Here's a Bloomberg link to the same story, it's good to have multiple sources on stories like these...

http://www.bloomberg.com/apps/news?pid=20601103&sid=a90DLQrWr.YY&refer=us

Gee, in light of this raid news, I wonder if adding 92,000 troops is related to this strategy of engaging the Iranians?

Gates looks to add 92,000 troops to military:
Defense secretary sets 5-year goal, unclear how long Iraq surge will last

http://www.msnbc.msn.com/id/16576547/

My conjecture.

Oil is no longer considered a commodity by our government, but a "National Security Interest". Therefore, it no longer is part of the open and free market place, but whatever rules the Fed and Central Banks care to impose upon it to make sure it does not collapse the major economic players of the world.

CONNECTING THE DOTS?

From the news story up the thread:

The U.S. economy will continue to rely on crude oil imports -- which currently account for more than half the nation's oil consumption -- panelists said at a hearing before the Senate Energy Committee on global oil supplies.

From my comments yesterday:

Russia has admitted to a year over year decline in exports, but what is particularly interesting is the decline in exports since June, 2006. According to a chart in the following article, oil exports to countries outside the CIS have steadily fallen through December, by a total of 600,000 bpd: http://news.goldseek.com/GoldSeek/1168362120.php

The Big Three--Saudi Arabia; Russia and Norway--accounted for half of the exports by the top 10 net oil exporters in 2005.

According to the EIA, the Big Three showed a combined increase in Total Liquids consumption of about 600,000 bpd from 2004 to 2005.

If we plug in a similar increase in consumption for 2006, the 1.1 mbpd decline in Saudi crude production, the probable 400,000 bpd drop in Norwegian production, and a 300,000 bpd (?) decline in Russian exports to non-CIS countries, it looks like the decline in net exports by the Big Three, as of 2/07, from the 2005 average, could easily be on the order of 2.5 mbpd.

From the EIA's This Week in Petroleum (1/10/07):

Given that crude oil inventories were above the average range for this time of year, there was plenty of crude oil available to draw upon, making the large crude oil draw this week not as alarming as it may first appear.

Bremerton-based carrier Stennis to deploy in Persian Gulf:

By The Associated Press
WASHINGTON – The aircraft carrier USS John C. Stennis is scheduled to leave the United States this month for the Persian Gulf region in a Naval buildup aimed partly as a warning to Iran.

Doesn’t it seem like more than a coincidence that just as we see increasing evidence of declining oil exports that Bush implements a significant across the board increase in military activity in the Persian Gulf area?

Also, if your doctor called you and said that some lab results are not “as alarming” as they initially appear, would you be unconcerned?

I thought the EIA’s description of declining US crude oil imports as being not “as alarming” as it initially appears was interesting. In other words, the EIA believes that the crude oil import numbers are alarming, but not “as alarming” as they initially appear.

I noted yesterday that, based on the HL method, Saudi Arabia is about 60% depleted, Norway is about 70% depleted and Russia is about 90% depleted (Alan corrected my mistake of using the 85% number).

IMO, the 90% Russian number is more or less correct, at least for mature producing basins. Through 2006, the US Lower 48 and Russia have basically produced 100% of what the HL model predicted they would produce, after crossing the 50% of Qt marks, using only production data through the 50% of Qt mark to generate the predicted post 50% of Qt cumulative production. Based on the HL method, both regions are about 90% depleted.

The Lower 48 is producing about 4.3 mbpd (C+C), while Russia is producing about 9.2 mbpd (C+C). The difference is that Russia had to make up for the huge drop in production after the collapse of the Soviet Union, which implies that very sharp production declines are ahead for Russia.

And let’s not forget the fact that the Cantarell Field, the second largest producing field in the world, is crashing. And let’s not forget the fact that Pemex has tried to hide their true assessment of the predicted decline.

So, if the world is on the edge of a potentially massive decline in net export capacity, and if your country is addicted about a 5% per year increase in Total Petroleum Imports, and if you are a president who believes that the American way of life is "non-negotiable," what do you do with your military?

From Drudge:
http://www.breitbart.com/news/2007/01/11/070111142703.6qdsdjv9.html
Rice warns Iran against aggression after US arrests Iranian consular staff
Jan 11 9:27 AM US/Eastern

US Secretary of State Condoleezza Rice warned Iran that the United States won't "stand idly by" if Tehran tries to disrupt Washington's renewed effort to stabilize Iraq.

Speaking hours after US troops raided Iran's consulate in the northern Iraqi city of Arbil and arrested five employees, Rice said Washington was determined to crack down on Iran's "regional aggression"

Thanks for the link. I was quite surprised by the ignorance of almost all of the participants, Senators included. The guy from the IEA was most difficult to understand. I had to change my stalwart opinion of MIT cause the Prof from their was pretty clueless and loved the sound of his own voice. His comment that Iraq had more BOE equivalent than S.A. was a bit surprising even though he indicated Natty was the reason why. I guess former head of the Iranian Oil Company Dr.Bakhtari doesn't know what he is talking about.

I guess I was not surprised but certainly disappointed that everyone still thought of ethanol as the holy grail. I didn't know whether to laugh or cry listening to them stumble thru a comparison of corn vs. cellulosic ethanol.

The retired Colonel made some good points on adding the cost of defense to the cost of a barrel and how the American taxpayer was getting screwed as a result since we are maintaining the flow for the whole world.
In total the half truths and misconceptions were most disturbing that even the testifying participants were so ignorant was scary.

IEA has had feature chapters on Peak Oil since 1998. Where have u been? If u meant "EIA", they have addressed Peak Oil on their website and presentations since Y2k...

Conocophillips fails to replace its reserves for 2006. On a cursory glance the reserves seem much higher compared to last year but most of it was acquisitions.

Proved reserve additions, including sales and acquisitions, are expected to be approximately 2.6 billion BOE.

Reserve additions from acquisitions are expected to be approximately 2.5 billion BOE, reflecting the acquisition of Burlington Resources and increased ownership in LUKOIL.

It is hard to parse all of this because of the barrels added by acquisitions. But from the 2005 annual report, proved reserves at the end of the year were 7.9 billion. Acquisitions added 2.5 billion barrels and 2006 saw production of 880 million barrels. And reserves today are 11.1 billion barrels. That math doesn't quite add up; I think it is because the Lukoil investment was not counted in reserves in 2005.

You can see this in the COP annual report from last year (PDF warning):

http://www.conocophillips.com/NR/rdonlyres/B90AC8FA-4F11-4383-81C9-7677E...

So, reserves have grown substantially. But you are right that the bulk of the growth was through acquisitions. From a company perspective, COP is doing right by their shareholders by growing reserves. From a Peak Oil perspective, the reserves growth may not add anything to the overall worldwide reserves.

I live in Minnesota, and we love the warm weather! What I have noticed is that money not being spent on natural gas for heat or for high gasoline prices is going into other things. For example, the bars are crowded, and people are buying expensive drinks. When the economy is slow the bars are quiet and people morosely nurse cheap draft beer.

Possibly real estate prices will rise in Minnesota as they inevitably must fall in Florida and Arizona.

BTW, why do you continue to live in Phoenix? Family?

Yes, Bob, I've seen this here in S. NH/ N. Mass. I work nights, last night I was coming home late at 2-3AM. And there were more cars out there than usual, generally at that hour it's pretty quiet. And it was cold last night - how odd for Jan (?). If there was 2ft of snow on the ground I doubt there would have been that much "traffic" at that hour. (Where the hell was everybody going anyway??)

Here in Willamette Valley OR we just got our first real winter (not counting a little snow blow in Nov). Sailorman of Minn. will laugh, but we are having 3-4 days of below freezing weather (25 - 32 F) with ~3" snow. This part of OR is a best-kept-secret in terms of climate. We are farther north latitude than Portland ME but exceptionally mild. I might try growing olives.

People might drive a bit more in warm weather, but it seems obvious that heating uses way more fuel than such a minor blip in driving.

The BBC has published a transcript of a recording of Van Jolissaint's
reply which seems to have been part of a Q&A session.

http://news.bbc.co.uk/2/hi/business/6250327.stm

He does sound more diplomatic than the original story implied, but there
is no mistaking the playing down of global warming as an issue.

Well, that sucks. Greenhouse gases released, and we don't even get to drive our SUVs or run our Nintendos in return.

Hello Eric Blair,

Thxs for this info. We need to start a betting pool on which coastal city gets hit first from a huge methane clathrate burp/underwater landslide setting off a 100ft tsunami urban renewal project. I pick NYC, AUG. 2015, precipitated by a huge Cat 4 hurricane running up the coastline. Everybody needs to get their predictions in before the Coast Guard issues their warnings by creating a database from monitoring ship reports.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I assume Leanan posted this before but I just read Reg Morrisons excellent piece on Methane Hydrates and Hydrogen (which also is a good primer on peak oil, human nature, and overshoot ecology).

His home page is http://www.regmorrison.id.au/ Click on link for Hydrogen: Humanitys Maker and Breaker.

I was aware of positive feeback loops in climate science but until reading this piece I was unaware of how little it might take to reach the methane hydrate tipping point - the article above suggests its already happening.

And why arenet we hearing anything about this? Deffeyes talks about it in his book as being unviable as an energy source (due to instability) but I havent seen alot about it on the climate side??

Alas, too much to read. I think reading complex subjects is reaching a point of diminishing personal marginal returns. Im going to go chop wood for a while, even though I probably wont use it this year...;)

Ocean's haven't warmed enough to cause any kind of methane release deep out to sea. Couple that with the fact that there are vastly more enhanced sensors operating on these ships now (a good thing) and the fact that no source was quoted what-so-ever leads me to believe this is another form of 'yellow journalism', making a story where one did not exist.

Methane is always 'bubbling up' from the ocean in small or large quantities. Exactly how big is this increase, 0.1%? 1%? Besides that, methane 'surges' will most likely occur near the shoreline, where there is far less water depth and as such is far more sensitive to changes in water temperatures. I don't recall any environmental article I have ever read that suggests the 'surge' will start out deep at sea.

I wonder if this is what caused that "gas-like" smell in New York City last week?

Ok Eric,

I saw your post earlier, went away, thought about it.

...Problem is, Gas Detection is a shed load more complex than many would assume...

If true, then Methane Genesis is very disconcerting.

I am no expert in Tanker Gas Detection
I am no expert in Refinery Gas Detection

But I do know a reasonable amount about rig gas detection.

1. Some Assumptions (due to lack of evidence)

a. The Tankers are equipped with a sensor array.
b. The Sensors focus on METHANE EQUIVALENT
- Each natural gas has a different calorific value. Each Gas has a different H-C bond excitation when subjected to IR Radiation
c. Tanker sensors are calibrated to go alarm when they reach 0.25% LEL Methane Equivalent or, perhaps 0.5% Methane Equivalent.
d. LEL = Lower Explosive Limit
f. Methane LEL is regarded as 5% volume
(5 litres of Methane, 95 litres of Air.).
g. The tankers concerned are reasonably modern.
h. They are equipped with modern, accurate, calibrated sensor arrays.
i. The sensor array is :
i. Calibrated
ii.Designed to read for Ambient (=Environmental*) levels of Methane Equivalent.
*Rather than extracted gas from say, a well bore.

Now assuming all these things are in place, and that there is no risk of corruption (sensors painted over etc)
And assuming that there is no cross-sensitivity (I once set off a rig H2S System with a cup of Orange Juice...)... I proved my point, but was not popular therafter.

Then, it is time to start looking at Why these false positives are occuring.

First of all: Are they False?

IF:
The Tankers are Modern
The Sensor Array is modern
The Sensor Suite is Modern

Then, the chances are that the sensor array is screaming a truth.

What Truth?

Methane has a specific response.
Ethane (for whatever reason ...H-C Bonds for Ethane behave very badly when excited by Infra Red light. It is the Dennis the Menace of H-C Gases.

Other Gases behave erratically, but usually they form less than 5% of the total gas detected.

The Oil extractive industry focuses on Methane. It is after all , the most common natural, hydrocarbon gas.

So....

Tanker fleets , equipped with MG Equivalent sensors are alarming gas warnings at say 0.25% LEL.

Nothing else on board says that it is a leak.

Trouble is: your sensor array is extremely close to a man-made problem source.

This cannot be discounted.

Mmmm...

BUT you may want to consider a geological vector.

Thermomethanogenesis... (I hereby trademark this expression :-))

BUT and this is a big BUT:

Methane Genesis may be linked with the Mass Faunal Extinction of the Permian.

Worst Case:

If this report is true, then:

Eat, Drink and be merry. For tomorrow we die.

(along with everything else that weighs more than about 50 kilograms).

But it could be good sensors + leaky tankers.

I hate to say this, most politicians kick something into the long grass with this sentiment:

''WE NEED MORE RESEARCH''

But , actually, if the tanker fleet is equipped with ambient sensors, then the tanker fleet is superbly equipped for monitoring this potentially Life Extinction Event in almost real-time as it traverses the seas (esp. when it crosses the continental slopes).

This opportunity should not be missed.

It is literally a :

'Once in an Eon Experience . '

Is there a Caltech Doctor in the house?

Basically, it just gets worse.

If true, then we have gone over a major tipping point.

Now maybe, if we are lucky, then these responses are due to better kit, and Methane has always been generated, but we were not capable of recording it so accurately - until now.

I hope so.

Which is why geologic repositories are a waste of time and money, and the notion of storing waste for thousands of years is sorta goofy and misguided.

Stick them in dry storage casks aboveground with the expectation of revisiting the issue again in 50 or 100 years. We'll sure as hell not leave spent fuel in a repository anyways seeing it almost certainly has future market value.

Nuclear waste is not the one ring of Sauron that needs to be removed from the earth. It just needs to be stuck in concrete storage for the next several decades until market value matures.

It's sort of current-events driven. This Russia-Belarus thing has generated a lot of press coverage.

If I'd known they were going to run a story on it this morning, I'd have posted all the Russia stories in the comments there instead of in DrumBeat.

Its actually a bit worse than that because there was still a good deal of shut-in production from Katrina last January and that is not the case now. You could probably find actual demand and supply numbers matching up to last year on EIA site, but as you know, Im chopping firewood so cant do it...;)

Glad to see someone else getting on the band-wagon with me. Wait for the rest of the month, their may be some 250 billion weeks ahead.

Our right to cheap lattes is non-negotiable, Nate.

I don't post only credible stories here. Heck, I post CERA and EIA announcements, not to mention the occasional Jerome Corsi gem.

I did mention that Lewis is a supply-side economist. I wouldn't have mentioned that if I wanted you to think he was credible. ;-)

He has written for the Financial Times, Asian Wall Street Journal, Daily Yomiuri, Japan Times, Pravda, Dow Jones Newswires, and other publications.

WG, do you mean that should have read: "and other fruity publications"?

You completely missed the point. Lewis ain't no fool.
Read it again, I suggest.
He gives good advice on what back-pack to buy when the alignments get worse. On a site for investors.

It looks inevitable that there'll be a switch, here too, towards the guys who write for financial sites such as Agora, Daily Reckoning, GoldSeek et al, simply because they are very good in their analyses. Byron King has been posted here before.
There may be a policy against commercial sites, but Leanan broke it already, if it exists.

Example: a superb analysis of oil markets two days ago at GoldSeek by Gary Dorsch:

What’s Behind the Crash in Crude Oil?

On January 5th, US crude oil prices had already plunged 10% over three days and touched a low of $55 per barrel, on news available to insiders, but not yet known by the public at large. OPEC was cheating on its pledge to cut its oil production to 26.3 million bpd in December. Instead, the cartel pumped 27 million bpd or 700,000 bpd above it’s agreed upon quotas.

-----

However, the sudden plunge in crude oil prices to $55 per barrel, was all the more puzzling, when one considers that US commercial oil stocks had fallen from 341.1 million barrels on November 17th, to as low as 319.7 million barrel last week. The sharp drop in US oil supplies suggested that OPEC was honoring its pledge to cut output 4.3% in November, and to defend US oil prices at $60 per barrel.

While the media focused on the balmy weather to explain the sudden 10% plunge of crude oil to as low as $55 /barrel on January 5th, what initially triggered the drop was a surprise move by Saudi Arabia to slash the price of Arabian Light, its finest blend, by $1.75 /barrel to a $7.50 /barrel discount to West Texas Sweet, for its US customers, the deepest discount in 10-months.

Excellent graps too.

Nothing against the writers here, but guys, eat your heart out. Even if you don't agree, it's a great starting point for a debate.

Where else have I read that Iran is cheating on its OPEC quotas, and why?
And seen that tied in with Putin, and prices for gold, Euro and Yen?

Actually anomalous weather(at least for as long as we've been able to record things) has been a phenomenon on multiple planets in the pass several months. In fact I read an article not too long ago, indicating an increase in activity of the spot on Jupiter (including size and color changes) as well as a storm system over one of the poles of Saturn.

http://saturn.jpl.nasa.gov/multimedia/images/image-details.cfm?imageID=2352

The storm(s) which is/are similar in some respect to Earth Hurricanes was so intriguing to scientists partly because they did not think a Hurricane style weather formation of that size and intensity could exist and partly because the storm was churning up lower layers of the Gas Giant's atmosphere which scientists believed could give them an insight as to what lies below the surface levels of a gas giant.

Also I believe that Jupiter has stopped being a cyclops and is developing another eye. A second storm(red spot) was seen developing on Jupiter last year.

http://news.bbc.co.uk/1/hi/sci/tech/4781730.stm

Granted our knowledge of the solar system is fairly limited but these are phenomenon which scientists are saying are both rare and exciting. And there are some scientists speculating that increase Solar activity may be responsible for of the behavior we are seeing.

The trend is your friend. This has been most painful but market wants to keep going down. It appears a lot of the stocks have stopped moving down and maybe finding a bottom. But the futures are their own monster.
Have you seen an RSI on the NYMEX it has to be in the low teens by now heck maybe even lower.

When I went back over the price history, I was surprised at how long the bull market has been going on. From 2002 to 2006, inclusive, the average year over year increase in annual oil prices has been 21%.

I suppose that anything that has gone up that long is ripe for a pullback, for almost any reason.

The irony, as I think you pointed out, is that longer term prices are being set--at least partially--as a result of short term weather patterns.

The interesting point is that prices aren't falling because of any evidence of rising world oil production. To the extent that prices are falling because of fundamentals, it's because of slumping demand, not rising production.

The Goldman Sachs Commodity Index lost 15.1% last year. The Dow Jones-AIG commodity index gained only 2.1% last year (underperforming the SP500, T-notes, emerging markets, etc). Both indexes suffered their worst performance in five years.

Institutional investors are not as clever as many people assume them to be and are probably lowering their exposure to commodities now to chase whatever their best asset class was from last year.

If it wasn't for time wasting distractions such as email and Minesweeper keeping the GDP down, Peak Oil would have been reached years ago. Hubbert's only mistake was that he didn't foresee the PC and the 'Net. Technology will save us after all--through distraction.

In a hybrid the gas engine directly powers the wheels along with the electric motor.
http://en.wikipedia.org/wiki/Types_of_hybrid_vehicle#Full_hybrid

In the volt, it the wheels would only be powered by the electric motor with the gas engine supplying electricity to the electric motor when the batteries can't source enough.
http://en.wikipedia.org/wiki/Types_of_hybrid_vehicle#Series_hybrid

Technically the Volt is still a hybrid, but GM wants to differentiate it from current Prius like technology.

Mind you this is all hypothetical as the volt doesn't exist and won't exist until someone invents the batteries for it.