We are now far advanced into the third central bank generated bubble of the last two decades, but our monetary politburo has taken no notice whatsoever of its self-evident leading wave. Namely, the massive malinvestments and debt mania in the shale patch.Call them monetary bourbons. It is no exaggeration to say that inhabitants of the Eccles Building deserve every single word of Talleyrand’s famous epithet: “They learned nothing and forgot nothing.” To wit, during the last cycle they claimed to be fostering the Great Moderation and permanent full employment prosperity. It didn’t work. When the housing and credit bubble blew-up, it washed out all the phony gains from the Greenspan/Bernanke printing spree. By the time the liquidation was finished in early 2010, there were 2 million fewer payroll jobs than there had been at the turn of the century.
Severe Flooding, Against a Background of Wind Turbines (Image: T. Larkum)
Never mind. The Fed simply doubled-down. Instead of expanding its balance sheet by 50%,as happened during the eight years between 2000 and 2008, it went into monetary warp drive, ballooning its made-from-thin-air liabilities by 5Xin only six years. Yet even after Friday’s ballyhooed jobs report there were three million fewer full-time breadwinner jobs in November 2014 than there were in the early 2000s.
Although an increasing number of people are adapting to the realities of more expensive and declining energy, and a permanently depressed economy, many are still… shall we say, circumspect, about their activities. They may have been driven underground after encountering ridicule or denial from friends and family, or perhaps are just are leery about random people showing up at their door when crunch time arrives.
Prep-dar n.Informal 1. The keen observation skills and attention to detail which allow you to identify other people who are aware of, and covertly preparing for, peak oil. 2. A shortened version of “prepper radar”.
So how do we find these fellow prep enthusiasts, so we can join forces, help each other, and make our communities stronger? You could check out your local Transition initiative, or search online for a peak oil meet-up in your area. However, some of these undercover peak-oil-preparers may be people you already know…. friends, acquaintances, work buddies, even family – you just have to figure out who they are.
Oil Mountain (Image: D. Bacon/Shutterstock/Economist)
To help you find them, here are the top ten clues that should set your Prep-dar buzzing. You might know a closet prepper if he or she:
10. Gives you a Bo-Go flashlight, first-aid kit, or copy of Just In Case: How to be self-sufficient when the unexpected happens for Christmas.
9. Knows the difference between the IEA and the EIA; and/or calls the EIA “the most incompetent bungling liars in the government.”
8. Is overheard exclaiming “But Sharon Astyk/Richard Heinberg/James Howard Kunstler/Dmitry Orlov/Matt Simmons/Gail the Actuary says ____________!”
7. Sends you articles published by The Oil Drum, Energy Bulletin, or Life After the Oil Crash , “FYI.”
6. Stores any type of food in a bucket.
5. Is fired after a happy hour at which she tells the boss he’ll be doing hard labor when “TSHTF.”
4. Privately admits to cashing out their entire 401(K) to purchase gold, ammunition, and prime farmland.
3. Complains of marital discord arising from arguments about the number of chickens that might fit on a quarter-acre lot, or the excessive amount of lawn which has been converted to okra production.
2. Tends to use terms like Cantarell, TEOTWAWKI or Hirsch Report after a few glasses of wine.
and finally…..
1. Offers to share seeds, teach you to can tomatoes, help you compost, build a raised garden bed, plant a fruit tree for you, car-pool, chop firewood, give you fresh eggs, set up a rain barrel, or show you how to use a solar cooker.
In that case, who cares if they know about peak oil – you want to be their friend!
“Peak oil” is starting to pop up in the media more and more these days. Everybody from Glenn Beck to the Sierra Club says that the world is running out of cheap oil and that this could be, well, inconvenient, for the global economy. But really, What is peak oil and what does it mean for you? And most importantly, is peak oil just another excuse for Beck to hawk Goldline or for Al Gore to seek more subsidies for solar panels?
Oil’s place in the global energy mix is transforming, including in mobility, which uses three-fifths of world oil (Image: Thinkstock/curraheeshutter)
Not to worry. Transition Voice’s Snarky Guide to Peak Oil sorts it all out for you. Or double your money back. That’s a promise.
What is peak oil?
The collapse of society? Mutant zombie bikers in the streets? Fox News commentator Neil Cavuto starring in his own prime-time TV reality show?
Peak oil is not the end of the world, but it will be the end of the Oil Age. That doesn’t mean we’re running out of oil, but it does mean the world is running out of cheap oil. And talk about bad timing — world oil has peaked just when countries like China, India and Brazil have started to use lots of oil for the first time, competing with America, Europe and Japan for the second half of world oil.
“How did OUR gas wind up in THEIR tanks?”
More Customers + Less Oil = Higher Prices.
Peak oil is as much about the economy and politics as it is about geology. And it’s not just about pain at the pump, though it couldn’t hurt to trade your pick-up truck for a Prius soon — or better yet, try to work and shop closer to home. Peak oil is also about paying more for all the stuff that oil makes possible, from bread made with wheat grown on factory farms to polo shirts and DVDs imported from China.
Peak oil, combined with climate change, might just mean the end of shopping as we know it, in the words of Australian author Paul Gilding.
The ‘fracking revolution’ has transformed the economics of oil production globally, with the US becoming a bigger producer than Saudi Arabia and – after decades of dependency on oil imports – even being able to export some of its surplus production.
US shale oil is unusual, too, in being privately owned: most of the world’s oil reserves (over 70 percent) are in state hands. Like the North Sea 30 years ago, in a world dominated by state-owned companies and publicly owned reserves, US shale could look like a new frontier for private operators on the search for fat profits.
New technology, high oil prices, and plentiful cheap credit have encouraged the boom. Some $200bn has been borrowed to invest in fracking in the last few years, accounting for 15 percent of the entire $1.3tr US junk bond market. Investors were, in effect, betting on continuing high oil prices making their investments profitable for years to come.
Price Slump
Last year’s slump in prices trashed that calculation. From a mid-year high of $115 per barrel, by the end of 2014 the price per barrel had fallen by more than 40 percent. More than half of US shale rigs have been laid up since October.
The driver, last year, was the behaviour of OPEC – the Organization of Petroleum Exporting Countries. OPEC is a cartel agreement among major oil producers that seeks to manage the international market for oil. With oil prices already plunging over the summer, OPEC could be expected to ease off on production. Restricting supplies should, thanks to the magic of the market, produce a decent increase in the sale price of oil. Instead, with Saudi Arabia taking the lead, OPEC decided to continue production levels. No agreement on restricting output could be reached. Prices slumped.
The economics of oil production are simple – crude, even. The upfront investment needed to sink a new well is significant. After that point, however, the variable costs – including pay – are a minimal part of the expenditure. That’s the case even when, as in Norway, oil workers’ average annual wages are $179,000.
These high initial costs, relative to lower running costs, mean that once a well is drilled the owner has a huge incentive to keep on drilling – even at very low prices. If they can cover their immediate costs, which are low relative to the initial outlay, they can make a profit in the short run.
But that creates a ratchet effect: once a well is drilled, only a spectacular fall in the price of oil will stop oil from being pumped. The more oil is pumped, however, the lower the price is likely to fall. Each producer, in this scenario, is trapped into producing more and more, driving down the price further and further. This effect has meant the slowdown in US shale output has been far slower than might have been expected, given the dramatic decline in price.
Both the stock market and oil prices have been plunging. Is this “just another cycle,” or is it something much worse? I think it is something much worse.
Back in January, I wrote a post called Oil and the Economy: Where are We Headed in 2015-16? In it, I said that persistent very low prices could be a sign that we are reaching limits of a finite world. In fact, the scenario that is playing out matches up with what I expected to happen in my January post. In that post, I said
Needless to say, stagnating wages together with rapidly rising costs of oil production leads to a mismatch between:
The amount consumers can afford for oil
The cost of oil, if oil price matches the cost of production
This mismatch between rising costs of oil production and stagnating wages is what has been happening. The unaffordability problem can be hidden by a rising amount of debt for a while (since adding cheap debt helps make unaffordable big items seem affordable), but this scheme cannot go on forever.
World Oil Supply (production including biofuels, natural gas liquids) and Brent monthly average spot prices, based on EIA data (Image: G. Tverberg/Our Finite World)
Eventually, even at near zero interest rates, the amount of debt becomes too high, relative to income. Governments become afraid of adding more debt. Young people find student loans so burdensome that they put off buying homes and cars. The economic “pump” that used to result from rising wages and rising debt slows, slowing the growth of the world economy. With slow economic growth comes low demand for commodities that are used to make homes, cars, factories, and other goods. This slow economic growth is what brings the persistent trend toward low commodity prices experienced in recent years.
The characteristic feeling of the post-2008 world has been one of anxiety. Occasionally, that anxiety breaks out into fear as it did in the last two weeks when stock markets around the world swooned and middle class and wealthy investors had a sudden visitation from Pan, the god from whose name we get the word “panic.” Pan’s appearance is yet another reminder that the relative stability of the globe from the end of World War II right up until 2008 is over. We are in uncharted waters.
Painting: “The Closed Bank” (Die geschlossene Bank). 1870s. Edoardo Matania (1847–1929). Via Wikimedia Commons.
Here is the crux of the matter as expressed in a piece which I wrote last year:
The relentless, if zigzag, rise in financial markets for the past 150 years has been sustained by cheap fossil fuels and a benign climate. We cannot count on either from here on out….
Another thing we cannot necessarily count on is the remarkable geopolitical stability that the world experienced for two long stretches during the fossil fuel age. The first one lasted from the end of the Napoleonic Wars in 1815 to the beginning of World War I in 1914 (interrupted only by the brief Franco-Prussian War). The second lasted from the end of World War II in 1945 until now.
Following the withdrawal of U.S. military forces from Iraq, the Middle East has experienced increasing chaos devolving into a civil war in Syria; the rapid success of forces calling themselves the Islamic State of Iraq and Syria which are busily reshaping the borders of those two countries; and now the renewed chaos in Libya. We must add to this the Russian-Ukranian conflict. It is no accident that all of these conflicts are related to oil and natural gas.
As I view the current world landscape, I am reminded of two movies (which I’ve written about before) that I think capture the zeitgeist: Melancholia and Take Shelter. In both the protagonists increasingly sense that something is terribly wrong, but can’t quite put their finger on it. Everyone around them thinks they are ill or crazy. But for both protagonists, their anxiety comes from an inner vision that stems not from mere psychic disturbances, but rather from alarming real-world circumstances that are about to break into the open.
In a sense, these two characters represent those of us who cannot repress the pervasive anxiety of our times and who seek not merely to alleviate it, but rather to face it–to find out its origins and address its causes.
I spend much of my life making the case for changing one’s life (and not just one’s life – for supporting political and social change that is associated with it) in fairly radical ways, very quickly. I spend a lot of my time writing about this, and periodically I get on a train or a bus or something and go stand up in front of people and make the same case. I know this is a diffcult thing for many people, whose infrastructure envelopes them and pushes them powerfully towards a particular way of life, so I try to make good arguments for doing it now. I make moral arguments, about the use of a fair share. I make political arguments about not giving our money to causes we abhore. I make economic arguments. I make the argument that it will probably be a lot easier to adapt later if we have some practice.
But in the last year or two, I’ve been debating with myself how necessary I think these arguments actually are. Don’t get me wrong – I think there are still compelling moral arguments to choose to live in a certain way, and to support certain responses to climate change and depletion. For me personally, these are the most compelling possible reasons for doing this – even if climate change and depletion weren’t a reality, the truth is that Americans can only consume as they do if they tell themselves that other people in the world really won’t mind if they take more than their share, and of course, we all know that’s complete nonsense.
But I also think that the days of being able to choose to live with less are probably over. My prediction for the coming decade is pretty simple – we’re headed fairly rapidly into a time past all choosing. If the “aughts” were about the growing recognition that things are going to change, the teens, I think are now about the growing reality of that change – the recognition that none of us have the resources, or the wealth, or the immunity from changing circumstances to resist change for very long. The question is how we will change, not whether we will.
What do I mean by this? I mean that whether it comes from a worldwide economic crisis (begun already, not nearly as resolved as people say, and likely to be ongoing), from the gradual end of growth, from carbon finally being priced appropriately at the mine/well/etc…, from the costs of dealing with a rapidly increasing number of natural disaster linked to our lack of ecological awareness, from actual energy shortages or simply extremely volatile energy prices, from rising poverty and unemployment that absorb more and more of us or from failing infrastructure as we face the costs of not maintaining our sewers, electric greed, soil, water systems…. it is going to be increasingly impossible for most of us to go on as we have been.
It is no accident that the bills come due pretty much all at once in this decade. This is the decade, for example in which we can probably expect to firmly establish our oil peak, and if the promise of shale fails, as it may, our gas peak as well. This is the decade in which we run out of money to pay the Medicare bill (2017) and in which we have really begun to see the growing consequences of climate change – an ice free summer arctic, the first one in which we expect really big waves of climate refugees, etc… This is the decade in which our deferred maintenence will begin to come due as more and more of the things we’ve left undone come back and bite us in the ass. This is the decade when we begin paying for all the things we were borrowing for in the last few years. How do we know this is true? Well, the most obvious reason is that these things are already happening.
I don’t think I’m yet convinced that in the UK we need to worry too much about being prepared for disasters. However, I found these articles interesting and worthy of ‘bookmarking’ to consider later.
100 Items to Disappear First
“From a Sarajevo War Survivor”
1. Generators (Good ones cost dearly. Gas storage, risky. Noisy…target of thieves; maintenance etc.)
2. Water Filters/Purifiers
3. Portable Toilets
4. Seasoned Firewood. Wood takes about 6 – 12 months to become dried, for home uses.
5. Lamp Oil, Wicks, Lamps (First Choice: Buy CLEAR oil. If scarce, stockpile ANY!)
6. Coleman Fuel. Impossible to stockpile too much.
7. Guns, Ammunition, Pepper Spray, Knives, Clubs, Bats & Slingshots.
8. Hand-can openers, & hand egg beaters, whisks.
9. Honey/Syrups/white, brown sugar
10. Rice – Beans – Wheat
11. Vegetable Oil (for cooking) Without it food burns/must be boiled etc.,)
12. Charcoal, Lighter Fluid (Will become scarce suddenly)
13. Water Containers (Urgent Item to obtain.) Any size. Small: HARD CLEAR PLASTIC ONLY – note – food grade if for drinking.
14. Mini Heater head (Propane) (Without this item, propane won’t heat a room.)
15. Grain Grinder (Non-electric)
16. Propane Cylinders (Urgent: Definite shortages will occur.
17. Survival Guide Book.
1. Acoustic Instruments – For entertainment and morale.
2. Aluminum Foil – Great for all sorts of things like cooking food, boiling water, enhancing antennas, keeping sunlight out, etc.
3. Axes – How else will you chop firewood?
4. Baby Wipes – Really easy way to keep clean.
5. Baseballs, basketballs, footballs, etc. – Playing ball is a great way to stave off boredom and keep morale up during hard times.
Credit Card Knife
6. Bicycle Gear – If gasoline is in short supply, you might need your bike to get around. That means you’ll need a bike pump, extra tubes, etc.
7. Book lights – It’s difficult to read by candlelight and you don’t want to waste your flashlight’s batteries. Book lights are cheap and last a long time.
8. Books – You might be surprised how much free time you have after the SHTF. Now’s your chance to read those books you always meant to read (like Atlas Shrugged).
9. Bug Spray – There is usually a major lack of proper sanitation after a disaster, especially if there isn’t running water. That means there will be more roaches and other critters. There might also be a lot more mosquitoes.
10. Bullion Cubes – These make boring meals much more delicious.
While channel surfing a little while back, I stumbled across the National Geographic channel’s show Doomsday Preppers which follows people who have essentially made a lifestyle of preparing for what they believe is going to be a catastrophic disaster that will lead to the end of civilization as we know it.
Almost all of the people profiled appear to be gun-and-ammo-loving Americans, who stockpile decades worth of food and paper products and believe having gazillions of gallons of gas will be their new world’s currency — when they come out of hunkering in their bunkers.
I can’t claim to have seen every episode, but I saw enough to find it ironic how often its subjects are preparing for something like a collapse in the banking system or faith in paper currency, or for a dirty bomb, but no one ever seems to be preparing for global warming in this extremely fretful segment of society.
It’s an odd and unfortunate paradox that the people who seem most concerned about future threats to our way of life seem to disregard one of the most dangerous and obvious ones we face at this very moment, today.
A United Nations (UN) report has put the world on notice that climate change will force millions of people to relocate triggering famine, inciting conflict and losing trillions of dollars worth of economic gains. The irreversible consequences of climate change will lead to economic mass migration. Then, there is a risk of violence which will increase from protests triggered by international or civil conflicts.
While I don’t think it’s a good thing to scare people unduly, a healthy respect for something on this scale is warranted. It’s a good idea to get an emergency preparedness kit, decide on a plan, and have awareness of what to do in the event of a disaster. It’s doubtful you will need an underground bunker with a year’s supply of canned food; it is, however, common sense to have a weather radio, flash light, and some non-perishable food items and all your necessary medications on hand in case the power is knocked out by a storm for example.
Along with your emergency plans, find the time to discuss with your family where you would go if you needed to take shelter in your home or if you needed to leave town for an impending hurricane or earthquake. Are you are unsure of what disasters are likely in your area or where you should go during an earthquake or tornado? Do sensible research. There are a number of resources online to get informed about disaster preparedness.
CDC’s preparedness website and FEMA’s emergency strategies and solutions are excellent resources for reliable and credible information on how to look after yourself and your family. Share your research with your neighbors and other members of your community. Knowledge is powerful and life-saving, and should not be wasted in the selfish pursuit of only looking after number one.
I find the Doomsday Preppers resembling escapists more than survivalists. Focusing on how to abandon modern life with the motto of the SHTF scenario — when the “Shit Finally Does Hit the Fan,” alarming and void of any caring for mankind, outside their own families. We’re in this world together, and our responsibility to preserve this planet goes well beyond any single individual’s bunker’s walls.
An article from back in 2012 with an interesting take on Transition versus Prepping
Is the “end” near? If the pop-culture version of the Mayan calendar’s “apocalyptic” predictions turns out to be correct and the world ends on 12/21/12, then you will probably not be reading this blog. The fiscal “cliff” sounds dire, but luckily it is only an annoying metaphor. This latest round of end-of-the-world hysteria is part of an ongoing theme in American culture that includes the 20th century fears of Cold War nuclear Armageddon, the “Y2K” mania leading up to December 31, 1999, Dick Cheney’s obsession in the early 2000s of terrorists with suitcase nukes, and the constant stream of movies and television shows portraying the sudden dramatic end of civilization.
Americans consciously or subconsciously understand that the world as we know it could alter in an instant, and such TV shows provide cathartic relief to that tension. Notable among cable television’s recent boom in “end times” programming is National Geographic Channel’s “Doomsday Preppers.” The show profiles individuals and families as they build bunkers and compounds, can dry goods, and purchase paramilitary vehicles that can serve as mobile homes in which to survive amidst the teeming post-apocalyptic masses. Each “prepper” has their threat of choice, ranging from earthquakes, tidal waves, droughts, and food shortages, to super-volcanoes, nuclear holocaust, viruses, terrorists, and more. The show takes all apocalyptic scenarios seriously and provides an expert to evaluate the prepper’s actions and suggest improvements and additional preparations they can make in the basic categories of water, food, shelter, and security.
Food Storage And Prepping Are So Important (Image: SurvivalistPrepper.net)
To audiences concerned with sustainability and climate change, the show sends mixed messages. On the one hand, most preppers demonstrate an admirable understanding of where their food and water come from, the motivation to design resilient systems, and display actions consistent with basic emergency preparedness. On the other hand, the show tends to highlight the “lifeboat strategy” of saving one’s self, family, and perhaps a few friends, while allowing the rest of society to crash and burn, with an emphasis on guns instead of, say, community gardens.
