Peak Oil, Hurricanes, and the Price of Gas

Dear Friend:

This newsletter was first written in 2005 - Let's see how accurate it was...

Warning: Just a word or two about "Peak Oil" believers and those that believe that peak oil is a scam... The "peakers" believe that there is a real shortage of oil and that it will very soon be used up. The "scammers" believe that peak oil is a fraud and there is no shortage of oil at all and fossil fuels may even be a renewable resource. Most scammers seem to believe that the fraud is perpetrated by "big oil", the US Government, and it's allies in order to artificially inflate the price of oil as a means of controlling the people and basically taking over the world and instilling a form of socialism or "New World Order". You know something?... I really don't care who is right or wrong - what I do know is that the price of oil is going to increase dramatically in the near future one way or the other. If I had to pick a side, I would probably be more inclined to side with the peakers. It just makes more scientific sense. And the scammers all seem to be a bunch of "conspiracy theorists".

Just after Hurricane Katrina hit and the Colonial oil pipeline from Louisiana to Atlanta stopped flowing for about a week, the price of gas jumped 50 cents a gallon in one day and then about another 30 cents a gallon the next day. Mass panic ensued in Atlanta and everyone rushed down to their local gas station to fill up. This caused shortages and more panic. What I want you to learn from this "mini-trial run" is this...

Everything in your life depends on oil

Just take a moment to think about it... what would happen if the price of gas went up to $10 per gallon? Can't happen you say? In the late '90's oil was $11 per barrel and $1 per gallon at the pump. Today it is $63 per barrel and anywhere from $2.78 to $3.29 or more at the pump. Much higher in other countries.  Depending on how you look at it, that's anywhere from a 3x to 6x increase in oil prices in just a 6 year period. By 2010, it could very well cost us $10 a gallon to fill up our SUVs!

peak oil

Note: This graph is Billions of barrels per year and the graph below is Millions of barrels per day.

2018 Update: This chart seems to be totally wrong. With the discovery of new oil deposits in North America, the "peak" seems to be moved off way into the future.

Listen... I am the last person on the face of the Earth to jump on the conspiracy bandwagon. I am skeptical of everything and check things out as best I can. I really do believe this "Peak Oil" hype is true. Heck...

Even if half of it is true, we are royally screwed!

I'm really not trying to scare you into buying a book from me by giving you false information - although I do have some helpful books that I'll tell you about later. I'm trying to give you useful and important information - so let's get back to thinking about what will happen if the price of gas gets too expensive for everyday people to afford....

  • No Electricity - most of our electricity is supplied by fossil fuels. Just think about it... no more electric lighting, no air conditioning, no TV, no radio, no CD players, no refrigeration, no heating, no microwaves or electric drills or DVD players.
  • No Water - without electricity to run the pumps, no water will flow out of your pipes. And remember - you can live for a while without food, but you will die quickly without water.
  • No Food - The farmers will not be able to run their equipment and even if they could produce food, it could not be transported to your local grocery store without oil. Pesticides and fertilizers are both manufactured with and from fossil fuels.
  • No Medicines - All modern medicines depend on fossil fuels.
  • No Transportation - No more planes, trains, or automobiles. No more stores fully stocked by 18 wheelers. No more FedEx, UPS, or US Postal Service.
  • No Local Government - This means no police to protect you, no road maintenance, garbage collection, etc. I wonder if they are still going to want their taxes?
  • Federal Government - Notice I didn't say "No Federal Government". There will be one, but it may be just as concerned with suppressing riots and controlling the Citizens as it will be in securing the last drops of oil on foreign soil. Oil wars and mandatory military service are predicted. Maybe that's why we will soon be required to have a passport to enter Canada - to keep the draft dodgers in instead of keeping the terrorists out. I'm not too sure the oil wars have not already started!
  • The manufacturing of just about everything you can think of depends on fossil fuels. So you can kiss all these things goodbye - cars, plastics, metal products, all electronic goods, clothing, and just about everything you see as you walk down the isles of Wal-Mart or Best Buys.
peak oil graph

2018 Update: To be honest with you, I expected this chart to be totally outdated and just wrong. But... it actually is pretty accurate. The green area above moved up a bit to somewhere around 81 million barrels a day and has been basically going sideways or slightly up ever since 2015. This is due to the discovery of new deposits of oil sands and oil shale. The demand line has come down a bit to somewhere around 100. Both lines seem to be converging somewhere around that 100 level. Let's hope they cross! If they continue to diverge away from each other, we're in trouble.

On with the original newsletter...

If what "they" are saying is true, then we will literally be thrown back into the stone age. Not the bronze age - the stone age! The numbers are pretty much indisputable... we started with 2000 billion barrels of oil. We have already used 1000 billion barrels. We use 28 billion barrels a year now. When you factor in increased demand in the US and other countries like China, we only have about 25 years of oil left. There is very little undiscovered oil left to find. And...

I've got more bad news for you!

When you factor in other elements like oil will become too expensive before it runs out, and oil will soon cost more to extract or pump than they get out (i.e. it may soon cost two barrels of oil to get one out of the ground), or a well planned terrorist attack may make all this happen tomorrow, or oil producing countries may soon figure out that they need the oil instead of selling it to other countries.... we're looking at around the year 2010 when the "experts" say it's going to start hitting the fan!

Don't worry... I was stunned too when I first found out how fast all this may happen. And alternative fuels and energy sources like coal, natural gas, methane, geothermal, hydrogen, nuclear, solar, hydro, wind, fuel cells, and ethanol all have problems associated with scaling them up to replace cheap oil. Even if you add up all these alternatives, they will not even come close to the equivalent of 28 billion barrels of oil a year. Out of all the alternative fuels, biodiesel has the most potential and promise, but even biodiesel is a drop in the bucket compared to fossil fuels.

Biodiesel may be of some help on a household level if you know how and are set up to make it for your own use. The first chapter of "From the Fryer to the Fuel Tank" explains in detail why our fossil fuel supply is literally drying up. Other chapters go on to explain in a very easy to understand way everything you ever wanted to know about biodiesel. Go back and read some of my previous newsletters on biodiesel and Jatropha for extra information. My book "Electricity - Make it, Don't Buy it" may very well come in very handy in 2010. Not only does it explain how to generate electricity using biodiesel, but it contains useful information on solar heating and cooling, methane, solar cooking, solar refrigeration, some interesting free energy notes, and much more. By the way... currently, a free energy device does not exist, but even if one were to be discovered, it may not save us from the "2nd stone age" because of economic and political problems that would take another book to explain. If someone would invent a device that would work on a household level, that might work though!

The bottom line is this... it will happen sooner or later and those that are prepared will survive and those that are not prepared - well... who knows? I know this... the Amish are going to be laughing all the way to their full dinner tables when all this happens. They are fairly self-sufficient and rarely use electricity or oil. That's why I like them so much and I sell the book "Living Without Electricity".


Bill Anderson