Forum Post: Why oil is the continuing problem

Everyone who read my previous post and commented should be proud of themselves. For now they are actually thinking about the problems we face in the right way. One person suggested that I didn't say enough about the Fed. Well, I hope to correct that now: I agree absolutely that although Oil prices were the trigger, the Fed and the abolishen of Roosevelt's iron laws were absolutely to be blamed for what happened next. But my contention is that without a trigger nothing much would have happened. But I agree entirely that the Fed, the administration and the banks are very corrupt in the USA and that's a major problem. They should have known that oil prices were rising continually and it was a matter of time before that burst the China-America economic bubble that kept so many ordinary workers in jobs.

Someone else asked about solar power being a solution. Unfortunately solar power is simply not efficient enough. T Boone Pickens plan was to deploy wind power on a huge scale down the spine of the Rockies and with solar power use this to generate hydrogen. This sounds great. Congress approved it. But they didn't critically FUND IT. The oil giants who pay into so called senators and congressmen's charities make sure that they lobby well to keep a lid on alternative energy methods.

The problem with oil is simply this: it is so cheap, so highly portable, so packed with energy either by volume or weight, that no alternative can ever match it. That means that to build the alternative - be it solar or wind, nuclear fission or fusion - and to make it economic - oil is vital. Without oil, we don't get cheap coal or gas because oil is used to extract even non-renewable energy.

To sustain a population of 9 billion people you need lots of oil. Each year the oil deficit grows. Each year they find less.

Economists have a golden rule. They say when oil gets scarce (due to it being too expensive to extract - more energy used than it provides) then people will find alternatives that are cheaper. This of course is a HUGE assumption. The assumption is that firstly the alternatives are there and secondly they have been scaled up to replace oil.

Try telling a mid-West farmer that he can use bio-fuel to run his combine harvester when the oil is too expensive to use and he'll laugh you all the way to New York and beyond! Why he'd tell you straight. It takes lots of fossil fuel diesel fuel to grow this corn and without it, I just cannot afford to turn it into fuel.

One calculation suggested to replace all of the worlds diesel with bio-fuel you'd need to plough over 99% of Europe. That's over the Atlantic Ocean where most of the white people's ancestors came from (just in case there are any Republicans amongst you! Only kiddin'.)

Once grown you are essentially turning arable land that would make food into fuel land, that cannot grow food. So it's either starve or stop driving your 4x4.

The oil problem has not gone away. It continues now. As China and India grow they consume more petrol. The Chinese have a car retail market growing by 20%. (doubling every 3.5 years). America's is maybe 2% (doubling every 35 years) but probably a lot less now. India's figure is harder to work out but it would be similar to China's. That's a lot of petroleum being used up in the future because these countrires contain most of the world's population.

So what you say? Well, if the planet was made from petroleum then at a rate of 1% consumption, the petroleum would last 2152 years. But at a global rate of consumption of 7% per year (that's a doubling in consumption every 10 years) then for our planet made of petroleum then the petroleum (gas you use in your car) is all gone in 342 years. Of course the planet isn't made of petroleum and in reality at that rate it's all over in 20 years.

Oil is therefore a continuing problem because as it becomes scarce its price goes up. This pushes the economic growth down. Then when the growth goes down the prices fall. But since oil is scarce, the fall is not as large as previously. The rise inevitably starts again as the economy recovers.

This is the boom and bust cycle with a twist: the booms are diminishing due to oil scarcity (higher prices by trend over many years) and the busts are deeper than ever (recession, hyperinflation, poverty). A country that continues to use oil to keep its economy flourishing, that bases its ideas on the American Dream, that thinks that life is an opportunity is about to wake up to the harsh reality of existence. The future is out there and it is bleaker than the harshest winter.

Now is the winter of our discontent wrote Shakespeare. I say Now is the start of all winters of discontent...