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A primer for local officials on
fiscal policy in an environment
of energy restrictions
or
Don’t be fuelish!
Gregory Travis,
greg@littlebear.com
The basic thesis
• Future supplies of gas and liquid hydrocarbon
fuels (gasoline, diesel, propane, natural gas,
etc.) are constrained by fundamental supply
issues which cannot be mitigated
– The availability of those fuels will become more
and more restrained in the future
• “The doubling of oil prices in the past couple
of years is not an anomaly, but a picture of
the future.”
– United States Army Corps of Engineers, “Energy
Trends and Implications for U.S. Army
Installations”
• We will not have a substitute for those fuels
A crash course in resource
geology
Resources 101
• Reality: You cannot produce (mine,
extract, etc.) any natural resource until
you have first found it.
QuickTime™ and a
TIFF (Uncompressed) decompressor
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• You find “easy & large” deposits of any
resource first and “hard & small” ones
later
– Think of an easter-egg hunt
You can’t produce what you
haven’t got
• This fundamental reality means
that the production (extraction) of
any non-renewable natural
resource follows a characteristic
bell-shaped curve. QuickTime™ and a
– Production starts out slowly,
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increases to a maximum at
approximately 1/2 of the total
resource, then falls steadily
– For fossil fuels, this curve is called a
“Hubbert” curve, after geologist M.
King Hubbert
A Hubbert curve
QuickTime™ and a
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What are we finding?
• Remember, you
can’t produce what
you didn’t find first!
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• We’ve found all
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It’s not for lack of trying
• We were/are drilling like
mad
– But recently industry is
“giving up” and investing
their money elsewhere
QuickTime™ and a
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discovery minus
production
– Since 1980 have been
“living on principle” --
production exceeds
discovery
Production follows discovery
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• Like discovery, production has characteristic bell shape
(Hubbert curve)
– This happens at the individual well, field, nation,
and world levels QuickTime™ and a
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• Aggregate of well curves = Field Curve
• Aggregate of field curves = National Curve
• Aggregate of national curves = World Curve
United States Production
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• Hubbert predicted, in 1958, that the United States would peak in 1970
– His prediction destroyed his career
• Hubbert was wrong
– The United States did not actually peak until 1972
Back to today, why is supply
constrained?
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• Like the United States in 1972, the World peaked in 2006
• Experience shows that, once peak occurs, you can only mitigate (slow) decline
in production. You cannot reverse the decline.
– I.e. ANWR, tar sands, technology, etc. can not “fix it,” can only ease the
pain
Your job
Realities
• Global liquid hydrocarbon (oil) production is in
decline
– Approximately 2% a year if we’re very lucky
– 8+% a year if we’re very unlucky
• “Saudi Aramco's mature crude oil fields are expected to decline
at a gross average rate of 8%/year without additional
maintenance and drilling … potential drilling in mature fields
combined with a multitude of remedial actions and the
development of new fields, with long plateau lives, lowers the
composite decline rate of producing fields to around 2%”
– Saudi Aramco spokesperson, April 2006
• “As Saudi Arabia goes, so goes the world”
– Houston investment banker & Cheney energy task
force member Matthew Simmons
And what they mean for you
• Gasoline and diesel fuels will become
increasingly expensive and less
available
• But what’s even worse than high energy
prices?
– Energy price volatility
• Volatility makes it impossible to plan and
predict the future
Make a decision
• Do you want to be in the front or the
back seat?
– You probably owe your constituents the
former
Front-seat driving
• Accept depletion & get out in front of it
• Hardwire into department budgets annual fuel
use decreases
– Total volume of fuel, not cost of fuel
– I suggest 2.6% a year in accord with the Oil
Depletion Protocol
(http://www.oildepletionprotocol.org/)
• Negotiate now long-term contracts with fuel
suppliers with those amounts plugged-in
How do we reduce fuel use?
• Efficiency
• Conservation
• Investment choices
Efficiency
• Change out county vehicle fleet as fast
as possible
– Smaller vehicles
• SUVs->Cars->Motorcycles
– More efficient vehicles
• Diesels and hybrids
Conservation
• Require written justification for all use of
county vehicles
• Consolidate trips
Investment
• Cease dis-investment
– It’s not rational to expend any public funds
on strictly automotive infrastructure,
especially on long-term infrastructure
investments
• Road widening
• Road creation
• Parking
• Etc.
Investment, cont
• Make new strategic investments
– Reduce vehicle dependence over time
• De-consolidate schools (reinvent neighborhood
schooling) to reduce busing costs
• Geographically consolidate government to
reduce transportation costs
• Cease all taxpayer subsidies of sub/ex-urban
greenfield development
– This tax base is likely to collapse as the underlying
property values collapse
Questions?
