Peak Oil: The Mother of All Risk Management Scenarios

This is a guest post by Joseph Sullivan. Joseph is a management and strategy consultant in Madrid, Spain. This is a link to his blog.

Risk Management like sustainability has become one of the buzz phrases and hot topics in business and management in general. According to Wikipedia:

Risk is defined in ISO31000 as the effect of uncertainty on objectives (whether positive or negative). Risk Management can therefore be considered the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risks can come from uncertainty in financial markets, project failures, legal liabilities, credit risk, accidents, natural causes and disasters as well as deliberate attacks from an adversary. . .

Strategies to manage risk include transferring the risk to another party, avoiding the risk, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk.

By definition, risk management involves the methodical identification and analysis of events that may or may not happen. The responsibility of present and future business leaders – as well as industry and government leaders of course – is to ensure the sustainability of the endeavors they oversee. So, shouldn't peak oil be considered a risk management scenario?

The Need to Consider the Possible Impact of Peak Oil

During a recent discussion on the topic of peak oil, the dean of one of America’s most prestigious business schools [who asked to remain anonymous], said

“…leaders should bring somebody in to their organizations right away to talk to them about this…if only to say they’ve had a thorough look at the subject and dismiss it. This is something that must appear on the radar screen and be addressed.”

Then, after study and analysis they can either write it off as an acceptable risk or act accordingly to minimize its effects…or even act to monopolize on the opportunities that may arise as a result of it.

Governmental Response

There is evidence that at least some federal governments have identified (and have begun addressing) peak oil as a significant risk management scenario. They may be choosing to keep a low profile about their recognition and handling of the subject for the sake of order and national security, however.

The actions of China represent an exception and indicate that China is adopting an openly aggressive strategy by gobbling up resources at every turn. China has been building its crude oil reserves, completing 102 million storage facilities while at the same time, nailing down 11th hour deals in late December with both Iraq and Venezuela. Another indication of China’s sense of purpose (and urgency) include an oil pipeline linking Russia’s far east to China’s northeast, set to start operation by the end of 2010. The pipeline would transport 15 million tons of crude oil annually. In short, China is unabashedly leading the way in terms of resource acquisition as a means to mitigate the effects of peak oil and the subsequent decline in supply.

Local and community governments-–with more manageable sized constituencies-–remain largely unaware of the peak oil scenario. Following the lead of Portland, Oregon, several cities have done some homework in evaluating the risk of peak oil and pulling together a plan, including major cities like San Francisco – but they are miserably few considering the number of towns and cities worldwide that ought to be leveraging each other’s risk evaluation and planning methods at least on a small scale or in clusters. This is an unnecessary risk exposure since they could play a key role in creating a responsible level of awareness and developing mitigation measures – IF they deem such actions necessary after a proper risk management analysis.

Business School Response, or Lack Thereof

Business schools, the very institutions where present and future leaders are formed, have also been slow to include peak oil in their many leadership programs about challenging times and sustainability. At a minimum and for the sake of credibility, the topic should appear as a "what if" leadership challenge in case-studies.

There is a particularly high representation of executives/business leaders from certain industries such as healthcare & medicine [pharmaceuticals] in the leading business schools around Europe and the US. Are these leaders and their teachers informing themselves and each other about the peak oil "blip" currently blinking on the radar screen? Judging from the on-line syllabi of current Executive Management & Leadership programs, the answer is No.

There is no evidence of programs or even case studies that address hypothetical scenarios such as:

1. A much more serious natural gas supply disruption than recently took place in Great Britain takes place. (Natural gas is produced with oil, and in some parts of the world, may face disruptions as well.) How might a business plan for such a disruption? As supplies get tighter, the chance of disruptions rises, for both oil and natural gas.

2. An acute oil price spike occurs, similar to or greater than the one of July 2008. What are the potential risks and mitigating measures for the aviation and general transport industries?

3. The planned technologies to replace oil fail to scale up quickly enough. This seems like at least a possibility, given the high cost of wind, solar, biofuels, and electric cars. What alternative approaches would business leaders suggest to minimize the effects of declining supply ? These approaches might be different for different industries, such as healthcare, automotive, and food & agriculture.

These [and other similar] business case scenarios should clearly be among the "war games" at the B-Schools, the institutions of higher learning whose collective mission is to shape present and future leaders.

The title of the executive leadership program at one of Europe’s most prestigious business schools is – “Creating global leaders capable of taking on the world’s greatest challenges” And I ask…Is the mother of all risk management scenarios included amongst the challenges?

I see business schools as part of the problem, not part of the solution. I cannot view them as anything other than indoctrination centres for BAU. "The very institutions where present and future leaders are formed" is a particular worldview I find rather different to my own, which spoils an interesting article.

I remember attending a management course at my UK university in the early 80s. It was designed to teach scientists the basics of

The example business presented was a sawmill owner. The starting condition had him as a small time operator owning one mill outright making positive cash flow but losing market share.

The end case, after financial investment, had him gaining market share but with an ever widening negative cash flow as his supply of readily accessible timber dried up, but with huge 'profits' and 'success'.

I decided not to go into finance.

Ralph -- And now add that experience to how Wall Street views the "real world" with the way public companies. I once drilled several horizontal wells into NG reservoirs. The NG would have been produced eventually by the existing vertical wells but at a much slower rate. The new wells resulted in the company-wide production rate increasing 400%. But even when you calculated the increased net present value of the production it was a money loser on paper: the cost to drill (which was borrowed against the reserve value)the wells was greater than the increase in value. But the increase in cash flow allowed the stock to be bid up from less than $1 to over $3 per share. Management was so happy they gave me a nice bonus. All I could do was shake my head and smile on the way to the bank. And yes, the company did eventually fail. The only good news about that was that Carl Icon (a Wall Street raider) took control of the company after a hostile takeover. He had readily drank the company Kool-Aid and thought it was undervalued.

Between old school economics and Wall Street it difficult to imagine us competing well with the Chinese in the rush to tie up long term energy resources.

The problem with Wall Street is their very short-term view of the situation. They are always looking at the quarterly report instead of the 10-year trend. Their assumption is that they can always sell the stock on short notice and buy another if the quarterly report looks bad; and they won't have to deal with the issue of whether the company will still be around in 10 years.

Another problem is that they don't think of what in risk management terms might be called, "common mode failure". What if all the companies are doing the same thing, something causes all the companies to go down together, and none of the companies are around in 10 years. Common mode failures are more common than people seem to think.

An example of common mode failure occurred on a DC-10 flying into Philadelpha, when the tail-mounted engine blew up and the flying debris cut the hydraulic lines all all three sets of redundant controls. Nobody had ever dreamed such a thing could happen - supposedly the chances were one in a billion. Fortunately, the pilot, for no good reason other than he thought it was an interesting exercise, had practiced flying a DC-10 without controls on the simulator, and he managed to land it at Philadelphia airport anyway. It was a very bad landing, but most of the passengers lived. They now know to place the redundant hydraulic lines further apart so one explosion can't take out all three sets.

The recent sub-prime mortgage meltdown is another example of common mode failure. I would say the common factor there was the failure of government regulation.

Hi Rockman,

allowed the stock to be bid up from less than $1 to over $3 per share. ..... the company did eventually fail. Carl Icon (a Wall Street raider) took control...

I had more than enough experience with venture capital folks and boosting stock prices.

In theory, these people provide a wonderful service. They risk their money to enable a small company with great potential the means to fulfil their dreams. Many an entrepreneurial enterprise in the US owes its existence to venture capitalists.

Unfortunately, the devil is in the details. The guys I dealt with would make Captain Hook look like a saint. It appeared to me that many of them would push their mother down a flight of stairs for a few extra bucks.

I always advised growing companies to be extremely cautious about using venture capitalists for an IPO. Kind of like the frog and scorpion story.

The end case, after financial investment, had him gaining market share but with an ever widening negative cash flow as his supply of readily accessible timber dried up, but with huge 'profits' and 'success'.

A common business error. You would think that they would mention it in introductory courses.

I used to design software that monitored for cash flow problems. In fact, a lot of oil companies paid more attention to cash flow and reserves-to-production ratios than to profits. It doesn't help that you have shown big profits in your quarterly report if your bank calls you up and tells you that your loan is due and there's no money in your account.

For an oil company with oil in the ground, it was a solvable problem, but the solution usually involved a bunch of people in black suits coming in and firing everybody in a corner office, and half the rest of the staff.

The end case, after financial investment, had him gaining market share but with an ever widening negative cash flow as his supply of readily accessible timber dried up, but with huge 'profits' and 'success'.

That is almost exactly the way the USA is being managed!

Perhaps the economists and the corporate managers need to spend some time rereading some children's books...

But julian, wouldn't this represent a way to bring in much needed balance to BAU 'endless resources' type of thinking?

The US Department of Defense has identified Peak Oil as a risk a few years ago and has been taking increasingly broad measures to reduce oil consumption, especially in the last 6 months.

Very interesting reports. At least the military is taking a long-term view of the situation. Without a viable military, the future existence of ANY society is questionable at best.

Is that so?

Without a viable Law Enforcement, yes.

Even a local guard. But the massive thing we have now?

There be no Quakers but where there be also short tempered Baptists. I don't know where it comes from originally, probably some old pamphlet or speech.

Costa Rica has had no army for over 60 years.
According to wikipedia,

The budget previously dedicated to the military now is dedicated to security, education and culture; the country maintains Police Guard forces.

In addition they can count 60 years of democracy without all the violence that has plagued all their neighbors which did have a military. So maybe it's not that obvious.

Thier nieghbors weren't the colonial era English, Spanish, Italians,Belgians, Germans, or US......nor modern era Soviet Russia or Nazi Germany or Japan.Of course most people don't think of the US as having a colonial era as such but ask any American "Indian" if you doubt it.We differed mainly in taking in our territorial holdings as fully integrated states on the double.

And since they have nothing much worth the trouble of "bringing them democracy" we can add the modern day US to this list by dint of the Costa Rican's good fortune of not having lots of oil.. ;)

Thanks Will, these are very interesting reports. Gail had once mentioned to me similar evaluations and planning reports carried out by certain branches of the US Dept of Defense. They too were quite comprehensive and very clearly illustrated the seriousness of the current situation. We have found these type reports to be particularly effective when addressing audiences who might otherwise be skeptical about the risks associated with peak oil. For whatever reason, we have found that they provide more credibility to the argument...(at least that has been the feedback we've received.)

Thanks for the links. The Energy Bulletin listing is especially nice.

Before Christmas, I participated in a symposium at the US Naval War College--one of the graduate schools of the US Navy. They were interested in what kinds of scenarios they should be modeling in their "War Games" at the graduate school. We talked about possible impacts of peak oil, including a possible impact on international trade. There were also climate change experts present at the same conference, but their scenarios were more limited--mostly rising sea levels.

The following is the scenario that Robert Gates participated in before he became SECDEF.

Oil Shockwave 2005

There are several other scenarios, analyses, and recommendations at Securing America's Future Energy, though they can be somewhat on the BAU-lite side at times.

Once again, thanks Will. Very useful material (for the same reasons I mentioned on you other links).

Below is a letter to the publisher of our local weekly paper that I sent tonight.

Several months ago we let our subscription to the Progress expire. I occasionally buy or borrow an issue but have no plans to renew our weekly delivery. While this may be seen as "throwing out the baby with the bath water", out of a sense of frustration related to content, for now I'll stand fast on my decision.

Our small paper is special in its accessibility. Anyone can write to the opinion section and express themselves, and I look forward to reading informed and thoughtful points-of-view. Two weeks ago the paper published a sarcastic and ill-informed opinion regarding global warming, casting ridicule and offering nothing constructive. In response I will post an example of the kind of discourse that would cause me to reconsider my decision regarding our subscription to this paper:

Those of you who are in denial and resorting to ignorant sarcasm regarding the issues of global warming and energy (oil) depletion would be well served to examine and consider the following:

"In 2007, the CNA Military Advisory Board (MAB) released the landmark report “National Security and the Threat of Climate Change,” which found that climate change constitutes a “threat multiplier” to existing security risks in some of the most volatile regions in the world. A 2008 National Intelligence Assessment confirmed the report finding that climate change is a serious threat to national security and long-term global stability. The MAB, which is comprised of some of the nation’s most respected retired admirals and generals, also found that “Climate change, national security, and energy dependence are a related set of global challenges.”
A year later, the CNA MAB reconvened to study America’s energy posture and further examine the issue of energy security and how it relates to climate change and national security. Moving beyond recent studies on the dangers of imported oil, this 2009 report finds that fossil fuels, as well as the nation’s fragile electricity grid, pose significant security threats to the country as a whole and the military in particular."

Full report available here: This is one of several reports I have found that tells me that your military, at the highest levels, accepts global warming and peak petroleum availability/affordability as reality. Another fun read is the "Joint Operating Environment 2008", a report by the Military sent to the Joint Chiefs, President and Congress regarding the future environment that the Military anticipates it will have to function in: . The section regarding energy (beginning on page 16) is telling.

This is your paper folks. Let's not squander it and an opportunity to have an informed exchange of ideas and facts about our county and our world. Let us not turn our discourse over to those whose dogma has little value as we face the future together. Debate invited.

Thanks TOD! Best hopes for small steps to awareness.

i like how u are focusing local.

If blather like the U.S. Navy Arctic Roadmap is what the military calls preparation it is many, many, many steps removed from any sort of real world action.

Navy Arctic Roadmap? That's not very nautical. If it's the U.S. Navy, shouldn't they have an Arctic Seachart instead?

An Arctic Roadmap would be very white and blank. At least they could get their hackneyed metaphors right.

Knew there was something about that title that made me scratch my head ?- )

They might have well left the pages white and blank for all they said.

The USA military is using a purchase price of $225 a barrel for planning. To me, this appears to be a simple way to plan for peak oil.

Perhaps blondie. But it also assumes they have oil available to purchase at that price. Or any other price. And it assumes, of course, they have the money to pay whatever price.

Sorta like all those folks who thought they could refi those adjustable rate sub prime loans when the time came because the homes would be worth that much more. Looked good on paper anyway. Planning on a contigency is all well and good as long as your assumptions come true.

The thing about the military is that if you don't want to sell your oil at $225/bbl, they can take it anyway. And if they don't have any money, they can still take it anyway.

It makes military planning for emergencies much simpler. If you really need something, you take it, and if someone objects, you shoot him.

So, you can expect that in a real fuel crisis, the military will get all they need, and you will get what is left over.

This was the thought once, but I see the lessons of Iraq telling us otherwise.

RockyMtnGuy -

I really can't see the US military worrying too much about the price they have to pay for oil, simply because they aren't the one's really paying for it, i.e., you, I and other taxpayers are the ones picking up the tab. If the price of oil spikes this year, just increase next year's defense budget accordingly. Congress won't balk.

Yes indeed, you can absolutely sure that the military, as well as state and local law enforcement, will never be wanting for oil, even if it means the rest of us walking to work.

I also have to laugh at some of these efforts on the part of the DOD at energy conservation. In my view, putting the name 'DOD' and the term 'energy conservation' in the same sentence creates an instant oxymoron. To me it's just a little bit silly claiming to be making efforts to improve the fuel economy of the likes of an Abrams tank or a C-5 transport, when the real question should be: is it really necessary to deploy this sort of stuff in multiple countries all over the globe?

you can expect that in a real fuel crisis, the military will get all they need, and you will get what is left over.

I agree, but I think it is much worse than that - when oil becomes short supply many people will take priority over the ordinary motorist in importing nations: the residents of exporting nations that we already see (ELM), the military, health service, government in general, emergency services, the rich etc.

Even if oil exports post peak last for say 30 years, the oil available to the ordinary motorist will only last maybe half that time - at a quarter of the available time only half the amount required for BAU will be available.

Another thing about military oil is that it is sort of like farm goods-the initial price is nothing in comparision to the price at the final destination.

Nevertheless the problem is very real and this is a very big but generally not mentioned reason why the Pentagon is so fond of ultra high tech toys.

When they worl, they save the lives not only of extraordinarily expensive and valuable highly trained troops but also eliminate the need for massive arounts of fuel sucking conventional equipment.

Just a handful of the most modern bombers equipped with the latest types of guided bombs can do as much as an entire air force in WWII.

And while the ground pounders like to claim you can't win a war from the air, it is not true,especially if you define win as rendering the enemy unable to fight or even simply survive.

The idea that places like Afghanistan cannot be subjugated is a fallacy based on two things-the remoteness of the country/difficulty of the terrain and what I refer to as television rules.
In times gone by invaders could not move and supply thier troops easily, or locate the locals by surviellance.

In modern times they can't just wipe them out because a more civilized citizenry back home won't stand for it on the six oclock news..This is of course a very good thing.

But if the chips are ever once on the table for one winner take all final hand, somebody will drop a few neutron bombs or simply spray the country with a non selective herbicide or maybe worse.There are lots of nasty cheap chemicals poisonous enough that a bite or two of grass would kill any camel, horse, cow or any animal for that matter..

One modern ballistic missile submarine refitted with smaller missiles of the ship to ship type could probably take out a hundred or more frieghters in a day and everything in an ocean in a month unless an opposing force could locate her and sink her.Of course she would need to be resupplied with missiles-but not food , fuel, or anything else.

The rules change every few years now.The next big war-not a police action like our current occupations of Iraq and Afghanistan-will be fought very differently fron the last one.It might be over in a month, or an hour,or a thousand years, if it continues after industrial civilization has been wiped out.

Further to the CNA study, a review of "Powering" was posted at Energy Bulletin last year:

My central point was that as commendable as Powering is, there is much that CNA overlooked:
- no acknowledgement of Hirsch or of the shrinking pre-peak window for effective mitigation,
- no examination of the Oil Shockwave exercise,
- no concern about the inadequate state of current US (and Canadian/continental) plans for fuel emergencies,
- their overlooking of the strongest of the IEA warnings, etc.

Perhaps even more relevant to this discussion on risk management is this article, which applies Nathan Freier's "Strategic Shocks" paradigm to the emerging trends on oil supply (PO, export decline, declining net energy/EROEI, etc.):

Freier correctly points out that strategic shocks are sometimes "at once both predictable (and often predicted) but also un- or inadequately prepared for."
He also cites an NPS study which observes, "In hindsight, it is clear that most shocks are the products of long-term trends...." (Freier, p. 6).

We have a growing cluster of clear trend-lines on oil supply, many of which are beyond debate or discussion.
The logical extension of these trend-lines is fairly obvious (and not favourable), yet very few people seem aware or concerned.

Freier is an analyst with the Army War College... as the military bibliography which Will mentioned indicates, the War Colleges have been the source of some progressive research on energy security.

- Rick M in Canada

Thanks, Rick. I read your article and agree 100% (rare for me). To sum it up in simple terms, the CNA study "Powering America's Defense" is an example of BAU-lite, which I remarked upon in a later comment.

There are only a few people around , people like Greenish, who keep on expanding thier conceptual envelope until it encompasses everything they have ever heard of.

That "ole goalongtagitalong" principle of organizational success is apparently just as alive and relevant at the top of the intellectual and managerial heap as it is on the factory floor.

People in general have a touching and childlike faith in the "they" and "them" which seem to be almost surrogates for a god or gods these days.

The entire climate change community blithely took the word of the economists that there would be thus and so perpetual growth as the basis of thier work, and while some of the folks involved may well have been aware of peak oil issues peak and kept thier mouth shut publicly for tactical /strategic reasons, I have seen no evidence to this effect.

Now if one of the largest gropups of well organized and funded and brightest most senior researchers assembled from the world's leading universities........

I humbly submit that the reader should draw his own conclusions.

Mine are that most people, including scientists, would rather die than really think.There is something in the collective intellectual head that says this far we go and not one inch farther for there be monsters beyond.

Of course the problem might just be that I am lacking in some normal little built in intellectual brake and the rest of the world is marching to the music of reality.If this is the case, TOD seems to be a sort of net that selectively sorts out members of this group -there seem to be a few of us here just about every day.

Charles: You know, I once read an interesting book which said that, uh, most people lost in the wilds, they, they die of shame.

Stephen: What?

Charles: Yeah, see, they die of shame. "What did I do wrong? How could I have gotten myself into this?" And so they sit there and they... die. Because they didn't do the one thing that would save their lives.

Robert: And what is that, Charles?

Charles: Thinking.

-- The Edge (1997)

OFM, and others here might like this series:

I apologize for the long excerpt below but IMHO it is the most important insight from the entire course. So if time is short and you can't watch the full course this cuts to the essence. Though frankly I'm still struggling to wrap my mind around the full implications.

I asked everybody to write down on a slip of paper his or her estimate of the date on which we would hand the draft of the book over to the Ministry of Education. That by itself by the way was something that we had learned: you don't want to start by discussing something, you want to start by eliciting as many different opinions as possible, which you then you pool. So everybody did that, and we were really quite narrowly centered around two years; the range of estimates that people had—including myself and the Dean of the School of Education—was between 18 months and two and a half years.

But then something else occurred to me, and I asked the Dean of Education of the school whether he could think of other groups similar to our group that had been involved in developing a curriculum where no curriculum had existed before. At that period—I think it was the early 70s—there was a lot of activity in the biology curriculum, and in mathematics, and so he said, yes, he could think of quite a few. I asked him whether he knew specifically about these groups and he said there were quite a few of them about which he knew a lot. So I asked him to imagine them, thinking back to when they were at about the same state of progress we had reached, after which I asked the obvious question—how long did it take them to finish?

It's a story I've told many times, so I don't know whether I remember the story or the event, but I think he blushed, because what he said then was really kind of embarrassing, which was, You know I've never thought of it, but actually not all of them wrote a book. I asked how many, and he said roughly 40 percent of the groups he knew about never finished. By that time, there was a pall of gloom falling over the room, and I asked, of those who finished, how long did it take them? He thought for awhile and said, I cannot think of any group that finished in less than seven years and I can't think of any that went on for more than ten.

I asked one final question before doing something totally irrational, which was, in terms of resources, how good were we are at what we were doing, and where he would place us in the spectrum. His response I do remember, which was, below average, but not by much. [much laughter]

I'm deeply ashamed of the rest of the story, but there was something really instructive happening here, because there are two ways of looking at a problem; the inside view and the outside view. The inside view is looking at your problem and trying to estimate what will happen in your problem. The outside view involves making that an instance of something else—of a class. When you then look at the statistics of the class, it is a very different way of thinking about problems. And what's interesting is that it is a very unnatural way to think about problems, because you have to forget things that you know—and you know everything about what you're trying to do, your plan and so on—and to look at yourself as a point in the distribution is a very un-natural exercise; people actually hate doing this and resist it.

There are also many difficulties in determining the reference class. In this case, the reference class is pretty straightforward; it's other people developing curricula. But what's psychologically interesting about the incident is all of that information was in the head of the Dean of the School of Education, and still he said two years. There was no contact between something he knew and something he said. What psychologically to me was the truly insightful thing, was that he had all the information necessary to conclude that the prediction he was writing down was ridiculous.

COMMENT: Perhaps he was being tactful.

KAHNEMAN: No, he wasn't being tactful; he really didn't know. This is really something that I think happens a lot—the outside view comes up in something that I call ‘narrow framing,' which is, you focus on the problem at hand and don't see the class to which it belongs. That's part of the psychology of it. There is no question as to which is more accurate—clearly the outside view, by and large, is the better way to go.

Perhaps many of the the people who frequent this site have been in some measure able to incoroprate their outside viewer's knowledge while not forgetting the things that they know—and and are able to look at themselves as a point in the distribution. To them this is not an un-natural exercise; They actually do this more often than not.

Perhaps this is what OFM is referring to when he says he is missing that intellectual brake. As probably also are many of the readers of this site.

To others in the mainstream , we TODers, are all just plain loony tunes ;-)

Thanks for the link,Maygar.

If you ever happen to be in Viriginia or NC I would be pleased to buy your dinner and a few beers in exchange for a couple of hours of conversation about your experiences.

OFM, I very much appreciate the offer and would be willing to buy a few rounds myself.
I haven't been up in your neck of the woods in a while. I actually have an Aunt in Charlottesville NC who is married to an Algerian and they own a middle eastern restaurant in town. Her daughter, my cousin is married to a Baptist minister in the next town over and it is not totally out of the question for me to go up there and pay them a visit. If I do I'll let you know and drop by for visit.



Very interesting, and so much truth in the way people observe situations.

Those involved in financial planning see this all the time. You ask a person "do you think you have enough money for financial emergencies, downturns, unemployment, etc.?"

The person replies "oh, I have enough so that I think I would be okay, it would be fine."

You then point out to them that many people with 10 and 20 times the money they have, and far higher incomes saw their life go to hell in a handbasket in recent downturns. Then you ask them, "why is that you with about $8000 in the bank and a $40,000 per year income should feel that you will fair better than a person with $80,000 in the bank and an $80,000 per year income? And many of them did very, very badly in recent events."

The truth is, they can't given you an answer, they had been doing the best they could, and they felt that should be good enough in a just and fair world. Well, the world is not assured to be just and fair...

Then the person being advised just gets pissed off, because they realize that their risk management scheme depends on them either being (a)smarter than everyone else (what are the odds?) or (b)luckier than everyone else (what are the odds?) If they had been either that smart or that lucky, they would already have the money in the bank, right?

I do not point the above out by way of being self rightous, I suffer from exactly the same gaps in logical planning as most people do. It is something that has to be guarded against constantly.

I do know a small class of people and families who have weathered every change since the Great Depression very well, and older relatives tell me the families in question did quite well even then. But I assure, they had more in the way of diversified assets (and I do not mean this mock "diversity" that is advertised on the brokerage house commercials, but the real thing) than most folks can even hope for.


I was skiing across a frozen lake once, and hit a soft patch in the snow, where a spring must have been thinning the ice. Water was welling up in the tracks for some 15' behind my feet. My dog was off chasing chipmunks any number of miles away, and I hoped I wouldn't break through and have to figure out how, in skis, to rescue myself from the freezing water.

I knew I didn't want to stay still and stress that one spot for very long, and I didn't think going back was great, in case that ice was only good for 'one pass'.. but also didn't know if I was still approaching the 'thinnest center' or something. I took a breath and continued forward but in a slight arc left, hoping I was getting off the bad patch with some geometric advantage in this route.

I made it.

I 'felt' I had some tools/skills available to me to help me 'be ok' through this, but I also just had to move forward the best I could, not really knowing enough to be sure of the outcome. The guy with $300 under a floorboard, or $8000 in a safe-deposit box, or a Million in mixed securities and gold.. there are some differences in their chances, but I don't think any of it changes the approach a person has to find to keep moving into the unknown.

I get a lot more scared today, thinking back on 'What if?', than I ever got in those few moments alone on bad ice.

I don't think that's 'optimism', except in the sense of the saying that 'if you're still breathing, you're an optimist'. (If you can figure that one out. I still puzzle over it.)


My poem goes something like this.

A pessimist sees the glass half empty,
An Optimist sees the glass half full,
I go
hand me another.

I am alive, and I could be dead any second now, so lets get on with it while I am still here.


Hi F,

Thanks for including this.

I wonder where the "new and creative" comes in?

Hi FMagyar,

estimate of the date on which we would hand the draft of the book over

I have lots of experience trying to estimate the effort and delivery date of large scale computer software projects. Methodology for this undertaking is a very long discussion unsuited for TOD. However, just a little antidote: in my early days as a mid level manager, I would present my estimates to higher manager. These estimates (at that time) were formed in much the same way as described in your quote - ask members of the team to give detailed estimates of each identified task (the inside view). Of course, the estimates were always terribly low and we never made the due dates.

When discussing this issue with a senior manager (much older and wiser) he confessed that any estimate he received from me (or similar managers) he simply multiplied by three (outsider view) and this is what he took to the board for approval.

This is when I decided to learn about more effective ways of estimating project effort and delivery dates.

Or you can take the cynic's approach: Double the number and add an increment.

"I'll get that for you in an hour" = 2 days
Tomorrow = 2 weeks
1 week = 2 months
3 months = 6 years
"A year" = 2 decades

and so on.

It is a view of some writers, to see what the characters know, to see what the reader knows, and to see what none of them know, and to see what the author does not know. When I look at a story, at times I will add something into it, that seconds before was not my intention. Now I have another layer of mystery to fluff out and get into.

Verbally I have a jumpy mind, I can be on one track and switch gears and then switch back and then hop over a hill and know where I am along all the paths I have just gone. Other's who might be around me, think I am insane but I am not the only one in my family that does this kind of verbal gymnastics, My dad in the master of it at least most of the time. When my brother and him and I are in the same room others can see us as if we are all doing roller coaster verbal rides.

I can't think as fast while typing, but verbally I am a bit different than you'd think by reading my posts.

Thinking about thinking is something that people sitting on a mountain might be doing.


I am often reminded of a saying: Given the choice to change their minds or changing the world most folks opt for the latter.

I think one of the problems is that the leaders in Risk Management are not willing to step forward and say that there is a problem, when there clearly is one.

In an early draft of this post, the name of the former dean of a business school who made comment about the need for covering peak oil in risk management analyses was included. He had talked with colleagues about this issue, but had not make public speeches about the issue. When contacted about his willingness to be quoted on The Oil Drum, he wished to remain anonymous.

I think part of the problem is that if the need to make such an assessment were included, it would be an admission that prior assessments overlooked an important issue. Also, the likelihood of harm would be quite high, and the ability to mitigate the harm would be quite low. Businesses would not like this result.

That's my experience, Gail, as well. I had spent over eight months educating the person who I mentioned in my article The End of Retirement. That person was connected and could have made a difference. Instead, he is quietly preparing and saying nothing about what he has learned. Of my group of colleagues the only one speaking up is me. Most people who understand don't want to say a peep.

Fundamentally, I think it's a lack of courage. It takes courage to say something with no agreement and to keep saying it. People will use all sorts of rationalizations as to why they shouldn't speak up or can't speak up, but that's all a cover hiding their fear of the consequences of the group.

By the way, I'm fully aware of the possible consequences. I say here often enough that I have compassion for government employees because when they do something the public doesn't like, I'm quite sure the public would put that employee on the rack if they could. Yes, humans can be loving and compassionate, but go to a local council meeting to see how vindictive and nasty they can be, too.

I think an important part of the equation is that people need to be made to understand that unless everyone, or at least a critical mass, is preparing, then quietly preparing on a personal level is meaningless.

Its like stocking up on supplies, then stuffing towels and socks around the door to your stateroom...on the Titanic.

I agree. This is a frustration.

This post raises the question of whether sustained effort is worthwhile in order to get "decision-makers" aware of Peak Oil and thinking about "risk management" strategies.

Given limited amount of energy, we try to answer the following questions:
- Can they be made aware with a reasonable effort?
- Are they likely to come up with a response that I will find desirable, if they do address this risk?

If the answer to either of these is "unlikely", then the effort needs to happen on a different level. Stocking up on supplies is only a small part of personal preparation.

I am struck by how much our level of comfort with society as it is presently set up informs what we personally decide to do about Peak Oil. Sometimes it seems like the only hope for fairness (in the wake of the Supreme Court's decision to let corporations decide the outcome of elections, for example) is for a crash that will undo our system to its core.

So it is hard to find something of value within the worldview of "risk management" to want to salvage. We will not "manage" this risk, as as for "managing" our lifestyle, overhaul is a more appropriate concept.

Paranoid, you may be right. In any case risk management, as I am considering it, also includes the possibility of working from a "severe & undoing crash" scenario. I guess it comes down to a question: Does it help to know about a disaster before it happens? The answer is easy if the information helps to avoid the disaster - but if the disaster cannot be avoided? Would pre-evaluation of the potential impacts, estimates of severity etc be useful to preparing and setting realistic (yet ambitious) objectives for the aftermath? I would say the answer is still "yes", unless EVERYONE is opting for giving up.

Thanks for the reply. I fully agree that it is better to know about a disaster before it happens. I worry about who sets the objectives you mention. I am attracted to the Transition movement because it is a grassroots movement that offers objectives I can help design and sign on to.

My basic belief, that few things ever function as "neutral" tools, lead me to examine the sources of an idea ("risk management" in this case), and the uses to which it has seemed well-suited so far, and to extrapolate what I might expect it to do for me in the future.

There might still be a place for components of the risk management approach. Handing the tool over to "decision-makers" given the state of our "democracy", is what might be most UNdesirable.

- Assuming it's as bad as the Titanic.
- Assuming that your stateroom is the only place you can stock things.
- Assuming you aren't stocking shortcut maps to lesser known lifeboats.
- Assuming that you haven't stocked one or more inflatable life rafts.
- Assuming that you haven't stocked drysuits and flotation vests in chests that only you know the combination for.
- Assuming that others would believe you, so it's worth your time to try to convince them.
- Assuming that even if others believed you, they would want to stock things or help turn the boat.

Unless you think we're headed for a nuclear holocaust WW III (might be, who knows?), it doesn't seem much like the Titanic to me. In which case the rest of the assumptions aren't needed or valid. Besides, about a third of the passengers of the Titanic survived. If your goal were to get your wife and kids to safety, with a good chance of surviving yourself, all you'd need to do is camp them out near a lifeboat and have something like a dry suit for yourself.

For how many events in history could a bit of foreknowledge, preparation, and a willingness to do whatever was required not have gotten you through? Or at least tremendously improved your odds?

"For how many events in history could a bit of foreknowledge..."

Thats where you lose. The magnatude of what is happening is unlike anything else that has ever happened.

or maybe it's just a down turn in the business cycle. According to you, you just can't know and I say BS.

Aangel, I think you've said it well. Most people (politician included) want to look good....and the sooner the better. Few of us are prone to accept looking bad or odd "during our watch", as a means of contributing to something constructive in the future - "during someone else's watch".

It reminds me an old expression: "Its amazing what can be achieved if you don't care who gets the credit."

Your post has me thinking: "Jimmy Carter".

I had a meeting tonight with Hoffman and a representative for Leno, over the State Budget (California).
Peak Oil and Energy were not mentioned, and there was no question BAU would not continue as far a future revenues was concerned.
Not even there to be rejected.

Thanks for the update, Scott. I've (largely) accepted that it won't get discussed until gasoline prices are back up near $4 and the general population starts complaining.

A risk management strategy for Peak Oil strikes me as
a sham.
What is risk management? It is a financial strategy for hedging against risk. To offset sudden Peak Oil you would buy oil futures, something that triggered the last financial collapse.
Risk management is not about changing your lifestyle but about buying insurance so you can continue your reckless lifestyle.

It is pernicious .

Speed limits are risk management. Fire departments with plenty of redundancy are risk management. Food reserves are risk management. Hourly water quality tests at the local public swimming pool are risk management.

Of course all these and thousands of other analagous activities could all be viewed through a monetary lens, something a simplistic mind might do.

Yes, precisely, these are good examples. Risk management does not appear to question the basic value of the underlying enterprise. The problem is narrowly defined as a speeding problem, when it could also be defined as a car problem. There is an implicit value judgement that causes us to fail to look outside the box.

Where misapplied, it allows corporations to continue manufacturing harmful products, while managing their risks with well-paid lawyers (or decision-makers).

And even if there are no value judgements involved, how do we decide if what we have on our hands (Peak Oil) is more analogous to of testing the local swimming pool, or testing the CAFO meat supply? And are we just testing the water quality hourly, or like in our local pool, are we getting kids out of the water for 5 minutes every hour, so the little ones will be more likely to use the restroom?

Simplistic minds have no place in any of this.

The issue of traffic speed is an interesting case. 'We' have decided to impose speed limits, but these are very high and permit significant, ongoing risk. This risk is mitigated by vehicle crash standards, seat/shoulder restraints, air bags, improved braking systems, road redesign, reconfigured signals (e.g. stop lights), education campaigns (drinking and driving, etc.), enforcement with radar, and so on.

All these latter measures are intended to make life at the limit of sanctioned speed less risky.

Why didn't 'we' decide to just lower the speed limit to a level which achieved all the gains made by all the other risk reduction measures?

Is there a lesson in here somewhere for the conception of risk management with regards to peak oil?

"Why didn't 'we' decide to just lower the speed limit to a level which achieved all the gains made by all the other risk reduction measures?"

Actually, this was done, and subsequently abandoned...

"The Locomotive Act (also known as the Red Flag Act) is a reference to the Locomotives Act 1865 introduced by the British parliament as one of a series of measures to control the use of mechanically propelled vehicles on British public highways during the latter part of the 19th century. This act required any motorised vehicle to be preceded by a man with a red flag."

Lower speed limits will lower the risk, if they are observed, but that's no good if they are not accepted.

Also, most carmakers will not guarantee survival in their cars, with the existing safety equipment, once speeds are over 60km/h (40mph) - what are the chances of getting the highway limit down to that?

I think the most important factor in risk management has been missed in the discussion to date. It all boils down to our elected politicians weighing up the risk of their being re-elected, or not. All other considerations are secondary.

For an example of government doing risk management on real world situations, and not electoral popularity, we need look no further than China..

Why didn't 'we' decide to just lower the speed limit to a level which achieved all the gains made by all the other risk reduction measures?

Well, there is that old law that required every motorcar be preceded by someone walking ahead of it with a red flag to warn people it was coming. That probably kept the accident rate down.

But, realistically, there is a cost-benefit tradeoff. Time is money, so driving slower costs people time and therefore money. Accident rates don't increase that much as speed increases, up to the design limits of the road. Every road has a design speed, and if you exceed that you are going too fast, but less than that you are driving within the limits of your reaction time. People tend to ignore speed limits, anyway. So, in general, you will get better results improving the roads and cars than in reducing speed limits. The drop in accident fatalities over the years illustrates this.

The German autobahns have no speed limits, and Germans insist on driving as fast as their cars can go (generally 100 MPH and up), but they don't have many more accidents doing that (The ones they do have are really spectacular, though.) They do have the advantage that people who can't drive very well stay off the autobahn and take the train instead.

Most car accidents are caused by alcohol, inattention, or incompetence, rather than speed. The real danger in cars is the nut that connects the seat to the steering wheel. And if you're really worried about car accidents, take the bus. Buses have a far lower accident fatality rate than cars. Trains are extremely safe as well.

Risk management is supposed to be more than a financial strategy, but getting away from the impacts of peak oil is going to be very difficult, regardless of what strategy one uses. Facing up to this will be difficult for risk managers. It seems like realization of this risk will call into question the usefulness of all of the other mitigation efforts the risk manager might undertake.

There's a book called "The Failure of Risk Management: Why It's Broken and How to Fix It" by Douglas Hubbert that is a worthwhile read for anybody who's interested in the subject. It looks at risk management in some detail and examines a lot of the reasons why it doesn't work all the time or for all people.

He points out that there's no scientific basis for a lot of current risk management methods, and they fail in predictable ways. Risk managers do not approach the problems in a methodical way and fail to evaluate whether their methods really work or not. A lot of their "best practices" are ineffective in evaluating or mitigating risk. Many of the models exclude the biggest risks and just assume they won't happen, rather than calculating the effect of the unthinkable happening. (I think of this as the Hurricane Katrina Effect - it's too horrible to contemplate what would happen if a Category 5 hurricane hit New Orleans, so let's just not think about it.)

Peak Oil is one of these big risks that are excluded from most models because it just messes things up so bad people don't even want to think about it.

He doesn't really talk about Peak Oil, although he does point out that oil companies that use the best risk management techniques have the best financial track record. For people who are wondering what the USGS is talking about when it uses Monte Carlo simulation methods to estimate reserves, he goes into some detail on how Monte Carlo methods work, and explains their pitfalls. I think the USGS has fallen into most of the pitfalls.

Monte Carlo is a great tool which I have used in the past. The big thing is to remember that in real life, you don't get hundreds or thousands of do-overs. Real life just runs one time, so you had better try really hard to make the right bet. Monte Carlo can help give you some feel for where the range of uncertainty lies, but it is very much subject to GIGO - garbage in, garbage out. As you mentioned, most people underestimate or ignore the black swans lurking far out in the tails.

Another way of saying that, which I just heard, was "taking failure seriously."

William Eggers, co-author of "If We Can Put a Man on the Moon, Getting Big Things Done in Government," (Amazon) describes how and why the London traffic congestion charge roll out worked so well. They did as much scenario planning as any I've heard because they really, really, really didn't want to fail.

That anecdote starts at 25:15 but the whole talk is very worth it. I think, WNC, you will very much appreciate how they approached that project.

Commonwealth Club Video

Great one Aangle. Now we are talking. That was great. Thats why I have no doubt that once we get on the right path humanity has the tools needed to engineer the power down.

That said we need to stop going over the details Ad nauseam and focus on forcing the situation onto the right path.

Hi Gail,

From your vantage as an actuary what difference do you see in risk categorization between standard but unpredictable risks like lawsuits and natural disasters and unique but predictable risks like peak oil and climate change?

I ask because I imagine that risk management teams speak freely and with conviction about the risks likelihood and consequences of hurricanes in the Gulf of Mexico and that the oil companies operating in the area listen to their advice. I would expect the same working relationship for lawsuits and pharmaceutical companies. Lawsuits and hurricanes happen all the time but you never know where, when, or how bad it will be.

Peak oil, climate change, and to some extent the financial crisis are fundamentally different types of risks in part because the projections are based on models that will only be proven after the fact instead of statistical analysis of historical data. And in part because people have no working knowledge or personal experience of the events.

It seems to me that actuaries and risk management teams are nominally advisers to leadership but that the two types of risk are presented and received differently. The routine, localized, random risks are confidently presented as factual information and it is received as valid data to be acted on. But the unique, global, projected risks are presented as tentative advice for consideration. Leadership has difficulty receiving the information because risk and uncertainty are normally reduced to quantified, actionable reports.

I see what you are saying. If what is being quantified is something that a person can project from the past, based on a history of discrete events, risk managers are quite comfortable with the idea. If it is new, you say based on a model, they are uncomfortable with the idea--and management wouldn't expect information presented that way. I think there is an in between area--it seems like some are modeling hurricane risk, as if climate change will have some impact on what might be projected from historical results.

I think the problem with peak oil (and other limitations to growth) is that most people (management, economists, risk managers) are working from wrong models (unlimited supply), and refuse even to consider the possibility that they should be using a finite model. If they sat down and used even limited common sense, they would see that the standard models are wrong. Of course, if finite models were used, it would be clear that the problems being described have a very high probability of happening--in fact, some of the predicted problems are already happening (recession, debt default, much higher than historical oil price). So management can see no need to listen, and risk managers, operating from the past, can see no reason to quantify the problem.

Remember the oil crisis in the 70s? (Ok, tbh I don't, I'm from later)

But afaik, people were scared of running out of cheap energy back then too. Imagine if you presented a risk management strategy revolving around 'the insecurity regarding oil and energy supplies in the future' end 70s. You'd be presenting an uncompetitive strategy for companies, because afterwards came the era of cheap oil.

The problem of peak oil is that we don't know the exact effects (in terms of how dramatic) and how fast those effects will be seen. The thing that makes that a bad thing, is that post peak operation requires a significantly different mode of operation compared to pre-peak-effects. Switching mode of operation too soon incurs significant cost that can only be justified by imminence of necessity.

Hi Gail,

If it is new, you say based on a model, they are uncomfortable with the idea... I think there is an in between area

I used risk management techniques in a couple of different ways and never was too comfortable with the more standard idea of mitigating financial risk - I also found a lot of BS floating around the subject.

However, as a developer of some fairly large scale, fairly risky, fairly unique computer software systems in the area of supply chain logistics, I did use a simple risk management technique that was quite useful: our team kept a running "top 10" list of the potential problems that could have a nasty impact on the project. It could be some new wireless protocol, or the control of a piece of conveyor equipment in real time, execution speed, or the effectiveness of a user interface, etc. The main idea was to reduce the risk that these potential problems would surface when it was too late or too expensive to fix them. Our basic strategy to reduce the risk was to create a high priority prototype environment to test the feasibility of one or more approaches to solving the problem.

So, to your point about an in-between area, if we applied this narrow form of risk management to PO we would, of course need a "project" and some project goals. Let's assume the project is to "powerdown" to end of the century with the least amount of pain (I know, kind of weak).

Our top 10 list would come from the "team" (say TOD folks) and we would list things like depletion rates, population overshoot, excessive consumption, debt and credit, technology expectations, war, etc. From there we would spin off sub-projects to test various strategies for mitigation of the various potential problems. The best solutions would then be incorporated into the overall project and fine tuned for compatibility.

Although this type of risk management could work well with PO/GW/etc, I think there is one major flaw: we do not have an identified project nor an agreed upon a set of goals and objectives. We don't have a project because the stakeholders (all humans) do not agree that a problem exists.

On one hand, some variant of risk management techniques could be useful; on the other hand, I does not seem we have the proper context to use this methodology.

I think part of the problem is that we are up against limits to growth, so mitigation options are pretty limited. If it were only oil, we would be a lot better off.

Hi Gail,

I agree that the larger issue is much more than FF/GW. If (big if) we had general agreement on the problems and goals, then I think our mitigation options are substantial. This does not mean that these options are very pleasant - it just means that we could try to minimize the pain and optimize the results emerging from the bottleneck we anticipate in the coming decades.

On the other hand, lack of planning for this type of mitigation could easily result in much more dire consequences than we might otherwise endure.

The focus of most formalized corporate and governmental risk management plans tends to be on the short-term effects of discrete events, such as an interruption in oil/gas supplies, strikes, natural disasters, international conflict, and other expected but unpredictable problems generally lumped under the heading 'force majeure'.

As far as using formalized risk management techniques to deal with a long-term degradation of our economic and industrial base, I would say that it is pretty much useless, largely because big business and big government are structurally incapable of implementing massively expensive measures that yield little or no immediate payback.

For example, when I was with one such large corporation about a hundred years ago, I recall a really nasty turf battle between the engineering department and the financial boys over whether it was a proper use of capital to install a relatively modest size emergency oil storage tank at one of our manufacturing facilities so as to allow operations to continue in the event of a supply disruption. Now scale that sort of a situation up about a million times, and one can easily despair of anything significant getting done.

Furthermore, its been my experience that any corporate initiative with the prefix 'ISO ....." on it will be a largely useless exercise in paper generation. The staff pretends to create a risk management plan so that management can pretend to have one. It's easy to generate paper as long as it doesn't result in money being spent. This sort of mutual masturbation seems to be particularly prevalent in the area of environmental and health/safety matters.

And I fully agree with the previous poster in that business schools and the people coming out of such are more likely to be part of the problem rather than the solution. Why do you think the Dilbert comic strip has become such a success?

I'm coming late today to this conversation.
Your story sounds right on the button.
Gail's comment just up-thread makes an interesting point - it rings true to me but I can't quite get my head round the 'if they just use commonsense' bit

If they sat down and used even limited common sense, they would see that the standard models are wrong. Of course, if finite models were used, it would be clear that the problems being described have a very high probability of happening--in fact, some of the predicted problems are already happening (recession, debt default, much higher than historical oil price).

It was not quite a hundred years ago but I was a horrified close-up bystander of official policy during the BSE (mad cow) years here in UK. The risks were simple. We knew (scientifically, but surrounded by many scientific uncertainties - scientific knowledge is not the same as usual 'local facts') that prions, the putative transmissible agent, could move between species by oral transmission. Some cases there was no transmission, but on the other hand there had been a case of 100% transmission to a zoo ungulate, IIRC. Thus if the whole of UK was exposed to BSE agent there was a possibility of transmission between zero, or 100%. The latter meaning we would all 60M of us die of BSE eventually. The latter risk was dismissed as too improbable. The clever argument was deployed that BSE was 'scrapie' passed on from sheep, because sheep derived protein had been added the to cattle feed. Humans had eaten 'scrapie' for at least 200 years and were apparently immune. The inconvenient fact was omitted that cattle had also been fed to cattle in the rendered protein mixes, and that BSE might not be scrapie. Commonsense said there was a reasonable chance that if you fed a novel(?) prion to 60M persons then some of them might show mad cow disease. This argument was not factored into risk assessment.
In official/industry circles the biggest risk was instead believed to be 'panic' that would scupper the beef industry. Of course it took in fact just one verified case of BSE in a human to scupper a large part of British Beef industry. The subsequent costs of regulation and safety measures was immense. (We had already it turned out scuppered the hemophiliacs).
With relevance to Peak Oil; your company's accounts type people actually running government? Sounds scary to me. The 'clever', 'anti-panic' argument clincher currently being deployed is that we have had lots of 'Peak Oils' and they have all been wrong. We are immune!

Governments and corporations do risk planning exercises of this sort when it comes to exceptional, intense, short-term events - natural catastrophes, terrorist attacks, etc. They do these because the potential political impact on the people on top can potentially be so very bad. They don't want such things happening "on their watch" if they can be avoided, and if they happen anyway, then they don't want to look bad. Even in these cases, sometimes the planning isn't done very well, or the execution. Examples: Katrina, Haiti.

Where they don't do so well is when it comes to long-term trends. An exceptional few corporations sometimes look at these a bit when it comes to identifying future opportunities or threats to their product lines or market shares, or where there are long lead times from initial investment to income stream (the oil industry, for example), but that is a very narrow focus. Governments also look at the long term mainly in the context of decision support for investments with long lead times - weapons systems or highways, for example. When it comes to broader, big picture views of the future, very little indeed of that is done. For the most part, those at the top assume that whatever happens ten or twenty years or more in the future won't be happening "on their watch". The future is thus pretty much "out of sight, out of mind" for them; their focus is very much on the present.

Those at the top of both business and government are particularly closed-minded toward any consideration of negative or pessimistic scenarios of the future. They have not gotten where they are by being negative and pessimistic, there is a culture in both business and politics that is strongly biased in favor of positive and optimistic people, and biased very much against negative, pessimistic people. They are not going to change their mode of thinking, and they are not interested in surrounding themselves with people who are not equally positive and optimistic.

Peak oil is just part of something bigger: the fact that non-renewable resources are finite and must all peak and decline - soon!, and the inevitable decline in the material basis of the economy that this implies. There is no silver lining around this cloud, there is no about of spin that can turn that into an optimistic vision for the future. Life may go on, and there may even be some good and happy things about life in the future, but we will be poorer. This is not the kind of story that the people at the top want to hear or even think about. The top dogs don't want to be the ones to break the bad news to the general public, and their underlings don't want to be the ones to break the bad news to the top dogs.

The bottom line in all of this: Stop looking to the government to become "peak oil aware" and to start doing the things that could help us to best adapt to a future of declining oil supplies. You are bound to be disappointed, it just isn't going to happen. Once we are far along the decline slope and the consequences have become severe enough, then things will have to change. Most likely, the change will first and foremost involve a different cast of characters. The type of mindset and skills required to effectively lead any government or business management through the types of adjustments required in a period of long-term decline are totally different than what is required and prized in the BAU positive/optimist culture. Only when we have totally different sorts of people in charge than the types we have now will I start looking to government and business to provide any sort of positive assistance to us as we navigate our descent.

In the meantime, we are on our own. It becomes all the more important for individuals, households, communities, and small businesses do do their own risk assessment and management. It is especially important - and I cannot emphasize this enough, please pay attention here - to deliberately offset the positive, optimistic bias that is prevalent amongst the top leadership layer of society, and that is promulgated as the "official outlook", with a more negative and pessimistic bias. Because those at the top are assuming that things will work out for the best, those of us at the bottom had better assume that things will most certainly NOT work out for the best, and may work out very badly indeed! This is the only approach that is sensible and prudent for most ordinary people to take.

Swedens Government is peak oil aware but doing something serious about global warming has even higher priority. Everybody who is doing anything serious with energy knows about the development of the north sea production of oil and gas and so on. The former socialist government had phasing out oil as a significant goal and it lives on in the governmnet institutions since it makes sense. The current right wing government has no incentive to change the work being done since it isent an ideological issue, its a practical issue and it would both hurt our country and the next election to screw up a practical issue.

Our neighbours Norway, Finland and Denmark seems to be about as practical. The Norwegians have allways connected the dots and Finland are pushing for more nuclear power even when the reactor building is late and over budget.

I regard a peak oil aware government to be a realy good thing and much of the environmental investments are made by the municipialities.


I was writing mainly in a US context. There are some countries with national governments that operate under a very different culture than what we have here in the US, and are just plain better managed than we are.

WNC Observer said:"In the meantime, we are on our own. It becomes all the more important for individuals, households, communities, and small businesses do do their own risk assessment and management. It is especially important - and I cannot emphasize this enough, please pay attention here - to deliberately offset the positive, optimistic bias that is prevalent amongst the top leadership layer of society..."

I think you've done a good job expressing the sentiment of many (most perhaps), and the resulting frustration and almost helplessness on the individual in society is numbing. My own sense - and you have touched on this - is that we have to find the most effective "soft spot" to address and work with. By this I mean, federal and central governments are ironically less apt or capable to hear and act (though they are certainly not ignorant of peak oil and its potential impact) - but this is probably not the right place. At the other extreme are individuals- who are probably too numerous and atomized to address and organize/mobilize in any productive fashion. In between however there may be a chance for leverage. My feeling then is that clusters of people (represented via companies, industries, city/municipal governments...and their respective leaders) may be that soft spot to address and create movemement.

I think that it is going to come down to people picking their turf carefully. I have serious doubts about the long-term sustainability of the USA as an integrated nation. It may take a century or more, but I think the probability is quite high that the US will eventually break up into a number of regional entities. Some of these will do much better than others. Of course, within each region there will also be local communities that do better than others.

I am really starting to question whether the effort to "save" the USA in its entirety might be futile. We can't undo the past several decades of history, too much has happened. Like all empires, our day in the sun must eventually come to an end. That does not mean that North America becomes a wasteland, but it does mean breakup. Life goes on, but it will go on at a smaller scale and on the smaller stage of smaller political sovereignties. In a low-energy-throughput world, I am doubtful that anything but smallish nations can exist anyway.

This thus suggests to me that if one is going to put one's efforts into anything, it should be in the local community and bioregion of one's choice. Hopefully, the place one picks will be among the "winners", and one would be well advised to give some thought to maximizing one's chances along those lines sooner rather than later.

"It may take a century or more, but I think the probability is quite high that the US will eventually break up into a number of regional entities." Posted by WNC Observer

I suspect that the initial start of the break-up will be far sooner than a hundred years out; more like 15-35 years. But I agree that the process of breaking up could go on for a century or two or three, unevenly, in fits and starts until finally some sustainable level is arrived at.

"In a low-energy-throughput world, I am doubtful that anything but smallish nations can exist anyway."
Posted by WNC Observer

I expect at the end of the process I referred to above, the political map of most of the world will resemble that of Germany before the 1871 unification. I can't see that this is necessarily a bad thing, but there seems to be some kind of philsophical/emotional commitment to large political unions which may complicate the winding down.

Antoinetta III

I think the word for that process, of going to smaller and smaller nations, is called "Balkanisation", and in my opinion, it doesn't work very well.

The US can survive as a large country, as long as the things that unite the people/states are greater than the things that divide them. And I do agree that that unity is likely to be seriously tested in the next few decades.

Canada has staved off the threat of an internal split (Quebec separation) for three decades, mainly because everyone knows Quebec, in it's current state, couldn't thrive on it's own, and lots of the english speaking people would leave for the rest of Canada, weakening it further.

Somewhere like Texas, however, is quite a different story. Places that are strong enough (which these days means are energy independent) can probably do it, which of course, eaves the remainder even more energy dependent...

Regional secession is entirely likely at some point, just look at irredentism throughout Europe. Borders have been redrawn, new countries have emerged, and empires have risen and fallen. I don't see why the U.S. will last forever, forever is a very long time. If things get bad enough who knows what could happen. With ELM I think the entire U.S. will be "energy independent", but not because it wants to.

If people are not happy with the government and declining living standards at some point, they may not see a beneficial relationship with the federal government. The republic has been abolished before, it can happen again. I don't think it'd be a shooting war though.

You must have cultural as well as economic glue.If the multiculturalist camp gets thier way, they will wish most ardently that they had not.

Not a lot of diversity was tolerated in places like a German kingdom or ministate before unification.

Indeed, I don't pretend to be able to predict the future but I imagine "multiculturalism" will be as dead as globalism. Just more symptoms of a culture of excess and a high energy society, "Our culture isn't good enough! Bring in other people and have them continue to be different so we are enriched!". Who knows how identity politics will play out in the future, I'm thinking it was a bad idea to encourage foreign language retention.

Hi oldarmermac,

re: You must have cultural as well as economic glue.

Agree so strongly. There has to be a set of values that overrides the particular. Something like, "This is how we, citizens of the world, treat each other - with care, respect. etc."

re: "If the multiculturalist camp gets thier way, they will wish most ardently that they had not."

My observation is that many of "them" (in the mc "camp") are simply short-sighted.

They don't see the positive aspect of a *type* of what I will call assimilation (for the lateness of the hour and not being able to think of exactly the right word) - maintaining certain traditions, while embracing a civil society and understanding how it works and why. In other words, understanding what enables the diversity of custom, culture and religion to peacefully co-exist and even go beyond that in a positive sense.

Hi Mac,

I think there are a few levels of multi-culture appreciation and, at some level, a very good thing. For example, we support our local Irish Heritage and Cultural Center. We really like the music, tracing the roots of our grandparents, the old stories, myths, poetry (and even the food!) But this all falls into the category of "fun and games" - I totally gave up on trying to learn any Irish Gaelic language. We have lots of ethnic restaurants and summer festivals for French, German, Italian, Indian, Asian, African, etc. Lots of fun to explore all these cultures and their histories.

But, I think that actually supporting languages, religious customs, holidays, etc as part of government mandates, is a slippery slope and needs to be approached with great caution. There is a good argument for services to help legal immigrants who are in transition. However, it seems to me that a common language and a shared sense of what is really the "common good" will be essential in trying to deal with the problems coming down the road.

I expect at the end of the process I referred to above, the political map of most of the world will resemble that of Germany before the 1871 unification. I can't see that this is necessarily a bad thing, but there seems to be some kind of philsophical/emotional commitment to large political unions which may complicate the winding down.

Read Leopold Kohr's The Breakdown of Nations - it will change your thinking about small vs. large nations.

[...] there seems to be only one cause behind all forms of social misery: bigness. Oversimplified as this may seem, we shall find the idea more easily acceptable if we consider that bigness, or oversize, is really much more than just a social problem. It appears to be the one and only problem permeating all creation. Whenever something is wrong, something is too big. [...] And if the body of a people becomes diseased with the fever of aggression, brutality, collectivism, or massive idiocy, it is not because it has fallen victim to bad leadership or mental derangement. It is because human beings, so charming as individuals or in small aggregations, have been welded into overconcentrated social units.

Kohr may very well have been the author that influenced my thinking more profoundly than any other that I have ever read.

Large nations make large wars, small nations make small wars -if any. Enough said.

You are all wrong!

The problem is not business schools. The problem is not leadership in risk management. The problem is not lying corporate management. The problem is not local, state or national governments. The problem is human nature. You can change people's minds about most anything... unless it requires that they change their worldview. That is the one thing that they will not change.

For instance, a person's religion is part of their worldview. Ever try talking a person out of their religion? But their worldview encompasses more than just their religion; it encompasses their view of the future for them, their children and their grandchildren. All will be okay in the long run, their worldview dictates this and they will not believe otherwise.

The story of Cassandra of Troy was a lot more than just a story told by Homer. It is an allegory, an allegory about human nature. Anyone foretelling possible world catastrophe will simply not be believed. People's worldview demands that all people predicting future catastrophes be wrong.

Ron P.

Cassandras are people. Do they not also have human nature?

Some people came to believe Moses and Jesus, whoever they were historically. Some people turn to alternative medicine. Some people change religions. Some people, let's say hypothetically, find out about peak oil, and then leave their job and change their lifestyle.

So of course worldviews can change. Maybe the problem is that we don't understand how it happens. (Hint: read "Influence: Science and Practice", by Robert Cialdini.)

I'd also suggest, before we all go arguing about how static and unchanging human nature is, that some of us investigate neuroplasticity, or how the brain actually changes and re-wires itself throughout life. They are now figuring out how to amputate phantom limbs, improve autism, getting some blind to see, some deaf to hear, and some stroke victims to regain nearly full function again. (Hint: "The Brain That Changes Itself", by Dr. Norman Doidge, book and audiobook available on Amazon, your local library, torrents, ED2K, and other filesharing.)

And, yes, of course, we are all wrong because all models are wrong. But some models are more useful than others.

May I respond for Darwinian:

Worldviews do not, cannot change, and for proof I offer myself as an example.

Thank you.

Cassandras are people. Do they not also have human nature?

Huh? 710, when I, or most others for that matter, make a statement about human nature we are not implying that everyone has the exact same nature. Far from it, we all differ, to a greater or lesser degree. Most people place great store in the words of their authority figures but there are always exceptions.

So of course worldviews can change. Maybe the problem is that we don't understand how it happens. (Hint: read "Influence: Science and Practice", by Robert Cialdini.)

You are doing it again, putting everyone into one category. Of course some worldviews can be changed but the vast majority cannot. Some people are by nature more skeptical than others. Such people are more open to the changing of their worldview. These people are rather few and far between however. And I have read Influence by Robert Cialdini. It was one of the best books I have ever read. I often quoted from it when I was a member of the Energy Resources list.

Do you remember the part of the book where two researchers joined the group that planned for the end of the world when their spaceship arrived? Do you remember that when the spaceship failed to appear, and the disasters failed to happen, how everyone but one kept the faith. The medium, who talked to the aliens, simply received a message saying they had decided to spare the earth. One man’s worldview changed, the rest kept the faith.

One member of the group, a doctor, stated that he had to believe. He had given up everything for this; he simply had to keep believing. And so is the nature of human nature.

Ron P.

It is impossible to reason a man out of something he has not been reasoned into. When people have acquired their beliefs on an emotional level they cannot be persuaded out of them on a rational level, no matter how strong the proof or the logic behind it. People will hold onto their emotional beliefs and twist the facts to meet their version of reality.

Sidney J. Harris, American Journalist

Human nature is the bad and the good. We all want more (of anything perceived to be positive).
That is good because it got us out of the caves, standing up, reading, cruising the web, finding TOD.
That is bad because in our quest for "more" we consume our enviroment and drown in our waste.
(enter Bob Shaw (I think): no, we are not smarter than yeast).

Thanks for checking out the science.

The claim that the vast majority of worldviews cannot be changed? A centuries-old myth, born out of Descartes' (I think, therefore I could be wrong) idea of a static, unchanging brain.

Clearly I have taken the wrong approach in attempting to change your worldview. Not so clear is whether changing your worldview would be a fruitful undertaking.

"You are doing it again, putting everyone into one category."

You are doing it again, projecting, AND putting everyone in the one category of "worldviews do not change".

Worldviews can change - it is called a "paradigm shift". Paradigm shifts don't just happen, and it is not so much a matter of argument. It is a matter of there being "new facts on the ground", and a new way of seeing those facts becoming viral. This doesn't happen often, it doesn't happen lightly, but it does occasionally happen.

WNC, question: When on those rarefied occasions when one's worldview does change, what do you think usually changes it, words or events? In other words what usually brings about a paradigm shift? Have you ever talked a man out of his worldview? Is this what usually changes worldviews, that is arguments? Or are sudden paradigm shifts usually brought about by earth shattering events?

I remember a history teacher of mine who, standing on his desk back in the 1950s, screamed to us: There is no such thing as a revolution in the mind of man, there is only slow eventual evolution." That was of course in the early days of the civil rights movement. I can think of no person from those days who had a revolution in his mind, not a single paradigm shift in the mind of a single one that I can name. But looking at the situation now it is obvious that there has been a slow eventual evolution... on a massive scale.

Ron P.

I think the driver is events, although especially in the case of scientific revolutions, one might be fooled because the event is surrounded by the words of published and presented papers. "Event", btw, needs to be defined quite broadly. A scientific experiment or observation can certainly be an "event", or example. It doesn't really matter all that much how eloquent and persuasive the words writing it up are, the real persuasiveness is that sceptics can examine the evidence or replicate the experiment for themselves.


Your history teacher was speaking about a decade before Kuhn's Structure of Scientific Revolutions came out. He might have modified his position somewhat after reading that.

As for the civil rights movement, IMHO the key events were in 1963, between Bull Connor turning the fire hoses on people at Birmingham in May, the murder of Medgar Evers in June, and the Birmingham church bombing in September. There was indeed a pretty sudden change of minds after that - most Northern whites and quite a few Southern whites decided that this was not the type of country that they wanted America to be. The passage of the civil rights act would have been very difficult before these three linked events, but it became virtually inevitable after them. Some would claim that King's speech during the March in Washington was what did it, but I don't think so. Quite a few white people heard what African Americans were asking for at that time, but that didn't necessarilly change many minds. It was the violent events before and after that convinced them that something had to change.

Yes, no doubt scientiic experiments can change one's mind. But usually it changes only those who are already on the fence. Some scientists have so much invested in their pet theories that even though they may be proven worng, they hold on to them until death. This is what led Max Planck to declare; "Science advances one funeral at a time."

Ron P.

Yes, that is true. Some people are so hidebound that they won't change their thinking even when reality hits them between the eyes with a 2 X 4. We are seeing the same thing wrt peak oil. It is an interesting question, why some people are open minded and others so set in their ways. You strongly hinted at it with that word "invested", and I believe that Kuhn pretty much agreed with that.

So it is "nothing ventured, nothing gained", but venture ("invest") too much in a particular theoretical construct or paradigm or worldview or whatever, and it becomes "much ventured, much to gain OR lose". And that brings us right back to risk management again!

WNC, very true and that's the tough part. By the time the facts on the ground change, it will be too late to properly plan to mitigate much of the damage. The adjustments will be made as a reaction rather than a plan. Get used to small cars, small homes, close vacations and high inflation.

It is impossible to reason a man out of something he has not been reasoned into. When people have acquired their beliefs on an emotional level they cannot be persuaded out of them on a rational level, no matter how strong the proof or the logic behind it. People will hold onto their emotional beliefs and twist the facts to meet their version of reality.

Sidney J. Harris, American Journalist (emphasis mine)

Clearly, then, you do not attempt to change someone's worldview on a rational level, since that method fails. To continue to do so would be insane. I never suggested that changing a worldview could only be done on a rational level.

This is why you don't approach it on a rational level, but on an emotional level, hence my reference to Robert Cialdini. Why didn't the other spaceship travelers change their worldview? The answer is contained in that book. How could those people's worldviews have changed? The answer is contained in that book.

My guess is that you're afraid of being wrong about YOUR worldview, one of the worst things that can happen to a thinking, caring person like yourself. Hmm. What to do about fear.

Clearly I have taken the wrong approach in attempting to change your worldview.

Really? What is my worldview? Why would you wish to change it? How does it differ from your worldview? What the hell are you talking about?

How could those people's worldviews have changed? The answer is contained in that book.

No it's not. 710 you are making no sense whatsoever. You are just rambling on and there is no intelligence in your argument, if you have an argument.

One point. Every proselytizing religion in the world is dedicated to changing everyone else's religion, a huge chunk of their worldview. To the degree that they are successful is the exact degree that a person's worldview can be changed.

In an attempt to make my point clearer I feel the need to post the entire Sidney J. Harris quote.

Perhaps the most important advance in the behavioral sciences in our times has been the growing recognition that the perceiver is not just a passive camera taking a picture, but takes an active part in perception. He sees what experience has conditioned him to see. What perceiver then sees what is really there? Nobody of course. Each of us perceives what our past has prepared us to perceive. We select and distinguish, we focus on some objects and relationships and we blur others. We distort objective reality to make it conform to our needs or, our hopes, our fears, our hates, our envies, our affections.

Our eyes and brains do not merely register some objective portrait of other persons or groups but our very active scene is warped by what we have been taught to believe, by what we want to believe and by what we need to believe. It is impossible to reason a man out of something he has not been reasoned into. When people have acquired their beliefs on an emotional level they cannot be persuaded out of them on a rational level, no matter how strong the proof or the logic behind it. People will hold onto their emotional beliefs and twist the facts to meet their version of reality. -Sidney J. Harris

Ron P.

"No it's not."

Yes, it is, and I say that with a clear understanding that I currently do not have the skills and resources and access to change your mind.

So as many are fond of doing in situations like this, I give up on this argument with you. For now.

Everyone else should check out Dr. Norman Doidge's book on brain plasticity.

Yes, it is, and I say that with a clear understanding that I currently do not have the skills and resources and access to change your mind.

Change my mind about what? Have you a clue as to what you are talking about? Do you even know what a worldview is?

(Wikipedia) According to Apostel, a worldview should comprise seven elements:

1. An ontology, a descriptive model of the world
2. An explanation of the world
3. A futurology, answering the question "where are we heading?"
4. Values, answers to ethical questions: "What should we do?"
5. A praxeology, or methodology, or theory of action.: "How should we attain our goals?"
6. An epistemology, or theory of knowledge. "What is true and false?"
7. An etiology. A constructed world-view should contain an account of its own "building blocks," its origins and construction.

Most of the answers to these great questions are already cemented in the mind of the child before he reaches adulthood. Not necessarly the right answers of course but answeres nevertheless. Lotsa luck on changing any of them with an argument. But you think you have a book that tells you how to do that. Now where have I heard that before?

Ron P.

OK - this back and forth between Ron and 701 brings up an issue I have run into before. I have read many (such as Thom Hartmann, J.M. Greer) who claim that what needs to happen for us to change our unsustainable ways is to have a massive change (improvement) in human consciousness - either an evolutionary leap in collective wisdom or a chathartic realization akin to a collective spiritual experience. This basically says that ideas change things and that some kind of right thinking education program, propaganda, or ideas (new mythology) will spread and help people overcome the habits of generations accustomed to cheap energy or the momentum of nature and entropy.

Yes - ideas and new philosophies do precede the widespread acceptance and cultural implementation of a new idea - so in a sense, thought does always precede and guide eventual cultural acceptance or belief. And on an individual level, one can have a chathartic experience or realization that does change fundamental beliefs. But it doesn't happen that often to that many people - entropy and the Pareto distribution?

I think a culture does not accept a new worldview or mythology until the ecology or economy makes it necessary. I agree with anthropologist Marvin Harris and the theory of Economic Materialism, which states that many religious beliefs, cultural taboos, and mythology arise from recognition of ecological realities. Raising pigs in a desert environment doesn't work energetically, so eating pig becomes taboo. Large families are beneficial to rural farmers, but not urban dwellers. A cow is worth much more in labor energy than food energy, so cow eating becomes taboo.

Joseph Campbell also stressed the causal connection between ecology and mythology. The Sioux originated from Minnesota woodlands and once had woodland mythology and deities. When the horse made living on the plains possible, enter sky, directional gods, and the White Buffalo. Not the other way around.

We will collectively adopt and embrace sustainable thinking as truth and mythology when we must follow it to survive. This is the hard heart of our PO predicament - that we will likely suffer and become poor in order to live within our means and realize the wisdom and common sense of sustainability...

For 710 (and any others hopelessly wedded to the idea that one can "educate" the willfully ignorant out of their batshit craziness), let me recommend "Greetings from Idiot America", one of the best lay-pieces written on the subject I've ever read.

Yes, over time, minds can and do change. However, before this process can even begin, one's mind must be "open" (receptive) to said change. I would further add the prerequisites of generally valuing reason over religious faith, and weighting empirical evidence above magical thinking. Which, for the great majority, is not the case.

Thanks Harm.
(Yesterday you might have had me "believing" in abiotic fat.)
In a world of batshit I always end up saying the same thing.

Belief is the enemy of truth.

I don't believe in peak oil. I just happen to think it is happening. With reason.
Without reason we have beliefs. These make us helpless tools of the charlatans who make them up and feed them to us.
For money, power, dominance, all the usual suspects. BAU in other words.

The necessary paradigm shift referred to in posts above requires a mass rejection of belief.
Luckily the Pope is on my side.

Philosopher and theologian Joseph Ratzinger, before his election as Benedict XVI, commented upon the relationship of truth with tolerance, conscience, freedom, and religion. For him, "beyond all particular questions, the real problem lies in the question of truth."
Ratzinger refers to achievements of the natural sciences as evidence that human reason has the power to know reality and arrive at truth. He also argues that "the modern self-limitation of reason" rooted in Immanuel Kant's philosophy, which views itself incapable of knowing religion and the human sciences such as ethics, leads to dangerous pathologies of religion and pathologies of science. He thinks that this self-limitation, which "amputates" the mind's capacity to answer fundamental questions such as man's origin and purpose, dishonors reason and is contradictory to the modern acclamation of science, whose basis is the power of reason.
In his book Truth and Tolerance, Ratzinger argued that truth and love are identical. And if well understood, according to him, this is "the surest guarantee of tolerance."

What is so special about believing something? Why should we respect belief?
We could try replacing it in our vocabulary with the word "think".
If that doesn't fit, use "hope", "guess", "wish" - or "fear".

Hello, HARM,

This is an interesting point.

re: "Yes, over time, minds can and do change. However, before this process can even begin, one's mind must be "open" (receptive) to said change. I would further add the prerequisites of generally valuing reason over religious faith, and weighting empirical evidence above magical thinking. Which, for the great majority, is not the case."

I have a little bit different take on this, though.

The first is about the interaction of "valuing reason" and the emotions, which also enter into what you are calling religious faith and "magical thinking."

It seems to me that the most - or, one of the most - fundamental experiences of the human being at the earliest ages (childhood) is of emotion and feeling.

The healthy development of the whole child/person requires appropriate what is termed "mirroring" of emotions, and empathetic response to the emotions.

So, it seems to me that the idea of "emotional honesty" is fundamental - that is, the experience and ability to both know what one feels and to express it without fear, and in a mature manner. (Not easy subjects to talk about - please bear with me!)

So, then, the "valuing of reason" is really, at heart, a combination of the ability to reason and a kind of emotional capacity.

"Denial" - the phenomenon and the defense mechanism - is normal, too.

Sometimes it's the degree of emotional support and social support that enables an individual to tolerate his/her emotions, to express them (maturely), and thus to deal with facts and reason or logical arguments.

Because people can (and do) also use "reason" as rationalization for actions that harm others. (Rationalization being a way to talk about what is *not* reason, but can be mistaken for it.)

So, I also offer an argument as follows:

1) The more people can be compassionate, listening and understanding towards others, the more likely it is for those others to value "reasoning" and what we like to think of as rational choices.

It's as though the emotional "space" creates the "reason" space. ("Space" in the sense of a description of the experience of having someone listen with full attention. This often allows the mind to process, to think freely, without fear.)

2) The more of this described above - i.e., "unconditional positive regard" for the other, listening, empathy, etc., - the greater the possibility of having a *way* to think about empirical evidence and act on it.

3) Or, to put it a different way, compassion (love) is required for honesty, is required for what we'd consider true rationality. ("Reason" that is not rationalization, but that perhaps undefinable "something more.")

4) Lastly, and my friend BicycleDave won't like this one (on the surface) - the meaning of "faith" *for some people* (important emphasis) is a way of attempting to maintain compassion and openness, despite repeated hurts and assaults, or "the slings and arrows" of life.

5) And, just to sum up: my experience WRT "peak" topics is that the ability of someone to give "peak" their attention - and further, to understand and integrate it into their educational background and previous experience - is primarily an emotional capacity.

I didn't see the correlation with educational level that I'd expected. For one thing.

Hi Aniya,

my friend BicycleDave won't like this one (on the surface) - the meaning of "faith" *for some people* (important emphasis) is a way of attempting to maintain compassion and openness, despite repeated hurts and assaults, or "the slings and arrows" of life.

As you know, I could never support the idea that religiously based beliefs have, in the grand scheme of things, any redeeming value. My life experiences lead me to believe that the most compassionate and open people are generally non-religious.

On the other hand, I am careful to never criticize a religious individual unless they are using their religion in the political arena. I fully realize how many individuals who are enduring great stresses are comforted by their religious beliefs. It is not my position to cause such a person more stress.

My focus is on the more systemic problems associated with organized religions.

Educate was not a word I used, nor did I imply a waking up, nor a metaphorical disconnection from The Matrix. And an argument is an attempt at logical discourse, which I also did not imply using.

Let's strip "worldview" of the what's not needed here: normative postulates, existential themes, philosophy, values, and ethics. What's left are emotions, the key component. Because for humans, all other cognition derives from the emotions, which derive from perception of various types of pain and pleasure.

So, can you present a logical argument to a stranger why he should be your friend? Yes, but why would you want to? This is not how friendships or rivalries are made, how love or hate are forged. Whatever detrimental or beneficial social bonds exist between people are formed from emotional cues. Reciprocation of treatment, authority, emotional liking, a sense of similarity with other humans, consistency with past behavior, and scarcity.

These, and a few other emotional cues, are why humans follow religions, wait in fields for UFOs, are susceptible to confidence artists, repeat past mistakes, fail to learn from their own experience, and why only 5% to 10% of the communication received in person is content, while 70% is received from body language and 20% - 25% from tone of voice. 90% to 95% of the information are emotional cues.

People get their worldviews from the authorities of priests, teachers, and family, from the emotional liking of friends and family, from reciprocation with virtually everyone, from similarity to friends, associates, family, and colleagues, from their own consistency with their past behaviors, and from painful experiences of scarcity or lack.

For a small portion of humans, for those people who actively think, pay attention, and care, this way of looking at worldview will not work, because their worldview comes from the authority of their direct experience, like with Thomas Jefferson or George Carlin.

But most people are easily manipulable to an external agenda. It's why Jesus (whoever he was historically) tended a flock, why people follow but don't question Jim Kramer or Glenn Beck, why people "fight for country" without asking why.

People are manipulable using those emotional cues of influence.

Hi 710

You must be the person who first brought up the idea of "emotional cues" and I just want to tell you how helpful that's been to me. I'm involved in a rather intense situation (WRT to a particular small set of people) and that idea helped me sort out what's going on. So true. Can be scary, as well. So, thank you.

Anyway, on a slightly different tack, I think my post just above yours does not contradict what you say, and perhaps compliments it.

The idea - well, more than idea - the experience of having access to a neutral and fully attentive listener, gives people a way to start to feel their own emotions, rather than be part of an emotional wave of influence coming at them or over them.

I'd be interested to hear more about the other factors you bring up, esp. the "scarcity" one, which doesn't immediately strike me.

"Think, pay attention and care."

Why I'm so fond of TOD.

Your posts are complimentary and complementary, and appreciated, Aniya. You delved into the realm of the thinking space, while I concentrated on the emotional space. Your post helps to better connect the emotions with what people think about their worldview.

And, to be fair to Darwinian, I must concede a small point in that the answers are not exactly contained in Cialdini's Influence. But most of the building blocks are there to form a usable answer, if you can ask some difficult yet important questions.

Connecting scarcity to emotional cues and then on to worldview might be a little difficult if you haven't read the book, but I'll give it a shot.

In influence, scarcity is a wildcard that can be applied in many different physical and emotional situations, and to other elements of influence. Scarcity may even apply to itself. Scarcity of scarcity is also known as abundance, and this can also affect pain/pleasure, emotional cues, thinking, and worldview.

In a basic application, scarcity refers to not having enough of something. Not enough to go around, not enough for everyone, not enough to last. You can have a lack of money, food, oil, electricity, stimulation, friendship, resources, among other things. A sufficient lack of any of these things produces discomfort and pain, resulting in emotional cues that drive people to seek these things out. We say and think these things are important and necessary, because of pain and harsh emotions during their lack and pleasure and positive emotions during their abundance.

Have you ever passed a tipping point into a decision to buy something after hearing, "order now, supplies are limited", "hurry, limited time offer", or seeing there is not enough of something on a store shelf? Have you changed your mind about something after hearing, "not many people know this, but ... ", or the con-artist's favorite, "I have to tell you something in confidence"? Do you you prefer going to a show that everyone else thinks is sold-out, over one that anyone can get tickets for? Do you like gold and diamonds?

If so, you have responded in part to scarcity.

And what is to be said about the scarcity of scarcity of humans? How does the current abundance of people on this planet affect any individual's worldview? Knowing there are so many people out there, does it make it easier or harder to get divorced, have more children, fire an individual, layoff a workforce, imprison or kill someone for different behavior, impose sanctions and wage war?

Ignoring the moral/heuristic consequences of any of these things, there is no scarcity of humans, so an element of an idea may be formed that any individual human isn't worth much and is replaceable. There's just so many of them.

George Carlin recognized in 1978, "We now have over three billion people on the planet, all claiming to have souls. Where did all the extra souls come from? Someone is printing up souls.

"And when there are too many souls, it lowers their value."

And now that the late, great Carlin is no longer with us, how much more importance do his words have, knowing that we won't hear any more from him? How does an artist's work tend to get valued after they die?

This is part of scarcity.

Somebody asked me what a soul was once, and I said maybe it's sort of like a Hologram, a 3-d image of someone that is formed by the interference pattern of the ripples of energy that person sent out, bouncing off the world. That latent image is still reverbrating, if you know how to look for it.

Carlin certainly made some good ripples.

Hi Harm,

First of all, IMHO, a person's worldview does predetermine how that person will make many of their most important life decisions. Second, I think that worldview is imposed upon very young children by their parents/community. Dawkins' God Delusion book discusses this at length. I agree with Dawkins that, in an ideal world, parents would not be permitted to brainwash young children with religious beliefs (not holding my breath on this one).

Yes, over time, minds can and do change. However, before this process can even begin, one's mind must be "open" (receptive) to said change.

The main reason for my comment is to just add a bit of anecdotal observation about this issue of what it takes to change one's worldview - which I contend is usually fleshed out by the indoctrination of religious beliefs given by parents.

A few years ago, I attended my 50th high school class reunion. We were a class of 100 students who attended religious schools from kindergarten through high school (and later most went to religious colleges). The community itself was very religious - I can't remember a single person being called an agnostic or (god forbid) an atheist.

At the reunion, I encounter 3 or 4 people who had "lost their faith" and greatly changed their worldviews - all the others seemed to remain staunchly in the camp of the faithful. I don't know why others dumped their faith; I can only comment about my own experience:

- I don't think my mind was "open" to a change - in fact, it was pretty closed.
- I did value reasoning process very much, but probably not "over religious faith"
- I was probably pretty good at interpreting "empirical evidence" in a way to reconcile it with "magical thinking"

What did happen is that I moved away from that community and began associating with very free thinking non-religious people. Of course, initially I vigorously defended my faith. But, over the course of about a year, I did an about face. The process was profoundly painful. In addition, I became pretty much of an outsider with my family and former community.

So, I'm kind of half way between Darwin and 710: people can change their worldview/faith because of rational argument - but it is a slow and painful process than most people would avoid. However, it does seem that 3 or 4% of my high school class made this change.

Jesus was crucified. Cassandra was raped and abducted and eventually her whole family killed. Moses was a prince who gave it all up and died on the way to Israel. Knock yourself out.

Looks to me like the examples you're pointing out are people who were probably inclined to their kooky ways early in life. Maybe Darwinian should have said that the older people are, the less they're willing and likely to change their worldview? What are the odds of the US baby boom generation renouncing their cars and tract houses and happily moving to the city to walk and ride bikes and transit en masse?

Jesus attempted to help, so did Cassandra, so did Moses. So did Einstein, and one result was the atomic bomb. So did Jefferson, and one result was the thinktank-military-industrial complex. So did Mohamed, and one result was jihad. Even Mother Theresa's actions promoted suffering.

So I will knock myself out. Everybody dies, or didn't you know? Sorry if this is the first time you've heard.

On the other hand, maybe I would be happier not giving a sh!te about any of this.

"Some people, let's say hypothetically, find out about peak oil, and then leave their job and change their lifestyle."

Not hypothetically in my case. I have done exactly that. People have called me brave, but I don't think so. In my mind I am a devout coward. So afraid of what the future holds as oil declines that I found my only choice to be not to remain where I was, doing what I was doing.

There are many uncertainties. Can I make a go of it at my age (62)? Will the political system hold together sufficiently for my place in this country to remain secure? Will this small community continue to welcome my presence? Can the community itself survive the possible outcomes of oil depletion? (I think it can and will. It is one of the biggest reasons that I came here)

I rarely post here, but I seriously value TOD as a place to read and learn. The posters here are clearly intelligent people seriously thinking about the future.

HI tuba

I'd like to hear more.

Perhaps you can write something about your "here" for a Campfire post?

I'm interested in firsthand experience. I think we could learn a lot from hearing about yours.

Some places are slightly different. In Russia there have been so many catastrophic events that very many people believe that the next one is just around the corner.
However, the result of this mindset generally leads to a ‘let’s party now’ attitude, as in the future the money will be worthless.

I hear you Darwinian and I cannot say I flatly disagree with your thoughts here. Consider, nevertheless, that foretelling catastrophe is often about something fairly far down the road (even "near-term" catastrophes are 2 or 3 decades away) and its hard for people to grasp because they don't feel it or they just don't want to look that far. This situation seems different to me. Peak Oil may very well have occurred already (July '08?) and coincidentally we've been in a severe and unsettling economic crisis at the same time. While not everyone is willing to make the connection between the two events, many people are and it certainly seems "easier" to illustrate that point as a possibility. Ignorance (by choice or not) and at every level of society has been the stickler here, and I sense that people are making the connection when they hear abou this. (Yes, I agree its amazing that up to now most people still have not heard...)I don't know what other readers' experiences are, but I am finding that people are listening more openly because of what they see and hear around them.

This new receptiveness surely won't allow us to avoid a dark tunnel ahead, but we need to move ahead and work toward creating the best possible options...don't you think?

I would argue that the natural human response, be it the best we have or the worst, is brought out by the system under which we organize ourselves.

Right now that system, dominated by a destructive monetary system, is exactly what will bring out the worst in man.

But what ever we do lets not look at the system and change it, lets just keep on tweeking the symptoms.

I think the skeptical views of peak oil as a risk management scenario and even the doubts expressed about whether B-schools are the right forum are understandable. Yet my experience so far has been positive. What we've found is that, like any other person you come across on the street, business leaders -(and like it or not, business schools recruit business leaders with the intention of contributing to their training)- just don't know about much about peak oil or its potential repercussions on everything (including business.) They need to be addressed as a prioritized group - not because of who they are as people but because of the potential influence they have. And not all influence is bad. They, like anyone else, have been equally receptive (or skeptical) to hearing & learning more about it, but they have also been in the position to provide wider forums to promote awareness and platforms to propose potential plans for mitigation, planning etc.

Like it or not, I feel we need to address decision makers and we need to go to where they congregate to do that.

ultimately, the decision maker will decide in his own interest, not in yours.

If you want control over decisions, keep decisions close to you.

The problem is that the risk will be too large for society to manage. If you are in a position (government) and you review the risk and determine that a solution is impossible you ignore the problem. You prepare yourself and family to survive the problem. You don’t tell the public and even deny the facts to keep people in the dark. Die off will be quicker and the likelihood of you and your family escaping increases. Maybe this is their risk management solution?

For those getting too doom and gloom, I should remind you that the US existed before cheap oil, and will (probably) exist after it. To automatically assume that the end of cheap oil means the end of civilized society is a HUGE assumption.

For instance, if the decline rate is slow, and mitigation efforts aggressively pursued (they won't be until the problem is glaringly obvious), then a transition to a low energy, low(er) entropy infrastructure is possible. As has been brought up before on TOD, the US still gets about 5mil/bbl/day from domestic sources. This combined with Canadian production and the 'new natural gas' should ease the decline. Under that scenario, a move from the gigantic (big business, big gov't, big universities) to the state and regional level does not have to be unduly painful.

Of course, if the decline rate is high, all bets are off. I don't see that being the case however. Yes, the US peaked in 1970, and currently produces about half the oil it did. But that took 40 years. Global production (probably) hasn't peaked, though it is close. If the Iraqis can bring even half of their goals online, that alone should make up for declines in Mexico, North Sea, North Slope fields.

I first heard of the crude oil problems when Carter was president. Since that time no other president has taken the matter seriously. Are all these men idiots? Reagan, Bush-daddy, Clinton, Bush-baby, and Obama. I think they are all very intelligent men. I also believe that there will be a peak in production of crude, astronomically high prices in future, and a collapse in our economy. Why haven’t these very intelligent people worked on this problem? When crude was almost at $150 a barrel our economy couldn’t take it. It will happen again. Why don’t these very intelligent men take action? Why?

Ross Perot ran on a plan to substantially raise the price of gasoline in the USA. He lost. The american people are to blame.

We are adapted to a much simpler world than the one we live in.
We have a few quirks that mislead us in a complicated world.
We have a hard time understanding the exponential function. There must be thousands of functions we don't get at all. A straight line is about our size; curves become hard very soon.
We don't distinguish between absence of evidence and evidence of absence.

We grew up in a landscape of probabilities that can be described as flat.
You will not find a person taller than 3 meters, nor will you find one smaller than 30 centimeters.
We now live in a landscape of probabilities containing dizzying peaks and abysmal holes.
Bill Gates is several thousands of times richer than most people on the planet - Napoleon killed several hundreds of thousands of soldiers, WW1 was about millions, WW2 about tens of millions.
But we act as if that landscape were flat. We don't know anything better.

We over react to catastrophes that have happened, but we very seriously underestimate the probability, and the consequence, of the ones that do happen. Nobody expected 9/11. It couldn't have happened if we had expected it. It could only happen because it was impossible. Guys with cutters? Learning to fly on flight simulators?
It is nearly ten years since 9/11, and we still can't take liquids on a plane (I will not even begin to talk about Iraq and Afghanistan as consequences) . Since Abdulmuttalah, or whatever the name of the underwear bomber is, we are just one step closer to full cavity searches on every passenger on every flight.

We do not take intelligent action because we are stupid, greedy, ignorant, and we don't have the brains to deal with a highly complex and highly volatile situation.

Sadly, we can only deal with what is directly in front of us.

There is a story, probably apocryphal, that a monkey who had been taught to speak in some manner, declared that the past is to the front, whereas the future is to your back. You can see the past, but you cannot see the future.

Maybe I should have said : we can only deal with what is directly in back of us.

Forty short years before cheap oil, slavery was widespread in the US, aboriginal people were being murdered and their land stolen, and I could go on. Where exactly is the line between barbarity and civilization?

More bombings in Baghdad today. Coordinated bombings of hotels, including at least one used by western journalists.

Even if they had the physical capacity to replace delining production elsewhere, which is doubtful, there is little likelihood of a sustainable flow of millions of new barrels per day from Iraq in any realistic near, or mid, term scenario.

But having cheap oil has enabled us to build houses in locations that would have impracticable or out of reach for most folks before the era of cheap energy. I live along the ridge line of the Green Mountains in Vermont and often wonder what would we do if we had a protracted gasoline and diesel shortage during winter. Couple the inability to operate snow clearing equipment with back-to-back 2 foot snows and we'd be in a hell of a fix. In the past the little towns had a grocery store and folks lived mostly in those little towns. A snow roller, sled or snowshoes could get you to the grocery for what little you had not already laid in. Now days, people live more dispersed, grocery stores are consolidated in a few locations within driving distance and we count on the roads being cleared of snow. Should the roads become impassable there would be no way we could get assistance to folks in need. We don't have a plan for such an eventuality – probably because we just can't imagine it happening.

But having cheap oil has enabled us to build houses in locations that would have impracticable or out of reach for most folks before the era of cheap energy.

I've thought about that in some depth. It's not just the Green Mountains of Vermont that will be impractical, there will be people living in far-flung commuter suburbs on the fringes of major cities that will have a terrible time getting to work or even to shopping centers in a fuel crisis. In a prolonged shortage, they might have to abandon their homes in the suburbs and move into central cities just to get basic supplies.

As far as I can tell, the solution is the walkable suburb - a rather small neighborhood with narrow streets and wide sidewalks centered around small stores, and with a transit terminal or rail station withing easy walk. It has to be small enough that everybody can walk to services, which limits it to about 1/4 mile across. In general, it could be not much over 160 acres, which fortunately is the size of farm that much of the homestead land was divided into. However, you need to have at least 8-10 houses per acre to make transit and shopping viable within that area.

That's not how modern suburbs are designed: They're completely build around the automobile, they're largely unwalkable, and they don't have viable transit service, so I don't think they have much of a future in the post-peak-oil era.

RMG - you are correct sir!

I've spent the last two years getting an MPA with those thoughts in mind. The towns and cities of the post-cheap-oil era will have to be scaled much smaller, and with a much great emphasis on sidewalks and transit.

I'm going to add a few points to what you stated above:

1 - 1/4 miles across is a bit small. If you were thinking of having a 1/4 mile across neighborhood on each side of the transit line, that would be more in line with the current consensus in the planning/transportation world.
2 - 8 to 10 dwelling units (DU) per acre is a very reasonable, realistic goal. Most DOTs (that operate and/or care about transit) put the threshold at 7 DUs per acre for bus service w/ 15 minute headways. Of course 'bus' can be substituted for trams/streetcars/light rail if the community is willing to shoulder the cost.
3 - Modern suburbs do not have a future. If they aren't cannibalized for scrap in the post-cheap-oil world, they will be the ghettos of the 21st century because of the transportation issues.
4 - The only trouble with the 'new suburb' is that room for manufacturing will have to be found. This will drive down the net density and may present pollution/nuisance issues. Hopefully they will not be built in the neighborhood (as was the case in the late 19th and early 20th centuries) but a ten or twenty minute tram ride away.

Just as we can't go anywhere when the roads are impassable, we can't go elsewhere when the economy sucks. Not that I do want to move, but even if I did it is unlikely that I could quickly sell my property and find a suitable alternative. For me there is no alternative – I love being here and have things in place to sustain me over a pretty long stretch. I'm not so much worried about myself as I am about the older folks who are unwell or already live alone. We need to establish a protocol for how to proceed should we perceive an approaching confluence of events where folks of reduced circumstances and/or ability may become cut off. Move them in with someone else, move someone in with them for the duration, or ...?
I'm trying to amp up my courage to suggest we throw a winter carnival ( all 300 of us ) where we have some of the locally made hard cider, local music, a solstice tree and get to the real objective of having demonstrations/events of operating a snow roller, dog sledding, horse drawn sledding, snowshoeing and anything else that can serve during a difficult time. Kind of reawaken old memories and get folks to start thinking.

Hello, m005e

You might want to check this out.

It's the best thing I've seen that combines everything.

"Leadership, service, community..." and they have fun, too. In fact, the good time is what attracts people to it.

Thank you! some good ideas hopped off the page and my courage meter went up to near escape velocity.

1/4 miles across is a bit small. If you were thinking of having a 1/4 mile across neighborhood on each side of the transit line, that would be more in line with the current consensus in the planning/transportation world.

I said 1/4 mile because I've read that people resist walking more than 5 minutes to a bus stop or stores. If you put one bus rapid transit stop at the center, with the stores, it could serve the whole neighborhood, and people could pick up some groceries on their way home from work. However, I think it's been demonstrated that people will walk twice as far to a rail station. You could put a rail station at the corner of four of these little neighborhoods, which would let one station serve all four. Or you could do both, if you want a full-service transit system.

Similarly, one school at the four corners could serve four of these neighborhoods. Kids are willing to walk farther than their parents. We should force them to walk to school rather than be driven because it's better for them. They're getting too fat like their parents.

I agree that putting industry (other than arts and crafts type shops) in these types of neighborhoods is probably a bad idea. It would be better to locate it in industry-only neighborhoods, hopefully not too far away, and link it with good transit service.

I don't see the problem with putting industry cheek by jowl with residences. That's the way my small town is laid out. Not all industry is steel mills. We have a plastics molding business, had a cannery up till a few years ago, a couple of car repair shops, all either down the street or across the street from houses. It's not only not a big deal, it's going back to the way things used to be.

Now if we could only get the abandoned railroad back in service ...

Actually, rereading my comment, I was actually thinking of a quarter section of land (160) acres, which would be 1/2 mile across. Minor mental lapse there, a flashback to my youth on the farm.

If you had 10 dwelling units per acre on 160 acres, that would give 1600 dwelling units, and if you assume 2.5 persons per dwelling unit, that would be 4,000 people in the neighborhood. Or 16,000 people per square mile. Quite a bit more than is typical of US subdivisions nowadays.

Of course, we are not using the model of the US subdivision as a exemplar by any stretch of the imagination.

2 - 8 to 10 dwelling units (DU) per acre is a very reasonable, realistic goal. Most DOTs (that operate and/or care about transit) put the threshold at 7 DUs per acre for bus service w/ 15 minute headways. Of course 'bus' can be substituted for trams/streetcars/light rail if the community is willing to shoulder the cost.

Interesting. 8 dwellings/acre is 1 dwelling/500m2, which is about the size of an average Australian suburban house block (locally we have residential blocks as small as 400m2, or as large as 1000m2 (mine is 950m2)). Yet we're told this is non-viable for Transit, and our bus routes are basically between railway stations and shopping centres. Go figure.

One appealing urban design concept is a completely walkable network of carfree districts, proposed by J. H. Crawford in "Carfree Cities", which is closer to 32 dwelling units per acre;

  Customary Units Metric
Population 12,000
Diameter 2500 ft. 760 m
Area 112 acres 45 hectares
Building Footprint 40%
Number of Stories 4 (US measure) 3 (European measure)
F.A.R. 1.5
Average Street Width 25 ft. 7.5 m
Building Depth 30 ft. 9 m
Courtyard Width 130 ft. 40 m
Walking Time to Halt 5 min.

I don't think the end of cheap oil means the end of civilized society. However, I do think the end of cheap oil means that life will be as different then as our way of life is different from life before the oil age. I also think that the US will not become a wasteland, but that in a world of low energy throughput, large nations may no longer be supportable. Entropy: it is the reason why "big fierce animals are rare" (great book, btw), and is the reason why ecosystems with less of an energy throughput can support less of a biomass, less of a food chain, and fewer and smaller predators at the apex. Exactly the same dynamic works in political systems. I expect (though I won't be around to see it) that the political map of North America will look very different than it does now, with many more sovereignties than there are at present.

Yes governments will exist in the future. Let’s go back in time before all the modern conveniences. A time my mother spoke of. In 1930 Mama said my grandfather worked his eighty acre farm with mules. They had a smoke house to cure out their meat. They had a cow for milk and butter. They didn’t have electricity or any modern appliance. Their work started before day break and would last until after dusk. My grandfather raised chickens and hogs. My grandfather had his twelve children to help him in the fields. He grew every sort of vegetable. He even grew sugar cane and made his own molasses. You could leave you windows and doors open at night because there was no crime because the KKK was wondering around the countryside enforcing their version of justice. They didn’t have a radio knew little of what was happening on the other side of county much less on the other side of the world. They didn’t know they were in a depression because they had everything they needed and knew how to take care of everything they had. My Mama was the last child born to my grandfather’s third wife. Make no mistake about it, life was tough. Today if stores closed my neighbors would become criminals in short order to feed their children. They can not take care of themselves even on the most basic level. They don’t have gardens or animals. They don’t know how to dress an animal. Chicken comes from Bojangles, beef comes from Burger King, and if folks had to squeeze a cow teat to get milk the babies would go hunger. Whether society crumbles quickly or slowly we are in for a long hard spell.

Lineman you sound just like me.

Another TOD member who remembers the past and life on the farm.

I did not see it though as very hard work. Yes it was physical and had to be but with children the work was shared. The younger girls watched and helped raise the babies and the older boys did much of the farm work.

What changed it IMO was those boys went to WWII and coming back no longer were happy with farm life. Left for the big cities and the girls married off to those big city boys.

Leaving my grandfather and grandmother to do it all with the exception of myself and my brother.

This was a quantum change. Darwinian says no one has a 'world view change' but seemed to me those returning boys and later the girls did have a massive 'world view change'.

The few who stayed on the farm grew the land and now are sitting in a very good position. Some farming thousands of acres and doing quite well while their city relatives are not doing so good anymore.

I remember my aged uncle ,on my mothers side , who raised us for one year saying to me..."Boy those kin of mine come driving down to this old farm from the big city in their fancy cars and when they are leaving say "Coy, we aint got the money for gas back home, cancha lend me a $20?".

I remember that to this day. Him squinting and chewing his plug of tobacco and explaining to me how worthless he thought they were.

Later his only daughter married a worthless jerk from Chicago and upon divorce blew her head off with a sawed off .410 while laying in bed with her own mother. (My own cousin).

Moral: Don't know but suspect 'worldview' changes are sometimes catastrophe events for some. Later her only child came to town and robbed his grandmother of her funeral expenses. She died badly.

Just some reality stores I keep in mind from life down in the 'flyover trashlands'.


How you gonna keep'em on the farm after they see gay Paree? (Paris , France)

WNC - That could make for some interesting speculation. I recently got done reading 'the next hundred years' by george friedman. He he glosses over climate change and peak oil which, in my mind, took a lot away from the accuracy of his speculation about the rise a fall of the great powers of the future. His contention was that high price hydrocarbons=slower than anticipated climate change.

As for the North American, I would guess the survival of large countries depends greatly on the rate of decline in oil production:
- 2% annual decline would (hopefully) produce the results Heinberg writes about in the Oil Depletion Protocol: serious economic dislocation but a manageable transition or powerdown (depending on the viability of alternative energy). The end result of such a scenario would be a weakened (and probably bankrupt given or long-term fiscal situation) US gov't. More power would devolve to the states and the continent as a whole would probably look a lot like it did one hundred years ago: few people, more 'natural' farming, dense industrial towns and cities connected by trains and barges.
- 5% annual decline would probably be too fast for the economy to handle. Lots of people would lose their jobs, lots of people would starve and complex organizations would exist only on paper. Regional governments and coalitions would emerge to fill the power vacuum left by the collapse of big institutions. City states would emerge along the US-Mexico 'border,' central and southern Mexico would splinter too. I think that in the US and Canada, regional governments would form in the Pacific Northwest, around the Great Lakes and along the Eastern Seaboard. The great plains and eastern Rockies are too dry for anything other than pastoralism. The southeast would probably be flooded with refugees from centeral and south america and devolve into anarchy.
- 10% annual decline would result in unmitigated disaster. Any human endeavors requiring a population base of over 100,000 would probably have to be abandoned. You can see where that scenario end up...

Devolution down to the states is the logical first step, but the states are all such artificial constructs that I don't see them sustaining themselves for very long. There will be a lot of combining into regional blocs, followed by secessions of marginal regions that don't feel they naturally "fit in" with the rest of their state and its regional bloc. After some slicing and dicing and recombining we may end up with anywhere from a dozen to two or three dozen sovereign entities in North America.

Garreau's Nine Nations of North America remains a valuable guide - not so much as a prediction of the number and identity of the eventual component parts, but rather to define where some of the main fault lines lie.

I had '9 Nations' in the back of my mind while writing that post. Cheers!

I see the county being the logical dividing lines.

In my county we will deal with folks from adjacent counties but beyond that folks tend to be a little suspicious.

We have a quite strong county government in my area. Even though I am kin to some of those elected I still respect them. Our highest county official is the Judge Executive, the judge is just a moniker and no legal background is or hardly ever applies. I have known the present Judge Executive for ages and can walk into his office anytime as can as well any other countian.

We then have local county magistrates who represent sectors of the county and all of the above are subject to the electorate. Even the sheriff, PVA and county clerk and others as well. Even the jailer and coroner. Overall it works very well and most of us are proud of our county. We have our own road dept as well plus the local jail and courthouse.

There is NO denying that all this belongs to naught but the people of the county.

The state doesn't mean that much overall. The nation even less.
We are used to solving our own problems and keeping it all very LOCAL.



I wonder if you are displaying a newly found sense of humor or sarcasm or just plain old country honesty or what, but that line about still respecting your local politicians even though you are kin to them is a classic worthy of HL Mencken or Mark Twain.

I wish I had said it myself.

In the past we have had some bad ones but the current crop is fair decent.

Yet if you are a man with a known good reputation in the county you will not fare badly with the sheriff or others. You will be treated with the respect you deserve in most cases.

A lot of pot is grown hereabouts. Some people use it badly and others not badly. The difference is well known to all locals who are in the know. Same with bad folks. They get no free pass.

This IMO is the way it should be. When you rise to the city level then 'no one knows your name' to quote a once favorite TV show. Then chaos can reign and you might find your next door neighbor to be found storing human body parts in his freezer. Or worse. Problems with living in dense areas and without kinfolk.

I strongly favor the county form of government then. I tend to hang very close to my roots and home terrority for those reasons.

Right now I am back in St. Louis tending to some unfinished bizness but soon to be heading back. Up here the motorists try to kill each other. I find that hard to live with. The food is far more expensive as well as much more.

Cheers then,
Airdale-helps to be on good terms with your local sheriff in all cases. Elections are drawing nigh. They will be out asking for votes.
I love it. I really do.

In the past we have had some bad ones but the current crop is fair decent.

Yet if you are a man with a known good reputation in the county you will not fare badly with the sheriff or others. You will be treated with the respect you deserve in most cases.

A lot of pot is grown hereabouts. Some people use it badly and others not badly. The difference is well known to all locals who are in the know. Same with bad folks. They get no free pass.

This IMO is the way it should be. When you rise to the city level then 'no one knows your name' to quote a once favorite TV show. Then chaos can reign and you might find your next door neighbor to be found storing human body parts in his freezer. Or worse. Problems with living in dense areas and without kinfolk.

I strongly favor the county form of government then. I tend to hang very close to my roots and home terrority for those reasons.

Right now I am back in St. Louis tending to some unfinished bizness but soon to be heading back. Up here the motorists try to kill each other. I find that hard to live with. The food is far more expensive as well as much more.

Cheers then,
Airdale-helps to be on good terms with your local sheriff in all cases. Elections are drawing nigh. They will be out asking for votes.
I love it. I really do.

For those getting too doom and gloom, I should remind you that the US existed before cheap oil, and will (probably) exist after it. To automatically assume that the end of cheap oil means the end of civilized society is a HUGE assumption.

That's an important point. And I would add that people are much more flexible than they realize, they will adapt, and they will manage to cope with a crisis that takes them back to the pre-cheap oil era. They just won't like it, and they won't do any advance planning for it. They will be in a state of denial until they absolutely have to change, and then they will change.

The decline will not be as rapid as some people assume. The US is 40 years past its production peak and is getting to a point where the decline is mostly over and is starting to level off. And Canadian production is rising, albeit slowly. Eventually Canadian production will exceed US production, but that will be because US production will be so low. Canadian production will never be as high as US production once was - they just don't have the population to do it from oil sands. It will no longer be possible for the US to import more and more oil whenever it wants to. Oil imports, except from Canada, will become less and less.

The main problem for most people will be that they can't afford to buy fuel, not that it won't be available to anybody with enough money. Middle class income earners won't be able to commute the long distances they are used to, nor jump into the car and drive to a shopping center whenever they want. They won't be able to afford it.

I'll second that RMG. And, we have seen precedents for this before. In WWII when there was widespread rationing of stuff, especially oil, people found a way to get buy. Poorer people would sell their ration of gasoline, or whatever., on the aftermarket (the black market) and richer people would buy it. For the poorer people, this was a good economic decision, sell their fuel at a high price and use the money to buy food, shelter, etc.

There are lots of things that people can live without, or live with much less of, It's just that for the last 40 years, we haven't really had to, and no one wants to, and governments have tried to avoid it.

And I don't think there will be a sudden "crash", unless there is a war, oil will just keep on creeping up in price, and equally gradually, people and business will find ways to use less of it. It may mean we learn to play cards with our neighbours instead of driving crosstown, but that's not the end of the world either.

Paul, RMG,

Some old English lady once said back in the early part of the twentieth century that she had never been able to imagine being rich enough to own a motor car or being too poor to afford a servant.Circumstances suprised her on both counts.

Perhaps our successful children will be able to afford servants but not gasoline and cars.

Yep, with the cost of labour going down, and fuel up, I'd say that day is getting closer. A century on from that woman's reference, we may have come full circle.

I think it was Agatha Christie.

Antoinetta III

I have a business degree from the University of Minnesota. One of the things I learned there from case studies and such was that the goal of a business should be to maximize profits within the confines of law and morality. That is why a monopoly is the dream of all business people but it is achieved by few, Bill Gates being among them.

I also learned that increased risk can lead to either greater profits or greater losses. If risk is managed such that it is reduced significantly, it follows that profits will also be reduced to match.

This then is the dilemma. Suppose Peak Oil risk is reduced through backups and redundancies that mitigate it. The business will suffer a loss of profit short term and maybe long term if the Peak Oil scenario turns out to be more like JD's Peak Oil Debunked than LATOC.

Facing this dilemma, what to do to maximize profits? The answer is clearly nothing until the problem's unfolding becomes clear enough that a risk assessment can be more definitive as to time and adverse implications.

This is because risk management efforts consume resources that necessarily come out of profits. And since most businesses are not like Bill Gates' but exist in a competitive environment with various constrains including the inability to raise prices much, those who continue on with BAU will show the greater gain and with it the competitive edge.

Asking a competitive business to assess the risk of an event like Peak Oil on which even regulars at TOD disagree as to time and severity is asking too much. We need to have a Peak Oil 9/11 or some such threat that does not go away after a price spike of a few weeks.

Then risk assessment might be possible because every one can see the danger although by then it will probably be too late to do anything about it.

One of the things I learned there from case studies and such was that the goal of a business should be to maximize profits within the confines of law and morality.

One of the things I learned from being *in* the business world was that laws are largely written by and for the moneyed elites, while bourgeois "morality" rarely enters the average executive's mind, aside from trying to cynically manipulate it via PR/advertising to gain an advantage.

Much like oil, the production of laws is an underground operation.

Few people ever see it or understand how it works.

But then again, it wasn't meant to be seen or understood by the public.

How about another unanticipated RISK factor associated with peak oil - early release of prisoners.

In California they are getting ready to pass a mandate allowing the early release of half of all inmates, with 'no' parole supervision in order for the State to save 500 million a year.

So what is the risk to everyone's safety as these prisoners are released amongst us? Surely, the result will be higher crime rates.

This is something I've thought about before in relation to post peak oil, i.e. constrained budgets and the cost of housing inmates. It's very expensive and I predict in the years to come many other states will opt for similar policies. If there ever is a full collapse of the economy, then the entire prison population would be released. Think of what it would be like if all those violent criminals are running loose during a time of chaos. Wow, what a scary thought. Probably the least educated, most violent individuals would rule this country in strict territorial zones, much like the gangs of today rule their turfs.

Interesting you should mention the CA plan. They've been chatting about doing something similar in Texas: release with no parole supervision. They can stay in Texas or opt for the $1000 cash and bus ticket to CA. Just the saving in the salaries for PO's makes it work on paper. And that doesn't even take into account the housing savings.

Except that relatively few of these are actually violent, dangerous predators. About half are in jail for non-violent drug offenses. All these last should be cut loose immediately, in my opinion. At some point the whole "War on Drugs" will be unsustainable and have to be abandoned; no political entity will have the resources to finance this kind of moralistic non-productive enforcement/regulatory activity.

Antoinetta III


I would bet that if we took all the small time crooks and dopers in this country and put them to work at a job making just thirty thousand dollars-say picking up trash along the roads-with the proviso that if they rob again or steal again they continue to pick up trash but in orange coveralls-nearly all of them would go straight.

Of course we would have ten million NEW criminals trying to get into this jobs progran, so it wouldn't work.:)

Most small time drug offenders should have never been arrested-our drug laws are a joke.

Risk Management is fundamentally composed of the following stages;

1. Risk Discovery
2. Risk Assessment
3. Risk Mitigation
4. Risk Monitoring
5. Risk Retirement

TOD covers 1, 2, and 4 for peak oil, and is increasingly providing articles that cover #3.

So yes, we need government and corporate leadership to address peak oil from a risk management perspective, creating and executing mitigations.

Each mitigation, however, has it's own risks that have to be assessed in order to correctly score the mitigation in relation to other potential mitigations.

For example, we see that China is reducing it's exports of rare earth minerals, that are critical in the production of motors for HEV/BEV/PHEV vehicles, wind turbine generators, etc. So peak oil mitigations that rely on these rare earth materials must have their scores reduced. So commuter light rail in conjunction with bike networks and telecommuting incentives may make more sense that expecting to rely on a growing percentage of HEV/PHEV/BEV, for example.

...rare earth minerals, that are critical in the production of motors for HEV/BEV/PHEV vehicles, wind turbine generators, etc.

Except they're not. You can make a perfectly good electric motor/generator without using a single gram of REM.

Great post.
The German initiative Climate Mainstreaming has a few interesting approaches to adress a similar risk issue, which is due to climate change:

For example the study, "German power utilities - caught in the CO2 trap?" shows that the big power utilities are seriously challenged by future climate policies. This was the first study of this kind (I know) that was developed by a cooperation of bankers and scientists.

And just like other industries are ignoring peak oil, these multibillion corporations obviously weren't aware of this so far.

What if the US Government is peak oil aware and aggressively working to mitigate its effects ?

What form would this take ?

Well first and foremost given the US its a large oil producer and peaked several decades ago.
If a mitigation effort was and is in effect then it would have started with US peak dealing first with
the problem of increasing imports.

Moving into the future one would expect that what ever policies needed to mitigate peak oil would already have been in effect and grown out of successful mitigation of US peak.

This suggests that the US at least has already dealt with peak oil and the major policy decisions are well in the past certainly they will be tweaked as needed but BAU already includes a fair portion of our policy response to peak oil.

Therefore peak oil is not a problem and need not be addressed by some sort of radical changes. Its for all intents and purposes a solved problem.

Thats not to say increasing efforts to mitigate peak oil won't happen just that they will happen within our current framework. Certainly the changes are fairly slow but so far at least they have been effective barring a recession here and there.

Now of course over the last several decades the middle class by almost any metric has been steadily impoverished a more aggressive response to imports esp oil imports could change this situation. Thus a more aggressive mitigation of our energy situation and imports in general would go a long way to reversing the steady decline of the US middle class. As peak oil becomes more problematic the plight of the middle class will likely worsen. However this is making the assumption that the decline of the middle class is perceived as problematic I'd argue that nothing at all suggests that impoverishment of the middle class is considered a problem. We will bottom out at world prevailing wages and I'd assume the belief is from then on out global wages will rise uniformly once imbalances have been erased. By world standards Americans are incredibly overpaid this has to correct with our move to globalization.

Indeed this impoverishment fits fairly well with peak oil as it allows the continued concentration of wealth even as the average person becomes more impoverished. Expansion to the global markets more than makes up for the fall of the middle class.

Thus I'd argue that mitigation of peak oil is well established and the policies already in place. The concern shown on the oildrum is not about peak oil itself but the dawning realization that the deck is heavily stacked against the middle class and peak oil is certain to hasten the collapse of the middle class.

But the card are already played the response is in action the train has left the station the horses have left the barn. Use any saying you wish but its clear to me that peak oil is really not a problem and thus there is simply no reason to treat it as one as long as the destruction of the middle class is an acceptable outcome.

To the question posed above: "What if the US Government is peak oil aware and aggressively working to mitigate its effects ?What form would this take?"

At dinner with colleagues who were following this discussion, one colleague answered the above question with 2 words: Resource Warfare. The expected debate ensued with a hundred different perspectives on why it may or may not be that simple. For me, the most interesting part of the discussion was another question that came forward and I am interested to hear the perspectives of this group on the question:

If the US went through all the efforts to try and justify the Iraq intervention with the argument of WMD at the UN, scrounge up international support and ultimately follow through with their plan by actually going to war at enormous cost (economic, life, "popularity", etc...), then why has their showing been so poor at the auction tables in terms of access rights to the oil?

If the US went through all the efforts to try and justify the Iraq intervention with the argument of WMD at the UN, scrounge up international support and ultimately follow through with their plan by actually going to war at enormous cost (economic, life, "popularity", etc...), then why has their showing been so poor at the auction tables in terms of access rights to the oil?

Well to answer that one has to assume we don't care about the auctions. Which means we don't expect the agreements will be honored. Which makes tons of sense if you think about it. If the answer Resource Warfare is the correct answer than one can imagine that at some point in the near future that oil won't be extracted bought and sold within the current legal framework. Obviously who ever has the physical troops located in the right places to control oil production in the new framework is the winner.

If you read all the news esp about the fields getting know bids its fairly obvious its a suckers bet but a few are willing to take it in hopes that they can actually take part later when the real division of Iraq oil takes place under a different set of rules.

Or we are going to pull out but yet again any knowledge of Iraq suggests this means civil war and again a different set of rules will be in place eventually. No matter how you slice and dice it whats going on now simply cannot be the last round of the game the contracts are barely worth more than the paper they are printed on. They might have some value but thats really hard to determine.

"If the US went through all the efforts to try and justify the Iraq intervention with the argument of WMD at the UN, scrounge up international support and ultimately follow through with their plan by actually going to war at enormous cost (economic, life, "popularity", etc...), then why has their showing been so poor at the auction tables in terms of access rights to the oil?"

They didn't understand the internal dynamics of Iraq, and the plan failed.

Antoinetta III

Resource Warfare

China has been doing this, though with monetary assets instead of military ones;

China Tightens Grip on Rare Minerals

China's Buying Spree in Global Fire Sale

Joseph -- My answer might sound simplistic but it looks to me to be that simple. Why isn't the U.S. winning bids in Iraq? Because the U.S. isn't bidding. Companies are bidding. Some private...some public. Some on the U.S. stock exchange....some on foreign exchanges. ExxonMobil and Shell USA are headquartered in the U.S. but they aren't the United States gov't. The U.S. per se isn't bidding because they aren't in the oil business. As far as I've seen there is no interaction between the U.S. gov't and any of the companies bidding on the contracts. In fact, based upon how these deals are designed, there looks to be little reason for any U.S. oil company to bid. ExxonMobil might been the largest oil company in the world but they can't even drill their own wells in the U.S. A view of a Deep Water drilling well operated by XOM: there are 140 souls onboard and maybe 2 to 4 are XOM employees. The rest are consultants but most hands working for the service companies. The Halliburton's and Schlumberger's of the world handle drilling and production operations...not the oil companies. If ExxonMobil had won one of these bids they would have had to immediately subcontract to the service industry. And the deal structures I've seen the oil will belong to Iraq and they can sell it to whoever they want. These are essentially engineering projects that have no bearing on who will eventually buy the Iraq oil.

Like I said: a simple answer. As far as any public statements by either the U.S. or Iraq govt's we haven't even asked for any preferential access. These are business deals. And our gov't isn't in that business.

ROCKMAN, thanks for your answer- I think its an excellent answer by the way and it echoes the sentiments of the discussion of the off-line forum I mentioned.

In my mind, a doubt remains (and I hope I can phrase it well.) Two clear motivations are play here:
1) the BUSINESS of oil, as you phrased it. Of course this is a huge incentive and I agree with the comment you provided (ie the US gov't is not in this BUSINESS and so the outcome is what it is...)
2) the SECURING OF OIL on behalf of the nation's interests and more important its security... (and the domination of this resource) in the face of its imminent decline of availability. And this is certainly the business of the US gov't (and of any government in fact.)

I would think that, regardless of the enormous appeal of number 1 above, number 2 is MUCH more important....Imperative in fact, in the eyes of those who govern over a nation. So in this sense, the apparent "matter of fact" way of loosing bids remains perplexing/surprising.

Joseph -- Re: the business of securing oil you mention. This is the area where the Chinese have left the U.S. at the starting line. With one possible exception the U.S. gov't has done nothing to secure future imports for the country. The biggest project they've ever undertaken was the SPR but that just gives us a breather from import disruption. In fact, the U.S has actually emplaced laws that make it more difficult for U.S. companies to tie up foreign oil reserves. Federal law makes it illegal to use bribery in such deals. And U.S. folks have been severely punished when caught doing so. Though I don't necessarily disagree with these laws they do put U.S. companies at a great disadvantage. I've known some folks with the Chinese energy companies and they actually list bribery expenses on their budgets as just that. A few weeks ago there were some headlines about the Nigerian gov't taking a few PR shots at China for "exploiting their African brothers." If you know about Nigeria this would be classified as a negotiating tactic and not a defense of their fellow Africans. The Nigerian gov't is classified as about the most corrupt institution on the planet.

The only effort I've seen our gov't make securing imported oil was perhaps it's offer to loan Brazil some money. Though the press release didn't say there were strings attached but one would hope so. But the Chinese had already put many times that amount of capital into Brazil. The one possible exception I mentioned above: if looked at in a very broad picture our military efforts in Iraq could be interpreted as a plan forward by our gov't. Granted there's perhaps too much hype as to how much Iraq oil production will increase over time. But its oil development had been slowed for a very long time and thus they could add a bit of delay to the worse effects of PO. So even though the U.S. might never import one bbl of Iraq oil it there will be more oil on the market and make our acquisition efforts a bit easier...maybe. But I think many would consider this angle a bit of a stretch.

The bottom line: the U.S. gov't has done virtually nothing, especially compared to China, to secure future imports for our country. Some would argue that the gov't efforts to restrict drilling activities on much of the federal leases is actually counterproductive. But I think it might have actually been a good move (though not intentionally by their way of thinking). Had there been more development we would have just wasted those resources trying to maintain BAU. When we hit the real crunch I have no doubt the gov't will turn loose those leases and perhaps even throw big incentives to the oil companies to develop them even faster.

Some might argue the gov't should form some sort of partnership with the U.S. energy industry as the Chinese gov't has done. IMHO that might look good on paper but I have my doubts as to how effective this approach might be. Too much politics and free market myopia for this to work well I do believe. Direct U.S. gov't potential to secure future energy imports might be a problem with no solution. Good and bad reactions are certainly possible. But a solution...not so much IMHO.

ROCKMAN - you've described it quite accurately I would say. So naturally the question remains: If, from the US perspective, the Iraq intervention was about securing oil (in the face of peak oil), what happened to the securing oil part? Maybe its not the right question... Or maybe there's no go answer. Thanks anyway for the exchange.

Joseph -- I generally avoid the queation of why we did what we did in Iraq. Depending on which personality you're referring the answer will vary. Maybe some (like the prez) thought we would be locking up future oil production for ourselves. But with the world structured as it is today that would seem foolish. We entered Iraq with U.N. approval. Would we expect the U.N. to approve any future demands we might make on Iraq oil?

If the U.S gov't used future oil availability as at least part of the motivation I would think they were anticipatine that increased avalability to be global and not just for us. In that sense, if Iraq truly is a sleeping repository for untapped reserves, then we still benefit by those reserves decreasing competion for what oil is left. But only for a limited period of time.

Rockman - that seems to make sense. In any case - and I think you alluded to this earlier - if things got really dire, its a whole new ballgame with a whole new set of rules.

If it gets really, really bad out there enough competing interests will make the movement or crude over much distance and distant memory, then everyone will know what really dire really means.

duplicate post

And a different take on Rockman's response; how is what's going on inconsistent with eventual commandeering of Iraq's oil as needed in an emergency? It makes perfect sense to have oil companies come in and rebuild production capacity. It doesn't really matter if the mechanism is free-market bids and contracts or government projects, either way the capacity gets rebuilt. And the free-market approach has efficiency advantages. It also doesn't matter that the Iraqis get much of the revenue. That's a good thing from a PR perspective, and does nothing to stop us from seizing the production at some point if needed.

The only reason to question the whole process would be if we were pulling the military out of Iraq with an unfriendly government left in place. Until then, this is all consistent with eventually supplying the US, or at least the US military, in an emergency. If nothing else, it allows Iraqi oil to be sold in the world markets to lower prices for everyone.

Here's another way to look at it. Look at a map of Asia. What's in the way of China seizing the Middle East by land? Mainly Afganistan, Tajikistan, Turkmenistan, Iran, and Iraq. Most of those countries should sound familiar by now from a US military perspective.

Kjmclark and Rockman - I think the combo of your answers makes sense. And its an interesting perspective you add at the end about China. Thanks again.

What's in the way of China seizing the Middle East by land? Mainly Afganistan, Tajikistan, Turkmenistan, Iran, and Iraq.

They've found it much cheaper to bribe the tribal warlords than to shoot them. If you shoot at them, they shoot back, if you bribe them, they say, "Thanks very much, where do you want your oil delivered?"

However, it's cheaper to deliver oil by tanker, and in that case you don't have to bribe as many warlords, only politicians and generals.

kjm -- I suppose it all depends on one's expectation of anyone seizing Iraq oil. I know of no provisions that require Iraq to ever sell the U.S. one bbl of oil. We could certainly start a war over the oil of course. But if Iraq oil is being shipped to the EU (most likely case) or China (a smaller percentage perhaps) do you expect the U.S. to declare war on those folks? And do you expect the United nations to not condemn the U.S. for such actions? And would you expect NATO to stand by and do nothing if oil purchased by their member nations was seized by the U.S. (typically oil is purchased at the out load point). IOW, when the oil is pumped into the tanker it belongs to the buyer (an EU nation) at that point. IMHO I would only expect such a U.S. action in the worse case Mad Max scenario.

But as I say above I fully agree with you that efforts to improve Iraq production benefits all importers COLLECTIVELY. How much direct benefit to the U.S. remains to be seen.

I expect that when production declines begin in earnest, everyone will do whatever they think they need to do to secure the oil they think they need. Just like in WWII, when Germany and Britain had a major front over Middle Eastern oil. If the Germans had ignored Russia and concentrated on the Middle East, as many generals recommended, that war might have ended differently.

Of course, I expect things to remain as free market international trade until then. And hopefully most countries will have taken enough measures to reduce their oil demand that they won't "think they need" to go to war over it. And no, I wouldn't expect the US to declare war on anyone. I would expect the US to, if necessary, point out to the Iraqi government that the situation has changed and the US military has unexpected need for their oil for regional security purposes. We would agree to pay them the rate specified in any contracts, and then take over whatever supply we need. I would expect the other country, China, I would think, to be the one to declare war, or to precipitate a declaration of war through some Pearl Harbor style attack. Remember that Japan attacked Pearl Harbor in part to deal with our cutoff of their oil and metal supply. Neither the Japanese nor the US declared war until the Japanese attacked Hawaii.

Japan, hoping to capitalise on Germany's success in Europe, made several demands, including a steady supply of oil, of the Dutch East Indies; these attempts, however, broke down in June 1941.[116] The United States, United Kingdom, and other Western governments reacted to the seizure of Indochina with a freeze on Japanese assets, while the United States (which supplied 80 percent of Japan's oil[117]) responded by placing a complete oil embargo.[118] Thus Japan was essentially forced to choose between abandoning its ambitions in Asia and the prosecution of the war against China, or seizing the natural resources it needed by force; the Japanese military did not consider the former an option, and many officers considered the oil embargo an unspoken declaration of war.[119] Wikipedia

I thought it was interesting to read on Bloomberg last week about all the Ivy League and other top-ranked universities in the US having record numbers of applicants this year. There was also a story in the NY Times about all the people taking GREs and LSATs. The idea is that to compete in this difficult economy you need to try even harder to climb over the head of the person standing next to you and force him/her out of the running.

Risk management for a lot of people means trying harder and harder to get a better education, more degrees, more prestigious lines on the resume, even while accepting lower pay, a part-time job.

There is no question that the people who don`t succeed and lose their jobs and can`t get others are being thrown (as it were) under the bus. They join the ranks of homeless and what energy they were consuming before, and no longer consuming because they don`t have a home, is happily, voraciously consumed by the people who still have homes. Some people watching wring their hands, some people try to help, governments provide sandwiches or shelter beds in some limited number.....but the bitter truth is that these homeless people failed to secure the energy they needed because they failed to compete for it in the very very harsh environment that exists now. (Sometimes this failure may be no fault of their own, or bad luck, unfairness, etc.)

I suppose risk management comes down to personal decisions. If you think you can compete for the top spaces (and hope to get control of the flow of resources from the higher position) then someone who has a talent can find space at the top (whether its in music, healthcare, science, law, arts, etc.). But someone who doesn`t go this route, for whatever reason, might have to try to secure access to the flow of resources closer to home, by having a farm with a spring and some chickens, for example.

Govts can`t discuss this because of the short-term nature of their frame of reference....and because it`s a complex problem.

Many people have become disenfranchised or forced to downsize, but others like you say are doing whatever it takes to stay at the top. That probably is a good survival strategy, especially as we move forward from here. Just make sure you have value enough to demand energy, and the more you can demand, the farther you stay away from falling out of the loop.

I've had a collapse perspective for some time now, but am now starting to lean more towards a slower descent, in which those that can afford to avoid personal collapse will continue to enjoy BAU for many years to come.

Thanks for posting an article on risk. The topic happens to be one of my keen interests and am preparing a short manifesto on a quirky fat-tail effect in project failures and in politics. I don't think anyone has quantified this specific effect before -- likely because it doesn't fit any traditional views. I may try to see if I can get it posted on TOD, otherwise I will post on my blog.

Business schools are the problem here. Years and years of pushing normal gaussian statistics has resulted in analysts not being able to quantify the gray swan events that have turned out to be the new norm.

I am seeing entropy as the driving force of lots of these fat-tail events. What is interesting is that the "sign" of the fat-tail can have both beneficial and detrimental effects. In oil discovery, the big reservoirs found are positive fat-tail events, whereas project failures and political grid-lock are negative fat-tail events.

Normal gaussian statistics are easy to work with, and give you the impression you have developed an adequate model, when it is very doubtful that this is the case. It was when we started to rely on these unrealistic models that we ran into difficulty.

Dear Joseph,

Thanks for posting this and for your efforts.

In the few minutes I have, I'd like to offer an idea I heard about and support, namely to somehow (by direction from State governments, *any* federal agency and/or the Executive and/or Congress) set in motion a direction for the National Academy of Science to do a study on global oil supply (implication: it's decline), impacts of same and policy options. for our petition.

This is simple, and brilliant IMVHO (which I can say because it wasn't my original idea).

The NAS has the mechanisms in place for the most objective look at this.

Unlike some (possibly), I have the view that "peak" information should be made public knowledge. One never knows what positive outcomes might result.

Having the Nation's only official scientific advisory body weigh in - especially with the policy options (and not just new energy extraction technology reports!) - gives a place for people like us to submit our work (not to put myself in the same category of the illustrious analysts here, but you know what I mean) - look at actions that are feasible (eg. Alan Drake, et al!) - and give everyone a set of facts to refer to.

It was done for GCC - I just don't understand the arguments against it for "peak."

Some people fear that the NAS would be fed info - but they are designed to be as scientifically objective as possible.

They will be able to purchase any data sets they need.

They have a process for submission of materials.

It's all good, as far as I can see. Though puzzling to me, the seeming lack of enthusiasm. Or, maybe it's there and I'm just a little lonely out here, not having had the time to put in on it that I'd like to.

WRT: The argument that people's minds can't be changed.

Well, actually, the present LTF infrastructure was put in place via a process that didn't require people's minds to be changed. It was decisions made by a few (yes?) and most people do what's right in front of them. (Buy a car to get to work, etc.)

Therefore, sensible policies that can help...

Oh well, talk me out of it. :)

Aniya, thanks for your comment and the information. No need to talk you out of it!)) The fact that we are here interchanging thoughts and positions and suggestions etc reflects in some way that we are all struggling to get a real grasp on this situation and how best to handle it (in our own little worlds or on a greater scale)...and by "handle" I do not necessarily mean "resolve". I for one am here, yes to express my views, but to learn, adapt and move forward with my learning. In short, I honestly don't think any of us own THE RIGHT VIEW and THE BEST PLAN.

"Unlike some (possibly), I have the view that "peak" information should be made public knowledge. One never knows what positive outcomes might result."

For reasons that I mentioned in a previous comment, today I remain convinced that an effective (and not necessarily unrealistic) approach to awareness and planning is through "people clusters". By that I mean addressing organizations, companies, industries, town/city/municipal level government. As I said above, today I think an approach via central or federal governments is both unrealistic and unlikely...and as many would reasonably argue, even unsafe because this would involve addressing the masses (not clusters). Reactions of the masses, it can be argued, are uncontrolled (as in self-control) and therefore risk being irrational.

"Having the Nation's only official scientific advisory body weigh in - especially with the policy options (and not just new energy extraction technology reports!) - gives a place for people like us to submit our work..."

This sounds reasonable and potentially positive... I am not familiar enough with this to determine possible downsides to the idea.

Thanks again

Hi Joseph,

Thanks for your comment. I'm glad we can talk about this in detail. Please feel free to email me (user profile) if you'd like to continue or possibly even help promote the study idea.

re: "By that I mean addressing organizations, companies, industries, town/city/municipal level government. As I said above, today I think an approach via central or federal governments is both unrealistic and unlikely...and as many would reasonably argue, even unsafe because this would involve addressing the masses (not clusters)."

The NAS would report to the entire Nation, including the federal government.

Here's what my experience is: the local town/city/municipality approach is fraught with just as much politics as politics on any other level, including national level. Just my two cents, I'm not sure I even know what I mean by this, except that all the same factors seem to come into play.

The main thing I've observed is this: those in leadership or power positions on the local, town/city/municipality level are *not* going to do anything other than support the status quo, absent some "mass movement" or groundswell of public opinion agreement on a single issue.

I think the idea of this groundswell is not realistic. I mean, to some is happening and is wonderful. Just that WRT policy changes on the scale that makes a real difference, such as electrification of US rail, etc., this is not happening, that I see.

Now, the thing is, the local government bodies also will not take any action without some scientific and objective statement to point to.

An example is GCC. There's a conference of mayors, and local action, because GCC is generally accepted as a scientific conclusion.

There is no equivalent to the IPCC for "peak", and therefore...nothing or a void, when it comes to a rationale for policy or action of any kind.

Yes, people can organize along the lines of transition towns, etc. and that's, of course, all good, good, good.

My point is that for any kind of official governmental action on any level, there are few - (which are, of course, laudable and notable) - exceptions to this. I don't mean to sound strident, please consider this tentative if you have counter-evidence.

Therefore, an objective study by the one body that studies every imaginable issue but *for some reason* had not be asked to look at "peak oil" - I say, let's get them going on it ASAP.

re: "Reactions of the masses, it can be argued, are uncontrolled (as in self-control) and therefore risk being irrational."

They're too busy watching TV and chatting on cell phones. :)

re: "This sounds reasonable and potentially positive... I am not familiar enough with this to determine possible downsides to the idea."

I welcome talking further about it. Please check out the comments on the signatures list, if you get a chance. Some very nice ones there, and some notable supporters, (though it is not just catching on like hot cakes, so to speak).

Aniya - thanks again and I will certainly check out the site and the comments. Perhaps we'll find that a multi-tiered approach is the way to go.

Funny how China, that probably doesn't even have a Business School, is forward planning on securing energy supplies. While western Business Schools keep teaching BAU and failed laissez faire economics based on perpetual growth that is completely unsustainable. I suppose these are the same Business Schools that graduated the leaders of GM, Enron and Bernie Madoff Inc. You get my drift.

Add to this the fact that China underwrites the mushrooming US debt I wonder whose business sense will secure the energy needed to power their economy as oil supplies tighten in the near future.

Probably doesn't matter. For the US to buy energy in the future they will have to borrow more money from China. The value of the unsecured (and unsecurable) green back will drop and if China stops supporting the entire US economy, the USA will not be able to pay for foreign energy anyhow. I wonder if the western business schools teach this?

End result: China gets the oil, the Big 3 auto makers (Toyota, Honda & Nissan) sell electric cars to desperate American drivers and everyone stateside wonders why the power goes out each night at 6 as all those clean green EV's get plugged in to the dirty coal and NG electrical system.

And our prestigous Business Schools are now just starting to do Risk Management on the entire non renewable underlying energy source of our civilization.

Wow. I feel better already.

Hello, wotfigo,

re: "Funny how China, that probably doesn't even have a Business School,"

Remefber: always do your Google - while Chinese authorities still allow it. :)
January 9. Special report.
China's B-School Boom
Meet the new managerial class in the making

"Walk into any classroom at one of China's elite business schools and what you're likely to see isn't all that different from what you would find at Harvard, Wharton, or MIT's Sloan School. True, there's a preponderance of Asian faces and the occasional smattering of Mandarin. But the classes, course materials, subject matter, and even the teachers are virtually identical to their U.S. counterparts."

Although, your point is well taken, in that the B-men and women are probably not the oil-securing men and women.

Aniya -- it may be different today but a few years ago I chatted with a fellow who taught one of those classes in China. The first road block he ran into was "Profit". The Chinese student understood what profit was in a technical sense but couldn't understand why a company would need to make a profit: "if a company can make a widget for $1 why would they sell it for more than a $1"? After all, the company recovers its costs, it employees people and delivers the product to the Chinese people at the lowest possible cost. If a Chinese company made a profit it would go to the gov't/people anyway so why mark it up? When he took into account how the Chinese gov't worked he said he actually had trouble coming up with a good answer. When he tried to explain the free market system in the U.S. they had a simple response: why does our gov't permit this situation to exist?

The Chinese have discovered profits since then, but they have a different perspective on it than American companies.

An American company would like to build a widget for $1 and sell it for $2, planning to sell 1 million of them at $1 profit per unit. A Chinese company would rather cut the production cost to 99 cents and sell it for $1, planning to sell 100 million of them at one cent profit per unit. Using this model, the American company would make $1 million in profits, and the Chinese company would make $1 million in profits.

Of course when the American selling price is $2 and the Chinese price is $1, the American company is going to sell none at all and the Chinese company will take the entire market.

Razor thin profit margins and high volumes. Cut the price and make it up on quantity. That's the usual Chinese strategy, and they're very good at it.

wotfigo said: "Funny how China, that probably doesn't even have a Business School, is forward planning on securing energy supplies. While western Business Schools keep teaching BAU and failed laissez faire economics based on perpetual growth that is completely unsustainable. I suppose these are the same Business Schools that graduated the leaders of GM, Enron and Bernie Madoff Inc. You get my drift."

I do get your drift and I take your point...there's truth there, so thanks for your comment.

My feeling is that you work on (and with) what you have. And by this I'm not saying, "let's just keep doing things the same way." What I mean is the defective clay business model clearly needs re-modeling and to do so you've got to roll up your sleeves and deal with that very same clay model in order to transform it. Forgive the improvised analogy. I hope you understand what I mean...

Thanks for the comments on Chinese Business schools. My poor wording. I know they have Business curricula but I imagine it would be seriously different to our laissez faire business structures. But I don't know - not my field.

And don't get me wrong, I am not holding a one party authoritarian state up as a model we should follow. But our business model is now seriously in need of overhaul.

Our business model of increased production and increased consumption has worked well for 520 years since 1492. Thanks also to the Steam Engine (industrial revolution), Electricity (technological revolution) and the bounty of fossil fuels.

But this system worked while the population to resource ratio was low. Now that that ratio has flipped, our business models of "Continously More & More" is now untenable. This at the same time our business leaders are destroying our local economy and community by exporting every job except cappucino baristas and corporate checkout cashiers.

Early on in this thread there were quite a few comments saying the Business Schools are the problem. I am on their side. It seems a bit late for business schools to do Risk Analysis on the single most important energy source we have that underlies our entire economy and civilization. Perhaps they will also do a risk analysis on Exporting Jobs. But this may be a bit too late as well.

It is my very firm opinion that unless our business paradigm shifts from endless exploitation of resources and human capital to a sustainable socially aware business future, then the "Long Descent" will become a "Catabolic Collapse". IMO it's that serious.

And Joseph, thank you.

I do appreciate your clay model analogy. And I hope guys like you can turn this ship around. Good luck!

You're gonna need lots of new young dedicated talent. The old entrenched business interests are not gonna give up or change. A model that's been successful for 500 years is not going to go down without a fight. But if "they" keep the old system going of putting corporate profits ahead of sustainable social responsibility then "they" will drag us all down as the old untenable economic system continues to die.

Thanks and Have a Great Day.