DrumBeat: February 3, 2007

A Civil War inside OPEC

A showdown within OPEC may soon erupt. Iran and Saudi Arabia are at odds over oil cuts. Could this fissure lead to OPEC's dissolution?

In This Corner

Iran and Venezuela have a few things in common. And, although both share a hatred for the U.S., the bond I'm referring to is their desperate need for higher oil prices.

Both have smaller production capacities than Saudi Arabia, so they would benefit from selling less oil at greater prices.

Global warming: the final warning

According to yesterday's UN report, the world will be a much hotter place by 2100. This will be the impact...

+2.4°: Coral reefs almost extinct

+3.4°: Rainforest turns to desert

+4.4°: Melting ice caps displace millions

+5.4°: Sea levels rise by five metres

+6.4°: Most of life is exterminated

Europeans hooked on Russian gas face tough choices in search for substitutes

Europe wants to break its decades-old dependence on increasingly unreliable Russian natural gas supplies amid fears that Moscow is using its vast energy resources as a foreign policy tool.

But there's no easy way out.

Green giant Russia to produce 1 billion tons of biomass for exports

[Minister for Agriculture Alexej] Gordejev says his country's current bioenergy production potential for exports stands at a whopping 1 billion tons of biomass per year. According to the official journal of Russia's agriculture ministry, 20 million hectares of land are immediately available for biomass production.

1 billion tons of biomass roughly equals 15 Exajoules of energy, or 2.46 billion barrels of oil equivalent, or the equivalent of 6.7 million barrels of oil per day. Russia currently produces some 9.15 million bpd of fossil oil.

EU will need imports to hit biofuel targets

Europe will need to import thousands of tonnes of bio-fuels to hit stringent new targets proposed by Brussels yesterday.

Don't blame Mexican tortilla crisis on biofuels, blame subsidized corn instead

We have received some sharp questions from readers on why we do not report on Mexico's widely covered 'tortilla crisis'. Don't these protests prove that there is a growing conflict between food and fuel? We don't think so. The questions stem from the unnuanced way in which mainstream media report on biofuels. The price increases of tortillas in Mexico are not due to biofuels as such, they are entirely due to the fact that corn and corn ethanol are extremely heavily subsidised in the U.S. and protected against foreign competition by high tariffs. Biofuels and U.S. corn ethanol are two entirely different things.

China: Increased search for offshore oil

China's top economic planner has called for greater offshore exploration efforts from local oil giants to meet soaring energy demand.

"Chinese oil producers are doing a good job extracting oil and gas on land, but not in the deep sea. More efforts are needed in this field," Zhao Xiaoping, head of Energy Bureau under the National Development and Reform Commission (NDRC), said on Friday.

North Sea gas and oil boom threatens dolphins

Marine conservationists have called for permanent protection of one of the UK's most important colonies of dolphins which is being threatened by a boom in North Sea oil and gas exploration.

Dmitry Orlov: Collapse and its discontents

It's been a couple of years since I started writing on the subject of economic collapse, as it occurred in Russia and as it is likely to occur here in the United States. Thus far, I remain reasonably content with my predictions: it's all lining up, slowly but surely.

Cyprus: Oil Dispute with Turkey Won't Go Before UN

Cyprus said Friday that it will not bring the oil exploration dispute with Turkey to the UN Security Council at the moment.

Government spokesman Christodoulos Pashiardis made the statement in an apparent response to a U.S. call for refraining from actions that might further raise the tension.

Iran: The war has already begun

As opposition grows in America to the failed Iraq adventure, the Bush administration is preparing public opinion for an attack on Iran, its latest target, by the spring.

Nippon Oil acquires North Sea oil/gas rights

Nippon Oil Corp., Japan's biggest oil refiner, has acquired stakes in six oil and natural gas blocks in the North Sea, a financial daily said on Saturday.

Analysis: European wind power

The market for European wind power capacity broke new records in 2006, according to the annual statistics issued by the European Wind Energy Association (EWEA). 7,588 MW of wind power capacity, worth some €9 billion, was installed last year in the EU, an increase of 23% compared to 2005.

Report Finds Energy Efficiency and Renewables Can Slash U.S. Carbon Emissions

The Solar Energy Society report says meeting that challenge in the United States will require Congress and the White House to make major changes in U.S. energy policy.

Silicon Valley Focuses On Solar Power

Silicon Valley is also poised to lead the way in developing alternative energy sources. Solar is in fact, the most rapidly growing energy sector and demand is driving innovation.

Tortilla crisis hits the poor as clean fuel drives up corn price

Tens of thousands of farmers, trade unionists and consumers gathered in Mexico City’s central square this week to protest against the rising price of the staple of the Mexican diet since pre-Hispanic times. “No corn, no country,” protesters chanted as they massed for the first big demonstration against Mr Calderón. Workers on the minimum wage could now spend a third of their earnings on tortillas alone.

The crisis, in which the price of tortillas has risen by 40 per cent in three months, has been blamed on a variety of factors, including hoarding by grain monopolies, rampant speculation and the North American Free Trade Agreement. Prices have also been affected by an increased US demand for corn as a source of ethanol, the alternative, ecofriendly fuel.

No time to waste in pursuing advances in energy

The administration is late getting around to dealing with the energy crisis. However, those of us in the environmental and conservation field are accustomed to the old saying "better late than never."

Comrade Hillary Tackles "Obscene Profits"

Ever the opportunistic populist, Comrade Hillary Rodham Clinton is seeking to make class warfare the hallmark of her 2008 presidential campaign.

Speaking before a room filled with hypnotized Democrats, Her Ladyship declared that she wants government to take excessive oil profits and "put them into a strategic energy fund."

15 points to break with oil addiction

1. Human addction to energy consumption has spiralled to an unsustainable level in which oil is the hard drug of the global capitalist economy.

Addax Petroleum Ups Security Measures in Nigeria After Contractor Death

Fuelling the future

Peak oil production is between 10 and 20 years' away, according to Europe's biggest car maker, Volkswagen.

After that, failing supplies and increasing demand will push fuel prices even higher. VW is calling for a drive towards a second generation of biofuels, claiming that first-generation fuels such as ethanol and biodiesel, compressed natural gas and liquid petroleum gas have different molecular structures, require the release of large amounts of carbon to produce (in some cases they release more CO2 than their equivalent fossile fuels) and require new production, storage and delivery infrastructures.

Peak Oilers' Error

Peak oil advocates argue that we are at or rapidly approaching the beginning of a long decline in oil production, having reached the "peak" of oil resources. Combined with the increase in oil use, some in the peak oil community are predicting dramatic consequences, says the Washington Policy Center (WPC).

These predictions, however, don't match the facts, says WPC...

Oil-rich Venezuela's leader urges energy conservation

With the zeal of a die-hard environmentalist, President Hugo Chavez plans to invest some of Venezuela's oil wealth in manufacturing solar panels and has begun giving out millions of energy-saving fluorescent light bulbs in homes nationwide.

Though his country survives on oil sales, Chavez is increasingly talking up the environmental cause and urging the world to cut back on oil consumption to prevent climate change.

Let Them Drive Corn

Facing a collapsing ideology, conservatives are now scrambling for damage control.

A canary in the Chinese coal mine

The wheat farmers of Donglu village can't sell their harvest. The wheat kernels are dark, sooty, hollow and twisted.

"Nobody wants to buy it, so we have to eat it at home," says Zhang Xiaojiao, a farmer in the village.

"Look at it," she says, brandishing a handful of the stuff. "It doesn't taste good. It tastes bitter. It's because of the coal pollution. But nobody cares about us, and nobody comes to investigate."

Limits to Growth co-author says collapse due to climate possible

If climate change sparks a global collapse this century, future historians are unlikely to acknowledge what caused it, says Norwegian scholar Jorgen Randers.

Canada does not see greenhouse gas cuts soon

It is unlikely that Canada will be able to reduce greenhouse gas emissions at all in the next few years, let alone achieve the major cuts needed to meet its Kyoto targets, Prime Minister Stephen Harper said on Friday.

Peak Oil Passnotes: The Iraqification of Iran

The war in Iraq has been a huge success for the elite in the United States, it is they who will eventually work with the Iraqi oil reserves and make the profits they so richly deserve. The same process will be undertaken with Iran, the first step being economic degradation, a move the United States will be successful in accomplishing.

Then ten years down the line, during the next Republican administration, the full Iraqification of Iran can begin. Or should that be the Central Americanisation of Iran. Simply destroy its infrastructure, reduce the population to desperation and they will pose you no threat, and the right people will eventually get access to the energy reserves.

Bolivian protesters shut down pipeline

Protesters forced the shutdown of a natural gas pipeline serving several of Bolivia's largest cities to demand that President Evo Morales broaden his petroleum nationalization and expand state energy company operations in southern Bolivia.

Venezuela vows Orinoco oil takeover by May Day

Venezuelan President Hugo Chavez on Thursday set the world's biggest oil companies a May Day deadline to surrender control of multibillion-dollar crude projects, accelerating his raft of nationalizations.

Support grows for new environmental body

Fear of runaway global warming pushed more than 40 countries to line up Saturday behind France's bid for a new environmental body that could single out — and perhaps police — nations that abuse the Earth.

How language on climate change has evolved

A brief look at how language on climate change has evolved, gradually showing that man-made factors are to blame.

Ten years left to avert catastrophe

If one or both of the ice sheets disintegrate, sea levels would rise disastrously to inundate most of the major cities of the world as well as low-lying and densely populated countries such as Bangladesh.

Climate Change: Case Closed?

Perhaps the scariest thing about the IPCC report is that is, by the nature of its composition, probably conservative.

Heating up: A gloomy UN-backed report is published

The other part of the report’s job is to make predictions about what will happen to the climate. In this, it illustrates a curious aspect of the science of climate change. Studying the climate reveals new, little-understood, mechanisms: as temperatures warm, they set off feedback effects that may increase, or decrease, warming. So predictions may become less, rather than more, certain. Thus the IPCC’s range of predictions of the rise in the temperature by 2100 has increased from 1.4-5.8C in the 2001 report to 1.1-6.4C in this report.

This was the IPCC saying 'We told you so'

No doubt we will go on hearing grumbles from flat-earthers and paid-up sceptics among economists and in the oil industry, but science is no longer on their side.

DVDs of the Boston ASPO-USA Oil Conference are now available at: www.aspousa.org

The set consists of 9 DVDs covering the complete 2-day conference including Q&As. They have been edited to show PowerPoint slides integrated into the speeches from the original presentations, so text and graphics are easy to read. (Note that the preview on the website does not show the integrated PowerPoint slides) .

Cost for the complete set is $75.00 + $7.95 shipping & handling for the 9 DVD set. They come in 2 DVD cases and are shipped immediately via priority mail.

So, I have been thinking about Saudi a lot and wondering just what they are up to. One exercise I like to do is to consider what my actions would be if I were running their oil business. My own thoughts are that I want to extract every possible penny from my depleting resources. To do this, I am going to manipulate the price just as high as I can (they do have the power to manipulate prices by withholding production) and see just how much is too much. I saw that the world dealt with (admittedly, some dealt with it worse than others) $75/bbl crude. I want to get the price back up there and test the waters again. I may want to push it to $100/bbl. I want to know just how much money I can extract without destroying my business. I am no longer satisfied with $25/bbl oil like I once was, and I will do all I can to keep prices high.

If I see that inventories are filling up worldwide, or that prices are falling, I am going to cut production. It is not my desire to supply the rest of the world with cheap energy. It is my desire to make them pay just as much as I can, without massively encouraging alternatives or a shift away from my business. I am not going to increase production until I see inventories start to come down, and prices get back toward those levels that were making my country so wealthy. I won't sell incremental barrels today for $50/bbl if I think I can get $75/bbl for them next year.

If my oil production has peaked, I think I would admit it to the world. I would be glad to admit it. I explain to my country that even though production has peaked, we will still be producing a lot of oil for many more years, and now we will get an incredible premium because of the pending supply/demand imbalances. The coming years will be prosperous indeed.

This is the way I believe they are running their business. In light of that, the moves they have made over the past year now are very consistent with this business model. That's why, when I look at them and their production moves, I say that if they have peaked it is certainly convenient that it caused them to reduce production just as inventories got full and prices started to fall shortly after that. They have not made a move yet that didn't make sense in light of market conditions. If they keep production down as inventories get pulled down to normal levels and prices are over $60, then I will say their moves are now inconsistent with market indicators.

So, how would you run their oil business if you are the oil minister of Saudi Arabia? What moves would you make that are different than what they have done over the past year? And would you open up your reserves to outside scrutiny? Why or why not?

It seems to me that the first rule of being in power is job security, not that your comments contradict this. But your early-on emphasis on maximising profit might not be the key consideration.

Is it reasonable to suggest that the Saud Family is principally facing an existential crisis (or a percieved one, if there is any difference) at this point? So the balancing game and the swings up and down of supply offerings might be the 'dance done to prolong the dance itself'.. Or at least until some other solution presents itself.. and there one is again advised to be careful what one wishes for, in case what 'presents itself' is a geologically imposed energy-sanction.

Of course, the decisions a manager makes would ideally be based on good, detailed oilfield information, which we here lack, it seems. But to read back from the actions we see, I have to first ask whether they are guided by Adam Smith and those market economics assumptions, or if other priorities and endgames (besides 'maximise shareholder value') are at play in the decision process.. I think 'maximum profit' is a security blanket in western thought, even if it, like the 'security' of carrying a handgun, may not be as guaranteed as one wants to believe.

Bob Fiske

I agree with both of you. I would add to it that they want to keep alternatives out of the picture. Make oil expensive but not overly so.
Maximum profit and job security = better w/o alternatives.

Robert, let's try this step by step.

I don't see what the Saudi's have to gain from announcing either their true reserves, or the fact they they have passed peak. When we say Saudi's, let's be clear we mean the House of Saud, not the country, by the way, a difference that may yet come home to roost.

I'm guessing the present situation serves the Saud House just fine. If we presume that their stated reserves are not accurate, they have information that others don't, and can build future policies on that. Very helpful, both politically and economically, to know more than others. Their present position doesn't depend on what they really have, just on what people believe they have.

A Saudi peak announcement can lead to global economic panic, something that, today, most likely wouldn't be good for them, or their US buddies. Prices may go up, but they may plunge as well, better keep the economy quiet and rolling in a steady stream of income.

Admitting that they have less than stated reserves might cost them face and status, both abroad, just look at OPEC, and at home, where the House of Saud is tolerated only beacuse of oil revenues.

What's best: an aura of unlimited profits, or one of large, but limited ones?

So no, I don't see what they have to gain by coming clean. But maybe you see things I don't.

So no, I don't see what they have to gain by coming clean.

I feel that way about their reserves. It doesn't really serve much of a purpose. If they are less than stated, then they would lose face as you say. Their OPEC production quote would also be reduced.

I guess the same loss of face would happen if they admitted to a production peak, but I imagine that this would ensure huge profits - far beyond the windfall of the past couple of years. I just go back and forth as to whether admitting to a peak would be something I would want to do. I think I would. I would want to foster supply/demand concerns, so that my remaining barrels have greater value.

I see your point, and we agree on most of it, but in your initial post you did say that you would come clean about that peak, mainly because of extra profits, if I understand you well.

What is more important to me than it seems to you is the possible shock for the world economy that a Saud peak announcement might bring.

And that would make those added profits "not secure" at best. There could be a massive shift towards other producers, or other fuels, there could be much more (geo-)political tension, their region is already volatile to the extreme. Uncertainty and finances are hard to mix.

If I were Abdullah's chief economist, I'd tell him to be very careful, and ride the train he's on now for as long as he can hold on.

Of course, if Abdullah knows what we don't, that there is a peak, he will have to look beyond that train ride as well. But, being his economist, I think I'd still advise him to sit tight for the moment.

Lastly: Abdullah, if he announces a peak, runs a serious risk of being targeted by his population for mismanaging the resources. Whaddaya mean it's almost gone?

Lastly: Abdullah, if he announces a peak, runs a serious risk of being targeted by his population for mismanaging the resources. Whaddaya mean it's almost gone?

That's just the thing, though. It wouldn't be almost gone. They would have enough for many more years of production - years in which they can extract absolute top dollar if scarcity is perceived. That's why I don't think the citizens would revolt if they announced a peak. It's not like the oil is going to be gone in a few years and the citizens living under bridges.

But that is still at odds with what the rulers have been telling their people of how they have enough oil to last for a century or more. If they have already produced around 107 billion bbls and they ONLY have another 85 billion bbls that might seem pretty ominous. It is going to take a while for people to understand that they are going to get paid a great deal more money for that remaining 44%.

The other thing the Saudi leadership needs to worry about is how the US is going to react when we realize how they have been lying to us about OUR oil. The Saudis might fear that when we realize that they cannot raise production to meet our projected demand growth, we might decide to take the oil under our protective custody (a la Iraq). We might want to fire their management for malfeasance and put in our own people.

re: Saudi Public reaction and US reaction to such an admission..

This was why I (so vaguely, I guess) was thinking in my first reply about considerations other than immediate profitability increases.. to jump back the 'Addiction' theme, a pusher can't tell his addicted customerbase that he will certainly be running out, even if there's some great benefit 'in the meantime'.. "The last few hits always feel the best!, Even if they cost a bit more!"

Of course jumping to the Drug analogies seems as audacious and uncalled for as comparing your political enemies to the Nazis.. but, there it is. There does seem to be some truth in the analogy.

"There's no greatness without Audacity"
-Oscar Wilde

By announcing a peak KSA would lose the political clout of seeming to be a swing producer. Also it would energize the world to look for alternatives sooner than otherwise. Such an announcement would be evidence of lying which might have political consequences.

I agree. People and organizations in power tend to be conservative. I mean conservative in the classic sense - resisting change. If you're on top in the current situation, naturally you'll be wary of any change. Those on top have little to gain and much to lose if things change.

Al-Qaeda has denounced the House of Saud for selling oil too cheaply to the infidels, instead of husbanding the resource for future generations. Announcing a peak would be playing into Al-Qaeda's hands.

I would say that restricting/husbanding output while charging whatever the market will bear is in the interest of both the House of Saud and its subjects. Such a viewpoint has great implications for the future of Iraq.

Iraq is currently outside OPEC's control and will remain so for as long as the US military is there. This provides the motivation for the resistance, whose actions serve to keep production low and effectively forestalls any actions to increase it. Thus, as the Saudi's have stated, they want the US to remain, but for different reasons, of course.

It's also interesting to note that Iran has the same basic interest as Saudi--hell, we might as well lump all oil exporters together, which is OPEC's main raison d'etre--stretch out production and maximize price. I think the US invasion of Iraq has effectively ended the "grand bargain" between FDR and Saud, and the mixed political messages we get from the Saudis is an artifact of a power struggle between the nationalist faction and the US Compradore faction within the Royal Family.

Given the above assumptions and their dynamics, it's actually in the interest of ALL the West Asian regimes to keep the US mired in Iraq thus stifling its ability to become the next "swing producer" until world oil supply has declined to the point where the concept of "swing producer" no longer has meaning. Thus the corollary is for the US to evacuate Iraq while doing everything it can to revamp its oil industry, although this won't be in the interest of the oil "majors" either, as their interests are essentially identical with OPEC's.

These boys are looking further ahead than they get credit for. The Sauds haven't remained in power by being utterly stupid. They anticipate, they divide and rule, they hooked up with the US for the only secure protection available to them, in short, they've played their hands quite well.

It's not smart to assume that today they would have lost their smarts. They're not going to sit and wait in total apathy while their wells run dry. KSA is one of the biggest clients of the US arms industry, and has been for years. The House is armed to the teeth. We won't find out if they have nuclear bombs till they use them, but I wouldn't dare bet against the possibility.

If there are problems with Ghawar, or the entire Saudi reserves, they will have their eyes on sharing both Iraq and Iran oil reserves, once these have been "secured". Aramco is a very professional team, well able to do what Exxon and Shell do, and they'll want and get their share in exchange for further support of the US. The White House can't make moves in the Middle East without the Saudi's, and why should they wish to? KSA is a voice that carries a ton of clout, and the US needs that, every inch of it.

They'll be like Siamese twins, each risks dying without the other.

It's one thing to buy armaments and another to be able to apply them effectively. The appraisal of Saudi's military capability is very poor. All their purcahses were no match for Saddam being in Kuwait. And remember they were duped by false US satillite photos into thinking they were next, which promted them to "invite" the US Oil Protection Service to occupy their country.

I find it very interesting who wants the US to remain in Iraq. Actually, it's easier to list those wanting the US to leave--the Iraqi nationalists, which comprise both Sunni and Shia groups. ALL the other regimes in the region want the US to remain, all citing various reasons, none of which have to do with oil. Even the Green Zone government allied with Iran wants the US to stay, as do the Iranians. This reality was reflected in the recent interview of Moktada al-Sadr in the Italian press and discussed by Juan Cole at his indispensible blog Informed Comment.

From both the Peak Oil and Climate Chaos perspectives, higher prices and decreased production are positives, while increased Iraqi production would be a negative since it would cause prices to fall and CO2 emissions to increase [The same goes for tar sand production increases]. Such a perspective seems bizzare since it implies an ongoing war in Iraq, but such is the current reality, although there's no guarantee that Iraqi oil production will rise after the US leaves given the dynamics of Iraq's internal struggles.

"If there are problems with Ghawar, or the entire Saudi reserves, they will have their eyes on sharing both Iraq and Iran oil reserves, once these have been "secured". Aramco is a very professional team, well able to do what Exxon and Shell do, and they'll want and get their share in exchange for further support of the US."

Damn!!! Never thought of that...makes damn good sense though...

Thank you.

These things need much more attention. People in power have one goal first and foremost: to stay in power. In order to do that, they have to look ahead. That can be done one of two ways: plan and execute action, or anticipate others doing it. Mostly, a combination of the two is the most logical.

From what I see, people in general see the Saudi's as a group of rich guys who sit back while their source of wealth will run out, whether in 2 or in 20 years, or 60 for all I care. For the Saudi's themselves, that is not the view. Of course it's not, they are the power that will do about anything it takes to retain that power. They look beyond the depletion point, and they know much better when that'll be, which is a huge advantage.

They have three things going for them right now, vis-a-vis the US:

  1. Lots of oil
  2. Lots of money, especially US dollars. The Fed can print till the cows are well home, but the Saud's can dump much more into the market short-term then can be printed stateside. They can kill the US economy. Really, they can.
    The Fed can print $10 billion tomorrow, but not $200 billion. It would collapse the dollar. KSA has much more then those $200 billion, and can dump it in 5 minutes.
    So their take is: give me a reason not to.
  3. Influence in OPEC, the Middle East, and the muslim world as a whole. Without Saud interference, the US influence in the region would vanish into thin air.

These three "powers" are being played out as we speak by the House of Saud, as a leverage against the inevitable depletion of their resources. I give you something now, if you'll give me something later. And they do have the smarts to not be easily cheated by empty promises.

Aramco will be one of the companies moving into Iraq and Iran, well, at least according to the plans being drawn up. We'll have to see how it plays out. The suggestion that the Sauds have all those weapons and don't know what to do with them is naive. They've covered their bases alright, but they're not trigger happy, that's like showing your hand in a poker game. Let the US do the shooting, that's the deal after all.

So...you're saying the US military is basically one, big mercenary group for the Saudis? That's ludicrous, that's insane, that's...not a bad deal for the Sauds at all.

US military ground forces, the type that really matter, are being rapidly used up in the Iraqi meatgrinder, and as the following show, the Saudis have virtually no offensive, let alone a defensive, military capability. And as to the battle capabilities of the Iraqi resistance, even someone without any military training should be able to understand these after-action reports, http://www.juancole.com/2007/02/4-us-troops-announced-killed-troops.html...

From the National Review, not a source I usually use, http://www.nationalreview.com/nr_comment/nr_comment020102.shtml

"As the ruling princes meet in secret family conclaves in their Riyadh palaces, they will have another consideration to bear in mind. They know that they have spent hundreds of billions of dollars on military equipment, but to no avail. The Saudi army is not an effective fighting force, and many, if not most, of the airforce pilots are only mercenaries on hire from other Islamic countries such as Pakistan. Maintenance and morale are equally poor. In their one and only experience of battle, Saudi soldiers ran away from the Iraqis during Desert Storm in 1991. Had the American military not been present, Saddam Hussein could have captured Saudi Arabia as swiftly and easily as Kuwait."

All indicators point to no improvement in Saudi military readiness/ability. "The small Saudi Army is denied ammunition to prevent it staging the kind of coup that overthrew Iraq’s British-run puppet monarch in 1958. A parallel `White Army,’ composed of loyal Bedouin tribesmen led by US `advisors, watches the army. The US Air Force, now based in Iraq and the Gulf emirates, is ready to intervene to protect the royal family in the event of a coup attempt." http://www.ericmargolis.com/archives/2004/06/the_storm_headi.php

Then there's this thread, http://www.strategypage.com/militaryforums/40-238.aspx and this one, http://www.worldaffairsboard.com/war-iraq/27818-saudi-will-intervene-ira...
Lastly, "Why couldn't the Saudis defend themselves?

"They had spent easily a hundered billion dollars since 1970 buying the best US equipment and training. Saudi Arabia spends more per capita on defense than any country in the world and has done so for years.

"In 1989 its expenditures of US$14.7 billion ranked eleventh among countries of the world. Nonetheless, this level of spending reflected a declining trend from a peak of US$24.8 billion reached in 1983. ... The share of gross national product (GNP) originally earmarked for defense in 1990 was 16.9 percent, materially below the peak of 22 percent reached in 1983 but still about twice as high as the Middle East as a whole. Defense outlays constituted 35.5 percent of central government expenditures in 1989.
Even today the Saudis spend more on defense than South Korea. The amount of American-made military hardware sold to the Saudis is stunning. They had the best hardware that the US, Britian and France could sell them. Given all this, why couldn't the Saudi army fortify its border with Kuwait and grind down Saddam's army?

"There are two answers, one general and one specific. The general answer is that the Saudi can't defend themselves because the Saudis can't do anything. Foreign labor performs all the real work in the Kingdom, from wasking clothes and picking up garbage, to construction, to the oil industry. Why should defense be any different? The specific answer is that a lot of the defense spending is wasted in corruption and graft. A lot of it is spend on the Saudi Arabia Nation Guard whose job is to protect the royal family from internal rebellion. But I think that isn't the real story. The true answer is that dispite all the equipment and training over decades, the Saudis simply do not know how to use what they have. Their culture does not create or support the kind of soldier required to use the complex tools at their disposal, nor does it promote indenpendent thinking or problem solving. The equipment is useless without strategy and tactics." http://rantwraith.blogspot.com/2005/02/frontlines-house-of-saud-1980-to-...

Business as usual is definetly in their best interests. Upsetting the apple cart by declaring peak would create many disagreeable events; covetousness, on the part of others, outrage, on the part of the population, as pointed out above. Etc. Very very bad for the oil industry - surely bad enough to offset ‘greater’ profits. (Many of these points are made above - I just started to type after the question...)

Then, just as important, there is loss of face - the fact of having to admit that the real world is not quite as it was presented, or that situations can change. Keeping a rosy, stable, all is OK face on things is practically mandatory; difficulties are deemed to be something that can be dealt with cleverly when they arise; the winner is the one who anticipates correctly and saves face for everyone. Loss of face means instant loss of power, eg. in OPEC, etc. Peak oil is an open secret, to be cleverly managed. Note, Western authorities do the same thing, but with a lot more noise in the media, it is a question of cultural style.

Lastly, there is the small matter that Saudi, in the sense of the Royals and those directly responsible or involved may themselves prefer the status quo, as they have been maintaining their position through a more or less fixed strategy since post WW2. Admitting that strategy, or the real world state of affairs, comprises upcoming difficulties, may be hard, even 'repressed.' My guess is that beyond commercial considerations, coupled with some good old geo-political calculations and acquisition of clout, no real planning for depleting resources has been made. This is evident in the dire impoverishment of their huge ‘young’ population, their use of slave immigrant labor, their grandiose projects, their stranglehold on the population, their lack of investment in other industries, etc. Conservative .. to a high degree; as their power both at home and abroad rests on it..

The curse of black gold, indeed.

Imagine if Saudi Arabia had had half of the planning intelligence of Norway. They could have invested themselves into hundreds of years of prosperity and a renaissance for their culture including the muslim faith.


Al-Qaeda has denounced the House of Saud for selling oil too cheaply to the infidels, instead of husbanding the resource for future generations. Announcing a peak would be playing into Al-Qaeda's hands.

That has been a common perspective. If that was true with the historical belief that the Saudi's had plenty left...

How would the decision trees change for all parties if we were Post Ghawar Peak and there was a reduced amount each year???

For one example;
Would someone "Seize it" before it was too late?

If they announced it, and the world believed that the age of oil is coming to an end, we could see demand destruction on a huge scale after a few years, which would lead to a collapse in prices.

Kind of like what happened in the early 1980's - world demand for oil *did* decrease for a while.

Ericy, yes there was huge demand destruction in the 1980, but that did not result in a collapse of oil prices. In fact, the exact opposite happened, prices went through the roof. Prices did not drop to normal levels until 1886 when production began to ramp back up. Demand destruction does not cause prices to drop....normally. Only if we have a severe depression will prices collapse. Of course most of us doomers expect that to happen....eventually. But I expect to see $300 a barrel prices long before we see $30 oil prices.

Ron Patterson

Prices did not drop to normal levels until 1886 when production began to ramp back up. Demand destruction does not cause prices to drop....normally. Only if we have a severe depression will prices collapse.

Oh, so THATS what the civil war was really about!

Just kidding Ron, I know you ment 1986 :P

Of course, as any animator knows, you have to have a wind-up before a punch. They call it 'anticipation'..

.. and in the case of a broad acknowledgement of PO, you'd have to balance the likely extreme reactions: the eventual demand-destruction against the initial and then persistent hoarding.. everyone would be building out SPR's and backup SPR's, no?

Bob Fiske

Robert, very good post, thanks. But I have a question. Now I know you really do not know what Saudi's true crude reserves are. None of us do. But we all have our suspicions. Here are a few guesses that were current on February 20, 2006:

Oil & Gas Journal....................264.3 billion barrels
BP Statistical Review..............262.7 billion barrels
Colin Campbell.........................159 billion barrels
Dr. A.M. Samsam Bakhtiari...120 to 140 billion barrels
Ron Patterson..........................70 to 80 billion barrels
Robert Rapier..........................???
Anyone else who would venture a guess. ????

I realize you may be reluctant to venture a guess, but please do. Let’s suppose for a moment that there was a way to accurately measure Saudi’s reserves. (Although we both know there is not.) And then suppose this were a contest and the one with the closest guess would win a million dollars. What would be your guess? Okay, my guess of 70 to 80 billion barrels is not specific enough so I would guess 75 billion barrels.

Ron Patterson

Actually, I have done this, but I would have to dig for the number. What I did was assume that the reserve number was accurate in 1982 when they closed the doors to outside scrutiny, and then just draw down by the amount produced in the interim. That avoids inclusion on that big reserve increase that showed up in 1990. But, it also presumes that there have been no increases in proved reserves in the interim, which is probably too conservative of an estimate. But, like I said I would have to dig up the number I came up with. I think it was in the 110 billion barrel range.

Edit: It was 95 billion that I had calculated, presuming no additions to their reserves since 1982:


95 billion barrels! Wow, I am shocked. Saudi cumulative production is around 108 billion barrels. That means they are at about 53% of URR.

Perhaps you and I are a lot closer on Saudi than I thought. We both think they have peaked anyway.

Ron Patterson

So Ron, to follow up on the role play Robert suggested, and with the addition of Robert's 95 BB, what would you do if you were Abdullah?

I'll make a first suggestion: buy a ranch in Paraguay.

HeIsSoFly, I would have to think about that for awhile. It is quite possible that the Royal Family is in denial, that they really do believe they have over 260 billion barrels of reserves. And you must realize that they really believe that if the price of oil gets high enough "alternatives" will replace oil and they will be left with a lot of worthless black goo on their hands. I suspect however that they now believe the price can go a lot higher before that happens than they used to believe.

They realize that if the world realizes that, not just Saudi but the entire Middle East reserves, are grossly overestimated then the price would go through the roof and those "alternatives" would be developed that much sooner. Of course you and I know better but they do not.

If I were Abdullah, and thought the way Abdullah thinks, then of course I would do exactly what he is doing. But If I were Abdullah and thought the way I think, I would tell the world what is really going on, watch the price skyrocket and make a lot more money.

And hope of course that the world's economy would not collapse because of very high oil prices.

Ron Patterson

Hello HeIsSoFly,

This is an issue I have been pondering for some time: what will the wealthy do WTSHTF?

Will American billionaires and multi-millionaires bail on the US when the going gets rough? Or will they be true heroes to help promote Peakoil Outreach & Biosolar Powerup like Richard Rainwater appeared to be doing at one time?

EDIT: [At what point will Tiger Woods use his fortune to help convert golf courses into vegetable gardens?]

Consider the Revolutionary War Patriot of wealthy financier Haym Solomon: http://en.wikipedia.org/wiki/Haym_Solomon

Will rich people like P. Diddy, Oprah, Britney, Tom Cruise, George Clooney, Jay-Z, Barbra Streisand, Jane Fonda, Paris Hilton, Harrison Ford, David Letterman, Jay Leno ante up their fortunes to help their fellow American? Will Paul McCartney, the Harry Potter author, and Elton John give their all for the UK downtrodden?

Will Bill Gates, Warren Buffet, Vinod Khosla, and the other CEOs who retired with huge 'Golden Parachutes', join the struggle to paradigm shift at home -- or is buying a Dubai house, sipping cocktails, and watching the implosion on big-screen HDTVs the plan? The South American Eco-Ranch? The Russian Dacha? Buying the big island of Hawaii?

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


I'll bet you they will all cling to the stubborn illusion that money can buy them shelter from the storm.

But neither the value of money, nor of anything else for that matter, can be accurately predicted from where we're sitting now. Land, perhaps, so we can grow food. Better learn hoe to farm.

Or would we prefer ammunition? If we have both, are we safe? Or do we need people around us as well (so we can sleep in peace)? If so, we'll all need shelter. Better learn how to build it.

Have we thought of a clean water source for everyone? Better learn how to test it, can't trust water on sight no more.

I find it hard to make such a list, there's questions, uncertainties and insecurities popping up at every angle. Maybe the illusion of money's power is a weakness, not a strength.

You ain't buying my land or food or shelter or ammo with no amount of cash. So what's its value?

Wonder of it would be possible to get some of the rich but not super rich to move to Sweden and invest in businesses that makes local society more robust? Its easy to figure out loads of ideas that makes a society more robust. Wonder how we can become more competitive for attracting such investments?

Hello Magnus Redin,

No problem--the beautiful Swedish women will attract hordes of rich, single Americans! Get your Govt. to promote this more by aborting male fetuses. Just Kidding!

Hello HeIsSoFly,

Thxs for responding. If Richard R. has gotten through to alot of these people by his example of his Eco-Tech Farm--these people are probably close to a tipping point of using their detritus cash to max. leverage into either Biosolar Powerup at home or further escape into the last refuges of detritovore addiction. No sense waiting until the buck is worthless.

I believe Tiger Wood's wife Elin is now pregnant. If Tiger becomes Peakoil aware-- he choice should be for golf-course conversion for his child's future. I need to google around to see if there is some way to email him.

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

You ain't buying my land or food or shelter or ammo with no amount of cash. So what's its value?

If you are the government, a squad of marines can take your land, food and shelter in about 15 minutes. If you are rich, a squad of Blackwater employees can do the same thing.

Face it, the people with money power and influence will be perfectly capable of getting whatever they want, regardless of what happens in the future.

True, of course,

Yet, the logic doesn't seem to apply too eloquently in Iraq, nor did it in Vietnam.

And what will you pay your Blackwater guys? Paper dollars? To do what with?

Why would they stay on your side? What do you have to offer?

We get into warlord territory here, Enviro Attny, and warlords seldom start out as the richest guys in the hood.

Well obviously the Blackwater guys get half your food and women. Jeez, don't you know how the warlord business works?

The fractioning of the Nation-State (to make it very brief) is well on its way, with both globalisation and ‘regionalisation’ (communities territorial, ethnic, religious, of class, etc. etc. closing in on themselves and banding together - US Christians, the famed ‘terrorists’, immigrants in France, Sunnis in Iraq, etc. etc.) contributing. The model some people think of is medieval, with feudal overlords and serfs, more properly a dystopic modern version thereof, far more deadly, such as huge swatches of land in Paraguay (Bush) or Argentina (Jane Fonda) ..but energy and goods flows and an ‘efficient’ large ‘economy’ - or for that matter a ‘peaceful’, ‘green’ small economy cannot be sustained in that way, or not in the way that people imagine it. Gated communities, golden lands for the rich, and homes off the grid don’t exist in vacuo, are set in a larger frame. Blackwater guys can command food and women as long as they have weapons and cars and even then their lives may be very brutish, boring, and seem senseless to them.

New models are sorely missing.

The only serious new models I've seen are from some of the outstanding science fiction writers of the past fifty years.

Social scientists seem (in general) to be afflicted with a terminal case of mental constipation when it comes to big ideas.

A little more food for thought:

Will Paris Hilton use her fortune to house the downtrodden in her hotels? Will P.Diddy use his bucks to buy clothing for the poor? Will Babs Streisand finance going back to 'The Way We Were" ala medieval lifestyles? Will Madonna blow her bucks on worldwide birth control and sex education so girls can be 'Like a Virgin'? Or will they load up their families on private jets to escape the starving mobs?

"[At what point will Tiger Woods use his fortune to help convert golf courses into vegetable gardens?]"

A whole new take on "eat your greens", har har! I'd be leery of eating any vegetables grown on an ex-golf course, at least for many years. The chemicals (pesticides, herbicides, fungicides) they use on those things are just hideous, though I believe there is some sort of trend towards a kinder gentler way of golf course management.

Hello Sgage,

What do you think the rich will do--stay or bail? I think they will buy citizenship and property in Dubai, Russia, etc, wherever FFs makes the living easy. This will make North America, Europe, China, and Japan crash even faster for those left behind as their rich and superrich join the exodus to get comfortably setup before the crash. Who knows?

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

"What do you think the rich will do--stay or bail?"

My strong sense is that the superrich are hedging their bets, i.e., maintaining pieds a terre (please pardon my French) in more than one place (Switzerland seems to be one common denominator), keeping their assets similarly distributed, and their passports up to date. This is purely anecdotal, based on the few superrich Davos-going folks that I consult for, and what I can gather about what their peers are up to.

I do not see an outpouring of directed efforts and resources towards amelioration of the, ahem, situation. Although I must say, several of the wealthiest people I know are extremely generous and way liberal in their political persuasion... it will be interesting to see what happens. On the one hand, they can imagine certain kinds of disruption, but on the other hand, they have a sort of naive faith in The System in the end. We shall see.

95 Gb WITHOUT any reserve growth or new fields. Don't toot that horn yet Ron :P Can you name one region on the plant that had substantial oil reserves that didn't experience reserve growth of any kind? :)

Hothgor, is it possible for you to post anything without being so very insulting? Is that really necessary?

Yes, I can name several places that have experienced reserve shrinkage instead of reserve growth. Oman for starters. The estimated reserves of Yibal have been downgraded considerably. Also, over the past 15 years, Mexico has downgraded their estimated reserves by over 50 percent. And Shell, as a company, has also experenced "reserve shrinkage" rather than reserve growth.

Reserve growth is caused by originally underestimating the amount of oil in a field, and it has been shown that that estimate is often too high instead of too low. It remains to be proven if this was ever the case in Saudi Arabia.

Reserve growth is also caused by "improved recovery techniques". But that has proven to largely be an illusion. At any rate those new techniques have already been in effect for over a quarter a century so that is largely already factored in. Saudi fields are not growing.

And, last but not least, reserve growth also happens when higher prices make more expensive and harder to recover oil, more economical. Therefore more reserves can be the result of higher prices. Jack 2 is an example of this kind of reserve growth. Milking very old fields for that very last barrel is another example. Saudi does not have any Jack 2's to find as the Persian Gulf is very shallow and has already been throughly explored. And milking a field for extra barrels only happens well after a field has peaked. Saudi is now milking tiny pockets in Abqaiq for those last few barrels.

The only addition to Saudi's reserves, due to new discoveries, was in 1989 when the Hawtah Trend fields were discovered. This little patch of very tiny fields have already peaked at about 200,000 barrels per day and are now in decline. At any rate they only added a couple of billion barrels to their total URR if that much.

Again, I believe Saudi Arabia's reserves are in the neighborhood of 70 to 80 billion barrels.

Ron Patterson

Yet Oman experienced reserve growth at some time so the point still stands. The rest of your post is full of hot air in a vain attempt to show one tiny country as the norm while ignoring the rest of the world! Most of the big KSA fields were discovered with the help of American and European oil expertises. As such, they will, with a high degree of correlation, follow the same reserve growth trend that most American and European found fields at the time went through. This is a point I tried to make to WT on many occasions, but he never seemed to get it.

Such is the nature of denial.

Again Hothgor, you get more insulting with every post. Is that necessary? Cannot you post like a gentleman instead of a like spoiled brat in a food fight?

Most of the big KSA fields were discovered with the help of American and European oil expertises. As such, they will, with a high degree of correlation, follow the same reserve growth trend that most American and European found fields at the time went through.

The Dammam field was discovered n 1938. Ghawar, Qatif, Abqaiq and several smaller fields were discovered in the 1940s. Safaniya, Khurais, Manifa and several smaller fields were discovered in 1950s. Berri, Zuluf, Shaybah and about a dozen very tiny fields were discovered in the 1960s. This was the last decade when fields of any size were discovered. No more giants have been found since.

Bottom line, it is foolish to say that Saudi's giants will experience reserve growth. The average age of their giants is over 50 years. Ghawar, their supergiant, will by 60 years old next year. Any reserve growth these giants, and one supergiant, were expected to experience has already happened.

There comes a time when reserve growth simply peters out you know. That time has long passed for Saudi's giants. The fact that they are all in decline, as Saudi admits, means that they are all well past their peak.

Ron Patterson


Oman is fine example of an oil state struggling with the reality of depletion.

The stuff they are doing now indicates a level of desperation hither-to-for never seen in Oman.

Steam injections on multi-muliple wells to extract what is basically sludge.

You dont bother with this if your light sweet fields are in good shape.

As stated, restated and re-re stated ad-nauseum on this site:

Once a country / region peaks, it never achieves better flow rates.

Once the King and Queen(s) peak, no amount of rooks and knights and pawns make up for the difference.

Technology enables better extraction on otherwise conitinuing decline.

Infill drilling and puddle sucking in proximity to existing infrastructure (that would never have been in place but for the kings and queens) prolongue the life of ageing fields*. That is what is happening in the UKCS.

You know this already, Darwinian, I am not teaching my granny to suck eggs, but I am surprised that others still fight against this.

* Since it is Saturday night, It may be worth mentioning that 1970's porn queens had a technique and a name for this:

Raising the Dead :-)

95 Gb would be 1P reserves, you would have to add the YTF (yet to be find) and reserve growth. The ASPO is saying YTF= 12.4 Gb. Note that the ASPO URR is for crude oil only.

RP: "Anyone else who would venture a guess. ???? suppose this were a contest and the one with the closest guess would win a million dollars. What would be your guess?"

Both KSA & Saudi Aramco have been consistent and almost faultless in their public statements for 36 months. My interpretation of these presentations leads me to believe:

1P Reserves are 240-Gb
2P Reserves are 30-Gb
3P Reserves are 70-Gb
Discovered sub-commercial resource is 240-Gb
Undiscoverd recoverable resource is 200-Gb
Past production to 06/12/31 is 120-Gb

In total, a URR of 900-Gb

IMHO, KSA has depleted 35% [120Gb/120+240Gb] of its original 1P Reserves (they claim 29%).

Note recent KSA's URR discussion: http://www.theoildrum.com/node/2220#comment-153023

no cheques, please send small unmarked bills

By my calculation, 900 Gb would mean that Saudi Arabia's territory would literally float on 6.5 cm of oil!

Ther House of Saud is a family of 5,000 oligarchs who "own" the largest production in the world. If they admit to peak oil their 20 mm subjects will realise how badly they've been cheated, and a bloodbath will likely follow to rival the Bolshevic or French revolutions. Also, the US dollar will really and truly collapse and their US Bonds, stocks and real estate become illiquid and possibly worthless.
If I were King of Arabia, I'd probably lie as long as possible about the true state of the reserves and production while rapidly selling as many US assets as possible without an abrupt collapse in the price of the US dollar. I'd buy gold as quickly as possible, and I'd try to make allies in the Islamic Fundementalist movement by giving them financing and refuge in my territory in the hopes they'd stave off beheading my family when the Islamic poop hits the fan.
Isn't it funny that this seems to be whats happening?

OMB...those were my thoughts exactly...it would be political suicide for Saud to admit Peak in their country. They MUST NOT panic the world or their subjects. Once it gets out, the game of status quo is over. It is a precarious balancing act they must walk.

Oilmanbob and Dragonfly, my sentiments exactly. As I have stated many times before, when the world realizes that Saudi reserves, and therefore the rest of Middle East reserves, have been grossly overestimated, this will be the bomb that rocks the world.

Kuwait has already undergone a thorough survey of their proven reserves. Before the began, last summer, they announced that they would reveal the results after the survey was finished. Then they announced that they had finished, but would not announce anything because they were "not obliged to do so."

No doubt, they had many discussions as to what might happen if the world found out that Kuwait had less than half the reserves they originally claimed. And they very wisely kept their mouths shut.

Ron Patterson

This is the last time the issue of Kuwait's reserves were even mentioned:

Middle East Economic Digest
November 17, 2006

These new processes are also being employed on Burgan, the world's second largest oil field. Al-Zanki rejects outright claims that the field has passed its peak. "In fact, we'd like to use it as a swing producer in the future," he says, confirming the continuing importance of the state's most profitable resource. Production capacity at Burgan currently stands at 1.7 million b/d and the plan is to increase that to 1.9 million b/d or even 2 million b/d over the next five years.

Despite the upbeat tone, Al-Zanki is unable to answer the lingering questions about the state's proven oil reserves. "The Ministry of Energy is formulating a response," he says. "It's in their hands now." Other senior oil officials in Kuwait have spoken of the increasing frustration over the issue. "We should have responded straight away," says one. "Now whatever we say, no-one will believe us."

But wouldn't an announcement of peak and impending decline be just the thing to catalyze a worldwide scramble for alternatives?

It might not impact the House of Saud (and Big Oil) in five years but in ten, fifteen, or twenty, it would certainly cut something off the hoped-for long, profitable tail.

Also, as others have, I raise the point of political instability -- rulers who once appeared to be beneficial parasites but, in the absence of future oil revenues, are seen only as parasitic might have to skedaddle to Montreux or Dubai years ahead of schedule.

On the subject of US inventories, it has been reported that they're high. Compared to three or four years ago, they certainly are. On the EIA website, though, inventories in 1982 were even higher than today.

What's so important about the five year average as opposed to a longer timeframe?

An excellent question. Another good question is, why aren't reserves quoted in days of consumption? And, how does today's 'cover', in days of use, compare with what we had in, say, 1970?

(Actually, the number of days cover is occasionally used, but total barrels is somehow more important.)

Reserves are quoted in consumption terms. It's called the R/P ratio and it's so large they do it in years (not days).

1970 remaining reserves & resource: 45 years (16,425 days)
2007 remaining reserves & resource: 64 years (23,360 days)

(Actually, the number of days cover is occasionally used, but total barrels is somehow more important.)

That's because from a refiner's perspective, all that matters is how many barrels are available in his tank. If he has a 2 day supply, but his tanks are filling up, he is going to cut back on his purchases. It doesn't matter if 10 years ago he had a 5 day supply at the same level if he hasn't installed additional tankage (and that is a low priority capital expense).

On the subject of US inventories, it has been reported that they're high. Compared to three or four years ago, they certainly are. On the EIA website, though, inventories in 1982 were even higher than today.

1982 is irrelevant, because what is important is how close you are to being full. The tankage availability in 1982 is not necessarily the same today. What you would need to know is how much spare capacity is available.

Robert, Have you been talking to Dmitry ?

"If the challenge is to avert planetary self-destruction, then let's all get on the same page: formulate a project plan, define the next steps, and start executing." Then you realize that the person you are talking to is serious, and the situation becomes awkward. "

Good luck with the "if I were king" excersizes in intellectual masterbation.

Batten the hatches and take stock of your Profound Locale folks...

Your analysis is like one that seems similar to classical economics in its assumptions that people act in a rational fashion. While I suspect there are fairly strong tendencies in KSA to try and deal with the oil issue in a rational way, one would have a tough time trying to sell the idea that the Saudis are 'rational' in a larger sense, unless you consider the medieval feudal kingdom structure of their society to be a rational one.

My own expectation would be that there might be a fair amount of rationality among high-level policy making people in KSA (including King and main Princes), but that there are strong currents of irrationality at lower levels represented by the level of petro-engineers who may (or may not) have a much more accurate grasp of what the overall oil picture is vis-a-vis depletion and spare capacity. And these people are who the policy-makers depend on for the... well, policy making. I see no reason to believe that, at this oil-engineer level, one would find any more rationality or acumen than one would find in say the engineers who predicted the North Sea would sail along until 2010 at max levels, or any similar such group. Look at the Exxon thread and their broad dismissal of PO based on tar sands and 'oil shale.' In fact, if one considers the Exxon and other US-based oil companies as occupying an analogous position in the US as the ARAMCO people occupy in KSA, you would likely get a very optimistically skewed picture of US oil capacities and capabilities. As WT has pointed out, there are even a few who still insist the US has not yet passed its peak.

I see no reason whatsoever to believe that the ARAMCO people are somehow more capable of delivering a true picture of their oil situation than are the US oil industry people.

Saudi Arabia is an interesting and important country for a number of reasons. It's history as a nation is short and intertwined with the recent history of the United States to a remarkable degree. Going way back, it appears that President Rooseveldt made a deal with the Suadi royal family, which was as simple as it was profitable. The United States would support, protect and co-opperate with royal family, with military force if necessary, in return for Saudi oil. In reality Saudi Arabia became a U.S. protectorate and valued partner. There have been ups and downs in the relationship and friction, but basically the alliance has held for the last sixty years.

Saudi Arabia has gone through enormous changes during the last fifty years. Population growth has been dramatic. Six, seven, eight children are the norm. Saudi has one, if not the fastest growing populations on the planet. I believe currently the Saudi population is growing a over 8% a year! The population is also one of the youngest in the world. With a substantial majority under thirty. Unemployment is massive. Estimates vary between twenty and thirty per cent. Good jobs are hard to find, without the right connections. At the same time there are hundreds of thousands of young people with excellent qualifications who are frustrated and increasingly bitter and angry at how their country is governed or perhaps that should be miss-governed.

At the same time as unemployment has grown the living standards for the majority of subjects has fallen substantially. The oil revenues simply can't keep pace with the rapid growth in population.

At the same time as many young Saudies have received educations abroad, they return to a society which is still basically fuedal in its social and political structure. In truth all normal political activity is banned as we would recognise it in the west. About the only "safety valve" where one can express ones discontent is through religion.

The Saudi Royal family, which the United States has promissed to support, is fabulously wealthy, but ridden with strife and factions. The different factions appear to balance each other out, leading to something close to inertia and making "reform" impossible.

Saudi is a country sitting not only on oil, but also on an enormous powderkeg, which could explode at any moment, given the smallest of sparks.

Civil strife or a revolution in Saudi Arabia would draw in the United States almost immediately. It's almost a paradox that whilst Saudi appears "stable" it is also incredibly dynamic, like a pressure cooker waiting to blow.

"Reformists" in the royal family are aware of the enormous problems they face, how on earth do they placate and control the legitmate asperations of their subjects, firstly by creating jobs, without releasing powerful social forces that might sweep the monarchy away. The Saudi royal family are balancing on the edge of a sword.

If it's true that the royal family have wasted the nations oil legacy and reserves are far less than normally assumed, this would function as the spark that would lead to an explosion in Saudi Arabia that would have implications far beyond its borders.

In reality Saudi Arabia became a U.S. protectorate and valued partner.

And they have stuck to that position thru thick and thin. The last thin being 9/11 and the fact that the then-Dems (see eg. M. Moore’s film) blamed the Saudis for 9/11, as 19 of the ‘terrarists’ were Saudis, etc. etc. The Sauds rode that out, understanding that it was garbage for the public, as they were certainly assured of such by BushCo. They were forced to join the ‘anti terrorist’ league in some measure - some have said it was in their interests, but it was not, they know how to deal with dissidents and need no advice - but they made nice.

In the subservience league, that is going very far. World wide it was understood as an extra capitulation, and showed that KSA is far weaker than it pretends to be.

A wee bit of something to think about in relation to a big change in the Iraq fiasco (and I ain't referring to Generalissimo Bush's 'surge':

Private Saudi citizens are giving millions of dollars to Sunni insurgents in Iraq and much of the money is used to buy weapons, including shoulder fired anti-aircraft missiles, according to key Iraqi officials and others familiar with the flow of cash.
. . . the U.S. Iraq Study Group report said Saudis are a source of funding for Sunni Arab insurgents. Several truck drivers interviewed by The Associated Press described carrying boxes of cash from Saudi Arabia into Iraq, money they said was headed for insurgents.
In one recent case, an Iraqi official said $25 million in Saudi money went to a top Iraqi Sunni cleric and was used to buy weapons, including Strela, a Russian shoulder-fired anti-aircraft missile. The missiles were purchased from someone in Romania, apparently through the black market, he said.

And we're beginning to see the results. Stinger missles are what forced the Soviet adventure in Afghanistan to end.

The Black Hawk helicopter shot northeast of Baghdad on January 20th was reportedly brought down by a shoulder-fired surface-to-air missile.


Thats about right.

Rule number 1:

Maximise the return on your assets

As would any good family business. (which is all KSA really is).

Russia is doing the same BTW. - Cannot blame them for learning Capitalism... we showed them how.

The boot is on the other foot and its kicking...

I agree with this Robert. But doesn't this kind of logic apply only when you know that you are cose or very close to your peak production?

Hi Robert. I agree completely with the bulk of your story, however, I believe you are wrong that the Saudis would admit to being post peak. I invite you to reconsider this point, based upon the following considerations.

RR wrote:

If my oil production has peaked, I think I would admit it to the world. I would be glad to admit it. I explain to my country that even though production has peaked, we will still be producing a lot of oil for many more years, and now we will get an incredible premium because of the pending supply/demand imbalances. The coming years will be prosperous indeed.

The thing to note is that the consequences for admitting peak occur regardless of whether peak has actually occurred. That is, if admitting peak makes for a prosperous future, it might also be the case that talking up peak prior to actual peak (ie. claim "we may have peaked" when they know they haven't) might also bring a prosperous future. According to your narrative, there appears to be no sensible reason why the profit maximizing time to admit to peak should coincide with the actual peak itself.

If you want to claim that the Saudi's would admit to peak when it occurred, and attribute this to a profit motive, then you need to explain why talking up peak early, or admitting it late, would not produce even better profit outcomes. There appears to me no obvious reason why this would be the case.

Therefore, if we accept profit sensitivity as the basis for the narrative (which I do), then it appears likely that the Saudi's would not admit to peak, for the simple reason that they have been so keen to keep their actual position with regard to peak occluded for so long. The timing of actual peak bears no relation to the appropriate time to admit peak within the context of maximizing profit. They are likely to keep their actual oil position occluded until which time they deem it profitable to reveal. There is no obvious reason why this time should coincide with the actual peak of oil production.

I think I just said the same thing about 4 different ways, but I hope it ended up being quite clear.

Hi Dot,

I appreciate your thinking here; good point:
"If you want to claim that the Saudi's would admit to peak when it occurred, and attribute this to a profit motive, then you need to explain why talking up peak early, or admitting it late, would not produce even better profit outcomes."

I also wonder:
1) It may also be the case that the motive for "not telling" is part of some other pattern, even habit.
2) I wonder if one might construct a scenario where they start to do something like (as noted upthread - they haven't done)...say they will set an example for the world by investing a certain percentage in solar, wind, Transit Oriented Development (and I may as well add: no more human trafficking).

If I were king I would do exactly what they are doing... I would see denial as both maintaining demand for the last possible moment and, meanwhile, I would not be so sure I would mantain my uneasy perch on the throne if all my citizens realize over half our treasure has been spent, with no huge fund set up for future generations. The ungrateful wretches might even think I was in some way responsible. Anyway, if I had any thought of coming clean, the rest of the royals would remove me in a flash.

It has long been lucky that the majors, who are well aware of the exact sa situation, are looking at the dismal future from the same perspective. Consider the current xom chair... will he be voted hundreds of millions in retirement - as was his predecessor - for his valuable services if shareholders begin to focus on declining reserves everywhere? Even worse, might shareholders and/or the board revolt as they realize he is not successful in replacing reserves? His clear incentive is to deny as long as possible.

Regarding price, even common knowledge that less oil will be produced in the near future will not necessarily affect price much - the laws of supply and demand will still hold. If production stays in balance with consumption then price will not move much... once storage tanks are full refiners simply can't buy any more to store for future needs, and their lack of buying will lower price. Consider gold... we are far past peak gold, but price has not come close to inflation over the past decades. Of course, some exporters might choose to export less, and future prices will almost certainly climb.

Well, someone else has been reading my emails! Those Meddling Kids!


"When Tyler first started working on his kudzu-to-ethanol project, the first three trials had negative results for alcohol.

"However, later I found that gases were collected in balloons," he said. "In the fifth trial I used a Breathalyzer, and it showed the presence of alcohol. Now, looking back, I thought the first three trials did have alcohol, but it just didn't show up."

I've wondered if there was a way to use the profligate and many times accessible weed for some benefit. Of course many of the other rules of Ethanol (Save fertilizing, planting and irrigating) will have to be considered, tho' I wonder if distillation could use concentrated solar, and whether the byproducts would still be useful as a soil nutrient, as this student had originally been testing Kudzu for..

Bob Fiske

I wonder if there are any details on how he is doing this. I would imagine the sugar content in Kudzu is very low, which is why he is having trouble getting results. You need a cellulosic process for this, but that is well beyond your average high school science project.

To conduct his experiment for the science fair and beyond, Tyler had to build a still. But before he could do that, Jablon had to fill out application forms with the U.S. Department of Revenue in Cincinnati for a federal permit to build a still on the school campus.

I had to do something similar in grad school to synthesize TNT. I went through a lengthy process with the ATF. For some reason, they get really suspicious if you want to make TNT. :)

I had to suspect that the sugar content was low, considering the type of plant it seems to be, but I didn't know for sure..

So here's hoping for some success in Cellulosic, neck-and-neck with fusion.. the tortoise and the snail race on!


Of course, the other direction I think of with a mass of transportable surplus vegetation is the biogas generation, ala mssr Pain. Don't know the efficiencies of the process, but you get heat, methane and good soil fertilizer (and principally the needed weed-managment) on the benefits side of the sheet, and you don't have to get rid of all that water in the distillation, it is working FOR you. ..If I understand the processes correctly.


(pardon the repetition of the same link so often.. I know there have been municipal level projects using bio-wastes in France, India and elsewhere for heat/methane co-gen, but don't have time for that research project)

Of course the sustainability of the highways gets brought into question again with this kind of topic, though the balancing benefit of an additional supply of soil-nutrients must work in its favor, as we seek to replace the NG-supplied Nitrogen and Ammonia fertilizers to whatever degree we have to.

Bob Fiske

In today's print edition of "The Wall Street Journal" on page A4 there is a story by John J. Fialka on the U.N. report on global warming that I found especially interesting. Herewith the first paragraph:

"WASHINGTON--U.S. government scientists Friday said the long-term outlook for global warming may be more dire than suggested by this week's United Nations' report, which they say doesn't fully address the impact of clouds and melting glaciers."

What I found of special note was that the whole article's thrust was that things may be much worse than suggested in the U.N., and also that there are large uncertainties--in other words, things could be much MUCH worse than suggested in the U.N. report.

When the "Wall Street Journal" prints an article, people take notice.

Dear Don,

Calm down, get a grip... at least I believe that's the rhetorical trick one uses to frame one's opponents.

Methinks it's time to batten down the hatches and tighten the riggin' there be choppy waters and dragons ahead! Pull in that bowline and splice the mainbrace, boys!

I was talkin' to a tar the other day, in a tavern over a cup of grog, who actually took part in crunching numbers for U.N. in minor though not insignificant capacity.

According to him the report on climate change is a compromise. So many countries were involved and so many different interests, that one spent literally months debating the meaning of single words. Single words. What did these words mean in different languages and how could one translate them and agree on which language would form the basis of the final document. This was apparently a long, tedious and exhausting experience for all concerned.

What I'm getting at here is that the report is a very "Political" document. That is it is "Compromise". What can we all, or most of us, agree on without coming to blows!

My friend mentioned that a more "radical" group of younger climatologists are privately tearing their hair out because they think the official report isn't strong enough, basically we may be rapidly getting close to various tipping points sooner than most people realise. That we may be heading for a rise of four degrees in fifty, not a hundred years, but keep that to yourself and don't tell the kids.

Fair winds be with you always, shipmate!

You are right to bring this up.

The IPCC is essentially a commitee.

Committees (In my experience) tend to find for a result that tends towards an average:

Neither too conservative or too extreme.

They want to appear sufficiently concerned but not be blamed for panic. This is always true where predictions are concerned.

May be two thirds of the time, a committee gets it two thirds right.

But it is worth pointing out that a Camel is in fact a race-horse designed by a committee..

Committees, like modern business is now addled with Group-Think.

Trouble is, such committee systems are particularly bad in dealing with tip-points and the possiblity of chaos as a variable.

We are in uncharted waters.

And committees rarely make for good leadership.

Yup! With more than 2000 scientists contributing you get a conservative, compromise position - everything is watered down; its the only way the thing can be published at all, so people agree as they don’t want their work and pov to be entirely wasted.

An interesting aside to this is how participants in the debate over wording have changed. At the first IPCC assessment, two of the biggest naysayers were KSA and Kuwait. This time, apparently China was prominent. Given the Chinese government's obvious tolerance for serious environmental change, I'm quite worried about their future role in climate change and fossil fuel consumption.

On othe op-ed page (same day) is a piece by Philip Stott suggesting that 75% of global warming is caused by cosmic rays! I'm not making this up! I'll paste it here and hope WSJ doesn't get upset.


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Political Science
February 3, 2007; Page A11

I confess I was afflicted by a profound world-weariness following the release yesterday of the latest gloomy machinations from the Intergovernmental Panel on Climate Change (IPCC). The U.N.'s global-warming caravanserai, founded in 1988 by the World Meteorological Organization and the United Nations Environment Program, had this time pitched camp in Paris, in order to issue the "Summary for Policy Makers" relating to Working Group One of its "Fourth Assessment Report: Climate Change 2007." This is the group that focuses on "The Physical Science Basis" of climate change, and its summary was greeted with the usual razzmatazz, the Eiffel Tower's 20,000 flashing bulbs being symbolically blacked out on the evening before. Further IPCC reports are due this year, one in April from Working Group Two, on the impacts of, and adaptation to, climate change, and another in May, from Working Group Three on climate-change mitigation.

But it is the science summary that always gives rise to the jamboree -- with journalists, politicians and eager environmentalists desperate to claim that this particular report is the last word on climate change, that it represents a true consensus, that the world is doomed, and that we must recant our fossil-fuel ways. Moreover, as in 2001 with the Third Assessment Report, Friday's release was preceded by speculative leaks, the political shenanigans and spinning beginning even before the final text had been haggled over and agreed upon.

Unfortunately, the IPCC represents science by supercommittee, as rule 10 of its procedures states: "In taking decisions, and approving, adopting and accepting reports, the Panel, its Working Groups and any Task Forces shall use all best endeavors to reach consensus." I bet Galileo would have had a rough time with that.

In this context, it is vital to remember that science progresses by skepticism and by paradigm shifts: A consensus early last century would have given us eugenics. Moreover, the IPCC does no original research, nor does it monitor climate-related data; its evidence is instead from selected secondary sources. But, above all, this supercommittee is more political than is often recognized, rule three firmly reminding delegates that: "documents should involve both peer review by experts and review by governments."

Friday's summary and "best estimates" of temperature-rise by 2100 (as compared to preindustrial times) are thus little more than a committee compromise chewed over by governments with different agendas: an average potential rise of three degrees Celsius (up from 2.5 degrees in 2001); a probable rise of between 1.8 to 4 degrees; a possible rise of between 1.1 to 6.4 degrees. So you can take your pick, also bearing in mind that there are groups outside the IPCC predicting cooling by one or two degrees Celsius. Moreover, the conclusion that climate changes seen around the world are "very likely" to have a human cause is wonderful Alice-through-the-Looking-Glass talk.

Unsurprisingly, the report will please neither a Humeian skeptic nor a rabid apocalyptic. Indeed, even before it appeared, environmentalists were incensed that predictions for the rise in sea levels this century have been lowered to between 28 and 43 cm (11 to 17 inches). They want the polar bears to be drowning now!

For the skeptic, however, the problem remains, as ever, water vapor and clouds. Enormous uncertainties persist with respect to the role of clouds in climate change. Moreover, models that strive to incorporate everything, from aerosols to vegetation and volcanoes to ocean currents, may look convincing, but the error range associated with each additional factor results in near-total uncertainty. Yet, there is a greater concern. Throughout the history of science, monocausal explanations that overemphasize the dominance of one factor in immensely complex processes (in this case, the human-induced emissions of greenhouse gases) have been inevitably replaced by more powerful theories.

Worryingly for the IPCC's "consensus," there is a counterparadigm, relating to the serious uncertainties of water vapor and clouds, now waiting in the wings. In the words of Dr. Henrik Svensmark, director of the Center for Sun-Climate Research at the Danish National Space Center: "The greenhouse effect must play some role. But those who are absolutely certain that the rise in temperatures is due solely to carbon dioxide have no scientific justification. It's pure guesswork." A key piece of research in this emerging new paradigm was published in the Proceedings of the Royal Society A (October 2006): "Do electrons help to make the clouds?"

Using a box of air in a Copenhagen lab, physicists managed to trace the growth of clusters of molecules of the kind that build cloud condensation nuclei. These are specks of sulfuric acid on which cloud droplets form. High-energy particles driven through the laboratory ceiling by exploded stars far away in the galaxy -- cosmic rays -- liberated electrons in the air, which helped the molecular clusters to form much faster than atmospheric scientists have predicted. This process could well explain a long-touted link between cosmic rays, cloudiness and climate change.

The implications for climate physics, solar-terrestrial physics and terrestrial-galactic physics are enormous. This experiment ties in elegantly with the work of certain geochemists and astronomers, who for some time have been implicating cosmic rays and water vapor, rather than carbon dioxide, as the main drivers of climate change. Indeed, they have put down up to 75% of all change to these drivers.

Cosmic rays are known to boost cloud formation -- and, in turn, reduce earth temperatures -- by creating ions that cause water droplets to condense. Calculating temperature changes at the earth's surface -- by studying oxygen isotopes trapped in rocks formed by ancient marine fossils -- scientists then compared these with variations in cosmic-ray activity, determined by looking at how cosmic rays have affected iron isotopes in meteorites. Their results suggest that temperature fluctuations are more likely to relate to cosmic-ray activity than to carbon dioxide. By contrast, they found no correlation between temperature variation and the changing patterns of CO2 in the atmosphere. But the mechanism remained far from understood -- until last October, that is, when the team in the Copenhagen lab may have discovered it.

Who knows where this exciting research will lead? What it unquestionably shows, however, is that the science of climate change is far from settled, and most certainly not by a government-vetted committee policy "summary" from a U.N. supercommittee.

The inconvenient truth remains that climate is the most complex, coupled, nonlinear, chaotic system known. In such a system, both "doing something" (emitting human-induced gases) and "not doing something" (not emitting) at the margins are equally unpredictable. What climate will we produce? Will it be better? And, if we get there, won't it, too, change?

This is the fatal flaw at the heart of the whole global-warming debacle. Climate change must be accepted as the norm, not as an exception, and it must be seen primarily as a political and economic issue, focusing on how best humanity can continue to adapt to constant change, hot, wet, cold or dry. The concept of achieving a "stable climate" is a dangerous oxymoron.

We must hope that IPCC Working Group Two on adaptation will set a wiser agenda in their April report.

Mr. Stott, professor emeritus of biogeography at the University of London, is co-editor of "Political Ecology: Science, Myth and Power" (Oxford University Press, 2000).
URL for this article:

Slate has an interesting collection of oil-industry photographs from the Magnum Agency...


Wow...those are awesome pictures. Really puts a face on the industry...worldwide.

ASPO February newsletter (http://www.peakoil.ie/newsletter/en/htm/Newsletter74.htm):

791. Regional Assessment – MIDDLE EAST (minor)
792. Norwegian Contraction
793. ASPO Norway
794. The Peak of Peaks
795. An Open Letter to CERA
796. Oil & Gas Journal Database
797. Production, Supply, Extraction or Depletion
798. Oil Prices
799. The Soil Association addresses Peak Oil
800. ASPO Canada
801. EU Seventh Research Framework Programme (FP7) call for proposal

The ASPO has been saying that "regular oil" peaked in 2005 for several years now. Is there any statistics out there to confirm this? For the ASPO, "regular oil" does not include heavy oil or deepwater. I would guess that none of the major agencies keep statistics for these separate categories, correct?

I'm working on it. It's hard to verify, you would have to exclude oil from tar sands (mostly Canada and Venezuela). Most public database (IEA, EIA, BP) includes oil from tar sands.

dbl post

cynus, my annual analysis of the ASPO database over the last five years confirms that 2005 Peak. But u are in error that it has been there "for several years". The Peak was moved to 2005 exactly a year ago. Prior to that, Colin Campbell and i had determined it was in 2004 based on the oil consumption and reserve info available in the Spring of 2005. In January of 2005, he had set a target for Conventional Peak for 2006. In April 2004, the date was thought to be 2005. It was 2003, in the previous month. And for the two years prior to that it was believed to have occured in Y2k. The Y2k Peak was extinquished by a new and significant production record set in Feb 2004.

Our last TrendLines review was on Wednesday this week. Campbell has revised upward past consumption by 28-Gb and reduced the future undiscovered component by 26-Gb. Further, in an email today, he advised me that he has also reduced the URR by 50-Gb overall (to 1850-Gb). With still 119-Gb of Conventional Oil "to be found" included in the URR database, the Peak Date has much opportunity to move to and fro.

These new calculations puts the Hubbert Peak at August 2005 (from April) with a suggested Peak Rate of 66-mbd. You have surmised correctly that EIA, IEA & OPEC do not track Conventional Oil. We receive spreadsheet data from many of the modellers but to my knowledge, none of the oilco's track CO other than in a very generalised fashion (to the nearest 100-Gb).

Who's "we", Frauddy?

F*uck off

In this issue, the ASPO claims that the minor middle east producers-- Bahrain, Dubai, Oman, Qatar, Sharjah, Syria, Turkey, and Yemen--peaked in 2000. Does this jibe with your database Khebab?

They don't say that Qatar has peaked but their graph is showing a decline from 2005. Qatar has reached a new maximum at 0.806 mbpd in 2006. I don't have data on crude oil only for the other countries.

My partner and I find it mind-boggling the IPCC released its report on climate change and is waiting until April to suggest solutions. This is worrisome because into the vacuum created by this delay rush a skads of half-measures like the ones in the Yahoo! article posted on Drumbeat yesterday - it included some truly bizarre suggestions such as "clear out your closet.

I think when people see a huge problem matched with feeble suggestions to combat it, they feel powerless. For example, on a BBC call-in show yesterday (World Have Your Say) a UK expert suggested a handful of familiar window-dressings -- he could only come up with five, instead of the de rigeur ten suggestions! He didn't really fundamentally address automobiles or animal agriculture, which between them make up more than 35% of emissions causing activity and which are both addressable on a government and personal level. No surprise then that someone called in later saying they concluded there was really nothing one can do to diminish one's contributions to global warming. Noone disagreed.

Can anyone think of a reason the report on climate change and the one on suggested solutions should be decoupled? It certainly can't be because the report on solutions is still in draft format awaiting some critical breakthrough?

With so many known solutions already out there for governments and individuals, it seems like a conscious decision has been made to manage the report's impact before peddling weak recommendations.

Can anyone think of a reason the report on climate change and the one on suggested solutions should be decoupled?
It's just the way it's been set up from the start, there's different groups working on different aspects. Phase one is only science findings.
This need not be so bad, it gives the writers and thinkers an idea of what they'll be up against when formulating their recommendations for adaptation etc.

IPCC website
Working Group I "The Physical Science Basis"

Acceptance and approval at the 10th Session of
Working Group I, 29 Jan - 1 Feb 2007, Paris, France
Information for participants
Release: 2 February 2007

Working Group II "Impacts, Adaptation and Vulnerability"

Distribution of final draft report 22 December 2006
Letter to governments - comments on SPM invited by
16 February 2007
Acceptance and approval at the 8th Session of
Working Group II, 2-5 April 2007, Brussels, Belgium
Information for participants

Working Group III "Mitigation of Climate Change"

Distribution of final draft report 12 Feb 2007
Acceptance and approval at the 9th Session of
Working Group III, 30 April - 3May 2007,
Bangkok, Thailand
Release: 4 May 2007

Thanks. Nice information.

However, since the final draft is locked on 12 Feb and there is only a 1.5 month time difference between Group II and Group III final drafts, will the Impacts study itself (versus the science behind it) even figure in the Mitigation report?

To me, since there is little likelihood Group III has any dependencies on Group II's final report, a more effective strategy might have been a one-two punch. Here's the Problem. Let it sink in. Two weeks later: Here's the solution. Shape the debate.

HeIsSoFly wrote:

This need not be so bad, it gives the writers and thinkers an idea of what they'll be up against when formulating their recommendations for adaptation etc

Totally agree. Which is why we lament the low quality of the current crop of recommendations filling the void. In twelve weeks time, when the cogitators have cogitated, what little urgency the Impacts report has created may have subsided. Especially if there is a war with Iran or some other gross diversion in the intervening time

That said, we will watch with interest and see if ideas such as the one Chirac is peddling for a global environmental body gain any steam.

TonyF: "Which is why we lament the low quality of the current crop of recommendations filling the void."

Tony, there is no shortage of advice on what "should" be done. The problem is in both finding ways for the scientists and public advocates to convince the legislators (in some jurisdictions) and for the politicians to convince the public of the necessity (in other jurisdictions).

It is generally agreed that g-20 nations must:
a) shutter coal fired elec generation plants
b) shutter diesel fueled elec generation plants
c) ban cars and trucks that are over 10 years old (unless they attain 30mpg)
d) commence immediate construction of nuclear power plants to replace lost elec generation and provide for future demand
e) implement immediate emission curbs on the gas/oil extraction and refining sector
f) ban fridges and dryers that have an EnerGuide rating higher than 100kwh/month (incl most over ten yrs old)
g) ban idling of vehicles for over five minutes
h) shutter nat'l gas elec generation plants by 2015
i) ban oil/gas residential furnaces that are not hi-efficieny rated (incl most built before 1985)
j) adopt the most stringent emission standards for consumer vehicles that is available today on all vehicles built after 2012.

These are some of my solutions. Shuttered plants may re-open after retrofits. But i question how many jurisdictions can withstand the public and corporate outcry that would befall them.

Remember, most people don't know the difference between air pollution and greenhouse gas inspired climate change ... there is much education to do. And what we do is dick-all if china and india are not aboard. China's emissions will exceed that of the usa in four years. China will exceed Europe's emissions in five years.

TonyF: "Can anyone think of a reason the report on climate change and the one on suggested solutions should be decoupled?"

The earliest GCM's started their computer runs in July 2004. It takes several weeks for most of the runs. These results then had to be backtested and revised. As the final info was compiled, the info was passed to the other Working Groups. There was no point in holding the results "secret" any longer 'cuz much of the science is published. Maybe not free, but available to the science fraternity none-the-less. More than a couple of thousand scientists are involved in screening out the bad and junk science submitted.

The release of the base science allows discussion to commence that is based on the best data whereas holding it back allows the bad and junk science reports to dominate the debate. AR3 is the fourth in a series of five year Reports by the UN.

One only has to look at the TOD threads over the last 60 days to see why the early science release is necessary. Al Gore type exaggerations were flourishing and polarizing the debate. This same process was happening in many venues.

What if potential flow rates are higher in Iraq than SA?. Controlling that flow and the resultant price could be crucial to revenue.
The rules and strategies on the downside are quite different from the upside. Who will be driving the world's oil supply for the next twenty years is still up for grabs, and SA is probably a lame duck in emperor's drag. and with an outbreak of 'populism' and 'resource nationalism', albeit democratic, to the south, I can understand the messy haste of American foreign policy, or at least the acceptance of it.

Peak oil production is between 10 and 20 years' away, according to Europe's biggest car maker, Volkswagen ...VW is calling for a drive towards a second generation of biofuels...

VW executives, like their braindead GM cousins, better start working on their resumes instead of frantically trying to keep their delusion of a global car-culture alive.

Peak Oil Passnotes: The Iraqification of Iran

... the first step being economic degradation, a move the United States will be successful in accomplishing.
Then ten years down the line, during the next Republican administration...

"ten years down the the line..."???? How about maybe 10 weeks/months down the line and during the current Republican administration.

"Canada does not see greenhouse gas cuts soon "

Those complacent, naked Ivory Tower Kings with their heads in the clouds, and asses bare, have been too busy watching the "global warming hour hand" on their cute little doomsday clock, and forgot about the Peak Energy Minute hand.

TOD drumbeat headlines will serve as a good source of material for the next chapter of Popular Delusions and the madness of crowds. I wonder what the next edition will cost after the current Price Revolution-in-progress?

Financialsense.com (Jim Puplava) is interviewing Roger D. Blanchard, author of "The Future of Global Oil Production" today.

Good summary of the facts we discuss here as well. The example is cited of Norway, who was unable to maintain production after their three major fields started declining. Despite rapidly bringing on a number of smaller fields, this was insufficient to arrest the overall production decline. (WT cited this issue a few days ago - this seems to be a good example of where smaller fields collectively do not make up for large field decline)

Roger sees peak at 2010, with Iraq, Algeria, Libia, and few other scattered countries still able to increase production at this stage.


Blanchard's comments about CTL were interesting. He estimated that for the US to produce 10 mbpd of petroleum from coal would require the US to quadruple its coal production rate from one billion tons per year to four billion tons per year. I assume that he accounted for the increased diesel consumption related to the four fold increase in mining.

Note that his 2010 world peak estimate is contingent on Saudi Arabia not peaking before 2010, which brings us back to the same point--if Ghawar is in terminal decline, Saudi Arabia has peaked, if Saudi Arabia has peaked, the world has peaked. And so far, Saudi Arabia is declining--as predicted by the HL model.


He estimated that for the US to produce 10 mbpd of petroleum from coal would require the US to quadruple its coal production rate from one billion tons per year to four billion tons per year.

I've worked in computer system design in MFG industry for 25 years. Building core business and supply chain systems. (OE,BI,PO, GE,AP,AR,etc) and
Friends and Relatives of mine (brothers/father/cousins) work on the RailRoad(Freight RR that is) and belong to the RR Brotherhood, etc.

The Powder River RR Bottleneck in coal distribution last year or so was an example and warning that we could no way in hell increase our coal Production/Distribution by 4 fold in a short time. More Tracks would have to be put in, etc. Lot of infrastructure.

That's what concerns me about all these proposals, You cannot switch a system as complex as our production/distribution/consumption supply chain without encountering unforseen set of system variables that stop everything.

You can attempt it, however system lockups, as we call them, will occur for very suprising and possible novel set of circumstances.

Afterwards, when looking back, and retracing it's events, it will become obvious why things didn't work out.

However looking forward you will never see or predict the unfolding of events.

We cannot "Switch" to anything else quickly. We did not "design" and "Build" the global economic supply chain, It Grew and evolved over time. The number of moving parts and control points is astounding.

It will breakdown to a more stable set of operations.

Writer Ken Wilbur and his theories pertaining to Holons come to mind when seeing that all our Stuff is built on assumption that Other Stuff exists and is working at a lower level.


Ken Wilber comments that the test of holon hierarchy is that if you were to remove a type of entity from existence, then all other entities of which it formed a part must of necessity cease to exist too.

For example;

Take away/constrict/don't build up fast enough, the railroads and we don't have coal fired powerplants.

If we don't have enough powerplants, we don't have lights and power.


Take away the ice and you don't have polar bears anymore.


Thus an atom is of a lower standing in the hierarchy than a molecule, because if you removed all molecules, atoms could still exist, whereas if you removed all atoms, molecules would cease to exist.

Wilber's concept is known as the doctrine of the fundamental and the significant. An hydrogen atom is more fundamental than an ant, but an ant is more significant.

The same test is true for letters and words, or people and countries. This natural hierarchy contrasts with other types of hierarchy (such as human leadership) which are dependent upon consensus and may be subject to dispute or change.


Samsara...you make an excellent point about switching gears too quickly. I work on a software system that had been stable for many years. Last year, my company decided to let our IT solutions group go crazy with new changes that would they hoped would move product quicker and give more transparency to inventory.

Well, it was too many changes and no one overseeing all the "innovations" to see the big picture of what was happening. The last 6 months has been hell of production batch crashes, common modules/applications breaking down (unrelated to Solutions' projects) and screwed up inventory.

This is what happens when too many "big idea" folks run with their own ideas without any guidance with what the other guys are doing.

Now, take this scenario and apply it to something REALLY important like our energy supply, mix well, and see what falls out.

Frickin' chaos.

Sorry, not an optimist with a quick switchover to alternatives.

Thanks for the post !

I like to remark that since the great dams and bridges where built in the 1800's and 1920's that we really have not increased the speed at which we can create infrastructure.

At best we are say 5 times faster more often twice as fast. This is over basically 100 years. So our deployment rates are not that great.

WT: "--as predicted by the HL model"

Jeffrey, i have been a proponent of linearization technique for several years. Laherrere has used it successfully for two decades. But everyone in the industry knows its vulnerabilities, margins of error and level of confidence limitations.

As i have pointed out to u over the last ten days with precise references, Hubbert's miscalculations include:

a) a three-fold error in global URR
b) a ten year error in Texas Peak Date
c) a four year error in Lower 48 Peak Date
d) a three-fold error in global Peak Rate
e) an eleven year error in global Peak Date (thus far & counting)

But we still have a chance to see his 1974 forecast of a "110-mbd Peak Rate for global supply" come to fruition for some partial redemption!

And last but not least, Colin Campbell found in 2003 that only 8 of 51 nations have a normalized linearization.

Jeffrey Brown (aka WestTexas), please tell me that all your cards are not riding on this record and methodology ...

Frauddy, you should sober up before you plunk yourself infront of the keyboard. You might make less a fool of yourself.

three-fold, ten year error... what meaningless unmitigated nonsense.

Please stop the name-dropping. It does nothing to overcome your pathetic smallness of mind.

Give AA a call.

Hey congrat's, Assh*le. Six sentences. That's a record for u, eh!

Guys, please grow up...I don't always agree with Freddy but his input is important lest this site become nothing more than a cult. Disagreement doesn't mean posters have a license to be rude. Freddy has to learn to roll with the punches, this is the price that must be paid if you take the minority position. From what I can see, almost everyone here "spins" their data in a way to suit their purposes. As for me, I want to see the data and as many interpretations of it as possible. So lets lay off each other and discuss the real issues.

As for my PO views, I think the logistical peak has "crept" up on us and it will merge into the geologic peak. The bottom starts falling out in 2011-2012.

Hubbert predicted a Lower 48 peak between 1966 and 1971, and it peaked in 1970.

Deffeyes predicted that 2005 was the most likely year for a world crude oil peak, and world crude production started falling in 2006.

I predicted that 2006 was the most likely year for Saudi Arabia to start declining, and Saudi production is falling.

Khebab predicted Mexico would start declining in the 2006/2007 time frame, and he is certainly correct.

Get back to me when you have evidence of rising production in any of the last three referenced areas. Until then, why do you continue to attack the method, even as it produces accurate predictions?

A look at what's playing on Comedy of Errors Central...

Giant Achievements to Be Gifted to Iranians in Coming Days

TEHRAN (Fars News Agency)- Iranian President Mahmoud Ahmadinejad said that his administration is going to publicize the country's remarkable progresses and achievements within the coming days...

Ahmadinejad also mentioned that one such victory has been in the field of nuclear technology...

The Iranian president also reiterated that the February 11 is the day when the Iranian nation's inalienable right to access and use nuclear technology will be established.


Iran Introduces AIDS Cure

TEHRAN (Fars News Agency)- After 7 long years of arduous work, Iranian scientists here on Saturday introduced a herbal medicine which cures Acquired Immune Deficiency Syndrome (AIDS).


((edit - just a few more weeks until the deadline passes on United Politicians of Nations Resolution #1737...

http://www.un.org/News/Press/docs/2006/sc8928.doc.htm ))

From the "Peak Oilers' Error":

These predictions, however, don't match the facts, says WPC:

At each point when environmental activists have claimed that the downturn was just around the corner, world oil reserves defied predictions and continued to increase.

The use of this fallacious argument is really getting tiresome. The fact that "environmental activists" have predicted things in the past and they have not materialized has NO EFFECT on the probability of peak oil happening.

Maybe I'm wrong, and I should go to Vegas and starting watching the roulette signs and bet on red or black streaks. I mean, that's why they have those signs anyway, right? Past events have a bearing on what will happen on the next roulette spin. I'll be rich!

The fact that "environmental activists" have predicted things in the past and they have not materialized has NO EFFECT on the probability of peak oil happening.

Interesting philosophical point. Bayesian Probability, anyone? It might not affect the probability that it has already happened (I prefer the word likelihood), but wouldn't a long run of mis-calling the peak affect the weight that you give to their claims, relative to other evidence, when you make your own estimate of the likelihood?

Just asking!


Plucky, not being a mathematician, I don't know much about Bayesian Probability, but let me put it in a different perspective. I have what I call my blibbit theory. A blibbit is officially described as 10 pounds of crap in a 5 pound paper bag.* But this blibbit is not paper, it is made of heavy timbers and sits on the top of a hill overlooking the town. The blibbit holds the entire town’s crap. And the blibbit was designed and constructed to hold 100 tons of crap.

One day the blibbit is full of 100 tons of crap. Some people in the town says; “Time to build a new blibbit, this one is full”. The city fathers say; “No, it will hold a little more.” So they keep pouring crap into the blibbit until it holds 110 tons of crap. The town folk look at in alarm and say; “She’s gonna blow!” The town’s fathers say; “Nonsense!”

The same scenario is followed at 120 tons, and at 130 tons of crap, and at 140 tons of crap. Then one day there are 150 tons of crap in the 100 ton blibbit. The timbers are creaking and cracking, crap is oozing from every crevice. The blibbit trembles and shakes from strain. And the town’s citizens say; “She’s gonna blow this time for sure!”

But the town’s fathers say; “We have heard all this before. You cried ‘She’s gonna blow at 110 tons, then again at 120 tons, then again at 130 tons, and then again at 140 tons of crap. And because you were wrong before this means you are wrong again. You are just wrong, wrong, wrong.”

Now here is the question: Because the town’s people were wrong before, when they predicted the 100 ton blibbit was about to blow, does that make their prediction more, or less, likely to occur this time? My theory is that their prediction is more likely to happen this time because every pound of crap adds to the probability of the blibbit bursting. The opposing theory would say; "No, because you have been wrong before, you are therefore more even likely to be wrong this time."

Who has the strongest probability of being correct? This, whether or not anyone will admit it or not, is directly related to the question; "Because peak callers have been wrong before, does this mean they are more or less likely to be wrong this time also.

Ron Patterson

*Back when all groceries were bagged in paper, bags were rated in the pounds they would hold before bursting. A five pound bag was about abour five inches across by three inches deep and about seven or eight inches high....approximately as I am writing from memory. RP

And the moral is.

No matter how long it takes to blow, shit rolls downhill :-(

As we read this, we were all nodding our heads as to the logic. Where Ron fails with this analogy is in the reality of the oil sector that no one can deny.

When the first prediction of Peak Oil was made in 1956, the "remaining" reserves and resource components of global URR was known to 823-Gb as per the five recognized Estimate providers of that time. By 1976, when forecasts had become mainstream, "remaining" reserves and resource had grown to 837-Gb (7 estimate providers) despite twenty years of consumption.

By the first Campbell warning of imminent decline in 1991, "remaining" reserves and resource had grown to 848-Gb (according to 8 estimate providers) after another fifteen years of consumption.

There was another camp of doomsters that told us the world would end in Y2k. The anti christ failed to show and amid lotsa Peak Oil forecasts in hand, "remaining" reserves and resource had grown dramatically to 1125-Gb (12 estimate providers).

That brings us to today. We have a vocal group of "it's right for sure this time" among us, yet the 18 providers of recognized URR Estimates tell us that "remaining" reserves and resource has mushroomed to ... drum roll ... 1983-Gb.

There is some validation for Peakists being regularly dismissed...

Consider this. Shale and CTL become feasible at $70/barrel. Today's contract acquistion price for crude is $46. When we look at the "remaining" reserves and resource figure in ten years in 2017, what do u presume logically it is going to be? And remember, the concensus for OIIP is currently 11-Tb.

My deduction is 2500-Gb...

No doubt Peak Oil is in our future. But the increasing rate of growth of URR that is price inspired illustrates that there's lotsa recoveable oil out there. The real determinant of Peak Oil is not its availability. There's plenty for two hundred years. The question is how long can the Supply Rate grow?

In that respect, the rate of growth of extraction is on a downward trend. But the results of the last four years show us that we are far from a flow Peak. From a dismal three year plateau of 77-mbd rates, the producers are now threatening the 86-mbd threshold. But why let facts get in the way of a good thread, eh!

Freddy wrote:

Consider this. Shale and CTL become feasible at $70/barrel. Today's contract acquistion price for crude is $46. When we look at the "remaining" reserves and resource figure in ten years in 2017, what do u thing logically it is going to be?

$70 a barrel and we have oil coming out of our ears. Fancy that. Hell, the world knows that we ain’t never gonna run out of oil. Freddy Hutter and Bjorn Lomborg have it all figured out. When the price of oil gets high enough it becomes economical to make oil out of just about anything.

The US Energy Information Agency estimates that today it will be possible to produce about 550 billion barrels of oil from tar sands and shale oil at a price below $30, I.E. that is possible to increase the present global oil reserves by 50 percent. And it is estimated that within 25 years we can commercially exploit twice as much in oil reserves as the world’s present reserves. Should the oil price increase to $40 per barrel we will probably be able to exploit about five times the present reserves.
- Bjorn Lomborg: The Skeptical Environmentalist, page 128

Ron Patterson

.... but wouldn't a long run of mis-calling the peak affect the weight that you give to their claims, relative to other evidence, when you make your own estimate of the likelihood

Certainly that effect exists, lets call it the cry-wolf factor. That factor is commonly manipulated - totting up unrealized predictions to discredit whomever. And it is effective - disbelief and scorn may set in, pinned to, resting on, erroneous world views.

Statistically, it comes down to focussing attention to the attention paid to outliers, exceptional cases, the abandonment of the mean, and non significant slopes and correlations to denounce their importance, relevance, etc. I think it is not so much a matter of miscalling the peak (which happens, natch) but pernicious cherry picking on the part of interested parties. How many predictions, their weight, precise measures, are taken into account? Not many.

waffe, as we see with a broken clock (right twice a day) or with cnn's calling that a Recession started last month (they were right on the 29th successive month finally), eventually Peak Date will be upon us.

The legitimate and recognized forecasts started in 1974 when m king hubbert called for a Peak Date of 1995 with a record Supply Rate of 110-mbd. For two years this was in most of the major magazines including Nat'l Geographic. This was followed by failed predictions for 1996, 1997, 1998, 1999, Y2k, 2001, 2002, 2003, 2004 & 2005.

There is some validation for Peakists being regularly dismissed...

Peak Energy and Matter raises havoc with currencies

Metal prices push United States to get creative with coins

...But there is a good chance that we will nonetheless find ourselves in an outright coin shortage of a form we have not seen in four decades and one that harks back to the monetary problems of medieval times...

But our coins are just tokens the government gives a value to. We can say they are worth whatever we like...


future headline: "Public tired of politician's mime and lipsynch contests, takes the initiative on recycling efforts - "this is a major grassroots movement ..." says area man as he carries off a guardrail..."

Crooks Steal Freeway Rails To Cash In On Metal

(CBS13) SACRAMENTO You really don't notice them until they're not there. Looking closely at some northern California freeways you can see huge chunks of guard rail are now missing...

Caltrans says in one month the crooks have stolen about 3,000 feet of rail, worth about $90,000...

“The guard rail is there to keep cars from going over the edge,” said Weiss.


Dmitry Orlov: Collapse and its discontents

...Others have accused me of Schadenfreude: of not being sufficiently dispassionate, but of greeting the troubles and the signs of the coming collapse with glee. This is an ad hominem argument, boiling down to "you say such things because you are the sort of person who enjoys saying such things."

Amen Dmitry. This especially applies to some paranoid and poitically correct types here at TOD.

Head in sand, ass in air, attack those who talk about the realities while you sit in your comfy chair...

"That's what you get for pretending the danger's not real...

...Wave upon wave of demented avengers march cheerfully out of obscurity into the dream...

what a surprise! A look of terminal shock in your eyes...

Now things are really what they seem, NO, this is no bad dream..."

The pinkest of floyds

I am now an *official* fan of Mr Orlov (article posted above...).

He makes more good points than I can recap here. As long as we can bemoan collapse, it hasn't happened yet. When it does, we won't be discussing it...

He has extra credibility for having lived thru the FSU collapse. More nasty than us Westerners realize, I'm sure.

The End Of The World!!! It has happened many times, to many people. It's happening right now to Pacific islanders, nomadic ice-hunters of the North, indigineous peoples all over the world. Some perish, some come out the other side, to a new world that they don't know.

Mr. Orlov is reaching back and letting us know how it feels...

I see Orlov as the FSU's Kunstler, but not as condescending. Does he have any books out?

Alerts shut 4 Swedish nuke plants

STOCKHOLM, Sweden (Reuters) -- Four out of Sweden's 10 nuclear reactors were off-line on Saturday because of safety worries, capping a difficult week for the Nordic country's nuclear industry.

Sweden relies on nuclear power for around half of its energy needs and electricity prices jumped last July when half the country's reactors were taken off-line in the wake of an emergency shut-down at one unit.

On Saturday two reactors at the Forsmark plant were shut after a problem was detected in a rubber seal on the outer wall of one of the reactors, one of the owners said.

Earlier this week the Ringhals 3 reactor was shut down to check and adjust instruments after some anomalous readings. Its sister reactor, Ringhals 1, has been off-line since Monday after a problem with its cooling system.

Ringhals 1 and Ringhals 3 are not sister reactors. Ringhals 1 is a BWR built by Asea-Atom and Ringhals 3 is Westinghouse PWR.

But Forsmark 1 and 2 are sister reactors.

There has been a lot of media activity this week in Sweden after an internal report were leaked from the Forsmark plant. In short it were a critizism of a deteriorating security culture. It suprised a lot of people since Forsmark has been very good at this. I guess they soon will be very good again. Wonder if there is a new generation of managers and other staff that needs to relearn old lessons? But that is pure speculation.

Forsmark had already decided to postpone the scheduled and extensive uprating work for one year to work with internal procedures and so on, the internal work started well before the media exposure.

This shut down in Forsmark gives me an impression of an internal audit finding that a low maintainance component had not been properly inspected and tested.

Hey Magnus

I'm not in Sweden of course, and you are, so you should have much better info ideally, but problems with a rubber seal does not sound, at first glance, like an internal audit issue. These saels are tested all the time, which points to a sudden occurence, not something that was simply overlooked for a while.

Forsmarks press release stated that the rubber seal is a part of an overpreassure relief system for the containment, it has no function during normal running or small accidents. A test indicated that it were not elastic enough any more.

I do not know if its part of the scrubber system for vented overpreassure or part of the older system that essentially is a blowout door that fails before the containment if it would be overloaded.

My guess is that checking and changing out such parts ought to be done during scheduled down time and that finding it now is part of a "turning every stone" process, but I dont realy know. I would expect an internal audit of procedures that satisfies all the people working on the plant would find some such issues.

You're right, it's hard to say, because not everything is ever revealed.
That is worrisome though, and will remain just that.

The issue takes me right back to Richard Feynman's description of how he figured out the Challenger accident 21 years ago. Rubber seal failure.

Hello TODers,

I have posted this before:

FF exporters that use their funds to build biosolar habitats, relocalized permaculture, RR & mass-transit, etc, etc, will enjoy far-reaching advantages postPeak because it allows them to continue to export FFs far longer to really leverage Biosolar Powerup. From reading Leanan's toplink: I am glad to see Chavez coming to this realization advocating CFs, solar panels, etc. This is much smarter than Dubai's building of the indoor ski-run in a desert.

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

Chevron's a laggard compared to Shell and Exxon:

Chevron 4Q profit drops 9 percent

I found this bit interesting:

"If someone came up to me five years ago and said the price of oil was going to be above $40, I would have put them in a straitjacket because it seemed so unrealistic," [Oppenheimer & Co. analyst Fadel] Gheit said. "Now, when oil starts moving down toward $50 barrel, we get excited and think it's a great bargain."

Wonder if he'll be saying the same thing when oil hits $100...$150...$300? ;-)

Mr. Gheit was just on CNN's In the Money. He says he called the drop in oil prices, but he doesn't think it will continue. He says oil will trade in a $55-$60 range, because the Saudis want it that way.

There were a couple of other interesting stories on In the Money today. One was about "planned obsolescence." They said it's real, at least when it comes to consumer electronics. Partly it's due to Moore's Law; they just expect products to keep getting cheaper and better, so they don't build them to last. But part of it is they want to "encourage" you to buy a new one rather than stick with your old one. The example they pointed to was the Apple iPod. The battery dies after a year or two, and there's no way to replace it (short of mailing it back to Apple). The net is full of irate customers complaining about their iPods failing after a couple of years. And Steve Jobs has said that he wants people to buy a new one every year. The end result: a lot of toxic electronics in our landfills.

The other story was about the squeeze on the middle class. As many have noted, the economy is doing pretty well, but the benefits are not going to the middle class. Wages are not rising for workers; instead, the profits are going to investors and CEOs.

They had some guy there trying to argue that Americans are better off than ever, because they can afford to fly on airplanes and go on cruises, which only the wealthy used to be able to do. The CNN anchor pointed out the lack of savings and high debt, and asked why he was talking only about spending. He said that that's what's important. People don't like earning money, they like spending it.

Great. Why not just skip the earning part altogether then, and just spend, spend, spend?


In Orlov's article, I loved this image:

"Financially, the US economy has degenerated into a sort of cargo cult, where people feel that they can continue to attract recycled petrodollars by dancing around piles of internet servers with their cell phones and their laptops. "

The dance goes on...

I liked that bit, too. He does have a way with words.

And it's true. There really are perfectly intelligent and well-educated people, even peak oil aware ones, who think we can continue the never-ending growth party by expanding the service-based economy. We'll all just sit at home telecommuting, selling each other insurance or writing computer programs.

All economies run into problems when the consumers become bought 'out'. So dreaming up new 'goods' to sell is necessary to the party. The truth is that every group of consumers goes into a depression once in a while, and the idea of extending the good times with 'service' products will work, for a while.

Orlov seems to me to have been influenced by his experience in FSU. And perhaps he will take glee if the USA does go into a depression; it would mean that it is no beter than Russia. However, although things are dire here at midnight, the sun will rise at dawn as usual.

To me the telecommuting is part of the solution though (disclaimer: Computer Programmer here :P ).

That said, it's only half the solution. A way to preserve some information infrastructure if you like. The other half (or more lickly(?sp) 3/4) is spent in a garden, or doing carpentry, or making clothes or doing masionary(?sp) work in the community.


Dmitri Orlov is a character right out of Dostoevsky's Possessed! (also translated as The Devils or Demons)

The first time I read one of his essays the hair rose on my neck with the shock of recognition. He is made in Russia like you wouldn't believe.

Many Russians will tell you that Dostoevskian characters simply don't exist or don't exist anymore. Oh, do I ever disagree. Our own InfinitePossibilities is another wonderful specimen -- if I don't miss my guess.

Hello TODers,

If the Zimbabwe Thermo-Gene Collision runs to its bitter end, this won't last very long:

Zimbabwe: Zim's Last Vestiges of Natural Habitat

They need Earthmarines to kill any invading starving person to prevent the last animal from being eaten, the last tree from being chopped down, if Zimbabwe has any hope of optimizing their decline.

More humans are born everyday than the sum total of all the remaining primates-- care for some bushmeat?

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

"matosi adonha" -- where dung falls in abundance. Or if you prefer: the US Govt's trickle down economics.

Hello all!
I´m new to this subject and I visit theOilDrum to learn more about PO and the oil-business, and I find this site very resourceful!

Further up in the thread there were some talk about how the Saudis are handling their current pruduction and reserves. I have some questions about these subjects:

1, is it possible that the Saudis are using their volontary cut in production to (secretly) stock up? And the reson for this might be either to mitigate the effect of a "seriuos-event-this-spring-in-a-adjacent-country" (i.e just across the "bay") AND/OR be using such inventorys to further hide their peak (production or geology)?

2, About reservs. Is there a risque to "destroy" a field due to extractions techniques so that in the end a lot less than expected was beeing extracted? Will such a situation show up in the reserv figures?
I guess that a combination of too high reserv figures to start with AND a situation where more of it than expected will be left in the ground must be a disastrous situation.

On a side note: As I said above I'm new to these facts about PO and are starting to analyze the situation what it will inflict on me and my family, and also to my society/country.
One thing that I find very amazing in this context is how popular it has become in Sweden to buy holiday-houses abroad. And by abroad I mean Thailand and Brazil. Yes, you read it correctly. It pretty much illustrates how we take cheap LONG-distance flights for granted and also how mentally unprepared for a coming reality we are.

Best regards,

1, is it possible that the Saudis are using their volontary cut in production to (secretly) stock up? And the reson for this might be either to mitigate the effect of a "seriuos-event-this-spring-in-a-adjacent-country" (i.e just across the "bay") AND/OR be using such inventorys to further hide their peak (production or geology)?

newBurger...welcome to TOD and yes, I think your #1 scenario could very well be a reality. They could keep some in reserve for "emergencies" or just to wait until prices pick back up for a higher profit.

When we lived in Christchurch, NZ, we had among our neighbors a Finnish couple who spent the southern hemisphere summer golfing and hiking down under and then, come April, headed back home for northern spring and summer. Family came and visited for a few weeks around the holidays. They also still had their summer cabin outside Helsinki, of course. When I asked them why the had a summer place way down in Christchurch, they said in a perfect deadpan it was because there were too many Swedes in Nelson. (It took me a minute to get the Finnish humor.)

According to Indo.com, that's 10,662 miles each way. Since the flight is usually via UAE or US/London, the flight miles are considerably longer.

1, is it possible that the Saudis are using their volontary cut in production to (secretly) stock up? And the reson for this might be either to mitigate the effect of a "seriuos-event-this-spring-in-a-adjacent-country" (i.e just across the "bay") AND/OR be using such inventorys to further hide their peak (production or geology)?

NewBurger, not likely. The Saudis simply do not have that much storage capacity. Saudi must store oil in above ground tanks. They do not have salt caverns like we do here in the US. If you produce in excess of 9 million barrels per day, then you could not possibly store more than a few days production. And if they are truly cutting back, then they could only return to their previous capacity. Not producing to their capacity now would not guarantee that that they could produce “over-capacity” later.

2, About reservs. Is there a risque to "destroy" a field due to extractions techniques so that in the end a lot less than expected was beeing extracted? Will such a situation show up in the reserv figures?

I guess that a combination of too high reserv figures to start with AND a situation where more of it than expected will be left in the ground must be a disastrous situation.

I assume you mean risk and not risque. Risque means “Suggestive of or bordering on indelicacy or impropriety.” Or “improperly sexually suggestive”. I really do not think that is what you meant. But yes, you can damage a field; though not destroy it, by overproducing it. If indeed that was your question, for I am really not sure.

But nothing shows in “reserve figures” except someone’s guess or what Saudi tells the public. There is no official tally of “reserve figures”.

And you ask; ” AND a situation where more of it than expected will be left in the ground must be a disastrous situation.

I am not sure what you are talking about here. But I assume you mean bypassed oil left in the ground that could not be extracted later. This is outside my field of expertise, but I suppose that could happen. But bypassed pockets, at least some of them could be drilled and extracted. Of course that assumes that they would know exactly where these pockets are. And I don’t think that is always possible. So yes, I suppose a lot of oil could be left in the ground.

Ron Patterson

Yes, "risk" is the correct word.
The concept of reservs seems to be a little difficult to grasp but I will do my homework.
What I meant in that question was if the reserves figures for a field are adjusted during the ongoing production? Lets say that a producer makes a desiscion to use a damaging technique too boost production for the moment but that will result in a lower TOTAL production. Will the reserve figures for that field be adjusted?.

And with "AND a situation where more of it than expected will be left in the ground must be a disastrous situation I meant something like this:
Lets say I have a field that I think will produce (extractable) 100 barrels, but I tell everone that it will produce 120 barrels because I like to impress my friends and hope for the best and assume I can find another field that makes up for the difference. And during production I do some things (like some damaging technique to momentarily boost production) and the end result is only 75 barrels and above that I have not managed to find that another field. That would not be a good situation...


What I meant in that question was if the reserves figures for a field are adjusted during the ongoing production? Lets say that a producer makes a desiscion to use a damaging technique too boost production for the moment but that will result in a lower TOTAL production. Will the reserve figures for that field be adjusted?.

No, the figures would not be adjusted. Remember that reserve figures are just a wild ass guess anyway. And they would not likely be adjusted because of production techniques.

Lets say I have a field that I think will produce (extractable) 100 barrels, but I tell everone that it will produce 120 barrels because I like to impress my friends and hope for the best and assume I can find another field that makes up for the difference. And during production I do some things (like some damaging technique to momentarily boost production) and the end result is only 75 barrels and above that I have not managed to find that another field. That would not be a good situation...

Well, that would not be likely to change the total recoverable reserves very much. Yes, you could damage the field by overproducing. But your scenario is not something that likely happened. The situation is far more serious than that. Saudi is not overproducing to impress anyone. They are always doing, what they perceive, is in their own best interest. Impressing their friends is important, but their own personal interest comes first. They would not intentionally overproduce their fields if they thought that would harm, and/or reduce the future production from their fields.

Ron Patterson

I think the Saudis may be refilling their reserves. Matthew Simmons says that spike in Saudi production in 2003 (to offset the Iraq war) was the emptying of the tank farms, not actual increased production.

My TrendLines January Report of Global Extracion & USA Energy Stocks is now online. Please drop by to see our new graphs.


USA Energy Stocks & Global Extraction as of Jan 26 2007

Summary: nat'l gas stocks are 6% higher than last yr; total oil products are 1% higher; and gasoline is 2% higher.

Commentary: (Jan 31, 2007) Global extraction of (all liquids) oil is growing on pace. A new Annual Supply record of 85.2-mbd was set in 2006. The global Quarterly Supply record is downward revised slightly to 2006Q3's 85.5-mbd. July 2006 has renown for the all time global Monthly Supply record: 86.1-mbd. (all supply figures from IEA).

Spare capacity at OPEC was down slightly at 2.5-mbd last month (in conflict with EIA global estimate in graph to right), but it was underlying global surplus production of 1.9-mbd of crude oil in 2006Q2 & 1.6-mbd in Q3 that brought prices down from their recent record highs and forced OPEC quota cuts for Nov 1st & Feb 1st to remedy that over supply which was enhanced by its occurrence while OECD Inventory levels were at record highs.

Crude oil & natural gas continue to flourish above their five-yr channels as seen in the graphs shown lower in the page. Our USA Crude Contract Avg Price year-end target of $53 was right on. At this time, TrendLines' 2007 year-end target is lowered to $51 (compared to last month's $52). We should continue to see a nat'l gas avg price of $6 with temp spikes to $9. America's Strategic Petroleum Reserve remains about 1% higher than one year ago. There will be continued decreasing pressure on prices and spiking with the likelihood of above avg temp's in the USA until April 2007 (due to El Nino). Our target for the Spring trough in working gas is raised to 1600-Bcf. Gasoline is enjoying a dramatic rebound and has drifted above its five-yr channel once again.

Technically, the biofuels that are significant part of the growth in 'total liquids' these last two years are not "extracted". Therefore to say "Global extraction of (all liquids) oil is growing on pace" is incorrect.

Your weather forecast is also inconsistent with the US Weather Service and Accuweather - who both are now saying the opposite about El Nino.

CM: "Your weather forecast is also inconsistent with the US Weather Service and Accuweather - who both are now saying the opposite about El Nino."

Charles, they were also wrong in October when i predicted here that the el nino winter would negate winter spiking...

And sorry, i did not know biofuels were a large part of non-conventional liguids. Lem'me see: Regular conventional oil is presently 65-mbd (ASPO). Total Liquids is 85-mbd (IEA). Non-conventional liquids is ...

Natural Gas Week
November 6, 2006
Volume 22; Issue 45

Chilly fall ushers in winter, but El Nino still holding key.
Haywood, Tom

But it is safe to say that the winter heating season has arrived, though it's hard to tell how it will play out. Like last year, the forecasts are all over the place, except for a general consensus that the coming January will be not nearly as warm as last year and the El Nino now developing in the equatorial Pacific Ocean holds the key.

AccuWeather's chief long-range forecaster Joe Bastardi is expecting a colder than normal winter in the Northeast than the National Weather Service primarily because he doesn't see this El Nino gaining enough ground to stymie other meteorological factors. However, Steve Gregory, senior meteorologist for WeatherInsite, says that it's now clear that the El Nino has already reached a moderate status and there's a 30% chance that it could become a strong event, which would send heating loads into a tail spin.

"Historically, once you have a 'strong' El Nino, there is no stopping it from bringing a warm winter to most of the nation--even New England," Gregory said.

I avoid Frauddy's website. The remittance he receives with each hit discourages him from from foregoing his bad habits. Don't worry he won't starve. By not clicking on his url you will be providing him with an incentive to find a role in life more in fitting with his capacities.

With the big jump from 85 to 86 mbpd the predicted 120 can't be too far away.

Ugh. TooIllForOil? Yup, that sh*tty little housefly is back...

Freddy/Hoth's contributions to this site are not worth the distortion that they introduce. These guys (guy) are masters of pure sophistry. Please, please, just kick them off and make them at least create new IDs. Whatever these guys are ( trolls, obnoxious SOBs, or just very, very socially awkward miscreants ) they just dont need to be here. I agree whole heartedly that discident voices are needed but these guys aint it. The most effective and most damaging propoganda is that which is laced with half-truths.. Just enough to sound credible but completely destructive to real understanding.


we all saw your profile - 11 days old!

there's about 13 of these anony's floating around. notice who's gone. notice who is new. smoke&mirrors.

The remittance he receives with each hit

You make this claim frequently.

Do you have any evidence that it is correct?

Otherwise it is a slanderous lie.

I don't know what the truth is but you are on pretty thin ice calling him Fraudy if your key message is itself a fraud.

thanx jack. there are no banner ads at my TrendLines site (yet!).

Frauddy crafts fraudulent posts, such as one earlier in which he drops Colin Campbell's name, with the devious intention of leaving people to believe that he and Campbell are collaborators. He wants to trade in Campbell's well-earned credibility. He is trolling TOD looking for hits for the less than useless website he maintains. Generally, I just ignore Frauddy, though I nod in agreement whenever Darwinian describes this lowlife as an incessant liar.

But the other day, this sack of slime decides that he is fit to describe Leanan as a member of the lunatic fringe. Now, I have never known Leanan to make a post that wasn't intelligent or witty or both. And I can see, as can anyone who visits TOD, that Leanan is half the reason for the quality of this site, and it is the quality of this site that attracts readers. In my book, people who exploit the work of others, while insulting them, are scum.

Previously I asked the fraudster if he received remittances for hits on his website. I was interested because I smelled a rat and asked because I don't know how the system works. I don't remember a denial. Absent a denial, I'll assume he does, though, I admit that perhaps he is only building an audience and hoping to cash in later.

I do know that when I asked him to clarify the "we" in his Campbell-ripoff post above, his response was typically rude, but uninformative.

One of the primary U.S. advocates of abiotic oil is geophycist John Franklin Kenney. He's frequently brought out by sites that attempt to discredit Peak Oil theory. Kenney owns Houston-based Gas Resources Corporation.

Kenney also gunned down his neighbors in California last Monday over a piece of property the size of a surfboard.

Wow. What a kook.

i agree. the only good lawyer is a ...

Nice comment Freddy considering the Grimes and his family were apparently much loved by the community. It’s kind of funny you commented on this story because the suspect’s behavior and personality somewhat resembles the tenor of most of your posts - arrogant and unyielding to anyone who doesn’t recognize his “genius“.

it's also kinda funny that u commented since your profile says u have a law degree. nervous? hits home?

Deleted earlier post for fairness.

I hope this scumbag gets the death penalty. But unfortunately he'll probably die of old age in jail. Pathological contrarian tendencies are not benign.