Guest Post: What Peak Oil?

Tyler Durden's picture


Submitted by John Aziz of Azizonomics

What Peak Oil?

Is peak oil imminent? Lots of people seem to think so.

The data (released by BP a company who have a vested interest in oil scarcity) don’t agree. Proved reserves keep increasing:

The oil in the ground will run out some day. But as the discovery of proven reserves continues to significantly outpace the rate of extraction, the claims that we’re facing immediate shortages looks trashy.

Some may try to cast doubt on these figures, saying that BP are counting inaccessible reserves, and that we must accept that while there are huge quantities of shale oil in the ground, the era of cheap and readily accessible oil is over. They might cite the idea that oil prices are much higher than they were ten years ago. Yet this is mostly a monetary phenomenon resulting from excessive money creation beyond the economy’s productive capacity. Priced in gold, oil is still very cheap — almost as cheap as it has ever been:

The argument that the vast majority of counted reserves are economically inaccessible is fundamentally flawed. In the long run there is only one equation that really matters in determining whether oil is extractable, and that is whether there is a net energy gain; whether energy-in exceeds energy-out. If there’s a net energy gain, it’s feasible. Certainly, we are moving toward a higher cost of energy extraction. Shale oil (for example) has a lower net energy gain than conventional oil, but still typically produces five times as much energy as is consumed in extraction.

But the Earth’s extractable hydrocarbons will eventually dry up, whether that’s in 500 years or 200 years. If we want humanity to have a long-term future on Earth, we need to move to renewables; solar, hydroelectric, thorium, synthetic hydrocarbons. And the market will ensure that, eventually — as the cost of renewable energy continues to fall, more and more of us will adopt it. I don’t buy the myth that markets are stupid — if humanity needs renewable energy (I believe we do) the market will see to it (I believe that is slowly happening). Markets are just the sum of human preferences.

According to the International Renewable Energy Institute:

Power from renewable energy sources is getting cheaper every year, according to a study released Wednesday, challenging long-standing myths that clean energy technology is too expensive to adopt. The costs associated with extracting power from solar panels has fallen as much as 60 percent in just the past few years.The price of  from other renewables, including wind, , concentrating solar power and biomass, was also falling.

So no. I’m not lying awake at night worrying about imminent peak oil. There’s plenty of extractable oil, and renewable energy will eventually supplement and replace it. But will politics get in the way of energy extraction? The United States has huge hydrocarbon reserves, yet regulation is preventing drilling and shipment, leaving America dependent on foreign oil. And the oil companies themselves are largely to blame — after Deepwater Horizon, should anyone be surprised that politicians and the public want to strangle the oil industry?

If there’s an imminent energy crisis, it will be man-made. It will come out of the United States’ dependency on foreign oil. Or out of an environmental catastrophe caused by mismanagement and graft (protected cartels like the energy industry always lead to mismanagement). Or out of excessive red tape. Or war.

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greyghost's picture

"BLOW ME DOUCHEBAG"...that is your answer? zero hedge takes your posts serious enough to give you space here? and you act like a 6 year old on the play ground!!!! enough said "come over to my blog and i'll kick you in the balls so hard they'll come out your mouth". REALLY.....that is what you bring to the table. i simply stated the other day that all you say is same old tired nonsense since the seventies. yet we are producing more and more oil...when does your story change? from the looks of your blog, it is all about survival in the mountains when the world comes to an end...which is the same old story since the seventies also. reminds me of the book "the late great planet earth" or something along those lines. god...what a piece of crap writing that turned into.

Jim Quinn's picture

"Simply stated" is correct. You are a simpleton spewing out your ideological storyline. Don't try to mislead the good readers of ZH that my site is some kind of survivalist website. Your ability to misinform and mislead makes me believe you are either a complete dumbass or are being paid to make bullshit posts.

My articles are backed up with facts. I get paid by no one to write my articles. I do it to reveal fools and knaves like yourself.

So keep spewing your storyline, but the smart ZH readers realize you are a fool. This article was as pathetic and vapid as one of your posts.  

malek's picture

Now you're acting completely stupid.

It is a fact: if you believe the dollar is being massively devalued, then you cannot at the same time post that the real oil price has been skyrocketing.
I have pointed that out several times but so far these logical fallacies keep being repeated, and no one ever gave me a concise rebuttal.

Jim Quinn's picture

Are you having a brain seizure?

Are you ideologues so lost in your own worlds that you actually read things that aren't even being discussed?

Supply and demand appears to be a concept beyond the comprehension of a vast swath of ideologically driven people with an agenda to push.


malek's picture

What does supply and demand have to do with devaluing the dollar???

I take that as you're avoiding discussion. Good luck to your beliefs, and enjoy your argumentum ad hominem.

greyghost's picture

welcome aboard the insult train malek. this writer can only answer with insults and by degrading posters. he challenged me to google eroei and all i find is that it is a theory and has many detractors...probably why quin has such a thin skin. i am having great fun egging him on. and he keeps answering with dealing with a nasty child.

AnAnonymous's picture

this writer can only answer with insults and by degrading posters.


He is a US citizen. This is what US citizen do.

BeetleBailey's picture

Not all "US citizenS" insult and degrade.

Stop generalizing.

Inspector Bird's picture

With all due respect, Aziz points out that oil WILL run out someday, and that most of the extractable oil isn't easily extractable.

But shale oil is a good example of why peak oil is a wrong-headed concept, as Julian Simon once pointed out.  Shale oil was, at one point, too expensive to extract vis-a-vis the value received at market.  Yet this is no longer true.  This is what a good market economy does - it shifts prices while innovation alters costs to make new markets viable.  As a result, peak oil is a long way off.  Very very far off.  And even if it isn't, alternatives are almost close enough to be viable, should we need to move quickly (which we don't).

As an average consumer, I've kept an eye on alternatives.  I'd love to have a solar panel or wind generator on my property.  These are options which are not viable to the average consumer today.  The costs exceed the expenses EVEN WITH tax breaks.  I know, because I investigate it each year.  If I'm willing to put up a huge capital outlay (which I am unable to do) and wait 15-25 years for payback (which I will not do), then yes, these are viable options.  But only the Ed Begleys of the world are either wealthy enough or silly enough to do it. 

I don't have this flexibility.  Nor do 90% of the US.  This is hard economic fact which many people ignore.

Facts remain - hydrocarbons are still viable, so it makes sense to continue to rely on them.

As for supply and demand, it is very clear to me that the cost of gasoline at the station is only partially set by supply and demand.  Why?  Because as a % of dollar spent, gasoline and oil products have fallen since 1980.  Our conservation efforts have been very effective.  On the other hand, the rest of the world is using more oil, which has driven up the cost of oil.  Yet even on this basis, the main reason for the rest of the world making things more expensive is driven cash.  Shove a pile of money into the hands of poor people and let them spend, and they may buy cars, or purchase products produced by hydrocarbons, etc. 

How does US printing impact China or India spending more?

Easy.  The US borrows against its future, this is funded by these nations, which makes them wealthier, and allows them to spend now due to the wealth effect.  We grow with debt, they grow with wealth.  This is enabled, on both sides, by keeping US interest rates low, and this is accomplished by printing money.  It's the Mississippi Bubble writ large.  Not hard to figure out, not crazy, not a brain seizure. 

The interesting thing isn't what's causing it - but where those nations will head.  In my estimation, China's doing it all wrong and will wind up broke in the end.  India I'm still not sure about, but they don't seem to be as profligate as China and may represent the true future economic power of the world.

I don't believe in peak oil, any more than I should have believed in 'peak horses'  or 'peak blacksmiths' in 1860.  It's a meaningless concept which the marketplace deals with effectively.

malek's picture

+1 oz. for Julian Simon reference!!!

Dr. Sandi's picture

You guys do realize that this isn't Jim Quinn the "Burning Platform" guy, don't you?

The real Jim Quinn has pretty decent spelling and grammar skills, unlike the current Jim Quinn.

But have at it. Kind of like beating on a virtual straw man. Whack away!!!

I'm going to come back as Hillary Clinton and lay down some real evil shit here.



greyghost's picture

if so, the real jim quinn should step forward. i even have an invite to the platform to have my balls but seriously the real quinn needs to up. everyone now sees quinn as a complete and utter ass.

malek's picture

Not sure, but it makes no difference.

When I post something I'm arguing about the facts, not the writer.

Jim Quinn's picture

You're brilliant analysis of "we are producing more and more oil" is on par for a clueless ideologue trying to convince idiots of his false storyline.

Your attempt to classify my libertarian website as a survivalist end of the world website is hysterical. I believe last week I was a tool for the oil companies. Which is it grey dimwit? Your comprehension abilities are on par with 3rd grader.

I take shits with more substance than the drivel I've seen you post on ZH.

Come on over to The Burning Platform and test out your debating skills, you dickless wonder.

greyghost's picture

hey jimmy....what is that TBP STORE OF DOOM all about...end of the world? the simple question of the day is.....are they drilling and using more oil today...than in 1970. the answer is either yes or no. is the story you tell the same as the college professors taught in 1970. do you remember earth day? the good dr. who wrote the end of the world book because we were running out of "everything". not only oil but food and water and air and the earth will freeze us to death in "global cooling". i submit that we are growing more food and pumping more oil and pumping more natural gas than ever before. no i will not go to your website since that is how websites get advertisers. no just not interested in end of the world doom [that is from your website] gloom and there is no hope crap. i prefer to see new oil/gas fields discovered and new improvements to the solar field like the mit research where they increased output something like 60% or the texas univ. that increased improvement by 40%. no i believe man will work thru the current mess and theft on a global scale. i bought into the endless end of the world crap from talking heads  for thirty years all the while being distracted as my country was stolen from its citizens. but don't worry, the end of the earth is at hand. yep...they thunk that during the black plague and WWI AND WWII and the civil war and the crusades. i do hope you make millions on your "doom store" and seeds and end of world food stuffs...good luck.

Jim Quinn's picture

The store of doom is a joke you ancient douchebag. I wouldn't expect someone who is stuck back in the 1960s to actually be able to think critically. You remind me of an ignorant grandpa who thinks they have all the answers, based on anecdotes and what their dumbass teacher taught them in 8th grade 5 decades ago.

Facts don't matter to ideologues like yourself. A storyline will do. You are a classic old crank with your declarations about earth day. No one knows what the fuck you are talking about old man. I deal with reality. You don't even know what peak oil means.

You should join your butt brother Zero Gov't in the willfully ignorant wing of your local old folks home. You old cranky farts provide a humorous aside here on ZH. I'm really surprised you were able to pass the math exam to get posting access.

That's a feather in your dunce cap.

Happy earth day.  

greyghost's picture

you still refuse to address the question at hand. IS MORE OIL AND NATURAL GAS BEING PUMPED AND CONSUMED TODAY THAN EVER BEFORE IN THE HISTORY OF OIL AND NATURAL GAS? yet you have a constant drumbeat of child like name calling. however, why call your store "doom"? that is your choice of words. how about enlightment or understanding or learning or any of a thousand positive words. chose "DOOM" .....interesting. you message is one of no hope. jimmy...what is the question at hand?

Jim Quinn's picture

My hope is that truly ignorant trolls die off in the near future. My hope is that I can enlighten enough people to see the truth, so they don't get misled by ideologues like yourself.

Why don't you regale us with stories of the centuries of shale oil at our disposal. I love that one. Let me guess. Larry Kudlow is your hero. drill drill drill - hope hope hope.

It is a shame that old farts with no facts think they can sway the ignorant if they just proclaim their lies loud enough. I would provide facts like I've done in every article I've written regarding our energy situation but they would go over your head. Your 3rd grade level grasp on the situation is beyond hope.  

Debating trolls like yourself is like kicking a retarded shit eating monkey.

Happy earth day hopey dopey.

Augustus's picture

Jim Quinn,

You are the most highly regarded evaluator of shit who posts on the Zero Hedge web site.  You should advertise your expertise with a large banner add at your own blog.  I have no quarrel with your claim to magnificent talent as one with a great eye for shit.

Jim Quinn's picture


Thanks. I can smell morons, trolls and the truly ignorant from a mile away. I actually smell something now. It is wafting directly from the post above.

greyghost's picture

there you are jimmy...what is the question of the day? ARE WE PUMPING AND USING MORE OIL AND NATURAL GAS THAN EVER BEFORE? hell, china is even stockpiling the oil know...just in case of war. you really are a piece of your bad mouthing other posters......good lord! i do hope the tylers are watching your performance here today.

Jim Quinn's picture

Grey beard

Am I getting under your ancient mottled skin? You seem a tad irritable. Every pathetic post you make reveals your complete ignorance regarding even the definition of peak oil.

Let me guess. You don't even know what EROEI stand for. Google it old man. Try to learn instead of spewing rhetoric. Do you understand the implications of this concept. Make me proud and explain the concept to me. This should be fun. 

Pumping more oil is great. We are pumping 74 mbd of conventional oil. They same level as 2005. Got it old man? Or will you show your willfull ignorance and contest that fact. Peak oil is simply the point at which we consume more than we produce. Got it old man? If you are able to pump out another 2 or 3 mbd at much higher production costs and consumption outpaces that 2 or 3 mbd increase, you've got yourself a peak oil situation grey man.

I know this is too much for your 3rd grade level brain, so I hope this doesn't give you a stroke. Try thinking old man. It doesn't hurt.

I think it is hysterical that you think Tyler actually gives a shit about your worthless comments. Are you going to put a complaint in the ZH complaint box? You douchebags crack me up.


greyghost's picture

i will continue to use the basic business method of operation. i will not spend 1 million dollars to extract 1/2 million dollars of oil. eroei is not the end all to the energy questions. it is a theory that has it's detractors...yes. just on wikipedia it states that the costs could be caculated down the rabbit hole endlessly. this "theory" appears like it could be made to support any position depending how far down the rabbit hole you go...what the writer chooses to include or not include will give so many variables as to be suspect. with your defense of such a thin theory i wonder if your are the author of such a theory? again i will stick to the basic laws of business...i.e. i won't be in business very long spending more than i get out. that being the case....are you saying that business is losing money drilling for oil/gas? if so how long have they gone breaking the laws of business and how long can they continue? it appears that the basic problem of "theory" again comes up against real life business. reminds of the univ. of calif. at riverside being sued by their business grads. seems the univ. had an excellant business school, only to have a new dean of busines move in. guessed it...his methods dealt with the "theory of business"...not practical business. seem the grads weren't being hired by the biggest and best....most had no job offers at all...ouch.

Jim Quinn's picture


I came up with the "theory" of EROEI???

That is a classic. You love to refer to things you don't understand as theories. 

I find it fascinating that someone who speaks so authoritatively about energy matters had never even heard of Energy Returned on Energy Invested. That reveals much regarding your opinions. You see, everything I've ever seen you post is nothing but your opinion. You attempt to discredit facts by calling them theories. You attempt to discredit my website by spewing misinformation based on a two minute perusal of my site. This is a common tactic used by ideologues who don't have facts to back up their opinions.

I'll explain the facts about EROEI. It is not a theory. It's so simple even you should grasp it, unless you refuse to.

If it requires more than one barrel of oil to be expended in order to obtain a barrel of oil, then it isn't economically feasible to do so. The billions of barrels of oil trapped in shale and miles beneath the ocean are only viable if it takes less than a barrel to obtain a barrel.

Your dreams of solar and wind are fantasies. Ethanol already requires more energy to create than it provides.

The confluence of supply, demand, price and accessibility are what create the dynamics of peak oil. You should learn the definitions of the basic concepts regarding energy before spewing your storylines. Do yourself a favor. Learn something. 


greyghost's picture

"my" dreams of solar and wind???? really...because i post alittle about strides they have made in last serveral month with solar, makes me a believer in solar or wind?? so jimmy is that you over at the univ. of penn. wharton school of business and theory???? if that is you don't you think people would like to know that your an academic/theory type of person. wikipedia says it is a theory and can be used to say and justify any proposal depending on what figures you use or don't use. the problem you have jimmy is that with all the nonsense in the academic fields there is a trust problem. far far too many people blowing their own horns. you have authors stealing other peoples work, the clowns with the global warming hoax, the students at the univ. of calif. at riverside losing with the "theory of business" on and on everyday day in and day out. you send me off to see the eroei and i come back with...well...not everyone is on board with this theory. and what you don't like it...who cares?

Jim Quinn's picture

Your starting to repeat yourself old man. I provided a few facts for you, but your storyline is more comforting. Thinking is hard. Math is hard. I know.

Your type is so predictable. When you are losing a debate you scramble to dig up some dirt on your opponent. Now you think I'm an academic. Wrong again old man. Your research skills are on par with your IQ.

Here's a few more facts for you old man. A barrel of oil was $23 in 2002 before your oil boy Georgie Bush decided to attack sovereign countries in the Middle East. Today it is $84. I know math is hard for you, so I'll calculate the increase for you. That is a 365% increase in 10 years. Over this exact same time frame the CPI is up 28%.

If your contention that we are producing more oil than we actually need and there is an unlimited supply right under our feet, how do you explain an increase in oil prices 13 times greater than general inflation?

I await your wisdom. So far your wisdom has consisted of accusing me of being paid by the oil companies, running a survivalist website, and being a college academic. I can't wait to hear what I am next.

It is pathetic and sad that there so many people like yourself who choose ignorance over critical thinking. Maybe you should google "critical thinking". I bet you conclude it is a theory. 

Happy Ignorance Day

greyghost's picture

ooohhhhh answered your own question. geo bush+middle east+war=higher oil prices. and yet priced in gold or silver shows an increase of dollars not a decrease of product. there are more cars, more food, more oil available today than ever before. eroei theory goes against all business logic, it claims that companies are spending more in energy than getting out...THEY SIMPLY CANNOT STAY IN BUSINESS VERY LONG DOING THAT....yet they continue to this day to seek and find and drill more and more energy....everyday. can this go on for ever...i doubt it.....will man invent better technology along the the world coming to an end by means of the eroei theory...far from it.

greyghost's picture

jimmy i have to go now. the greek elections are in play. i am hoping the golden nazi party garners enough votes to allow them to be seated in parliment. after watching the news feed from europe last night talking about golden dawn getting 7% of the vote. after ten minutes of fear mongering they finally state that 7% is not enough to be seated in parliment. should they get seated it will be worth the price of admission to watch these clowns go ape shit over such an event. will the talking heads go as ape shit if the communists win????

Jim Quinn's picture

I have to answer my own questions because the dimwit I'm debating is incapable of answering my questions. Bush + war + middle east shouldn't matter if we have such vast supplies of easily accessible oil. The increase in dollars should have impacted everything, but CPI is up only 28%. Oil is up 365%. If the supply of oil is not a problem than it should have gone up consistent with how money printing impacted everything else. Cars and steel and food did not go up 365%. They tracked general inflation. I look forward to you ignoring the facts again as you flail about in a frenzy of accusations and theory.

I know you prefer to twist your arguments and flail about attempting to obfuscate and confuse the issue, but I prefer the facts. You really should have paid attention in Econ 101. You might understand the dynamics of supply and demand.

It is really quite humorous to see you blather about EROEI since you acquired your vast google knowledge earlier this morning. I guess a little knowledge in the hands of a dimwit is dangerous.

Thanks for playing.


Jim Quinn's picture

Grey man

I'm waiting. You wanted to have a debate about the facts. Where'd you go?

Are fact based debates not your cup of tea?

I thought so. Storylines are a lot easier.

Are you studying up on EROEI?

Dr. Sandi's picture

Jimmy, this is your mom. Time to get to bed and stop playing on the Internet now.

If you're good, tomorrow I'll let you pretend to be an undercover policeman again.

clymer's picture

Jim and Grey, if you two could upload a small graphic to attach to your moniker (grey, you could use this:

and Jim, you could use this: ),

it would provide the readers a faster reference to your posts. This banter is fascinating :)

Jim Quinn's picture

Calling Dr Moe, calling Dr Curly, calling Dr Larry, calling Dr Sandi

Toying with anonymous internet trolls is amusing.

Observing the vapid comments and insane beliefs of Gray Ghost, Zero Gov't, David Pierre and a host of other ZH trolls convinces me that this country is truly fucked.

Do you have a perscription Doc?

Umh's picture

What's wrong with this blog?

LowProfile's picture

He uses ad hominem attacks on anyone who disagrees with him, regardless of the merit.

True.North's picture

Absolutely correct.

Sending fiat in return for hard assets - they call it 'long funding' @ Goldman (once they've gone short the appropriate parties).

greyghost's picture

falak...what does this have to do with peak oil? your talking about the dollar policy where "everything" of value is priced in dollars. under your post we should have peak copper,wheat,corn or iron? because the u.s. mantains this policy we have "peak oil". is it not to just maintain the u.s. dollar since oil is the largest commodity? has nothing to do with quantity. as always stated here on zero hedge price is the great equalizer...and the "price" in "gold" and "silver" says no shortage, just over printing of u.s. dollars. creating the need to police the middle east....yes. another mind numbing exercise is the "china" peak oil story...since china is stockpiling oil we "must" have peak oil. hmmmm.....maybe they are just doing what the germans did just before WWII......STOCKPILE....for war???? oh no not war....must be peak oil.....just has to be.....doesn't it??????

falak pema's picture

you don't seem to understand priorities :

The US took the easy way out: control the biggest oil patch and link it to their weak link after 1971 BW revoke to reinforce THAT link, USD fiat hegemony. By doing this they condemned the western world to live under a FAKE fiat umbrella that devalued the reserve currency, and consequently, as seen in the 1970s inflation spiral, their own wealth. It ruined the first world paradigm of welfare state and middle class wealth. It destroyed it instead of encouraging the US to seek an alternative energy and monetary route. As encouraged by the Shah and Peanut CArter's synfuels program. Game changer then that would have ensured first world's energy independence. So they chose then to outsource world production, thus further gutting the first world labour market; final dagger into the heart of the democratic and middle class construct. They chose SERFDOM for the 99% and freedom for the 1%; THEN, in 1980.

What has it to so with Peak oil? Peak oil is about OPPORTUNITY COST for replacement of the one golden resource that has fed the growth of industrial world since 1973 : ME oil monopoly. We needed an alternative energy or geographic fossil reservoir in first world, aka US coal syn fuels. We didn't put our backs to it. We CHICKENED OUT, we lost that opportunity cost of alternative energy AS OF 1981! That's the strategic price we paid! Now its that much more difficult as WE KNOWINGLY PUT, IN HUBRISTIC CERTITUDE, ALL OUR EGGS IN ONE ME BASKET, those of these wahhabist shills, who share not our values and who make our leaders into DIRE FEUDALISTS. We are in oligarchy regression, we even begin to think like them; the unkindest cut of them all! The ultimate betrayal of enlightenment. Lost opportunites to build a new paradigm, lost values, lost faith in ourselves. What was your question?

Why is PEAK OIL important? It isn't per se, in a unified political world, which doesn't exist today, it wouldn't be a big deal. But its political and mind set consequences are debilitating in a divided, hostile you understand THAT crisis of civilization? Deeper than whether we burn oil or sun or gas. We've lost our compass, our sense of values! (Apart from the ecological conundrum which I believe in but not most on Zh, so I won't dabble in that aspect of the planet's evolution).

We the people have lost our future! To those who are not on the same page as us. Not that they are worse, they are different and we must regress. As they call the tune and we pay the bills in the future, like people without a sense of what excellence means! 

BigDuke6's picture

FP you are the Rushdie of ZH.

Dreamy scribbles of dire subjects.

falak pema's picture

dreamy, lol, I'll buy that but not about oil. I worked in this industry for twenty years and I stand by what i say in terms of fact and consequence. Its a malignant cartel, its an extractive empire. Its not a dream, its a nightmare. Ask the Nigerians and the Gabonese and the Congolese; we raped them economically for forty years of their share of wealth. And we have built the ME monster just like in the old Crusader days. Its our NEW Jerusalem, hubristic colonisation of immeasurable consequence, the oil patch.

No dreams there, just stark reality; maybe the scribbles...

greyghost's picture

you're bringing up jimmy carter? that says everything. probably the worst president in american maybe the current one. lol carter...the one who said we would stop building the stealth bomber...which works great mr. carter. or did you mean the president that gave away the panama canal so china could move in and lock up both ends of the canal....did you mean that carter. not the baby clothes carter?

falak pema's picture

I meant Synfuels initiative killed by RR in 1981-82. RR told Saudis in 1982, (King Fahd, newly installed pro-american, rabid muslim king, who was all in on the Saddam Iran caper then and needed US support locally), to open the tap big time and forget peak oil in their OWN back yard. As far as RR was concerned that was US property anyway. And we have built our world since on that flawed assumption. If you know anything about the history of your own country and the wrong turn we took there from the energy paradigm perspective, you would not be so smug in bad-mouthing this President, who at least made ONE right decision. Lets face it, he was in august company by those who preceded or succeeded him; in the light of events as they have transpired : RN, GF, RR!


malek's picture

You got the big picture right, but are exaggerating some points to support your wrong conclusion.

The US has already imported lots of ME oil before Nixon broke the gold link and allowed us to pay for oil purely in funny money. So that action strengthened that approach - and maybe tricky Dick was fully aware of it. And on the other side the Oil Embargo shortly thereafter might also have been caused by some ME leaders becoming aware of it.

But if that symbioses ends -for what ever reason-, it means the US must go back to producing things to be able to pay for oil with real stuff (or indirectly with gold).
And as that also depends on demand in the oil exporting countries, that would make Canadian oil much more competitive to the ME, for example.
Or the US could push to produce more oil themselves.
And surely the drive to reduce energy consumption would get a big push.

We wasted time, yes, but there will be no crisis of civilization because of peak cheap oil.
Other developed countries demonstrate the US could comfortably live with half the energy it uses, and that's after already counting in the bigger size of the country (transportation needs) and the fact that more than half the country needs air conditioning during summer.

falak pema's picture


We will resolve this crisis of civilization when we decide to come OUT of BOTH these strangleholds. Pax Americana's future is written in the resolution of this conundrum IMO.

DaveyJones's picture

Poetic that both White House Dicks supplied profound chapters in the Petro Dollar tragedy. When Cheney said "the American way of life is non negotaible" he meant more than one perspective. Criminals often construct their own necessity defense in their twisted murderous minds. 

malek's picture

The crisis we have was not caused by using oil.

It has everything to do with dumping lots of money on select people, which (at least subconciously) know they didn't deserve it in such large amounts. If you can keep up with that long enough (no problem with fiat and control over a pool of shit everybody wants: oil), you undermine the foundations of society, some call it morality, in a VERY effective way.

(No, I'm not saying every rich person is undeserving of his/her wealth.)


Cathartes Aura's picture

ahhh falak, you're putting deep thoughts to posts,

We are in oligarchy regression, we even begin to think like them; the unkindest cut of them all! The ultimate betrayal of enlightenment. Lost opportunites to build a new paradigm, lost values, lost faith in ourselves.

these things are rarely mentioned here, but underpin civil-izations. . . there are many things lost of late, but lost values, and lost faith in ourselves & each other, this is the stuff of regrets.

they are different and we must regress

evidence all around us.

YuropeanImbecille's picture

The important part here is the "cheap oil" part, if you only have a EROEI of 1:5 then the markets can not continue to grow as we have seen to date.

So it has nothing to do with how much oil there is, the question is at what price? A 1:5 ratio will not allow for a globalization with infinite growth.


Will we fix this issue? Absolutley, but there will be a transition period that will be a bit troublesome.