Dear Jim and Family,
I have bad news. An analyst with an oil background did a study on the oil producing nations and found they would stop exporting 50% of their oil in around 5 years, averaging decline of 10%/year to total world oil exports. The USA is 60% dependent on imported oil, and is currently growing 7% of our needs via ethanol (corn). As we’re in the process of losing Mexico at 15% per year and will see them encounter some social breakdown in 11-17 months time due to loss of exports and tax revenue for their social services, we’re going to see two hard blows to our energy supply and our economy.
Currently the Average Joe driver uses around 10 gallons of fuel per week. In five years he’s going to have to adjust to just 4 gallons per week, and that number will decline along with our domestic oil supply, in decline since 1970.
There are two ways to deal with this problem. (1) Ignore it until you get major shortages causing social collapse, which is expensive for everyone, including rich people and the government. or (2) Institute fuel rationing and price stabilization. I hate that that sort of thing is an option, but its that or total collapse. The government won’t get paid taxes if there’s total collapse, much less keep all its toys running. The rich people who own the government won’t like it either, as it makes them targets for kidnapping and closes their favorite restaurants and ruins the service. Thus, option 2 is far more likely in my opinion.
What can you expect? Either next year or the year after, following some event that briefly causes a massive price surge (say up to $7/gallon over two weeks), the public will demand a solution. The Socialists, sorry Ruling Peoples Progressive Liberal Party (aka Democrats) will get themselves a law demanding gas rationing. The current president will refuse it, but they’ll cajole an overwhelming majority or wait for the next president to sign it into law, which is certainly possible. What will it be like? Probably around 9 gallons per person, per week, based on driver’s license. Spouses can share and it motivates people to either sell their SUVs or carpool with them, which effectively doubles or triples their fuel economy per person. Consider that a 20 mpg Ford Explorer with four people inside is effectively getting 80 mpg per person. Sneaky, isn’t it? And they can combine their rations to fill up the SUV, thus keeping it on the road and keeping their jobs, even if it takes a bit longer to get to work. As time passes and the ration gets smaller, motivation to buy more efficient vehicles or simpler lives and work locations becomes a more serious pressure and the economy gets more fuel and location efficient.
Additionally, expect some blackouts and more screaming and yelling by the public before utility prices rise enough to keep the lights on and motivate people to conserve. Since the price of oil and gas are going to rise anyway, it can’t be helped. If things go very well, we’ll have something sustainable in about 10 years. If they don’t, well, then be sure to visit the range to keep up your skills and stock up on food. This is going to be long haul and there’s no bouncing back from the end of cheap oil, not exactly. We’ll just get better solar panels and used to living on a lot less energy, just like people got used to living without muscle cars. Its the future and it can’t be helped. Sorry for the news. This is awfully soon and not exactly abrupt, but very expensive and demoralizing. Best, – InyoKern