DrumBeat: February 23, 2007

Dale Allen Pfeiffer: The Fallacy of Bleed-Out

The idea is that, although Bush was wrong to get us into this war, we are there and we cannot simply pull our troops out. If we do so, then Iraq will collapse into civil war and Iran could very well take over the whole country, including its oilfields.

This seems plausible. But when you look closely at this argument, you will see that there is nothing to support it other than the delusion that the US is fighting the good fight. There were no terrorists in Iraq before we invaded the country. The so-called insurgency is in reality a resistance. This has been a war of conquest from the start. The US troops there must terrorize the Iraqis in order to maintain any sort of ascendancy. In so doing, they demoralize the Iraqis and themselves.

Pemex to Get More Budget Control Under Senate Bill

Petroleos Mexicanos, Mexico's state- run oil company, would gain more control over its budget and pay reduced taxes under a 10-part energy bill the Senate Energy Committee plans to approve.

DuPont teams on Iowa biofuel plant

DuPont Co. is licensing technology to a company that will build a cellulosic ethanol plant in Iowa within the next four to six years, company officials said Wednesday.

Farmland the new hot property

Farmland from Iowa to Argentina is rising faster in price than apartments in Manhattan and London for the first time in 30 years.

Demand for corn used in ethanol increased the value of cropland 16 per cent in Indiana and 35 per cent in Idaho in 2006, government figures show. The price of a Soho loft appreciated only 12 per cent, while a pied-a-terre in Islington near London's financial district gained 11 per cent, according to realtors.

The climate change revolution

The world is in the midst of a great political transformation, in which climate change has moved to the center of national and global politics.

As earth warms, lawsuits mount

But problems arise when it comes time to pin down those responsible for climate change.

A Battle Over the Costs of Global Warming

The rest of us can usually ignore these spats, but once in a while there is an academic fight that really matters. The economics profession is engaged in one of those right now and, as luck would have it, it’s even more entertaining than most.

Southern Ocean Being "Strangled" by Greenhouse Gases

The pristine Southern Ocean, which swirls around the Antarctic and absorbs vast amounts of carbon dioxide from the atmosphere, is slowly losing a fight against industrial gases responsible for global warming, scientists say.

Turkey, Egypt try to avert tension over Cyprus oil

Oil reserves in the sea around the island of Cyprus have been estimated to be worth around $400 billion.

Turkey had warned Greek Cyprus not to search for oil and gas in the area, where it says it also has legal rights and interests.

The Senate slaps sustainable ag

As a new farmer, I can't imagine a world without ATTRA, which stands for Appropriate Technology Transfer for Rural Areas. That's why my blood began to boil this morning when I found out that the Senate had voted to defund ATTRA's ultra-modest $2.5 million annual budget.

Higher renewable energy standard will create jobs

Raising the state's standards for electricity produced by renewable energy will create thousands of new jobs and increase Colorado's gross domestic product by nearly $2 billion, Gov. Bill Ritter said Thursday.

Podcast: Dmitry Orlov interview

University of Nevada professor demonstrates new hydrogen fuel system

Thanks to research done by a University of Nevada, Reno professor in the area of hydrogen energy generation, soaring power bills could become a thing of the past. And, finding a power source for your car that costs as little as $1 per gallon could also soon become a welcome reality.

Xcel Energy Study: with a Smart Grid, Plug-In Hybrid Electric Vehicles Could Have System Benefits

The study found that PHEVs may result in a reduction of the overall expense of owning a vehicle and, with the help of smart-grid technologies, eliminate harmful vehicle emissions by up to 50 percen.

Ties that Bind

Media talk of ‘resource wars’ is one expression of the connections being created by the capitalist class as is all the talk of ‘peak oil’, ‘energy security’ and ‘over-population’. But no matter how sophisticated the propaganda is it cannot hide the devastating effects of climate change, especially its impact on the poor of the planet and sooner rather than later, the climate change chicken will come home to roost.

Rather than be taken in by these myths as some on left have been, we have to articulate a vision of an alternate economy based on a rational and sustainable utilisation of resources, made all the more critical by the realisation that the major effect of climate change is going to be on the production of food and the impact rising sea levels is already having the millions people who live in low lying areas of the planet.

Community Solutions: Seeking local answers to a global issue

The use of oil permeates the fabric of American life. It fuels our transportation, heats our homes and businesses, provides us with plastics, fertilizers, pesticides and helps puts food on the table. If the oil supply dries up, what does that mean for our way of life? Grassroots groups across the country are calling for relocalization as a way to help secure the things that are essential to our daily lives — food, water, shelter, warmth — and to create a lifestyle that is sustainable and ensures a viable future for our children, using resources that are renewable.

Iran Is Iraq

Iran is not Iraq, except that it is. Most intelligent people today recognize that the U.S.A.'s adventures into Iraq were not about an evil dictator, or about democracy, it was about, as James Kunstler so eloquently puts it: "setting up a police station in Iraq." Not to steal their oil, but simply to insure world access to Iraqi oil.

Oil Industry Magical Thinking

We don't need to scratch our heads and wonder how responsive the oil industry will be to voluntary targets and public subsidies; it's never worked before. The only measure that produces real improvements in pollution and energy efficiency is firm standards backed by meaningful penalties.

Yankee Doodle's World Turned Upside Down

But the Saudis face their own inconvenient truths. Matthew Simmons, an industry banker, shocked the oil world when he questioned whether Saudi Arabia would be able to continue to expand production at the very same time that Wood Mackenzie, an Edinburgh-based oil industry consultancy, calculated that much of the future production expansion is likely to come from expensive and environmentally damaging unconventional sources within 15 years. If this projection holds up, the Saudis would need every dollar, euro, and riyal to maintain their currently all-too-lavish lifestyles. There won't be any left over in the Wahhabi cupboard to care for Mother Bandar's poor little Anbar doggies. That will only mean that We, the People of the United States of America, will be expected to foot the energy trough feed bill with our blood and our bounty, and we already aren't very thrilled with that prospect as it is currently configured.

James Howard Kunstler: "America, Think Downscale!"

In his book, “The Long Emergency,” Kunstler predicted that the age of the cheap oil economy is quickly passing, and that “globalism...will fizzle out.” One of its victims will be “suburbia.” Another victim, he added, and this brought cheers from the audience, will be that “warehouse on wheels--Wal-Mart.”

Ghana, Nigeria power talks in final phase

The Nigerian deal and another 100 megawatts expected from Ivory Coast would augment electricity supply to the country to ensure regular power supply during the highlights of Ghana’s Golden Jubilee celebrations on March 6.

Do we desire a streetcar?

My 48 minutes on the free Trolley are not particularly important, except that with global warming and "peak oil" fears approaching the boiling point, some Charlottesville area planners are considering creating a regional transit authority and possibly tearing up the Trolley route to run a modernized-- and environmentally friendly– electric streetcar down West Main Street.

California: Rolling Blackouts Likely by '09

A plan to discourage new power plants in Southern California's most polluted communities could lead to rolling blackouts in Riverside, city officials said.

California Senate Democrats Unveil “California First” Global Warming Bill Package

Saying that “Senate Democrats believe there is a simple, direct, cost-effective path we can take now to reduce greenhouse gases,” Senate President pro Tem Don Perata announced yesterday the introduction of a sweeping eight-bill package that aims to improve air quality and reduce greenhouse gas emissions in California in the most practical ways.

Oil Workers Evacuated from Accommodation Rig in North Sea

Total Norge is evacuating nearly 300 workers from an accommodation rig in the North Sea after two of the unit's twelve anchor chains broke during a storm with winds reaching near hurricane strength.

Oily truth emerges in Iraq

The President presumably would have us all believe that if Iraq had the world's second-largest supply of bananas instead of petroleum, American troops would still be there.

Now comes new evidence of the big prize in Iraq that rarely gets mentioned at White House briefings.

Venezuela, Argentina to Issue Joint Bond

Venezuela and Argentina will offer a US$1.5 billion (euro1.1 billion) joint bond issue next week, the two countries said Wednesday.

President Hugo Chavez said the "Bond of the South" will go on offer Monday. His Argentine counterpart Nestor Kirchner said the bond will have an "excellent" coupon rate.

Top Five US Cities for Cleantech

Since their launch in fall 2006, SustainLane.us has been growing in spades, building out an extensive resource base for government agencies and employees to share best practices in an open-source network.

...On Friday they released their newest piece of research: a rating and review of the nation's top five cities for cleantech development.

German Biodiesel Sales Slump on New Tax

Germany's once-booming biodiesel industry has reduced output by 30 to 40 percent so far this year as new biofuel taxes cut demand at fuel stations, biofuels industry association VDB said on Thursday.

Weekly Offshore Rig Review: Jackup Lovers

As we continue our ongoing examination of the offshore rig market, this week we will be looking at the companies that are contracting the largest competitive jackup fleets in the world. Looking at this information over the past year and into the future helps to paint a picture of which operators have been and will be the most active.

Nigerian Militant Group Claims Hostage Escaped

The Movement for Emancipation for Niger Delta (MEND) said in Lagos Thursday that a Lebanese hostage named Imad Saliba escaped from its custody Wednesday.

Peak Performance?

Peter Odell, one of the most astute, life-long observers of global oil scene, calls them "peak-oilers." Some of them were quite unhappy when I pointed out (in Energy at the Crossroads, in these pages, and in Worldwatch in January 2006) their propensity for wholesaling catastrophic scenarios of the world once the global oil production peaks and begins to decline. But how else can one label such writings as Richard C. Duncan's "Olduvai theory" according to which the declining oil extraction will plunge humanity into life comparable to that experienced by some of the first primitive hominids who inhabited that famous Kenyan gorge some 2.5 million years ago?

Nuclear plant's safety rating takes hit

The Nuclear Regulatory Commission on Thursday downgraded the safety rating of the nation's largest nuclear plant, subjecting it to a level of scrutiny shared by just one other plant in the nation.

The NRC made the announcement following three years of problems in various safety systems at the Palo Verde nuclear plant west of Phoenix.

UK nuclear plans delayed until May

Ministers have confirmed that the government’s plans for new nuclear power stations are to be delayed after a High Court judge last week ordered Tony Blair to rethink his flagship energy reform.

Minnesota raises renewable energy goal

Minnesota has a new law that will require utilities to use wind, sun and cleaner-burning fuels to produce a quarter of the state's electricity by 2025, a standard that advocates called among the most aggressive in the country.

Sequel to gasoline

Peak oil. Heard about it?

It is supposedly the biggest nightmare of our times - or, at least, it's going to be.

It's the point when the world's petroleum production maxes out and then starts declining. You know: beginning of the end of the world economy….

If that's not made you sit up and think, this will! Peak Oil will be circa 2011 AD. That's another five years from now.

The big-car problem

EARLIER this month Germany's carmakers were hit by new emission limits proposed by the European Commission. There were howls of protest, not least from Angela Merkel, the German chancellor. So the proposed ceiling was raised a little, to 130 grams of CO2 per kilometre to be met by 2012. This still left the makers of many of the world's most prestigious cars with the most work: in the European Union only six German-made models meet the target, but 34 of those made by competitors do. Moreover, of all the cars on sale in Germany which pump out more than 200g of CO2 per kilometre, most are German.

Sempra Energy shows sharp earns drop

Sempra Energy, the parent of Southern California's two major gas utilities and an energy trading business, on Thursday posted a 65 percent drop in fourth-quarter profits, hurt by investments in Argentina that soured when that country's economy collapsed five years ago.

Peak Oil Passnotes: The Oil Market Heats Up

The oil and energy markets like to paint themselves as very scientific places. From the geology to the deep water technology, from the super tankers to the powerpoint presentations. But as we all know the truth is nothing of the sort.

The Time is Right for the Majors to Seek Bigger Fish

There is plenty of optimism among the deal-making community in the upstream oil and gas sector. Much is in the pipeline and some deals and refinancing initiatives are already in the public domain.

Scramble for Iraq's oil begins as troops start to pull out

We are about to find out if the invasion of Iraq really was a war for oil. The country is on the verge of passing a petroleum law, which will set down rules for investing in its oil industry. That will set off a race among the foreign oil giants, scrambling for their slice of Iraq's vast oil riches.

Nigerian oil minister says oil output capacity rising six pct per year

Nigerian oil minister Edmund Daukoru said that exploration had raised the country's oil reserves to about 35 bln barrels from five bln barrels in 1999, and that production capacity was rising.

"Reserves now stand at about 35 bln barrels and this underpins a steady growth in production capacity," Daukoru told a news conference here.

Film maker, Yahoo team to fight global warming

Yahoo and the producer of the documentary "An Inconvenient Truth" launched a website devoted to rallying US consumers to fight global warming by switching light bulbs.

African trade fears carbon footprint backlash

A recent bold statement by UK supermarket Tesco ushering in "carbon friendly" measures - such as restricting the imports of air freighted goods by half and the introduction of "carbon counting" labelling - has had environmentalists dancing in the fresh produce aisles, but has left African horticulturists confused and concerned.

Petroleum Rex

Likewise, Petroleum Rex thinks he can outwit entropy, depletion, and decline, no matter what people like M. King Hubbert have told him. (Hubbert showed us the cursed fate of finite resource development – it can't expand forever; it peters out.) Petroleum Rex just swarms upon energy, devours it, shits it out, all the while calling the prophets of depletion "doomers."

I noticed something pretty interesting yesterday, on the CERA thread, where I was having a "Deja Vu" HL debate.

In 1956, Hubbert predicted that the Lower 48 peak would be between 1966 and 1971, based on URR estimates of 150 Gb and 200 Gb respectively. He also predicted, in 1956, that the world peak would be no later than 2006.

In effect, Hubbert said that if the Lower 48 URR was 200 Gb, then the peak would be no later than 1971.

The Lower 48 peaked in 1970.

Using data through 2004, Khebab put the Lower 48 Qt (a HL estimate of URR) at 196 Gb.

Deffeyes predicted that 2006 was the most likely year for a decline in world crude oil production (within a 2004 to 2008 time frame), and world crude oil production is declining (EIA).

You continuously point to the US and the North Sea as examples of where HL happened exactly as expected, so thus HL should be used as the guiding model for everywhere. But both the US and Great Britain have had stable political climates, and a system of capitalism throughout their Oil producing life cycles. I would argue that those are both prerequisites for HL to work correctly.

The same can not be said for Iran, Iraq, Russia, Saudi Arabia, as well as countries in Africa. Iraq is a battlefield, certainly not the best environment to see a good HL plot. Russia has only recently recovered from the fall of the USSR. Iran is under UN sanctions I believe. Saudi Arabia is a kingdom.

The bottom line is HL is a capitalistic model of oil field development. The world just doesn't fit that model cleanly.

I don't disagree with you that we are at or near peak...but there are a lot of political reasons for that.

Geologically, (if there were no political boundaries and plenty of capital available for development) I think we could probably get to 100mbd. But that's really a moot point not worth arguing. What we're gonna get is a relatively (10 years?) long plateau and then a decline.

At least that's my take.

Although I would say that you're right that the bell-shaped curve of the Hubbert curve does not fit every region, an HL-plot certainly seems to work.

The reason why the US-48 is used as an example is because it was developed gradually - fits the hubbert curve almost exactly. The reason why the UK is used is because it is a two-humped camel, not fitting the curve at all. Just like Russia and Saudi Arabia, for instance. EVEN THEN the HL method worked. It won't be long til Saudi Arabia replaces the UK as HL's second prime example...

I'm still not sure when to listen to a dog leg or not, or where the line should be drawn..

Speaking of dog legs, I see one in this post by Euan Mearns yesterday


Another case of HL producing a false alarm with the real peak following ~10 years later. If Saudi Arabia follows the same pattern it should begin its involutary decline around 2015.

now does that nice little post take into account the cooking of the books in the 80's where S.A.'s reserves doubled literally overnight with no physical proof of it?
this is something westexas's estimates using HL take this little fact into account and has been proven right so far.

Freddy weren't you banned?

Do you think no one notices your sockpupet?

At least learn to capitolize, that would make your posts a little different.

The change in inflection on the data set right before 1999 was the same pattern that we saw right before the Texas, Lower 48 and Saudi declines.

In any case, rather than arguing hypotheticals, why not argue actually predictions?

As Deffeyes predicted, world crude oil production is declining (EIA).

As I predicted, Saudi crude oil production is declining.

As Khebab predicted, Mexican crude oil production is declining.

What is really bizarre about this whole "debate" is the ongoing attacks on the HL method even as region after region start declining, as predicted.

Here is the best information I have seen to date on what you talk about. This was done by Khebab, cover what fits and what doesn't fit very well in respect to HL. Worth the time to look at has 30+ charts from around world.


Thank you.

The bottom line is HL can be a good indicator, but is not always the gospel. Oil producing regions can be throttled back, improperly developed, mismanaged, or even destroyed (natural disasters, hurricanes). Saudi Arabia would have the biggest financial incentive of anybody to do this, and as a Kingdom they are much more capable of pulling it off then in a capitalist society where monopolies are illegal.

Sometimes I wonder if there's room for any shades of grey at TOD.

For the record, I will state that it is possible Saudi Arabia really is over the hump and is now in massive decline. Or they could be throttling back to protect the price of oil. No one outside of a few people knows for sure. We watch and wait.

Actually, I think that whether one is a communist, capitalist, socialist or Paris Hilton worshiper has little to do with the peak. The big fields are found first. The overall decline sets in when the decline in the big fields can't be overcome.

I am really using the Lower 48 and the North Seas as best case histories for the post-peak decline rate.

"Paris Hilton worshiper" WT, great shout out for our great pal Oil CEO. Can we get him Unbanned? I miss him. I can get him to behave I swear.

westexas i strongly advise you to not use greenman's script.
many people have replied to this post and are attacking hl and your very good predictions with no data to back it up. and your lack of reply's and counters makes them appear they are right and the saudi's won't decline for another decade or more!

Damn, I'd just turned off the script, and now it looks like I've got to turn it back on.


There is a plethora of housing and mortgage-related news this morning. None of it good:

Lowe's Earnings Fall Less Than Analysts Anticipated

ResMae's Collapse May Signal More Subprime Lender Bankruptcies

Mortgage woes weigh on H&R Block profit:
Results weighed down by subprime mortgage unit it put up for sale


Oh ya...and we are starting the day with crude priced over $61 to boot. It rose overnight.

And gasoline went up over two cents overnight. That's huge!

Anybody keeping track of those recent predictors of $30 oil, so we can send them a lump of (clean) coal for their stockings next Christmas?

In "normal" (increasing oil production) times, a recession would bring about lower prices across the board, which is one of the "benefits" of a recession.

Depending on the depth of a recession/depression, we could easily see a decline in oil prices, but the problem is that we are looking at a stair-step downward pattern in regard to oil production and prices: (1) Production falls; (2) Prices rise in order to balance supply and demand; (3) Then production falls again.

IMO, we are not going to see a rise in oil production, and the Export Land model only makes things much worse.

Again, the only thing that makes sense to me is a crash Electrification of Transportation program.

IMO, the suburban auto/housing/finance business model is dying in front of our very eyes.

I am becoming increasingly concerned about the effects of a recession upon oil production. If the global economy cannot support an oil price high enough to pay for the increasingly higher costs of oil production, the fall-off in production could be quite rapid, and perhaps in many cases, conclusive, assuming the current level of affluence would never again be attained. Also, the closer we are allowed to come to the geologic peak before an economic correction takes place, the more rapid the fall-off in production would be. (Yes, I know, this is the crux of the whole PO issue, it's the rate at which it could happen that increasingly alarms me.) Even the CERA meeting recently, was expressing concern about the increasing costs of production.

Also, GailTheActuary made a good post yesterday about the need to address our current state of housing's energy requirements. Even if we could achieve electrification of transportation, the housing issue is looming and in need of equal attention. As she stated, houses need heated enough to keep pipes from freezing, or we have the beginnings of a downward spiral in urban infrastructure.

Based on the Lower 48 and North Sea case histories, the function of the oil industry in a post-peak environment is to slow the rate of decline of conventional production. Note that we slow the rate of decline by accelerating our rate of consumption of a depleting resource.

I think that the major effect of volatile oil prices and rising costs will be on nonconventional production, e.g. ExxonMobil's decision to cancel a GTL project. But again, all we are talking about is accelerating our rate of consumption of a depleting resource.

Meanwhile, note that we are seeing a furious counterattack on any suggestion that we are past, at or close to peak world crude oil production.

And so it goes.

All I can advise people to do is to implement ELP and "Cut thy spending and get thee to the non-discretionary side of the economy." And I recommend that everyone start lobbying for Alan Drake's proposals.

Interestinlg though, the furious counterattacks never stand up to scrutiny. In fact to date I don't think i've heard one counter-argument that couldn't be proven nonsense within 30 seconds.


I've always viewed the counter-attacks like what happens with a cornered animal. The animal will try anything and everything to get out of that corner. It will become vicious and ruthless and will attack anything that stands in its way.

Those that are counter attacking are increasingly pulling out all stops/possibilities to convince an ever more disbelieving world. Someone mentioned yesterday that their statements are becoming a nonissue.

Just as people have learned to ignore what Bush and Cheney say these days, so people are learning to ignore YergCo and its massive disinformation program.

First they Ignore you, then they laugh at you, then they fight you, then you win.

Unfortunately, no one really wins since this is not a game.

It may be nonsense to you and me.

But these counterattacks anesthetise public opinion. Every educated person I know (MDs and PhDs) is quite sanguine.

Thanks for your reply, WT! That does help keep things in perspective.

westexas i am still waiting for a response from you about the 'localize' part of elp and why it locks one in with one company if you happen to still be a wage slave and not living off a pension or 401k you have no doubt built up. i say this because from what you talk about and how you developed this strategy you must be about 60. you have admitted to working in the oil field which would despite the willing pay cut you took probably netted you a huge amount.
because i do want a alternative to what i see for me and the fellow wage slaves about my age and that is we are basically sol in trying to prepare for anything.

Hi, westexas,

Thanks for the explanation you posted to me as well as this information. It looks like that neo-con version of the invisible hand is going to fumble the ball even worse than it has been doing.

I heartily agree with you that Electrification of of transportation is THE priority. If national security was really the aim of GWB you guys would be well on the way in that regard since 9/11 instead of producing alcohol from corn and starving cows. (would George possibly have some sort of fixation on distillation?)

Check this fact, which I read, that regular heavy rail non electrified has an efficiency rating of over 4 to 1 over regular long haul trucking, electric I imagine would be better. See 'US Railroad Efficiency' at: http://www.trb.org/conferences/railworkshop/background-McCullough.pdf , in particular Table 1 page 8

Incidentally we had a lovely streetcar system here in Vancouver until the city fathers tore up the lines. I was about 10 at the time and the transition from a lovely gentle ride to one filled with gasoline fumes, lurching and bumping really made a negative impression on me. It would really be nice to travel in a civilized manner again. That's one positive benefit P.O. may result in.

Black Bald.

Make sure to read these couple. It is going to be EXCITING day/weekend.

Subprime Titanic Hits Iceberg: Wall Street Abandons Ship
by Richard Benson


The BBB- rated portions of ABX contracts are "going to zero"...And the "Subprime Carnage" Worsens...

Oh, and BTW, It looks like Bill Gates is cashing out some more too.

Look on this link on how many shares he has sold.

Nov, 2006: Bill Gates sold off $580,912,000 of MSFT shares.

Feb, 2007: Bill Gates sold a further $292,541,000 of MSFT shares.

This means that in the last 3 months Bill Gates has dumped a total of $873,453,000 of shares in MicroSoft.


We are in exciting times. The End Game has started.


graph: markit.com

The perceived risk of owning low- rated subprime mortgage bonds rose to a record for a fifth day after Moody's Investors Service said it may cut the loan servicing ratings of five lenders.

An index of credit-default swaps linked to 20 securities rated BBB-, the lowest investment grade, and sold in the second half of 2006 today fell 5.6 percent to 74.2, according to Markit Group Ltd. It's down 24 percent since being introduced Jan. 18, meaning an investor would pay more than $1.12 million a year to protect $10 million of bonds against default, up from $389,000.

The BBB- rated portions of ABX contracts are "going to zero," said Peter Schiff, president of Euro Pacific Capital, a securities brokerage in Darien, Connecticut. "It's a self- perpetuating spiral, where as subprime companies tighten lending standards they create even more defaults'' by removing demand from the housing market and hurting home prices, he said.

One of the little ironies about encouraging people to move out of outlying suburbs is that it just leaves some other poor sucker with the mortgage.

Of course, the ultimate problem is a Fannie Mae meltdown. Ultimately, we are all going to pay for the auto/housing/finance boom and bust.

As noted down the thread, IMO Alan Drake offers us the only reasonable hope of surviving this mess.

As I asked yesterday, has anyone who voluntarily downsized had reason to regret it?

I'm all for public transportation where it makes sense. I love the NYC subway and the T in Boston.

But as Stuart pointed out when he crunched the numbers, mass transit is not going to make much difference for the vast majority of us.

IMO, we saw that clearly during the oil price spike last year. Demand for public transportation jumped, but in many areas, service fell. The higher energy prices left local governments struggling with budget deficits, and they could not afford to expand service, or even maintain it in some areas.

I'm glad you reminded us of Stuart's work.

The problem of insufficient population density to make mass transit a significant factor (to offset less oil available in the future) is something not easily addressed. For all the goodness of rail (and I use it every day here as I have no car) to work in a community people just have to be willing to live closer together than in, say, Maricopa county.

Such assessments are based on peoples' current tendencies -- most keep driving alone even at $3/gal, and will do that even at $5. But with further rising fuel prices and further falling perception of wealth (as the housing bubble keeps bursting) those tendencies will eventually change. And with enough demand for other transport solutions, laws and funding mechanisms will be changed to accommodate such solutions, e.g., "jitneys". The challenge for the peak-aware is to push as much as possible in advance for the right changes, since early changes and investments will ameliorate the future pain somewhat. If currently, say, 1% ride the bus and the bus is half full, then without further investment, when suddenly TSHTF (e.g., attack on Iran), and many more try to ride the bus, it still leaves 98% out.

For most people they do not have an alternative to their car. And for those people, not driving means no income. Their is no real alternative for them. They are not financially stable enough to stop working - they are locked into the system.

The actual price of gasoline will not discourage usage by a large number of people until it becomes a truely insurmountable cost in there lives. I don't think this price will be $5, $10, or even $20/gal for a large portion of the population. Price alone will not change the behavior of the mass public - directly anyway.

I think the biggest changes will start to occur as a secondary responce. Because of high prices there will be government controls put into place. These would come in the form of rations or price controls, but both will have a similar affect.

Eventually we will end up with situations similar to what is present in Iraq. There is an offical gasoline market, but you have to wait hours to get your gasoline, if it is available at all. Once the reliability of the market is destroyed a black market will develop - either to avoid the wait or get around the rations - at a premium price.

At this point you will see a much more radical change in behavior. It won't be a choice of paying $50 to drive to a job to make $200 and being able to rationalize that. It will be pay $100 to garrantee I can get to work, or sit in line for 4 hours then pay $50, or maybe I can't even get to work today because there is no gas available to buy. This will cause more disruption then price alone. This will force change one way or another.



I could not disagree more.

I think that most people that participate on this board have above average incomes, and really do not understand how the majority of the population lives.

Its true that 10 buck a gallon gas would not impact my life greatly.

However, there are many people that live hand-to-mouth already, and 5 buck a gallon gas would put them over the edge, let alone $20.

If gas reaches 10-20 bucks, that would trigger some nasty inflation across the board. Except for used SUV's that would be virtually worthless. Demand destruction would bring the prices back down.

I really believe that high energy costs would trigger a fiscal crisis, leading to catabolic collapse. Capitalism cannot function very long in a sustained, negative growth environment.

I agree that there are a lot of people on the edge of financial collapse - many people close to me are in that situation. But the problem is that most people will sacrafice a lot of other things before they give up driving. Yes they will car pool, reduce non-esential travel, and try to trade to more economical vehicle - but they will not give up their vehicle all together.

They can't.

Even though the price of gas may destroy them financially in the long run they will continue to drive because if they don't then they have no income.

They will put it on credit cards, roll the debt into their 'home equity' so they can pay for a weeks worth of gas over 30 years, and then start the credit card game over again. They will sacrafice short term health care, retirement and education savings, food, clothing, and other basic supplies. The system will allow them to burry themselves. Systematically they poor will be removed from the equation, forced into situations I cannot imagine.

But price increases alone will not change the motor fuel system for those that can still afford it, the market will adjust for those still willing and able to pay. Unless there is some driving force outside of strictly price - namely supply disruption - there will not be a change in the market.

Yes - at some point there will be a catabolic collapse, the house of cards will come tumbling down. I think that many of our poor will be sacraficed to keep the machine running for the elite. Only when the upper middle class and the elite are being squeezed will they give up on the market and the collapse begins.



It looks like we see the situation the same.

The only thing I would add is that the situation you describe is already underway. The negative savings rate and record consumer debt is an ominous sign.


The poor are already being sacrificed. What the poor do in this situation is they stop paying. They stop playing the game. They give up. They do the "Grapes of Wrath" thing. We have'nt seen people starving in this country in any great numbers in a long time. Some will resort to crime. Some will just lay down and wait for the Govt. to step in and do something, like in New Orleans. Many will die waiting. The thing is, the bottom of the pyrimid is very large. If most stop paying, the game is over. A forclosure that no one will buy is worthless. A person with no assets can't be touched, what would be the point? Then we get a lot of bank fraud and cooking of the books. Then the banks start to fold. We have a lot of phony capital out there that will just vanish because it wasn't really there. Damn, our whole monetary system is just such a scam.

What if the only choice that most Americans have is to downsize in close proximity to mass transit?


Published on 21 Aug 2006 by GraphOilogy / Energy Bulletin. Archived on 21 Aug 2006.
Net Oil Exports Revisited

by Jeffrey J. Brown

A Proposed Triage Plan

I believe that vast expanses of American Suburbia are going to become virtually abandoned in the years ahead. Alan Drake has noted that a good deal of suburbia was so poorly constructed that a lot of it is biodegradable. Alan has outlined how we can go back to what we used to have: electric trolley cars connected to electric light rail lines.

CBS Sunday Morning, on 8/20/06, had a segment on "tiny houses." They profiled a home designer and builder who specialized in building very small functional homes of about 100 square feet. You can find more information on his website.

What this builder has realized, and what millions of Americans are just beginning to also realize, is that anything over 100 square feet or so per person is not a necessity; it is optional consumption, a want, instead of a need.

The US is not Switzerland, but Alan Drake has described how Swiss per capita oil consumption in the Second World War was about 0.25% of current US per capita oil consumption. They did it primarily by electrifying their transportation system.

I propose a sort of triage operation: "tiny" homes and multifamily housing along electric mass transit lines. In my opinion, it is the only way that we can preserve some semblance of a civilized society. The suburbs are, by and large, a lost cause.

What if the only choice that most Americans have is to downsize in close proximity to mass transit?

Civil insurrection, probably.

Stuart's work is pretty persuasive, IMO. More efficient cars is a better use of our resources. No, I don't think the happy motoring lifestyle can go on forever. But I think more efficient cars will be a step toward no cars.

But this is where Export Land comes in. In order to just keep our Total Petroleum imports flat, our consumption has to decline at the same volumetric rate per year that our domestic production drops and the US HL model says that we are about 85% depleted.

So, the momentum of the suburban auto/housing/finance model (although slowing) is still outward bound, while, IMO, we are today in transition from a long term expectation of 5% per year exponential increase in Total Petroleum imports to the reality of declining petroleum exports.

I don't think that we have time to transition to more efficient autos. I think that we are just going to see abandonment of large swaths of the 'burbs. It's not like it hasn't happened before in the US. There are lots of and lots of towns that were virtually or totally abandoned because of economic factors.

If that happens, transportation will be the least of our worries.

Transportation will remain a critical concern in any scenario. Transportation serves the economy by providing the distribution of goods and services and by facitating the mobility of labour. The economy is a force unto itself and will not forego services necessary to its survival until some reformation allows it to do so.

Changes will occur. More efficient vehicles are coming into the market, but the most available opportunity is to make more efficient use of vehicles. Shared transportation will become the norm it was not so many years ago, in both sub-urban and rural areas. Just as the container is supporting the shift back to rail transport of freight, other communication devices like cell phones and networked computers will facilitate the return to an efficient use of the carrying capacity of the automobile.

There will certainly be a loss of value for much real estate. Business people will abandon locations that are dependent on consumers having instant access to cheap transport. I expect more home delivery services and an intensification of commercial activity to locales well served by public transit.

The initial resistance from taxpayers to public transit investments, completely understandable given the financial pressure people are and will face by declining disposable income, will be overcome. Business will become very transit supportive because of the labour mobility issue. Labour mobility is central to the efficient functioning of a market economy. Business support is (sadly) all that is necessary politically, but business will be supported by a growing number of individuals lacking the means to own a car, by others whose physical impairment from age or illness keeps them from driving, and by others who choose not to drive for ethical reasons.

As always there will be a great deal of fricton, but changes to tranportation patterns can and will occur rather quickly.

The great danger in many locations is that the transition to a era of declining hydrocarbon sourced energy, in combination with tensions caused by environmental degradation, climate change, wealth and income inequality, and other pressures, will provide fascists the opportunity they seek to gain power.

The last is a very discouraging thought. I would rather think that bush&co are a temporary blip, but it is easy to imagine somebody elected that promises all the energy we are entitled to, naturally we will have to abrogate all our rights to give him the power he needs to give us what we deserve. IMO we always get the gov we deserve...

As disgusting as the Cheney regime is, in my opinion, it is not a fascist regime. The true fascists wait in the wings. Think of the likes of Pat Robertson. The fascists will be as comfortable collaterally damaging their fellow citizens as Clinton and Blair were the children of Iraq during the embargo.

Peak oil/gas threatens to financially distress large groups of people who would not normally listen to demagogues, for example property owners in transit poor areas, or owners and workers in businesses that find themselves in superfluous activities.

The peak oil/gas aware need to consider mechanisms that will assist these people in their efforts to maintain their standing in society. Otherwise, they will swell the ranks of the fascists.

As disgusting as the Cheney regime is, in my opinion, it is not a fascist regime. The true fascists wait in the wings. Think of the likes of Pat Robertson.

Right idea, wrong language. The Cheney regime is precisely a classic fascist regime in the Italian model, "The perfect merger of corporations and government" - Benito Mussolini.

What you fear, and I agree would be be worse, would be a Pat Robertson regime, which would be more similar to German national socialism with extreme persecution of designated scapegoats. Imagine concentration camps for non-Christians, gays, abortion providers, and other heretics. Visualizing that nightmare post economic collapse is what motivated me to emigrate from the US in 2005.

The peak oil/gas aware need to consider mechanisms that will assist these people in their efforts to maintain their standing in society.

Look at "Sustainability" again.  If it doesn't already have what you think is necessary, maybe it'll fit in.

Hi jkissing,

"re: IMO we always get the gov we deserve...", I guess you mean "deserve" in the sense of having made "less good" choices (?). Education comes into making choices, though. (Of course, the problem is that so much (all?) of our early education is in the hands of others.)

THe problem is much deeper. The temptation to avoid education, eg watch tv, drugs, and other distractions, has neve been higher. Meanwhile, advertising has become a very high art, and pervades everything, always urging the consumer on, addicting us all to high energy consuming goods. Once addicted we rationalize that what we want to hear is the truth, making it easier fore cera and msm to guide us into 'less good choices.'

Transportation will remain a critical concern in any scenario. Transportation serves the economy by providing the distribution of goods and services and by facitating the mobility of labour.

I'm talking about the kind of transportation needs served by streetcar.

Moving goods is a whole 'nother kettle of fish.

Why, Leanan, can't move fish on streetcars? Did I miss something?

Hey what kind of line is this anyway, Econ 101 for 8 year olds?:

Transportation serves the economy by providing the distribution of goods and services and by facitating the mobility of labour.

Yeah, well, that's the problem isn't it? We know what it does, but what'll you do when transportation runs out?

Facilitating the movement of Labor? What is that? Read this stuff at TOD:C: Get in the back of the truck, Miguel, we're heading for Alberta.

It did occur to me that if I chose wording suitable for a nine year old, the point might be lost on some.

Everyday in North America, tens upon tens of millions of people are transported to and from work by car, by mass transit, on foot, by bicycle, and even by boat. Mostly by car. Some people transport their skills electronically. This is one dimension of the mobility of labour. Another is the ability of workers to access the work that offers them the best available conditions and the ability of employers to find the most suitable workers at the lowest price. So physical mobility (for most) provides people the opportunity to sell their labour to an assortment of employers and to have the best possibility of advancement in their careers.

Whether, we like this system or not -- perhaps you prefer serfdom -- it undeniably underpins the optimal division of labour, which is the foundation of the productivity of the economy.

Some people on this list appear to think that only those who know how to snare rabbits and cook gopher stew are going to survive when the famous shite hits the fan, which, it appears by the state of preparations some are making, is thought to be even closer than the rapture. Enjoy your adventures.

Almost all of humanity is going to continue to live in communities dependent upon trade, and is going to learn how to make do with less liquid fuel and probably less energy altogether. We're not going to give up the advantages provided by a division of labour. We're going to continue to allocate resources to the mobility of labour since that mobility is one of the strands that optimizes the division of labour. The political left, the right and the centre, and most importantly, the business elites, will not agree to any other course. At least not in any timeframe of relevance to anyone alive today.

The transport of goods is another strand optimizing the division of labour. The long distance transport of goods in North American is shifting to rail, thanks to a force which Adam Smith pictured to be like an invisible hand. My contention is that in the immediate wake of permanently higher fuel prices market forces will direct the daily transport of labour to shared private transportation wherever public transportation is inadequate or less desirable. I don't think it is likely that any of the proposed new technologies/fuels will sustain single occupancy private transportation, at least as a popular mode of transport.

It is not just a declining supply of liquid fuel, which will drive this change. An ongoing loss of income, not necessarily due to higher nominal prices, will be at least as important a factor. I say not necessarily higher nominal prices, because the price of fuel may not rise substantially, as demand is curtailed. Incomes will fall, I am convinced, because of a declining EROI. But that is another matter, for later. In any case, income available for transportation will be constrained.

Over time, in my view, the transportation market will be redesigned such that public transit, increasingly rail based and electrified at that, strongly supported by 'the business community', will be the dominant mode. It will be fed by 'jitneys', servicing areas of low population density and feeding into a public transit system.

To reiterate an earlier point, people will be stressed by changes that lead to financial impoverishment relative to other groups, even as the overall wealth of the society diminishes, and to the denial of aspirations. There is every reason to fear that large numbers drawn from this group will fall in behind the fascists.

Don't fool yourselves; they are there, waiting for their chance.

Hi toilforoil,

Thanks, re: "wording suitable". (Well, sarcasm is usually lost on me, as for simple explanations,though, I appreciate them.)

re: "Incomes will fall, I am convinced, because of a declining EROI. But that is another matter, for later."

Do you have in mind a way to analyze this?

Yes. But going from 'in mind' to communicable and valid model may exhaust my life force. At one level I am trying to determine whether hydrocarbons, given current and expected technology, can serve as a proxy for supply and demand in a theoretical representation of the economy. I am also looking at such things as the stickiness of investment in the energy sector vs investment in general. Also, I am trying to create a list of indicators.

Hi, t,

Thanks for responding. Of course, please preserve your "life force"; (I'd like much more personal energy myself.)
In terms of your ideas here, I think the area is important. I don't know what you mean by "proxy" for "supply and demand" - do you mean as taken together? (Likewise, would like to hear more about what you mean by "proxy" and "stickiness".)

Q/and hope: Hope you'll share when you get a chance, even as a "work-in-progress".

One thing that bothers me is having looked at a paper (I'll write about it later) - it seems like a lot of people looking at the hydrocarbon picture are making unfounded assumptions about the economy. A good question, it seems to me, is to try to look at some way to analyze the impact of LTF loss as it relates to separate sectors: including other energy input sectors, such as electrical generation (with different fuels).

Hi Aniya,

I took some unfortunate shortcuts in my response to your inquiry.

I use proxy in the sense of 'substitute for', but this doesn't really serve to communicate my meaning.

Assuming we decide to view reality through the (macro)economics looking glass, we find the motive force behind the flow of production in a circular flow within the economy: this flow has a demand side and a supply side. Demand assures supply. But where does demand originate? Demand is produced by supply. In other words, output is generated by demand, and demand is generated by output. Supply and demand, as employed here, do not refer to the schedules of supply of and demand for any particular item, but represent the aggregate of supply and demand in the economy. Are the demand for and supply of hydrocarbons also co-dependent?

Stickiness was also a lazy shorthand on my part. What I meant to convey was the idea that not all investment is equal in terms of its economic productivity and ultimate impact on the maximization of utility (I will leave aside the debate as to whether striving for utility maximization promises a happy ending for civilization; I am attempting to deal with the dominant set of ideas on its own terms).

Perhaps we can continue this discussion later. Bed beckons.

take care

The 1,150 mile Pacific Electric rail system around Los Angeles


also ran freight.

The Pacific Electric also ran frequent freight trains under electric power throughout its service area, including one of the few electrically-powered Railway Post Office routes in the country

Oranges and, yes, fish traveled the same lines that streetcars used.


Best Hopes for "back to the future",


Where's Doc and the flying Delorian with the Mr. Fusion when you need them!?

I am no petro-cornucopian, but I think some of the doomerism is quite extreme.

Here is one problem of US suburban areas which could be quickly rectified if people wanted to: zoning laws.

Right now you have monoculture blocks of housing with no services at all at a close distance. When gasoline is $15 a gallon, communities will eventually start to change their mind and allow conversion of local residential lots into 'soft' commercial services. You might have more small offices, primary physicians, dentists, hair salons, Starbuxen, and even 'minimarts'/bodegas coming to the local corner of a suburban tract.

Then, in the suburbs there could be hybrid-electric private jitneys taking people to local services on ad hoc routes.

Before then, in the sunnier & drier areas, lots of people will take up motorcycles and scooters, as in the 3rd world now. They're much cheaper than a hybrid car with similar to better fuel efficiency. When it rains or snows, lots of business will stop.

You can look at the patterns of business and transportation in 3rd world countries which are not major petroleum producers---they already have in effect highly expensive oil which needs foreign currency. These places can't really adjust well to even more expensive oil as they've done the easy stuff.

The 'exurbs' are screwed.

As many posters have already discussed, there are a number of ways that our current physical infrastructure, communities (in their varying degrees of authenticity) , towns, cities, farms and their interlinkages can be adapted & jerry-rigged to suit the ELP model. Because our society is so wasteful and contains so much excess fat, it won't require amazing technical feats to get back to the basics and serve our needs - even in suburbs (where there's a lot of land for urban agriculture). To this we can add the proven technical breakthroughs that are already in the pipeline - thin-film solar panels, algae-derived biodiesel, efficient wind turbines, etc. Despite being behind on rail, it's cheap and easy to build when push comes to shove. ¡Si se puede! THE BIG 'IF' IS NOT TECHNICAL BUT SOCIAL. If we can work together and embrace community, we can make amazing things happen and live well on less. We can embrace the immigrants among us as fellow humanity and invite them to live in the spacious houses we don't really need. We can use our labor to farm intensive permaculture. Trusting, supportive communities can practice trade in specialized goods and provide mutual aid to others.

On the other hand, if people try to schitzophrenically maintain an atomized high-energy lifestyle and/or look to the fascist movements that are now waiting for their chance to gain power, such as the Christian right Dominionists, then the game is up. Private security firms and concentration camps in the name of fighting illegal immigration, etc are symbolic of all that can go wrong. Interesting times indeed.

"We can embrace the immigrants among us as fellow humanity"

When the hell has the human race ever embraced people that are not of their tribe. When the downhill roll really picks up, the last thing people will do is tolerate someone who doesn't look think and act exactly like they do.

Hi Zoe and Enviro,

I'm glad to see a conversation about living together.

re: "...the last thing people will do is tolerate someone who doesn't look think and act exactly like they do."

From my point of view, it's not differences that are the problem, per se. It's how one's (or collective) perception of fundamental safety plays into it. By safety I mean - safety of one's physical and emotional well being, for example.


I'm not calling you wrong, but if we want to focus on solutions, totally dismissing the possiblity of grass-roots multiculturalism will not empower anyone. This is why social capital or whatever is so important. States such as MN and ND in the midwest US have cultures that are repsectful and community oriented. Even in small rural towns where all the kids leave to go to college in the big city, the population is at least stable because of immigrants moving in to work at the slaugher houses and farms. The Twin Cities also has the world's largest ex-pat/foreign born population of Somalis and Hmong. There is a strong feeling of affinity with the immigrants, which dovetails in with their own desire for strong families and community. It's not about cultural differences so much per se, as it is about accepting surface difference and finding common needs, goals and values. These places will fare relatively better, and not because of technical fixes. I won't be putting my money on Mississippi or Texas when TSHTF.

FYI, the Somalis have been causing a lot of religious friction; one example is the attempt to impose Shari'a restrictions against alcohol upon people taking cabs from the airport.  Don't expect them to fare well after they've worn out people's patience.

Hello WT and/or Khebab,

[off-topic, but I wanted you to hopefully see this]

One of the basic themes of your ELM is that the first world is outbidding the Third World for FFs. At the CIA factbook, I found some files that lists oil consumption, oil production, and oil imports by country:


Unfortunately, I am not a computer guru, but I thought you or Khebab could track these numbers, then compare later as the CIA updates them to see how much Third World oil demand destruction is going on. Maybe you already have a better info links than these. Cheers!

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


Khebab and I are going to work on a Net Oil Exports article.

WT: I'm looking forward to it.

I think it may be useful to categorize the exporters using socio-political metrics in order to achieve an accurate accounting. For example, KSA is experiencing population growth and is also seeking to move up the oil production value chain to create jobs for that population. The result should be rising per capita income, a rising standard of living, and increased domestic oil consumption. Same looks to be true for Russia.

Nigeria appears to be a kleptocracy where little oil income reaches the general population. There is little change in per capita income and consumption patterns. There is a need to categorize producer countries to take account of these differing consumption patterns.

I started to perform this breakdown but you and Khebab will do it so much better. Cheers!

I read where Japanese oil imports were -2% last year.

Everygody is getting less than they really want. Lowest growth regions, eg africa, step aside, low growth eg japan/europe make do with just a little less, med growth like us are flat, and high growth like china gets what others are doing without.

The electric assisted bicycle, which some on this board consider a silly toy, could be a powerful tool to expand the habitable radius around mass transit stations to 10 miles or more. Once the population of areas such as Southern California is reduced by, say, 15%, the number of housing vacancies will be sufficient to allow families to move more easily and frequently to where the work is. This population reduction could be accomplished by romoving illegal immigrants. There is too much existing infrastructure to write off suburbia. And many suburban yards are large enough for families to grow most of their own food. Suburbia won't die unless/until there is a massive people die-off.

Earlier I made the comment that the electric assist tricycle will become the comic symbol & sterotype for elderly baby boomers. The ultimate "un-cool" means of transportation for teen-agers !

Depending upon weather/climate and terrain, I think a 3 to 5 mile radius is more likely to be viable than a 10 mile radius.

We could easily cut the average sq ft/American by half, which economic forces may require. In that case, most of Suburbia will be boarded up when they require major repairs (i.e. age 25 for new built homes).

Best Hopes,


This population reduction could be accomplished by romoving illegal immigrants.

This would also reduce world oil consumption (demand destruction as the aliens return to their previous less-consumptive lifestyle), solving several problems at once.

I have to ask the question of why we even need mass transit? Is transportation really that important? Do we need mass transit to survive? I live in the North Dallas suburban area and there is nothing in downtown Dallas I would need post peak. It is just office buildings, bars, concrete, and some musuems. North of Dallas is some arable land which to me seems more important. Why not move North, buy some acerage, and form some type of food co-op with a local farmer. Seems like a better plan to me than moving closer to a major city that is office buildings and concrete.

Abandoning the suburbs comes in diverse forms. So you prefer the move-to-the-farm version. Many will, once food prices get high enough.

As long as there are some urban jobs too, there will be need for transit.

There will also be transportation problems in rural areas. With different solutions.

I think what I am trying to say is that I don't understand what a city like Dallas would offer to a massive influx of people post peak. Like I said it is mainly buildings built to house the compaines of a service economy. If we end up going to more localized economies will it be that important to be near mass transit? My point is that it may not. Moving away from high concentrations of population may be a better idea again because I do not see what Dallas could offer in an economic collapse/peak oil world. My imagination however may not be working today.

I'm inclined to agree with skent about the value of large cities. It seems like most of the concerns with suburbia and peak oil involve the difficulties of commuting long distances to the city center, but most of us in the suburbs of southeast Houston rarely go downtown. My imagination may also not be working, though.

I think we will end up with five functional modes of housing:

1. low-to-medium density walkable urban(ish) towns and small cities. While Rome managed to have over a million people at its classical peak, it did not endure (and depended on slave labor). The current metropoli we have today are also only viable with abundant energy.

2. Shanty-towns adjacent to urban cores, such as we see in the 3rd world today. I'm beginning to expect a lot of these. With any luck, this will be a transition phase. The transition might last generations, though.

3. Farms. Farming is our one indespensible occupation. Families live near the fields, orchards, and feedlots and "export" substantial amounts of food.

4. Homesteads. Basically single-family farms that do not "export" significant crops to others.

5. Small towns that service nearby farms and homesteads. We may (and I hope we do) see primary processing of agricultural outputs happen here. Things like canning, juicing, butchering (depending on how reliable refrigeration is), winemaking, beer brewing (transport question here, it might be too expensive to "export" beer, which is heavy compared to the grain it is made from), cheese making.

As you pointed out, your nearby urban core may not have anything in particular to offer you. How many of the jobs in those high-rise office buildings are in finance, advertising, corporate/government bureaucracy or other occupations that we can expect will steeply decline in the near future? The number of office jobs in general can be expected to decline sharply.

And, as I opined a few days ago, how stable is the job you can access via mass transit? Creating stable jobs is another critical component to reducing the need for individual transit.

Extending the electrified rail system to the small towns supporting farms will be critical to continuing to feed the urban populations.

Articles about Singapore, Mumbai, Beijing, etc. describe men, sometimes women, too, leaving the farms and crowding into the cities to do any sort of manual labor they can find. One was a "bam-bam man," a porter who carries stuff on a bamboo rod across his shoulders all day. From whatever pittance he makes, he sends money home.

This makes me think that there won't be farm jobs for everyone that is unemployed, and that jobs will go to people with connections to the farmers.

I think that's why that magazine sales article struck me. Those people are like the ones that used to run off to join the circus, or the army, or to sign aboard a ship - they had run out of opportunities near home.

This is very much how I see the future.

I think the urban centers which currently provide a lot of service jobs will transform in to urban centers that provide a lot of industry and manufacturing jobs. These types of jobs tend to be very shift orientated, and in general would be well served by mass transit.

I also see suburbs transforming. Along the mass transit routes there will be high density housing, with high quality near the routes, declining steadily as you procede further away - hence the shanty towns.

I also see the farms and small towns transitioning. I grew up on a farm, and come from generations of farmers. Dad would tell stories of picking up the milk cans with a horse drawn trailer to go to the local creamery - there was one in every town. Grandma used to work at the canning factory a few miles from home. Cattle could be sold in dozen's of markets or to local butcher shops. Now there are two creameries, one canning factory, and two sales barns in a 100 mile range. I think over the next 25 years we will start to see the break up of all of the consolidation, and a relocalization of these services. The large factory farms will be busted into smaller tracks as manual labor starts to replace current equipement.


My vision of the "most likely scenario" is quite similar.

But there are other scenarios possible as well, depending upon the choices we make. Most of them are darker,

Best Hopes,



Hi Kevin,


re: "I think the urban centers which currently provide a lot of service jobs will transform in to urban centers that provide a lot of industry and manufacturing jobs."

Do you have any ideas about what would be involved in a transformation like this? So, I just discover there are (still) steel mills, http://www.ussteel.com/corp/index.asp. I believe, however, there are no bicycle manufacturers (commuter-type bikes).
Do you think there will be the capital to establish industry and manufacturing? If so, what are you basing this on? And, do you think it can happen in a decent amount of time?

Don't be coming up here. There is plenty of land east, west and south of Dallas.

Just being a devil's advocate, wouldn't it be somewhat cornucopian to
believe we could abandon all of the suburban property and move closer
to mass transit quickly enough to prevent the whole economic house of cards from collapsing? This involves rebuilding housing for millions
and millions of people on a very rapid, impossible timescale. Look at the resources that would be involved! You also would have to think there can be a transition from one lifestyle to the next. I don't, I think it will be a hit the wall and pick up the pieces thing. It just sounds to me like the cornucopians when they wave their hand at problem and say things will just work out.
Sorry about the cornucopian reference, it was the only one that came
to my flu addled mind.

I will point to two periods of US history.

From 1897 to 1916, the US (pop ~90 million in 1910) built subways in our largest cities and streetcar lines in 500 cities, towns & villages. San Angelo, Texas, pop. 18,xxx built a 3 mile streetcar line to get from one end of town to the other. The Los Angeles basin had 1,000 miles of Urban Rail that also carried light freight.

I like to point out that "Peak Streetcar" was built with coal, sweat & mules.

From 1950 to 1970 we dramatically changed our urban form, trashed virtually every downtown (once the center of commercial activity) and a high % of the well built pre-WW II housing.

In neither case were we under any major compulsion or emergency similar to Peak Oil.

Best Hopes,


comparing apples to oranges.
your comparing a country of a much smaller population and much more abundant resources. much of which at that point did not need heavy industry to just to get too, less bureaucracy and more politicaly literate populace

to one that is well into it's decline phase, no guarantee of imports from other country's, resources that are already used in other infrastructure or lost for good because they were used to make warships/planes/trucks/tanks/various misc military equipment during the TWO world wars between then and now(one of which you do not seem to mention at all even though it falls into said period you mention). more of which that will be used up making /more/ warships/planes/trucks/tanks/various other military equipment as each administration elected elects to use military force to try to aquire foreign resources.

i am very sorry to say that because of the reasons you conveniently lack to mention. your idea that we will painlessly transition from our current way to a mass transit dream so we can continue bau will not work. though i do not think that is the reason you do what your doing. you do it because it gives you power and fame, it doesn't that this won't work as long as you get power from selling a idea that sounds like it might work but is killed by factors you always gloss over.

I do not appreciate the personal character attacks.

The US is rich in resources, even today (5+ million b/day of oil) and Swiss have always been poor in resources.

No two nations are identical, but this does NOT mean that lessons cannot be learned ! Switzerland is a Western Industrial democracy, unlike, say, Cuba.

And I have never used the word "painless" for the post-Peak Oil era. In fact I have compared it to being beaten by an iron rod, not a stick.

I will limit my future responses to you.


The dude forgets that the steel for this phase-change in our civilization is sitting,refined,in a thousand scrap auto yards.I once ask my brother[the engineer] why he belived collapse would not be permenent/chaos....he replied"we have too many engineers sitting around"

I hope he is right


Ideally, we'd have just about every educated person conversant with enough chemistry and physics to have a good idea of where to start looking for solutions.  Of course, if this were the case, the pols wouldn't be getting away with murder as they are now.

I am doing my best, within the constraints of helping locally in New Orleans and nationally/globally.

Best Hopes for more Involved Engineers and other technically minded folk,


Hello T,

I'd also like to have a basis of respect and trust here. With it, I feel safe to post. Otherwise, I'm reluctant.

I find in your post an interesting idea, namely the role of manufacture for military purposes.

A suggestion: Perhaps you could discuss this in some terms, such as an analysis of the arms trade, and how this might or might not be effected,and perhaps how to prevent the most valued remaining resources from being used up for military purposes.

re: "you do it because it gives you power and fame"

I'm wondering if you'd be willing to try translating this in to your own feelings and needs. My suggestion is to look at www.cnvc.org for explanation of what I mean. It's the best way I know to deal with what otherwise are/(or are perceived as), personal attacks.

Some good news is that some cities became "untrashed", beginning in the 70s. I worked in downtown Denver in the early 70s; much of it was still a bowery, a slum, a place for homeless and drunks. Now, it is thriving, approaching what a city should be with a great downtown pedestrian mall that people actually use, supplemented by quiet, hybrid electric buses. Vibrant, fun, exciting, and becoming more efficient every day. And much it is accessible by light rail.

Why did some cities make this transition and other cities became mere shells of their former selves. Well, we could start with the fact that people in Denver cared and they elected leaders with vision who cared, who thought about and implemented a better future. Yes, Denver is the center of a horrible, spaced out suburbia/exurbia but still thrives.

I live in an 1890 era house that has been cut up into 6 apartments. The construction required to do that, or to turn an old cotton warehouse or factory into housing is significantly less than building all new housing.

I agree that the longer we wait, the harder the impact will be. But just because our procastination & delay will increase suffering does not mean that it is not a worthwhile path, and an essential "silver BB".

Watch "Grapes of Wrath" to show what environmental disaster and economic collapse can lead to. But gasoline will be unaffordable for desperate migrants.

If we had gone to 90% federal funding for every worthwhile Urban Rail project in 2000, CAFE increased, new highway funding bleed dry, etc. I would have some confidence today that post-Peak Oil suffering in the US would still exist but it would be limited.

Instead, tonight I reflect on the Grapes of Wrath and the city that I live in.

I still want to raise the low point and speed the adjustment to a sustainable way of life (not to be confused with Cheney's non-negotiable Way of Life).

Best Hopes,


Hi Alan,

I appreciate your going into more detail here. Thanks.

Suburbs are zoned to suit the car, if they were rezoned to suit the pedestrian would it not be possible to save much of the present infrastructure. I am not sure what is considered suburban lot size but most of what I can see courtesy of google earth looks to be on lots about the size that city lots were in the 30's and forties.

Change in zoning would I think result in individuals adapting to the situation out of self interest to do the job of downsizing or rather (I can't think of a term for it) but coagulating into clumps would sort of say it.

As an example of what I am getting at is things like the corner store would almost automatically reestablish itself serving a few thousand and having the same variety as a large mall, just smaller amounts and delivered to the store by truck from a railway station.

I really can't imagine how all this would evolve into a new form but I do think that zoning,tracking and electrification would be key words in that evolution.

I would like some rebutal or criticism here so that I can think about this more clearly.

Black Bald

"Clustering" is the term used in planning in New Orleans for neighborhoods coming back slowly (less than 50% occupied).

But few US cities have neighborhoods worthy of the name. People are as likely to move to another state as 10 blocks away to be close to a "cluster".

One has to ask what would cause the "clustering" ?

TOD effects around Urban Rail stations would clearly be the seed to create such a cluster, as would a viable source of long term employment (walk 4 blocks to work, etc.)

Absent a reason to cluster I see large scale abandonment and loss of services due to losses in economy of scale. (Fire & police are less cost effective with lower density).

Best Hopes,


Thanks Allan,

The reason I see for "clustering" (thanks for the word) is the freedom that rezoning would give the individual householder to turn their property into a business as well as a home. I remember Vancouver in the 40's when there was a good public transportation system (streetcars were still in use)there were 5 'corner groceries' within two blocks. The area hasn't changed much except the stores have closed, the density is about the same now as then,about the same as Levitown.
Personally I think you are likely right and I am being rather Pollyanna about local governments doing a simple no cost thing like that. When the last gallon of gas is in the car the movement will start. I just hope those thousands of gallons heading in my direction run out before I have to call out... "looks like we've got company for dinner love".

Best hopes all around,

Black Bald.

People are as likely to move to another state as 10 blocks away to be close to a "cluster".


Continuously Productive Urban Landscapes.

In the future, people will work to make every structure work to produce food as well as shelter, or they will deconstruct abandoned structures however they can to use parts elsewhere to help in growing food and providing shelter.

Water collection and storage in various barrels and cisterns, enthusiastic composting of everything compostable, greenhouses made from whatever materials can be salvaged, insulation stripped from abandoned structures to superinsulate useful structures, chickens and goats in yards, orchards planted in parks -- all of this will seem normal.

The suburbs will change dramatically, but enclaves of folks will circle up and find ways to grow food and make shelter that will work.

I think that as the economic crash comes along, much will change in terms of what is seen as important and desirable in neighborhoods -- be they urban, suburban, exurban, or rural.

Continuously productive landscapes does not mean wall-to-wall rows of crops

If one takes a permacultural approach, it means observing the land, climate, and community and responding to needs and features in a dynamic process which yields enough to live while preserving the "natural capital" of the place as much as possible.

Survival will only happen within the context of cooperative communities.

My guess is that local law enforcement in the future will involve some very quick and severe penalties for those who threaten the survival of a neighborhood with violence. Urban law enforcement may devolve into citizen patrols linked to the police force, with people assuming that those who are able take their turn to serve in this capacity.

It is possible that some communities will build on a rudimentary understanding of citizenship as an active engagement in making a safe place to live and work together for the common good.

There will be all kinds of violence and the "Horsemen of the Apocalypse" will take many lives. My thought is that over the next 30 years more people will die than survive. Who will survive, and how often they will be uprooted by one calamity or another is anyone's guess.

There's no fortress or bunker that can ensure survival. I do think it will be a matter of improvisation for us all.

"Precarity" as the new way of life, the new paradigm.

beggar...good analysis and I whole-heartedly agree with you.

There will be some areas of suburbs and exurbs that survive depending on which communities are close to usable resources (water, good gardening/farming land) and have the individuals that are willing to cooperate together to form functional community groups. These groups will have to function independent of the the larger city government (if that entity still functions cohesively), but may have to somehow contribute to that government body (bribes, taxes, manpower for projects). Government above the level of city may be chaotic and superficial (i.e., national assistance in New Orleans after Katrina).

Conversely, there will be suburbs and exurbs where no one cooperates and violence reigns. Individuals will be isolated and forced to go it alone. Functional communities will have to make security there #2 concern after food/water and it will have to brutal in order to get the word out to other would be attackers to leave them alone. For this reason, the nomadic mobility model of survival is less likely to be successful than building your community bonds and surviving where you are.

Since building these community relationships takes time and PO could be anywhere from now to 10 years from now, it is prudent for everyone to start looking for those communities now in which they would like to be included and relocate or to start building those relationships now where you are currently located.

I believe this to be A#1 priority to surviving PO.

Hi D,

Just thought I'd take this opportunity to once again mention one of the most successful community-organizing efforts and models I've seen. Namely, http://www.ashland.or.us/Page.asp?NavID=541. Any community can apply for funds to hire a coordinator to start it up. The basis (emergency preparedness) is one that cuts across most all lines. A foundation for other types of organizing.

My question is, in close proximity to what mass transit. Most of the few places where transit exists are already badly overpopulated, and the transit is usually badly overloaded. Think Lexington Avenue. And all of the new projects listed by AlanFromBigEasy a while back don't add up to a hill of beans, or even a single bean, in the context of almost a third of a billion people. And massive Federal overregulation makes it cost more to buy a rail car than to buy automobiles for the passengers. For example, consider the L.A. Red Line, at several million bucks a pop in today's money (1.5 million each, 10-20 years ago).

True enough, in an economy so awful that the suburbs had collapsed, driving would be a huge problem. However, it's utterly inconceivable that money would be available to build or maintain massive quantities of ADA-approved gold-plated rolling medical wards with intractably complicated and expensive boarding mechanisms that seize up in the wrong kind of weather, such as winter - never mind the alternative of platform-oriented heavy rail and the large quantities of multimillion-dollar elevators that go with it. And then there would be the rails, and the impossibly expensive Federally overregulated roadbeds to put the rails on. This whole solution has nowadays become just too massively and hopelessly expensive to address the stated problem on any meaningful scale.

There is yet another issue. In my city, which is not a terribly high-cost place, it costs around $3.50 to provide a mere diesel-bus ride, but riders typically pay only 70 to 80 cents. If everybody started using the bus, this freeloading would have to stop, or at least almost stop, especially in an economy that wasn't producing vast and abundant tax revenues. And if it stopped, the typical rider would be paying virtually the same as AAA says it costs to drive, so there would be no point to it. That is, there is no reason to use the bus, save to collect the subsidy. It gets even worse, because there are proposals for an electrified light rail line floating around - and the expense is essentially incomprehensible.

Now, in a non-collapsed economy on an 'undulating plateau' and with far higher taxes, some of this nonsense might be feasible (but still not genuinely affordable) - but the stated scenario was not that, it was a scenario of collapse.

I have not emphasized the point, but we need to build and operate more efficiently. I am known in transit circles for my hostility to "Art in Transit" (1% of budget per feds, I have seen ONE worthwhile piece of art bought with this program). Urban Rail needs to stop being "Urban Jewelry". Larger savings can be had by reigning in the consultants, standardizing, less gold plating (I have coined the term "Transit Palaces" for some stations), efficiencies of scale AND improving the quality of transit management.

Lexington Avenue is a poor choice as an example. The plan was to tear down the 3rd Avenue elevated and replace it with the 2nd Avenue subway (#2 on my list of priorities). Work started on the 2nd Avenue subway when NYC ran out of money 40 years ago. What is operating today was not what was planned. The rest of the MYC subway system could be used as an example.

Comparing Urban Rail to buying autos is invalid. Cars last ~15 years and have high operating expenses during that time. I am concerned about diesel bus service post peak oil and you will note that I have NOT promoted this other than as a feeder to Urban Rail. Even today, EVERY transit agency that operates both buses and rail has lower (often less than half) operating expenses for rail pax-mile than bus pax-mile. This spread will widen as oil increases in price. "Heavy Rail" operations often cover 80% to 90% of their operating costs from the farebox and there exists a subsidy for public policy reasons.

On the other end of the spectrum, New Orleans has found that they can operate 80 year old streetcars for less/hour than modern buses with diesel @ $1/gallon. New cars for Canal should be cheaper still. Streetcars carry more pax, go faster and attract more pax. The best New Orleans bus covered 40% of operating costs from farebox & ads. The historic St. Charles streetcar was around 80% and Riverfront streetcar 95%-100%. No data from Canal Streetcar before Katrina.

My streetcar line opened in 1834, cars were built in 1923/24 and last major maintenance was 1989-92. I took an 1897 subway to ASPO-Boston and perhaps half of the infrastructure cost was over 100 years old.

Diesel bus only transit service will have a rough time post-Peak Oil. Urban Rail will not.

Best Hopes,


Urban jewelry ... hadn't thought of it quite that way. But that's really what they're thinking WRT the light rail / trolley proposal. Not so much to put in something useful - oh, that would be a nice side effect but it isn't the crucial point, which is that a city isn't a City until it has rails.

I belong to an invitation only group of transit advocates. Usually one or two per city (4 from LA), we are the citizens that advocate for Urban Rail for decades. George Isaacs (died 2006) was a member who worked 40 years to get the Hiawatha Light Rail built in Minneapolis. Ed Tennyson is another (he testified against GM in the trial for shutting down streetcar lines, GM lost and paid $1,000 fine). I hosted a dozen members who came down for the Canal Streetcar Line opening in 2004 (3 AM April 18th :-).

We discuss and criticize among ourselves the faults & errors in planning. The term "Urban Jewelry" was coined by Lyndon Henry, "Transit Palaces" by me. Our "inside" analysis is often brutal. US transit COULD be much better in many cities (one member divides good management West of Mississippi, bad management East of Mississippi River, a rule of thumb with some validity except for San Jose & Miami).

However, I am aware that one cannot simply assume good management, proper planning, etc. One takes what one can get. I do advocate (and have thoughts on) how to improve the process. But better funding is step #1. Even "bad rail" seems to work out over time.

What city are you in ? Tampa ? Charlotte ?

Best Hopes,


Ironically, the AMTRAK train from northern California to Los Angeles is about 50% more expensive than the bus, as well as slower. And unfortunately, neither the Amtrak bus nor the local bus line has a stop at the AMTRAK train station.

Many parts of Amtrak are dysfunctional and basically non-competitive today. There is not enough freight track capacity in California and the railroads are unwilling to give up some slots for Amtrak service into LA Union Station.

Instead of High Speed pax only tracks being built, California would be better served by semi-High Speed Rail (pax @ 110 mph and express freight @ 100 mph, regular freight (medium density) at 70 mph, all electric) between LA & SF (and San Diego, Phoenix, Sacramanto). Much lower cost, much higher functionality since it adds badly needed freight capacity. Perhaps 3 tracks of semi-HSR would make a significant boost to CA's economy today, and a larger one post_peak Oil. (110 mph trains use 1/4th the electricity of 225 mph trains as well).

Best Hopes,


sorry the swiss did that for other reasons. and some magical(yes thats the only way to describe it) attribute of the swiss is not the cause.

1. any sacrifice they did, they did because it was going to be temporary none of them thought the war would be permanent. so they willingly did without, trying to do the same but to tell them the 'sacrifice' will be for the rest of their life. while at the same time each year their sacrifice aka forced efficiency gains would have to increase to keep up with the decline would not work but is required.

2. they being neutral militarily(not taking either side) allowed them to still trade with occupied country's. it was also a good place for the axis and allies to spend their r&r as well as a good banking state for both sides to store their loot. this kept their government in power when otherwise the state would collapse from a lack of resources and income.

3. the population was much smaller and their consumption pre-ww2 was much smaller then it is now let alone what the u.s.'s consumption is. so this is a very bad mis-representation of data.

By 1948, Swiss oil use was up x30 from 1945. But still at a per capita level where, if the US used as much, we could join OPEC as the 4th or so largest oil exporter.

The rest of your post in nonsense and I do not appreciate the personal attacks.


This thread is probably dead, still:

If one focusses on differences, one finds them. The Swiss model is interesting, I think, worthy of consideration (as I live there, Duh!)

CH is self-sufficient for electricity (details skipped, it wasn’t in 2005) which is ‘nukulear’ and produced by hydro. The important difference with the US or other(s) is geographical; CH is small and incredibly mountainous and wet (hydro); the topography means that settlements and towns are in the valleys and lines of transport are naturally constrained, there are few options, and goods and people move along those lines. (Clustering; communal efforts; maximisation of loads, etc.) Much of the travel in the past was very difficult, the ups and downs considerable, solutions were needed. Of course that is not true of the whole country, and not eminently noticeable now to the freely travelling visitor.

The public transport is great. But CH’s energy consumption is roughly 60% fossil fuels today, and to put it delicately, it is not diminishing.

My wife and I have voluntarily downsized our home, transportation, and winter heating/summer cooling needs, and we're feeling pretty good about our decisions so far. It's been quite a change for us, and we've both had to make hard decisions to abandon much of our "prior investment" in jobs, living location, lifestyle, friends, etc.

So we sold our two homes in CA and bought one home on 1/2 acre in Eugene Oregon, eliminated our debt in the process, and have some capital to do improvements like solar. Although we've halved our living space we more than doubled our space for growing food, and figure we can comfortably feed 4-5 adults with everything except meat, although we will be raising chickens and rabbits shortly.

We live within walking/biking/bus transportation of everything we anticipate needing, and the local community is filled with like-minded folks. We're also renting out a room out as part of a micro-community we're establishing in our neighborhood.

No regrets, except for leaving friends and family back in CA, which was the hardest part of our decision to move and simplify/redirect our lifestyle.

More stuff from the Housing Bubble Blog:

The Chicago Tribune reports from Illinois. “Housing analyst David Seiders told Chicago-area builders Thursday that the federal estimate of 3.5 million homes for sale at the end of 2006 is ‘grossly understated.’ ‘There is a big inventory overhang out there, and it’s bigger than anybody understands,’ he said.”

“In an annual forecast on the local industry in Addison, Seiders, chief economist of the National Association of Home Builders, cited the high level of sales contract cancellations in 2006. Many homes marked as sales in government data ended up back on the market too late to be counted as inventory, he said.”

“‘Cancellation rates more than doubled between the end of 2005 and the end of 2006, meaning that net sales for the year nationally may be down 65 percent,’ he said.”

Now for something humourous!:


A quick question about your ELP philosphy:
would it not put a country into recession if we were to execute your plan?


More like the greatest depression.

Actually, someone asked me the following question, "What happens to the economy if we all stop borrowing and spending?"

The implication of the question was that it is our patriotic duty to shop till we drop (in fact I think that our Great Leader said something to that effect). It tells you a lot about our country when a simple suggestion that we under consume and save is somehow considered in some quarters to be vaguely un-American.

As Jim Kunstler said, we need to once again become a nation of producers, rather than a nation of consumers.

It is also our Patriotic Duty to take out many loans, no matter the terms of those loans. Once we stop taking out loans, entire sectors of the financial economy cease to exist.

I've never posted my website up as I do not want to be considered a spammer!
But here is what I produce (I may even turn it into a business one day). My one time spam.
Incidentally it is about as much use to society's survival as a wet sock.:-)
But it keeps me going.


that's cool!
I've a seven year old son and would love to build one of those with him. what is an appropriate age to start in with him?

Don't be afraid to order your first 6in-8in mirror. The scope tube can be anything you like.
Now is a good time for him to learn some basic woodwork (i'd say 7 is not too young as long as you are operating the power tools and him on the hand tools!). A simple plywood tube to start would suffice. Google telescope making books. Any specific questions, e-mail me off list and i'd be glad to help more.



Another thing you need to do is SLOW DOWN. Last month I visited the US on holidays on my way to other countries, and the number of Americans exceeding the speed limit amazed me. And they weren't just travelling at 5/10 MPH over the limit either.
My over riding impression of all the countries I visited was of too many people and too much traffic. The streets of London and the tube system are just jammed with people all the time.
I read an interesting remark today that was made by the oil analyst Charles Maxwell last year when speaking to Barrons.
He said that in 1964, 48 billion barrels of oil were discovered and 12 billion were used. In 1988 23 billion were discovered and 23 billion were used and in 2005 5-6 billion were discovered and 30 billion were used.
So,when you look at those figures and also consider that the 893,000 acres that make up the Ghawar oilfield once had an oil column 1300' thick and in many parts is now below 100' you can see what's coming

umm i think bill gates is dumping his stocks only because he knows vista will sink his company.
i don't think he knows about any of this stuff yet.

I agree that the selling is a normal course. Bill and Melinda have withdrawn almost $13 billion from M$ to put into their charity Foundation's world wide activities. This week he partnered with the Canadian government and put $28 million into an AIDS vaccine research centre. Recently he has committed to put *most* of his wealth into similar cures/vaccine research over the next three decades.

But Vista, nyet. We heard the same tales of supposed blunder upon intro of 98, ME, 2000 & xp. He has beat the odds for ten years. In the end, the price is right and nobody wants to dance with a new learning curve. Especially business.

Dragonfly, thanks for the articles. This one (http://news.yahoo.com/s/ap/20070223/ap_on_re_af/zimbabwe_end_game) just in the news about Zimbabwe is also interesting. Two weeks ago their inflation rates was 1250% and now less than 30 days later it is at 1600%. The news has said that Zimbabwe was in a long slow decline. It is as usual, that nothing about oil was mentioned in this article, but only those things perceived as impediments to free market capitalism. And yet I recall looking in awe as Zimbabwe went from a visibly thriving country to a standstill from March 2005 to August 2005, when oil jumped that year, and Zimbabwe left the age of oil.


Oil Prices: What Next?

Where do oil prices go from here, up reckons David Guthrie. And heres why...

David Guthrie - Other articles
Thu 22 Feb, 2007

In big picture terms, oil is firmly established in my mind as a secular bull market. The floor for oil is now that $40-$30 area and any approaches towards that level should be used as strategic buying opportunities for the product itself, its futures and derivatives, and for those big and smaller oil companies with long-life reserves proportionate to their size. Price will probably continue to find a ceiling at $70-$80 in the near term, particularly if the pace of growth around the world slows a little this year, as seems likely.

However, 2-5 years out I fully expect to see the long- term supply/demand balance driving prices to well over $100 per barrel.

Isn't it odd that the top article linked to today touts hydrogen as a solution because "GM says it is easy to make" and the new GM prototype can go further with more horsepower than the last hydrogen prototype.

The article is from the IndiaAutoTimes or something like that.

So, hey, we won't need any oil right? Oil will be a too cheap to meter, I tell you!

I think we are into the stages of grief, mourning for the loss of the planet we took for granted and for the loss of the easy lifestyle.

Afraid of the very real end, we are bargaining by trying to find any technofix to take us to the dream held up as the apex of human success: care free days of easy motoring and material abundance.

I do expect oil to get more expensive as well. Major anthropogenic catastrophes like war can make this happen, but other things "above ground" as well

I do not know if TPTB will try to continue to use the "above ground" argument to cover the geological reality of peak.

Tariq Shafiq, a former executive in the Iraq National Oil company and one of the experts called in to draft the country's petroleum law, says Iraq could "very easily" get to 3.5 million barrels a day. He says it is "physically" capable of producing 10 million barrels a day - around the current output levels of Saudi Arabia, the pre-eminent producer today.


This is from a Drumbeat posting above. A few observations:

1) If the above estimate of Iraqi reserves are correct then once peace breaks out in Iraq it is likely the price of oil would suffer a sharp decline. Investors, and everybody else, will realize that we will be awash in the stuff within 5 years. The Economist's prediction of $5 a bbl oil may turn out to be correct, just a decade or too early.

2) Given the above it would also appear likely that KSA would have little or no incentive to assist in achieving Iraqi stability. I doubt you could operate the Kingdom with oil at $5 a bbl prices. KSA therefore appears to have strong incentive to provide funds and assistance to Iraqi insurgents to defer the outbreak of peace.

3) Along the same lines, stability in Iraq, and a forecast increase in oil production, would likely have a negative effect on all other high cost provinces and result in the curtailment of E&P. This would include the tar sands and offshore regions.

4) Peak Oil would be deferred by several decades and Yergin's optimistic forecasts would be vindicated (one wonders how much prospective Iraqi production is already being factored in to CERA forecasts. This may be the reason for their optimism).

5) Of course, if oil does drop significantly in price, then we can kiss the planet goodbye. Or we can seek to maintain a nominal price of $60 a bbl and use the increased margin on $5 a bbl production to manage and run some form of CO2 sequestration scheme.

Food for thought. Cheers!

While I am no expert on Iraq, most of the stuff that I have read suggests that Iraq has the best remaining undeveloped potential reserves in the world.

To put 10 mbpd in perspective, based on ExxonMobil's high end estimate of a 6% per year decline in existing wellbores, we need about 4.4 mbpd of new crude + condensate production every single year to just keep production flat, with no increase in production to meet new demand.

So, over the next 10 years we would need on the order of 44 mbpd of new production just to maintain our current crude + condensate rate. And it will take a long time to ramp up production in Iraq, especially with everyone shooting at each other.

Also, when you start applying the HL model to various producing regions, you actually begin to have problems getting up to Deffeyes' estimate of 1,000 Gb remaining as of 1/1/06. So, I think that Iraq's reserves are actually going to be needed to get to the ultimate URR of 2,000 Gb of conventional crude + condensate.

Finally, I don't think that it is a coincidence that the US has 150,000 troops in the region that has best remaining reserve potential in the world.

Finally, I don't think that it is a coincidence that the US has 150,000 troops in the region that has best remaining reserve potential in the world.


Also not a coincidence that we see so many suggestions of a conflict with Iran when their chief oil province just happens to lie adjacent to Iraq.


WT: I guess the question is: what number of troops will the US need in Iraq to ramp up oil production? 300,000? 500,000?

Yes. All those troops and an investment of at least $10 billion per month. Might even be worse than the EROI of directly burning 1-dollar bills in an electricity plant.

Caps: OTOH, it is a sweet deal if you are part of the inner circle scooping the cream off the top of that 10 bill a month.

Indeed. My new word for the day :oilgarchy

The 10mbd number for Iraq is fiction: it's a theoretical possibility only, it would require a vast infrastructure that is simply not present, and which would take multi-billions of dollars and years to build.

And yes, it is ideal for the US. Nobody cares about producing Iraqi oil for export. Maybe a little bit, to keep Tillerson happily employed, but nothing major.

What matters is producing enough to fuel the armed forces in their quest for hegemony in the region. KSA is on our side, but shakily. You would need a lot of troops to secure their oil, and with the presence of Mecca and Medina, and the Islam resistance vs foreign military in holy places, why bother when you have Iraq?

For the moment, KSA is a solid ally. Iraq is an insurance policy for when that might change.

it's straightforward: If you have the power, you wish to keep it. That's how it works. And you don't do that by waiting till things happen. You make them happen. That's control, and that's power. If you control the US military, you don't use it to react. You pre-empt. If you think peak oil is a serious issue, you move your pieces on the chessboard before the whip comes down. Not after, never after.

If you have the strongest army, and you see others catching up, what do you do? You hit them before they get too strong.

This is what we see unfold before our eyes, in hidden terms, in clouds of diplomatic talks and agreements and accusations of foul play. That's just smoke.

Oil is power, and will increasingly be so. But it's real power only when you have an army to feed it with. Fighter jets won't fly missions on cauliflower juice anytime soon. Oil. Say it again. What is it good for?

To figure out what's going on, refer to Sun Tzu.

Phoenix asks state for $1.7 billion for more & faster light rail

They want to build 2025 plans for 53 miles by 2020 and add 23 more miles by 2027.

However, conservative state senator in crucial position is VERY much against $1.


Best Hopes, even for the Asphalt Wonderland,


Note that they expect federal funding for about 1/3rd of total costs.

We built the Interstate Highway system with 90% federal funding and before GWB, federal funding paid for 80% of new Urban Rail projects that "qualified'. The Canal Streetcar Line in New Orleans and the Pittsburgh Light Rail extension (north under river) were the last two projects to get 80%.


In regard to your proposal on the other thread to lay a HV DC cable from Iceland to Scotland, what would be the approximate transmission loss over the 500 miles?

I found this link discussing costs of other schemes, which may shed further light on your idea.

sorry but if dc was so good for long distance transmission eddison would of won and westing house would of went bankrupt.
but that did not happen. ac proved to be ideal for long distance transmission without exotic and expensive materials.

i think you should read up on some basic electrical theory. because the energy needed to maintain a super conductor(no room temp ones exist they all have to be super chilled to near absolute zero) would eat up any theoretical prediction that long distance dc is better..

Technology changed with the advent of power electronics. And HV DC still has a niche merket, long distance transmission of fairly large amounts of power or between out of phase grids.

Today, from Portland OR to Los Angeles in the US (and between Texas grid & East US grid), with Wyoming to Phoenix planned. Northern Quebec & Northern Manitoba to the south in Canada.


OPB had a TV special on "The Big Easy" awhile back that we finally watched last night, made me think of you. Film footage @ 1938 showed street cars EVERYWHERE! My god it was amazing. The main street(didn't catch the name) was 4 tracks wide with a car about a block apart. Side streets had 1 track. Alot of people in the streetcars to boot. Very very few auto's.
Alot of historical footage, jazz, etc. "Streetcar Named Desire" Walt Whitman.
I looked at all the street cars and realized we might have a chance after all. Amazing!

Two interesting points that Alan makes:

(1) We did it over 100 years ago: http://www.familyoldphotos.com/tx/2c/chadbourne_street_trolley_san_an.htm

(2) Today, the average American uses as much oil as about 400 Swiss citizens used in the Second World War.

Implicit in all of this, is what I have described as a triage operation regarding suburbia. Large parts of it cannot be saved.

If it were up to me, I would make Alan Drake the key note speaker for the ASPO USA meeting in Houston.

Jeffrey Brown

I'd make Alan mayor of New Orleans.

And President of the frickin US of A.

I'll see your mayor and raise him a US Transportation Secretary.

PLEASE only after GWB and his FEMA, Dept of Homeland Security and other appointees are out of office.

I would do something "politically incorrect" upon learning that, say, $1.3 billion in levee repairs (and improvements to fulfill 1964 promise & law) had been transferred from New Orleans to the more Republican West Bank of the Mississippi River.

Best Hopes for only 23 more months,


can't agree with you.
the situation has changed compared to 100 years ago. i am surprised someone like you would not take this into account.

the situation has changed from 100 years ago

Yes, and it should be FAR easier today to do what we did 100 years ago with "coal, sweat and mules".

Technology is MUCH advanced. We have the perspective and knowledge to avoid the mistakes they made (and yes, in that massive build out, some mistakes were made). Our wealth is much greater (after adjusting for inflation) as is our population (x3).

We should be able to replicate what was done a century ago with 1/10th (or less) of the per capita effort.

We lack the social cohesion, common sense and will that they had though.

Best Hopes,


hmmm...I disagree- we need to look backward to help us plan forward.
What I see locally today is "expensive" light rail. What I saw on that OPB show was alot less expensive, probably slower, less safe, but heavily used. Eventually it will come down to "options". "Cheap(er)" might become a bigger factor. It looks pretty clear to me that long term that electric trolley's will be our future, like it or not, unless you subscribe to total social colaspe. Yes we will have oil but it will be needed by Ag, shipping of goods and materials, and servicing/repair to the infastructure.

Suburbia- (houses on lots) do have land that can help support food production like it did when I was a kid - this looks clear to me as well, so I don't buy total suburb colapse. What I do see is that the idea of driving everwhere or walking out your front door to waiting mass transit is not in the cards. You will have to walk/or ride a bike or something to a station and wait for a train/trolley.

IMO - The change is already happening. Here in Portland, OR light rail is expanding and housing close to transit like this is holding its price better. Look also at big auto's problems and I think they have been given thier last artificial support with the business tax credit for rigs over 7,800 lbs GVW. At some point credit be damned it will cost too much to run vechiles that much and business will not buy them. I think that turning point is now. There are local "community gardeners" who give you a share of the crop for using your backyard to grow food.
I think the change is here, we can't see it for what it is - just yet.

The reduction in purchasing non esential junk is the next change that will have to take place is going to be alot bigger and tougher. Lowes is having profit problems, Walmart is trying to attract wealtier shoppers. You see it in bits and pieces in the news if you look. The economic falicy of "always the lowest price" is coming back to bite americans as thier jobs have left to cheaper overseas production. You can have higher wages and low prices for only so long. It can and must change - the pendulum swings...

This part of the economic reorganization is not clear to me. The mega box stores with thier mega parking lots what will become of these? Factories? We in the US will need to build stuff and that will require factories. Most box stores are along major accesss routes and could be converted into mixed use-factories/shopping with the parking lots becoming housing?

Change is coming and people will get creative when they have to. Unsustainable lifestyles are not "better" for anyone. Wages and lifestyles will contract, people will adjust, in fits and false starts, and life will go on.
They are building/expanding light rail today and there will be more in the future.



I am probably going to be in Portland in May, if anyone might be interested in a Peak Oil presentation, or we might at least get together for lunch.

We are contemplating moving to Portland.

Either sounds good to me. I will e-mail you. Portland is expensive as far as properties go, just to warn you.

We had 222 miles of streetcar tracks and over 600 streetcars (plus over 100 electric trolley buses) in New Orleans.

Good history through 200+ photos of Canal Street streetcars at


Worth a look for what was (and can be again).

A 1930 map of streetcar tracks along after rationalization (tracks reduced to just 4 on Canal Street, Canal Street running minimized for faster operations).


Best Hopes for the Desire & Elysian Fields Streetcar Lines :-)


I wish some of our posters with specialized knowledge of the oil industry would comment on the credibility of the claims of large deposits of oil and gas beneath the desert in the Sunni areas of Iraq that were cited near the end of yesterday's Drumbeat. (Sorry, I don't know how to link to it.)This strikes me as a too good to be true solution to the problem of Shiite and Kurdish oil fields which seem to leave the Sunnis out and fighting mad. Anybody want to shed some light on this one?

A similar post showed up today and I make some assumptions in respose to Jeffrey above.

Given the extent of the Iraqi embargo I am not sure there are many with current knowledge of Iraqi potential and until leases are secured those who do know will not be saying very much.

The fact that a number of major firms did enter into E&P agreements with the prior Iraqi government does lend creedence to the belief that there may be some validity to the possibility of making a reasonable assumption about Iraq's estimated predicted hypothetical future production potential.


The only figure I've heard for all of Iraq was a URR of 115Bbbls. If you can recover 40% of this (46Bbbls) at an average rate of 6.7 MB/d (a bell curve peaking at 10MB/d, simple estimate) the supply would last about 46/2.44 or about 19 years. That's a lot of oil, but not several decades worth just for the US.

I guess it goes back to your question: how big is the prize?


A note on terminology:

OOIP: Original Oil In Place

URR: Ultimate Recoverable Reserves

The percent of the OOIP that you recover determines URR.

The HL method produces Qt, which is a mathematical estimate of URR, using annual production (P) and production to date (Q).

According to one article posted at ASPO, Iraq actually has only 47 Bbbls. Supposedly, this was the result of a leaked post-war U.S. survey of Iraq's oil reserves. (Note that it ties in pretty well with what Deffeyes, etc., have said about the phantom political barrels.)

The results of the survey were supposed to be made public in 2004, but here it is, 2007, and it's still classified. Perhaps because the news is very bad, even if you don't believe in peak oil. The oil was supposed to pay for Iraq's reconstruction.

... but for what it is worth, the general concensus is that Iraq is under explored. What you haven't found, you can't really survey.

What I don't know is whether there are elephant sized structures which have been identified, but have not yet been drilled, or whether the optimists are merely banking on closeology / that fact that there is a lot of desert there for the hoped for upside potential.

the general concensus is that Iraq is under explored.

I'm not so sure about that.

Perhaps the most striking part of Deffeyes' first book is when he talks about being in a room with a bunch of other petroleum geologists at a conference or some such thing. They were looking at maps, and it turned out that no matter where you pointed on the map, someone in the room had personal knowledge of the oil possibilities there. Even the most obscure valley in Iran or Iraq...someone had been there. According to Deffeyes, the only exception was one section of the South China Sea, which was still unexplored due to the political issues (both China and Japan claiming it).

I suspect the Middle East is better-explored than most like to think.

BTW, one reason for Iraq's lower than expected oil reserves is supposedly that they have done permanent damage to their best fields, by their management practices while under sanctions. (Pumping oil back in to get natural gas out, for example.)

Try 37 billion, a lot closer to the mark and the same for Iran

Holy crap.

And Iran? That's the low end of even Bahktiari's range.

That may be so, but this article disagrees. http://www.payvand.com/news/07/feb/1093.html
What I can never figure out is who is right. If Iran is in decline, then it seems easy to look at what they have pumped and the year they peaked to get a first approximation of their reserves. They peaked in 1985, but was that because they exhausted half their oil or was it because they had expelled the West and haven't put into production as many wells as might have been done otherwise?

Down under is in the business, and has access to pretty good info. I always read everything he posts. Wish he'd post more often.

I believe Pemex posts their latest figures today if someone wants to post them here. For some reason I can't get into their site.

There is a recent Bloomberg article about Pemex and its budget here

Production at Cantarell, which accounted for 55 percent of Pemex's output, fell 12 percent to 1.79 million barrels a day in 2006 from 2.03 million a day in 2005. The field's output is forecast to decline 15 percent this year, Pemex Chief Executive Officer Jesus Reyes Heroles said on Feb. 7.

``The risk that we have is that Cantarell's production drops by 1.5 million barrels per day,'' Labastida said in the radio interview. ``That's equal to all the domestic consumption.''

The Labastida quote (he is a former Mexican Energy Minister) sounds a bit hard to believe. Presumably he is talking about a fall of 1.5 million barrels over a longer timeframe than just one year?

It would make sense if he is afraid of a drop TO 1.5 million barrels per day or less

David Shields is predicting that Cantarell production will drop by 500,000 bpd from 12/06 to 12/07 and then by another 500,000 bpd from 12/07 to 12/08.

Yes, but the reference to all of domestic consumption wouldn't make much sense then.

Actually, I think that the Pemex guy and Shields are saying the same thing. A key point to keep in mind is the difference between average year over year declines and month to month. Month to month declines give you a better idea of where production is actually at a given point in time, especially in a declining area.

From 12/05 to 12/06, Cantarell fell by about 500,000 bpd. Pemex is claiming something of a rebound for January, but it is probably a one month rebound.

Shields is predicting that production will drop by 1.5 mbpd from 12/05 to 12/08. This decline is consistent with the worst case decline, out of five scenarios that Pemex looked at. Shields, who has extensively studied this issue, asserts that Cantarell is declining at rate close to the worst case.

Some time around the 2010 time frame, Mexico may cease to be a net exporter of any consequence.

Re: German Biodiesel Sales Slump on New Tax.

That article says:

Germany's government introduced a 9 cent a litre tax on biodiesel, saying this would rise in automatic stages to match the 45 cent a litre tax on fossil diesel by 2012.

- sounds reasonable to me: give the new fuel preferential treatment for a while to get it started, but phase it out. If it cannot stand on its own eventually, then it is not a "solution". If biodiesel already, with the 9 cents tax, fails to outcompete fossil diesel (with 45 cents tax), despite using "cheap" rainforest-destroying palm oil feedstocks, then that's a hint that the EROI is dismal.

To carry over from a response from Roger Conner on yesterday's UK Energy Descent, I would say whether his beliefs classify him as a cornucopian depends entirely on time frames. My own view of the possibilities of technology continuing to allow human 'progress' (read: expansion) is tempered by my perception that technology (of the type necessary) has a development curve of diminishing returns. For every techological hurdle we overcome in energy production and everything essential related to energy production, there is another obstacle represented by another curve of diminishing returns.

Picturing this in a graphic fashion, it might resemble some of the stacked oil-depletion graphs we see. All these technologies wane off at some point in such a way that the entire 'technology of progress' wanes off in a cumulative curve of diminishing returns.

I am perfectly willing to accept that a technology of some sort or other (using JM Greer's IMO more correct division of Technology into technologies) can enable us to maintain BAU for a while. But these ForAWhile's become shorter and shorter as growth and complexity demand exponentially more energy.

It appears to me that, worldwide, we passed a number of peaks around 20 or 30 years ago and that worldwide population expansion has been essentially 'running on fumes' in the same manner a gasoline engine will rev up suddenly as it burns the last few drops of fuel.


Well, since my name came up....:-)

Your post is very thought provoking, but one line jumped out at me...

"It appears to me that, worldwide, we passed a number of peaks around 20 or 30 years ago and that worldwide population expansion has been essentially 'running on fumes' in the same manner a gasoline engine will rev up suddenly as it burns the last few drops of fuel."

I think that is for the most part a very, very true statement. In the 1970's we were essentially given a choice: Change the way we operated, or basically sell our destiny and fate for a new "fix" for the American peak from outside the U.S. We chose the latter, and opted to import our way back into a party, the one that began in 1982 and lasted for two decades. We knew then that it could not last forever, but decided to hope that things would somehow fix themselves.

Alternatives that had been developed in the 1970's were put back on the shelf, and can still be found in the remaining dusty old books and articles, abandoned. Our assumption seemed to be, "well, we can go back to them when we need them...."

What was lost was the one irreplacable commodity: Time. Thirty plus years of wasted consumption, billions of BTU's thrown away. We lost the development time on the alternatives to waste, and let the technical skills and ideas of a generation of technicians dissapate away, essentially blown to the winds.

Now, we are having to re-invent the wheel, put back together old connections, rebuild teams.

It is true that one set of solutions lead to another set of problems. That is human history writ large. But, does that mean we must abandon the attempt to find and use the most efficient solutions available? I don't think we have any choice but to try. When you are bleeding, you apply a tourniquet now.

I am sometimes fascinated by the "bi-polar nature" of how the Americans percieve time. One camp, the CERA type, say "peak is 2030 or so, don't worry be happy! The "assured decline" camp says, "hey, if a solution won't hold for the next 1000 years, don't mess with it!" I know that is a bit exagerrated for effect, but the point stil holds. What do people think of humanities future 500 years down the road? In the 1950's and '60's, it was believed that in the long haul, mankind would not remain on this planet alone, but that space held real options. I know of some who were very concerned about resource depletion even then, and who posed space as mankind's only way forward. Other's proposed the sea as resource provider, and nuclear fusion as energy source. All those ideas are now considered jokes (are they jokes, or did we just decide that they were?)

I am struck with a deep philosophical problem: Did lack of will cause the so called "peak" as we walked away from the work of a thousand years and all the options, or did so called "peak" in the 1970's cause the lack of will, which now closes off all options?

I don't know.

I once heard a historian, when asked what caused the callapse of Rome, say, " a lot of things, but the biggest was that no one really wanted to save it."

Roger Conner
Remember, we are only one cubic mile from freedom
( re-edited for spelling)

There's some evidence to attribute this lack of motivation on the part of Roman citizens toward saving their civilization to the advent of Christianity. Basically, the focus of early Roman Christianity was on the second coming happening quickly. So early Christians were told to accept their earthly status (quite appealing to the wealthy, and justification to keep slaves enthralled) since the end was near anyway, and encouraged to retreat from public life to focus on spiritual matters. So workers, slaves, and the wealthy paid less attention to the day-to-day work needed to maintain their increasingly complex civilization, cultural entropy set in, and thus the decline.

My take on Rome's collapse was that the vast majority of the inhabitants [aka citizens] had little stake in the empire. They were the descendants of citizen farmers and merchants who had been bankrupted by having to fight the upper class's, aka Senate's, wars [sound familiar?] and were forced to surrender their farms and business premises to the govenrment from which the senators bought them cheap. Their 'pacification' was the reason for the phrase 'bread and circuses'.

See "Blood in the Streets: Investment Profits in a World Gone Mad" by James Dale Davidson and William Rees-Mogg.

That, or everyone got lead poisoning from the water piping and degenerated into fits of spasms, aggression and confusion.

These are more random thoughts on the natural gas situation. It looks like U.S. natural gas storage will bottom out around 1400 Bcf by the end of next month, before beginning a cyclical rise due to warmer weather. 1400 Bcf is about 22 days of supply, a very low number but still comfortably in a normal range for this time of year.

Several studies posted on TOD recently have suggested that North American natural gas production is about to go off the edge of a cliff, with drops of 5-10% beginning this year. If this is true, the natural gas situation will become critical in a great hurry. Assuming next winter's weather is normal, a drop of 7% calculates to natural gas storage at the end of March 2008 as 0, no gas at all. Obviously, we can't get all the way to zero; the system would break down before then. Therefore, we ought to watch the natural gas situation very carefully to see how things develop. As of November, U.S. production was tracking about 1% below 2005 and a little over 2% below 2004, so no cliff yet.

It's important to remember that natural gas, unlike oil, is not very fungible. North American natural gas demand has to be met by North American supply; liquid natural gas amounts to less than 5% of total supply and can't grow very fast. Another factor to consider is that the end user of natural gas often pays for it only after it has been used. A consumer first heats and uses electricity in the home, then gets the bill a month later. This is unlike crude oil, where a user pays for gas at a fuel pump before putting it in the car. This fact may affect consumption habits.

What is your source for Natural Gas production numbers?

Absolutely sickening.

Oh, so it wasnt about Weapons of Minor Distraction then...

I dont suppose the average Iraqi joe will see much trickle down either.

According to the eia website (http://tonto.eia.doe.gov/oog/info/ngw/ngupdate.asp) the US consumed around 23 Tcf in 2006, having produced about 80% of this (18 Tcf) with the rest imported from Canada and a little bit as LNG, mostly from Trinidad.

A 7% decline in US production would 1610 Bcf/yr, nearly three times the amount currently imported via LNG.

And yes, that's a bit more than the storage low point. We could run out!

So, assuming no changes in LNG tankers and capacity per station, we'd need to quadruple the total LNG capacity during the coming year, and add another 1600+ Bcf annually in the fugure just to match flat demand. EIA predicts demand increase to 26Tcf/yr by 2030.

This assumes Canadian NG exports remain flat, but eia's short term energy outlook expects a reduction from Canada. Could that be due to an increasing amount of their NG used to heat oil sands?

Lots of assumptions here

  • Sufficient LNG source (Qatar?) and compression capability
  • Enough LNG tankers
  • Ability to build LNG terminals
  • Federal edict or lack of NIMBYism getting permits to build LNG terminals
  • Terminals are near storage and point of consumption etc.
  • Canadian NG doesn't decrease too fast

The EIA NG weekly gas update mentions recent approval of two new LNG terminals with a 5Bcf capacity. Can they be built in a year?

Here in New England our homes are mostly heated with oil, but NG is now being used for base load electricity in addition to peaking units. Sounds like rolling blackouts to me...

Your posting caught my eye because I was recently in a debate over the EIA being "experts" in ths stuff (gas and oil). My challenge to the "opposition" was to find something, anything, with regard to production of natural gas and oil where the EIA has actually gotten things "right." I can produce a very long stream of things they've gotten wrong.

My contention: in recent years is that the EIA does a great job (and service) in collecting and compiling data after the fact, but since about 1998 their ability to predict anything accurately concerning production and/or cost has been sorely lacking.

I think your skepticism is well-founded. For "humor" I point you to a couple of slides from the following presentation:


particularly slide 1:


and slide 6:


Almost all the electrical generating capacity added in the US since 1999 has been gas-fired (simple and combined cycle turbines). Much of that addition was based upon no immediate gas shortage, relatively low cost for fuel, emission control and basic generating technology and the relative simplicity in siting requirements for the turbine technology.

Small problem, though, with the gas costs and the availability have turned out (since there seems to have been a group think on this approach).

So, now we are committed to something like 40 LNG gasification plants(or more, though one just 'bit the dust' in southern CA. Maybe NIMBYism, but today we see much more BANANAism and not just from 'environmentalists') around the US shores because we can't figure out how to stop importing energy?

For more EIA humor see:


Rolling blackouts just might be part of the joke.

The big natural gas problem coming up is, as you say, that added electricity capacity is all NG based. 1999 is not a good start date, though, the NG building frenzy goes back 20 years. And the breaking point is not the entire US, it's mostly New England.

You have to take into consideration, though, that existing LNG terminals (there's 5 in continental USA), state that they have a lot more capacity than presently used. Still, on the FERC website a few months back there were 71 more planned/approved etc. But how many will see completion? Anyone's guess.

Also: it takes years to build these terminal things, and North American NG will run out very soon.

It's hard to see what exactly goes on (Dave Cohen knows more, but he's left TOD), but for people in New England an investment in private power sources looks good.

New England hopes for Quebec hydro power, but it's doubtful that will arrive in time.


They are not needed. The LNG conversion to normal gas can be done on board the LNG tanker and piped ashore underwater.

Woodside Petroleum the big Australian LNG producer has a proposal before authorities in California to pipe gas from 20 miles offshore from Longbeach by a sub sea pipeline. A bouy which lies 60 metres below sealevel when not in use is raised by the ship and the gas is planned to come ashore near the LAX International Airport into the normal gas network

It is called the Oceanway Project

Anyone interested in learning more about LNG coming ashore from under water connections should google "Oceanway Project" where there is information on this. You don't have to build LNG Terminals on shore

Hi ST,

Believe me I'm no expert in oil/gas, but when I saw NasaGuy's posting I had to check out EIA and ISO-NE's reports.

Last summer, ISO-NE peaked at about 25 GW on a record hot day in early August as I recall. They posted a report of generating capacity; a quick look in excel says of their 30.5 GW summer seasonal capacity, 11.3GW or 37% of it is fueled primarily by NG. That's a lot more than the 20% or so nationwide.

I agree, EIA's forecasts look like nonsense, but their historical data is good. Your slides are pretty obvious compared to more recent presentations, especially the lower 48 conventional curve in slide 6.

IMO the next two weeks will avg 180bcf withdrawals, bringing us down to 1500bcf. Five year avg 4-wk march draws is 237. So, I think 1400bcf is optimistic. If we get to 1300 the market will realize that NA consumed 400bcf more than was produced last year... and a warm summer was matched with another mostly warm winter. Meanwhile, new peaking plants are all ng.

IMO US production will be flat, but not NA.

US ng peaked in 01, down 4% since, canada in 01/02. NA IP from new wells down 2/3 since 98. NA needs 10% more rigs every year to maintain production; current us rigs looking for ng now 1440, up nicely from 1290 avg last year... but, canada lost 160, which drifted south looking for higher rates. So, with canadian rigs down 25%, IMO canada production will go down 10%, or 600+bcf, while tar sands will soak up at least 300bcf more than last year, meaning US imports will go down 1000bcf, or 4% of our consumption, and accelerating into next winter.

Another more warm winter, please.

My comments yesterday that we will see a natural gas crisis in the US within three years now looks very optimitisic, after reading the above today.

However I think outside of the PO community my views are looked upon as very pessimistic - and almost unbelievable.

Meanwhile Canadian export production is dropping and NG futures are starting to price in a tighter supply/demand balance (or rather imbalance):

Falling Prices Crush Canadian Production, Exports
Breaking News from NGI's Daily Gas Price Index
posted Feb 23, 8:13 AM

The new Canadian natural gas export year is off to a weak start, with volumes continuing to slip as reduced prices slow supply development, according to trade records kept by the National Energy Board (NEB).

NYMEX Natural Gas
February 22nd Settlement Prices
Mar 2007 7.727 +.081
Apr 7.803 +.088
May 7.880 +.090
Jun 7.955 +.090
Jul 8.040 +.085
Aug 8.115 +.075
Sep 8.168 +.071
Oct 8.266 +.066
Nov 8.771 +.066
Dec 9.271 +.061
Jan 2008 9.561 +.061
Feb 9.556 +.061

Here's an interesting discovery. According to my most recent EIA table on natural gas production (January 2007 Monthly Energy Review), U.S. output bewteen August and October 2006 was actually higher than in the same period in 2004. The 2006 numbers are likely to be revised however, and it is worth noting that EIA rarely adjusts its numbers upwards.

Notwithstanding that statistical curiosity, there is not a doubt in my mind that natural gas will be the first fossil fuel domino to fall. Compared with the United States, Canada's coalbed methane endowment is quite modest. I agree with jkissing that a rapidly decline in Canadian exports is baked into our energy future. Yet the Matrix couldn't be more blissfully unprepared. It is in "maximum complacency mode," as Stoneleigh so nicely put it the other day.

No school today here in balmy Lithuania. A lovely 18 below 0 (Fahrenheit). So I got to read the news a bit.

The Barron's Online site (subscription required, unfortunately) had a piece yesterday from Banc of America Securities, I didn't see it referenced anywhere here. Excerpts follow.

Costs Cresting in Energy Exploration

WITH JUST OVER ONE-HALF of the companies in our exploration coverage group having reported fourth-quarter results, earnings per share have been more than 10% below expectations due to total per-unit costs that are more than 7% higher than expected, with production about 1% below our projections.

Virtually all cost categories have come in higher than our estimates, with the variance attributable to general cost inflation (especially in Canada) and increased hurricane repairs in the Gulf of Mexico (lease and operating expense), higher finding and development costs (DD&A) and higher year-end cash-based incentive compensation (general and administrative expenses).

Including our estimates for those companies that have yet to report, we estimate fourth-quarter "organic" production will be up 2.3% year over year and 2.4% sequentially, while full year 2006 "organic" production will have increased just about 0.5% despite a 38% year-over-year increase in exploration-and-development spending.

That last paragraph really caught my eye. Yikes! I'm pretty sure those figures (0.5% and 38%) are not typos.

Add your favored economic future to this picture and it gets especially interesting. Thus, the purpose of my post up-thread.

the attra article is truly sad.

It is, but is/was inevitable. Small farmers can't afford to pay $5,000 for a plate of barbecue.

I tell people this all the time: Don't cry about being "abandoned" by your government. Get free of it, ASAP. You'll live longer.

RE: Dale Allen Pfeiffer: The Fallacy of Bleed-Out

Pfeiffer should stick to his guns, do research on food etc. And that he's good at.

He has nothing to say on Iraq that hasn't been said a thousand times befiore, and a thousand times better. Best under someone's wings, wobbly on his own feet. Nothing wrong with that. But it helps if people see their own limitations before others have to point them out. Saves embarrassment. Saves time too.

The spineless slimy invertebrate is released from the White House dungeons once every six months, or so it seems. The only times you see him quoted in the media is when he's at least 10,000 miles from home. You may laugh, but why is that?

Other news today: Cheney worried about China military spending, blah blah.
You know what currency they use to buy their arms, Dickie?

Please God, one little stroke.....

Here's a tip, America: John McCain for next president. Don't count him out. Not until January 20th, 2009.

Cheney says all options available for Iran

U.S. Vice President Dick Cheney said on Friday the United States retains all options in keeping Iran from acquiring nuclear weapons but the White House stressed it was seeking a diplomatic outcome.

Reaffirming longstanding U.S. policy, Cheney told ABC News in an interview while on a trip to Australia: "As we've said, we're doing everything we can to resolve it diplomatically, but we haven't taken any options off the table."

In addition, The Weekend Australian newspaper said in its Internet edition that Cheney has endorsed Republican Sen. John McCain's proposition that the only thing worse than a military confrontation with Iran would be a nuclear-armed Iran.

They're going to do this guys. This ain't fiction.

Other news today: Cheney worried about China military spending...

Yeah, let's talk about that.

As per the Financial Times, the development of the Kashagan oil field in Kazakhstan has hit delays and snags.

I recall reading about this oil field last year. Pretty much everything predicted then has come to pass as expected.

A piece from the Boston Globe on paid infiltrators doing their thing on blogs:


I've been waiting for a piece like this.
it opens the debate as to if it happens here. if it does happen here who stands to benefit? not exxon. how much would a service like this cost? swaying public opinion can't be cheap.

Well, I charge a reasonable fee, If I may say so.

"This seems plausible. But when you look closely at this argument, you will see that there is nothing to support it other than the delusion that the US is fighting the good fight. There were no terrorists in Iraq before we invaded the country. The so-called insurgency is in reality a resistance. This has been a war of conquest from the start. The US troops there must terrorize the Iraqis in order to maintain any sort of ascendancy. In so doing, they demoralize the Iraqis and themselves."

Conspiracy theorists!!!


“When plunder has become a way of life for a group of people living together in society, they create for themselves in the course of time a legal system that authorizes it, and a moral code that glorifies it.”
~Frederic Bastiat

The Bastiat quote is great. However, IMO it's true for all complex civilizations and many more besides.

One of my favourite anthropology books is Mervyn Meggitt's book on warfare among Papua New Guinea Highlanders, Blood is Their Argument

The highlanders are sharp folks. Jared Diamond in his Guns, Germs, and Steel wondered whether they might not be among the smartest people on earth, largely because you simply don't last long in those societies unless you are quick on the uptake. And those selection pressures have existed for many centuries.

However, Meggitt noticed that the reasons they gave at the onset of each of their many wars were clearly hollow most of the time. Invariably, when a clan found itself running short of good land -- because good times had increased their numbers -- they found reason to pick a fight with a neighbouring clan they thought they could clobber. Their indignation and sense of outrage at the slights of their newly closen enemy were real: as real as the usefulness of the land and livestock they acquired at the end of a successful war. But they didn't consciously fight for land. They fought because the other clan had stolen a few pigs, snatched some crops in the night, perhaps a woman was raped, or any of a host of reasons.

Capacity for self-delusion about one's motives might just be a very valuable evolved trait. It allows us to be social and cooperative 95% of the time and also at times to be cold bloodedly predatorial as a collective without ever destroying the basic trust that makes a community possible.

Your last para sounds like something straight from Richard Dawkins.

Yes, Reg Morrison talks of this same phenomenon in "The Spirit in the Gene". We are fortunate enough to be witnessing this very phenomenon “real time” in the present. “AL Qaeda” and “Bin Laden” are primal fairy tales fabricated by the military industrial complex. We don’t fight for “freedom and democracy” we fight for oil. It is not possible without the deception.



“Given the right leadership and sufficient external threat, the primary product of such spirituality may be extraordinary social cohesion. …Almost every leader of note has, either consciously or unconsciously, fished these murky waters at some time or other.

Their reward is a united people armed with humanity’s shining Excalibur. To unsheathe this magic blade, such visionary leaders must first win over the populace with the primal fairy tale, which invariably contains two ingredients;

1.) A Monster-preferably one who speaks an alien tongue, prays to heathen gods, wears peculiar clothing, and/or has different-colored skin.
2.) A Miracle-earned only by sacrifice, but culminating in triumph for the home team and a nasty end for the Monster.

This tired old routine has worked its magic with astonishing regularity since the dawn of history, and no one with fully functioning DNA seems wholly immune to the lure of it. Its genetic nature shines through the grisly statistics that follow every major conflict, especially those that incorporate genocidal slaughter.”
~Reg Morrison, 1999 “The Spirit in the Gene, Humanity’s Proud Illusion and the Laws of Nature”

Hi Everyone,

Just a note...to share (with express permission!)...

"The (UCSB) Energy Summit presentation slides are now up on the website and can be accessed by clicking
on following link: http://www.c2c.ucsb.edu/summit2007/presentations.php

We are 10-14 days away from edited C2C Summit programs which will be streamed
to our web site under the "About the Conference" header at:

and also available for dvd purchase from the following site
after March 19, 2007: http://www.id.ucsb.edu/fvo/fo.html

Also a regional event of possible interest to you:

As part of the Global Warming: Science & Society Event Series, *Dr. Steve E. Koonin of BP will speak on Thursday, March 8 at 8:00 p.m. at UCSB's Campbell Hall. * The name of his lecture is entitled "Energy Trends and Technologies for the Coming Decades." Provost from 1995 to 2004 and professor of theoretical physics since 1975 at the California Institute of Technology, Koonin is currently the chief scientist of BP in London, the world's second largest integrated oil company and the largest oil and gas producer. Koonin's research has included the study of "earthshine," a phenomenon that more accurately reveals fluctuations in Earth's albedo, a critical climate parameter. In his talk, Koonin will discuss global climate issues and, as stated in his own words, "one of the most important problems facing society—energy."

The Governor of Maine has declared a state of emergency so the fuel delivery companies can work their drivers overtime delivering propane in the recent not-very-cold-snap. [I guess the winter has been so warm the fuel companies laid off their surplus drivers.] At the same time Maine Emergency Management Agency (MEMA), under the control of National Guard, is sticking it's nose under the tent. The same day Bush signed the Military Commissions Act, he also signed revisions to the Insurrection Act - even further federalizing the Guard. Essentially, energy supplies in Maine are being drawn under the wing of the military.

There are the obvious routes to authoritarianism via violence and terrorism but I'd not thought of this one outside the context of pandemic. But it's not that different; our slavish free market fundamentalism [Maine Energy Policy a.k.a. "numb as a hake"] brings us brittleness and break down. Jet Blue. Meanwhile, we're still driving 75 on the Turnpike and planning to dump $1Billion into widening a ten mile stretch through Portland Maine.

In addition to ELP, form an affinity group.

cfm in Gray, ME


Yet another reinvention of the perpetuum mobile? It sounds very suspicious, and similar to another venture that claimed to turn any trash into hydrocarbons.


Air-powered cars could circumvent the battery problems for electric cars.