I have a friend from Brazil who has been in Canada for a little over 12 years. Loves the country despite the cold and she still holds fond memories of home—which she visits often.

I tell you the latter so that you can rest assured that she holds no animosity or unrealistic memories that sometimes comes from those ex-pats who never return to the country where they were born and raised.



She was raised in an upper-middle class household in Sao Paulo, with maids etc.–which was and is the norm for that economic group. She remembers how her family handled the various currency crises and other economic difficulties that the country experienced in her youth. She has mentioned that if you have means you can protect yourself from the worst ravages of money printing and the resulting inflation—but you never escape it entirely.

One habit that she developed in Brazil was evaluating each trip by car by how much gas you used. It was almost ingrained in her psyche. Basically, she was raised to not waste fuel.

If you recall Brazil was hit hard by the rise in oil prices and the oil shortages in the 1970’s. This combined with their experiences in WW2 with gasoline shortages and their requirement to buy imported oil with depreciating dollars means that a frugal mindset is ingrained with regard to transportation.

The onslaught of peak oil means that this mindset of weighing the pros and cons of each trip will have to be adopted by North American’s. One of Canada’s dirty little secrets is that out per capita oil consumption is higher then the US’s and most of the world. What is not widely understood is that while the Western provinces export oil—the Eastern provinces import oil from the world market. We don’t have any east-west pipeline.

Essentially, we consume more oil per person than the currently demonized US and we are reliant on imported oil—not a great place to be in an era of declining oil supplies.

This talk refers to one implication of Peak Oil. We will need to be more energy conscious in North America as to how we ship goods– floating barges versus trucking. A barge can move 340 truckloads worth of goods for 1/35th of the fuel versus 340 trucks—and it only takes 13 days to move that from California to Portland Maine through the Panama Canal. Rather than dropping goods off at Long Beach after they cross the Pacific and putting them on 350 trucks to the Northeast we put them on one barge that has one tugboat pushing the equivalent of 350 truckloads.  We can  possibly claim that certain goods are time sensitive—but that argument falls flat for most goods.

Conventional wisdom is that there is a decline rate. However, no one seems to believe that the Middle East will ever be on a decline curve as they provides no data–only assurances. The US decline rate excluding Alaska and offshore oil went from 10 Million barrels per day in 1970 to 6.5 Million barrels in 1981—it is now down to 2 million barrels per day.  This simple fact close to home is missed by many commentators or is minimized like it doesn’t exist. The North Sea which was discovered relatively recently used more modern methods of extraction and peaked quickly at 6.1 million barrels in 1999. The UK is now at 1.1 and Norway is at 1.7 after 7 years. The decline curve is very steep—even steeper than the US decline curve.

If the world has a 5% decline rate overall with modest growth rates—we need to add 60 million barrels of new production in 10 years time in order to maintain supply. That is 10 new North Sea’s. The odds of that are virtually zero.

Price won’t take care of this problem they way it has in the past. Higher prices will not introduce new supply as it has in the past because all the “easy oil” has been found. New oil will have to be mined (Tar sands) or brought up from very deep water.

See Part 4: Peak Oil and the 3000 Mile Caesar Salad (Part 4)
See Part 6: Matt Simmons on Peak Oil and Technology–Will It Save Us