He seems to be assuming there will be no tangible shortage of the oil itself - limitless reserves. I don't think even the most conservative experts assume that.

Certainly I agree the dollar should be re-fixed to gold, at the least. Better to eliminate paper money and return to gold and silver bullion.

$1.66/gal regular gas
$2.02/gal diesel fuel
$1.99/gal heating oil
Here in Va as of yesterday.

Re-fixing gold to the dollar might help oil prices (assumibly?) but what price effects would it have on everything else? Seems the Feds (or at least this administration) wants a Weak dollar....and with the mounting national debt of $7.4 Trillion growing by ~$400+ Billion/year it looks like it'll stay weak for sometime to come, perhaps forever...
vgkg

You evidently have the same issue that we have on the left coast. The least refined fuels are the most expensive. Are they trying to keep the cost of gasoline down?

As far as the dollar: Weak? When Asia decides to stop financing us it will be practically worthless (I understand they are already starting to "diversify" their holdings).

That's right, with a gold standard, the Feds couldn't keep printing money and so put off repayment of debt to future generations OR continue inflationary pressures so as to reduce the value of present bonds and other instruments of investment. Back to 15% inflation, anyone?

This is a good analysis of the potential crisis in supply of oil. Any comments on Klare's predictions?

The site doesn't have a direct link so I'm posting the whole piece.

.....
ZNet : Foreign Policy

Looming Energy Crisis Overshadows Bush's Second Term
by Michael Klare; TomDispatch; December 08, 2004

When George W. Bush entered the White House in early 2001, the nation was suffering from a severe "energy crisis" brought on by high gasoline prices, regional shortages of natural gas, and rolling blackouts in California. Most notable was the artificial scarcity of natural gas orchestrated by the Enron Corporation in its rapacious drive for mammoth profits. In response, the President promised to make energy modernization one of his top concerns. However, aside from proposing the initiation of oil drilling in Alaska's Arctic National Wildlife Refuge, he did little to ameliorate the country's energy woes during his first four years in office. Luckily for him, the energy situation improved slightly as a national economic slowdown depressed demand, leading to a temporary decline in gasoline prices. But now, as Bush approaches his second term in office, another energy crisis looms on the horizon -- one not likely to dissipate of its own accord.

The onset of this new energy crisis was first signaled in January 2004, when Royal Dutch/Shell -- one of the world's leading energy firms -- revealed that it had overstated its oil and natural gas reserves by about 20%, the net equivalent of 3.9 billion barrels of oil or the total annual consumption of China and Japan combined. Another indication of crisis came only one month later, when the New York Times revealed that prominent American energy analysts now believe Saudi Arabia, the world's largest oil producer, had exaggerated its future oil production capacity and could soon be facing the wholesale exhaustion of some of its most prolific older fields. Although officials at the U.S. Department of Energy (DoE) insisted that these developments did not foreshadow a near-term contraction in the global supply of energy, warnings increased from energy experts of the imminent arrival of "peak" oil -- the point at which the world's known petroleum fields will attain their highest sustainable yield and commence a long, irreversible decline.

How imminent that peak-oil moment may in fact be has generated considerable debate and disagreement within the specialist community, and the topic has begun to seep into public consciousness. A number of books on peak oil -- Out of Gas by David Goodstein, The End of Oil by Paul Roberts, and The Party's Over by Richard Heinberg, among others -- have appeared in recent months, and a related documentary film, The End of Suburbia, has gained a broad underground audience. As if to acknowledge the seriousness of this debate, the Wall Street Journal reported in September that evidence of a global slowdown in petroleum output can no longer be ignored. While no one can say with certainty that recent developments portend the imminent arrival of peak oil output, there can be no question that global supply shortages will prove increasingly common in the future.

Nor is the evidence of a slowdown in oil output the only sign of an unfolding energy crisis. Of no less significance is the dramatic increase in energy demand from newly-industrialized nations -- especially China. As recently as 1990, the older industrialized countries (including the former Soviet Union) accounted for approximately three-quarters of total worldwide oil consumption. But the consumption of petroleum in developing nations is growing so rapidly -- at three times the rate for developed countries -- that it is soon expected to draw even.

To meet the needs of their older customers and satisfy the rising demand from the developing world, the major oil producers will have to boost production at breakneck speed. According to the DoE, total world petroleum output will have to grow by approximately 44 million barrels per day between now and 2025 -- an increase of 57% -- to satisfy anticipated world demand. This increase represents a prodigious amount of oil, the equivalent to total world consumption in 1970, and it is very difficult to imagine where it will all come from (especially given indications of a global slowdown in daily output). If, as appears likely, the world's energy firms prove incapable of satisfying higher levels of international demand, the competition among major consumers for access to the remaining supplies will grow increasingly more severe and stressful.

To further complicate matters, many of the countries the Bush administration considers potential suppliers of additional petroleum, including Angola, Azerbaijan, Colombia, Equatorial Guinea, Iran, Iraq, Kazakhstan, Nigeria, Saudi Arabia, and Venezuela, are torn by ethnic and religious conflict or are buffeted by powerful anti-American currents. Even if these countries possess sufficient untapped reserves to sustain an increase in output, as long as they remain chronically unstable, the desired increases are unlikely to appear. After all, any significant increase in day-to-day energy output requires substantial investment in new infrastructure -- investment that is not likely to materialize in countries suffering from perpetual disorder. At best, production in such countries will remain flat or rise sluggishly; at worst, as in Iraq today, it may even threaten to fall. Indeed, the persistence of political turmoil in countries like Angola, Colombia, Iraq, Nigeria, and Venezuela has largely been responsible for the higher gasoline prices still evident, despite recent modest decreases, at the neighborhood pump.

If anything, the potential for conflict in such countries is likely to grow as demand for their petroleum rises. The reason is simple. Increased petroleum output in otherwise impoverished nations tends to widen the gap between haves and have-nots -- a divide that often falls along ethnic and religious lines -- and to sharpen internal political struggles over the distribution of oil revenues. Because the wealth generated by oil production is so vast, and because few incumbent leaders are willing to abandon their positions of privilege, internal struggles of this sort are prone to trigger violent clashes between competing claimants to national power.

In many cases, these clashes may take the form of attacks on the oil infrastructure itself, further jeopardizing the global availability of energy. As shown in Colombia and Iraq, where raids on oil pipelines and pumping stations have become a near-daily occurrence, such infrastructure -- stretched out over miles and miles of jungle or desert -- represents an unusually vulnerable and inviting target for terrorism. Not only do such attacks deprive the prevailing regime of vital revenues, but they also constitute an assault on the United States and the large multinational corporations that are deemed responsible for so many of the developing world's afflictions.

With oil demand regularly outpacing supply and disorder spreading in major producing areas, global shortages and resulting high prices are likely to become the norm, not the exception. Ideally, the United States could compensate for any shortfalls in the global availability of petroleum by increasing its reliance on other sources of energy. When producing electricity, for example, it is often possible to switch from coal to natural gas and back again. But most of our petroleum supplies are used in transportation -- mainly to power cars, trucks, buses, and planes -- and, for this purpose, oil has no readily available substitutes. Indeed, we have so organized our economy and society around the availability of cheap and abundant petroleum that we are severely ill-equipped to deal with the sort of shortages and supply disruptions that are likely to become the norm in the years ahead.

It is here that the performance of the Bush administration should come in for close scrutiny. In response to the earlier energy crisis of 2001, the President appointed a National Energy Policy Development Group (NEPDG), headed by Vice President Dick Cheney, to analyze America's energy predicament and devise appropriate solutions. The NEPDG issued its final report, the National Energy Policy (also known as the Cheney Report), in May, 2001. How the group arrived at its final assessment is a matter of some speculation, as the administration has refused to make its deliberations public, but its conclusions are incontrovertible: rather than stress conservation and the rapid development of renewable energy sources, the report called for increased U.S. reliance on petroleum. And because domestic oil production is in an irreversible decline, any rise in American oil usage necessarily entails an increased reliance on imported petroleum.

In a crude attempt to mislead the public about the nature of our oil dependency, the Cheney Report called for increasing U.S. energy "independence" by exploiting the untapped oil reserves of Alaska's Arctic National Wildlife Refuge (ANWR) and other protected wilderness areas. But ANWR only possesses sufficient petroleum to provide this country with (at most) 1 million barrels per day for an estimated 15-20 years, a tiny fraction of the 20 million barrels of additional oil that will be needed to supplement domestic output in 2025. What this suggests is that the overwhelming bulk of this additional energy will have to be acquired from foreign sources. To obtain all this imported energy, the Cheney Report calls on the President and his chief associates to place a high priority on acquiring additional petroleum from producers in the Persian Gulf, the Caspian Sea basin, Africa, and Latin America -- that is, from regions especially susceptible to instability and anti-Americanism.

As a result, we are more dependent on foreign oil in 2004 than we were in 2001, and all the indicators suggest that this dependency will only become more pronounced during Bush's second term. Yes, the administration has proposed modest investment in the development of hydrogen-powered fuel cells and other new energy systems; but, at current rates of development, these new technologies will not prove capable of substituting for oil on a significant scale during the next few decades. This means that we will face our looming energy crisis with no viable fallback measures in sight. We remain trapped in our dependence on imported oil. In the long run, the only conceivable result of this will be sustained crisis and deprivation.

When, and in just what form, the United States enters the coming energy crisis cannot be foreseen. Perhaps it will be provoked by a coup d'at in Nigeria, a civil war in Venezuela, or a feud among senior princes in the Saudi royal family (possibly brought on by the impending death of King Fahd). Or it could be thanks to a major act of terrorism or a catastrophic climate event. Whatever the case, our existing energy system, already stretched to its limits, will not be able to absorb a major blow like this without considerable readjustment and pain -- or worse. While President Bush is likely to respond to a new energy crisis, as he has in the past, with renewed calls for drilling in ANWR and the further relaxation of U.S. environmental standards, nothing he has proposed to date even suggests a viable exit strategy from perpetual crisis.

Michael Klare is a professor of peace and world security studies at Hampshire College in Amherst, Mass., and the author, most recently, of Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency (The American Empire Project, Metropolitan Books).

Copyright C2004 Michael Klare

[This article first appeared on Tomdispatch.com, a weblog of the Nation Institute, which offers a steady flow of alternate sources, news, and opinion from Tom Engelhardt, long time editor in publishing and author of The End of Victory Culture and The Last Days of Publishing.]
.....

Yes, it seems that every hiccup in oil production shoots the price of crude up ....with accompaning retail rises about the same day!! No reserve - no cushion.
Also it seems that corporations have to project healthy reports or they are in trouble quickly. So many hedge and fudge their reports and whammo..it backfires on them.

Meanwhile, back at the ranch, my electric power company has tentative plans to expand with a new plant using coal gasification with reduction of sulphur, mercury, and such polluants. The reason for coal kind of fits in with the uncertainty of natural gas I suppose. They say that there is plenty of coal.

Seems to me that Bush and Company as getting just the energy program required to pay back those supporters in the various energy businesses. High pump prices may not mean necessarily high profits but do me higher evaluations of reserves and other resources and capacities. What is all this worry about imported energy...it is far too late.

Thanks for the reference to Jude Wanniski's article. I would have more confidence in the gold standard, if that mechanism had prevented the great depression, back in the 1920's. I agree that defict spending by the federal government is ultimately de-stabilizing with regard to the value of the dollar. I would like to see this become an issue in the next presidential election.

With regard to auto fuel, by best guess is that the pump price is being kept artificially low, in order to prop up public support for the current administration. Without government interference, the price per gallon for gasoline might be twice what we are seeing.

Eric, the great depression was nothing new, the U.S. had seen at least three such depressions before. Two between 1815 and 1830, and another after the civil war. The difference though was that Hoover and then FDR tried to use the government to do something about it; it worked, they made it worse (the first two and the great depression had the same cause: land speculation).

The dollar has lost 95% of its value in the last century, gold has the same purchasing power in relation to the price of goods.

Eric, it can't wait four years. We better make the deficit an issue now and enforce it at the polls in 2006. The budget is out of control and stands to get worse with continued drain from overseas empire building and the proposed Social Security privitization looking at adding another few trillion. At some point, the fall in value of the dollar and US's poor credit will cause the foreigners carrying our tab to choose not to finance us and then we'll be in a real pickle.

From what I've read, the main causes of the great depression were unprecedented private debt (consuming the future now) and huge disparity between the incomes of the top few percent and the average. Disturbingly similar to today's conditions.

I doubt land speculation could wreck an ecoomy because the average person can't afford to speculate much, so when the bubble bursts it's mostly a situation of the already well-off having a lower net worth on paper.

"Land Speculation"?.....I wonder if that can translated into today's real estate price explosion/bubble?

I see a difference between overvalued stocks or paper money and overvalued real property; unfortunately, folks have mortaged and re-financed said properties to purchase other consumer goods and even shares in stock. If the economy tanks in a recessionary way, the value of property will decline while the value of indebtedness lags in that fall. We will have to repay those debts with currency with diminished value.

That's exactly what I'm referring to Vgkg. The question is how will the prices be readjusted. Will the houses actually lose dollar value, or will the dollar depreciated to reflect the true value?

It'll be really messy if it's the latter.

Time for some history and economic lessons.

There were actually many causes of the Great Depression. One of them was people buying on margin hoping to make a quick buck on the stock market. People at that time could borrow up to 100% on margin to buy stocks (can't do that any more). For a while it worked. However, as in previous and current stock bubbles, when it burst, it really burst. References--see tulip bubble of 16th century in Holland and compare that to other recent and previous crashes.

There were also some other basic problems with the economy. During the 20's while the rest of the country was living in prosperity, the agricultural industry was in ruins. People were moving to the cities in unprecendented numbers. These new people all couldn't find work and unemployement was growing. The stock bubble was "the straw that broke the camel's back"--let's not forget what else the camel was carrying to break his back in the first place.

Today's real estate speculation is mainly due to 2 reasons. One is the rise of the stock market in the 80's and 90's which left people with unprecedented wealth. Combine that with today's low interest rates and you should expect a rise in real estate. There is an inverse relationship between interest rates and property values. When rates are lower, people can afford to buy larger homes with the same monthly payments. Therefore, they can afford to make larger bids on homes. However, if our national debt continues to accumulate at the rate we are going, it will squeeze interest rates causing them to go up, and many people who bought homes will find themselves "upside down", ie the debt on their homes will be greater than its value, which by the way happened in the real estate bubble in the late 80's/early 90's (one of the main reasons of the S&L collapse).

Some people may choose to just "walk away" from their homes, and banks and other debt holders will be left trying to sell these newly possessed homes. Most of the debt holders will not be able to recover the full value of the homes and they will be forced to sell at a loss. Two things then happen: 1) If enough of these debts are incurred by a single financial institution, we the taxpayers may be left with the bill to bail them out. 2) The instititons will try to sell the repossesed homes as quickly as possible often at lower than market prices, which will cause the prices of the other homes to go down accelerating the process. Sort of sucks doesn't it.

When an economy goes into a recession, the government will often borrow even more money to try to stimulate economic growth. Sort of perpetuating cycle isn't it. I attached a link about the great tulip crash and other great crashes. Compare that to the stock market crashes of the 20's and 90's and you will see an uncanny resemblence. To quote a quote often quoted but never heeded

Those who do not learn from history are doomed to repeat it

Here is a link that might be useful: Great Crashes of History

~George Santayanna

Close-his is

Those who cannot remember the past are condemned to repeat it.

There are other variations like

History repeats itself, has to, nobody listens
---Steve Turner

If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience
--George Bernard Shaw

Lessons have been around for a while. Everyone has their own take. It is just our nature not to learn from them, hence the number of quotes.

VP Cheney has been quoted as saying that "Ronald Reagan showed us that deficits don't matter".
Me thinks that the moth flew pretty close to the flame that time around....

George Santayanna may have said that as well, but he is most well known for "Those who do not learn from history are doomed to repeat it."

Oils well that ends not so well??

End of Oil Could Fuel 'End of Civilization as We Know It'
By Robert Roy Britt
LiveScience Senior Writer
posted: 14 December 2004
03:28 pm ET
SAN FRANCISCO -- Opponents in a long-running debate over when the world will run out of oil squared off Tuesday in a crowded room of scientists, reaching only one conclusion: The supply of fossil fuels is fixed and the world economy will eventually have to wean itself from oil.

The most dire and perhaps speculative forecast calls for global oil production to peak next year -- specifically on Thanksgiving.

Others say the end can't be accurately predicted, but that it is likely decades rather then centuries away, and that the consequences will be grave: huge inflation, global resource wars -- China vs. the United States was emphasized as a possibility -- and the end of civilization as we know it.

Other experts at the face-off, held here during a meeting of the American Geophysical Union, said there is nothing to worry about in the short term.

U.S. peaked already

The argument stretches back to a 1956 prediction by M. King Hubbert that oil production in the lower 48 U.S. states would peak in the early 1970s. He was right. The United States now imports nearly 60 percent of the oil it uses.

Kenneth Deffeyes, a Professor Emeritus at Princeton University, has taken Hubbert's logic a step further and predicts the world's oil production will top out late in 2005.

"It's Thanksgiving plus or minus three weeks," said Deffeyes, who grew up in the oil fields and was a researcher at Shell Oil for several years.

Deffeyes second book on the topic, "Beyond Oil: The View from Hubbert's Peak" (Hill and Wang) is due out in March. His crystal ball is full of complex formulas and, most scientists agree, numbers that are impossible to accurately pin down, such as the amount of oil in known fields and how much more will be found.

"This is not science," said Michael Lynch, a political scientist and energy consultant. "This is forecasting."

Lynch agrees there are problems with relying so heavily on oil, and he sees more price volatility ahead. But he argues that many smaller deposits will be found and they will add up to "a lot of oil" over time. He also faults the running-dry-soon predictions as being based not on geology, but on politics and economics: Oil production in various countries has flattened or fell at certain times for reasons having nothing to do with how much they could produce, Lynch says.

Further, Lynch contends, it is not possible to predict the discovery of new oil fields or the true size of existing in-ground reserves. He likens current oil forecasts to stock market prediction. Charts fit history well, he says, "but they're not predictive."

Alternatives?

Likewise, analyst Bill Fisher of the University of Texas at Austin sees plenty of oil over the next few decades. Fisher sees no reason to panic. He expects the world to gradually transition to an economy based on natural gas during the first half of this century, then to a hydrogen economy before 2100. He pointed out that estimates of oil reserves tend to grow over time, no matter who does the guessing.

The debate got more complex at this point.

Caltech physicist David Goodstein sees little hope for hydrogen, which he said requires fossil fuels in order to extract. And natural gas, like oil and coal and shale (another proposed alternative) are all finite, Goodstein argues.

"The oil will run out," he said. "The only question is when."

Goodstein puts little stock in nuclear fusion, which for decades has been proposed as the cousin of fission with unlimited potential. "Fusion and shale oil are the energy sources of the future, and they always will be," he quipped. Solar energy shows promise, he said, but "we haven't figured out how to use it."

So Goodstein takes a pragmatic approach. It doesn't matter so much when we run out, he argues, but what we do about it.

Global trap

Goodstein, author of the book "Out of Gas: The End of the Age of Oil" (W.W. Norton & Company) sees a looming world crisis that could fuel war and bring society to its knees.

"We have created a trap for ourselves," Goodstein said.

The United States has so far avoided serious consequences from the trap by relying on imports. The country uses about 7 billion of the 30 billion barrels of oil produced annually around the globe. And it makes us rich. Oil consumption equals standard of living, experts agree.

Meanwhile, other countries are beginning to clamor for oil at unprecedented rates, and therein lies the recipe for potential disaster.

China uses a comparatively modest 1.5 billion barrels a year (perhaps 2.4 billion this year) according to some estimates. India consumes less. Both countries' economies are becoming increasingly dependent on oil, however. China's consumption is expected to grow 7.5 percent per year, and Indias 5.5 percent, according to the Institute for the Analysis of Global Security.

By 2060, oil production will have to triple just to meet global population growth and maintain current standards of living, said Stanford University geophysicist Amos Nur.

Yet China's own production has been flat since the 1980s and it now imports 40 percent of what it needs.

'When do we panic?'

"What matters in the short term is, when do we panic?" Nur said. "In my opinion, the point of panic has already taken place."

It's a behind-the-scenes sort of panic. The two largest economies on Earth -- China and the United States -- have already incorporated the finite nature of oil into their national security policies, Nur argues, citing policy statements from both governments reflecting the need to secure stability in oil-producing countries and a free flow of the resource. The war in Iraq, a country second only to politically unstable Saudi Arabia in oil reserves, is another clue, he said.

"There is a huge conflict that might be emerging," Nur said.

Some of the fine points of the various presentations were argued, even resulting in one shouting match over how much oil is in Saudi Arabia. But none of the roughly 500 scientists in the room voiced disagreement with Nur's view of the potential for war.

If the world is sliding toward global conflict over oil, the skids may be pretty well greased, politically speaking.

Governments do not have the political will to prepare for the end of oil, says Goodstein, the Caltech physicist.

"Civilization as we know it will come to an end sometime this century, when the fuel runs out," Goodstein said, adding that "I certainly hope my prediction is wrong."

All I can say: I'm glad that I'll be gone by that time but feel sorry for my grandchildren. It has been a grand ride surfing the frontiers of fossil fuels.

Who cares? I predict that this: Anything Into Fuel is the future, at least in the shorter term. Even those concerned about global warming shouldn't object as the process is carbon neutral. Additionally, instead of trying to keep heavy metals out of sewage so that it can be composted, why not run it through this process, which ensures that they are converted to insoluble oxides?

How much of our waste consists of organic compounds (even plastic could be fed into this process)? I know this technology has been mentioned before, but it seems to be very quickly forgotten. If costs are higher than for crude, who cares? If and when oil reserves start to run down, people will be willing to bear the cost.

Right On! No more burials, only burning in the interest of energy production and efficiency! Outlaw composting -- every bit of organics goes to co-generation systems or their future analogs.

SoCal23-Your "Anything Into Fuel" link reminded me of a giant Mr. Fusion. LOL.

Here is a link that might be useful: Mr. Fusion

Marshall, the majority of material in your average landfill could be similarly processed. No reason to go after home composters (or their compost for that matter).

Santa Barbara County used to lead on the matters of personal and municipal recycling and has been tub grinding at least a part of the yard/tree trimming waste stream for some time. OTOH, during time of expensive natural gas, all or part of this organic waste stream has been diverted to co-generation plants up toward Sacramento.

Santa Barbara Co. and constituent cities failed to meet the State-mandated "50% diversion rule" by the 2000 deadline. More than 50% of total waste is still land-filled.