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Peak Oil – “The Debate is Over”

It’s been a long time coming, but the uber-significant Peak Oil issue has finally started to infiltrate the corridors of power. What they’ll do with this information remains to be seen….

There is no reason for optimism. — Dr. James Schlesinger (former Secretary of Defence and the U.S.’s first Secretary of Energy)

I made mention recently of the leaked German Military Peak Oil study (German PDF here, key points summarised in English here) which looked at the Peak Oil issue from a national security standpoint. Now the New Zealand government has created their own study — releasing it publicly, rather than forcing some conscientious and concerned person to have to sneak it out the back door.

The summary findings of the study are almost word-for-word with what I wrote a long time ago (here and here for example).

Although there remain large reserves of oil which can be extracted, the world’s daily capacity to extract oil cannot keep increasing indefinitely. A point will be reached where it is not economically and physically feasible to replace the declining production from existing wells and add new production fast enough for total production capacity to increase. Projections from the IEA and other groups have this occurring, at least temporarily, as soon as 2012.

The difference between the global capacity to produce oil and global demand is the supply buffer. When the supply buffer is large, oil prices will be low. When the supply buffer shrinks – due to demand rising faster than production capacity or production capacity falling – prices will rise as markets add in the risk that supply will not be available to meet demand at any given point in time.

When a supply crunch forces oil prices beyond a certain point, the cost of oil forces consumers and businesses to cut other spending, inducing a recession. The recession destroys demand for oil, allowing prices to drop. Major international organisations are warning of another supply crunch as soon as 2012.

The world may be entering an era defined by relatively short periods of economic growth terminating in oil price spikes and recession.

New Zealand is not immune to the consequences of this situation. In fact, its dependency on bulk exports and tourism makes New Zealand very vulnerable to oil shocks. — The Next Oil Shock? Parliamentary Library Research Paper (emphasis added)

What we’re talking about is, quite simply, perpetual recession:

There is a risk that the world economy may be at the start of a cycle of supply crunches leading to price spikes and recessions, followed by recoveries leading to supply crunches. — The Next Oil Shock? Parliamentary Library Research Paper

With its humble military base, I can’t see New Zealand attacking Nigeria or Venezuela, so considering transition to a steady state, post-carbon economy could (should) be on the cards.

The New Zealand study brings similar findings as a UK study from earlier in the year — The Oil Crunch – a wake-up call for the UK economy — except with updated data it’s moved the forcasted crunch forward from 2015 to 2012, which I personally believe to be a far more realistic timeframe.

The fuel that lubricates the wheels of modern life, and that supports a population that’s multiplied fourfold since its discovery, is now becoming increasingly uneconomic to mine and we’re now looking in geological nooks and crannies we would never have considered even 15 years ago. This black gold has been with us for the entire lifetimes of all living today, and our dependence on it has grown radically with every decade. It is estimated that at present rates of development and consumption we would, if it was available, use as much oil in the next 25 years as we’ve used in the last 160 — somewhere around 1 to 1.3 trillion barrels. With the EROEI (Energy Returned on Energy Invested) for oil mining (I can’t help but wonder if we’d be in this mess if we’d called it ‘mining’ from the start, instead of the disingenuous term ‘production’) far lower today than in previous generations and increasingly unviable you can be sure our economies will collapse before we’ll get anywhere near close to sucking up those kind of quantities.


Some of the world’s largest economies also happen to be the biggest oil importers (think the U.S., China, UK, Germany, France, Japan, etc.). The global economic knock-on effects of these guys effectively trying to out-bid each other for supplies of crude will be immense — particularly when oil and gas exporting nations realise the need to stockpile reserves to soften their own fall into a post-carbon world.

Saudi Arabia has stopped exploration missions of new oil fields to save the wealth and pass it on to future generations, King Abdullah, Custodian of the Two Holy Mosques, said here Thursday. —

If you happen to live in a nation with neither a powerful economy nor its own oil reserves, your country will be left by the wayside as the business as usual mentality urges those nations still able to to persevere on into darkness. Perhaps being ‘left by the wayside’ has some consolation, however, in that if you happened to, instead, live in a country with oil, don’t be surprised to see your people labelled as terrorists and your borders invaded. The only encouraging thing in this regard is that wars are terrifically oil-dependent and thus will be uber-expensive. The EROEI ratio for war will, as we descend the peak oil summit, become even more absurd than it is today.

Just to be clear — a 2008 type price spike, when repeated in today’s seriously weakened economic situation, will cause significant social trauma. And, people are increasingly realising, there will be no end to this trauma. It will be ongoing, and relentless, and all constructive efforts to rebuild society along sustainable lines will be hampered by limited resources, limited capital, social unrest and collapsing social infrastructure. It’s time for lucid people worldwide to ensure these things are in the minutes of council meetings where they live.

Not only have we been taking finite supplies of oil for granted but we just do not realise how difficult it will be to live without it. None of us lived pre-oil — we’re far removed from the horse and cart, subsistence farming age that was the foundation of civilisation before — but we may well live post-oil. Most of us are spoilt, soft, individualistic and highly trained for a world that was, and that will never be again.

Consider where you reside, and what your village/town/city will look like with 20, or 40, or 60% unemployment, or worse. Consider the vulnerabilities of supply lines to your town. Consider your housing needs, and what it will mean if you cannot make rental or mortgage payments. And remember, in our current system — where perpetual growth economics is regarded as the only game worth playing — people without money are outsiders. If you cannot consume, you have no value in this system. As people fall off the edge of economic activity, the game will continue with a decreasing pool of wealthy players: oligarchs, corporate feudalists, mafia — whatever you want to call them. Governments may bail out big industry, but they won’t come to your rescue. This is evidenced by the suburbs of foreclosed homes in the U.S. — some being ‘retrieved’ by nature while their former residents struggle in tenements, trailers or their cars.

I’ve been sharing these things on the internet for more than four years, and others have for far longer — yet governments are ponderous and pathetic even to see and understand these issues, let alone do something about it. As many of you know, Cuba’s ‘Special Period‘ is a microcosm of what we can expect, to varying degrees of severity, to occur. The same holds true of the panic and economic turmoil of the 1970s OPEC embargo era. Along the lines of what Castro did in the early 1990s, ideally governments would today enact policies that incentivise transition, and that make sustainable primary production of all human needs (food, water, shelter, clothing, etc.) the most financially attractive endeavours to be trained for and involved in. However, while we should be agitating for holistic, future-minded leadership, a reliance/trust in centralised decision-making reactions to these realities would be misplaced. At present all industry-owned government seems to know to do is try to maintain the status quo — beating the impossibly dead horse of economic growth that only exacerbates the pressure on oil supplies. Despite acknowledgements that we’re entering an era of acute energy shortages, the world’s leaders do not seem capable of considering anything else.

We must learn how to observe, plan and work together to find peaceful, tangible solutions, and now. It seems to me that mankind will now, right now, either learn lessons of humble, objective cooperation and voluntary simplicity, or we’ll all go up in smoke in a final every man for himself free-for-all over the dregs of the world’s remaining stores of energy, food and land — and while we’re doing that we’ll move to the most destructive ‘sources’ of liquid fuels there is (tar sands, coal to liquids, biofuels, shale oil….).

The first thing you can do to secure your own future is to share this information.

I’ll leave you to ponder these things as you watch the following talks from the ASPO 2010 Peak Oil Conference held between October 7-9, 2010 in Washington:

Dr. James Schlesinger (former Secretary of Defence and the U.S.’s first
Secretary of Energy): The Peak Oil Debate is Over

(More from Dr. Schlesinger here)

Watch the rest here — including:

…and more.


  1. Very timely article Craig, when I was down doing my internship at the PRI I was banging on a fair bit about the economic problems that will hit us as the most imminent of the challenges we face going forward. While I’m not saying all the other challenges we face are not of the utmost importance, the economics of the society we live in or on the edge of are very close to serious disruption and we as permaculturists should be amongst those that are most open to this idea. After all we get peak oil, we get biodiversity loss, we get the unsustainable nature of modern agriculture and we get global warming. What I found amongst a lot of the Permies (and this is in no way a critism guys and gals) though ,is that a lot aren’t acting on that knowledge whith regard to getting themselves up to speed on the greater detail of how these challenges are going to effect the economics of their daily lives. I’m sure most of us have had the situation where we are trying to explain peak oil or climate change to someone who we soon realize just don’t believe it or just can’t let
    themselves believe it ( which is probably more accurate) regardless, I’m not going to delve into the psychology of it but there seems an unwillingness to take the information on board .

    What we as permaculturists need to do to protect ourselves and those around us is to start getting ourselves up to speed on the economics of the coming financial storm as it is the most imminent threat by far, how many of us would have food if the bank where we kept our money collapsed ? How many could buy the things we need to set ourselves up for a more sustainable life if the banks collapsed ? How many of us could
    service debt on a mortgage if the banks collapse and we had no job because unemployment was climbing
    above 22 percent , this is much of America today.

    A case in point . From the information I had read on the web regarding the financial implications of peak oil, debt saturation and all the other nasties coming our way we decided to sell our house and change our superannuation fund to a self managed fund. The decision to sell the house was because long term we knew it wasn’t where we wanted to live. All this occurred directly prior to the market crash in 2008 . The direct result was we didn’t lose nearly 20-25 percent of our super because we had the money sitting under our control in a bank account and quite a bit as mad money ie cash for a rainy day. After a few months the house prices and rental prices started to drop and what had been a boom market dried up . Then not long after that the redundancies started getting handed out. When ,not if but when, we have the next leg down in our economic contraction this is how it will play out in a lot of places all over the world , it’s already happening in the US and because I live in a mining town here in Australia we got a little taste as the US economy slowed in 08 , which stopped them buying consumer goods , which reduced demand for raw materials which Australia provides , and presto! Economic hardship coming to a town near you. Because we had made our arrangments more resilient we weren’t really affected , but many people in the town we severly hit . But of course how soon we forget, things picked up ,houses are up to their old exorbitant prices the mines rehired even more people (many who it had just given redundancies to) and business as usual is back in place .

    But tell me how secure would you feel in a town cut of by wet season floods for up to six months of the year, where all your food comes in by road or barge from nearly 1000 klm away, and the local power is generated by diesel engines that are also supplied fuel by ship from over 1000 klm away. NOT VERRY .

    So were moving of course, but my point in all of this is get yourselves informed and keep informed.
    A couple of great links are And.

    People get yourselves informed ! We don’t have a lot of time and you can’t be as effective in educating and training others unless you look after yourselves first.

  2. Instead of pleading with my local council/city commissioners, I think I will continue increasing my farm’s productivity and gaining skills in that area. This is motivated by a host of, dare I admit it, “individualistic” factors, potential profit being one of them.

    I might share this info with people who might actually use it, which won’t be local government ‘leaders.’

  3. JBob – if the focus is on profit, we’ll not change our course. It’s what led us here.

    What will get us through this is cooperation – and community cooperation must happen at a community level. That means village/town/city council meetings. In what other way can we possibly discuss and action change?

  4. The deceptive thing about “Peak Oil” is that it is not at all about oil. More accurately, it’s the end of a big illusion. Specifically, the illusion that we could use our natural capital of high quality fuels in a way that does not take the effects of depletion into account.

    It’s high time we take a very close look at who worked hard to keep that illusion afloat for so long. The difficult issue of course is that, while five years ago, people may have whispered “peak oil”, there was a massive psychological barrier to accepting it and openly talking about it. Widespread phenomenon, I have vivid memories of that.

    If energy gets scarce, then evidently, what we do with it while there is still a lot of it available matters more than what we decide to do when the shortage really bites. Personally, I’d consider the two key priorities to be:

    1. Identify those people, beliefs, and mechanisms that got us into the situation.

    2. Work hard to ensure decision making improves. We just cannot afford any more collossal mistakes – they would become prohibitively painful. This may well mean the end of both the neoclassical economic model and the careers of its professional proponents.

  5. Craig,

    one thing to keep in mind though is that there will be a vicious rapid learning phase where people learn to value energy.

    One of the first large consuming activities to be severely curtailed will be home heating – it just produces minimal economic value for the energy expended. Now, one can do a lot with better insulation and living in smaller space, but a number of people will be driven to learn more about energy by having to shiver more in winter.

    I see a very real danger that the cultural response to this could be along the lines predicted by Jay Hanson (

    Well-intended activists from both the Left and Right — armed with facts and ideologies — will form political movements, select the best liars for leaders, and take to the streets demanding that government take us back to “the good old days”. The worse our problems become, the more they will act instead of think. The less they think, the worse our problems will become.

    I am fairly sure that this is what can be expected in terms of a reaction to the problem by certain parts of society with serious judgment deficits. Two problems are that many of these are disproportionately loud bullies, while most of the rest of society doesn’t actually know how to properly deal with bullies. We might not be able to address the first problem directly, but there is a lot we can do about the second. I think we seriously have to – or it’s pretty much curtains.

  6. jbob just don’t get caught in the trap of thinking you can go it alone , it won’t be a very pleasant life , as to pleading with local councils etc it’s almost a case of why bother, I think low level civil disobedience along the lines of getting building permission etc will become rife in years to come , it’s ground up all the way I fear !
    Thomas the thing most peak oil commentators don’t get is that peak finance in the end will bring on the hurt of peak oil much faster as finance for oil drilling ,infrastructure etc dries up in the face of capital disappearing from the markets and diminishing returns.

    Find a strong resilient community become a part of it divert as many monetary transactions as possible to trade / barter etc , get out of debt, and hold as much cash as possible as we are heading dowm a deflationary path over the next few years and cash will be king for those essential things that we need out of the monetary economy. Please all check out the automatic earth specifically the primers and get up to speed.

  7. Tim,

    an important point to be aware of is that we Germans have had one extra – and quite painful – culture collapse in recent history which shaped our collective cultural memory, namely the end of the Third Reich (thank heavens). I’ve started about a decade ago doing some serious research into what it meant to live in 1946, in a completely collapsed economy (remember, every last bit of resources got diverted to preventing the inevitable – which was losing the war).

    Now, people in Germany by and large are not aware that that country is producing more electricity from renewable resources these days than what people had to get on with during the second half of the 40s, say. That wasn’t a pleasant time, for sure, but the way I see it is that some countries such as Germany so far already have made far better strategic decisions than others, and hence in comparison will do better than others. The way I see it, renewable energy will mostly be “the gold of the 21st century”, and we may see a phase where we have to constrain personal energy consumption viciously to have sufficient energy available to rebuild the energy sector on saner principles. There will be a transition phase, and what nations did achieve so far will depend how well they will manage.

    Still, one alarming observation is that the Peak Oil study by the German Military which Craig mentioned seriously got that point wrong. Let me quote from the introduction:

    Allerdings besteht eine gewisse Wahrscheinlichkeit, dass der Peak Oil bereits um das Jahr 2010 zu verorten ist und sicherheitspolitische Auswirkungen je nach Entwicklung der hierbei global relevanten Faktoren mit einer Verzögerung von 15 bis 30 Jahren erwartet werden können.

    “There is a certain probability that Peak Oil will happen around 2010, and depending on how relevant global factors play out, we can expect security related effects with a delay of 15-30 years.”

    They got a few other very important points fairly wrong as well, but there still is quite some useful material in that study.

  8. Yes, how they can possibly think security will become an issue only 15 years after economic collapse is a rather interesting calculation. Thomas – you’re a mathematician, give me the probability.

  9. Great post Craig. But I’m not sure this is correct (unfortunately):

    “The EROEI ratio for war will, as we descend the peak oil summit, become even more absurd than it is today.”

    I think you might be underestimating our governments’ ability to justify its warmongering. After all – what better way for a demagogue politician to deal with all those unemployed masses then send them off on a unwinnable war.

    Here’s a pertinent comment from – I think the poster is only being half-sarcastic:

    “I think your shorting the military. They will figure out how to kill people. If smart weapons become difficult to deploy and I agree with your basic thesis then we will go back to more brutal methods. Probably the US will work on perfecting city wide firestorms napalm on steroids. If petroleum based incindery weapons become the premier ones the irony is interesting to say the least.

    In any case I’m sure that the military of most nations is up to the task of killing people for the cheapest price possible worst case they will simply adopt the machete method refined in Africa and killing people can be done for about the same cost as cutting sugar cane to fuel the cars of the wealthy. Assuming a Machete Killer costs about 2-3 dollars a day but can cover most of his costs looting the homes of the people he killed I can’t see why killing people can’t even be done for a profit.

    For wealthier countries you can sell your older weapons systems and mass produce the simpler ones to cover your costs but we already do that in fact one of the problems in the future is we have so saturated the world with guns and bullets it may be hard for military to even use this approach to cut the costs of killing people. Of course localized shortages of bullets in conflict areas along with aggressive recycling of military waste and indeed moving to more recycling friendly arms should really help. I could see a lot of the renewable concepts being picked up by future armies to keep kill ratios high as budgets are cut.

    Of course the army that finally figures out how to make delectable dishes and fuel out of its victims will do quite well in fact I could easily see some armies resort to rendering the killed to fuel their tanks and as and added bonus they can sell the leftovers to organic farmers. I’m not sure exactly what the energy and fertilizer value is for a human corpse but its got to be fairly decent fat Americans would probably be sold for a premium.

    So overall esp if you consider moving to more sustainable killing methods and heavy use of recycling I don’t see much problem for the military keeping its killing efficiency high for many decades to come.

    We have not even begun to really work on the problem so lots of low hanging fruit out there or in this case you would probably call it low hanging heads.”

  10. > Cyrus, you aren’t the first person to come up with the idea of soylent biodiesel.

    Mate, I was just quoting – one of the best sites on the web for peak-oil discussions. Those guys have been thinking about these issues for a very long time. Some of them since the ’70s.

  11. By the way Ed Straker – I really like your blog.

    Most permaculturalists tend to be fairly positive and optimistic people and there’s nothing wrong with that. But when it gets to the point that they flat-out refuse to consider a pessimistic future they go from being merely optimistic to delusional.

  12. Cyrus,

    back in 1946, when Russian troops were about to occupy Vienna, the Nazis tried to blow up all bridges over the river Danube in an effort to prevent the inevitable for another two or three days. However, most people clearly saw that the war was lost, and that doing so would complicate recovery enormously. The resistance managed to thwart all attempts by the Nazis to destroy the last bridge.

    We are in a very similar situation today: mad ideologists keep on trying to push the inevitable a few months further into the future, making recovery much more difficult in doing so. At some point, the population won’t allow that anymore.

  13. > At some point, the population won’t allow that anymore.

    I don’t disagree with you Thomas. I just fear that that point is still far off in the future. Maybe after WWIII?

  14. It seems, to me, that the most effective strategy we have is formation of true community. What this entails is simply getting to know and level with those who live in direct radius to where you live. This doesn’t mean connecting with only people who agree with you or are part of your clique. Community does not equal monoculture of ideas, lifestyles or belief systems.

    Second, and perhaps even more important, seems to be the method and course of dissensus. It seems most strategic to move past the consensus model (this of course does not mean that there is no place for consensus) — to do what we find to be correct and right in our personal situations in regards to the knowledge we have on the energy situation and the resources we have in our reach. We cannot alarm the whole world or hard sell anyone on our ideas (well, yes we can hard sell our ideas, but it seems very ineffective and perhaps degenerative in the long term). If we attempt to turn peak oil action into a religious or revitalization movement, what will we gain in the long run? From a systems standpoint that does not seem very strategic or leveraging. I’ve found John Michael Greer’s writings on the topic of peak oil to be the most profound and helpful insight of any other writings out there. Perhaps you could pop a link to his essays on dissensus into the end of a post on peak oil? Dissensus and Organic Process & Why Dissensus Matters

  15. Craig, “if the focus is on profit, we’ll not change our course. It’s what led us here.”

    The focus need not be on profit, but without profit we will get nowhere.

  16. “1. Identify those people, beliefs, and mechanisms that got us into the situation.”

    Thomas, I just finished reading the book “Det Biologiske Mennesket”, and it’s facinating how far the sience of human behaviour ecology has come to identify those people, beliefs and mecanisms.

    “The focus need not be on profit, but without profit we will get nowhere.”

    JBob, the focus can’t be on profit, but on making a yield of natural capital. Capitalism plays on egoism, while tribalism plays on our tribal pattern from Rift Walley. In fact, the tribal pattern is also a result of our egoistic gene, to bring our genes to further generations. But an egoism with a positiv sign.

  17. I am in my 60s and my parents had me in their forties. Their childhoods were pre-oil, pre-cars, pre-electricity and I have to tell you that got on just fine! They worked hard yes, but they had organic gardens and were healthy, there was a good community spirit, with people dropping in on one another, dances, etc and depression was rare. Perhaps it’s nothing to fear after all, although I concede we will have to ensure that people have access to land. Perhaps that’s a good thing, too, as we restore equality in our society.

  18. “Sargas provides solutions for ultra low emission power generation from Fossil Fuels. Our patented designs capture 95% of the CO2 and virtually eliminate NOx & SOx emissions, whether applied to greenfield or retro-fitted plants.”

    I’m afraid we’re entering the coal age again:

  19. Øyvind,

    Heat pump performance is usually measured in HSPF (Heating Seasonal Performance Factor) – a very strange and perhaps deliberately misleading ratio of heat out to electricity in which measures output and input in different energy units (BTU vs. Wh).

    If you want the actual ratio (heat out : work in) where heat and work are measured in the same energy units, you have to multiply a HSPF with 0.293.

    Typical HSPF is somewhat over 7.5, often below 8. The best heat pumps on the market have a HSPF of about 10. That corresponds to (heat out:work in) between 2.2 and 2.9. Now, as the production of electrical work from fuel in an engine only gives us about 1 Joule of work for 3 Joules of fuel burnt, there is little point in using a heat pump unless you also harvest the waste heat from electricity generation – essentially: produce your own electricity.

    This machine claims to achieve (heat out:work in) of 13.3, or a HSPF of better than 45. While this does not actually violate the laws of physics yet (max possible theoretical efficiency for pumping heat from 5 Celsius to 20 Celsius is about 19.5), it is an extraordinary claim, and quite likely an “accounting trick”. I wouldn’t believe it unless I see independent measurements.

    But we’ve gone far off-topic here…

  20. Thank you for information! Well, I think its on-topic as it’s important to save oil for heating. If this heating central keeps what it promises it will also be easier to be self sufficient from self produced electricity, as you will need significantly less of it to heat your house and hot water. The Austrians are serious people, so I think their claims might be true.

  21. Øyvind,

    Save oil for heating?! Now let’s see…

    By and large, we heat our homes so that our possessions have it warm. Mostly, we waste a lot of oil because we own a lot of stuff we actually do use very rarely and also believe that it better always should be warm as well.

    So, if we were serious about living with considerably less oil, reducing personal possessions to what one actually uses and needs would be the first important step. To us as a society, it would be a fairly big step, but isn’t the problem actually a lot about us being afraid of big steps?

    Next, we are just not used anymore to more appropriate indoor temperatures. To me, 10 degrees is quite okay even without winter clothing, but most people would consider that insane. I don’t think our ancestors would – it would have been pretty much normal reality for them.

    Third, the age of cheap fossil fuels kind-of started at about the time when we just learned about the physics of heat and electricity. Joule’s law about electric heating in resistors was discovered in 1840. These days, we can do many things very easily our ancestors could not as they didn’t know the physics – we just never bothered to give it some thought, as convenient cheap fuel was “too easy to get”.

    I’m fairly sure we will soon see electrically heated vests that magnetically connect to special sockets a la Apple Macintosh notebooks. Can certainly be done for well under $100. Let’s conservatively estimate heating power as 40 Watts (body heat for a non-obese adult man of 1.80 m should be ca. 80 Watts), and assume constant round-the-clock heating. That’s pretty much one kilowatt-hour per day. Over – say – five cold months, that’s then about 150 kWh. That much electric energy is contained in about 60 liters of diesel oil. That’s about as much as the average German uses to heat about 4 m^2 of his flat over the year.

    So, we could easily reduce heating costs by a factor 10 here. Given that the value of the mechanical work contained in one liter of oil is over $1000 of that work had to be done by a human, I think that’s a smart thing to do.

    Dear PRI, please please get together with a few people and see that you add such vests to your store – rather than just selling books. You could make a serious amount of money that way. You certainly have the right audience to find quite a few customers for such a product among them.

  22. Maybe I meant save oil from heating? All these English prepositions are a big confuse for me. Also I think it’s a problem people have changed their clothes from warm wool to cotton. A lower indoor temperature is surely better for your throat, as hot air during winter times dries out your mucosa.

  23. Craig, though your article seems to be self explanatory few realize that the problem of extinguishing oil reserves is even deeper than one can think. It is a political-economic problem. Political economy is defined by the British Encyclopedia as a totally forgotten science. The central question of the political economy is the definition of capital. The modern definition of capital suggested by text books on economy or economics raises a smile or may provoke a burst of laughter.
    Today we can prove that EVERYTHING is energy. Life is the additional energy gained by energy expenses of a living organism in regard of a corresponding energy resource. Economy is a collective effort of living organisms (and not only human!) to obtain, store and redistribute the energy gained above individual consumption. Politics is an inherent part of every economy dealing with the redistribution of energy. Politics totally depends on the volumes of energy gained by a society or its ability to get energy from an external source. Actually one can draw some persistent laws idrntifying the behavior of societies depending on availability of energy with them.
    Oil has been the main source of energy practically throughout the twentieth century. Oil as a liquid, easily stored, transported and preserved source of energy cannot be replaced nowadays by so called “alternative” sources. There is no alternative for oil in the next 20-50 years. Humanity will have to survive during this period of time. The reason for that is simple and has nothing to do with the intentions of individuals or governments. The molecule of oil contains more hydrogen than any other hydrocarbon except gas. Gas has no volume so it has a limited use in its gaseous form. We use the hydrogen heat capacity that is the highest among other known elements in the Universe to be converted into the kinetic energy to move our heavy vehicles at a great speed. The conversion takes place in the combustion engines.
    Hydrogen is used in full while carbon that has a much smaller heat capacity is used only partially while most of it is ejected into the atmosphere with oxygen causing pollution. So, oil is the most ecologically friendly fuel in existence because it contains less carbon and more hydrogen than coal or plants ( as well as any other biological fuel). Every hydrocarbon may be technically converted into another hydrocarbon. But here comes the problem of EROEI. An elementary physics text book will tell you that it takes more energy to separate hydrogen from other elements than the energy you get in a molecule created through the merger of hydrocarbon with other elements, namely carbon. Most of hydrogen is used in any conversion. The Universe has been created and is being run by the thermonuclear reactions of hydrogen that is the most abundant element in the Universe. So any alternative source of energy is uneconomic by definition from the stand point of EROEI now. Humanity has learned how to create a massive amount of nuclear energy through splitting atom, but has not yet learned to manipulate the energy that it holds. If you compare the amount of electric energy produced by nuclear electric power stations and the potential energy contained in just one atom, leave alone the huge amounts of waste produced by the same stations, you inevitably come to the conclusion that nuclear power stations must be disregarded at all as an economic way to produce electricity. At the same time when we learn how to manipulate the energy of the thermonuclear reaction we will be able to economically produce all kinds of artificial liquid fuels with a high component of hydrogen in them – the energy of an artificially produced thermonuclear reaction is so great that we would not care how much of it is used for the conversion of any hydrocarbons into a usable liquid fuel. Ther is no other way out.
    In my mind it would be naive to think that only few of us can put together those very known facts and come up with a proper conclusion. Some people think just in the same way but do everything possible to prevent an open scientific discussion on the subject. Why? The answer is money and the definition ( or to be 100% frank the lack of it) of capital. Albert Einstein tried hard to understand political economy but failed for a good reason – he lived in the era that resulted in the consumerism theory of John M. Keynes. The founder of the political economy Adam Smith was absolutely right for the agricultural era he lived in by saying that “capital is land and labor”. Agriculturally developed land was the main source of energy that was obtained mainly with hands and horse power. He contemplated that land was the real capital but since land is illiquid market wise ( you cannot exchange a square foot of land for a hat) the capital is measured by labor, or, in other words, money as a universal market liquid measurement of all kinds of labor with hands or head. So money is the measurement of labor and capital is the major source of energy. Until oil became the main source of energy in the 20th century 95% (!) of the Earth population had been engaged in agriculture. Unlike land oil is 100% liquid physically and market wise. Could it have become the standard for capital? Little has been left or published from the written legacy of John D. Rockerfeller. Some sources claim that he wanted to call his company “Oil Standard” but was forced to change it for “Standard Oil” which in my mind makes no sense. The world would have been different by now if oil had become the standard of capital in the early 20th century. That was unaffordable for governments and bankers. That is why the Federal Reserve System was secretly created in the free and oil rich nation that wanted it least of all without knowledge of the American people or its proper approval on the Jekyll Island. Money with no commonly accepted connection with real capital (oil reserves as of today) turned into just a mechanism of manipulation of the behavior of the people. Consumerism stands ideologically not very far from Marxism. Both are based on the assumption that all natural resources (including the most important ones -those of energy) are abundant and unlimited. It is always just not enough labor or money to develop them. As a result the Consumerism and the Communism theories lead to the same result in the end- an overall control of governments and banks ( in case of the first) over the markets and behavior of people- by force or by money that in fact has less and less value. The Arab Spring, turmoil in Western Europe caused by unemployment or a change of the presidents in the USA will change nothing, their emergence and policy are subjects to the objective laws of political economy that has been being disregarded for nearly hundred years. Just look at text books explaining the money supply. I may be willing to be considered a total fool but I will never understand how 100 bucks put on a bank account all of a sudden become 200 dollars. The fact is that the money supply goes in a completely different way. Just for an example. You fill your tank with X gallons of gasoline. You pay X amount of dollars for this amount. You drive X number of miles on the gasoline bought. You need another X amount of dollars to be paid for gasoline to drive another X amount of miles. So does everybody in the civilized world. The gasoline you spend for driving is gone – it is converted into the kinetic energy of the movement of your car. But the money remains in circulation – it is not gone and its amount is doomed to increase to let you buy more oil! If the reserves of oil are unlimited there is no worry, but they are. Today there is an unbelievably huge amount of money and little oil left. Soon we will be talking not about oil prices but about who gets the oil. The picture published with your article is correct- little oil means wars. Welcome to the ugly reality!

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