Life After the Oil Crash

Life After the Oil Crash
"Deal With Reality or Reality Will Deal With You"
http://www.lifeaftertheoilcrash.net/

Dear Reader,

Civilization as we know it is coming to an end soon. This is not the wacky
proclamation of a doomsday cult, apocalypse bible prophecy sect, or
conspiracy theory society. Rather, it is the scientific conclusion of the
best paid, most widely-respected geologists, physicists, and investment
bankers in the world. These are rational, professional, conservative
individuals who are absolutely terrified by a phenomenon known as global
"Peak Oil."


"Are We 'Running Out'? I Thought
There Was 40 Years of the Stuff Left"


Oil will not just "run out" because all oil production follows a bell
curve. This is true whether we're talking about an individual field, a
country, or on the planet as a whole.

Oil is increasingly plentiful on the upslope of the bell curve,
increasingly scarce and expensive on the down slope. The peak of the curve
coincides with the point at which the endowment of oil has been 50 percent
depleted. Once the peak is passed, oil production begins to go down while
cost begins to go up.

In practical and considerably oversimplified terms, this means that if 2000
was the year of global Peak Oil, worldwide oil production in the year 2020
will be the same as it was in 1980. However, the world?s population in
2020 will be both much larger (approximately twice) and much more
industrialized (oil-dependent) than it was in 1980. Consequently, worldwide
demand for oil will outpace worldwide production of oil by a significant
margin. As a result, the price will skyrocket, oil-dependant economies will
crumble, and resource wars will explode.

The issue is not one of "running out" so much as it is not having enough to
keep our economy running. In this regard, the ramifications of Peak Oil for
our civilization are similar to the ramifications of dehydration for the
human body. The human body is 70 percent water. The body of a 200 pound man
thus holds 140 pounds of water. Because water is so crucial to everything
the human body does, the man doesn't need to lose all 140 pounds of water
weight before collapsing due to dehydration. A loss of as little as 10-15
pounds of water may be enough to kill him.

In a similar sense, an oil-based economy such as ours doesn't need to
deplete its entire reserve of oil before it begins to collapse. A shortfall
between demand and supply as little as 10-15 percent is enough to wholly
shatter an oil-dependent economy and reduce its citizenry to poverty.

The effects of even a small drop in production can be devastating. For
instance, during the 1970s oil shocks, shortfalls in production as small as
5% caused the price of oil to nearly quadruple. The same thing happened in
California a few years ago with natural gas: a production drop of less than
5% caused prices to skyrocket by 400%.

Fortunately, previous price shocks were only temporary.

The coming oil shocks won't be so short-lived. They represent the onset of
a new, permanent condition. Once the decline gets under way, production
will drop (conservatively) by 3% per year, every year.

That estimate comes from numerous sources, not the least of which is Vice
President Dick Cheney himself. In a 1999 speech he gave while still CEO of
Halliburton, Cheney stated:

By some estimates, there will be an average of two-percent
annual growth in global oil demand over the years ahead,
along with, conservatively, a three-percent natural decline
in production from existing reserves.That means by 2010 we
will need on the order of anadditional 50 million barrels a
day.

Cheney's assesement is supported by the estimates of numerous
non-political, retired, and now disinterested scientists, many of whom
believe global oil production will peak and go into terminal decline within
the next five years.

Some geologists expect  2005  to be the last year of the cheap-oil bonanza,
while estimates coming out of the oil industry indicate "a seemingly
unbridgeable supply-demand gap opening up after 2007," which will lead to
major fuel shortages and increasingly severe blackouts beginning around
2008-2012.

The long-term ramifications of Peak Oil on your way of life are nothing
short of mind blowing. As we slide down the downslope slope of the global
oil production curve, we may find ourselves slipping into what some
scientists are calling a "post-industrial stone age." 

Graph: The Energy Curve of History?
Source: Community Solution

Peak Oil is also called "Hubbert's Peak," named for the Shell geologist Dr.
Marion King Hubbert. In 1956, Hubbert accurately predicted that US domestic
oil production would peak in 1970. He also predicted global production
would peak in 1995, which it would have had the politically created oil
shocks of the 1970s not delayed the peak for about 10-15 years.


"Big deal. If gas prices get high, I?ll just  drive less. Why should I
give a damn?"


Because petrochemicals are key components to much more than just the gas in
your car. As geologist Dale Allen Pfeiffer points out in his article
entitled, "Eating Fossil Fuels," approximately 10 calories of fossil fuels
are required to produce every 1 calorie of food eaten in the US.

The size of this ratio stems from the fact that every step of modern food
production is fossil fuel and petrochemical powered:

1.  Pesticides are made from oil;

2.  Commercial fertilizers are made from ammonia, which is
    made from natural gas, which will peak about 10 years
    after oil peaks;

3.  With the exception of a few experimental prototypes, all
    farming implements such as tractors and trailers are
    constructed and powered using oil;

4.  Food storage systems such as refrigerators are
    manufactured in oil-powered plants, distributed across
    oil-powered transportation networks and  usually run on
    electricity, which most often comes from natural gas or
    coal;

5.   In the US, the average piece of food is transported
     almost 1,500 miles before it gets to your plate. In
     Canada, the average piece of food is transported 5,000
miles from where it is produced to where it is consumed.

In short, people gobble oil like two-legged SUVs.

It's not just transportation and agriculture that are entirely dependent on
abundant, cheap oil. Modern medicine, water distribution, and national
defense are each entirely powered by oil and petroleum derived chemicals.

In addition to transportation, food, water, and modern medicine, mass
quantities of oil are required for all plastics, all computers and all
high-tech devices.

Some specific examples may help illustrate the degree to which our
technological base is dependent on fossil fuels:

1.  The construction of an average car consumes the energy
    equivalent of approximately 27-54 barrels, which equates
    to 1,100-2,200 gallons, of oil. Ultimately, the
    construction of a car will consume an amount of fossil
    fuels equivalent to twice the car?s final weight.

2.  The production of one gram of microchips consumes 630
    grams of fossil fuels. According to the American Chemical
    Society, the construction of single 32 megabyte DRAM
    chip requires 3.5 pounds of fossil fuels in addition to 70.5
    pounds of water.

3.  The construction of the average desktop computer
    consumes ten times its weight in fossil fuels.

4.  The Environmental Literacy Council tells us that due to
    the "purity and sophistication of materials (needed for) a
    microchip, . . . the energy used in producing nine or ten
    computers is enough to produce an automobile."

When considering the role of oil in the production of modern technology,
remember that most alternative systems of energy ? including solar
panels/solar-nanotechnology, windmills, hydrogen fuel cells, biodiesel
production facilities, nuclear power plants, etc. ? rely on sophisticated
technology.

In fact, all electrical devices make use of silver, copper, and/or
platinum, each of which is discovered, extracted, transported, and
fashioned using oil-powered machinery.  For instance, in his book, The Lean
Years: Politics of Scarcity, author Richard J. Barnet writes:

To produce a ton of copper requires 112 million BTU's or the
equivalent of 17.8 barrels of oil. The energy cost component
of aluminum is twenty times higher.

Nuclear energy requires uranium, which is also discovered, extracted, and
transported using oil-powered machinery.

Most of the feedstock (soybeans, corn) for biofuels such as biodiesel and
ethanol are grown using the high-tech, oil-powered industrial methods of
agriculture described above.

In short, the so called "alternatives" to oil are actually "derivatives" of
oil. Without an abundant and reliable supply of oil, we have no way of
scaling these alternatives to the degree necessary to power the modern
world.

(Note: alternatives to oil are discussed in depth on Page Two)


"Is the Modern Banking System
  Entirely Dependent on Cheap Oil?"


Yes.

The global financial system is entirely dependent on a constantly
increasing supply of oil. Since, as explained above, all modern economic
activity from transportation to food production to manufacturing is
dependent on oil supplies, money is really just a symbol for oil.
Commentator Robert Wise observes:

It's not physics, but it's true: money equals energy. Real,
liquid wealth represents usable energy. It can be exchanged
for fuel, for work, or for something built by the work of
humans or fuel-powered machines. Real cost reflects the
energy cost of doing something; real value reflects the
energy expended to build something.

Nearly all the work done in the world economy -- all the
manufacturing, construction, and transportation -- is done
with energy derived from fuel. The actual work done by
human muscle power is miniscule by comparison. And, the
lion's share of that fuel comes from oil and natural gas, the
primary sources of the world's wealth.

As Dr. Colin Campbell writes in "The Financial Consequences of Peak Oil,"
the continued expansion of this wealth is only possible so long as the oil
supply continues to expand:

It is becoming evident that the financial and investment
community begins to accept the reality of Peak Oil, which
ends the First Half of the Age of Oil. They accept that banks
created capital during this epoch by lending more than they
had on deposit, being confident that Tomorrow?s Expansion,
fueled by cheap oil-based energy, was adequate collateral
or Today?s Debt.

The decline of oil, the principal driver of economic growth,
undermines the validity of that collateral which in turn
erodes the valuation of most entities quoted on Stock
Exchanges.

What the average layman typically fails to recognize is that the oil driven
"economic growth" Dr. Campbell speaks of is absolutely necessary for
individuals, businesses, and governments to pay off their debts.
Commentator John La Grou writes on page six of his 11 page report on Peak
Oil:

. . . debt service requires economic growth in proportion to
the size of the debt. Today's industrialized debt is at its
highest "real dollar" value in human history. Personal debt,
corporate debt, government debt - all are at or near
historical highs, and growing at historically unparalleled
rates. Hence, the level of economic growth required to
sustain such debt is at an all time high.

The connections between the oil supply and the financial system are almost
universally overlooked/ignored by persons concerned about Peak Oil. It's
simple: when you take out a loan, you do so with the expectation that there
will be more money available to you in the future than there is now. This
is what enables you to pay back both the principal and the the interest.

Since, as explained above, money is really just a symbol for oil, you are
actually taking out the loan with the expectation - whether you realize it
or not - that there will be more oil available to you in the future than
there is now.

If this ends up not being the case - if the money/oil supply has actually
decreased by the time it comes for you to pay back the loan - you default
on your loan. If more than a small percentage of individuals, businesses,
or nations begin defaulting on their loans at roughly the same time - as
they will once the economy begins to contract due to skyrocketing energy
prices - the banks will be unable to make new loans without spiraling the
economy into a hyperinflationary meltdown. (See the Weimar Republic of
Germany, circa 1920s)

Without the banks making enough new loans, businesses that are attempting
to pay back their current loans will be unable to do so since they won't be
able to find enough paying customers. The computer store owner, for
instance, will not be able to find enough customers to buy his computers
since most personal computers are bought on credit (ie, a loan). As a
result, he goes bankrupt. The same principles apply for the car dealership
owner, the home builder, etc.

Since most of our economy revolves around selling or servicing items such
as cars, computers, cell phones, or homes, all of which are constructed
with fossil fuels, powered by fossil-fuels and most often bought/sold on
credit or with loans, the dots begin connecting to form the word "financial
collapse" rather quickly.

This financial collapse will, in turn, further devastate our ability to
implement alternative systems of energy. Any crash program to develop new
sources of energy will require a tremendous amount of capital, which is
exactly what will not be available once the global monetary system has
collapsed.

Don't think for a moment that the central banks aren't fully aware of the
severity of what we are facing. For instance, on June 28, 2005, Gary
Duncan, the economics editor for the UK based Sunday Times, reported that
the Bank of International Settlements (BIS), aka "the central banker's
central bank", had issued the following warnings regarding the economic
fallout of further rises in the price of oil:

Oil prices may well remain high for a prolonged period of
time . . . Further rises ? if they materialize ? may have
more severe consequences than currently anticipated . . .

Everyone needs to commit to some unpleasant
compromises now, in order to avoid even more unpleasant
alternatives in the future . . .

Duncan goes on to summarize the bank's report as follows:

The US current account deficit meant that a further slide in
the dollar was "almost inevitable", while the BIS sounded a
warning that the deficit could yet lead to "a disorderly
decline of the dollar, associated turmoil in other financial
markets, and even recession."

Make no mistake: a bank as crucially important to the world economy and as
influential to the markets as the BIS doesn't  just casually toss out terms
like "unpleasant compromises", "severe consequences", "even more unpleasant
alternatives", "turmoil," and "disorderly decline" in relation to the oil
markets  and the dollar (which is the reserve currency for all oil
transactions in the world) unless something very nasty is brewing in the
background.

(Note: to read the full text of the bank's report, click here.)

On a similar note, Warren Buffet, the world's second richest man, recently
warned of "mega-catastrophic risks" and "investment time bombs" currently
threatening the global economy. Add those to a mix of sky-high energy
prices, destabilizing resource wars, less than inspiring leadership, a
possible currency collapse, more"petrodollar warfare", and well, the
picture begins to look pretty grim, pretty quick.

What all of this means, in short, is that the aftermath of Peak Oil will
extend far beyond how much you will pay for gas. If you are focusing solely
on the price at the pump, more fuel-efficient forms of transportation, or
alternative sources of energy, you aren?t seeing the bigger picture.


"Is the Bush Administration
Aware of This Situation?"


Of course they are.

As mentioned previously, Dick Cheney made the following statement in late
1999: 

By some estimates, there will be an average of two-percent
annual growth in global oil demand over the years ahead,
along with, conservatively, a three-percent natural decline
in production from existing reserves. That means by 2010
we will need on the order of an additional 50 million barrels a
day.

To put Cheney?s statement in perspective, remember that the oil producing
nations of the world are currently pumping at full capacity but are unable
to produce much more than 80 million barrels per day. Cheney?s statement
was a tacit admission of the severity and imminence of Peak Oil as the
possibility of the world raising its production by such a huge amount is
borderline ridiculous.

A report commissioned by Cheney and released in April 2001 was no less
disturbing:

The most significant difference between now and a decade
ago is the extraordinarily rapid erosion of spare capacities at
critical segments of energy chains. Today, shortfalls appear
to be endemic. Among the most extraordinary of these
losses of spare capacity is in the oil arena.

Not surprisingly, George W. Bush has echoed Dick Cheney?s sentiments.  In
May 2001, Bush stated, "What people need to hear loud and clear is that
we?re running out of energy in America."

One of George W. Bush's energy advisors, energy investment banker Matthew
Simmons, has spoken at length about the impending crisis.

(Note: Although he has advised Bush/Cheney, Simmons considers himself
strongly non-partisan on energy issues. His writings are highly regarded
amongst the energy and banking community for their grounding in
nonpartisan, heavily documented, and virtually infallible research &
analysis.)

Simmons' investment bank, Simmons and Company International, is considered
the most reputable and reliable energy investment bank in the world.

Given Simmons' background, what he has to say about the situation is truly
terrifying. For instance, in an August 2003 interview with From the
Wilderness publisher Michael Ruppert, Simmons was asked if it was time for
Peak Oil to become part of the public policy debate. He responded:

It is past time. As I have said, the experts and politicians
have no Plan B to fall back on. If energy peaks, particularly
while 5 of the world?s 6.5 billion people have little or no use
of modern energy, it will be a tremendous jolt to our
economic well-being and to our health ? greater than
anyone could ever imagine.

When asked if there is a solution to the impending natural gas crisis,
Simmons responded:

I don?t think there is one. The solution is to pray. Under the
best of circumstances, if all prayers are answered there will
be no crisis for maybe two years. After that it?s a certainty.

In May 2004, Simmons explained that in order for demand to be appropriately
controlled, the price of oil would have to reach $182 per barrel. Simmons
explained that with oil prices at $182 per barrel, gas prices would likely
rise to $7.00 per gallon.

Simmons predictions are downright tame compared to what other analysts in
the world of investment banking are preparing themselves for. For instance,
in April 2005, French investment bank Ixis-CIB warned, "crude oil prices
could touch $380 a barrel by 2015."

If you want to ponder just how devastating oil prices in the
$200-$400/barrel range will be for the US economy, consider the fact that
one of Osama Bin-Laden's primary goals has been to force oil prices into
the $200 range.

Oil prices that far north of $100/barrel would almost certainly trigger
massive, last-ditch global resource wars as the industrialized nations of
the world scramble to grab what little of the black stuff is remaining.
This may explain why the director of the Selective Service recently
recommended the military draft be expanded to include both genders, ages
18-to-35.

A March 2005 report prepared for the US Department of Energy confirmed dire
warnings of the investment banking community. Entitled "The Mitigation of
the Peaking of World Oil Production," the report observed:

Without timely mitigation, world supply/demand balance will
be achieved

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Some other lectures leading to solutions
http://raenergy.igc.org/Googleclick.html

Franklin Roosevelt said that the domination of our nation by large corporations is the
definition of fascism. http://www.rense.com/general63/ssi.htm

Under the placid surface [of the economy], there are disturbing trends: huge
imbalances, disequilibria, risks -- call them what you will.
Altogether the circumstances seem to me as dangerous and intractable
as any I can remember, and I can remember quite a lot.
Paul Volcker, Former US Federal Reserve Bank Chairman
April 10, 2005.


"Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes that you can do these things. Among them are a few Texas oil millionaires, and an occasional politician or businessman from other areas. Their number is negligible, and they are stupid."

-- President Dwight D. Eisenhower, 1952


"The modern conservative is engaged in one of man's oldest exercises
in moral philosophy: that is the search for a superior moral
justification for selfishness."
-- John Kenneth Galbraith

"Fascism should more appropriately be called CORPORATISM because it is a merger of state and corporate power." -- Benito Mussolini (from Encyclopedia Italiana, Giovanni Gentile, editor). http://raenergy.igc.org/republicanfascistparty.html


Ra Energy Fdn.
Raleigh Myers
Worksheet bio
http://raenergy.igc.org/bio.html
Blog
http://raenergy.blogspot.com/

Call to Action blog a virtual seminar for change
http://www.google.com/search?q=Global+Vote+raenergy&hl=en&lr=&ie=UTF-8&oe=UTF-8&filter=02Eigc%2Eorg%2Faction%2Ehtml

Newsgroups beginning in the eighties
http://groups-beta.google.com/groups?q=%22Ra+Energy+Fdn.%22&start=0&scoring=d&ie=UTF-8 &

and web
http://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GWYA,GWYA:2005-04,GWYA:en&q=%22Ra+Energy+Fdn%2E%22

Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it's the only thing that ever has. - - Margaret Mead


Let us experiment with laws and customs, with money systems and governments, until we chart the one true course - until we find the majesty of our proper orbit as the planets above have found theirs& And then at last we shall move all together in the harmony of our sphere under the great impulse of a single creation - one unity, one system, one design.
                                                                                                               Roger Bacon

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