Ideas about the Future of Energy in the US (from our Industry Insider and Prof. Goose)

We are approaching a time when the American people will be paying more attention to energy and the problems we face than ever before. The time to ponder the short- and medium-term future of energy supply in the United States is here.

After reading various sites today,, The Energy Bulletin, FTD, and many of the other sites in the peak oil webring (see link in right sidebar), let me try to put together some of my thoughts. (There's so much to get a handle on, as always, with the peak oil situation--it really is like squeezing dry sand at times, isn't it?).

(a long, hopefully useful post after the fold, including some thoughts from our anonymous industry source...)

* My point since we started this project has been that "peak oil" changes the rules of the domestic and geopolitical games.  There is no more immediate supply of cheap oil to call upon than what we already extract daily: refining more-sour crude, exploration and retrieval only becomes more and more costly from here on in, and ergo, behaviors and lives will have to change to adapt.

Because of our crippling dependence on petroleum (which will become more obvious each day that passes in the coming weeks), one terrorist attack, one malevolent world leader with oil, or, unfortunately one event like Katrina that disrupts "the Spice" (Frank Herbert's Dune reference) can bring a country, especially one that uses a quarter of the world's daily supply of oil, to its knees.

Don't get me wrong. Ceteris paribus, Katrina would have desperately hurt the US had it happened 10 years ago. However, in the era of peak oil (when there's just no wiggle room to find cheap supply to put into the system), the turmoil that Katrina hath wrought may hurt us in ways we haven't even fathomed yet because of the way our lifestyles will have to change in order to adjust to less available energy.

* I mentioned last week, during Katrina's ill-fated approach to NOLA, that this whole scenario resembled The Oil Storm from F/X (check your schedules, I think they are reairing it).  So far, this situation has followed the script, almost to a tee. (By the way, in case you're curious, in the show the next thing to happen is that extremists in SA saw this time of geopolitical weakness as a perfect opportunity to overthrow their government, then took control of the oil in SA.)

* Matt Simmons was quoted as saying "this [Katrina] is the trigger event that will drive energy prices way, way higher." Well, duh...but for how long? Is this a permanent change?

And then here's Simmons from another story:

My guess is that over the course of the next nine months, a lot of the major oil and gas companies are going to come to the awful realization that all of the production plans that they have are going to fall by the wayside because they can't find a rig," Simmons said.
But what exactly will Katrina be a trigger event for exactly? A problem with infrastructure? A logistic clusterfuck? (forgive me, JHK.)

* Another set of thoughts I've been having is that the short- and medium-term impacts of Katrina will drastically reduce consumption (due to recession/depression) and therefore give us some time to soften the blow of Hubbert's Peak of oil supply.

My anonymous source in the industry provided evidence for this notion, and here's what she said (it is a compelling case):

Consider that awareness of Peak Oil has just begun debate within media circles.  The federal government has taken the position that "all is normal." Demand/supply is as tight as a drum, with gas prices inching upwards, and consumers grumbling about "oil company gouging". Even within the PO community, there are those who believe that the invisible "market demand" will always make things right, and prices rocking along slowly rising supports their view.

Along comes a single weather event, in an area KNOWN for these events, and it does what hurricanes always do - it destroys manmade stuff, knocks over trees, remakes the coastline, and vanishes into the wind. This has happened in exactly this area since we began recording these events, and well before that. It is definitely nothing new under the sun. We knew this could happen, but it wasn't cost effective to try to prevent it from happening!

The ramifications of this are at first not apparent, as we are concerned with saving lives and then property. But once this has ended, what has changed for the immediate future?

  1. Domestic oil production is reduced for a relatively decent amount of time (12-24 months) by, hmmmm, say 15% (note from PG, this is well above the 10% reduction for greater than 90 days that was described as a "nightmare scenario" a few posts back by experts...and these numbers are in line with the GOMEX oil supply outage predictions.)
  2. 1,000,000+ people are out of work. They may not be placed on the unemployment rolls due to bureaucratic magic, but they are nonetheless out of work, and most without somewhere to live.
  3. The primary shipping point for goods delivered to the central part of the country is likely out of commission for 12-24 months.
  4. Traffic to the affected area is restricted due to roads, especially the interstates like I-10, being destroyed for 24-36 months, WITH rapid rebuilding. (Note from PG, this is especially true of the LOOP/Fourchon areas...getting supplies in there via ground to fix anything will not happen for a long while).
  5. Oil company exploration plans are extended for a few months due to sorting out hurricane damage.
  6. Refinery output looks like it will be curtailed by 20% or more for several weeks because of power outages and infrastructural damage.
  7. Shipbuilding (including naval boats, oil rigs, platforms, etc.) is hampered by the loss of multiple shipbuilding facilities in the affected area.
  8. In a very tight steel market, demand begins to surge as rebuilding of the infrastructure begins.
  9. The same thing happens in the cement market.
  10. Grain exports are reduced as the other international ports cannot take up the slack caused by the loss of New Orleans, or the costs incurred shipping by truck instead of via the river are much higher.
  11. Gasoline, diesel and heating oil distribution to areas via the Port of New Orleans have ceased for the foreseaable future. This is especially true until the power can be restored so we can see if the pipelines are functional. Without power, we cannot tell anything, as they have to be pressured up.

What does the loss of GNO, Pascagoula and the oil platforms do to things like the economy, gasoline prices, US oil demand and the world supply? What does 1,000,000+ unemployed do to the economy? How about 1.5M homeless? What kind of a burden does that put on what little safety net the government offers people?

And where does the lack of sufficient oil supply figure into each of these items? You need energy to find solutions and other alternative sources of energy!

So much to think about, isn't there?

In sum, these are the questions we need to answer, as a nation, in order to understand the (perhaps very) tough road ahead we all face with regard to energy. Whether Katrina gives us a respite to regroup (because of destroyed demand due to a recession/depression) and solve our problems or not, we still face serious, serious energy problems.

The solutions? There are myriad policy options, we just have to motivate the people who represent us to make the right ones.

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Katrina - a survey of the economic and geopolitical impact

The only solution is to diversify. There is no one solution. When we first started using oil, people thought it was going to end all of our environmental problems because horse manure was littering the roads and all the disease and awfull smells that it caused. Now we have a different problem (#1 oil is an non-renewable resource, #2 the environmental effects are even worse). If we go to a hydrogen economy, we'll have problems that we can't even think of. That's why we nee to diversify, energy efficiency definitely plays a role in this (not energy efficiency is the same thing as energy conservation), renewables and non-renewables will also hae a role.

The big problem is that we drive cars everywhere. That will probably have to end.

Ghostbusters (1984) via IMDB:
Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, "biblical"?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath-of-God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies. Rivers and seas boiling.
Dr. Egon Spengler: Forty years of darkness. Earthquakes, volcanoes... Winston Zeddemore: The dead rising from the grave.
Dr. Peter Venkman: Human sacrifice, dogs and cats living together - mass hysteria.
and you know when President Bush is pleading for oil companies not to gouge and people to conserve energy - the shit has hit the fan. Reuters:
Bush expresses 'zero tolerance' of price gouging in interview as prices spike above $3 a gallon. September 1, 2005: 8:04 AM EDT

WASHINGTON (Reuters) - President Bush warned against price-gouging of gasoline Thursday in the aftermath of Hurricane Katrina and said looters should be treated with zero tolerance.

"I think there ought to be zero tolerance of people breaking the law during an emergency such as this, whether it be looting, or price-gouging at the gasoline pump or taking advantage of charitable giving, or insurance fraud," Bush said in an interview on ABC's "Good Morning America."

Gasoline sellers have been fast to raise prices in the wake of the storm. Prices have risen above $3 a gallon and in some places higher because of a sudden drop in oil supplies.

Bush said Americans should conserve more gasoline in response to the crisis and said he expected Saudi Arabia to do "everything they can" to provide more oil. He said eight refineries are down in the Gulf and "it's going to take a while" to get them going again.

"I would hope Americans conserve if given a choice," he said.

emphasis mine. fear also mine.
FTW's Mike Rupert offers a sobering assessment of the possible condition that the LOOP may be in at

Frightening indeed.
I missed the first half of Oil Storm, but I guess now we are up to the point in real life so I guess there's no need to go back...

I think this is a key point that the media have started to pick-up on - that oil supplies are tenuous at best at meeting current levels of demand. I have heard this repeatedly, but they seem to assume that once the higher prices create the incentive to increase investment that the situation will ultimately balance out. This is the crucial point that we need to take issue with. Supply is not going to increase much and indeed in the long term, it will fall.

I'm still waiting for the energy conservation call. I heard that the EPA has loosened standards on refining gas that is less polluting. Why is that a better solution than asking people to conserve?

Thanks Prof G and Insider for pointing out the interconnections within the economy and oil energy sector.  This has been obvious to many posters at TOD.

I am incensed today that there is still not a message from the government to reduce consumtion in moderate ways.  Dave, Lou, MW and others in posts this week have said there is a lot of low hanging fruit that will ease oil supply.  This is also true of cement, steel, wiring, etc. that will be needed to re constitute the gulf area.

That our leaders do not recognize this is unacceptable.  There should be a national message to not waste energy this Holiday weekend.  A message that says "Here is how states and businesses cut back a little so that the remainder can be shifted to the gulf".  As Insider states there will be a continuous need for more energy and supplies in the GOM starting now than there was last month.  This greater need will easily absorb any reduction by the rest of the country.  

My point is we won't slip into recession by not consuming as normal up here in the north if the materials we were going to consume are now consumed by the GOM.  

By not telling everyone outside the affected area to consume less the stated message is that the economy will have to get larger - Consumption same in rest of U.S. but emergency repair ramp up in GOM.  Clearly this can not happen with the energy constraints caused by Katrina.

Will this message of shifting resources ever get stated by authorities?

I am not confidant that will ever be said.  It would call into question the enormous resources being squandered in the Middle East for the war on Terror.  The U.S. has gotten itself in a box where it can't stop consuming on any front.  We must stop consuming somewhere on a National level or the law of supply and demand will make the choices for us.

I am still waiting for a leader to step up and LEAD!

Your excellent anonymous source writes that "awareness of Peak Oil has just begun debate within media
circles." True of the US - but `back home' in Europe, false consciousness still rules.

The most recent example: today's `Frankfurter Allgemeine Zeitung' - Germany's leading highbrow daily  - has a major (page 1) editorial entitled `The Price of Oil'. And who's ultimately to blame for the spike, apart from Hurricane Katrina? Well, it's the state-owned and private oil companies which "during the 80s and 90s invested too little in new production facilities and refineries." Of course.

Needless to say the editorialist goes on to assure us that "[t]he tense market has nothing to do with the finiteness of oil reserves. Despite growing consumption, proven oil reserves have also increased in recent years." ("Mit der Endlichkeit der Ölreserven hat die gepannte Marktlage nichts zu tun. Die nachgewiesenen Ölreserven sind auch in den vergangen Jahren trotz des wachsenden Verbrauchs gestiegen.")

My guess is that as peak oil begins to hit, the more `peaking mantras' of this broken-record variety we are likely to come across in the media.

We'll be back to the horse and cart and these guys will still be banging on about the growth in `proven reserves'. Jesus wept.

This Villepin seems to be a lot more aware of the problem, weeks ago we was saying this situation was not temporal, now talks about "post-oil" era. From the WPost:
France announced it would give financial aid to millions of families to help them cope with sky-high oil prices, and promised to boost renewable energy.

"We have entered the post-oil era," Prime Minister Dominique de Villepin told a news conference.

And he writes poetry, too!

With my best wishes from the dry south of Europe...

With no sarcasm or ill will intended whatsoever, I can summarize the anonymous comments by saying: "Really bad stuff happened.  What does it mean?  Someone find me an economist!"

I'm completely serious about this.  Economics is the study of the allocation of scarce resources.  Various energy sources have suddenly become a heck of a lot more scarce than they were a week ago.

As a very short first pass, let me point out that in any market shock timing is critical; you can't talk seriously about the current energy situation without being hyper-aware of the time frame in the discussion.  The other often overlooked factor is market psychology, which certainly includes, but is by no means limited to, things like the phenomenon of people topping off gas tanks and making the collective situation worse.

We're in a classic market shock, in that no one predicted this would happen more than a few days before it struck, so no one had a chance to prepare to any appreciably extent.

Back to time frames, with a focus on gasoline:

We have the immediate short run, which I think of as the next few days, but no more than a week.  During this time I expect, as I believe Dave mentioned in another topic, for there to be spot shortages (as we're already seeing in some SE US cities) and quickly adjusting prices.

In the short run, starting in about a week and stretching to a month, we'll see prices settle in at a new level, likely in the high $3/gallon to low $4 range.  The chances are good that shortages will be minimal, with no need for overt rationing (as oppsed to the price-induced rationing caused by the market doing its thing).  The market will have "sorted itself out" as economists like to say.

The medium term, a month to perhaps six or seven months (basically until the spring 2006 cyclical oil price rise), will likely be marked by a major mental readjustment for US consumers.  Some will scream for gov't to "do something", some will actively seek and use ways to reduce their gasoline consumption (early adopters of the new mindset, so to speak), and some will keep fillin' the ol' SUV and driving too much and accelerating too hard, stuck in denial.  This staged response will slow down conservation efforts, but it will also prevent chaos--you don't want every SUV owner in the country to try to trade in their vehicle for a hybrid at the same time.

We'll also see real economic impacts in the medium term; reduced consumer spending overall, greatly reduced spending on transient entertainment items (trips to the movies and theme parks; buying video games and DVDs might actually go up as people shift even more to home-based activities), reduced resale value on low-MPG vehicles, etc.  Essentially, this will be the whole economy starting to reconfigure itself to accomodate higher energy prices.

Finally, the medium term is when we'll see some of that refinery and oil production capacity in the NOLA area coming back online.  This should ease prices a bit, but my guess is not much.

The long run begins with late spring 2006.  This is when people have had a chance to internalize the months-long experience and start making longer-term plans.  I expect that the car market will be very interesting, to say the least, by then, as many more people will be trading in old low-MPG vehicles for new(er), more efficient cars.

But we'll also see things like shifts in the size and location of new home construction, changes in gov't policies (hey, I can hope, can't I?), and a general but marked increase in the level of mainstream awareness about energy and efficiency issues.

And in the very long run, we're all worm food.

We have got to keep track of these posts to see how accurate they are 1,2 6, & 12 months out.

I hope you are right Lou.  I am concerned that fundamentals have changed.

I hope I'm right, too, although I'm so used to being wrong (insert economist joke here) that it doesn't much bother me any more.

But I think we can't stress enough to the less-energy-aware people we talk to that the fundamentals have indeed changed, and permanently.  Right now we're in the early days of a market shock, but the worldwide energy markets began shifting well before Katrina, and will continue to do so after the current shock subsides.

I keep telling people that 1) if you think energy is expensive now, you're in for a distinctly rude awakening in the coming years, and 2) it will never be this cheap again, at least not for any significant length of time.

In my opinion, those of us who see the big picture have a moral obligation to help everyone else understand what's going.  With gas prices rising quickly and some markets experiencing shortages, we should have no trouble getting their attention.

With peak oil debunkers, we have our work cut out in showing the big picture:
Odograph responds in the comments section.
Building awareness of PO--a clear and correct perspective--is a very important point. As everyone on TOD knows, this is a very complex issue. And Herbert Simon won his Nobel Prize for pointing out that people oversimplify complex problems.

Building awareness takes time--multiple exposures to an idea, from credible sources, delivered in a form that the intended audience can take in. This is hard enough under the best of circumstances. But it will be greatly hampered by interference effects--one incorrect but appealing statement can torpedo a well-constructed perception. These can be emotive: "It's just the big oil companies price gouging," or logical but not quite right: "It's a temporary shortage caused by refinery outages," and so on.

What can we do? Consider the good examples of the visible PO voices: Deffeyes, Campbell, Simmons, Kunstler, Savinar, and many more. Start the discussion, raise the level of discourse, repeat the truth.

Get out there. Be prophetic. Write. Cultivate the media, and be the voice on radio or the TV sound bite, like Heading Out on the BBC. Proselytize among colleagues, customers, clients, students. And be willing to keep doing it for years.

The ideas and the vision are here at TOD. We need to keep expanding our sphere of influence.

lou i like your post but you barely covered the fun stuff

like in the next few months the hording will start slowly
but surely.  the news reporters will find one guy in the
middle of nowhere who is hording and hype it up so everyone
get scared and the corporations will start advertising to the
market and say we have afforable gas storage solutions.

then democrats will start calling for more legislation but
Bush Jr. will say he is to busy helping people in the south
to deal with another partisan attack.  

in 6 months the only policy change will be that Bush Jr.
makes a promise to increase the capacity of the SPR

or maybe Bush Jr. will say this is why we need iraq oil
more or iran oil more.  

anyone wanna bet that with all the national guard gone private
corps. get contracts to rebuild?

"devistation is oppurtunity" from the movie the corporation

sorry if i missed something but why is nobody talking about the
indonesian currency drop.  all the poor countries are losing
it and rich countries are out bidding them and if there is any
large sacle long term economic problems they will only come from
the poor countires (or the ignorant irrational consumer panic)

(and for us USA citizens - how many have written their reps?)

re: Indonesia

Because the answer is obvious: Indonesia has subsidized energy too mch for too long and the markets know it.  In Indonesia, gas is something like 80 cents a gallon!  If the government tries to continue that subsidy, it'll go broke.  When it hikes the gas price enough to stop the fiscal bleeding, the economy will slow abruptly.  In either case, Indonesia is hosed for the short term and investors pulling out while they still can.

One bright side: Indonesian domestic consumption will have to fall sharply, and that puts more oil back on the world markets.  Especially if Indonesia resorts to being a net oil exporter.

I think your predictions make sense in the short term, Lou, but I don't think there will be that much effect in the long term. Gasoline futures are pretty much discounting the effects of Katrina by the November-December time frame. They expect prices to be back down about where they were last week, within 5 to 10 cents. If this prediction is correct then there won't be that much impact where it counts, in people's pocketbooks.

Most of the attention will be focused on the humanitarian problems dealing with the refugees from NO and other areas that experienced with destruction, and on rebuilding the infrastructure there. Once gas prices come back down, I don't think this crisis will be primarily seen as impacting energy costs, rather the other costs and problems will be predominant.

I think a lot of people are too eager to assume this is an oil shock rather than a gasoline shock. With 1,000,000 additional people out of work, plus much higher gasoline prices, it is conceivable that US demand for oil will actually DECREASE in the short-term.
I hope you are right, but really what we are saying is that this event "exposes" to the average American just how tenuous the supply of oil is and how easily it can be disrupted. Add some political instability and you have a real disaster because there is no excess supply that can ramp-up.

Peak oil means more instability in supply as well as an overall eventual decrease in supply.

The refining situation is just another symptom of the supply crunch. Who is going to invest in a new refinery when there is no apparent oil supplier that can feed it?

You quite likely might be right in the short run. If nothing else, there isn't the infrastructure for the US to start importing oil in larger amounts. But this will only mean that other places in the world will be able to start claiming dibs on the oil which otherwise would be US bound. Once the US repairs the damage and is ready to start importing again, what is going to happen to the price? The US's lessened demand was likely filled, there's no spare capacity, and the US will still have less domestic production. Unless the US has greatly cut desired demand, they will be hungry for oil, and the price will jump as countries/companies try to out bid each other.

Right now, yes it's mostly a gasoline shortage, but there is a strong spectre of an oil shortage as the US's importing infrastructure comes back on line after having been down. And the longer it's down, the worse it will likely be as the countries taking up the US's slack will have become more dependent upon the oil they'd been getting.

There was a very good analysis of Katrina and the economy at

One of the main points made was that the secondary and re-insurance market stands a good chance of complete collapse. Already reeling from last year's disasters, the industry may not have the assets to cover the losses associated with Katrina. Homeowners and businesses in the disaster area could find that their insurance is worthless. This, in turn, will lead to a wave of foreclosures. But the assets on which the note holders will foreclose no longer exists--the houses and businesses have been wiped out. In some cases, even the land upon which the building sat no longer exists. Worse still, insurers will be unwilling or even unable to underwrite new construction. No insurance means no mortgage, and that will make rebuilding impossible.

The normal backstop for all of this is the federal government. It is an open question whether the bond market will absorb the massive additional debt that will be needed to pay for this. And it's a safe bet that Bush and the Republican congress will not even consider raising taxes to help cover the costs. (Indeed, the top-priority item on the agenda of the next Congress is eliminating the Estate Tax.)

But that money has to come from somewhere. The economic impacts of Katrina will drag the economy down dramatically, thus cutting federal tax revenues even further and forcing the Treasury to issue yet more debt. It may well be an economic perfect storm.

I totally disagree with the comment about 'the secondary and re-insurance market stands a good chance of complete collapse.'

Many of these homes were unfortunately uninsured [the homes in the South tend to be passed down through the generations more than in other areas, therefore there may not be mortgages which would require insurance, further, these are often areas with lesser incomes], and the insurance business is pretty well capitalized and has learned to share the burden.

Here's one scenario that kills homeowners: even if insured, I would suspect that none of them are insured for their LAND value.

What if they don't rebuild.

My understanding would be that any insurance claims would have to be based on people buying the flood insurance extra coverage. Was that required within the city? As others pointed out, many homes wouldn't have ben required to have insurance because they didn't have mortgages.

All this is minor. A major US city's worth of economic activity has been shut down for a while; half a million people don't have the jobs they had two weeks ago. Insurance money won't begin to remedy the damage here.


The expansion of the SPR was included in the energy bill Bush just signed - hidden in plain sight...

To add to the misery index, the Bushco bankruptcy "reform" law kicks in today.  Once these displaced people have exhausted all their financial resources they're going to find out well and truly screwed they really are.
Ceteris paribus! That's why I love this site!

Naturally, we are dwelling on the domestic US situation. But what about fundamentals in the world oil market. For example
  • Nigeria is completely unstable and production halts there are now routine.
  • Ecuador -- see Nigeria
  • Mexico has tipped this year, no longer an exporter
  • The North Sea is depleting at a rapid pace
  • Indonesia is foundering, no longer an exporter
  • Saudi Arabia is maxed out for light sweet crude
  • US production has just been reduced 1.3 mbd
  • Vulnerability in Iraq is now higher after Katrina (see Saboteurs briefly shut down Iraq's oil exports (Aug 22) for example)
My point is that even with our overwhelming domestic problems, we are still dealing with a shaky world market. Afterall, oil prices have been rising for months and months anyway, despite what Ali bin Ibrahim Al-Naimi says.

Don't get me wrong -- I love the Saudi Arabian Minister of Petroleum and Mineral Resources. But American exposure to foreign disruptions has never been higher than now.
Right on all counts, Dave, and that's precisely why I'm so unsettled right now.  

If the world was awash in plentiful oil and the US was seeing price increases purely because of infrastrucutre bottlenecks, then I could relax and shrug off the "high" prices.  But the market was strung as tight as a piano wire pre-Katrina, and now we're facing not just an even tighter market, but significant additional risks from the situations you mention.

Now would be a good time for everyone to borrow against their stockpile of karma points.

i gotta agree with dave here (don't get me wrong
here, i have loved learning about the domestic
infrastructure with katrina) the global long term
is much more predictable.  

in some of domestic shortage posts i feel this
undercurrent of alarm or tension.  but all this
worry is only for physical shortages (i got no
oil because the pipe is broke but I AM NOT BROKE)

the long term global is all about people and countries
going broke trying to out-bid USA and EU corps. and
consumers.  We rich people have the deepest pockets and
can survive the worst demand spikes.  while the poor
people and countries will see recession, depression and
collapse first.

katrina is not a peak oil event, it is a big production
problem but when the peak oil event happens no one will
know because opec hides its numbers (twilight in the desert)

and even when peak oil becomes public the rich will still
out bid the poor and there will be no climatic colapse or

I'm sure the war planners have contingencies for times like this (kick the US while down scenarios) -- or at least I hope they do. Critical energy infrastructure (domestic and foreign but thinking mostly domestic at present) must be at a much higher risk level than ever before in history...

At least the friendly and ever-helpful Venezuelan president Hugo Chavez is keen to off discount oil to the US (not a political comment on my part; despite being a conservative its my view that Venezuela can do whatever they want with their resources):

Venezuela offers oil and aid to hurricane-battered US

The government and the nation of the Bolivaran Republic of Venezuela express to the United States and its leaders their dismay over the magnitude and consquences of Hurricane Katrina,' the ministry said in a statement.

 Chavez had threatened to cut off oil supplies to the US, and after US evangelist Pat Robertson called last week for the US to assassinate Chavez, the Venezuelan leader accused Washington Monday of 'giving protection to a terrorist, who is demanding the assassination of a legitimate president.'

Did anyone read the ASPO newsletter that came out today?  Link In it there is an excerpt from a NYT magazine piece where the former Saudi oil minister Husseini spills the goods.  With growth and demand AND global depletion rates we need about 6 mbd additional production EVERY YEAR.  In his words: not sustainable.  No surprises here for most on this blog.

The second thing of interest is a reprint from a regional Virginia newspaper that summarizes the groing pattern of shortages in the poorer regions of the world.  This is where you find that Canary gasping for breath.  Welathier nations can ensure their supplies of crude and refined product in a tight market, poorer nations cannot.

Finally, I know some folks here are concerned about the lower income families and how they are affected by PO.  Well, we are seeing right now before our eyes who is most immediately and severely impacted by sudden energy crises.  It ain;t the people who rent those fancy boxes in the Superdome, just those who are herded in when distaster strikes and no one even considered how to get those without cars or money for gas out of the city.

Seems "every man for himself" isn't really a very effective emergency policy now is it?

Yeah, I completely agree - what is an evacuation plan that just tells everybody to "save yourself" and leaves poor people to fend for themselves. I doubt many of those who stayed had much of a choice...we should be ashamed.
There are now appx 1.5MM people displaced by this, most likely. They will run through their financial resources quickly staying in hotels. Once the "better off" exhaust their bank and credit accounts, what happens?

I think this has the makings for a lot of trouble in Houston where many have fled. I think what is happening in GNO today, with the gunfire and madness is to be expected in Houston in one form or another as people slowly go broke without any income, and are faced with utter destitution. On top of that, government banking laws only want to confiscate their remaining property via the new bankruptcy act. It appears to me from the Superdome and now Astrodome security details that the main focus by the Feds is to keep them quiet and out of sight from the MSM. And also all in one place if possible.

I don't think they can file for Louisiana unemployment in Texas, or can they? And are any of them even thinking that far ahead?? Man, this is a nightmare...

One thing Katrina has exposed is the federal government's lack of financial flexibility due to its policies of deficit spending. Responsible Keynesian economics used to say that we balanced the budget at full employment, ran a surplus to take the steam out of inflationary booms, and ran deficits to stimulate the econoomy during recession. It went without saying that in times of war or national emergency all bets were off, but the idea was, that if the national debt were kept manageable during "normal" times, federal borrowing capacity would be there when we needed it.

However, we now run government finance under the assumption that government is the enemy of democracy and large deficits are a necessary and proper way to prevent government from spending money on intrusive or redistributive programs; proponents call this "starving the beast."

It would seem that under normal budget conditions the federal government would be there to help the states if unemployment insurance funds were temporarily overwhelmed by the Katrina disaster, and that federal funds could also be quickly appropriated for reconstruction. And maybe all that will be done in any case. It will just be more problematic than perhaps it should be.


I agree completely.  We have moved from prudent accounting to nothing but rosy scenarios.  I see this in government and business.

Things are fine and will be better in the future!  Everyone will be employed.  The sun will always shine.  Stock market returns will only go up, so invest there.  Why worry!  

Egads I'm stating to sound like StepBack!

My point is, the mentallity of the nation is that we don't need to plan fo rough times or crisis anymore.  But tough times and emergencies cycle around no matter what and to have this attitude when we are facing peak oil is just plain dangerous.  

You used the words "responsible" and "government" in the same paragraph.

What a concept....

what's the update on refineries and oil rigs, LOOP.
it's all about power generation at this point, billyt.  until they get the diesel generators up and running (optimistic: 5-10 days depending on severity of the situation)...we have 8 or 9 (I've seen both numbers) offline that have an output of...damn, anyone have that output of gasoline there?  I have to go teach, and I don't have time to look it up.

We don't have any capacity in biodiesel, and will not in the near future. It may be a solution for later, but it just doesn't help anybody this month.

i had a silly idea but i have to share it

instead of exporting food (which destroys the
farmers of the poor countries because of our farm
subsidies) we could take all that grain on the
mississippi and take all those people who
are out of work and build biodiesel farms
and biodiesel prodution plants all over the south.

but that is just crazy

could never happen

now you're thinking out of the box.
Re: On Levees, Hurricanes and Climate Change

I am going to tell a story of neglect and lack of leadership in this post. My point of departure is Intricate Flood Protection Long a Focus of Dispute by science reporter Andy Revkin from today's NY Times.

As Rick, Stuart Staniford and I have pointed out recently, we are in a particularly active hurricane seaon, which is only now about half over. Since 1995, hurricanes have been more frequent most likely due to a natural variability called the Atlantic Multidecadal Oscillation. Although hurricane frequency is not significantly correlated with climate change, hurricane intensity is. Look at Ross Gelspan's Katrina's real name from the Boston Globe. His site is other posts here at TOD for more information.

There are two approaches to dealing with climate change. The first is too attack the root causes of anthropogenic (human-caused) warming by reducing the emissions of greenhouse gases (CO2, Methane) into the atmosphere. The second is mitigation. Accepting that a certain amount of warming is in the "pipeline" -- in fact, about 0.6C if we stop all emissions today -- mitigation involves taking sensible steps to prepare for extreme weather events e.g. droughts, floods, heat waves and intense hurricanes.

This brings us to the levees around New Orleans. As Revkin reports
Mr. Naomi [Army Corp of Engineers senior project manager] grew particularly frustrated this year as the Gulf Coast braced for what forecasters said would be an intense hurricane season and a nearly simultaneous $71 million cut was announced in the New Orleans district budget to guard against such storms....

In an interview last night, Mr. Naomi said the cuts had made it impossible to complete contracts for vital upgrades that were part of the long-term plan to renovate the system....

Weaknesses in the levee system were foreshadowed in a report in May on the hurricane protection plan for the region and the budget gap.

The district headquarters said, "The current funding shortfalls in fiscal year 2005 and fiscal year 2006 will prevent the Corps from addressing these pressing needs."

They also meant that there was far too little money to study thoroughly an upgrade of the protections from the existing standard, enough to hold back a hurricane at Category 3 on the five-step intensity scale, to a level to withstand floods and winds from a Category 5 storm.
I will not address the issues raised by the replacement of the Gulf Coast natural defenses to tropical storms (wetlands, mangroves) by human engineering control measures like levees and pumps. And I will only briefly point out that 1 meter is a reasonable estimate of the amount of sea level rise expected over the 21th century -- look at Confronting Climate Change in the Gulf Coast Region for a summary of the problems that need to be addressed now and in the future.

In conclusion, the US, abysmally led by George Junior, has failed to acknowledge climate change as a problem and so naturally they have failed to take any mitigation measures to prepare for it. In fact, funds were reduced for maintaining and enhancing the levees around New Orleans to prepare for more violent hurricanes in the future. I am not sure how the funding pipeline works here, but sufficient money was not available. Our political leaders learned absolutely nothing from the intense storm Ivan last year.

Stupidity, Cupidity or Criminal Negligence? What's the difference now? It doesn't matter now, the damage is done.
This is one thing that irritates me, is the constant barrage of Monday morning quarterbacks who seem to believe all of the problems can be traced to one evil, devious man named GWB.

The money that was cut would not have built the levies. Should the money have been approved, there may have been a $20 billion dollar plan put together that would have been built partially with the help of some national infrastructure bill loaded with barrels and barrels of pork. Even if approved, do you think the levies would have sprung up overnight?

Bottom line is that there are opportunity costs for every dollar spent, and while it's easy to say that dollars spent here could have prevented this or that, you can take another realistic scenario (let's say, a chemical attack at the Mall of America) and say "what an idiot our leader is - we should have spent millions to protect against that" - but we're not hearing that now, we'd hear that from you the days after it happened.

If we tried to protect ourselves from everything, we'd have nothing.

I know my post isn't among a group of similar thinkers, so forgive me if I let any rebuttals go without another response (we aren't changing each other's minds) but how about doing something else than complain about how other people aren't executing and how other peoples' ideas are pathetic and get out there and do something positive.


skagen, other perspectives are welcome here, seriously.

there's an obvious anger amongst folks (second stage of grief) about this...but I tend to agree with you from the cost/benefit side of spending $20b (which would've ended up being $40b).  

My real problem is the planning and response.  Basically, an atomic weapon went off in NOLA.  We've been preparing for these kinds of scenarios for years...and if they saw a Cat 4 coming at NOLA, they should have spent the money prior to the storm to evacuate folks out of there, if they knew NOLA was this vulnerable.

Of course, this is all Monday morning quarterbacking.  If they had done that and Katrina had been a Cat 1, the waste would have been chastised as just seems to me that err on the side of caution, but perhaps that's my personality.

let me clarify

when anybody makes a reference to Bush Jr.  or
GHB or Bush Admin. replace that label with

all the people in the USA who are greedy rich and only
care about short-term profits and who love doing
business with china and suadi arabia and only
care about covering for their own rear ends

(generally speaking)

GWB (couldn't spell my way out of the high pressure side of Ghawar)
yeah, I was gonna say, isn't GHB the date rape drug?
and ecstacy and special k
and rBGH is bovine growth hormone
That's great. The danger to NOLA and the Gulf Coast from major hurricanes has been known for decades and climate change has simply exacerbated the problem.

And now somebody who points out the obvious negligence is called a Monday Morning Quarterback. What is that, a joke?

How much money did we spend in Iraq this week?
no, no Dave...hear me out.  First, I am saying that there's no winning in this situation for anyone...whoever is in charge would have been attacked for either not being aggressive enough or being too aggressive, no matter the outcome.  

I AM NOT DEFENDING BUSH.  The planning and response have been horrible.  I am merely saying that prevention for that one area would never have been passed Congress.  Why?  Because, the amount of money that would have had to be allocated by the federal government to the NOLA project would have never survived the legislative process because it would have taken too much money away from other states, it would have been left on the cutting room floor...and that's if either political party was in charge.  Do you think some rep from Ohio would vote for that?  No, because it's not in their district's interest.  It's not how things would work in a federal system.

Wasn't protecting the largest US seaport in the best interest of about thirty states? the "there's no way this will happen in 500 years" way.  Politicians (from BOTH parties) don't think that way folks.  I am not defending it, I'm just explaining it.
Re: " the 'there's no way this will happen in 500 years' way"

That's the whole point about climate change with respect to Donal's excellent remark. With global warming, the 500 year event happens much more frequently. I wouldn't be surprised if something like this were to happen again before the decade is out.

I'm aware that our political leadership is incapable of addressing these issues. But protecting our energy hub would appear to me to be in national interest, Mais, Oui?

I think maybe their representatives will soon understand how very much it WAS in their best interest...

Guys, I am with you on this.  Just understand I am trying to explain the Realpolitik of why prevention of this kind of tragedy would never have occurred.  Politicians have to think short-term and be reactive to keep their jobs.  It's why most policy outputs of government are so myopic.

Will this change things?  I sure as freaking hope so.

The unfortunate reality is that "no way could that ever happen" is the same thinking that

  • our economic system can carry on, fueled by oil forever
  • if we one day realize there isn't enough oil to keep everyone in new XBoxes each year, we'll simply invent something else
  • the private market will see all this coming in advance and be there, ready with solution in hand, at just the right time.

To that I say VHS and BetaMax.

(not a real analogy but seemed funny at first... the rest of my points are serious)

"Realpolitik in many cases has been for the advancement of the national interests of a country over ethical or principled concerns."

Meaning...politics in the US is pure reactive rational pragmatism on the part of American officeholders, which is in turn reflective of the majority of Americans' mindset.

NB: I am not saying that's a good thing.  As I said above: "will it change?  I sure hope so."

I don't think anything will change the current setup except a change in Presidential party. Even then, we will simply have a different shade of myopia, but maybe with a more domestic slant...
It is a rare thing that anyone bothers to attack my research. It doesn't happen much anymore execpt from those new to trying to debunk our research for the first time. I am much more used to the ad hominem attacks, such as I have seen here, that seem always to intensify the more From The Wilderness is proven correct. As far as your list wanting sourcing for my remark about the Saudis admitting they can't increase production, here you go.

And yes, I have proven that Bush and Cheney were directly behind and responsible for 9-11 with 1,000 verifiable footnotes. That view is rapidly gaining general acceptance because of the quality of documented evidence that so many people have suffered to bring to light.

Thanks at least for allowing me to respond and provide you with what you asked for.

Mike Ruppert