Tuesday, May 7, 2013

RE: Fuel Freedom, Ending our oil addiction

A video was sent to me by an organization 'Fuel Freedom' which seems like a worthy initiative to break the hold on the oil monopoly. However, in the interest of that actually being successful I have some points I'd like to add, and a couple places I take issue with. Oil is particularly ingrained in our society and the complex after effects of any major change in our energy situation should be discussed thoroughly I think.

First, check out the video for yourself.

I like that they cover peak oil, although without calling it peak oil. I think what's important to keep in mind though is it's not just peak oil, it's peak everything.
For this reason I don't think that stopping at fuel is enough, let me explain.
Oil isn't just a fuel, it's pretty well in everything. For instance, in the video garbage is talked about as being a possible replacement as the United States has a lot of it, which it does, unfortunately that garbage is itself mostly produced with oil. It's not really an alternative, it might work to help with any transitory attempt but investing in significant long-term infrastructure (which itself requires oil to build) so that we can turn garbage into oil doesn't make a lot of sense in the long run if the ultimate goal is to break the oil addiction. The bottom-line of this is if the oil addiction is successfully broken then it is axiomatic that the amount of garbage will reduce as consumption of oil-based products also needs to reduce. The further we got away from oil, the less "fuel" there would be available, only compounding the effect.
Another problem with focusing on fuel purely is that it ignores the increasing costs of the infrastructure that make that fuel useful. This year my city had a major problem with potholes, the roads are falling apart, and are getting ever more expensive to maintain. The manufacturing of roads and cars themselves involves incredible amounts of fuel. Personal transport amongst sprawling cities (encouraged by housing starts which are needed to keep the loan based GDP flowing) add to the strain. We can't just be smarter about the type of fuel we use, we must be smarter about how much we consume so living in that suburb miles from work isn't all that great.
The video makes a great call though by saying the base price of oil is $80 which is required (and manipulated) to keep oil production flowing. They are correct, if oil price drops below $80 for any significant amount of time production will stop. You'll all remember I made the same call last year. What I don't think they are accounting for however is the subsidy that oil itself plays towards the alternative (correct term is derivative) energies. The reason is that the infrastructure necessary to implement them itself relies on oil thus the $50 price given for these alternative energies is not accounting for the fact that the energy currently being provided by oil which is of much higher quality than any of the other energy listed is helping to reduce the price of the derivatives however the moment any significant swing moves towards those derivatives the stability of the oil production will be thrown out of whack thus hurting the financial viability of any derivative. The worst part being that if the price of oil collapses which it would inevitably do after the initial spike the incentive would be once again to use oil. Perpetuating the cycle. You'll all remember we covered this before also.
The biggest issue here is we're not just addicted to oil, we're addicted to cheap money and growth and we won't be able to address the fuel addiction so long as burning those fossil fuels are needed to pay off banker debts and "maintain growth". Of course, Chris Martenson describes all of this best:

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Richard Fantin is a self-taught software developer who has mostly throughout his career focused on financial applications and high frequency trading. He currently works for CenturyLink

Nazayh Zanidean is a Project Coordinator for a mid-sized construction contractor in Calgary, Alberta. He enjoys writing as a hobby on topics that include foreign policy, international human rights, security and systemic media bias.

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