DrumBeat: March 1, 2007

Moscow is urging its residents to switch to energy-saving light bulbs

Russia has begun its first major energy-awareness campaign since the fall of the Soviet Union in 1991, bringing an unfamiliar sight to Moscow streets: billboards urging people to switch to energy-saving light bulbs.

But Muscovites are not being encouraged to go green to save the planet.

The city government in Moscow has realized that the country's wasteful ways with energy could mean that before long there will not be enough fuel to go around.

Venezuela Orinoco Companies Fear Voucher Compensation

Six of the world's largest oil companies caught in Venezuela's continuing oil nationalization are bracing for an unfavorable compensation scheme for many billions of dollars in investment. The idea involves paper investment vouchers.

Troubles for the Iraq Oil Deal

Barely two days have passed since Iraq's Prime Minister Nouri al-Maliki hailed the country's new petroleum law as a "solid base for unity of all Iraqis" -- a rare boast these days. President Bush has also trumpeted it as proof that Iraq has a viable future. But parliamentarians and Iraq's oil unions have already begun mobilizing against the draft legislation, arguing that it is a desperate attempt by al-Maliki's government to satisfy Western demands, which could damage Iraq's economic future and speed the country's ultimate disintegration.

Sign Your Country on the Dotted Line

Old research habits die hard. Actually, it's my belief that knowledge should not be compartmentalized - you know what you know, and latent awareness can only help. Now, why does my linguistic training apply to fossil fuel?

I can read the new Iraqi oil law in its original form.

Zimbabwe: Fuel price hike sounds death knell

The sharp hike in fuel prices is likely to sound the death knell for most companies, already weighed down by an acute shortage of foreign exchange and key inputs, top economists warned this week Economic experts spoke as the pump price of a litre of petrol rose to a staggering Z$6,500, inflation shot to almost 1,600 percent, and the country electricity shortages woes intensified.

Cambodia Eyes Benefits from Offshore Resources

Cambodian Prime Minister Hun Sen said Wednesday his country will begin seeing benefits from exploitation of its offshore oil and gas resources by 2010 at the latest, vowing to use the income to improve education and health.

EU green targets 'too expensive,' OECD energy official warns

Claude Mandil, head of the 26-member International Energy Agency, said the aim could be very costly unless environmentally friendly energy production costs become significantly reduced.

China expands oil target list

China has added nine oil and gas producers in North Africa, South America and the Middle East to a list of countries that it wants major Chinese companies to invest in.

Kuwait, Qatar, Oman, Morocco, Libya, Niger, Norway, Ecuador and Bolivia are now on the list, which builds on previous ones issued in 2004 and 2005, the National Development and Reform Commission said on Thursday.

Oil Free by 2050

The US military needs oil -- about 300,000 barrels a day -- to fight.

...It should come as no surprise then that the Department of Defense is giving very serious thought to oil independence. The notion is that the nation -- and particularly the military -- must have assured access to energy, and oil isn't such a safe bet any more.

Australia: 'Wind drought' causing farm water woes

Pastoralists in Western Australia's mid-west say a 'wind drought' is causing major problems on their properties.

Windmills are not catching enough wind to pump ground water to fill storage tanks.

Creative uses for CO2

For more than a decade, Stefan Bachu, a senior advisor with Alberta's energy regulator, has been excavating through half a century's worth of geological data to find out how much of Canada's greenhouse gas emissions can be entombed in Western Canada's vacant oil and gas reservoirs. It has been a painstaking, unsung endeavour, but it could ultimately help relieve Canada's greenhouse guilt.

DOE Makes Draft Plug-In Hybrid Electric Vehicle R&D Roadmap Available for Comment

The DOE Office of FreedomCAR and Vehicle Technologies (FCVT) has developed a Draft Plug-In Hybrid Electric Vehicle R&D Plan to accelerate the development and deployment of technologies critical for plug-in hybrid vehicles.

Barking up a new tree for renewable energy sources

Carbon-neutral and cheap, wood pellets look like a good fuel bet - as some schools and businesses are already discovering.

Saudi Arabia's crude oil production reaches 10.7m bpd in 2006

The President of Saudi Aramco stated that Saudi Arabia's production of crude oil has increased to 10.7 million barrels per day (bpd) by the end of 2006, Arab News reported.

He pointed out that during the past year, Aramco has upgraded the optimization of its upstream operations and development and depletion strategies in order the rising demand of crude oil worldwide.

Saudi Aramco Found More Oil Than It Produced In 2006

Saudi Arabian Oil Co., the world's largest oil company by production, discovered 3.6 billion barrels of crude oil reserves last year, 6% more than it produced, the Saudi Press Agency reported Wednesday

Dredging contract for Manifa field signals a start on extensive works at the facility

When completed Manifa will include a central processing facility, water injection facility and offshore platforms, as well as pipelines and an upgrade of the Khursaniyah Gas Plant - to cope with the extra gas flow.

Protests Suspend Maintenance, Gas Restrictions Extended

Maintenance work on the Canadon Alfa field in Argentina's Tierra del Fuego province was suspended on February 24, extending the duration of gas cuts to Chile's region XII, the latter country's energy regulator CNE said in a statement.

The works were suspended due to security concerns as a result of union protests related to salary issues.

Chile studies nuclear, hydroelectric power to satisfy mining, domestic energy cravings

Responding to political pressure to solve a potential energy crisis, Chilean Energy Minister Karen Poniachik said the ministry will commence a technical study into the use of nuclear power in Chile.

Indonesia: Nuclear power plant gets a cold response

The government's plan to press ahead with construction of the country's first nuclear power plant in 2010 was met angrily by Jepara residents Wednesday.

The New and Improved TXU!

It appears that the promise to not build eight of TXU’s 11 proposed coal-fired power plants does not constitute a future ban on all coal plants. “We did not commit for any time period to a complete moratorium on coal plants,” said the private equity rep.

Oil Field Explosions in Oklahoma Leave Four Injured

South Africa presses the nuclear button

The government declarations in mid-February came simultaneously: one announced that work is to begin on a second nuclear power station, and the other proclaimed South Africa’s deposits of uranium as a strategic reserve.

Ontario gas pains continue

Imperial Oil resumed crude oil processing Wednesday at its refinery in Nanticoke, Ont., but production won't be back to normal for two more weeks, which will extend Ontario's fuel shortage.

Will green tech become the valley's new bubble?

Silicon Valley's shift toward green technology is in high gear. Will it create the same kind of bubble, bust and lasting change as the Internet itself? Are we going to party like it's 1999? Will we hear venture capitalists like John Doerr describe ``green tech'' the way they did the Internet boom in the 1990s as the ``largest legal creation of wealth in human history''?

Pickens: global oil production has reached its peak

Legendary Texas oilman T. Boone Pickens sees today's stubbornly high oil price as evidence that daily global production capacity is at — or very near — its peak.

If demand for crude oil rises beyond the current global output of roughly 85 million barrels per day, Pickens told The Associated Press, prices will rise to compensate and alternative sources of energy will begin to replace petroleum.

"If I'm right, we're already at the peak," Pickens said earlier this week in Doha, on the sidelines of the Forbes magazine CEO conference. "The price will have to go up."

Oil prices rebound to two-month high

Oil prices rebounded to another two-month high Wednesday, as traders brushed off Tuesday’s stock market plunge and refocused on declining product inventories.

Key lawmakers skeptical of Bush fuel savings plan

Influential members of Congress expressed doubt on Wednesday about the White House goal of raising auto fuel efficiency by 4 percent next decade, convinced the target would harm U.S. manufacturers.

Inpex to Spend 200 Billion Yen a Year on Oil Fields

Inpex Holdings Inc., Japan's largest oil explorer, said it will spend more than 200 billion yen ($1.7 billion) annually to search and develop oil and gas fields over the next three to four years.

Diversify sources, and don't expect positive changes in Russia, say energy experts

Europe is likely to be increasingly dependent on gas and oil imports, whose security it is less and less able to guarantee.

Tokyo ends first snowless winter

The Japanese capital Tokyo has ended winter without snow for the first time on record, the weather agency said Thursday, amid rising global concern about climate change.

Scientists watch polar areas for changes

Are we really heading for an ice-free Arctic? More than 50,000 researchers hope to find an answer during a massive study of how global warming and other phenomena are changing the coldest parts of the Earth — and what that means for the rest of it.

Inuits blame U.S. for climate change

The Inuits of Northern Canada and beyond are taking their case against the United States on Thursday to an international human rights commission. They have scant chance of a breakthrough but still hope to score moral and political points against the U.S. and its carbon spewers.

Germans tackle climate change riddle

But whatever the cause, Mr Fuchs says businesses are already thinking about how to adapt if these warm temperatures become the norm.

"We need water in the summer to cool our power stations, deep enough rivers to allow ships to navigate, enough wind for turbines," he says.

Iowa ethanol biorefinery gets $80 million grant

Broin Cos. will receive up to $80 million to build a biorefinery that would make fuel from corn cobs as well as corn kernels in Emmetsburg.

Nepal: Energy crisis brings industrial production down to 20%

The national industrial production has dropped down to around 20 percent of its total capacity after the Nepal Electricity Authority (NEA) started 40 hour a week load shedding a few weeks back.

What a Way To Go: Life at the End of Empire

“What A Way To Go” names Peak Oil, climate change, mass extinction, and population overshoot, as the four pivotal and daunting challenges that humans must address and resolve if any species are to remain on planet earth. Equally terrifying, in my opinion, are two symptomatic offshoots of these four: nuclear holocaust and global economic meltdown.

Traders are expecting the market to head lower this morning. Dow Jones futures have bounce between 90 points and 130 points below fair value. Most say this is because of a comment by the Bank of Japan, or perhaps it was some Japanese banker. Anyway he issued a warning to those who "borrow in Yen but sell in Dollars". This caused the dollar to plunge against the yen and the Dow futures to drop by over 100 points.

Ron Patterson

Looks like we might have another bloodbath today.

IMO the four year rally which led to a new high in nominal terms (although nowhere near that in real terms) is now over and the large-scale bear market that began in 2000 has resumed. My view is that this decline has very much further to go to the downside. It may stair-step down with rallies of different sizes along the way, some of which might whipsaw the markets up and down very sharply (ie volatility should be a prominent feature), but I think the overall trend will continue to be down, perhaps for several years. I would expect it to involve the unwinding - perhaps rapidly as thresholds are crossed - of enormous leveraged positions, which would wreak havoc with the derivatives market and the banking system. IMO the effect would be strongly deflationary.

I have read it would more be more disinflationary in nature.

Check this out...



It seems like the old dogs in Congress can't learn new tricks. They still believe higher fuel mileage standards will hurt the auto industry. They can't see that the failure to raise mileage standards is the reason US manufacturers are in such pain now.
I've long believed that if industry is required to make changes because it is in the public interest than the public through its government should share the cost. In return for the subsidy the government would recieve shares of stock and a share of the profits.

>It seems like the old dogs in Congress can't learn new tricks. They still believe higher fuel mileage standards will hurt the auto industry. They can't see that the failure to raise mileage standards is the reason US manufacturers are in such pain now.

The reason why US auto makers are in trouble is because of their huge entitlement programs. They are forced to generate high margin vehicles in order to stay afloat. While it would not be difficult to produce smaller, fuel efficient vehicles, they would face a lot of compitition from foreign auto makers which can sell vehicles for a much lower margin. US automakers need to support workers that retired in the 1960s, that are still collecting their pensions. On the other side, foriegn makers have relativity few pensioneers. If US makers tried to complete with foriegn makers they would quickly go bankrupt. As it is, they are barely staying afloat.

I suspect that in the not too distant future, US auto makers will dump thier pension programs on the PGCC at the dis-pleasure of retired auto workers.

This is the same problem with the airline industry. In a lot of ways both of these markets would be better served if some of the existing players did go bankrupt, and just closed down. This would allow for the other companies to buy up the resources (plants, planes, etc) without the pension plans. If there are mergers you get all of the pensions along with the resources.

While what you say is very true, you villanize the pension plan. There's nothing inherently wrong with pension plans - they just have to be properly funded along the way. You can't let the corporations continue to underfund their obligations.

Congress needs to step in and protect people's pensions. As it is, anyone who retired in the 60's (best case they are what 90+ years old?) has gotten their shirts handed to them in terms of inflation.


It would help if we imposed a tariff on imported cars equal to the health care subsidy provided by their government.

It would help if the USA had a national health care system like all other major industrialized countries. Even the former head of GM-Canada said that the national healthcare was good for business - until he was moved back to a US job. They reap what they sow. As for the pensions, the unions should have demanded proper funding rather than empty promises. I guess the "growth" religion entraps all classes.

Basic health care insurance provided by the gov't as one option for US citizens would bring down a major cost to US corporations and level the playing field. The cost would be great, but what is the cummulative cost we've already incurred due to lost jobs that won't ever come back. US workers and corporations can compete if the game is fair.

If there goverement subsidy health care they probably pay it in taxes instead.

Impressive. Saudi Arabia is storing 2 million barrels per day. Instead of leaving it in the ground they prefer to build ever expanding tank farms. Their domestic demand is too small to absorb such a large volume.

Fun with numbers and how lying can create the reality you want.

The first two Saudi links above; the first Saudi increased production to 10.7 mb/d. The second says they increased production capacity to 10.7 mb/d. There is a considerable difference.

No way can they claim that they actually produced 10.7 mb/d, that was probably just a mis-quote by whomever wrote up the article. However they can claim that they have the capacity to produce any figure they can dream up.

Ron Patterson

saudi production, according to the 2nd article was , 9.3 million bpd (3.6 x 10^9 /1.06/365) but how much was exported ? ............i'll bet the ever vigilant westex can tell us

"Saudi Aramco Found More Oil Than It Produced In 2006"

I don't know what this headline was doing on the CATTLENETWORK website but it certainly sounds like cowpat to me!

Sorry that joke was bullshit.

Indeed. There is no way they found over 3 billion barrels in 2006.

It must reflect on an increase in recoverable oil from existing reserves where vast armies of fairies are sent into the ground with modified vacuum cleaners that suck every last drop of oil out.

Marco, don't you remember, we weren't supposed to tell anyone about the fairies...

You just add a figure, any figure to the existing reserves.
Back it up with some 3-D modelling and hey-presto

It is called 'Nintendo Geology'

Once upon a time, you had to drill and test. Now you just need to visualise it on advance computers.

And as we know, computers never lie.

well i would sure hope that the saudi's would find some oil with all the rigs they are utilizing .........otherwise we are all f*****, real f*****

My take on this is more negative. They are trumpeting a 6% surplus of oil found over oil produced. This after spending tons of money on extra oil rigs.

I agree. But most readers of such articles will not know this detail.

9.142 mbpd Crude+Condensate plus 1.479 mbpd NGPLs + .080 mbpd Refinery Processing Gain = 10.701 mbpd

the article referenced crude production

I'm just telling you where the number came from. One commentor up above thought it was a misquote and another agreed with him and added that most readers wouldn't understand the detail. I don't know who all the "most readers" would be, but I can guess who two of them are :)

I'm just telling you where the number came from. One commentor up above thought it was a misquote and another agreed with him and added that most readers wouldn't understand the detail. I don't know who all the "most readers" would be, but I can guess who two of them are :)

Not very likely. The first article stated:

The President of Saudi Aramco stated that Saudi Arabia's production of crude oil has increased to 10.7 million barrels per day (bpd) by the end of 2006, Arab News reported.

The second article stated:

Aramco's installed oil production capacity increased to 10.7 million barrels a day by the end of 2006, SPA reported Jumah as saying.

The first article stated crude oil. The second article gave the exact same figure and just said “oil production”. But if the first article really meant crude, like it said, then it would be only logical that the second article meant crude as well. After all, if thy meant to add NGLs and refinery gain, to the crude oil, the figure would have been way above 10.7 mb/d. So if you use simple logic here, the first reporter simply dropped the word “capacity” from the report. After all they both came up with the exact number of 10.7 mb/d.

Dissident is right, most readers would not be able to figure this out. In fact, it is highly unlikely that people who read the first article, in the media, would also read the second article also. But because we have both, we can deduct that the word “capacity” was most likely dropped from the first article.

And while it is true that most readers would not understand this, at least one reader would still not understand it even after it was clearly explained. NGLs and refinery gain had absolutely nothing to do with it. (A clue: Saudi does not add refinery gain to crude exports. Refinery gain can only be added to refined products.)

Ron Patterson

The Saudis themselves have admitted that their current crude oil production is "about 8.5 mbpd."

The articles quote Arab News as the source. See ArabNews.com. The story there starts as follows:

JEDDAH, 1 March 2007 — Saudi Arabia’s oil output increased to 10.7 million barrels per day (bpd) by the end of 2006, according to Abdullah Jumah, president and chief executive of Saudi Aramco.

Claim is they reached that level. So what is the guess? 5 minutes at that rate on 31-Dec?

and here is home Schlumberger reported it- does this clarify matters:


Freddy, you keep coming back with new aliases. What's up?

Whats wrong with last viking?

There goes my 401K. What little gains I had this year are evaporating quickly, except for my Diversified Bonds. I had most of my money in Developed International and Midcap Value which had done wonderfully the last two years.

How many are in the same boat? Watching their retirement disappear before their eyes.


Mine disappeared in 2001. Still have not recovered yet.

''A stockbroker is a gentleman who takes all your money and invests it until it is all gone.''

- Spike Milligan

DF said,
"Mine disappeared in 2001. Still have not recovered yet."

Exactly.....someone asked me the other day if I was trading in penny stocks....and I said, "Well, they weren't when I bought them..."

Oh well, it only hurts when I laugh.....hee, hee, hee, OWWW!

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

No worry. There must be some deflation in the market before the Fed has the cover to drop interest rates and start the next re-inflation. You want to be in equities before the Fed drops the rate. The next few months is a good time to dollar cost average into the market and position yourself.

Goldman Sacs, before the market drop this week, was already predicting two interest rate drops this year.

First the pain, then the gain.

i dumped much of my stock (mutual fund) holdings about 3 wks ago in favor of bonds (funds again) my 401k is rather miniscule for better or worse

Never have a naked long or short position in any market.
The pros are always spread into a position which generate small consistent profits. I have been doing this for thirty years.

Umm...for those of us that don't play with stocks themselves on the market...how does this advice help me with my 401K?

My 401k is and has been self-directed since leaving my last
corporate job in 1999. Alas, I don't have any advice for you
beyond getting an education in the markets and paying attention to what is being done to you by the people who control your 410k.

Dragonfly41 asked,
"Umm...for those of us that don't play with stocks themselves on the market...how does this advice help me with my 401K?"

One of the things that I have learned is that you ABSOLUTELY must have something going on off and away from your 401K....a very astute financial person recently told me, "I go pretty aggressive most of the time in 401K, because if I make a killing I get the tax advantage, plus I am getting the shares at a discount, and then invest on my own in TIP (Treasury Inflation Protected) Bonds from the U.S. Treasury, for the backup safety factor...."
Another way to do it is go agressive 401K and then go some good dividend plays on stocks....but having everything in a 401K seems like a bad trip to hurtsville to me....but maybe that's just me....
Remember, we are only one cubic mile from freedom

Have you considered some offshore/deepwater stocks?
Noble Corp (NE)
Ensco Int'l (ESV)

They are both trading near below 6 times 2008 earnings. While their stocks are no higher than a year ago, earnings will continue to increase each year a rapid clip.

They are both major recipients of spending from NOC around the world looking, or planning to look, for more oil in the last unexplored regions.

Also, you might try the Jan 2009 SPX Put Options at 1200, consider it a form of portfolio insurance.


I have been very, allow me to say VERY disappointed with offshore/deepwater stocks.

It is true they are cheap....but why? Well, their costs have gone throught the roof due to the extreme costs of jackup rigs, if they can get the rigs at all...and the oil has to be pipelined back to terminal....has anyone seen the construction cost of building even short pipeline lately? Steel has been fantastically expensive. I recently (three years ago) owned a Gulf of Mexico offshore driller, and to this day they have made a clear profit maybe 2 quarters in the last ten....after expenses, inability to get crews and a pipeline broke and stopped half of the companies income for almost a year!

It is a very, ver tough business.....I could have bought the S&P index and made more, or bought John Deere and Caterpiller on dry land and made twice as much as most oils, on or offshore, since 9/11. The oil and gas bubble has NOT materialized except in the myths of those who hate the oil companies and investors....

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

"their costs have gone throught the roof due to the extreme costs of jackup rigs, if they can get the rigs at all..."

Exactly, the dayrates for deepwater rigs are going through the roof. You want to own the rig, not the poor bastard trying to rent one for 450,000 per day. Matt Simmons has been saying for years that there is a world-wide shortage in offshore drilling rigs, and the result of that is that the companies with the rigs are making lots of money.

What you are describing sounds more like an E&P. You're right about one thing though, costs of deepwater rigs have gone through the roof and that's exactly why I am investing in them. Costs will only continue to go up, and that won't be good for most "oil companies". In fact there are only a handful of true deepwater drillers in the world, and they are sitting pretty because they happen to be in the right place at the right time.

If there is one stock investment that a peak oil believer should be in, its the oil services in particular the deepwater drillers.

Here in Toronto the gasoline shortage worsens. Should be interesting when TSHF as the 4th largest metro area in NA cannot get the gasoline it wants (at any price) because of a single refinery fire. The invisible hand is working really well.

Bidding for declining petroleum exports

While the US Personal Saving Rate may not be a perfect measurement, it has been a consistent calculation, and it went negative when oil prices spiked, just as world crude oil production started declining in the second quarter of 2005.

As I have stated several times, IMO we were bidding against regions like Africa last year for declining net petroleum exports, and the next round of bidding, against regions like the EU and China, will be much tougher.

What is notable is that the US had to borrow money to outbid Africa.

What I find interesting about the first quarter of 2007 is that our petroleum consumption is at record levels, while our product inventories and total petroleum imports are the lowest since 2004. In February, we met product demand by drawing down product inventories at the rate of about one mbpd.

My guess right now is that we are going to see between a 5% and 10% annual decline rate in net petroleum exports worldwide. This translates to a 50% drop every 14 years and every 7 years respectively.

To give you an idea of how rapidly net oil exports can decline in a discrete region, for the UK to go from exporting one mbpd in 1999 to being a net importer in 2005 suggests an annual decline rate on the order of 40% per year (I assumed that they went from exporting 1.0 mbpd in 1999 to exporting 0.1 mbpd in 2004).


The simplistic Export Land Model: http://static.flickr.com/97/240076673_494160e1a0_o.png

Note that a 5% decline rate in production per year and a 2.5% increase in consumption per year resulted in a 50% drop in net oil exports in less than five years.

From The Housing Bubble Blog:

From Fortune. “When a certain $126,000 subprime loan on a $696,000 house on the West Coast failed to produce a single mortgage payment, alarm bells went off at Clayton Holdings, a company that monitors credit risk.”

“Closer scrutiny revealed other red flags. The borrower’s previous rent payment had been $1,000, compared to the $4,482 she was supposed to be shelling out for both the primary loan and the $126,000 piggyback. And her stated income was $84,000 even though she was an hourly worker at Target.”

On average, you need to allocate about 5% per year of the value of a house to property taxes, insurance, utilities and maintenance (in some areas more than 5% because of high insurance costs). In any case, this suggests a monthly cost of about $2,900 for a $696,000 house, even without a mortgage payment.

From CNN Money:

The risk in subprime defaults

Serious delinquencies - defined as loans at least 60 days late or in foreclosure or bankruptcy -
for a 5-month old loan originated in 2006 is running at almost 4 percent, according to Moody's,
compared to 2.2 percent for a similar loan originated in 2004.

The scariest part of that statistic is the fact that 2006 borrowers are still in their
fixed-rate period. "What will they do when their payment starts to rise?" says Glenn Costello
of Fitch Ratings.

I've only got one thing to say; (H)ELP! (Hurry)! Economize, Localize and Produce!

If my memory is correct, US households have taken roughly $500+ billion in cash out of their homes each of the last couple years. I think the US spends about $300+ billion per year on motor fuel -- $2+/gallon times 140+ bn gallons per year. I'm sure someone reading the board has more precise figures, but the basic point is that the extra fuel expenditures due to the runup in oil is more than swamped by the home equity extraction that appears to be the driver behind the negative savings rate.

I think the land export/peak exports model you often discuss frames the oil issue better than simple "peak oil". With only a portion of world production entering the world market, the market is setup for possible future price spikes. I suspect Mexico will provide an early case study in the tradeoff between keeping domestic consumers happy and maximizing revenues via international oil sales.

- Sonic

People are stepping aside everywhere, not just africa. Everybody, not least the fast growing chinese, would no doubt be buying more if oil were still at 25/b. The us historically wants 2% more/year, so most years have been record years - nothing unusual about 07 except that the rate of increase is much lower. I do assume that US population growth now exceeds our growing consumption, meaning us per capita is past peak.

Looking at our imports from a different angle, as long as oil is sold in dollars, and so long as we own the printing press, we will get our 'fair' share (that is, sufficient to maintain our non-negotiable life style for those important enough to count), even if, as anybody who has considered the issue must believe, exports continue to decline. BTW... I wonder which displeases our administration the most... a nuclear armed iran, or an iranian oil bourse that does not accept dollars? Clearly an evil combination...

How about a study of export volumes, say from 1990? I assume we are past peak... Another way to look at this issue is to consider the per capita consumption of all oil importing countries...

Found this nuggest this morning....


Try using a 5th order poly and those trend lines will swing the other way ...


Dont have the data table only the graph...perhaps you could show me how.

Hold up too.....look at 1/27/07. I think it's pretty clear it's going up, c'mon.

U.S. Weekly Natural Gas storage numbers are out:

Gas in storage dropped 132Bcf to 1733 Bcf. This is a very normal drop for this time of year. Storage is currently 13.4% below last year's levels and 11.5% above the five year average.

So where are we going to be November 1, 2007? I mean as far as the storage number goes... Anyone care to make an educated guess?

I figure we've had basically normal weather this yr, Rig count is ever increasing (but not fast enough to keep gross NG production from their lowest level since 1993), and resulting in storage that has declined yoy by 13%.

My guess: We'll be down to the five yr ave in November.

Everything is totally dependent on what the weather does - and I have no idea. Production and demand are so close that a very few percent difference in demand makes a huge difference, like the warm winters had on the oil storage numbers.

To go with Leanan's news item at the top;

What a Way To Go: Life at the End of Empire

Make sure to Read this one today.

A Warning from Harry Schultz
(Sauvé qui peut)

Frankly, dear, dear readers of mine, I fear we've lost the game. The insiders have won.


Also this one from Rob Kirby.



Ontario's truckers are starting to feel the fuel shortage pinch. What life is like in a just in time economy.


John: Latest report is that the gasoline shortage has spread to Montreal.

Just wanted to let everyone know that the DOE cellulosic and BTL ethanol grant recipients have been announced.


Eligibilty for up to $100 million was based on project merit and each had to show a 60 percent industry/40 percent government cost share.

WT - Note the Rangefuels 'first unit' is rated at 10MMgy while the commercial plant proper will (according to their submission) be 40MMgy. The capital costs we calculated earlier may need to be reduced by a factor of 4 if this is truly the case.

Hi Syntec, are these plants gassification plants? Also is the catalyzer feedstock CO or CO2?

They are all different.

Green Car Congress has some brief descriptions of each project here.

Hi etoh - nice handle.

Alico, Abengoa and Bluefire are bio-chemical refineries i.e. enzymatic fermentation of biomass, however, Bluefire intends on mixing some MSW into the feedstock base.

Broin is (combined) i.e. corn ethanol and cellulosic ethanol and the cellulosic facility is essentially an augmentation of the exisiting corn ethanol ops. This is called an 'integrated biorefinery' and it is these IBs if you will, that are being pushed for by the DOE as a natural progression from the existing fermentation infrastructure.

RangeFuels is the thermo-chemical or BTL refinery. Here wood waste from the state of GA. will be gasified into a syngas stream of CO and H2 before entering the catalyst reactor. The output of total liquids is predicted to be 90-110 gallons per ton of dry wood but that remains to be seen.

I should point out that Abengoa is in fact pursuing the gasification route in parallel to their BC production path development. PNNL out here on the westcoast is a project partner.

Note that these are not the only cellulosic plants commissioned for the US - just the grant winners.

Syntec, its not what you think, the handle stands for "electricity to hybrids" - heh heh just kidding

I was reading up on your company and I wonder if your catalytic process could handle CO2? And how does the back end (syngas to etoh) compare to the Pearson process in terms of yield and capital? I would appreciate any information that is not under wraps.


Backyard Fuel Cell

For all of you do-it-yourselfers out there.

Or rather for all of you MD multi-millionaire Merck VP scientists with a second home in the San Juan Islands.

Given that the storage scheme represents 3/4 of the $50k cost, I don't know why he didn't add wind power to the mix, as the San Juans do have a bit of that in the winter.

tankless h2o heater recall

GAO report on Peak Oil

This just breaking from Platts:

A draft US Government Accountability Office report finds that, though it is difficult to assess whether the world has reached "peak oil," a large number of experts surveyed for the report believe the world may have reached the peak for conventional petroleum supplies, said Representative Roscoe Bartlett, Republican-Maryland.

Bartlett, who has raised concerns that the world has produced more oil than remains in reserves, ordered the report from GAO -- the nonpartisan investigative arm of Congress -- and will release it within the next month.

For background on the GAO report, see Tom Whipple's columnn from November 16, 2006: The Peak Oil Crisis: The Studies (also posted at EB.)

-Bart / Energy Bulletin


For me, the most compelling observation is that the average monthly Brent spot crude oil price in the 20 months prior to 5/05 was $38 per barrel, while the average monthly Brent spot crude oil price in the 20 months after 5/05 was $62 per barrel.

So far, based on EIA data, 5/05 is the record month for crude + condensate.

The cumulative shortfall between what the world would have produced at the 5/05 rate and what we actually produced (through 11/06) is in excess of 300 million barrels of crude + condensate.

However, as have discussed, I think that Net Oil Exports are falling much faster than overall world crude oil production is falling.

When we get the EIA data for December, I'll do another oil export estimate, for all of 2006.


Ah. We've been waiting for this report...

This report could be huge. The global warming UN report, for all its faults, is having a big impact because it has the imprimatur of the UN. Also note the harm done by EIA again because it is an arm of the government. A GAO report that supports the notion of peak oil soon could counter all of that.

Don't get too excited. Note the phrasing: "peak for conventional petroleum supplies." Plenty of wiggle room for the supposed "experts" to say we'll ramp up non-conventional oil and continue the happy motoring lifestyle.

Hello TODers,

When this GAO report is finally released: I expect it to be controversial. Hopefully, we can dissect and discuss it here on TOD, then send a list of rebuttal questions to assist Roscoe Bartlett and his staff for their use in Congressional Hearings.

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

has the open letter from chris to cera, linked below, been posted before? If so, I missed it.


Yes, it was discussed in the Dec. 23 DrumBeat. Probably a lot of people missed it, since it was the holiday season.

So much for an "efficient" "free North American market" in gasoline that can allocate supplies to customers based upon ability to pay. Where is the "invisible hand" when you need it? http://www.thestar.com/News/article/187346

I found another Architect Magazine in a box:

America Circa 2030: The Boom To Come

Does the housing downturn have you spooked about future development? Fear not, says urban planning analyst Arthur C. Nelson. There's plenty of space just waiting to be built.

In 2030, there will be 106.8 billion square feet of new development, about 46 percent more built space than existed in 2000 - a remarkable amount of construction to occur within a generation. What is equally important, though, is that 97.3 billion square feet of existing space will need to be replaced. In other words, new and replacement-related development will amount to 204.1 billion square feet, equal to about 90 percent of the built space that existed in 2000.

Much activity will be focused on the redevelopment of suburban shopping centers and malls, as well as office and business parks. Why? There are five important reasons.


And to think I was worried ...

oh my god
is this our future?
time to really, really examine your food sources

Quick and easy way to become Kyoto compliant by following Al Gore's example:

If Gore and his energy glutton apologists are serious the “carbon offset” are as good as reducing consumption, then I say we start pushing carbon offsets as national energy policy.

Here’s how the numbers work out:

According to wikipedia, Kyoto would like us to be 7% below 1990 levels by 2010.

And according to Pew, in 1990 we had 6109 Million Metric Tons (MMT) or 10^12 grams and in 2004 we had 7075. To meet Kyoto [protocols] this year, we would have to be at 5681.

To make the difference up we need, as a country, to buy 1394 MMT of offsets.

According to TerraPass, we can buy 450,000 lbs of offsets for $1500.

Converting to metric, that means 204.1165665 Metric Tons. Assuming no more bulk discount, we would have to buy (1,394,000,000 / 204) = 6833333.333 of those passes.

Times $1500, that comes out to $10,250,000,000 or just over $10 billion.

And according to Greg Mankiw’s reading of the CBO report, (Page 345, Option 48), we can raise $49.3B a year by boosting the gas tax 50 cents.

So if that math holds, we add 15 cents to the federal gas tax, and use that $15B to buy “Carbon Offsets” each year, and bam, we’re the only Kyoto Protocol compliant nation, and with minimal tax burden.


Follow the link to see the sources.

So are these numbers accurate?

All that shows is that "offset" schemes such as TerraPass are just methane-emitting piles of bovine refuse.

The only way to reduce climate impact is for each and every one of us to consume less. Reduce, reuse, and recycle -- in that order.

We're saved!

A former Canadian defense minister is demanding governments worldwide disclose and use secret alien technologies obtained in alleged UFO crashes to stem climate change, a local paper said Wednesday.

As soon as I saw your post I knew it was going to be Paul Hellyer. The poor man has truly lost it, years ago.

BTW, when we speak of "former" defense minister, we are talking about 1970. That was a ways back.

Has anyone noticed that US standard of living appears to have peaked coincident with US peak oil production?

"Has anyone noticed that US standard of living appears to have peaked coincident with US peak oil production?"

Sorry, but I don't believe that for a second. Or it may be at peak right now, but it sure has not declined.
If it were true, we would not have to drive through moving chicanes of slow moving vision blocking SUV's with one person in them....and we simply cannot get around here in Central Kentucky due to the giant new houses being built, most for two people, and this is in Kentucky!! :-O....my dad raised 4 kids in a house that is smaller than most suburban garages on those houses....

If we think this period is tough, heaven help us if hard times ever really do hit....
Roger Conner Jr
Remember, we are only one cubic mile from freedom

Yes. And I think they are related. Peak oil USA goosed the offshoring of jobs, as manufacturing moved to where the cheap energy was.

While it's true we have more stuff now than ever, we are working harder for it. It now takes two incomes to support a family, not just one. You need more education than you used to get a "good" job, and even then, you don't have the job security your parents had. Pensions and medical benefits are not what they used to be. Even marrying a doctor isn't what it used to be.

Leanan: Everything you say is correct, but there are many more people making big money (and many more ways to make big money) than 30 years ago. Many enterprising Americans have made literal fortunes in internet porn or spam, just to use two examples.

Exactly. The gap between the haves and the have-nots has widened into a chasm. IMO, this is exactly what you expect to see when peak oil starts to bite.


I hope we can really discuss the GAO Report, the NPC Report, and any deep reporting from Europe and the U.K. at the time they are released, and see exactly where the powers that be and the "experts", for lack of a better word, are telling us the world oil and gas issue stand. Here's why:

Already the DOE's Energy Information Agency has for all practical purposes put any concern abut energy supply and price to rest with their Outlook to 2030, and it's graph showing energy prices having already been as high as they will be out to 2030:

The United States Geological Survey (USGS) has been extremely damaging to any real concern over energy supply. If they are right, we are in no bad shape, but if they are wrong, they have left a nation blind and defenceless.

We know that the big guns at OPEC and BP and ExxonMobil have essentially dismissed any peak concern to 2030.

We know that CERA with some of the best contacts in the U.S. have essentially dismissed the issue to 2030.

Now, we have two big American studies coming. These two studies will essentially seal the fate of the Peak Oil Awareness issue in the public mind.
If they give credence to the idea, then we could see real concern and action.

But, and this is BIG, if they take the path of the above mentioned parties, it's over. The Peak issue will essentially become like the UFO movement, always interesting to some, fascinating to a few, but not a concern to the general public, and something no educated person will want to be identified with.

The GAO has a good reputation as big government organizations go. Will they have the nerve to go completely against the DOE projections, and tell the USGS they are completely wrong and essentially have left the U.S. misinformed and unprepared if that is what they find? We'll see.

The NPC (National Petroleum Council) did an astounding job of research, and showed supreme candor and honesty concerning natural gas in 2003 in it's "Balanced Options" report (and showing the USGS and others to have been completely incorrect in their assessment). This was the first long research study that essentially declared North America in trouble on natural gas. Can we expect the same honesty on crude oil if that is what they find? We'll see.

As for the European Union, their studies are of interest to us for the purpose of corelation to the American findings, and will be awaited also, but it is the two towers, GAO and NPC who will now decide the force of this issue, this movement if you want to call it that.

The stakes are VERY HIGH. If the GAO and the NPC both come out with results about like Department of Energy, USGS, CERA, OPEC, ExxonMobil or BP, any attempt to raise venture capital or loans for alternative energy or energy conservation projects will be DOA (Dead on Arrival), with only the Greenhouse gas issue left, and if there is no percieved danger, that will get mostly talk, on the coasts where the ocean may rise and hurricanes are a real danger.

YES. It is imperative that the best statisticians, technicians and energy thinkers we have visiting TOD really go through these two reports line by line.
We have to know exactly what the percieved future will look like to the masses, the bankers, and the movers and shakers in the officially given text. Because even if both reports are incorrect, what matters more in the immediate sense is the guidence they give planners, lenders and decision makers. The Department Of Energy's EIA projection and the USGS stats have already delivered a knock down punch to the "peak aware/peak concerned community". The GAO/NPC twin reports could either be vindication for the peak cause, or the fatal blow.

One last thing: Up this string on Drumbeat was fascination with the Saudi Arabians pulling oil out of the ground and storing it in giant tank farms. Remember, the tank farms are the easiest thing to build in the energy industry.

PLEASE: Be very careful of Saudi Arabia. If they can back storage oil in tank farms, and if they are producing what they say they are.....and we still cannot know what they can produce.....Saudi Arabia is VERY dangerous to us right now, there is no other way to say it.

If they can do it, and choose to spool up supply, to be released at the most damaging moment to us, they could collapse the oil price, and flood the market. This would effectively end alternatives and real conservation efforts, and leave us in OPEC control for as long as they could produce oil. We simply have VERY LITTLE idea of what they can or cannot do, it is all guesswork.
But, a sudden release of oil at the worst possible time could be almost more damaging to the long term future of the United States and the developed technical world than Peak Oil itself. It is a very unpredictable time. Please be ready for ANY eventuality, including price increase OR decrease, supply increase OR decrease, and sudden volitility. I will show you my plan on this issue, if you would like to see, and some ways to "case harden" so that we are protected in either eventuality, but I want to stress again, this could be very dangerous to the U.S. economy and security in ways not even foreseen at this time.

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

you seem to be saying that peak oil is what is contained in some government report. I doubt that is what you mean.

elwoodelmore says,

"you seem to be saying that peak oil is what is contained in some government report. I doubt that is what you mean."

Your correct, that is not what I mean. What I do mean is that the mitigation efforts and changes we need will require the effort of people in all industries and in all trades, in management, politics and education, in the arts and sciences, in entertainment, it will require the efforts of all ages and both genders, they will have to be across all ethnic groups and races....they will have to preach this cause as religion in the churches among Jew and Gentile alike... and many, many people will have to be persuaded that the decision is worth taking and the effort worth making...

If I have not one, but multipe official and so called "authoritive source after source telling me in no uncertain terms that the whole things a joke, go back to your homes folks, there's nothing to see here...and you sure ain't gonna' make a livin' or a business at it.....

you see, my distinction is different than many here....I am not interested in "peak" just to see a trainwreck and see people suffer, and see the work of 5000 years laid down in rubble....I am here looking for a solution. And telling people that oil prices, electric prices, nat gas prices and electricity about 30 years from now will be about where they are now after inflation is NOT going to spur anyone to action.....the NPC and GAO REALLY are our last gasp folks, other than that, this cause is about as relevent as a Curling tournament in Wisconsin....FASCINATING for those who LOVE that obscure little game, but only a reason to smile and shake their head for everyone else. Sorry, that's just the way the world works.
Peak oil TOMORROW may well be, but if no one believes, it might as well be being hit by a high speed train while taking a pizz on the tracks,,,,the outcome is assured. The game is over. Only those who want to see a bloody mess will stay around....

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

Roger: IMHO, you are overstating the importance of this report and other US guv pronouncements. When oil roars past $100, things are going to change no matter what guv reports say.

Perhaps. But as I said in my post just above this one, I have no interest in Peak Oil just to get to cheer a train wreck. I am interested in possible solutions and mitigation. Many bankers, venture capitalists and decision makers do not read ASPO documents, but they do see the words of the following groups in every business page. The paragraph below was to me the point that I most wanted to make:

"The stakes are VERY HIGH. If the GAO and the NPC both come out with results about like Department of Energy, USGS, CERA, OPEC, ExxonMobil or BP, any attempt to raise venture capital or loans for alternative energy or energy conservation projects will be DOA (Dead on Arrival), with only the Greenhouse gas issue left, and if there is no percieved danger, that will get mostly talk, on the coasts where the ocean may rise and hurricanes are a real danger."

That is why I mentioned the Saudi's. They are not stupid. They remember or have studied 1982. They know the extreme value of a well placed price drop.
Their competition is struggling to stay in the game, by which I mean Mexico and the North Sea in particular.

We are nearing the crucial point not in whether "Peak Oil" will occur, because if it is upon us, there is nothing that we can do to change that, only to mitigate and prepare. We are upon the crucial point as to whether the will mitigate and prepare is possible at all.

Roger Conner Jr.
Remember, we are only one cubic mile from freedom
(notice, not from all the oil we want, but slavery to others,