THE OBAMA DOCTRINE: AT ANY COST

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Posted on 6th June 2014 by Administrator in Economy |Politics |Social Issues

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“Of course, increasing energy costs drives up the price of literally all goods and services, in addition to destroying jobs, so this only scratches the surface. What we are witnessing is the deliberate lowering of the American standard of living out of ideologically motivated malice by executive fiat.

The highest price of all won’t come in terms of dollars, but will be paid in something more precious still: liberty. Obama and other extremists in the government tried to impose this regulation through legislative means but failed. So Congress was shoved aside; the rules are to be imposed by unelected and unaccountable EPA bureaucrats. The division of powers established by the Constitution is collapsing because Congress evidently does not have the character to defend its domain from usurpation by the executive branch.”

Dave Blount on Obama’s killing coal directives

How many more times does Obama need to shit on the U.S. Constitution, ignore Congressional and Judicial requirements, and cover-up his administrations crimes before someone with balls will step forward and start impeachment proceedings. Obama is a dangerous sociopathic tyrant who needs to be removed from office before he destroys what remains of this country.

Obama and his extremist sycophant followers do not care about making your life better. They know their rules, regulations, laws, and procedures will not actually do anything to save the planet. They want control over your lives at any cost. Their control freak initiatives are designed to provide government with complete control over every thing you do. Destroying the coal powered plants that currently provide 40% of our electricity, with no legitimate alternative, will have one and only one impact – driving the price of electricity higher. These communists dropped out of economics class in college to take classes in community organizing. The law of supply and demand is inconsequential to ideologues with an agenda of complete control.

The EPA’s own regulatory analysis of its rule to cut carbon dioxide emissions from existing power plants says it will hike retail electricity by as much as 6.5% by 2020 — all while forcing 19% of the U.S. coal-fired capacity to shutdown and decreasing coal production by up to 28%. “Under the provisions of this rule, EPA projects that approximately 46 to 49 GW of additional coal-fired generation (about 19% of all coal-fired capacity and 4.6% of total generation capacity in 2020) may be removed from operation by 2020,” the EPA says in its regulatory impact analysis of the Obama administration’s Clean Power Plan. The decrease in coal-fired power will also cause natural gas prices to rise up to 11.5% as an additional 1.2 trillion cubic feet of natural gas is used to make up for the lack of coal power in 2020. And this is information from the government drones who think this is a great idea. The true impact will be ten times worse.

But the U.S. Chamber of Commerce reported that EPA’s power plant rule would increase peoples’ energy costs by $17 billion per year. In total, the EPA rule would cost the U.S. economy $50 billion annually and kill 224,000 jobs per year. Previous EPA regulations have already set the stage for skyrocketing electricity prices. The Mercury Air Toxics Standard (MATS), which comes in full effect in 2016, has already been predicted to force many coal plants to shut down and help drive up electricity costs.

These rules and regulations will add an average of $145 annually to all 117 million household electricity bills in the United States. The U.S. Energy Information Administration (EIA) says closing coal plants will drive up natural gas prices by 150% over 2012 levels by 2040, this cost rise will cause electricity prices to jump seven percent by 2025 and 22% by 2040. Obama and his minions are hanging their hats on the shale gas storyline of hundreds of years of natural gas. The entire storyline is a sham. The propaganda is false. Killing coal will drive the price of natural gas sky high and create shortages, blackouts, and misery for the American people.

Senator Thune has it right:

“Make no mistake, the administration’s proposed rule is nothing more than a national energy tax that will be yet another sucker punch to middle-class families struggling to get by in the Obama economy. These regulations, which will increase electricity costs, will especially hurt low-income families and seniors who live on fixed incomes and already devote a large share of their income to electricity bills. In addition to hurting families, the regulations will destroy jobs, while essentially doing nothing to improve our global environment. The president’s proposed regulations are lose-lose-lose.”

Everything Obama supports is designed to take money out of your pocket and put it into the hands of government drones who think they know how to spend your money better than you. While Obama destroys our energy delivery system and further impoverishes senior citizens and the poor, the government grows ever more powerful and infiltrates every crevice of our lives. Our liberties, freedoms, and right to live our own lives is stripped away.

As Obama and his apparatchiks destroy our economy in the name of saving the planet and providing “free” healthcare for the masses, China and India bring 4 coal powered electricity plants  online every week.

Global demand for coal is expected to grow to 8.9 billion tons by 2016 from 7.9 billion tons this year. China is expected to add about 160 new coal-fired plants to the 620 operating now, within four years. During that period, India will add more than 46 plants. The U.S. has the largest supply of coal on the planet and we will be shutting plants as China and India build them. How exactly is the planet benefiting from this?

Lastly, do you find it interesting that the regions with the least economic impact from Obama’s regulations are areas controlled by Democrats and those impacted the most are controlled by Republicans? I’m sure it’s just a coincidence. Obama wouldn’t play politics with our energy.

LET’S KILL COAL

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Posted on 2nd June 2014 by Administrator in Economy |Politics |Social Issues

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Sometimes I think Obama and his minions purposely want to destroy our economy, based upon the ridiculous and utterly disastrous belief they can control everything and everyone. They believe they are smarter than everyone else. They believe they can solve all the problems in the world with thousands of pages of regulations enforced by clueless government drones working in a vast bureaucracy in Washington DC. The hubris and arrogance of these people is beyond the pale. Over 40% of our electricity in this country is produced by burning coal. We have the largest supply of coal on the planet. The shale oil and shale gas miracle is a fraud. This past winter revealed the downside of natural gas storage and supply. Obama and his minions won’t be satisfied until there are blackouts and rationing of electricity. This boob and the boobs surrounding him actually believe the rest of the world will follow his lead if he just unilaterally imposes massive restrictions on the use of coal. I’m sure China, Russia, and India can’t wait to follow Obama down this path to a cleaner planet.

Meanwhile Boobus Americanus stares at their iGadgets, HDTVs, and computers, powered by electicity, while agreeing with Obama’s plan to kill coal. And so it goes.

New EPA rules could burn coal state Democrats

Administration said to be seeking 30 percent emissions cut by 2030

By S.A. Miller

The Washington Times

It’s not just electric companies and coal miners bracing for the Obama administration’s announcement Monday of tough rules to reduce greenhouse gas emissions from America’s roughly 600 coal-fired power plants, rules designed to cut U.S. power plant emissions by nearly a third in the next 15 years.

Democratic candidates and the party’s campaign organizations have positioned themselves carefully in anticipation of more stringent emissions standards that will thrill the party’s environmentalist base but cause political headaches for Democrats facing tough challenges in states that produce coal or rely heavily on coal to generate electricity.

About 40 percent of electricity in the U.S. comes from coal-fired power plants, considered to be the nation’s top source of carbon dioxide pollution. Leaked details of the plan suggest Mr. Obama will set a goal to cut greenhouse gas emissions from the nation’s power plants by 30 percent by the year 2030, preventing an estimated 650 million tons of carbon dioxide from power plants.

Coal-fueled plants will face the toughest challenge to meet the president’s centerpiece goal.

The Environmental Protection Agency regulations, which industry insiders expect to be hundreds of pages long, likely will be Mr. Obama’s strongest effort yet to tackle climate change.

The executive action, however, will expose some Democrats to charges that they are complicit in what critics call Mr. Obama’s “war on coal,” including candidates in several states whose fates will determine whether Democrats can retain majority control of the Senate after November elections.

The National Republican Senatorial Committee, which oversees the GOP’s Senate races, drove home the point in a blog post last week: “Senate battleground states are largely coal-intensive states, which makes President Obama’s upcoming EPA announcement even more important. These states will be particularly hard hit by the rate spike that will come from the Obama administration’s cap-and-trade fiat.”

In West Virginia, where coal is king, Senate candidate Natalie E. Tennant, a Democrat, quickly turned on Mr. Obama when asked about the regulations. Ms. Tennant trails in polls in a race against Republican nominee Rep. Shelley Moore Capito for the seat of retiring Sen. John D. Rockefeller IV, a Democrat.

“I am pro-coal, and I am pro-coal miner. I will fight President Obama, the EPA, the Senate and anyone else who tries to undermine our coal jobs,” said Ms. Tennant, the West Virginia secretary of state.

Sen. Kay R. Hagan of North Carolina, one of the most endangered Democrats this election year, also will have to handle the issue carefully. Her state relies on coal plants for about 38 percent of its electricity.

Ms. Hagan sent a letter late last month to EPA Administrator Gina McCarthy that begged her to delay the regulations. Ms. Hagan weathered criticism days earlier from Republican rival Thom Tillis for not joining a bipartisan group of senators who asked the EPA for a similar delay.

In Kentucky, the nation’s third-largest producer of coal, Democratic candidate Alison Lundergan Grimes has struggled to distance herself from Mr. Obama’s energy and climate change policies as she seeks to unseat Senate Minority Leader Mitch McConnell. Kentucky obtains more than 90 percent of its power from coal-fired plants, according to the U.S. Energy Information Administration, and Mr. Obama is deeply unpopular in the state.

The McConnell campaign hit Ms. Grimes, Kentucky’s secretary of state, early on for backing the “war on coal.”

Her weakness among Kentucky coal voters was evident in the May 20 primary election, when she lost a substantial share of the vote to underfunded opponents in 21 counties, nearly all of which depend on the coal industry.

The EPA regulations also will fuel Republicans’ attacks against vulnerable Democrats in other energy-producing states, including Sen. Mary L. Landrieu in Louisiana, Sen. Mark L. Pryor in Arkansas and Sen. Mark Begich in Alaska.

Although their states could benefit from an increase in the use of natural gas as coal is phased out under the new emissions standards, they will have to fend off criticism from Republican rivals that the Obama administration’s EPA is hostile to energy and business interests.

The coal debate also will reverberate across the campaign trail for Rep. Nick J. Rahall II, West Virginia Democrat, who has had to deal with the fallout from Mr. Obama’s energy policies as he tackles one of the toughest races of his nearly 40-year career.

The EPA rules also threaten to step on Democrats’ national campaign message that focuses on jobs and the economy.

Providing fodder for the EPA’s critics, a U.S. Chamber of Commerce study released last week calculated that the emissions reduction goals set by the Obama administration would reduce the nation’s gross domestic product by $51 billion a year, cost 224,000 jobs and increase American electricity bills by $289 billion from 2015 to 2030. EPA officials have disputed the Chamber of Commerce estimates, and other critics note that the projected costs amount to only 0.003 percent of a $17 trillion economy.

The coal industry lobby also warns that an increased reliance on natural gas will result in unreliable electric supplies and mass blackouts.

“This administration has largely turned a deaf ear to those states that are most affected,” said Laura Sheehan, senior vice president of communications at the American Coalition for Clean Coal Electricity, an industry lobbying firm. “Their goal is to bring about the end of coal-based electricity in the United States.”

In response to questions about the administration’s climate change agenda, Democratic Congressional Campaign Committee spokesman Josh Schwerin stuck to the party’s message.

“While every candidate runs with their own message in their own district, Democrats across the country are focused on strengthening the economy by creating good jobs, supporting equal pay for women, investing in infrastructure and putting the middle class ahead of special interests,” he said.

“As Democrats zero in on strengthening the economy for middle-class families, Republicans have abandoned any pretext whatsoever of caring about jobs or the economy and now have a singular focus on conspiracy theories and partisan political games. It’s abundantly clear to voters which party is focused on the economy and which one is focused on political gamesmanship,” Mr. Schwerin said.

Mr. Obama also has sided with environmentalists to the detriment of red state Democrats by repeatedly delaying a decision on whether to build the Keystone XL oil pipeline from Canada to the Gulf Coast in Texas.
Read more: http://www.washingtontimes.com/news/2014/jun/1/new-epa-rules-could-burn-coal-state-democrats/#ixzz33UH2UZ2f
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ENERGY INDEPENDENCE – THE BIG LIE

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Posted on 14th November 2011 by Administrator in Economy |Politics |Social Issues

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 PRICE OF A BARREL OF OIL 1978 – $14.00

“We are the generation that will win the war on the energy problem and in that process, rebuild the unity and confidence of America.” - President Jimmy Carter, 1979

“We have it in our power to act right here, right now. I propose $6 billion in tax cuts and research and developments to encourage innovation, renewable energy, fuel-efficient cars, and energy-efficient homes.” - President Bill Clinton, 1998

“I think that in ten years, we can reduce our dependence so that we no longer have to import oil from the Middle East or Venezuela. I think that’s about a realistic time frame…That’s why I’ve focused on putting resources into solar, wind, biodiesel, geothermal. These have been priorities of mine since I got to the Senate, and it is absolutely critical that we develop a high fuel efficient car that’s built not in Japan and not in South Korea, but built here in the United States of America.” - President Barack Obama, 2008

“We don’t have to wait on OPEC anymore. We don’t have to let them hold us hostage. America’s got the energy. Let’s have American energy independence.”- Rick Perry, CNN Debate, October 18

“We must become independent from foreign sources of oil. This will mean a combination of efforts related to conservation and efficiency measures, developing alternative sources of energy like biodiesel, ethanol, nuclear, and coal gasification, and finding more domestic sources of oil such as in ANWR or the Outer Continental Shelf (OCS).”Mitt Romney  

PRICE OF A BARREL OF BRENT OIL 2011 – $114.00

 

It is too bad that our 255 million cars can’t run on hot air. American presidents have propagated the Big Lie of energy independence for the last three decades. The Democrats have lied about green energy solutions and the Republicans have lied about domestic sources saving the day. These deceitful politicians put the country at risk as they misinform and mislead the non-thinking American public. They have been declaring our energy independence for 30 years, but we import three times as much oil today as we did in the early 1980’s. The CPI has gone up 350% since 1978, but the price of a barrel of oil has risen 800% over the same time frame. Today, I hear the same mindless fabrications from politicians and pundits about our ability to become energy independent. Any critical thinking analysis of the hard facts reveals that the United States will grow increasingly dependent upon other countries to supply our energy needs from a dwindling and harder to access supply of oil and natural gas. The fantasy world of plug in cars, corn driven vehicles and solar energy running our manufacturing plants is a castle in the sky flight of imagination. The linear thinking academic crowd believes a technological miracle will save us, when it is evident technology fails without infinite quantities of cheap oil.

I know the chart below requires some time to grasp, but I’m sure the average American can take five minutes away from watching Jersey Shore, Dancing with the Stars, or the latest update of the Kardashian saga to understand why the propaganda about energy independence is nothing but falsehoods. You have U.S. energy demand by sector on the right and the energy source by fuel on the left. Total U.S. energy use is nearly 100 quadrillion Btu. In physical energy terms, 1 quad represents 172 million barrels of oil (8 to 9 days of U.S. oil use), 50 million tons of coal (enough to generate about 2% of annual U.S. electricity use), or 1 trillion cubic feet of natural gas (about 4% of annual U.S. natural gas use).  

Please note that 37% of our energy source is petroleum, which supplies 95% of the energy for our transportation sector. That means your car and the millions of 18 wheelers that deliver your food to your grocery stores and electronic gadgets to your Best Buy. You can’t fill up your SUV with coal, natural gas, nuclear energy or sunshine. Without the 7 billion barrels of oil we use every year, our just in time mall centric suburban sprawl society would come to a grinding halt. There is no substitute for cheap plentiful oil anywhere in sight. The government sponsored ethanol boondoggle has already driven food prices higher, while requiring more energy to produce than it generates. Only a government “solution” could raise food prices, reduce gas mileage, and bankrupt hundreds of companies in an effort to reduce our dependence on oil. Natural gas as a transportation fuel supplies 2% of our needs. The cost to retro-fit 160,000 service stations across the country to supply natural gas as a fuel for the non-existent natural gas automobiles would be a fool’s errand and take at least a decade to implement.   

    

The green energy Nazis despise coal and nuclear power, which account for 31% of our energy supply. They want to phase coal out. They aren’t too fond of fracking either, so there goes another 23% of our supply. You might be able to make out that itsy bitsy green circle with the 7% of our supply from renewable energy. And more than half of that energy is supplied by hydro power. Less than 2% of our energy needs are met by solar and wind. For some perspective, we need to use the equivalent of 17 billion barrels of oil per year to run our society and solar and wind supplies the equivalent energy of about 300 million barrels of that total. I think our green energy dreams will come up just a smidgen short of meeting our demands. Nothing can replace oil as the lifeblood of our culture and there is no domestic supply source which will eliminate or even reduce our dependence upon the 10 million barrels per day we import from foreign countries. There are some hard truths that are purposefully ignored by those who want to mislead the public about the grim consequences of peak cheap oil:

  • The earth is finite. The amount of oil within the crust of the earth is finite. As we drain 32 billion barrels of oil from the earth every year, there is less remaining within the earth. We have drained the cheapest and easiest to reach 1.4 trillion barrels from the earth since the mid 1800s. The remaining recoverable 1.4 trillion barrels will be expensive and hard to reach.
  • The United States has about 2% of the world’s proven oil and gas reserves, but consumes 22% of the world’s oil production and 27% of the world’s natural gas production.
  • Demand for oil will continue to rise no matter what the United States does, as the developing world consumption far outstrips U.S. consumption. Oil is fungible and will be sold to the highest bidder.
  • The concept of energy returned on energy invested (EROEI) is beyond the grasp of politicians and drill, drill, drill pundits. EROEI is the ratio of the amount of usable energy acquired from a particular energy resource to the amount of energy expended to obtain that energy resource. When the EROEI of a resource is less than or equal to one, that energy source becomes an “energy sink”, and can no longer be used as a primary source of energy. Once it requires 1.1 barrels of oil to obtain a barrel of oil, the gig is up.
  • There is a negative feedback loop that revolves around oil supply, oil price and economic growth. As demand continues to rise and supply is more difficult to access, prices will rise. Since oil is an essential ingredient in every aspect of our lives, once the price reaches $120 to $150 a barrel economic growth goes into reverse. Demand crashes and investment in new sources of energy dries up. Rinse and repeat.

Finite World

World oil production peaked in 2005 has been flat since then, despite a continuous stream of promises from Saudi Arabia that they are on the verge of increasing production. The chart below from the U.S. Energy Information Administration propagates the standard fabrications about energy supplies. Even though worldwide oil production has clearly peaked, the oil industry PR whores and government agencies continue to project substantial production growth in the future. The mainstream media trots out Daniel Yergin whenever it wants to calm the masses, despite his track record of being 100% wrong 100% of the time. The brilliance of his July, 2005 Op-Ed shines through:

“Prices around $60 a barrel, driven by high demand growth, are fueling the fear of imminent shortage — that the world is going to begin running out of oil in five or 10 years. This shortage, it is argued, will be amplified by the substantial and growing demand from two giants: China and India. There will be a large, unprecedented buildup of oil supply in the next few years. Between 2004 and 2010, capacity to produce oil (not actual production) could grow by 16 million barrels a day — from 85 million barrels per day to 101 million barrels a day — a 20 percent increase. Such growth over the next few years would relieve the current pressure on supply and demand.”

Oil production capacity has not grown by one barrel since Yergin wrote this propaganda piece. This is despite the fact that prices have almost doubled, which should have spurred production. The current energy independence false storyline – the Bakken Formation – has gone from production of 10,000 barrels per day in 2003 to 400,000 barrels per day now, while the hundreds of millions invested in developing the Canadian tar sands have increased production by 50% since 2005. Despite these substantial increases in output, worldwide production has remained flat as existing wells deplete at the same rate that new production is brought online.

 

The facts are there is approximately 1.4 trillion barrels of recoverable oil left in the crust of the earth. We currently suck 32 billion barrels per year out of the earth. This means we have 44 years of oil left, at current consumption levels. But we know demand is growing from the developing world. Taking this fact into consideration, we have between 35 and 40 years worth of recoverable oil left on the planet. That is not a long time. Additionally, the last 1.4 trillion barrels will much more difficult and costly to extract than the first 1.4 trillion barrels. The remaining oil is miles under the ocean floor, trapped in shale and tar sands, and in the arctic. Despite these hard facts, governmental agencies and politicians continue to paint a rosy picture about our energy future. I watched in stunned amazement last week as five bozos on the McLaughlin Group news program unanimously proclaimed the U.S. would become a net exporter of oil in the coming decade. Do these supposedly intelligent people not understand the basic economics of supply, demand and price?  

It seems the governmental organizations always paint the future in the most optimistic terms, despite all facts pointing to a contrary outcome. The EIA predicts with a straight face that oil production will rise to 110 million barrels per day, while the price of a barrel of oil remains in the current $100 to $125 per barrel range. Non-OPEC production has been in decline since 2004, but the EIA miraculously predicts a 15% increase in production over the next 25 years. OPEC production has been flat since 2005, but the EIA is confident their 50 year old oil fields will ramp up production by 25% in the next 25 years. Does the EIA consider whether OPEC even wants to increase production? It would appear that constrained supply and higher prices would be quite beneficial to the OPEC countries. And then of course there is the unconventional oil that is supposed to increase from 4 million barrels per day to 13 million barrels per day, a mere 325% increase with no upward impact on prices. These guys would make a BLS government drone blush with the utter ridiculousness of their predictions.

 

The picture below is an excellent representation of how the easy to access oil and gas of the earth have been tapped. They were close to the surface. The remaining oil and gas is deeper and trapped within shale and sand. The new technology for extracting gas from shale has concerns regarding whether fracking and disposal of waste water can be done safely, especially near highly populated areas. The relationship between fracking and earthquakes could also prove to be problematic. The wells also have rapid decline rates. Add a mile of ocean to the picture below and you have some really expensive to access oil and potential for disaster, as witnessed with the Deep Water Horizon.

 

The EIA projects natural gas supply to grow by 10% between now and 2035 due to a 300% increase in shale gas supply. It seems the EIA believes the fantasy of 8 Saudi Arabia’s in the Bakken formation of North Dakota and decades of gas within the Marcellus Shale. These fantasies have been peddled by the natural gas industry in order to get support for their fracking efforts. This false storyline is damaging to the long-term planning that should be taking place now to alleviate the energy scarcity that is our future. In 2006 the EIA reported the possibility of 500 billion barrels of oil in the Bakken formation, based on guesswork. The U.S. Geological Survey has since scaled this back ever so slightly to 3.65 billion barrels, which is six months of U.S. consumption. The deceptions peddled regarding Marcellus shale are also colliding with reality. The U.S. Geological Survey recently produced an estimate of Marcellus Shale resources, which will cause the EIA to reduce its estimate of shale gas reserves for the Marcellus Shale by 80%. The price of natural gas is currently $3.54 MMBtu, down from $13 a few years ago. Extracting natural gas from shale has high capital costs of land, drilling and completion. It is not economically feasible below $6 MMBtu.

 

Based on the known facts and a realistic view of the future, there will be less supply of oil and natural gas as time goes on. We can already see the impact of these facts today. Even though Europe and the U.S. are in recession, the price of oil continues to rise. The developing world continues to demand more oil and the supply is stagnant. Stunts like withdrawing oil from the Strategic Reserve are foolish and politically motivated. Is the world then running out of oil then? No, but any increase in future global oil production will be modestly incremental and production could be thrown off course by any number of possible events, from an Israeli attack on Iran to (another, but successful this time) al Qaida attack on Saudi Arabia’s Abqaiq oil refinery. Any forecast regarding future oil production and prices isn’t worth the paper it is written on unless consideration to wars, revolutions and terrorism are factored into the equation.

We Don’t Matter

Americans like to think we are the center of the universe. Those who propagate the misinformation about U.S. energy independence are clearly math challenged. The total proven oil reserves in the world total 1.4 trillion barrels and the United States has 22 billion barrels of that total, or 1.6% of the world’s oil. The U.S. burns 7 billion barrels per year, so we have enough oil to survive for three whole years. The U.S. consumes 22% of the world’s oil despite having 4.5% of the world’s population and less than 2% of the world’s oil. Do these facts lead you to the conclusion the United States will be exporting oil in the near future?

 

When you hear the pundits breathtakingly describe our vast natural gas resources you would think we are the dominant player in this market. Not quite. The United States has 4% of the world’s natural gas reserves. Predictably we consume 22% of the world’s natural gas. Russia controls 25% of the world’s natural gas reserves, with the Middle East countries controlling 40% of the world’s reserves. The pundits can hype our “vast” supplies of natural gas, but the facts clearly reveal it is nothing but hype.

  

The U.S. is consuming less oil than it was in 2005. U.S. consumption is not the crucial factor in determining the price of oil today and our consumption will matter even less in the future. Emerging market countries, led by China and India, will be the driving force in oil demand in the coming decades. According to the IEA, “Non-OECD [emerging markets] account for 90% of population growth, 70% of the increase in economic output and 90% of energy demand growth over the period from 2010 to 2035.”

 

This demand is being driven by the growth in vehicles in emerging markets. The U.S. market has reached a saturation point, but China, India and the rest of the world are just beginning their love affairs with the automobile. The accumulation of facts regarding both supply and demand should even convince the most brainless CNBC talking head that the price of oil will continue to rise. The 2008 peak price of $145 per barrel will not hold. The tried and true American method of ignoring problems until they reach crisis proportions will bite us in the ass once again.

 

Slippery Road Ahead

The concept of EROI is incomprehensible to the peak oil deniers. When Larry Kudlow or one of the other drill, drill, drill morons proclaims the vast amount of oil in North Dakota shale and in Alberta, Canada tar sands, they completely ignore the concept of EROI. Some estimates conclude there are 5 trillion barrels of oil left in the earth. But, only 1.4 trillion barrels are considered recoverable. This is because the other 3.6 trillion barrels would require the expenditure of more energy to retrieve than they can deliver. Therefore, it is not practical to extract. When oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. and about ten for one in Saudi Arabia.

The chart below clearly shows the sources of energy which have the highest energy return for energy invested. I don’t think I’ve heard Obama or the Republican candidates calling for a national investment in hydro-power even though it is hugely efficient. The dreams of the green energy crowd are shattered by the fact that biodiesel, ethanol and solar require as much energy to create as they produce. Tar sands and shale oil aren’t much more energy efficient. It’s too bad Obama and his minions hate dirty coal, because has the best return on energy invested among all the practical sources.   

 File:EROI - Ratio of Energy Returned on Energy Invested - USA.svg

Worse than the peak oil deniers are those who pretend that oil isn’t really that important to our society. They declare that technology will save the day, when in reality technology can’t function without oil. Without plentiful cheap oil our technologically driven civilization crashes. We are addicted to oil. Americans consume petroleum products at a rate of three-and-a-half gallons of oil and more than 250 cubic feet of natural gas per day each.  You might be interested in a partial list of products that require petroleum to be produced.

Solvents Diesel fuel Motor Oil Bearing Grease
Ink Floor Wax Ballpoint Pens Football Cleats
Upholstery Sweaters Boats Insecticides
Bicycle Tires Sports Car Bodies Nail Polish Fishing lures
Dresses Tires Golf Bags Perfumes
Cassettes Dishwasher parts Tool Boxes Shoe Polish
Motorcycle Helmet Caulking Petroleum Jelly Transparent Tape
CD Player Faucet Washers Antiseptics Clothesline
Curtains Food Preservatives Basketballs Soap
Vitamin Capsules Antihistamines Purses Shoes
Dashboards Cortisone Deodorant Footballs
Putty Dyes Panty Hose Refrigerant
Percolators Life Jackets Rubbing Alcohol Linings
Skis TV Cabinets Shag Rugs Electrician’s Tape
Tool Racks Car Battery Cases Epoxy Paint
Mops Slacks Insect Repellent Oil Filters
Umbrellas Yarn Fertilizers Hair Coloring
Roofing Toilet Seats Fishing Rods Lipstick
Denture Adhesive Linoleum Ice Cube Trays Synthetic Rubber
Speakers Plastic Wood Electric Blankets Glycerin
Tennis Rackets Rubber Cement Fishing Boots Dice
Nylon Rope Candles Trash Bags House Paint
Water Pipes Hand Lotion Roller Skates Surf Boards
Shampoo Wheels Paint Rollers Shower Curtains
Guitar Strings Luggage Aspirin Safety Glasses
Antifreeze Football Helmets Awnings Eyeglasses
Clothes Toothbrushes Ice Chests Footballs
Combs CD’s & DVD’s Paint Brushes Detergents
Vaporizers Balloons Sun Glasses Tents
Heart Valves Crayons Parachutes Telephones
Enamel Pillows Dishes Cameras
Anesthetics Artificial Turf Artificial limbs Bandages
Dentures Model Cars Folding Doors Hair Curlers
Cold cream Movie film Soft Contact lenses Drinking Cups
Fan Belts Car Enamel Shaving Cream Ammonia
Refrigerators Golf Balls Toothpaste Gasoline

 

The propaganda blared at the impressionable willfully ignorant American public has worked wonders. The vast majority of Americans have no clue they have entered a world of energy scarcity, a world where the average person is poorer and barely able to afford the basic necessities of life. This is borne out in the vehicles sales statistics reported every month. There have been 10.5 million passenger vehicles sold through the first 10 months of 2011. In addition to the fact they are “purchased” using 95% debt and financed over seven years, the vast majority are low mileage vehicles getting less than 20 mpg. Only 1.8 million small energy efficient vehicles have been sold versus 6.1 million SUVs, pickup trucks and large luxury automobiles. Americans have the freedom to buy any vehicle they choose. They also have the freedom to not think and ignore the facts about the certainty of higher prices at the pump. By choosing a 20 mpg vehicle over a 40 mpg vehicle, they’ve sealed their fate. How could the average soccer mom get by without a Yukon or Excursion to shuttle Biff and Buffy to their games? Have you ever tried to navigate a soccer field parking lot in a hybrid? The horror!

The American public has been lulled back into a sense of security as gas prices have receded from $4.00 a gallon back to $3.40 a gallon. This lull will be short lived. Oil prices have surged by 15% in the last two months, even as the world economy heads into recession. The link between high oil prices and economic growth are undeniable, even though the deceitful pundits on CNBC will tell you otherwise. Ten out of eleven recessions since World War II were associated with oil price spikes. Gail Tverberg sums up the dilemma of energy scarcity for the average American:

“High-priced oil tends to choke economies because high oil prices are associated with high food prices (because oil products are used in food growing and transport), and people’s salaries do not rise to offset this rise in food and oil prices. People have to eat and to commute to their jobs, so they cut back on other expenditures. This leads to recession. Recession leads to lower oil consumption, since people without jobs can’t buy very much of anything, oil products included. In some sense, the reduction in oil extraction is due to reduced demand, because citizens cannot afford the high-priced oil that is available.”

But don’t worry. The rising oil and food prices will only impact the 99% in the U.S. and the poorest dregs across the globe that spend 70% of their income on food. The 1% will be just fine as they will bet on higher oil prices, therefore further enriching themselves while the peasants starve. The market for caviar, champagne, NYC penthouses, and summer mansions in the Hamptons will remain robust.

There is no escape from the ravages of higher priced oil. There is plenty of oil left in the ground. But, the remaining oil is difficult, slow and expensive to extract. Oil prices will rise because they have to. Without higher prices, who would make the huge capital investment required to extract the remaining oil? Once oil prices reach the $120 to $150 per barrel range our economy chokes and heads into recession. We are trapped in an endless feedback loop of doom. The false storyline of renewable energy saving the day is put to rest by Gail Tverberg:

“Renewables such as wind, solar PV, cellulosic ethanol, and biogas could more accurately be called “fossil fuel extenders” because they cannot exist apart from fossil fuels. Fossil fuels are required to make wind turbines and other devices, to transport the equipment, to make needed repairs, and to maintain the transport and electrical systems used by these fuels (such as maintaining transmission lines, running-back up power plants, and paving roads). If we lose fossil fuels, we can expect to lose the use of renewables, with a few exceptions, such as trees cut down locally, and burned for heat, and solar thermal used to heat hot water in containers on roofs.”

Predictably, the politicians and intellectual elite do the exact opposite of what needs to be done. We need to prepare our society to become more local. Without cheap plentiful oil our transportation system breaks down. Our 3.9 million miles of road networks will become a monument to stupidity as Obama and Congress want to spend hundreds of billions on road infrastructure that will slowly become obsolete. The crumbling infrastructure is already the result of government failure, as the money that should have been spent maintaining our roads, bridges and water systems was spent on train museums, turtle crossings, teaching South African men how to wash their genitalia, studies on the mating habits of ferrets, and thousands of other worthless Keynesian pork programs. If our society acted in a far sighted manner, we would be creating communities that could sustain themselves with local produce, local merchants, bike paths, walkable destinations, local light rail commuting, and local energy sources. The most logical energy source for the U.S. in an oil scarce scenario is electricity, since we have a substantial supply of coal and natural gas for the foreseeable future and the ability to build small nuclear power plants. The Fukushima disaster is likely to kill nuclear as an option until it is too late. The electrical grid should be the number one priority of our leaders, as it would be our only hope in an oil scarce world. Instead, our leaders will plow borrowed money into ethanol, solar, and shale oil drilling, guaranteeing a disastrous scenario for our country.

The United States is a country built upon the four C’s: Crude, Cars, Credit, and Consumption. They are intertwined and can’t exist without crude as the crucial ingredient. As the amount of crude available declines and the price rises, the other three C’s will breakdown. Our warped consumer driven economy collapses without the input of cheap plentiful oil. Those at the top levels of government realize this fact. It is not a coincidence that the War on Terror is the current cover story to keep our troops in the Middle East. It is not a coincidence the uncooperative rulers (Hussein, Gaddafi) of the countries with the 5th and 9th largest oil reserves on the planet have been dispatched. It is not a coincidence the saber rattling grows louder regarding the Iranian regime, as they sit atop 155 billion barrels of oil, the 4th largest reserves in the world. It should also be noted the troops leaving Iraq immediately began occupying Kuwait, owner of the 6th largest oil reserves on the planet. Oil under the South China Sea and in the arctic is being hotly pursued by the major world players. China and Russia are supporting Iran in their showdown with Israel and the U.S. As the world depletes the remaining oil, conflict and war are inevitable. The term Energy Independence will carry a different meaning than the one spouted by mindless politicians as the oil runs low.

And as things fell apart
Nobody paid much attention

Nothing but Flowers – The Talking Heads