PEAK OIL IS A WAY OF LIFE NOW

All quotes below come from the Financial Times:

"This week oil climbed to $87 a barrel, its highest level since October 2008 and prompted concerns that triple-digit crude was once again in the offing.

This was after a period of eight months when oil traded between $70 and $80, a narrow band that pleased oil producers without hurting consumers too much.

The latest surge seems to have been prompted by rising confidence in a global economic recovery, even if most traders and bankers are still cautious about supply and demand fundamentals."

In July of 2008 oil hit $147 a barrel and along with the collapsing real estate market nearly drove America to her knees. So what's the magic number this time; $100, $120, $130? I don't know but I'm sure it will be well below the $147 that did it last time.

"...Policymakers seem untroubled. Energy ministers at the International Energy Forum in Mexico last week embraced less volatility, not lower prices. Lawrence Summers, director of the US National Economic Council, in remarks this week bemoaned his country’s dependence on foreign oil supplies, but did not complain about prices.

Some economists do not view $80 oil as a threat to global growth, which the International Monetary Fund projects at 4 per cent this year. James Hamilton, an economist at the University of California, San Diego, is author of a paper that found oil’s 2008 surge to $147 a barrel helped tip a housing-led slowdown into a recession. This time, the relatively steady nature of the price rebound has allowed consumers to adjust.

“The shock value is gone now,” Prof Hamilton says."

Sure the shock value is gone. So what??!! It wasn't the shock that damned near destroyed us with the last go 'round, it was the cost! We haven't adjusted to higher prices, we just can't do anything about them. The only adjustment possible has been to drive a whole lot less and reallocate the money we have from food, clothing and entertainment to energy. And, as prices go up more will go to energy and the rest will be just forgotten. We're not alone with this which is why higher energy costs will destroy the economy and any chance of recovery.

...“If we were to move to $100 a barrel, economic growth would start to slow, but ‘derail’ is likely too strong a word,” Mr Allidina says.

A move to higher oil prices would not necessarily generate corresponding gains in retail fuel prices, as new refining capacity has made petrol markets more competitive. In the US, filling stations in most states still sell petrol for less than $3 a gallon, well below the peak of 2008. In the UK, however, petrol prices are close to record highs, even though crude is well below its peak."

I want to move into that ivory tower these guys live in because it is far removed from the rest of the world. Oil hasn't even gotten to $90 a barrel yet regular gas here is $2.89 a gallon. What the hell are these guys smoking? It's like the weatherman telling us we're going to have a sunny day without opening his window to see the rain.

"...When oil prices last surged to $100 a barrel in late 2007, US and other rich-country consumers blunted the impact by drawing on home-equity loans and credit cards to finance petrol purchases, says David Greely, energy economist at Goldman Sachs.

“It does raise the issue if we’re in a much more credit constrained world going forward, are consumers able to do that or will they be more sensitive?” he asks."

Let me answer that question for you; YES!!! We have no way to pay for higher fuel costs except to rob from Peter to pay Paul. Every additional dollar spent on energy will cause a drop in demand for something else. High energy costs will destroy this economy because it will destroy the people's purchasing power. It's not just the direct cost of energy, either. It's the higher cost of everything that is shipped by oil powered means or uses oil in manufacturing or contains oils as an ingredient. And that's just about everything. So we'll have less disposable income to spend on more expensive goods. I don't need a degree in economics to tell these morons that this just won't work.

If higher costs don't spell the end of our economy they mark the transformation of it. America is going to be forced to reduce and reorient itself. We will buy locally from people in our communities. Eventually we will be buying locally produced goods from those people. We will be growing more of our own food and fixing what breaks instead of throwing it away and buying new. That means that we will all have to relearn the basic skills that mankind has relied on for 5000 years. Moving numbers around on a spreadsheet isn't going to be a useful skill much longer.

This is Peak Oil. If we don't have access to cheap and abundant oil we cannot live in the manner we have become accustomed to. We have refused to develop any other source of energy such as nuclear or natural gas, even going as far as to erect barriers against them, because our politicians have been bought and paid for by the oil producers. And now, it's too late.

We're caught in a vicious loop that we can't get out of. Any indication of economic recovery will cause energy prices to rise. Rising prices will kill the recovery. Because the failing economy will force oil prices down and energy prices will fall with them, the economy will start to recover once again, which will cause a rise in energy prices, which of course will end the recovery.

Each time we complete this cycle the price point at which energy will cause another collapse will be lower than the last time because each one of the cycles will progressively destroy the ability of the economy to recover. At some point, recovery will not be possible.

We are nearing the end of the second cycle which means that when the price of oil hits some magic number, the recovery (what there is of it, which ain't much) will fail and the economy will collapse, again. This time it will go a little deeper.

Start to view the world in light of this new reality and prepare for your future accordingly. Develop relationships with your neighbors and support local merchants. Begin to think and act as locally as you can. It may cost a bit more to shop with a local merchant than it does at the big retail discounter but the local guy will be the one that will stick with us in the end if we help him to stay alive. We need our little towns and our churches, our friends and families. Our world is in the process of shrinking to a walking distance as cheap and readily available energy fades away.