Interesting Stuff Out There Today...

I wanted to bring your attention to a few things out in the 'sphere today.

First, there's an interesting take on the importance of Cassandras to the peak oil movement over at WorldChanging today. (EP's already been there!)

Second, an interesting post by the Watchful Investor linking a Federal Reserve study that reports that our current unemployment rate actually being as high as 8.7%, reaching Europe-like levels, just because people are choosing to stay out of the workforce.

Finally, here's a guest post by fan-favorite J:

"This article has some good stuff, which is strange for a rag like USA Today:

Nugget #1: "Futures quotes do not dip below Wednesday's $59.11 a barrel for September delivery until June 2008, by which time new supplies in Africa and the Gulf of Mexico are expected to be available."

Nothing else needs to be said, if you ask me...all it takes is continued warm Atlantic waters and increased storm activity. Never forget that tropical storms can and often do spawn on the African coast, and those platforms are no different than the ones in our own Gulf of Mexico.

Nugget #2: "In addition, tiny Murphy Oil said Wednesday that its quarterly exploration expenses rose 72% to $40 million due to energy searches in the Congo and Malaysia."

Murphy is the former owner of ODECO, which used to hold the largest fleet of offshore rigs in the world. Their primary oil comes from older shelf platforms and deepwater drilling in the Gulf of Mexico. REALIZE that their increased costs are TYPICAL of the entire industry. Murphy just happens to need to share this with stockholders due to their reduced dividends from international ventures. Larger companies can hide these numbers more effectively, and will always hide everything they can about their inner workings.

Nugget #3: "There's just not that many corners of the world left to go drill holes in anymore," affirms PFC Energy analyst Seth Kleinman, who says the exploration activity underway will be accompanied by a consolidation wave in a struggle of the fittest. "One sure way of adding to your reserves," he says, "is to buy them. And companies are sitting on top of a lot of cash right now."

Everybody in this business knows that another wave of consolidation is coming. THOUSANDS of petroleum engineers are banking on this to be their last 'hurrah' before cashing out and retiring. They already have exit plans based on bonuses yet to be had, stock prices yet to be reached. But everybody knows the reserve picture, and so the confidence level is very high that these exit plans can be carried out with financial success. The fallback position is to continue working. What will be left in the oil patch will be a shadow of what we have today, just when we are getting things rolling from the new capital influx."

J also suggests having a read of this piece.

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How about the 6 million or so barrels per day that we will lose to depletion between now and 08?

Regarding the Cassandra article, I was a network manager during the late 90s, but never thought Y2K would be all that serious. But it was. Not because anything happened, but because I, and many others, spent much more than usual on IT to prepare for Y2K. In 2000, I spent very little, having already upgraded our moldy old machines and software. I suspect a lot of people did the same, which may have provided a pin to prick the technology bubble.

Now we're talking about pins that may prick energy bubbles, housing bubbles, debt bubbles, environmental bubbles.

oh yeah, i forgot that piece of the puzzle. i was working in UNIX systems (few core Y2K issues, a few application problems to be fixed, and i fixed a handful of those). BUT we did really well because one easy way out of Y2K was to just scrap your old COBOL mainframe, and move to UNIX. so sure, another way the problem was "fixed" was that people turned off systems that couldn't be fixed.

... but as another take on this, i think Global Warming might be a bigger parallel for Peak Oil. it shows what happen when people don't listen to their scientists/engineers, and "select" for good news.

Odograph is square on with the Y2K explanation
It was predominant in legacy COBOL code

Worse case scenario for Y2K was that some (only some) transactions would have to be hand corrected because the machines screwed it up

You cannot hand correct OIL !!!

Once the flow fails to feed our hunger fast enough, no amount of hand ringing is going to patch over the shortcomings.

The oil patch tiles of our Earth Shuttle are coming unglued and our craft is starting its unstoppable descent down Hubbert's slope.

So the following is clearly a comforting thought:
Hey, everything went A OK with Y2K
Nothing to worry about this time either!!!

I for one am greatly relieved.

Whenever I read stuff about how bad Europe is because of high employment, I always ask myself: "Is this using the exact same metric?" ... Same with GDP, inflation, etc. I know the government does a lot of magic on these numbers to make them appear better than they really are. Hedonistic inflation, for example.

Do European countries count people that stay home in their calculated unemployment rates? If not, then their rates are actually higher too.

Again this is a simple comparison of rates. When you dig beneath the surface things are not very good in Europe. Example: in France 61.3% have been out of the work force for more than 6 months, and 41.6% for more than a year. The comparable U.S. numbers are 21.9% and 12.7% repsectively.


In the UK, the government counts only those people who are 'actively seeking work' and are claiming a particular benefit because of it. To get the benefit, you have to regularly demonstrate you're seeking work. This means showing local officials a steady stream of job applications and being willing to take almost any job they offer you. Then you get counted.

It's worse in Germany... ;-D

Eric -

Greenspan and the Feds have distorted the GDP and CPI numbers into a meaningless morass of mungified excrement. If you want to get a handle on it, you have to go back to when Volcker was at the Fed and use that system. Doing so yields unmanipulated unemployment around 9% and the unmanipulated savings rate in America at +/-0% - pretty exciting, eh?

And this is the exact way the revisions were done (have fun deciphering this!):

Revision of the Personal Income and Outlays Estimates

Personal income, personal outlays, DPI, and personal saving are revised beginning with
January 2002 to reflect the results of the annual revision to the national income and product
accounts (NIPAs) released last week. The NIPAs usually are revised each July to incorporate
newly available and more comprehensive source data, as well as improved estimating

Annual revisions to the estimates of personal income and outlays, which begin with 2002, are
shown in table 12. Changes in revised and previously published monthly estimates of personal
income, DPI, PCE, personal saving as a percentage of DPI, real DPI, and real PCE are shown in
table 13; changes in revised and previously published annual and quarterly estimates are shown in
table 14.

Personal income was revised up for all 3 years: $3.0 billion, or less than 0.1 percent, for
2002; $7.3 billion, or 0.1 percent, for 2003; and $23.7 billion, or 0.2 percent, for 2004. For
2002, upward revisions to compensation of employees and to personal dividend income were
partly offset by downward revisions to rental income of persons and to personal interest income.
For 2003 and 2004, upward revisions to compensation of employees, to personal dividend
income, to personal current transfer receipts, and to farm proprietors' income were partly offset
by downward revisions to nonfarm proprietors' income, to rental income of persons, and to
personal interest income.

Personal current taxes was revised up $0.6 billion for 2002, was revised down $2.0 billion
for 2003, and was revised up $6.5 billion for 2004. DPI was revised up for all 3 years: $2.4
billion, or less than 0.1 percent, for 2002; $9.3 billion, or 0.1 percent, for 2003; and $17.3
billion, or 0.2 percent, for 2004. The percent change from the preceding year in real DPI was
unrevised at 3.1 percent for 2002, was revised up from 2.3 percent to 2.4 percent for 2003, and
was revised down from 3.7 percent to 3.4 percent for 2004.

Personal outlays was revised down for all 3 years: $23.2 billion for 2002, $53.0 billion for
2003, and $19.4 billion for 2004. Revisions to PCE accounted for most of the revisions for all 3
years. The personal saving rate (personal saving as a percentage of DPI) was revised up for all 3
years: From 2.0 percent to 2.4 percent for 2002, from 1.4 percent to 2.1 percent for 2003, and
from 1.3 percent to 1.8 percent for 2004.

Gotta love seeing your tax dollars at work...