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DrumBeat: May 7, 2007
Posted by Leanan on May 7, 2007 - 9:10am
China’s 7 billion barrel oil bonanza
PetroChina, Asia’s largest oil and gas producer, sent Hong Kong’s stock market into a frenzy last week with news that it has discovered 7.5 billion barrels of new crude oil in an undersea field in Bohai Bay, just off China’s northeast coast. It is a stunning windfall. The oilfield, called Jindong Nanpu, is Asia’s largest petroleum find in three decades and is expected to boost China’s known oil reserves by a fifth. News of the bonanza sent shares of PetroChina (PTR) soaring 14% on Hong Kong’s stock exchange Friday to more than US$1.30, vaulting the company past BP (BP) and Gazprom to become the world’s third most valuable oil producer.But the Bohai discovery also underscores just how rapidly China’s addiction to oil is rising. PetroChina says that when the new field begins production, probably in 2008 or 2009, it will likely pump out about 180,000 to 200,000 barrels per day. That’s a lot of new crude. And yet it isn’t nearly enough to keep pace with the voracious appetite of China’s booming economy. At those levels the Bohai bounty would be roughly equal to just the growth in China’s foreign oil imports last year.
The Complete User's Guide to T. Boone Pickens
Pickens believes that Peak Oil, the point after world oil production reaches maximum output, will occur sooner than later. In his fund, BP Capital -- which tripled in 2005 and rose 30% in 2006 -- he picks stocks that he feels will rise dramatically due to higher oil. He likes offshore drillers, alternative energy, nuclear power, natural gas, and oil. At Stockpickr.com we keep track of all of Pickens's holdings (see link on the right).
With prices at record high, demand and refining problems could push them much higher. Any relief in sight?
Blast cuts Russia-EU gas pipeline
An explosion in Ukraine has knocked out of service one of the main pipelines exporting Russian natural gas to the European Union, the Ukrainian emergency situations ministry told AFP on Monday.A "large explosion" cut the pipeline, which carries Siberian gas through Ukraine to Germany and other EU clients, ministry spokeswoman Viktoria Ruban said.
...There was no immediate information regarding the effect of the incident on deliveries to the European Union, the biggest foreign gas market for Russia, the world's leading natural gas producer.
Obama: More fuel-efficient cars needed
Democratic presidential candidate Barack Obama (news, bio, voting record) said Monday that U.S. energy policy must change in order to help domestic automakers answer the rising global demand for fuel-efficient vehicles.
Average pump price hits record $3.07 a gallon
Gasoline prices have surged to a record nationwide average of $3.07 per gallon, nearly 20 cents higher than two weeks earlier, oil industry analyst Trilby Lundberg said Sunday.The previous record was $3.03 per gallon on Aug. 11, 2006.
Iraq: Explosives found under pipeline
Four Iraqis were arrested early Monday after soldiers found a load of explosives planted under an oil pipeline in northern Iraq that carries crude oil to Turkey, the Iraqi Army said.
Malaysia to build 7 billion dollar oil pipeline project: Abdullah
Malaysia will build a seven billion dollar pipeline to transport Middle East oil across the north of its peninsula to East Asian countries, Prime Minister Abdullah Ahmad Badawi said Monday.
India: 'Govt trying best not to increase petrol and diesel prices'
Petroleum Minister Murli Deora on Monday said the Centre was trying its best not to increase the prices of petroleum products like petrol and diesel even though the international oil prices had registered an upward trend in the past few months."The international prices of oil have increased from 40 dollars to about 62 dollars a barrrel so there is no question of reducing the prices of petrol and diesel," he told reporters here.
India's crude oil import bill jumps 24% to $48.1 billion
India's crude oil import bill jumped over 24 per cent to $48.1 billion in 2006-07 on back of rise in international prices.The country imported 110.85 million tonnes of crude oil in 2006-07, which is 11.5 per cent up from 99.4 million tonnes bought in 2005-06, petroleum ministry officials said.
Saudi assures Philippines of oil supplies
Saudi Arabia, the world’s largest oil producer, has reaffirmed its commitment to help plug any disruption or shortfall the Philippines may encounter on its oil supply.
Philippines: Fake power crisis?
President Arroyo, along with Department of Energy Secretary Raphael Lotilla, ceremonially switched on the electrification of 128 rural barangays in Masbate in rites held at Malacañang Palace last Friday. Masbate is dependent on the 8-MW oil-based power plant owned and run by the state-owned National Power Corp.
Hawaii, get ready for 2010 ConCon
It's been nearly 30 years since Hawaii held its last state Constitutional Convention and re-examined in a holistic way how our government could be reorganized to better meet the many challenges facing the islands today. Hawaii is a different place from the one it was in 1978, the date of the last ConCon. The number of people residing on Hawaii Island, Kauai and Maui has doubled. Oahu has grown by 230,000 -- nearly a 50 percent increase. Sugar and pineapple plantations, once the defining industries of the islands, have practically disappeared, and our economy is still dependent on mass tourism, whose future looks shaky as we approach an era of Peak Oil raising costs of airfares and all our imported goods.
Getting the trains to run on time
NO POLITICIAN has spent more bedside time at the MacArthur Maze collapse site than Gov. Arnold Schwarzenegger. San Francisco Mayor Gavin Newsom likewise has poured on the attention to solve Muni's spotty performance.Transit, it turns out, is job No. 1 when it flops and fails.
Yergin Sees Clear Road Ahead For More Fuel-Efficient Cars
The road is getting much clearer.This week, legislation will emerge from committee, and almost certainly soon head to the floor of the U.S. Senate. It might not get that much notice in itself, but it ought to, because it tells you how much has changed on energy issues. And, given its probable passage (or that of something along its lines), the new legislation will have a big impact on the automobile industry, on gasoline consumption, and on what people drive.
Mesa could pull plug on utility customers
For years, Mesa has relied on millions in profits from its 16,000-customer electric utility to keep its libraries and city offices open and to pay its police officers and firefighters.As a result, Mesa has invested little to maintain its electrical infrastructure, leading to an aging network of transmission lines, transformers and substations. Some of the technology dates backs to the 1950s.
After thousands of years of human history, it seemed we are now at or just a couple of years away from the all-time peak in energy available to humanity. What a time to be alive! What a truly awe-inspiring event to actually be living through! We should have a party to celebrate the end of the 150 year Oil Party.
Why one-day gasoline 'boycott' won't work
With gasoline prices topping $3 a gallon again, a number of readers, including Greg in Louisiana, are wondering about a proposed one-day "gas boycott" that has a goal of taking $2.3 billion in oil company profits. Aside from circulating some questionable math, organizers of this event stand exactly zero chance of having an impact on gas prices.
Spike in gas prices puts E85 back in spotlight
The E85 pump at the Bellmart gas station in La Porte has gotten a workout since gasoline prices spiked, cashier Pam Angeledes said.Motorists are pumping the gasoline alternative into as many as 40 vehicles a day, double the number of a few months earlier, she added.
Go Green With Buffett, Lynch and O'Shaughnessy
The U.S. Environmental Protection Agency recently unveiled its quarterly list of the top 25 "Green Power Partners," highlighting companies, institutions and government agencies that are spending the most on renewable energy sources such as wind and solar power.
Poll: Current price of oil is not justified
Canada's business leaders believe the current price of oil is not justified, but argue the situation is in much better shape compared to the oil crisis in the mid-to-late 1970s.
Big blip ahead on the market radar
A third hit will come on the Pacific, where the most lucrative of all Qantas routes, Sydney-Los Angeles, will see the arrival of Virgin and probably Air Canada next year. And then there is peak oil. Oil prices will be much higher in four years. Turbulent times lie ahead for Qantas, not just this week.
For my next mission: save the world
EDF chief Vincent de Rivaz believes nuclear power is the answer to stopping climate change.
Citigroup Rates Rio Tinto, BHP as Ripe For Private Equity Takeover
China’s PetroChina discovered 7 billion barrels of oil in Bohai Bay in Northeast China. It’s the largest oil find in that part of the world in 30 years. And no, it is not proof that peak oil is wrong. It is proof that oil is more expensive to find and produce than ever before.
While I am no economist, I have strong feelings about offshoring / outsourcing. While it’s great for the corporation in the short-term, it disenfranchises the American worker and leads to a squeeze on the once-healthy middle class. You only need look at the manufacturing sector to see how a whole sector of jobs has left the country … and if, as some theorize, global warming and peak oil lead to a time where importing of virtually all our manufactured goods is no longer viable, we may regret having dismantled our manufacturing infrastructure.
AUSTRALIA is falling behind the rest of the world on biofuels due to sluggish government policy and inaction by oil companies, according to the Australian Renewable Fuels Association.
Questions loom as auto industry vows to boost 'flex-fuel' vehicles
The auto industry's ability to successfully bring the so-called "flex-fuel" vehicles to market faces a number of obstacles, from a distribution system that remains limited to a small number of gas stations to consumer awareness and acceptance of the alternatives.
Question marks over China's climate commitment
Huge questions remain over China's commitment and ability to combat global warming after the surging Asian power bruised and cajoled but also charmed delegates at a UN conference, observers said.
Kurt Cobb: The point of despair
I recently gave a talk to a college audience on what I called the hidden role of energy in every environmental problem. As part of my presentation I went through a depressing list of environmental problems and showed their connection to our energy use. The next day I received a message from an audience member who clearly understood the implications of my talk, but who bemoaned my failure to provide practical solutions. He said I had left the students feeling hopeless.
Heat on parents to have fewer kids to cool planet
A LOWER birthrate would help cut carbon dioxide emissions, according to a British report.The Optimum Population Trust warns that each Briton uses nearly 750 tonnes of carbon dioxide in a lifetime, an effect equivalent to 620 return flights between London and New York.
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A couple of things in the news that seemed noteworthy...
Delaware Energy Debate Could Turn on the Wind
Offshore Turbines Among 3 Proposals
Hampton Roads-to-Richmond barge service floated
Artist/Band: Old Crow Medicine Show
Lyrics for Song: James River Blues
Lyrics for Album: Big Iron World
I just heard the awful news
I could steer around the rocks
But theyre bustin down the docks
James river blues
That train came on through
And the worlds gotten slow
So wheres a boat man to go
I think Ill float on down
To Richmond town
They dont need us anymore
hauling freight from shore to shore
That big iron hauls much more
than we ever could before
Ive see good men going wrong
Ive seen bad ones get it right
As that river rolls along
Ill be steppin out tonight
On the cool flow
floatin down down below
the bridge till the waters edge
From the ridge to the ledge
From the hills to the sea
Ill become a memory
James River blues
James River blues
James River blues
Another Old Crow fan! Great! :-)
Here's one of their songs that just rings of the old leftie social justice union days, you gotta' love it, I don't care who ya' are.....
Old Crow Medicine
Show I Hear Them All
I hear the crying of the hungry in the deserts where they're wandering.
Hear them crying out for heaven's own benevolence upon them.
Hear destructive power prevailing, I hear fools falsely hailing.
To the crooked wits of tyrants when they call.
I hear them all
I hear them all
I hear them all
I hear the sounds of tearing pages and the roar of burning paper.
All the crimes in acquisitions turn to air and ash and vapor.
And the rattle of the shackle far beyond emancipators.
And the loneliest who gather in their stalls.
I hear them all
I hear them all
I hear them all
So while you sit and whistle Dixie with your money and your power.
I can hear the flowers a-growin in the rubble of the towers.
I hear leaders quit their lying
I hear babies quit their crying.
I hear soldiers quit their dying, one and all.
I hear them all
I hear them all
I hear them all
I hear the tender words from Zion, I hear Noah's waterfall.
Hear the gentle lamb of Judah sleeping at the feet of Buddha.
And the prophets from Elija to the old Paiute Wovoka.
Take their places at the table when they're called.
I hear them all
I hear them all
I hear them all
RC
Remember, we are only one cubic mile from freedom
I like their take on Dylan's rock me
Yes, the gentlemen played the Victoria theatre in Dayton, Ohio and encored with Dylan. I would love for Dylan to take this group on as his backup band, for a tour. I will see them again at Bonnaroo in June.
I saw them in Acton, Maine several years ago.
what can I say? Cutest boys that play banjos and fiddles.
to
die
for.
Interesting reading.
http://www.wecnmagazine.com/2007issues/may/may07.html
So is Dave Hoopman misquoting the Guy, or should he be dismissed for his age as possibly senile?
I am sure the future lies somewhere between his opinion and Al Gore.
http://www.alumnifriends.mines.edu/photo_gallery/2003/hon_degree_medal_2...
http://www.motherearthnews.com/Livestock-and-Farming/1976-03-01/The-Plow...
It is a 31 year difference between articles... anything could have happened.
The problem with the May 2007 article is that the inteviewer isn't asking informed questions so much as just rambling along. The interviewer really needed to ask specific questions regarding CO2 levels, etc.
I'm not sure what to think, his statements about the fundamentals of Climate Change are quite wrong. He is quoted favourably by GW deniers, which is not a good sign.
He does have a point though, climate change of the glacial sort is currently driven by Milankovitch cycles. Manmade global warming may delay the onset of the next glacial period, but is unlikly to prevent it.
William Ruddiman has published some theories in area, worth reading. However, global warming, by definition, will not lead us into a glaciation. It will be a few thousand years before that happens.
You heard it here first....
http://www.realtechnews.com/posts/4365
Hmmm....seems plausible at minimum and I've been telling people the rise of CHINDIA will come at the expense of America. It's a zero sum game.
The question I always ask is once the outsourcing happens, who's going to be left with jobs to buy the products?
I have asked the same question to my professors and I have yet to get an honest answer. They are so into the fact that comparitive advantage works, that the only answer I ever got was the gov't is suppose to retrain displaced workers. Well that's grand and all, but what about the jobs left?
here's my opinion. We've got roughly 330 million people. I would surmise we only need about half that. The middle class is a social engine for control. Everyone hopes to get there and hardly anyone makes it out. There are fewer ways to make it into the middle class and they are being wiped out by inflation and debt. The lower classes are doomed as they are in a global labor arbitrage game they can not win since the costs of living are so much higher.
Meanwhile the middle class is getting squeezed like an orange between looking upper class and servicing the debt to do so. In the meantime they are mostly oblivious to the coming disasters. The upper class will always be this way and they are not worried about labor issues as they are now truly global in that many US companies now derive a majority of their revenues from outside this country.
The only snowball in hell's chance is to gain an edge in information and utilize skills that are locally specific. It's hard to say what will happen but planning for what could happen like reduced globalization but you've got to keep in mind paradigmes are resistance to change and we'll find every way to maintain the status quo.
The "Great Education Myth" as Sirota calls it.
cfm in Gray, ME
I keep reading posts about the lack of skilled workers in the energy industry in the US. We have spent the last 30 years telling kids the future lays in computer software. What I'm reading tells me all those kids should have learned welding, mechanics, and construction skills instead. There is even a lack of drivers for 18-wheelers. My brother paid for college by working at McDonald's. He worked for 15 years as a systems analyst. His job was outsourced. He's back working at McDonald's.
There's a great 90 day course to learn the skills to work on a land drilling rig through the Midland, Texas community college. I'd bet money that with a little hands-on experience and his computer skills he could get an extremely good job with any number of oil service companies in domestic exploration and production.
The thing that is really scary is that huge numbers of empty shipping containers are piling up in the ports because the US no longer makes much of anything that the rest of the world wants to buy.
Empty shipping containers?????
One of the most accurate measures of the activity of the US economy and consumer/industry spending is rail freight traffic. The first four months of the year show railroad carload traffic down over four percent and intermodal traffic (containers and trailers) down about the same. Those goods from China are not flowing nearly as fast as they were a year ago. Go to www.progressiverailroading.com and hit the news bar and look at May 4th rail news about rail freight traffic.
On Another Note:
Several posters recently made statements that India did not increase its oil consumption and oil imports last year. WRONG! The above article states that India's oil imports were up over 11 percent year over year for 2006. They are on course for more of the same this year.
Shawnott: Not a problem for the companies. The middle class (consumers) are growing rapidly in Chindia. I am always shocked how most Americans are unable to visualize a world economy that is not dependent upon the American middle class consumer.
The one "good" thing I see coming from this is, as the upper middle class and middle class become devalued down closer to lower class, the political majority will swing from corporate / capitalist to liberal / socialist.
I fear the lag time between elections and lag time for americans to realize they are now lower class will be far too long.
Good insight. I argue with some socialist bent friends about this sometimes. I honestly believe at some point taxes will go up to maintain the regime but it will be cast as a necessity against the acsencion of China which is currently fueled by American and other foreign firms investing. When the engine gets started so to speak, does anyone think the Chinese might not take control of their domestic industries once they are built? They will do it in the name of their citizens who will by then reached a middle class status en mass and would be demanding social change...look at this it's starting already....
http://www.breitbart.com/article.php?id=070507090936.m37a86dd&show_artic...
I didnt know that one child policy children could have TWO! Guess that was the compromise. Point is...these people will react like humans do and demand a larger share. So the state will either dissolve into something new and more open or it goes the other way once the power is accumulated on a world scale. I've got a whole idea how they could be working on a big plan to take America financially, but this is finals week so I can't put my effort into yet. Hopefully following graduation I'll have some time to put some effort into it.
I Have NO simpathy for automakers.
Imagine how many EV1's they would be selling today.
If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago.
for some reason this posted in the wrong spot...sorry
Not to mention their role in deliberately killing off urban mass transit in numerous cities to FORCE people to buy and drive their #%%$# cars .
"I Have NO simpathy for automakers."
I assume you mean American automakers. Thats too bad considering how many Americans are employed by them. And not all of those employed have a say in what vehicles actually see production.
As for the EV1, which was designed to address Californias' assinine "zero emmission" policy not fuel savings, it FAILED in the market. And cost billions to produce.
"If your industry is based building machines that run on fossil fuels, and you dont have the common sense to research the future supply of the fuel for the machines you build, then you deserve to become extinct. Every other dam country's automakers caught on YEARS ago."
As for researching alternatives to fossil fuels GM and others are spending billions on automotive applications using alternatives as fuel. Unfortunately there are NO suitable alternatives for fossil fuels, each having MAJOR drawbacks.
Also the last time I looked EVERY automaker produces vehicles that run EXCLUSIVELY on fossil fuels. Can you name me one that does not?
Daimler Chyrseler makes the GEM.
http://www.gemcar.com
And Honda makes a compressed natural gas Civic that could be converted (by the owner) to bio-methane.
BTW: GM spends billions on PR and advertising, NOT on "researching alternative fuels". And demand exceeded supply for the EV-!.
Best Wishes for the survival of responsible auto companies,
Alan
<"Daimler Chyrseler makes the GEM.">
The GEM runs off of fossil fuel generated electricty stored in batteries. The sources and ratio of electricity can be found here: http://en.wikipedia.org/wiki/Electricity_generation
<"And Honda makes a compressed natural gas Civic that could be converted (by the owner) to bio-methane.">
Compressed natural gas is a fossil fuel. I haven't found bio-methane at my local gas station yet.
<"BTW: GM spends billions on PR and advertising, NOT on "researching alternative fuels".">
I have no doubt that marketing and advertisings' budget outweighs Larry Burns', here is a list of just a few of the vehicles GM made in their search for alternative fuel applications. And they weren't done on the cheap either!
http://www.gm.com/company/gmability/adv_tech/400_fcv/fact_sheets.html
<"And demand exceeded supply for the EV-!.">
Not in the North! Having one die on you on the test track certainly gives one time to ponder that particular vehicles shortcomings. "GM's internal research showed very clearly that the EV1's already perilously low range would be reduced by as much as 50% for use in cold-weather states." See here for more: http://en.wikipedia.org/wiki/EV-1
A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars).
US West Coast + Coastal BC
Desert SW
Mexico
US Gulf Coast
Florida
Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average.
I see GM research as an extension of their PR department. They are not serious about developing anything (except hiring psychologists to design Hummers for the reptile brain). Small Daimler Benz had their own wind tunnel DECADES BEFORE GM did. Their VOLT has been shown to have just been a publicity stunt (used off the shelf golf cart drive train).
To paraphrase "Engine Charlie", GMs President and Eisenhower's Secretary of Defense; "Wfat is good for GM is bad for the United States".
My first car was ALMOST a Vega (some high school friends did buy that hand grenade of a car). If I had bought it, the financial disaster would have destroyed my working through college and changed the course of my life.
Worst Hopes for GM,
Alan
"A Very large market exists where cold weather is rarely or never a problem (and many/most US households have two cars)."
An automotive company cannot make a car that functions exclusively in those areas and climes. Imagine the headlines (not to mention lawsuits) "Family of four perishes driving an EV1 through Rocky mountain snowstorm"
"Personally, a majority of my trips are less than 15 miles round trip and it gets below 32 F about twice a year on average."
That puts you in the front of the line to qualify as an ideal Volt customer!
"Small Daimler Benz" also suffered the same strange malady as did the rest of the Fatherland. NO DOMESTIC SUPPLY OF OIL! WWII ring a bell? I'll bet, back then, they wished they didn't HAVE to have their own windtunnel.
"design Hummers for the reptile brain)."
No argument.
"My first car was ALMOST a Vega"
No comment (see below) :-P
"Worst Hopes for GM"
That wasn't a very smart comment and it belies the error in your thinking. As if you would be untouched should GM go under! But I was thinking more about the two big flaws in your proposing of light rail systems you coveniently overlook:
1. Light rail had a shot in this country and it FAILED.
2. Train stations are excellent targets for terrorists. Try the Madrid bombing and the Tokyo subway gas attack for example. A couple of successful high profile attacks would put the whammy on ridership.
Around the Detroit area a popular bumper sticker reads "Out of a job yet? Keep buying foreign".
Incidentally GM's Bob Lutz was on a local show AUTOLINE DETROIT
http://www.autolinedetroit.tv/# (warning long load time)
calling for a "Manhattan type project" to address both fuel economy and global warming. Sounds like he's getting the "word". I wonder if he's read "Twilight" or TOD?
As I said last year, assume that your income drops by 50% and assume that gasoline goes to at least $8 per gallon. How would you change your lifestyle?
If I am wrong about where we are headed, you will have less or no debt, more money in the bank, and a lower stress way of life.
For those who believed, or believe, in borrowing their way to prosperity, we are going to see the emergence of an interesting new voting bloc--the Formerly Well Off (FWO's), who used to own nice debt financed cars and homes. The FWO's who believed ExxonMobil and CERA's pronouncements that Peak Oil was decades away are going to in a very, very pissed off mood.
Hell hath no fury like a FWO who has had his SUV repossessed and his McMansion foreclosed upon.
The last time anything at all like this happened - the 1970s - the thrifty people with "money in the bank" were looted by means of both rampant inflation and the Savings and Loan taxpayer bailout, in order to provide a free ride for the "FWO"s of that day. In the end the FWOs weren't - instead, they made out like bandits by eventually paying off their debts in grossly inflated dollars.
Maybe it will be Different This Time Around. But it's not clear how much to bet on it. So far, the discussion seems to center on the government just giving the potential FWOs the houses they never paid for, and balancing the books by yet again looting the thrifty. So precedent and politics, at least since the mid 20th century, do not particularly endorse thrift. Instead, they say that "money in the bank" is simply flushed down the drain.
You hit on something important. Until recently, being thrifty has not really paid off. Yes, a lot of people are probably going to finally get burned as the music stops, but there are a lot people who have made a lot of money or, at least, have enjoyed a lot of assets during the era of no limits debt.
Presumably, a bunch of people are losing their homes that they couldn't afford in the first place. They will have to make other arrangements, as it were. On the flip side, however, a radical reduction in housing prices will be beneficial for those who are just now getting into the market.
Arguably, if you are going to have trouble paying your mortage, this is the best of times. Since you are now part of a crowd, there is an incentive for lenders to be "creative" in keeping you and everyone else in their homes.
I must admit I have trouble wrapping my mind around this, probably because of my somewhat puritan perspective on debt. I have no debts other than a small mortgage, and that is very much less than I can afford.
Maybe I am the one that is the sucker.
Yes it's how the old saying goes, if you owe the bank a thousand pounds, you have a problem, if you owe the bank a million pounds the bank is the one with the problem. Well, together their mortgage lenders owe the bank a lot more than a million, and if they break some they might break a lot more.
It's an interesting question that we have debated at length. Clearly, at the present time, we are see deflationary effects in the housing/auto/finance sectors and inflationary effects in food and energy.
Regardless of whether we end up with Weimar Republic style inflation or Thirties style deflation, or both sequentially, or more likely some combination of the two, reducing your cost of living and energy consumption, IMO, is a very good idea.
The US is going to be forced, whether we like it or not, to reduce our overall consumption, especially our energy consumption, in much the same way that forced energy conservation came knocking on Africa's door last year.
Itulip has it nailed....disinflationary forces just like you describe WT, followed by inflationary hell.
http://www.itulip.com/forums/showthread.php?t=417
He has some clout in the past since he did manage to muster the strength to call the tech boom, but everyone claims to have done so now. I think on the back end (5 years maybe or more) we see massive deflation as this whole thing pops especially when oil scarcity becomes front and center as opposed to the sidelines it still sits on.
Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
Deflation is not exactly something that can be avoided - no one can be forced to take credit. And if a speculative bubble stops growing, it collapses.
The Fed certainly can lower interest rates... if they are willing to print the difference instead of borrowing it. This is the classic "monetizing the debt" that the US used in the late 70s to finance its debt then. Reactions like KSA's threatened pullback from the dollar to gold (which is what drove gold over $800 per ounce back then) caused the US to shift gears, leading to Volcker as Fed chairman and his resulting recession in the 1979-1982 time frame. Note that this occurred at the same time as oil production was falling globally but they could have played the other card and hyperinflated their way out of debt.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
If?
M3? QED, no?
>Though interesting, the argument has a certain flaw - the assumption that the Fed can lower interest rates as it pleases, without concern of broader consequences.
In the last week or two, the Fed overnight rate has dropped below its target rate of 5.25%. Repo's are now trading about 5.12 ~ 5.10%. This hints that fed may drop rates, or just let institutional borrowers, borrow below the official rate.
I believe this is because the fed is concerned about mortgage lending issues. I have a hunch that they are far more concerned about failing lenders than a falling dollar. Plus, the Treasury (Paulson) has made a bigger push for China to remove its peg on the dollar. This leads me to believe that fed intends to inflate the dollar, and damn the overseas consequences for now.
If dollar does drop, countries that wish to preserve their US export market will be forced to adapt. This could be in the form of pegging their currencies to the dollar, or lowering their interest rates to make their currency less attractive.
>As America is in need of constant international capital inflows at this point, the Fed can cut interest rates as it wishes - at the cost of destroying that balancing act.
The Fed and the Treasury dept. have been buying the treasuries that have not purchased by investors during auctions. Had they not, the yield on treasuries would have been much higher. The Fed and the Treasury dept. have essentially pegged US interest rates in order to prevent credit from drying up. I can't say how long they will continue this but I don't seem them stopping this practice anytime soon.
I've put it this way:
The American consumer is standing at a four way intersection, with:
Inflationary 18 wheelers on two sides coming his way: rising food/energy costs and rising health care costs, and
Deflationary 18 wheelers on two sides coming his way: falling real estate values and falling real wages (especially because of increased competition for jobs).
Meanwhile, the party goes on...
Consumer credit rises $13.46 bln in March-Fed
Analysts were expecting a $4.5 bln gain. Also, Jan's consumer credit increase was revised up from $6.61 bln to $8.42 bln, and Feb was revised up from $2.97 bln to $5.56 bln.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
One of Charles Dickens persons in one of his novels(can´t remember which) said, if you have an income of 100 pounds, and you spend 101 pounds you live in misery. But if you spend 99 poundes you live in prosperity.
I got two opportunities to enlarge my debt in the mail today. Its terrible to get a reputation for paying your bills.
I'm remodeling my house in Galveston, but paying the cost out of cash flow. My electric bill was $27.00 at @0.0145 cents per kilowatt hour this month, and I live 4 blocks from good wade fishing. My car gets 33 mpg and has 196,000 miles, and I could pay cash for a new one. My only debts are a student loan of approx. $3,000 left and a mortgage of $568.00 a month, plus insurance taxes and utilities adding about $250.00 a month. I'm a landman, and the late eighties and nineties shore learned me.
The upshot is that WT's advice is excellent. Its real conservatism-the secret to overcoming financial insecurity is spend less than you earn. Real patriotism is conserving, not flag waving. Every person needs to take personal responsibility first, and, THROW AWAY THE CREDIT CARD OFFERS!
The FWO will form the basis for a real fascist government in the USA and Canada too. The Neocon adventure was the American "beer hall putsch" and we should be prepared for the real fascist take over when the FWOs vote them in with a much clearer mandate.
I wish we could afford the life we are living.
"Better-heeled failing home economics too"
As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.
http://www.latimes.com/business/la-fi-evict6may06,0,5268127.story
The ugly face of foreclosure: When foreclosures climb, entire communities can go down.
If it is like this now, imagine what will happen for every one dollar increase in the cost of gasoline.
http://www.energybulletin.net/19420.html
Published on 21 Aug 2006 by GraphOilogy / Energy Bulletin. Archived on 21 Aug 2006.
Net Oil Exports Revisited
by Jeffrey J. Brown
This is my big worry. Someone upthread mused that people might be driven to a more socialistic view of things. I wish I could be so optimistic. How will the middle class react as it crumbles? My fear is that it will sign on to the empire project, saying we need the oil -- let's go get it.
That's fine so long as the next step is to take this gun and go shoot at those guys. It's not going to be my ass fighting for this bullshit.
Hi tate,
re: "...It's not going to be my..."
Maybe not. It's your tax money, though.
http://www.blackwaterbook.com/news/
WT,
Have you read "The Millionaire Next Door"? It supports many of your ELP points. In a nutshell it points out that those living within or below their means comprise the majority of millionaires. Having researched it by questionnaire, they report that the guy driving the Ferrari or Mercedes is often basically broke, while the one driving the 15 year old Volvo or Ford is often a millionaire. It was really quite interesting. One of the areas that also really surprised me was an analysis of millionaires by country of background. There were, proportionally, very few English millionaires, very surprising considering the significant impact of Britain and the leadership position of the English on the development of the US. There were a disproportionate number of Scottish millionaires, which actually didn't surprise me that much. I am part Irish and have seen the frugality and conservatism with which this group approaches finance. The group with the greatest percentage of millionaires per capita in the US ... Russians. That surprised me. One might speculate that there is some serious emigration bias going on considering the difficulty of conditions in formerly Soviet Russia, but having embraced capitalism and now loaded for bear with oil and natural gas resources it gives one pause. I guess I had heard the saying somewhere that the Russians are the best horse traders in the world. Putin hasn't dissuaded me of that with his use of ostensibly marketplace issues to let Europe know, -oh by the way you freeze in January without our natural gas.
One other point I forgot to mention from that book. The majority of millionaires in the US are not high flying stock traders, derivatives experts, lawyers or bankers, but tradesman, small business owners etc.
Shouldn't be surprising, since there's so many more of the latter than the former, and since saving a million dollars over your working life isn't all that hard.
If you start with $25,000 - down payment on a house, say, or seed money into a small business - and then add in $5,000 per year (mortgage payments of $400/mo, work put into the business, or a bad mutual fund) - you will (with 6% interest, which is the historical rate of real estate appreciation, and is well under the historical investment rate) have a million dollars in 40 years.
Compound interest adds up. Anyone can retire a millionaire if they get in the habit of saving a little while they're youngish and have a decentish job.
How long before upper management of these companies also gets outsourced? Those oversized compensation packages are really scandalous. Eventually all that would be left here in the U.S. would be a sales staff of some sort, plus retail outlets.
My belief is the only thing we have left is capable people in the largest companies. From what I've gleened, those in upper management (talked to a few at a luncheon) know about the globalization labor issue. They understand the big picture and they are exploiting it for their companies gain.
I think upper management will close ranks so to speak and once you start chipping at the margins as to WHO in upper mangement could be outsourced, you create a situation where all bets are off so why not move the world HQ out of America? Oh halliburton already is and at some point it will become a serious question. Why stay in America when the rest of the world has caught up and strategies for growth can't be HQ'd in a deflating country.
I will say this. I dont think the exec's have a whole lot to worry about. The capable people rise to the top's of the pile. They find ways because that's WHO they are. The posers will be eliminated and the talent remaining will be superior. 26% of China has a higher IQ than our entire country and 28% of India is higher. Puts things in perspective....no?
To some extent though globalization feeds on itself. If your competitor can undercut you because they outsourced and you didn't, then there is additional pressure to outsource yourself no matter what your actual feelings in the matter are.
I remember a conversation I had with a young woman. MBA type, kind of conservative. I had read a story in the paper about how some junior executive types of positions were being outsourced - don't remember what types of jobs they were, actually. What really amused me was how this woman immediately realized that the writing was on the wall - those junior positions are the farm team for upper management, and without skilled junior executives, where would upper management get people who knew what they were doing.
What was even funnier was the original story cited sources where people were talking about unionizing. It is funny - it is when your own jobs are threatened that a person wants a union - the rest of the time they don't want to have a thing to do with them.
In the end though, a US company that has a CEO with a 50 million compensation package will be at a disadvantage to a foreign company where the CEO makes 2 million instead. So why not outsource those jobs as well?
What it all comes down to is you get what you pay for.
The developed world jobs market still isn't being hollowed out at the apocalyptic rate of the anti-globalists. Instead, markets and jobs are being created globally.
They will certainly have the highest IQ peasants going forward then. IN a sense these countries are going through their industrial age now although it's not the same since many of their people already live in modernity. In a sense they are really two countries w/ an international global elite that has more in common w/ the western global elite than they do with their own countrymen. It's the same story in Latin America. Sure they have large middles classes, but much of this will recede back into the peasantry in a generation. Numbers-wise these groups will still be large but they will never be the profile of the country. These cultures will remain bifurcated. These countries will never achieve the profile of modern industrial countries like japan or the US. It will never happen. Not broadly. Too late. WE already used all the oil!
Matt
Yeah right. A perfect system where the cream rises to the top. Cream like Bush, Cheney, Ken Lay, Bernie Ebbers etc ad nauseam.
These clowns gonna be blindsided by History together with any chump who puts one iota of faith in them.
Ultimately you end up like the Dutch East Indies Trading Company. Founded in the 17th century, it existed until the 19th century as I recall and was immensely wealthy. But all it was at the end was a holding company for assets of other companies elsewhere around the globe.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Two of my employers attended this year's AIA convention in San Antonio. One was back this morning, and raved about the environmental presentations, particularly the closing keynote by Al Gore. He said, "Republican or Democrat, you've got to love Al Gore." (Actually I know a lot of Republicans who don't like Al Gore.)
The AIA site lists Gore, but writes:
But ...
http://www.mysanantonio.com/news/metro/stories/MYSA050607.01B.gore.35aec...
This is the first I heard of a Gore alternative to the painless cap/trade game for business. That's good, but I did not see the word CONSERVE anywhere in the SA Express-News Gore coverage. Has Al ever clarified his TN McMansion consumption expose'?
Ever wonder what the world would be like if the GOP had been successful at impeaching Clinton? Al Gore would of had the advantage of running in 2000 as the sitting president at would most likely been sworn in on Jan 20, 2001.
I think now, and thought at the time, that Bill Clinton should have resigned for the good of his party.
Just what good would that have done the Dems? Both parties are hopelessly infected with corporatism.. they cannot make decisions without knowing that somewhere, Daddy (#1, #2 or #3) is going to either Nod or Frown at the action.
Do you think Bush should do anything for the good of his party now? And would it really affect the course of the Repubs, or are they just so over him that it wouldn't matter?
Bob Fiske
I think Clinton's resignation would have put Gore in a stronger position to win the next election, would have prevented the neoconservative stranglehold on power we've had for six years, and could have prevented the Iraq war. I'm not sure where it would have left Hillary, but I'd rather see her in Congress than in the Presidency.
After Saddam was captured, Bush should have declared victory, left enough troops to protect the pipeline, but otherwise ended the occupation. At this point his only achievable goal/pretext to claim victory and leave would be to catch bin Laden.
Benjamin Cole wrote in yesterday's Drumbeat: "Demand in India appears to be falling, and was down in 2005 from 2004."
It "appears" this statement doesn't jibe with today's India's crude oil import bill jumps 24% to 48.1 bn story:
"The country imported 110.85 million tonnes of crude oil in 2006-07, which is 11.5 per cent up from 99.4 million tonnes bought in 2005-06, petroleum ministry officials said."
It appears that data is trumping Mr. Cole's beliefs.
I do think that demand/price destruction will happen, but the globally interlocked economies of India and China are primed to roll right on thru this $60 road block. China is especially committed to showcasing the 2008 Olympics. They alone may power steady demand/consumption just to thread this needle. Afterwards, all bets are off on how this all unwinds. Probably not in a nice way.
I was using figures from BP, which showed Indian demand fell in 2005. We'll see what BP says about 2006, soon. By the way, India is planting millions of hectares of a plant named jatropha, and plans to replace 20 percent of its fossil diesel consumption from plant oil, within 14 years. If successful, and if married to hybrid-diesels, we then can see how India will actually consume less fossil fuels going forward. It does not require any exotic technologies. It only requires oil prices stay abovem say, $50 a barrel.
But the key point: After a 150 percent price- run-up in 1979, world oil demand fell 11 percent percent, and did not recover for 10 years, when oil was cheap again. This time around we have better technologies, and the price has doubled or tripled, depending on what you want to call the bottom.
It just makes sense that people will use less of any commodity if the price goes up. It make take time, but it will happen. Urban centers become hip, smaller cars, hybrids etc. Sheesh, we could cut our consumption in half in the US, and not miss a beat. We would actually acheive a higher standard of living, and less pollution.
2006 or 2007, if prices hold (the marginal cost of production of a barrel of oil is about $5) will mark the year of Peak Demand. We can look for declines, just like after 1979. Back then, demand reovered when oil become cheap again. If oil does not become cheap again, demand will keep falling.
I believe we should tax gasoline in US much more heavily, and make sure demand keeps going down. In effect, we will transfer wealth from OPEC to the US Treasury.
The big risk now is that oil prices do what they always do, and that is collapse after a peak, and we start guzzling again.
Sorry, but the marginal cost of production in the US is a lot closer to $40 a barrel than $5. I personally think a stiff import tax makes the most sense, with the revenues going to fund alternative energy, retooling our society to cut our carbon footprint and reduce the national debt.
I have read about India's goal for planting jatropha trees (these are native to the SW US and Mexico). Their main plan for biodiesel from jatropha is to power the RAILROADS. A lot of this acreage of trees is being planted along RR right of ways.
This is also a make work program for India's lessor privleged that can work in the Jatrpha groves gathering the continously produced oil seeds and in the pressing mills. Like Brazil with ethanol this will be a fuel with a high EROEI due to the labor intensive nature of the crop and its processing. However this Jatropha tree still needs a fair amount of fertilizer (oil or NG input if not using manure) to produce, although it can grow with minimum water compared to many fruit trees.
BenjaminCole
Yes, railroads, and much else. The planting along railroad tracks is for the railroads. They have other millions of hectares under cultivation for regular diesel. The goal of the Indian government is 20 percent of all diesel in the country be bio, I think by 2020. I researched this heavily as I wanted to plant jatropha in Thailand. I concluded oil would have to stay above $80 a barrel to make it work, and then it would be marginal. At $100, you have a working farm. Palm oil apparently pencils out already, and huge palm groves are being planted.
The jatropha plant is not perfect. On the other hand, it has never been selectively bred for oil content. Corn used to be the size of your pinky. After selective breeding, it became much larger. Jojoba was bred in Israel, and radical increases in oil content were acheived. It was still too difficult to actually harvest. But, say in 10 years, look for jatropha plants with larger, oil-rich seeds. The Indians are working on it, and they seem to have pretty good ag scientists. I corresponded with them, by e-mail. No doubt, somebody will write that this is impossible too. Everything seems impossible, except to wait for some horrible future. I guess we just cry ourselves to sleep at night.
Back to the U.S., there was a one-time switch for power plants back after 1979. And, adjusted for inflation, the price was higher in 1979 than today. Those are two factors that will limit today's response to higher prices.
On the other hand, today we have the technology to make great cars that get 45 mpg, and run them on a mix of ethanol and gasoline. Today Europe is going to a 20 percent bio-diesel mix, by law. Autos will probably consume less fossil gasoline worldwide in 10 years than today. Unless oil becomes cheap again.
My guess (waiting for the BP report) is that we saw flat or small increase in world oil consumption in 2006. We are not getting an 11 percent decrease, as in 1980-2. In 2007, we probably will see a small decrease in consumption. The USA is already declining, and Europe too. China growing.
So, still, the question is there: If world fossil crude demand continously falls at $60 a barrel and above, what does that mean? Is the day of reckoning pushed off for several decades? I suspect so. The IEA seems to think we will be producing far more oil in 20 years than today. They do not forecast declines in production, but huge increases. They could be wrong. But, that wrong?
Meanwhile, the worldwide marginal cost of production, according to the IEA, was $3.57 a barrel in 2003. Somebody wrote that it is $40 in the USA. That must be off. If that were true, we would have no production in the USA in the cheap oil years.
The marginal cost of a barrel, worldwide, is probably under $6 today, but demand is flatlining. It really looks like we are setting up for a glut, or else OPEC will have to cut, cut, cut, cut.
If Iran and Libya get back into the game (and they want to), there may not be enough cutting possible. Iraq is a mess forever probably.
Sunflowers also look pretty good for temperate climates like the US, and rape seed for northerly climes like Canada & N Europe (with considerable range overlap between the two). As I've posted elsewhere, I believe that it might be feasible to grow enough oilseeds for biodiesel to at least keep essential equipment running. I calculate that it would take 2.5-5% of farm cropland just to grow enough oilseeds to fuel farm equipment. Add to that all the other equipment that really is essential and really must run on biodiesel, and you are probably up to 20-25% of cropland, which is about as much as we had better dare divert from food production. That doesn't leave ANY biodiesel production for private automobiles, nor any cropland for ethanol crops (which would be a waste in any case).
...any cropland for ethanol crops (which would be a waste in any case)
*I* support the biological consumption of ethanol !
Best Hopes for the simple pleasures of life post-Peak,
Alan
Look into cattle-corn-ethanol-methane plants. These plants acheive huge energy retruns, on the range of 40-1. Cattle stay near the ethanol plant, Cattle dung is converted into methane, and fires the plant. The left over grain is fed to the cows. Ethanol goes into your gas tank.
Before, the leftover corn was dried, pelletized, and shipped to wherever, and re-shipped back to the cows. Now, just give the cows the wet mash.
You will see many of these plants in Iowa within 10 years. And a lot of other places.
Pigs and potatoes next?
We do not have to cry ourselves into defeat. We can continuously reduce fossil oil consumption, with just mediocre planning. We can make Peak Demand happen before Peak Oil, and save a lot of hardships. Market forces may be making that happen already.
Or, we can whine, whine, whine.
I wonder if that has anything to do with the flat or small increase we saw in world oil production?
Hi Benjamin,
Thanks and I'm interested in hearing more about farming, (in general, and also farming in Thailand.)
re: "The IEA seems to think we will be producing far more oil in 20 years than today. They do not forecast declines in production, but huge increases. They could be wrong. But, that wrong?"
This is a good question. My impression is it has been addressed at length on TOD, so one suggestion is to look up comments on IEA.
I'm thinking...one way to approach this would be to take particular predictions and then look at "how wrong" the difference became.
This would be a way to put some percentages and numbers on "wrong."
re: "Meanwhile, the worldwide marginal cost of production, according to the IEA, was $3.57 a barrel in 2003. Somebody wrote that it is $40 in the USA. That must be off."
This was "Oilmanbob", if I recall.
I'd be interested to see his reponse to this. Is the IEA using some kind of average figure? Or, what's up? I tend to take the numbers given by oil persons, such as Bob, at face value, but perhaps he could explain further.
India has a decent amount of rail line electrified (had a bookmark on DOA computer) and was slowly expanding this system. So the spur line requirements of Indian Rail for bio-diesel will not be great.
Best Hopes,
Alan
I believe most of that decline you keep harping on about was from switching electricity generation from oil to coal/natural gas.
That was a one time event, it can't happen again.
The mindset back in the 1970 was that the supply shortages & price increases were temporary, politically manipulated episodes. The mindset was that oil was hugely abundant, and that cheap and plentiful supplies will resume soon. It will be a different ballgame post peak.
"2006 or 2007, if prices hold (the marginal cost of production of a barrel of oil is about $5) will mark the year of Peak Demand."
--You're absolutely right because it will also mark the peak for supply. YOu can not demonstrate demand for oil that is not there to be consumed. The variabale will be price. Indians and Chinese are just getting started. Don't kid yourself. Millions and millions of Indians are saving up for a new Tata and they will get it and they will drive, no matter what it takes!!!(They are thinking about it every day. And soon their dream will come true)
Matt
"India is planting millions of hectares of a plant named jatropha, and plans to replace 20 percent of its fossil diesel consumption from plant oil"
That makes perfect sense, why try to feed all those starving millions, begging in the streets?
Pain at the pump hits boaters even harder
You just can't argue with logic like that.
There's got to be a brighter future for sailboats in this.
I am preparing my sailboat for the season now. In the yard where I keep my sailboat I have a chance to talk to other boaters. I filled my 13 litre gas tank twice last year. One guy working on a cabin cruiser beside me said his boat wasn't to hard on fuel. He crossed Lake Erie last year and back and it cost $800.
"The way this thing burns gas I need all the gas I can get," Bro said of his boat
A claim on past drumbeats was when Carter had a proposal to outlaw recreational boating to save gas, the number of letters written to the White House exceeded all other letter writing campaigns by volume.
http://wallstreetexaminer.com/blogs/winter/?p=748
Just wanted to point out how the MSM is silencing someone who seems to garnet a whole lot more support than the talking pieces being paraded in front of the camera's. It is awful that Ron can garner such praise from across the networks, yet NO ONE dares point out the obvious point that RON PAUL is the leader that could actually make a difference. His own party doesn't like him because he actually sticks to the values. gee who does that anymore?
Well, he hasn't got a chance. I like him a lot, but hes pretty libertarian and everyone hates them. The left dont trust free market or more state sovereignty and the right doesn't want anyone that thinks the purpose of government shouldn't be to continually build a better war machine.
Learsy Suggests OPEC To Blame for High Gasoline Prices
This one's quite entertaining.
Obviously, the write of that piece believes that SA, Iraq, Iran, etc. should all become part of the United States... wonder what meds he's on, obviously they're working quite well...
Franc (penguinzee)
If Raymond Learsy doesn't like what OPEC is selling, he should take his money elsewhere. Isn't that the way "the market" is supposed to work?
Franc, I'd be willing to bet that before it's over, SA, Iraq, Iran, etc will be part of the US -- at least the part that we want (they can keep the sand -- CERA says we have a 250 year supply of that). The only thing that will prevent it is if the rest of the world decides to stop taking that crap that the Treasury prints up.
Airdale,
From your post yesterday, a beautiful line about what matters:
I find myself experiencing life differently. Bill Bonner, in Empire of Debt said that young people have a lot to worry about because they have a lot of living in front of them. I'm about to turn 30 (not old yet) but have found my worrying to be less acute recently.
I think a part of this change has come because of spirit. Not God (or god), but spirit. What is life for? What am I going to make of it? What does anxiety accomplish for me?
There are times lately when I've been much more aware of my experiences. Playing with my kids, walking in the woods, sitting in the glow of satisfaction after completing hard work. Acknowledging the historical immensity of this era of humanity.
I'm trying to accept the dizzying unknowns that are held in the future, to not fear them, but instead to experience them.
Tom A-B
Airdale has hit a number of chords:
At the bottom of this article at EnergyBulletin (from a link up top) Kurt Cobb: The point of despair
Incidentally, my story, "Toward Yesteryear," posted on yesterday's drumbeat, won the "Please Pass the Hanky Award" at the World Without Oil website. :o)
-best,
Wolf
I'm in that boat, er river, back a few boats (24). I am graduating college next week and I am struggling with ideas to parlay into an existance. I dont want to work for others, but I'm finding it difficult to venture into working on something PO related. I've got some big ideas but I need to work for big companies. I find myself caught in the moment a lot more because as gas increases I feel the grip tighten and I realize we won't have all this at some point in my life. We'll have a lot of empty stuff and I'm trying to figure out how to best take advantage of it. So I stop and appreciate the ability to do this now because I imagine a world when some choices will be eliminated.
Dude:
Check out cattle-corn-ethanol-methane plant.
Then think about pigs and potatoes. You take the pig poop, and turn it into methane, fire a potato still, get ethanol. The leftover mash is fed to the pigs.
Both potatoes and pigs yield more calories per input than cattle and corn. But the cattle-corn-methane-ethanol plants are claiming 40 energy units out for every unit in. There is a huge future in this.
Late in the May 2 Drum Beat thread, I posted the following calculation converting the 40+ units of energy out for every unit of energy in to the more standard basis, which includes the energy included in producing the corn, based on the information in the link Benjamin provided.
I have not looked at how potatoes would differ from corn. I know potatoes provide a very high yield per acre, so may have promise.
Airdale's post struck a massive gong with me too.
I am getting the impression that all over the world people are pausing in mid-step, holding their breath, peering around, listening intently and saying, "What was that? Did you hear something? What's happening? Something's going on."
I've recently found myself thinking a lot about concepts like harmony, respect, connections, man's place in nature, Gaia and the web of life. After 56 years of hard-assed rationalism I suddenly find myself reading a book on Paganism and Wicca, and saying to myself, "There are a lot of points I've been missing."
And not to go all mystical-apocalyptic on anyone, but it's an interesting bit of symbology that the Mayan calendar suggests a massive change in the human situation in 2012. On the winter solstice, to be precise.
Forward into the past!
I am getting the impression that all over the world people are pausing
No, you are just looking about seeing if you can find others who feel the way you do. Being on-line lets you find otheres who express a similar idea.
The masses have not noticed.
Eric,
I would disagree. Productivity sets America apart from everyone. No on on the planet is as productive on paper as us. This has come at the expense of the rest of our lives. This is beginning to be questioned since working all our lives doesn't get us much. Therefore many, many more Americans are turning to spirituality in SOME FORM.
The religous right is growing by leaps and bounds or have you missed all the stories of the mega churches being built? We've got baby boomers ready to die and they are all concerned about what happens next. Perhaps the rest of the world is already tuned in to their spirituality so much more so than in this country. Now the US is growing up in terms of its short history and we are becoming open to something else. It's all about the baby steps.
"Therefore many, many more Americans are turning to spirituality in SOME FORM."
Yes, and it is the "SOME FORM" of spirituality that has a lot of devils in it. The born-again (?!) fundamentalist save me jesus 'God Bless America' xenophobic form is one mighty big Devil.
We'll see what they actually practice as opposed to preach when TSHTF.
I agree, however do you think the masses of people believe they are anything but spiritual in their quest for [fill in blank]?
Excellent thinker on this stuff Joe....
http://www.joebageant.com/
He rails these guys and he can since he was smack in the middle of fundamentalist hell.
If that's what's happening, there are sure a lot more people who feel this way coming on-line. The on-line change over the last year has been dramatic, in both numbers and tone. When I first started reading TOD almost two years ago, discussion of collapse and dieoff was confined to an apologetic undercurrent. Other web articles discussing the imminence of collapse were few and far between. Now they're everywhere.
I'd agree that there's some self-selection and "proximity effect" reinforcement going on, but the change seems to be larger than that could account for. Maybe the news about Peak Oil is actually penetrating the zeitgeist, perhaps on the coattails of Global Warming.
That's odd.....Social Security is "planned" to run out that year.....change is comin for sure.....
http://thefinancedude.blogspot.com
I've occasionally got the same impression, but on the other hand there have always been people complaining about or questioning the state of the world. And it's something that many people are likely to do at an older age (or so I've heard - I don't qualify personally!). It's easy to read particular articles, or watch particular TV shows and come to believe that more and more people are wanting to "escape the rat race". But the statistics show the escape opposite - the world, both developed and developing, is becoming more urbanised, not less. Indeed a recent UN report estimated that some time in the next few months the world will be exactly 50% urbanised for the first time in history. By 2050 it's expected to be 67%.
There's plenty of websites promoting "counter-urbanisation" but no stats to back up the claim that it is actually occurring as a general trend in any particular country or region. And of course, even if it were true that there was a growing trend of people moving out of cities, I'd be surprised if it really meant people were becoming less dependent on private motor vehicles - in fact, precisely the opposite. What the impact of peak oil will be on those who have made that move is anyone's guess.
What I'm talking about isn't just the same old counter-urbanization. It's the growing number of people saying, "You know, our species is completely f#@kin' doomed, no question."
Unless there's a looming millennium I haven't heard about, this seems to be happening strictly because people are putting two and two together about the environment, GW and PO. I've never heard this level of apocalyptic sentiment before, and I was in the high tech bidness in 1999.
If so, it's potentially our biggest problem. Pessimists rarely actually get out there and make the changes needed. I understand the logic behind the pessimists' viewpoints, but I also see that there are plenty of potential ways out. I've made it my personal goal to do whatever I can to help find those ways.
Yah, airdale gets all spiritual when not promoting chewing tobaccy, Harley Davidsons and generally wishing hellfire and painful death on those who dare cross him. Not to mention where he goes when Posting Under the Influence.
I consider myself lucky, in that I've always had an intuitive affinity for feeling how whacked out-of-sorts our culture is. (Of course, some good psychotropic experiences in nature helped nudge this along too. ;-)). The spiritual/feeling side of life has come rather easy for me; although this by no means suggests I've got it down. It's just that I somehow got the connection about what really matters.
Despite our basic physical needs, we are at heart driven by longings of feeling or spirit. As Richard Heinberg's Museletter #181 (recently posted in the Drumbeat) noted:
"Modern brain research explodes the notion that logic can exist in pristine isolation from emotion and somatic states: as neurologist Antonio Damasio explained in his book Descartes’ Error: Emotion, Reason, and the Human Brain, emotion and reason are not separate; in fact, the latter is inherently dependent upon the former. "
Many others have written about the myth of reason/logic's isolation from the deeper underpinnings of our spirit/emotions. David Orr, writing in Earth in Mind: On Education, Environment, and the Human Prospect, touched upon our spiritual longings:
"We need decent communities, good work to do, loving relationships, stable families, the knowledge necessary to restore what we have damaged, and ways to transcend our inherent self-centeredness. Our needs, in short, are those of the spirit; yet, our imagination and creativity are overwhelmingly aimed at things that as often as not degrade spirit and nature." (From the book essay: "The Problem of Education" pg.33)
As to how this recognition helps us now I have no idea, except that I do believe the mounting evidence of loss and destruction is making it harder for reason and logic to avoid/deny recognition of what is really going on, and what this portends for those people, places and non-human creatures we care for.
In any event, here's to best hopes for getting in touch with, digging in, and holding on to what does matter to us spiritually. A healthy biosphere (earth) of locally sound communities, with decent life prospects to practice love in.
And thanks to graywulffe and Airdale for laying out their feelings and for those whose hearts were struck.
Godraz quotes a David Orr as saying
.
Well he's entitled to his opinion, but we really need food, shelter, and clothing and desire to reproduce. Everything else is simply a way of staving off boredom for people who don't have to work most of every day.
P.S. I'm sure the "I'm going to do it on my own" surivalists will quickly come to the same realization.
-
James Gervais
Hope was the last ill to escape Pandora's box.
.. and of course for humans to have a chance at producing anything near the levels of Food, Shelter and Clothing they need, much less the Desire to Reproduce, you would need Decent Communities, Stable Families, a Knowledge about restoring the world, ways to transcend self-centeredness.. things that feed our spirit, our liveliness, our Hope.
I think many survivalists will be bothered to see how much they are actually having to come to town. Trade, Barter, get help, deal with other people to make it happen. Cheap fuel has been a boon to a lot of isolationism and unchallengable ideologies. What happens when you can't just dart anonymously into some quickie-mart on the edges of civilization to keep your tanks topped off?
Bob Fiske
The Truth About NHTSA’s Revised Corporate Average Fuel Economy Figures
By Robert Farago
May 6, 2007
http://www.thetruthaboutcars.com/?p=3652
And in the comments:
How much fuel each vehicle uses does not matter to the planet, it's the total amount of fossil fuel the world burns that matters. Forget CAFE and start rationing and impose a fossil carbon tarriff on imports.
Hi thomas,
So, are you in favor of a tarriff on oil imports, you mean?
What else? Do you have any other ideas for "best case mitigation paths"?
One of my questions about tarriffs on imports, is the role and reaction of multinational corporations.
What percent of oil use is their use?
So, do they simply go elsewhere for stock?
I.e.., who is the audience/target for this action?
And, how is the tarriff collected?
What happens next? Who spends the money? And on what?
I'm looking for suggestions of MP3's or videos about peak oil so I can hand 'em out TO the guests at my Birthday party. Stuff that would not be a copyright violation to copy/distribute.
(Snagged the idea from: http://www.energybulletin.net/29347.html
We should have a party to celebrate the end of the 150 year Oil Party.)You can order copies of the CD of a one hour joint interview with Matt Simmons & Jim Kunstler (November 1, 2005).
At the symposium that night, Matt Simmons, Jim Kunstler and Boone Pickens were present, and the sole local media coverage was the SMU student newspaper (although an account was later published in Outside Magazine). There is a transcript of the interview at the EB link.
http://www.energybulletin.net/19686.html
Published on 1 Nov 2005 by KERA/Energy Bulletin. Archived on 26 Aug 2006.
Simmons-Kunstler interview
by Glenn Mitchell and Jeffrey J. Brown
Introduction
BenjaminCole
Simmons has a huge stake, and investment banking business, tied to higher priced oil. Kunstler has made predictions, and now is trying to vaildate his predictions by talking them to death.
In fact, world consumption is already falling. We have witnessed "Peak Demand" and it came before we see Peak Oil. OPEC cutting back production, to sop up extra supplies.
The real key is to look at world oil consmption after the 150 percent price spike of 1979. It fell 11 percent and did not recover for 10 full years (when oil was cheap again).
This time around, we have had a doubling or tripling of oil prices, depending on what you want to say the low price was. Demand is falling in the Western world, and slowing everywhere else. It is falling in India, by the way.
The Bohai Bay (China) discovery is bigger than most people know. China is the one nation with strong growth in demand for oil. The new find may mean they can meet increases in demand internally. So, no more 7 percent annual increases in oil demand from China. With conservation, substitution and Bohai, we may see world demand from China stabilize. Certainly that will happen if oil stays above $60 a barrel. That may not happen; the marginal cost of production for a barrel of oil worldwide is under $5. But demand is falling now.
What this all adds up to is this: We need a new and increasing tax on gasoine in the United States. Otherwise, we will see falling prices and increased demand again.
Except that demand is UP in India, contrary to your beliefs. Demand is UP in the USA. Demand is UP in China. Demand so far is only down where people cannot afford it.
Your assertion that demand is now falling is not substantiated by the available facts.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Demand may be up in India but that cannot be inferred from the posted Drumbeat link (by Leanan above)
If you read the article linked it is clear that India was an importer of crude and LPG and an exporter of Diesel, Petrol and Naptha. Perhaps there is sufficient info. in the link to calculate the net change in internal consumption.
"Officials said India's fuel demand grew 5.9 per cent to 119.84 million tonnes in 2006-07."
As I read this sentence it means exactly what it says.
Sheesh!
Ok - so demand was up 5.9%. That number was less than the 11.5% increase in crude imports mentioned at the beginning of the piece.
"The country imported 110.85 million tonnes of crude oil in 2006-07, which is 11.5 per cent up from 99.4 million tonnes bought in 2005-06, petroleum ministry officials said."
Interestingly enough that demand growth equates to 128,000 barrels per day of additional consumption of crude oil.
I wonder where that demand growth ranks amongst the worlds major crude oil burners.
Greyzone
Although I think BCole is probably something of a malingerer and is to be dealt with with some caution the pattern of demand is rather more complex than you suggest, as I pointed out in a drumbeat post a few days ago (it was near the day end and so got little reply).
Using EIA demand figures, comparing the years 2003 and 2006 the post demonstrated:
a) China's demand has risen 20%+
b) The rest of Asia showed a 7% rise
c) The US showed a small increase (just over 1%)
d) Demand from European OECD countries was effectively no different in 2006 cp to 2003.
'Conventional' thought has it that demand destruction is occurring down amongst the poorest countries (and I am sure it is). However if you consider that the OECD countries have grown GDP strongly between 2003 and 2006 (cumulatively by at least 9%) and yet have not increased their oil consumption this implies to me that they are using oil more efficiently (which to my mind comprises a type of demand destruction). Substitution may of course also be playing a role.
If you wanted to take a optimistic view of this you could say some of the most developed countries in the world seem to be using the same amount of oil to deliver a bigger bang for their buck - whether their net energy demand is greater would be worth looking at as well.
Thanks for the comparisons, andyh.
It's late and this reply will probably be buried but nevertheless....
All this talk about "demand" is a bit cockeyed... First, as I tried to challenge Mr. Cole before, when looking at historical production figures (in this case of oil) one has to understand the actual history behind the production itself, if one wants to make enlightened conclusions... Secondly, it is not possible to accurately determine what the true desire for oil is in any particular nation...
One important reason is staring you in the face, literally. Take as an example the computer you are using... was it made in America? Let's say it is a Mac. Assembled in Taiwan, of material from all over (for covenience let's say the plastic shell came from China.) Oil is consumed in China to make the pieces, oil is consumed in Taiwan to assemble the computer, and oil is consumed on the way to and inside of the US to ship it to you (along with any support items.) Oil is consumed all along the way to bring you, the US customer, that item. The thing is, the GDP increase for China for that plastic shell was trivially small, for the assembled item the GDP accounted to Taiwan is a bit more, but the GDP accrued to the US statistics is significantly larger (Apple's markup over manufacturing costs being what, 3x ?) Yet China and Taiwan had to increase their oil demand to bring the USA that larger GDP.
The amount of import of goods into the US is staggering... what that means is the US has "outsourced" some of its raw material demands, including oil. When looking for statistics on this one immediately discovers how difficult it is to get to the truth... a great amount of import statistics are listed in dollars, but "dollars" is not a unit of energy measurement. What you need is to find the type of product, weight, and then estimate the amount of oil required to manufacture and ship that to the US. Difficult to say the least.
Likewise for US exports, but given how little material goods the US actually exports (other than grain but that is coming to an end...) it would seem not to add that much to US oil demand. Also, given that US exports greatly consist of soft goods and services, most of the oil going into those dollar denominated exports is used to support the lifestyle of the US creator (software engineer, movie star, etc.)
Whenever I hear someone saying that the US needs to bring manufacturing back home, I wonder to myself if they really know what they are saying.... the raw material, including oil, will have to be imported too... reality is that simple sloganeering falls way short of appreciating the true physical universe.
It is a world economy out there. Any single country's oil "demand" is not just for the physical needs of their citizenry, but for their need to participate in the world economy. When looking at oil imports into a nation you are seeing the net result of that nation's desire to not only live a certain lifestyle but also to maintain it wrt other nations.
My other whole rant about this "demand" thing is that that term comes from economics and if you want to look at the past production curve and call that "demand" then so be it... but that approach does not tell the story that needs to be told. Namely, that what oil gets you, the homo sapiens, is the abilty to do greater work (as physicists use the term.) You measure that ability in joules (or in whatever you units system you prefer.) Less joules, less work. If you ( = the World system) are not going to get those joules from oil, you have to get them from somewhere else if you desire to accomplish the same work.
Interesting thoughts; in essence I believe you are pointing at the de-industrialization of the US (to explain to some extent those figures). Thanks for that insight.
here's a yabut for you : yabut, items manufactured in the good old usa wouldnt(or shouldnt*) need to be replaced (with cheap imported junk) every 1-5 yrs. that is if people in the good old usa would get outta the habit of buying cheap imported junk.
* cars being an exception. us car manufacturers learned how to build cheap junk long before the japanese took over no. 1
Hi InJ,
Thanks for filling in to help explain those stats. I definitely agree with you on your concluding sentence, namely,
"If you ( = the World system) are not going to get those joules from oil, you have to get them from somewhere else if you desire to accomplish the same work."
So, the total amount of non-human work done has to shrink. And will do so dramatically, barring some changes and switches to "renewables".
One question:
Re: "Whenever I hear someone saying that the US needs to bring manufacturing back home..."
Okay. So, what approaches have you thought about or discovered for "best mitigation" for the world? US?
What are your thoughts on this.
Bring manufacturing back to the US - no (?)
Then, some ideas or suggestions for "best coping" are - ?
The Bohai Bay (China) discovery is bigger than most people know
Mr. Cole must work for PetroChina, either in their exploration division or in upper management.
That may not happen; the marginal cost of production for a barrel of oil worldwide is under $5
Some few barrels produced by Saudi Aramco may still have production costs under $5/barrel but few barrels elsewhere. At $5.50/barrel, the pipeline to the North Slope of Alaska would be shut down, 100% of Canadian tar sands would be shut down, every stripper well anywhere would be shut down, North Sea production would be shut down (perhaps one or two fields would stay open), etc. etc.
Wishful thinking by Mr. Cole,
Alan
Source: here
Be still, my beating heart!
Let's see — 405 + 298 + 202 + 112 = 1017, which when we round up, equals 10.2 billion tons! It all adds up, it's looking good, break out the champaigne! Where can I invest in PetroChina?
Ahhh, how many barrels a day is that going to be? and when? Just asking...
best --
From the article down the thread, which reminds us of the report of the "10 Gb plus" Mexican discovery last year:
Do not neglect that Venezuela claims its reserves are larger than KSA's. Per Greg Palast, this is acknowledgded by an internal DOE report, and is "a geopolitical earthquake". China, by its actions with Venez, seems to be aware of this. Anyone know of the DOE analysis?
"Palast: Internal US Department of Energy analysis (I got my hands on it for BBC; it's in the book) shows that Venezuela, not Saudi Arabia, has the largest reserve of crude. That's a geo-political earthquake."
[Interview with Amy Goodman]
"That may not happen; the marginal cost of production for a barrel of oil worldwide is under $5."
Are you confusing the low cost producer's lifting costs with "the marginal cost of production?"
Not only is this not the cost to drill and produce oild from a new field anywhere in the world [on average], if you are making the case for abundant oil you also need to also look at this from the point of view of curtailment of production if the price of oil falls.
On that basis the "marginal cost" of a barrel of oil by maintining existing production s the current market price plus some wishful thinking increment where the eternally optimistic oilman hoping for higher prices continues to operate sub marginal wells until forced to recognize reality and shut them down.
Take out the stripper wells, remote, deep water, steam flood producers or high water cut / high cost producers through lower crude prices and see what happens to aggregate production. The oil glut of the late 1990s IIRC caused the loss of almost a million barrels per day of U.S. domestic production. Some of this came back on line later as some wells were shut in rather than plugged and abandoned, but the rest isn't coming back at any price. Part of the price you are paying today is the result of production lost in the late 1990s.
And oh by the way, if the price drops, the "peak demand" in your model goes away as the quantity demanded moves back up the curve.
and just a few short months ago we heard all about the 15gb jacks II discovery ...............and if that deposit had been depleted during that time, it would have been about equal to worldwide consumption.
google video
Robert Newman - History of oil
He is a performance artist with a very entertaining way of laying it all out there.
And I've seen that - does anyone know its copyright status?
Buzz kill!
Possibly OT.
I noticed the disturbing BEE phenomenon just north of Toronto this weekend.
I was in my garden and found several bees lying on the ground squirming (dying), and none flying around. (The garden is organic)
Does anyone know if they are tracking CCD somewhere? I didn't know it was in Canada (yet), but didn't research it.
I went up to my cottage as well, and found only the big fuzzy (wild) bees in my orchard. Odd.
I also noticed that when I came back out to the garden later (at home), the bees on the ground were gone. I can only speculate but I would imagine that birds must have scarfed em.
This bee thing is disturbing.
According to Einsteain we now have T minus 4 years...
Who? Wha? What happens in 2011?
The legend is that when bees go extinct, humans will go extinct 4 years later.
Ahh...
Einstein on Bees
Bees aren't quite extinct yet...maybe 2012 then.
"Probably not by Einstein" thou.
Long in-depth article here:
Please Lord, not the bees
Thanks for this article. An depth, balanced appraisal of the situation. I try to keep up on the subject, but hadn't come across this one.
As some may recall, I've mentioned that last year, honey bees were absent at my 150 tree orchard. It looked the same this year, but we've had such a cold, bone dry spring. Temps finally breached 65 this past weekend, and some honey bees returned, I imagine from a wild source that rebuilt last year. Sure was uplifting to see them, but they arrived too late for cherries, some pear. I expect that the other native pollinators may have saved these, esp the pear. Plums bloomed this last week in such profusion I imagine it was them that called the honey bees. Apples yet to blossom to any degree.
Don't know whether this has been posted before, but it's scary:
Alarming Disappearance of Honey Bees (Feb 2007)
http://www.gotmead.com/index.php?option=com_content&task=view&id=882&Ite...
I hadn't realised the bees were actually disappearing.
And the scary bit:
I have a question. It concerns the voluntary/involuntary pull back in KSA's production.
On pg. 211 of Confessions of an Economic Hitman by John Perkins (2004) the author puts forth a plausible scenerio, but how likely is it that this is happening right now?
For those of you who listen to a radio station in the Pacifica network, you may be familiar with this man's name. During his book tour he gave interviews on several programs including Democracy Now with Amy Goodman. This book recounts his career as an "economic consultant" working for an international construction and engineering firm. One that competed for contracts against other firms such as George Shultz's Bechtel.
His career spanned the 70s through the 80s. His role was to get countries such as Ecuador, Panama, and Indonesia to sign on to huge loans, via the IMF and World Bank (hello Mr. Wolfowitz), for massive industrial projects. As all who were involved knew, in the end, the ultimate size of these loans would eventually strangle each of the countries and the borrowers would be forced to make "concessions." Such as turning over their natural resources to US corporate control.
On pg. 211 it's 2003 and the US has just invaded Iraq. Perkins wonders if one of the main goals was to break up OPEC. He says that "by some estimates Iraq has more oil than KSA." He goes on to say that a possible outcome from our invasion could be that "OPEC might attempt to reassert itself. If the United States took control of Iraq, the other petroleum-rich countries might have little to lose by raising oil prices and/or reducing supplies."
Perkins concludes that OPEC might be thinking that this strategy would work when it's combined with the fragility of the US dollar. Most here know what will happen if OPEC starts to demand payment in Euros. This happenning in the near future seems unlikely. But I wouldn't be surprised if China has a contingency plan that involves the cooperation of OPEC in an attempt to cripple the US's current hegemony or to limit at some stage the continuing US attempts to spread democracy. Perkins explains it could play out this way: at some point, while OPEC squeezes supply, a certain major US creditor might start to demand certain repayments in a currency other than the US dollar.
Now, I very much like the analysis that's been happenning on TOD. Some of the last three to four weeks of stories on KSA's output have been so compelling that I have had to add this fiesta of analysis to my current list of addictions. And, since we don't have the true Saudi numbers, or the luxury, as of yet, of hindsight, it would be foolish not to continue to consider alternative storylines.
How likely is this scenerio? I think it's plausible, but a lot of things are plausible.
I'm trying to figure out what scenario you're talking about.
"If the United States took control of Iraq, the other petroleum-rich countries might have little to lose by raising oil prices and/or reducing supplies."
Is that a scenario? How does the US invasion of Iraq lead to KSA having little to lose? What is it they "had to lose' before, and no longer have?
The US and KSA are Siamese twins in a morbidly twisted way. They weren't born like this, just saw their kidneys spontaneously join as they grew older.
Abdullah tearing away from Houston/DC is merely posturing to appease third parties. If the US withdraws from KSA, Abdullah and a 1000 other princes are dead tomorrow morning, if they haven't escaped to their Paraguay properties first. If KSA oil would fall in hands other than Houston's, the threat to the US would be so great, we might as well get a Chinese president, build sweatshops and save at least some of our children.
If you want a scenario:
There is one reason only why we haven't started fighting big-time yet: until 2007, there was enough oil to go around for the countries that have sizeable armies and weapons.
While not a professional in the matter, game theory would suggest that as long as the US can mantain chaos in Iraq (and Iran) they are fulfilling their basic objective, which is preventing the U$S from losing it's reserve currency status.
If this happens the free ride is over, stop the printing press and the whole country is in default.
Odds are that something along this line will come into play much sooner then PO or global warming.
An in depth look at the history and current stalemate in Iraq concerning oil, just posted I believe.
http://www.tomdispatch.com/index.mhtml?pid=192709
Now this is what I call gouging:
Iran must delay petrol rationing: MP
Sounds like the perfect solution to the current tight inventory situation in the U.S.
I am reminded of a Dilbert cartoon from years ago. Their new software program had some bugs. When installed, it erased your hard drive. If you were on a network, it erased all the hard drives on the network. If you had a modem, it dialed up all of your friends and erased their hard drives. If you had a speaker, it cursed at you while erasing your hard drive. The manager said go ahead and ship it. They would fix the problems with Version 2.0.
All my software comes from Dilbertland. Always has.
Wondering when Stuart's next Saudi piece comes out?
From ODAC News:
from WSJ
decline at Cantarell will average about 11% a year over the next six years, then slow to around 4%-5% per year
Overly optimistic. Better than the best of the 5 scenarios leaked by Pemex insiders.
So far, Cantarell (by my observation) seems to be in the middle of those 5 scenarios with annual depletion of 20% to 25%. Give another 6 to 9 months to confirm this trend.
Best Hopes,
Alan
I've enjoyed the extremely informative debates about Ghawar and how close to peak we currently are but I'd like to step back from that and ask a different question.
Irrespective of the actual date of peak, what is the likely decline rate of production once we fall off the 'bumpy plateau'?
My view is that regardless of what models might suggest, "above ground" factors are going to be the determining factor in what is produced after we fall off the bumpy plateau - most likely less than what theoretical models suggest.
The percentage of what is produced that is available for import to the US is likely to change also - this may be much lower than we have grown accustomed to, if, for example, we have monetary problems.
I mailed a package from Houston Texas to Calgary Canada this morning. They offered a choice of ground or air mail, and air was only 10% more than ground. The postal worker then told me that as of next Monday, international ground would no longer be an option - everything would go air mail. This was due, she said, to rising gas prices. Didn't exactly make sense to me - planes use gas too - but that's what she said.
I discovered something similar... this year I was mailing various packages from Japan to the US and when investigating the options discovered that in some cases express mail was cheaper than regular airmail! Then when I wanted to to ship some heavier (say a couple of pounds weight) items, discovered that ground mail was almost as expensive as airmail!
My theory on this: Background - airmail and express mail from Western Japan comes to the US into SFO via United flight 886. That is a Boeing 777, a plane noted to have extra plenty space for cargo. Adding a few more bags of mail has probably very low marginal cost increase to United, so UA probably bids very low to the USPS and JapanPost to carry.
Meanwhile, ships and shipping containers from Asia to North America are ladened with all sorts of goods, e.g. Kunstler's infamous plastic salad shooters. So the shipping companies are not hurting for business heading east and likely don't want to deal with the small stuff (such as national mail.) Anyone who has lived in Japan and wanted to ship a few heavy (household) items to the US quickly discovers the high cost of surface shipping.
Everybody thinks jets waste fuel... but the real savings is to be had by not travelling at all.
A few months ago, I sent an unanswered email into the UPS system suggesting a new delivery service. Something along the lines of 'When the wait is worth it' or 'When it is worth it to wait'.
My idea was for delivery companies to offer a service where you could order products worldwide but the delivery time would be anywhere between 2 and 4 months. The advantage? The cost to ship would not be the largest percentage of the purchase price, as it is now when goods are delivered overseas in a one off purchase (for example, some books from Amazon sent to Asia). The news that ground is not being offered as a delivery options shatters any of my hopes for a slower, less expensive delivery option.
A few months ago, I sent an unanswered email into the UPS system suggesting a new delivery service
Emails are the electronic version of a scribble on toilet paper.
For a serious missive you still need paper.
If you had written a nice letter to the CEO of UPS and FEDEXed it ... ideally to his/her home address then you WOULD have got a full answer from someone senior in the company.
Ground transportation tends to be by truck so it's obvious why it's less efficient. A large cargo jet carrying nothing but cargo (no human passengers) can carry a huge amount of material at a fairly decent fuel cost per pound compared to ground transportation cost (by truck).
The scenario would be different if we had rail and barge access to everywhere that needed mail delivered but we don't, because we're damned fools who tore up our rail system for the "freedom" of the automobile.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Incorrect!!! There is no aircraft that can move a ton of freight at lower energy cost than any surface transportation mode, truck included. The laws of physics dictate that. An aircraft has to expend energy simply to keep its tons of cargo six miles high before we even start talking about energy required to blast through the air at +500 mph. There is no way for that to be more efficient than simply overcoming rolling friction, sometimes gravity and air resistance at ground level while being supported by terra firma.
I suspect that the reason for higher charges may be the labour charges and logistics charges for the longer average travel time.
The Chinese oil find reported at the top of the page ("the largest find in Asia in the past three decades") would provide, roughly, 190 days of oil for the US. Where are all of those new super-giants I keep hearing abooot?
Oil and Gas International reported the Jidong Field discovery might be onstream in three years with 208,000 bopd.
THE COLLAPSE OF THE COLLAPSE? STAY TUNED
Seth nicely opens a topic that needs to be talked about....
"The Chinese oil find reported at the top of the page ("the largest find in Asia in the past three decades") would provide, roughly, 190 days of oil for the US. Where are all of those new super-giants I keep hearing abooot?"
So what's going on? What are we to make of these type of stories, which are beginning to tumble in from all over the world?
Recently we have seen discussions of finds deep offshore (the Jack2 story) Cambodia (who knew/knows how much oil is in the Bay of Thailand?), China (what?!! I thought they were DEAD for new oil finds of any kind!), offshore West Africa (even the doubters say, well yes, Nigeria and Angola have shown there is oil that can be produced there, if you can avoid the murderers), Brazil (despite the press hysterical rantings, it is new oil, NOT ethanol that has made Brazil energy independent), the reopening of Libya and possible new north African oil (Libya has shown there is some there, and Algerian natural gas causes one to wonder.....), deep Gulf of Mexico finds (how much, how expensive to get...?)...well, I will stop for now, you get the picture....
Now, the doubters of course say, "that's nothing", that's nothing", that's nothing" over and over again until it becomes a mantra, but the problem is that the "that's nothing" reply is suffering from "death by a thousand cuts", and is becoming a bit tired and embarrassing actually....because where there is a little bit of oil (and some of these finds are a bit more than "a little bit") there is often more. Chevron says as much about the Cambodian find, claiming that their experts say there is MUCH more in the area, and China and Brazil hope for the same news and have some reasons to think it may be true. What if.... (?) there is MUCH more, that these fields truly are the tip of the iceberg?
Because here is what the current "hegemony" of oil producers, i.e., Saudi Arabia and the OPEC brotherhood fear most, much, much more than they fear "peak":
If any one of the above "finds" turn out to be just the tip of an iceberg, they could be facing exactly what they faced in 1982, that is a collapse of oil prices as new fresh fields come on line, fields early in their production days that can deliver, at least for awhile, a flood of oil. For Saudi Arabia, and other regimes that have overspent their budgets, and are now heavily invested in new development and pretrochemical expansion, it could be a catastrophic financial setback. If any two of the new finds turn out to be the tip of an iceberg.....well, as we say out here in the country, they can send their mouth way down south and kiss their a++ goodbye for a long time...given the political and ethnic turmoil in the region, perhaps forever.
But of course, we all KNOW that won't happen, right? These are just little baby fields, there is no REAL oil there, any boob that is not paid by CERA knows it, right?
How you answer that question depends in part on how much you have at stake, and how old you are.
If you remember the 1970's clearly, and were old enough to follow the money, you are not so certain that any one of these fields will not turn out to be a major surprise to the upside. I well remember how easily folks dismissed the North Sea....even if there is oil there, it was said, the danger and expense of trying to extract it means it will be produced damm slowly, it just will not be that big of a deal. Likewise, African production, and deep offshore production around the world.
But, the new did make a difference, and a big difference if you had a lot at stake.
From 1982 to aprox. 1999, the established oil industry fought off a flood of cheap oil, and suffered. Exploration efforts almost ceased to exist, as the giant companies fought for their lives (in a round of mergers, several old and big names did not in fact survive), and Saudi Arabia sank into debt. Like the private Western oil companies, KSA did not spend hard earned money on exploration or development of new projects.
Many of the executives and technicians, in Houston, in KSA, now getting late in their careers, spent their formative years in the terrible near two decade oil patch depression. They do NOT want to go through that again. They think that they are smarter than the long gone old men they began their working careers answering to....this time, they will handle it differently.
Thus, investment in new E&P is moving in a much more measured way, after all, if your still producing more than enough oil for the refineries to handle, why compete with your own new, more expensive oil?
Saudi Arabia is playing the game PERFECTLY if the world has newer oil competitors (if they are wrong, well, they are still in good shape, as it leaves them as the big dog in yard).
KSA is betting much of it's money on finished value added oil product. Think about this: That is money that it could be spending in new exploration and new production development, but why would they? They seem to know that they have enough production, (or they would not be spending billions on giant petrochemical refineries and plants with no prospect of feedstock to run through them).
They are keeping the production high enough, holding a stable price at a high point, but one that they don't think will dampen demand (anything under $75 or $80 per barrel is NO indication of an emergency of any kind...given inflation and currency decline of the dollar, that is about where it should have been for the last several years).
Saudi Arabia and others in the know seem to be giving all the indications of knowing that the supply crisis could well collapse in a year or so, and they will have to be ready to ride out the recession in oil prices again.
How? This time, they will be the CUSTOMER for oil as well as the supplier. Cheap raw materials pouring into brand new refineries, cheap natural gas locally available to make fertilizer and plastics, it is the Saudi's and Qatari's who will enjoy the benefits of cheap oil this time.
The end of the age of oil? It's coming, but perhaps not just yet...
-----------------
So what could go wrong, and end the possibility of a coming oil glut (and remember, that's all we are talking about, and all that is needed is the "possibility" to cause OPEC, the banks and the producers of oil to review and possibly change their plans, and throw a monkey wrench in the "dump suburbia and move to the hills because James Howard Kunstler told me so" theory of estate planning...)?
PLENTY. First, the new fields may indeed be nothing but a pizz in the sea, and make no difference. For the doomers, they can hold out hope....
Secondly, the infrastructure problem. This is the arguement that was made over a year ago by the French Chief of Total Oil, Christophe de Margerie, when he said that numbers like 120 million barrels per day would never be reached, not because the oil was not out there, but because the manpower, equipment, and political arrangements needed to produce that much could never be achieved.
Thirdly, the cost of developing these fields will be a huge factor. The producers of newly developed but expensive oil are still in great fear of the Saudi's.....just as the capital is expended, the Saudi's come on with cheap Persian Gulf offshore oil and oil from newly developed but cheap Saudi onshore projects, and the independent oil companies lose their shirts....any new oil development will be brought on with GREAT CAUTION, and let the aging SUV owner scream and cry all they want.
Lastly, what I will call the "Benjemin Cole" arguement of peak demand, closely akin to the Roger Conner Jr. argument of "confluence", for those who have been reading here at TOD for awhile.....
We have to recall that the price rises of the 1970's basically flatlined consumption growth for a decade. This time however, we have China/India and other developing countries coming online for consumption.
But, current and upcoming technical developments in efficiency are MUCH more powerful than those of the 1970's-'80's.
The Saudi's and the major oil companies may have made a major error this time, in that much of the technology is beginning to reach "confluence", that is, the new efficient products are able to sell not only on the basis of efficiency, but on the basis of convenience, security and style.
Oil consumption per GDP in the U.S. and other developed nations may indeed be absolutely flat and even begin a decline in the near future. For those who say that world oil consumption will still climb, that frankly is their problem and only serves to weaken our trading partners and adversaries. It has long been a myth of American hubris that we have either the ability or the right to tell other nations what their energy consumption and greenhouse gas emissions should be. The U.S. is in a position to regain the position of home prosperity we knew in the 1980's, created in great part by flat energy consumption and cheaper energy prices.
The other nations of the world will have to make their own choices.
Of course, the possibility of near term oil production declines cannot be dismissed, and the United States, either way MUST, repeat, must decrease imported oil consumption simply for economic reasons. We are bleeding to death on balance of trade issues, and if worldwide finds in Africa, Asia, and even Saudi Arabia were to deliver huge amounts of oil to the world and create a glut, and this is hugely important to convey to the American people, it would do the United States no benefit and could in fact due us great harm. It doesn't matter whether it is Cambodia, West Africa or Saudi Arabia that is collecting our dollars. What matters is that they are leaving the United States.
It is crippling us much faster than "peak" per se ever could.
We simply cannot, no matter how much oil and natural gas is available to the world, continue to consume fossil fuel at the level we currently do. We surely must develop to avoid increases in the amount we consume, but here's the rub:
If there is a drop in oil prices back to the $38 to $40 per barrel level, we will see a meltdown in the alternative fuels industry, in particular the ones that are of questionable value and narrow margins: Tar Sand and ethanol will become an investor bondoggle. Even if you don't like these options (I don't) we should be ready for the possibility that the amount of money and material wasted will be phenomenal, and investors will be wiped out.
So, what we know is what we don't know. If anyone "assures" you that they KNOW the "peak" in oil production is here, and they know the catastrophe is coming soon, run from them just as fast as you would from the CERA types who will tell you they KNOW that there is no problem, and the oil import bonanza can go on until the middle of the century. Niether side can KNOW that either scenario will reflect the truth, or anything near it.
The rap singer "The Streets" has a great line....."I got a good one for ya' dad....today I went to see a Rabbi, a Priest, and a Protestent clergyman....you always told me to hedge my bets."
The young are beginning to learn a valuable lesson, one the old need to remember: Try to hedge every bet. EVERY BET.
Thank you.
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
Like it. Very thought provoking. A suggestion : repeat it on the next (newer) Drumbeat, it deserves a wider view.
The basic thing which must be understood (and is understood by most people on TOD, I presume) is that Peak Oil does not mean "no oil". Nor does it mean that there cease to ever be any more new fields dicovered. There have been discoveries in the years prior to 2007, and there will continue to be discoveries after 2007. It is the long-term trend in the RATE and overall VOLUME of discoveries that matters. That rate of decline may not be abolutely uniform. Those who develop models to project the future must display them as a smooth curve, but we should all understand that real life won't actually be that way, it will be jagged, and there may be an occasional year with an unusual number of new finds. One year does not a trend make.
The basic problem is that the long term rate of discovery is not growing, but is in decline. Furthermore, an ever greater percentage of new fields discovered are smaller and have worse EROEIs. Meanwhile, up to now at least the demand has been continuing to grow. Supply has been able to match it, but as the production curve has now crossed the discovery curve that can't continue -- production must plateau and peak, and then begin to decline.
The best that can be said of some big finds is that they offer the posibility of making the rate of production decline a little less severe, thus buying us some time for mitigation. If those in charge of these things are smart (and if they are not, why are they being paid so much?), they will develop and produce any big new discoveries gradually, preerving as much oil in the ground for as long as they possibly can. The post peak environment is different and imposes different rules than were in effect pre-peak, which is why I am hopeful that a big discovery or two won't plunge the price of oil again.
WNC Observer, your points are excellent.
Many at TOD have talked about a fuel tax of some type, but that is not politically acceptable to many. I would at least hope for a "floor price" to avoid a drop into stupidly low prices (which would most probably be temporary anyway) that destroys the will to change.
The volatility in price may cause many people to consider change behavior and purchasing patterns as much as the price of fuel per se. I see no end to the volatility.
RC
Remember, we are only one cubic mile from freedom
http://www.guardian.co.uk/worldlatest/story/0,,-6615825,00.html
Obama on oil
Too bad he's only proposing raising fuel efficiency.
I'm not one for baroque style, ornate conspiracy theories, as when you back up they usually look like some Rube Goldberg contraption with 20 dependent contingencies. That said, I just can't help myself, here's one. Could the recent refinery problems be purposefully engineered? It is a bottleneck that likely could be influenced by a small percentage of involved parties being on board. It also would possibly serve two or three purposes if PO is accepted as a serious problem. 1) It creates demand destruction by elevating the price of refined gasoline, similar to a gasoline tax but without the tax. 2) It shifts public perception from PO to refinery induced gasoline shortages, if such were considered necessary. 3) It artificially, at least temporarily, suppresses the price of crude as crude inventories rise. As a disclaimer I don't buy into this myself but it certainly has occurred to me.
As a corollary, does reaching record gasoline prices prior to the start of the driving season say anything supportive about PO? Personally, though not dismissing PO, I think it still, for the moment has to go into the interesting coincidence bin, but will be real curious to see where things are a month after Labor day.
ZPDM123,
Have you by chance seen the documentary (shown on many PBS stations) or read the book, "The Smartest Guys In The Room", about the growth and then callapse of Enron?
If you have, this would explain your (and my own) willingness to accept what I once would have dismissed as silly conspiracy theories. If you have not, then you should, although it may serve to fuel paranoid concerns of the type you describe above (remember, just because the guy is paranoid, that does not prove there are not folks out to get him!) :-)
Speaking of these type of "accidental outages", even though there is audio tape of the traders at Enron, Calpine, Dynergy and others arranging them, most Californians and almost all of the "delusional gorge" doomsters still say California has an energy crisis....it's like those people who believe in crop circles even though they have been shown by the pranksters how it was done, when, and why....
To paraphrase Bertold Brecht, "Hitler may be dead, but the bitch that bred him is still on the loose."
So it is, "Enron may be dead, but the bitch that bred it is still on the loose."
Here's the good news, though. While it may be painful for awhile, turn them loose...they are cutting their own throat.
I was talking to a business friend the other day, and bragging about the fuel mileage of the new Mercedes Diesel, (around 36 mile per gallon, luxury sedan mind you...) and said "But if you can afford a 52 thousand dollar car, I guess you really don't care or worry about fuel mileage...", to which this mild mannered professional lady says, "are you kidding, I would pay 52 thousand bucks just to spite the filthy bastaards (I assume she was referring to the oil companies and refiners, would that be a safe guess?)
I know, that may be an unfair rap on the oil companies by the lady, but right at that moment I think I developed something of a crush on her....:-)
RC
Remember, we are only one cubic mile from freedom
Refineries are expensive and don't get built unless the numbers work. The simplest explanation as to why they are not being built is because they can't get the numbers to work. The simplest explanation is usually the true one - Occam's Razor. (Good old Occam usually can be counted upon to cut down the conspiracy theories.)
The question as to why the numbers don't work these days is a more complicated and interesting one, answerable perhaps by someone who knows more about oil refinery economics than I.
Running on Empty, Running Dry
The US end of April gasoline inventories were at their lowest for any April since 1956. Could this report be credible? What is peak oil?
http://news.morningstar.com/news/ViewNews.asp?article=/DJ/200705021349DO...
Exxon Mobil recently listed a vast amount of untapped oil remaining to be tapped as "frontier oil" instead of conventional oil. That is heavy oil (tar sands) and shale oil. A large amount of conventional oil prospects were estimated as being in countries restricting access. Easier to guess that there is oil there than to actually produce it.
$4.00 oil ahead.