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America and Britain – gasoline and GDP implications
Roland Watson, New Era Investor
Gasoline prices are now hovering about the $4 per gallon mark in the USA as the disruptive effects of Hurricane Katrina continue to work. As stated in another blog entry, about 12% of refining capacity is down but we expect that to improve in the days ahead.
With Americans consuming 9.5 million barrels of gasoline a day, this represents a 2 million barrel shortfall. How important is gasoline to American GDP? At the raw consumption level, at a recent average of $2.60 per gallon in a $12 trillion economy, it adds up to 3.1% of total GDP. A sustained price of $4.00 a barrel takes us up to 4.8% of GDP.
This has a twin effect, one is to take away 1.7% of GDP away into the coffers of multinational oil. How that money is put to use is a complex question, but the short answer is that it does not reproduce as much as 1.7% of national GDP.
Secondly, a higher gasoline price shaves a little off purchasing power on other items, so the trickle down effect begins at the pump and works its way down to the shopping malls, through wholesalers and various other ancilliary services.
…There is only two ways that a sustained $4+ gasoline price could drop to 3% of GDP in America. Either, the economy grows to accomodate it which is unlikely since high gas prices dictate the opposite or Americans make the same shift towards more efficient usage in a manner similar to the British.
If the American public perceives Hurricane Katrina as merely a hiccup, they won’t do it. So, it seems that only a sustained high gasoline price will achieve this and, once again, it looks like only Peak Oil is going to have that necessary long lasting effect.
(X September 2005)
Mayor of Sebastopol, CA on peak oil preparations (AUDIO)
Global Public Media
Larry Robinson, mayor of the city of Sebastopol in Northern California, talks to Dave Room of Global Public Media about Sebastopol’s preparations for the onset of peak oil.
(2 September 2005)
Running on empty (Julian Darley interview)
Local energy analyst says oil dependency is driving us toward a crisis
Matthew Burrows, Westender
Like Cassandra, the seer of Greek tragedy, Vancouver-based energy analyst Julian Darley has been foretelling a potential disaster that the powers that be don’t want to hear.
“…economics was invented without thinking about energy. So here you have this supreme irony: a system called economics – a flow of money – is really about the flow of energy, but it never mentions energy.”
“If you develop a system which is based on completely false premises, and takes no account of its central motivating factor – energy – then no wonder you just carry on without any knowledge of it,” he says. “It’s treated like oxygen. You don’t wake up in the morning and worry about whether you’ve got any oxygen or not. It’s just something you take for granted. It’s been around a long time, and our bodies are predicated on a ready supply of oxygen. We get into trouble very quickly when it gets short. With the economic system now, we have a similar situation that is making it very hard to breathe.”
For three years, Darley – with the help of wife Celine Rich – has developed online information networks through Global Public Media (GlobalPublicMedia.com) and the Post Carbon Institute (PostCarbon.org.)
…Another solution is described in Darley’s forthcoming book (co-written with Celine Rich and David Room), Relocalize Now!. As the title suggests, Darley sees a future in which humans adapt again to a foot economy, instead of a fuel economy. It would also be what Darley calls a “total reversal of globalization,” returning manufacturing and food production to the local area. In conjunction with that, Post Carbon Institute wants to set up small energy farms that run on wind and solar power, and some biofuels.
“This is about action,” says Darley, “because, frankly, I’m a little tired of just talking.”
(1 September 2005)
Peak Oil and the working class
Dale Allen Pfeiffer, Online Journal
…You can be sure the elite have already determined how to maximize their profit from peak oil. For all the blather of the economists, they know that our economy must start contracting as a result of diminishing energy production. And they know that in any form of capitalism—be it free market, state supported or highly regulated—continuous economic contraction is a euphemism for collapse. The smart money knows when to get out, and the smart money knows how to manipulate even a downturn for maximum profit.
Recent news items ($380 Oil? Banks talk Oil Depletion, Michael Kane. From the Wilderness, June 7, 2005) indicate that the privileged class could use peak oil hysteria to prematurely drive up prices to artificial heights. While oil prices should currently be climbing, there is no good reason at this point for them to be as high as $60/barrel. It is the result of speculation, and someone is making a big profit from it. As of yet, peak oil has only been whispered around the marketplace. The real market panic lies ahead of us, maybe a year away, but perhaps as soon as next month or next week—if it has not occurred before this article is published.
When the panic comes, it will be managed by the elite. They will extract their profits from it, and then they will liquidate their assets and move them offshore before the market crashes.
(2 September 2005)
A view of Peak Oil from the viewpoint of the anarcho-syndicalists (International Workers of the World — IWW).
You Bet Your Life
Michael C. Ruppert, From the Wilderness
…Several things are now becoming clear. It is unlikely that New Orleans will ever be significantly rebuilt. When we talk about collapse as a result of Peak Oil, New Orleans is an exemplary – if horrifying – glimpse of what it will look like for all of us. In the case of New Orleans, however, it’s happening about two or three times as fast as we will see it when Peak Oil becomes an unavoidable, ugly, global reality. How long? Months. If we’re lucky, a year. As of August 2005 it’s not just a race to make sure that a particular region is not eaten by warfare and economic collapse. Mother Nature is obviously very hungry too. What region will be the next to go? What sacrifices can be offered before the inevitable comes knocking at our own personal door? Who can be pushed ahead of us into the mouth of the hungry beast in the hopes it will become sated?
How low can human beings sink? Keep watching the news. It’s not the first time civilizations have collapsed. This has all happened many times before. This behavior is not new. What is new — but is now dying — is our enshrined belief that there were to be no consequences of our reckless consumption and destruction of the ecosystem. What is now dying a horrible death is America’s grotesque global arrogance, brutality and cupidity.
What is not being discussed rationally by the mainstream media is Katrina’s impact on energy production. They don’t dare. By my calculations and those of oil energy expert Jan Lundberg, the United States has just lost between 20% and 25% of its energy supply. My projection is that it’s not coming back — at least not most of it.
(2 September 2005)
More Katrina coverage from The Oil Drum
The Oil Drum
(2 September 2005)
More good coverage and commentary from Down Under
Big Gav, Peak Energy (Australia)
(3 September 2005)
Bartlett’s timely message on nation’s energy woes
The Herald-Mail (Maryland)
Now that prices at the pump have hit $3 a gallon, many people are beginning to take seriously Rep. Roscoe Bartlett’s argument about the need to develop alternatives to oil for some of the nation’s energy needs.
The 6th District Republican was in Hagerstown Wednesday to talk about a variety of subjects, including stem-cell research, but the oil situation made his comments on that topic most timely.
Rep. Bartlett has been arguing for some time that, for the nation and the world, oil production has peaked. Couple that with rising demand in countries such as China, Bartlett said, and price increases are inevitable.
But the Congressman said there are things citizens can do to cope, such as buying a gas-electric hybrid auto, as he did in 2000. With 93,000 miles on it now, Bartlett said it still averages 45 mpg.
For the nation as a whole, there are temporary alternatives, such as the development of so-called tar sands, oil shale and a renewed reliance on coal and nuclear power.
And, Bartlett said, there are also renewable resources such as wind power, biodiesel and ethanol.
To develop all these alternatives will take time, Bartlett said, which will necessitate conservation in the meantime.
Bartlett said that conservation need not be forced, if the public is educated on the necessity of doing it. He noted that in California, the average citizen voluntarily uses only 60 percent of the energy used by average Americans elsewhere.
Could Bartlett be wrong? Surprisingly, he said he hopes he is and that everything will work out without the need to do anything drastic.
…As Bartlett said, Americans are clever, creative and can solve these problems, provided they have good leadership. It’s time for other voices to join his.
(2 September 2005)
