Some of the most advanced thinking in the areas of sustainability, social justice, and environmental protection have come to the same conclusions: it’s time we rethink the corporation, and put the power back in the hands of the people.
Corporations are a Frankenstein monster that we created to serve us, but which have turned against us. Without the personal ethics and responsibility of a person, but holding greater liberties and rights than a person, a corporation is free to pursue its own best interest, without regard for the welfare of the people on which it is built.
Corporations have increasingly dominated the economic landscape since they were first created in the 1600s in England. But some say their days are now numbered, and it is time to replace them with structures that enhance the well being of the entire society, rather than just enriching the few who control the corporation.
Here’s an interesting quote on the topic (thank you, Lou Dobbs). Can you guess the source?
“We may congratulate ourselves that this cruel war is nearing its end.
It has cost a vast amount of treasure and blood. . . .
It has indeed been a trying hour for the Republic; but
I see in the near future a crisis approaching that unnerves me and causes
me to tremble for the safety of my country. As a result of the war,
corporations have been enthroned and an era of corruption in high places
will follow, and the money power of the country will endeavor to prolong
its reign by working upon the prejudices of the people until all wealth
is aggregated in a few hands and the Republic is destroyed.
I feel at this moment more anxiety for the safety
of my country than ever before, even in the midst of war.
God grant that my suspicions may prove groundless.”
–Abraham Lincoln, Nov. 21, 1864
[Source: What Lincoln Foresaw:
Corporations Being "Enthroned" After the Civil War
and Re-Writing the Laws Defining Their Existence]
Chilling, isn’t it? And he we are again today. Well, let’s look at some alternatives.
POCLAD, the Program on Corporations, Law and Democracy, is “13 activists working with individuals and existing groups to launch democratic insurgencies that put corporations once again subordinate to ‘We the People.’ We are looking for people experienced in stopping corporate harms who want to rethink organizing strategies, exercise democratic authority at the local level, and strip fundamental powers-such as free speech and due process-from corporations.” They invite your participation in this dialogue.
Taking a legal tack on the problem is the movement to eliminate the legal status of personhood that corporations enjoy. As the corporation is a legal fiction we created in granting corporate charters, then we may also disband the corporate charter. There is much work being done in this area, from grand theory to citizens’ groups opposing the charters of individual corporations, such as this one in Ohio. For a good backgrounder on this topic, see
How Corporate Personhood Threatens Democracy
How Corporations Became ‘Persons’
The amazing true story of a legal fiction that undermines American democracy.
Corporations were not always so out of control. In 1868, the Supreme Court “ruled that corporations were not citizens within the context of Article IV Section 2 of the constitution. Elaborating the court defined a citizen there to apply only to natural persons, members of the body politic, and owing allegiance to the state. Corporations only had the properties that were conferred on it by the legislature.” [Source: Corporate Law: A History]
Unfortunately, their power seems to have grown considerably since then.
Other approaches to reforming the corporation have come from within, from sustainability-minded business executives with an eye on the future. For them, the goals and the ethos are clear enough, the question is how to implement it. And they are finding some success, as is socially responsible investing, in “doing well by doing good.” See the Better World article “Corporations and Sustainable Development”
for more on that.
Shall we undertake to tranform the corporation, or shall we put it out to pasture in favor of a new model? Post your comments below.
I’m guessing that a lot of my fellow liberals who visit this site avoid William Safire’s column in the Times, but today’s is worth a read.
For all its talk of opening up markets in the rest of the world, this administration seems completlely uninterested in preserving market-based competition in the U.S. Indeed it seems interested in just the opposite: stemming “SEC overreach” so that corporations can abuse and manipulate markets. Safire is, of course, an old-school conservative, meaning that he actually has some ideals that extend beyond self-interest, and as such is justifiably outraged by the “vertical integration” of American media.
Real capitalists understand that capitalism means competition within markets, and that the markets themselves must be protected. From that perspective the turn of this century looks not unlike the turn of the last, yet our own Trust-Busting Movement isn’t even a twinkle in the government’s eye at this point.
The Five Sisters
By WILLIAM SAFIRE
February 16, 2004
Source: The New York Times
WASHINGTON — If one huge corporation controlled both the production and the dissemination of most of our news and entertainment, couldn’t it rule the world?
Can’t happen here, you say; America is the land of competition that generates new technology to ensure a diversity of voices. But consider how a supine Congress and a feckless majority of the Federal Communications Commission have been failing to protect our access to a variety of news, views and entertainment.
The media giant known as Viacom-CBS-MTV just showed us how it controls both content and communication of the sexiest Super Bowl. The five other big sisters that now bestride the world are (1) Murdoch-FoxTV-HarperCollins-WeeklyStandard-NewYorkPost-LondonTimes-DirecTV; (2) G.E.-NBC-Universal-Vivendi; (3) Time-Warner-CNN-AOL; (4) Disney-ABC-ESPN; and (5) the biggest cable company, Comcast.
As predicted here in an “Office Pool” over two years ago, Comcast has just bid to take over Disney (Ed Bleier, then of Warner Bros., was my prescient source). If the $50 billion deal is successful, the six giants would shrink to five, with Disney-Comcast becoming the biggest.
Would Rupert Murdoch stand for being merely No. 2? Not on your life. He would take over a competitor, perhaps the Time-Warner-CNN-AOL combine, making him biggest again. Meanwhile, cash-rich Microsoft — which already owns 7 percent of Comcast and is a partner of G.E.’s MSNBC — would swallow both Disney-ABC and G.E.-NBC. Then there would be three, on the way to one.
You say the U.S. government would never allow that? The Horatius lollygagging at the bridge is the F.C.C.’s Michael Powell, who never met a merger he didn’t like. Cowering next to him is General Roundheels at the Bush Justice Department’s Pro-Trust Division, which last year waved through Murdoch’s takeover of DirecTV. (Joel Klein, Last of the Trustbusters, now teaches school in New York.)
But what of the Senate, guardian of free speech? There was Powell last week before Chairman John McCain’s Commerce Committee, currying favor with cultural conservatives by pretending to be outraged over Janet Jackson’s “costume reveal.” The F.C.C. chairman, looking stern, pledged “ruthless and rigorous scrutiny” of any Comcast bid to merge Disney-ABC-ESPN into a huge DisCast. Media giants — always willing to agree to cosmetic “restrictions” on their way to amalgamation — chuckled at the notion of a “ruthless Mike.”
McCain’s plaintive question to Powell — “Where will it all end?” — is too little, too late. This senatorial apostle of deregulation, who last week called the world’s attention to the media concentration that helps subvert democracy in Russia, has been blind to the danger of headlong concentration of media power in America.
The benumbing euphemism for the newly permitted top-to-bottom information and entertainment control is “vertical integration.” In Philadelphia, Comcast not only owns the hometown basketball team, but owns its stadium, owns the cable sports channel televising the games as well as owning the line that brings the signal into Philadelphians’ houses. Soon: ESPN, too. Go compete against, or argue with, that head-to-toe control — and then apply that chilling form of integration to cultural events and ultimately to news coverage.
The reason given by giants to merge with other giants is to compete more efficiently with other enlarging conglomerates. The growing danger, however, is that media giants are becoming fewer as they get bigger. The assurance given is “look at those independent Internet Web sites that compete with us” — but all the largest Web sites are owned by the giants.
How are the media covering their contraction? (I still construe the word “media” as plural in hopes that McCain will get off his duff and Bush will awaken.) Much of the coverage is “gee-whiz, which personality will be top dog, which investors will profit and which giant will go bust?”
But the message in this latest potential merger is not about a clash of media megalomaniacs, nor about a conspiracy driven by “special interests.” The issue is this: As technology changes, how do we better protect the competition that keeps us free and different?
You don’t have to be a populist to want to stop this rush by ever-fewer entities to dominate both the content and the conduit of what we see and hear and write and say.
At 32 pages, this paper is a whopper. But it’s well worth reading to understand the whole picture of global oil and gas reserves and production. It’s packed with data, has lots of great graphs, and some incisive observations.
Here’s a small excerpt to whet your appetite:
7.1 Oil Industry
Oil companies frequently publish reassuring press releases, speeches and “studies” on the future availability of oil; the oil industry has a natural financial interest in doing this:
- The signal of diminishing resources could induce the consumers to reduce their oil consumption even faster than necessary. In such a case the oil industry would be left with more oil available on the market than consumers would want to buy. Certainly, this would be bad for business.
- The signal of diminishing resources and hints at “diminishing assets“ could lead shareholders and investors to redirect their investments into new business opportunities with more growth potential. This also would be bad for business.
- It would be best if consumers and shareholders would stay loyal to oil even at declining production rates and rising prices. This would bring about the highest earnings at minimum costs. Therefore, the best communication is to convince the consumer that any current problems are only temporary – and thus to keep them dependent on oil even in worsening times.
Because of these motives the industry will never admit that the future availability of oil might be a problem and rather tends to communicate growing reserves. All this however does not necessarily prevent the oil industry from investing in new business areas.
7.2 Consumers and the Public
The consumer is interested in using cheap energy in everyday life to gain as much comfort as possible. Therefore disturbing messages are seen as endangering the present way of life and questioning the own behaviour, and it is therefore very likely that they will be discarded. On the other hand, messages which confirm the present lifestyle find open ears and are readily believed. So in a way the interests of all participants in the market point into the same direction: it is more comfortable not to be aware of the imminent problems caused by peak oil production.
Future World Oil Supply
International Summer School On the Politics and Economics of Renewable Energy at the University of Salzburg
Werner Zittel, Jörg Schindler, L-B-Systemtechnik GmbH, January 2003
“Everybody hates this topic but the oil industry hates it more than anybody else.”
–Colin J. Campbell
In a “better” world than this one, TV would be used to communicate important information to people – for example, there would be many channels devoted entirely to free, interactive education. But of course television today is seldom used for such noble purposes, and instead used to control our minds with high-powered psychological cues embedded in commercial advertisements.
These commercials are the creators of many criminals.
TV commercials tell us that if we aren’t average or better looking, own a late model car, live in a new brick house, in a new suburban neighborhood, on half an acre of bright green lawn, with neighbors to either side of us just the same; if we don’t fit this picture, we are somehow deficient in character and unworthy of respect.
And there you have the basic ingredients of a criminal – a person who thinks he needs these things, and because he doesn’t have these things he develops a poor self-esteem. This is a person who will lie, steel, and cheat to get what he has been taught are the ingredients of a real human being and that without them you are worthless and less than a real human being.
In a better world, people would not be programmed and brainwashed this way by greedy big business, self-serving politicians, and other ruthless people. In a better world, poor people would not have to resort to crime to fulfill their programming. And consequently the crime rate would be virtually nonexistent. Any crime that remained would be looked at with pity, treated as the mental illness it is, and cured.
Here is the second of today’s articles. At 13 pages, it’s longer and a lot more technical than the other one, but if you’re interested in the specific data about oil and gas production and depletion, and the likely effects on the world economy, this is the article for you. Again, its numbers are a little bit out of date, but the projections and charts still hold. Good, meaty material.
–COil Crises Delay – A World
Oil Price Forecast
Vincent Ramirez, July 1, 1999
Presented in this short essay are
12 figures which serve to illustrate the present and future relationship
between the world supply and demand of crude oil. A future price forecast
for crude oil is presented in the final chart,
The simple conclusion of this study
is that severe price pressures will be placed on crude oil as a result
of declining supply, starting between years 2004 and 2010. Demand will
decrease somewhat as supply prices increase, and at some point, around
$30-60 per barrel of oil, alternative energies (natural gas, oil sandstone
deposits and synthetic oil from coal) will economically replace the declining
supply of natural crude oil. A “serious crises” is not predicted by this
study, mainly for the reason that some additional oil reserves will be
found during the transition period to higher prices.
The following terminology is used
throughout these figures, and are defined here.
Ultimate Oil = Discovered Oil + Undiscovered Oil.
Oil Remaining to Produce = (Discovered Oil – Produced Oil) + Undiscovered
Remaining Consumption Time = Oil Remaining / Rate of Consumption
Surprisingly, there is good consensus
opinion amongst professional petroleum scientists about the quantities
in each category, when calculated at these gross scales.. Data for
each of the variables above are provided from two principle sources – the
Oil and Gas Journal, which publishes annual estimates (also available at
the BP-Amoco website), and Petroconsultants S.A., an international petroleum
consulting firm with a particularly large independent database. These latter
data are presented by C.J. Campbell in his book “The Coming Oil Crisis”,
The Campbell book is a thorough treatise
of the topic of this paper. His estimates of ultimate oil are rather
more conservative than the Oil and Gas Journal, primarily because he does
not accept the large increases in stated reserves for the Middle East Gulf
region during the last 8 years because there was no technical work done
to support these increases. Rather, he believes these increases are the
result of political motives, i.e., the OPEC Cartel quota system is based
on stated reserves. I was aware of this phenomena prior to reading
Campbell’s position, and I agree with his conclusions on this point.
Undiscovered reserves are estimated
to be 180 billion barrels by Campbell. This is also a median estimate of
the 10+ professionally published estimates, and a number that I agree with,
based on my experience at Shell Oil Company in which we reviewed each of
the 600 sedimentary basins of the world independent of the Oil and Gas
Journal and Petroconsultants S.A. For this report I have used 183 billion
which is Campbell’s number, corrected for arithmetic errors.
Production of undiscovered reserves
is not accounted for by Campbell, though he acknowledges that these 180
billion barrels will be found. In my model, all of the 183 billion barrels
are found and produced prior to 2050. I find it rather odd that Campbell
makes no account for producing future reserves, but point out that this
is rather masterfully hidden in his production decline tables. Rather,
he calculates that all of the worlds remaining reserves will be found and
produced after year 2050.
The issue of undiscovered reserves,
also known as “yet-to-find” reserves, is not as critical to future supply
constrictions as one might at first imagine. This is important to understand,
as much of the debate concerning future oil supply and impending crises
seems to be not resolvable as there is disagreement over this final “ultimate
reserves” number. The main issue in not “how much”, but rather, “when”
remaining reserves can be brought to market. This issue is addressed systematically
in this report, but suffice to say that maximum and minimum limits can
be quantified which constrain the coming oil supply problem.
DESCRIPTION OF FIGURES
Figure 1. Total World
Oil Consumption. For the last 10 years world crude oil consumption has
increased from 23 to 26 billion barrels per year.
Figure 2. Total World
Consumption, indicated by region. The world total has increased from 60
to 71 million barrels per day. Note that the Former Soviet Union has decreased
by 50%, and could reasonably be expected to increase in the future. The
Asia Pacific region increased from 12 to 20 million barrels per day during
this period. All other regions have had only modest increases.
Supply from Known Reserves
Figure 3. World Oil Production,
by Region. This chart shows the relative importance of production from
each region. Note that the USA is in decline. The group “All Others”
includes Mexico, Central and South America, Canada and some smaller Middle
East region countries. Oil production appears less than consumption due
to oil refinery storage and errors in the reported data.
Figure 4. World Oil Production
versus Prices of West Texas Intermediate Crude Oil. Production increases
from 1950 to 1971 resulted in no price increases during this period. However,
minor curtailment of a few billion barrels per year resulted in sharp price
increases. Much debate concerns itself with whether or not this price increase
was real or artificial. Regardless of the cause, this is the one example
of supply restrictions and their resulting crude oil price inflation.
Figure 5. Giant Oil Field
Discoveries. These are displayed by region as bars on the graph, but the
cumulative discoveries and 10 year moving averages are displayed as lines.
Total discoveries (all field sizes), are shown in the gray dashed line;
these data were reported each 10 years and are interpolated between decades
(1996 is accurate also). There is a clear decrease in giant oil fields
discovered since 1965. Note that there is a poor correlation between oil
price, displayed on figure 4, and discovery volume; it seems that the prolific
oil discovery phase outpaced demand. Giant oilfields account for 62% of
the total world reserves.
Figure 6. Production
of Discovered World Oil Reserves. This is the present decline cycle of
all known reserves. The area under the curves represents the total amount
of reserves. Hence, an increase of the peak production would result in
a steeper decline rate, as the amount of known reserves is fixed.
This graph provides the minimum case for supply side crude estimates and
is the model presented by Campbell in his “Oil Crises” scenario. I consider
this to be the lower limit of future production, as production from new
reserves should be considered.
Supply from Future Reserves
Figure 7. Ideal Depletion
of a 1 Billion Barrel Oil Field. This is an idealized scenario for production
and is used later in this report to make production curves for “yet-to-find”
oil. This curve shows production for a 30 year production cycle, used in
order to establish a best case scenario of production. Oil production begins
in the second year following discovery. In reality, a 50 year cycle would
be more appropriate since the oil found may not be in a single pool, may
need additional development (long pipelines) which delay first production,
or may have reservoir properties not amenable to fast production.
Figure 8. Discovery Distribution
for Optimistic Scenario. This is the future discovery schedule for the
anticipated 183 billion barrels of oil. These discoveries are scheduled
to occur rather simultaneously in all regions, and rather early, peaking
at 14 billion barrels per year in year 2003. This accelerated schedule
serves to define the limit for the best case depletion scenario.
Figure 9. Future Production
from Undiscovered Reserves. This is a calculation of expected production
based on the ideal production profile of figure 7 and the accelerated discovery
schedule of figure 8. This chart shows the yearly and cumulative
production generated from the calculation of these two parameters. This
is the quickest scenario that the discovery of the worlds remaining reserves
could be brought to production. Delays in either discovery or production
will serve to shift these curves to the right, but total production would
be the same.
Figure 10. Model for Depletion
of World Oil Reserves. Historic production is projected forward to year
2050 for minimum and maximum cases. The minimum, shown in green, accounts
for known oil reserves only. The maximum case, shown in red, accounts for
production which includes “yet-to-find” reserves, discovered and produced
at the maximum rates possible. Actual production in the future will lie
between these two curves. Also, the actual decline rate may be flatter,
in which case peak production will be lower.
Oil Prices and World Economics
Figure 11. Relationship between
Crude Oil Prices and the Consumer Price Index (CPI) in the USA. There is
a direct relationship between crude oil prices and inflation, as shown
on this chart. This suggests rather serious consequences for the future
as supplies decrease, which will occur at some time between 2004 and 2020.
Long before the “crises” stage of world oil depletion, increased oil prices,
caused by slight constrictions in the supply-demand ratio will cause inflation
increases in the US and world economy. Present and historic federal bank
policies have favored increases in interest rates in order to fight inflation
(generally thought to be caused by “hot” economic expansion and labor shortages).
This type of cure-all will also dampen oil sector investments – but at
the time they are needed most, providing double-trouble for the inflationary
problem. This will further reduce oil discovery and production, adding
additional burden to the supply problem, thus creating higher oil prices,
additional inflation, etc.
There is no traditional business
solution for this problem. Supply is fixed.
Figure 12. Future World Oil
Prices. All prices are in 1999 fixed U.S. dollars. There is no accounting
for inflation in this model.
I anticipate that oil prices will
rise rather quickly once the slightest supply constriction is perceived,
starting before 2005, and possibly as soon as 2002. The accompanying inflationary
pressures will hurt businesses other than the oil sector. Costs for the
oil sector will remain relatively fixed initially, except for labor costs.
Stock markets will make their traditional response to inflation, with the
exception of oil companies.
Other energy sources will substitute
partially for oil at some price. Natural gas reserves will help, but serious
pipelines will need to be built, and this will take time. Oil sand deposits
certainly become economic at some price, but not below $30 per barrel minimum,
and preferably $40, based on my own experience in the Canadian provinces.
Synthetic oils manufactured from coal become viable substitutes at around
$60 per barrel, based on the experience gained by German engineers during
WW2. These energy substitutes will keep oil prices bound within “reasonable”
ranges, at $30 minimum but probably nearer to $60 per barrel as real supply
restrictions are realized.
The historic and present cycle of
crude oil production has always been a regime of supply greater than demand
as large fields of cheaply produced oil (i.e., free flowing) have been
readily available. Production from these fields has large impacts on supply
for at least 20 years after their discovery. Though the discovery of new
reserves has tapered to insignificant amounts in the last decade, the production
response to this is not yet generally perceived because “pump prices” remain
flat. This is the result of previous discoveries which are now at their
The world is definitely entering
an era in which demand will be greater than supply. The only question is
when, and is anticipated to be between year 2004 and 2020 by this report;
but rather sooner than later, as the later date involves quite optimistic
variables. Additional petroleum production from natural gas, oil sands
and synthetic crude will delay or resolve future supply problems, but not
at current prices of $18 per barrel. Rather, prices of $30 per barrel are
anticipated immediately upon first acknowledgement by oil futures
traders of real supply constraints. Subsequent inflationary pressures and
increased production declines will quickly force prices to near $60 per
barrel, at which time significant production from alternatives is feasible.
There are three important things
to note. First, the oil industry is perceived as having sent out this supply
crises alarm several times already. As a result, the public is somewhat
insulated from these warnings, including federal policy makers. I anticipate
that tax and investment policies during the transition to “supply” economics
will exaggerate the coming problem as economists continue to try and stimulate
the non-energy business sector as it has traditionally done. A better solution
would be to stimulate the energy sector early through tax and investment
incentives, thus promoting a stable transition.
A second point worth considering
relates to the future increase in costs of world production. This point
is often overlooked, as it is difficult to evaluate on a macro-economic
scale. However, an analogy for a single oilfield is sufficient to understand
the future costs of world production. Initial production from new oilfields
encounters virgin pressures and these wells flow oil naturally, at prices
around $1 per barrel for direct operating costs (without transportation).
Declining reservoir pressure due to oil production eventually requires
artificial lift to raise oil to the surface, with costs in the $3 to $5
per barrel range. These costs continue to increase as concurrent water
production (and disposal) increases and water eventually becomes 99% of
the total produced fluid before the oil field is abandoned. Additional
oil may be recovered through secondary techniques, but these costs are
around $8 per barrel, minimum, and consume about 20% of the energy, or
crude, produced. All fields are produced in this manner, and costs are
directly related to reservoir pressure.
World production today is dominated
by the Middle East Gulf region which has a large part of its reserves in
fields that still have high reservoir pressures, and as a result production
costs, with transportation, are less than $5 per barrel – currently. This
will change as reservoir pressures naturally decline due to production.
The impact of this is far greater than “future production forecasts” imply,
as a world with Saudi Arabia producing from artificial lift is quite different
than one in which Saudi Arabia produces from free flowing wells – though
the “remaining reserves” might seem significant. The immediate impact is
that threats of $5 per barrel oil will no longer be realistic if all producers
create deficits with temporary overproduction. Thus, the floor price for
crude oil will continue to increase.
The point of this long explanation
is that total reserves numbers are misleading – as they promote a view
that supply will be fine until the day the last drop of oil is produced
– and on that day, we have a problem. Rather, we should be aware that average
world reservoir pressures are declining naturally, and operating costs
are increasing. These affects will be felt concurrent with actual
supply constrictions and will have a dominant impact on future crude
prices, particularly the floor prices.
A third point worth mentioning has
to do with previous responses to oil supply constrictions. The one example
of this occurred from 1974 to 1981, and during this time, oil prices lifted
from to $4 to $38 per barrel. In hindsight, this is often regarded as a
“panic response”, because in fact macroeconomists have concluded there
was no real shortage. Whether or not this is true, I regard the period
of a good example of the oil price volatility to be expected when real
supply constrictions do occur.
“He who produces last makes the most
money” will be the doctrine of the future, though it would hardly seem
that anyone gives any thought to this idea. This concept seems contrary
to modern business principles of valuation based on net present value,
but this is only a result of using flat oil price forecasts far into the
Today’s harvest has two more articles on Peak Oil and Gas that I recommend to your attention. Both are a bit out of date–1999–but the projections are still accurate and after slight adjustments, the numbers are current.
Here is the first, an excellent overview of the global energy picture, the supply problem, the likely effects, the possible solutions including what you can do, the problems of the hydrogen economy, and the questions of why the oil and gas depletion issue doesn’t have more visibility.
I strongly encourage everyone who wants to get real to read this one and think about what it means for your future. Please read it!
The Oil Crash and You
Oil shortages soon
by Bruce Thomson, www.RunningOnEmpty.org
Editor’s note: mainstream media are not providing the facts on
our petroleum dependence. Environmental groups don’t address it much
either, and the well funded ones put all stock into renewable energy as
an inevitable solution. The worldwide web is perhaps the best source of
energy insight, such as www.dieoff.org
Summary: This document reveals that within ten years:
– Oil extraction from wells will be physically unable to meet global
demand (the evidence is from the oil industry itself).
- Alternative energy sources like nuclear and natural gas will fall far
short of compensating for expected shortages of oil. There is simply not
enough time to convert over to them.
- Massive disruptions to transportation and the economy are expected
around 2010 when the final peak of production of all petroleum liquids
(globally) is followed by decline.
Most significant effects:
- Gradual, permanent cut-off of fuel for transport and for industrial
machinery. Global trade will greatly decline.
- Agriculture (food production) depends heavily on fertilizers and chemicals
made from oil.
- Shortages of 500,000 other goods made from oil.
- Therefore, reduction of virtually all business and government activity.
Difficulty of adapting: A major part of the problem is that existing
equipment is designed only for oil fuels. For example, the world’s
11,000 airliners cannot run on natural gas, nuclear or coal.
By-products of oil: Cost and decreasing availability of 500,000
known uses of oil: Fertilizers (farms/food supply), medicines, plastics,
insulation, computers, asphalt, inks & toners, paints, glues, solvents,
antiseptics, golf balls, CDs, trash bags, nail polish, detergents, chewing
Hidden problem: Not only will the oil supply dwindle, but the
shortages and climbing prices will obstruct industry as it attempts to convert
society to other forms of energy.
Proof of impending shortages: Much uninformed literature says
oil is plentiful and that better extraction will maintain adequate supply
for decades. However, there is (1) the misleading reporting of oil inventories,
by oil extracting countries; (2) a clear, forty-year trend of less and less
discovery of oil, and (3) dwindling outputs from the steadily-emptying wells.
Alternative energy sources will not prevent shortages: Alternative
fuels have been studied. As replacements for oil they are grossly inadequate
both in quantity and versatility of use. There is insufficient time to prevent
heavy impacts from oil shortage.
When, and how bad: Year when global oil supply first fails to
meet global demand: about 2009. Rate of decline of global oil supply: 3%
every year from 2009 onward. Duration of decline: Forever. Oil takes millions
of years to form, in very special geological conditions. Barrels consumed
globally per year: More than 22 billion in 1999. (About 2 billion barrels
per month.) Barrels discovered globally per year: about 6 billion. Discovery
of oil fluctuates each year, but peaked in the 1960s, and has declined at
an average of about 9 billion barrels per year over the past 40 years. We’ve
mostly just been using up huge old oil fields. Pre-1973-discovered oil in
use today: More than 70% of present global supply. Ratio of oil consumed
to oil discovered each year: Four consumed for every one discovered.
The “invest more to find it” idea: Yet-to-be located
oil, globally: After a century of exploration, the earth’s geology
and oil resources are generally well known. When the fields are emptying,
money only helps to scrape out the hard-to-reach remainder. There are 210
billion barrels left to discover and 1,000 billion barrels left to extract.
This is indicated by the 40 year decline in discovery of oil. No amount
of money will create oil that simply isn’t there. Number of oil wells
already in world/USA: More than 500,000. In USA, 80% of the wells now produce
less than three barrels a day. Percentage of oil recovered from a typical
oil well: 20% to 60% . It relates primarily to the density of the oil. You
get less from a heavy oil than a light one because it sticks in the reservoir.
“Technology will solve it” idea: To compensate for the
expected 3% oil decline (at today’s 22 billion barrels a year), society
would have to create and install, by year 2009, permanent supplies of portable
energy, equivalent to 660 million barrels of oil a year. Then as oil keeps
declining forever, increase this new energy it until it replaces 40% of
the world’s energy supply (22 billion barrels a year) OR reduce energy
demand equivalently as the global population increases by almost a quarter
million people every day.
The “better efficiency” idea: Increases in efficiency
usually fail to reduce consumption (more m.p.g. just causes people to travel
more or buy two cars, or other goods) unless they are personally determined
to reduce their consumption.
What about nuclear power? Nuclear is currently being abandoned
globally. (International Energy Agency 1999). Its ability to soften the
oil crash is very problematic: past accidents, risk of more, and terrorism.
Many more reactors would be needed. Tons of radioactive materials to transport
at risk to public. Nuclear waste disposal is still the major, unresolved
problem, especially breeder reactors producing plutonium (a nuclear weapon/terrorist
raw material, half-life contamination is 240,000 years). All abandoned reactors
are radioactive for decades or millennia. Nuclear is not directly suitable
for aircraft and vehicles. Adapting nuclear to make hydrogen or other fuels
would be a huge, and energy-expensive project. Nuclear fusion is still not
available, after 40 years’ research and billions of dollars invested.
Proportion of global energy provided by natural gas: 20% of global
energy supply (1997). As a replacement for oil: Gas itself will start running
out from 2020 on. Demand for natural gas in North America is already outstripping
supply, especially as power utilities take the remaining gas to generate
electricity. Gas is not suited for existing jet aircraft, ships, vehicles,
and equipment for agriculture and other products. Conversion consumes large
amounts of energy as well as money. Natural gas also does not provide the
huge array of chemical by-products that we depend on oil for.
Hydro-electric present use: 2.3% of global energy supply (1997).
As a replacement for oil: Very small compared with 40% energy provided at
present by oil. Unsuitable for aircraft and cannot supply the present 800
million existing vehicles.
Coal current global use: 24% of global energy supply. As a replacement
for oil: Is 50% to 200% heavier than oil per energy unit. Bulky and dirty.
Would require expansion of coal mining, leading to land ruin and increase
in greenhouse gas emissions. Hard to fine-control the rate of burn (oil/gas
is easy), therefore is used in power stations to make electricity, wasting
half of its energy content. A single coal-fired station can produce a million
tons of solid waste each year. Present coal-mining machinery and transportation
runs not on coal, but on oil-based fuels. Burning coal in homes pollutes
air with acrid smog containing acid gases and particles. Large pollution
& environmental problems: (Smog, greenhouse gases, and acid rain). Liquid
fuels from coal: Major pollution, very inefficient, and huge amounts of
Global solar use: Solar provides about 0.006% of global energy
supply. Energy varies constantly with weather or day/night. Not storable
or portable energy like oil or natural gas, so, unsuited for present vehicles
and industry. Batteries bulky, expensive, wear out in 5-10 years. Photovoltaic
solar equipment (US$4/watt) is about 15% efficient, giving about 100 watts
of the 1 kW per square meter exposed to bright sunshine (enough for one
light bulb). A typical solar water panel array can deliver 50% to 85% of
a home’s hot water though. Using some of our precious remaining crude
oil as fuel for manufacturing solar & wind equipment may be wise.
Wind global use: Global wind power use: 0.07% of 1990 global energy
supply. As with solar, wind energy varies greatly with weather, and is not
portable or storable like oil and gas. Each wind turbine from Denmark produces
an average of 698 kW averaged over a year.
Current global hydrogen use: US (only) 1998 consumption is 0.01%
of global energy. As a replacement for oil: Hydrogen is currently manufactured
from methane gas. It takes more energy to create it than the hydrogen actually
provides. It is therefore an energy “carrier” not a source. Liquid
hydrogen occupies four to eleven times the bulk of equivalent gasoline or
diesel. Existing vehicles and aircraft and existing distribution systems
are not suited to it. Solar hydrogen might be an option in some of the hot
Other sources of energy: Shale, tar sand, coalbed methane, ethanol,
biomass (from vegetation), etc. Effectiveness as replacements for oil:
Huge investment in research and infrastructure to exploit them, plus large
amounts of now-expiring oil supply. 6% of US gas is from non-conventional
generation. The major problem is that they cannot be exploited before the
oil shocks cripple attempts to bring them on line, and the rate of extraction
is far too slow to meet the huge global energy demand. [Some alcohol
fuels use as much energy in their creation as they provide. -ed.]
How it will affect us—grain production: Food production &
delivery depends on oil. Food grains now contain between 4 and 10 calories
of fossil fuel for every 1 calorie of solar energy input. Four percent of
US energy budget is used to grow food, while 10 to 13 percent is needed
to put it onto our plates. The worsening oil shortages will make production
increasingly expensive. Putting food production closer to cities will be
vital, feeding animals questionable. Percentage of US grain used to feed
cattle: 70%. Efficiency: The meat feeds 1/5 as many people as the grain
could. Number of cats & dogs in USA: 131 million. American pet food
business is $30 billion/yr, and is growing. “Future food” being
consumed by using gasoline in vehicles: Gasoline consumed ‘now’
will deprive future agriculture of energy for producing food. Below are
examples of how much “future food” a 30 mile-per-gallon vehicle
is “eating” now. Also shown is the heavy physical labor humans
will have to do in future when gasoline is unavailable for farm/industrial/office/home
machinery: Bread, 1 kg loaf = 6 miles= one slice per 422 yards. That 1/5
gallon=human heavy farm labor for 23 hrs. Beef, 1 kg = consumed by driving
76.2 miles. That 2.5 gallon=human heavy farm labor 300 hrs. Canned corn
1 kg= consumed by driving 5.4 miles. Again, 1/5 gallon=human heavy farm
labor 20 hrs.
Oil for global automobile transportation: 800 million Automobiles,
USA: 132 million. Trucks (all types, in USA): 1.5 million. Buses: (all types,
in USA): more than 654,000. Locomotives: (USA) 26,000. World aircraft fleet:
11,000 aircraft, more than 100 passengers. All 11,000 designed for oil-based
fuel. World shipping: 85,000 ships in world. Decked fishing boats in the
world: 1.2 million. Globalization: Will end. (Fuel costs & scarcity).
Oil for industry—construction industry example: Energy to
build an energy-efficient home is equivalent to 6,500 gallons of gasoline.
Number of by-products of oil: Over 500,000 including fertilizers
(they are the most vital), medicines, lubricants, plastics (computers, phones,
shower curtains, disposables, toys, etc.), asphalt (roading and roofs),
insulation, glues/paints/ caulking, “rubber” tires and boots,
carpets, synthetic fabrics/clothing, stockings, insect repellent.
Government services: City drinking water, along with over 55,000
services to consider. Petroleum required for water supply pumping, sewage
disposal, garbage disposal, street/park maintenance, hospitals & health
systems, police, fire services. National defense (land, sea, air). Possibility
of wars over remaining oil.
International oil import costs affecting economy and employment :
Sharp rises (increasing global competition for dwindling oil available
from five Middle-Eastern countries and former Soviet Union.). International
tensions. Military also obstructed by oil shortages. National debt, inflation:
Money goes out of country to oil producers. Money gets scarce. Interest/mortgage
rise up. Government prints more money to pay overseas energy bills. Money
devalues. Prices rise. Poverty: Public, and businesses become poorer paying
higher energy costs. Less spending, less sales. Layoffs. Welfare payments,
taxes: Taxes up. Pensions for aging/disabled population reduced or discontinued.
Other serious quality-of-life aspects—heating and cooling: In
cold regions oil heats buildings (burned as fuel in homes or in oil-fired
electric power stations). In hot areas oil power provides air conditioning.
As natural gas is substituted for oil, the gas price is rising fast. Smog:
Energy price and shortages will increase wood and coal burning in homes,
increasing city smog and global warming.
Why public warning is so late with misleading reports of actual stocks
of oil: (a): By firstly understating discoveries, and then later overstating
discoveries, oil companies have given the false, but pleasing impression
of an increasing discovery trend. Investors respond accordingly, and finance
more exploration. (b): The seven major oil-extracting countries have for
years reported unchanged reserves (even though they were extracting and
selling billions of barrels of oil, and that the reserves would therefore
be less each year). See table of “spurious reserve revisions”. (c):
In 1988 five of those countries claimed they each had about twice as much
reserve oil as in 1987. http://(d): The most important fact to focus on
is that, in the confusion, the public perceives an increasing discovery
trend while the discovery rate has drastically declined.
OPEC countries depend on income from exports: OPEC countries need
to earn as much oil revenue as possible to support rapidly growing populations
where the public health care, education and other services are provided
free, from oil revenues, not by taxes. See table of reserves.
Personal preparations—what you can do: Reduce energy dependence
of family, home, lifestyle. The less fuels and goods you consume, the less
the impacts will be. Workplace: Same. Work on it with friends: Workmates,
neighborhood, city, governments. The ideal use for remaining oil and mineral
reserves is into industries that create alternative energy equipment like
windmills, solar water heaters, biomass (vegetation that creates fuels),
etc. Share your feeling with others. Try to stay positive and active rather
than ignore it or blame people for it. Where there’s life there’s
hope, especially if we collaborate and are creative. Humans have always
faced hardships, and many among us do so constantly now. Learn from them.
Possible emergency measures to consider: Alert the entire public so people
will accept preparations for the oil shortages, participate in implementing
solutions. Relocate food production nearer to cities. Relocate workplaces
nearer to homes or homes nearer to workplaces. Prepare for conserving and
rationing of dwindling oil/other resources that are created using oil. Population
control to prevent children being born into extremely harsh conditions that
seem likely, and to conserve soon-scarce resources for those already alive.
Re-localize, to reverse globalization. Alert national leaders to cooperate
against this major threat that faces us all. Note: “The USA has the
exceptional position as the largest and a growing importer. US imports deny
somebody else access to oil. For example, starving Africans result. Tax
on gasoline is lower in the USA than in other countries by a large factor.
So the US could easily curb its excess. In fact it has no option. The worst
thing the US can do is press OPEC to increase production, which will simply
make the peak higher and the decline steeper. It is just digging itself
into a bigger hole, morality apart.” – Colin Campbell, in private email,
More information and documented evidence: This sheet, and all
references and authorities for this information are available for download
by temporarily joining the RunningOnEmpty internet forum mentioned below.
In MyGroups page, click the Files section. It is among the first files.
Web sites: This leaflet is also displayed in full on the Web at
www.RunningOnEmpty.org. The oil die-off is explained in up-to-date detail
at www. hubbertpeak.com, and
www.dieoff.org Both sites are keyword-searchable,
with scientific and oil industry literature about this topic. It is heavily
annotated with authoritative references.
Discussion forum-Implications, action:
Author of this sheet: Bruce Thomson, moderator of RunningOnEmpty forum
at www.egroups.com/group/RunningOnEmpty and helped by members of those
COPY THIS ITEM FREELY TO OTHERS.
Fake State of the Union Address
This copy & paste remix of the president’s 2003 State of the Union address isn’t fair, but it’s very funny. (Longtime readers of GRL will remember this from about a year ago.)
Source: Kai Curry
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