Sunday, May 25, 2008

Not a Doomsayer, but...

Well, maybe I am.

The pic to the right is from I am Legend.

My friend Ben Hatke, about a year and half ago, introduced me to the quasi-organized body of knowledge regarding "peak oil," a phenomenon which basically means we are going to run out of oil relatively soon and our economy and way of life will change dramatically.
At the time, I was a car salesman, already seeing the desire of many customers for hybrid vehicles and gas conservation. Because of this, I thought that car companies would see the writing on the wall and make more earnest efforts to alter their fueling technology. But this has not been the case, as the automakers continue to produce gas guzzlers, even while they cut production for vehicles in North America. Ford, has recently announced plans to cut production of their best-selling F-Series and SUVs due to gas.

The F-150, the best-selling large pickup for 31 years only gets an estimated 12 MPG in the city and 18 MPG on the highway. That's awful, but that's been the industry standard for many years now and the industry, while it claims to be "green," has barely made even a dent in our consumption of oil.
Meanwhile, the auto industry in China and India is booming--and they're not drving Hybrids.

What I am gettting to is that this means a lot of consumption of fuel. I presently believe at this time that we are in for an oil shock at the pump, while the MF oil companies' revenues continue to soar to record margins to the tune of a billion a week. Some are preparing in a very serious way to handle this seemingly inevitable catastrophe, and the more gas prices spike to where the oil companies want them to be, the more I think these people aren't so loco and it's time to get a subscription to Mother Earth News.

Back at Christendom, I thought it was almost the cute eccentricity of a bygone age when my history teacher--the college founder--related the sage advice of his grandmother from Maine: "Don't let your life be ruled by a machine."
She had said this in response to the boom in mechanized industry at the beginning of the 2oth century. He had ended his class on this note, and even laughed about it, passing it on for what it's worth to reveal just a glimpse into the hardened personality of those in ages past.

Common sense is that we will one day run out of oil. Many debate when, but it may not matter if price shoots up to 10.00 a gallon and the world's economy comes to a screeching halt. Back to the horse and carriage we shall go.

And the Glock will come with me.
Over and out,


Steak said...

$4 dollar-a-gallon seems to have everyone saying, "Holy cow! Ben Hatke's screwball opinions were right all along! Pigs are flying, Hell is frozen over, and the apocolypse is nigh!"

Well, fear not. Ben's crazy opinions are just as nutty as ever. We've still got lots and LOTS of oil still in the ground. Soaring gas prices have nothing whatsoever with a shrinking supply of oil that cannot keep up with demand.

High gas prices are the result of the weak dollar. Since we import so much oil, we have to pay more to foriegn countries because our dollars have lost so much value. High gas prices are not a problem for countries with relatively stronger currency. The gas crisis is a US dollar phenomenon, not a sign of a global oil peak and decline.

For lower gas prices, one of two things have to happen. Either he federal government: 1) strengthens the dollar or 2) allows drilling in environmentally protected areas within the US so that we are less dependant on imports for our oil.

Sadly, Congress shows no interest in either. Instead, they've siezed on the simplistic notion of demonizing the oil companies. "Big bad oil companies are gouging you at the pump!" is a powerful propaganda message, and I am dismayed to see how many people, including Nick, apparantly, are buying into it.

Oil companies make, literally, a few cents off of every gallon of gas they sell. Rising oil prices just make it more expensive to supply gas stations, but it does not increase the profit they make off each gallon.

Unfortunately, the more people believe in the "evil" oil companies who are supposedly profiteering greedily off the peoples' misery, the more likely Congress will be emboldened to pass a "windfall profits" tax, an imaginary solution to a real problem.

If you think gas is spendy now, just wait until Congress "fixes" the problem.

The Scientist said...

Oil companies aren't increasing the profit they make off of each gallon of gas? How are they pulling in these record quarterly profits? Selling pixie dust?

Steak said...

Hey, the scientist.

The *consumption* of oil is growing every year. Oil companies are selling more fuel than ever... That accounts for the record profits, and there is still no proof that oil exec's are gouging you.

Nick-dog said...

Ryan, you are correct when you state high gas prices are the result of a weak dollar. However, even with the adjustment for inflation we are now paying more at the pump than we did in the

I disagree that drilling in environmentally protected areas would significantly decrease gas prices. In the short term, it would do little to ease the pain at the pump, since it would take 12months to put together the infrastructure for a new segment of the industry.

Secondly, the way I understand it, there's not much oil to be had from said places in the first place, or at least the type of crude that is most easily used to make gasoline.

Ryan, I understand that you are dismayed with my "gee, oil companies are gouging me rhetoric," but if a series of companies in a particularly industry are making a billion dollars a week translating to record profits 8 quarters in a row, you are being gouged.

Hurricanes, refinary problems and (fabricated) supply issues, etc., etc., are just an excuse to make you and I pay more and fatten their bloody coffers.

So, I don't think it's a simplistic notion to demonize the oil companies when they are making money hand over fist. It's obvious, especially when you consider that the oil companies have "banned together" to form their own non-profit to advertise on the radio and elsewhere why gas prices are so high and tell Congress where to keep it's energy legislation.

Talk about propaganda.

During the first 9 months of 2005, Exxons profits was about 25.2 billion, up 50% from the year before. Are you saying, then, that oil consumption also rose by 50%? No way. Shell and conoco-phillips also increased their profits by 50%, with BP at 32.5% increase.

Again, that's the change from 2004 to 2005.

I'm not saying we need a "government" gas solution. We need to entrepreneurs to create different forms of energy and energy consumption. I am saying it's delusional to think A:) Oil will last forever; B) oil companies aren't taking us for us for as much as they can while pleading ignorance or not guilty.

Anonymous said...

I think the simple fact of the matter is this: alternatives to oil will simply not be cost effective to produce or purchase until oil is ridiculously expensive.

And it's true that drilling in environmentally protected areas won't help right away (neither will those enterprising entrepreneurs, incidentally)--which is why the government should have permitted it about 20 years ago, when it first came up. We'd be good to go by now!

Ben Hatke said...

The substance that keeps the US economy afloat is oil. The problem with this is that we rely on foreign supply for this crucial substance AND that there is a finite amount of the substance.

Even if Global Peak Oil is still 100 years off, those two points are problematic. And it's not a problem congress can solve.

Nick-dog said...


I am offended that you would even suggest drilling in Alaska!

How dare you!


Steak said...

To date, humanity has produced and consumed 1 trillion barrels of oil. We know that there is at least still 1.2 trillion barrels left in the ground.


Hybrid cars are already a reality, with Toyota leading the way. (BTW, Nick, I've never understood your irrational hatred of Toyotas.) Electric cars shouldn't be that far off. If Congress really wanted to end the oil crisis once and for all, they could give tax breaks and incentives for companies who produce advancements in electric cars and fuel cell technology.

My point is that we've got lots of oil left and plenty of time to move on to the Next Thing. Society didn't plunge into a post-apocalyptic anarchy when we started to notice that it was getting harder and harder to find whale oil.

Nick-dog said...


Thanks for the Manhattan Institute Link.

My irrational "hatred" of Toyotas is really just a preference. I really don't prefer them, though they have proven to be reliable cars for many consumers.

That being said, the media loves Toyota, Honda and Suburu, etc., and has a bias against American auto makers. For example, whenever Toyota issues a recall, until about a year and a half ago, the media was mostly mute on the subject. But when Ford has a problem, and they are notorious for recalls, the media is all of them.

Still, that bias is somewhat understandable as dealerships across the country have given the car industry and, in particular, the hitherto Big 3, an oft-times tarnished reputation in a variety of ways.

Personally, I love American cars in general, so I tout them as superior, though that's not always true, especially in the case of sedans.

Ford has worked out many of the kinks in its line up, but GM and Chrysler have a ways yet to go.

All that said, in 2006 Hybrids were only big sellers here in the D.C. area and California. That demographic has changed because of the price of gas in recent months.

While Hybrids are a start, the automakers in ages past had already produced gas-sipping engines which basically achieved the same gas mileage as that of a supposedly environmentally friendly "Hybrid."