There Will Be Blood

I bet there's enough biofuel in that thing to power a Hummer for a year.

The guys over at Bondad's Blog, especially NDD, have been charting the rise of oil prices and their potential impact on the economy.  Shorter version: it doesn't look great.

They use a few models that suggest we are on the cusp of an energy-price induced recession.  This would be the double-dip that everyone has been worried about.  The political effects of this... well, who the hell knows.

But it's telling that the political press - and largely the economic press, too - has been hyperventilating over the budget deficit, which is really a long term problem based in declining tax revenues and higher medical costs.  Meanwhile we have a legitimate economic crisis creeping over the near horizon.

The scary thing is that this crisis has no easy and immediate answer.  If oil hits $130 a barrel, we're simply doomed and there's not a ton that can be done about it.

You can't drill anywhere that's easy, or else they would be drilling there already.

Biofuel technology runs into a food problem (ie we have to stop making biofuel out of corn) and the non-food biofuels (like the algae process) are not ready for the wholesale production that would make a meaningful dent in fuel prices.

Other options, including thermal depolymerization, would also require a year or more of start up time to get production going.

Thermal depolymerization is a process that takes organic waste - say offal from a slaughterhouse or even sewage - and heats and compresses it, turning it into light crude.  It was too expensive to do when oil cost $80 a barrel.  Which is why it needed a long term commitment from a federal energy policy to subsidize and expand it, so that when we DID have $110/bl oil, we would be ready.

Peak oil, if that's what this is, was not a surprise to anyone with brains and foresight.  Just as Iraq/Afghanistan being a quagmire was not a surprise, just as the levees failing was not a surprise, just as the housing bubble collapsing was not a surprise.

But we have a political culture that predominately focuses on the past and past battles.  Why the hell are we still arguing about abortion or the existent of Medicare?

Obama tackled health care first in 2009-10.  And he got an historic deal.  But from his political perspective and more importantly for the health of the American economy and the global ecosystem, perhaps his focus should have been on a comprehensive energy policy that addressed both carbon emissions and fuel sustainability.

Who knows.

But this is the first really bad economic news I've heard in a while.  Much worse than future problems with the budget.

Though I doubt anyone in DC gives a good God damn.