Highlights from "Titanic Sinks"
http://dieoff.org/page143.htm
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OIL
There is NO substitute for energy. Although the economy treats
energy just like any other resource, it is NOT like any other
resource. Energy is the precondition for ALL other resources and
oil is the most important form of energy we use, making up about
38 percent of the world energy supply.
NO other energy source equals oil's intrinsic qualities of
extractablility, transportability, versatility and cost. These
are the qualities that enabled oil to take over from coal as the
front-line energy source in the industrialized world in the
middle of this century, and they are as relevant today as they
were then.
Forecasts about the abundance of oil are usually warped by
inconsistent definitions of "reserves." In truth, every year for
the past two decades the industry has pumped more oil than it has
discovered, and production will soon be unable to keep up with
rising demand.
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ECONOMY
The global economy relies on energy subsidies to function -- it
burns energy to make money. By definition, an energy "source"
must produce more energy than it consumes, otherwise it's called
a "sink" -- it's "depleted".
Today, the global economy receives almost 80% of its energy
subsidies from nonrenewable fossil sources: oil, gas, and coal.
They are called "nonrenewable" because, for all practical
purposes, they're not being made any more. The reason they are
called "fossil" is because they were "produced" by nature from
dead plants and animals over several hundred million years.
The key to understanding energy issues is look at the "energy
price" of energy. Energy resources that consume more energy
than they produce are worthless as sources of energy. This
thermodynamic law applies no matter how high the "money price"
of energy goes.
For example, if it takes more energy to search for and mine a
barrel of oil than the energy recovered, then it makes no energy
sense look for that barrel -- no matter how high the money price
of oil goes. This is expected to be the average case in America
around the year 2005.
This coming century, the global economy will "run out of gas" as
nearly all fossil energy sources become sinks. One can argue
about the exact date this will occur, but the end of fossil
energy subsidies -- and its dependent: the global economy --
are inevitable.
A good analogy is like having a motor scooter with a five-gallon
tank, but the nearest gas station is 10 gallons away. You can
not fill your tank with trips to the gas station because you burn
more than you can bring back -- it's impossible for you to cover
your overhead (the size of your bankroll and the price of the gas
are irrelevant). You might as well put your scooter up on blocks
because you are "out of gas" -- forever.
It's the same with the American economy: if as a country, we must
spend more-than-one unit of energy to produce enough goods and
services to buy one unit of energy, it's impossible for us to
cover our overhead. At that point, America's economic machine
is "out of gas" -- forever.
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MARKET
The market is like the float in a carburetor, as the engine
demands more gas, the float falls and allows more gas to flow
in from the tank. But the float has no information concerning
the amount of gas left in the tank until the fuel line is unable
to keep up with demand.
So it is with the market. As the demand for oil increases, the
increase in price signals oil companies to pump more oil out of
the ground. But the market will have no information about the
amount of oil left in the ground until production is unable to
keep up with demand.
Global oil production is expected to "peak" around 2005.
References at: http://dieoff.org/page143.htm