In which a group of graying eternal amateurs discuss their passions, interests and obsessions, among them: movies, art, politics, evolutionary biology, taxes, writing, computers, these kids these days, and lousy educations.

E-Mail Donald
Demographer, recovering sociologist, and arts buff

E-Mail Fenster
College administrator and arts buff

E-Mail Francis
Architectural historian and arts buff

E-Mail Friedrich
Entrepreneur and arts buff
E-Mail Michael
Media flunky and arts buff

We assume it's OK to quote emailers by name.

Try Advanced Search

  1. Seattle Squeeze: New Urban Living
  2. Checking In
  3. Ben Aronson's Representational Abstractions
  4. Rock is ... Forever?
  5. We Need the Arts: A Sob Story
  6. Form Following (Commercial) Function
  7. Two Humorous Items from the Financial Crisis
  8. Ken Auster of the Kute Kaptions
  9. What Might Representational Painters Paint?
  10. In The Times ...

Sasha Castel
AC Douglas
Out of Lascaux
The Ambler
Modern Art Notes
Cranky Professor
Mike Snider on Poetry
Silliman on Poetry
Felix Salmon
Polly Frost
Polly and Ray's Forum
Stumbling Tongue
Brian's Culture Blog
Banana Oil
Scourge of Modernism
Visible Darkness
Thomas Hobbs
Blog Lodge
Leibman Theory
Goliard Dream
Third Level Digression
Here Inside
My Stupid Dog
W.J. Duquette

Politics, Education, and Economics Blogs
Andrew Sullivan
The Corner at National Review
Steve Sailer
Joanne Jacobs
Natalie Solent
A Libertarian Parent in the Countryside
Rational Parenting
Colby Cosh
View from the Right
Pejman Pundit
God of the Machine
One Good Turn
Liberty Log
Daily Pundit
Catallaxy Files
Greatest Jeneration
Glenn Frazier
Jane Galt
Jim Miller
Limbic Nutrition
Innocents Abroad
Chicago Boyz
James Lileks
Cybrarian at Large
Hello Bloggy!
Setting the World to Rights
Travelling Shoes

Redwood Dragon
The Invisible Hand
Daze Reader
Lynn Sislo
The Fat Guy
Jon Walz


Our Last 50 Referrers

« Gay Gay Gay | Main | Elsewhere »

May 14, 2008

A Question for our Presidential Candidates

Friedrich von Blowhard writes:

Dear Blowhards,

The blogger Hellasious raises an interesting point I haven't heard dicussed much by any of our presidential candidates:

…at $120 per barrel, revenue from exporting crude oil and its products comes to over $1.85 trillion per year. The Middle East alone gets nearly a trillion and the former Soviet Union $300 billion - and that's before including natural gas.

At current oil prices, this is by far the largest capital recycling and concentration pump in the entire history of the world. A dollar may not buy as much as it used to, but a trillion every year still buys plenty…Very plenty, in fact: [it buys] US and European banks, other resource companies like ore and coal miners, shipping and port operators, electricity, water and telecom providers and a host of other essential businesses. That's where all the SWF [sovereign wealth fund] and private oil money is going, most commonly channelled through secretive private equity funds.

Obviously, the oil exporters are furiously planning for their post-Peak Oil future: sensibly, they don't want to ride camels again. And if this goes on much longer, by the time their oil wells start to decline they will own everything that matters and will be sitting - literally - atop all the money in the world.

What are the rest of us - Americans and Europeans alike - doing to plan our post-peak future? Next to nothing, is the painful answer. If a few EU nations like Germany, Denmark and Spain are attempting to face the alternative energy challenge, the US as the largest oil consumer is making a momentous mistake by its absence. Stubborn reliance on imported oil is rapidly impoverishing the nation. That sucking sound we all hear in our pockets is money vacuumed out by the oil exporters, only to come back as foreign equity ownership of everything.

I think a detailed policy response to this situation would be kind of reassuring from our future leaders, don't you?



P.S. Is it just me, or is this whole campaign the most surreally irrelevant and, ahem, beside the point exercise you can remember? Surely somebody -- somebody at the DoD perhaps -- must be thinking hard about what the new world heralds and what we might do about it. Or is everybody just asleep at the switch?

posted by Friedrich at May 14, 2008


Nice find.

Have any of the candidates made their positions clear on anything? (And would it matter it they did, of course ...)

I like Hellasious' idea of the OPEC countries sitting on top of the all the money in the world. How can I get a piece of that?

Posted by: Michael Blowhard on May 14, 2008 9:54 PM

I keep wondering where all this "Peak Oil" nonsense comes from. The US has plenty of oil. The Strategic Petroleum Reserve in Alaska has hardly been touched, and ANWR is chock full of a lot of oil, far more than they are letting onto.

And there is the Bakken Oil Formation out in North Dakota. There are admittedly hundreds of billions of barrels out there. The USGS just released a study saying that 3-5 billion barrels are out there but they only claimed that 1% of the oil there was recoverable! And they also left out 1/3 of the formation from their study. California and Florida, as well as large parts of the west, are off limits thanks to the enviros, funded by the oil companies.

The real truth about the oil business is that there is too much oil. That's a real hard pill to swallow, but if you look into the history of the oil business, its completely true. From the takeover of the refinery business by Standard Oil, to the formation of the Texas Railroad Commission, to OPEC, to the oil companies funding the environmental movement, the idea has always been to form monopolies and oligopolies and to restrict exploration and production to keep prices high. The only time the oil price drops is when the big boys want to bankrupt the little guys and buy up their wells for pennies on the dollar.

Isn't it interesting that the US hit "peak oil production" in 1971, the same year Nixon took the US dollar off the gold standard? Gee, what a coincidence! See, the US decided to export its inflation from social spending/welfare spending all around the world. Even with the ridiculous inflation of the 1970's, it would have been far worse if the US could not have done this. The mechanism to do this would be the world oil trade. Those exported dollars started the petro-dollar market and its recycling into the intenational banking system. The OPEC countries also agreed price their oil in US dollars and to finance US federal budget deficits by buying US treasury bonds.

What's going to happen when the US dollar loses its extra-special reserve status? Lord knows, but its not going to be pretty. We can produce all the oil we need for a very long time. The present condition is completely artificial.

Posted by: BIOH on May 14, 2008 10:47 PM

No one in the presidential selection process understands the economy. The public does not, the press does not, and the candidates do not.

The economy is essentially run by a group of "expert" economists. Unfortunately, the process of becoming an "expert" economist does not seem to be correlated at all with financial skill. Ben Bernanke is an academic. He got promotions by writing papers. He is no more qualified to run an economy than a NY Times Technology reporter is qualified to run Google.

Due to the massive inflation of the dollar (and every other currency), oil is effectively becoming a new global currency. The net of this is going to be a massive wealth transfer to the middle east.

The current governance system has become far too complex for anyone to understand.

Posted by: Patrick on May 15, 2008 12:20 AM

Smart guys like Greg Cochran seem to think we’ll be fine. I’m not so sure. I think the shit is going to hit the fan in my (40ish) lifetime. BIOH, Have you read James Howard Kunstler? He makes a compelling case.

Posted by: Sven on May 15, 2008 1:16 AM

Yes, this election seems totally irrelevant to anything worth talking about.

Here in the Philippines, I'm constantly asked who I favor in the presidential election. I always reply: "Nobody."

Posted by: Shouting Thomas on May 15, 2008 1:22 AM

The storm troopers of the left won't allow drilling in Alaska, drilling off shore in Florida or California, almost certainly will discover the endangered high plains cow chip to stop exploration under North Dakota, won't allow nuclear....

Until the terror grip of leftist enviros is broken, in both parties, nothing will change.

Posted by: ricpic on May 15, 2008 11:34 AM

It's not just you. Never before has a campaign ever been floated on such a bottomless sea of bullshit.

Posted by: vanderleun on May 15, 2008 11:58 AM

How I wish Ron Paul were still in the race, forcing some real and substantial issues into play ...

Posted by: Michael Blowhard on May 15, 2008 12:11 PM

One of my friends from high school has been working in nuclear power since college.

He spends 9 months out of the year in Europe!

Given the amount of thought that the average American gives to this and other big questions facing us, we really do deserve to be flushed down the toilet of history.

Posted by: Brutus on May 15, 2008 12:46 PM

Sven, I like James Kunstler a great deal, but I think he's all wet about Peak Oil and the imminent collapse of suburbia and American car culture. My own guess would be that BIOH has an even lower opinion of Kunstler on this matter.

Part of my difficulty with Peak Oil is that I have no understanding of what is meant by it. If it means that we will be unable to meet current world demand for oil at some time in the future (or future world demand extrapolated from current demand) then the notion is incoherent. Current demand for oil is dependent on price, so imagining demand continuing regardless of what happens to price is something I just can't get myself to do.

And yet...some very bright people are concerned about Peak Oil, including a pretty smart guy on this blog. I can't just dismiss them out of hand.

Though, to tell the truth, very bright people are also concerned about Global Warming, and I am increasingly inclined to, well, dismiss them out of hand.

So...I don't know. I have this feeling that fears about Peak Oil, CAGW and the trade deficit are all going to dissipate over the next few years. I mean, we can't even tell if we're in a recession or not! Crikey, the stock market finished near 13,000 yesterday. The 'fuh?

I'm worried sick to tell you the truth. Worried sick that I can't even tell what I'm supposed to be worried sick about any more.

Gack. I need a drink.

Posted by: PatrickH on May 15, 2008 1:11 PM

PH: "I'm worried sick to tell you the truth. Worried sick that I can't even tell what I'm supposed to be worried sick about any more."

That's a great way of putting the current malaise into words. You could probably sell a book proposal on the theme.

I'm an agnostic on Peak Oil and Global Warming -- know little about either, have zero personal experience in both fields. So how would I know? Mistrustful of experts and political leaders, god knows; on the other hand very sympathetic to certain eco-concerns. Wary of Kunstler (who I think is great on architecture and suburbia) because Peak Oil seems to validate his general vision so totally. On the sixteenth hand, it isn't as though he dreamed Peak Oil up -- there are a lot of hands-on, experienced people out there who argue the case. Anyway: what do I know about any of it?

As I understand it, the scary part of Peak Oil is the combo of extraction rates tailing off while demand rates per person (think China and India) skyrocket, and population sizes increase. This leads to something that isn't a case of, "Gosh, prices are still inching up." It leads to complete chaos as everyone scrambles for access to what remains. Political viciousness galore. It isn't just about filling gas tanks, after all. Most of the fertilizer that's used these days in large-scale ag is petroleum-derived. So food shortages ensue, never a fun thing.

Anyway: Wikipedia does a good job of explaining what's meant by Peak Oil. Weird that it doesn't t mention Kunstler, who's certainly the public face of Peak Oil, but interesting to meet and learn about all kinds of other people caught up in the issue, pro and con.

Posted by: MIchael Blowhard on May 15, 2008 1:25 PM


Yeah I've heard Kunstler. When I bought into the "Peak Oil" scam the last few years, I became familiar with his writing and heard some interviews with him on the web.

I think he's all wet, and buys enthusiatically into the "Peak Oil" scam because it gives him a great opportunity to beat up on surburban life, which he despises with a passion.

Speaking of nuclear power and hydroelectric, ain't it funny that the green/brownshirts have put the kibosh on a lot of that here in the US? It seems to make more sense if you realize the oil boys, who are busy buying up coal, solar, wind, and other technology, fund the green/brownshirts.

Can anybody say "energy monopoly"?

Posted by: BIOH on May 15, 2008 1:29 PM


"I keep wondering where all this "Peak Oil" nonsense comes from. The US has plenty of oil. The Strategic Petroleum Reserve in Alaska has hardly been touched, and ANWR is chock full of a lot of oil, far more than they are letting onto."

"plenty", "hardly been touched" "chock full" are not quantitative statements. "Peak Oil" is a quantitative statement.

Hubbert predicted peak oil in the US using a quantitative method long before the 70's. Oil production peaked in the US in the 70's, as predicted, and has steadily declined since.

The same methods have been applied and have predicted peak oil in the World about now. We may expect that oil production will decline from now on.

One place to read about it is the book by Ken Deffeyes.
"Hubbert's Peak: The Impending World Oil Shortage"

Posted by: Robert Hume on May 15, 2008 1:44 PM

FWIW, investment banker (and conservative dude) Matthew Simmons is another Peak Oil guy. Here's an interview with him.

Key quote: "The idea that they are under-exploiting their [reserves] is a terrific theory, but it is actually superficial and naive."

I'm no judge, of course. But the idea that M. King Hubbert, Kenneth Deffeyes, James Kunstler, and Matthew Simmons are all part of a conspiracy to delude us that also includes the petro industry and the enviro organizations ... Well, I confess that I'm having a hard time wrapping my mind around that one.

Here's another interview with Simmons. Key quote:

If I'm right, then we have to assume that five or 10 years from now we'll be producing less oil than we are today. And yet we have a society that is expecting, under the most conservative assumptions, that oil usage will grow by at least 30 to 50 percent over the next 25 years. In other words, we would end up with only 70 percent of the oil we have today when we would need to have 150 percent. It's a problem of staggering economic proportions -- far greater than the temporary setback of a terrorist attack on energy infrastructure -- that could end up leading to more geopolitical fistfights than you can ever imagine. The fistfights turn into weapon fights and give way to a very ugly society.
Posted by: Michael Blowhard on May 15, 2008 2:06 PM

Robert Hume and Michael Blowhard,

I read Deffeyes book, and that's what convinced me of "Peak Oil" several years ago.

Unfortunatley, Deffeyes is indeed a liar. In his book, he states that there is an "oil window" below which, you don't find oil, but natural gas. Said bogus "oil window" was said by Deffeyes to be at 15,000 ft.

Yet you can prove this is total nonsense by looking at the Jack discovery in the Gulf in Mexico recently. They drilled down over 20,000 ft to hit that well. And there are so many other examples of this that its easy to see that Deffeyes is full of baloney. And this isn't just a minor thing either. If his credibilty can so easily be disproved on something that should be known by any competent petroleum geologist, then the rest of his screed is questionable too.

Matt Simmons is a banker. Kunstler has no inside infromation. He's just a commentator.

As far as Hubbert goes, his theory rests solely on the idea that oil is a non-renewable "fossil" fuel. But oil isn't a "fossil" fuel. It is abiotic, or generates naturally from carbon and hydrogen molecules deep in the earth's crust.

There's lots of information on this, but its hard to find, given the extensive propaganda for "Peak Oil" on the net (and who would think that the big oil companies could sponsor a propaganda campaign on the internet--they hardly have a nickel to spare with $120 a barrel oil!).

Here's a nice little blog with lots of links to prove that "Peak Oil" is nonsense:

Jerome Corsi (who is exposing the North American Union) is all over this too. Just google his name and search the topic.

As far as "Peak Oil" being a "quantitative problem", you only know that the big oil oligopoly wants you to know about exploration and reserves. They have all the incentive to lie and rip you off, and yet you rely on these same companies for all the oil info. That's like asking a used car salesman to give you a good deal. Talk about naive!

Posted by: BIOH on May 15, 2008 2:44 PM

Well, your oil-blog host is also an investment banker, so we have a case here not of "mere investment banker vs. authoritative, objective source," but of "dueling investment bankers." And he seems to be relying on industry sources himself. But practically speaking is there anyone who knows anything in a third-person, "objective" kind of way about the oil industry and oil reserves who doesn't have industry connections? How could that be possible?

Posted by: Michael Blowhard on May 15, 2008 3:37 PM

"Sven, I like James Kunstler a great deal, but I think he's all wet about Peak Oil and the imminent collapse of suburbia and American car culture."

You know what? Fuck "American car culture." Our unwillingness to change our habits out of pure stubbornness will be our downfall.

However, I'm in agreement about nuclear power. That is one of the handful of energy sources we should be investing billions of dollars in right now.

Posted by: JV on May 15, 2008 5:37 PM

Post a comment

Email Address:



Remember your info?