2012-A Doomsday Year? (part two)

Posted: 15/01/2012 in economy, end times, legislation, New World Order, Preparedness, survival, Uncategorized
Tags: , , , , , , ,

In part one of “2012-A Doomsday Year?” I wrote about the rising costs of food, and in particular, some of the insidious ways that these cost increases become implemented in a way that most of us really do not see the increase. That is at least until we suddenly get hit with the fact that the can of tuna fish we are holding in the grocery store used to cost quite a bit less than it does now. Food prices are not the only things we will see drastic increases in over the next year. I fully expect the price of gasoline to rise to a level significantly higher than it is today. I filled my car last night with 87-octane e10 fuel at a price of $3.349 per gallon. A couple or so weeks ago, I paid $3.269 per gallon at the same C-store.

That is not much of an increase, comparatively speaking, but it is in fact what I believe is the beginning of what will be a long term trend to crank the price of automotive grade fuels up to a level at least 25 to 30 percent higher than what we are comfortable with today. What do I base my predictions on, and what kind of timeframe are we looking at here? Simply put, part of my reasoning has to do with what some analysts refer to as a situation known as peak oil. Unfortunately, many in the prepper community have a false idea as to what peak oil really means, and are led astray by some of the merchants of fear we encounter all too frequently when discussing preparedness and survivalism.

Another part of my reasoning lies in the fact that the subsidies that have allowed for lower ethanol costs in the fuel stream are gone, and this is the causative factor for the recent increase in gasoline prices at the pump. The true cost of Gaia worshiping is starting to come to light, but people still fail to see the truth of the so called climate change argument, or rather, the climate non-change argument. However, this is another issue that I will get into later, for now, the increasing price of fuels is the topic under discussion.

Peak oil, as I mentioned earlier, is a somewhat misunderstood or misrepresented phenomenon that can in fact mean different things to different groups of stakeholders. One camp suggests that peak oil will occur when the maximum amount of oil is reached, and the supply begins to decline. In one sense this is a correct description, as the peak of any commodity is considered to be when its maximum rate of production is reached, and the available supply begins to decline. This goes for any non replenishing product, not just oil. Copper, silver, gold, and other minerals all can be placed under the same consideration. When you pull all there is out of the ground, there ain’t no more. That’s when the price will really skyrocket.

However, when I talk about peak oil a different definition is suggested. Since 1979 the ethanol industry has been subsidized by the taxpayers to the tune of 600 billion dollars and then some. Because the tax bennies expired on 01 Jan of this year, this will drive the price of ethanol up, and therefore the cost of gasoline at the pump. I do not actually see any major jumps in the price of crude over the next twelve months, barring any military action regarding Iran’s posture, however, we will see a gradual increase with a lot of bumps and grinds tempering that increase. Again, the bigger consumer level price increase will be mostly the ethanol component of the fuel we are forced to use in our vehicles.

Herein lies the bigger problem with fuel prices and preparing for the coming times. The RFS program created under the Energy Policy Act (EPAct) of 2005 established the first renewable fuel volume mandate in the United States. This mandate required 7.5 billion gallons of renewable- fuel to be blended into gasoline by 2012. This will happen, but the situation gets worse. According to the EPA’s renewable fuels website:

Under the Energy Independence and Security Act (EISA) of 2007, the RFS program was expanded in several key ways:

  • EISA expanded the RFS program to include diesel, in addition to gasoline;
  • EISA increased the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022;
  • EISA established new categories of renewable fuel, and set separate volume requirements for each one.
  • EISA required EPA to apply lifecycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces.

RFS2 lays the foundation for achieving significant reductions of greenhouse gas emissions from the use of renewable fuels, for reducing imported petroleum, and encouraging the development and expansion of our nation’s renewable fuels sector.

The elimination of this subsidy will force the price of ethanol to rise as the government-forced usage of it increases, as we get closer to 2022. This will naturally cause the price at the pump to reflect the increasing production prices. We are going to need to accommodate an increase in the production of a fuel that is of questionable worth at the cost of mo0re than just the creation of ethanol. More crop acreage is going to be needed to be utilized for fuel production at the expense of food production acreage.

Currently, to add to the escalating price we find that speculative investment is creating a situation whereby the actions of Iran as it threatens to close the Strait of Hormuz is seemingly causing the price of crude to rise. The reality is, as always, that it is really the speculative investment market that is causing the rise in price. Other Arab powers have already promised to increase production should Iran make good on its promise, so in effect the supply available should not drop, suggesting that this pending crisis is really a non-event in real terms. Always be aware that speculative investment drives much of the pricing in commodities markets.

So, to summarize thus far, we have two major factors contributing towards the coming collapse of life as we have come to relish it, 1. increasing food prices, and 2. increasing fuel prices. Both of these elements are vital points to consider as you make your plans to survive the coming times. In part three of 2012-A Doomsday Year? I will look at some of the geopolitical elements and how what happens on a global basis really does affect you, and what you do in your back yard.

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