Rossputin.com: Rational Thinking About Our World

Mike, Joe, and Greg's comments on my recent note about "Changing my views on oil...a bit" are worthy of their own posting. I welcome comments or emails with your views as well.

First, Mike R:

First let’s all agree that our dependence on oil is indeed a ‘burning’ national security issue, (pun intended of course).

Second let’s all agree that the free market is going to solve or force us to solve this problem in the very near future. We are most likely headed for a very serious oil shock when the all but inevitable military strikes against Iran occur.

The broader issue of oil consumption is much deeper than most people even realize. We live on oil in every way except to consume it directly as food but it is absolutely necessary in getting our food to the table in every step from planting to grocery store shelf.

Nuclear, solar, wind, hydro, thermal, coal power(s) are not really at the heart of the issue of oil since none of them replace what we use to fuel our automobiles, trains, planes produce our fertilizers, plastics, lubricants etc. etc. etc…

The entire ethanol debate is too ridiculous to even be discussed by rational beings since it takes more oil going in to produce ethanol than it delivers at the precipitator spigot.

The unfortunate dilemma is that oil is still relatively cheap and we are completely disconnected from the fact that our dependence is precariously dependent on global political stability in the most unstable parts of the world and that our enemies control the resource.

This will remain the case until the ‘shock and awe’ hits home and oil is north of $150 a barrel sending both the U.S. and the rest of the western world into an economic tailspin replete with very real hardships in the form of vast shortages of everything from food to disposable diapers. Today’s Americans will suddenly know what it felt like to live in their grandparent’s time during the depression and the war or worse.

Here is the quintessential question in this problem; how do we impress on people the precariousness of this problem and force them to begin examining how impacting the problem is so that they start thinking differently and consuming differently before a crisis is upon us?

The answer to me is a big negative because I don’t think that that kind of consciousness can be raised or visualized by most people.

It goes a lot further than driving a Prius. It means changing everything we do from how we farm to how much we consume and why we consume it. It requires a kind of nationalism almost to the level of animosity toward the nations that hold the resource that we voluntarily enslave ourselves to, such that we think consciously when we make every choice and purchase, “fuck em”, I can do without that or with less of it if it means keeping my dollars from going to them.

The biggest boycott imaginable.

The Conundrum.

If we do in fact manage to reform our thinking in this way we will also, of course, at least in the short term, reduce our productivity and our consumption to such a degree that it will have negative economic consequences and negative quality of life consequences. This must be the result until an entirely new paradigm develops around new energy and new ways to restructure our country around that new energy paradigm.
A new source of energy that as yet, remains unknown.

This means new ways of distribution as well as production of that energy. It also means adaptive reuse that matches productivity with an eye toward making the most of what we make. Disposability is not an option until everything has been efficiently exploited from everything we produce.
The problem with the market in this case is that it is severely discounting the possibility of the catastrophic even as that probability of a catastrophic event is rising.

The put is too cheap, oil is too cheap. No one yet believes enough in the overnight catastrophic disruption of the flow of oil, just like no one seriously entertained the possibility of foreign terrorists using our civilian aircraft as cruise missiles. Sure some dark room, think outside the box folks had postulated it the way they postulated various nuclear war scenarios but it wasn’t a real and present.

People resist change unless it is forced on them or is clearly demonstrated to be to their benefit.

Since we do not have a ready replacement for oil that benefits anyone, especially in the short term, it would seem very likely indeed that the market will have to force that change and it will be ugly. Very ugly.
Our entire infrastructure is dependent on the free flow of relatively cheap oil. Without a replacement for oil that utilizes the old infrastructure, at least transitionally, it will be a long and painful process that will have a millennial impact on our culture and way of life.

I doubt very much that any sort of consciousness raising movement to create a new paradigm can come through any sort of charismatic call to arms on this issue. I doubt that draconian government action in the form of dramatic taxation on all things oil consuming would work or be tolerated.

I equally doubt that “benign” incentives in the form of tax relief or subsidy would be enough to make the change either.

I doubt that Mr. Kucinich’s aliens are arriving with a new energy panacea any time soon.

The market will solve this problem, but at the cost of the market collapsing when the “Black Swan” suddenly appears to fundamentally alter our thinking and awareness.

I just hope we can survive that day of realization.

------------------------

And now, Joe H:

When all else fails, I fall back to what I know: The market will solve this, if we allow the proper information flow. Government has chosen to distort information flow to the economy to arrive at its own heavily lobbied (read that Al Gore vs John Dingell) result. An example of this distortion was when the oil price spiked to the unimaginable price of $50-60/bbl Bush tapped the Strategic Petroleum Reserve to lessen the economic hardship. Economic hardship comes because people didn't plan for, or properly place value on, energy efficiencies that are real. Hybrids are not really more energy efficient. That 1,500 pound battery cell is made up of exotic metals that had to be smelted somewhere in Canada, South Africa, China or Japan, and had a positively huge energy input to mine, mill and fabricate. There is a reason that platinum is $1,400 per ounce... because it takes digging it as much as 11,000 feet underground, and moving enormous amounts of tons (like 20 - 50 tons) for each and every ounce. That is not real energy independence.

A few examples of incremental progress toward energy independence could be that, if citizens had been allowed to feel the true impact of the price shock, they would have gone out with a infrared thermal imager (purchased at any hardware store for about $20) and taken a look at their house during the evening after sundown to see if they are losing heat from areas they might not have expected. They might buy a tankless water heater so they aren't holding a tank of hot water at the ready all day (and losing heat) while they are at work. And they just might decide that they don't need to go somewhere and burn an extra gallon or two...

Let the market work and get government the he-- out of the way!

---------------------

And last, but not least, Greg S.

After the first Iraqi war, I read a quote that, as I recall went something like this: "If Saddam Hussein had invaded Fiji, the United States would have sent a strong letter of consternation." If Fiji were oil-rich the story would of course be different.

Calling the Iraqi wars "oil wars" is of course correct, but they were not undertaken to enrich Exxon or Halliburton. The world's standard of living relies upon readily available energy supplies. Saddam's regime threatened the entire Middle East supply of oil to the world, and so he is gone; the US is generally OK with having despots in power, as long as they don't threaten the world's energy supplies. So Chavez and Ahjmedingbat can stick around as long as they don't get to carried away with their self-importance.

The West runs on oil, of course, and the West does not care where it sates its thirst. We lambaste Chavez, but his oil is still imported by the US and is in fact one of the largest percentages of foreign oil we import. Keep in mind, though, that the West and Japan are complicit in sending oil money to totalitarian regimes - this is not simply a USA problem. If Venezuela embargoed us, the rest of the World is treaty-bound to share the shortfall. (Brings up another point: If Venezuela did in fact embargo us, it would be meaningless. They would still export oil - but it would go through an extra trading step before it got here. It might even be off-loaded in Trinidad and then reloaded to another tanker, but we would still get it, although at a higher cost.)

The only available viable substitute is nuclear power - and/or we could tax gasoline like England, so that we are paying $5.00 more per gallon. Meanwhile, we can and should drill ANWR and areas that are currently off-limits in the Gulf of Mexico and elsewhere.

Eventually the solution will be market-based. Oil will become more expensive compared to other fossil sources - coal liquefaction, tar sands, oil shale - all of which have environmental consequences but are still cheaper and produce more net energy than wind, solar, or bio-anything.

We are going to have a fossil-fuel based economy well into the next century.