How would $20 gasoline (or diesel) impact your family budget?
Peak Oil possibly occurred in 2018. Analysts like Simon Michaux, Nate Hagens and Art Berman (all PhDs) are trying to talk sense into a culture and a guru class that are "energy blind."
How would $20 gasoline (or diesel) impact your family budget?
Simon Michaux believes that 2018 was “peak oil.” Peak oil means annual global oil production has reached its peak and will decline thereafter. Maybe 2018 was peak oil. Maybe it wasn’t.
(Note: The $20 per gallon figure is HYPOTHETICAL. It is not the product of analysis of any experts mentioned herein.)
But peak oil will occur at some point. The question is when. Oil is a finite resource. If 2018 was not peak oil, smart money says it will be soon. And smart money says no one is talking about it, and no one is prepared for it.
In this video, at 45 seconds, Simon Michaux (who holds a PhD in Mining Engineering) displays a graph that shows “possible peak oil” in 2018.
If 2018 was peak oil, then, by definition, global oil production will decline thereafter.
This has never happened before.
We have never in our lifetime, or in the industrial age, seen fossil fuel production and consumption decline year over year.
This year’s oil production is always greater than last year’s, except for recessions--such as 2008--and exceedingly rare events such as the decline of the Soviet Union in the 1990s.
What happens to our economy when oil declines year after year?
We don’t know.
What happens when persistent downward trend replaces a persistent upward trend?
It’s a different economy.
We have never known an economy that exhibits declining annual oil production. So let’s speculate. What would that look like?
We’re NOT talking about the end of fossil fuels. We ARE talking about the end of SUPER-CHEAP fossil fuels.
Imagine, hypothetically, that gasoline went up to $20 per gallon. We would still have cars. But we would drive more sparingly. We would shop closer to home. We would take fewer long trips. We would find ways to economize when longer trips are a necessity. Businesses would adjust and do things closer to home.
We would see higher prices in goods that contained a lot of “embedded energy,” i.e., higher prices due to energy consumption during the process of mining materials, processing materials, transporting and storing goods.
We would find substitutes. That’s how markets work.
If gasoline and diesel prices rose above $20 per gallon, we would buy fewer cars, because it takes oil to MAKE cars, not just to drive them.
Let’s further speculate what would happen if gas and diesel rose above $20 per gallon.
Yes, this is all speculation. But this WILL happen at some point. The question is when.
If/when gas and diesel top $20 per gallon, the price of overland trucking will rise. And the price of transoceanic shipping will rise.
So, insofar as we get our food from transoceanic shipping or long haul trucking, e.g., from California, we will see those prices rise, and will adjust accordingly.
We will tend to get our food closer to home, and from processes that require less fossil fuels at every stage, not just transportation.
We will adjust to price rises that reflect fossil fuel intensive methods of growing and processing food. For example, nitrogen fertilizers rely on cheap fossil fuels. Heavy tillage requires cheap fossil fuels. Feeding grain to animals requires cheap fossil fuels.
Cows can eat grass their entire lives, if need be. Chickens can eat bugs, worms and even mice. Pigs can forage for fruits, roots and nuts. And such animals live happier lives than is typical today.
Also, we humans eat calories from commodity grains--such as corn, soy, wheat and rice--that are artificially cheap due to cheap fossil fuels, which enable the large scale use of heavy tillage and chemical fertilizers.
Price hikes in these (grain) commodities will cause us to get more of our food from meat, milk, fruit and nuts, which are better for you anyway.
The above described adjustments will be good for our health and good for the environment, but will be painful for people, families and societies that are not prepared.
Very few people, pundits or analysts can see this coming. Very few business leaders, political leaders or community organizers can see this coming.
Peak oil has always been inevitable. So one can only speculate as to why our pundits and advisors are not seeing this.
But experts like Simon Michaux, Art Berman and Nate Hagens (look them up on YouTube) are seeing this, sounding the alarm and explaining the details.
Nate Hagens says that our culture--and our gurus--are “energy blind.” We are blind to the inevitable decline in energy production and what it means for our economy.
We attribute our success to our cleverness, to our intelligence and to the invisible hand of the free market. We don’t realize or acknowledge that oil is the fuel of our economy.
Borrowing a concept from Nate Hagens and Art Berman, oil is the hemaglobin of our economy. Just as hemaglobin is needed to carry oxygen through our blood--and we would instantly collapse without it--oil is needed to process and transport all the goods and services that we call an economy.
Our economy would collapse instantly without oil. It will decline precipitously if oil suddenly becomes less abundant, more expensive, or both.
This will happen sooner than we expect.
People like Simon Michaux and Nate Hagens are saying that a downturn will happen quicker than we think, for reasons that are beyond the scope of this article and outside my expertise, except to say that it involves inflation and the likely default of banks and governments on whom businesses depend for liquidity and revenue.
Does this sound like Chicken Little? Chicken Little said, “The sky is falling. The sky is falling.” And it never did.
But there’s another fairy tale that could be pertinent: The Emperor’s New Clothes. The Emperor had new clothes made of invisible thread that “intelligent” people could see. But a child pointed out the obvious. The Emperor, in fact, had no clothes.
If Peak Oil was in 2018 and no one is talking about it, is it possible that the Emperor has no clothes?
Please watch this video, featuring the inimitable Simon Michaux.