That's an interesting pattern on that chart. I hope we hit $4/Gallon this summer.

It's May! We're 2 years post C+C peak (assuming the stats aren't updated in the next few months).
We should have a party or something.

Matt Simmons on the Schlumberger Web site: Aging Rig Fleet, Slowdown in Drilling Sharpen Oil Peak.

Offshore Drilling Expansion Announced

WASHINGTON — The Interior Department announced a major expansion of offshore oil and gas development Monday with proposed lease sales covering 48 million new acres off Alaska, in the eastern Gulf of Mexico and in the central Atlantic off Virginia.

So, according to the Taxpayer and Consumer rights group, the oil companies are purposely creating a shortage. Good. I'm glad someone is taking the bull by the horns and doing what we should be doing as part of public policy.

Raise the gas tax and do it on a percentage, not a fixed basis. Consequently, at least, the revenues from same will rise in direct proportion to gas prices. Use the revenue from same to reduce income taxes for the middle and lower classes and/or use the revenue for conservation projects,transit, and some forms of alternative energy research.

My article "Our Finite World: Implications for Actuaries" is the lead article in the May/June issue of Contingencies magazine, out today.

Evidence is building from the physical sciences that we are starting to reach some of earth’s limits. Unless we can find some technological solutions, once these limits are reached, we can expect to see a very changed world. Instead of having constantly increasing resources available to us, we can expect ever-decreasing resources to be available. Instead of seeing year after year of growth, increasing longevity, and improving morbidity, we can expect the opposite.

A strange energy related twist on the race for the moon, and one that could have a chilling effect on future cooperation in space. Further, you have a Russian official concerned with US interest in space as he says it will put the US in a position of energy dominance over the rest of the world in 20 years as hydro-carbons are running out.

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/05/01/wmoon01.xml

Granted, the position of the US on fusion power is cautious, but the Russians seem to have gotten in a real tizzy about US refusal for a joint moon exploratory mission.

Apparently Helium 3 is a pretty sought after material in fusion research.

My article posted on TOD yesterday as "Our World Is Finite: Is This a Problem?" is currently the winner of the blogs on the WorldWithoutOil website. It is listed as "An analytical view of implications".

I posted a link to Dmitry Orlov's article "Closing the Collapse Gap: The USSR Was Better Prepared for Peak Oil the the US" (giving credit to him) on that web site today. We'll see how it does.

Concerning the "Annual pump price rise is fast, furious this year" article on MSNBC:

If you want a good scare, read the reader comments regarding this article at

http://boards.msn.com/MSNBCboards/thread.aspx?boardid=799&ThreadID=272523

It is amazing to me that people can cook up the craziest, most imaginative conspiracy theories, but they NEVER discuss the simpler possibility of an inherent supply side problem (aka peak oil).

It is also amazing how many people expect some outside force to take care of them: "SOMEONE should do SOMETHING". Yeah right.

It just goes to show that, although most of us here read this site daily and know all of the major issues and feel like we are pretty immersed in peak oil as a concept, the average joe in the U.S. still has no clue. Scary.

Re: Kuwait Oilfield discovery article

I would guess it is fair to assume it isn't spectacular, but I could be wrong.

I also doubt it is even giant class, since that is reasonable good news material in today's environment as well.

However, even if these assumptions are wrong, is it relevant if we already on the peak plateau?

We need a new giant every 6 days, or 60 per year to BREAK EVEN.

It is pretty easy to see this isn't happening, so it will take a tremendous amount of small fields to make a difference to the down slope.

Me: Planning for the worst, but always hoping for miracles.

Computers as environment-unfriendly as planes?
http://news.com.com/2100-11392_3-6180528.html?part=rss&tag=2547-1_3-0-5&...

15:54 01May07 RTRS-Saudi Aramco oil output edges down 1.7 pct in 2006

RIYADH, May 1 (Reuters) - Saudi Arabia's oil production slipped 1.7 percent in 2006 while the proportion of exports to the Far East and the United States increased and gas production rose, figures published by state oil company Saudi Aramco showed.

Aramco said in an annual review posted on its Web site on Tuesday that it produced 3.252 billion barrels of crude oil last year and exported 2.54 billion barrels. The figures were slightly down from 2005, when total crude oil production was put at 3.308 billion barrels and exports at 2.62 billion barrels.

Average daily production was 8.9 million barrels, down from 9.1 million barrels per day in 2005.

The Far East accounted for 51.6 percent of crude oil exports, the United States for 19.2 percent and Europe for 6.6 percent. That compared with 49.7 percent for the Far East in 2005, 18.6 for the United States and 7.7 percent for Europe.

“Aggressive exploration programs were able to replace the 3.25 billion barrels of oil it (Aramco) produced in 2006, bringing its recoverable crude oil and condensate reserves to 259.9 billion barrels," an Aramco statement said.

Gas production rose to 3 trillion cubic feet, from 2.87 trillion cubic feet in 2005, and natural gas liquids production slipped to 399 million barrels from 400.4 million barrels.

Aramco put Saudi natural gas reserves at 248.5 trillion cubic feet.

Refined products output in 2006 rose to 595.66 million barrels from 591.95 million barrels. Aramco exported 183.96 million barrels of refined products in 2006 and 285.37 million barrels of natural gas liquids.

The kingdom, OPEC's largest producer, is boosting its crude oil production capacity and refining capacity in response to global demand. It aims to increase crude output capacity to 12.5 million bpd by 2009 and to 15 million bpd at a later date.

"In 2006, we achieved crude oil reserves replacement of 104 percent, adding 3.6 billion barrels. In addition, we doubled our target for new non-associated gas reserves, adding 10.4 trillion cubic feet," it said.

"With our greater emphasis on increasing production of natural gas to fuel the domestic economy, our major discoveries in 2006 were gas fields ... In the next 10 years we hope to add 50 trillion cubic feet to our current 248.5 of gas reserves."

((Reporting by Andrew Hammond, editing by Anthony Barker; Riyadh newsroom +966 1 4632603; Fax +966 1 462 7113; andrew.hammond@reuters.com))

The war for your electric bill
Private-equity buyout funds are targeting electric power companies in deals that generate massive debt, stop the building of better plants and jack up rates. They take the profits and stick consumers with the cost.

The last time Wall Street applied its best minds to the electric power industry, they brought us Enron, brownouts and wholesale-price-gouging in California, not to mention higher electric bills.

Now, not even 10 years later, they're at it again: Private-equity buyout funds have set their sights on electric utilities. And the result will be? You guessed it, higher electric bills for you and me. As if inflation and the rising cost of oil and natural gas isn't pushing our bills up fast enough already.

If you enjoyed Chris Vernon's (TOD Europe) article on Senegal, you might like this journal about a womens' cooperative getting micro-finance via the Internet. Cool!

RE: The Year of Magical Eating: The 100-mile diet and other food stunts

http://reason.com/news/show/119909.html

Several thoughts (which are only applicable within an assumption that energy will inevitably become increasingly more expensive, but that this will not cause a TEOTWAWKI doomer scenario):

1) Transport is just one factor of energy input into food production. In many cases it is not by any means the largest energy input. It is difficult to sort these all out. It may not always be the case that local is always lower energy. For example, the ice cream produced locally probably has a much higher energy input than does cheese imported from hundreds or even thousands of miles away, because freezing ice cream and keeping it frozen takes a huge amount of energy.

2) Then there is the whole issue of driving around the countryside to find the local food. If you can't get what you need within the same trip that you would normally take to your local supermarket anyway, then the extra fuel expended driving is likely to more than offset any meager energy savings that are inherent in procuring local food.

3) Not every type of food can be grown at every location, and even fewer can be grown in a cost-effective manner. Oranges can be grown north of Florida if you grow them in greenhouses, but the extra cost of the greenhouse and the energy to heat it in the winter will end up more than offsetting the transport cost of the Florida oranges. This is why Florida has a competitive advantage when it comes to citrus fruit and many other frost-sensitive fruits and vegetables. A lot of oranges can be shipped north on boats and trains; the boats can be fueled with biodiesel and maritime shipment is a highly efficient method of transporting bulk goods, while freight trains can be electrified and are also highly efficient. Why give this all up? Our diets are better as a result of being able to obtain a wider variety of foods than what we can grow locally. This process also allows for the more efficient production of food and the maximization of productivity of each area. If Florida could only sell oranges to Floridians, then very few oranges would be grown, and a lot of land that might otherwise be productive would be either unused or devoted to less productive uses.

4) What happens when your local food catchment area suffers a drought, or a late spring or early fall frost, or a crop disease or insect outbreak? Having a wider range and greater diversity of food supply definitely helps prevent famines.

5) The best source of local food is the food grown in one's own garden. There is nothing stopping anyone from doing this to the extent that they are able. For those without land, there are (or should be) community garden allotments available. For most people, kitchen gardens should be a net economic plus, helping the household budget and offsetting some of the pain that higher energy prices will bring. To the extent that land presently growing grass or weeds is brought into household food production, to that extent we can help each household and each community develop a little bit of resiliancy to cope with sudden shocks in energy, transport, and food prices.

Insurance a business-breaker

For most business owners, who are insured through a state pool, wind insurance rates are now about 2½ times what they paid before Katrina. With commercial rates already much higher than residential rates for similar structures (because there are four times as many homes insured by the pool as businesses, thus spreading the risk), the recovery of business districts all along the coast has been thrown into doubt.

Thanks Leanan for all your work digging up the articles!

Has anyone noticed that there hasn't been any really interesting news in this area (oil, energy) for a couple weeks?

(explains why copyright discussions are major threads lately, and not including contributor keyposts)

Quiet before the storm?

Some milestones:

45 days until Hurricane season officially starts.

120 days to the peak of Hurricane season(sept).

19-20 days forward of gasoline supply on hand (depending on this weeks numbers)

24 days until start of DRIVING SEASON.

-7 days since KSA should have increased imports to meet driving season demands.

Yesterday's Bee Experience

As I was walking through my apartment complex after work yesterday, I noticed a bug or something flopping around on the ground. Usually I wouldnt have stopped, but this time I had to see what it was. It was a bee, and it looked like it was having a seizure! Well I couldnt risk being caught staring at the ground by a neighbor so I continued on.

Later, around 7ish, I took a walk to the grocery store just around the block. When I just got outside the complex' Orwellian "security" gate, I noticed more bees spazzing out on the pavement. There must have been about 20 or so bees on the ground, some dead and some just freakin out. There were a few live ones flying around the flowers, but that still wasnt very reassuring.

Best Hopes for cure to bee epidemic?? =/

Contrary to what just about everyone thinks, we won't have natural gas shortages, we'll have surpluses that render additional supply redundant.

But from Qatar? Are you sure? Exxon scraps a $15 billion terminal, for fear of cost overruns, and we'll still get the gas? Where? Putin?

LNG to stymie pipelines, U.S. warns

_{"If you accept that the North American gas market is changing, then Alaska and Mackenzie's competition isn't with declining U.S. offshore Gulf Coast production, it's with very lowcost gas production in Qatar," Mr. Kelliher said..}

CALGARY - The head of the top energy regulator in the United States says the arrival of unprecedented volumes of liquefied natural gas (LNG) starting next year could push back Arctic gas development and throw another wrench into the Alaska and Mackenzie pipeline projects.

Joseph Kelliher, chairman of the Federal Energy Regulatory Commission (FERC), said yesterday an expansion to one of the four existing U.S. LNG terminals, plus five new facilities due to be operating in 2008, mean the super-cooled fuel imported by tanker will contribute a "very large share" of total U.S. gas supply for the first time ever.

FERC expects a sixth terminal and another expansion to be completed in 2009. The regulator has also approved nine new terminals and three more expansions beyond that.

LNG is obviously winning the race with Arctic gas to feed the continent's growing demand for the heating a power-generation fuel, Mr. Kelliher said in an interview from Kelowna, B.C., where he is taking part a conference hosted by the Canadian Association of Members of Public Utility Tribunals.

Both the Alaskan and Mackenzie natural-gas projects, with the latter's economics increasingly being questioned since its price tag recently ballooned from $7.5- billion to $16.2.-billion, could wind up being pushed farther off into the future because of LNG's emergence.

Second day in a row a mysterious force comes in to the market at 2:00 and absolutely hammers the oil market. The refiners and even the integrateds have to be loving this. Buying oil at $64 or less and selling gas at $2.20/gallon. They are printing money.

Here's a little mathematical quibble that appears in a lot of stats cited here. (This is not a complaint about the TOD commentators who quote these stats, but rather the MSM who writes them up in the first place.) Here is an example from today:

April auto sales were so slow that even Toyota reported a decrease from the same month last year. Ford's U.S. sales also fell, while Chrysler edged up.

Most analysts were predicting that U.S. sales overall will be down due largely to the slumping housing market, rising consumer debt and no pent-up demand for vehicles.

Gasoline prices also are at or near $3 per gallon, and many consumers were expected to delay auto purchases until they find out what will happen to gas prices during the upcoming summer driving season.

Toyota Motor Corp., whose brands include Toyota, Lexus and Scion, said Tuesday its U.S. sales dropped 4.4 percent to 210,457 last month from 219,965 in April 2006.

Whenever there is a "percentage", there must be a numerator and a denominator. The problem is that the denominator is often obscured. In this example it is actually pretty clear, it is the sales in April 2006. But in many other reports it is not so clear. And when they say "measure X dropped in month Y, the Nth drop in as many months", and they really mean "X was lower last month than in the month a year earlier, and we saw the same pattern in the last N months" I think the language is misleading. E.g., imagine the following numbers, for consecutive months Jan. 2005 -- June 2006, with a big but one-time drop in Dec. 2005:

2005: 100, 101, 102, 103, 104, 105, ..., 110, 90
2006: 91, 92, 93, 94, 95, 96

- here we have a month-to-month increase in each and every month in 2006, but one can still say that "in June 2006 we saw a drop in X, relative to the same month in 2005, and this was the 6th consecutive such drop". Harumph! (I've seen a lot of such in the housing bubble reports.)

While I'm on this soapbox, I want to clarify (?) something that WT often repeats: that the year-on-year drop in oil output, in a region that is just past peak, is lower than the month-to-month annual rate of decline. I think what he means is that after the peak the shape of the curve is such that the slope starts out flat ("plateau"), then starts a shallow decline, then gets gradually steeper and steeper. (What mathematicians call a "concave" curve, and looks to my eyes as "convex".) This curviness means that any longer-term average rate of decline is less steep than the most recent bit of the curve.

When one talks about a whole year, say, that's the sum of 12 monthly data points, say, and is thus the area under that curve for that period, or, equivalently, 12 times the average height of the curve (of monthly data points) over that period. If you compare such a year with the following year (further out the decline curve), the drop is not as large as the drop between the ends of the second year, because the first year average is only slightly higher than the end of the first year due to the shallower slope within the first year.

Even more so if the baseline period compared with the recent period is a period that includes some length of time preceding the peak, i.e., mixes in some data points that are lower than the peak because they were before the peak, then the baseline level for measuring the YOY decline is lower, and thus the decline percentage is smaller.

(this would be easier to explain graphically but that's too hard for me top post...)

http://www.courierpostonline.com/apps/pbcs.dll/article?AID=/20070426/NEW...

A new Amtrak funding bill is finally making its long slow journey through congress. Lautenberg is pushing for $11.4 billion total with a lot of rail improvements as part of the package. With the current makeup of the congress it is probably going to make it through. Now we just need to see if they can squeeze it by Bush.

This is a lot more than his $800 million subsidy and $100 million for rail improvements...

Flush with cash as a result of soaring energy prices, Prime Minister Vladimir Putin behaves like a man who is utterly unconstrained by "world opinion" (however defined), or the possibility of incurring Washington's wrath.

What's the difference between "world opinion" and "the possibility of incurring Washington's wrath"?

This is way, way OT...but interesting to me nonetheless.

The last few big storms that have come barreling across the midsection of the US have resembled a massively circulating storm system (like a hurricane on land).

Check out accuweather and click on animate to see the rotation. If you zoom into the four state region of Kansas, Missouri, Oklahoma, Arkansas you can see it quite clear. I have noticed this pattern a lot lately and don't recall it as much in the past. Usually, the storms come through this time of year in more of a linear train sequence.

http://home.accuweather.com/index.asp?partner=accuweather

For those with a little time on their hands:

almost free garage heat - just drink a lot of soda

Have fun!

I suppose we'll see an increasing amount of home-made heating remedies as the cost of energy continues to climb, and people get increasingly poorer.

-best,

Wolf

Aussie solar developments:

http://www.stuff.co.nz/4044811a28.html

I have just read several articles about bottled water all of the linked from the "100 mile food" article of above.

What surprises me in that article is that the couple mentioned drive all over the place to get their foods, really wasting a whole lot more gas money than just buying from the market down the street.

We aren't going to be able to survive very long if we ALL had to live off the produce from a 100 mile radius of our houses. Though some would be better off than others. Arizona and Nevada are two states that come to mind as places I would not want to be if I had to live solely off the land. I know a lot about the plants in my area that I can live off of, it is that I know they won't feed more than 10 people let alone the 185,000 that live within 20 miles of here.

It is not that it will all go crashing down in a single week, but we should at least understand better where our foods do come from. Chilean sea bass, and grapes and pears and any number of other things that come from halfway around the world maybe can be pruned out of your diet and you can invest in the farming of local produce with local growers.

Little Rock has a Farmers co-op selling local produce for a set fee for 3 months. Meat, cheese, canned goods, and fresh veggies and fruits are all in the mix. I don't think I could feed a family off the baskets, but it is a start in the right direction.

"chay" posted a cute you-tube video called "Are Humans Smarter than Yeast?" to a thread which is mostly past at this point. A link is here:

http://www.theoildrum.com/node/2510#comment-185504

He is asking for comments.

(Sorry, I posted this up above on the wrong thread).

We don't often look at demand as much as we should but there is some EIA data out there. I looked at demand in the years 2003 and 2006 (which covers the most recent oil price surge). In terms of % changes (cp 2006 with 2003) in demand (mb/d)

US demand was 3% higher
OECD Europe demand was effectively unchanged
Total OECD demand was 1% higher

However:
Chinese demand was 24% up
Demand in other Asians states was 8% up
Demand in other states (non Asian, non OECD) was up 12%

Total global demand was up 6%

Possible interpretations?

a) The OECD countries have been able to grow at around 3% per annum (cumulative 12%) between 2003-2006 using very little extra oil. If your looking at where efficiency increases (or in a way demand destruction, if you accept more growth for the same fuel is a form of demand destruction) is happening it seems to be principally in OECD Europe.

b) China and the other Asian countries have been growing much faster but have used much more oil.

c) The 'others', which by extension must include the poorest (non-Asian) countries in the world have also perhaps surprisingly increased demand, by 12%. The comment is often made on TOD that demand destruction must be happening in the poorest countries - if it is its being disguised in these figures (I hasten to add thats not to say its not happening in places like Sierra Leone, Costa Rica etc; but if it is these figures suggest that countries which rank a wee bit above them in the global pecking order (places such as Uruguay, Bolivia etc must be increasing their demand to cover it).

These are just a few possibilities that might be worthy of further interpretation; optimists might want to fix on how OECD countries have seemingly grown for 4 years without demanding anymore oil, but I couldn't possibly comment........

Politico.com is now accepting questions which will be asked to the republican candidates during a 30 second speed round in the 5/3 GOP presidential candidates debate.

There are currently 29 questions in the energy category and a few of them address PO. If you have a minute, please add a question about PO here - http://www.politico.com/debate/askquestion.html.

Remember that this is a 30 second speed round. This question will not make the final cut since it cannot be answered in 30 seconds...

To all the candidates. Do you believe in the theory of "Peak Oil"? Has world oil production peaked? When will it peak? What will the effects of peak oil have on the United States in 20 years? What is your plan on energy?

Thanks!

Has everyone in the markets taken leave of their senses? Does no one remember that making a burger at McDonalds is now considered a Manufacturing job for statistical purposes in the US? Does no one remember the oil supply/demand problem or that Gasoline stocks have been drawn down fo 10 straight weeks? What about the housing market and sub-prime loans? What about China divorcing itself from the US Dollar? When Market movements are so divorced from reality and you can feel the Mania in the air, you know a BIG correction is imminent. Also, what about Venezuela? It's a Full Moon. Am I going to wake up in the morning to find it was used to conduct an invasion? God, even the Tech bubble wasn't this manic. Are we looking at 1929... or worse?

Ali Al Naimi, Saudi Arabian Minister of Petroleum and Mineral Resources, announces a new $7 billion megaproject

As Aramco is short on new oil megaprojects, this megaproject is a world scale aluminium project. Light weight aluminium can only go up in price as energy costs increase. The required 1400 megawatt power plant will probably use inexpensive Saudi natural gas.

http://www.khaleejtimes.com/DisplayArticleNew.asp?xfile=data/business/20...

http://www.green-energy-news.com/arch/nrgs2007/20070058.html

As everyone is waiting for tomorrow's (er, today's) EIA report, and whether gasoline stocks will be up or down, I've thought about the question of how much the US is willing to spend for gasoline and are we seeing demand destruction yet. Indeed, walking around the neighborhood tonight I realized I didn't know how much we spend week to week on gasoline, or where it would end...

Looking at the EIA data for gasoline prices and consumption, and making lots of generalizations (e.g., price = average of all grades and formulations, that the Monday gas price can be used for the entire week of consumption, etc.), I estimated the weekly expenditures on gasoline (not diesel, jet fuel, etc.) to be:

{ week ending} {$$$ x 10^9} { % increase over 2006}
03/02  6.56 7.21%
03/09 6.87 8.11%
03/16  7.08 9.84%
03/23  7.13 5.17%
03/30  7.41 9.34%
04/06  7.67 6.61%
04/13  7.74 6.12%
04/20  7.87 5.06%

[sorry, no time to deal with table tags...]

So, Americans are nearing $8Billion/week expenditure on gasoline, and we are spending more this year than last (note that the variable date of Easter plays a bit of havoc with year to year measurements for end of March and early April, I suspect.)

What stands out to me is as the total approaches $8 billion the week to week (and year to year) changes get progressively smaller. Now, for the week ending 4/27, the gas price measurement on 4/23 was a tad bit less than that measured on 4/16, but after the EIA report last Wed there was some serious price movement... Looking above it seems to me the nation's 115,000 or so gasoline stations will have a harder and harder time coaxing significantly more $$$ out of the populace for this time of year.

So, I'm expecting some demand to have went down.