American Freedom from Oil: A Bipartisan Pipedream

The following guest essay is by Kevin Kane. Kevin is a market analyst, economist, Asia political affairs strategist, and Korean language linguist living in Seoul, South Korea.

American Freedom from Oil: A Bipartisan Pipedream

By Kevin Kane

During election campaigns, presidential candidates, policy leaders, and pundits pander to both American fears and desires when they demand that the U.S. should pursue “energy independence” by eliminating oil imports. This has been a rallying cry of every President since the 1970s when American domestic production began a steady decline that continues through today.

Is energy independence a realistic policy, or as we are a part of one globally integrated economy, do we need a more relevant global energy strategy that captures the inherent economic and financial vulnerabilities associated with our age of irreversible interdependence?

Perhaps we need to look outside our domestic tunnel vision and broaden our perspectives on energy security. Seeing the bigger globalization picture will require leaders, starting with President Obama, to refocus the world’s perspective on energy from the zero-sum national to positive-sum international level. Essentially, the world needs a global energy strategy.

Global Energy Security

If leaders are serious about energy independence, they will ask the more appropriate energy question, “How can we create global energy security?”

When asking this more relevant question, we can derive many proposals, beginning, but not limited to, the following three general approaches:

(1) First, recognizing that global economic integration creates mutual energy insecurity, President Obama could propose addressing the topic through the G20, and call for the creation of a global energy security committee tasked to draft a global energy strategy proposal.

(2) Second, this global energy strategy should focus on building cooperation, creating transparency, eliminating barriers to foreign energy investment, eliminating energy trade-related tariffs, advancing liberalization, coordinating R&D, facilitating technology sharing, and managing mutual energy insecurity.

(3) Third and finally, we have to cease “framing” energy security as a national goal, and rephrase our terminology to reflect our mutual international energy insecurity.

Our Oil Interdependence

American leaders, and the proposals of many environmental, renewable energy, and oil company lobbyists, individually or collectively, are incapable of “freeing the U.S. from foreign oil.” While the U.S. may benefit from reducing oil imports and increasing investments in offshore drilling, energy efficiency, and oil substitute technology, we must recognize that these efforts do nothing to free the American economy from oil’s transnational social, economic, and financial linkages.

If one globalization-connected country’s economy were to experience a supply shortage or an industry-crippling price shock, seemingly distant and unrelated, but economically integrated, countries will feel the effects of these shocks in their own trade and financial sectors. Thus, in an era of globalization, nations connected to the global economy are mutually vulnerable to the effects of oil price and supply shocks regardless of their independent national energy strategies.

Consider how America’s subprime mortgage crisis rippled through seemingly unrelated economies across the entire globe, from South Korea to Russia. We should expect the same economic-linkages to spread the effects of an oil supply or price shock to seemingly energy-independent economies.

American policy leaders need to recognize that eliminating oil imports will not create energy independence.

Leader of the Energy World

As the tip of the globalization spear, American leaders need to think much bigger about how the U.S. will achieve energy security in a world where one nation’s energy insecurity is another seemingly unrelated nation’s economic vulnerability. American leaders have to recognize that the U.S. is only as energy secure as the world’s least energy-secure globalization-connected economy, which includes nearly every developed and developing country in the world. Americans pride themselves on being the leaders of the free world. Perhaps it is about time to lead the world towards universal energy security.


Kevin Kane is a market analyst, economist, Asia political affairs strategist, and Korean language linguist living in Seoul, South Korea. Kevin holds a BA in political science from Georgia State University and a Master of International Studies with a concentration in international trade and economics from Seoul National University.

Kevin has seven years of military experience serving in Asia and the U.S. as a leader in project management and government affairs, two years of intensive academic study in energy economics and the oil and gas industry, and three years of cumulative internship, fellowship, and consultant experience working alongside Asia policy strategists and fortune 100 business advisors.

Actually, if WT's Export Land Model is correct (and I believe that it pretty much is), then it won't be all that long - maybe a decade or slightly longer - before the US IS "energy independent", regardless of what the power elites want or do, because there will be no more oil available for import.

We don't need to worry about how to make it happen, we really need to worry about how we will cope when it does happen.

I think this is an astute view. I believe similarly about climate change and the national debt -- soon enough events will conspire to balance the equation.

We're a nation built on leverage -- oil leverages the distant past, capitalism leverages the resources of distant lands, and debt leverages the future. Unfortunately, we're set to de-leverage on all fronts.

We're a nation built on leverage -- oil leverages the distant past, capitalism leverages the resources of distant lands, and debt leverages the future.

That sums it up quite well. And our brain scaffolding evolved forward and upward vis-a-vis lower animals able to comprehend, design, and implement....leverage!!

Thank you for your comments.

Thanks, Paleocon, for this tidy summing up of our leveraged situation.

Which leads to the question: how to cope with the inevitable end of oil imports?

The US will still have at least a few mbpd of its own oil for many decades to come, and we will still get a trickle from Canada for quite a while as well, so what we are actually looking at is getting by with maybe 25-33% of what we are using now.

Most people imediately leap to biofuels. They will have a place in the future, but there is no way that we are going to be able to replace that 66 - 75% of present oil consumption with biofuels; even if we all starve, we can't do it. That doesn't mean we must have zero biofuels, though. I am inclined to think that we will definitely need to produce a substantial amount of biodiesel to assure that essential public service, agricultural, transportation, and military equipment can continue to move. We can probably produce at least 1-2 mbpd oil equivalent of biodiesel without starving anyone, especially if we change agricultural subsidy and food stamp policies so that non-grass-fed meat is discouraged instead of encouraged, and people are encouraged to eat most of their food farther down the food chain. Maybe we could even get up to as much as 3-4 mbpd of biodiesel, but I really doubt that we will be able to do much more than that. I am far more sceptical about ethanol, especially corn-based ethanol. With GCC, it might become feasible to raise sugar cane on an increasing range of land along the gulf coast, and the EROI for ethanol from sugar cane is considerably better than it is for corn. I doubt that we'll be able to produce much more than 1-2 mbpd of ethanol at most.

Add in a few NGLs, and we may be looking at having to get along with something like 6 - 8 mbpd of "all liquids", which is around 30-40% of what we use now.

Need I say that this means no more BAU, especially in the transportation sector? Obviously, very major and sweeping transformations are going to have to take place in how the US operates, and these changes are going to have to take place very quickly.

First, the liquid-fuel-powered ICE automobile will not be entirely going away, but there will be fewer people who can afford to own and operate them, those who do have them will be driving them much less often and for much shorter trips, there will be more people sharing rides, and the few new cars that are bought will be much smaller and more energy efficient. This is all going to have to happen very fast. A lot of people are going to be stuck at home, or having to live away from home closer to their workplaces during the week, or having to carpool or take public transportation. They are not going to be at all happy about this sudden change in circumstances.

When I say "public transportation", that does not mean that a complete electrified intra- and inter-city passenger rail system is going to spring up overnight. No, when the full extent of the crisis that will be bearing down upon us becomes evident, then that will be when the power elites START building it. No, strike that - that is when they will start PLANNING to build it. No, that is still to optimistic - that is when they will start TALKING about planning to build it. The American people are going to have to put up with DECADES of inadequate public transportation. Some, maybe many, places will never get anything close to what they need. The immediate response is going to have to be to put more buses into service: coaches for inter-city routes, large urban buses for express and cross-town routes, and smaller shuttle buses for local routes. Bus manufacturing may be the one sector of the transportation equipment industry that may do well over the next couple of decades. Bicycle makers will do well, too, as will the makers of walking shoes.

What about all those EV's that are supposed to be on the way? There will be some, but I suspect that the cost for anything with a very long range and highway cruising speed will always be too high for most people. I also doubt that the recharging infrastructure will ever develop to the extent necessary to really make these viable as a long-distance transport option. NEVs, on the other hand, are likely to become much more common over the next two decades. For many people, transport will become multi-modal: walk to nearby destinations, take the bike in good weather or the NEV in bad weather or when you've got a lot of groceries to haul or the trip is a little too far to walk or bike, hop on a local shuttle bus or intra-city bus (or a street car or light rail system if you are lucky enough to have it) for trips around town, take the coach or inter-city train for trips to cities up to a few hundred miles away, and maybe fly to cross-continental or intercontinental destinations (very expensive, and thus very infrequent).

As we have discussed here extensively, the pattern of human settlement in the US is going to have to change considerably. The transformation will require many decades to complete, but it is probably already starting now. Cities, towns, and suburbs fortunate to be located along passenger rail transport corridors will all become more densely populated, and housing patterns will shift so that there is less heated space occupied per person. Suburbs and exurbs that are far removed from rail transport corridors are going to depopulate, wither and die. Many urban neighborhoods will go through the drastic depopulation like we are seeing in Detroit and Flint right now until cities have completed their reconfiguration into denser and more transport-efficient settlements.

I also expect to see oil heat quickly become history. There will probably be a crash program to help get the last few holdouts off of oil and on to something else.

These are just some of the transformations that will be happening. Count on it.

I've shared your views for a long time. I would imagine that the relationship between oil consumed and actual standard of living is very logarithmic i.e. a 50% reduction in oil use only corresponds to a, say, 10% drop in living standards. I could pretty well drop my fuel use by 50% (if I had to) without being materially less happy than I am now. Perhaps that is a function of peak oil awareness though, and that most of the population aren't so lucky?

What are your views on Biodiesel from algae - which can be implemented on non-arable land therefore not reducing the food supply? It is resource intensive with low EROEI, but if it can shift the needle a bit then every little helps.

I'm reserving judgment on algae-derived biodiesel. I have no doubt that it might eventually become technically feasible. Of course, oil from oil shale might eventually become technically feasible, too. It isn't technology that is the limiting factor for either of them. The real limiting factor is the fact that both of these - and a great many other potential alternatives as well - are so damn capital-intensive. We need to be concerned about EROI, but we also need to be concerned about plain old ROI as well. There are not going to be unlimited funds available for capital investment. In fact, if things unfold as I am predicting they will, capital funds are going to be extremely constrained. We simply are not going to be able to do everything that might be theoretically possible to do. We are going to have to pick and choose our projects carefully, and a lot of promising-sounding "solutions" that are being touted today are going to end up being unfunded because the financial numbers just were not good enough for them to make the cut.

I am pretty confident that we can grow enough oilseeds to produce at least a couple mbpd of biodiesel, no matter what; I am much less confident above and beyond that.

WRT your comments in your first paragraph:

Yes, there is not necessarilly a 1:1 correspondence between oil consumption and per capita GDP. A big part of that is because there is a stronger correlation between all energy consumption per capita and GDP per capita, and oil only accounts for about 1/4 of our total energy supply and consumption. The other energy sources will eventually decline too (except for renewables, which had better increase), but over a longer time frame.

However, my comments in my other post WRT capital funding very much apply here. The economic pie may not shrink all that much, but the slice of the pie going to pay for oil, and the slice of the pie going to fund capital investments for energy exploration and development, renewables, transportation, and reconfiguration of the built environment, are going to expand considerably. While the statistics might say that your per capita GDP is not much lower, the amount of purchasing power you will actually have in your pocket for everything else will be considerably less.

Singo, a 50% drop in personal oil use might not translate to a 50% drop in standard of living. But the drop is EVERYWHERE. Thus there is a 50% drop not only in gasoline and home heating but also industrial production, food production etc. A 50% drop in fuel for industry crashes whatever is left of our economy. A 50% reduction in fuel for agriculture is a disaster in the first world countries. It wouldn't have to hurt so bad if we still had the infrastructure for a world with 50% less fuel. But we replaced that infrastructure. In order to build new infrastructure - ie public transport for all, re-localization of farming etc guess what you need - aha energy. Since we didn't do this in the past as oil declines in order to restructure the society we have to pull out fuel for that task in a world where fuel is declining. Being the creatures that we are we will likely try to restructure just a tad down the slope which leaves us with the endless task of restructuring down over and over. Decline is relentless - it doesn't stop at some % and then hold steady.

The Hirsch report said we needed 20 years to work seriously on dealing with this BEFORE PEAK. Guess what we don't have 20 years anymore.

Singo -- Not so sure about your numbers. If a 50% drop in oil consumption leads to you're losing your job and being unable to find another one I would say your drop in living standards would greatly exceed 10%. 10 or 15 years when the alternative/green industries ramp up you might get one of those jobs. Might be a little tight till then though.

I tell everyone the same thing..........that we "pay" an extra 50% in energy use to get an extra 10% in quality of life.
I have actually cut my energy use by more than 50% and I don't feel deprived at all.
Just planning trips was a huge reduction.
The other thing that made a large difference was setting thermostats using ceiling fans and closing off vents to rooms that are not used frequently and wearing long underwear and fleece pullovers indoors.
Americans could easily cut energy use by 50%.I know I have done it.

The trouble is, that's the low hanging fruit. There is a law of diminishing returns at work here. First unit of "sacrifice" or "pain" yields a big efficiency boost. Each additional unit yields smaller and smaller gains. Pretty soon, the cutbacks really do start to hurt.

I understand but we haven't even tried yet.
Europe is an example of what can be done immediately.
Spoiled Americans won't change though.

Sure we've tried porge...and succeeded. Haven't you read about the drop in US energy consumption the last 18 months? Hasn't even caused any lifestyle change for me. But, then again, I'm not one of the 17% un(under) employed out there. Some economic pain is expected. Just grateful I'm not the one paying it.

we can't 'do' europe immediately

a)we are bigger people
b)our geography is more dispersed (requiring either moving it closer, or more transportation)
c) I would argue (as do some neuroscientists - see American Mania) that there is a genetic as well as cultural bias for novelty seeking/stimulation etc. These and other attributes make it difficult to just put our daily activities in reverse

I mean these things not as individuals but as a nation/culture...and I'm not suggesting it isn't possible to powerdown, but it will have to be in self interest or interesting to take hold..

Interesting you bring up a gene suite for the American lifestyle.
I have always thought that there was a "genetic makeup" that defined the typical immigrant to the US.
Most people think of genes in terms of hair texture and skin color but the selfish/aggressive/independent behavior embedded in American culture has to be a readily exploitable predisposition.
I am sure you could point me to some literature that exists on the topic.

we can't 'do' europe immediately

a)we are bigger people

Aaahh... Americans are not nearly as big as the Dutch. The Dutch are the biggest people in the world. The average height for men in the Netherlands is 6 feet 1 inch. Scandinavians are also bigger than Americans.

We are still bigger. You forgot to multiply height by width.

In so far as a tendency to consume energy is a heritable trait, it is subject to Darwin's natural selection. We will change to better fit the changed environment, as all living things have done for a rather long time. Or, as has also happened, we will, perhaps, go extinct. But I rather doubt extinction for such an adaptable animal that has already demonstrated an ability to colonize very diverse niches.

Perhaps, larger body size is actually adaptive for reduced energy consumption by a population. Perhaps smaller. I can't make a plausible
argument either way.

Based on observables a higher body density and a larger mass have been selected for colder climates but that has probably got more to do with heat retention than anything else.
Humans also probably had to be pretty clever to survive in the harsher Northern climes.
Our cerebrum has eclipsed all other considerations by an order of magnitude with the exception of disease resistance.
Smarts will trump everything in the next evolutionary bottle neck.

The more I run this stuff through my head the more I believe that George Mobus is correct.

Smarts will trump everything in the next evolutionary bottle neck.

I bet physical fitness, skill with weaponry, hoarded wealth/commodities, political connections, instincts and survival skills will be every bit as important --if not more so-- than "smarts" in any evolutionary bottleneck. And the relative value of "smarts" all depends on how you choose to define it. And let's not forget about the role of plain old dumb luck.

I agree that since most Americans are extravagantly wasteful with energy, it wouldn't be too difficult to cut energy use in half just with easy behavior changes and using simple technologies that aren't all that costly. (Insulation, ceiling fans, awnings, long underwear, powerstrips to combat vampire loads, unplug needless gadgets, ultra low-flow showerheads, LEDs, chimney balloons, weatherstripping, programmable thermostats, clotheslines, unplugging second refrigerators, carpools, bicycles for short trips, being more judicious about leisure travel, no more energy intensive toys like jetskis, etc.) We have cut our energy use in half, too, without much trouble.

Cutting energy use in half again is also possible with some investment (both personal and public)--solar hot water, solar PV, public transit, electric bicycles, double-paned windows, frontload washers, heat pumps, energy efficient refrigerators,choosing to live closer to work, better mileage cars, choosing to live in walkable communities, communities making it easier to get around by walking and biking than by car, etc.

Cutting energy use in half the third time--that will be more of a challenge. But let's reduce our energy usage by 75% in the ways we know will work and then worry about that last 25%.

That is great list. I have unplugged a second refrig and any not needed gadgets. The power strip is a great idea and even a master switch would be better. Also use battery clocks and turn off the clock features in appliances (minimal, I know but it is something).
Work out and play sports instead of riding toys etc.
Just bought a front load washer which cost more but it is well worth the "investment".
Have double panes and added insulation last year in the attic.
Now I have to xirascape the yard and quit watering.
I agree it can be done easily and then reallocate the energy to necessary uses like food etc.
If nothing else it buys a lot of time.

After you do your personal cuts, now count the cuts in all the other areas that use energy to supply your needs. Cut 50% from your water utility for pumping and cleaning your water and sewage then add that to your monthly bill of necessaries to pay for. Cut 50% from agriculture and then add the added cost of food to your monthly bill of necessaries to pay for. Cut 50% from your local hospital and see if you still can get the same services. Cut 50% from your police force gas bill and see if crime goes up. Cut 50% of the fuel for electrical repair vehicle and see if power outages last longer. Cut 50% from the fuel for highway repair and see what the roads look like. Or try to change over to solar and wind and cut more than 50% so you can have the fuel for the upfront costs of a major reworking of our infrastructure.

Fuel is in everything we use not just our gas tank and our heat and electric bills. It is embodied in every item in your house and your house itself. Every repair to your house is going to cost more. It is embodied in every bit of food you eat.

trickle up effect.
eat down the food chain.
Healthier from physical fitness and better diet puts less strain on health services.
Hell if the government actually cared about peoples health they would hand out free gym memberships for preventive measures.
less driving less road wear.

can only do what one person can do.

The lose of jobs could be approached by going to 25 hour work weeks and spreading it around(this could also lessen crime).
Have the employer make sure the workers are scheduled to all come from the same section of town on the same shifts to facilitate carpooling etc.
And the services need to be looked at for more efficient operation anyway.
I was at my kids pee wee football game and the idiots sent 3 emergency vehicles because a kid broke an arm!!! They just wanted to speed around and blast the sirens. What a colossal waste.(and one was a full sized fire truck!).

I agree that since most Americans are extravagantly wasteful with energy, it wouldn't be too difficult to cut energy use in half just with easy behavior changes and using simple technologies that aren't all that costly. (Insulation, ceiling fans, awnings, long underwear, powerstrips to combat vampire loads, unplug needless gadgets, ultra low-flow showerheads, LEDs, chimney balloons, weatherstripping, programmable thermostats, clotheslines, unplugging second refrigerators, carpools, bicycles for short trips, being more judicious about leisure travel, no more energy intensive toys like jetskis, etc.) We have cut our energy use in half, too, without much trouble.

I agree that there is some fat left to be shed in regards to cutting energy use etc. However, poverty is not a historical novelty; we have always had poor people living on a dime even in best economic times. Why then didn’t they insulate their houses, change their food diets, wear long underwear, and so on? Only few extravagant ones were riding bicycles, cooking their own meal, moving in with relatives. For 17 years that I’ve been living in Canada I’ve been witnessing people struggling with poverty and yet not doing these practical and reasonable things to ease their lot. Why do we expect people all of the sudden changing the patterns of their behaviour? I am afraid many people will just perish not realizing that they can change their lives and adjust to new realities.

However, poverty is not a historical novelty; we have always had poor people living on a dime even in best economic times. Why then didn’t they insulate their houses, change their food diets, wear long underwear, and so on?

Because there's a high correlation between poverty and ignorance?

Hi Taomom,

As I've commented before: you have a great list of solutions for reducing personal energy use. I have no doubt that your suggestions could have enormous positive impact IF a critical mass of people actually implemented them.

However, I see little evidence that any significant number of people will voluntarily adopt these practices. I encounter very few people who actually recognize that there is a "probem". Nate's essay a few days ago demonstrated how difficult it is for people to recognize this type of problem.

It seems pretty unlikely that there will be any mass movement to adopt your (excellent) suggestions until far more people buy into the idea that we really need to change our collective lifestyle here in the good old USA.

Those few people who do adopt your suggestions may feel a personal sense of satisfaction - but, I doubt it will actually impact the course of history. I submit that the most important thing we can do is to become politically active and support any organization or movement that attempts to educate the public on PO, GW, population overshoot, environmental destruction, etc. We need laws that will enforce good behavior and the only good laws are those that have the overwhelming support of the people being governed - therefore, education and persuasion are the key elements in this mix. However, it may well be too late considering the nature of US politics.

Good point about multi-modal. This is hardest to do in suburbs with cul-de-sacs that require long, roundabout paths to even destinations that are close as the crow flies.

What do you think about conversion of the long-distance trucking fleet to natural gas. Couldn't that represent a significant wedge in reducing oil use?

As important as I think PO is, in America it could easily be a non-event for quite a while, given the huge amount that is wasted.


1) all current single-passenger commuters car pool to four or five,

2) people start walking and biking and taking public transport to all destinations where this is reasonable,

3) we ban inefficient clunkers and raise CAFE standards considerably,

4) and if the long distance fleet goes through a crash program of converting to natural gas,

we will be pretty close to getting by on what we can produce here for a good long while. Of course, this would all be even remotely possible if all the elites and most of the people suddenly come to fully understand the depth of our situation, and it the Rep's and Dem's have a kumbaya moment, set aside their differences, and decide to actually work in the nations best interests. So--nevagonnahappen.

I'm not as interested in bio-fuels, except perhaps some bio-diesel for use on the farm. As you mention, NEV/plug ins can be a part of the mix, but we can get pretty far even without these.

What do you think about conversion of the long-distance trucking fleet to natural gas. Couldn't that represent a significant wedge in reducing oil use?

I think that almost everything presently going long-distance by truck is eventually going to go by train (or to a minor extent, by boat or barge). This trend is already underway to a much greater extent than many people realize. The trend will accelerate as motor fuel prices increase and highway maintenance budgets decrease. Trucks will only be used to haul things locally to/from train depots.


1) all current single-passenger commuters car pool to four or five,

2) people start walking and biking and taking public transport to all destinations where this is reasonable,

3) we ban inefficient clunkers and raise CAFE standards considerably,

4) and if the long distance fleet goes through a crash program of converting to natural gas,

I do think that there will be a lot of car pooling. However, it is a lot harder to implement than some people appreciate. Getting together people who live not-too-far apart from each other and who work not-too-far apart from each other, and who have compatable work schedules (and never need to stay at work late or leave early) - that ain't at all easy! It is difficult enough that quite a few will find it less of a challenge to just get to the nearest mass transit node. Of course, car pooling will be of very little help for all of those local trips, where people's destinations and schedules are all over the place.

I think that a lot of the public transportation increased usage will come from an expansion of the "park & ride" concept. Many people will be able to walk or bike to these as more routes are added and more nodes built in. Many more will find that these are within NEV range, making the NEV/mass transit combo a feasible alternative to driving a conventional car to work. There will also be an increase in local shuttle bus loops that people can catch and take to the nearest mass transit node. This is what I mean by multi-modal.

I don't think we need to ban clunkers. Higher fuel prices and the possibility of rationing being imposed will take care of those. Nor am I a big fan of the CAFE standards; it could be argued that they have actually done more harm than good. If the FedGov wants to really help drive the market toward more fuel efficient cars, then it first needs to impose stringent fuel-efficiency standards for its own fleet purchases, and to make compliance with those same standards a requirement for all vehicles purchased even in part with federal grant money by state and local governments. Assure the auto makers a large market demand for fuel-efficient cars, and they will build them.

Of course, this would all be even remotely possible if all the elites and most of the people suddenly come to fully understand the depth of our situation, and it the Rep's and Dem's have a kumbaya moment, set aside their differences, and decide to actually work in the nations best interests. So--nevagonnahappen.

I'm not looking for that kumbya moment - you are right, nevagonnahappen. I suspect that the FedGov is pretty much just going to have to shrink due to lack of funding (as the national economy declines), and thus become increasingly irrelevant, leaving it to the states, localities, businesses, and individuals to do the coping and adjusting.

This comment I posted in the Dec 15 DB in response to a comment on the National Research Council study, released on Monday, has some thoughts about fuel economy.

On the other hand while the best mpg US car buyers can hope to get for non hybrids is 33city/41highway, European buyers can choose from the 10 Diesel Cars With The Best Fuel Economy (MPG) ranging from 54 to 70 mpg (EU combined driving cycle) and that's just the top ten! A couple things about this list are that there are improvements like this for the 2010 model year and positions 2 and 9 are held by Fords. So, if the average US commuter could wrap their head around using a much smaller, much less powerful car for their commute, there is a lot that could happen in the US without needing to use hybrids or electric cars. An interesting look at that angle is taken in a Ferbruary 2007 article on MSNBC titled "U.S. ‘stuck in reverse’ on fuel economy"

Alan from the islands

You make a point that I have believed for a decade now: The best thing the Gov't could do for fuel efficiency is to issue RFP's for its fleets that required responders to meet fuel reqs, either high-mileage or alt-fuel.

There is no reason that the postal service jeeps could not be CNG hybrids, or EVs. Postal semis could be state-of-the-art too (rail is still too slow for first-class right now). Work vehicles of every sort could be smaller or hybrids, and work trucks could by diesel hybrids as well.

Even school buses would be perfect PHEV candidates (two routes per day, with re-charge in between) if they weren't built so cheaply and disposable. Police cars would be good "strong hybrid" candidates too.

Given any decent-scope RFP the gov't would stimulate innovation and promote battery technology via end-user demand. Add some US-sourcing requirements and you'd have all the US-vendor political support you could handle.

Even better, the used vehicles would trickle down to the "clunker" market. You see plenty of gov't trucks, cars, and police vehicles on the road with the doors re-painted to cover the dept badges.


Many more will find that these are within NEV range, making the NEV/mass transit combo a feasible alternative to driving a conventional car to work. There will also be an increase in local shuttle bus loops that people can catch and take to the nearest mass transit node. This is what I mean by multi-modal.

If the general public actually realized the FF problems we are facing, there are perfectly sensible solutions that could be implemented very quickly. We could mandate that all motor vehicles operating on public roads be equipped with governors that limited speeds to 35 or 40 mph and allow NEV and HPV to go anywhere in the USA without fear of being killed by an 80 mph SUV. We could convert one side of all express ways to mass transit. We could do lots of stuff like this - but, I see almost no way that any of these solutions are going to be implemented because very few people buy into the idea that there is a problem.

I know that you envision a kind of natural transition into a powerdown mode - I can only hope you are right, but it is hard to be optimistic about this given the current opposition we see to things like measures to abate CC.

I suspect that initiatives along your suggested lines are more likely to be implemented by states and localities on a piecemeal basis rather than through any sort of federal mandate. I have no confidence that anything very good or constructive will come out of Washington; I have come to the conclusion that the US FedGov is constitutionally dysfunctional and cannot and will not be fixed. Instead, as the country continues its economic decline, Washington is going to increasingly be de-funded, states and localities will turn their backs on it in disgust, and Washington will become increasingly impotent and ignored.

I actually see this phenomenon as reason for hopefulness. If we had an all-powerful central government that actually knew what it wanted to do and always did it, then there would be a very high risk that it would stubbornly do all the wrong things right up to the catastrophic end, and effectively block regional and local efforts to pursue better alternatives.

The FedGov is already moving to block regional and local efforts to control illegal immigration, despite the laws on the books against it.  If initiatives threaten the interests of strong lobbies, Washington will throw sand in the gears.

Yes, exactly. Which is exactly why we should all earnestly want to see it shrink into irrelevancy as quickly as possible. As I said, de-funding should accomplish most of this.

I've been emailing back and forth with a DOT employee here on almost exactly this topic. I may not hit all your points dohboi, but a serious retooling of land use and transportation would definitely have to happen. (I've edited some names for)

I can believe that people (MPAs or otherwise) would find the $10 figure ridiculously high, mostly because we've never experienced it. It would be something of a black swan, both because its totally outside the realm of collective experience (even it Europe, gas is closer to $8/gallon), and because the implications are, frankly, a little frightening. Consider the effect such high oil prices would have on the transportation of goods alone (never mind the cost of resource extraction, processing, workers getting to factories, etc...). The summer of '08 would seem like a dress rehearsal.

I wonder why transit didn't see a greater bump in ridership? (5% nationwide, according to my colleague) If I read my history correctly, during the 1970s oil shocks, people carpooled, rationed gas and in some places the gov't enforced odd/even license plate driving days. None of those measures were even on the table in '08. But a gas tax holiday was... You're probably right that there is little stomach for sustained Euro-style gas taxes.

As far as market forces, economists frequently ramble on about higher prices=extraction from marginal/expensive sources. But it takes a long time (several years) to bring those sources online, and often they don't produce as much as promised. I have nothing against economics, but I wonder (assuming high oil prices didn't cause recession here) if people would find themselves willing to make different land use choices in the long run? You mentioned five years as a probable 'tipping time' under a high oil price regime, and that seems reasonable. As you pointed out in class, many people move every seven to ten years, so high transportation costs would probably speed that process.

I'm not saying all our cities would look like NYC, but I can imagine lots of middle class people moving to the older parts of cities (at least on the East Coast) which are close to transit lines/work/supermarkets. Under such conditions I think most poor people would be priced out of compact center cites and be relegated to the suburbs (imagine that, people wanting to live in Wilmington, but not off of Kirkwood Highway!)

Last year during my Land Use/Transportation linkages class, (name deleted) spoke to our class about transportation planning issues. I got the impression that the potential for high oil prices wasn't really on his radar. He seemed to put a lot of stock in EVs and possibly hydrogen cars, but I have my doubts about the scalability of both technologies. Are we really going to convert 230 million cars from ICE to electric or hydrogen? Where will the electricity come from to make the hydrogen? Where will the rare-earth metals come from to make all those batteries? Maybe we can convert some of our vehicle fleet to CNG, but that seems likely both to push up the price of natural gas and misuse an incredibly valuable resource (i know that last bit is a value judgment, but I'm making it...)

I've rambled enough for now. I think this issue is very interesting, and has huge implications for the transportation sector in particular, and the country as a whole. Given the talk about carbon pricing, the economic growth of China and India, and the declining size of new oil discovery vs depletion rates of old fields, $300/barrel oil seems like a very real possibility within the next decade, and one for which there has been no preparation, or even discussion.

I wonder why transit didn't see a greater bump in ridership? (5% nationwide, according to my colleague)

Transit's full during rush hour already. They don't have enough spare capacity to add much more than that.

Not only is a lot of transit full during rush hour, but most of it is glacially slow. Even at $4/gallon fuel is typically only one-third or one-fourth of a person's overall outlay for driving. It's going to take more than that to outweigh the enormous time cost of using transit in most places in the USA that even have it.

The US will still have at least a few mbpd of its own oil for many decades to come, and we will still get a trickle from Canada for quite a while as well, so what we are actually looking at is getting by with maybe 25-33% of what we are using now.

Maybe, but that probably presumes an almost total discontinuation of the global oil trade. Will that happen? Perhaps, but the question leads to a number of considerations...

What if trade did not stop? What if oil was simply available to whoever still had the wealth to pay for it in money, gold, guns, food, etc.? In this event, there is no guarantee that the US citizenry would actually get to use oil produced in the US. Somebody else might pay more. Or, since we have guns and food, perhaps we would be able to get additional oil. Not clear.

If trade does stop, they you have some potentially nasty implications. For starters, a number of nuclear-armed nations that are totally dependent on oil imports to support their current population base (at any standard of living). That could go badly in a hurry. Of course, the previous scenario could also go badly if some of these same import-dependent nations do not appreciate (or are unable to participate in) the "free-market" distribution of resources.

So, I'm not sure that there is any meaningful amount of oil that we can count on having access to once we become "energy independent". Perhaps we will have 25%. Perhaps more. Perhaps much less. If things go very badly, the question of access to oil may be moot.

The question of how remaining resources can be globally allocated peacefully is a huge problem. And solving that problem without having very bad things happen is not, in my opinion, a given (okay, possibly a mild understatement ;-). I think that Kevin Kane's idea of trying to move thinking towards a "global energy security" mindset is a thought in the right direction, but perhaps not for the same reasons. In a world of nasty weapons and declining resources, long term national security and global security are basically dependent on global cooperation in agreeing to a system for the peaceful distribution of those remaining resources. While possible, there isn't much demonstrable evidence that we (as a country or a species) are at a point where we can truly work and play well with others at that scale. Please note that I am certainly not wishing, advocating, or predicting that bad things will happen. On the contrary, I dearly hope that sanity prevails and that we (globally) can get our collective s**t in order before anything or everything goes south on us. I'm just a tad concerned given the current state of global politics, relations, etc. Just thought I should mention that... don't want to be taken for a complete doomer. ;-)

What's the saying?... Be careful what you wish for, you just might get it.

Energy independence... coming to a nation near you... sooner than you might like...


Three words: Oil Depletion Protocol. I remember seeing Colin Campbell talking about this in one of the videos I have watched.

Alan from the islands

I don't really worry about the possibility of large scale nuclear exchanges (beyond the odd couple of nukes exchanged between Pakistan and India, maybe), because such would end up being the equivalent of the "Game Over" message blinking on the screen. Maybe human life would go on to some, largely meaningless, extent, but probably not mine, not for very long anyway. I don't worry about asteroid strikes, either, for much the same reason.

It would not surpise me at all if one or more nations were stupid enough to attempt to obtain their oil by military means should normal market transactions leave them empty. I say "stupid", because given the fact that oil infrastructure is terribly fragile, such applications of military force only have one inevitable outcome - damaging the resource and thus making it unavailable to everyone. I guess if "beggar thy neighbor" is one's actual goal, that might make some sense, but otherwise, no. I see no reason to see military adventures as a potential salvation to the impending oil shortfall that the US faces.

Might the US sell its oil rather than retaining it for domestic use? I doubt that would happen. It is more likely that the military would insist that we conserve what little we have left for future military use. I do think it is more likely that the US will ramp up coal exports. We will need to sell something to pay for whatever we still import once the dollar becomes toilet paper, and there are not many things left that we can sell in quantity; coal is one of the few things on the list.

To be honest, the one game-changing "black swan" that really does worry me is a military coup d'etat in the US. Right now, the probability of that is close to zero. Ten or fifteen years from now - I'm not nearly so sure. Our political system is totally dysfunctional and not up to the massive challenges that we are already facing, let alone what is coming down the pike. The military is one of the few institutions in the US that still works really well, and is held in pretty high esteem these days. The US has become a crony capitalist banana republic - it really is becoming more and more like a third world nation all the time. If the history of most of those is any guide, then like the old tire commercial, "Sooner or later, you'll have Generals". I really do worry about this, if there is anything that keeps me up at night, it is this one.


Recall the warnings about "Military Industrial Complex" - it does not appear that this warning was taken very seriously.

Yes, but that's just part of it. It isn't the MIC that is the main driver for the USA becoming a crony capitalist banana republic. The two entrenched parties + Wall Street/mega-corporations + mass media seems to be the main nexus for that phenomenon.

No, when the full extent of the crisis that will be bearing down upon us becomes evident, then that will be when the power elites START building it. No, strike that - that is when they will start PLANNING to build it. No, that is still to optimistic - that is when they will start TALKING about planning to build it

That would assume they even know what a plan is.

WNC Observer,

This is a great post. It seems to me that the communities/regions best able to anticipate and adapt to this set of predictions will be the most economically viable very shortly. Not sure how to convince public officials that failing to prepare for a low oil future=no economic viability=no tax base=no existence.

Yes, good call. Apologies if you mentioned the mil. already, as I only scanned the first sentence of each paragraph, but add to all this the gonzo amount of liquids the military consumes. Whether domestic or import supplied, it's jaw dropping. Would that cut into what's available to Mr. & Mrs. Joe Six? Ultimately?

Also, I always wondered if there was a way to graph (if the info's available) how much oil is consumed in the process of liberating oil from distant lands, and how that balances, red or black?


The relative net import numbers for the US, the largest OECD net oil importer, and China, the largest non-OECD net oil importer, are probably a good indication of where we are headed. In the 2006-2008 time frame inclusive, the large cumulative decline in US net oil imports was more than matched by the large cumulative increase in Chinese net oil imports--China bought every barrel of oil that we did not import, plus some. I expect to see this pattern continuing, i.e., non-OECD countries taking a larger share of declining net oil imports versus OECD countries taking a smaller share of declining net oil imports.

Meanwhile, the slight decline in the annual volume of global net oil exports in the post-2005 time frame is highly misleading. I estimate that by the end of 2009 oil importers will have burned through 20% to 25% of the total volume of post-2005 global cumulative net oil exports.

"I estimate that by the end of 2009 oil importers will have burned through 20% to 25% of the total volume of post-2005 global cumulative net oil exports."

I can't quite follow this. Won't importers have imported 100% of the net oil exports, by definition? I'm really not trying to be dense or cute.

Perhaps you mean 20-25% of all oil that will ever be exported from 2005 into the indefinite future? That would be quite stunning indeed.

Perhaps you mean 20-25% of all oil that will ever be exported from 2005 into the indefinite future?

I think that is what I said. Cumulative Net Oil Exports (CNOE) is the total volume of net oil exports over a defined time period.

As I have previously pointed out, the Indonesia, UK and Egypt (IUKE) case history is a prime example. Their combined production peak was 1996. Over their initial three year decline phase, their annual volume of net oil exports fell by only 9% from 1996 to 1999; however, at the end of 1999 their post-1996 CNOE were 52% depleted--their post-peak cumulative net oil exports were more than 50% depleted in only three years. In exponential terms, their initial three year net export decline rate was only 3%/year, but their initial three year post-1996 CNOE depletion rate was 25%/year.

Our current export situation is very much analogous to a guy, who lost his six figure salary, but who is living close to his old standard of living, while depleting his savings and severance capital at a ferocious rate.

But I think that this is a key point: "China bought every barrel of oil that we did not import, plus some."

Globalization is, of course, a term to describe a set of evolving rules that permit capital to move freely and securely around the world.

In the context of globalization the movement of the most strategic economic resource of our era, oil, to a place where it most productively increases the value of capital is to be expected. It is like water finding its level.

Despite fantasies about the power of the US military, this trend is entrenched and, in the time frame that counts, irreversible.

As Chindia is increasingly able to absorb new technology as efficiently as the United States, the US will have to compete with Chindia on the basis of the cost of labour, where all else is equal or of insignificant import.

Hopefully, 'the power of the Word of the Lord' will comfort the newly impoverished American masses. 'Blessed are the meek' and all that jazz.

Food for oil.

I think we talked about that already.

Such a trade would put pressure on the oil exporting nations to rein in their own consumption.  If the Persian Gulf states, Venezuela and Mexico charged even $2.50/gal, there would be a fair amount more oil on the world market.

The Energy Export Databrowser allows you to scale graphs to US consumption for exactly this type of comparison:

I have no doubt that Chinese consumption will continue to accelerate. But I am perhaps naively hopeful that the US can reduce its consumption of oil by 30% without a collapse of the economic and social system.

-- Jon

But I am perhaps naively hopeful that the US can reduce its consumption of oil by 30% without a collapse of the economic and social system.

I am confident (perhaps naively as well) that the US can and will reduce its consumption of oil a lot more than that without a collapse of the economic and social system. But it will hurt like hell.

Well, the problem is that it doesn't stop at 30% because the financial system will likely implode, making it difficult to get the remaining oil out. Because of that, I think the chance of the whole mess holding together past this coming decade is low and past 2030 almost but not quite zero.

The "apparent decline curve," which factors in just net export decline (but not including net energy decline, which would make it slightly steeper) looks more like this:

With that kind of decline, how does the fiat currency/fractional reserve banking system (aka the global ponzi scheme) continue to function?

As the deflationary spiral we've entered gathers steam, we won't be able to prop up the banks any longer. We're managing to do it now (barely, the FDIC is still regularly closing banks almost every weekend) but we're just in round one.

Here is what's still headed our way:

According to a number Mish (I think) dug up, a full 30% of the mortgages that are still about to reset are already 30-days overdue.

No one knows how to handle a deflationary spiral very well other than to let it runs its course. Sure, we try things but they mostly don't work or don't work for very long.

After the first step down here: is the condition of the residential real estate market in just the U.S.:

We are, using a term my friend an ER doctor told me his team used, "circling the drain."

On the bright side, we're a crafty species and we can (and will) reorganize in some fashion (or blow each other up — I'm working for the first case but can't rule out the second).

I've seen this repeated here - so wanted to comment on this.

...decade or slightly longer .... because there will be no more oil available for import

This won't be the case because
- OPEC countries will want to continue getting money by exporting oil. That is what sustains their life style
- US maintains a huge army which will be put to "good" use in such "emergencies"

One thing the sentiments like the above don't take int account is how might the elites world over react to depleting oil. Turning a blind eye to it now is one thing - but a decade from now they will react. Humanity is fairly good at reacting to obvious short term dangers.

Elites will not just simply give up their power. They will do whatever it takes to maintain the power. They will invade countries and take over remaining oil, ration it back home. Collapse will happen in some countries dependent on oil but without a strong enough central power structure - but then such countries have faced near collapses from time to time - like some sub-sahara countries.

I agree that it will be decades before global net oil exports approach (probably never hitting) zero, but as net exports contract I expect to see more of a pattern of net food exporters trading with net oil exporters.

evnow: See my post above. Military interventions might very well be attempted, but they will not result in more oil coming to the US. The only thing they will accomplish is damaging the oil infrastructure, thus assuring that nobody gets it. That might "beggar thy neighbor", but does nothing to bring more oil to the US.

Militaries are very good at breaking things and killing people, but that is about all they are good at.

As for the OPEC countries wanting to continue to earn money through exports: Yes, but -

- Just because they are still exporting a little doesn't mean we'll get it. The way things are going, the US dollar will likely be toilet paper. The likelihood is that we'll simply be outbid for whatever little oil is available beyond a certain point, and that point is coming sooner than you think.

- There are also limits as to how much OPEC governments can cut back their own domestic consumption. Most of these regimes sit on top of pretty restive populations as it is.

Yes, the power elites running the US likely will react once their backs are up against the wall. I'm operating on the assumption that past behavior is a pretty good predictor of future behavior, and that doesn't inspire much confidence that the reaction is going to be particularly wise or competent or effective.

You don't need to wage a distructive war to get what you want. You just need to have a large enough force. That is why the Iraq war was so stupid - Saddam was ready to flee and handover the power.

The way I look at it we are likely to have the following instead of no oil for imports.
- We will have controlled markets rather than open markets
- OPEC will continue to export oil in bilateral agreements with various countries
- We might even have import quotas and export quotas (even if we can't agree to CO2 emission quotas !)
- All countries will ration oil. In most countries (including China and most of India) distribution is done by public companies. That makes it easier to ration.

I'd like to see if anyone has published well thought out scenarios based on game-theory.

You don't need to wage a distructive war to get what you want. You just need to have a large enough force.

Well, I get what you mean, but the US is probably at its peak in terms of military power right now. Actually, we are probably already past peak - we are finding it really difficult to scrape up enough troops to do even a half-a$$ed job in Afghanistan, and that's even with the withdrawal well under way in Iraq. I can pretty confidently predict that with the huge budget deficits that the US is racking up and an Obama presidency, we are almost certainly going to be looking at some big budget cuts and force reductions hitting the Pentagon, probably starting with the next budget cycle. This isn't going to be just a short-term cyclical thing, it is the start of a long-term trend. Ten years from now, the US will still be strong enough to defend itself, but the days when we can intervene in affairs halfway around the globe will be over.

The way I look at it we are likely to have the following instead of no oil for imports.
- We will have controlled markets rather than open markets
- OPEC will continue to export oil in bilateral agreements with various countries
- We might even have import quotas and export quotas (even if we can't agree to CO2 emission quotas !)
- All countries will ration oil. In most countries (including China and most of India) distribution is done by public companies. That makes it easier to ration.

I suspect that you are right about the bilateral agreements, but guess who is running circles around the US when it comes to that?

I don't see much of any type of controls or structure being sustained on an international basis. By the end of the next decade, most of what little there is along those lines will be unravelling as things deteriorate into "every nation for itself".

I am certain that there will be some form of rationing, or at least controlled allocation, in the US. The military and other essential government services will get what they need first, then agriculture, then essential transport and industrial users, and then private citizens will get whatever is left, which will be less and less all the time. I'm not sure that they are even going to need to issue ration books. Many of the priority users will have their own motor pools and fuel will be allocated and shipped directly to them. The higher priority users will also have special cards that can be used at specially designated service stations, entitling them to get their allocated amount at a designated price. Once that is in place, the government can just leave it to the market to set an equilibrium price for what little is left, and most consumers will just be priced out of the market. The Government can even tell them that there is no rationing, and blame it all on "the market" instead.

Ten years from now, the US will still be strong enough to defend itself, but...

Seems to me a crazy thing to think about. Who would want to invade? What would they want from us? Some of our financial experts to advise them on how to revive their economy through stimulus packages?

I think that any threat for the next few decades would be less a matter of invasion and occupation than it would be an attempt to cut us down a notch and eliminate any possibility of the US intervening in their own sphere. Those are essentially the same war aims that the Japanese had in WWII - there was never any serious thought of actually invading the continental US (although they would have no doubt tried to grab Hawaii and Alaska if they could).

Saddam employed that very "scorched earth" policy when the US went into Kuwait in you are probably correct.

WNC -- The new 51st state comes to mind as a method of coping: the great state of New Saudi. worked with Mexico...why not them?

Actually, I expect that the US will pretty much have disengaged and withdrawn, or at least will be well along on the process of doing so, from the entire Eastern Hemisphere within about a decade or so. Our economy simply will not be able to support anything more than a maritime defense strategy. We'll be positioned to defend the periphery around North America - mid-Atlantic, mid-Arctic, mid-Pacific, Caribbean - and the Mexican border, and that will be it. This is the best outcome that can be hoped for given a terminal case of imperial overstretch.

Even holding on to Hawaii and Alaska will be challenging enough.

Worse comes to worse WNC you'll be welcomed in Texas. Hell might break loose in the rest of the world but it won't get past the Rio Bravo, Sabine or Red Rivers.

Hell might break loose in the rest of the world but it won't get past the Rio Bravo, Sabine or Red Rivers.

Unless it puts on an OU jersey. Texas seems to have a hard time defeating that. :)

Those Okies are just Texans who took a wrong turn at the river. We do make allowances for a poor sense of direction. And think what life wil be like for the rest of the conference when we combine the teams.

Actually I'm not much of a sports fan but I enjoyed your little jab anyway.

I was ruminating about your response (maybe yesterday) about ingrained push-back toward Washington initiatives and Yankee attitudes in general. I feel the bile rise up daily just reading posts here -- the mildly-condescending, partronizing, derisive, or scornful tones of those who purport to know what's best for everybody, especially for ignorant Red state conservatives. That tone isn't going to go over very well in the parts I'm familiar with. Mostly those here would rather take their chances figuring it out on their own than take advice and help from Washington.

Just wait until those Red State conservatives fail at figuring it out on their own. The Red State economies are more dependent on the Feds than they admit to. Just look at all those military bases in Texas and how they howl when the Pentagon plans to close any of them. Conservative Senators have always made sure that the Air Force buys planes it doesn't want and the Navy buys ships they can't find enough crew members to man. The claim is always made that it is the private sector that creates jobs but there are few which would not bid for a government contract. Big business is even worse. Lockheed-Martin is considered private enterprise but how many customers do they have that don't get their money from taxpayers.

I'm waiting for a Red State senator to stand up and say,
" Close those bases and defense plants in my state because we can get by without help from Washington. We can feed all our poor folks with local money so don't send us food stamps. Our supermarkets will do fine without those customers. Our old folks don't want their Social Security and Medicare benefits anymore. Our college students don't need those Pell Grants and loans anymore. We'll do without that Fed money for our highways and airports. We are Real Americans and don't need money that goes through Washington."

Since that money doesn't come from some magic fountain in Washington, but is taken from Texas and everywhere else and then sent back after being partly dissipated, I'd hesitate to imply that places like, especially, Texas, that are not landlocked, couldn't exist on their own. Seems very likely to me that they could.

Realistically, I expect to see D.C. "buy" the states as they go insolvent, assuming the Feds can still float debt longer than the states will be able to. However, once the Feds move to heavy inflation and yet things keep getting worse, the states will strive to reassert rights so that they can stop sending so much tribute to Washington with so little in return. That's when things will fracture, IMHO -- and it could be a long time coming. Probably we'll decide as a nation to dump a bunch of creditors and trash some other nations before we go for each other.

Obviously free trade between the states has had a lot of value for a long time, and that won't change for most, but I could certainly see the energy-producing states upping their power plays at the expense of the highly-populous but less-endowed states. What does Washington really have that Texas wants? What does NY have that North Dakota wants?

But that's the point -- they'd be willing to fail on their own, rather than be told how to live. It's not just red states with military-industrial pork, as CA is right up there getting their share, as is the Seattle area, and others.

I don't buy the give with one hand, take with the other is a necessary reason to have Washington in the loop. Net it out and no state would be too far out, and education is the area that would drop in cost with little drop in value without easy gov't loans. Just like housing and medicaid, the gov't creates an inflated market when it gets involved. And of course there are a bunch of fat lobbyists and host of bureaucrats who siphon off their slice, and usually some big banks playing in the wings as well.

The Red States are net recipients of money from Blue States. I'm surprised you do not know that.

But that's only money, and the magnitude is relatively small. If you take out highway funding and military spending, it would be less still. The blue states do have more manufacturing, IIRC, though.

The key point is that too many dollars loop through Washington only to boomerang back with a few percent lopped off in transit. More money should stay local, and be better spent; less should fuel a disconnected Washington engine.

Interesting comments all. My original fairy tale was based upon the Big What If: what if matters go really bad in the US and the Federal gov't becomes ineffectual. Which states could manage on their on to some reasonable degree? Just really teasing about that possibilty but the conversation did hit some interesting points: long before TSHTF really bad perhaps we'll see a time when the Feds can't flow back much revenue to the states. IOW the Feds are collecting just enough taxes to function only at a federal level. That point would be reached long before the Mad Max model shows up IMHO.

All they do is hit a few buttons on the keyboard and voila! cyber cash for everyone!
All taxes are anymore is a way of keeping people oppressed and under control.
The whole thing is broken beyond repair already.

it won't be all that long - maybe a decade or slightly longer - before the US IS "energy independent", regardless of what the power elites want or do, because there will be no more oil available for import.

If follows then that energy independence is a valid goal that is way ahead of its time. It is those who are fighting it who are living in the past. For once politicians pushing energy independence are ahead of the foot draggers.

Opponents of independence want to rely on energy interdependence and economic globalization which will surely falter as the effects of Peak Oil take hold. We only need look at Copenhagen to see what would happen to a international conference on oil interdependence.

In general, countries do not sacrifice their own self interest to benefit others. It is politically untenable.

The larger mistake is thinking that Copenhagen could ever be anything but a political grandstanding event. Anybody who works on international standards for anything knows how grindingly slow those processes can be, and how politically strangled. Before you have a vote to standardize a new spec, you have a long history of drafts, refinements, straw-ballots, and amendments. And often the effort stalls or bifurcates due to incompatible business drivers of the sponsors.

There is nothing stopping any nation from unilaterally choosing to conserve more and emit less. Case in point: California with its CAFE laws leading the way for the US, and the EU and Japan each going one step further than that. When it comes to efficiency, to he who bears the cost will predominantly accrue the benefits. Why not start there?

Yes, and I think we should be leading by example. But ultimately a global Jeavons' paradox can come into play. As we reduce, it provides more for others to use--consider WT's point that China is increasing imports of oil at the same rate that the US has been decreasing over the last couple years.

So some kind of global agreements are necessary at some point, ideally sooner than later.

Having said that, I think some other bi- and multi-lateral (but far from global) agreements could go a long way toward reducing rates of CO2 emissions. A rapid phaseout of coal mining by the top six producers would reduce CO2 from this major source by 80%.

Not that this is going to happen either, but just to show that various multilateral agreements COULD make a major difference if it were politically feasible.

Americans pride themselves on being the leaders of the free world

Well if nothing else we sure lead the world in resource consumption though I'm not sure how proud we should be of that particular distinction.

Limits to growth


Just one. How doess 300 million divided by 6.7 billion compute to 3% of world population?

Just one. How doess 300 million divided by 6.7 billion compute to 3% of world population?

The US represent of course around 5% of the world population. Their share will not shrink significant in the near term future and will soon start to rise slightly as the US population growth surpasses the world avarange growth from 2020 onwards - if no major event happens of course :-)

Don't be a smart alec!

Where's WHT when you need him

You are right the US population is about 4.5% of global population. That however doesn't make much difference to my main point which is that despite the fact that Americans make up a relatively small part of the overall global population the US is a major global resource hog, using up a disproportionately large percentage of global resources.

As if the US leadership gives a f*ck about the rest of the world. As far as I can tell it only serves their self-interest. The leaders are not interested in global energy security.

Appreciate your contribution Kevin, but as long as this doesn't change, and it will not any time soon if ever, your exercise is totally irrelevant.

Oh, dear: no use cussing about it, save perhaps for some empty satisfaction. You might do as well to step outside tonight and yell at the stars in the sky. As I've said before, the great majority of the voters who elect that leadership have little stake - that is, little stake obvious to them - in much of the rest of the world (especially Europe, which, unlike China, might attract surprisingly little notice if it simply vanished magically tonight.)

The world is thousands of miles - not kilometers, mind you and mind you well - away. Out of sight, out of mind; many have never crossed an international border. Sorry about that, just the facts - and if straitened energy circumstances alter it, the change will be only for the worse due to contact being reduced below even what it is now.

There are several aspects in which the goal of "energy independence" is a useful concept.

It's a recognition of America's gaping energy deficit. Perhaps this deficit is sustainable; perhaps the USA is exporting enough goods and services to finance it indefinitely... Eh? Oh!

Furthermore, even if America's energy deficit were sustainable, it stinks of neo-colonialism. Oil has been cheap for so long, in large part, because of the neo-colonialist management of supplier nations by the US and others. The palaeo-colonialist episode in Iraq (Take up the white man's burden!) marked the end of this era.

Thirdly, it's a useful rallying cry in the quest for sustainable energy. You can't really import sustainable energy.

However, insofar as it tends to reinforce the fashionable undercurrent of isolationism in the American psyche, I agree that it's less than helpful. And as it's completely unattainable in the short term, reinforcing international co-operation on energy planning is an urgent necessity.

See Copenhagen.

I would call this post; The Globalization Pipedream.

Today we have a system of global commerce built on cheap oil, a system that makes no sense in an energy constrained world. The lynchpin is the US military policeman amid a network of predatory markets that today includes mercantilist Communist China.

Surprisingly, of all OECD countries, US energy independence is closest to a reality now(66% independent).

43% of US petroleum(2008) is not imported.

Thanks to our neighbors Canada and Mexico almost 44% of US oil imports come from North America. So overall only 1/3rds of US oil comes from overseas.

Under Jimmy Carter a goal was set to free the US economy from foreign energy encumbrances. This is a theme that goes back to the founding of the USA.
It is also most in agreement with Peak Oil and self-reliance.

The economist Thomas Malthus defended the tarrifs on imported grain to stimulate local industry against the cornucopians.

I find it to be rather amusing to see the cornucopian posts here at TOD.

It would be more to the point to investigate how remaining oil reserves could be developed to maintain the world oil supplies that benefit people other than americans.

Unfortunately, since these are not in the USA we can't really help the world with that problem.

A tariff on imported oil would actually be an effective conservation measure. It probably would not significantly increase domestic production, but it would reduce consumption. An increased gasoline tax would work the same way. It really depends on which is politically doable.

I find the very term, 'energy security', highly troublesome for a number of reasons.

First off, when any member of the US power establishment speaks about enhancing energy security, that is usually a code word for a doctrine based on the US militarily dominating the Middle East and Central Asia so that the US can control who gets how much. The problem is the US has been actively at this for many years but it hasn't been working very well, and the Middle East doesn't seem to be any more secure that it had been (and, arguably, even less so).

Second, talking about global energy security strikes me a lot like talking about food and water security on a lifeboat. Security for whom? And enforced by whom? It is a perfect zero-sum game: the more for you, the less for me. So, he who is capable of enforcing the 'security' will inevitably carve out more of the goodies for himself. The US obviously wants to be the enforcer, with all the privileges that status conveys.

Another phrase the US power establishment loves to use, is 'access to oil'. Here again we have another innocuous sounding code word for something far more sinister.

Stripped of all the froth, this one essentially means, 'I demand the right to extract oil from oil-rich sovereign countries (provide they don't have nuclear weapons) for both my own needs and to sell it for a profit on the open market. I will pay the country what I determine to be a reasonable royalty on the oil I extract, but I cannot be denied this oil on pain of military intervention.'

Is my translation fairly accurate?

Sounds reasonable to me for the most part joule. I would agree that the ME doesn't seem very secure at the moment. Doubt we'll ever use such a description anytime soon. But not being secure isn't different than not being under control. Today, not just in the future, every bbl of oil is shipped out of the ME with US tacit permission. We don't openly tell everyone it's OK to carry on BAU but the fact remains that the US is in a strong position to shut down or redirect oil exports anytime it chooses. Granted, it would take an extreme situation for us to do so. But such situations may be in our future. And I'm not talking about US naval vessels boarding a tanker full of KSA oil. The KSA will export oil to whomever it chooses. The presence of US forces might make such choices for the kingdom without firing a shot. We're talking about diplomatic Armageddon, of course. Like I imply this would probably be a very ugly New World. But possibly unavoidable.


Yes, the US (for now) is not engaging in overt aggression in the Persian Gulf, but rather is practicing not so subtle influence. However, that influence extends only so far, and for all its military might, the capabilities of the US in that region are not limitless.

While the US Navy can control what goes out of the Gulf, it would have a very hard time preventing some other nation (such as Iran) from throwing a great big turd into the Persian Gulf punchbowl.

A few missiles launched on Ras Tanura, and/or a few tankers attacked on the way in or out of the Gulf would immediately throw the global oil market into extreme panic mode, not to mention the effect on maritime insurance. Oil prices would immediately go through the roof.

A country like Iran cannot win, but it is capable of being a very effective spoiler and could totally f*#k up the global economy by such actions. Of course, it would suffer economically itself, but so did the US when it embargoed oil to Japan in September of 1941. Waging war has always been costly. But that has seldom been a consideration.

Is my translation fairly accurate?

Yes, but what is troublesome to you about the euphemism "energy security?" Is it troublesome that it signifies aggression, or that the euphemism is necessary at all?

If policymakers were honest, they would have a hard time convincing people to make sacrifices for the wealthy minority.

I don't worry that the US, Canada, and some other countries run out of fuel in this century or the next. The reason is that those countries sit on enormous coal resources. It is human nature that we do not want to give up our live style we are accustomed, decadent as it may be. The attitude will be "to hell with the environment since we need fuel for our cars and heating/cooling, etc". For decades, coal companies blowing-off whole mountain tops in lovely W. Virginia just to make it easier to get to the coal and increase shareholder value. Look at the pictures of destroyed valleys and streams. It is being accepted since longtime so why not continue? Hence, there is no real pressing reason to ration fuel or introduce radical societal changes yet.

I see the same unfortunate future as you do ng. But only if it's a relatively slow crash will coal start taking its dubious place of dishonor in our future IMHO. It's the prospect of a fast crash that produces very ugly images of the future for me.

Rockman recently claimed that all USA oil production data is publicly available.
The number one priority is to place the production history of the >35,00 online in a public repository. I was under the impression that this was hard to get, especially if one looks at how nicely the UK and Norway makes their data available..
This is a first step to bipartisanship -- keeping the communication channels open.

Web -- Why make it available to the public? 99.99% of those folks couldn't make hide nor hair of it. OTOH, if some clever folks decide to do a detailed analysis just get a very small grant from the DOE and it's all theirs. And, like I said earlier, if the USGS wants to work the data it will cost the Feds just a fraction of the salary of just one of their geologists to buy a subscription. Then the Feds are free to publish all the data and results they generate.

Go to and I think you'll be amazed at the data base available. I only mentioned production history. There a huge data base of mineral leasing, well testing, field abandonment, etc. Not sure if I remember correctly but I think you can get a short term trial access for free. Trust me on this Web: all the data anyone would every need to study US oil/NG production is available in excruciating detail. And I mean excruciating: just a guess but I think I've spent a good 2 full man years during my 34 years just pulling such data. Such research has been my specialty actually.

I think it's worth pointing out to the TODers out there how an oil company generates a drilling project in the US. I suspect the process is something of a mystery to many. And this is how it's been done for many decades. I decide I want to look for a drilling project in Geology Trend A in S Tx. BTW: this is exactly how an ExxonMobil geologist would do it. First I get a map of all the oil/NG wells drilled in the county I want to hunt in. These maps come from a private company that maintains this data base. Sell the same map to anyone with $100. They get the info from the permits filed with the state of Tx. Now I get all the log data. When a well is drilled the operator runs electrical tools down the hole that provides a "picture" of the geology. I use these logs to map the shape of the geology under the ground. These logs also indicate the nature of the rocks down there. Now I see a spot that looks interesting. It's sits between two oil fields that have been produced, depleted and abandoned. I pull all the production info on those two fields off of Drilling Info. I also pull all the state records on these well: drilling permit, completion records, abandonment records, etc.

Now I think I have a prospect to drill. Maybe my "subsurface" mapping (using those well logs) is sufficient to sell the idea to management. Or maybe there is seismic data available that might support the idea. I go to a seismic broker who will research every available seismic line shot by every company out there (and he does this for free...gets paid a commission from the data seller if I buy). I buy the seismic (again, available to anyone with a check book). If it all comes together I get someone to pay for the drilling. We lease the acreage. This info is available at the county court house for free. We file a drilling permit with the state of Texas showing exactly where we want to drill and how deep we plan to drill. We drill and make a well. We file a completion permit with the state telling exactly where and how we want to produce the well. This info is free from the state to anyone who wants to ask. We produce the well. Every month we send a report to the state showing how much oil, NG and water we produced that month BY THE DAY. This info is also available from the state for free. I could go to Austin and pull all the data myself but it's much more cost efficient to buy a subscription from Drilling Info.

What I described is how 99.9% of all drilling prospect have been generated in the last 60 years or so. Neither ExxonMobil or any other Big Oil has a warehouse of secret data. They have a little proprietary data, of course. But nothing that would prevent anyone with the time from knowing the production history of US oil/NG wells in extreme detail. Every field...every well. All this info is available FOR FREE to everyone in the US if they want to go to the different state regulatory offices. It's just a lot easier to buy a subscription to a private data base. And that cost is completely insignificant to the man power costs needed to analyze the data. A 20 yr geologist with the Survey makes around $100,000/yr. A one year subscription to the data bases cost less then $25,000/yr. And, as I mentioned earlier, such studies have been done many times to different degrees and published. By universities, individuals, oil companies, the Feds. Westexas is a clever guy for sure. But he didn't have a vision one night showing all the info he uses to construct his models. He probably subscribes to some of the same data bases I do. It's all available to anyone who wants it.

Somebody with access to this data should place it on a web server. Its as simple as that.

Barring that, there are +35,000 fields in the USA from what I understand. For 150 years worth of data, if I spent 1 cent for every yearly data point, this would come out roughly $30,000. If I spent $1 per data point, that would cost me $3 million. A yearly subscription is $25000. I need all the data as I do not want to introduce a bias, so a subscription may not do any good if it is cherry-picked. The alternative would be to generate an umbiased, purely random sample of a portion of all the data. The question remains, how much will this end up costing me? The UK has all the data for hundreds of fields on-line, right now.

I can understand why they want someone to pay for the data. If you think $1 is too much for each data point, think how much it costed to originally produce from a field. The cost of the data is peanuts relatively speaking. So it really makes you wonder why thay even want ANY money for this info?

Web -- Why make it available to the public? 99.99% of those folks couldn't make hide nor hair of it.

Let's not forget, that kind of attitude reinforced the uproar behind Climategate. It was the attitude of the "annointed ones lording over the data" of which the ignorant public would and could not understand. Not that I agree with any of the Climate skeptics, but I want to take advantage of their indignation and righteousness. We have earned just as much righteous anger as they have, and more since the skeptics are largely phonies anyways.

It's not an attitude Web. These data are copywriten properties of private companies which have invested many millions of $'s to accumulate the data and the more millions to keep it updated. These are not oil companies saying you have to buy a subscription. ExxonMobil et al could care less. These data base companies have nothing to do with drilling or producing oil/NG in this country. They were created to fill a void. Would you expect all the book publishers to put all their works on line for free? For that matter why don't we force Microsoft to make all the products available to the public for free. You ready to give up your paycheck for the sake of our society? Any one else? A show of hands perhaps?

And, as I clearly pointed out, all this data is free. You want to find out every little detail about every well in Texas that has ever been drilled and produced. I can send you the address of the Texas Rail Road Commission in Austin. A lady by the name of Kathy mans the front desk Just tell her what you want and she show you how to find it...for free. they even a free coffee pot for you.

As far as collecting and working with the subscription data base I assume you have a hard drive. I've collected hundreds of gigabites of this data without making one photo copy. And why would I? Like I said, these data is in Excel. Why print and then hand input the data when all you need do is copy and paste as needed.

And no one in this country has the privilege of "indignation and righteousness" with respect to oil/NG production histories in the U.S. That data is available to every citizen, even all the members of TOD. Always has been and always will be. All someone has to do is get off their butt and go look it up. If you remember where this thread started it was with a fellow who was looking for info on how he might study oil/NG production histories in the US and globally. My original response explained how it could be easily and rather cheaply done. Some needs the answers generated by someone else's sweat and then spoon feed to then should look elsewhere.

One last point: do you disagree with my statement -- "Why make it available to the public? 99.99% of those folks couldn't make hide nor hair of it." Granted, you're not part of the 99.99%. But it's not a slap at our fellow citizens. 99.99% of our folks can't design a climate model either. There's a whole lot of technical studies that 99.99% of our folks can't do. And I include myself in that number.

I don't mean to sound like I'm scolding you Web. But I'll repeat my original point: anyone in the world can access virtually the entire history of US oil/NG production and run models till the cows come home. If we had access to just a fraction of the same data from the OPEC countries we would have a very accurate picture of where current global production was going. That was my real point in answering the original post.

I don't understand the bottom-line.

First, at the top of your comment, you say that all this is copyrighted data and no one will give away this information for free.

Second, further down in your comment, you say all the data is free for the asking.

The first point conflicts with the second.

I remain very confused.

I don't think I am the only one interested in this. Jonathan Callahan is doing some incredible work on collecting data and presenting this information to TOD in a very user-friendly way. He might have some of the same confusion that I have.

you say that all this is copyrighted data and no one will give away this information for free.

This is kind of a subtle legal point, but I'll try to explain it: You cannot copyright data, you can only copyright the presentation of data. Thus, the data in the phone book (names, telephone numbers, addresses) is not copyrightable, but the phone book itself is copyrighted. You can't legally copy the phone book, but you can legally copy the names, telephone numbers, and addresses in it.

That's probably too subtle, but I'll leave it there.

Rockman is quite right. All the necessary oil production data is available for free from government agencies. If you know how to do it, you can just run down to the appropriate government office, find the data, and interpret it for yourself. You might even get free coffee while you're doing it. However, if you want someone else to find the data and interpret it for you, that will cost you money. Probably a lot of money.

There are companies that aggregate the government data, interpret it, format it, and otherwise massage it for the oil companies. If you view your time as being worth nothing, they don't do anything you couldn't do for yourself, if you knew how. Most people in the oil industry think their time is worth more than nothing, so they would normally buy the data they need from these companies.

Thanks for that interpretation.

IMO, since no one has done anything meaningful with this data, the future of the oil age is not "worth more than nothing" -- it is in fact worth nothing. Sad, but true. No one has decided to pick up the ball and do anything with the data, not the government, not any academic institution, not any concerned private citizen, no one. I would know exactly what to do with the data, but as it is, I have a late start since I just learned about this availability.

I guess what got me so confused was the fact that the two USGS geologists, Attanasi and Root tried to predict reserve growth from historical USA data several years ago. I recall writing about this, and people scoffing at them that they had bad and imcomplete data. I took this at the time that getting a complete set was next to impossible.

Well, the fact is that the USGS could predict US reserve growth from the available data, but I get the impression that they don't like the results that they see.

Most of the oil that is going to be found in the US already has been found, and what is left to find doesn't amount to much, so estimating it is a pretty straightforward process.

They probably just don't want to believe they have already produced most of the oil, although that is what you would infer from the production curve. It's been nearly 40 years since US production hit its peak, which you would expect to be when half the reserves had been produced.

I'm jumping in late here as I had a full day on the job (rare these days). As I read Kevin's essay my first thought was "Aw man, this guy's in trouble. I guess he hasn't spent much time on the Drum." Yet, after a quick scan of the responses to his post, even I was a little amazed at how quickly the TODers cut right through Mr. Kane's suggestions that the U.S. could lead the world in any movement towards energy security, or that there can be any semblance of global energy security at all. I hope that Kevin has a thick skin and doesn't take our vigorous debate around his essay too much to heart. Welcome to TheOilDrum, Mr. Kane! I hereby dub you "Grasshopper".

Welcome to TheOilDrum, Mr. Kane! I hereby dub you "Grasshopper".

I warned him that TOD can be a meat grinder. But the responses weren't too bad. Kevin wants to write more articles about energy, and I told him that this is a pretty good proving ground for that. I have learned much from the back and forth here and on my blog.

Thank you Ghung for your kind comments.

I think most everyone commenting on this post (and in the web-site) is missing the real big story in energy and that is Natural Gas from Shale Reservoirs. The fact that vast, huge new reserves of natural gas can be recovered from shale reservoirs will change the Peak Oil World. The geologic and chemical processes that create natural gas have a much larger window of pressure and heat occurrences than those that create crude oil, and as a result, natural gas is far more abundant in nature than crude oil. Now with recent technological advances unlocking these vast gas shale reservoirs, the era of natural gas dominance over oil has started and will last for at least 50-100 years. It will trump all current renewable energy technologies on simple economics----its cost is far lower. Natural Gas can do everything important in the worldwide energy economy that crude oil currently does, except perhaps jet fuel for aviation. It will come be the preferred fuel for transportation within 5-10 years as its low cost supply and low cost engine conversion beats electric cars/trains with ease. I know some skeptics question whether gas shale reservoirs are for real, but if they could see the worldwide frenzy currently taking place by the major oil companies, large independents and governments to lock up licenses/leases in basins with oil shale potential (and the are many such basins) they would be convinced---witness ExxonMobil's recent bid of $41b for XTO (a US independent with large gas shale production, reserves and leasehold). This whole gas shale revelation is yet another confirmation of the age old truism that no one can accurately foresee the future and the technological advances that will be made. The human race and its economies will continue to grow and expand for many years, in spite of all the doomsday scenarios continually spouted to the contrary!

If energy were our only problem I might sort of agree with you. Declining energy isn't our only problem, it's just a good indicator of things to come. We can't grow ourselves out of this.

I do not think bitumen can be made inexpensively from natural gas leaving a problem in manufacturing cheap asphalt.

If U.S. transportation is converted to natural gas, then there would be a massive increase in demand forcing the price up. New wells, pipelines and gas stations would have to be built requiring massive amounts of investment capital that would be diverted from other (renewable) projects. The cost of cooking, heating buildings, electricity, nitrogen based fertalizer and plastics would all rise damaging the economy. The U.S. will pass the peak production rate of natural gas in less than 50 years (probably < 20 years>) leaving this country dependent first on imports from Canada and then expensive LNG shipments from around the world. We would trade dependence on one depleting fossil fuel with another and dependence on one foreign supply of energy with another. It would be fantastically profitable for those who produce natural gas, but a disaster for the rest of us. Eventually the world will reach the peak production rate for natural gas leaving us with an even bigger problem to solve. Through out the natural gas era our population would be increasing and our accumulating pollution would be choking our only habitable environment.

Actually, those Canadian oil sands would be just about perfect for that. A lot of their downside is in trying to break down the long-chain bitumins into shorter chain molecules. Leave them as they are and the EROI and environmental impact look a hell of a lot better.

Not to worry though, highway maintenance budgets are going to shrink so much that we are not going to be needing all that much asphalt. On the contrary, I suspect that some day people are going to be out on the abandonded highways and parking lots with pick axes and wheelbarrows, mining them - America's "oil sands".

The U.S. will pass the peak production rate of natural gas in less than 50 years (probably < 20 years>) leaving this country dependent first on imports from Canada and then expensive LNG shipments from around the world.

Just so you know. Canadian natural gas production peaked a few years ago and is now declining. Canadian authorities have said that their strategy is to curtail exports to the US in favor of domestic consumption.

There's nothing secret about this. However, US authorities are somewhat in a state of denial about energy, so they may not want to broadcast it.

The NG story is one of the reasons why I am just a declinist - and actually sleep well at night - rather than being a doomer. We've got too much energy on tap to worry about our entire economy and civilization collapsing tomorrow, or next week, or even next decade.

NG is still a non-renewable resource, though, and depletes quickly. There is also a law of diminishing returns at work, in that the costs continue to go up for each new unit brought into production. It doesn't really how much oil or gas is in the ground, the question is how much we can afford to get out. At a certain point, it becomes more cost effective to simply adjust to using less, or to develop renewable sources instead. This is one of the reasons why I am a declinist and not a technocopian: the economic paradigm is shifting in a profound and fundamental way, and we are going to be forced by non-renewable resource depletion to a frugal, sustainable future.

A few good points todd but here's a little reality check. Most important, probably almost every acre of undrilled SG lease acquired in the deal will expire before XOM would drill them. Mineral leases have a rather short life. Most of the SG leases were taken with 1 to 3 year life. Even hanging on to a lease isn't cheap: many lease require an additional payment on the leasing anniversary if a well hasn't been drilled at that point. Given the current uneconomic value of drilling SG wells today (as evidenced by the majority of SG drillers who have shut down drilling operations) you shouldn't expect to see XOM pushing many drill rigs into the play. They only other motivation, offered by another TODer earlier, was that XOM wanted the personnel at XTO. Could have hired every one of those folks away from XTO for a whole lot less the $14 billion.

What has happen with XTO has happened in every oil patch down turn: companies are weakened and the strong buy them up based on cash flow for the most part. If XOM has big plans for the SG plays they would just wait for the economics to get better and then go lease the up country side. If NG prices continue to stay low (as I suspect) you'll see more such acquisitions.

I'm in the business Rockman and I can tell you that SG leases are being drilled all over the country and XTO is drilling a fair number of them. Sure, not all of XTO's 300k acres of current leases in the Marcellus Play will be drilled before they expire in the next 3 to 5 years, but a good percentage will be drilled. XOM is keeping XTO as a separate business unit to work the SG plays. You are dead wrong about SG economics. They have never been better than right now. $5+ gas price plus wells costs that are 1/3 of what they were 1.5 years ago. More and more companies are going all in on SG plays, witness Devon selling all their international and US Gulf Coast properties to focus on SG plays in the US. The SG from the Marcellus play alone will supply the US with 30 to 50% of its energy needs for many, many years. And you are wrong that fossil fuels are a depleting resource. First of all the amount of NG resources is 10+ times that of crude oil and crude oil production rose worldwide for 100+ years before peaking. The amount of NG resources in hydrates is far larger than in rock reservoirs. Don't worry, NG will get mankind by for the next 100 years easy and by then who knows what kind of renewable energy technology will have unlocked then? Human history is full of doomsday prophets who have always been proven wrong.

And you are wrong that fossil fuels are a depleting resource.

Ok, I'm not in the "business" but I know that if you have a finite amount of something and you use some of it, then you have depleted the resource. Third grade math: I have 4 blocks. The dog ate one block. Now I have three blocks........ Do you need for me to go over that again?

It's always nice to have another visitor from Fantasy Island.

Human history is full of doomsday prophets who have always been proven wrong.

Until one isn't.

Hint: past performance is no guarantee of future results...

Even economists get that one.

Human history is full of doomsday prophets who have always been proven wrong.
Until one isn't.

It's the old parable of the Boy Who Cried Wolf.

People tend to forget that one day the wolf showed up and ate the sheep (or in other versions, ate the boy) and the villagers ignored his cries until it was too late.

So, when the boy cries wolf, and there is clearly no wolf in sight, the prudent thing is to tell the boy he's an idiot, and start planning for the day the boy cries wolf, and there is a wolf. One day there might be a wolf.

To assume that there will never be a wolf is to ignore the less commonly quoted rule: When you AssUMe, you make an Ass out of yoU and Me.

Kevin Kane:

Sorry but you´re a typical political guy.. bla bla bla and at the end you said nothing...

Isn't that ironic that your not a "political guy" and yet you said a lot more "nothing" and "bla bla bla" than myself, "a political guy"?

I worked for most of my career in a government agency facility whose budget was being steadily reduced. This amounts to a microcosm of what is expected for the world with the decline phase of Peak Oil - an interdependent global system with declining resources.

I can tell you that whatever team and mission esprit that existed when I started my career had disappeared by the mid 1990s. Despite exhortations by our upper managers and team building exercises, individual groups began to draw inward and focus on survival. Eventually, the accountants took charge and management only complained constantly about overhead charges and space charges. Work and budgets were not shared and communication between groups steadily eroded and became confrontational and resentful. Employee lawsuits and EEO complaints increased and passive aggressive behavior increased, especially among "out" groups with little work to do, and intergenerational resentment manifested. We even had an employee freak out and start a screaming rant on top of his desk - pretty extreme behavior for a middle class schlub civil engineer (luckily, nobody hurt).

As below, so above. I think Mr. Kane's essay ignores what has been observed many times in human groups when resources are stressed. It brings out the worst of our survival behaviors, and what he is suggesting - better cooperation and planning? - flies in the face of that fairly well established phenomenon.

Your assumption that stress brings out the worst in people reflects your personal experience, which of course cannot be generalizable.

First, consider the well known and very generalizable theory of induced innovation coined by Dr. J. R. Hicks, which suggests that people are more likely to innovate (increase cooperation: a form of innovation) under times of stress than under times of no stress.

Second, your assumption does not consider that the game--as in game theory--isn't repeated, allowing the users to learn from their instincts as barriers to their desired outcomes. My suggestion reflects a Stag Hunt model repeated over and over, as is reality: repeated.

Third, under times of extreme stress people tend to sharpen their focus and become more aware of what is at stake, thereby increasing their interest in cooperation as a potential means to their desired outcomes. Stress can increase a persons rational behavior, assuming of course they are not "off their rocker" like your co-worker who wouldn't make it a day in the military. In terms of generalization power, history in fact favors my assumptions far more than yours.

Take for example cooperation within allied powers, axis powers, Vietnam (both sides), and all throughout history. In fact, during the Cold War (or Hot War as Robert McNamara called it) Soviet allies cooperated as did American, Western, and non-Western allies despite reasons within each side not to trust one another. Despite many reasons to fight amongst each other, the Soviet bloc cooperated because they "believed" they were faced with a common threat. The same can be said for the reasons behind forming all other collective defense or security organizations.

In the case of economic interdependence, the common threat is mutual energy insecurity, which suggests that national energy security may require "collective defense" against energy insecurity. Energy insecurity is a threat to everyone because of financial and economic integration. As Northeast Asia economically integrates while the U.S. becomes financial connected with China, South Korea, and Japan, we are all vulnerable and dependent on one another. The same can be said for Europe and Russia, and then Europe to the U.S., and et al. We are all peripheral powers and energy insecurity is the hegemonic power that threatens us all.

Thank you for your thoughtful and analytically exhaustive comments!

Kevin, your sarcastic concluding response to my comment was rude and immature, and it makes me even less inclined to give your ideas additional thoughtful consideration or credence.

You basically wrote an op-ed piece with no "analytical" models to support why you thought the world would be cooperative in the face of energy shortages. And my observation of non-cooperation is just as valid as your opinion that cooperation between economic competitors would happen. There are plenty of examples in history where loss of free energy led to social collapse and violence (see Tainter, Diamond, et al.). So quoting Hicks doesn't make your assertion any more generalisable.

I simply disagree with your principal thesis that world powers will recognize energy decline as the "enemy," and manage to preserve the global economy.

The global economy represents a level of complexity that must have free energy to be sustained. Energy decline will allow entropy to increase and I doubt the current global order and interdependence will continue. The thermodynamic cards we have been dealt are not in favor of a continued globalised economy or sensible recognition of the common enemy.

The current global BAU model also represents a hegemony of economic elites that has managed to destroy large amounts of the global ecosystem, local subsistence economies in undeveloped countries, along with the American manufacturing sector. So, I would also ask if the current hegemony and rule in the interest of financial markets and bankers is worth preserving - especially if striving to develop and restore national and localized economies might be a smarter option for dealing with energy declines.

"American policy leaders need to recognize that eliminating oil imports will not create energy independence."

It may take more pain at the pump for American consumers to empower "policy leaders" to take the courageous steps Kevin outlined. In today’s, every man (nation), for themselves atmosphere doing the right thing is often political suicide.