New Martenson Report: Oil - The Coming Supply Crunch (Part II)

In this Martenson Report for subscribers, I continue with Part II of our discussion on what the next oil supply crunch will mean and steps you might take today to lessen the impact.

Oil - The Coming Supply Crunch (Part II)

Here's a snippet:

Executive Summary

  • Explaining Oil Pricing - oil prices are "set at the margin"
  • Oil Storage - When it's pumped out of the ground it has to go somewhere
  • Oil Price Behavior - slight supply and demand imbalances drive prices
  • The Total Shortfall - too little oil to support a robust recovery
  • Nothing Fails Like Success - the worst thing would be a rapid economic recovery
  • Timing - when will Oil Shock III arrive?
  • What should you do?
  • Investments, food, selecting a community, and an abbreviated buy list

In Part I of this report, I laid out the case that the combination of declines in the production output of existing oilfields and a lack of investment in new oil fields would lay the foundation for Oil Shock III.

This report will examine Oil Shock III by painting a number of possible scenarios, and then discuss steps you might take to weather the storm, when it arrives. I will help you translate current news and future projections into actionable information. My goal is to help you better understand what is going on and what you can personally do about it.

This is a companion discussion topic for the original entry at

Hello Chris:
As usual another awesome read. Thank you.
We purchased 3/4 of a cow with 2 friends. It it a sizable investment "your meat weighted 595 at $1.50 pd. That comes to $892.50." that I’d hate to see spoil. I do have a generator but it runs on fuel. I recall reading somewhere that most of our electricity comes from oil and coal.
I also recall reading on the blogs that you have a solar array.
Do you have any photos of it? Any details of it? Any dumbed down electrical explanations of it? We can heat with wood, and we do, and we can draw well water with the generator and we can collect rain water and we have 500 gallons (topped off) of propane. I’d just need to run 1 freezer and one freezer/frig (assuming I don’t have to buy a second freezer for my dead cow.
Thanks in advance

Chris thank you. This is the most thorough set of recommendations for adjusting to the next step in the descent that I’ve seen yet.

For anyone out there who hasn’t subscribed yet, do it now, even if just for a month, and read this report (and the two previous, if you think anyone close to you needs additional convincing).

Off to get DH to read this, so we can talk about our future…


Good report - most people don’t see it coming and we certainly want to stay ahead of the stampede on this! It’ll be like a herd of elephants all trying to get out the elevator at the same time.

We’ve been constantly updating our zero energy living just for all the reasons you outlined in this report and more. We figured there would be an energy shortage and a "mini-ice-age" sometime in our future. We were going for high food out-put with low energy input. Though we started our journey to energy independance over 2 years ago, we have only made a dent in our energy use because even our own food production is so energy intense!

Travel to family functions, doctor appointments and school/work are still our highest energy use, heating came next and electrical demands are soon to be met with home made wind turbines and few sets of solar pannels.

Canning, freezing and drying food all takes huge amounts of energy. We finally settled on a solar food dryer with wood backup heat. Our goal is to put away 2 years of dried food a year incase we become ill, the weather doesn’t cooperate or money got tight. We’ll be converting an old wet cellar into a root cellar sometime soon too. Raising feed for our animals is also on our list this year as we plan to keep chickens year-round and our dairy goats have multiplied so growing enough feed & hay will be worth all the eggs, milk, yougurt and cheese.

For our woodlot we are planting hybred poplars which are ready to cut in 3-4 years to the right diameter that means we no longer need a wood splitter. They re-grow after cutting so they won’t need to be re-planted. The wood lot is also for sheltering the young orchard so it is doing double duty. Once those are in we are doing a permaculture of strawberries understorying the trees and of course, no mow grass for pathways. I’m looking forward to strolling through the orchards an picking a fresh apple. . . by then I’ll have forgotten about al the hard work it was to plant it!

Warm Regards-


Hello EGP:
I’d be interested in hearing more about chicken food. We have about 30 hens and 2 roosters. I’m going through about 50#'s every 3-5 days depending on how many table scraps go to them and what makes it to compost.
I only have 3 acres to play with. About 1 is wooded and 1.5 will have sheep soon. Garden, greenhouse and mini lean to barn take up the rest.
Thanks in advance

When I drove up to Montague back in early March for Chris’s seminar, I can remember seeing several houses with solar panels just outside or close to Montague. The first thing that came to my mind was Chris was behind it! I knew I was getting close at that point. Laughing

Thanks for another great report Chris. After quite a bit of thought, last week I put my condo on the market. I had come to the conclusion that it doesn’t meet a lot of what Chris mentioned in the latest report; water, food, land, rural area, community, etc. I can’t believe how hard it was to go actually go through the motions of calling my realtor, but I did it! I wonder what people will think when they see my cabinets and closests full of canned goods and toilet paper? Smile

I’m looking at either land or a rural home with some land that is close to the remaining farms here in CT. One other thing that I’ve thought long and hard about is being closer to my family. Being of Italian descent, Italians are fantastic gardeners and are very resourceful. I plan to spend as much time as I can this spring/summer around my family’s gardens to soak in as much knowledge as I can. While I will be farther away from work once I move(I can still carpool and/or use the train), I think the short term pain will be more than made up for in the long run with a more sustainable as well as enjoyable lifestyle. Hopefully my actions and first steps may inspire someone else here who is on the fence on where to live.


I’m a big fan of the SimpsonsCool In this cartoon there are two very
good characters: Homer (a bad boy) and Flanders (a good one). They -
neighbors. Homer is a pretty stupid guy, thinking only about beer and
beef. Flanders is a clever man who always cares about future. Flanders
is always well prepared for emergency. Homer - never. But as emergency
comes, Homer always goes to Flanders and "Flanders, I have no food! I
know, you have. So give me your food!!!". What I want to say? It’s not
enough to be prepared for a crunch by yourself, if your neighbors
aren’t prepared at all. Why? Coz they simply will force you to give all
or at best part of your goods saved for bad times. So if you have
electricity but others don’t, in tough times, to my mind, it’s too
naive to think that others will not claim that you from you.


Can you smoke part of it? You might not want it all smoked but even some would cut down your freezer load. I don’t consider smoking to be the healthiest way of preserving stuff but several sharp pharmacist folks (Graedons) used to say that if you took a couple of vitamin c while eating smoked stuff, you acidified your stomach even more and prevented nitrosamine (carcinogenic chemical) formation. That’s what I do on the occasions when I eat smoked food.






As well as the smoking the meat, you might also consider canning a portion. Major pain in the arse, but another option.

Hello SG and Worker Bee:
I haven’t built a smoker yet, have a good book about it and a client showed me how to make a small one as well. We can extra stuff from the garden.
We have been down the store bought canned food and tried dried food and MRE’s. I like to eat so what can I say. As bad as red meat is I like it.
As a precaution I’m going to read up on solar. I have some books on it. Not to knock the authors but I think there has got to be an easier way to explain this. Take care


Real quick, dumb question from a chicken newbie (two in-city hens are all we have):

When you want the chickens to breed, do you put the roosters and a few hens together for a bit and then separate out those eggs and then separate the hens and roosters again or what? I guess what I’m wondering is how you get a new crop of chicks without worring that you’ll crack open an egg for breakfast and find a chick inside. Yuk! I suppose I could read a book or check out a chicken website (but then I wouldn’t get to make a post!)

  • LYS


I won’t poach (get it) the egg question, except to say there is a highly technical device for determining the fertilization status of the external embryo, which I like to call the "Highly Technical Device for Determining the Fertilization Status of the External Embryo, HTDDFSEE", or candle for short.



Great report Chris, this summarizes the enormous challenge I began researching and preparing for the moment I stumbled across the movie A Crude Awakening last summer.

In an earlier post I shared some graphs illustrating the marginal pricing effect:

I’ve already been working on many of the things you suggest. A lot can be carried with a bike trailer, low gears help a lot if you live in a hilly area. I decided to keep my trailer though my kids are outgrowing it.

Ultimately, rather than worrying about having the most efficient vehicle I’m preparing to just drive a whole lot less.

As I work to expand my garden, I suggest to everyone as new to it as me start small and start now so you have time to mistakes and learn before it really counts. You can learn and do a lot with just a few containers on your deck.

On the timing of supply and demand cross-over, is that based more on a return to economic growth and increased demand or to supply destruction as existing supplies decline and less investment is made in developing new sources.






Ok all, I am looking for some input.

I am active duty USAF and have no real home. In other words, I have lived here in England since 2005, but coming up in 2011 there is a high probability (98%) My family and I will be forced to move…somewhere.

With that said we have already done many things to better prepare as many others here such as planting a garden, building up a food storage, PM’s, adjusting investments accordingly…you all get the point I’m sure.

Having said that, this brings me to my question. Knowing that you don’t really have a home how does one prep on the major scale? Don’t get me wrong, I don’t feel unprepared by any means if that makes sense, but taking for example Dr. Martensons great recommendations (almost all of which I considered, even got pricing on solar panels, but stopped short under the unknown of whether or not I will be here).

Going down his main 5.

I was priced out of the hybrid’s when I got my car (2007 Ford Fusion), I don’t regret buying it, but to prepare I have bought a few cases of oil when it went on sale. I am also looking to get some filters and other parts just to have on the side. Does anyone know any tricks for storing extra fuel, or what companies allow you to buy fuel cards and top them up with gallons (I know I am in England, but would consider topping up ahead of a return to the states).

As for going solar(water). Is there a portable version? I don’t like the wording there…I just mean something that can possibly be set up with out construction workers mounting it to my house here? That way when I have to move I can bring it??

Insulation is not really an issue. I have been working on that since I bought the house as well as changing all lighting to low wattage bulbs.

I am very interested in wood-burning, and know I can do it here. This is one I will probably have to look locally though.


If anyone has any input that would be awesome. I don’t feel ill-prepared, but am looking to solicite ideas as to what others in my position would consider, or maybe I am already doing everything someone in my position can do.

Anyway, thanks for the input.


I think I saw that in a cartoon once when I was 8 years old. Didn’t realize it was real. Cool. Must stock up on candles an matches.

Hello Lemonyellowschwin:
We have 2 roosters (had 10 originally because we were so chicken stupid I thought you needed them (roosters) to get eggs - this is one thing I did without reading - never again will I not read and then do something).
Marsh got upset with how they were going after the hens.
We ate 8 roosters.
They really do fly headless, land a heck of a lot better than I did 1/2 the time - and I had a head on my shoulders.
We have 2 roosters left for about 30 hens.Chirpy and Runner.
If Runner pecks me one more time he may be dinner soon.
Chirpy is a pig, I doubt very much there is one hen with an unfertilized egg out there - ever. The guy has a serious obsession. Feel bad for the hens even after taking the axe to 8 roosters. Runner I wonder about, think he might like roosters over hens, or maybe like eating there is a pecking order here with chickens.
You could quarantine them but we didn’t. We only quarantine them inf they get hurt so the others don’t peck at the injury.
We purchased a small cheap incubator from for about 20 bucks and have 2 eggs in it now. It takes about 23 days for them to hatch, I’ll let you know in about 15 days how we make out. There is a way to tell if they are male or female upon hatching or soon there after in the chicken book we finally got.
Marsh read it, I was too busy reading about the economy last summer. She is the chicken guru, I just help the kids clean the lower level of the greenhouse and gather eggs and help feed and water them. I built my little guy an egg stand out of stone and put a small fridge in it and he puts the money toward his college fund. (After converting it to grams of gold). He yields about 18 - 20 eggs a day now. It is the honor system (well mostly we have CCTV security cameras all over and on the entrance.)

I feel your pain, I just about broke my left arm Friday nite as I slipped on the steps to our coop as I got rushed by one of my Cornish crosses.

We have sex-link, Rhode island reds, Cornish, and plan to get some Guinea foul this June because I hear they take care of snakes in the garden. What are you raising? Brown or white eggs?

We also just released 6 (now 4 are left) Mallard Ducks into the pond. I hear they have good eating eggs to, but have yet to try one.



Hello Rog:
We have about 9 white Leghorns, 1 silver Leghorn hen and rooster, 9 RI Reds, 2 Americanos, 3 Black Stars, 3 Red Stars, 1 Jumbo Cornish X Rocks (3 died of heart attacks before slaughter, I hope this one makes it to the slaughter cone and dinner table and doesn’t become hawk meat) and a few others…
We get white, brown, and tinted green eggs, oh, and light tinted brown.
Neat about the Guinea’s eating snakes. Our "free" range is enclosed in galvanized hardware mesh. We have a LARGE population of hawks so I’m afraid to let them in the garden. We do have snakes. Mountain Rattlers, various Black Snakes and Copper Heads. The electric fence keeps the bear out, snakes (all but black ones) are left up to the shotgun.
Take care
PS I hope your arm heals well and soon

Can anyone point me to information on the best way to invest to capitalize upon the coming oil shock? Some securities that come to mind: SLB, HAL, COS, USO, and of course the big oil companies like Exxon-Mobile.

I suppose a reasonable approach would be to diversify into a variety of things tied to oil, like:

  • Oil services providers like SLB and HAL

  • Oil companies themselves, like XOM and COS

  • Oil ETFs or ETNs, like USO

Well, thanks for the well wishes. I’d post a pic but who wants to see a swollen old purple arm?

That’s a really nice assortment. Are you closing in on just a couple of breeds, or are you going to maintain the variety? What do you think are the best birsd you have if you were to only have a couple?

I have a friend that used to have rattlers until he got the guinea’s. The only problem is that if your neighbors have them, once they hear the calls from the other flock, you will either have none or twice as many as they do what it takes to get together.

If you are worried about hawks, I think you can use a livestock guard dog like a great Pyrenees to find for your flock when you are not there. Typically you see them with goats or sheep, but they work for chickens too, and they sleep outside so you don’t have to treat them like a typical pet - and everything that comes with that.

I think it might have been a raccoon that got my first 2 ducks - but the last 4 went to school on the first 2 and now have been OK for 2 weeks outside unprotected.