“Experts say the sharp growth, if it continues, means several of the world’s most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.”

According to this NYTimes.com article,  the economies of oil rich countries are growing so fast that they are becoming their own fastest growing markets. This increases the squeeze on countries like the US as more and more global demand will keep the price of oil rising. If we’re in Peak Oil (using the last 50% of supplies) then this feedback loop will only speed up the rate at which we run out of fossil fuels. Given that our entire economy requires access to cheap fuel to operate, we’re in serious trouble. Yet our representatives in Bali this week are obfuscating and generally refusing to accept any kind of mandated carbon caps.

The Wall Street Journal, which has had some of the best reporting on climate change issues weirdly offset by their insanely unscientific (ignorant) editorial stance, has a story today on the Peak Oil theory. Unfortunately it’s locked behind their paid sub firewall (another quandary- I support Rupert Murdoch in his plans to open up the WSJ online).

Peak Oil theory says that there is a point where we have taken 50% of the available oil out of the earth and consumed it. At this point the supply diminishes until none remains. The oil industry has consistently claimed they can pull 120 million barrels/day through 2050 even though others were sceptical. This has changed. The WSJ article quotes OPEC officials and oil executives who now say we may hit Peak Oil as soon as 2010-2015. The reality is that our current demand exceeds 180 million barrels per day so we’re already overstrained for capacity. This is a major call to action by those who have had a vested interest in keeping the oil economy in place.

The problem is the inherent problems with the way oil consumption and mining works. In the first 50% we’ve been skimming the low hanging fruit, taking out the most profitable and easily accessed half of the supply. The remaining 50% will get increasingly more difficult and costly to acquire. This means can’t blithely assume we have say another 50 years to fix the problem. What we can assume is an economy crippled by major increases in fuel costs in just a few years. In other words this is it- we have to stop pretending that conservation is a choice rather than a necessity. The oil people have done the math and realized that they better start preparing us for dire circumstances…

BTW, that theory of usage is way out of whack- with India, China and other countries becoming huge consumers of oil our total global needs are skyrocketing far beyond our ability to refine. This is another acceleration factor. $8/gallon anyone?

And I’m wondering what price will initiate real change. The recent protests in Burma against the military oppressive government weren’t triggered by human rights abuses, they were the result of the government removing their artificially low gas prices (under 10 cents a gallon). Overnight it became virtually impossible to afford to drive. This triggered an entire country to rise and confront their government on a wide range of issues.

Recent earnings reports from the big oil companies had their results down sharply from the year before (when they recorded the highest profits in history for any kind of company). Ask yourself why? My answer?

They have been intentionally keeping gas prices at the pump from rising as oil prices have risen because they know the social implications of a sharp rise. One economist estimates that a $10 rise in oil should increase retail gas prices by 2.2 cents a gallon. Oil has risen almost $50/gallon without a related rise in gas prices over the past year. However, on the heels of these earnings reports and the extremely unstable political situation in the Middle East (Kurds and Turks fighting, Musharraf showing his true thug nature, Israel and Hamas fighting, sword-rattling between us and Iran…) we’re finally seeing prices rise. High test today was $3.47! Now these are New York state prices that include high taxes but…

So oil is nearing $100/barrel which puts the true cost, adjusted for inflation, higher than at our worst point during the Arab oil crisis of the seventies. I’m old enough to remember gas lines, rationing and an uptake in public transportation. I imagine that these things won’t happen until we hit $5 because we’re slightly more efficient mileage-wise than we were then. But only slightly, thanks to the insane lobbying to keep gas-guzzling behemoths legal by the US auto industry.

We could easily be driving 100 MPG vehicles today. If we were, we wouldn’t be at war in the Middle East, we’d be in a position to tell the Saudis to stop this fundamentalist craziness, we’d be an example in fighting climate change for the rest of the world and we’d be creating a better world for our grandchildren.

So bring on the $5/gallon gas if that’s what it takes to wake us up.

BTW, GM posted a $39 billion dollar loss today. This would never have happened if they had any real strategic long-term planning instead of the afore-mentioned lobbying and reliance on old technology instead of innovation.

“They’re moving everybody to the Iran desk,” one recently retired C.I.A. official said. “They’re dragging in a lot of analysts and ramping up everything. It’s just like the fall of 2002”—the months before the invasion of Iraq, when the Iraqi Operations Group became the most important in the agency. He added, “The guys now running the Iranian program have limited direct experience with Iran. In the event of an attack, how will the Iranians react? They will react, and the Administration has not thought it all the way through.”

This freaks me out: Read Seymour Hersh’s New Yorker piece on the extensive ramp-up of Iran war planning in the White House and then send the article to everyone you know. These people are completely insane.

Money Quote from an unnamed intelligence official:

“Cheney doesn’t give a rat’s ass about the Republican worries, and neither does the President”