Coping: Life in “Running Out Of….” Land

Urban survival is a constantly changing task.  As it changes, clocks are heard ticking all over the place.  Damn cacophony of ’em this week.  Where to begin?

We expect the stock market timer to go off in the final third of August – something we’ve been saying 6-months – well ahead of so-called “experts.”  One the side, we’re watching short position options strategies for this winter.  North Korea is on a time fuse.  And the doom porn folks never seem to tire of headlines about “climate change” though as we showed in PN yesterday, mostly it’s a PR term and not a scientific fact.

Elsewhere, the Nazi-group think of Germany is coming back into focus as Angela Merkel returns to her communist (“We’re in charge of everything and will tell you what you’re allowed to think…”) roots and Germany votes this fall on the next politically illiterate clown posse to seize the Reichstag.  But there is another clock running that will kill off urban life within 30 years and it ain’t getting much respect at the moment…

(Continues below)


The stalker behind the headlines is Oil Depletion.

I mention this because on the discussion part of this site Wednesday, ol’ Jon called out Oilman2 to explain what’s going on with oil. Reader Jon does ask a good question now and again…

You really need to read the detailed overview of the oil patch offered by OM2:

“In reply to Jon.

Jon –

I can refer you to several recent articles, but the main thing you need to be cognizant of is this little oilfield phrase – “depletion never sleeps”.

Even in a crappy economy, or even a zero growth economy, every day that we use fossil fuels for our lives ((ahem) gasoline, diesel, jet fuel, plastic, power generation, etc.), the amount of proven reserves declines. Every single day this is happening, rain or shine, war or peace, electric self-driving cars or motorcycles – unless you are Amish, you are using tremendous amounts of fossil fuel just to get to work and back (even on a subway).

The trick that we have been using is that we are always discovering more oil, or finding new ways to get at oil. This allows us to replace these proven reserves with more. However, since about 1973 or so, every replacement we find is more expensive. At this point, EROEI on shale oil is pitifully low. So while we can replace what we use, it costs us MUCH MORE to replace it today.

Zero or near-zero interest on loans has allowed oil companies to explore and fund shale oil. Most are negative cash flow on their balance sheets, even with minimal loan interest, at $50/bbl. Never mind what you read in the headlines – go look at some publicly traded companies and see for yourself.

Low oil prices are good for economies, as the lower fuel price allows for more free cash to develop whatever the economy is developing. Higher oil prices disallow a lot of this development, as the fuel bill includes and impacts all transportation, all electricity and most modern food and shelter.

The problem is that low oil prices DISCOURAGE exploration because it is inherently risky and cash intensive. The net result these days is that exploration budgets worldwide were slashed by about 60% or more since 2014. In short – we haven’t found replacement deposits or technologies for what we have been using.

We are running the planet on the oil fields and technologies discovered prior to 2014 – and many of those fields are 40-50 years old or more. Since depletion never sleeps – you can take the EIA production numbers and then the EIA consumption numbers and see where we sit today.

My guess is a huge oil price spike in the period from late 2018 to 2020. We haven’t been replacing what we use because oil companies cannot make any money at $50/bbl due to the higher cost of finding smaller deposits.

Here is a place where you can get lost in the details, and they have some lively discussions…

What is the electricity generated from that powers the nascent EV fleet? Do these EV’s use any plastic in their construction? Do batteries use any plastic in their construction? Do the computers that run the EV and self-driving things utilize any plastic in their manufacture? Do the roadways they run on utilize any fossil fuels in their construction or repair? Is lithium mined by hand or with modern fossil fuel powered mining equipment?

The single biggest issue with wrapping your head around this is that damned near everything you own or build or eat has a very significant fossil fuel component. In most cases, the power density required to do the same thing with solar requires a net negative amount of solar panel construction and computer controls and batteries and wiring (yes – all wiring uses plastic insulation). Imagine a battery powered bulldozer or Abrams tank – and you will get the power density required for heavy work like construction and mining.

If you want to truly understand how addicted we are at this point, I wrote an article years ago for George which he can point you to somewhere, or maybe repub it here in the free section. In it, we just remove anything that requires fossil fuel from a typical suburban human – then you can see what is left after modern things requiring fossil fuel are removed.

The simple but politically impossible solution is to have interest rates low but not stupidly so, as in QE, and to have an oil price in the $75/bbl range. That will work for a decade or so, until we find all the oil we can get at those prices. Then to find more, the price has to rise because of declining EROEI and declining volume and accessibility of the remaining oil fields.

American energy independence is a complete myth, created by politicians. Simply look at our oil import figures for the last 2 years – because we are still importing in spite of the “shale oil revolution”. Art Berman was very correct when he called shale oil and gas a “retirement party” rather than a revolution.

I have friends who sold their companies in the last few years simply due to being unable to find any new economical oil and gas deposits. They cashed in because of a dearth of viable oil prospects to drill!
Now bankers and politicians want us to export LNG, which is the cleanest energy source we have. And they want us to export it in a depressed market – geniuses at work….

One other thing – “Libya is increasing oil production”….
From what point? From before they were bombed and destroyed by NATO or from their production levels last year?
“Russia ruled out cuts”… but did they scale back their exploration budget? What is their depletion rate for their current reserves? Is that for oil or gas or both?

These blanket statements plopped out like info nuggets by people writing articles are better classified as butt nuggets, simply due to their lack of critical thinking and accompanying critical questions.
In these modern times where everything is monetized including most news via clicks on web-pages – you MUST always ask critical questions.

What you discover when you do is that Libya may not be really increasing output and Russia may not need to make cuts because their depletion rate will do just fine. Neither statement is proven, but they can still be true without making the original statements in your post false.”

OM2 mentioned an article he wrote a couple of years ago on the website.  The article he’s referring to is What I think of Oil and the Future…”

The facts are unchanged.  The present bump is from fracking.  Ask me after the eclipse how that worked out.

Now to the “urban survival” part.

Elaine and I took a chance when we moved to the Outback along about 2004 because we wanted to “step-down” from the gerbil wheel life.  sure, it paid $100K+ but it also consumed 70-hours per week (and more, depending on how you score the commute).  And how do you score time on road trips away from home? Been a very successful road warrior but at some point you get road weary.

One of Oilman2‘s offspring seems to have taken root in his dad’s thinking.  He and his S.O. have a very workable plan to build a genuinely sustainable life outside of the Urban core area.

And that’s the point to focus on today:

You know (I assume) that at least one – and likely several – of the following clocks will go off in our lifetime.  Allow me to relist: (A huff of the China board marker, to get me started…)

  • EMP Attack
  • Oil Depletion
  • North Korea overruns the South
  • Iran lobs nukes at Israel
  • U.S. and China go to war over the South China Sea island and resources out there.
  • Terrorists attack a U.S. nuke plant – both control rooms
  • Terrorists let loose a MASSIVE bioweapon attack in the U.S.
  • Or a mass poisoning in the food chain
  • Runaway inflation results in a replay of the Weimar – think wheel barrows of money for a loaf
  • Then we have the August eclipse could set off a (massive quake) at New Madrid, Yellowstone, Seattle/Portland, or hell, just up the street from your place…
  • Did I mention the cost of healthcare is going up 25% next year if congress doesn’t get off the dime?
  • And what about state pension plans…they’re heading for collapse, too.

Then there’s the grand finale we’ve labeled the Second Depression which will happen when all of us “grays” all wake up one morning and want to have a final fling.

We get online, try to sell off some stocks but there are no buyers because everyone is transitioning to the “Rent Your Life” mode and everyone is believing the fairytale of government pensions.  Thing is: SOMEONE has to pay for ’em which may be (as we have said many times previously) why there has been such a push for open borders…

This weekend, for the side, I’m collecting “Lessons of the Great Depression” – a compendium of what people had to do to survive through that period.  A workbook.

The major difference between then and now?

The new tech is not television or radio, it’s talking to computers.  And they were up to their ears in energy just waiting to fuel WW II back then.  Hydro dams could be built.  Today?  The low-hanging fruit has been picked..

That world of the 1930s didn’t sink into the interest rate disaster we’re in, nor were robots coming to take their jobs. Gumption and innovation could work a feller out of it.  But this time? Medicated as the big cities are?

And they weren’t overrun with illegal immigrants in the 30s (that’s a legal description, not hate speech, you idiot!).  The world has 2-billion people when the pallor of economic ,malaise settled over the world. Thanks to the Obama regime we kept bringing in under-vetted people – why?

Don’t get depressed about it.  Just think how much more fun and suffering we can have with two and a half times more people fighting over depletion, food, government hand-outs…that stuff that never sleeps.

You can work your ass off planning for it, maybe coming up with workable strategies to cope forward.  OM2’s boy HT is doing it.

It’s your call, but like a dear friend once told me:

“Some choices you just have get to on the bus, ’cause if you don’t,  you’ll be under it.”

Damn smart woman.

Is there wisdom to chasing paper in an unsustainable city living in housing you don’t own, utterly dependent on banks that require power and internet connectivity and freedom from malware?  When you could code in the woods and miss some money but skip the commute?

Hard time for choices, these.  But when the dominoes begin to fall in our list as they will do in coming years, I’m thinking the right choice will come into focus quickly.  Remember where you read it – and you do have a choice.

We hope you choose wisely.

For us, it’s Thursday morning in the Outback:  Garbage out and wash down the solar panels.  We know we have oil under our place.  8,750, 92,00, and 9,500 feet down on the north slope of the Palestine Salt Dome.

Here…some of the early history about the land we’re sitting on:

The Palestine salt dome has been known for many years, having been described briefly by Penrose* in 1890 and by Dumble 2 in 1891. The dome was recognized through the occurrence of salt, which was obtained here in small quantities prior to 1890. The production of salt lapsed for many years, but recently the industry has been re- vived- and a modern plant producing a large quantity of salt of vari- ous grades has been established.

There are no conspicuous indications of oil or gas here, and so far no deep test wells for oil have been put down. The discovery of tarry oil in a deep well on the Keechi dome, 6 miles north of the Palestine dome, has stimulated interest in the oil possibilities of the’ domes of this area and has led to the leas- ing of the- lands on and around them. The writer spent one week’ in October, 1916, in studying the geology of this dome and the surrounding area. He wishes to offer grateful acknowledgment to Judge O. C. Funderburk, of Palestine, for assistance in the field, and to Mr. A. L. Bowers, president of the Palestine Salt & Coal Co., for information relating to the drilling of salt wells. L. W. Stephenson, of the Geological Survey, studied the Cretaceous fossils from the area, and to him the writer is indebted for much of the information concerning the age of the formations present. “

Turns out that under the salt was this hugely productive oil field.  And even without the subsurface rights, we figure the surface lease will be a nice back-up to Social Security, if it comes to that.

Lesson 1 for the week:  Low income ain’t so bad, if you manage the outgo is even lower.

Lesson 2 for the week:  Figure out where the highways of the  future will be built and then buy property that is in the eventual right-of-way if you can.

G4 technology?  My buddy Vince the tower tycoon is already leasing up sites.  But even his client’s aggressive build-out plans depend on the good offices of people like OM2.

In case you’re wondering, yes, our third on-ramp to the internet (and one of the wireless networks here) has been solar-powered since 2008.

We were sure early, but I don’t think we’ll be wrong in what’s to come.  Ask people in Illinois if government workers are underpaid.

Write when you get rich,

16 thoughts on “Coping: Life in “Running Out Of….” Land”

  1. The last two times we got big spikes in oil costs, it crashed the global economy, so IMHO it’s a foot race between the markets and oil prices.

    • @ Marlowe7

      You are pretty much correct. For most people, the exact species of Black Swan Event will not matter either.

      What we are looking at is a total loss of value of the US dollar as the end product of any of these swans. The reason for that is everything is dollar denominated, especially debt. Everything is leveraged and owned by someone else via debt – “rent your life” as George is wont to say. And if your currency is in a basket with the US dollar, or heavily linked to the dollar, then what?

      When the floor falls out from under the dollar, when the emperor is standing naked and the children are laughing, what happens after that?? China, Russia and others have been buying physical gold and taking possession – because when everything turns to crap, gold is the eons old default position to be in. But if you cannot physically touch it, have it in your possession, then the promise that you own it is very easily broken without consequence.

      Who is coming to repo my house when the local police and sheriffs aren’t being paid? What would they do with my house anyway, since nobody would be able to buy it and the value is 1/3 of the alleged mortgage value?

      The amount of unwinding ahead of us is truly staggering, and I don’t know how it will play out. I do know that everyone involved will try their best to avoid the consequences, so it is very unlikely to be overnight and thus I am inclined to envision a series of shocks, breakdowns and so on until things just lock up.

      Rome wasn’t built in a day, and it didn’t die in a day either…

      • Because we don’t live in Roman times but we live in the present time I think it will happen in the blink of an eye and no one will ever even know it unless they read the new news

      • Yes, I saw that China and Russia will drop the dollar as the world reserve currency, America’s trading partners will drop the dollar. Look to 911; 2 1/2 hours to destroy what it took several years to build. That is the model going forward on more than one level. Good column, still time to prepare.

    • You missed the Peoplenomics report on the English Civil Wars which will be the template for here. Tisk, tisk…

  2. TPTB are manipulating the dependence on “fossil fuels” and the coming crash. Alternatives are being actively quashed. Hemp for example could be used as an alternative to many things, but we can’t grow it in the US, because why exactly??? Then there’s the theory of abiotic oil. If it is true then what we’re seeing is temporary rather than a permanent decrease in available oil.

    • @ Annie –

      Abiotic oil is a real thing – but there is very little abiotic oil. And while there is more abiotic gas, there is very little of that either. Nothing that could be called much more than a ‘taste’ in terms of even light use of petroleum – noncommercial quantities only.

      There is no need to manipulate dependence on fossil fuels – we are wholly dependent, because everything we use to make solar cells and batteries and mirrors and nuclear reactors comes from petroleum – from the wiring harnesses and plastic control knobs to the fuel used to deliver the parts and the bottled water that truck drivers drink – petroleum is the primary workhorse of the entire planet.

      Hemp got rolled into the marijuana thing via ‘special interests’ when the legislation was written, and if you think the cotton lobby wasn’t involved, then you are likely smoking another type of hemp…

  3. Hey George/Oilman2,

    What is OM2’s son doing? I would be interested in learning more about his coping methods going forward! Maybe find a way to contact or communicate. I also look forward to this weekends Peoplenomics!

    • @ Millienial Caller

      You can look on George’s Rural Pioneer website for some of it. Lately both son and I have been doing a lot more work off the farm due to the poor economic situation. But our intent is to get commercial growing of various things in sustainable fashion, with very minimal petroleum inputs. And we usually get in two days work each week. Right now we are clearing off more land and trying to find the fence lines in 15 years worth of regrowth.

      Lots of repair/recycle/repurpose things to defray capital expenses – only possible when you live in unincorporated areas free of over-regulation.

      Primary coping methodology is to spend the least possible amount, and when spending do so with an eye to permanent and cost-effective solutions. Those are adapted depending on what we find on the cheap, so it isn’t always flashy looking.

  4. George,

    Looking at your list – I personally would ‘expand’ it by explaining it in light of the apparently isolationist agenda of the Trump administration. Instead I would order items by whether it affects the United States as Trump perceives the world. (Note: this is his perception as I see it but not mine!) I will be adding an ‘item’ that you have missed.

    EMP attack over USA – massive. Elsewhere – nil. Oil depletion – since if this happens it won’t be in the next few years – nil.
    North Korea vs. South Korea – massive from a military and humanitarian standpoint, but will Trump really care?
    Iran vs. Israel – ditto with input from the hardcore crowd.
    USA vs. China – world ending.
    **India vs. Pakistan** This has been heating up – possibly world ending.
    Terror attacks – nukes, bio, food supply – this so variable, remember the ‘T’ scare of (I think) the 80s – since fear is the objective – governments would be compelled to control the news about the event.
    August Eclipse – not a problem – eclipses happen all the time around the world.
    Financial problems – whether healthcare, money, or whatever are the result of imbalances – which will ‘work themselves out’ – people will be hurt, do governments care? Most often not. It’s the rare one that does – we did care once and must again!

    We are a nation of disparate factions – have always been, often proud of the fact. We will survive, and thrive!

  5. Watched the movie last night. The Big Short. Suggest everybody see it, because big short two is on its way.

  6. George,

    Begging to differ, “illegal immigrant” is not a legal term. The proper term of art is “illegal alien” or “illegal foreigner”. Neither specifies the intention of the individual. An immigrant is someone who moves to a country and intends to reside there permanently, becoming part of the culture. An alien is simply a non-citizen. The intention of an alien(legal or otherwise) may be to become an immigrant, or simply to visit or do business. TPTB and MSM have intentionally confused these meanings and nobody ever refers to an “illegal non-immigrant”, though there are plenty and that class includes terrorists, drug runners, coyotes and other criminals, along with folks who simply overstay their visas. It’s past time to clear up these concepts.

  7. maybe some other people have noticed this I have three dogs most of the time they’re outside I have spring water and then I also I have containers of water that are collecting added from the tree the dogs prefer the water that’s coming off of the trees compared to the spring water I’m thinking at the spring water is acidic does anyone notice this that your animals prefer the water that comes from the sky and hits trees over spring water

  8. Total breakdown of the distribution system, including imports coming off ships. Death of 2/3 of the inhabitants of the cities by gangs that formed to forage for food within 3 weeks. Mass exodus from the cities resulting in at least 1/3 of those living outside the cities dead as competition for food gets serious. A second wave of massive deaths caused by disease from decaying human bodies, so many there are no resources to dispose of them.

    Civil war in various locations throughout the country as various groups strive to form fiefdoms around vital resources like refineries, farm/gardening ground that does not require fertilizers or commercial irrigation, and manufacturing facilities of basic strategic items, mostly made by hand.

    Cannibalism reports from everywhere after domestic animals, pets and then wildlife are consumed to extermination.

    See Bosnia/Kosovo survivor stories for history, Venezuela for live examples. The population of Venezuela has lost an average of 19 lbs per person so far.

    This does not happen all at once, the gang controlled major cities fail at various times as infrastructure sporadically and unexpectedly fails with no possibility of repair, dumping those desperate gangs into the countryside in a third wave.

    For the haves, desperate times. For the have nots, a once in a lifetime opportunity.

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