Viewpoint: We are facing a severe survival test

This is the winter of our discontent and also of our discomfort. Our wake up call has arrived. U.S. News, in a recent article analyzing the energy outlook, predicts the next several months will test our survival skills to the maximum.

Peak Oil and Gas are beginning to weigh upon us. Experts in the energy field have been saying for months that natural gas will be our biggest problem this winter, and we are seeing its cost heading for the moon as supplies tighten up.

Some look at the prices at the gasoline pump and believe it all is a matter of big oil companies gouging the consumer, but that analysis is misleading.

Mike Ruppert, publisher of From the Wilderness publications, says it this way: “Peak Oil cannot be a conspiracy of big business to get rich when big businesses are about to be shut down, either because of a lack of energy or a frozen work force. It cannot be a conspiracy of big business when GM and Ford teeter on the edge of bankruptcy; when 800,000 jobs are slated for the ax this winter; when Delta and Northwest are in bankruptcy; when the Federal Reserve has blithely announced it is going to conceal how much money it is printing into the M3 money supply.

“It cannot be a conspiracy to impose a one-world order when the international scene is starting to look like a saloon fight in a ‘B’ Western. It cannot be anything other than what it is: the beginning of the collapse of modern industrialized civilization.”

As the first snowfall of the season smacked the Northeast last week, it became even more apparent that hurricanes Katrina and Rita did a lot more to our energy supply and distribution system than most had thought; the ripples are still spreading through our economy.

Natural gas costs 38 percent more than last year’s record prices, and oil is up 21 percent from that benchmark. So what? So many factories and businesses are going to be closed, and very many people will be out of work, putting additional stress and pressure on poor and low-income families. Few federal dollars will be available to help them.

If this winter brings bitter cold, as it is indicating it might—there will be especially difficult times, particularly in the Northeast, where natural gas shortages will affect electricity supplies, and oil supplies also will suffer. U.S. News quotes Diane Munns, a utility regulator in Iowa who heads the National Association of Regulatory Utility Commissioners. “We pray for warm weather,” Munns said. “We have a prayer chain going. People are talking not just about high prices but actual shortages.”

That sentiment was seconded by Matthew Simmons, a prominent energy investment banker in Houston. “We’re headed into a winter,” said Simmons, “that could be a real winter of discontent.”

Most of the country is still in denial about peak oil and gas, but more are beginning to be aware as the national media finally take note of the problem and start to report on it.

Last summer’s hurricanes hit our oil infrastructure in the Gulf of Mexico harder than anyone had anticipated. The oil industry is reporting 23 percent of the Gulf’s natural gas production—2.3 billion cubic feet per day—will be shut down through March. That is very serious business when you consider 52 percent of U.S. homes heat with gas.

According to U.S. News, the U.S. already was using more natural gas than it produced even before the hurricanes and prices were hitting record levels then. Between 1990 and 2004, demand leaped 16 percent, mostly driven by power plant operators. Natural gas is used to generate electricity.

The country is relying on natural gas from Canada and is turning more and more to liquid natural gas (LNG) shipped from Africa, but the imports aren’t enough to satisfy demand. Roger Cooper, executive vice president of the American Gas Association, told U.S. News: “We’re vulnerable. If we were hit in the 1990s, we would not have been in this situation. But when you are consuming 100 percent of your supply, there’s not much room to maneuver.”

The law of supply and demand is operating, big time. Last week, the market price of natural gas hit $15 per million btu [British nethermal units], more than double the price last year. The normal methods of storing gas in underground caverns, such as NICOR does, are not adequate. The result is higher heat bills for homeowners and tougher choices for businesses.

The National Association of Manufacturers says hundreds of factories will be forced to lay off workers and freeze or cut wages because of the high heating costs. Some of the larger manufacturers have shifted operations overseas, closer to cheaper fuel supplies. Smaller companies don’t have that option. Paul Ciccio, executive director of the Industrial Energy Consumers of America, said: “In manufacturing, there’s just one way to use less energy, and that’s to make less widgets.”

For consumers, the higher costs already are taking their toll. Mervalene Eastman lives on the Crow Indian Reservation in Montana. She is unable to work because of health reasons and also is caring for a 7-year-old nephew. Her situation is desperate.

She was behind on her payments last winter when a $380 bill in December to heat her four-bedroom home climbed by $100 in January and again in February. Now she owes not only back payments but a reconnection fee and a security deposit. All that comes to more than $850, an impossibility for Eastman.

She uses a couple of space heaters and sometimes fires up the oven of her electric range to try to keep warm in Montana’s winters when temperatures can hit 50 below zero Fahrenheit.

“My electric bill is so high,” she told U.S. News, “what I’ve been saving to pay MDU [Montana-Dakota Utilities] I’ve been tapping into to pay electric. Once January comes, I don’t know how I’m going to keep everybody warm.”

It’s a familiar story to Jerry McKim, chief of Iowa’s Bureau of Energy Assistance. “These households are carrying significant debt from last winter into this winter,” he said. “That’s something people aren’t catching.”

The two biggest threats facing the Northeast are: a heating oil shortage, aggravated by the export of distillate fuel oil, which includes both diesel and heating oil, up nearly 50 percent this year; and secondly, a severe shortage of electricity with possible brownouts or blackouts. Many of the power generators are gas-fired and also deregulated and so are under no obligation to continue supplying power; they can simply shut down and sell their fuel at terrific profit.

In New Orleans, already devastated from Hurricane Katrina, a winter failure of the heating system would be catastrophic. Any lengthy heat loss could cause water pipes in commercial and residential buildings to burst, and “traps” where steam escapes could freeze and fail, causing steam pipes to split and lose pressure.

Jim Woolsey, former head of the Central Intelligence Agency, who is dealing with energy issues in the Crescent City, said parts of New Orleans could look like “a frozen New Orleans.”

And the threats don’t stop with the coming of spring. Around the world, agriculture is in trouble. According to the International Society for Ecology and Culture, farmers are going bankrupt in record numbers.

At the same time, global trade in food is booming. Each year, the distance between producers and consumers grows. Today, the average meal in America has traveled more than 1,500 miles to reach your table.

These two trends are linked. Global food economy is harming the majority while enriching the few. Big agriculture is a major contributor to rising carbon dioxide emissions and, as a result, climate change.

We need to be heading in the opposite direction, closing the gap between farmers and consumers. Not only would such a change rejuvenate the land, but it would furnish jobs at the local level, rebuild community and allow farmers to earn a decent living while providing urbanites with healthy, fresh food at affordable prices—without the added transportation costs and fuel consumption.

It may take some time in the dark an

d cold and some hunger pangs in the belly to wake Americans to that reality. “I hate to sound like the voice of doom,” said McKim, “but somebody has to say this stuff. It’s just like Hurricane Katrina. They knew it was coming, but little was done to prepare an effective response. And the same thing is happening here.”

How are your survival skills?

From the Dec. 21-27, 2005, issue

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