Friday, July 18, 2008

A Bumpier Plateau

Over the last two weeks the price of WTI crude oil has dropped from around $146 per barrel to just over $129 per barrel. This is partly due to the most recent EIA Weekly Report published by the U.S. Energy Information Administration, which showed that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3 million barrels during the week ending 11 July 2008. Also, total motor gasoline inventories increased by 2.4 million barrels during the same period, on top of a 900,000 barrel increase during the previous week. These numbers seemed to confirm the pronouncements of many market “analysts” stating that a slowing U.S. economy would reduce overall petroleum demand, driving prices lower. Lower oil and gasoline prices also led to a Wall Street stock rally late this week. The financial news media headlines covering these developments sounded a celebratory note, as if to say, “See! Things aren't that bad after all. We're returning to normal. Happy times are not far away!”

I have a different interpretation of these events; namely, that we are experiencing one of the aspects of life on the “bumpy plateau.” For those who study peak oil and theorize about how it will play out, the bumpy plateau has two meanings. The first meaning has to do with absolute quantities of petroleum liquids produced worldwide on a daily basis. Many peak oil watchers have theorized that as the world reached a peak of oil production, the peak would not be sharply defined, but would consist of several months of production fluctuating in small “bumpy” increments around a maximum average “plateau” number, before beginning to irreversibly decline. That is what we have been seeing since May 2005, as we have bumped a few percent or so above and below an average figure of 85 million barrels of petroleum liquids per day. The major oil companies and many national governments are struggling desperately to increase this number significantly, yet are failing, because the new oil projects they bring on stream can't offset production declines from old fields that are now at a point of exhaustion.

But the second bumpy aspect of the bumpy plateau has to do with price. When worldwide daily petroleum production cannot grow, the price of oil rises, because the worldwide “official” economy is based on the expectation of continuous growth at a certain percentage per year. Oil is the foundation of the majority of that economy, and no business or government wants to shrink, so corporations and institutions who want the oil begin to offer ever-larger sums of money for that oil. But as the things made with that oil become too expensive for the end users – little people like you and me – to afford, the demand for products made with oil drops, because people are forced to do without. Thus the price of oil begins to drop – even though the underlying fact of limited oil supply hasn't changed.

Human nature being what it is, most people don't grasp the significance of the original rise in the oil price. That price rise should serve as a signal and a wake-up call telling us that it is time to make a permanent shift to a lifestyle and a society that doesn't rely on oil, a society that is learning to live well on less. Most people, including the masters of the present global economy, are not receptive to this message because they only think in the short term. They will doubtless think that the recent drop in petroleum prices means that our present oil “crisis” is purely temporary. The drop in price will therefore spur more consumption, driving demand back up and causing another rise in prices to a level which again reduces demand, driving the price down again, and kicking off another price rise cycle. Each price spike in the cycle is higher than the last, and each price drop is shallower than the last as time passes.

I believe I saw a personal example of short-term thinking this week. For the last few months I have seen fewer and fewer large SUV's and monster trucks on the road. But two days ago as I was waiting for the bus, I saw someone driving what looked like a new Chrysler SUV; I think it's called an “Aspen.” If you look it up on line, you'll find that it comes with either a 4.7 liter, 303 horsepower engine, or a 5.7 liter, 335 horsepower HEMI engine. The thing's as big as a Chevy Suburban! You can have one new for around $32,000 if you want one. But why would anyone want such a thing at a time like this?

This particular SUV went by me so fast that I couldn't see the face of the person driving it, but I have to wonder what was going through the person's head when they bought it. Had the mainstream media in this country done such a good job of turning this supposedly adult American into an unreflecting, impulsive child? And what does this say about the Chrysler Corporation, that at a time of constrained oil supply and spiraling gasoline prices, when people are resorting to desperate measures to unload their Suburbans and Excursions and Yukons and Expeditions and Tahoes, Chrysler comes out with a brand new SUV? They deserve to go bankrupt.

What's needed during this journey along the bumpy plateau is a long view, an ability to grasp the big picture of what's going on. This is an important part of the process of preparing for a more difficult future. The fact that the crisis may ease somewhat at times does not mean that the crisis is temporary. Those who are wise will remember this, and undertake the necessary steps to learn to live more simply, to harden their bodies to do difficult things and to endure adversity, and to explore all their options for preparing for the coming times. As time passes, those who refuse to prepare will be left with fewer and fewer options, until at last their options are bitter.

Speaking of hardening oneself, my commute to work used to consist of riding the light rail to a bus stop, then switching to bus over a hilly two-lane road route, and riding my bike the last mile and a half to work. The evening commute consisted of riding the bus over the same hilly two-lane road from my office to the morning bus stop, then riding my bike home. Total miles per day on the bike were around ten. But when gas prices went over $3.75 or so per gallon, I found that the bus bike racks were often full, and I began to have to ride a lot farther. It seems that many people are discovering alternative transportation, as many buses now have full bike racks in the morning, no matter which route one wants to take.

But riding more has been good for me. When I first started riding the hilly roads between the light rail stop and my office, I hated it. On particularly steep portions of the road, I would get off and push the bike uphill – while young men on racers and pretty, athletic women passed me or went screaming down the opposite side of the road. I remember one afternoon when a smart-aleck guy rode past me shouting “My gears are lower than yours!” as I was walking my bike uphill.

I suppose I could blame my softness on age; after all, to quote a poet I read a while ago, “Time grates my life and yours to sand.” But I'm not that old, and I refuse to act even as old as I am. So for the last two months, I've been forcing myself to ride over that blasted road both ways, and for the last two weeks I have been able to pedal the whole way in the morning without getting off the bike. And on the return trip, I twice pedaled all the way from my office to the light rail station without getting off. My body, which used to protest, “Help! I'm dying!” now takes hills with the attitude that it ain't nothin' but a thing... I've even left a few riders behind. Now I'm racking up at least 100 miles a week on my bike, and my truck is used mainly as a place to dry vegetables (I got the idea from Sharon Astyk's blog).

I'll leave you with a picture of some alternative transportation, for those who are interested and who might be short on cash. It's a bargain, but I don't know how well it handles hills.

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