Peak Food

Andrew McKillop on petroleumworld.com shows how the oil stocks of the US and some other countries are declining.  It is interesting that some reserves do not add up to many days supply.

As food cannot now be grown or distributed without plentiful supplies of oil, this should be ringing alarm bells.

Here is part of his article:

“As already noted, many times, the media finds it is not ‘politically correct’ to explain high prices as due to oil – very simply – depleting and running out. So they prefer to cite storms, technical problems, refinery accidents, rebellion and wars in Nigeria, Chad and Sudan, the Iraq war, al Qaida, Vladimir Putin and the ‘anti western Kremlin’ now menacing pipeline routes in Georgia, the Kazakhs or Venezuelans applying ‘resource nationalism’ to their oil reserves and demanding higher taxes and shares of profits, the greedy and wasteful Chinese importing too much oil, the Indians doing the same, very hot weather (or very cold weather), and why not earthquakes ? – anything will do as long as NO mention of Peak Oil is made. It is however politically OK to cite declining or shrinking inventories as an explanation of why oil prices are high.

“Why are inventories declining? One reason is Peak Oil, driving up prices and making stock controllers and managers run the smallest-possible or ‘just in time’ stocks. They can and do hope that prices will fall before they have to re-order, but all too often they bet wrong. Oil refiners, too, have to regularly buy crude oil – at whatever the day’s price is, and then cover this against vagaries of refined product market prices through buying and selling ‘crack spread’ contracts. This again is a market mechanism that – finally – transmits any crude oil price rises or falls to downstream consumers.

“Another and the biggest reason is strong demand – the world car industry, with a fast increasing Chinese segment, will produce about 65 million new cars in 2007, small private business jet plane sales increased about 25% in 2006-07 and will increase about 30% in 2007-08, world container shipping movements will grow at least 10% - 11% in 2007.

“Strong demand itself drives us closer and faster to Peak Oil because the supply side can’t keep up.”