Calm before the Storm

Peak Oil? You wouldn't know it. People are talking all over the place about the promise of tar sands, ethanol, and wind power. Gasoline is dropping in price. I had predicted before the summer that oil would hit $95 a barrel and gasoline $3.50 a gallon. Summer is nearly over. The price of oil at its highest was about $78 a barrel and right now it is struggling to hold onto $70; gasoline is tumbling rapidly from a high of $2.95 a gallon to today's $2.56 a gallon. Iran's dictatoriot Ahmadinejad seems all huff and puff like a wolf that can't blow the house down. There's been a war between Israel and Hezbollahia, cohabitant of Lebanon, but that appears to be blowing over. The far prognosis for natural gas is grim, but right now there is a tremendous glut of the stuff. Hurricanes? This has been a dud of a season. Only now are threats coming up, but the latest one, Ernesto, has diminished from a potential Gulf rig and refinery whacker to just another thunderstorm with rain and tornado threats here in Virginia. So where's the peak oil? Where even is global warming?

It's coming. We don't know exactly when, but there will come a time when the world will not be able to increase oil production. Someone at the recent ASPO convention says that will occur 1500 days from 2006 July 26 or so; that's in the year 2010. Others say 2008. When it happens, they say, only "tremendous demand destruction" will cause demand to meet supply. In the past few months, oil production worldwide has stayed steady at 84 million barrels per day, but some of that could be the result of refinery destruction. But it also suggests we may be nearing the peak. We have trouble with the Alaska pipeline, although half of it is back up. They say that Saudi Arabia is experiencing trouble trying to match oil output with its rhetoric.

So this makes us all feel uneasy. What to do now? Move to the city? Grow a vegetable garden in our yard? Buy a Toyota Prius or a bicycle? Move closer to work? Stock up on food? Is this a disaster or something? It will be, but not of the kind that stocking up for disasters will help, because it will be long lasting. My thoughts are that we should reduce our output - take out all that is unneeded for fulfillment in our lives. Cut the lights. Ride the bike. Take the train. Move to the city, or even better yet, to a self-sufficient urban village or cohousing project. We do what we can, and we will just have to see what happens.

Credit and debit cards at pumps could lead to disaster

How do I pay for gasoline? When I was a child, my father used to go up to a gas pump. A serviceman in a policeman hat would come out and put a pump in the gasoline tank. I would see the digits spin, until the terminate somewhere near $2 or $3. Then my father would pay the serviceman. When I got out of college and owned my first car, I would get gasoline on my own, getting out of my car and putting the pump in and pumping until it said something like $10. Then I would go into the establishment, which was now a small grocery or convenience store instead of a auto service station, and pay the $10. I would get gasoline like this all the way until well into the 21st Century.

Then a change occurred. I started getting out a card and sticking it into the pump. I now follow screen instructions, pumping in the gasoline, and getting a receipt. That is how much my credit or debit card was charged for the gasoline. Then I would drive away without having to go into the store. Usually the amount is now $25, or for my van, $45. How times have changed.

There is a danger here. As long as people went into the store or paid someone cash, higher gasoline prices would crimp people's desire to drive places. This would cause a needed decrease in demand, and a drop in gasoline prices. But if people are going to stick cards in machines and build up charges on a credit card, people are not going to conserve. The direct association between gasoline and money is no longer there. Drivers don't worry about money until their credit card bill comes.

And then people react in the usual way they react to credit card balances. They pay the minimum amount and interest starts accruing. If gasoline prices are going to be charged like this in an era of ever rising gasoline prices, this will cause serious trouble. People will keep charging bigger and bigger amounts as gasoline prices continue to go up. Demand will stay high, furthering bigger raises in gasoline prices. Eventually people will not be able to pay their credit balances, and bankruptcies and defaults will occur all over the place, and this could cause a string of bank failures. This could be exacerbated by inflation, causing the Fed to raise interest rates. In other words, we could have another Great Depression.

People need to start conserving now. Forget the credit card, and pay only with what you got. Else we are heading for a real monster of a financial crash.

The Five Biggest Problems in the World Today

You hear a lot of stuff happening on the news and elsewhere nowadays. People are fatter than they were 10 years ago, gasoline is $3 a gallon, Israel and Hezbollah are having a free for all with each other, the Iraq conflict is continuing on and on and on with no end in sight, hurricanes threaten Gulf of Mexico oil supplies, sex offenders maraud the landscape and so forth. But what really are the biggest problems we face today? This is important because some theories (Periodic Presidents, the Fourth Turning, and the Great Turning) are saying that a major crisis period may be coming shortly. If so, what's going to cause the crisis? I think it is likely to be one of these five problems that leads to the crisis, and I will enumerate them in terms of their likeliness.

5. Discrimination. No, it didn't end with Martin Luther King and the civil rights movements of the 1960s. We still see it nowadays, in the destruction of a gas station because its owners wear turbans (Sikhs), the murder of a gay man in Wyoming, and even in the way we associate with people in our everyday life. Discrimination is alive and well. It would help if everyone would recognize the worth and dignity of every person.

4. Prevalence of Mainline Religions. This is a large grouping of related problems. The problem is that mainline religions, such as Christianity, Islam, Judaism, Hinduism, Jainism, and so forth, promulgate belief in a higher power ("God") way up there that answers their prayers. "I thank God for helping me through this disaster." What about those that did not survive? Was God with them? Sounds like a retributive God to me. Further, many people and nations begin to make God in their own image. For since the Ultimate Reality is so immense as to be unreachable, the best we can do is make up images that are specific to ourselves, and from this develops the idea of Good vs Evil, with Good being us and Evil being those other guys. From this conflicts develop. Muslims are especially apt to spout off religion in their own name, from the death threats against people who draw caricatures of Mohammad to the majority of people in Afghanistan who want someone executed because he wants to practice Christianity instead. In this country, it manifests itself in forcing us to hear "Under God" in our schools, in demagogues such as Pat Robertson and Jerry Falwell, and in forcing high school teachers to teach non-science, such as creation and intelligent design. I believe that religious beliefs are at the heart of the present crises in the Middle East that threaten the entire world. People need to understand each other before demanding that they be understood, and the world will be a better place.

3. Retirement of Baby Boomers As we go down the list, we get into more serious problems. This one was caused by all the World War II vets who came home and started manufacturing babies and families, creating a population boom that caused schools in the 1960s to rapidly expand, caused a glut of PhDs in the 1970s, a housing boom in the late 1970s. We baby boomers are headed into our retirement years, and when that happens, some nasty things could happen. What happens when boomers withdraw from their 401(k)s instead of putting money into them? Will the stock market crash? Certainly the presence of all these aging boomers requiring care will be a drag on the economy. I suspect people will want to work longer, but this is still a danger signal in the years ahead. It has caused Harry Dent, an economist, to call for the Mother of All Depressions next decade.

2. Global Warming. Or in general, global climate change. All these fossil fuels that we are burning up is spewing carbon dioxide in the air, which prevents sunlight from getting out and causes the Earth to warm up. Al Gore presented the case for this quite nicely in his documentary An Inconvenient Truth. This is a movie that needs to be seen, as Al Gore has presented a convincing case that indeed global warming is affecting the way we live. We see it now, in Hurricanes Katrina and Rita, in some of these storms across the nation such as the Great Northeast Storm of 2006 June and the St Louis Blackout storms of mid July, and in desert-like conditions in some areas and heat waves all over the place, especially the American West and Europe. This is a problem that needs to be dealt with in the years ahead if we are to avoid destructive events. But it is not the biggest problem we face. Al Gore went to all this bother to prepare a first-rate documentary on the Number 2 Problem. We need something like that on the Number 1 Problem:

1. Peak Oil Our whole civilization is based on it. Oil. It is nonrenewable, and the world is near the halfway point. This means that in the years ahead, while demand for oil soars, production of it will decline. This will result in all sorts of havoc if we are not prepared for it. Good descriptions of the problem are available at www.oilcrisis.com and its links, Jim Kunstler's Clusterfuck Nation Chronicles, although the use of the f-word and other such words in his chronicles detracts from the message, Kenneth Deffeyes' web page, and many other sites. Peak Oil is why the price of gasoline has risen from 88 cents a gallon in 1998 to $3.00 a gallon today, and we can expect it to rise further. It is hard to find substitutes - hydrogen has storage and other problems, ethanol has an energy return ratio of 1 or less, there aren't enough wind turbines (although they are easy enough to construct), and solar power is a long way from providing us all the energy we need. We need to conserve as well, by eliminating the use of energy that really isn't needed by us - computers that burn all night long, lights that light up the ground for nobody, and so forth. To me, Peak Oil tops all of the other problems. It will stop Global Warming. It is important enough that, although I would recommend voting for Democrats in general this fall, if you are in Maryland's Sixth District (Cumberland and Hagerstown), don't. Vote Republican - for incumbent Repv. Roscoe Bartlett, who shows more awareness for Peak Oil than anyone else in Washington.

These are all problems that we need to deal with. Note that I don't list terrorism. I believe this is a subproblem to Prevalence of Mainline Religions. Religions drive people to commit acts of terrorism, for example, to go to where there are 55 virgins. It is a red herring. Terrorism is not the problem. Global Warming is a serious problem but it is not The problem either. The Problem is Peak Oil. Focus our attention on that, and the other problems probably will work themselves out.

Interstate System Turns 50

As part of my membership in the American Automobile Association (not AAA - that's an honor student's report card), I get the magazine AAA World. The big picture on the front cover is an Interstate highway sign saying "50": The Interstate Turns 50. After some hunting around for it because the front page of the contents looked more like a blary ad than like a table of contents, I found it on page 62. On 2006 August 13, the Interstate System will be 50 years old. Interesting. It started on my 10th birthday, so on that date I will be 60 years old. 10 + 50 = 60, and the Interstate System has been an integral part of my life, as it has for everyone around me.

The article contains some interesting information on the Interstate highway system, including its history. It seems that Dwight Eisenhower started it by going on a tour of the United States in 1919 to document all the places in our country that it was hard or impossible to get to by automobile as justification for his plan to build a network of superhighways in our country. Later on, when this adventurer was President of the United States, on 1956 August 13, Congress passed and Eisenhower signed into law the Federal Highway Act of 1956. It mandated the construction of a network of superhighways across the nation. These highways would have no stop signs, no intersections, no rail crossings, no highway traffic jams, and in fact nothing to impede auto traffic. When you get on one, you just simply go and go and go forever into the distance. This made distant places a lot easier to go to and changed drastically our lifestyle in this country. In fact, it has been called not only an economic force, but a democratizing force as well.

Some of the early cartoons presented in the article are interesting. For example, one has the treasury secretary put a stethoscope to the highways of our nation; in his other hand is a doctor's satchel. Another one has a series of letters to Congressmen soaring in to the air to the nation's Capitol, with cars driving on it as though the letters were a superhighway. The cartoon was urging us to prevail on our leaders to construct such a highway system. The system is just about complete now, and in many places it looks like something unearthly or extraterrestrial, with all these highways crisscrossing all over the place. Take a look at Rochester, New York's Can of Worms, Richmond, Virginia's James River Bridge, Bryan Park area, or I-895 bridge, or Washington, DC's Springfield Mixing Bowl, and you see what I mean.

But has it all been good? Think of all the land that was used up in constructing the Mixing Bowl. It must be a square mile or more. And they are still making it bigger and bigger. The highways have encouraged us to drive cars all over the place and to go out farther and farther into the suburbs, engaging in what Jim Kunstler ("Clusterfuck Nation Chronicles") calls "an idea with no future". This network of highways makes us dependent on the automobile, and it does not do all what it was intended to do. It avoids city traffic jams, which are annoying, all right, but it causes superhighway traffic jams, which are colossal and waste huge amounts of our citizens' time and fuel. Further, the fuel which drives all of this Interstate is about to run out. The world is nearing "peak oil", after which production will decrease from year to year, causing shortages all over the place. This could lay waste to this entire assemblage of concrete ribbons. Maybe the superhighway system is the Great Moai Statue of our society, like the statues that Easter Islanders built before they ran their remote island out of trees and their way of life.

The AAA article says nothing about this ominous future of our interstate system, and further, they have the gall to praise, in a subarticle entitled "A Recipe for Success", Colonel Sanders and his Kentucky Fried Chicken enterprise. That's right, AAA. With these highways comes Kentucky Fried Cruelty and We Do Chickens Wrong, not to mention trans fat as well.

The Interstate System of highways is a great achievement of humankind. From out of dust and dirt arises an intricate and complex network of concrete ribbons throughout our nation. I say we should use what's coming up, the system's 50th birthday, to say "Mission Accomplished" and not build any more Interstate highways. Instead, let the rising cost of gasoline take traffic jams off the highways.

Economic Collapse and Bubble Boom, Part 2

I received both books today, The Coming Economic Collapse by Stephen Leeb, and The Great Bubble Boom, by Harry S. Dent. I haven't read all of these volumes, but I have read enough to come with some conclusions. I believe Leeb more than I do Dent.

Stephen Leeb believes that peak oil will profoundly affect our society. He shows this more than in his earlier book The Oil Factor, and in some cases suggests we could be nearing an end to our civilization, although he says this need not happen if we take the right actions. Like other peak oil people, he says that oil prices will continue to rise for the foreseeable future. This happened before, in the 1970s, and he uses that decade as a model for what is coming up in the next few years - the Double Zeroes and the Teens. During that time, inflation threatened to get out of hand. It was stopped by Fed chairman Paul Voelker raising interest rates so high that they suppressed inflation, and eventually caused things to come back to low inflation. Mr. Leeb notes this can't happen this time because of huge consumer debt. If Bernacke were to try that, housing buyers would disappear, people would not be able to pay their adjustable rate mortgages, and house prices would plummet, taking stocks and the economy with it. So the only thing left is to let inflation rage. This implies that we could be heading towards million-dollar homes, then million-dollar cars, then million-dollar computers and so forth, and I hope we aren't heading towards 1923 Germany.

Leeb says that wind holds the most promise to replacing oil in our society; he doesn't mention the idea of converting coal to gasoline, as in his earlier book, I guess because he says that wind can be used to electrolyze water into hydrogen for fuel for fuel-cell vehicles. Among the investments that should be shunned are those that did poorly in the 1970s: cash, bonds, stocks, and small-cap stocks (although the latter did well in the 1970s). Instead, he says we should invest in oil, gold, real estate, China, India, and alternative energy. It is hard to follow such a strategy now because it seems that oil and gold have a tendency to drop in price as of late. But he says we should invest in these things.

Harry Dent did not do as well with his Bubble Boom. He uses generational theory and the upcoming Fourth Turning for his predictions. He says that a booming market, to the extent of Dow 40,000, will come in the next few years, by 2010. Then he says the Mother of all Depressions will occur, because the Baby Boom generation will start retiring and require support. He even describes a mini-history of 2010-2024 and beyond. I read through this and it seems like a repeat of the Great Depression and World War II. He even calls for the election of an FDR-like president in 2012. If he is talking about a Crisis President, I think this president is more likely to show in 2008, and I made a claim on Beyond Opinion that this president could be Al Gore. He does present a graph in which there is an uncanny resemblance in the Dow of 1921+ and the Dow of 2002+, but many other authors have found such similarities, and they haven't panned out. The truth is that no two Fourth Turnings are the same. The one before the Great Depression and World War II was completely unlike those crises. Instead of dragging on for 16 years or so, this one, the Civil War, was over in only 4 years, and it did not involve much economic dislocation, at least for the North. Dent makes the same mistake as President Bush - overemphasizing terrorism and ignoring peak oil. Neither Leeb nor Dent mention global warming.

Harry Dent seems to completely ignore peak oil, and assumes we are going to have an adequate supply, and gives brief mention to the Athabasca tar sands in Canada, although that oil takes a lot of energy to get from the tar. He devotes an introduction to peak oil, and he suggests that prices are going back to under $40 a barrel and that oil and oil stocks are about to tumble. I don't think so. The problem is not some trick or some technicality in a figment of the imagination such as a stock's price, but is a genuine supply problem with the stuff. His reading is fascinating in places, however, and he demonstrates well the concept of the S-curve, which is also called the logistic curve. Dent applies this curve to automobiles, computers, and cellular phones. He says that we are 90% into the Internet S-Curve. I think he should apply his S-curve concept to cumulative oil production. He will find that we are near the 50% mark on that curve; i.e., nearing peak production. His recommendations are for stocks of all kinds until 2010, and then invest in money market funds and the like. Leeb says those investments will lose purchasing power to inflation.

I asked both of these men about the theory of the other. Leeb does say in his book that retirement of baby boomers (a prediction of the Fourth Turning) will drag the economy, but that peak oil is the more serious problem. A spokesman of his said that baby boomers will continue to find work into their later years and so that will not be a problem, unless peak oil makes it one. However, as we have seen, Dent does not mention peak oil at all, and actually says that oil prices are a bubble and are about to tumble.

Which am I to believe more? I'd go along with Leeb. The Fourth Turning is an interesting concept, but still merely an abstract concept, but oil is a real substance. Either way, we could be in for some hard times, and I believe that the Fourth Turning crisis will center on finding how to continue civilization without fossil fuels.

0=1, Blogger?

Two days ago I posted a blog about two books about the future, written by H.S. Dent and by Stephen Leeb. I got a comment on it today and OK'd it for this blog. After I did that, Blogger continued to say that the blog had no comments. But when I clicked on "0 Comments", I got a comment! The one the commenter had submitted. Blogger, 0 comments is not 1 comment. Either there is a comment there or there isn't. It can't be both. The worst part about it is that I have to go all around my blogs clicking on notifications that say "0 comments" because some may have comments. Blogger needs some truth-in-commenter-counting audits.

Bubble Boom and Economic Collapse

Peak oil is coming. Some say as early as 2005 December 16, which has come and gone, and others as late as 2037. To me it looks like it's coming in 2008. Our present steady oil market will be replaced by a declining one, and shortages, high prices, and possibly wars will occur. Further, baby boomers like me (I will be 60 years old soon) will start retiring in droves around 2010; they will live on retirement incomes and drag the economy down. Grim outlook. How should I invest? I have run into two financial analysts who take societal trends into account: Stephen Leeb, who takes peak oil into account, and H.S. Dent, who takes generational theory into account. Up to now, Stephen Leeb (The Oil Factor) calls for alternating mostly safe investments (if oil increases 80%) with investing in energy, gold, and real estate (bubble busting soon?) (if oil decreases or increases less than 20%). H.S. Dent (The Roaring 2000s) says that incredible boom times have come (yeah, the dot-com boom and bust) and that we are going to get more big boom, until 2010 when the Mother of all Depressions with 15% unemployment will arrive and last 15 years.

What do they call for now? Stephen Leeb has published a new book, The Coming Economic Collapse, in which he says that peak oil will cause the world economy to go into a severe recession or depression, but he says one can still "get rich" from it. I don't see how. H.S. Dent has published The Next Great Bubble Boom, in which he says an incredible boom will occur until 2009, with the Dow hitting 40,000 (that's right - forty thousand) and then the roofs are coming to be coming down everywhere like roofs on houses in New Orleans during Katrina: The Mother of All Depressions. I have ordered both books.

I will read them when I get them this week, and will find out what they say. In the meantime, I will say that investing in near peak oil times has proved to be tricky. Oil does not go monolithically up. Instead, it soars in price, causing people to grouse, grumble and do without. This causes demand to decrease ("demand destruction"), causing oil to fall in price. In addition, the higher gasoline and other fuel prices cause a slowdown in the economy and higher inflation rates, and these things cause the stock market to fall, taking energy funds and gold with it. So for example, my energy and gold shares have done great so far this year, until recently when they fell, costing me 1% of my portfolio. Stephen Leeb reminds us that we should not buy and hold, but at no time did his negative oil indicator sound. In fact, his positive indicator has hit several times. So I have held. But I do know one thing. If the weather models predict a major hurricane hit on the Gulf Coast, I am pulling out of stocks altogether.

Maryland Sixth

To me the most interesting US House of Representatives race of the year will be that in Maryland's Sixth District. I used to work and go to church in this district. Back in the 1970s I worked at Ft Richie, near Hagerstown and near the Pennsylvania border, and went to church in Hagerstown. The district includes Hagerstown and sprawls all the way westward to the border with West Virginia. It is the most conservative of Maryland's congressional districts and only one of 2 out of 8 whose representative is Republican.

The current Representative is 80-year-old Roscoe Bartlett, who is well-known in peak oil circles as the only US Senator or Representative that knows aobut the peak oil situation coming up and is willing to talk about it, to the extent of having conferences about it. For this reason, if I were living in Maryland Sixth, I would vote for Roscoe Bartlett, even though he was Republican and despite some of the stands that he has taken.

But I wanted to see what the Democrats would say. So far, the Democrats have been puny about Peak Oil. They criticize the Republicans, especially President Bush, for the high gasoline prices we have been having, even though those are the result of supply and demand. But they don't come up with substantive proposals for dealing with the problem. I found out that there are two Democratic possible challengers to Repr. Bartlett: Barry Kissin and Andrew Duck. So I tried seeing what these two people would say about Peak Oil.

I looked at Andrew Duck first. He wants to bring the price of oil back to $30! His site recommends this portfolio of actions: Conservation, Increasing the fuel mileage targets for vehicles, Research and infrastructure support for biofuels, Clean coal gasification [sic], Increased support for wind power, and Increased use of natural gas. This sounds a lot what I would recommend: a full court press. I would add plugin hybrid cars to the lis and railroads to the list. How come people in government won't recommend a return to the railroads? But his wanting to bring back oil to an unrealistic level and his not mentioning peak oil at all had me favoring Roscoe Bartlett for election.

I emailed Duck about the 30% and he surprised me with his reply. It turns out that Roscoe Bartlett may not be all the peak oil champion that the peak oil people make him out to be. According to Duck, Roscoe Bartlett voted no on Tokyo accords, no on increased CAFE standards, and at first no, then yes, to drilling in the Arctic National Wildlife Refuge. Duck says he votes the Bush and Republican line repeatedly. This makes me wonder about Roscoe, since outside of peak oil, his stands are quite dissimilar to mine, because they are all Republican stands. However, Duck does not mention Peak Oil either.

I looked up Barry Kissin and found his site more interesting. He gives a long dissertation on how Roscoe Bartlett is not what he is cracked up to be. Mr. Kissin actually talks about Peak Oil, whereas Andrew Duck does not. I found Mr. Kissin's paper to be interesting, and it makes me wonder which candidate would indeed be the best from Maryland's Sixth. It makes me wish I were in Maryland, so I could make such an important peak oil vote. However, even he does not call for what I think is really needed: a $1-10/gallon fuel (including diesel and gasoline) tax and compensating reductions in other taxes, especially income taxes.

So if I were in Maryland, I would contact all three candidates and point out the flaws in their positions, and see how they react. This would determine who I would favor to go to Washington representing Maryland's Sixth.

Note my abbreviation for Representative: Repr. I use that instead of Rep., because Rep. is ambiguous and could mean Republican.

Computer Call about the Oil Companies

I received a call from Harris Miller's campaign for US Senator from Virginia at 2006 April 26 19:38. It came on my Caller ID as “Unavailable”, and was a computer call urging me to vote for Miller and help us beat George Allen. I wish these campaigns would not send out computer phone calls? I don’t appreciate them. They bittering my phone and disturb what I am doing. Normally, this would mean the candidate would not get my vote. But there is no way I will vote for George Allen - the worst governor Virginia has had since 1978. I don't like the idea of voting for a third party either - I feel that Sen. Allen must be removed from office. Especially I don’t want George Allen to repeat his term as senator and thereby become a possible Presidential candidate in 2008. But there are ways of sending him back to his home without throwing unsolicited computer calls on my telephone.

I also did not like some of what I heard the message say. The Miller camp said “Stand up to Big Oil.” Now Big Oil is no saint. But attacking oil companies because of record high profits and high gasoline prices is not the right approach to the problem. The oil companies can’t help it if they have all that money. It is because of supply and demand – increasing demand (especially because of China and India) and limited and tight supply are causing the prices to go up and the profits of the oil companies to go up. The problem is that the world is nearing a peak in oil production, and soon world production will decline despite all the desperate drilling in the world. Instead of attacking the oil companies, the Democrats should encourage conservation of oil – car pools, hybrid, diesel, and plugin hybrid cars, and railroads – and development of wind, solar, and (at least for a while) nuclear energy, as well as high taxes on fuel to curb demand, along with substantially lower income and other taxes. This is a problem that confronts all of us, including the oil companies, and I feel that an approach urging these things as well as cooperating with the oil companies and others concerned with this problem will yield better results in the long run.

I also would like to see talk about peak oil and its consequences. So far I have not heard a single Democrat say that the world is headed for trouble because of the peaking of oil production. However, at least one Republican has, namely Repv. Roscoe Bartlett of Maryland. If he were running instead of George Allen here in Virginia, I would vote for him, and if Mr. Bartlett runs for President, he has my vote, even though he will be 82 years old.

So please, Mr. Miller, if you want to be serious about beating both the oil crisis and George Allen, start talking to us about the possible consequences of big oil.

And when you call, have a human call. OK? Thanks.

Oil Price Correction?

I am now hearing reports that oil's price will drop 20% this year to something like $55 a barrel. I find this in http://www.cbc.ca/cp/business/060419/b041964.html, but don't go there after a few days; you probably will get "not found". Instead I quote some of it here:

The recent runup in commodity prices is due to speculative activity that sets the stage for crude-oil and base-metal prices to drop by 20 per cent by year-end, a TD Economics report (TSX:TD) warned Wednesday.

This comes from CBC, the Canadian network. The article says that a correction in both energy and "base metals" (including gold) will occur sometime this year.

Do these people know that peak oil is coming?

Now I do think that retractions in oil and gold prices do occur. A major correction occurred last year when Hurricane Katrina hit, taking refineries off line and preventing crude from being refined, decreasing its value. I lost thousands (which I have gotten back this year) during this time. Most of these are small contractions and they are followed by big increases, which are happening now.

This is because oil may be nearing the peak where no matter how hard the suppliers pump and pump, they still can't meet world demand. The world market is tight as a snare drum, and any disturbance in it causes immediate reactions. Oil and gasoline will continue to increase in price in the next few years as demand rises, and supply stays the same for a while, then declines.

I am not sure I want to keep shuffling money in and out of energy shares every time Ahmadinejad goes nucleuckoo in Iran or hurricanes smash rigs and refineries in the Gulf of Mexico. The long term trend is up, then up, then way up. I am just hoping supply and demand will help us find alternatives before some really drastic things happen. It's going to be nip and tuck. (that's why I call this blog Cliffhanger). But a change once or twice a year might be advisable.

So what do I predict? I think oil and gold will keep rising through the middle of the summer, to $3.10/gal and $75 a barrel by the end of April, $3.30/gal and $85 a barrel by the end of May, and up to a peak of $3.45/gallon and $95/barrel by the middle of summer. It then will decline to about $2.40/gallon in December and maybe $75 a barrel, and then rise again in 2007, to even greater heights. If a hurricane strikes in the Gulf, oil will hit $90/barrel and then decline moderately, maybe to $65 a barrel by October, while gasoline will hit $4.70/gallon and there may be shortages.

So what to do about stocks and other investments? I say hold on to those energy and gold shares, because they are not ready for a correction. They will continue to head upward for a while. Sooner or later, probably late summer, the US and world economies will be hit by these prices and a downturn will occur. This has not happened yet. People are still driving all over the place as before. When the downturn occurs, oil and gold prices will go down. So if there are strong signals that this is happening, pull out of oil and gold shares. In fact, pull out of all stocks and put everything in money market funds. When oil and gasoline start rising again, then put the money back into oil and gold. If a hurricane threatens the Gulf, pull everything out, including oil, gold, tech, medical, and everything else, immediately. Being able to access weather models such as the Global Forecasting System (GFS) can help you decide this will occur before the media starts harping all over the place about it, so you can pull out and retain all of your gains.

But even if you pull back, eventually get back into oil and gold, for the money of the future is in these, with oil in ever increasingly scarce supply.

That's Right, Blame the Oil Companies Again

The price of oil and gasoline is going steadily up again, as I had expected. Earlier, I predicted that some time this summer, the price of oil would peak at about $95 a barrel and the price of gasoline at about $3.40. This is because we are somewhere near peak oil production, although it is hard to tell just how near, due to the damage by Hurricane Katrian. In general, prices are going to go up, because demand is up and supply is either going up slightly or staying steady. The only way to get them down is through lower demand.

Nevertheless, people are blaming the oil companies again. New York Senator Charles Schumer is calling for an investigation to see whether oil companies are deliberately holding back production to raise prices. He says they are running at 85% capacity, when they should be running at 90%. Apparently he does not know or does not want to admit that there is a supply problem with oil that is driving up the prices.

If the oil companies are running at 85% when they could be running at 90%, they are really doing us a favor. They are using less oil. That will delay the day that shortages and other undesirable effects come because of the dwindling supply of cheap oil. Why does Sen. Schumer want us to go full tilt with the oil production? Why does he want to gobble up the stuff faster and run out faster?

Prices are going up because supply can't meet demand or can just barely meet demand. Now that may bring in huge profits to the oil companies. If so, they should use the money to sponsor looking for new sources of energy or for conservation. Paying their executives hundreds of millions of dollars per year certainly is not going to help their reputation. But the oil companies can’t be blamed for gouging the public, regardless of what it does for their profits.

Stop blaming the oil companies and do something that will help. If prices are higher, curtail consumption, and encourage development of renewable energy.

Kurzweil's Singularity

I ran into a book by Ray Kurzweil (a name which reminds me of synthesizers) called The Singularity is Near. In this book he states that major events in the Universe are happening faster and faster and at some time in the future, an infinite number of events will occur just before a certain time which he calls the singularity. These events could start with the creation of the universe 13.7 billion years ago. Kurzweil then follows that with formation of the Earth and Sun, formation of life, Cambrian explosion, and so forth until he concludes with the Industrial Revolution, the car and airplane, the television, the computer and the Internet. Each of these events come sooner by a certain factor than the previous. If this factor is constant, it follows that these events converge to a point in the future, the singularity, which Kurzweil calculates will be somewhere around 2045. Kurzweil continues to describe events beyond this; in fact, two of his six stages of existence follow the singularity.

Is there any such thing coming up? Certainly an infinite number of events can't occur in a finite time. As this singularity is reached, the process breaks down. So what's going to happen? I tried to see if there were any singularities in my life. I found at least two of them, and possibly others. Both of these two singularities had catastrophic results. This says that singularities are not necessarily positive. Indeed, what could be happening is a conversion to a time when we run out of oil, have huge global warming effects, have a number of wars going on, and so forth. The consequences for humankind of this kind of singularity are huge; maybe our world civilization will collapse.

What will things be like if a singularity like the one Kurzweil occurs? In both of my singularities, I wound up in a world or existence substantially different from what went on before. It was like entering a new world. So that is how I expect this singularity will behave. Something earthshaking will occur then, and a new world order will ensue. In 2045. Well, we will have to see if this happens.

We Were Warned, or Were We?

I saw "We Were Warned: Tomorrow's Oil Crisis" on CNN at 2006 March 18 2000 EST (8 pm) and was disappointed by the documentary for several reasons:

1. The ads did not go with the documentary. One of them was a Lexus ad for this fancy schmancy car that advertised all that's great about it except fuel economy. Another one was about how cool it was to have a cell phone that wasn't a cell phone because it was a video game with cell phone capability.

2. An executive from Exxon-Mobil said we had 100 years (or was it billion barrels) of oil left in this country if they could dig for it. What I know is I think of this Hubbert curve for our country peaking in 1970s after a discovery peak in the 1930s, and then I think of world production peaking in the 1960s and drawing the curve from there, except that the executive wants to push out the right side of the curve as though it were Pinocchio's nose.

3. The main problem I found with this documentary was that it used an unlikely double disaster scenario as its base point for discussion. I think it would have been better if it had shown absolutely no Katrinas, Ritas, al-Qaedas, bin Ladens, planeattacks or any other such deviations from business as normal and still shown that the effects of the crisis would still occur: high oil prices, empty Wal-marts, no tourism, people fighting with each otehr, and plunging stock markets.

4. I do note that that point that another poster made about the ethanol from sugar cane solution working only in Brazil showed up absolutely nowhere in the documentary.

5. I also note that for the hurricane on Houston they used footage from Rita, and for the disaster in Saudi Arabia, I think they used footage from Persian Gulf War I.

A better documentary is "The End of Suburbia". I have heard of a 90-minute documentary called "Oil Crash" but have absolutely no idea as to how to see it. In the meantime, CNN needs to try again with its documentary on peak oil and come up with something that is more likely.

Telescopes Will be Better in 2050

At the latest meeting of the Richmond Astronomical Society, someone brought up an article in the BBC on the Internet that said that telescopes will be worthless by 2050. The article maintains that global warming, which increases cloudiness, and jet contrails will combine to form a haze that ground telescopes will not be able to penetrate.

Global warming is a serious problem. However, I think that telescopes will be better in 2050. This is because of peak oil. Professor Gerry Gilmore of Cambridge's Institute of Astronomy maintains that air traffic will increase, increasing the number of jet contrails, which produce artificial cirrostratus clouds that obscure the sky. He says, "You get these contrails from the jets. The rate at which they're expanding in terms of their fractional cover of the stratosphere is so large that if predictions are right, in 40 years it won't be worth having telescopes on Earth anymore - it's that soon."

No, Professor Gilmore. You did not take Peak Oil into consideration. There may not be any jet planes flying in 2050 to make contrails with. These planes require fuel, and you assume that jet travel is just simply goinjg to increase without limit. Instead, oil production will peak, probably between 2008 and 2010, and decline from that point on. By 2040, only a fraction of today's oil will be produced. From this must come the fuel for jet aircraft. It follows that far fewer aircraft will be flying, unless some way can be found of powering aircraft other than with petroleum products. So actually, the contrail situation will be better.

Global warming will wane, also. It is fueled by fossil fuels, and these will decline after 2010, and so will global warming. There may be some temporary increase due to coal, but if clean, renewable alternative fuels are developed, these will dominate in 2050, meaning a sharp decrease in CO₂ emission. Further, energy prices are sure to rise dramatically, due to peak oil, and so people will invent new means of conserving electricity, and hence generation of power from power plants. These may include such things as a device that will turn out lights unless people are in the room. If these proliferates, the cities will turn dark at night, and the stars will come out.

All of this means much better viewing in 2050 than now. Don't move or take apart Lick, Wilson, or Palomar Observatories! These telescopes will be much more useful functioning under beautifully starry skies in the year 2050. That is, unless peak oil and an energy crunch prevents power for clock drives and equipment from coming into the observatories.

This blog also appears in Here and Above.

Chain Reactions

I am a member of a church supper group. Dinners are scheduled once a month, in which a bunch of couples come to this one couple's house who hosts them and prepares a dinner for them. This allows us to get to know each other better. I thought of what happens if not enough couples are assigned to the dinners. If only 4 couples are assigned at a time, then if one or two can't make it (this can easily happen), then the hosts have to reschedule the dinner so that they all can make it. So there would be a large number of reschedulings; these would conflict with other dinners, church, and other events and cause more reschedulings. This reminds me of something I saw back in the 1950s in shows, perhaps on Walt Disney's Tomorrowland, of a demonstration of a nuclear fission chain reaction.

In such a chain reaction, a neutron hits an atom of Uranium 235 or Plutonium 239. This causes the atom to split, ejecting energy according to E=mc², two smaller atoms such as those of barium and krypton, and one to three more neutrons. These in turn would hit other atoms, which in turn would break up into two smaller atoms and produce more neutrons. The number of free neutrons grows exponentially until the entire chunk of uranium or plutonium is consumed. The resulting energy is tremendous, and produces the familiar mushroom cloud of a nuclear explosion.

In the 1950s they demonstrated the concept by covering an empty room's floor with mousetraps with ping pong balls on them. Then someone would throw a ping pong ball into the room. The result is dramatic. Almost instantly, the air would be filled with balls pinging and ponging all over the place. This demonstrates the concept well, but I realized that this experiment can be used to model other things as well, after seeing a Java applet from my alma mater that demonstrated this concept at http://ccl.northwestern.edu/netlogo/models/Mousetraps .

For example, Peak Oil. If you clicked on the mousetrap URL and ran the Java app, notice the graph on the bottom, measuring the number of balls in the air. Now compare this with the curve that is used to demonstrate the concept of Peak Oil. Don't they look similar? It's because similar concepts are involved.

Oil was discovered in 1859. At first, only a handful of Pennsylvanians used the oil. But these people talked to others about this wondrous substance, and other people started to dig for oil. These in turn did wondrous things with the oil, such as invent and operate automobiles and aircraft, and this led others to want the oil. This kept spreading all over the world, resulting in a growth in the use of oil that resembles the up side of the Peak Oil bell curve. However, as people began spreading around drilling for the oil, less and less oil was available to find and drill for. This puts a damping effect on the growth of oil production, until eventually the damping will exceed the growth and turn it into an exponential descent or decay. The same thing happens with mousetraps or uranium, as the chain reaction runs out of mousetraps to spring or uranium atoms to fiss.

In both cases, the determining differential equation is the same: y' = Ay(C - y) . C is the total capacity of the system, and A is the rate at which neutrons or ping pong balls are generated per neutron or ball strike. Solving the equation and graphing the solution results in a bell-like curve called the logistic curve.

The equation can be used to describe other behavior as well. Take people living in a city around 1900. They live in decent neighborhoods. But some get dissatisfied and move out farther from the city so they can have more room. These people are like ping pong balls that get ponged and hop out to land on another mousetrap. This causes more people to move out. This accelerates as the once livable neighborhood deteriorates in the inner city. Eventually the suburbs get crowded and people move out even farther from the city. This causes the inner suburbs to deteriorate as well. Look at the Java applet again. Doesn't that red blob remind you of a typical city with development going on? It's fueled by oil, of course.

The equation can be used to describe bacteria in a Petri dish, viruses in the body of a large animal, the growth of the Internet, the growth of automobiles, and in fact, the growth and decline of just about any product or fad. It's an equation we need to live with. We live in a world that moves on in logistic curves, and Peak Oil happens to be one of these curves.

World Civilization Nearly Bought the Farm Today

Turn on the news. What did you hear today? The big story was the destruction of a mosque in Iraq and the reaction that it caused among Shiite Muslims in Iraq. Right now, CNN is highlighting the low-key Mardi Gras that New Orleans after Katrina will celebrate next week. It's not even Mardi Gras yet. A port deal was approved giving operation of 6 US ports to a Dubai company, and legislators are griping about it. ABC has up front the story of some prima donna having breast cancer. The local news is all in arms about the euthanizing of two black bears at a local zoo because one bit a boy; this after we found out about how Chesterfield's supervisors and other officials have been flying extravagantly (or vainly, to use Carly Simon's term) all over the place at taxpayer expense. Some of this is relatively important. It seems the lives of prima donnas and murder cases of lily white young females dominates the news.

All miss the big one. Our civilization almost bought the farm today. Some suicide bombers came into Abqaiq terminal and blew themselves up. They only blew up some minor stuff. If they had blown up the pipeline from Mideast oil to the Persian Gulf, a huge amount of oil would have been taken off the market. This would have caused skyrocketing oil and petrol costs all over the place and would have caused massive shortages as well. Much economic trade would have ground to a halt amidst the $300 a gallon oil and $9.50 petrol. Look at EV World and you will see what I mean.

It's time the hypermedia quit with the murders, the divas and other Hollywood personalities, and the continual harping on tragedies that have already happened such as Katrina. They need to focus more on peak oil, and to throw these other things aside and give stories like today's Saudi attack top billing.

Two Dollars and Twenty-Fix Cents a Gallon

What's the price at East Coast? Two dollars and twenty-fix cents a gallon, that's what. What's a fix? It looks like it is part 5, part 6, and doesn't know what it means or which it is. Maybe it is $2.25 1/2 a gallon or $2.255 a gallon, or considering that they always put a 9/10 of a gallon on the big price, maybe it's $2.264 a gallon. Maybe it is some new number or mathematical concept that looks like some digit, like the symbol for infinity looks like an 8 on its side. Of course it can't be infinity, although it is trying to reach that impossible level.

Apparently it is a malfunction of a bipartite sign in which the bottom and top halves of the digits are operated separately. If so, what other new digits can we come up with? A woo (top looks like a 1, the bottom like a 2) looks like a question mark? without the dot. A throur (between 3 and 4) looks like Captain Hook's bad hand. A seight (between 7 and 8) looks like a bird riding on a unicycle. And so forth.

But can these newfangled digits really measure what's coming up with oil? It may be nearing a peak, in which case we can expect those price signs to continue to go up frantically, like a bouncing Wal-Mart happy (or maybe sad) face hitting a price sign and causing the price to go up instead of down. Indeed, I wonder where we will get the energy and the oil we need in the future after we reach the peak. Maybe if that happens, the crazy digit in the price will mean exactly what means: we will all be in a fix.

Cliffhanger Developments for 2006

Well now, 2005 has come and gone, and along with it the Deffeyes Thanksgiving of 2005 November 24, supposedly the date that Peak Oil occurs. It has been an eventful year all right. Both petrol and oil went up in price dramatically, raising the price of oil to about $66 a barrel and the price of petrol to $2.54 near where I live. The hurricanes then came, possibly sent to us by Peak Oil's brother, Global Warming. That destroyed so much in the Gulf of Mexico that the price of petrol went all the way to $3.25 on average near where I live, and at some stations hit $3.49 a gallon. Then they went down rapidly, down to $1.95 a gallon, because refineries came back on line, oil from the Strategic Petroleum Reserve arrived, and so did oil, petrol, and natural gas from Europe. I expected this because of the rebound effect. Petrol prices should now go up, and I have observed this, as they are now about $2.15 a gallon. The price of crude oil actually went down when the hurricanes struck, because with fewer refineries operating, there is less demand for crude oil. It is now going back up, around $61 a barrel. The world is operating without any slack, producing and consuming 82 million barrels of oil each day.

So what's ahead for 2006? I think prices are going to go up. Oil will probably hit about $95 a barrel, just short of the century mark. Petrol around here will be $3.50 a gallon in the summer. Prices should then edge back again, provided a new batch of hurricanes don't cause trouble in the Gulf.

I do not think oil has peaked yet, but it could soon. Some people are saying the peak will not come until 2020 to 2025, and they may be counting oil from a number of unconventional sources, including deep ocean, Canadian tar sands, liquefied coal, and oil shale. These take a substantial part of a barrel of energy to produce one barrel, hardly efficient. I think the progress to the peak will be slow, and the ill effects that James Kunstler predicts in his Clusterfuck Nation Chronicles for 2006 may eventually come up in future years. For example, I hardly think that the Dow will go to 4000. I think it will end the year around 10,700, about where it is now. If you want your money to earn money, try energy stocks and funds, gold, gold stocks and funds, and money market funds. Inflation should be coming up, but I don't see that happening. I find it interesting that Kunstler thinks that China is going to go cuckoo and that South America is going to go loco. In other words, the whole world is going to go bananas soon. Further, he thinks that China will wag the dog and attack a central Asian nation to divert attention from domestic troubles caused by a worsening fuel situation. I don't see any evidence that will happen any time soon.

There are some ominous developments, hwoever. The price of oil is going back up again. Russia is denying Ukraine gas because Ukraine will not pay $230 per 1000 cubic meters of gas. This price corresponds roughly to a monthly bill here for gas of about $1,400. Pretty high. Ukraine has enough to last 6 months. Its pipelines also feed western Europe, so the result could be a skirmish between western Europe and Russia. Even worse yet, Euripe could cut gas to the United States, causing serious problems here. There could be cold snaps here this winter. And as Kunstler points out, the price of gas goes up when the weather is colder than normal and down when it is warmer.

So what's going to happen in the future? As I said before, this one may go down to the wire. It's a cliffhanger. Supply and demand is pretty powerful and will push alternative energy sources into the marketplace as the cost of fossil fuels go up. Whether this will be enough to cause a catastrophic shortage remains to be seen. Conversion to the new sources will cause a series of crises in future years, and the outcome of these will determine what kind of future our world will have.

Note that I use the word "petrol" to describe fuel for motor vehicles, rather than gasoline or benzine. Gasoline is confusing because it shortens to "gas", which also means methane from the ground. Benzine can be confused with benzene, the aromatic compound with ring molecules.