Peak Oil, the Economy and the Potential for Civil Unrest

From the End is Near Department, Tom Whipple of the Falls Church News-Press is ending the year with a column on the potential for civil unrest here in the U.S.  Check it out.  Whipple has been studying and writing on Peak Oil for years.  There is a growing number of folks out there who believe that the U.S. is ill-equipped and has waited too long to develop and implement an energy policy which takes us from the Oil Age to whatever will be the next energy economy.  From farmers’ fields to the long commutes many of us make to get to suburbia to work every day, so much is dependent on oil.  So much of that oil is now supplied from sketchy parts of the world.  The theory goes that as the world’s supply of oil peaks – and it will (or has) – the society’s ride on the downside slope will be difficult and long; again, because we’re not prepared with an alternative(s). 

Writers like Whipple, James Howard Kunstler and Matt Savinar to name a few believe that this post-peak period will be a test for America that could include civil unrest.  You can read about these issues in many places and make up your own mind.  I tend to think that rather than years or decades of unrest and awful economic pain, we may be looking at years of discomfort.  I accept Whipple’s final paragraph:

America has not faced a serious domestic crisis for 150 years. We have never faced a situation where 300 million of us bound up in a complex and interdependent society has had to make major involuntary changes in our lifestyles.

I’m Beginning to Think the Russians are Bigger Blockheads Than I Once Believed

A recent poll by a popular Russian TV station found that Josef Stalin was the third favorite Russian (he was actually Georgian) of all time. He was beaten by a medieval prince and an early 20th century prime minister.

Among the greatest butchers of history, Stalin ranks right up there with China’s Chairman Mao Tse-Tung and Germany’s Adolf Hitler. What’s the problem with the Russian people? Fifty million votes were cast in the poll – I have no idea as to the control over how those votes were cast. You can read about it here and here.

Russia today announced they are preparing to halt natural gas supplies to the Ukraine.  From the New York Times:

The transit of Russian natural gas across former Soviet states to Western Europe is a pivotal economic and security interest of the Russian government as taxes on exports of oil and natural gas account for about 60 percent of the budget.

About 80 percent of Russia’s gas exports to Europe, meanwhile, cross Ukrainian territory.

Customers include major European utilities like Germany’s E.On and the Italy’s Eni.

This is a rather aggressive move, especially in the wake of the conflict Georgia earlier this year.  It would be one thing for Russia to make a move like this and affect only one of its former Soviet republics.  It’s an entirely different matter if Western Europe pays an economic price.

With everything President Obama will be dealing with after January 20, I hope he’s saved some of his and others’ brainpower for Putin and Medvedev.  These guys are half-cocked and dangerous.

Editor’s Note: This is a portion of the program Meet the Press from November 16, 2008.

(Source: CQ Transcriptswire)

BROKAW: (…) It is “Green Is Universal” all week here at NBC, and the issue of energy dependence is certainly key in that discussion. And joining us now, a very familiar figure, the legendary Texas oil man, T. Boone Pickens.

Welcome, Mr. Pickens, from Dallas this morning.

PICKENS: Good morning, Tom.

BROKAW: You just heard that very spirited discussion. Do you think the Big Three automobile dealers should survive?

PICKENS: You know, I — it’s not my subject. But I wonder, you know, what you’re going to do about the next industry. Is it going to be the airlines?  Or what if Toyota and Honda want some help, too?  I — I don’t know. I don’t know where it stops.

BROKAW: Well, let me talk about what you have been talking about on television and everywhere else these days, which is converting to wind-driven general — generation of electricity and transferring natural gas to big public transportation.

I am told that, given the perilous state of the economy, the decline in oil prices, which has not made it as urgent in the minds of a lot of consumers, that you find yourself now at a very difficult crossroads financially in your own situation, and you’ve had to call a halt to your development plans.

PICKENS: Well, the wind, you know, it — I’ve got a — I had planned on 30 percent equity, 70 percent debt, and I can’t get any, any, any money for that at this point. But it doesn’t mean that’s the end of it. It’s been postponed is all it is.

And so — but we’ll get up and going. I don’t receive my first turbines until 2010, so I’ll get it done and we’ll be going by 2010. So it’s — we have to get — in America, we have to get on our own resources. And wind and solar are going to have to be used — they — for all kinds of reasons.

But one, we’re going to have to add 20 percent more to our power generation infrastructure in the next 10 years. So that’s 200,000 megawatts. That could really help us. The first year, when you start that program, and it should be started within the next year or two, that when you start that program the first year will be 138,000 jobs.

And, by the time you finish it, it’ll be 3.5 million jobs. So the wind infrastructure is — it’s going to have to be done. When you do that, you’re going to release a lot of natural gas, and natural gas is abundant.

We have abundant natural gas in American. It’s the cheapest natural gas in the world.

PICKENS: So here we have an abundant, clean by eight — cleaner by 80 percent than diesel, cheaper; and it’s ours. We need to put our heavy duty 18-wheelers on the natural gas.

BROKAW: When you went to President-elect Obama and talked to him about your plan, was he enthusiastic and did he agree to support it as a high priority in his new administration?

PICKENS: Well, when you say enthusiastic, I wouldn’t say he was jumping up and down. But he asked a lot of questions and took notes. But now, two times I’ve heard him say that, in 10 years, that we will not be importing oil from the Mideast.

If that’s — and I believe him when he says that, which tells me he has a plan. And that plan would have to use natural gas, because natural gas is the — it’s the one and only fuel that moves an 18- wheeler other than diesel and gasoline.

You can’t do it with a hybrid, you can’t do it with a battery, you can’t do it with a fuel cell. The only fuel — so when you — it’s not like we’re choosing a fuel, it’s the only fuel that we have in America that will replace foreign oil.

BROKAW: Senator Obama is very much in favor of having a million electric cars in a very short period of time. Do you think that that is practicable, and is it part of your larger scheme?

PICKENS: Well, I like the idea. There’s no — the plug-in hybrid’s good. But think, Tom, one million of those looks big on a parking lot. But you got to think — you got to look at the whole picture. There are 250 million vehicles in America, and the hybrid, all it does is move the light duty, you know, cars and trucks — or pickups. But the trucks, the big stuff, has got to be moved by natural gas.

But when you look at 250 million vehicles and you’re importing 70 percent of your oil from foreign countries, and of the 70 percent, 50 percent comes from the Mideast. So if — if Senator Obama is going to accomplish what he wants to do — it’s all here. We can do it.

In America, it’s interesting, because this has nothing to do with politics. This has something to do with all of us in this country. And we can all pull together, do the right things, and we will solve the energy problem.

BROKAW: Former Vice President Al Gore has another plan for the generation of electricity in this country. He wants to take it entirely off the carbon footprint, remove it from oil and coal, those kinds of fuels and go to alternative forms of energy, and he wants to keep nuclear in place where it is.

Can both of your schemes fit in the best interest of the country?

PICKENS: There are some things that — that Al and I have in common. We have — we’ve talked about this subject. I think that Al can go along with the bridge of natural gas to the battery transportation fuel generation, which is 20 to 30 years away for — to get it to the level that I think it will have to be to, to take out foreign oil.

So here you’re — you’ve got the bridge, and you go ahead and use it, the natural gas, and get to the battery as quick as you can.

BROKAW: And, Mr. Pickens, let me ask you about this as well. The price of oil has dropped, as you know better than anyone, down to around $50 or $60 a barrel. That has driven down gasoline prices. People don’t feel the same urgency that they did last summer when they were paying more than $4 a gallon for gasoline.

Does that relieve the political pressure on members of Congress and even on your efforts to get something else done that is an alternative to the traditional way of fueling transportation in this country?

PICKENS: Well, first, we’re importing almost 70 percent. I think that is a huge security problem for the country. I want that fixed. So we’ve got to reduce the dependency on foreign oil. The cost of it, we got lucky. But we got lucky, but there may be another part to it, too. When I launched my campaign on July the 8th, gasoline was $4.11. Today it’s half that price.

I don’t know. If you look back over the history of oil prices, gasoline prices, we’ve yo-yoed at times. In the ‘70s we — the price went up, and then we had plenty of oil all at once from the Mideast. When we did, the price when down. We put away any ideas of renewables at that point. And then in the ‘80s, the ‘90s and here we are again. The price has gone down, so, oh, boy, we’re fixed. Well, we’re not fixed because we’re still importing almost 70 percent.

But this is great to have cheaper gasoline prices, no question about that. If there’s anything that helps our economy, it’s lower energy costs. So — but it doesn’t mean that we’ve solved any problem because, over the history of 40 years of no energy plan in America, we now have to have an energy plan. And I think we’ve got it.

There are only two ways you can go, Tom, on this. One, you have an energy plan to solve the problem, and if you don’t have an energy plan that means you’re for foreign oil.

So it’s going to come down to a very clear up or down, and it’s going to be the American people who are going to — are going to demand an energy plan for the future generations of our country. BROKAW: For most of your career, Mr. Pickens, you were a traditional Texas oilman, one of the most successful in the game, and of course it was in your interest for the Big Three in Detroit to continue to turn out those big automobiles that had a big appetite for oil-based products.

As you look back on your career now, do you have any regrets about what you did earlier?

And did you ever think, at that time when you were in the midst of your oil career, “What are we doing to this country?”

PICKENS: I don’t think so. You know, I was a good geologist and I found a lot of oil, and that was the business I was in. And, you know, you were burning it in your car and so — I was too and the rest of the people in America.

So what this comes down to it’s — you know, if you want to blame somebody for it, you can say you didn’t have the leadership in Washington and start there.

But all of us in America used the oil. And the reason we did, the gasoline was cheap. It was cheap, and that’s why we did it.

And now when we saw gasoline — when we saw oil go to $100 a barrel all of us realized that we’re in a different, we’re in a different world now. And if you think oil’s going to stay down at $50 and $60, I — I’ll make you a $10 bet on that, that we’ll be back to $100 a year from now.

So — and we’re going to — it’s going to move on up. If we don’t do anything — go with me, fast-forward back, or fast backward, that 40 years…

BROKAW: Rewind.

PICKENS: … 40 years, no plan. Now, if we go fast-forward 10 years with the same approach to energy in America, where will we be? In 2018 we’ll be importing 75 percent of our oil and the price will be $200 to $300 a barrel. That is not going to work.

BROKAW: T. Boone Pickens, thank you very much for being with us. I know that we’ll be hearing from you in the days and years to come.

END