the rig moving in on his property upon their arrival ... unless he was very careful about not reading his mail or responding to posted notices. I have no knowledge of how it works in Michigan, but some level of due process is required.
I was also taken aback by Pickens' "Let's switch to Natgas" speech.
Several TOD and even some ASPO-USA conference speakers have spoken not so optimistically about US natural gas production forecasts.
However, Al-Fattah's 2006 paper suggests that US nat gas production rate would grow from 2005 to 2015 at 0.5% p.a. Modest, but still a domestic source.
Then again if I'm reading the EIA data correctly, that forecast has not come to pass (at least not yet).
Who has the latest round up on real data on the ground - what does it look like?
Is Pickens wrong on this one (i.e. out of the fryin pan, into the fire)?
Dr Hirsch's remark about the unexpected plateau of crude oil production since 2004, instead of a sharp peak, was predicted by the model that I developed recently. It assumes growth of unconventional crude oil production without capacity limit and growth of conventional crude oil production within capacity limits of 1979 Gb and 2320 Gb. The simulation uses Hubbert linearization techniques.
It predicted peaking of World Liquids production during 2nd quarter of 2009 (median forecast) and not later than during 3rd quarter of 2011 (upper forecast). The predicted rate of fall from peak will be much less, only 0.6 % per annum, compared to the median predicted fall of around 1.5%, as given in the The Oil Drum | update. Peak production will not exceed 97.2 mb/day.
I suspect your models already wrong. If your serious about it then you need to look at forced logistic equations for the back side. The reason I think they are right is they correctly model the step like fine structure in post peak production. These steps could potentially be used to constrain the forcing function.
http://www.britannica.com/EBchecked/topic/207261/fine-structure
KSA for example has a large forcing function while the US was not that bad and Russia's was effectively zero.
So if your post peak model does not have production steps or stair like production profiles then its not the right model.
http://en.wikipedia.org/wiki/Logistic_map
This forcing brings down the URR a lot and makes the real final recoveries questionable.
The cool thing is collapse is part of the model.
The fine structure mapping to guess the forcing function is my trick if you will.
Are there any published assesments by Hirst on when he considers Peak Oil to occur? On the video he talks of a long plataue starting in 2004 but I didn't hear any talk of when we might drop of it or decline...
Nick.
Hirsch was great at the University of Pittsburgh also, giving a fantastic key-note on energy. He gets the issues, has the connections clearly presented, and gives a great presentation. It is quite amazing to watch. Thanks for posting this. MSNBC has also said in presentations that "there is no oil shortage" and "prices are set by speculation", at least in sound bites. The public must be terribly confused now.
At the very top of this thread in the intro is a link to the famous Hirsch Report.
One item which I've yet to see discussed on TOD is what might possible happen once we all become aware of the the magnitude of problem. I'd expect that once production drops 10% there will be a collective "Oh s**t!" and we'll (hopefully collectively and peacefully) begin to dramatically reduce the wasteful use of fossil fuels. Dr. Hirsch alludes to this in the CNBC report.
Maybe we'll need to mandate larger decreases per year than the ~4% historical depletion rates just to ensure that the resource lasts longer. Or will the markets naturally take this into account and withold supply in order for the resource owners to maximize their profits? (This might already be happening in KSA.)
One big factor is that people in general may well agree that "wasteful" use of fossil fuels should be eliminated, I think most people will define "wasteful" as "activities X, Y, Z that I personally don't do anyway".
I don't understand the numbers here. Assume we here in the US need, I don't know, 4 terawatts of electricity by 2028. (We use 1 TW now, and will need another when the fleet gets electrified. I'm assuming that gross needs will double over twenty years.) Assume further that this energy costs about $2 per installed watt, which seems more than reasonable given the trends. (That's about where Nanosolar-type PV is right now.) That's eight trillion over twenty years, or $400 billion a year. $400 billion a year is not that much. It's like 10% of the annual global investment flow, isn't it? Less.
The demand is obviously going to be there.
Part of the problem is the production of energy. The other part is providing it in useful forms. ie nice, highly efficient and cheap batteries or liquid fuels or whatever. The second part is likely to be more expensive than the first.
But overall I agree. It's not an insurmountable problem.
I wouldn't care about rationed gasoline for example if I had a plugin-hybrid car. But I don't have one and they're likely to be very expensive at first.
Anyway, $12 gallon is only slightly more than what Europeans are paying now. I think Americans will be paying at least $20 per gallon in the future.
The deputy Chairman of Gazprom was interviewed on "Closing Bell" on CNBC today as well.
If I heard him correctly he said he could assure the viewers that they would be able to meet the demand, both domestically and export, for natural gas and crude oil...
I don't think he said how long they could meet that demand for though.
Apparently he was in Montreal signing a letter of intent for a partnership to provide liquified natural gas to Canada (Quebec City).
I find it deeply troubling that Canada, once a a giant of natural gas production, is now having to arrange for IMPORTS of natural gas, and that no one in the mainstream media has yet picked up on this crucial turn of events.
The local 'paper of record' in Montreal, La Presse, has managed to cover the dealings between Gazprom and Gaz Métropolitain (the Quebec gas utility) without ever calling attention to the question of WHY natural gas must be imported into Canada all of a sudden.
Perhaps the extraction of oil from the tar sands is the reason.
The Quebec market for gas is pretty small, since a lot of domestic heating is done with hydro electricity. Also there was recently a natural gas discovery estimated at 4 TCF in the St Lawrence lowlands between Montreal and Quebec City. Finally, I am not aware of any supply constraints from western Canada into the eastern market.
AFIK, the main driver for this terminal will be exports to New England and NY.
Part of the problem is a very large amount of NatGas is shut-in by the Alberta government to be used by the Oil sands miners.
Does anyone believe the GOP did NOT see this coming and concealed the data from the public?
Cheney's energy task force and our energy policy have been buried under "executive privilege" which concealed their true intent.
This is yet another criminal conspiracy.
I think to a limited extent they understood probably the government as a whole had the entire picture.
They can certainly read the peak oil sites and probably have access to better info than we do.
For example simply counting tanker sailings via even a common commercial satellite or via ships logs is easily doable.
In my opinion their concern was not the world running out of oil but the majors running out.
In general if you assumed that all the oil fields in the world that exist today are exploited to the maximum technical level possible and that new finds in Antarctica/Greenland etc are possible along with better technology etc then from this perspective its a political/economic problem. And peak oil is in the distant future.
Just making sure the poor oil majors have fields to drill is sufficient reason for our governments actions.
You don't need to invoke any sort of conspiracy theory.
They should actually know more but they don't need too to support their actions if maintaining the Oil Majors is important. So it does not matter. My opinion is that initially keeping Billy Bob Oil CEO rolling in money was the initial reason for the invasion of Iraq and pincer move on Iran but its evolved over time into a larger more peak oil aware scheme. I'd not accuse the current US government of doing something for grand reasons will simple greed is sufficient.
My opinion is that initially keeping Billy Bob Oil CEO rolling in money was the initial reason for the invasion of Iraq and pincer move on Iran but its evolved over time into a larger more peak oil aware scheme. I'd not accuse the current US government of doing something for grand reasons will simple greed is sufficient.
Come on dude, you really think they are saying "Pheew, good thing we are in Iraq with oil peaking, boy I had no idea"
Except the part of the GOP giving us all free gasoline hasn't worked out and our troops might have to walk out of Iraq
No I just have faith that the current regime in the US is and was willing to involve us in two wars remember Afghanasitan this is a pincer move on Iran solely to regain access to oil for the major oil companies.
You don't have to invoke peak oil or any other resource constraint theory simply the Majors have run out of places to find oil and are ready to retake their old ME fields. This is consistent with the moves in Mexico and the moves in Libya. You don't need to look beyond this for some higher motive. The fact that this need is coincident with world peak is accidental at best. The two needs occur for almost the same reason.
I think the realization that this would not result in a new surge of oil to power the American dream came later one. The original plan was probably for a flood of oil from peaceful Iraq powering the American housing bubble out so everyone was worth millions on paper and the rich almost infinitely wealthy. Then we liberate Iran and the good times roll.
When this plan fell apart and realization of peak oil/ Iraq problems etc they then went to plan B.
I don't think peak oil played into the original invasion plans and like I said its not needed to justify the move at least for the current government.
Now of course with the real situation unfolding it means that this plan will roll forward but slightly modified since we will have to maintain a large military presence in these oil colonies.
In no particular order the next oil colonies are Mexico and Venezuela probably a joint operation with a Junta seizing power in Mexico and helping us in Venezuela. One reason I think we are holding off on Venezuela and of course the Columbian will help so its really a Mexican/Columbian/US invasion of Venezuela.
But I suspect planed for after democracy is dissolved in Mexico.
And of course Iran. And later if KSA messes up and we become adept at controlling and eliminating populations in the Middle East I think we will turn on the Kingdom if the Royal family is displaced.
Then of course various moves in Africa and central Asia sparing with Russia.
None of this really required peak oil just peak oil for the majors. Real global peak just makes scenarios like this more probable to occur.
I still can't figure out how they can pull this off without a draft so that the only big missing piece.
Using Mexican troops was my solution in South America.
Haha! Love it, so true.
memmel, You give the US government too much credit on Iraq. We are still there because the architects of the war do not want to admit they were wrong to invade in the first place.
I do not think helping the IOCs was ever much a reason for invading either. The major motivation of Doug Feith (who's got relatives on the West Bank), Richard Perle, Louis Libby, and other leading Jewish neocons was to protect Israel.
We are still there because the architects of the war do not want to admit they were wrong to invade in the first place.
I don't think the architects think of it that way. The oil booty is going up in value every day. Plenty of people are making out like bandits on this adventure. I just don't buy that they thought they were going to be out of there quickly. But then again I am paranoid and have a penchant for tin foil hattery.
I agree its about oil and money and if peak oil makes it more lucrative and strategic to stay in Iraq then the US will probably stay. But the actual invasion itself was probably initiated for far stupider in my opinion reasons. Simple greed.
It's blowing up in the media!!! Peak Oil will supercede Global Warming as "the talked about issue". It's about time!!!!
Maybe now the masses of stupidity will awaken & we can start to get collective public influence on Policies and Action.
You need to understand... this is only just getting started.
Still waiting for the day when some Peak Oil talking head, from Pickens to Simmons to Hirsch to Kunstler to Heinberg to Campbell to Deffeyes, mentions population growth. Our legal immigration is now above 1 million and we still give illegal immigration a wink and a nod. Perhaps they hope that one of these immigrants will figure out a solution that they wouldn't have figured out had they bloomed where they were planted?
This is not an American problem. It's a global problem.
They don't mention population at all, either global or American (all but one are American). But it won't do much good for them to talk about population control in Africa or Asia or Latin America if they can't even get American citizens and politicians to appreciate the damage population growth does and take action against it.
But we will do something about it, just like we did during the Great Depression. It would just be nice to do it sooner rather than later and stop the rich from spouting their fallacy during good times. But once unemployment hits 20%, all the rhetoric from rich politicians and business people about how we wouldn't survive without the illegals and how we will falter without immigration - will slowly disappear.
FiniteQuantity
I totally agree. We can't allow anyone in public forum to discuss environmental issues without forcing them to face the ugly realities of population pressures.
I attended a speech here in Seattle several months ago by Nobel Peace Prize winner, Wangari Mathai. In the event that you don't remember her, she was founder of the Green Belt Movement in Kenya which is committed to protecting the environment through forest protection and planting trees. I was dismayed that not once in her speech that she mentioned issues of population. With a growth rate of 2.76% (https://www.cia.gov/library/publications/the-world-factbook/geos/ke.html), the population of Kenya is set to double in less than 30 years. It is not being honest with your audience to claim that envirornmental issues can be solved by tree planting with that rate of population growth. Since that time, I've resolved to not let a politician or environmental speaker make a speech or presentation without at least addressing a question on the issues of population.
Jeff, I hear you and am with you 100%. I was incredulous to learn that the Sierra Club, a group dedicated to protecting the environment, particularly the American environment, takes no position on immigration.
And you are right - they have to be forced to face reality. I think deep down they all know its a big problem. But it goes against a few things we hold sacred, like births and religious doctrine. And thus the rationalizations and wishful thinking gets the best of them. And it's not just environmentalists. Most Peak Oilers struggle with the concept as well. I saw a 3 part presentation on You Tube that was at some County Fair in the mid-west. As part of their "solutions" section, they mentioned several things, but population control was not one of them. Apparently Peak Oil is no worse with 400 million Americans than it is with 300.
Even worse is when an "environmentalist" starts using the word sustainable and still can't bring themselves to mention population growth. As an aside, the politician in Eugene, Oregon (and I suspect many other places) have introduced a phrase designed to allow them to continue to take bribes from builders and still maintain their positions - "sustainable growth".
You mean I live on the globe but I don't live in America?
Population growth is a local problem. Population growth is a regional problem. Population growth is a global problem.
When people immigrate to America their fertility goes UP. Keeping people out of America lowers world population growth.
Also, immigration amnesties boost the fertility of illegal immigrants.
Facts are helpful things.
immigration now is like selling tickets for seats on the Titanic after its hit the iceberg.. All aboard.
Heh, Heh,---paints a great mental image--thxs
But the people buying the tickets are getting off of life boats with holes in them. The Mexican government gets over 50% of its revenue from oil sales. China has an economy based on selling goods to us - and we just might decide that exporting all our manufacturing jobs over there wasn't a good idea. Ditto for all the service jobs we sent to India.
The chart below shows my attempt at forecasting global population using a simple logistic fit (ie no national birth rates or death rates are used). Since 1989, the global population growth rate has been decreasing.
Also shown for comparison purposes is world C&C production rate which is indicating a peak plateau of 74 mbd from 2005 to 2008.
(click to enlarge)
This graph looks an awful lot like Figure 3, Panel D p. 252 of "Overshoot" by William R. Catton, Jr.
I like this excerpt from the Overshoot book given by Amazon:
"Today mankind is locked into stealing ravenously from the future. That is what this book is about. It is not a book about famine or hunger. Famine in the modern world must be read as one of several symptoms reflecting a deeper malady in the human condition - namely, diachronic competition, a relationship whereby contemporary well-being is achieved at the expense of our descendents. By our sheer numbers, by the state or our technological development, and by being oblivious to differences between a method that achieved lasting increments of human carrying capacity and one that achieves only temporary supplements, we have made satisfaction of today's aspirations dependent upon massive depravity for posterity."
I am surprised to hear you say the rate only started decreasing in 1989. I had thought that the people that tell me not to worry about world population growth ("it's gonna peak in 2050 with no government intervention required") say that the growth rate has been declining since the 1960's or 1970's.
Why does your oil downslope not look like one half of a "bell curve"? That is, why does its slope start out high and then decrease rather than the opposite?
The forecast from 2008 to 2012 is bottom up based on over 350 projects/regions and indicates production decline rate of just over 3%/yr from 2009 to 2012. The red line is a continuation of that decline rate which gives total production from 2008 to 2100 of just under 0.78 trillion barrels(TB). The green line used Colin Campbell's forecast remaining URR which corresponds to a higher remaining URR of 1.16 TB.
On a more general level, there are too many regions of the world experiencing high production decline rates. Offshore areas of Mexico, USA Gulf of Mexico and the North Sea are declining very fast. The March 11, 2008 IEA Oil Market Report, page 23, stated that mature fields in these areas were declining at greater than 15%/yr.
There are not enough countries which are able to increase production to offset the high offshore declines. Angola is on a plateau. Russia is declining slowly. Saudi Arabia has passed peak. Azerbaijan, Iraq, Nigeria and Brazil are increasing production, but it's not enough.
The chart below is from Colin Campbell's May 2008 newsletter in which he has revised his peak year forward from 2010 to 2007 at 84 mbd total liquids or almost 31 Gb/yr as shown in the chart below.
http://www.aspo-ireland.org/index.cfm/page/newsletter
(click to enlarge)
I suppose if deepwater oil production was ignored in the above graph, then there would be more of a bell curve shape.
For more info, please refer to my Feb 2008 forecast update
http://www.theoildrum.com/node/3623
Thanks Ace this is pretty much my base approach as long as oil was readily available the logistic growth in population drove the growth in oil.
The monkey wrench if you will is is really the growth in the consumer or consumer purchasing power which is not quite the same as population.
So the base drive is a simple population logistic.
On top of this is the modified consumer driven logistic sort of per capita purchasing power.
http://krusekronicle.typepad.com/kruse_kronicle/2008/03/charting-histor....
The large jump in wealth after WWII drove the logistic for oil higher than would be indicated by a pure population. By the 1980's its inline with the slowing population growth.
Sure the pull back in production in the 1980's had above ground factors but the underlying forcing functions
also indicate that nothing was preventing it from happening. So the overall GDP/Population equation in a sense allows a pullback. But you can see that some function of world GDP and population seems to match very well with the oil production.
Basically what happening as we hit everything peak with oil being a big factor we see the wealth equation start taking a nosedive vs the population and the number of oil consumers begins to drop of rapidly.
This is what we call demand destruction. The price of oil or energy in general remains high. In my opinion production for a lot of reasons drops of radically and we have say 1-2 billion or so energy consumers and about 4-5 billion and more that are no longer part of the modern energy society. So you have islands of wealth in a sea of misery. Basically 90% of the wealth in the top 10% and the other 9% in their supporting staff with 1% of the worlds wealth shared by the remaining 4 billion.
http://en.wikipedia.org/wiki/List_of_countries_by_income_equality
I was unable to find cool charts on this focusing if you will of wealth but its a sharped peak Gaussian and it has become the driving force for the worlds economy. Intrestingly it seems it started just spot checking the historical data right on top of the 1989 inflection point in population. So from 1989 forward world wide brazilification has become a driving force and should swamp other functions in the near future. So I expect a swift flip world wide to Brazil like demographics with real energy supplies determined by above ground factors as to the ability to pacify or eliminate the local populations around needed resources as needed.
Finally found a graph I like.
Using the US wealthy as a proxy for the worlds wealthy is not a bad approach.
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
In this case you get almost perfect agreement between population wealth concentration and oil production and gdp.
More here.
http://en.wikipedia.org/wiki/Distribution_of_wealth
A interesting calculation for the US is if you apply a heavy discount on suburbia i.e do a Kunstler style write off. Not saying suburbia disappears but that it moves to Brazilian style rental slums then you can pretty much eliminate all the remaining wealth not in the hands of the top 1%.
It does not have to evaporate over night but a housing bubble now followed by a steady drop will eliminate the viability of loans for homes and lead eventually to the remaining real wealthy able to purchase most of the housing stock and farms for pennies on the dollar and turned into cash flow positive rental units.
For me its fascinating how this concentration game seems to work I'd also assume you have the same dynamics in the stock market at some point for example with it eventually crashing the real wealthy able to buy all the companies for pennies. Basically what seems to happen as as wealth crosses a concentration threshold debt is withdrawn and the money supply reduced to the amount held by the wealthy. Cash becomes god in effect. Then you transition to a pre fiat economic model not sure if its gold backed probably land or asset backed system. Our in our case energy/food/land. So its quite natural to convert quickly to a aristocratic society.
Its a bit interesting that by not taking any action to avert this transition the wealthy that manage to make it through it or arise afterwards are huge winners. A modern example is the collapse of the Soviet Union and rebirth of Russia one can easily see that the winners of this transition are far wealthier than they where previously. Certainly not all the wealthy make it and new players arise during the transition but overall it seems these transitions eventually result in even greater concentration of the remaining wealth generally to higher real levels than before the transition.
ace,
I realize you are just doing a simple logistic fit. But don't you expect population growth (or shrinkage) respond more quickly to the coming decline in oil production?
We are are still in the plateau and already the increases in nitrogen fertilizer prices have been astounding. I am expecting crops to become N limited.
Boone Pickens thinks ethanol is a joke because it is so small at only 5%. Spoken like the big oil man he is. They never miss a chance to put down the competition even if it's only 5 percent.
That 5% may be small overall, but for some areas of the country it's a big deal. I could say that Texas oil and Mesa Petroleum are a joke because their production is so small compared to the total requirements of the U.S.A..
Why do we have to try to eliminate imports in one fell swoop? Can't we take baby steps and hopefully deal with Peak Oil a little bit at a time with many partial solutions?
Peak Oil will be mitigated by little jokes like ethanol and the wind and solar Pickens holds up as a big deal. Wind as a percentage of Iowa electricity production is 5%, the highest in the country. Is that a joke too? Solar? That is a joke for sure, at least at the moment. Are we going to cover the earth with PV panels? I don't think so.
He holds up natural gas as the cure for Peak Oil. No way. The infrastructure is set up for liquid fuel. Are we going to convert large numbers of cars and trucks to natural gas? Where are the natural gas filling stations? Haven't seen one lately.
Ethanol, while it will never be more than a small percentage, is compatible with the current infrastructure. That is important.
Nah...as much I have posted (today) that I don't think NG is a solution.
I think he is talking GTL (gas to liquids) drop in replacement for gasoline.
But...won't happen (IMO). There is a reason we are building LNG ports!
Just because he is part of Big Oil doesn't mean he's not right. EROI of drilled oil at worst right now is about 8-1. After factoring all energy inputs EROI of Corn ethanol is at best 2-1 but more usually 1.2-1, sugar cane is a little better best case 3-1 usually more like 1.5-1. Now add to this water needed and new arable land needed to be brought into production.
Does anyone have a real number on the price per gallon of bio-diesel or 1.3 gallons of ethanol after the tax and production incentives are removed?
Ethanol has to get a lot bigger.
Look the US produces ~250 million tons of GARBAGE a year, denstined for landfills.
70% is paper, yard scraps, food waste and plastic.
Look at Coskata's gasification/ethanol technology;
gasify to carbon monoxide and using 'smart bugs' to create ethanol.
http://www.coskata.com/
175 million tons times 100 gallons per ton=17.5 billion gallons of ethanol--12% of US gasoline consumption.
The Hirsch link was on Yahoo Finance first thing this morning.
Talk about Mainstream exposure!
I'm with Darwinian on this one.
It was just about all I could think about today.
Thanks Super G for giving it its due.
More mainstream exposure - here's Dr.Hirsch's Keynote Speech at the 2008 Alternate Fuels and Vehicles Conference in Las Vegas:
http://video.google.com/videoplay?docid=5073156043556583807&q=Robert+Hir...
Very interesting!
Ere we go (again)... But I don’t think they have worked out the underlying cause yet....
http://www.dailymail.co.uk/news/article-1020821/Warnings-new-fuel-protes...
Warnings of new fuel protests as motorists struggle with fastest rise in diesel prices for a decade
By Ray Massey
Last updated at 2:20 AM on 21st May 2008
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Rising prices: The price of diesel has increased dramatically over the last five years
Motorists are struggling with the fastest rises in diesel prices for a decade as the fuel crisis worsens.
With oil soaring in a trading frenzy to a new high of nearly $130 a barrel last night, the stock market fell and Chancellor Alistair Darling pledged international action to beg oil producers to release more supplies.
Diesel is rising even faster than petrol and an increase to an average of 125.4p a litre - or £5.70 a gallon - is crippling motorists and hauliers, with yet more rises to come, the AA reveals today.
A new round of fuel protests is due to start in London next week as critics demand that the Chancellor slash duty. Motoring groups fear the £6 gallon is weeks away as industry experts predict oil will top $150 a barrel.
Yesterday the world's biggest oil producer Saudi Arabia was celebrating 75 years of its national oil company but showed no signs of releasing more supplies despite a request from President Bush.
Saudi oil minister Ali al-Naimi stated the 'kingdom's view that the currently produced quantities meet market needs and that the production capacity can meet any additional energy needs.'
City experts said the high oil price was being driven by speculators who, having had a role in the mortgage crisis, have now become active in the oil and gas market.
Some 45 per cent of new car sales are diesels. They have grown in popularity because of their traditionally better fuel economy - until the mid-1990s diesel was cheaper than petrol - and now lower CO2 emissions which mean lower road tax.
But the widening gap as diesel becomes ever more expensive means those benefits are being wiped out.
Since early last week, the price of petrol has risen 1.73p a litre while diesel has gone up 2.66p.
The average pump price of petrol has risen 4.49p a litre in the last month, to 112.55p a litre in the middle of this month. Even in the few days since those sums were calculated, it has risen to 113.34p.
Motorists in many areas are paying far in excess of the average price. The price-comparison website PetrolPrices.com said some motorists are paying 137p a litre for diesel and 124.9p for unleaded.
Low-paid but essential car users - such as community workers and district nurses - are out of pocket because Government-approved mileage allowances of 40p a mile for the first 10,000 miles and 25p thereafter are failing to keep pace. If employers do pay more, the employees are taxed.
At the CBI annual dinner last night, Chancellor Alistair Darling spelled out how the West would have to go cap in hand to the Arab-dominated oil cartel OPEC.
But diesel tax is 50.5p litre fixed and VAT on fuel is variable :
125p litre = 19p VAT and 50.5p duty = 69.5p total or 55% taxation in total.
Assuming people don't want to pay extra tax to substitute out fuel duty then at most the goverment could cap VAT to 90p litre to maintain 2003 tax takes ?
In reality people are a) greedy and b) stupid so will clog themselves up and panic whilst demanding someone else's taxes rise.