DrumBeat: February 25, 2007

Another Kashagan article: Eni's Kashagan oil field hit by delays

Development of the world's most important new oil field will be delayed by a further three years and require almost double the investment initially anticipated, Eni, the Italian oil group operating the field, said on Friday.

In Big Buyout, Utility to Limit New Coal Plants

Under a proposed $45 billion buyout by a team of private equity firms, the TXU Corporation, a Texas utility that has long been the bane of environmental groups, will abandon plans to build 8 of 11 coal plants and commit to a broad menu of environmental measures, according to people involved in the negotiations.

Kurdish officials to back Iraq oil law

Kurdish authorities have agreed to back a draft law to manage and share Iraq's vast oil wealth, removing the last major obstacle to approving the measure and meeting a key U.S. benchmark in Iraq, a top Kurdish official said Saturday.

Bahrain refined oil exports fall

The average daily exports were 241,220 barrels compared to 249,181.

The decrease was attributed to a decline in imports from Saudi Arabia as well as maintenance of the Bapco refinery.

An Eastern Mediterranean Oil War?

The United States' ultimate strategic design is intended primarily to weaken Russia’s role in Central Asia and the Eastern Mediterranean, while isolating Iran from this important energy source.

Coastal Brits fret about climate change

The offshore wooden barrier that once protected the sand and clay cliffs of this stretch of eastern English coast has broken apart, and the government has decided that with the expected rise in sea levels and storm surges that experts attribute to global warming, some vulnerable coastal areas are no longer worth defending.

Grain pain harms the biofuel industry

HIGH grain prices are threatening the nascent biofuels industry, raising input costs and making the fuel less economic compared with oil.

Air New Zealand

When he joined Air NZ in 2003 - jet fuel was US$30 a barrel before peaking at US$90 a barrel three years later. It was an "uncomfortable" place to be. But a reversal of the "peak oil" scenario, which many doomsday-sayers believed would collapse the sector - has brought new confidence across the sector.

A Few Rambles On The Virtues Of Living In Town

Though I sometimes use my vehicle when the weather is particularly nasty or time is limited, I can usually do many of my activities by walking or riding a bike if I choose. And living in the shadow of Peak Oil, I’ve come to appreciate the benefits of being in a village, town or city where I can reduce my reliance upon the automobile.

Venezuela Spending on Arms Soars to World’s Top Ranks

Venezuelan military and government officials here say the arms acquisitions, which include dozens of fighter jets and attack helicopters and 100,000 Kalashnikov assault rifles, are needed to circumvent a ban by the United States on sales of American weapons to the country.

They also argue that Venezuela must strengthen its defenses to counter potential military aggression from the United States.

French Join U.S. Résistance Over London Traffic Charge

Ever since the London authorities imposed a charge to drive into the city center in 2003, the United States Embassy has stood as a beacon of automotive defiance, refusing to pay what its diplomats call a tax from which they should be exempt.

But when city leaders almost doubled the size of the charging zone this week, casting their net over an area housing many more embassies, the Americans suddenly acquired new allies in their resistance, including from unusual quarters like France, which has not always been quite so supportive of American diplomacy.

International Energy Agency revises oil demand upwards

In its monthly Oil Market Report released last week, the International Energy Agency said that if Western governments do not design policies to conserve oil, consumption will continue to increase and "in just three years the rate of oil demand growth will once more outstrip the growth of new oil supplies." They concluded that if oil consumption is not curbed, "the slim respite from tight spare capacity may prove very brief." The result of a market with tight spare capacity is increased volatility, and an inability to avoid price spikes.

Great articles, Leanan! I really appreciate your 7 day a week services to all of us.

TXU is already the largest producer of wind in Texas and is making a handsome profit from their operations. They also are the biggest source of mercury pollution because of their lignite plants in East Texas.

doesn't Leanan just freaking rock?

She really does an amazing job filtering through so much stuff to find the nuggets. I would love to see her list of keywords she uses for alerts ... but I know that's proprietary ;)

Rock.... sure. Skilled/talented? Damn straight.

I highly recommend a CBC radio special series called Spin Cycles (http://www.cbc.ca/news/background/spincycles/index.html). The theme of last week's episode (#5 of 6), spinning war, was particularly good. This week's episode will probably be "live" on-line at 11 eastern.



Sharp hedges, but has the production history


Shell bets on CIS Thin Film:


Honda aims to be there and go big:

Plus the newcomers,
Q-Cells, Daystar, Global Solar, HelioVolt, Konarka, Miasole, and Nanosolar

There seems to be a growing consensus that the North America faces a potentially dangerous natural gas crisis within the next three to five years, and potentially sooner if weather conditions were to turn against us (i.e.extremely hot summers or extremely cold winters).

Due to local opposition at almost any site chosen and technical /financial issues, the needed imports of LNG (Liquified Natural Gas) are unlikely to arrive in time, unless we assume a miracle is forthcoming.

Stopping increased consumption of natural gas in the production of electricity is now becoming a national safety/security issue.

Can thin film solar get here fast enough? Notice the confluence dates of production, 2007-2010 seems like a pivotal period. Few can easily understand what this level of distribution and freedom on energy production can do, it is a new paradigm.

If CIS thin film can deliver what it promises, a revolution bigger than the computer/internet age is at hand. We will know, and very soon.

Roger Conner
Remember, we are only one cubic mile from freedom


Do you expect electricity produced from CIS is capable of climbing a cliff?

  • US Nat Gas wells depleting at 32% and rising.
  • Number of rigs needed for stable production rises each year.
  • Utilization of rigs approaching capacity.

What comes next? Rig count must increase forever to keep the gas flowing. This will drive the cost of drilling, and cost of natural gas. The end result will be, that wind and solar will become cost competitive on some magical day in the future, and utilities will trip over eachother to install systems on rooftops, just like DirectTV and Cable.

utilities will trip over eachother to install systems on rooftops, just like DirectTV and Cable.

Perhaps in MAdison Wisconsin - where all new roofs must be south facing....but not for saps like me who has an E/W Roof.

(thus my PV panels are perpenduclar to the ground on the south wall.)

Mark B asked,
"Do you expect electricity produced from CIS is capable of climbing a cliff?"
(and attached a very interesting chart, thanks...:-)

I don't know. But frankly, the LNG option is falling apart fast. North American nat gas production could perhaps be pushed up slightly, but as we have seen other posters mention, the return per well is declining, so it would be at great expense, and the math shows that we would be unlikely to increase production enough, fast enough. It can be expected that the tar sand effort in Canada, and the increased consumption of both fertilizer and heat for distilling in the ethanol industry will also drive natural gas consumption higher.

We are now running low on options. A massive return to coal is of course a horrendous choice for obvious reasons. So the two remaining choices that can make a difference big enough and fast enough are:
(a) Widespread conservation
(b) Alternatives (wind, solar thermal and PV Solar as the most promising choices)

The conservation route will work, but it will require will. Insulation, movable insulation (insulating shutters) more efficient heating and air conditioning (ground source heat pumps as an example), improvement in appliances and lighting, daylighting, etc. (Does anyone ever go to the energystar site?
Also, re-evaluation of natural gas use in every business and industrial practice it is used in. Reduction of Diesel fuel consumption

The reason this is important is that unknown to most consumers, Diesel fuel now requires an increased amount of natural gas to produce, as it is used as desulfuring agent to produce Ultra Low Sulfur Diesel fuel.

But, at the end of the day, there is no avoiding the fact that electric consumption in the U.S. is only going to grow, even with conservation measures. Thus, we have to turn seriously to the alternatives, Wind and Solar.

We have long discussed the wind option, and it has grown as an energy provider, but it must be admitted that it is limited by wind availability and the variability problem.

Solar PV suffers the variability problem, but if cells and panels can be made that are cheaper and more efficient, they can be used almost anywhere. The issue is price per kilowatt. The trend seems to be moving very fast in favor of PV electric, and a fair number of firms are now preparing for mass production. We are at the turning point.

There has been some concern about the supply of Indium. I once did a long post on TOD exposing research I had done into that metal, in which I found that the supply was not nearly as limited as it is sometimes made out, but of course, it was read by virtually no one, being somewhat dry and "boring" to most. For most of it's history, Indium has been considered virtually useless and had no real market, thus no effort has been made many years to even extract it. Likewise, no real effort has been made at improving methods of extraction. I would recomment that anyone interested go to the largest supplier of the metal, and check it out, it is actually very interesting:

The industry is claiming no real problem on Indium supply for many years, and the thin film solar industry is investing in production capacitiy as though they have no fear of not having raw material. However, the points about supply are well taken, and we should not go into the game wasting the raw material needed to sustain the industry. Indium can be recycled (although for many years, it was so cheap and lacked a market that no one really tried), and all efforts should be made to use the material wisely.

So, can CIS thin film solar climb a cliff? All indications are that it is at the very front of the development curve, and can grow very, very fast. But can it outrun our coming natural gas crisis?

By itself, probably not. But it can be a major part of a overall solution involving electric power consumption conservation efforts, Diesel conservation, and heating/cooling efficiency improvements. In the longer term, it holds revolutionary promise, as the methods of production and the use of raw materials improve. But right now, we must concern ourselves with the near term (3 to 5 years).

We are now at the point that "analysis paralysis" cannot be allowed to slow our efforts. The storm is on the horizon, so close we can start to feel the winds from the storm front. We are running out of time.

Thank you.
Roger Conner Jr.

Remember we are only one cubic mile from freedom

Third alternative:  Radical increase in efficiency of use.

In this category I would put gas-burning heat pumps (esp. if we could get one of the sub-$300/kW SOFC units into mass production) and just plain insulation.

One radical increase in efficiency. Transfer freight from heavy trucks to electrified rail. 20 BTUa diesel > 1` BTU electricity (joules for y'all metric folk).

Best Hopes,


If the semis burned natural gas, you might be on-point there....

The #1 source of home heating in the US is natural gas. #2 is heating oil. Heating oil is just diesel without controls on cetane and higher sulfur.

Many industries can switch between natural gas & oil, depending upon price. A number of city buses burn NG, but most burn diesel.

Although a number of small islands burn diesel, it seems unlikely that diesel would become a major source of anything other than emergency power in North America. However, shortfalls of NG will result in more blackouts and much more emergency generation, see China in 2005 as an example. The demand for diesel for on-site generation during blackouts affected world markets.

With some friction, NG & diesel are fungible within a range.

Best Hopes,


Again, let's double the efficiency of use (for those things we cannot convert).  Replace oil furnaces with diesel-driven heat pumps.  A Lister-type is about 30% efficient, and a heat pump with an EER of 12 has a coefficient of performance of about 3.5.  If heat losses amount to 10%, the net CoP is 0.3*3.5 + 0.6 = 1.65.  This is around double the efficiency of the typical oil furnace, cutting fuel requirements in half.

If the coupling between the engine and the heat pump compressor is electric, the system can run on the grid when it is available and use the diesel for backup.  The potential for DSM (utility switches the diesels on and off to shave peak loads) ought to have grid managers salivating.

I'm with you on this, RC. I believe electricity produced from solar technology will be a major piece of the solution via applications of electric rail, cars, heating, cooling and cooking, etc. I am preparing to move 10 miles outside a small community that lies between two large cities in Texas (San Antonio and Austin). I own four houses on about 26 acres... the smallest one I'm keeping for myself, the others I hope to keep rented. Living off the grid is my desire. Do you think it's possible to heat/cool/cook/refrig completely from solar in this part of the country with a 700 sqft stone house, metal roof (with fireplace)? After reading Nate's article and comments on Climate Change, Sabre Tooth Tigers and Devaluing the Future, and the encouraging news of CIGS, I am ready to take the plunge and invest the dollars. Hope I'm not too late - :-).

Dear out:

I'm not sure where you live, but here on the Columbia River where I live most of us believe LNG importation would be an unmitigatable disaster -- economic displacement, environmental catastrophe, and a security risk besides. No doubt you would welcome such a thing in your own back yard -- but maybe that isn't even necessary. The four existing plants in the US are reportedly not running at full capacity, and all of them can be expanded when necessary, at far less cost than building a new facility.

The problem seems not so much to be NIMBY's like me, but cold, hard market logic: the market doesn't need the stuff at the price it is willing to pay, and the LNG supply is not available anyway.


I am not in the camp who would pick on those locals in various communities who oppose LNG terminals. It is their community, and they have the right to attempt to decide the type of community they want.

To your remark, "No doubt you would welcome such a thing in your own back yard -- but maybe that isn't even necessary." First, I won't make a statement on that, because I am an inlander, in Central Kentucky, so we are not confronted with the choice. It would be cheap of me to say, "yes, we would love to have an LNG Terminal!", knowing that there is no possibility of one being put here. As for "maybe that isn't even necessary.", I have seen no study that shows that the needed volume of LNG can be handled by the 4 existing plants no matter how much they are expanded, unless one assumes expansions of gigantic scale, and likewise, massive expansions in the pipelines to those plants. And imagine the LNG tanker traffic at only 4 terminals! The four we have are simply not enough if all indications are correct.

The critical issue is time. We are simply running out of it. We have been blessed with extremely mild weather, and have already "outsourced" many natural gas critical industries. (fertilizer being the most critical). How much more we can outsource before we really start to damage the U.S. economy we don't know.

What we do know is this: The coming natural gas crisis is about the only issue that such diverse pundits and experts as Matthew Simmons, CERA's Danial Yergin, T. Boone Pickens, the EIA, Roscoe Bartlett, former Fed Chairman Alan Greenspan, and current President G.W. Bush can agree on.
Should that not inform us and cause us to take action?

The LNG option was the preferred course of action of the powers that be.
For a variety of reasons, that option is collapsing. 5 years past where the nation was assured by it's leadership that this path was absolutely essential to have any hope of nat gas supply meeting demand, LNG is virtually stillborn, if not aborted in the womb.

This is why I say again, massive conservation efforts, solar and wind are now becoming our only way to avoid a national emergency, and we probably have 3 to 5 years at most. If we get unlucky on weather, it could be much shorter.

One more thing: In the discussions surrounding the TXU buyout, there is discussion of aborting a good number of planned coal fired plants. This would be a major victory, and should be encouraged, but it only increases the pressure to find some other way to make electric power. Going to natural gas in our current situation would only be another nail in the coffin. This is the time for the alternatives to begin to make their market move. The market pressure for the incorporation of thin film solar, solar hot water, and windmills is increasing daily. Can they deliver? We have to hope so.
Our options are running out.

Thank you for your attention, Roger Conner Jr.
Remember, we are only one cubic mile from freedom

It's the price and availability of indium which will determine the future of the thin-film market, IMO.

I'm all ears. What is the source and market for indium? According to Wikipedia, it is about as abundant as silver in the Earth's crust, and the major current source is Canada.

Is that another reason to pre-emptively invade? Blood for indium??

It's a bitch to extract and refine. Check out the historical prices. The use of indium in flat-panel computer displays has increased demand enough to cause the price to increase 10X from 2002 to 2006.

The use of rare earth elements in thin film PVs will hit a wall when it gets down to ever hoping for them to be manufactured in quantities enough to begin to replace fossil fuels.

It's a bitch to extract and refine.

that is a concept many people here seem not to understand. % of earth's crust and concentrations of said material are not the only factors in obtaining resources.

capslock said,
"The use of indium in flat-panel computer displays has increased demand enough to cause the price to increase 10X from 2002 to 2006."

While that market has certainly driven the demand and thus the price of Indium up, there is another factor: Speculation.
For many decades, the market for Indium was so limited, and the metal was controlled by such a small group of insiders, there was no speculation attempted.

Recently, the market has drawn enough attention as a speculative play that the FTC had to send out market fruad warning notices telling people that there were many attempting to sell futures in Indium at extremely outragous prices, and with no assurance that they actually had or could get possession of the commodity.

There is one more point: The amount of Indium per square foot of panel is actually quite small, just as it is in flat panel display panels. And the thin film industry is still primitive in it's application of Indium. It is striving to reduce the consumption of raw materials daily.

But, you are correct, as are other posters here, to point out that the materials needed to make the panels are indeed the limiting factor.

We have to assume the industry will get more efficient with each passing day, and they are correct in their bet that the raw materials are out there.

Roger Conner Jr.
Remember we are only one cubic mile from freedom

Uni-Solar is producing some of the best thin-film PV in the world, and it requires no indium. They are using amorphous silicon, which is much cheaper to produce than solar cells made of crystalline silicon, and is not in short supply.

Sun Edison is using their cells in many large scale projects.

I bought four amorphus 10 watt panels 20+ years ago becuase they were cheap. The layers are delaminating from the glass. Hope the new ones have a better lifespan. I also bought a 37 watt shortly after and it's fine. All of the other 48-75 watt panels I have are crystalline. I'll wait quite a few years before I try "the state of the art."

The a-silicon PV from Uni-Solar have been winning projects in California for the elementary school rooftops project, and recently on a Staples Distribution Center in Killingly, Conn., which represents the largest solar panel installation in New England.

I can only assume that these business successes attest to their products quality and price competitiveness.

The lifespan of any PV technology is extremely important because of the very low trickle of power that comes out of it. PV depends on long life for a positive lifetime energy return. If amorphous PV can't cut it in the longevity area, it will soon be history.


Errr, Natural gas IS dsolar... just aged.

Humanity has little choice but to use the photon of the now.

(unless fusion on earth is somehow harnessed.)

In China, ownership soared to 87.2 air-conditioners per 100 urban households in September, from 24.4 seven years earlier. The countryside, home to two-thirds of the nation’s population, is poised for even greater growth. In 2005, there were 6.4 air-conditioners per 100 rural households, a 35-fold increase from a decade earlier.


I guess the Chinese are like Americans. They like to be cold in the summer and hot in the winter.

I can only imagine all the racket those zillions of little air conditioners will be making.

Why is it that the accumulation of wealth, by itself, rarely leads to happiness, and often times, the harder we work and more money we make, the less we seem to enjoy it? Each of us has our own relationship with money. And like any relationship, it can be deeply destructive – full of debt, fear and regret. But it can also be satisfying and fulfilling, expressing our deepest values.

Interesting programming on linktv today. The film Affluenza, which looks at "a couple of the greatest social maladies of our time: over-consumption and materialism."

Lynne Twist, author of “The Soul of Money” also has some very interesting things to say in the accompanying commentary.

For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

1 Tim 6-10

This idolatrous nation (i.e. the "Western Industrial Democracies") will soon pass from the temporal scene. The world is an ongoing miracle: there is plenty of energy, plenty of food, plenty of water, plenty of everything for a worshipful people who will live in right relationship with Creation

The world is an ongoing miracle: there is plenty of energy, plenty of food, plenty of water, plenty of everything for a worshipful people who will live in right relationship with Creation.

Yes, God will save all us Bible thumping Christians. The rest of you idolaters can go straight to hell. God, via his miraculous powers, has provided enough fossil fuel and enough water to support all those who support Him. So when all you heathens are gone, there will be plenty enough left for all us sanctimonious Christians.

Seriously folks, and this is a serious matter, people who believe that God will make things all right if only we do His bidding are one of the things that is making this world a hell hole. Many Muslims think that the world would be a paradise if only all the Christians were all dead, and most Christians feel the exact same way about Muslims. Religion, today, is one of the things that is making things so bad. As long as people believe that “God will fix everything” then there is no need for us to do anything. We can all just kick back, watch television and drive our SUVs while waiting for God to fix everything.

Ron Patterson

please note that you also might want to add the worship of technology into that too. that seems to be a form of faith.


In regard to your request for advice for younger people on preparing for Post-Peak, and in regard to the "E" and "L" parts of ELP, I think that a good $10 investment is a PDF that you can buy from George Ure at www.urbansurvival.com on how to live on $10,000 or less per year. One of the primary recommendations he makes is to arrange your life so that you can get by without a car.

In regard to the "P" part, working for or becoming a provider of essential goods and services, almost anything related to the production or conservation of energy makes sense. Repair and maintenance makes a lot of sense. Perhaps a good rule of thumb is that you probably don't want to be in most of the sectors that have done well in the past 20 years or so.

In general, we are in the early stages, IMO, of an epic transformation of the US economy--from one focused on meeting wants to one focused on meeting needs.


Regarding your ELP advice: I found out the hard way what it is like to go from an outsized salary, an outsized house (and an outsized appetite for fine food) to more modest circumstances. While I am happier today, I never would have made the transition voluntarily, as I was too caught up in the "samara" of life - money, prestige and material possessions.

I now live happily with less, in a smaller home, with reduced expectations, and more importantly, without the hunger for more and more and more of the stuff I never really needed in the first place.

If times do get tight in the future, as many of us expect, there are many more people who will learn the hard way what it's like to live with less, and with reduced expectations. I hope that they will find the transition as liberating as I did (although for many, I doubt that they will).

PS Thanks for your wonderful and informative posts. I am glued to my seat to see what happens next in ExportLand...


My income, from early 1986 to early 1989, fell by about 75%, as I did what I had to do to stay employed and to keep the family fed with a roof over our heads. As I have previously outlined, one of the things that I did in early 1989 was to volunteer for a 50% salary cut, offset by getting an equity interest in oil prospects I generated. We are rapidly approaching a period of labor surplus, IMO. By vastly reducing your expenses, you are better able to compete for the remaining jobs. Reality sucks.

In any case, a lot of my current advice is based on "Been there, done that."

Good luck and all we can do is try to warn those who will listen.

As I have repeatedly said, if I am wrong, you will have a lower stress way of life, less (or no) debt, and more money in the bank. If Yergin, et al, are wrong. . .

G in V.

Regarding your ELP advice: I found out the hard way what it is like to go from an outsized salary, an outsized house (and an outsized appetite for fine food) to more modest circumstances. While I am happier today, I never would have made the transition voluntarily, as I was too caught up in the "samara" of life - money, prestige and material possessions.

Notice my user ID. Basically saying that Samsara_is means; That is the American(and others) way to live.

If somes good,
More's Better,
And Too Much Is Just Enough.

I have worked with computers the last 25 years, and have lived the corp. life. Found out about Peak Oil in 2001 from a FTW article. We sold our home in suburbia in 2004 at the top, and move into an apartment. Paying off all loans scaling down. Learning new things. Got a deploma from North Carolina State U. in Renewable Energy and Sustainable Building Methods(great coarse btw).

Am learning all we can about farming. Looking to move back homeward, Upstate NY down in Richmond way.(looked at VT, NH, Mass first)

I am handy, and my wife and two Twentysomething daughters are with us too. A few of brothers and sisters and other relatives have been convinced and are taking action.

Slowly and surely as all members of our society are still involved in the Passion Play of Maya, you will see people (like myself, you and others) are doing a slow moonwalk backwards to the nearest exit.

It's like an underground movement at this point. Lots of labels but it all involves everyone awakening to the truth of the matrix and starting planning, and most importantly "Making NEW little choices everyday".

Paying off bills, learning some self sufficency, insulation...

SOmethings will be effective, some won't but they are all indications of people moonwalking backwards towards the door in this scene.


Indeed - When the music stops playing, as it inevitably will, I don't want to be the one left without a seat. I've economized, I've localized, but as far as producing? I've still got some way to go. I'm a white collar guy looking at a blue collar future... Learning how to install ground heat pump systems might be a good second career choice here in the Northeast, or not?

I meant "samsara" of course. Oh well.

thanks for the advice.
once not too long ago one of the things i wanted was to live on my own, now despite my mother's wishes i am sticking around. much to the dislike of my mother but it's better i not try to make the leap since i would have to move back in later anyway as things get bad.
as for the book, i'll consider it.

finally, so you admit the localize part could be a gamble? thats the impression i got when i looked into it.

finally, so you admit the localize part could be a gamble? thats the impression i got when i looked into it.

Doesn't it just depend on where your job is?

If you relocate to a large city w/ public transportation you will have multiple ELPish job oppertunities.

Wasn't that the point of cities? Collect the workers and the jobs together?

it not only depends on where your job is, but what it is.
jobs come in many forms and you can bet at least 70% are going to be gone, though from what i understand it might be closer to 90%. when you realize this it basically becomes a guess at which job will survive and which wont. cause the last thing you want is to become part the ever increasing jobless mass. you won't have a chance to get another job once you fall to that point.

I think I understand now.

You want to avoid a Grapes of Wrath type scenario. That is when you loose your job, there will be so many others in a similar situation you'll never get another.

So what's a safe job?
Off the top of my head:

Anything in the oil business.
Anything in the energy business for that matter.
Military and military contractors should be safe.

Of course even in those fields you would need to be specialized. If your work is low skilled some hungry unemployed guy will just undercut your wages.

What to stay out of?
again, unskilled labor
The big 3 Us automakers
consumer electronics (my field)
finance/real estate

What do you think?

I think that a good $10 investment is a PDF that you can buy from George Ure I think that a good $10

Come now. What can George Ure tell anyone for $10 that they did not know up front?

(I email him at least once a month with something that is used in the week.htm post. 3-4 times month. I see no value in paying $10 or $40 (yea he accepts silver/gold/platinum as payment) for telling me what I already know. (the screwing of us pleebes.)

epic transformation of the US economy

I have no doubt that the 'transofmation' will be "impressive". Alas, I'm not in the halfpasthuman time monk crowd WRT income so I, like most people who read here....influnced by this "transformation".

I wish you were right, WT. But we are going in the opposite direction. We are producing stuff that it is not even wanted, much less needed -- military equipment. And there is nothing on the immediate horizon that will change that.

We are producing stuff that it is not even wanted, much less needed -- military equipment

Naw, some 20% of the population makes their income of FRN's off such production. They "need" that work.

One web post somewhere was claiming that all one needs is a minimum of 20% to effect change in a government.

Besides selling based on fear works. If you wanted money to rebuild a doomed city....that doesn't happen. But if you use such resources without taking money from people's pocket in the NOW.....how will a 20% or more arise to challenge the other 20% that make their living off of war?

"Many Muslims think that the world would be a paradise if only all the Christians were all dead, and most Christians feel the exact same way about Muslims"

Of course us athiests think that the world would be a paradise if all the Christians and Muslims would just go away.

I second that!

CNN did a story about American atheists. They interviewed people who had been kicked out by their landlords for being atheists, despite being pillars of the community otherwise.

They also reported that polls show most Americans would rather have Muslims or gays for neighbors than atheists.

I find that strange. I have lived in the Bible belt all my life and have always expressed my atheism at every opportunity. I have never experienced discrimination. I have, for several years had a Darwin Fish on my car. No one has ever commented about it. At work everyone knew I was an atheist. (I am now retired.) I was often on talk radio shows, arguing with creationists or Bible thumpers. My boss’s secretary heard me once and promptly requested that he fire me. But he just laughed at her and told her this was a free country. I guess I have been just lucky.

Ron Patterson

Did you sue anyone over a nativity scene or Xmas party? That won't win any popularity contests. I don't get vocal atheists, muslims, or christians. Never known a Jew that tried to convert me. Usually whatever they are selling I pick a point contrary and mess with their heads. I wish someone would fire me over religous preference. I need a long paid vacation.

As just a remark about atheists being hated - as an opinion, this is a media generated meme. Creating hated minorities is one of those very well worn tricks used in politics, and after attempting to do it over the years with 'eco-terrorists' (you know, PETA, ELF, someone picketing a store selling ham with a sign basically saying don't eat meat), 'feminazis' (nothing like defending mom and apple pie by attaking women), and so on, but none of those attacks have worked out that well - the environmentalists generally have reality on their side, and most women and many men don't think it is a feminazi thought to expect equal pay for equal work.

And as attacking the religion of Islam seems sort of geopolitically stupid, there aren't too many alternatives on tap.

Illegal immigrants? Well yes, actually, there does seem to be a groundswell of hatred, but it is the wrong sort - the Hispanic community seems quite able to organize itself politically, while the hatred against 'those' people tends to miss the fact that American citizens who consider themselves 'Hispanic' are a growing demographic that simply can't be ignored by politicians looking for mainstream success. (I'll ignore the economic aspects of those immigrants for now - but they certainly served to depress wages and union presence in such industries as meat packing.)

I believe the hatred that suddenly appeared against those immigrants shocked many in power (mobs are fickle things), and 'atheists' look like a pretty safe bet as an alternative. What is interesting, of course, is the cart and horse thing - will the attacks come after enough media pumped fantasies are distributed, or will atheists also turn out to be a disappointing target, requiring some other group to suddenly discover that it is now hated by all good people - if you have any good ideas, Murdoch would likely pay a decent finder's fee. Though I don't think the EU bogeyman will play as well in the U.S.A. as it has in Great Britain.

Drug users, including tobacco smokers but not ethanol.

After posting the above concerning religion, I have had second thoughts and now regret posting it. Religion is not the blame for anything; religion is rather the result of our adaptive mind. It is only our nature to group together in tribal clans and create religious beliefs that make us special in the eyes of our gods.

Religion is an adaptation that allows us to, among other things, kill those who compete with us for resources and food without remorse. God wills that they be wiped from the face of the earth and we are obliged to do the bidding of our god.

Religion is simply an evolutionary adaptation, the result of our evolutionary success. Religion is a natural phenomenon and not a place where we can really lay blame for anything. I don’t know what got into me to make such a silly accusation as I did in my previous post. I really knew better but just got pissed off and forgot myself. I guess emotion sometimes make us say very stupid things. Well, it does for me anyway.

- The destruction of the natural world is not the result of global capitalism, industrialization, 'Western civilization'
or any flaw in human institutions. It is a consequence of the evolutionary success of an exceptionally rapacious primate. Throughout all of history and prehistory, human advance has coincided with ecological devastation.
John Gray, "Straw Dogs"

As for pointing to our mental failures with scorn or dismay, we might as well profess disappointment with the mechanics of
gravity or the laws of thermodynamics. In other words, the degree of disillusionment we feel in response to any particular human behavior is the precise measure of our ignorance of its evolutionary and genetic origins.
Reg Morrison, The Spirit in the Gene

Ron Patterson

Religion is an adaptation that allows us to, among other things, kill those who compete with us for resources and food without remorse.

Irrespective of any ethical considerations I think we cannot afford that "luxury" today.
Modern warfare isn't cost effective, plundering is not anymore what it used to be in Roman times.

"Religion is an adaptation that allows us to, among other things, kill those who compete with us for resources and food without remorse..."

The remorselessness in this quote is not a function of religiousness, but of the abberrant ideologies that are merely dressed up in Priests' robes these days. Because they call themselves 'Religious', please don't be confused by their delusions. The burgeoning of fundamentalism is a fearful set of superstitions that to me seems to be the equal and opposite (but often just as destructive) reaction to the overwhelming success of industry and finance to eat up the planet with blind fervor. Extreme, accelerated progress is met with the counterpunch of anxious and angry denialism. Moderation in NOTHING..

If you were to talk to some of the truly 'Religious' people working lately in the world, the Dalai Lama, Rabbi Michael Lerner, Father Berrigan (dec'd?), Rev. Dr. King, Mother Theresa.. etc, etc.. you would not meet this attitude of 'God will save the believers', 'We can justify anything behind a veil of Faith'.. There are those who feel this way, but they are not the true bearers of anything truly religious.

Bob Fiske

If you were to talk to some of the truly 'Religious' people working lately in the world, the Dalai Lama, Rabbi Michael Lerner, Father Berrigan (dec'd?), Rev. Dr. King, Mother Theresa.. etc, etc.. you would not meet this attitude of 'God will save the believers',

But NONE of those people really matter when it comes to actions.
The net effect is a justification of the religious nonsenses which are then used by the "exceptionally rapacious primates" to carry on remorseless killings.

'We can justify anything behind a veil of Faith'.. There are those who feel this way, but they are not the true bearers of anything truly religious.

The "true bearers" aka "religious moderates" are only the breeding ground for the extremists who are the ones who matter.
Just look at the game the complementary "moderates"/"fundamentalists" Islamists are playing in their fight against the "choosen people" (and vice-versa BTW).
It would be fun if it weren't such dangerous madness.

"But NONE of those people really matter when it comes to actions."

These people were ALL about actions. I don't know what actions matter to you K, but if you're only going to COUNT the actions that are violent and destructive, then of course you'll have to discount the Positivity and Creativity of these leaders, or the inspiration that their work still inspires in countless others. Gandhi, King, Berrigan and Theresa 'Don't matter?'.. they are the Moderates who provide a stepping stone, a 'breeding ground' to the Swaggarts and the BinLadens?.. No, they are the radicals who take the conversation and the people who hear it in the other direction entirely.

I'm sorry you are unable to see a distinction there. Religious fanatics are not the offspring of these movements.

By the way -- the text the author quotes from, St. Paul's alleged letter to Timothy -- is a forgery.

Of the thirteen epistles ascribed to Paul in the Bible, only five can be identified as authentic with any degree of certainty. Yet, all thirteen are headed with the bold inscription, THE EPISTLE OF PAUL THE APOSTLE TO . . . Such blatant subterfuge in the face of undeniable evidence amounts to a most scandalous and irresponsible deception. I know of no minister of the gospel who has ever had the intestinal fortitude go before his congregation and make this revelation. They, instead, proudly promote themselves as paragons of virtue and honesty; purveyors of truth - the only truth. Intellectual dishonesty is their stock in trade.


Thank you, a helpful link!

Don't speak to me of shortage.
My world is vast
And has more than enough
for no more than enough
There is a shortage of nothing,
save will and wisdom;
But there is a longage of people.

Garrett Hardin


I don't have an answer to your question... But when I was in my 20's I was much more interested in experiences then I was in "stuff". As you get older though, hanging out at home and enjoying "the finer things in life" has more appeal.



Same with me - in my 20's I was mostly out and about in the world, sometimes with one suitcase, a guidebook, and one nice suit purchased in Hong Kong that I would pull out and iron on those days when I had to travel. (But that's another story :-) ... I'll bet that there are a lot of interesting personal backstories here at TOD!)

Today I do enjoy the finer things in life (modestly), and I do enjoy hanging at home, but I no longer live beyond my means like I did during the "new economy". Finding a balance that one can be happy with, and not living every day wanting things one doesn't have, is the key I suppose.

I’d like to add my 2 cents to the discussions by many of those here as well as JHK concerning the outlook for the future of the suburbs. On the one hand, it’s apparent that if we have a total collapse or rapid decline of some sort that leads to wars, food riots etc., then all bets are off. I don’t want to go there, and can only hope or pray that doesn’t happen.
On the other hand, let’s assume that the eventual decline is slow, and most of the public manages to stay relatively calm. What I see as perhaps a likely scenario for the suburbs is the following. Some areas of the suburbs could well be abandoned for the most part, but others would likely not be. The people who live in these homes won’t have anywhere else to go, so will stay put. When they lose their jobs or must give them up for lack of adequate transportation to the city, which may be 30 or 45 miles away, they will start looking for means of support close to home.
Some may find jobs locally, and those who can’t, could well start some small business or other on their own. Perhaps one may have some machine tools in his garage that he’s used for a hobby, and will find some useful tool he can make and sell to others. Maybe tools for gardening or whatever he can think up, based on what things are needed in the area. This could lead to so much work that he begins hiring local help as well. Right now, such things are readily available at the hardware store made most likely in China at a labor rate of 50 cents an hour, but that could change by then.
Maybe someone who is good at sewing and has sewing machines could start a small business making clothes, or repairing clothing for others. This could also be the start of a larger business. Obviously the zoning laws would need to allow this, but that problem will most likely take care of itself when the need arises. Businesses that need labor in close proximity would move to where a workforce is readily available as well, leading to more available jobs in the area. The house on the corner will become the local food mart and trading center for the neighborhood. Other houses will become the bases for other needed services.
These former and sometimes isolated suburbs will become small communities in themselves, and trade with other nearby communities. Much like small town USA of the past. The yards and surrounding land will become gardens and farming areas, which is plenty of work to keep many residents occupied.
Of course many of these homes are McMansions of 6000 square feet, but that won’t be a problem at all for any carpenter worth his salt. (yours truly) These huge homes that can no longer be affordably heated by the lone homeowner, with natural gas if it is available at all, will simply be subdivided into apartments or condos. The heat will most likely be electric, which itself may be of limited quantity, but I think will most likely be around for some time. The 6000 square foot house will become 4 small abodes of 1500 square feet, or 6 at 1000 square feet.
Even if building materials are in short supply or very expensive, the same carpenter will have a ready supply of almost everything he needs for the remodeling from purchased or abandoned homes nearby. Plumbing pipe, lumber, sinks, toilets, cabinets, doors, and on and on. If he can salvage from other homes, he won’t need much of anything from outside the area to complete the necessary work. This could be a large business with employees as well. The HVAC work of throwing out the natural gas fired furnaces and replacing them with electric ones will be a big business in itself I would think. (How times have changed. 15 years ago I would have recommended replacing electric furnaces with natural gas, but it’s exactly the opposite today.)
There are of course areas in the country that won’t do so well, as an example perhaps Arizona with limited water and areas to grow food. Areas that are vastly overcrowded now may have to thin out and have residents move to areas more suitable such as Iowa or Missouri. This would of course all be a slow and perhaps painful process, but seems a doable and logical scenario to me.

Ground loop heat pumps will be the way to go in most of the country (air source heat pumps in New Orleans, South Florida) *NOT* electric resistance furnances ! I use a SEER 12 window heat pump.

What motivation will people have, once they decide to abandon their McMansion to move 1.5 miles away to the nearest "cluster" and not into a totally different city or state ? Portland OR might look good, or the South Bronx, or ... depending upon the scenario.

Sidenote: Yesterday I attended (and walked 5 miles) in a political protest/jazz wake (New Orleans puts the Fun into Funeral) and considered this expression of community. Public parades & partying are part & parcel of who we are. We talk, laugh and enjoy even the worst in life.

Then I saw the "American Experience" on PBS (transmitter working again :-) episode on New Orleans. One of the best. They did a good & true job of covering 5 of our 58 facets. I would recommemd it (remember the missing 53 facets). Perhaps you can understand why "The longer you live in New Orleans, the less fit you are to live anywhere else" and why I am staying put, fully Peak aware and hurricane aware.

Best Hopes,


It rains all the time in Portland. You don't want to go there.

Rain is the energy raw material for hydroelectric power >:-) (icon for devil or at least devilish)


Hey, hey, hey... Rain is liquid sunshine. Many of us Portlanders appreciate it. Ah, it's pouring outside right now! Beautiful!



The fundametal problem with suburbs is that they've disrupted the natural relationship between city and country.

Before a city would be dependant upon surrounding farmland to feed it. This is why big cities in the past were located near waterways as this gave them access to more farmland, and why cities located in arid climates would be very small. The farmers has a symbiotic relationship with the cities as they would sell food and recieve goods manufactured in the city in return.

The suburb has destroyed this relationship, it takes away the farmland from the city but offers the city nothing except the prospect of death by starvation. They are as such nothing more than a historic abnormality, and as such they will cease to excist.

If a dieoff occurs, I suspect you are correct. Till then, many of these suburbanites will have the choice between sleeping in the street or alleys of the city, migrating elsewhere, or remaining in the shelter it provides. Personally, I'd take the shelter.
The dislocation of many will certainly occur once PO is upon us, but shelter is shelter, even if there is no heat. The suburbs will offer something to the city. The food that grows in those yards is certainly better than none. Houses that are salvaged to subdivide other large homes could be completely removed and add to this farmland. These areas can provide labor as well. I could see really large monstrosities like Atlanta or Houston or Los Angeles having a struggle, but smaller cities might do OK.

"The suburb has destroyed this relationship,"

Picking Nits, I would say that you are pointing at a symptom, not a disease. The relationship was destroyed by insanely cheap, condensed energy. That allowed us to build a new nation in forms that make no sense, since energy picks up the slack in any discrepancy.

As Silent Watcher (?) said above.. one bit of silver lining to the McMansions, is that they (and the SUV's) represent a great store of materials to be reallocated into the 'retrofit', as energy and the upcoming economies tell us what shape our world must take. Not that these material will always be easy to reuse, not being initially used with anything so pragmatic in mind for them.. but hey..

Bob Fiske

One Small Step

Free workshop: Beginning Vegetable Gardening

A free two-hour workshop on how to grow vegetables* in your backyard or
other small space will be held this Saturday, February 24, from 10 until
noon at the Green Project, 2831 Marais Street.

What and when to plant, how to prepare your soil, container gardening,
watering, mulching, and composting are some of the topics to be covered.
Newcomers to New Orleans or to vegetable gardening will get off to a
good start with this basics class.

Bring your questions! Handouts and resource lists will be provided.

For more information or directions visit www.thegreenproject.org

Best Hopes,


Swamp Street? Makes sense :-)

held this Saturday, February 24, from 10 until
noon at the Green Project, 2831 Marais Street.

A global web site cares about the happenings in a doomed city exactly why?

"... exactly why?"

Not to respond for Alan but might it be Civilization?
Survival is the bare minimum but isn't the only issue.

might it be Civilization?


Nice guess. Keep guessing.

For Survival is the bare minimum to be met, having the content of the presentation on line would merit having the world know about it. Meeting announcements about an event that will have transcripts or content on line, with follow-ups in a fine plan.

Plenty of on-line (and off line) sources on gardening. If one has an interest, go to your local library. And if you lack a local library, odds are your living environment has people growing food on lad, or you are in a war zone.

"Gold's bull market is all about oil"

Listen to any pundit or metals analyst talking about the price of gold today, and chances are they'll tell you to watch oil. The price of crude, in fact, has become crucial to the bull market in gold – or so you might think.

"We need oil to break and hold above $60 for gold to rise further," agree the traders and dealers interviewed by Reuters and Bloomberg each day. Yet by mid-February, oil had failed to hold above $60 per barrel. Gold, on the other hand, stood nearly 10% higher from when oil's bull market broke down last fall.

What link there is failed to hold firm even during the "commodity bull" that saw hedge funds pile into both oil and gold over the last half-decade or so. Crude oil first turned higher in 1999; gold didn't get started until 2001. Oil's major leg up began in 2002 and peaked in mid-2006; gold's uptrend remains rock-solid today.

More importantly for active gold traders, short-term fluctuations in the gold price have next-to-nothing to do with movements in oil. From 1983 to 2006, the average correlation between their weekly price changes was a mere 0.10. Yes, the connexion improves if you look at the three years ending Dec. '06. It rises to 0.33. But the correlation would be nearer to 1.00 if gold really was "all about oil".

I’ve noticed the “oil/gold” ratio idea mentioned as well. Not sure how valid it is, but it seems to have some affect for sure. I get the idea that slowly but surely, people are starting to notice that the world financial system may be headed for hard times. Of course gold isn’t just a commodity like tin, it’s also a monetary commodity. You show a gold coin to anyone in the world, and “money” will almost surely cross their minds. Maybe these last few years that gold has been slowly rising, is an indication that some are moving more of their assets into gold, as a way to protect them in the event of financial disaster.

The idea of PO has been slowly filtering into the minds of more and more people during these last few years as well, which gives a good reason to have some doubt about future financial stability. Maybe the concern over PO and the disruption it will cause leads to higher gold prices when oil rises?

I see your point about there being better alternatives to electric resistance furnaces. I didn’t mean to imply it was a “best” solution. I would think everyone would have to choose from what’s available first, and what’s most efficient second. Many here have championed many ideas that I’m sure are better than resistance. I’m thinking mostly near term, long term, who knows?
Best regards

Of course there is a very strong connection between the bull markets in oil and gold. They are both real assets that must be purchased with paper money by people/businesses/countries who value the asset as a "real thing" and see the dollars that they are paying with as a necessary medium of exchange, whose value is upheld by the confidence of those who choose to use it.

Confidence in the US Dollar is waning, and its purchasing power will follow. The continuous increase in prices for everything we buy is the way ordinary market participants experience the decrease in the dollars value. This will necessarily drive the prices of tradable goods and services upward.

Interesting audio from a presentation by Scott Ritter a few weeks ago talking about the prospects for an attack on Iran. IMO this is the issue that far exceeds all others in the near term. And Ritter certainly seems like an honest man.


Warning: there's no good news here... :-(

The latest from Sy Hersh on Iran is up at New Yorker.

Good grief! Makes you shudder, this is not good.

a March-April attack is looking more and more possible every day..

Scariest part of the Hersh article is that the inner circle is now Cheney, Elliot Abrams, Khalilzad, and Prince Bandar. No comment necessary.

How's this one make you feel then? How about a military coup?

Dangerous times. Could these types of news headline accumulate to the tipping points for the markets in general? (Oil, Gold, DJI, Currencies, etc) ?

US generals ‘will quit’ if Bush orders Iran attack


I'm going to repost something ThatsItImout posted in yesterday's Drumbeat that needs immediate attention. This is a REAL opportunity to raise awareness in a major newspaper audience. I think it would be highly beneficial for us to go post some comments over there and try to raise the popularity of this effort at the WSJ.


Folks, do not forget about our fellow energy bloggers at Wall Street Journal,


After a nice burst of "energy" (pun intended) I have noticed the traffic has dropped off some there, and we want to show WSJ that folks care enough about this topic to make a blog there worth doing....it gives us a chance to preach to more than just the choir on this stuff :-), and maybe even catch the ear of some fo the PTB in the financial community....

There is no signup required to post comments...very easy. I have bookmarked this site to go back to daily.

Hello Dragonfly41,

Roger and you make an excellent point! I think all TODers should pledge themselves to making at least one comment daily on the WSJ blog--it will be good for them and us to enlarge this synergy. If it grows to a significant level: CERA will be forced to rebutt our comments there---then think of the fun we can have debating directly with Yergin and Jackson while the WSJ covers the topic.

Git 'er done!!!

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

I posted on the continuing Kashagan field setbacks, which CERA in their great wisdom, didn't see coming.

Considering their actual great technical knowledge, sometimes it seems they are intentionally only stating the party line of major oil companies - and not what they really think.

rigzone reported on friday that conoco's corocoro field offshore venesuela is delayed again until mid 2007. is this another of the big projects coming onstream that is supposed to drive the price of crude down to $ 30 ??????

past articles have given a mid 2005 startup, then early 2007 and now it "may" start by mid 2007 at an estimated 120 m (as in thousand) bpd

The Oil & Gas Journal had a list, a few weeks ago, of all new/redeveloped fields that should produce 100,000 bpd or more, including Kashagan (which at best won't hit peak production until after 2010). The total was only about 4.5 mbpd.

ExxonMobil's high estimate of 6% per year for the decline rate from existing wellbores worldwide (their range is 4% to 6%), means that we need about 4.4 mbpd of new crude oil production every single year--just to keep production flat (crude oil = C+C). Or, we need 44 mbpd in new production over the next 10 years, just to keep production flat.

If Ron (Darwinian) and I are correct that Ghawar is in terminal decline, every single field that is or was producing one mbpd or more is now in decline or crashing.

And yet people are predicting higher crude oil production, even as the cumulative shortfall between what the world would have produced at the 5/05 rate and what we actually produced continues to grow; it's now in excess of 300 million barrels of crude + condensate (EIA).

Edit: I posted these three notes on the Simmons thread

If memory serves, Mexico also blamed the shortfall in exports in December on bad weather. In any case, on a month to month basis, overall Mexican production is on track to decline by 50% in 10 years. Oil exports are on track to decline by 50% every three years. Of course, if David Shields is correct, these declines will accelerate as the Cantarell crash really kicks in. This is of course one of those increasingly common “coincidences” where a region starts declining after crossing the 50% of Qt mark (Khebab’s HL plot in this case).



Pemex reports oil production off

Petroleos Mexicanos, the state-owned oil monopoly, said Friday that oil production fell 7 percent in January from a year ago, the sixth month of declines.

Average daily crude production was 3.14 million barrels, down from 3.37 million barrels in January last year, Pemex, as the Mexico City-based company is known, said in a statement.

Output rose 5 percent from December production of 2.98 million barrels a day.

Crude exports plummeted 23 percent to 1.58 million barrels per day from 2.05 million barrels a day in January 2006. Pemex said the drop in exports was caused in part by adverse weather.

i'm with ya westex. is brownfield still blowin' past dallas ?

It started clearing last night, and we have blue skies again. It was pretty spooky yesterday; lots of people in Dallas had never seen a dust storm like that. DFW Airport was shut down for most of the afternoon and into the evening, because of the high crosswinds.

My wife, not from West Texas, had never seen a dust storm, when we moved to West Texas 25 plus years ago. When she saw her first one, she thought the end of the world was at hand.

Would you please send me your email address to hicksinlubbock at cox dot net. I live and work in Lubbock and have been lurking on this site for close to a year. Have some questions for you that I'd rather email than post here. Thank you.

One of the odd things I've observed is that almost everyone accepts the North Sea decline (the North Sea is now 70% depleted, based on the HL plot) as involuntary, but the conventional wisdom is that the Saudi decline (Saudi Arabia is now 60% depleted on the HL plot) is voluntary, even as Saudi production continues to fall at about a 8% per year rate, as predicted by the HL and historical models.

By the way, if the Saudi Oil Minister reports oil production as crude + condensate, and if crude + condensate is the principal feedstock for refineries, and if the price of oil is discussed in terms of the price of light, sweet crude oil, why do so many people use Total Liquids to talk about production rates?


Nicosia, Feb 24 : In a recent interview with Wall Street Journal, (Saudi Oil Minister) Ali Naimi said that Saudi oil production stood at 8.5 million barrels a day, about one million barrels a day less than the country's output six months ago.

It is interesting to note that the OPEC targeted cuts for November, December and January was 1,200,000 barrels. Saudi's share of that was supposed to be 380,000 barrels. Yet Saudi has cut about 800,000 barrels per day as of November and over a million bp/d as of February, (according to Ali Naimi). The rest of OPEC has cut about 200,000 barrels per day combined.

Now the question must be asked, why is Saudi Arabia cutting far more than their fair share? Why is Saudi allowing the other OPEC members to cheat so badly on their quotas while they suffer with cuts over twice as large as they pledged?

I guess they are just all heart and feel sorry for other OPEC members far less fortunate than they.

Ron Patterson

By the way, if the Saudi Oil Minister reports oil production as crude + condensate, and if crude + condensate is the principal feedstock for refineries, and if the price of oil is discussed in terms of the price of light, sweet crude oil, why do so many people use Total Liquids to talk about production rates?

Because that's what matters.

If, in 2015, C+C was down to 50M while Total Liquids was up to 100M, what do you think would happen? Do you think the economy would collapse because there wasn't enough "true" oil, or that people would cheerfully burn whatever liquid was in their tank and go on about their business?

One might fairly argue that Total Liquids should be examined on an energy-content basis, but - to be frank - complaining that we "should" be paying attention to some particular subset of fuels sounds unpleasantly like sifting through the data to find a part of it that backs up a pet theory. One could look at light,sweet or at crude or at C+C or at any of a number of other slices of the liquid fuels pie to see trends in that particular subset, but from a perspective of "are we in trouble?", the sum total of liquid fuels is the important number.

The principal additional component to Total Liquids is NGL, which comes from both oil and natural gas reservoirs. As Khebab has noted, one barrel of NGL does not have the same BTU component as oil, and the US does not offer much encouragement for gas. Our natural gas production peaked three years after oil peaked.

Also, note that all we are talking about is increasing the rate of extraction of finite fossil fuels.

Pitt, yes total liquids matter. But coal matters also as we can make coal oil from it. Nuclear energy matters because we can make hydrogen fuel from water with it and we can also charge batteries and run battery operated cars. We can burn alcohol in our cars or palm oil in our trucks. Wind matters because we can not just push sail boats with it but we can turn windmills, generate electricity and with that electricity generate hydrogen or charge batteries.

What we are trying to measure is how much freaking crude oil we have left!

How long before we will have to totally depend on battery operated cars or hydrogen cars or cars, trucks and boats that run on bottled gas? But when you mix alcohol, palm oil, bottled gas and liquidified coal together with crude oil, our true concern, you only confuse the issue?

You are right, everything matters. Coal matters, nuclear energy matters, corn and soybeans matter, palm trees matter and wind matters. But we are trying to guage when peak, and subsequent downturn of crude oil will happen. It is best not to confuse the issue by mixing all those other factors in with it.

Ron Patterson

Pitt, why are we so concerned with oil?
Here is the chart/article that Khebab found and posted. Each alternative must be multiplied by 50 to equal 1 years use of oil. I was surprised at what it would take to replace "oil". Obviously it won't be easy.

This is a very quick chart to look at - well worth the time.


Yikes. A cubic mile of oil really is a hell of a lot of energy.

he thinks it's a easy amount to replace, but i doubt he takes into account the energy density involved.

TrueKaiser said,
"he thinks it's a easy amount to replace, but i doubt he takes into account the energy density involved."

First, the article/post by Khebab, complete with the comments

I have made it clear in several posts what a revealation this post was to me, and how it altered my thinking, creating what can only be called an "intellectual" crisis, or at least re-alignment in my view of energy.

I have since used a variety of the revealation as my closing line on TOD, to help me always keep it in my perspective.

TrueKaiser's words ""he thinks it's a easy amount to replace, but i doubt he takes into account the energy density involved.", could most easily be aimed at me, given my fascination with the perceptual change that Khebab's post created for me, but I do not feel they would be an accurate description of my views...

I do NOT think one cubic mile of oil would be "easy" to replace.
I do however, now see that that amount of energy would be possible to replace with concerted effort. I know now that the amount of oil we consume in comparison to the scale of the Earth (in volume or in weight) is not that great. Of course, we know that the Earth is not composed predominantly of hydrocarbons of the type that oil, natural gas and coal are constituted of (but of inert minerals, metals and rock), but we also know that two of the more common elements on the surface of the Earth are in fact hydrogen and carbon. These are driven by a constant stream of energy from the sun in the form of biological activity, and of course, we have the hydrogen locked in water, which can (not easily, not cheaply, but can) be released by energy if the correct devices are used.

On the density issue, we have to ask if that is really that great of a deal....if a hydrogen or hydrocarbon fuel were one tenth the density of oil, then we would be talking 10 cubic miles of area.....still a tiny space in comparison to the volume of the Earth....one hundreth would be 100 cubic miles, etc., but this would become simply a containment issue (i.e., pressurizing the gas, as is done all the time in industrial and energy practices)

I wish we could get Leanan to do a string on energy density, as I have let many of my notes and research on this get scattered, but it is something I want to look at again, but back to point...

Would one cubic mile of oil (and remember, for the whole world, but per year) be easy to replace? NO. Is it possible to replace? I can find no proof indicating that it could not be replaced with effort.

Is one cubic mile of oil a lot of energy? OH YEAH!
Is it an infinite amount? No, far from it, and it is the perception that I had long held that was shattered by khebab's post, that we faced an almost infinite problem, so large as to be virtually impossible to deal with.

Just for fun, after reading khebab's post, I asked several of my friends, well educated and perceptive folks, what they thought the volume of oil humans comsumed per year given in cubic miles would be?....it was fun! They first thought, and you could see them doing what I did, trying to visualize the tank farms, the tankers, the giant wells, and then picture the area, Saudi Arabia, Kuwait, Qatar, all the Persian Gulf....and more, Mexico, the North Sea, again the giant fields and wells.....

They guessed.....maybe 50 cubic miles, or 70? Then they tried to visualize again, no help from me.....no, no, it must be at least 100...maybe more....!

Do you see why this is important? Most people have no interest in alternatives because they think this is a completely insurmountable problem....they are convinced that there can be NO alternative that can work, and of course, they are often encouraged to believe exactly that, by ALL SIDES.....I have heard if from both the "peak aware" and the oil companies!

The other issue is the way in which oil is given as an almost "magical" substance. We are told that there is nothing that has it's special hydrocarbon structure, that oil and nat gas are exceptional by their very composition.

Of course, any good chemist or biologist knows better, and knows that hydrocarbons are at work being formed on Earth every day. Some of these hydrocarbons are even superior to oil in that they are forming with no sulfur, and almost no impurities of the type that were captured over millions of years in fossil oil/coal/tar sand/oil shales, which are in fact, exceptionally dirty when you think about it!

But replacing even half of one cubic mile of oil will be HARD. Why? Because all of our infrastructure, all of our industry, and our "aesthetic" (for lack of a better word) are built around oil. People must be convinced that it is not only possible to replace a great deal of it (we don't have to do it all on the first day) but that it is needed. Humans are creatures of habit. I am more convinced with each passing day that we are an oil culture not because oil per se is so great, but simply because that is what we got in the habit of using and building around. And old habit's are hard, very hard, to break....

Roger Conner Jr, and yes, here it comes....
Remember, we are only one cubic mile from freedom :-)

They guessed.....maybe 50 cubic miles, or 70? Then they tried to visualize again, no help from me.....no, no, it must be at least 100...maybe more....!

IMO, that's more a reflection of our inability to visualize volumes than anything else. Like my parents, ordering a cubic yard of topsoil, then being shocked by how much dirt they got when it was delivered.

BTW, I only do DrumBeats - the news/open threads. If you would like to write about energy density, drop an email to Prof. Goose. We do sometimes publish guest posts.

It's substantially overstated (roughly a factor of 10), by not taking losses into account.

Take the nuclear equivalent.  It's stated as 52 1.1 GW reactors running for 50 years.  That's 9.019e19 J of energy.  Dividing by 6.1 GJ/bbl, I get 14.8 billion bbl equivalent; that works out to 2.351e12 liters or a cube 1330 meters (4362 feet) on a side.

But that's comparing the nuclear plant output (after all the losses of conversion) to the raw crude input.  Per Odograph, the well-to-wheel efficiency of the average passenger vehicle is a pathetic 12.4%.  Cut the figure to 322 reactor-years to deliver the same energy... and even less, when you realize that less than half of all energy from oil goes to run passenger vehicles.  Slash off a lot more if you think that electric vehicles would have much less overall energy consumption than our current fleet.

The realistic figure is about 160-180 reactors (or 3.2 to 3.6 for 50 years) to replace the energy we actually apply from that oil to wheels of passenger cars, and cut that reduced figure in half for a fleet of electric vehicles.

Pitt, Easy-to-get oil out-of-the-ground is the 800 pound gorilla in the room. It fuels 95% of our transportation needs and all the alternative fuels together give us the last 5%. Once PO occurs, transportation will contract and eventually stop. Any alternative fuel would have to make up a very large percentage of our transport needs to keep our current systems running. All other fuels together would need to provide something like 25% of our needs before it could really enter into the transportation, fuel equation at TOD. Only increasing the efficiency (fuel economy) of our current ICE engines can provide that type of impact. That is really quite easy to do. Have a 55 speed limit, reduce trips to those that are necessary, devolve from 8 to 4 cylinder cars with manual shift. It can be done. My first car had all of 50 HP and it got me everywhere I wanted to go.


I will see your 50HP, and raise you a 36 HP engine (the same as that of the original VW Beetle) and a hydraulic hybrid drive, that would recapture deceleration and braking loses and apply them on acceleration....

50HP? What are ya' some kinda' hot rodder? :-)

Roger Conner Jr
Remember, we are only one cubic mile from freedom

Any of you oil guys in Texas know about this company, Ormat Technologies, Inc? They are a geothermal power company that plans on using old oil wells to tap geothermal heat. They are a big company but I never heard of them before. Here is more:


Is the technology legitimate? Anyone in Texas think this will work? Anyone heard about this company?

maybe so but how does ormat intend to pump the water to the surface ? they dont say in the article. note in their article that they plan to return the water to injection wells miles away. kind of hard to see how there would be a much of a net gain , but i remain open minded.

The technology is very legit. Those using a water cut for enhanced oil recovery have contended with fluids coming out of the ground at from 160F-200F. By using a refrigerant based rankine cycle enough power can be generated to power the pumps and then some. Gas wells are usually deeper and hotter than oil wells which makes using that heat even more profitable.

Lemons into lemonade!  I love it!

And the best part is, these low-temp Rankine engines will produce a lot more power during cold weather.  This will boost their output exactly when heating demand is greatest.

it really boils down to (pun intended) the overall system efficiency , the geothermal temperature gradiant and the pumping fluid level. electrical submersible pumps (esp)are not very efficient. and to get 200 degree F water, the depth may be beyond the capability of the esps.

Ormat already has one unit operating in Kansas which uses the old fashion rocker pump. Submersible electric pumps are not part of the system.

i have an orri in some not very deep and not very hot (not very productive either) gas wells.

What's an orri?

Does anybody have data which shows the percentage of world oil supply (total liquids now at about 85 million barrels/day) sold through long term contracts for the last 30 years, on a yearly basis?

An alternative way to calculate this percentage is to get data on actual annual oil volumes delivered through the oil exchanges including NYMEX (New York) and IPE (London) to the buyer. This volume can be subtracted from total volume to get long term contract oil sales.

30 years ago the majority of oil was sold through long term contracts similar to the LNG market structure today. Over time more oil started to be sold through oil exchanges on a short term basis. However, I think that recently the oil volumes sold through the oil exchanges have been decreasing. Given that these volumes are probably decreasing this could be one of the reasons for the increased volatility of the oil price.

An associated issue with decreased oil volumes through oil exchanges is that oil prices determined by these oil exchanges are more easily manipulated.

Ace, for starters total liquids are not sold by long term contracts on any exchange. Crude oil is traded, gasoline is traded, propane is traded and heating oil is traded, natural gas is traded and even ethanol is traded. But there is no way to mix them and get a total. Oil trades in barrels, gasoline trades in gallons and natural gas and propane trades in cubic feet. It is like mixing apples and oranges. There is just no way to total them.

But just looking at crude oil, there is still absolutely no way to know how much actual oil was traded. For instance there were traded Friday, just on the NYMEX, and just looking at contracts through December of 2008, there were 464,525 contracts traded of one thousand barrels each. That is six and one half times the actual crude oil oil that was consumed in the entire world. If you add in the other two major exchanges in London and Tokyo, you would have over ten times as much oil traded in one day as oil consumed in one day.

This is possible because only a tiny fraction of all contracts traded actually ends in any crude oil being delivered. Most contracts are settled, in cash before they expire. The TOCOM, (Tokyo), settles contracts only in cash. But even if you knew the number of contracts that were open at expiration, this would still tell you nothing. The NYMEX simply puts the holder of a long contract together with the holder of the short contract together and they must settle among themselves. And in the vast majority of these contracts are still settled in cash.

So how much oil is actually delived and received as the result of a NYMEX contract. There is no way of knowing but you can bet it is only a very tiny fraction of oil actually sold.

Ron Patterson

Is there a portion of long term supply contracts which involve an agreement that prices will be adjusted according to some measure of value determined by commodity exchange contracts?

Toilforoil, your question is a little ambiguous. I am not sure what you mean. But I think you mean is; “are contracts for actual oil (long term?) adjusted for changing prices that may happen in futures contracts?”

Okay, first contracts for actual shipments of oil are not long term, except for the number of weeks a trip from Saudi to China or wherever may take. And I am sure contracts are negoated for delivery a month or two in advance. And no one really knows that answer because most countries do not publish the terms of their contracts with their buyers. But I would highly doubt that after the deal is made, any adjustment in price is made to allow for price change from the loading of the tanker to the unloading of it at its destination.

Prices for tanker delivery are negated between seller and buyer and we are not privy to those negations. But you can be sure that both seller and buyer have one eye on the futures price but neither is obligated to adjust the bid or ask price according to what oil is going for on any exchange. And it would be extremely unlikely that any contract for tanker delivery would contain a clause that would adjust the price depending on what the price on the NYMEX may be when the tanker reaches its destination.

At any rate you can check out the average estimated contract price for the actual delivery of oil here:

And this price follows the NYMEX price, offset by a few dollars, from week to week. But I would bet that price is set at load time, not at delivery time.

And looking at those prices I notice something startling! As of January 5, the estimated OPEC price was $1.23 below the NYMEX price for WTI Cushing crude. But as of the last report, February 16, the OPEC price has dropped to $5.64 below the NYMEX price. The OPEC price has lost $4.41 to the NYMEX price in just six weeks. I am sure this means something but I am not sure what. It could mean that the quality of OPEC crude has deteriorated considerably. Then it could mean something else entirely.

Anyone care to venture a guess?

Ron Patterson

Thanks, Ron

I would not be surprised if the quality of OPEC crude has deteriorated. It’s likely that most of easy flowing light crude has been produced and any light OPEC crude currently being produced is probably blended with very heavy crude (eg from the Ghawar tar mat) to produce a deteriorated crude which gets a lower price.


Yes, the Saudi oil price in their contracts with suppliers are based on prices from the NYMEX and IPE commodity exchanges. An example from Saudi Arabia is shown below. I assume that other suppliers use similar pricing formulae.

Will NYMEX and IPE benchmark oil futures contract prices become less significant for supplier price formulae?


”Crude oil is the world's most actively traded commodity, and the NYMEX Division light, sweet crude oil futures contract is the world's most liquid forum for crude oil trading, as well as the world's largest-volume futures contract trading on a physical commodity. Because of its excellent liquidity and price transparency, the contract is used as a principal international pricing benchmark. …the delivery point is Cushing, Oklahoma, which is also accessible to the international spot markets via pipelines.”

The IPE (International Petroleum Exchange of London) produces the IPE Bwave which is a weighted average of Brent futures prices during the day.

Prices set by the NYMEX and the IPE are used as pricing benchmarks in the world.

Although there are a huge number of oil futures contracts traded on a daily basis, the physically delivered oil from these futures contracts is unknown but small. From
”The NYMEX futures price for crude oil, which is reported in almost every major newspaper in the United States, represents (on a per-barrel basis) the market-determined value of a futures contract to either buy or sell 1,000 barrels of WTI or some other light, sweet crude oil at a specified time. Relatively few NYMEX crude oil contracts are actually executed for physical delivery.”

Assuming that relatively few NYMEX/IPE crude oil contracts become physical deliveries then the NYMEX/IPE contracts serve as risk management tools and set benchmark prices.

At the end of 1999, Saudi Aramco decided they would no longer price their crude oil sales with respect to Dated Brent, so sharing the concerns of the majority of their customers about the reliability of such a price reference. A new price formula was launched, based on what is called the IPE Bwave…”

World suppliers and buyers of oil use the NYMEX/IPE benchmark prices as a basis for the prices charged by suppliers to buyers.

What happens if these NYMEX/IPE benchmark prices are not favourable to the world suppliers?
The suppliers can change the pricing formula!

For example the Feb 2007 article below states that ”The kingdom (Saudi Arabia) raised its Arab Light crude to Europe from Ras Tanura by $1.40 to BWAVE minus $4.65, and from Sidi Kerir by 80 cents to BWAVE minus $4.50. Arab Light to the United States climbed $2 to U.S. WTI minus $5.50.”

I thought that OPEC and Saudi Arabia are supposed to make only production cuts which cause the NYMEX/IPE benchmark prices to rise without requiring Saudi to change their pricing formula. (supporting evidence for involuntary production cuts by Saudi?)

If NYMEX/IPE benchmark prices become unfavourable to suppliers and these prices continue to display extreme volatility due to speculators, hedge funds, supply tensions and terrorist events, then some suppliers may decide to draft supply contracts using pricing formulae which are not based on these NYMEX/IPE benchmark prices. As more oil production is controlled by state owned oil organizations, these countries, for political reasons, may not want to continue basing their oil prices on the NYMEX/IPE contract prices.

If oil suppliers base their oil prices on an alternative basis to NYMEX/IPE benchmark prices then this will reduce the significance of the NYMEX and IPE benchmark oil futures contract prices.


"This report from the Canadian Broadcasting Corporation investigates the campaign to deny the science of global warming and slow international action against it. "The Denial Machine", 8.30 pm on ABC TV."

edit: for those of you in australia : This program will be repeated about 11.35 pm Wednesday 28 February; also on ABC2 digital channel at 9.30 pm Wednesday and 8 am Thursday.