Monday, April 05, 2010

Officials Waking Up to Peak Oil?

A series of news items from the previous month suggest growing awareness of the peak oil problem by business leaders, scientists, and governments. So says Chris Nelder of the web site Energy & Capital:

Forecasts grew increasingly pessimistic as it became apparent that regular conventional crude supply had peaked at the end of 2004. Even as the biggest oil price spike in history ensued from 2005-2008, crude production remained flat and unresponsive.

OPEC scaled back some of its development plans as costs soared. Non-OPEC production not only failed to deliver any actual increase, but began to decline. Forecasts were revised lower.

Corn ethanol boomed and busted, as it was revealed to be the net energy non-starter that serious analysts always knew it was. It also was suspected of adding pressure to food prices at a most inopportune time.

Unconventional production from oil shale and tar sands failed to grow as expected, as producers shied away from high-cost, low-production projects.

The International Energy Agency (IEA) finally included the depletion of mature fields in its analysis, and became increasingly shrill in its warnings about future supply.

A few current and former oil industry executives began making public statements about the diminishing prospects for new supply, and a few even acknowledged that it would be hard to increase production much beyond current levels.

Then high oil prices proved intolerable to an economy stretched thin by the bursting of the bubbles in the real estate and financial sectors.

Yet official recognition of the peak oil threat remained muted, couched in warnings about "adequate investment" and blithe assertions that demand would soon peak, averting any supply shortage.

All that seems to have changed in the last month. A sudden deluge of reports and summit meetings suggest that the oil industry and energy officials are now taking peak oil very seriously indeed.


Check out the full scoop here.

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Posted by Chris Schelin at Monday, April 05, 2010 | | Comments

Friday, February 12, 2010

Decline Going Mainstream?

At the beginning of December I commented on the Newsweek cover story, "How Great Powers Fall," in which economic historian Niall Ferguson openly entertained the idea that America's huge load of debt may herald the end of her superpower status. At the time it appeared, to my eyes at least, as a lonely statement of historical inevitability. It has been surrounded by assurances, or at least hopeful assumptions, that our unequivocally bad times, however severe, are still just bumps on the road to renewed prosperity and might. Perhaps most Americans are still pessimistic about the current state of affairs and the near-term future, but I wager that few conceive that dramatic changes in their way of life, or the global order writ large, are plausible.

The latest issue of Newsweek, however, mentioned the prospect of imminent decline multiple times. In a column on Chinese-US relations, Fareed Zakaria writes about a

great fear that the U.S. economy is in deep structural decline. If American politicians cannot muster up the courage to make the U.S. economy competitive again, and Beijing perceives that it is dealing with a superpower in inexorable decline, relations between China and America will change fundamentally. [emphasis mine]


Turning the page, the next column by Jacob Weisberg comments on the nation's current political paralysis, turning blame from the politicians to the "biggest culprit of all: the childishness, ignorance, and growing incoherence of the public at large." In aggregate, he says, the American people live "in Candyland" by simultaneously holding desires for government both to tackle big problems and "get out of the way." This is his concluding paragraph:

Our inability to address long-term challenges makes a strong case that the United States now faces an era of historical decline. To change this storyline, we need to stop blaming the rascals we elect to office, and look instead to ourselves. [emphasis mine]

Turn the page yet again and Robert Samuelson's column warns that delay in addressing the budget deficits will eventually compel odious tax increases and painful spending cuts. Turn the page yet again and Evan Thomas' article on Obama's "candor deficit" stresses that the public's trust in a better future for their children is in jeopardy and the time has long since come for politicians to drop slogans and speak honestly about the challenges and sacrifices necessary to forge a better future. One wonders how successful such honesty will be since, as Thomas writes, "liberal democracies are notoriously unable to demand sacrifice from their citizens, outside of time of war."

Elsewhere in the mainstream media, decline is openly discussed or otherwise implied. Economist and Nobel laureate Paul Krugman recently wrote about Obama's "cluelessness" in a New York Times column. Responding to the president's recent pro-business and pro-banker comments, including a statement about the influence corporate leaders have had on his economic policies, Krugman ends his column with these words:

We're doomed.

Canuck commentator Eric Margolis of the Toronto Sun wrote a column last week about America's black hole of military spending, stating that the U.S. has reached "imperial overreach." Meanwhile, Paul Farrell of MarketWatch, part of the Wall Street Journal Digital Network, lists 20 "made-in-America" time bombs of debt that threaten the global economy and can "destroy your retirement."

Signs and portents, perhaps.

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Posted by Chris Schelin at Friday, February 12, 2010 | | Comments