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Thursday, September 13, 2012

Commentary on Gas Prices

It is understandable for someone to feel the pinch, and even to complain about it, however, a little perspective goes a long way

It is a popular habit among the majority of drivers to cite rising gas prices as a source of great frustration and even hardship. It seems to be just as popular to seek to blame some evil for this suffering.
Yes, it used to cost less to drive around, and yes, for a commuter, driving probably represents a large slice of the household economic pie.
Yes also to the fact that Big Oil is pretty close to evil, if you define evil as cornering a market and making stupendous profits. But hey, didn’t we embrace capitalism once and for all back in 1989?
I would not necessarily rule out blatant collusion when it comes to Montreal’s unique position of having prices above $1.50/L, however, in the big picture we are not all that unique. If I had told you in 2003 that the price of a litre of gas was headed north of a dollar, you’d have laughed at me along with the rest of 99% of the population. But that was in fact what I was saying to those who might have listened, and well, most people laughed, or just didn’t want to listen. We are all paying well above a dollar now – from coast to coast. And the 5 to 10 cent difference at the pumps is incidental.
Now, it’s not as though I am psychic or especially prescient. Nor am I an expert in petroleum geology, or economics. At best I am an environmentally-minded citizen cum avid energy geek: I am a mere lay-person who has taken it upon myself to look beyond the mainstream media (and industry-guided discourse) to answer some big questions about energy consumption and its consequences.
What I have learned has been no less than life-changing, in that I have come to see how incredibly and completely dependent our modern, technological lifestyle is upon our treasured black gold.
I have come to learn that this resource truly is finite, and that there is a geologically documented phenomenon known in the industry as “peak oil.”
Get to know this term.
Peak oil is complex and the interpretations are many, including outright denial from, you guessed it, Big Oil: those who don’t want anyone to have an incentive or need to reduce their consumption.
What peak oil means is that at some point, the world will no longer be able to produce as much oil as it did the previous year, and eventually the rate of depletion becomes significant enough to affect the economy (ie. “growth”).
Guess what? We seem to have entered the peak phase, which is best described as a plateau. During this period the more expensive methods of extraction become relatively viable: enter fracking & tar sands. While these are touted as miraculous solutions in the media, by industry and by governments (an extremely dubious claim, by the way), what they amount to is a desperate society’s scraping the bottom of the barrel. When you hear stories about these “new” sources of oil, try to remember that what you’re really hearing is the story of peak oil.
Similarly, when gas prices go up – and yes, they’ll generally continue to rise – remember you are again hearing the story of peak oil played out on the ground.

Further reading:
In fact, The Energy Bulletin is great hub of different authors on the subject is:
some of my favourites include: Richard Heinberg, Kurt Cobb, Tom Murphy, John Michael Greer, and Dmitry Orlov, to name a few.

See also Kenneth Deffeyes, Colin Campbell, and former Chief Economist at CIBC Jeff Rubin.
There is a so-called Peak Oil online community as well as the Association for the Study of Peak Oil (ASPO), meeting this year in Austin Texas in November.

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