We earthbound heroes are currently consuming more barrels of oil, more trainloads of coal, more energy than we ever have before. This is no real surprise given continued skyrocketing population and demand in the so-called 'developing nations,' most notably China and India. Americans and Europeans pat ourselves on our backs for finally considering our grotesquely huge 'carbon footprints;' meanwhile China is getting set to build 300 new coal-burning power plants and a gas-guzzling culture of personal motoring somewhat like the fatally flawed system we built many decades ago, and is patting itself on the back about that. As the world's most outrageous consumers of energy for so long we Americans really don't have much of a leg to stand on in urging conservation by other countries just because they happen to be late to the party. But will an energy diet be forced on China, the US and everyone in between by unalterable geological realities? Will a global recession -- or depression -- cause a reduction in demand that will make supply issues moot? Are we near Peak Energy Demand as well as peak production? Such questions were considered unreasonable just a few years ago.

The US once had plenty of oil spouting up right here inside the borders. Black Gold. Texas Tea. The stuff was everywhere. Jed Clampett accidentally shot some. Until the late '60s, the US exported more oil than any other country. When demand rose oil companies went out and found and pumped more out of the ground. This apparent super-abundance of dirt cheap energy led us down the primrose parkway to our suburban super-consumer lifestyle. Then something extremely wacky happened to usher in the 1970s, the decade of disappointment: oil production in the US peaked, and started to decline. Despite increasingly desperate and thorough extraction efforts, the oountry was locked into a fate as an oil importer, and thus started to build an immense trade deficit to continue servicing the lifestyle.

The bell-shaped curve that illustrates the diminishing returns of oil production within the US over time looks a lot like the bell-shaped curve that would describe oil production in any country. Global oil production, an aggregate of production from all countries, will follow an arc of similar shape. The vast majority of oil-producing countries have passed the summits of their production curves, and all indications point to global production being very near the top of that slope, poised there with skis and goggles and a parka. Is the slope a double black diamond or a bunny hill? White-out conditions currently obscure our view of the situation down the mountain although we're catching glimpses of rocky cliffs and avalanche chutes.

Some people who understand a lot about the energy business were predicting a pull-back in the price of crude in January. When it was near 90 bucks even those who subscribed to the 'Peak Oil' theory guessed the price would fall back into the 70s or so before re-starting a more fundamental climb. It didn't. Oil marched on up past 100 and made that benchmark look mundane within a week or so. This recent spike has had more to do with the collapse of the dollar and a simultaneous flight of investor capital out of the stock market and into commodities, and less to do with supply-and-demand fundamentals. Wheat, gold, copper, everything else has exploded in recent months along with oil. Some economists are calling it a 'commodities bubble' and predicting a big correction; most are predicting a continued bullish trend for all commodities in the long-term, as supply issues loom ominously in the background. Or in some cases, the foreground.

Today, March 17 2008, was an interesting day in US history. It was announced that JP Morgan Chase, backed by $30 billion of government cheese, would acquire Bear Stearns for two bucks a share -- even though Bear's CEO went on TV Friday to tell investors and employees that the firm was worth 80 dollars a share. If you're an investor in Bear Stearns who kept stock based on the assurances of company insiders, you might be pissed. You might be looking to join some kind of class-action suit. Also today, commodities prices took a major hit after a long period of gains, perhaps signaling the start of that more serious sell-off people have been expecting. Oil dropped a monumental five bucks but still settled well over 100, at $106. Many analysts would not be surprised to see a prolonged skid bring the per-barrel price back to around 80, weighed down by the economic turmoil that promises to continue beyond the run on Bear Stearns, which was just one among hundreds of firms built on pure hot air and poised on the brink of bankruptcy. But nobody really knows what is going to happen. Uncertainty rules the day.

In today's global atmosphere of energy angst and very tight oil supply, the few countries that still control enough of the slickery resource to possibly sell it to others are becoming extremely rich and/or disproportionately powerful or important. These countries include traditional Middle Eastern suppliers like the Kingdom of Saudi Arabia, Kuwait, U.A.E.; Iran and Iraq also, with massive untapped reserves; war-torn African countries like Nigeria; Venezuela; Russia; and possibly Brazil. That's about it. Mexico is currently an exporting country but that is due to change before long. Bottom line is the oil is no longer here, it's There, and increasingly difficult to produce. No amount of drilling in Alaskan wildlife refuges will change that.

Average Joe American has done quite a bit of complaining -- Waaaahhh!! -- but has not curtailed his driving in response to higher prices. Are the prices really that high? As Matt Simmons likes to point out, gas is still only about 17 cents per cup. Compared to where we were a few years ago that might seem high. Compared to a few years from now? I doubt it. I would guess that four-dollar gas will seem like a dreamy memory by then, just like fifty-dollar oil seems like a dreamy memory now. That's something we couldn't really imagine back in the 1990s, when oil was around ten dollars per barrel. Simmons, author of Twilight in the Desert, expects oil to climb past $200/barrel by 2010. It is widely believed that Americans will complain like groggy toddlers but continue to burn similar quantities as prices rise -- that it will take actual supply disruptions to shock us, or force us, into significantly changing our pattern of consumption.

Many still feel that ultra-cheap gas is some kind of American birthright, and these folks may be in for a rude awakening. Scapegoats and various symbolic villains will be lashed out at as energy prices wrap up Americans and squeeze 'em like a boa constrictor. It's OPEC! It's the Saudis! George Bush and his cronies! Cheney! The environmentalists! The oil companies! Al Gore! Oprah! Wrong on all counts, good buddy.

As you fill up the tank in the coming years, and the price per gallon rises past four, five, six bucks, and the kingdoms of the desert and the Iranians and Hugo Chavez get richer and more powerful and more nuclear, and you continue to drive and fill 'er up and complain, just check out the reflection in your side window there if you're looking for somebody to blame.