Peak Oil Task Force

Thank you Craig. Your chart shows the history of gas prices, which is where we’re all feeling it right now. It would also be interesting to chart the price of oil. It has gone from $20/barrel in 2002 to a high of nearly $120 early last week.

Speaking as one who participated in the drafting of this Resolution to create a peak oil task force, I can say that you understand the gist of what we’re trying to do. Daniel Lerch, of the Post Carbon Institute, said it most succinctly: “The issue is that we are likely entering a period of increasingly frequent and large fluctuations in oil prices and supply.” We have changing demand and supply factors, instability in oil producing regions, and inherent difficulties in forecasting oil production.

The proposed task force would primarily be about our community facing the long term challenges associated with Energy Uncertainty.

The long term challenges include attempting to answer the following questions:
How will the global economy adjust?
How will this impact our regional and local economy?
How can our local municipalities set meaningful budgets?
How can our local municipalities make long range land use and transportation plans?
How can our local municipalities best serve its citizens and the local business community?

How will we be able to do all of the above with such uncertainty in the price of the most important material to the global economy?

Obviously there are aspects of this issue that need to be dealt with on a federal level, but as Metro Councilmember (Portland’s regional govt) Rex Burkholder said, “It’s local government that has the job of looking out for citizens’ interests on a day-to-day basis…Threats of major disruption of our oil supply, or skyrocketing costs for fuel, are direct threats to our communities. We have to respond. We can’t wait for leadership from Washington.”

Craig,

I just finished scanning John Watts’ authoritative, well-researched and thoroughly mind-numbing HamsterTalk post on Lake Whatcom.

Short Summary:  We can continue to build in the Watershed if we do it carefully.

Watts’ dissertation reminds me of Don Barzini’s summation at the meeting of the Mafia families in Godfather Part I.  The Families will get into the drug business, but “it will be controlled”.

In terms of community “process”, fixing Lake Whatcom pales in comparison to the challenges of dealing with Peak Oil on a local basis.  Right now, I think many citizens in the City and County are Processed Out.  Visioned Out.  Meetinged Out. We may be reaching a peak of confabulatory paralysis.

Still, if you and the City of Bellingham want to take a crack at coming up with alternative transportation solutions, good luck—-there should be no shortage of true believers in the Peak Oil Club that will want a seat on another citizen panel. And plenty of scribes in the local wonkosphere that can deliver up position papers on any and all varieties of technical fixes to the purported shortage of oil that is currently bedeviling the citizenry.

Some Suggestions:

All City and County Priuses should be auctioned off immediately.  A symbolic gesture, but one that would provide local citizens with the opportunity to own an economical vehicle at a discounted, used car price.  Turn what is essentially a taxpayer-subsidized vanity vehicle for government employees into cash.

Put the sale proceeds into a fund that would be used to subsidize the cost to convert all city and county vehicles to natural gas or propane.  Our own Local Government Stimulus Package.  These conversions could be done fairly quickly.

The government of British Columbia jumped on the Natural Gas Vehicle bandwagon nearly two decades ago and it was fairly successful.  Unfortunately, gasoline became cheap and plentiful in the 90’s and government, as well as consumers, lost interest.

There was no tax on natural gas, so it was very cheap. Much cheaper than gasoline. $6 fillups. However, there were conversion costs (about $1500) and many citizens were not up to the task, even though the government would reimburse you for half the cost ($750).  Back in the 90’s, nearly every taxi in Vancouver ran on natural gas. Lower operating costs and longer engine life offset the cost of the conversion.

The BC government had a hard time keeping its promise not to tax natural gas, which was a primary reason for the lower price.

The inability to tax something is the biggest disincentive for government involvement in anything. Without gas tax revenue for the government, the natural gas vehicle program in BC languished.

Today, very few vehicles are running around BC on natural gas fuel. And that’s because until quite recently, gasoline was fairly cheap. Not as cheap as it is in Venezuela or Iran (15 to 20 cents a gallon), but well within the budget of the average person.

With $4 a gallon gas a looming certainty, the average consumer is now paying attention.  If your focus is finding alternative energy sources in an era of “Peak Oil”, natural gas presents a practical alternative. 

Google “natural gas vehicles”  for a quick, unturgid overview.  Check out NGVAmerica and How Stuff Works on the top of the list.

Longer term, change all City and County passenger cars from gas to electric.  Invest in Rideks.  This vehicle has been quietly gaining acceptance and momentum over the years.  WWU has been involved in some phases of development.  You could not get more a “home grown” solution to Peak Oil than a Ridek.  See Ridek.com.

Vancouver BC has about 25 natural gas refueling stations.  It could have hundreds, if the government wanted to get seriously behind this alternative fuel.  It certainly is not due to lack of supply.

There is no practical reason why Whatcom County service stations could not add natural gas to their fueling options. 

Local jurisdictions can have some influence in regulating the dispensation of petroleum products.  Remember how the oil companies howled when Oregon mandated no Self Serve Gas Stations? But it was perfectly legal.  And a good deal besides—full serve stations provide an added margin of safety and quite a few jobs.

Don’t you just hate pulling into one of those prepaid-only-mega-gas malls with 50 self serve pumps and one teenage attendant sitting in a tiny booth behind bars and bulletproof glass?  Well, at least in Oregon you don’t have to submit to the self serve indignities of most other states, including Washington.

Why not set a goal that, by 2012, every gas station in Whatcom County will offer natural gas and propane to its customers?  An aggressive government might just be able to pull it off.  The economic driver would be a much lower fuel price—natural gas is cheap and plentiful—as well as a practical, socially responsible option in dealing with the reported decline in world oil supplies.

A wasting asset like oil should not be burned as motor fuel, anyway. The primary purpose of oil should be for lubrication.  Alternative fuels like natural gas are more appropriate for internal combustion engines, and have the added benefit of producing far less air pollution.

Good luck !

John Lesow

John, What if we ignore your heavy-handed, top-down proposal and let the market react to higher gas prices?

What if we listen to more knowledgeable voices and take a reasoned approach?

You write about, “the reported decline in world oil supplies.”
But you don’t really know, do you?

By the way, I’d like to see Mr. Mayberry’s chart adjusted for the decline in the value of the Dollar vs. the Euro. the curve would be much flatter.

Much of the increase in the price of oil can be laid at the feet of the Fed, which has maintained interest rates far lower than, in my estimation, they should be. Brian Wesbury made that case in a recent op-ed in the Wall Street Journal.

That said, with rising interest rates will come cheaper oil. Commodity prices are rising already.

Commodity prices are falling, of course, in anticipation of interest rate increases.

Pardon me.

Thanks to all for this robust conversation regarding our energy-from-oil crisis.  Although my background is finance and I have absolutely no engineering experience, I believe that our long-term energy crisis will be solved only when our energy needs are satisfied by clean, unlimited and inexpensive sources.

One such solution has been proposed by a team of inventors led by Lt. Col. Thomas E. Bearden, Ph.D. (US Army Retired).  In March 2002, Dr. Bearden?s group was awarded a US patent for the Motionless Electromagnetic Generator (MEG).  The MEG is not a ?free energy machine? as some have claimed.  It is simply a device that extracts energy from the vacuum, much like a windmill extracts energy from the wind, or a solar panel extracts energy from the sun.  The MEG has produced up to 100 times more power than input by the operator, yielding a coefficiency of production (COP) substantially above 1 (overunity).

Dr. Bearden and his colleagues have been ridiculed because they have challenged the status quo.  His group has been working for many years to obtain the funding needed to design and produce the MEG for a large scale market.  Perhaps they will obtain such funding; perhaps they will not.  Either way, it is clear to me that relying on energy sources that are limited and polluting is yesterday?s paradigm.  Whatever intelligence created this universe undoubtedly incorporated a better way to provide energy for its inhabitants.  I believe Nikola Tesla understood this, and I believe Dr. Bearden does as well.

Although many consider Dr. Bearden a quack, I have personally communicated with him by email 14 times since September 2007, and I find him to be incredibly lucid and knowledgeable.  As Arthur C. Clarke noted, ?? the four stages of response to any new and revolutionary development are: 1. It?s crazy!  2. It may be possible ? so what?  3. I said it was a good idea all along.  4. I thought of it first.?

For anyone interested in Dr. Bearden?s work, I am happy to share my email communications with him as well as my copy of his book, ?Energy from the Vacuum: Concepts & Principles.?  Additional information is available at Bearden?s website, http://www.cheniere.org.

David,

My suggestions for Craig’s Peak Oil Task force are practical and fairly easy to implement.  Practicality trumps theory, particularly in local government.

Lighten up. Don’t get mired in dreary statistics that may or may not be relevant to the current discussion. 

I don’t purport to have all the answers.  Neither do you.

John Lesow

Per David Onkel’s request, I did create a graph showing the exchange rate impact and you are correct it is fairly flat, although you still have to be careful as not the entire increase in the price of gas can be attributable to foreign exchange.  I will try to get it posted later today.  It certainly shows how messed up the current political discourse is on gas prices.  To some extent, however, we digress from the point of the taskforce which is not dealing with the current gas price situation. 

There are many complex reasons for our current situation, including exchange rates, just like there are many complex reasons for natural disasters and terrorism.  The point behind this taskforce is to do some planning on the part of our local community so if some future event happens we will have more response options.  Locally, we are not going to come up with the technological solutions, we can determine what actions we could take however to minimize the impact. 

I tend to be an optimist at heart and do not really get into doomsday scenarios.  I also recognize that this is incredibly complex and if we wait for a disaster to figure it out it will be that much worse.  Just like if we ignore natural disasters until one comes and then try to figure out how to respond in the heat of the moment, the response will be weak (Katrina comes to mind).

John Lesow wrote,“Lighten up. Don?t get mired in dreary statistics that may or may not be relevant to the current discussion. “

In my very short comments, devoid of statistics?

This, from the master of the mandate?

Craig,
Thanks for the chart.

I continue to believe that the market will incentivize change far faster than you, and even I, could imagine, and certainly with greater agility than any government plan.

David,

I ran out of time today to get the other graph, plus I want to show the price of oil as well as gas prices.  I will finish that tomorrow after I get some other work done.

Per your comment on the market solving the issues.  I am a trained free market economist, most of my professors at school were trained at the University of Chicago.  I then spent 3 years at Chrysler and 6 years at Intel and I learned another important truth.  Large organizations (corporation and governments) are very resistant to change, in fact much of the process that are set up are meant to maintain the status quo. 

In the peak oil debate that leads to an interesting paradox.  The innovation of the free market versus the bureaucracy of the institutions involved.  My concern, and the predominant reason I speak up on this particular issue, is that the institutional forces may very well win this battle.  They have the money and the resources and often use them to thwart innovation that may hurt their company.  Big oil and government have everything to lose and so far are acting in such a way to make sure they do not lose, even if we ultimately do.  That is why I keep stating that local communities are going to have to plan to make sure they have options.

Reducing our dependence on oil is a laudable goal, but we should focus on what is doable locally.

Simply acknowledging that oil will eventually run out, is adequate reasoning, to begin to convert from oil to alternatives, including using our feet more.

The focus on doable, will result in concrete solutions that can be measured. We should start with government, simply because it is a command and control system, and leadership for the community will be most effective and noticeable there.

There are many suggestions, that although heartfelt, maybe premature and distract attention to what we can reasonably do now.

Discussion about national, or international affairs may be useful, but for the most part are out of our control. What we can control, and is a major part of the problem, is consumption. Consumption is not a national problem, it is a personal problem.

I am one of the worst.

So how do we as a community do something together, to reduce our use of oil?

I don’t know, but I do know that we are not the only community confronting this problem, and if all the communities address and reduce their oil consumption, this is the one time that OPEC will notice. A drop in consumption, especially a permanent one, is what they fear. This is the one method that we can really effect international events.

The other thing that I noticed is that what causes consumption to decrease, bus ridership increase, and oddly urban sprawl to decrease, is a high gas price. If gas was $5 a gallon, the buses would be full, and people would be moving back into the cities. This would save us a bundle of dough in a lot of ways.

I suspect that any ideas should have some way to measure their effects. It really helps when people can see the savings in real dollars and cents. It reinforces the behaviour change.

What can we do to permanently reduce our use of oil in Whatcom County?

This is where the brainstorming begins.

~

Doug,
You wrote,
“Simply acknowledging that oil will eventually run out, is adequate reasoning,...”

It might be, but expert opinion is that we will not run out until you are long gone.

“to begin to convert from oil to altern-
atives, including using our feet more. ”
That’s fine, but the market will do a very nice job of providing incentives to achieve that conversion.

Here’s where you get badly derailed:
“We should start with government, simply
because it is a command and control system, and leadership for the community will be most effective and noticeable…”

Command and control systems didn’t work in the Soviet Union, and they won’t work here.
If you disagree, please explain to me how they might work.

Environmentalists have been arguing for carbon taxes for years, using the premise that higher fuel prices will result in reduced consumption. They were right about that, but could never collect the political will to enact legislation to impose the tax.

(They might havebeen able to, but they overreached. a proposal for a Pigovian tax might have been politically palatable.)

Now that the market (gasp) has produced high oil prices, everyone is aghast. The result, however, will be the same. Petroleum consumption will decrease, and people will change their consumption patterns.

What we’ll do as a community will be to collectively reduce our use of oil, because it is more expensive thanit used to be. The market is a far more efficient motivator than your opinion.

You wrote,“this is the one time that OPEC will notice. A drop in consumption, especi
ally a permanent one, is what they fear. This is the one method that we can really effect international events.”

They don’t fear it at all. They have the oil, and they have the cheapest production costs. If consumption drops, resulting in lower oil prices, higher cost producers will drop out,and they (OPEC, Russia, Iraq) will be left producing and selling. No matter how much we try to reduce our “dependence on foreign oil” (a fool’s errand in my opinion),
we remain in a global market for oil.

We can no more be independant of foreign oil than can we be independant of any other commodity produced and marketed in a global market. I cringe when I hear politicians make the witless assertion that it could be otherwise.

There is no “foreign oil”. There is only oil, and it is the basic source of our wealth, a huge store of solar energy that we are harvesting to our advantage.

Next, you wrote, ” If gas was $5 a gallon, the buses would be full…”

I regret to tell you this, but the time penalty of bus ridership reserves it to about 6% of the population, perhaps 8% at the most. These numbers apply even in big cities that were developed before the invention of the automobile, when land-use pattens were far more dense.

You seem to believe that higher oil prices will result in behavior patterns typical of less developed, and less wealthy, societies. I am confident that what you foresee will not come to pass.

Enough!

David Onkels,

You ask some fine questions. Let me take a stab at answering them adequately.

I doubt that we are going to run out of oil any time soon, especially with $120 a barrel oil. At this price every drilling rig is running 24/7/365, and every manufacturer of drilling equipment is manufacturing at full capacity.

Having said this though, oil will eventually one day run out, and the transition will take a long time, as there are many large hurdles. It won’t hurt to go ahead and get started planning for what we are going to do, when the oil does eventually run out. We might find that we are better prepared than other countries, and I simply don’t see a downside in preparing for the future. Practical solutions only though.

$120 a barrel oil is a powerful incentive for change, and I agree that it will work wonders for creating new and novel solutions. Greed, is not always bad.

I referred to the governments command and control system, as it applies to its employees, not to the public in general.

If the Mayor commands its employees to prioritize energy conservation, these employees are required to follow the Mayors directive. I am sure that government can save a little energy, and provide leadership by example in the process. A side benefit is that lowering the cost of government frees up money for other critical services that compete for limited tax revenues.

I agree that the market is a powerful motivator and should not be discounted in any way, but we can supplement the markets incentive in selective ways to assist in getting people to change our dependence on oil. This change will likely take decades though. There is no single silver bullet.

Now here is where I suspect we differ. You can blame Exxon or the majors, but the fact remains that 90% of the world’s oil is not controlled by Exxon or the majors, but is in fact controlled by OPEC. OPEC is a monopoly that would not be tolerated in any commodity market, but for the simple fact, they got us by the balls. Which causes us to speak in respectful tone, when we would really like to strangle the bastards.

The single number that OPEC watches like a hawk, is total world consumption.

When total world consumption begins dropping below production, they will notice. Our job is to contribute to our consumption dropping in permanent ways. Remember that oil was only $20 a decade ago. Oil is a commodity and not immune to the laws of supply and demand.

I agree that there is no such thing as being independent of foreign oil, but we can increase the supply of oil in general, and that will have an impact. Domestic sources exist and they can be helpful in increasing supply. I do worry that we are only going to get one more serious lowering of oil prices caused by increases in supply, before a long slow decrease in oil supply will hit us in the middle of the forehead. I would hate to squander this and not utilize this supply opportunity to adapt.

Remember Darwin did not suggest that survival was of the fittest, on the contrary, survival is ensured to those that are the most adaptable, and no matter who is correct in when peak oil arrive, we will need to ultimately adapt.

Lowering our carbon footprint in general, is not a goal that has much downside, if done tih an eye towards steady measurable progress, and not falling into the trap of irrational approaches that are not well thought out. Example: Ethanol.

Bus ridership or public transportation is an interesting issue. Increasing ridership from 6% to 8% is a 25% increase. This is significant. Remember there are no silver bullets. Lots of singles will do.

Getting people to live closer to their employment and services probably provides a bigger savings, but the tow together, is an improvement.

The fun idea for public transportation is what happens if the public transportation system switches from a command and control system to a demand driven system. The waiting penalty shrinks substantially, and ridership goes up significantly.

This is why NY city has so many cabs. Cabs are demand driven.

Instead of the government telling us when the bus will be there, we tell them when we “need” it to show up and where we want to go. So many of the new Internet systems are demand driven, .... and they work well.

We are getting less wealthy day by day, and the future will bring changes that we cannot even dream of today. Adaptability and a willingness to change will be crucial to our success,

Fun conversation. Thanks.

Doug

Doug,
Thanks for your comment, most of which could have been written by me, if I wrote as well.

From my last post on the “Transportation-Discussion-Continued” thread:

“If you consider that a 45 passenger bus gets about 2.5 miles per gallon, it?s easy to do the math and see that a bus with five passengers is not very fuel efficient. I think that a jitney (privately or company-owned) or a van-pool system, scheduled with a sophisticated, maybe viral, computerized scheduling system, will provide convenient, custom, door-to-door transportation that our existing large-unit bus system is unable to supply without huge time penalties for users. Government, again, will be the largest impediment to this transformation.”

It’s the only hope, really.

Some analysts, by the way, are now pedicting $200-per-barrel oil before the price falls to reasonable levels. The world is awash in capital looking for a productive home. Unfortunately, much of it has been used to speculate in oil of late.

Hey Dave,

Because folks tend to extend trends into the future forever and folks forget that oil is a commodity and still is subject to the laws of supply and demand, we may be predicting the future incorrectly.

When I get out my crystal ball, I see from Craig’s excellent charts that peaks of high commodity prices are always followed by valleys in pricing. This is especially true with mining and oil production. this is because when price get high for a commodity mine open, or drilling begins. This increases supply and the commodity falls in price. This is further exaggerated when prices are high because consumption falls off at the same time new production comes on line.

The low prices are exaggerated because it takes so much time and capital to open a mine, or oil well, that once up and running, nobody wants to shut them down. Often in the low pricing cycles mines and oil wells operate at a loss for extended periods of time

The key to commodities is to watch the marginal cost of producing the commodity. When the profits are very high, the watch out, there is a price decline in the works. When prices are too low and producers are losing money, then there is a price increase in the works. This is especially true when high cost production has been shuttered.

The silliness in all this peak oil stuff is not if it will happen, but when.

Any third grader can predict and understand that we will eventually run out of oil. A third grader can understand that we will eventually run out of copper, gold, and steel.

The question is when.

Much of the worlds oil has been discovered on land, but the earth is 90% water and we are just now understanding how to effectively drill for oil under water. This is no small thing. Further, without getting into too many details, there are a number of oil fields that are known, but not allowed by the accounting rules to be shown as reserves.

I know of two fields locally that are know, are significant, but are not currently under production. One, is the oil and gas field under Hecate Straits, and the other is under the Bering Sea. Both were drilled and discovered long ago, but are just now being justified economically.

All of this leads me to believe that all predictions aside, we have not reached peak oil and there will be another traditional commodity cycle to be endured, where oil prices decrease from where they are today.

Much drilling is ongoing and major pipelines, and refineries are scheduled to come online in the next five years.

Oil is still a commodity, and will not simply increase uniformly in price forever.

When the cost of producing oil, even new oil is about $30, there are tremendous incentives to drill and find oil. Whenever these conditions existed in the past, man has never, ever, failed to produce more supplies.

It may indeed be different this time, but the odds are against it.

~

I could nitpick at a lot of the details of the various posts here, but I’ll stick with mostly a few general observations.

Although I disagree with David O. and Doug K. about the timing of peak oil, I see a lot of good ideas being bandied about between you two, and also from Craig. This type of conversation can help generate good ideas, and sharpen the thinking of all of us.

My hope for the task force is that a lot of different stake holders are represented - different viewpoints, different backgrounds, different ideas, different expertise. I have definite opinions that I’ll argue for, but I don’t expect everyone to agree with “my solutions.” My personal philosophy is that we need to come together and work together toward common mutually beneficial goals. Dividing along traditional opposing political lines doesn’t seem to get us very far. That’s why I like this website. John Servais may lean a bit to the left, but he’s more concerned with good government than he is with toeing party lines. You may not always agree with him, but that’s part of what makes this site interesting.

Trying to time peak oil is interesting, but whether we’ve got one year or twenty, most of us agree that fossil fuels are a finite resource and that we’ll eventually run into limits on this planet. The Hirsch report for the U.S. Dept. of Energy pointed out that a 20 year lead time is needed for a smooth transition off of our oil dependence, or a minimum of a decade of “intense, expensive effort.” We’d best begin now, in my opinion. I highly recommend reading the executive summary of the Hirsch report, btw.  The report doesn’t focus on trying to time the peak, but is rather a very detailed risk assessment/mitigation report.
http://www.netl.doe.gov/publications/others/
pdf/Oil_Peaking_NETL.pdf

John Lesow, I have a great deal of respect for you, but I don’t think the natural gas powered vehicles will work. Would be a very expensive transition, plus natural gas in North America is also in short supply.

David Onkels, I think your jitney idea is one of the best. You might not be fond of Pat Murphy’s overall philosophy, but he did write up an interesting proposal for a smart-jitney system.
http://www.communitysolution
.org/ppts/SmartJitney.ppt

David MacLeod,
If you’re looking for people to serve on that task force, I could recommend nobody more qualified than Bob Morton, if he can be persuaded to serve.

I know that he disagrees with you about the timing of peak oil, but he has a lifetime of professional experience in oil production and refining.

Thanks for your kind comments about the jitney idea. Similar systems work well in some cities in the eastern United States, but they are mostly underground and divorced from the formal economy.

Significant resistance to the implementation of any system of this kind could be expected from WTA and the employee unions.

Doug,
I’ll post a reply tomorrow. thank you for your comments about the economics and timing involved in the oil business, where timelines, as David MacLeod has stated are very long indeed.

Many people forget 1998, when the price of oil was down near $10 per barrel, and Texaco, Chevron, Exxon, and Mobil, Conoco, and Phillips were six companies.

I’m writing to wish a belated happy birthday to Friedrich Hayek, who was born on May 8, 1899. Today, more than ever, Hayek’s ideas are under attack, nowhere more than in Bellingham.

The formation of a Peak Oil Task Force troubles me because of the pronouncements of some here and certain elected officials in local government concerning the concept of peak oil (which I view as a long-term problem), and the influence it should have on local land use policies, even in the near term. It’s clear that some of these people will volunteer to be members of the task force.

It’s not a huge leap of reason to foresee that the task force might conclude that the risk of incipient peak oil compels us to reconsider land use, population density, transportation, and growth policies immediately because of the long-term effects of those policies.

I see this as a step toward central planning based on insufficient information. Predictions of near-term oil depletion obviously exceed the limits of human knowledge, because they defy testing.

“[In} ‘The Road to Serfdom’ (1944) and in subsequent works, Hayek claimed that socialism required central economic planning and that such planning in turn had a risk of leading towards totalitarianism, because the central authority would have to be endowed with powers that would have an impact on social life as well, and because the scope of knowledge required for central planning is inherently decentralized.” (Wikipedia)

I’d like to restate my premise, which is that the price of oil, should it remain elevated, will rapidly lead to changes in behavior, and that those price signals are the best incentive to conserve the resource. As market behavior changes, investors will quickly alter their plans, leading to an aggregation of land-use decisions that most benefits all of us.

If historical patterns are repeated, however, the current high prices will lead to increased supply and lower prices. Recent studies have found that current price levels are the result of a supply imbalance and not so much the actions of speculators.

I’m not arguing against the formation of the task force. I am merely stating a reservation that I have about the motivation of some who might serve on it.

David O.

A couple of things.  First, what is your definition of central planning?  When I think of central planning, I think of the old soviet model where a bunch of bureaucrats in Moscow make all of the decision for people spread through the country.  Our federal government (and to a lesser extent state) often engages in this type of activity with fruitless results.  When our federal government launches a peak oil task force, then I will join you in your concerns.

I have a hard time though saying local city and county governments engage in any central planning as they do not have the authority or mechanism to control much of anything (most of it has been usurped by the state and federal government).  Society works best in a bottoms-up approach where local citizens work with local elected officials to address concerns and work out appropriate solutions for their community.  This has been a great example of that process.  A number of local citizens have been discussing this amongst themselves for over a year.  They would now like to elevate the conversations and get the legitimacy of the local government to engage in further dialogue.  I know many of the people behind this, and although I do not know what drives them or motivates them, I do not get the sense that any of them are the central planning type (at least based on my definition.

Craig,
Are you claiming that local governments don’t make decisions and impose rules that affect and constrain the economic lives of their constituents in the most basic of ways?

Remember that the United States was established on a foundation of rights endowed by the Creator, including the rule of law, private property rights,  and individual liberty free from intrusion by the government.

Craig,
Are you making the claim that local governments don’t affect the lives of their constituents in the most basic of ways? Are you saying that local planning decisions do not cost them in their use of their land and in the conduct of their lives?

I’m sorry if you disagree, but my definition of central planning begins with the City Council.

I think that planning should be constrained to nuisence, pollution, statutory proscriptions, and private covenant.

Craig Mayberry,
“I have a hard time though saying local city and county governments engage in any central planning as they do not have the authority or mechanism to control much of anything…”

Are you serious?

My last three posts were buried as the result of a software problem. When I posted them, they disappeared. I’ve reread them, and I’ve decided they can stand, with it understood that the repetitive elements of the posts are the result of those problems.

John has been more than helpful in resolving the problem.

Site manager note:

There was a limit of 20 comments in the code which I did not know about.  The limit is now 50.  Sort of don’t want to limit - so this might be tweaked some more.

An update: The City Council passed the Resolution unanimously on May 19th, and the County Council passed a slight variation on the original Resolution on the 20th - also unanimously. Sam Crawford had introduced an alternate Resolution, but instead of the Council choosing between the two Resolutions, a negotiation was done that was satisfactory to all parties.

Things seem to be happening fast in terms of ‘peak oil awareness.’ Below are some recent stories in the media. The first one references the IEA - please see the comments about the IEA Chief Economist Fatih Birol in the “Transportation Discussion Continued” thread from April 18.

Oil Monitor to Slash Estimate Of World’s Supply of Crude
Neil King Jr. and Peter Fritsch, Wall Street Journal
The world’s premier energy monitor is preparing a sharp downward revision of its oil-supply forecast, a shift that reflects deepening pessimism over whether oil companies can keep abreast of booming demand.

The Paris-based International Energy Agency is in the middle of a large study of the condition of world’s top oil fields. Its findings won’t be released until November, but the bottom line is already clear: Future crude-oil supplies could be far tighter than previously thought.

The IEA has predicted for several years that crude-oil supplies will arc gently upward to keep pace with rising demand, topping 116 million barrels ...

The decision to rigorously survey supply ? instead of just demand, as in the past ? reflects an increasing fear within the agency and elsewhere that oil-producing regions aren’t on track to meet future needs.

....The IEA’s pessimism over future supplies has been building for some time. Last summer, the agency warned that OPEC’s spare capacity could shrink “to minimal levels by 2012.” In November, it said its analysis of projects known to be in the works suggested that the world could face a shortfall by 2015 of as much as 12.5 million barrels a day, unless there was a sharp drop in expected demand. The current IEA work aims to tally the range of investments and projects under way to boost production from the fields in question to get a clearer sense of what to expect in production flows.

“This is very important, because the IEA is treated as the world’s only serious independent guardian of energy data and forecasts,” says Edward Morse, chief energy economist at Lehman Brothers. Examining the state of the world’s big oil fields could prod their owners into unaccustomed transparency, he says.
(21 May 2008)
http://online.wsj.com/

Comments by Kevin Drum at Washington Monthly:
The IEA’s concern is with both the absolute condition of the world’s oil fields and the amount of investment being made in new projects. Either way, though, a shortfall of 12.5 million barrels is huge. If that’s an accurate assessment, prices are going to have to double another couple of times to bring demand into line with supply. $500 oil, anyone?

Record oil prices signal ‘new world’
Shawn McCarthy, Globe and Mail
Markets confounded by new class of investors making long-term bets on crude; rare trading patterns mark shift in sentiment
—-
OTTAWA - Investors are placing huge bets that today’s record crude prices are headed sharply higher in the coming years, essentially gambling that scarce resources and a weak U.S. dollar will trump the age-old law of supply and demand.

As crude for near-term delivery shot past $133 (U.S.) a barrel yesterday, many analysts were more focused on the stunning price increases in futures contracts covering oil deliveries for the next eight years.

Amid “peak oil” warnings of scarce supply and a permanently weakened U.S. dollar, traders have driven future prices well above current levels, a rare pattern in oil markets known as contango.

“It seems that we’re living in a completely new world,” said Peter Beutel, president of Cameron Hanover, a Connecticut-based risk management firm.
(22 May 2008)
http://www.theglobeandmail.com/

‘Peak oil scenario’ approaching faster than expected
An Lu (ed), Xinhua
ABERDEEN, Scotland—After successfully forecasting current oil prices at the first All Energy conference in 2001, John Westwood, an energy expert, said here on Wednesday that “more pain is to come” for world energy.

Speaking at the opening session of the All Energy’08, the 8th in the annual series, John Westwood, Chairman of energy analysts Douglas-Westwood, a research consultant company for international energy industries, said “there is a strengthening view that the ‘peak oil scenario’ is approaching much faster than any of us expected.”

He said people such as Christoph De Margerie, CEO of Total, and T. Boone Pickens believe the world will never exceed its current level of production as new oil fields fail to compensate for declining ones.

The energy expert said recently published statistics suggest production from ten out of the top 13 international oil companies, including BP, Chevron, Total and Shell may have already passed it speak.

He said that in 1970 such oil companies controlled about 80 percent of world reserves whereas today that 80 percent is in the hands of national oil companies.
(21 May 2008)

http://news.xinhuanet.com/

http://moneynews.newsmax.com/david_frazier/oil_prices/2008/05/20/97465.html?s=al&promo_code=62FB-1

The doom and gloom here, promoted mostly by David MacLeod, really bothers me. “Peak Oil” is going to be a far longer-term problem than he would have us believe.

I’m not optimistic about the useful productivity of the “Peak Oil Taskforce” if it is populated by true believers. If the membership includes experts in critical fields who disagree with Mr. MacLeod, I’ll be more favorably disposed to consider the task force’s recommendations.

I foresee, unfortunately, badly-conceived recommendations for land use regulations, based in unsupported projections of insufficient future energy supplies, unless dissenting voices are given a place at the table and a voice in the process.

From the comments at Sound Politics:
“I recently got back from a trip to Kiev, Ukraine. They had Park N Ride size vans all over the place. People would line up on a street corner, and another van came along every 10 or 15 min. Around subway stops, there would be half a dozen lines of people, one for each route. The little vans just kept coming, and the lines moved nicely.

Inside the vans were clean and well maintained. Passengers voluntarily passed money forward to the driver, making change from each other’s payments.

It was efficient, convenient and friendly. And all private enterprise.

About a year ago I read that some enterprising Eastern Europeans tried informally doing something similar in NY. Everybody loved it. So the city shut it right down.

Yeah, you can’t start a private bus company ‘round here.”

Does anyone have anything to write? I think that I’ve written some petty provocative comments here, and I’m greeted by silence.

I’m left to conclude that you are not open to debate about your ideas.

Mr. Onkels,

I’ll first address your last point: “Does anyone have anything to write? I think that I?ve written some petty provocative comments here, and I?m greeted by silence. I?m left to conclude that you are not open to debate about your ideas.”

This thread now has at least 29 replies, which I believe is a record number for this website, and a fair number of those replies have been in response to yours. That can hardly be interpreted as silence. Personally, I’m quite busy and can only get to this site once or twice a week, and I don’t always think to scroll down to see if there are new comments posted to old articles. I anticipate having even less time in the near future, so please don’t interpret my silence as anything other than a shortage of time.

I read the David Frazier commentary at NewsMax that you pointed to. He says “Although analysts at Goldman Sachs stated that they expect the price of crude oil to rise to $141 per barrel in the second half of 2008, my research suggests that the ongoing slowdown in the U.S. economy and the recent stabilization in the exchange value of the dollar will cause oil prices to fall significantly over the next couple of months.” 

His logic here is good, and I would certainly agree that high prices eventually lead to demand destruction. Supply will also increase to meet demand, until we lose access to the resource. Still, high prices/increased demand leads to innovation in alternatives. Basic Econ 101 stuff. However, there are many complicating factors that need to be considered as well.

Reading David Frazier’s bio, I don’t see any expertise as an energy analyst. Based on that alone, I would be inclined to look further into the analysis of the alternative view that oil prices will continue higher - views held by such esteemed names as Arjun Murti (Goldman Sachs), Jeffrey Rubin (CIBC World Markets), Matthew Simmons (Simmons & Company Intl), Charlie Maxwell (Weeden & Co.), T. Boone Pickens (billionare hedge fund manager), Fatih Birol (IEA chief economist), etc. (to name just a few). Are all these folks just “doom and gloom” kooks?

You say “?Peak Oil? is going to be a far longer-term problem than he [me] would have us believe.” Well, I believe it is a VERY long-term problem. I think J.H. Kunstler characterized it exactly right with the book title “The Long Emergency.” I don’t know if we’ve already reached the true peak. No one can know until at least a couple of years after the fact. And the exact date doesn’t matter much. More important is that we begin preparing for it as soon as possible. A very important report for the Dept. of Energy by SAIC demonstrated that because liquid fossil fuels are so embedded in our economy, “Mitigation will require a minimum of a decade of intense, expensive effort, because the scale of liquid fuels mitigation is inherently extremely large.” That is a decade necessary for a crash program, and this same report said a 20 year lead time would be needed for a smooth transition. I think I provided a link to this report in a previous post. Check out comments from the lead author of this report, Robert Hirsch here:
http://www.youtube.com/watch?v=qSbfvZiJ9g0

Please watch/listen to the above 7 minute video. What is the probability that Hirsch is correct? At what point of probability would it be prudent to at least do further research on this issue, and at what point of probability would it be prudent to begin some sort of mitigation or adaptation to this problem? Robert Hirsch, PhD is senior energy program advisor at Science Applications International Corp. SAIC serves customers in the Department of Defense, the intelligence community, the U.S. Department of Homeland Security, other U.S. Government civil agencies and selected commercial markets. Their report for the U.S. Dept. of Energy was titled “Peaking of World Oil Production: Impacts, Mitigation and Risk Management”.

News Max is not my preferred choice for either news or commentary, but since your David Frazier link is from there, consider also this article that recently appeared on News Max. It seems to me that some of the best info on the oil situation comes not from those inside the industry, but from those who have departed from it. Two of the best examples are Colin Campbell, retired petroleum geologist, and Sadad Al-Husseini, the former top executive of Saudi-Aramco.

So check out this NewsMax article: Saudi Oil Exec: Crude Reserves Figures Bunk

Thursday, May 29, 2008 4:04 PM
http://moneynews.newsmax.com/streettalk/
saudi_oil_exec_crude/2008/05/29/99965.html
(I’ve broken up the above link so it’ll fit better on this webpage - you’ll have to reconstruct it).

Reply to Mr. Onkels, part 2.

Regarding “unsupported projections of insufficient future energy supplies”:
I think this is an unfair characterization. To the city and county councils we offered a briefing paper with a multitude of footnotes in support of the argument, as well as a 20 minute power point presentation that was backed up by quite a bit of research and data. On this website I have offered a fair amount of support as well for my arguments, although it has been a series of haphazard responses to other comments, rather than a well-prepared logical presentation of the peak-oil argument.

A starting place for a good overview would be here:
http://www.energybulletin.net/primer.php

And a more recent summary of a peak oil perspective on our current situation here:
http://europe.theoildrum.com/node/4007

You said “I?m not optimistic about the useful productivity of the ?Peak Oil Taskforce? if it is populated by true believers. If the membership includes experts in critical fields who disagree with Mr. MacLeod, I?ll be more favorably disposed to consider the task force?s recommendations.”

First of all, my views are my own, and I’m not representing the views of the task force or the committee that suggested the task force here. I’m also not in charge of the task force selection process, and do not know if I will be serving on the task force.

My opinion is that the purpose of Energy Scarcity Task Force is not to debate the timing of peak oil. According to the Resolution, the purpose of the task force is to “examine the energy vulnerabilities of our current infrastructure and consider appropriate changes in order to ensure that economic, social, and environmental infrastructures are resilient in the face of uncertainties brought about by shifting energy markets.” The task force members “will be selected by the Mayor of Bellingham and the Whatcom County Executive, representing a broad range of government, community and business interests.”

More than anything, I think it’s about our community being able to appropriately respond to oil, gas, and electricity price volatility, whether they be a result of peak oil, terrorist attacks, speculative bubbles, or whatever. My opinion is, whether peak oil now, or in 20 years, we need to be building resilience into our system now.

In regards to the selection process, this from COB’s Clare Fogelsong:

“1. When will people be selected for the task force? 

Selection of TF members will likely occur near the end of June.

2. How do they apply to get on the task force? 

A notice announcing the process for application will be released on Monday June 2nd.

3. What kind of people are the city and county councils hoping participate in the task force?

We will be looking for people with knowledge of the resource scarcity issue, expertise in one or more of the topic areas, and who are able to put the required amount of time into the effort.  They also need to be team
players, this is a short duration project and members will need to be able to work in a facilitated setting.

4. What is involved (i.e. commitment) for people who become members of the
task force?   
   
The schedule will be determined by the members but I anticipate members will be meeting once a week for a few months and less
frequently for a few more months to bring all the pieces together into a plan.  Sub-committes may do much of the work and some of the work will be accomplished through email, and conference calls.”

Finally, Mr. Onkels, I still like your idea for a jitney business as outlined in your last comment. It could be a business, or it could be a voluntary community network, with drivers and passengers being registered online.

Several transportation options have already begun in our community, though small in scale. There’s Bellingham Community Car Share
(http://www.communitycarshare.org/), and the pedicab service downtown.  Smart Trips is also doing well in encouraging alternative transportation choices.

OK, this might be my last post in a while…I tend to spend too much time in long responses when I’m here, and I have many other commitments to attend to.