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DrumBeat: January 3, 2007
Posted by threadbot on January 3, 2007 - 10:05am
Science activists blast ExxonMobil on warming
Alden Meyer, the Union of Concerned Scientists’ strategy and policy director, said in a teleconference that ExxonMobil based its tactics on those of tobacco companies, spreading uncertainty by misrepresenting peer-reviewed scientific studies or cherry-picking facts.Dr. James McCarthy, a professor at Harvard University, said the company has sought to “create the illusion of a vigorous debate” about whether humans are behind global warming.
Iran Cuts Gas Supplies To Turkey To Meet Domestic Demand
Iranian authorities say the country has stopped supplying natural gas to neighboring Turkey in order to meet growing demand at home this winter, Radio Farda reports.Iranian Oil Minister Kazem Vaziri Hamaneh said he had apologized to Turkey's energy minister but added that he hoped the opening of a major gas refinery in Iran's southern Fars Province by the end of this week would help solve the problem.
Eleven of Iran's provinces are currently facing gas shortages, including some of the coldest areas like Kurdistan, Zanjan, and East and West Azerbaijan, according to Radio Farda.
An interview with Subdivided filmmaker Dean Terry
There was a higher and higher crime rate over there, constantly, and the response is, you know, more security systems, big bars on the windows, instead of what like Robert Putnam says, the leading social scientist in this whole area, who I interviewed - he has this thing in there, the number one determiner for the crime rate is how many people in the neighborhood know each others' first names. Not how many police, not how many alarms - we need to figure out ways to strengthen our community bonds, rather than figure out ways to create higher walls and more gates and all those kinda things. It just doesn't work: all you do is lock yourself in and become more fearful, and what you really should be striving for is to be more open to each other, rather than more closed.
Most widely read at PeakOil.com 2006
Here are the best read stories from Peakoil.com newsboards throughout 2006. Stories have been arranged according to month, to counterbalance the advantage older stories might have over newer ones. Unforunately, it should be noted that stories may not always be available at their original sources anymore.Nevertheless, the list makes for an interesting, let's say, undulating plateau between hope (biggest ever oil field off US coast), disbelief (CERA: "Peak Oil" theory is wrong) and despair (Fiscal crisis for Mexico as oil starts to dry up).
The peak oil story during 2006
Key factors behind 2006’s production reality (using O&GJ data):• Depletion continues to overwhelm new production in the North Sea (-9.6%);
• Most regions were flat (Asia-Pacific +0.6%, Africa -0.2%, Western Hemisphere -0.4%);
• Only Eastern Europe and the Former Soviet Union increased substantially (+4.3%);
• OPEC increased 0.7%, though production in Iran and Saudi Arabia declined; Iran has genuine production problems, while Saudi Arabia claims they cut production voluntarily.
So the key question here: have we reached peak production? We maintain that it’s too early to tell. ASPO-USA won’t be surprised if production of total liquids increases moderately over the next few years. However, for that to occur, we would expect that some disturbing recent trends-from geologic limits to nationalism and geopolitics-would have to slow if not reverse. But more importantly, we assert that the combination of difficulties posed by peak oil production are sufficiently challenging that we should act on that information now rather than delaying action based on hopes offered by optimists.
The Top Renewable Energy Stories of 2006
OPEC Output Cut Seen as Key to Oil Prices in 2007
For oil traders returning to trading pits on Wednesday, the new year begins with something that hasn't preoccupied them in years: OPEC production cuts.
Enlarged Membership to Boost OPEC's Clout on Oil Market
The Organization of Petroleum Exporting Countries (OPEC) started enlargement for the first time in over 30 years by admitting Angola at the beginning of 2007, and was poised to tighten the cartel's grip on world oil market.
The $20 drop has given consumers a false sense that the parabolic rise in oil prices is over. This couldn't be further from the truth. While it's likely we'll continue to see some weakness in the sector over the next few months, the long-term fundamentals are still in place that could propel oil prices over the magical $100 mark.
America’s healthcare predicament will be resolved in the context of the worldwide energy emergency idiomatically known as “peak oil.”
Europe Wary of Implications of Sakhalin Loan
The European Bank for Reconstruction and Development is likely to abandon a loan to Sakhalin II, the huge energy project in the far east of Russia, after Royal Dutch Shell PLC and its two partners were forced to sell a 50% stake in the venture to Russian natural-gas giant OAO Gazprom. The European development bank -- set up in 1991 by Western governments to support the private sector in former Communist states making the transition to a free market economy -- had planned to lend Sakhalin II about $300 million.
Within OPEC there are pro-American group and anti-American group. As oil and gas needs rise in coming years, Russia and anti-American OPEC groups will join hands. That may include Venezuela, Iran and so on. There will be two distinct groups under two superpower blocks. First the pro-American Western and Middle Eastern group of nation. Then there will Russia led block of countries.
South Korea’s trade surplus shrinks sharply in 2006
SEOUL –– South Korea posted a 28 percent drop in its trade surplus last year despite record-high exports, the government said Monday....Imports were fueled by high energy and raw material prices, it said.
Nigeria: OPS Raises Alarm On Fuel Prices
The Organised Private Sector (OPS) yesterday raised alarm over current high cost of petroleum products resulting from acute scarcity warning that the trend if unchecked would spell doom for the industrial sector and private businesses.
Iraq Government Focusing on Rebuilding Oil Industry
Oil sector continues to miss opportunities
KUWAIT CITY: Kuwait Petroleum Corporation (KPC) made a mistake when it missed several good investment opportunities and disposed of its productive centers in 2006, says oil expert Hajjaj Bukhadour.One of the most important shortcomings faced by the oil sector in 2006 was the decline in the level of maintenance of oil installations in spite of the millions of dinars spent for this purpose, he adds.
2007 Could Be The Year of Biomethane
Biomethane, chemically the same as natural gas yet available from essentially any kind of organic waste, is emerging as a viable renewable alternative to fossil fuels.
Australia: Minister explores tidal power
Biofuels have been approved for commercial sale in France as of 1 January 2007, says the French Finance Ministry. The plan calls for new pumps to be installed at between 500 and 600 points of sale before the end of the year. According to Le Monde, "green fuel" containing up to 85 percent ethanol and 15 percent gasoline should be available in "stations-service classiques" by September.
The New Energy Debates: Will the new Congress act to change our disastrous energy policy?
James Kunstler: Forecast For the Year Ahead
The major trend on the oil scene the past 12 months is the apparent inability of the world to lift total production above 85 million barrels a day — with demand now rising above that line. It is unclear how much more demand destruction will come out of the Third World before bidding intensifies between the developed nations. One commentator in particular, Dallas geologist Jeffrey Brown — a frequent contributor on the web's best oil debate site, TheOilDrum.com — is advancing the idea that we are entering an oil export crisis that will presage a more general permanent world-wide oil emergency. Brown holds that the major oil exporting nations are using so much of their own product, because of rising populations, that their net exports are falling at an alarming rate, perhaps as much as 9 percent annually
Heating costs forecast to drop
Home heating bills this month will drop 10 percent below January 2006, despite expectations that customers will use more natural gas to combat a colder winter this year, Pacific Gas and Electric Co. said Tuesday.The San Francisco-based utility said its customers can expect to save $12.37 on average. It credited long-term purchasing contracts that avoid price spikes and its pipeline and storage capacity for helping keep prices down.
New Zealand: Commissioner calls for more local power
Promoting local and small-scale generation would bring "greater resilience" to New Zealand's electricity system at a time when climate change and fears over peak oil had heightened concerns about the security of supplies.
"Peak Oil" Despair Versus Energy Innovation
In fine Seattle fashion, the group wants to dialog about "the emotional, spiritual and philosophical ramifications of life-altering resource scarcities." That may yield ambient methane, but developing real energy alternatives take systematic innovation and capital, not vegan potluck hand-wringing. One entirely more more constructive approach is plug-in hybrid vehicles which run on conventional fuel and electricity stored during off-peak down times.
Nabors warns profit to miss estimates
Nabors Industries Ltd. warned on Wednesday its fourth-quarter earnings would fall short of Wall Street estimates as weakening gas prices cooled demand for its drilling rigs.
Animal fats touted as future fuel source
DEXTER, Mo. - Jerry Bagby is typical of the oil men who are prospecting for a fortune in the Midwestern biofuels boom. He's convinced there's oil in these hills — and he's found a well that no one else is using.Bagby and a longtime friend have cobbled together $5 million to build a new biodiesel plant on the lonely croplands outside this southeast Missouri town. They're betting they can hit paydirt by exploiting a generally overlooked natural resource that's abundant in these parts — chicken fat.
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Lessons for Peak Oil from Framing of the Climate Change Debate?
COMMUNICATING CLIMATE CHANGE: Revkin Describes an "Invisible Middle" of Scientists Concerned Over 'Pandora's Box' Claims of Pending Catastrophe
Communication professor Matthew Nisbet's Framing Science blog comments on Middle Stance Emerges in Debate Over Climate from the 1/1/07 New York Times
FWIW: Real Climate: "Climate Science from Climate Scientists" blog's take on the New York Times article: Consensus as the New Heresy
Prometheus:"The Science Policy Weblog" post Real Climate Comment as comment to above blog post.
Climate Science: "Roger Pielke Sr. Research Group Weblog" post A Breath Of Fresh Air In the Media On Climate Reporting - An Interview and Article By Andy Revkin
Gristmill: "Environmental News and Commentary" story My problem with Revkin's article
Chris Mooney's The Intersection blog comment What Does "Non-Skeptic Heretic" Mean?
And there are probably more posts in here someplace.
The suggestion that chicken fat should become a major fuel source is idiotic - uh, yeah, because factory farms and its animal concentration camps are soooooo environmentally efficient. Not. If humans are going to survive with an environment in tact - the mass "production" of animals must be phased out. If you look at the facts, it is hard to think of a more destructive industry - the products are very energy/water intensive, create incredible amounts of waste and enviromental destruction, directly cause most chronic diseases, causing untold human as well as animal suffering... but hey, I guess if you don't care about the planet, biodiversity, people, or animals, it's a darn good idea! Incredibly destructive companies like Tyson are just not going to survive energy descent, unless they morph into something sustainable and beneficial (good luck on that).
http://www.veganoutreach.org/whyvegan/environment.html
The suggestion that chicken fat should become a major fuel source is idiotic - uh, yeah, because factory farms and its animal concentration camps are soooooo environmentally efficient.
The other thing missing from the story is that those guys are wrong: Chicken fat is being utilized for biofuels. In fact, contracts are being inked right now to use waste animal fat in biodiesel production.
Rendering is an ancient business. I think maybe because it is not something we talk about in polite industrial society, we forget that it's out there, and assume "waste."
The interesting thing might be that fuel uses might pull rendered fats from their traditional uses, whatever they might be.
BTW, I just noticed that my canned Organic Black Beans from Trader Joe's, actually come from China. Should I have a moment of panic as I think of "organic" and "china?"
Given what I've read of pollution in China, I am trying to avoid all foods from China. That's in addition to the other reasons, such as trying to eat more locally.
I'm glad you made this excellent point on rendering. To often we assume it's "waste", ie landfill, and don't realize the myriad of uses that carcasses and trimmings are put to. Perhaps it will help to increase the price paid for the material.
It's hard to term anything organic as waste. Yet a side point of recent trends I've noticed in rendering is the increasing difficulty, no doubt also fuel related, in getting the rendering truck. Times past I could just call, and it'd be here within a couple days. Now you have too be "on their route"-have a weekly or monthly pickup. It's very diffecult to get an on-farm pickup. So the animal rots in the field, where the coyotes and magpies clean it up. Which is just as well, the price never amounted to a hill of beans.
Last year while touting the merits of the CSA I belong to, I found a few cans of these TJ's Organic beans stamped "China" in my cupboard. It was very frustrating to see that, as a can of these can be added to just about any meal. I've stopped buying them, since even if "organic" means the same in China (I'm very skeptical of that one), the trip around the world probably canceled out any benefit to the planet by buying organic. Since then I have found them with and without the China stamp on them. I wonder if this means that the ones not stamped are from the states (probably CA), or just that they don't have the stamp?
I personally will not buy anything labelled Organic that is not produced in the country that I am purchasing it in.
- Environmental benefits are cancelled out or worse
- Quality control or even "what is organic" is unclear
- one does not know what controls are there at the grower/packager level or in the supply chain to ensure that the product was indeed organic
In addition to China and others I believe that in Europe too there was some recent loosening of organic standards.
Also various special interest groups have succeded in preventing passage of labelling rules that would have forced retailers to label and stand behind country of origin labels - so
- read all lables carefully (when available)
- let the buyer beware
I would say that buy organic but try and ensure that it was produced as locally as possible - and definitely within your particular national border.
Well, finally something about which I feel qualified to add something to the discussion! Beans!
As an vegetarian and mostly organic house w/ two smallish kids, we found ourselves going through copious amounts of organic, canned beans--from TJ's and elsewhere. We were even buying by the case! Then, after very good luck making our own soymilk on a regular basis (see http://www.soymilkmaker.com/ ) we thought we'd try our long-forgotten crock pot...
Long story short: the cheapest, best-tasting, low-salt, perfectly cooked pinto, black turtle and pinto beans you've ever had! AND, we figure the small amount of electricity used for cooking is better than all of the energy to process and can and transport that can from ???. (Yeah, I know the beans themselves were trucked, but hey, we're tryin!)
Want to try it? Three cups cleaned, dry beans of your choice. Eight cups of water. Pinch of salt. Cook in your crock pot on high while you sleep--wake up to awsome beans. It really couldn't be any easier, plus, we've always (usually) got cooked beans ready to rip (!) in the fridge whenever we need them.
I must repeat how much tastier these are compared to any canned bean.
Salud!
Thanks, I'll try a smaller batch in my smaller crockpot ... which only has one speed.
Odograph,
I have two crockpots, one of which usually has a scrumptious batch of chilli con carne in it; the other one alternates between cabbage and potato soup (with soup bones) and whatever else I feel like, such as chicken with organic brown rice.
In the winter time I can keep crockpots outside (covered from inquiring animals) instead of the refrigerator when space gets scarce. One nice thing about my two-crockpot system is that whenever people stop buy unexpectedly, there are always a few quarts of soup for them--that combined with my most excellent homemade bread (organic stone-ground whole wheat flour) makes me a nearly permanently prepared host at very little effort. (Bread freezes very well and can be quickly thawed in the microwave.)
Delicious crockpot food not only can be cheap and nutritious, I have found that it helps me in weight loss, because "real" food is far more satisfying than the typical U.S. junk food diet.
Robert:
(Hijacking a bit here) Any comment on these 2 stories on corn-based ethanol that are being put out to farmers? Given the political clout coming into alignment here (Archer Daniels Midland, Khosla, the farm vote and the mantra of independence from ME crude oi), I read this as a steam roller for corn ethanol to the deteriment of sound energy policy and investment in advancing other alternatives, such as PHEVs.
Your juxtaposition of ethanol producers with those calling for energy independence is misleading.
What some politicians and activist groups espouse is a far cry from the reality on the ground and no one in the ethanol community is saying energy independence can be met with ethanol alone.
Ethanol and biofuels in particular, are but one important part of a total, overall solution to mitigate the liquid transportation fuel crisis that is Peak Oil.
Khosla and other proponnents such as myself who believe ethanol to be sound energy policy, have gone to great lengths to explain that corn ethanol is but one step in an ongoing drive to a more efficient and higher yielding production path.
And in the case of PHEVs, I have personally advocated the procession to Bio-PHEVs where R&D and investment monies for both technologies is warranted.
My apologies for applying too broad a brush. I meant to refer specifically to congressional policy making and funding decisions. Given the current political and fiscal environment, I doubt that their planning and funding horizons will extend much beyond the 2008 presidential election and that their thinking will be fairly shallow. Rather, I expect they will stop at the first solution appearing to fall within the boundaries of the calculus of the 2008 vote and corn-based ethanol fermentation appears to do that, irrespective of its EROEI or the potential of other solutions.
Yes, unfortunately that is one of the drawbacks of the US political system, however, there are some new elements in 07' that should affect the decision making process, namely, the transition to a Democrat run House and Senate.
Domesitc energy security is very much a non-partisan topic and coupled with a likely guest appearance in this year's State of the Union, the Dems will be also forced into substantiating their Energy Independence platform. Of course they will soon discover the reality of the situation at hand and thankfully there are dedicated people behind the scenes at NREL and similar US institutions like INL and PNWL who have the necessary expertise to show them what is actually doable.
Yes, unfortunately that is one of the drawbacks of the US political system, however, there are some new elements in 07' that should affect the decision making process, namely, the transition to a Democrat run House and Senate.
Domesitc energy security is very much a non-partisan topic and coupled with a likely guest appearance in this year's State of the Union, the Dems will be also forced into substantiating their Energy Independence platform. Of course they will soon discover the reality of the situation at hand and thankfully there are dedicated people behind the scenes at NREL and similar US institutions like INL and PNNL who have the necessary expertise to show them what is actually doable.
This also spells trouble for the pet-food industry. It may get very expensive to keep Fido or Tabby in the manner to which they have become accustomed.
I wouldn't be surprised, as we go down the backslope of PO, to see a drop in the number of songbirds as millions of backyard bird feeders are left empty because of non-existent or limited bird-seed supplies.
Or , as the song goes: 'four and twenty blackbirds baked in a pie...''
I mostly agree with veganmaster on this issue. The first world definitely consumes far more meat than it should, and that meat is produced in a scarily destructive, and morally questionable way. Grain consuming animals are especially suspect for food production. Because their feed isn't easily consumed by humans, ruminants can occupy some higher ground, except that the conventional system feeds them grain anyway. But making a higher value product from animal fats that are going to be produced anyway isn't that bad of an idea, especially if it will counter some fossil fuel use. (Whether it does reduce fossil fuel use is an important point.)
More importantly, lets not lump all livestock production into the same category as the dominant conventional form. One can produce and consume meat in an environmentally sustainable and healthy way. To a point, one can even keep the welfare of the animal in mind. Feel free to disagree, but I believe that supporting the members of the livestock industry that most closely satisfy my concerns is a better strategy than condemning the industry as a whole. That is one of the reasons that I'm not vegan, or even vegetarian, but consume meat two or three times a week and animal products (dairy, eggs) nearly every day. Most of these products come from producers that I feel are moving in the right direction. More and more, since I have the will, time, and land, I'm producing these products myself (an eye-opening experience).
Spoken as a true Calgarian. Alberta ranchers produce some of the best beef in the world where great pride is taken in producing a quality product. And as Europe's slow food movement winds its way to North America, one can hope that quality will overtake quantity like it used to.
Well, at least it seems certain that Quantity will be overtaken, one way or another..
Obviously, Jim Kunstler has excellent sources.
Hello WT,
Good for you! Good for TOD! Jim Kunstler's mention can only help TOD get more eyeballs over time.
Here is a photo of detritovores desperately trying to quench their thirst, probably just moments before 'demand destruction'.
http://photoblog.msnbc.msn.com/archive/2006/12/19/21569.aspx
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Yeah... it's unfortunate Jim doesn't know squat about ethanol though.
Happy New Year Drummers!
That is one frightening photo!
Yep, if that was a stream of beer leaking out of a broken vat or pipeline from a nearby brewery--I would be among the first sucking up the dead yeast & suds. But considering just how explosive that much evaporating gasoline is-- I would trying to put some distance between me and the inevitable flame front. Recall what happened in Mexico when leaking volatile liquids exploded in the Guadalajara city sewers [7.1 on the Richter Scale!]:
http://www.semp.us/biots/biot_356.html
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Dante at PO.com (as usual) had some interesting points about the inventory reports.
He pointed out this article, originally appearing in the WSJ.
Oops.
Dante further notes:
Leanan,
You raise most interesting questions as to why we live in a "reign of error." These questions occurred to me first back in 1958, when I noticed some bloopers in a leading college psychology textbook, and since that date I've made a hobby of collecting silly mistakes in textbooks. There are a remarkable number of them, and I think the two main reasons are:
1. Sloppy reading or research, including lack of copy editing.
2. Prodigeous ignorance on the part of writers and editors.
One of my alltime favorite mistakes was in an early edition of the excellent Colander text on principles of economics. For one or two editions the date given for the invention of money was 7000 B.C. This is an obvious mistake, because 700 B.C. (Kings Midas and Croesus) is the correct date, but nobody knew or cared to correct the mistake until I wrote the publishers. I have noticed even more silly mistakes since the advent of spelling and punctuation checkers; IMO they have multiplied errors by about a factor of three. Copy editing is seldom done "in house" by book publishers anymore, and quality control in this field is about what you get in Chinese-made compact flourescent bulbs.
Not to get off topic (though I'll do it anyway, right now), but I was stunned at all the CFL trouble people have had on the other forum.
I've used the things in every light that I own (the cheap ones too...) for about 10 years now, and they've lasted something like 5-10 years on average. Never had any problems with them, except for one that I dropped. :-)
Just saying, it must be some electrical problem that the things don't like. Maybe using american (60 hz 120 volts) bulbs in european structures (120 hz, 220 volts, IIRC)?
Anyway, just saying....
I guess that errors placed in supply reports that bump up inventory quantity that are later quietly corrected is another mechanism to drive oil/gasoline prices lower; similar to the change to the Goldman Sac’s commodity index by reducing the index holding value of gasoline, forcing investors to dump gasoline futures at a perfectly political advantageous time.
Sudden supply increases make headlines.
Does anyone know what time period the error correction was for?
From the WSJ:
I have heard, a while back from at least a couple of independant sources one of which I am pretty sure was Financial Sense Online, that the weekly gasolene / distillates / crude stocks data is statistically derived rather than being actually measured. If I recall correctly actual measurement happens semi-annually, I think at fixed dates rather than a partial rolling basis.
I really ought to research the facts on this but my time is short ATM. If anyone here knows the truth of this I'd be most grateful if you would enlighten us.
Dante says the recalibration is done quarterly. The inventory report is taken a lot more seriously on those dates.
Does that correction put our crude stocks down into the ranges that previous years would lead us to expect, or are we still above the top boundary, in general? I thought the November crude numbers had us above by something like only 3-5 million barrels, right?
Just wondering if that rosy data was an errata?
Bob
Of course it does.
If it didn't, the doomers would be harping so loudly right now that this thread would contain nothing else of use :P
Wow. After reading the comments on the Peak Oil Despair article at the poster's site, I am dumbstruck by what we are facing in trying to educate people about Peak Oil. In a single read through I found abiotic oil idiocy, God will save us idiocy, Liberal freak conspiracy idiocy, The Market will save us idiocy and Tar Sands/Coal will save us idiocy.
I know I should get out more, but there's only so much surfing I can do at work. It simply had not occured to me that (assumed rational) people thought all this stuff anymore.
In case I haven't said this before: thanks to everyone at The Oil Drum for hosting a reasonable, equitable and rational debate on the subject of peak oil.
I couldn't agree more about the idiocy part. I think the reason people come up with this crap is fairly simple: none of it costs money and none of it requires any changes in anyones lifestyle, some almighty power (god, the market or technology) will save us from having to move our asses.
It's as simple as that: people are lazy, intellectually as well as physically.
The real answers are, of course, out there for decades: conservation and renewable energy sources. Conservation means having to drive a smaller iron, which to many will feel like genital amputation. Renewable energy sources will add cost to the current energy generation infrastructure. And it obviously sucks having to pay more, even if it is not going to be nearly as much as most imagine.
Abiotic oils isn't necessarily idiocy. It is if people think that we'll never have trouble finding new oil, but don't connect the theory itself to the cornucopians that use it to advance their agenda. The theory is sound. It does look like at least some oil is abiotic in origin. For instance, look up "Lost City" to see some hydrothermal systems that produce heat and methane through serpentization of periadontite (spelling is all over the place here, I'm sure).
Wrong! Abiotic oil is total idiocy!
Wrong again! The theory is complete idiocy, totally idiotic, dumb, ignoriance gone to seed, down in the dirt stupid! There is no oil of abiotic origin.
Ron Patterson
Abiotic oil no, abiotic hydrocarbons such as methane of course yes. Maybe this is where some confusion lies. However, the last thing I want us to do is go after the methane hydrates and finish destroying the earth.
Methane hydrates are generally accepted as biotic, oops.
Dude, you don't know what you're talking about. Check out the wikipedia abiotic oil page, it's pretty compelling. In fact, the first experiment that proved it (pretty conclusively, BTW) was the drilling in scandinavia where all previous theories proposed that there couldn't be oil, but the abiotic theory thought there would be, sure enough, it was found.
There is a lot of very compelling evidence for this, don't dismiss it because you think it infringes on your holy held beliefs. It doesn't, btw infringe upon what you think it infringes upon, but of course you don't understand the theory anyway, so why do I bother.
Even if abiotic oil weren't idiocy (which according to ALL available science data it is), the thought that an unlimited amount of abiotic oil would be at all useful is idiocy. Revisiting highschool chemistry, one can point out that oil by itself does not release much of any energy. It has to be burned with oxygen to do that.
So unless the abiotic oil folks also have knowledge about the location of unlimited abiotic oxygen wells (which are hopefully WELL seperated from the oil wells... or else the earth becomes a giant chemical bomb), and unless they also know how to dispose of the CO2 generated by that reaction, we can file "abiotic oil" under "other disturbances of the human mind", very much like creationism and pyramid power.
A bit over a year ago I briefly dismissed abiotic oil:
A very few people do not believe that oil and other fossil hydrocarbons are produced from dead plants and animals = "biotic oil", they believe in "abiotic oil". This is a good discussion of that possibility:
http://www.museletter.com/archive/150b.html
(unfortunately the above link doesn't currently work and RH's new site doesn't seem to have that Museletter on it at present)
I agree with the above link and think that abiotic oil is incorrect for at least 99.9% of the oil we find. If you want to know more about abiotic oil try these, but I think it is a false idea and not worth reading about:
http://www.fromthewilderness.com/free/ww3/100404_abiotic_oil.shtml
http://en.wikipedia.org/wiki/Abiotic_oil
and a series of 3 articles exploring in detail various facets of abiotic oil:
http://www.fromthewilderness.com/free/ww3/102104_no_free_pt1.shtml
http://www.fromthewilderness.com/free/ww3/011205_no_free_pt2.shtml
http://www.fromthewilderness.com/free/ww3/012805_no_free_pt3.shtml
I'd be interested if you can find any concrete evidence of abiotic oil's existence. As far as I'm aware no oil company has drilled or explored for abiotic oil to date - but oil companies' disbelief is no guarantee that something isn't true ;-))
i dont think anybody can say that there is no abiotic oil and i dont think you will find many scientist who say that there is absolutely none. but the quantity so far discovered, if any, is insignificant.
For abiotic oil to exist, there would have to have been carbon and hydrogen somewhere below the earth's surface, mating up to form carbon chains with hydrogen atoms attached [ie., oil]. But hydrogen is a very small molecule, so it would percolate upwards quickly and disappear [this is also one of the major problems to be overcome to have a 'hydrogen economy']. So whatever would have kept the hydrogen there would have to be impenetrable, and thus the oil could not possibly have percolated up to a depth at which it could be found. So even if you want to believe in abiotic oil, you have'nt proposed a solution to finding more.
i am sceptical about your theory as to how aboitic oil could or could not percolate up to where it could be found. and before you label me as abiotician let me state that i am not. but do you belive that jupiter is made up of mostly methane ? and if so do you deny the existance of abiotic methane ? imo this is the strongest argument i have heard from the abioticians as to the existance of abiotic methane ( and oil by polymerization )
So much writing, so little understanding. First of all, the mechanism is generally accepted to be some variant on a serpentization like reaction that creates methane from unstable periodontite like minerals. This is the sort of reaction that (verifiably) runs the lost city, but of course you wouldn't know that, as you know nothing about the theory. Nobody thinks the core of the earth is one big ball of methane.
Now, how does methane percolating up through fissures turn into oil, well several means are likely. Various polymerization reactions as the temperatures and pressures change might be possible, but it's also likely that it would require some sort of methane eating bacteria deep within the crust. In any case, the heart of the theory is that not ALL oil is likely to have come from above, and it has been proven pretty conclusively by repeatedly drilling in places where no conventional oil is thought to be possible, but which have large deep fractures that would allow for easy movement of gas from deeper underground, and (lo and behold) finding oil.
well ok, and i dont claim to have a vast knowledge of this theory or any other theory that might explain how abiotic oil might exist in "vast quantities" within the earth's crust. and frankly i dont think humans have enough knowledge of the physics or chemestry of the earth to explain every phenomonom. i only pointed out that methane apparently exists within the universe apart from a biotic processes . and i might add that helium is produced from sedimentary rock ,probably not biotically generated.
My angry rant wasn't against you.
Though as a side note, I think the problem is this. The abiotic oil guys are claiming that it is probably NOT true that every drop, every molecule of oil on the planet was once a living thing basking in the sun on the surface. By simply finding some oil that they think is highly unlikely to have originated this way, they have essentially proven their case.
Various political groups with an axe to grind start making up things about "vast quantities", which has little if anything to do with the original theory, and suddenly the environmentalists are throwing red paint on the scientists who are just trying to understand the world a little bit.
Anyway, this is why I despise greens almost as much as economists, and I don't think I'm entirely alone in this.
Also, of course I never said anything about "finding more", just that the theory itself is pretty sound. Guys like you of course dismiss it, not because of any problem with the theory, but because it's politically problematic, as it's used by the cornucopians. Rather than explain that this is probably right, but it doesn't mean what the cornucopians think it means, you just pretend that the theory itself is false. Have some integrity.
Net Oil Exports; Saudi Production & "Speculation on this Website"
Following are links to two articles in which I made key predictions regarding net exports by the top three net oil exporters (1/27/06) and world and Saudi production (5/25/06).
The world comments were largely just supporting Deffeyes’ prediction. My primary contribution was in using Texas as model for Saudi Arabia (KSA).
Again, this was all based on analysis of Hubbert Linearization (HL) plots by Khebab, and my work on exports was largely inspired by earlier work by Matt Simmons (as was my emphasis on KSA).
I also posted some rather puzzling comments by Dave Cohen, in which he, in effect, complains about my “speculation.” I have further comments down the way.
http://www.theoildrum.com/story/2006/1/27/14471/5832
Hubbert Linearization Analysis of the Top Three Net Oil Exporters
Posted by Prof. Goose on January 27, 2006 - 1:47pm
Guest post by westexas
(My original comment shown, edited version was posted)
http://www.energybulletin.net/16459.html
Texas and US Lower 48 oil production as a model for Saudi Arabia and the world
Published on 24 May 2006 by GraphOilogy. Archived on 25 May 2006.
by Jeffrey J. Brown & "Khebab
http://www.theoildrum.com/node/2130#comments
The Top Energy Stories of 2006 (and Happy New Year!) from The Oil Drum
Posted 1/1/07
Dave Cohen:
Dave,
First, we do have a lot of data on Ghawar.
What we don’t have is confirmation by the field operator that the field is in decline or crashing, whereas the operators of the Cantarell, Burgan and Daqing Fields have confirmed the declines in these fields.
Matt Simmons put the Original Oil In Place (OOIP) at about 170 Gb for Ghawar, and Simmons put the world record recovery factor for fields like this at about 45%, or about 77 Gb. Cumulative production to date is probably close to 60 Gb. Simmons quoted a retired Aramco executive as saying that there was no way in his opinion that URR would exceed 70 Gb.
Ghawar is at about the same stage of depletion at which an analogue field, Yibal started crashing, just as the operator, Shell, was gearing up to handle a predicted flood of new oil. Instead, they confronted an unexpected flood of new water.
However, the absolutely key point is that the best case water cut is about 35%--after the Ghawar Field was redeveloped with horizontal wells. After you redevelop with horizontal wells, and you still have a one-third (best case) water cut in a rapidly thinning oil column between a rising water leg and an expanding gas cap, what do you do?
What you do is watch the water cut increase and the oil production fall--just like the Yibal Field.
IMO, it is speculation in the extreme to expect to see flat to rising production from Ghawar.
Second, in regard to the HL model.
I could understand criticism if net exports from the top three exporters had risen and if Saudi production had risen, but the opposite has been true. Exactly as I predicted, exports by the top three exporters are down and Saudi production is down.
Based on the HL model, KSA is 60% depleted as of the end of 2006. And as predicted by the model, production is falling.
IMO, what is pure speculation is to expect to see rising production from a region at 60% of Qt, when I am not aware of a single example of a large producing region showing rising production past the 60% of Qt mark.
(Note that I define large producing region as 60 Gb or more. We have seen production rebounds past the 60% of Qt mark, e.g., Russia, but production did not exceed the prior peak level, and mathematically, Russia was just making up for what was not produced after the Soviet collapse. I predict that the big oil stories for 2007 will be confirmed production declines in both Saudi Arabia and Russia.)
Hello WT,
Out of curiousity, do you know offhand if Deffeyes is aware of TOD? Have you tried to contact him by email, snail-mail, or phone?
Does he have an opinion on your ELModel, and would he be interested in writing something to be posted on TOD? Thxs for any info.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I've only met Deffeyes once, I think around 2003, at a Peak Oil conference in Midland, Texas. We traded a couple of e-mails after that, but I haven't had any contact with him in quite a while.
http://www.princeton.edu/hubbert/about-ken.html
Kenneth S. Deffeyes
B58A2 Guyot Hall
Princeton University
Princeton NJ 08540
Fax: (609) 258-1274
Email: deffeyes@princeton.edu
Hi WT,
No amount of analysis will convince people that there is a problem unless and until oil becomes very expensive. I noticed that when oil was in the seventies and climbing higher, it was easier to convince people that there was an imminent crisis. Now that oil has settled around $60, people no longer believe there is a crisis.
My question to the readers of TOD is: If oil exports are declining at 6-7%/annum, why does the price of oil refuse to climb above $63? There is no significant demand destruction in any of the major oil consuming countries. WT, when do you think the price will exceed $80?
I cannot speak for Westexas, but I think I know why prices for petroleum products are not soaring. At a higher price there will be a lower quantity demanded. This phenomenon is sometimes called by the misleading and ambiguous term "demand destruction," but it is simple Econ 101.
In other words, if oil were at one Yergin ($38 per barrel), then a much larger quantity of it would be demanded than at sixty dollars per barrel. Because of the higher price, petroleum consumption by prosperous countries has grown by far less than it would have at the price of one Yergin, and in the poor countries of the world the consumption of kerosine and diesel and gasoline has (I think) declined in absolute terms--e.g. Zimbabwe.
Don,
What you are saying is plausible. Does anyone have numbers for oil consumption in countries where more than 1 million barrels per day is consumed? Was there less consumption in 2006 as opposed to 2005?
And note that someday declining exports will catch up with conservation and prices will start soaring again. When will it happen?
Suyog,
To the best of my knowledge, the numbers for quantity of crude and refined products imported by the top 100 or so importing countries are late, incomplete, and unreliable. I doubt that the quality of the data is going to get better any time soon.
Estimates can be made on the basis of subtracting certain known quantities from certain other known quantities, but these estimates have big margins of error.
Some of the most convincing evidence is anecdotal--gathered by journalists.
If world output has not gone up, and if some countries such as China and the U.S. have increased imports, it is a pretty safe bet that other countries must have decreased imports. In general, the poorest countries have the poorest data on everything. For example, in Nigeria I doubt that anybody knows the population of that country to the nearest ten million, because there has not been an accurate census for decades. If you can't even count your own people, how can you be expected to count exports and imports of oil?
The headlines point to the warmer than expected forecast leading to lower prices for heating oil. But why should this affect WTI? Is there some substitution going on?
Personally I think this is more along the lines of the pause that refreshes. The Thai fishermen not fishing because of the high price of diesel will soon be back on the water once the lack of fish causes fish prices to rise to make it worth their while
Thai fishermen never stopped fishing and fish prices in Thailand never went up. I have been living in Thailand, ating Thai fish and trying to dispell this silly urban myth for months now.
In my view the price in the past two years simply "overshot". The percieved oil scarcity and the threats to oil supply caused it to grow quite beyond the long term equilibrium level. Now demand finally started to adjust and quite likely marginal amounts of capacity are also soming online. The result is temporary surplus and potentially even do the opposite - "undershoot" in the next months.
The problem is that the perceptions driving oil price are moving much faster than both demand and supply sides, leading to the volatility we are observing. I think this will obscure the oil depletion until the peak itself and maybe even long after that.
Kunstler offers this explanation:
I am skeptical of Kunstler's explanation because except for sub-Saharan countries and a few exceptions like Bangladesh, I see growing consumption almost everywhere. And the countries in sub-Saharan Africa were in trouble even when oil was at $10/barrel.
Where is "everywhere"?
I've seen a lot of stories about "demand destruction" in the news over the past 2-3 years. Heck, even Americans cut back on driving and buying boats and SUVs, if only briefly. Riots in Panama over increased gas prices, Vietnamese fisherman docking their boats because they can't afford fuel, widespread blackouts in Pakistan and India, etc.
We can settle this by comparing oil consumption figures for countries and regions in 2005 and 2006. Then it will be visible where the demand destruction has occurred and to what extent.
Who has the numbers?
I doubt the 2006 numbers are available yet. It's only Jan. 3!
I've used the old joke about the drunk, after the bar closed, looking for his lost keys under a streetlight, because the light was better there, when he lost his keys down the street.
We've got the best data in the US (a case of damning with faint praise), but trying to figure out what is happening worldwide based on US data is a problem. However, I do think that declining US Total Petroleum imports are suggesting that we are going to have to bid the price up if the US wants to keep consuming petroleum products at its current rate.
This is why I suggest we look at other products produced from a barrel of oil.
Asphalt etc. Obviously oil refining will be optimized for the highest grade products first gasoline/diesel etc to ensure adequate supply. Modern refining methods leave far less waste products like asphalt which were common with simple refining of high grade oil.
Information on the world wide supply of some of these products such as bunker fuel is readily available although not free as far as I know.
I'd love to see if someone with access can get the historical data on say bunker fuel supplies and prices and asphalt. If we are post peak we should see obvious signs of strain in supplies of these two products.
Bingo!
I buy Delo 400 (chevron) regularly for use in tractors and diesel trucks. About 1.5 yrs ago it started rising. Was @35.00 per case of 6 gallons. Looked again 2 weeks ago now it's at @55.00 PER CASE. We have had realativly high gas/diesel prices during this time. IMO the oil price has risen faster than fuel during the same time period.
I suspect more heavy oil is getting refined into motor fuel.
Asphalt price as causing several projects locally to shrink or be delayed. Contracts are written with a asphalt price clause now.
May mean something or not but it isn't making front page news.
Has anyone ever seen data? Kunstler's assertion seems plausible but does anyone know? I've seen tiny squibs and anecdotes that would support K, no more.
The other possibilities are that the economy is contracting faster than any measurement out there would have it or that someone somewhere is suddenly getting very much more efficient. How would we know?
Oil down over $2 on nymex.
Or we are post peak and facing a slowing economy.
We might be post peak and independently of that facing a slow economy. That has not stopped the solar and wind turbine industry from soaring last year, despite the fact that solar is strongly limited by the supply of silicon (now that is a crisis!). It also hasn't stopped the Chinese from building more construction of all kinds than ever or from bringing more coal fired power plants online than their lungs can tolerate.
I wouldn't put my name under any statement that connects the economy with PO. It just isn't correct to assume that the world will grind to a halt if it gets a little less oil next year than it got last year, unless the oil under consideration is that in industrial lubricants.
Commodity prices play a big role in the worlds economy.
Rising commodity prices are the reason that globalization will fail.
1.) Manufacturing moves to the cheapest labor source
2.) The labors cannot afford the products.
3.) Products are bought either via debt or sale of high value technology by former manufacturing nations that now basically sell intellectual property.
4.) Eventually the market economy suffers recession the exporting countries follow since they have no internal markets.
5.) The killer is rising commodity costs since this cannot be controlled via globalization as commodity prices rise the cost of goods rise.
This cost can not be controlled via globalization since the importing nation cannot get the exporters to purchase either more debt or more high value goods to offset higher commodity prices since the money for commodities is being drained away into inefficient commodity producing prices.
The effect of rising commodity prices eventually stops expansion via globalization and results in negative global GNP. Globalizaton requires that resources are supplied at ever increasing rates to prevent persistent high and increasing commodity prices and the resultant death spiral.
So not only are commodity prices important they are all that matters.
And here is why you are wrong:
China and India are building enormous lower class and middle class wealth and IP bases right as we speak. They can and will replace their initial markets in the developed world with their own internal markets and trade with other developing nations. A great example of this is the industrial demand in Germany after WWII. The "Wirtschaftswunder" was fueled by internal demand. I understand that a similar phenomenon happened in Japan. Especially China is in a far better situation than either country after their total destruction and both India and China are manouvering very nimbly in a globalized world.
Commodity prices simply raise the common playing field, they do nothing to change the dynamics of these two nations having over one third of the world population to work with and to sell to while the US is limited to 5% of the current world population. It is simply a matter of "the bigger player wins".
The world's resources are not as limited as most people think. We do have an (for all practical purposes) unlimited energy supply. It is called the sun. We are sitting on a planetary crust that is ten miles thick with ALL elements we will ever need and NONE of the chemical elements with stable nuclei with exception of helium and hydrogen ever get lost. Recycling, of course, becomes a necessity, once we are talking about supplying six to ten billion human beings on the level of industrialized nations. But then, again, recycling has not been used, yet, by anyone, on any relevant scale.
Call me again when the US has been able to hold on to the economic leadership of the world and the British Empire has been restored in 2035. Then I will gladly admit that you were right. Until then, I will continue to watch the inevitable decline of the Atlantic and the birth of the Global Pacific century.
Well, I do not know what you would consider "relevant scale", but recycling is done pretty extensively in Germany and many other European countries. It is most obvious for packaging, but also exists to quite some scale for appliances, cars and even electronics.
Your assertion that we have limitless resources because the nuclei don't get lost would only be true with a practically (not theoretically) infinite free energy supply (and flow rate!). Diffusion of resources means that there is a point where the concentration process takes up so much energy (and other resources, like catalytic materials), that the process ceases to be of any practical value. It's a bit like an EROEI of less than 1:1.
Further on your assertion of limitless solar energy: capturing this energy needs physical resources. According to Liebig's law, a system is limited by the least available essential resource. So which is the least available essential resource for solar? Anyone?
Cheers,
Davidyson
I agree with Don, Leanan and Jim.
I think that we will see rounds of bidding cycles for declining exports. As Jim noted, the poorest are the first to face forced conservation, but the next round of bidding, IMO, will be much tougher for the US.
The next bidding round is underway, not just for oil but for natural gas too. China is the elephant in the room.
From Rigzone, Dec 20:
Then on Dec 28, via AP (my emphasis):
And then yesterday from Bloomberg:
The US and other Western oil importers are going to discover that all those FX reserves that China has been stashing away in order to maintain its crawling currency basket give it a huge amount of leverage in a world of diminishing natural resources. And those reserves are still rapidly building as China's enormous trade surplus with the US shows little sign of correction.
Actually... if you think about per capita income, it will be much tougher for the Chinese. They actually NEED oil to keep their economy running, while we can still afford to waste it for fun. If you had to chose between restricting your fun or curbing your needs, what would you do?
"Wasting it for fun" is a large part of OUR economy, don't you think? Its hard to say who it will hit harder.
I think we (US) and the Chinese will simply perceive the same situation differently. To them the solutions, renewables and conservation, will look very attractive: they don't like to suffocate but also like hot showers, while to many of us they will appear restrictive since we need to settle on smaller cars.
And since I like small cars, don't like to suffocate and also like hot showers with zero carbon emissions and therefor, I will perceive the future as big time fun. It all depends on your expectations and likes and dislikes. If you are a big waster, you won't like what is comming. If you are a responsible citizen, you will be fine.
"Actually... if you think about per capita income"
Well there is always a (historical) moment of adjustment, but essentially you're wrong. Oil will flow to where it's use will bring capital the greatest gain. The U.S. economy (and therefore capital employed in the US) has more to gain from conservation than from the deployment of the marginal barrel. The marginal barrel will more likely find a productive home in China, India, or some other locale.
It is only an illusion that individuals buy oil; economies buy oil.
Neither the US nor China will lose or win. Thanks to globalization, it is now every man for himself. No old-fashioned solidarity ; that is 'uncompetitive'.
It's funny how $60 is the new $20...even here we forget that $60 was a scary number not too long ago, yet it's business as usual now.
Energy is cheap. Even at $60 it's cheap. If you pay around $0.12/KWh for electricity (about the going rate many places), then you pay the equivalent of $240/barrel for your electricity. Oil is still about the cheapest game in town, until it passes the magical $80/barrel mark where it starts to get into the realm of off-peak coal and nuclear electricity.
That's the thing to remember. Energy is cheap. At $100/barrel it'll be cheap, at $150/barrel it'll still be cheap. People might start looking for alternatives once oil is no longer the absolute cheapest, but unless the price breaches $200 ($4/gallon gas, which is what the EU already pays), I don't see an economic collapse.
You are completely correct. Cheap and expensive are emotional, not economic terms. People will adjust to energy from oil becoming as expensive as energy from the electricity grid. And one day they will switch and hydrocarbons go the way of the Dodo.
The economic problems in the EU are a function of the cost of their social nets. The existence of these problems never did and continues not to depend on energy markets. People who lived in the EU and were employed there will know that. Sadly, most Americans weren't and lack the insight that not every place on Earth looks and works like the US.
True, the energy derived from a US gallon of gasoline is about equivalent to a month's hard manual work by a young, fit man. At current prices that's less than 2 cents per hour.
One might be able to imagine a future time when the price / energy produced of labour and gasoline are roughly equivalent - or at least within a factor of 10 difference. Taking the latter case (labour price = 10x gasoline price for equivalent energy) where would you put that?
Labour at $1 per hour, gasoline at $200 per gallon?
Agric,
Well stated! One of the most notable effects of peak oil is going to be falling real (corrected for inflation) wages. I suspect that nominal wages will not fall, but instead there will be increasingly rapid inflation to erode not only the purchasing power of wages but also the purchasing power of Social Security, Medicare, and pension payments. Your numbers of $1 per hour for labor and $200 per gallon of gasoline look about right, and so thirty or forty years hence the nominal wage might be ten dollars per hour and the price of a gallon of gasoline could be $200-$400 in nominal terms, as the dollar goes the way the Mexican peso has gone over the past thirty or forty years.
In addition to falling real wages I expect huge and long-lasting increases in both cyclical and structural unemployment. How big and how long lasting is anybody's guess--depends to some extent on how effective government policies are.
However, I am not a doomer: Many times societies have faced falling standards of living and survived, sometimes to thrive much later on.
Also, over a long period of time the real cost of gasoline will be limited by the cost of coal to liquids (and to a lesser extent tar sands to liquids and perhaps shale to liquids). Thus it may be that over the next thirty years the price of gasoline will first rise a great deal, then fall to (in 2007 dollars) about six to ten dollars a gallon, depending on actual costs of making synthetic diesel, gasoline, etc. Because of the world's large coal reserves and the proven technology for getting liquids from coal, I do not see how the long-term cost of gasoline can be much greater than the average total cost of a synthetic gallon made from coal. (BTW, I'm adding in a guestimate for the cost of carbon sequestration into my WAGs.)
"True, the energy derived from a US gallon of gasoline is about equivalent to a month's hard manual work by a young, fit man. At current prices that's less than 2 cents per hour."
The problem with this calculation is that you are not taking into account the systemic costs involved in making the gasoline useful vs the systemic costs involved making the human power useful. With engines, machinery, factories, roads etc., the gasoline is just a non-drinkable liquid. A man with a hoe can weed a fair patch of potatoes, but a gallon of gasoline without a tractor is fire-starter.
Just refer back to the photo of people in the River of Gasoline and consider how much their labor is worth (how much can they actually get paid for it).
Systemic costs aside, these are people that value the gasoline more than their lives. I doubt they could earn $0.02 USD per hour doing manual labor (probably due to lack of available jobs).
http://photoblog.msnbc.msn.com/archive/2006/12/19/21569.aspx
That photo is powerful. It should be reviewed anytime we consider the values of humans and oil/gasoline.
There is one other factor at play in my opinion. The BIS (Bank for International Settlements, or the central banker's bank, has just released their derivative positions through June 2006. (See www.bis.org/statistics/otcder/dt21c22a.pdf). The "Other Commodities" category, which includes oil, has now reached $5.8 TRILLION, from only $0.9 Trillion in 2004. One can speculate about this, but my take on it is that they are using these contracts to smooth out the price of Brent oil. Through the buying and selling future contracts of this magnitude, there is no doubt that they can place the price of Brent contracts on a daily basis to their liking. (Note that the Brent front contract price is the most widely used reference price for oil contracts - i.e. oil that is not sold through the spot market).
Further evidence for this is found in the behavior of the Brent front month contract 100 day moving average - if we adjust it for the fluctuation in the dollar exchange rates, we find that it is linear to a very high degree (regression index of .9972). I can not think of a natural explanation for why this should be, and therefore ascribe it to the steering of oil prices by the BIS. Since August, the 100 day MA has been trending linearly down, with an accelerated trend since NOvember 22nd.
It is my opinion that the BIS engages in this behavior to smooth out oil prices, and that they use the SPR reserve and perhaps other oil storage facilities world wide (KSA?) to deliver / take delivery of those contracts that get exercised.
We should interpret the present linear downslope as evidence that the BIS is letting oil prices drop in a controlled manner, and therefore that they anticipate sufficient supply in the short term (6 months say). If this trend should compress and turn up, we would read that as the BIS expecting oil supply to tighten again.
BIS is not a "bank" as such and does not carry positions, certainly not in the trillions. What you are seeing are total, global position data of all major international banks reported to the BIS for their survey. The BIS itself does not engage in any speculative or smoothing operations, neither can it. It is essentially an international bureaucratic organization. Its main function is to generate global banking regulations.
Nevertheless, the commodity derivatives' growth as reported in the survey is certainly huge (in notional terms - the market value is much, much less) and that by itself is very a strong indication of the froth that surrounded the oil market last year. Some may remember how I kept stressing that point back in May.
Regards
You are of course completely correct. The question stands though - what are the major international banks of the world doing in the market, holding positions this large in a supposedly "free market"?
There is no such think as a "free" market. Major players have always manipulated everything and anything to make a profit. Do you know why they call it the "invisible hand of the market" (the supposedly super-natural force that Adam Smith dreamed up to justify free-market capitalism)? Because it doesn't exist! However, the manipulators' very real and visible hands are all over every market you can think of, from crude oil to mint oil.
Now, as to banks...Since the demise of the traditional role of the major money-center bank (intermediation between "saver" and "borrower") a couple of decades ago, they have been increasingly making their money in trading - everything and anything.
Major banks are now mostly trading houses.
Regards
Probably more related to hedge funds trying to make a profit. They each think they have better info than the other guy, and some of them actually do. The net result is just that some money goes from one hedge fund into another one, the IBanks make a healthy cut, and the world as a whole benefits from what little information the funds might have been able to tease out.
I was going to ask you, Francois, if you have comparative numbers for Fed and ECB interference in the markets.
And seeing BIS as just some regulatory office is at the least naive, in the same way that most people see the Fed as such.
BIS and IMF do have an market instrument Special Drawing Rights. And yes, for most they are "just some" handy thingy too, but they offer great opportunities of manipulation.
It's still just keystrokes that replace the value of gold, not a recipe for happiness.
And it's simply not true that growing economies are the reason behind SDR's; it's fractional banking. It wouldn't be hard to reset the international value of gold vs a basket of currencies, if the economic growth were reflected in additional issuance of money.
The problem arises when there is no longer any way of tracking that growth, as in when every step along the way from Fed to consumer only needs a 10% reserve, and a $1 million bond buyback becomes $100 million in extra consumer credit along the way.
A 3% yearly growth of the US economy is easy to trace and include, but $10 triillion of added deficit is not.
The difference between gold and SDR's is simple: one has value, the other does not.
The gold price was set for many years, and perhaps still is, from a little office in The City in London. SDR's replace gold.
Saudi Arabia puts their own spin on Ghawar and production forecasts:
http://www.saudiaramco.com/sa/webServer/general/Summary_Fifty_Year_Crude...
Ghawar has had over 30% water cut for ten years now. It got as high as 36.5% in 1999 and has generally come down since then (at least up until a couple of years ago). If it's at 35% today as WT says then that is hardly indicative of a water breakthrough.
See also "Another Day in the Desert" from here:
http://www.ceri.ca/Publications/documents/GoE_Oct05.pdf
a rebuttal to Simmons' book. Horizontal wells allow production at low pressure drops which reduces the water coning effect and prevents premature breakthrough. This is what the Saudis are doing in their major fields now.
They were forced to go to horizontal wells, because their vertical wells were watering out. This of course is precisely what Shell did at the Yibal Field, and everything was fine--until the water hit the horizontal wells.
At both Cantarell and Ghawar, the remaining oil is in rapidly thinning oil columns between rising water legs and expanding gas caps. Both reservoirs are much more permeable to water and gas than to oil.
The problem--even with horizontal wells--is that the reservoirs are not homogeneous. Some of the structurally highest wells in the Ghawar Field watered out early because of the high permeability Super K zones.
The key difference between Cantarell and Ghawar is that Pemex has admitted to the decline at Cantarell, while the Saudis claim that their 800,000 bpd drop in overall production is "voluntary."
Furthermore, Saudi Arabia is now declining, as the HL model predicted. So, we are now arguing about "why" Saudi production is declining and not "if."
So pumping oil with water pressure is like sending water through a sponge - oil flows through the easiest pathway first causing problems? "Floating" the oil out is too slow, not economic, or not possible? Chemically treated water injection - you mean like detergent to "wash" the oil out?
Amazing stuff, I think I will stick with horticulure at least I can see what is going on.
http://www.saudiaramco.com/sa/webServer/general/Summary_Fifty_Year_Crude...
Thanks for the link Haflin. Slide 16 of this article says that 50% of Saudi's 260 billion barrels of reserves are currently developed and in production. Only 50%! This means they have another Ghawar, another Safaniya, another Abqaui and another Berri, another Zulfu, another Marjan and even another Shabah, all just waiting to be developed and put into production.
I wonder when the new Ghawar will be brought on line?
Ron Patterson
The article about climate change having a "middle ground" is deliberately misleading by the "iron triangle" yet again. Those that the article implies are "in the middle" are not in the middle at all. Rather they are on the side of recognizing the existence of climate change. The only difference is the degree of preparation they believe may be necessary to combat it or how to do proper risk management against it. These scientists do NOT believe that climate change is false, as do the deniers. So the article tries to paint this image of a middle ground when the reality is large scale consensus about the reality of climate change.
Increasingly, the climate change deniers look more and more like abiotic oil proponents - fools or deliberate liars. There can and should be debate about what responses are appropriate to climate change. There should not be debate about whether to respond or not.
Always good to start the day with some hearty laughter.
The European Development Bank, like its Africa and Asia namesakes, is a World Bank/ IMF instrument. It seems fair to call their business colonialism.
And if they "threaten" to withhold a grand 1.36% !!! "investment" from a Russian energy project, you can be sure they're laughing in the Kremlin too.
---------
Rigzone deserve kudo's for saying it as it is, haven't seen a lot of that:
The first paragraph below is the funniest of them all. Looking at total cost overruns, they should EACH have to pay $3.6 billion.
The second spells out what broke the deal, and it's not Vladimir Soprano or whatever stupidity US/EU media can come up with.
Shell tried to pull a fast one, and got caught "in da jar".
They claimed $10 billion total cost, signed a deal, and came back right after with a $20 billion bill. This would have meant no income for Russia for many years. That's when they got mad, and swore they'd get even, and better. And they did! Shell simply showed it couldn't be trusted as a partner.
And more kudo's to Rigzone: the "green" complaints started long before the government got involved. In fact, Shell refused to lay the pipeline out of the way of the whales, until Putin, under pressure from Russian greens and the locals, stepped in and simply ordered them to. And he didn't appreciate having to do that.
Yes, I can only imagine how in Kremlin they are laughing at this humoristic attempt of those dinosaurs to exert their influence. Or more likely they simply ignored it with a smile.
I'm always amazed how previously influential institutions can so easily fall back behind their times. IMO the European Bank/World Bank/IMF are far beyond their "peak" influence. More and more developing countries are scrambling to get out of their orbit, which has proven disastrous for anybody that got into it. You can hardly fool somebody twice.
Actually, the European Bank for Reconstruction and Development is frequently in direct competition with the IFC (International Finance Corporation) which is a part of the World Bank. The EBRD is an European Union organization.
Could be so, but competing with them does not mean they are not persuing essentially the same goals.
NPR's Marketplace ran an article about "Gas -Price Conspiracy" related to the 2006 elections. Interesting numbers and observations.
http://marketplace.publicradio.org/shows/2007/01/02/PM200701026.html
No other explanation is offered as to how gasoline prices in the USA dropped 500 percent in the run-up to the elections and then began climbing right after the elections.
Any thoughts on this?
Ah...conspiracy theory!!!
I had proposed this awhile back, but was beaten down for it. Why would all the petro companies do this all at the same time...I was asked.
Problem with conspiracy theories is that they can hardly ever be proven, so they are a waste of time. What if the companies DID do this? What are we going to do...prosecute them? They can cut their profit margin whenever the heck they want to for whatever reason.
The great thing is IF this is what the petro companies did...the Republicans still lost. People were pissed off by more than just the price of gasoline, I guess!!
Such innumerancy! How can anything fall more than 100%. Or did you mean a 50% drop. The price drop was a seasonal thing. It happens almost every autumn as vacation travel drops and then prices go up as the holiday travel season starts.
Will this really happen?
Where will this 1.5 mb/d come from? With Angola joining OPEC's ranks, only Russia, Brazil and the Caspian area have any real growth potential outside OPEC. I think these three might increase oil extraction by close to 1 mb/d, probably less, but this will not likely offset the decline in other non-OPEC countries. But we shall see.
Ron Patterson
Call it WISHFUL THINKING and simply ignore it.
Must be Canadian oil sands
from The peak oil story during 2006
They cited Oil & Gas Journal as the source. Is there anybody else who claims a rise in OPEC production for 2006?
Well, if you count Angola's joining OPEC as a rise, maybe so.
Nope again. If you count Angola, OPEC averaged 32,410,000 barrels per day for 2005, C+C. For the first ten months of 2006 OPEC + Angola averaged 32,179,000 barrels per day, a drop of .7%.
Ron Patterson
Yes, I meant counting Angola in OPEC for 2006, but not for 2005.
Nope! OPEC C+C decreased by 1.2%, average for the first ten months of 2006 verses total average for 2005. All Liquids decreased by .9% for the same period.
http://www.eia.doe.gov/ipm/supply.html
Ron Patterson
Peak oil related quote from democratic presidential candidate Tom Vilsack
http://www.foxnews.com/story/0,2933,240306,00.html
I'm gonna stick my neck waaay out and bet that the candidates with a real chance for the presidency won't be talking about peak oil between now and the election. Too much painful reality is not good for getting one elected. After the Iraq happy-talk fell through, the electorate will not be in the mood for some hard truth.
[edit] And if oil peaking actually makes it out of the mouth of one of the main candidates, we will *know* that we're in trouble.
Why didn't he challenge the GOP bias of Fox? Get them to specify what powerful Democratic interest groups he is supposed to challenge. Considering that the GOP has controlled Congress for the last 12 years and the White House for the last 6 years yet has failed to open ANWR and the OCS of GOP controlled Florida. Next time on Fox he ought to challenge GOP hopefuls to stand up to the House of Saud, to stand up to industries which have exported jobs to China and India, and to call for an open investigation of Halliburton\Cheney sweetheart deals. If Vilsack comes to Lamoni I'll ask him to do that.
on Terry interview
In Switzerland, most believe that the crime rate is rising, which is not true. 1. (Of course, sub- or peri- urban devps. in CH are not like US ones; nor are the inner cities; arguably, one might say that ‘pockets of poverty’ don’t exist..). Quite likely, it isn’t true in the US either, but that would take some careful study, many caveats, it is so vast and varied.
In CH, the ‘rising crime rate’ is a good example of personal confirmation bias which is socially embedded or socially induced. Interest groups (police, govmt., security companies, authoritarian types generally) induce fear for their own purposes. But there is more to it than that; ‘developed’ societies, to lower crime stats. further than 1920 - 85, have to implement dire measures, such as gated communities, cameras, the tolerance for anonymous accusations, very tough police, more prisons, etc. Self-defeating, or useless, perhaps, but few look on it that way.
Terry seems to make some hay out of the idea that community connections and traditionalist ways are superior -not stated baldly, and there is more in the interview-, but there is the idea of social fabric being destroyed. That is so, and it may reduce people’s feeling of well being but it is unlikely to be related to crime and insecurity, and suburbia, after all, was chosen by those who live there, the American dream. Fun to have a house of your own etc. etc. - if it’s there, and affordable, who would prefer a ratty flat and the stress, bore of neighbors who you must share with? Ask any Yemeni or Algerian...The logistics of suburbia are dire on the grander scale; ‘growth’ and ‘development’, which have stark limits.
1. Published mainstream media stats come from the police and are shoddy, eg. they don’t take growing population into account, don’t distinguish between residents and travelers or tourists (ie mobility does contribute to crime stats) and don’t, on this point at least, trumpet their own assiduity and efficiency, in that they log in more ‘minor crimes’ and make more arrests for such. (not for drugs in CH.)
And your evidence to support this is that since everybody "likes" having his own house, then suburbia has nothing to do with the problem???
(sorry, but a bit of moralization follows)
What may be percieved as good at individual level may not be that good at societal level. What if I like abusing my children? From my point of view this may be a "good thing", right? Suburbia in my opinion is causing major traumas at societal and individual level, which can be easily seen from a more distant point of view. They all come down to the degradation of societal fabric, which you so easily dismissed with your hedonic argument. Here are a few that, anyone can see:
1) First and most important - alienation. People simply don't meet people any more. With time human connections become a burden, one does not want to bear. We are simply becoming socially lazy and the result is apathic, aliented, "I don't care" society. The result - people start to threat each other not like fellow human beings, but rather like objects they have to deal with (or use for their own benefit). People's relations are growing hollower and sympathy and cooperation are starting to disappear. This degrades the moral strength of the society and crime is only one of the logical consequences.
2) The society segregates. Meaning that certain groups tend to be isolating themseves in certain areas, which the other groups avoid to visit. This is a logical result in a society where everyone is able to choose location based largely on what he is trying to escape from. Thus poverty and crime tend to stay "out of sight, out of mind" for the majority of people. But they exist and they tend to prolifeterate far from the jurisdiction of the "good" neighbourhoods. The solution of the good ones is to put gates and surveilance cammeras - maybe temporary preserving themselves but not in the long run IMO.
The solution should include building mass transit instead of highways and shelters instead of prisons. But it's already getting too late - like you showed americans, and most people as a matter of fact, tend to "like" their privacy and the fake sense of security it gives them though in fact they do nothing else but trade short term benefits for long-term ones. Tragedy of the commons all over again.
Ack. Enough with the editing already!
My fault, stealing time from a work task and was unable to spare the time for a good once-through edit
It's a myth that people in suburbs are more alienated from their neighbors than city dwellers. Results from a recent study reported in the Los Angeles Times:
http://www.latimes.com/news/local/la-me-fences27nov27,0,5242844.story
"For every 10% drop in population density, the likelihood of people talking to their neighbors once a week goes up 10%, regardless of race, income, education, marital status or age."
Thanks to our highways and suburban lifestyles, people get along better with their neighbors than when they are crowded ass by elbow in the cities where mass transit works so well.
If the criteria is how often you say "hi" to your neighbour, it is possible that you are right. My opinion is based on anecdotal experience and I can't provide you with studies for it. Most of the people I know, are saying hi to their neighbours and may even know what they do, but are highly unlikely to envolve in any higher level of social interractions with them. Social life in most occasions is limited to parties or guests, where generally you need to be invited or to the beer after work with collegues.
I have to say that I don't think suburbs themselves are the real cause of the problem, but rather they are a symptom which makes the problem worse. On one hand it is possible one to have a decent social life living in a suburb if he finds enough friends in the area. One the other, the distances make casual and more natural contacts quite difficult and these are extremely important for the social ties. IMO, suburbs are also a very unforgiving place for kids and old people. Actually this is what I should have started with at the first place.
I don't know, maybe it's just a funny day. Good article from Financial Times.
Some holiday retail news:
´06 holiday shopping season unimpressive
http://futures.fxstreet.com/Futures/news/afx/singleNew.asp?menu=economic...
Aren't you the one who said your business (a large one) would be downsizing in 07. That still in the works?
Any hints on company name?
Thanks
Yes...good memory.
Our business transformation process is ongoing and we will be downsizing in 2007 (we have been for the last two years). I think a lot was waiting on the Xmas 06 results. We are not done crunching those numbers.
- Company is in Kansas City, MO.
- It has billion dollar+ yearly revenue.
- It's privately owned.
Like Robert...there is a lot of information I can't make public without reprecussions. The business transformation information has been published in the KC Star so it's already public info.
Let's see...private company, billion+ revenue, Xmas sales...
I'll go with either Hallmark cards or Russell Stover Candies
Let's see...private company, billion+ revenue, Xmas sales...
I'll go with either Hallmark cards or Russell Stover Candies
"When you care to send the very best!!!"
[finger to nose]
It's a long story as to why I am here...used to be an entomologist...it involves wife and kids.
If you worked for the candy company, you could be making chocolate-covered ants.
Yummmm....delishhhh!!!
During my bug days...I had the privilege of consuming many different types of invertebrate concoctions.
Gotta love it. A increase of "only" 2.5% over last year is a disappointment. Gotta keep the infinite growth party going.
Didn't everyone hear Bush's call to go shopping? They must hate America, buying only 2.5% more stuff.
Is that 2.5% increase in real (inflation adjusted) or nominal dollars?
If in nominal dollars, that means no increase at all and suggests that even as we type the U.S. is slipping into a recession.
Generally, it takes several months looking in the rear view mirror correctly to call a recession.
Even if it were in real dollars, that 2.5% would have meant a 25% loss simply because since last year the attention span of your kids and significant other's has decreased by another 27.5% and no matter how many gifts they get, they feel happy for a much shorter time.
Just kidding. Or am I? Seriously... how much does all this buying buy us? More retail jobs? Great... that means more people without ANY REAL experience and education. I don't call the ability to sort boxes and stack goods on shelves a particularly useful point on anyones resume. Does anyone here? If you can take a piece of metal and convert it into a precision machined part, that is experience. If you stack boxes... that is a loser job.
It's in nominal $'s but the increase refers to same store sales, i.e. it compares sales at stores open for a year or more. Total sales are higher, we will know more tomorrow when individual retailers release their Dec. numbers. But Xmas was still relatively weak, particularly since most stores had to discount very heavily to boost sales. Their profit margins took a serious hit.
I propose that they include sales from the date they start putting up all the christmas crap in the stores. If they are going to advertize from late August on then they had better count some of that too. I find it highly irritating to be bombarded in late summer. Makes me feel like this is only BS for some fricking mucky muck. Sales are off...well BFD.
The grinch!
And speaking of shopping...here's another article about that group that didn't buy anything new all year:
S.F. group enjoys shopping sabbatical
Brief note about the first major tropical cyclone of Australia's season and how its caused the evacuation of key O&G areas, http://www.ft.com/cms/s/d15bc650-9b0c-11db-aa70-0000779e2340.html
"Publication of the bureau’s report coincided with the first tropical cyclone of the season. The approach of Cyclone Isobel, off the country’s north-west, forced the suspension of production at at least two significant oil fields as well as the closing of BHP Billiton’s Port Hedland iron ore export operations. Last year, Cyclone Larry caused more than A$1bn in damage to north Queensland, including the destruction of almost all of the country’s banana crop."
A quick note on Isobel. It was a very strange cyclone with 2 eyes and has gone through very quickly indeed, if fact (i haven't checked) everything will be back open by now (thursday lunch time here). It has now joined up with a strong cold front over our Goldfields region (800km SE of Port Hedland) & is causing havoc & flooding for our farmers and vacationers, roads cut, lambs with exposure, and topsoil removal after our drought conditions.
Monthly EIA numbers are up at: http://www.eia.doe.gov/ipm/supply.html
Rick
New High Month from Table 1.4 = July 2006 at 85,491.
Old High Month from Table 1.4 = May 2005 at 85,205 (revised to 85,313).
New High from Table 1.3 = May 2005 at 74,151.
Old High from Table 1.3 = Dec 2005 at 74,115 (revised from 74,079).
October 2006 from Table 1.3 = 73,496.
Interesting. So they actually moved the peak earlier?
How long do they keep going back and adjusting the numbers?
As I have learned everything I know about this from Darwinian (I know very little), I'll let him answer it.
But, in this case, the EIA revised the totals back to January 2005...and yes, moved the peak back to May 2005 from December 2005.
Rick
That Deffeyes. What a Pollyanna.
Pollycopian.
The new EIA oil production figures are out.
http://www.eia.doe.gov/ipm/supply.html
They give the data throught October 2006. They also involve some major revisions for the past few months. Canada's production was revised upward for the last couple of months by about 180,000 barrels per day. Syria was revised up by 50 million barrels per day and the US was revised upward 50 million barrels per day for September. Only "Other" was revised downward by 30 million barrels per day.
I will post more on what the data is telling us after I have had time to digest it with my Excel spreadsheets.
Ron Patterson
50 million barrels per day?
50 million bpd here, 50 million bpd there, . . . you know after a while this could add up to a fair bit of oil;-)
The following peer-reviewed article (Proceedings of the Natl. Acad. Sci.) is available for free:
The Iranian petroleum crisis and United States national security
The only reference to "peak oil" (you'll know when PO has been accepted as it will lose the quotes) that I could find is in the abstract.
The author proposes to destabilize Iran's economy by driving down the price of oil through massive conservation and efficiency improvements amongst the consumers and thus choking off their revenue stream (as in the former USSR, although I didn't see it mentioned). Anyone see this happening? I don't. And wouldn't the Saudis love to take down the Shiites in Iran a notch or so by flooding the world with cheap oil? Such is the thing that dreams are made of...
(Export Land) News item at the top: Iran Cuts Gas Supplies To Turkey To Meet Domestic Demand
Very interesting article, thanks for posting. The author is a geologist at John Hopkins, - Stern (author) doesn't appear to be directly alluding to a geopolitical agreement (in my intrepretation) to increase oil output -- he doesn't appear to be an international relations expert -- but appears to recommend vehicle fuel conservation to reduce oil demand and thus drive oil prices down, thus damaging the Iranian economy. However, Stern admits that conservation will be difficult to achieve.
I think you are right on though in thinking that the US and perhaps the EU would like to find some other agreement/means to decrease oil prices to damage the Iranian economy (also would hurt a list of other "threats" Venezuela, Russia, etc) and lower oil prices would also help the US/EU economies -- as well as most other non-oil dependent economies. A successful agreement between KSA and the US was documented in the book [Victory: http://www.amazon.com/Victory-Administrations-Strategy-Hastened-Collapse/dp/0871136333/sr=8-1/qid=1167856104/ref=sr_1_1/002-9815466-2936052?ie=UTF8&s=books]. All references in the book were based on interviews with top US officials (Weinberger, etc and author was a member of the Hoover Institution) -- info in that book cannot be found elsewhere. The agreement left KSA with $200Bn of debt and a growing very unstable lower income population -- likely KSA will not want to go through that again.
Fantastic article, one more comment. KSA can't increase production, as they have complained, from Ghawar and other new projects because they are mainly going to produce Arab Light -- despite the name "light":
EIA: A premium crude oil like West Texas Intermediate, the U.S. benchmark, has a relatively high natural yield of desirable naphtha and straight-run gasoline (see graph). Another premium crude oil, Nigeria's Bonny Light, has a high natural yield of middle distillates. By contrast, almost half of the simple distillation yield from Saudi Arabia's Arabian Light, the historical benchmark crude, is a heavy residue ("residuum") that must be reprocessed or sold at a discount to crude oil. http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_m...
US and Asian - refining capacity cannot handle extra "Arab Light" http://www.apachecorp.com/Explore/Explore_Features/200601/Topic_Report_I....
I think it takes about 4-5 years to upgrade and many (although I am not certain) US refiners started upgrading in 2005 so we are looking at 2009 before KSA can impact gasoline prices with additional Arab
Light. Marathon Oil started upgrading last year and expects to be complete by 2009 http://www.marathon.com/content/includes/PF_News_Releases.asp?ReleaseID=...
To sum up, if there is additional KSA capacity will mean higher spreads between oil grades over the next 3-4 years and not much impact on gasoline prices.
I noted Iranian oil and Arab Light are similiar in sulphur content and API grades, so if Saudi Arabia increases production, it will impact Iran's oil revenues through a larger spread between light sweet and heavy sour, but won't have much impact on gasoline prices as refining capacity for heavy sour is at a bottleneck.
KSA would really be shooting themselves in the foot if they increased production of Arab Light now -- the refineries can't handle it and it would make spreads even higher (huge) between heavy sour and light sweet.
Arab Light:
- Price: Dated
- Loading point: Ras Tanura, King Fahed,
Juyamah
- API Gravity: 34º
- Sulphur Content: 1.78
Iranian Light:
- Price: Dated and assessed
- Loading point: Sidi Kerir
- API Gravity: 33.1º
- Sulphur Content: 1.5
Iranian Heavy:
- Price: Dated and assessed, FOB
- Loading point: Sidi Kerir
- API Gravity: 30.2º
- Sulphur Content: 1.8
http://data.iea.org/stats/codebook/eng/spot_cr.html
Interesting, this same Roger Stern published an article in the same PNAS that was quite controversial around here a year ago:
http://www.theoildrum.com/story/2006/1/24/235629/454#5
According to the summary from Johns Hopkins:
John J. Boland, an expert on utility economics and environmental policy who serves as Stern's faculty advisor, said the journal paper, part of Stern's doctoral thesis, raises important issues. "It's a pretty significant article," he said. "One thing Roger does is attack the perception that petroleum is scarce. That's a very unpopular position, one that is aggressively disputed by our government, even though other analysts have also raised this idea."
Perhaps this new article will be better received since it is not quite so threatening to the local reigning orthodoxy.
All resources are scarce--in the strict economic usage of the term "scarcity." Thus oil is undoubtedly scarce and always has been and always will be. Now, how scarce is "scarce"? I'd look at price for an indication.
IMO the limiting price on gasoline and diesel will be the long-run average cost of making synthetic liquids from coal. Let's add in some costs for carbon sequestration . . . and my WAG for a long-run equilibrium price for a gallon of gasoline in the twenty-first century is six to ten dollars a gallon, using 2007 U.S. dollars.
There is a lot of coal out there, and as conventional oil becomes scarcer, then synthetic oil will make a lot more sense, despite serious environmental problems and enormous capital investment required to build coal-to-liquid plants.
I am not a doomer. By the time we begin running low on coal, I imagine we can go the nuclear/electricity route or possibly fusion/electricity some fifty years from now.
The transition from where we are now through a time of rapidly rising real prices for diesel and gasoline is going to be a tough one--probably involving major economic disruptions.
I read the 1.20.06 Roger Stern article "Oil Market Power and US National Security" -- it mainly concludes OPEC now has monopoly pricing power.
Not much (if anything) new in geology, as he doesn't address geology in detail -- his treatment of oil geological scarcity is very brief -- he states "(oil reserves) have increased every decade since 1850." Bam. End of story. Oil is not scarce nor will be scarce, despite OPEC reserves have not been independently audited for two decades.
Therefore, as oil is not scarce the price of oil should logically according to Stern be equal to the marginal price of production, as there is no scarcity rent. The price of production is very low according to OPEC producers (who are not audited) and therefore the price of oil should be low giving them minimal profits. As the price is high, OPEC has monopoly pricing power.
Stern doesn't offer any solutions to breaking the market power of OPEC with anything but the forboding conclusion "Whether more purposeful intervention could break market
power we cannot know. Yet should it go unchallenged, the present may come to seem a peaceful time."
Overall I would say there isn't much new there concerning refutations to peak or "plateau" oil.
This story got pretty a fair amount of attention from the MSM. Though it hit the press around Christmas, so probably a lot of people weren't paying much attention.
Report: Iran oil profits could dry up by 2015
The latesr revised EIA figures sets a new peak!
http://www.eia.doe.gov/emeu/ipsr/t11c.xls
Peak oil, Crude + Condensate, is currently May 2005 with production of 74,151,000 barrels per day. December of 2005 averaged 74,115,000 barrels per day. October 2006 C+C was 73,496,000 barrels per day or down 655,000 barrels per day from the peak in May 2005.
Ron Patterson
It looks like we are missing about 300 million barrels of crude + condensate-- from June, 2005 to October, 2006, inclusive.
In other words, we have produced about 300 million barrels less oil than if we had just maintained the May, 2005 production level.
This number changes with revisions, but the bottom line is that the EIA is consistently showing a shortfall measured in hundreds of millions of barrels of crude + condensate (and Khebab demonstrated that the revisions tend to be downward with time)--despite historically high (nominal) oil prices.
Gee makes me wonder what the inflation number (might) do?
And M3?
$25,000,000.00 bonus's? (WTF?)
It is starting to smell bad...
I stumbled on a third party measure of US M3 recently:
http://www.nowandfutures.com/articles/20060426M3b,_repos_&_Fed_watching....
It's grown from a +8.5% annual change when reporting stopped in march 2006 to over 11% in late december.
And if you look at M3 ex-M2, the change from a year ago has reached over 20%.
French court rules pork soup kitchen not racist
Here's an article explaining what the controversy was: In Paris streets, soup with a tang of intolerance
Reminds me of the trend toward religious charity here. Churches are taking over what family, employers, or the government used to do. They're offering food, daycare, healthcare, job counseling, housing, etc. - but only if you convert.
Not universally true. My church (mainstream Protestant) serves homeless meals, shelters homeless teens, and provides transitional housing with no strings attached.
I have the impression that in Europe the care for the less fortunate is seen as a state affair, whereas North America leaves it much more to religious groups. Europe seems to have less really destitute people too, maybe because the state cares more all the way, and prevents them from becoming homeless in the first place. Still, Europe is many different cultures, let's not forget that.
The article is priceless!!! A new coat for a bite of pork chop, how can you refuse? And if you do, you got at least a boost of pride.
Leanan,
De Villepin either reads you, or the papers, or the French are plain scared stiff when it come to right-wing groups.
I recall reading that the pork soup was a reaction to aggressive behavior by young Muslim bullies who took food and goods set aside for the old, the disabled, etc. The pork kept them away. (It's not anti-semitic; IIRC, there's the "Chinese restaurant exception" for American Jews. ;-)
The only way the soup kitchens could be racist is if Islam is a race; it is anything but.
Well, just as the revised EIA figures pushed the C+C peak backward by seven months, it pushed the "All Liquids" peak forward by 14 months. Peak All Liquids is now July of 2006 with 85,491,000 barrels per day. That is 714,000 barrels per day higher than the current latest data, October 2006. That figure was 84,787,000 barrels per day.
As far as peak year is concerned, 2006 just passed 2005, All Liquids by 1,000 barrels per day, 84,564,000 for 2005 verses 84,565,000 for the first 10 months of 2006. However November and December figures will both be quite low so no doubt 2005 will wind up as the peak year.
But C+C, 2005 is still peak, year and month. 73,653,000 was the average in 2005 while so far in 2006 we have averaged 73,468,000 bp/d. That is, so far, 185,000 barrels per day below 2005.
http://www.eia.doe.gov/emeu/ipsr/t14.xls
Ron Patterson
Hello Darwinian and others,
Thxs for revised updates. Assuming Deffeyes, WT, and you are correct and C+C continues down--is there any way to determine when decreasing [natgas resources and C+C] has to start dragging down the 'all liquids' quantity?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I noticed something very strange:
I keep a spreadsheet of the Total Liquids data from EIA - to track revisions and make charts. When I calculate an average of the monthly data for 2006 YTD, I get 84,561.93 kbpd, not 84,564.9208733431 kbpd as listed on their spreadsheet posted on their website.
The difference of 2.99 mpbd is enough to make 2005, not 2006, the peak year so far.
Did the EIA really make a mistake in calculating an average?
Are there rounding errors for each month (but why list each month's datum to 15 significant digits - to the nearest 10 millionth of a barrel?)?
Is there some reason to make 2006 appear to be the highest year even if the data show that 2005 was higher?
Hmmmmm......
In view of future revisions to the data for total liquids, I would not take relatively small numbers seriously at all.
Almost all series of economic data are subject to revision, even years after first publication. (The Consumer Price Index in the U.S. is an interesting exception to this rule; it is NEVER revised, even when major mistakes are discovered. There is an interesting history here that I'm not going to touch here.)
By the time we have accurate data, they are of interest mainly to economic historians. There is an "iron law" that the more recent data is the less reliable it is.
I fully agree.
When I see numbers like say 85.342 million bpd for November and 85.347 million bpd for December, I don't see how anyone can seriously draw any conclusions, one way or the other, from such a small difference in what are probably quite dodgy numbers to begin with.
I think you would agree that once a certain number gets published in a respected publication, it sort of gets sanctified, repeated, cast into stone, and finally accepted as coming from on high. I've seen this again and again in the environmental field, where the same demonstrably wrong statistic gets repeated over and over again until everybody takes it as gospel without question.
Most areas of science and economics must operate with incomplete and oftentimes conflicting data. Any mediocre technical person can deal with perfect data, but it take something of an artist to sort through bad data and divine anything vaguely resembling the Truth. Most of engineering design is no more accurate than plus or minus 10 percent, at best.
The whole trick in most of this is to appreciate what you don't know. (Not to mention Donald Rumsfeld's knowable unknowns and unknowable unknowns, or whatever.)
So, we have to guard against getting our magnifying glass down to close to the ground and thus missing what is really happening.
Something like the 260 billion number for SA reserves. Repeat a lie often enough...
But the conclusion you CAN draw is that it didn't go UP 2-3 million a day. It is level or decending slightly. NOT GROWING by leaps and bounds any longer.
Why might be a little harder to discern...
John
The EIA does not just average each month, as you and I might do on our spreadsheet. They average each day. That is, they take the average for February and multiply it by 28, and the average for March and multiply it by 31, and so on. Then they divide by the total number of days. Doing it that way, you get a slightly different figure than if you simply give each month the same weight.
This is where the difference may lie.
Ron Patterson
Ron,
Given all the uncertainites in the data, even more future revisions and whatnot, do you really think that more than the first three digits in these numbers are significant? I certainly see no reason to go to the right of the decimal place, and you should probably throw away the digit or two to the left of the decimal too.
Yeah, I love that precision at the EIA. Their data is "accurate" to 15 siginificant digits. That's to the 10 millionth of a barrel.
Every 0.0000001 barrel of oil is accounted for. I feel better already about our oil supply. Thanks, EIA.
Don, those were not my numbers, they were wehappyfew's. I was simply pointing out why his numbers did not match those of the EIA. And no, I do not think the last few thousand barrels per day are significant. Hell, I would expect that overall, they off by about one million barrels per day.
Ron Patterson
Holy Cow...the DOW is going through some crazy gyrations today.
It was +100.00 earlier today, but now shows -34.85. I agree that daily fluctuations are to be ignored, but what the h3ll?
There was good news on the manufacturing front. But it was wiped out by bad news from the Fed.
Interesting that both the price of crude and the value of the dollar are falling today.
Uh... yeah what happened today to justify that $3 drop?
My guess is the insanely warm weather. It's supposed to hit 60F in NYC this weekend. Crazy hot, for January.
" Crazy hot, for January"
I expect that 60 will be a typical high for NY in January from now on.
We are going to have 60 tomorrow also. It is quite likely I will be hearing a mower running somewhere in the neighborhood before much longer. I am willing to bet that nobody has ever mowed their grass in the Pittsburgh area in January during the entire time this region has been settled.
This "winter" is really starting to disturb me. We have a tradition on my street that during a really bad snowstorm, we pull out the fire barrel and have a party. With the current weather, we could have our summer block party now.
Below is the price of Brent Crude front contract, the dollar index (from http://www.federalreserve.gov/Releases/H10/Summary/indexn96_b.txt, the corrected oil price (Brent x Dollar Index), and the 100 day moving average. The $2.00 drop in Brent today was somewhat mitigated by the rise in the dollar index.
But notice how the 100 day moving average is relentlessly dropping by .10 to .13 every day, even on days that the oil price increased. This can only be if the expiring data (100 days ago) and the current price (dollar index and Brent) are carefully managed with respect to each other - else we would see much more variation in the 100 day MA. And this linearity goes back all through 2006 and 2005.
Francois.
Date Brent Dollar B*D 100 day MA
12/18/06 62.36 81.591 50.880 52.421
12/19/06 62.09 81.146 50.383 52.305
12/20/06 62.44 81.077 50.624 52.185
12/21/06 62.44 81.200 50.701 52.068
12/22/06 62.69 81.386 51.021 51.961
12/25/06 62.69 81.386 51.021 51.837
12/26/06 60.99 81.442 49.671 51.705
12/27/06 61.11 81.478 49.791 51.577
12/28/06 60.81 81.367 49.479 51.457
12/29/06 60.34 81.412 49.124 51.332
1/1/07 60.34 81.412 49.124 51.216
1/2/07 60.32 81.093 48.916 51.104
1/3/07 58.34 81.687 47.656 50.988
Increased volatility is usually a very good indicator of a change in trend. Usually.
Well...tomorrow is the Demmies turn...we'll see how the market reacts to all that "change in trend"...this will NOT be a stellar year in political cooperation.
Classmate Fred Fair forwarded
http://www.prosefights.org/shattuck/fredfair/fredfair.htm
http://video.google.com/videoplay?docid=4332830819848713435&hl=en