The Federal Highway Administration’s Traffic Volume Trends reports travel on U.S. roads and streets was down 0.9% for November 2011 as compared with November 2010. Cumulative travel for 2011 was down 1.4% from 2010 through November.

In the early ’80s, VMT (moving 12 months total) stayed below the previous peak for 39 months. Currently VMT (moving 12 months total) has been below the previous peak for 48 months – a full 4 years – and the trend shows no sign of reversing any time soon.

Could it be that the all-time peak in vehicle miles traveled (VMT) in the U.S. – August 2007 – is now securely behind us?

In Oregon, vehicle miles traveled (VMT) was down 0.4% in November 2011 compared to November 2010. Cumulative VMT for 2011 is down 2.0% from 2010. VMT in Oregon has been down every month in 2011 compared to 2010.

With VMT down, it’s not surprising that Americans continue to consume less gasoline. Total petroleum deliveries fell 1.1% in November compared with November a year ago, pulled down by a 1.8 percent decline in motor gasoline demand.  It was the lowest level of November consumption for gasoline since 2000.

Total petroleum deliveries fell 1.2% to an average of 18.9 million barrels a day in 2011 compared with 2010. Except for 2008, this was the largest drop in annual domestic deliveries over the past decade.

If petroleum deliveries are any indicator, VMT will prove to continue to drop in December 2011 – and substantially. December 2011 petroleum deliveries were down 5.9% from December 2010, declining to an average of 18.6 million barrels per day, the lowest level in 15 years. The Federal Highway Administration’s report for December can be expected confirm that VMT for 2011 as a whole is down over 2010.

AP reports the typical American household will have spent a record $4,155 on automobile fuel this year – 8.4% of what the median family takes in, the highest share since 1981.

Don’t expect 2012 to be any better. More likely, fuel will be getting even more expensive.

Brent crude will average near $111/barrel for 2011, even more than in 2008 when oil prices hit a peak of $147.50/barrel. Some analysts think oil prices will average a bit less in 2012, perhaps averaging $105/barrel. Others analysts predict that oil prices will be even higher than in 2011, projecting WTI (which have consistently been significantly lower than Brent this year) to average $100 per barrel next year, eclipsing 2011′s average of about $95/barrel. Oil-price.net projects WTI prices to be at $112 a year from now.

Nobody is expecting oil prices to drop, or at least not much. Here’s a big reason why: Saudi Arabia, the world’s lowest-cost producer, requires a price of $91/barrel just to break even.

The glory days of cheap gas are over for good. Our memories aren’t playing tricks: remember gas wars, gas at 19.9 cents a gallon? In my Fiat 850 Spyder – $2000 new, right off the lot, and 50 mpg – driving seemed virtually free. We were young and immortal, oil was infinite, and the world was empty and ours for the taking. There were no bounds, no limits. Vietnam and then the first gas crisis in 1973 were the first intimations that the imperial project – to stride over not just the nations of the world, but over Nature herself – was destined to go awry.

A few were prescient. Limits to Growth was published in 1972, foreseeing humanity bumping up against constraints to both sources and sinks by the first decades of this century. Way back in ’56, Shell geologist M. King Hubbard predicted that U.S. oil production would peak in 1970 – a prediction that proved spot on.

Porter Stansbury at The Daily Reckoning posts this chart showing “real wealth” per capita in the U.S. since the mid-’50s.

Note that “real wealth” in the U.S. peaked about the same time as U.S. oil production. Coincidence?

Stansbury measures “real wealth” using a standard commodity index (the CRB) up to 1975 and gold post-1975 (when gold began to trade freely). When peak oil arrived in the U.S., Nixon took the U.S. off the gold standard. With the U.S. kissy-face with the Saudis, the dollar became the petrodollar.

I’m not sure I would put a lot of faith into this measure of “real wealth” – but the correlation of peak wealth with peak oil is provocative. There’s no question that the U.S., indeed the entirety of Earth, has become a poorer, more degraded home for humans since 1970, despite decades of “growth” and “progress”. That degradation doesn’t even begin to show up in our accounts.

Around 1970, reality arose and smacked us across the face.  Humanity has been working through the range of responses – denial, anger, bargaining, depression, not yet acceptance – ever since.

2011 will see the annual average price of crude oil the highest in history. Brent is expected to average about $111 for the year at the end of 2011, well above its previous high of about $97 in 2008. Despite record high oil prices, global oil supplies are defying standard economic theory and stubbornly refusing to grow.

The chart above, posted by Stuart Staniford at Early Warning, shows production of crude plus condensate has been basically flat since 2005. The meager increase over the last seven years in total liquids is largely coming from increases in NGPLs (hydrocarbons larger than methane removed from the natural gas stream), “other liquids” (biofuels, coal-to-liquids, gas-to-liquids, etc), and “refinery processing gains” (volume gains which occur in the refinery as heavier oils are cracked to lighter fuel products).

One economic consequence of stubbornly high oil prices in the U.S. is that people are driving less and less. Petroleum (gasoline and diesel fuel) consumption is well off peak 2007 levels, as seen in this chart posted by Mish Shedlock.

Vehicle miles traveled (VMT) in the U.S. has been in a down trend now for almost four years – an unprecedented occurrence.

Mish offers an explanation of what’s happening:

The best explanation for declining gasoline usage is that millions have dropped out of the labor force.

* * *

People have given up looking for work, entered forced retirement collecting social security, ran out of unemployment benefits, do more shopping online, or are simply too broke (or have less desire) to travel than before.

Don’t expect the economic exhaustion that is a consequence of peak oil to end any time soon. John Michael Greer this week warns that already, the future can’t pay its bills.

Over the last decade . . . crude oil prices have more than tripled; over the last decade, behind a froth of speculative booms and busts, the world’s industrial economies have lurched deeper into depression. Peak oil researchers have pointed out for years that the former trend would bring about the latter, but long after events proved them right, the connection still remains unnoticed by most people.

Given the reality of a collapsing economic superstructure, a quite rational response is to begin to ease your way out and re-engage in the household economy, where wealth is unreported and untaxed and cannot be siphoned off.

The hyping of “Black Friday” retail sales cannot dispel the reality that the U.S. economy remains becalmed in the doldrums. Despite record corporate profits, jobs and personal incomes are refusing to bounce back. Calculated Risk posts the charts.

It’s going to get worse. The U.S. economy is destined for another recession in 2012. The American dream has turned into a nightmare – and we can’t wake up.

The Eurozone has already fallen back into recession. Which is bad news for anyone hoping for a tidy resolution of the sovereign debt crisis. The arithmetic doesn’t work without strong and sustained economic growth.  The European project looks set to implode.

The world’s leaders are adrift, with neither direction nor oars.

At least since the end of World War II, the western world has come to embrace growth as the primary objective of public policy. Growth is not only good, it’s the natural order of things: a world without growth is literally unthinkable. What has gone wrong? Why have the winds of growth faltered?

Think oil. The Oil Price Information Service says Americans are on track to spend $488 billion on gasoline this year, up $40 billion from the record high of 2008. Recall what followed the oil price spike in 2008: the worst economic crisis since the Depression. Money spent on oil is less money spent on everything else.

Given the lethargy in the world’s economic powerhouses, how is it that oil prices at the New York exchange have once again breached the $100/barrel mark? How is it that Brent prices are climbing towards $110/barrel and are expected to hit $115 by the end of the year?

The answer is found in charts posted by Jeffrey Brown at The Energy Bulletin. In the post, Brown indicts Daniel Yergin for his consistently rosy forecasts of global oil production. For our purposes, what is most revealing is the underlying global all liquids production . . .

. . . global crude and condensate production . . .

and, most importantly, global net exports.

Since 2005, global all liquids and crude production has been essentially flat while net exports have been falling. Meanwhile, oil consumption by developing countries including China and India have been soaring. Consequently, western economies are being increasingly squeezed.

Around the globe, nations are being squeezed as the energy supplies that lubricate the wheels of the economy are becoming increasingly scarce. Within the U.S., not only is the economy being squeezed; people are being squeezed as a corrupt political and economic system enable the rich and powerful to seize an ever-increasing share of the national wealth.

One thing is for certain: this isn’t going to end well. Let go of any expectation of a return to a world of economic growth as we have come to know it.

The last post commented on the stark climate warnings contained in the International Energy Agency’s World Energy Outlook 2011:  if we fail to implement new policies by 2017, we are on a dangerous track for a temperature increase of 6°C (11°F) or more.  The IEA’s energy supply and demand assumptions are also worth a look.

The Executive Summary presents the following demand and supply projection for 2035:

Oil demand (excluding biofuels) rises from 87 million barrels per day (mb/d) in 2010 to 99 mb/d in 2035. * * *

The cost of bringing oil to market rises as oil companies are forced to turn to more difficult and costly sources to replace lost capacity and meet rising demand. Production of conventional crude oil – the largest single component of oil supply – remains at current levels before declining slightly to around 68 mb/d by 2035. To compensate for declining crude oil production at existing fields, 47 mb/d of gross capacity additions are required, twice the current total oil production of all OPEC countries in the Middle East. A growing share of output comes from natural gas liquids (over 18 mb/d in 2035) and unconventional sources (10 mb/d). The largest increase in oil production comes from Iraq, followed by Saudi Arabia, Brazil, Kazakhstan and Canada. Biofuels supply triples to the equivalent of more than 4 mb/d, bolstered by $1.4 trillion in subsidies over the projection period.

The “supply” numbers total 100 mbd rather than 99 mbd – let’s presume the 1 mbd discrepancy is due to rounding errors. The IEA projects oil demand will hit 99 mbd in 2035, but the world will be producing only 68 mbd of conventional oil . . . leaving a 31 mbd gap to be filled. NGLs and unconventional oil are projected to cover 28 mbd of that, leaving 3 mbd to be covered by – biofuels? Didn’t the 99 mbd figure for demand exclude biofuels?

That aside, the IEA thinks that the next 24 years will see 31 mbd of “oil” from:

• Natural gas liquids – 18 mbd
• Unconventional sources – 10 mbd
• Biofuels – 4 mbd

This implies three things:

1. That natural gas liquid production will more than double by 2035, from about 8 mbd today.
2. That unconventional oil production doubles by 2035, from about 5 mbd today.
3. That biofuel production will triple by 2035.

Nick Hodge observes the big problem with this is that it’s never been done:

It took us 40 years to add 31 million barrels per day of conventional oil production — the easy stuff.

The IEA is saying we can add the same capacity in half the time using much harder-to-get resources.

Out of the 68 mbd of conventional oil that the IEA projects to be available, 47 mbd – twice the current production of OPEC countries in the Middle East – are from sources yet to be developed, just to offset depletion from existing sources. Really? The world is going to discover and/or develop two more Middle Easts worth of conventional oil, in just 24 years? Where, exactly?

Stuart Staniford at Early Warning suggests that the source of new supply is not likely to be Saudi Arabia. He points out that Saudi production has been fluctuating between 8 mbd and 9.5 mbd since 2003. In response to the interruption in Libyan production early this year, Saudi briefly boosted output to a peak of around 9.7 mbd or 9.8 mbd – not quite achieving a promised 10 mbd – but have since eased back to about 9.5 mbd.

Bottom line: is Saudi Arabia going to save the global economy’s bacon? Here’s Staniford’s assessment:

So are we any the wiser as to the great question of whether Saudi Arabia has significant spare capacity and could increase production to 12mbd or more if only they chose?  Only slightly I fear.  I interpret the fact that the Saudis couldn’t quite meet the 10 mbd promise and almost immediately backed off that, despite amply high prices, as consistent with the story that the recent Saudi production expansions have only gone to offset declines elsewhere (perhaps especially in north Ghawar).  The increasing rig count also suggests a lack of comfort with the amount of spare capacity presently available.

However, I can see that someone who thought the Saudis were able to produce more but are profit maximizers who intend to keep prices as high as possible consistent with not actually throwing the world economy into recession might also be able to tell a story about how the Saudis did the bare minimum to moderate prices after it became clear that the Libya price spike was causing global economic harm but then began gradually lowering production as prices slowly began to fall following the price spike, keeping the world in a state of slow growth, but some growth, while maximizing the Saudi take for its oil.  The one weak point in this story is that it offers no explanation for the rising rig count.

Of course – at this point maybe the difference between the two views doesn’t actually matter that much – either the Saudis can’t produce more or they won’t, but either way the effect is to keep oil prices high enough to be a significant constraint on a world economy that is already struggling.

Continued economic growth is dependent on continued expansion of energy supplies.

The EIA is schizophrenic in thinking there’s a way to square the circle. There’s only one way to head off catastrophic climate change: shrink the economy, by a lot, and quickly. Gail Tverberg at Our Finite World explores the implications:

If GDP growth and energy use are closely tied, it will be even more difficult to meet CO2 emission goals than most have expected. Without huge efficiency savings, a reduction in emissions (say, 80% by 2050) is likely to require a similar percentage reduction in world GDP. Because of the huge disparity in real GDP between the developed nations and the developing nations, the majority of this GDP reduction would likely need to come from developed nations. It is difficult to see this happening without economic collapse.

The reality is, we don’t have a choice. Other limits to growth aside, the energy resources necessary to keep the globe on the economic growth path simply aren’t there; growth will come to an end whether we like it or not. The choice we do have is whether to destroy Earth as a host for human life first.

If we don’t change direction soon, we’ll end up where we’re heading.

So begins the Executive Summary of the International Energy Agency’s World Energy Outlook 2011.

And where is it we are heading?

We cannot afford to delay further action to tackle climate change if the long-term target of limiting the global average temperature increase to 2°C, as analysed in the 450 Scenario, is to be achieved at reasonable cost. In the New Policies Scenario, the world is on a trajectory that results in a level of emissions consistent with a long-term average temperature increase of more than 3.5°C. Without these new policies, we are on an even more dangerous track, for a temperature increase of 6°C or more.

Four-fifths of the total energy-related CO2 emissions permissible by 2035 in the 450 Scenario are already “locked-in” by our existing capital stock (power plants, buildings, factories, etc.). If stringent new action is not forthcoming by 2017, the energy-related infrastructure then in place will generate all the CO2 emissions allowed in the 450 Scenario up to 2035, leaving no room for additional power plants, factories and other infrastructure unless they are zero-carbon, which would be extremely costly.

Unfortunately, we’ve come to learn 450 ppm CO2 is much too high to avoid catastrophic climate consequences.

The conclusion that limiting CO2-equivalent to 450 ppm will succeed in limiting temperature increase to 2°C is based on the assumption that no feedback loops will kick in, an assumption that is already proving unfounded – for example, Arctic amplification is already kicking in and thawing permafrost will further accelerate global warming.

If humanity wishes to preserve a planet similar to that on which civilization developed and to which life on Earth is adapted, paleoclimate evidence and ongoing climate change suggest that CO₂ will need to be reduced from its current ~390 ppm to at most 350 ppm. To be safe, we’ll likely have to get back to pre-industrial levels of 280 ppm, and rather quickly.

And how are we doing? The European Environment Agency keeps track.

Even under the most optimistic (more accurately, unrealistic) scenarios, it’s looking like the IEA’s outlook is unjustifiably rosy. The concentration of CO2 in the atmosphere is now about 390 ppm, however, the concentration of CO2e has already hit 450 ppm.

A 2011 paper by Dr. Minqi Li of the University of Utah lays out the horrible and inexorable consequences of continuing to pump greenhouse gases into the atmosphere:

It is now widely understood that human economic activities have led to emissions of greenhouse gases, mainly carbon dioxide emissions from fossil fuels consumption, which contribute to long-term global warming and threaten to bring about global ecological catastrophes.

In 2010, the global average land and ocean surface temperature was 14.6°C, which was 0.9°C higher than in 1880 and 0.3°C higher than in 2000 (NASA 2011).

If global warming rises above 2°C (relative to the pre-industrial time), dangerous climate feedbacks may be triggered, leading to the release of more greenhouse gases from soil and ocean. For this reason, 2°C warming is generally considered by scientists as the “safe limit” beyond which global warming may be out of human control.

A 3°C warming would destroy the Amazon rainforest, leading to a further warming of 1.5°C. Southern Africa, Australia, Mediterranean Europe, and Western US would turn into deserts. Sea level could rise by 25 meters and billions of people could become environmental refugees.

With a 4°C warming, the melting of the Arctic permafrost could release massive amount of carbon dioxide and methane. Algae, the main carbon sinker in the ocean, would die out. The world is set for runaway global warming that could lead to additional temperature rises by several degrees.

If global warming rises to 5°C and above, much of the world would cease to be inhabitable and global human population could suffer a catastrophic decline. Table 4 summarizes the potential consequences of various degrees of global warming. It is not exaggerating to say that the very survival of the human civilization for centuries to come is at stake.

* * *

Without any further increase in greenhouse gases, the current level of greenhouse gases already implies a long-term warming of 2-4°C.

Note that Dr. Li, an economist, does not hesitate to point the finger at human economic activity as the cause of climate change.

Naomi Klein emphasizes this same point – that capitalism is the culprit – at The Nation: lowering global emissions as drastically and as rapidly as climate science demands can be done only by radically reordering our economic and political systems in ways antithetical to the “free market” belief system. Climate change is a consequence of unrestrained greed.

The fact that the earth’s atmosphere cannot safely absorb the amount of carbon we are pumping into it is a symptom of a much larger crisis, one born of the central fiction on which our economic model is based: that nature is limitless, that we will always be able to find more of what we need, and that if something runs out it can be seamlessly replaced by another resource that we can endlessly extract. But it is not just the atmosphere that we have exploited beyond its capacity to recover—we are doing the same to the oceans, to freshwater, to topsoil and to biodiversity. The expansionist, extractive mindset, which has so long governed our relationship to nature, is what the climate crisis calls into question so fundamentally. The abundance of scientific research showing we have pushed nature beyond its limits does not just demand green products and market-based solutions; it demands a new civilizational paradigm, one grounded not in dominance over nature but in respect for natural cycles of renewal—and acutely sensitive to natural limits, including the limits of human intelligence.

Climate change is a message, one that is telling us that many of our culture’s most cherished ideas are dangerous and destructive enough to not only imperil human civilization but to ravage the capacity of Earth to sustain life. Averting catastrophic climate change requires nothing less than a radical overhaul of our economy and society. Averting catastrophic climate change requires that the nations of the world abandon their obsession with economic growth and instead focus, above everything else, on slashing fossil fuel consumption.

Beginning like, now. Not next week, next year, next election, next congress, next climate conference. Now.

Fat chance of that happening.

Dr. Mamdouh Salameh’s address the 17th Annual Energy Conference of the Emirates Center for Strategic Studies and Research warned of a coming severe oil crunch, probably by 2015 or thereabouts, with oil prices projected to exceed the level reached in July 2008:

[A] projected price ranging from $150 – $170 per barrel by 2015 may not be out of place. When the oil price hit $147 per barrel in July 2008, it precipitated the biggest economic crisis the world has ever witnessed since the 1930s. One can only imagine what damage to the global economy a price level of $150-$170 per barrel could cause.

Salameh is Consultant on Oil and Energy Affairs for the World Bank. He said OPEC will soon reach a crossroads: it must ramp up supplies very significantly to stem the projected steep rise in the oil price or risk becoming irrelevant. But OPEC’s last experience with soaring prices in 2008 doesn’t bode well. OPEC members couldn’t increase production in 2008 because it had hardly any spare production capacity. Salameh said the supply situation hasn’t improved:

Today, OPEC still has little spare capacity and therefore can no longer influence the global oil market and the oil price.

OPEC works more effectively when oil price are falling because it is within OPEC members’ power to cut production to shore up prices. But when oil prices are rising, OPEC can’t reign in price increases because its ability to increase production is constrained. Since oil prices are projected to remain high well into the future, OPEC could become irrelevant.

The 34 member countries of the Organization for Economic Co-operation and Development (OECD) -including the U.S. – have set as their mission “the increase of general well-being“.

So how is the U.S. doing, compared to other member states? According to a report by the Bertelsmann Stiftung, not at all well. The U.S. is at the bottom of the list, in the same company as Greece, Chile, Mexico, and Turkey – as seen in this chart posted by Charles Blow at the New York Times.

Blow levels a fierce and damning indictment:

We are slowly — and painfully — being forced to realize that we are no longer the America of our imaginations.* * *

We have not taken care of the least among us. We have allowed a revolting level of income inequality to develop. We have watched as millions of our fellow countrymen have fallen into poverty. And we have done a poor job of educating our children and now threaten to leave them a country that is a shell of its former self. We should be ashamed.

According to the Congressional Budget Office, the very richest of us have been taking more and more while everyone else has had to settle for less and less.

The graph below from Barry Rizholtz The Big Picture showing that household income for all but the very, very richest has barely budged since 1979.

The CBO reports that incomes for “households” in all income groups have risen since 1979 – but that doesn’t mean that people are richer or better off. Much of the increase in “household” incomes is explained by more women entering the work force, forming dual income families.

But the additional household income doesn’t ensure that families are better off financially. Remember back when one income was enough to support a decent life?

Increasing income can disguise increasing poverty if the increase is eaten up by rising costs. For most people, energy and health care costs are growing faster than incomes, leaving less and less money for everything else despite increasing GDP.

And then there’s the fact that real average incomes in the U.S. have stopped growing at all, as seen in this chart posted by Michael Panzner at Financial Armageddon.

With more and more of a stagnant pie going to the top 1%, everyone else has no choice but to get by with less and less.

For the past 30 years or more, America has been obsessed with economic growth above all else. And acquiring wealth is the ultimate sign of virtue, as evidenced in the speech prepared by House Majority Leader Eric Cantor for presentation at the University of Pennsylvania’s Wharton School of Business, cancelled when the school opened attendance to the first 300 who showed up – and activists from Wall Street movement took up the invitation.

There are politicians and others who want to demonize people that have earned success in certain sectors of our society. They claim that these people have now made enough, and haven’t paid their fair share. But, pitting Americans against one another tends to deflate the aspirational spirit of our people and fade the American dream. I believe that the most successful among us are positioned to use their talents to help grow our economy and give everyone a hand up the ladder and the dignity of a job.

In an op ed at the Washington Times, Cantor reiterates that objecting to income inequality is “class warfare” that gets in the way of growth.

But the politics of division have reared up, fueled by efforts to incite class warfare. * * * Yet last week, the president called for more stimulus spending paid for by higher taxes and more job-killing regulations. The past two years have shown that this is no way to create jobs. In lieu of more wasteful stimulus spending, we should go all-in on ways to invigorate growth.

Economists don’t take trickle-down economics seriously – why do politicians? The consequences have manifested themselves over the last thirty years, for everyone to see. But the idolizing of economic growth enables us to pretend that inequality doesn’t matter.

The idea that exponential growth can continue indefinitely on a finite planet is insane. The consequences of pursuing it – most alarmingly, global warming and attendant climate change – are catastrophic. The social and ecological predicaments we find ourselves in can be addressed only if we let go of the idea of growth and instead embracing degrowth.

Bad news: a new study finds that the prospects for avoiding dangerous global warming are bleak, indeed.

In the study, titled Emission pathways consistent with a 2°C global temperature limit, the team of scientists reanalyzed a large set of previously published emission scenarios based on integrated assessment models. They found that in the set of scenarios with a ‘likely’ (greater than 66%) chance of staying below 2°C, emissions peak between 2010 and 2020 and fall to a median level of 44 Gt of CO₂ equivalent in 2020 (compared with estimated median emissions across the scenario set of 48 Gt of CO₂ equivalent in 2010).

Current climate models show if the increase in average global temperatures is to be kept below 2°C (3.6°F), emissions must not only peak by 2020, emissions must fall by almost 10% by 2020  – and then continue to fall rapidly to well under half of current emissions by 2050.

Climate scientist Neil Edwards commented on the study’s findings:

The alarming thing is very few scenarios give the kind of future we want.

The International Energy Agency (IEA) recently announced global CO₂ emissions decreased for the first time since 1990, due to the 2008-2009 economic crisis – but warned, don’t expect a trend. A large rebound is anticipated in 2010. (Note: a report published by the European Commission’s Joint Research Centre and PBL Netherlands Environmental Assessment Agency found that global carbon dioxide (CO₂) emissions increased by more than 5% in 2010, reaching an all-time high.)

The IEA’s findings are contained in a free document that contains highlights from CO₂ Emissions from Fuel Combustion 2011, an IEA statistics publication which will be released in November 2011. The full document, which contains all the latest information on the level and growth of CO₂ emissions, is being released to inform the upcoming UN climate negotiations in Durban. Key findings include:

1. Two-thirds of global emissions for 2009 originated from just ten countries, with the shares of China and the United States far surpassing those of all others (combined, these two countries alone produced 41% of the world’s CO₂emissions).
2. Between 1990 and 2009, CO₂ emissions from the combustion of coal grew from 40% to 43% and natural gas from 18 to 20%, while CO₂ emissions from oil fell from 42% to 37%.
3. Two sectors – electricity and heat generation and transport – produced nearly two-thirds of global CO₂ emissions in 2009, up from 58% in 1990.

In their study, the climate scientists found only three of the 193 scenarios examined would be very likely to keep the warming below the danger level – and all of those require heavy use of energy systems that actually remove greenhouse gases from the atmosphere. That would require, for example, both creating biofuels and storing the carbon dioxide from their combustion in the ground. Edwards put it this way:

What we need is at the cutting edge. We need to be as innovative as we can be in every way.

In the statement quoted above, Edwards is assuming that the objective is to preserve the energy-intensive economic growth paradigm. But the paradigm is the problem. Every day it is becoming increasingly clear that cutting edge technology and innovation are not the answer.

One example: many Oregonians across the political spectrum, including Governor John Kitzhaber, have promoted forest biomass as a energy source, thinking woody debris from thinning, brush clearing and removing dead trees could help the state meet its renewable energy goals while at the same time restoring forest health and providing jobs in rural communities. But not so fast, say OSU researchers: managing forests for biofuel production will increase carbon dioxide emissions from the forests by at least 14%. The OSU press release quotes co-author Beverly Law:

Until now there have been a lot of misconceptions about impacts of forest thinning, fire prevention and biofuels production as it relates to carbon emissions from forests. If our ultimate goal is to reduce greenhouse gas emissions, producing bioenergy from forests will be counterproductive. Some of these forest management practices may also have negative impacts on soils, biodiversity and habitat. These issues have not been thought out very fully.

Looking to technology and innovation to enable humans to continue to pursue the economic growth that is consuming the very ecosystems that sustain us is just the denial of an addict. What is necessary is acceptance: growth is destructive and must be reversed. We must welcome and embrace the collapse of our current economic system, and learn to live within an economic system that conserves rather than consumes the larger systems of which it is a part.

A study by Lieutenant Colonel Christopher Fleming at the U.S. Army War College concludes the volatility we’ve seen in oil prices and the lack of increased production as a response to high prices is evidence that we’re hitting geological limits to global oil production.

The excerpt below is from the abstract of the study “Considering oil production variance as an indicator of peak production“:

The primary finding was unprecedented statistical variance in oil production rates as well as in oil prices beginning approximately 2005 to 2010. In the case of oil production rates, variance is at historically low levels. In the case of oil prices, variance is at historically high levels. The data indicate a new higher order of inelasticity between oil price and oil production.

These findings support peak oil forecasts in the range of 2005 to 2010 and together provide strong evidence that geological factors could presently be limiting world oil production.

The inelasticity between oil price and oil production Fleming talks about is evidenced by the wild swings in oil prices over the last six years, as seen in this graph posted by Stuart Staniford at Early Warning . . .

. . . while the lack of response from oil producers can be seen in this graph posted by Gail Tverberg at Our Finite World showing production from the Middle East and North Africa (MENA) since 1965.

MENA Monthly crude oil production, based on EIA data.

MENA’s oil consumption is rising, so even if MENA’s oil production could rise, that does not mean that oil exports would rise. For example, Saudi Aramco projects Saudi Arabia’s domestic consumption will reach an equivalent of 8.3 million barrels by 2028, more than double the 3.4 million barrels equivalent in 2009 – leaving precious little for export.

Ecological economist David Stern recently published a paper on the essential role of energy in economic growth, aptly titled ‘The Role of Energy in Economic Growth“. Stern observes that mainstream economic theory pays no attention to the role of energy; however, physics shows that energy is necessary for economic production and, therefore, economic growth. The “synthesis” model proposed by Stern explains the industrial revolution as a releasing of the constraints on economic growth due to the development of methods of using coal and the discovery of new fossil fuel resources.

Climate considerations aside, for business as usual – the continuation of economic growth – it’s bad enough that the world is bumping up against limits to oil production volume; however, the energy returned on energy investmen (EROI) is dropping, too – it’s costing more and more energy to produce the same amount of oil. A new study titled “A New Long Term Assessment of Energy Return on Investment (EROI) for U.S. Oil and Gas Discovery and Production” finds:

EROI for finding oil and gas decreased exponentially from 1200:1 in 1919 to 5:1 in 2007. The EROI for production of the oil and gas industry was about 20:1 from 1919 to 1972, declined to about 8:1 in 1982 when peak drilling occurred, recovered to about 17:1 from 1986–2002 and declined sharply to about 11:1 in the mid to late 2000s. The slowly declining secular trend has been partly masked by changing effort: the lower the intensity of drilling, the higher the EROI compared to the secular trend. Fuel consumption within the oil and gas industry grew continuously from 1919 through the early 1980s, declined in the mid-1990s, and has increased recently, not surprisingly linked to the increased cost of finding and extracting oil.

A new paper by economist James Hamilton titled Oil Prices, Exhaustible Resources, and Economic Growth documents that a key feature of the historical growth in production has been exploitation of new geographic areas rather than application of better technology to existing sources, and suggests that the end of that era is nigh. Hamilton shows that economic dislocations have historically followed temporary oil supply disruptions.  He concludes:

If the peaking of global production results in further big increases in the price of oil . . . the economic consequences of reduced energy use would have to be significant.

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If the future decades look like the last 5 years, we are in for a rough time.

Most economists view the economic growth of the last century and a half as being fueled by ongoing technological progress. Without question, that progress has been most impressive. But there may also have been an important component of luck in terms of finding and exploiting a resource that was extremely valuable and useful but ultimately finite and exhaustible. It is not clear how easy it will be to adapt to the end of that era of good fortune.

Tom Murphy writes that we now find ourselves in an energy trap.

In brief, the idea is that once we enter a decline phase in fossil fuel availability—first in petroleum—our growth-based economic system will struggle to cope with a contraction of its very lifeblood. Fuel prices will skyrocket, some individuals and exporting nations will react by hoarding, and energy scarcity will quickly become the new norm. The invisible hand of the market will slap us silly demanding a new energy infrastructure based on non-fossil solutions. But here’s the rub. The construction of that shiny new infrastructure requires not just money, but . . . energy. And that’s the very commodity in short supply. Will we really be willing to sacrifice additional energy in the short term—effectively steepening the decline—for a long-term energy plan? It’s a trap!

A rough time, indeed. Effectively coming to grips with this new reality won’t be from the top down; it’s futile to look for or expect political solutions. Rather, doing so will require the kind of “magic” that begins with the individual, and works outward from there. It’s not the destination that matters, but rather the journey. And anybody can take that first step.