 | Depletion Levels in Ghawar | The Oil Drum | Ecological Footprint, Energy Consumption, and the Looming Collapse |  |
DrumBeat: May 16, 2007
Posted by Leanan on May 16, 2007 - 9:02am
Here is a quick run down on the possible disaster we face this summer as we head into Memorial Day with the lowest beginning-of-driving-season stocks in US history. It would have been convenient had someone found out exactly what Minimum Operating Levels really have become. I suspect we will answer this riddle this summer.Minimum Operating Levels of petroleum inventories are when all cushions have been used up and the system is now starting to “rob Peter to pay Paul." At this stage, the risk of shortages starting to crop up is Red Alert.
The AAPG Oil Reserves Conference, Nov 2006 - How Much Is Left?
Late last year, in November 2006, the American Association of Petroleum Geologists organised a two day conference in Colorado Springs, USA which was by invitation only, described by the Oil and Gas Journal as the “AAPG Hedberg Research Conference on Understanding World Oil Resources”. The theme of the conference was to discuss the world’s remaining reserves of oil, and to reach some conclusions about how large reserves were. 75 specialists attended. Everyone who attended had specialist knowledge of original oil field data in specific basins around the world. The USGS were joint organisers and made a number of presentations comparing their studies with industry and state oil company experts having original data sets.
Venezuela Private Oil Rig Ops May Drop on Nationalist Risk
Venezuela's threats to "nationalize" 18 oil rigs currently operated by outside firms sent a shock wave through the local oil services industry at a time these services are in high demand around the globe.
OPEC: World oil demand to reach 85.4 mln barrels a day in 2007
The world's daily demand for oil will reach 85.4 million barrels this year, up 1.2 million from 2006, said the Organization of Petroleum Exporting Countries' (OPEC) Secretariat Tuesday in its monthly report.
Norway government eases 2007 projected oil, gas production
The Norwegian ministry of petroleum and energy has downwardly revised the country's projected oil and gas production this year, cutting its total production figure to 243 mln cubic metres of oil equivalent (cmoe) from 249 mln last year.
Norway Has Not Yet Reached its Golden Age as a Gas Nation
"Norway has not yet reached its golden age as a gas nation, and will supply natural gas to Europe for many decades to come, Tore Torvund, head of the business area Oil & Energy in Hydro, announced at the 14th European Gas Conference in Oslo on Tuesday.While oil production from the Norwegian continental shelf is on the wane, Torvund emphasized that Norway has major gas reserves that have not yet been produced.
Nigeria: Shell declares force majeure on 170, 000 bpd Bonny oil exports
Angry Ogoni youths occupied a major oil pipeline feeding the Bonny export terminal in a protest which began on May 10, forcing Shell to cut 170,000 barrels per day of production.
Venezuelan oil output hits 2.35 million bpd
Oil production in Venezuela dropped 40,000 bpd in April, according to the International Energy Agency.
Pakistan, Saudi Arabia may pose bigger problems than Iraq, Afghanistan
Security collapse in Pakistan and Saudi Arabia could pose far greater problems for the west than either Iraq or Afghanistan, a former US general said on Tuesday, according to the Australian Associated Press news agency.
The 6,400 employees at Brazilian environmental regulator Ibama have started their threatened strike in protest over what they deem as government interference in the organization's structure, local press reported.President Luiz Inacio Lula da Silva published a presidential decree late last month ordering Ibama to split up the management and overseeing of nature reserves into a new institute dubbed Chico Mendes.
Iraqis resist U.S. pressure to enact oil law
Opposition ranges from vehement to measured, but two things are clear: The May deadline that the White House had been banking on is in doubt. And even if the law is passed, it fails to resolve key issues, including how to divide Iraq's oil revenue among its Shiite, Kurdish and Sunni regions, and how much foreign investment to allow. Those questions would be put off for future debates.
What Happens After US Withdrawal from Iraq?
It seems that the question being asked behind the scenes in Washington today is not whether or not the US forces will withdraw from Iraq, but when and how, and, more importantly, who will take the place of the US troops in Iraq?
Power industry warns on high price of moving to ‘clean coal’
The UK power industry has told the Government that the development of “clean coal” power stations will not take place without heavy subsidy and higher electricity prices.
Next-Gen Energy Conference: Moore's Law for solar?
Is it time for the solar power industry to focus less on tech R&D and more on delivering affordable solar energy to the masses?
Hydrogen cars may be a long time coming
President Bush's goal of putting the next generation of Americans into cars fueled by hydrogen is slipping away.Technology, economics and human behavior are proving to be formidable obstacles to the president's dream of using hydrogen - the most abundant element in the universe - to reduce America's dependence on gasoline.
Our view on atomic energy: As globe heats up, nation warms to nuclear power
Solar, wind and other renewable energy sources are more desirable than nuclear — but they're not ready to produce the huge amounts of electricity the USA consumes. Nuclear power isn't a perfect answer, but safely managed and regulated, it needs to be a bigger part of the nation's energy future.
Saudi Arabia has discovered two new oilfields near Ghawar, the world's largest field, Oil Minister Ali Al Naimi said.Output from one of the fields was light crude with an API gravity measure of 35 degrees. The Derwaza-1 well on that field, 70 km southeast of Ghawar, produced 5,569 barrels per day of oil and 2.8 million cubic feet per day of gas.
The second field produced heavy crude with an API gravity of 27.4 degrees, the SPA news agency said.
Saudi Aramco Signs Offshore Manifa Contract with J. Ray McDermott
Saudi Aramco signed a lump-sum turn-key contract with J. Ray McDermott for the engineering, procurement, fabrication, transportation, installation and hookup of offshore platforms for the 900,000 bpd Manifa oilfield development project.
Will oil go up or down $10 per barrel in the next few years?No one can answer that with any certainty as dozens of interrelated political and economic forces can each move prices several dollars per barrel, and divining the collective effect is impossible.
Will oil hit $100 per barrel?
That, surprisingly, is an easier question because there is one indicator that may give you a pretty good idea: the U.S. response to Iraq's civil war.
Turkmenistan's natural gas: mixed blessing
A weekend deal with Russia for a pipeline will raise revenues for the ex-Soviet country, but some worry how those will be spent.
IEA Warns Russia, Iran Against Pushing 'Resource Nationalism'
Ministers of International Energy Agency member states warned major natural gas producers such as Russia and Iran on Tuesday against disrupting energy markets with production-adjusting actions based on nationalism and using their rich resources as leverage over others, IEA officials said.
Why $5 Gas Is Good for America
The skyrocketing cost of oil is sending pump prices soaring. But it's also subsidizing research into new technologies that can change the energy game.
Congress urged to ease pain of gas prices
The average U.S. household is already spending $1,000 more per year on gasoline than it did five years ago, two consumer groups say in testimony they planned to present to a House Judiciary Committee task force Wednesday.That's an increase of 85 percent, and rural households have been hardest hit because they spend about 20 percent more on gas than urban residents, the Consumer Federation of America and Consumers Union said, citing Labor Department figures.
"It is time for Congress and the administration to do their part to help alleviate the pain consumers are feeling at the pump," said Mark Cooper, director of research for the federation. At Wednesday's hearing, he plans to call on the federal government to provide greater oversight over oil industry market practices, create strategic refinery and product reserves, and enact policies that promote reduced oil consumption.
Despite cost of gas, motorists still driving
For all their complaining as they pay $3 a gallon or more to fill up their cars, few American drivers have yet to reach the point of cutting back.....Most Americans are locked into their driving habits, and can do little to alter their fuel-buying patterns when prices rise, experts say. For example, the number of workers with commutes lasting longer than 60 minutes grew by almost 50 percent between 1990 and 2000, according to Census Department data.
'70s-style gasoline crisis possible, Senate told
"We are one major incident away from a 1970s-style gasoline crisis," Paul Sankey, an oil analyst, warned the Senate Energy Committee yesterday.
Dow, Shenhua closer to clean coal plant
Domestic coal mining giant Shenhua Group and US-based Dow Chemical Company have signed a cooperation agreement and announced plans for a feasibility study, bringing the two a step closer to building a world-class coal-to-chemicals complex in Northwest China's Shaanxi Province.
Motorists will pay for energy 'solution'
It's hard to believe the news on gas prices could get any worse. But the rush to ethanol almost certainly will push prices at the pump even higher. And that's not all the bad news: The ethanol craze already is causing food prices to rise, and they will rise higher as farmers try to meet the huge, government-mandated demand for corn.
Senate defeats climate change measure
The Senate, after one of its first full debates on global warming, on Tuesday defeated a proposal requiring the Army Corps of Engineers to consider the impact of climate change in designing water resources projects.
Ignore car fee critics, London mayor tells NYC
London Mayor Ken Livingstone backed New York Mayor Michael Bloomberg's plan to adopt the British capital's traffic-fighting vehicle fee, urging him on Tuesday to ignore critics and any drop in approval ratings.
LA wants to slash greenhouse gases
Los Angeles — a city devoted to cars and polluted by the exhaust that comes with them — announced Tuesday an array of steps to sharply reduce greenhouse gases by 2030.Some ideas appear easy, like planting trees and giving each household a couple of energy-saving fluorescent light bulbs. Others are speculative at best, like expanding the city's mostly ignored subway and hoping to slow water use at a time when the city's population is growing.
16 cities to go green under Clinton plan
Sixteen cities around the world will begin cutting carbon emissions by renovating city-owned buildings with green technology under a program spearheaded by former President Clinton's foundation.
California to rank greenhouse gas content of fuels
California on Friday will unveil a ranking of greenhouse gas emissions from motor fuels with the goal of encouraging people to use low-carbon alternatives.Scientists will reveal the formula for calculating the amount of greenhouse gases emitted from the full cycle of fuels — from extraction and harvesting to combustion — said David Crane, an advisor to California Gov. Arnold Schwarzenegger.
Clarion Caller: An interview with renowned climate scientist James Hansen
...The only way to keep CO2 from exceeding 450 parts per million would be to say we'll have no more emissions from coal, and that would mean that we should not be building any more coal-fired plants until we have the sequestration technology. A molecule of CO2 from coal, in a certain sense, is different from one from oil or gas, because in the case of oil and gas, it doesn't matter too much when you burn it, because a good fraction of it's going to stay there 500 years anyway. If we wait to use the coal until after we have the sequestration technology, then we could prevent that contribution. I don't think that has sunk in yet to policy makers, because there are many countries going right ahead and making plans to build more coal-fired power plants.
California-Sized Area of Ice Melts in Antarctica
Warm temperatures melted an area of western Antarctica that adds up to the size of California in January 2005, scientists report.Satellite data collected by the scientists between July 1999 and July 2005 showed clear signs that melting had occurred in multiple distinct regions, including far inland and at high latitudes and elevations, where melt had been considered unlikely.
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Is Gazprom Vladimir Putin's retirement haven?
Analyst: Russia's energy policy geared to make Gazprom global champion
http://www.marketwatch.com/news/story/russias-putin-positioning-top-gazp...
Doesn't that just say it all?
As for the call for the government to "enact policies that promote reduced oil consumption" - the best policy is to let the price increase, dude!
Of course she doesn't have a choice - if she stopped driving, her life would change.
And give the choice, she would rather spend upwards of 10 hours a week in her SUV than not.
That truly says it all.
My dear Sandy, putting aside whether you actually have a choice or not -
If you don't choose for yourelf, then a choice will be made for you...
Oh, this one is really good too, from the "70's style oil crisis" article above
What is "unconscionably excessive"? Costs more than bottled water ?
I thought this one was also telling:
He could have been driving something such a Scion XB to 'haul around' his 'wares', but that would be whimpy, wouldn't it?
well it's just a really aesthetically unpleasing design. Plus an suv w/ all the attendant poor handing dynamics. I'll take a TDI and use a roof rack (probably holds almost as much anyways)
matt
Actually, the Scion XB (old version, as pictured) has on-rode driving dynamics that are more car-like than truck-like. While it barely exceeds the external aesthetics of an Aztec, it has quite a bit of room inside, 30+ MPG efficiency, $14k list price.
That said, I think the best solution for the GMC Yukon person is a cargo van. Or, wait until fuel prices reach $5+ and stay that way; then the US will suddenly have a large assortment of vehicles that are currently only used everywhere else in the world but here.
The Scion has 74 cubic feet of cargo volume.
The Chevy TrailBlazer has 107 cubic feet of cargo volume.
The Honda Odessy Minivan has 147 cubic feet of cargo volume.
The Scion wins out on MPG at 33mpg HWY.
The Chevy Trailblazer gets 20mpg HWY.
The Honda gets 25 mpg HWY.
The Scion wins out on price as well. $14k.
Honda minivan is $25.6k
Chevy Trailblazer is $25.8k
If you need good gas mileage AND big cargo capacity, minivans are the way to go. Just take all the seats out, and BOOM, cargo room. If you don't need as much cargo space, the Scion is the way to go.
Well, we could sell the used Pukons to countries with subsidized gas prices.
Don't forget to take them off when not in use...
http://www.metrompg.com/posts/roof-racks.htm
Come to think of it, a Pukon is really good for towing things. That is if you have things that you need to tow.
I know someone who has one - he uses it because he races cars (Porsche), and need to pull a trailer with the race car. Don't talk to me about it - that isn't my hobby.
I'm waiting for the "soccer kid" riots to begin, when mommy has to say NO, ride your bike or forget it! Oh the cruelty of it all...
Yeah, all those reports that people "cannot change" their driving, since they have to drive to work, and then we have the stats (that Stuart posted here?) that only 20% of US VMT is commuting to work.
Delusional.
You may not be far from the truth. (And this will also impact the UK because of the way many of us now live).
Two types of driving:
None discretionary - Work commutes, food shopping etc
Discretionary: - Piano lessons, Rugby practice, football, tuition etc etc. Then of course the summer holidays: Visits, holidays, the beach etc
Everything to keep their most Imperial and Royal Highnesses happy, occupied and not (the dreaded word here) BORED.
Long gone are the days when kids were expected to look after there own entertainment in the summer. Kicked out after breakfast, back at sunset, out on your bike for the whole day. Setting fire to wasps nests, vapourising ants with a magnifying glass, playing down 't tip with asbestos sheeting, discovering Cider with Rosie.
This idyll was actually quite true 40 years ago. But then perceptions have changed: A kiddy fiddler behind every bush, An Osama in every anonymous white van...
So, expect discretionary driving to dissappear off the menu this summer. And consequent degeneration of national child health.
Ah well, at least every pre-diabetic, asthmatic, obese kid will be 'safe' this summer.
btw: UKGov MOD has just dropped its fitness criteria for new Army recruiting entry levels. Running in boots is out: the 'little darlings' have spent their lives in trainers so the foot bones of new recruits are too soft.
Example: The Ten Tors hike in Devon / Cornwall was abandoned last weekend for 'health and safety' (It was raining, a bit...). 850 Soldiers, helicopters and St Johns Ambulance were involved in the 'rescue' of the teenagers involved.
A spokesman said: ' Although NONE of the participants completed the hike, ALL were awarded the Ten Tors Medal'.
AFFS! Why bother then? Why not just buy it off ebay?
God help us if the Belgian Girl Guides invade the UK. We are toast.
Jeezus effin Christ: Maybe 12 year old African kids with AK47's should inherit the earth.
Astounding, and I thought only Amurkhan kids deserved outrage such as this!!!!
You...you really mean that some folks other than us idiot Amurkhans have spoiled rotten children and soccer mommies?
Why then is it all I mostly hear is bitching about the USA?
Thanks Mudlogger for the realist update and appraisal.
A personal note: I tried my damnest to raise my kids right but the schools, television and there mother decided they knew best. After 5 years of grade school my son didn't know the answer to 2+2. It was all downhill after that.
Airdale--Phillip Wylie said it all...years ago.
Question: Why don't we just jail the pedophiles for life or else execute them? Or let them swab out jail cells for the rest of their miserable life? Why do we need to 'study' them? Ditto serial killers.
Oh no. I thought it was only here in the US.
Your Ten Tors Medal story is bad and sad. It's sad that someone can't speak out without getting labeled as being mean and too hard on the poor little tikes. I agree why bother, have cookies and milk instead.
My son pitched a fit because he was "mistreated" by working here at home AND GETTING PAID above minimum wage the whole time. He constantly rubbed everything the the kids from high tech families had in my face as a sign of his mistreatment. I was a frickin battle and I'm glad he moved out as soon as he did. Still brings it up. I'm sorely tempted to tell him STFU, get counsuling, or just stay away.
Seriously, WTF? "Suffering" is not having mommy and daddy buy you are new car, insurance, gas, the best computer, new snow board, the list goes on. Helped him through college and to buy a house. I guess he thinks my bank account was supposed to be his. After a while you just get to that point if he can't shut up and grow up then I don't want him here, and this is very sad IMO.
I get so mad a people who think they are helping thier kids by giving them everything. Is it 1)guilt from not spending time with them. 2)that the parents had to do without and never wanted thier kids to "suffer' as they did.3) They want thier kids to be cool. 4) Caved into thier kids pressuring them.
I haven't a clue, but its a bitch putting up with the shit. Fortunatly my wife and I are on the same page(!!!) Even if you have the money they need to earn it themselves. Yes you can help them but not like so many parents do in my not so humble opinion.
Sorry to see its so universal. I see lowering standards here to. Volenteer(sp?) coached b-ball one year in kids gradeschool. My god the attitude/language that came out of soome kids. I went to the principle and talked to him. He agreed with my observation (needing some firm discipline!)but said our hands are tied. The two worst offenders from this tiny school have been in the papers - arrested for drugs and stealing. Words cannot describe how disgusted I was by the whole experience, never, ever again.
Naah, fuhgeddaboudit, mommy's never going to say anything like that. Never in 106 years. "Too dangerous." I don't think the objective statistics are one iota worse than 20, 30, or 40 years ago. But ever since Ralph Nader, mommy and daddy have been consumers living in ever-growing sheer terror of their own shadows.
Well, fancy that - just a couple of days after explaining what may be happening in Ghawar, the Saudis find a couple of new fields - size unknown.
See, the Saudis are truly transparent, and love to share whatever data they develop.
As long as nobody starts getting any ideas that the oil might starting running out.
Maybe they had been using the Croft structure map and when Stuart and Garyp stretched it out they moved in a rotary.:)
FF
That whole area has been explored. Its not exactly far from Ghawar and they have mapped the whole area within an inch of its life, witness 'Jafura', 'Harmaliyah', 'Niban'. All this means is they've sunk a well or two into some small likely prospects and found some oil.
How many exploratory onshore drilling rigs does Aramco have?
What is their strike rate?
What size are these two fields?
Those are more interesting questions...
They certainly hit the mother lode on one of those sites with,what?... nearly 5,600 bb/day:)
you got to Love It!!
I'm back down in the southern Bahamas after a quick month of shopping and medical stuff in the U.S. We're paying $5.00 a gallon here already and nobodys slowing down yet
"it's just a temporary thing"
Ed
if you slow down, you just give up your "share" of the gasoline which can be had at todays prices to someone else.
Is that what is known as a lost opportunity cost?
Its called Prisoner's dilemma or Tragedy of the Commons
Say! If US cuts demand 10%, other importers will slurp the 10% right into their own demand including new SPRs. Ain't gonna happen unless exporters first agree to ration/allocate their output...which action will be announced soon, if not already being gradiently implemented.
Other festering wildcards?
Political changes among exporters, especially as they see they are being screwed and reality of PO. As in Iraq, Iran, East-African Coast, Gulf of Mex., Canada.
Policy change among exporters who already demonstrated some political change to being victimized, as Venezuela, Libya, Algeria, Russia.
[dump US Dollars in bidding up crude prices].
Is N-S pipeline from Iraq into KSA being used to conceal depletion? or "resting" fields?
Desperate measures to fight back where change is ssuppressed, as in vulnerability of pipelines, storage, producing-field and loading infrastructure.
This is era of RPGs that penetrate 5'armourplated rebar-concrete and foot+ of reactive-armour; 500 mph underwater torps; $100 GPS kits; volunteers/mercenaries waiting in line for your offer.
As we await today's EIA report, I put together a little analysis to show just how far we have to go to dig out of this hole:
http://i-r-squared.blogspot.com/2007/05/this-week-in-petroleum-5-16-07.html
My predictions? Gasoline inventories to go up today, but we will enter Memorial Day with the lowest inventory level on record.
Bloomberg is predicting a rise of 1 million barrels, which seems significant. They've been fairly accurate in the past.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aa7L4t5X4gy8
I had been looking for their prediction. Thanks for that. I would point out, though, that they have missed some badly (by millions of barrels) over the past couple of months. We will know in 27 minutes.
AP Dow Jones Newswires poll of analysts:
Crude + .5
Gas + .9
Distillates +1.2
I don't think a million is possible....I guess we will see soon.
One million is very possible. In fact look at spring production histories over the last 10 years and you'll see that 1-2 million growth per week should be probably the norm.
However as Robert noted at his blog, we are still way too low for the summer driving season. And Matthew Simmons noted that consumption almost always rises further in July and August. Consumption is so high in the summer that they cannot raise production then. They have to draw down pre-produced stocks, which is what the spring buildup covers.
Spring is always the build season for summer gasoline inventories. It just didn't happen this year which should make this summer interesting to say the least.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Well, 1.7 M barrels is good but not great news.
I was concerned about the build based on an imports shortfall in last couple weeks(400kbpd). To build comparatively to previous years this week, they had to increase production, and imports.
I just got in and haven't seen the report yet, so the exact break down is unknown me still.
More later when I read the report and R-squared/Robert's comments.
A single typical supertanker holds around 2 million barrels. And tankers can carry gasoline as well as crude (witness gasoline exports to NA from diesel-heavy European refineries). So when does the tanker load become inventory? When it docks? As it offloads? With this kind of granularity it seem hard to take a one million barrel fluctuation as consequential.
AFAIK, the only major US port that can take ships much larger than the low end of the "supertanker" range (~100,000 tons) is the Louisiana LOOP. And I think the LOOP is set up for crude only.
Any one with better info ?
Alan
A 2 million bbl capacity tanker is not typical. 2 million bbls is a VLCC 250kt dwt or thereabouts(very large crude carrier) and yes it carries crude not refined products. Most US ports are contrained by draft with the exception of LOOP (louisana offshore oil platform)which is crude import only, and although the larger petroleum product carriers 80k dwt can fit into most US ports they can only do so part laden...
As for 1 million bbls +- in the weekly stats...noise.
To get a better feel for trends etc you have to take 3 to 4 weeks as an aggregate..
rgds.
I think this story might be of interest to some here. The original
articles have been removed (in short order) from the UK websites, presumably
because of legal or D-Notice intervention. The full text is available
here as well as other blog sites.
A new Round-Up has been posted at TOD:Canada.
Tell everyone you know in Melbourne, Australia..
The Association for the Study of Peak Oil, normally a reclusive bunch of number crunchers, has ventured out into the world of movies and entertainment. We are hosting the opening night for the new Peak Oil movie:
Book Now: www.cinemanova.com.au or phone 03 9349 5201.
Panel discussion following the film with Kenneth Davidson (The Age), Elliot Fishman (Institute for Sensible Transport) and Phil Hart (former facilities engineer in UK North Sea oil and gas industry).
National release dates on the ASPO Australia website. If you watch it, you won't be so surprised when petrol hits $1.50/litre. You could also post this flyer on the nearest pinboard.
On a separate note, I'd be delighted to hear from folks interested in peak oil anywhere in Oz, but especially in Victoria: www.philhart.com/contact
cheers!
Phil.
DownUnder.. can you contact me via the link:
www.philhart.com/contact
Where abouts in Oz are you?
Some on TOD have complained about the (new) comments clearing to read when posting.
I right click and open "Post Comment" in new window then close window when done and continue to read NEWs.
Also I suspect if when DIGGing, REDDIT, or SLASHDOTing, if you right click and open in new window they don't dismiss as one url flooding the vote over and over. Makes each vote unique and harder to filter.
Just a thought. I might me way out in left field (and under the overpass).
Haven't figured how to accomplish this on my MAC other than cut and paste in new window.
That is not the problem.
The problem is, when you post a message, in a new window or not, all the "new" tags that appeared while you were reading and posting are cleared.
As noted yesterday, I (on my Apple Mac Mini :-) click |Reply in new window|, type out my response, but delay clicking "post".
I first read all [ new ] posts AND hit reload to catch any new posts in the last few minutes. THEN I hit post.
About 80% of the time. Self discipline ...
Best Hopes for Perfect Software,
Alan
I think we all figured that one out on our own. It's not exactly rocket science.
But it's a PITA. This problem is the result of an attempt to fix an earlier complaint (having to load the whole thread each time you reply). Obviously, having to reload the whole thread anyway, before you post, is not exactly a fix.
You don't have to reload, but you have the option. It's all about options. The way it used to be, you couldn't post a comment without the whole page reloading on you. Terrible for those on dial-up. Here in the woods of Vermont I get 30 kbps on a good day.
Hopefully super-G (blessed he!) will find a way to prevent the "new" tags from getting updated when they shouldn't. Perhaps based on the URL format.
Here in the woods of Vermont I get 30 kbps on a good day
Here is the wilderness of the Lower Garden District of New Orleans, I was lucky to get that when I first joined TOD.
But broadband has been restored for some months now. However, I got "used to" slower speeds and workarounds (do not load images as a default for FireFox) and since I am negative financially, I have kept dial-up. For now.
Best Hopes for less static,
Alan
Try satelite if you can afford it. Life won't get any easier on dialup. I used to get 18-21 kbps. It's amazing how much more time you can waste on the internet when you're not getting angry at slow loading speeds.
Let me explain it via a scenario with a passage of time.
1. You open up an article with comments to read. You have lots of "new" tags to read.
2. As you read, you post a reply in a new window.
3. As you continue to read, John Doe posts a reply in a new window.
4. You post another reply in a new window.
5. Next, Mary Smith posts a reply.
5. Now you refresh the article to get the next batch of "new" tags.
Will John Doe's post show as a "new" tag to you? No, it does not, even though you have never read it before. Will you see Mary Smith's post as "new"? Yes you will because she posted after you last posted.
What happens is that each time you post, the site software marks that time as the last read time for the entire article and comments. So as soon as you refresh to get new articles you will only get "new" tags on articles posted AFTER your last posted. This probably occurs because Drupal tracks only the time you last read the entire article and the thread. More sophisticated software will track the time at which you read each post. A happy medium can probably be struck here if Super G can modify the site so that it does not update your last read flag when you post a reply, but only when you refresh the entire thread.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
I gather this is not possible. At least not easily. Something to do with the way Drupal handles databases.
One help would be pre-composing a reply in a text editor. Then the reply would be a very quick copy and paste. It is also better for careful review of what you are writing, something that not many people do.
Unfortunately, I think the opposite is happening. People reply quickly, without reading carefully, because they want to read the thread as quickly as possible, and reply as quickly as possible, knowing that the longer they delay, the more "new" flags they will lose.
Leanan,
I posted this yesterday -- perhaps you missed it due to the "flags" problem.
It would be nice if users could set backward their own "timestamp" within a topic -- say, a button to "rewind" by 10 minutes, 30 minutes, or whatever. Just a thought.
No, I didn't miss it. It's just not technically feasible, as I understand it.
http://www.ft.com/cms/s/980ece92-0349-11dc-a023-000b5df10621,dwp_uuid=fc...
IRAQ has 100B more barrels of undiscovered oil, right?
Can anyone point me to an article or data that completely refutes this or at least provides some accurate data to make the oil point on a finance board?
100 billion barrels isnt much at all.
at 85 million barrels a day we end up with about 3.5 extra years at current consumption.
still not forever, but it could be significant enough to save the world from collapse. imagine if peak oil is recognized and a switch from FF to something occurs, we will still need a great deal of oil to make the switch. iraq may be able to provide that to the world.
(plus of the 100Bbarrels, maybe 50% is URR) soooo..... [someone correct me here if i am wrong]
Iraq was set up so that the British Navy could get oil for its Battleships about 90 years ago. The chances that there should be mega oil fields lurking unfound there must be rated as rather unlikely.
My backyard has 200 billion barrels of oil. Because I said so. Without drilling. Without any testing or other exploration. My backyard is now as important as Saudi Arabia.
Let's make a deal, ok? Give me money and I'll let you drill in my backyard.
And that about sums up the entire Iraq 100 billion barrel oil claim right there.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
If the place isn't explored, tossing out a number like 100B barrels is meaningless.
I never explored my back yard for burried pirate treassure, so using the same kind of logic it must have a 100 troves of gold and diamonds buried in it.
But I believe their claim that the place is unexplored is simply not true. BP mush have been to the place before they got kicked out of the county. They probably didn't find the right sort of rocks and abandoned the place.
As I recall the 100 to 115 billion barrels of oil are a fairly standard estimate used in the industry for Iraq's oil reserves (see Cambell etc https://aspo-ireland.org/newsletter/en/htm/Newsletter75.htm ). I can't tell you the criteria (proven, probable etc). I was at a recent public meeting with the Kurdistan Regional Government (KRG)- probably the same one as that where the FT got its quotes from, as there were journos from all the main news agencies. The KRG said that the region (Northern Iraq in old terms)had very little exploration info outside of the know Kirkuk and other main fields - they said that Google earth was as good a start as anywhere for new exploration. So, on this basis there are grounds to say much of the area 'is not explored'. Whether it will yield 45B barrels is another question. All other quotes, such as ramping up KRG production to 500K barrels in the near term and producing 2-4 extra million barrels per day longer term - are speculation at this point. There is no data to base this on - at least by the standard criteria used for reserves reporting. The main concern at the moment is the strong disagreement between the central Baghdad government and the KRG in their attempts to set up new oil exploration and production contracts with Internationl Companies unilaterally.
That 100 B barrels doesn't exist. CERA parent company published that report to convince Sunni's they have oil in their part of the country to defuse their objections to US plans in Iraq.
Tate 423,
Yes, here is very good information from the AAPG by M K Horn and associates. They would be lucky to have 35 billion barrels left. In the link below look at Figures 2 and 3 and for accurate details on the large oil fields -click on Table 1 below Figure 17.
Also note what they say about Ghawar in the text at the bottom.
http://www.searchanddiscovery.net/documents/gong03/index.htm
Summary of Weekly Petroleum Data for the Week Ending May 11, 2007
The bulk of the gasoline build continues to be on the West Coast (1.2 million barrels out of the 1.7 build).
So, excluding the West Coast, the US only showed a 500,000 barrel build in gasoline inventories.
Edit:
The West Coast is geographically isolated, gasoline wise, from the rest of the country. Four weeks ago, gasoline inventories in the rest of the country (excluding West Coast) were 167.2 mb, versus total gasoline supplied (whole country) 9.2 mbpd. Most recent week, 166.6 mb, versus total gasoline supplied of 9.4 mbpd.
I suppose that West Coast consumption numbers are out there somewhere, but if we look at non-West Coast inventories, relative to total US consumption, the Days of Supply number has gone from 18.2 days to 17.7 days. Regardless of what the exact number is, the bottom line is that for most of the country, it looks like gasoline inventories relative to consumption are declining.
As I showed on my blog, we would have to build 4.8 million barrels a week for 3 weeks just to get to the lower end of the range, and 2.4 million barrels a week to avoid going into Memorial Day with the lowest inventories on record. So, after today's numbers, the situation looks worse.
I use an ExxonMobil station on the Dallas North Tollway as my personal indication of where gasoline prices are headed. This morning, I noticed that they broke the $3 barrier for the first time this year (of course, that's old news for a lot of the country).
One of the things that concerns me is that gasoline is and will be underpriced, and we are going to have spot shortages because prices are not high enough to dampen demand.
Indeed it seems distributors are in a race to quell demand with price. (and profit too, I'm sure) I was in Chicago on Monday and the high price was $3.55 for regular unleaded. The average posted for R/U in the last 8 hrs. is now $3.68
Gas Price Watch (It will be interesting to see if the 'L' ridership gains any)
The latest round of 'raise it or we'll drain it' sees each successive load costing enough more that merchants must increase quickly to cover replacement.
BTW WT, the only place that gasoline dropped was California thanks to those big tanks of gas from abroad.
Robert, this may explain why I am seeing a much larger profit margin between wholesale cost and the selling retail of gasoline. It may be a direct effort to dampen demand?
In KC metro, regular unleaded is universally $3.09 now throughout all stations on the Missouri side. With wholesale at around $2.30, it should be around $2.80.
[edit: corrected spelling)
I go back and forth on the likelihood of price based demand destruction - I think that people will not change their usage much until they absolutely have to. They'll pay whatever they must until they simply don't have the money. Therefore, demand reduction will only occur with those on the edge of solvency. How high do prices have to get before that shows up as a significant reduction in demand? A lot higher, I'd bet.
I'm trying to get a feel for how big the effect will be - I expect it to switch rather rapidly once the housing crash builds, and as the economy falls apart, but there could be a considerable delay until that happens. It seems like it would be a tough thing to model.
Twilight: IMHO, one of the reasons for the inelasticity is the belief (fostered by the MSM) that the price increase is temporary. Unless one is at the financial edge, decisions re type of vehicle to purchase or miles driven weekly will be determined by one's expectations of future long term prices. Influential MSM mouthpieces are still given air time without ridicule when they discuss a return to $30 crude oil.
Not to mention the usual congressinal hearing inquiring trying to determine the problem, what is causing high gas prices "this time". Although, the hearing were interesting yesterday in that one of the experts relayed how there was a very effective way to fix the refinery capacity problem --- consume less and implement taxes and other demand constraining techniques.
On the one hand, the oil companies are being excoriated for not building enough capacity; on the other hand we are talking about steps to reduce demand. This is one of the oil companies biggest fear; they invest a bunch of additional money in refineries and then demand drops.
Well, regardless, the best way to fix capacity problems is to reduce demand. And the best way to reduce demand is to convince people that high gas prices are permanent. And that requires leadership and courage.
And the best way to reduce demand is to convince people that high gas prices are permanent. And that requires leadership and courage.
Great comment. First candidate to stand up and tell us that truth and propose something reasoned to do about it gets my vote. (they're going to need votes)
Unless they start to demand payment in cash there will be no demand destruction, some people will just charge it with no intent of paying.
Interesting notion, but wouldn't that attitude then be for all purchases? Why just petrol? When retailers begin demanding cash, is that then the beginning of the slide towards barter?
"You can never solve a problem on the level on which it was created."
Albert Einstein
Demand Destruction will appear when it's cheaper to spend the week in a motel than to drive an hour each way every day.
I know some people who are already doing that. The local motel charges $100 a week, so they stay there, and only go home on weekends.
There will also be a business opportunity for someone to buy up RVs when they become too expensive to drive, relocate them to a place within walking distance of large factories and office parks, and rent them out by the week (or rent the space to workers who have RVs). They will have to work out sewage, water & electric (PV or wind generator opportunity?) hookups, and get around local zoning laws, but most likely they will just set up in the places that allow it. The ones that don't will just see their major employers die for lack of skilled workers that can make the commute.
"So, after today's numbers, the situation looks worse."
Can't agree with you here Robert. It's not the end of the world if we go into the driving season below the average range.
As I noted a couple of weeks ago, over the last five years May is normally when the largest uplift in demand occurs, and the question was whether we could get stocks to materially build this month. Today showed that despite earlier fears, high prices have attracted extra imports and consequently we've had a stock build with refinery utilization still sub-90%.
I'm not saying things look fine now - stocks are still very low and there's likely to be a permanent threat of a price spike right through summer. But contrary to what has been reported by many media outlets, high prices do now seem to be curtailing demand enough to relieve the situation (I think we need one more week to be sure, and it might require a few more cents yet).
No way are we out of the woods, but I don't see how you can say things are worse.
Can't agree with you here Robert. It's not the end of the world if we go into the driving season below the average range.
What I mean is that we are even more likely to go into summer with record low inventories. We did not attain the average build that would have been required to avoid record low inventories.
Obviously, things could have been worse. They could have reported a draw. But note that I am not just talking about being below the average range. I am talking about record low inventory levels (and an even worse situation with respect to days of supply).
......record low inventories, and record high demand, despite record high prices
"......record low inventories, and record high demand, despite record high prices"
This has got to be the most portentous sentence fragment ever on TOD.
Can we say inelastic demand?
Yes, something else will be demand destroyed...dinners out, toys, lawn care, visits to the dentist...
In many ways, the build is bad news as WT(and others) point out, prices will not rise high enough and fast enough to effectively demand destroy gas usage, just cut a little further into discretionary spending.
But, I don't wish bad things on anyone so we will call it good news.
How about most of Africa?
http://www.iol.co.za/index.php?set_id=1&click_id=3016&art_id=vn200705091...
Oh yes...I agree. But I think we are on the verge of moving beyond Africa.
And, I was referring to gasoline prices in the US specfically due to inventories.
I was thinking about this this morning (while riding my bike to work).
The price of gasoline will not rise fast enough, or perhaps ever high enough, to stop 'us' from consuming every drop possible.
The whole 'market' dynamic seems to insure that whatever amount of oil (thus gasoline) the world produces, it remains just affordable enough to someone to get consumed.
How will we ever conserve in such a system? If they drill it we will buy. And by the way, the "don't buy gas day" boycott is about the stupidest thing I've ever heard of.
I just don't see how, given the world we live in, how we won't burn every barrel of oil and every chunk of coal.
A corollary to what you say is that we will conserve as much as we need to to keep gasoline affordable, but not a drop more. Under this scenario, conservation is the new "swing producer." I don't know if I believe this or not, but I've recently started thinking that this might be happening on some level.
inelstic demand, addiction, whatever. when they stop eating to get their fix, we will know that it is truely an addiction.
No - they need their fix to keep eating. Utterly rational.
Car=job=credit card=food. If you take away the car, there is no way to work and possess credit, which means no food.
Addictions are in the mind, after all.
The frightening part in much of the U.S., is that the last two generations of suburbia have ruined much of North America's most fertile land. If you live in Fairfax City, Virginia reaching anywhere with agriculture is at least a day away by foot. And there are now hundreds of thousands people around you.
The problem with food is a lot closer than many people realize, if there is a very serious disruption of fuel supplies in the United States.
"I am talking about record low inventory levels (and an even worse situation with respect to days of supply)."
Exactly, until inventories increase significantly, we are on a tightrope, ready to fall off at any moment.
Better than expected result again this week (despite refinery utilization not climbing much) - mainly due to the import cavalry arriving.
Gasoline demand held up pretty well considering retail prices were on the way to all-time nominal highs, but it certainly looks as if there's been some demand response. It will make all the difference if demand now stays close to last year's levels.
Region-wise, Gulf Coast (PADD III) stocks rose by 1.4 mb and West Coast (PADD V) by 1.2 mb, whereas East Coast (PADD I) fell by 0.7 mb and Midwest (PADD II) by 0.3 mb.
[These are weekly estimates, subject to revision. Data source - EIA. Week ending dates are for 2007 (2006 is a day more). Capacity is % of fully operable. Imports, production and demand are million barrels per day. Stocks are millions of barrels]
Gasoline demand held up pretty well considering retail prices were on the way to all-time nominal highs, but it certainly looks as if there's been some demand response.
What makes you say that? It looks to me like demand rose over week ago and year ago levels, despite the higher prices. I would have expected a drop in demand.
The population is growing, so "normal" would be an increase. Maybe he's counting "not growing as fast as expected" as a drop?
But look at the trend over the past month - despite the large increase in prices. I think it's going to take a lot of pain before people start really coming to grips with their fuel usage. $3/gal is now acceptable.
"What makes you say that?"
Just three weeks ago 4-week average gasoline demand was up 2.3% on last year. In this week's report demand is now only up 1.0%. If things continue as they have done over the last couple of weeks then that increase is likely to go below 1%. However, we've got a low number coming out of the average next week, so that's why I said (in my other comment to you above) that we really need to see another week's numbers.
It's not the absolute weekly rise I'm looking at, but the relative y-o-y trend, because that gives an indication of what peak gasoline demand will be in the summer. Just on this week's numbers alone (prodn + finished gasoline imports) there's almost enough to meet last year's peak demand, and utilization is still less than 90% (although unfortunately we don't know what gasoline exports currently are).
If demand goes back to being up 2% y-o-y then I agree that the situation is more serious and further price rises will probably be needed.
However, as I noted up the thread, non-West Coast gasoline inventories have fallen slightly, versus four weeks ago (the West Coast is up 5.9% versus four weeks ago), while consumption is up versus four weeks ago, leading to declining non-West Coast Days of Supply numbers.
It seems to me that we will need perfection this summer to avoid much higher prices and/or spot shortages. Everything--refinery utilization; minimal hurricanes; abundant imports, etc.--will have to go right.
It does look like those growing imports are going west, and the east will be shaky at best unless this changes significantly in the next few weeks.
The east looks even more vulnerable in a hurricance situation with the current balance.
Actually, the numbers on this are quite surprising. Four weeks ago total gasoline imports were 1.164 mb and the West Coast share of this was 150,000 bbls (12.9%).
This week imports were 1.528 mb and the West Coast share was a mere 93,000 bbls, only 6.1% of the total.
Stocks are rising on the West Coast despite falling imports and fairly flat production. So unless gasoline is being transported in from other areas, the obvious conclusion is that demand has taken a significant knock.
Maybe the problem on the East Coast is that it's not feeling enough pain yet - over the past four weeks national retail gas prices have risen by an average of nearly 23 cents, but the East Coast rise has been only 14 cents.
Phoenix (4 million suburbanites running around in their Hummers) is the swing consumer. As of a couple of years ago, they now have pipelines from both Texas and California.
So the ratio of CA to TX gas can swing significantly (with market growth, I do not think either pipeline can supply 100% of demand) and this is how a CA surplus can be "exported" to Texas. Supply, say, 80% of PHX from CA and keep TX westward exports down. Or vica versa.
Alan
Thanks FTX.
So, demand destruction on the west coast instead of import gains, I wouldn't have guessed. I suppose they got the price signal sooner.
But doesn't that also indicate that the east coast's production isn't still up to the task? As they took the lions share of the imports and showed little inventory gain (around 500K barrels).
Either way it definitely puts a different perspective on the situation.
And thanks for the chart again.
Yep I was wrong on imports to Cali. West coast was down in gasoline supplied 1.48mb total for the week down from last week's 1.548mb.
EIA shows a $3.45 average price for California.
Looks like it was the Mid-west and Rockies turn this week.
$3.35?
That sounds expensive! Poor you!
Btw, gas is 7.70 US$ in the Netherlands.
Sorry to hear you have to pay so much for gasoline Richard. Though How about you take over the extra 1000 dollars a month a family pays here or more for health insurance. We don't have a system here like the Dutch, and many other social programs that the extra tax on your gas pays.
Quid Clarius Astris
Ubi Bene ibi patria
Hallo Richard, Goedemorgen.
One of the beste years of my life was spent in Sittard in 1971. My Nederlands was better then.
I know about fuel prices there and really I do expect we will be getting ours more in line with yours. It will be a difficult transition and hopefully we can apply many of the strategies you already have in place. Widespread cycling, electrified rail, and many walkable neighborhoods.
Are you able to still maintain a car?
Goedenacht (my time) xburb
California is using less gasoline, at least in 2006 relative to 2005.
State's drivers are pumping less gas (LA Times, April 13, 2007)
The time scales also fit the last major housing slump. Arguably, demand destruction has more to do with income and a no longer building housing industry than anything else.
I'm not going to argue against any of that WT, and I'd add that as well as considering the regional situation, it's worth looking overseas as well.
Those gasoline imports have come from somewhere, and that may be depriving the domestic market, putting pressure on prices there too. Here's a snip from a UK news article three weeks ago:
Since then the national average has risen to 95.9p (which may not seem much of a jump, but remember that most of the UK price is tax). The £1 price point is a politically sensitive one in the UK, even more so since UK inflation has been rising above the Bank of England's target level.
So, it would seem the U.S. situation is having some serious repercussions elsewhere.
[Anyone who wants to keep an eye on UK gasoline prices can do so here]
So, it would seem the U.S. situation is having some serious repercussions elsewhere.
I have had to explain that to many people over here, who are wondering why gasoline prices are going up in the U.K. It's U.S. demand pulling imports that direction.
Incidentally, I just got off the conference call with the API. Alan gave them hell over light rail. :-) They were pretty flustered.
With increasing imports needed to be pulled towards the US in the next couple weeks...if we are to come close the the needed build up (I said if).
Good for Alan! Are you planning on posting a transcript again?
Thanks for both of your efforts to educate and inform!
Are you planning on posting a transcript again?
They should have the transcript up today, and I will try to pull out excerpts and post. But I think there are several stacked up in the queue right now.
We are supporting non-oil transportation. We support ethanol
The big dog exited before by Q.
The idea was to introduce the concept into their organization, so when things get tighter, they may see electrified rail as they do ethanol today, a good PR move to support.
I did try to be polite (was I ?) and I am interested as to how much asphalt is disappearing and I am glad to hear that VLSD (on the road diesel) is in good supply for my M-B 240D.
I also brought out the fact that tight inventories mean shortages during hurricane evacs. People stranded by the side of the road or blocking traffic until they are pushed off :-((
What is the link for refinery energy consumption ?
Best Hopes,
Alan
BTW, freight RRs are spending $10 billion on capital projects, mainly expansion. Oil companies are spending $9 billion on US refineries.
The idea was to introduce the concept into their organization, so when things get tighter, they may see electrified rail as they do ethanol today, a good PR move to support.
Yeah, you did the right thing. You got it on the record, and it will be in their transcripts and in the podcast.
I also brought out the fact that tight inventories mean shortages during hurricane evacs.
I don't think this was registering with them. It was also the question Jeff was asking. So, that's why I spelled out the inventory situation for them. I got the impression that they really weren't aware. They kept saying "inventories on the low side." That's why I said "record lows."
What is the link for refinery energy consumption ?
I sent the paper to API, and they were going to send it to the participants. If you want it before then, I can e-mail it to you.
Glad you were on the call. And remind me to never challenge you on rail. You had them pretty flustered.
Hello R-squared & AlanfromBigEasy,
Good for you both!
The quote: "I also brought out the fact that tight inventories mean shortages during hurricane evacs."
That would be the ultimate USA PR disaster for the IOCs--I would lose lots of sleep if I was an top-level oil-exec thinking about this scenario. Just imagine a couple of million people caught unprotected because of fuel shortages as a Cat 5 came roaring in-- any survivors would hunt the oil-execs down to avenge for the loss of their families. Yikes!
If the IOCs are smart, they would be building some carefully placed seasonal Strategic Hurricane Reserves instead of buying back their shares of stock.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
"Alan gave them hell over light rail. :-) They were pretty flustered"
Well...good!
Good on both of you, we need a fighting chance on this. Better to get those MSM brains cells alligned before they will be stressed by the problems we have aimed at us. Did you give them a years persciption of prozac for PO realization depression?
Matt Simmons referred to the Minimum Operating Level question. The most frequently used number I have seen is 170 mb for gasoline. Anyone have a better number?
I wonder if we might plot gasoline inventories less the Minimum Operating Level?
A search turned up the 170 million barrel number and this from the energy bulletin comments following Simmons.
[*Editor’s note: A description of this Minimum Operating level clipped from an EIA publication follows. “…maintaining minimum operating levels (e.g., gasoline must be present in the pipeline at all times to push product further through the pipe. When actual inventories drop below minimum operating levels, the system effectively may be running on empty. EIA reported that PADD II inventory levels in May and June 2000 were at or near minimum operating levels.]
So easy enough to find.
Pad 2 weekly data 1999 to 2007
Those averaged (in thousand barrels) was 46887 for May of 2000. So far this May the average is 46522
27 million barrel minimum for pad 5
Yep 26,329 two weeks ago 27,444 last week, and a 'comfortable' 28,622 this week with a price drop.
And this quote from another EIA publication.
Buyers watch weekly reports of stock levels for unusual and persistent declines in levels during
periods of high demand. If stocks are falling and approach minimum operating levels (i.e., the level
needed to keep gasoline flowing from refineries to end users), wholesale buyers sometimes become
concerned that supplies may not be adequate over the short term, and willingly bid prices higher to
assure that they have product.
Sounds about right. After every Wednesday release we have seen that wholesale pop and the retailers in the tight areas are right behind. Wow.
Matt Simmons referred to the Minimum Operating Level question. The most frequently used number I have seen is 170 mb for gasoline. Anyone have a better number?
I had no idea it might be that high. I am going to ask Doug MacIntyre at the EIA and see if he knows. If that is correct, then we are really on thin ice entering hurricane season.
The MOL will NOT be perfectly allocated in all areas of the country. Is this an idealized average assuming perfect allocation, or does it include enough extra to cover everyone and the "usual" unexpected demand ?
If a Cat 5 hurricane changes direction and is plotted for landfall on the border between Miami & Ft. Lauderdale in 48 hours, what is the MOL for South Florida ?
Best Hopes ?
Alan
Here was Doug's answer when I asked about this:
Come on people! let's reward Stuart's hard work by digging the article on Econbrowser, we need at least 40+ diggs to make it in the popular story front page:
The last time I looked this story was on page 19 of the Up and Coming Stories list at Digg (stories ranked in terms of popularity). The TOD community can do better than that. If this story can be promoted to the popular page then far more people will see Stuart's amazing Ghawar article.
It's in the top 5 in the general science thread:
http://digg.com/general_sciences/upcoming/most
OK, I apologize for the nature of this question, but...
I think I am now interested in buying options on oil. (Specifically, options to purchase oil at $100 in 2015, or whatever the highest price/longest time is.)
Can anyone recommend a broker and/or mechanics of doing so?
From anyone who has done this sort of thing, are there any particular pitfalls I should be wary of (e.g., I know the market is not very liquid.)
Thanks in advance
Call up PHIL FLYNN at Alaron Trading in Chicago
I would not call up Phil Flynn. If you are not smart enough to figure this out yourself than you are not even close to being smart enough that you should be dealing w/ options. Do your own research first at the very least. Full service brokers need to make way too much money to maintain their lifestyles to be able to give you anywhere near value for your money. You can lower your cost basis and thereby your risk by doing w/o. THis is yet another problem w/ commodities in that it will be difficult (but not impossible) to get self-serve privileges as an amateur. If you are sure enough that oil is going where it is going then just buy one of the bigger Canroys like PGH or HTE or buy USO. You will make more than enough.
Matt
Even though I decline to get heavily into the world of futures and options, I decided to pick up a few option contracts. Can't be much worse than losing money in the stock market... and I have previously been in USO and learned here of the money-losing contango. So I checked into it, and found a full-service broker who would do the deed for me at $50 total per buy, in and out. (RMB Group).
I assume that like my term life insurance, it's money that will be lost. I'm treating it as a hedge against dire stuff. Of course, past a certain point the NYMEX and other bits of infrastructure won't be dependable, but I decided to get a few crude options anyhow.
For instance, as of this morning the bid-ask spread for 100 calls on DEC2010 WTI was 2000-2800. If one is fairly sure that it will be above that, and willing to risk things falling apart and never seeing it, that could be a reasonable play. Beats vegas odds, probably, if the stuff on this site is roughly correct.
There aren't many people willing to sell call options that far out now, though, so they seem to be able to set their own prices.
So... maybe "low expectations" is a good thing. I won't be disappointed if my term life insurance never pays off, and if my little options contracts don't pay off, it will either mean that oil is still flowing cheaply, or I probably couldn't get to my liquid assets anyhow.
ymmv
You might want to just consider OSU. There have been complaints about the returns on this being hurt by contango (Only a worry as long as we are in contango) but i think net -net when you consider all the costs and risks of trading commodities it's probably the best thing for just about anyone who is not a big player (and my apologies if you are!). If you line it up it correlates pretty decently w/ the crude price and you can just trade it like a regular stock and they do everything. Plus it pays out close to 3% at this price ,which makes up a decent amt. of the contango losses. I think as a general rule,retail investors should avoid options of any kind other than those which reduce risk (hedges,covers )
I would qualify this recommendation by saying you might want to take profits a little on the early side if things go really crazy, just in case there are any solvency issues.
Matt
What exchange is OSU on? I can't find it anywhere.
I know about DBO.
If it were any commodity other than oil, I'd say it would be senseless to do any option with it 8 years out. But considering only history is a guide, it's a good bet oil will be over $100 in 2015. Oil is tightly linked to the overall commodity moves of the CRB. This linkage prompted a discussion here back in August (when it looked like oil would never go below $60 again) where SelfAggrandizedTrader predicted oil at $55 by November. I wrote a post 9/3/06 looking at the CRB/oil linkage and agreed that oil was going down some for awhile (I think it went as low as $52 in November). But if you are going to hold an 8 year commodity option, you will have to tune out a lot of short term expert analysis. For example, the following would tempt you to regret your option:
This view makes you wonder if your option is topping before you have profit. But such short term views don't see the forest for the trees. If you step back for the big view, you see this:
This is an inflation adjusted look at how bull/bear cycles run; they almost always last 10 years or more, and the present bull cycle started just 3 years ago. Historically, oil has moved in lock step with the CRB cycles except for cases like the 70s when geopolitical forces cause a decoupling between oil and the CRB where oil can go higher while the metals, etc. go lower with a weak economy (as I charted in my 9/3 post). Just the historical precedent alone could well justify an 8 year oil option. But when you add the current unprecedented geophysical and geopolitical problems with oil supply, it almost seems like a slam dunk.
http://www.telegraph.co.uk/news/main.jhtml;jsessionid=PWIBPXU2BZARZQFIQM...
Bolton: We must attack Iran before it gets the bomb
By Toby Harnden in Washington
Last Updated: 2:16pm BST 16/05/2007
Speaking of Neocons:
Wikipedia has an excellent article on uranium enrichment for those unfamiliar with the subject.
Enrichment in itself is not proof of a nuclear weapons program. But the presence of highly enriched uranium would be. The Iraneans could easily prove their program is peacefull, by letting outside inspectors look at the finished product. Something they're unwilling to do.
On the other hand Iraq did let inspectors in, and that didn't do them any good at all.
The idea of an imminent treat is not true. To gather the required amount of material to produce several bombs would probably take the Iranians a decade.
A decade at most, if they decide to build one. It really depends on the rate at which they install more centrifuges. If that rate is significant, they might cut the time to their first bomb to a few years. A more likely number, in my opinion is 4-6 years because we do know that they are adding centrifuges. On April 9th, Mahmoud Ahmadinejad announced the activation of 3000 centrifuges. This is widely regarded as propaganda. On April 13th, the UN disputed that number, suggesting that 650 were in actual operation.
Note that 3000 centrifuges can produce enough highly enriched uranium for a single bomb in about one year. Note that Iran intends to build 50,000 centrifuges. Note that they do intend to continue adding centrifuges continually for the next several years.
Given the above, I would guess (purely a guess) that these first centrifuges are dedicated to producing nuclear fuel for peacetime reactors because they want to get that reactor up and running. Also note that it will be probably 12-24 months before they have sufficient spare centrifuge capacity to even consider refining for a bomb. This is what leads me to my guess of 4-6 years for a bomb, IF they choose to build one.
Please note that I am NOT suggesting that they are or are not building a bomb. But all available public evidence indicates that they are still 4-6 years from building such a weapon should they decide to do so. I would guess that 10 years would be the point where they actually have a small stockpile of warheads, probably on the order of a few dozen since those 50,000 centrifuges will probably all be in operation by the 5-7 year mark. I'd also guess they would get a second reactor running after the first is going with a centrifuge farm that large. Perhaps someone with nuclear engineering expertise can comment more precisely on how much nuclear fuel such a farm can produce.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
They are actually just a short freighter trip from North Korea from having a bomb.
http://www.globalsecurity.org/org/news/2003/030119-dprk01.htm
Pakistan is even closer.
http://www.guardian.co.uk/international/story/0,3604,349793,00.html
There are still some 200 IAEA inspectors in Iran, and these inspectors have access to the sites:
Iran merely banned a few dozen from countries that support sanctions "in violation of the international nuclear treaties that Iran has signed."
Iran feels it is held to different standards than other countries, which is probably right and which they are probably right to protest against.
Let the US, and Britain, France and China, open up their labs to the same level of international scrutiny that is demanded of Iran.
That's pretty straightforward, right?
More likely sure, but it could also be plausibly denied if they were attempting to construct a nuclear navy or any other application that requires small power reactors.
The problem with these guys is that they never go away, they just resurface on a different stage.
John Bolton. Great source:
- proven pathological liar
- completely devoid of any negotiation or political tact
- hater of UN, international law and multi-lateral action
- in favor of strong, militarily active US (acting unilaterally to its own interest only)
Gee, I wonder why he wants to bomb Iran to smithereens :)
Regarding the article posted in today's DrumBeat: "OPEC: World oil demand to reach 85.4 mln barrels a day in 2007"...
It's interesting to me that OPEC is advertising the fact that worldwide demand is going to increase by 1.2 million barrels per day over 2006, but at the same time they are decreasing their rates of extraction because they claim demand is not there.
To quote westexas: Saudi Arabian oil minister Ali Naimi was quoted as saying that Saudi Arabia had cut back production because they could not find buyers for all of their oil, even their “light sweet oil.”
Am I missing something? What is the strategy here? They want to maximize oil sales at high prices, but it seems to me they risk shooting themselves in the foot by suggesting they can maintain a higher volume of extraction.
Tom A-B
I would suggest not in the foot, but in the head.
cheers.
My "Iron Triangle" theory is that some major oil companies and some major oil exporters are respectively concerned about punitive taxation and military takeovers if they admit to the reality of Peak Oil.
I have frequently described ExxonMobil and CERA as the two biggest threats to the US oil and gas industry--because American politicians and voters are going to be semi-justified in their conspiracy theories regarding oil prices, when the trillions and trillions of barrels of oil that ExxonMobil and CERA promised us fail to appear.
Of course, ExxonMobil, CERA and Saudi Arabia, et al, are going to blame "other factors," besides relentless depletion.
So they're stringing the world along with the story that they can pump out more oil in an effort to avoid a worldwide oil grab. That makes sense to me.
It's interesting that OPEC or it's members frequently slip up and give us clues that they can't produce more, or are at least mightily challenged in trying to increase their rates of extraction. I suppose there are a lot of people "behind the curtain" in these OPEC countries and I'm sure there are hundreds employed in OPEC Public Relations for the sole purpose of damage control.
Has anyone on TOD worked for ARAMCO or another OPEC member? I'm interested to know if there is a schpiel given to new employees about what can and can not be discussed with outsiders in an effort to keep the game going.
Tom A-B
I should add that in a lot of cases, people actually believe what they are saying about "trillions and trillions" of barrels of remaining oil. But is is a belief that is helpful to the perceived best interests of some major oil companies and exporters.
We then get into the whole pop psychology aspect--denial and cognitive dissonance. I have previously described a WSJ column on cognitive dissonance, where the author used examples of cultists who believed that space aliens would arrive on a given date. Frequently, when the aliens failed to arrive, the cultists redoubled their efforts to persuade non-believers.
Peak Oilers have frequently been described as cultists, but the irony is that we believe that a physical world has physical limits. The "Cornucopian Cult" which in fact is the conventional wisdom in the US, is that we can continue to expand our energy consumption, basically forever, by always bringing new sources of energy on line.
The problem for us is that while major oil companies were not supporting the space alien concept, many are supporting the semi-cornucopian view of energy.
I don't think they have much choice as to what they can say IMO.
The strategy is to guarantee the destruction of the West.
____________________
MySpace.com/ziontherapy
Couple of offbeat railroad stories...
Train passengers asked to get out and push
And here's a follow-up to that story about the stolen railroad track in Germany:
Men convicted of stealing miles of railway line
A bit of geopolitical fun.
The U.S. is a major consumer of Venezuela's oil - and in terms of quantities, delivery times, ports, tankers, refinery fit, one tightly integrated into the American oil supply system, from ground to gas station.
If Venezuela suffers significant production declines, the effects are directly felt in the U.S. This remains a very two sided truth - whether in terms of American supported strikes among the well off managers of Petróleos de Venezuela to bring Chavez down, or the coup against Chavez, America cannot afford much interruption in Venezuelan production without painful consequences.
In terms of the rig article, which was quite good, one point seems overlooked - the United States can very ill afford any disruption in Venezuelan production. There is unlikely to be much effective opposition to such strongarm tactics from a president who continues to grant himself powers, because having the oil flow is more important than trivial concerns about laws or principles or finances.
Obviously the risks are being weighed (Venezuela buys Chinese, after all, at least for rigs), but left unsaid is that ensuring a constant flow of oil remains paramount, with any interruption of such a quantity of American oil imports a disaster to be avoided at any cost, outweighing virtually all other considerations.
This is how the free market and politics look at the peak - oil is the overriding concern, and how to acquire it becomes a central and unspoken motivation for nations, the same way sex is for individuals - always present, by definition never discussed in polite society. Whether Chinese guarded rigs in the seemingly genocidal Sudanese desert, or nationalized rigs in Venezuela, the overriding concern will be the oil moving through the pipeline, and nothing else.
The threat to move rigs away is valid - except that it hurts the U.S. more than Venezuela. An unspoken truth, which Chavez seems to understand. If he walks the tight rope well, he can likely match Qaddafi - now that Libya has regained its position as a major oil exporter, the West no longer has any difficulty ignoring his excentric rule. Libya has major reserves at 39 billion barrels - but at 1.6 million barrels a day, Qaddafi has only half the leverage of Chavez, so to speak.
As for Iran? Well, we will see whether the West can tolerate yet another nation possessing nuclear weapons - after all, both North Korea and Pakistan joined the club over Western objections. Ironically, Qaddafi was able to become a respectable international figure by providing access to Libya's involvement in that fairly sophisticated marketplace, it seems.
The ride down the peak is most likely to done with eyes closed - with them open, it would just be too ugly. It takes a certain lens to see the world through oil, and most people find that view too distorting of what is assumed to be reality.
Re: Clarion Caller-interview with Hansen
Hansen has a numer of other good points, ie:
"we need to use oil and gas, which are precious fuels, as if they were precious."
and
"I think that scientists need to help connect the dots, because otherwise the dots are connected by special interests."
But I'm afraid the rise in oil prices will just spur electric vehicles and a huge consumption of electricity, met by coal, and with no real curtailment of oil use.
But I'm afraid the rise in oil prices will just spur electric vehicles and a huge consumption of electricity, met by coal, and with no real curtailment of oil use
Thus my advocacy of measures that can "trade" 20 BTUs of diesel or gasoline for 1 BTU of electricity (or ? BTUs of food for bicyclists).
Best Hopes,
Alan
Alan,
I like your trade measures, but till things are essentially beyond control, I think it has the old snoball down below chance of implementation.
Looking at gas prices and demand , the fact that there's so much crap consumers can cut before gas price really effects them, probable switches to coal and Hansen's stern warning, Cellier's comment on today's main post of 1GW nuclear every other day for 50 years to replace fossil fuel, or a holocaust a day, well, the three horseman of population, peak oil, and global warming are almost enough to make one a doomer. But where does that get you.
If one does not try, then failure is certain.
I am, I know, on a long odds mission. I do not truly expect to stop the TEOTWAWKI, but hopefully make the world on the other side a bit better. Pre-position ideas for partial implementation as TSHTF, and afterwards.
But since I have already seen the TEOTWAIKI, another profound change is less frightening. Perhaps US male life expectancy will drop a decade, as it did when the Soviet Union > Russia. New Orleans life expectancy is certainly down several years ATM.
I do what I can. The barriers are more social and political than technical (although the technical issues are daunting !). Hopefully, as gasoline heads towards $10/gallon, some of those barriers wiil weaken and fall.
Best Hopes for getting our act together SOON !
Alan
For PHEVs, Teslas, etc., probably yes.
For NEVs, not necessarilly. They are small enough, lightweight enough, and have a limited enough range that recharge by PV panel may be feasible. If the NEV makers were really smart, they would throw in a fold-up PV recharger panel with every vehicle they sell. Other than the purchase price, that would be virtually "free" transportation, which should be a pretty good selling point.
NEV with a solar panel on it:
http://www.zapworld.com/ZAPWorld.aspx?id=3804
My prayers have just been answered! Maybe the entire world isn't quite totally insane after all!
Actually, it's not a "Neighbourhood Electric Vehicle" - those are limited to 25 mph. This one will do 40 mph, which is far more realistic. Technically, it's an enclosed three-wheel motorcycle.
Contrary to popular opinion, Biofuels Reduce Meat Prices. Maybe.
Unlikely. DDGS is toxic to cows, which is why it is limited to only 4 lbs/cow/day. It acidifies their rumens, causing both internal ulceration and liver problems (which is why the industrial feedlot industry uses half the antibiotics in the country--keeping cows alive long enough to get slaughtered) as well as leading to the evolution of acid-tolerant e-coli, which can be deadly to humans (normal grass-fed cows have only alkaline-tolerant e-coli which are killed in an acid human stomach). The Canadian grain industry is now expecting a 10 million ton glut of DDGS this year.
It's not good for ethanol producers, since a fall in the price of a coproduct that accounts for 20% of the ethanol's value changes the economic equation. Also, it's not good to have the price of an output fall below the price of the input (corn), as is the case now.
Corn (not DDGS) is an important animal feed in itself, so the rising price of corn may well offset the decline in the price of DDGS.
You lost on me on this one.
The factory-farmed, antibiotic nightmare that is 'beef' today, is the direct result of massively subsidized GM corn production for use as a cheap feed.
DDGS has nothing to do with the gong show as it exists today, however, the increased usage may or may not exacerbate the situation.
Close, but cattle in feedlots were initiated as a solution for exacerbating surplus grain problems long before the advent of GM crops. GM crops were introduced to a country awash in grain. Never made sense to me.
Historically, hogs were known as mortgage burners. It was a way to add value to production on the farm. Mortgages were based on crop value, increasing the value of that crop thru hog sales used to retire many mortages early. The practice was slowly abandoned, and by the early 90's and the crash of pork prices, it was gone. Pork became a nightmare with beef.
This might entertain all you engineers out there.
http://www.physics911.net/
These guys have watched too many Godzilla movies.
Give it up. people here won't understand the actual physics unless it hits them with a clue by 4. they remind me of kids trying to force a square peg in a round hole and telling their parents how well it fits.
Gulf Coast spot market gasoline (physical) exploded to the upside today (up 15 cpg) as more refineries reported reduced run rates (latest = Valero at Houston and COP at Sweeney).
With gasoline demand up again per the EIA stats released today and the highest prices in U.S. history in Grp III (spot market gasoline FOB Tulsa = $2.79/G, which also makes it the most expensive gasoline in the nation!), the sky is the limit on how high gasoline and crack spreads can go this summer.
If you don't believe me, just wait until the "H" word gets muttered in the Gulf Coast soon (H = hurricane)!
You can always count on Wired to get the story mostly wrong, and they don't let us down in Why $5 Gas Is Good for America (link above).
$5/gallon is good because we will be able to finance all sorts of substitutes for oil, as the classic economics of scarcity tells us (Hotelling). In fact, there is no such thing as scarcity -- afterall, the Stone Age didn't end because we ran out of stones. All of this will occur "just in time", so there's no need to worry. The author, one Spencer Reiss, has undoubtedly gone to college and has learned his lessons well! Give that man a gold star!
Future Senator Blutarsky preps for
the Econ final
This article was from Dec 2005. Spencer will have to forgive me if I'm not as impressed with the prospects ethanol as he is. In 2006 the number of stations where one could purchase E85 went from around 400 to around 1100. Only 48,900 to go to achieve some type of meaningful market penetration (there are a 170,000 fueling stations nationwide).
It doesn't do much good produce ethanol and build flex fuel vehicles if there is no place to buy the stuff.
... for the convenience of TV, you can only be one of two kinds of human beings, either a liberal or a conservative. -- Kurt Vonnegut
So, I found this message in one of my "junk" e-mail accounts. It's from True Majority, a liberal political group.
(Weirdly, I don't get much conservative political mail. The conservative sites to which I have given my junk addy seem to have mostly sold it to Nigerian scammers, who try to play on my supposed Christian sympathies. So I get e-mail messages begging me to help them get money their deceased husband meant to build a church or buy an organ or send a mission to convert the heathens. I just have to give them my bank account number...)
Amusingly, the True Majority e-mail uses the image the Matt Simmons article posted above does - the hand pumping gas. Must be a royalty-free clip art or something.
Much is being made both here on TOD and in the general US media about the surge in petrol prices in the past month or so.
However I am not seeing much about how this will feed through into inflation in the US. Is there a standard formula out there for this in the Us ie a 10c rise in petrol maintained for a 3 month period adds 0.05% to the CPI?
There must surely be the real risk of second round effects coming through because of these rises (ie delivery services hiking charges etc etc), which in turn will impact inflation.
In short the near term outlook for US inflation must be worsening as we speak, for me negating any chance of near term cuts by the Fed, despite the fact that the economy is floundering?
Food and energy have been conveniently thrown out the basket used for the CPI.
So don't worry, even though you may starve and stand still, it won't affect inflation numbers.
It's not that the government is cheating, they merely changed the rules off the game. What else are governments for but to set the rules?
To wit, official inflaton stands at around 2%. but the LA Times ran this today:
Once again, California leads the nation!
The usual disinformation. If you average it over 10 or 15 years food prices are not up much at all.
Current prices also do not bear out what you say, except perhaps for some expensive supermarket in CA. In the bay area if you have personal transportation you can drive to a Walmart much outside Frisco and pay much lower prices.
Here is a weekly advt. from a generic Kroger store in the SE. Usually Walmart Supercenters are cheaper.
http://atlanta.inserts2online.com/customer_Frame.jsp?drpStoreID=448
For e.g. check out Page 3 of the link above (wkly ad). Breyers Ice cream 1/2 gallon is $2.50 and has been so for at least the past 15 years.
BTW if you stand the fact that it is not organic Breyers Ice Cream is one of the best.
Sorry but you can't buy 1/2 gallon of Breyers Ice Cream anymore
Now it 56 oz for the same price as 64 used to be
Breyers Ice Cream
Assorted Varieties, 56 oz
Ed
True enough - a sneaky price rise. It was always a 1/2 gallon.
However, it is still a very small annual rise over the 15 years or so that Breyer's has been at about this price (but you may have to time your buys to sale weeks)
On Page 1 of the same e-flyer , 73%_Lean Fresh Ground Beef is $1.39/lb.
Fresh whole fryers are 79c/lb
Even the fresh fruit on Page 1 looks reasonable to me.
IMHO inflation is primarily in medical-services and supplies. That part is out of control - but again IMO it is because of the twisted system that exists in the States. My (libertarian) preference is to do away with insurance and all expenses are to be paid by the patient.
Since that is unlikely to fly the only way to control costs is to make it one-party payee (Feds) and available to all who file an income tax return (all must file - even if the declared income results in zero tax).
Peak oil, peak natural gas, peak coal energy posts may be whipping a dead horse.
What to do about it maybe of more valuable. Like the post on Peak Oil from guy from Argentina experiences.
Trying to send crooked US attorneys to jail is more interesting to us.
And shape-up NSA too.
And our friends too, we speculate, of course.
Its amazing how even the smallest factors can cause huge problems in complex systems.
http://www.usatoday.com/news/science/enviro/2001-07-05-wind-power-bugs.htm
Bugs can gum up wind-power turbines
However, this has no effect for much (most) of Wind Turbine production.
Why ?
Because WTs install undersized generators (weight & cost issues high up on a tower) that "max out" at about half of shut down speed. Power (from the blades) is generally a cube of wind speed. So, at shut down speeds, 8x the power used by the generator is available at the blade roots.
This also means that as wind speeds die down, power production plummets. A 9% drop in wind speed (below max generation, say from 11 to 10 mph) = -24% drop in electrical production.
Insect accumulation is "not good" and future designs (and blade replacements every decade or so) should have design improvements.
I suspect that this effect diminishes as towers get higher. Few insects "fly high" (although those night time warning lights do not help). And frequent rains help as well.
Best Hopes,
Alan
What about Sesame?
"Thousands of years ago in the Middle East, Africa, and India, the seeds were crushed to produce an oil that was used for lighting lamps and for cooking oil."
The USGS claimed that EOR might add alot more production. Take a look at this chart:
The US oil companies must be using all the EOR money can afford with deep offshore rig rates soaring. Meantime the US was showing a downtrend in production. The talk was like EOR might add substantial production, I supposed it is not being widely used yet. Matt Simmons described the tertiary recovery of Cantarell petroleum by nitrogen injection as like stepping on a tube of toothpaste. They get alot for awhile, then suddenly it will be gone.