Showing posts with label peak oil. Show all posts
Showing posts with label peak oil. Show all posts

Tuesday, November 10, 2009

Remain calm, oil is well. . . .

Gee, we kind of are the Great Satan, aren't we?

I mean, we suck up vast amounts of the world's natural resources in order to support ridiculously overblown lifestyles and compulsive consumerism. We drive all over the place in SUVs, spend money we don't have like no one will ever cut up our national credit card . . . and it's all either to scratch our itch, or go to war in regions of the world we'd care nothing about if not for oil.

Oil is the fast food of our supersized national appetite.

AND WE'LL DO ANYTHING to deny the reality that the jig is about to be up. From the Guardian in London:
The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation's latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Now the "peak oil" theory is gaining support at the heart of the global energy establishment. "The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year," said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. "The 120m figure always was nonsense but even today's number is much higher than can be justified and the IEA knows this.

"Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources," he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was "imperative not to anger the Americans" but the fact was that there was not as much oil in the world as had been admitted. "We have [already] entered the 'peak oil' zone. I think that the situation is really bad," he added.
IN A WORD . . . sigh.

Thursday, July 10, 2008

Surely, it's the video of the year

You know, we can deal with peak oil and the West being put over a 55-gallon barrel by Middle Eastern extortionists by invading one sand sewer after another forever and ever, amen. And we can do that at the cost of thousands and thousands of American lives as we bankrupt the American nation in the name of our quintessentially American petroleum jones.

Or we can go the unconventional-warfare route, putting the whole thing in the hands of the generals Zucker.

I vote for letting Jerry and David Zucker do to OPEC
what they did for the airline industry.

And stop calling me Shirley.

Monday, April 28, 2008

Ruh roh? Ruh rOPEC!

Why do I get the feeling that the America of 2015 won't much resemble the America of 2008?

And why do I likewise get the feeling the U.S. cities that weather the energy storm more or less intact will be the ones that get on the stick and get serious about mass transit -- particularly light rail and streetcars?

Probably, that feeling comes from having read
this Dan Dorfman column in The New York Sun:

Get ready for another economic shock of major proportions — a virtual doubling of prices at the gas pump to as much as $10 a gallon.

That's the message from a couple of analytical energy industry trackers, both of whom, based on the surging oil prices, see considerably more pain at the pump than most drivers realize.


Oil recently hit an all-time high of nearly $120 a barrel, more than double its early 2007 price of about $50 a barrel. It closed Friday at $118.52.

The forecasts calling for a jump to between $7 and $10 a gallon are based on the view that the price of crude is on its way to $200 in two to three years.

Translating this price into dollars and cents at the gas pump, one of our forecasters, the chairman of Houston-based Dune Energy, Alan Gaines, sees gas rising to $7-$8 a gallon. The other, a commodities tracker at Weiss Research in Jupiter, Fla., Sean Brodrick, projects a range of $8 to $10 a gallon.

While $7-$10 a gallon would be ground-breaking in America, these prices would not be trendsetting internationally. For example, European drivers are already shelling out $9 a gallon (which includes a $2-a-gallon tax).


Early last year, with a barrel of oil trading in the low $50s and gasoline nationally selling in a range of $2.30 to $2.50 a gallon, Mr. Gaines — in an impressive display of crystal ball gazing — accurately predicted oil was $100-bound and that gasoline would follow suit by reaching $4 a gallon.

His latest prediction of $200 oil is open to question, since it would undoubtedly create considerable global economic distress. Further, just about every energy expert I talk to cautions me to expect a sizable pullback in oil prices, maybe to between $50 and $70 a barrel, especially if there's a global economic slowdown.

While Mr. Gaines thinks there could be a temporary decline in the oil price, he's convinced an overall uptrend is unstoppable. In fact, he thinks his $200 forecast could be conservative, and that perhaps $250 could be reached. His reasoning: a combination of shrinking supply and increasing demand, especially from China, India, and America.
I'M GETTING THE FEELING, too, that there's an old, simple and reliable bicycle in my future.

Ironic, isn't it, that because the Chinese are becoming more like us -- at least in our extravagant, unsustainable way of life -- Americans ultimately will become more like the Chinese used to be until so very recently.

Wednesday, November 07, 2007

Writing checks today that tomorrow can't cash

You're looking a little sleepy.
Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage.
SO REPORTS Time magazine. All awake now?

Good. Here's what else the piece says:

This gloomy assessment comes from the International Energy Agency, the Paris-based organization representing the 26 rich, gas-guzzling member nations of the Organization for Economic Cooperation and Development (OECD). The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA's 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts.

"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told TIME this week. "Lots of targets have been set but very little has been done. There is a lot of talk and no action." .

The reason for the IEA's alarm is its expectation that economic development will raise global energy demands by about 50% in a generation, from today's 85 million barrels a day to about 116 million barrels a day in 2030. Nearly half that increase in demand will come from just two countries — China and India, which are electrifying hundreds of cities and putting millions of new cars on their roads, most driven by people who once walked, or rode bicycles and buses. By 2030, those two countries will be responsible for two-thirds of the world's carbon gas emissions, which are the primary human activity causing global warming .

India and China have argued against enforcing strict emission controls in their countries, on the grounds that these could hinder their economic growth and prompt a global economic slowdown. But the new IEA report says working with China and India on alternative energy sources and curbing emissions is a matter of global urgency.

The bad news is not only environmental. As the world scrambles to boost energy supplies over the next two decades, an ever-greater percentage of its supplies of oil and gas will come from a dwindling number of countries, largely arrayed around the Persian Gulf, as the massive North Sea and Gulf of Mexico deposits are finally exhausted. That will leave the industrialized countries far more dependent on the volatile Middle East in 2030 than they are today, and the likes of Saudi Arabia, Kuwait and Iran will dictate terms to companies like ExxonMobil and Chevron, which increasingly operate as contractors to state-run oil companies in many producer nations.

"Most of the oil companies are going to be in an identity crisis, and need to redefine their business strategies," Birol says. The soul-searching may have already begun, as oil executives begin sounding the alarm about the supply crunch that lies ahead. Last week, Christophe de Margerie, CEO of the French oil giant Total, told the Financial Times that even the target of 100 million barrels a day is an optimistic one for an industry that currently produces 85 million — far short of the 116 million barrels a day the IEA projects will be needed by 2030 to fuel the global economy.

And in a sharp departure from the usually reassuring comments offered by Big Oil executives, De Margerie said companies and governments now realize that they have overestimated the amount of oil that could be extracted from places difficult to reach and costly to explore. "It is not my view, it is the industry view," he said. In other words, the message is that the current sky-high oil prices may not be a temporary burden on the world economy.

IF YOU'RE not much worried, try reading what Georgetown professor Patrick Deneen has to say. And remember, it's his job to study this stuff:
Declining oil production does not solely imply more costly commutes; indeed, when considering the profound effects of higher energy costs (i.e., less net energy in the world), higher commuting costs seem to be of comparatively negligible importance. The effects of peak oil throughout the economic system (including in the most obvious form of higher transportation costs) have far-reaching and world-altering consequences.

First, declining amounts of energy raises serious questions about the viability of “globalization.” This phrase, taking the descriptive form of a process, implies an apparently inevitable and irreversible set of actions that no human activity can resist or prevent....

Globalization, simply put, describes a world in which ever-greater interpenetration of culture and peoples has occurred as a result, at base, of economic expansion and interconnections. These economic interconnections themselves have been the consequence of the spread of free market economic system worldwide, a system that has depended essentially upon thoroughgoing mobility and ease of transportation. The current form of global capital rests on a worldwide labor market in which low-cost markets produce goods for more wealthy high-cost labor markets, which in turn trade for developments in technology and what Robert Reich has called the “products” of “symbolic analysts.” We inhabit a world almost unthinkable, if nevertheless attributable at least in theory, to Adam Smith, in which extremely low cost markets, producing goods largely made of plastic and chemical derivatives (i.e., petroleum), supply high-labor markets with products produced more cheaply than if those same products were produced in the same town as the consumer. The low cost of the raw materials (forms of petroleum) and the overall low cost of bulk transport (shipping and air-freight, propelled by petroleum), result in the cheap production of a nearly unimaginable array of products, all of which rest significantly on a platform of cheap and ample fossil fuels. Peak oil implies higher costs. However, higher prices are themselves a signal of a more fundamental phenomenon, namely less overall energy and less overall material. To the extent that the material form of globalization rests upon this base, the arrival of peak oil means that this basis of globalization will begin to unwind.

“Symbolic analysts” and hence advanced modern economies will be also adversely affected. In the simplest form, declining energy (as was evidenced in 1971) will result in less overall economic activity. A contraction of the economy will occur, and with it, the basis of many of the jobs that now result from an economy based upon growth. Much of the financial services industry will unravel; indeed, banking itself will come under extreme stress as fiat currencies loose value worldwide, and inflation makes existing and future loans increasingly worthless and dries up sources of investment. Material and technological development itself will stall as there is less overall investment, and the basic platform of modern high-tech communication and computing – electricity – will become increasingly expensive. High electrical costs may be forestalled with the increased reliance upon nuclear energy, but that very increased reliance will quickly manifest itself in the form of higher prices due to limited worldwide supplies of uranium.

Movement of products and people will become more difficult and less frequent. There is significant question about the future viability of commercial aviation. Once exclusively the privilege of a wealthy elite, it is likely that commercial aviation will again become the province of the very well-off and a rare experience for a middle-class that has come to take it for granted – but only after significant contraction in the number of existing carriers and, accordingly, flight routes. Many parts of the country and the world that were once isolated will find themselves again less accessible, and less easily departed from. Inasmuch as globalization has particularly rested on the long-term expansion of aviation, with the imminent arrival of peak oil, its future is deeply in question.

Domestically, the national economic system depends extensively upon trucking. This industry will become increasingly strained with the arrival of peak oil, most immediately in the form of higher energy costs which will be passed on to consumers in the form of higher prices for goods and services. The interstate highway system will come under stress, inasmuch as the primary ingredient of pavement – petroleum – will make repairs on roads more costly and therefore rare. Higher prices will mean less ability to afford even what have come to be regarded as the necessities of civilization. These include not only “necessities” such as labor-saving devices, pharmaceutical products (many of which are themselves based on petroleum products), household items and the like, but perhaps most importantly of all, food. Indeed, the implications of peak oil upon food costs, and food production itself, border on the apocalyptic.

The imminence of peak oil directly and adversely impacts our ability to grow and transport sufficient quantities of food. The amount of fossil fuels used to grow basic agricultural commodities, and hence, to provide feedstock and ultimately fill our supermarkets, in the form of fertilizers, fuel for farm equipment, refrigeration and food transportation, is enormous. It is estimated by some that it takes approximately the fossil fuel equivalent of ten calories to put one calorie of food on our tables – significantly higher if one considers a meat diet. Another way of considering this equation: the equivalent of approximately 300 gallons of petroleum or its derivatives are necessary to produce our annual diet. Still another way to consider this fact: our daily diet would require the equivalent of 111 hours, or three weeks, of human labor. With the arrival of peak oil, our capacity to continue to produce adequate food supplies for a planet of 6 billion people will increasingly come into question. Already it has been noted that the demand for corn for the processing of ethanol has led to a steep increase in food costs, particularly given the extent to which corn lies at the root of much of the modern industrial world’s diet. Some of the gloomiest prognosticators of the peak oil phenomenon foretell the horrors of a global “die off.”
THE PARTY'S OVER, people, and we're going to wake up to one hell of a hangover.

We, particularly in the United States, have been living like there's no tomorrow, what with all our obnoxiously huge houses in obnoxiously far-flung "communities" from which we commute to our jobs in obnoxiously large SUVs.

In our land of the everlasting today, we no longer can distinguish between "want" and "need." We have a choice: We can stop the madness, or we can continue on like there's no tomorrow.
But if our self-indulgent lifestyles keep writing checks today that our futures can't cash tomorrow, there's this one little problem.


Thursday, October 25, 2007

'Peak oil' . . . was last year?

From CNN:

The world has reached the point of maximum oil output and production levels will halve by 2030 -- a situation that will eventually lead to war and disaster, a report claims.

The German-based Energy Watch Group released a report Tuesday saying the world's oil production peaked in 2006 and from now on will drop by around 3 percent a year. It says that by as early as 2030, the global availability of oil will be half of what it was at its peak.

"It's a very serious result," said Hans-Josef Fell, a German lawmaker from the environmentalist Green Party who commissioned the report. "I fear the world will come into a big economic crisis in the coming years."

The report warns that coal, uranium, and other key fossil fuels are also in declining supply. It predicts the fall in fossil fuel production will bring with it the threat of war, humanitarian disaster, and general social unrest.

But Leo Drollas, who leads oil and gas market analysis and forecasting at the Center for Global Energy Studies in London, said there are plenty of supplies and no looming crisis. He said the report sounds like "scaremongering."

Wednesday, October 24, 2007

The Giant Suck . . . or, Get a Horse

A while ago, I was gazing out the kitchen window at the lawn guys a couple of houses down. They were doing what probably was the fall's last mowing, along with some seasonal aerating. I'll bet they used up a gallon and a half of gasoline, easy.

It occurred to me that this ritual of American suburbia in five or 10 years will seem as foreign to us as quilting bees, canning season or making tallow candles to beat back the darkness from your unelectrified cabin.

YOU SEE, the jig is almost up for America Uber Alles and the easy life of the middle-class. The oil is running out, and the phenomenon called "peak oil" is just around the corner, maybe no further off than three years hence.

After that, global oil production will start to slide several percent per year, all in a world of exploding demand for cheap energy. Needless to say, the effect on an entire economy -- an entire way of life predicated on lots of cars running on lots of gas -- will be devastating and will change forever the way we live.

That's not me saying this. It's
this, "this" being an analysis in the British magazine Money Week:

The American middle class consumer though indebted still travels to the fry pits and big box retail stores lining the eight lane highways. And they are still spending money with that good old up tempo American resilience to jolts from the outside world. In spite of the fact that they can no longer use their homes as ATM machines by progressively re-mortgaging when property prices were going up.

Sub-prime crisis or not, the Fed will rescue the system and the American way of life will go on as always, with a few temporary tweaks and household budgetary adjustments... won’t it? After all, didn’t George Bush Snr. forcefully declare at the Earth Summit in 1992 that “the American way of life is not negotiable.” And the centrepiece of that way of life is suburbia and has been for 60 years.

It spawned suburban sprawl and the ‘drive-in utopia’ and enabled millions of people to live a long car drive from their work. The ultimate American story has been and is played out in the suburbs to the delight of the Simpsons scriptwriters and makers of dark movies such as David Lynch.

So is American suburbia screwed? Does it represent, in the words of James Howard Kunstler, admittedly a car hating, new Urbanite iconoclast, “the greatest misallocation of resources in the history of the world’’?

Will much of American suburbia become the “new slums” peopled by the “new and impoverished proletariat”, while others scramble to escape? Are we soon going to be talking about America’s “former middle class”? To quote Sam Goldwyn, it’s a “definite maybe.”

How come? At its root, there’s a simple unvarnished fact. And it’s not about over-stretched borrowers. It’s a crude and brutal fact that the ‘cheap oil fiesta’ is over. And what exactly is the problem? It’s this. Americans remain oblivious to the red light on the fuel gauge, and the long and short of it is that the whole suburban phenomenon was and is built around the car, and the central dogma that oil will remain abundant and cheap for ever and anon. Upon that is predicated the system that has sustained the daily lives of the vast bulk of Americans - the ‘American dream’ - since the late 1940s.


Instead, we tend to go with those who see the free market price oil price more likely to hit $100 per barrel than $30 and in any case to stay at $70 and above given geopolitics and demand pressures. We are seeing the growth of bi-lateral or multi-lateral neo-mercantilist oil supply deals between the likes of Russia and China, Angola and Nigeria and China, India and Russia, and Venezuela with various consumers. This is leading to shortfalls of supplies available for the rest of the world via the NYMEX and other bourses.

So if the world is indeed heading down the arc of oil depletion, and if geopolitics and neo-mercantilism bring significant insecurities into US oil supplies, the American suburban lifestyle built round the car will start to destabilise and wobble with deep and wide ramifications.

Just ponder this... the average Caesar salad travels 1,500 miles to the supermarket shelf. And those 12,000 mile supply chains of cheap, if increasingly ‘tainted’, Chinese goods will begin to look uneconomic with a $100 per barrel oil price. Indeed at anything much over $70. Moreover, US agriculture, currently being reshaped by the oil-intensive ethanol-from-crops movement, has been consolidated in a very small fraction of the population, and relies on pumping oil-based products – fertilisers and pesticides - into the soil to yield food crops.

Maybe, to misquote and modify Randy Newman: “if he were alive today, Thomas Jefferson would be rotating in his grave.” Assuming that in some degree or other, the era of American suburbia is ending, at a speed yet to be determined, America will be forced to recalibrate itself to some degree. This could yield a lot of opportunities amidst the turmoil. For example, in general terms, ‘the local’ supplier will bulk larger vs ‘the distant’. There will a ‘made here’ and ‘still made here’ placards reflecting more home grown businesses, and not just restaurants and beauty parlours but textile and auto-parts manufacturers among others. More small towns will be developed and built.

OF WHAT I'VE BEEN READING lately, the above is the rosy view from a Brit who has more faith in American ingenuity than I do. A more prevalent view among those warning that "peak oil" is nigh, is that the economic upheaval brought by the increasing scarcity -- and costliness -- of the lifeblood of Leviathan America may bring about a situation where it's every man for himself, that "state of nature" described by English philosopher Thomas Hobbes in his masterwork, Leviathan.

And, according to Hobbes, life in the state of nature is "solitary, poor, nasty, brutish, and short."

Count Georgetown political theorist Patrick Deneen among the pessimists:

I think there is a growing possibility of severe social and personal pain and dislocation, of societal upheaval and even political chaos. These are not conditions that we have ever experienced and seem implausible, even incredible. But, the bleak scenario we may face is not because human beings - and Americans especially - can't live this better way of life, but because we have organized our lives in ways that make any such easy transition implausible if not impossible.

There are obvious ways in which this is so: take, for instance, the example of banking. The modern capitalist system is built on the health of a banking system. The health of a banking system rests most deeply upon a foundation of economic growth: no one would lend out money at modest interest if they believed first, that there was great risk of default, and second, if the money returned in the future (even with interest) was worth less than money in the present. Our banking system hums along in the backdrop of economic growth; in a backdrop of economic contraction, the banking system would become dysfunctional. Some bankers might succeed by making good bets on individuals, but the systemic backstop that the future will be brighter than the present would disappear (this is the same principle by which we do better betting on the market than necessarily on individual stocks; we can afford to have some losers in our portfolios in the backdrop of a rising market. Just as a rising market makes everyone look like financial geniuses, so too a growing economy makes our high-finance Hampton banker boys look brilliant).

Beyond such specific examples, however, there is a deeper cause for concern which is tied most fundamentally to the very plausibility of the modern liberal system. Modern liberal society is premised on growth - constant, unrelenting growth. Liberal democracies have always and everywhere come under severe stress, and very often have disintegrated under conditions of prolonged economic contraction. Much of modern history records not the stability and "normality" or naturalness of liberal democracy, but its profound fragility. America has come to believe that liberal democracy is its birthright, even that it is the natural condition of mankind. There is much evidence to contradict this belief: liberal democracy has in most cases been a difficult political arrangement to maintain, perhaps above all because it requires belief in its fundamental justness from the populace. In the absence of the prospects of limitless growth, the populace of many liberal democracies have rejected the justness of liberal democracy, and their societies have unravelled, at times descending into conflict, civil war and chaos.

Why should this be so? In a nutshell, liberal democracy contains an internal contradiction: liberalism is a political theory of basic economic inequality; democracy is premised upon the belief in political equality. Democracy exerts an egalitarian pressure upon liberalism, to which liberalism must offer some compensation. The earliest theorists of liberalism understood well that they were commending a theory of economic inequality: in the justly famous Chapter 5 of the Second Treatise on Government, John Locke argued that liberal society allowed and even encouraged increasing economic differentiation between the "industrious and rational" and the "quarrelsome and contentious." Advanced liberal societies permitted the exacerbation of the position between these two sorts of humans: the rights of liberal society required defense of the State, above all, to prevent the assault on wealthy "estates" (or property) by the larger "quarrelsome and contentious" classes. Locke foresaw the potential of proto-Marxist temptations among the poor to deprive the wealthy of property. In the end, the promise of State protection of property was not sufficient: liberal society cannot last if there is a persistent desire on the part of the lower classes to encroach on rights of property. A repressive (Western) liberalism has generally not proven successful.


People will not gladly or easily accept sure knowledge of a future of decrease. The idea that we will gradually and easily slip into a "better future" in which the stock market continuously loses value; in which our houses grow less valuable year after year; in which our purchasing power, via our dollar, buys less every passing day; in which our children can expect to make less money, to have a "less successful" future than previous generations; in which we will have to adjust our expectations to accept work of a more manual nature, for less money, and with less leisure - that we will go gladly into that "better life" without a tumultuous political upheaval and a vicious fight over the valuable scraps that remain is implausible if not pure fantasy and dangerous wishful thinking.

OY. If only Deneen were an ill-informed crank making this stuff up out of whole cloth, which he isn't.

As a matter of fact, one of the leading experts on "peak oil" two years ago sounded alarm bells in Washington. But instead of sounding the alarm bells with the American public and industry, our leaders already had taken another tack in 2003 -- invade the country with the world's third-largest oil reserves.

And that may well be exactly why we're in the Iraq quagmire today. But more on that later.

British journalist David Strahan
interviewed Dr. Robert Hirsch, author of the 2005 paper Peaking of World Oil Production: Impacts, Mitigation, and Risk Management -- written at the behest of the Energy Department and commonly known as the Hirsch Report -- about his findings:

When global oil production peaks, the economy is likely to shrink in direct proportion to dwindling fuel supplies, says Dr Robert Hirsch of the think tank SAIC.

Speaking at the Association for the Study of Peak Oil conference in Houston, he also warned that as peak approaches, producer countries including OPEC and Russia are likely to husband their reserves for future generations and limit exports, potentially sharpening the decline in oil available to importing nations.

WHAT THAT MEANS is the topic of a fascinating audio interview with Hirsch conducted by Strahan, author of The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man. It's well worth your time.

And, of course, we get back to Iraq. You know, the country with the world's third-largest oil reserves -- greatly undertapped oil reserves, thanks to the sanctions against Saddam Hussein's regime. Again, here's some of an article
by Strahan, the British journalist:

But despite the oil majors’ undoubted interest and influence, the decision to attack was not taken in the boardroom. Iraq was indeed all about oil, but in a sense that transcends the interests of individual corporations – however large.

The elephant in the drawing rooms of both the White House and No 10 was the fact that global oil production is likely to ‘peak’ and fall into terminal decline within about a decade - the inevitable result of 40 years of dwindling oil discoveries and ever-rising consumption. Oil production is already on the slide in 60 of the world’s 98 oil producing countries - including the US and Britain. Dr Michael Smith of the oil consultancy Energyfiles forecasts another 14 will join the descent during the next ten years. Aggregate oil production in the OECD has been falling since 1997, and all major forecasters – including noted optimists such as the International Energy Agency and Exxon Mobil - expect output for the entire world except OPEC to peak by the middle of the next decade. From then on everything depends on the cartel, but unfortunately there is growing evidence that its members have been exaggerating the size of their reserves for decades, and that their output could also falter soon.

As I report in The Last Oil Shock, the international oil consultancy PFC Energy briefed Dick Cheney in 2005 that on a more realistic assessment of OPEC’s reserves, its production could peak by 2015. That would tip global output into terminal decline, almost certainly bringing soaring oil prices, deep recession and worse. A report published by the US Department of Energy, also in 2005, concluded that without a crash programme of mitigation 20 years before the event, the economic and social impacts of the oil peak would be “unprecedented”. The evidence suggests that these fears were already weighing heavily with Cheney, Bush and Blair.

In a world of looming oil shortage, Iraq represented a unique opportunity. With 115 billion barrels Iraq had the world’s third biggest reserves, and after years of war and sanctions they were also the most underexploited. In the late 1990s Iraqi oil production averaged about 2 million barrels per day, but with the necessary investment its reserves could support three times that output. Not only were sanctions stopping Iraqi production from growing, but also actively damaging the country’s petroleum geology by denying the national oil company access to essential chemicals and equipment. In one of a series of reports to the Security Council, UN specialist inspectors warned in January 2000 that sanctions had already caused irreversible damage to Iraq’s reservoirs, and would continue to lead to “the permanent loss of huge reserves of oil”. But sanctions could not be lifted with Saddam still in place, so if Iraq’s oil was to help defer the onset of global decline, the monster so long supported by the West would have to go.

As I reveal in The Last Oil Shock, the CIA was also well aware of Iraq’s unique value, having secretly paid for new maps of its petroleum geology to be drawn as early as 1998. Cheney also knew, fretting publicly about global oil depletion at a speech in London the following year, where he noted that “the Middle East with two thirds of the world’s oil and lowest cost is still where the prize ultimately lies”. Blair too had reason to be anxious about oil: British North Sea output had peaked in 1999 - and has been falling ever since - while the petrol protests of 2000 had made the importance of maintaining the fuel supply excruciatingly obvious.

WHICH MIGHT BE WHY Vice-President Dick Cheney has a strikingly different take on the wisdom of invading all of Iraq and occupying it than Defense Secretary Dick Cheney did in the wake of the first Gulf War.

Of course, taking all of Iraq this time, then occupying it, hasn't worked out so well. Nor has the resulting chaos done much for exploiting those Iraqi oil reserves.

And we might only have three more years until the petroleum hits the fan.

Returning for a moment to the dire predictions of Hirsch, the oil-supply expert,
here's Deneen again. Just so that we're perfectly clear on what we might be facing much sooner than we think:

The impact of an ongoing negative growth economy in a society that is premised upon ongoing and permanent growth will be catastrophic. Everything we assume about the future would change. Few jobs, few bank loans, difficulty providing goods and services (including food), shrinking numbers of college educations, the evaporation of our national wealth, declining levels of research and innovation across the board, no retirement accounts, the decline of the middle class and devastation of the lower classes, etc.

In answer to a question whether "peak oil" will occur as a gradual plateau or a sudden and drastic decline, Hirsch points to the high likelihood of increased resource nationalism (a phenomenon we are already witnessing around the world). He notes that private oil companies no longer control petroleum resources; national companies do. As awareness of peak oil spreads, there will first be a further spike in oil prices and a growing inclination of resource-rich nations to hold their remaining oil in reserve for domestic production and in expectation of further rises in price. This response will, of course, only accelerate and deepen the crisis.

Hirsch foresees the likelihood of gas rationing as a reactive answer to our current inability to begin cutting back our consumption. Nature will exact her price, whether we are willing to pay for it significantly now or drastically in the near future. Our techno-optimists tell us that technology will come to the rescue. The nice thing about holding this position is that no one has to act responsibly or like an adult. It was once the case that adults acted with prudence, awaiting not the best case scenario but preparing for the possibility of a worse. Our liberals and conservatives alike tell us that technology will save us, but mark my words, when TSHTF they will be the first to blame someone else: the Saudis, the Iranians, the Russians, Hugo Chavez, you name it. Our impressive military will be called upon to secure our vital national interest, wherever it might happen to be buried. And at that point no one will be able to suggest that perhaps we have ourselves to blame, because we did nothing when intelligent but obtuse people knew what was coming at the end of our wild ride down Sunset Boulevard.

THIS IS WHAT HAPPENS when a society lives beyond its means. This is the very real consequence of sin, of avarice on a societal scale.

We have gotten what we wished for. It didn't make us happy, nor did it sate our appetite for more, more, more. And now we're going to lose it. All.

A lot of fundamentalist types -- of both the Protestant and Catholic persuasions -- thought they had it figured. The wrath of God will come upon us, borne on the waves and winds of a monster hurricane. Or shake the world with the power of an earthquake.

Engulf the world in a nuclear fire?

INSTEAD, maybe God's just chastisement of His deeply crooked people will come in with the relative quiet of oil wells slowly going dry. One after another, world without end, amen. Maybe the judgment of the Almighty comes, as it always has, in giving rebellious and willful humanity all the rope it needs -- plus free will.

If and when our Western house of cards comes tumbling down upon us, don't blame God. We could have been less avaricious. We could have lived more simply. We, at any time, just could have cut it out.

We didn't have to be our own hangman. We didn't have to take the rope and make a civilizational noose out of it.

IT'S NOT God's fault. It's ours.

Did you really need that $35,000 SUV? Did you really need two of them? Does your family need to be a three- or four-car family?

Did you really need that 4,500 square-foot house in the exurbs? Did you need to live in the exurbs -- or even the suburbs -- at all? Did I?

Does everybody in the family need two cell phones, a BlackBerry, three iPods and a mega sound system in each car?

Do you need Evian, Aquafina or any other kind of bottled water (and the petroleum needed to make the throwaway plastic bottles it comes in) when the stuff out of the tap is the same two parts hydrogen and one part oxygen?

AND WHAT ABOUT the $250 -- a piece -- you just dropped on Hannah Montana tickets for your two preteen daughters, who really, really didn't need to go to a damn Hannah Montana concert? You'd raise holy hell if your county government imposed a $500-a-year tax on you to build and subsidize convenient, low-cost, energy-efficient mass transit.

Yes, you would.

Well, now the conductor is coming down the aisle, announcing the end of the line. Your fare card is spent. Please exit to the back.

HAT TIP: Crunchy Con