Saturday, December 17, 2011


As a Canadian, the Harper Government's rejection of the Kyoto Treaty this week made me ashamed.  Yet one more comfort-seeking half-man in leadership who can't make a difficult choice.  Big surprise.

Knowing that Stephen Harper is from Alberta and a Fundamentalist pseudo-Christian, is all anyone really needed to know to predict this could happen.  Alberta is the energy producing capital of Canada and home of the infamous oil-producing tar sands which are the largest single source of carbon emissions in Canada.  Meanwhile, Alberta is also the most right-wing of Canadian provinces, so from a Canadian standpoint, that makes Harper's type about the closest one can get to being bonafide Canadian Taliban.  How he became Prime Minister is still (somewhat of) a mystery to me.

This time, I will spare my usual diatribe against the climate change denialists, because there is nothing I can do to punish the denialist morons, that reality itself won't dish out x 10, in due course.  In fact, it will be the very prevalence of climate change denialism that makes the ultimate outcome to the energy saga that much more devastating.  Expending all efforts on denial and obfuscation has merely served to delay the inevitable, and thereby ensure the ultimate impacts will be many times worse, while at the same time suspending any investments that would have otherwise dealt with the problem in the meantime.  For the archaeologists of the future who dig through a mile of rubble to read this archive: understand that climate change denialism is just an artifact from the zeitgeist of the Idiocracy i.e. as a society, we have become a 400 pound fat man who can't get out of his own way.  

Regardless of mankind's ongoing need to ignore the obvious and inevitable, fortunately nature has a set of built-in safeguards (aka. resource scarcity) to limit the damage humans can do to ourselves and other species.  Will resource scarcity be enough to save ourselves from ourselves?  Now that is a debate for real men and another time.

Whereas the climate change debate is fraught with projections and uncertainty, making it highly prone to  manipulation and obfuscation, underlying that asinine debate is a set of far more concrete facts which are far less easily discarded.  In fact the below facts are hardy, durable and largely immune to manipulation even by the knuckle-dragging set.  By analogy, imagine the morons of the day debating the size of the hole in the hull (or indeed if a hole even exists) while the Titanic is already keeled over and diving to the bottom.

Following, I lay out  the set of events and circumstances that will inevitably wean the human race off of hydrocarbons for good, without requiring us to convince one demented hillbilly, SUV owner, Prime Minister or combination thereof.

If we really wanted to curb the use of oil sooner rather than later, here is what we should do have done:

1) First, deplete the vast amount of crude available in the nations that consume the most oil, thereby making them highly dependent upon imports and stable/affordable oil prices

STATUS: 95% COMPLETE.  The U.S., Europe and China are the world's largest consumers all highly dependent upon oil imports

2) Massively deplete the world's remaining large oil fields and then obfuscate about how much oil is left, giving everyone a false sense of complacency so that we overconsume the remaining oil and underinvest in new sources of energy i.e. create a cartel called OPEC and make output quotas dependent upon "stated" oil reserves, thereby giving every nation an incentive to obfuscate and over-inflate their oil reserves.

As an example, the Ghawar field in Saudi Arabia is still the world's largest in terms of output, and yet production from that field started back in the 1950s.  One needs no other piece of evidence to know that field is near the end of its production life.  Still, they lie...

3) Price oil on world markets based upon how much oil is coming out of the ground v.s. how much is remaining in the ground i.e. systematically underprice oil and hence facilitate over-consumption and further delay the migration to sustainable energy.

The supply side of oil futures pricing is based upon how much crude is coming onto the market in a given time (term) structure.  The spot price is likewise based upon how much is currently being offered and has no relationship to how much is left in the ground.

As an example, if a country, let's call it Russia, were to forcibly amplify its oil production by injecting sea water into its wells, then it would cause production supply to increase in the short-term while impairing the long-term output potential of its wells.  Short-term, that tactic would cause world oil prices to fall and hence over-stimulate demand, while laying the ground for an eventual asymmetric dropoff in supply in the future.

4) Leave the remaining sources of oil deep underground/undersea and/or in unstable nations that are overtly hostile to the West.  In other words, make the continuous supply chain as tenuous as possible.

As I reiterated recently, among the top 15 oil producing nations are: Saudi Arabia, Iran, Iraq, Venezuela, Mexico, Russia and Nigeria.  Incidentally Canada's oil sands currently produce roughly 1.3 million barrels per day as against global annual consumption of ~83 million barrels per day i.e. it's a drop in the bucket.

5) Create legacy infrastructure and transportation links highly dependent upon cheap oil and create a food industry highly dependent upon an ongoing cheap supply of energy

Watch the movie Collapse for more detail on the fragility of the supply chain and our over-dependence upon (cheap) oil in our food supply.  Be sure to have a change of underwear handy.

7) Create suburbs and cities that are widely dispersed and require cars to do anything or go "anywhere"

This is one of the central themes of Kunstler's blog - that we have created suburbs and exurbs that are totally disconnected from sustainable reality because they are fundamentally reliant upon a steady stream of cheap and abundant oil.

8) Over-invest in legacy automative technology (aka. internal combustion), requiring massive capital infusion at a time when capital is about to become extremely scarce.

Think way back to 2007 when oil hit $147/barrel and filling up the average SUV cost $100.  Now double or triple those figures.  Also recall, the mad scramble to trade in many of those behemoths at a time when there were absolutely no buyers to be found.  Rinse and repeat.

9) Lastly, create a global economic depression that will drive the price into the ground, eliminate long-term capital available for investment and otherwise take Harper's oil sands offline

Sadly but predictably, investments in sustainable energy are highly correlated with the price of oil, due to the substitution effect i.e. why "go green" when oil is so cheap.  That in turn will lead to underinvestment in not just green energy but also oil exploration, similar to what happened in the late '80s and '90s.

Underinvestment will constrain supply, which will amplify the oil price increases emanating from an expanding economy, should such an economy ever exist again.  This means that every attempt to revive the economy will meet with skyrocketing oil prices similar (but on a magnified scale) to when oil ran from ~$12/bbl in 1999 to $147/bbl in 2007.  These high oil prices will drain the economy and eventually send oil prices crashing again.  Rinse and repeat...

In summary, subsidizing (by not taxing) the consumption of imported energy for these past decades ranks as one of the gravest mistakes our serially inept policy-makers have made.  The economic consequences of decades of over-consumption of hydrocarbons and resulting over-reliance, will be devastating, leaving aside the less predictable but likely equally devastating environmental impacts.  As always, nature will be the final arbiter, by selecting against those societies that choose the path of short-term gratification at the expense of their own longer term self interest.  Basically, we have now become a society too stupid to realize how stupid we are, which is what you would expect in a nascent Dark Age.