DrumBeat: May 17, 2007

Russian Oil Companies Push East for New Growth

Russia is scrambling to unlock the vast oil wealth of East Siberia to keep crude output in the world's largest oil producer from falling. But to succeed, Russian companies will need deep pockets.

High oil prices have helped Russian oil companies post record profits in recent quarters. Yet as output growth from Russia's main oilfields in western Siberia begins to slow, the country's oil giants are pushing eastward to tap new resources that sit under some of the world's most forbidding terrain. Without new production in regions like East Siberia, crude output in Russia, the world's second-biggest oil exporter after Saudi Arabia, will flatten or decline, industry observers say. Although Russia is the world's largest crude producer, at 9.79 million barrels a day, much of its output goes to meet domestic demand.

Houston Valero refinery is off line

Valero's Houston refinery will be off line until sometime next week because of boiler and steam system problems, the company said Wednesday.

All of the plant's 64,000 barrels per day of gasoline and 44,000 barrels per day of distillate production is off line because of the problem. Distillate includes diesel fuel and heating oil.

...Also Wednesday, ConocoPhillips said a leak on a sulfur recovery unit at its Sweeny refinery in Brazoria County led to a shutdown of that equipment. The company would not reveal how much production has been cut back because of it.

OPEC doesn't see need to boost oil supply before summer, top official says

OPEC doesn't see a need to boost oil supplies before the summer and will stick to its view that global oil markets are amply supplied, a top official from the group said Thursday.

"There's no need for us to do more," Abdulla Salem el-Badri, secretary-general of the Organization of Petroleum Exporting Countries, told Dow Jones Newswires in an interview.

His remarks are the latest sign that OPEC wants to see crude oil stocks being drawn down more as a way to shore up prices.

El-Badri said U.S. gasoline stock levels are "acceptable" despite the industry's concern that inventories have fallen too low to meet the usual surge in summer demand.

Gas prices won't deter Memorial Day travelers

Despite record fuel prices above $3 per gallon, more Americans will travel by car over the Memorial Day holiday weekend than a year ago, according to a survey by travel agency AAA.

In a sign that energy costs will affect behavior, however, AAA said travelers are planning to stay closer to home and take shorter trips.

BP leader won't say budget pressures directly caused Alaska leak

BP America President Robert Malone acknowledged Wednesday that budget pressures made life difficult for company workers trying to safely operate BP's pipelines in Alaska's giant Prudhoe Bay.

But Malone stopped short of conceding that cost cutting was directly to blame for the company's failure to detect the corrosion that caused two pipelines to leak, forcing the company to shut down a portion of the nation's largest oil field and sending crude prices soaring.

Scientists Back Off Theory of a Colder Europe in a Warming World

“The concern had previously been that we were close to a threshold where the Atlantic circulation system would stop,” said Susan Solomon, a senior scientist at the National Oceanic and Atmospheric Administration. “We now believe we are much farther from that threshold, thanks to improved modeling and ocean measurements. The Gulf Stream and the North Atlantic Current are more stable than previously thought.”

Why ethanol backfires

Shifting more corn to fuel production has serious consequences. Importing the sugar-based variety from Brazil makes more sense.

Russia draws Europe into its orbit

On May 9, the Chinese People's Daily admitted, "If we look at US-Russian relations closely, it is clear that we are standing at the edge of a new cold war." It was an assessment long in coming.

Making a living

Plenty of outsiders come, because Twin Oaks is energetic about inviting them. The community has a detailed system for recruiting new members: If you want to join, you have to spend three weeks here first, during which you might milk cows, weave hammocks and cook breakfast in the dining hall. Then you have to leave and wait 10 days to see whether the community will invite you to join; after that you have to think about it for yet another month before making a decision.

The process is meant to both avoid disruptions to the community (visitors are shepherded by designated handlers) and, as far as possible, to keep people from joining hastily. After all, the choice is a sweeping one: to freeze one’s assets, move to rural Louisa County, and plug into a distinctive subculture where everyone goes by a single name—often not their birth name—and Valentine’s Day is replaced with another holiday, called Validation Day.

Australia: How the Hippies are finally changing the world through Eco Villages

"An Eco Village can be a lot of different things for a lot of different people," he says. "We define an Eco Village as a place where people can live in a more sustainable way and yet, not have any impact on their quality of life. This refers to the natural environment, but also the social and community context, as well as the economic and enterprise aspect."

Experts say oil refineries stretched too thin

Record gasoline prices have exposed the shortcomings of the aging U.S. refining system, but there are no quick fixes, a panel of energy experts told lawmakers Tuesday.

That suggests gas prices will be vulnerable to refinery outages through the summer. And one expert said gas shortages are possible.

"We may have an emergency this summer," Deutsche Bank's lead oil analyst, Paul Sankey, said.

Oil-Patch Dems Say Warming Bill Must not Harm Supply

Nearly 20 House Democrats from largely oil-and-gas producing states penned a letter to their leadership yesterday in an attempt to make sure climate change legislation does not lower energy supplies or increase prices.

John Michael Greer: The view from the grassy knoll

I’ve argued before that the unfolding crisis of industrial society is not really a technical problem, to be solved by the familiar tools of science and engineering. It’s a human problem, with deep roots in the mythic narratives we use to make sense of the worlds of our experience. It’s worth remembering that those of us discussing peak oil are not exempt from the same difficulty. Like every other member of our species, we think with narratives, with roughly the same inevitability with which we walk with feet, and the narratives we use to make sense of peak oil can be just as misleading as the narratives other people use to ignore it.

Between Fossil Fools and Peak-Oil Prophets

There's a fine line between fools and prophets. Talisman Energy CEO Jim Buckee treads it boldly, and his recent Peak Oil proclamation is certain to ruffle some feathers.

...But he doesn't despair. Instead, Talisman has become the vanguard in what I call the Transitional Energy Economy, a movement to turn the corner from Peak Oil doom-and-gloom towards a more efficient and profitable energy horizon.

Utilities brace for worker shortage

About half the USA's 400,000 power industry workers, largely baby boomers, are eligible to retire in the next five to 10 years, according to Carnegie Mellon University's Electricity Industry Center. The industry already has shed about 40% of its workforce since 1990 in response to deregulation, the center says. As many states froze electric rates in the 1990s, utilities cut payrolls to fatten profits and offset losses from the low-priced sale of power plants, says center co-director Lester Lave. Companies shut down or scaled back training programs.

That undercut the main appeal of a utility job: stable, lifelong employment. Today, high school graduates "are looking at jobs with computers sitting in an office, rather than working with their hands," says Jim Hunter, utility director for the International Brotherhood of Electrical Workers (IBEW) union.

Shell to Stay in Nigeria Despite Violence

"Shell has been operating for 70 years in Nigeria," said Shell Chief Executive Jeroen van der Veer after Tuesday's annual general meeting of shareholders in Scheveningen, the Netherlands.

Despite the fact that the Nigerian government skims-off 95 percent of the profits for the oil production on land, Shell wants to greatly expand production, including oil production at sea, he said.

"The world simply needs the energy from Nigeria," said van der Veer.

Hungry Zimbabwe faces severe wheat shortage

The slow pace of planting has been attributed Zimbabwe's chronic shortages of fuel, fertilizer and electricity for irrigation.

The southern African country, once hailed as the region's breadbasket - is already facing a massive deficit of more than a million tonnes of the staple maize crop.

India: High gas rates may upset NTPC expansion plans

NTPC Ltd, India’s largest power generation company said the price at which analysts expect gas from new fields to be sold, at $4.50 (Rs184.50) per million British thermal unit (mBtu), is too high.

The company has threatened to drop the expansion plans for its gas-based projects if this is the cost of gas.

No tax hike for schools, Kent pledges

County Tax Assessor, Gerald Barber said that the spending habits of county residents, along with high gas prices, could be driving down ad valorem tax collections on new cars.

...A trend towards cheaper and used vehicles may also have caused the tax shortage, an automobile dealer said.

'Green' Car To Cost Lots Of Green

Toyota's commitment to hybrid automobiles was on full display Thursday when the automaker unveiled its most expensive gasoline-electric vehicle yet -- the 15 million yen ($124,000) luxury sedan Lexus LS.

Why gasoline prices are rising while oil isn't

Last summer when oil traded at a record high near $79 a barrel, gas at the pump went for about $3.03 a gallon. Today, crude's about $62.50 a barrel and a gallon of regular unleaded costs $3.10

Doesn't seem right, does it? The price of a barrel of crude ought to be a better benchmark for what you pay at the gas pump.

In today's economy, though, that type of formula is out the window, a relic from the days when refineries kept crude stocks high during winter months and Americans didn't drive longer and longer distances to get to home, work and play.

Lawmakers link gas prices to investments

While oil companies blame soaring gasoline prices on unexpected refinery shutdowns, Congress is questioning whether industry mergers and investment decisions have erased a supply cushion.

Gas prices make consumers seek new plans

The soaring price of gasoline is leading many Americans to adopt new strategies to economize on fuel, especially during the summer holiday driving season that's about to begin.

Another spike in gas price

Upset by high gas prices? You’ve got more power than anyone else to change how much you spend on motor fuel. It’s up to individuals to decide whether they live three miles or 30 miles from work. They decide whether they drive big SUVs or four-cylinder sedans that go two or three times farther on a gallon of gas.

Big Oil needs to be held accountable

The oil company executives use every lame and untruthful excuse possible for raising the cost of these fuels so that they can put untold millions in their private bank accounts. The latest excuse is, "Not enough refineries." So, when will even one of our gallant leaders ask the question: "If refineries are the problem, why isn't there a gas shortage?"

Gas prices burn off profits

That extra burden from rising fuel costs — roughly 45 percent in the last two years — has affected the company’s bottom line by 3 percent. “That’s big and it’s forced us to reduce capital, like not replacing trucks or enlarging our fleet.”

And the recent spike in fuel prices has rubbed salt in that growing wound.

'Crazy' gas prices prompt carpooling - Actually, despite the title of this article, it's about how prices haven't prompted carpooling.

"Even if I get a horse and buggy and trot in to work every day, I'll find a way," she said.

Water: Vermont's answer to energy crisis

But there is an answer for Vermont's energy future, with or without nuclear energy, and it would help keep Vermont the number one least polluting state in the country and the sixth most desirable tourist location in the world. The answer is hydropower. Hydro Quebec has 35,000 megawatts of hydropower. We need only 1,000 megawatts in Vermont, a drop in a mighty big bucket. It doesn't emit carbon dioxide, it is renewable (as all hydro is regardless of the size), and it is reliable 24/7.

ONGC to quit Indo-Burma gas pipeline project

The Oil and Natural Gas Corporation Limited, ONGC – Videsh Limited or OVL has walked out of the Indo-Burma gas pipeline project in the footsteps of the Gas Authority of India Limited, GAIL.

Should petrol supplies be limited?

Imagine a time when petrol supplies are strictly rationed to help combat global warming.

In such a world, a country's annual quota could mean prices sky-rocketing towards the end of the year as supplies dwindle, before crashing back down again in January.

David Strahan: What Stern got wrong

The Stern review on the economics of climate change completely fails to acknowledge the imminent decline in global oil production.

Labor conference on global warming fails to address energy

A North American Labor Assembly on the Climate Crisis was held May 7 and 8 in New York City. Put on by the Cornell Global Labor Institute, the event was sub-titled "Building a Global Movement for Clean Energy". A report by labor organizer and peak oil activist Jerry Silberman.

Say no to bigger suburbia, American journalist says

Urban sprawl should be on its last legs, says an American journalist.

"Suburban development will have to come off the menu," James Howard Kunstler said in an interview this week from his home in Saratoga Springs in upstate New York.

Coal at crossroads as energy progenitor

A lone, but powerful, holdout to this otherwise universal acceptance of upcoming federal environmental restrictions is Gregory H. Boyce, chief executive officer of St. Louis-based Peabody Energy Corporation, the world's biggest coal company. To put Peabody's coal reserves in perspective, its 10.2 billion ton coal pile stocks have nearly twice the energy content of global corporate energy leader Exxon's petroleum hoard.

India's energy sector requires $150b investments by 2012

A report issued by KPMG, a leading consultancy firm in India, showed that the country's power and energy sectors such as coal, oil, gas and nuclear power will need funds of $120-$150 billion over the next five years, Khaleej Times reported.

China to fill Aoshan tanks with Mideast oil by June

China will make its first crude fill into its second strategic oil storage facility at Aoshan by the end of May, signalling Beijing's determination to bolster its emergency inventories despite high oil prices.

The delivery of about 2 million barrels of Middle East crude into Aoshan comes after the world's second-largest consumer finished filling its first 33 million barrel facility, part of its target of a 100 million barrel buffer by the end of 2008.

Huge Chinese oil field may be bigger than thought

Latest explorations indicate that China's newly found Jidong Nanpu oil field in Bohai Bay may have more reserves than previously estimated, state media reported Thursday.

Is China able to find another big oilfield?

Q. The discovery of the Nanpu oilfield was in an old, prospected zone, and how was the discovery made possible?

A: the Bohai Bay is a prospected oil zone, and so is Jidong, or eastern Hebei province. The discovery of the Nanpu oilfield is owed to a couple of factors, namely, 1. scientific decision made; 2. technological progress scored; 3. the sound, top rate work of organizing and, 4. correct theoretical guidance.

Bicyclists, transit officials and environmentalists are happy about high gas prices

As gas prices sail to new highs in the Twin Cities and nationwide, most observers are expecting people to complain, pay up and keep driving.

But some welcome the rising cost of fill-ups -- not just bicycle dealers, but also environmentalists seeking to reduce air pollution and transit advocates who see hordes of new passengers.

Greens angered by 1m flights giveaway

The giveaway comes as Ryanair struggles to fill its planes amid an unexpected drop in demand across the low-cost airline industry during April. The airlines have been hit hard by the doubling in air passenger duty just as they have been taking delivery of new planes and opening up scores of new routes. What the airline industry calls "load factors" - the proportion of seats filled in each plane - have dropped across the board.

Tom Whipple - The Peak Oil Crisis: Alarms Are Sounding

Across the world alarm bells are starting to clang. Above every gas station, a large sign is proclaiming that prices are on an unstoppable climb towards un-affordability. In Paris, the International Energy Agency has announced that the demand for oil is likely to exceed the supply later this year, unless, of course, OPEC steps up production. In the Middle East OPEC spokesmen reiterate time after time that all is well, there is plenty of oil, and there is no need to increase production.

In Ottawa, a parliamentary hearing on energy security broke up in turmoil last week when a distinguished professor pointed out that, unless Canada stopped selling 60 percent of its oil to the US, Canadians would soon be “freezing in the dark.” In Nigeria, Chevron is evacuating hundreds of employees to forestall the possibility that they too will be hauled off to the swamps as hostages in an increasingly bitter insurgency. The Chinese just announced that their April oil imports were 23 percent higher than last April’s. Iraq, Saudi Arabia, Venezuela -- everywhere you look – there are unmistakable warnings of troubles to come.

Big Oil attacked over record gas prices

Critics tell House panel that mismanagement, lack of competition are behind record prices; call for gas reserve, possible oil company breakup.

Gas pumps gulping family pay

For the very poor, "people buy less medicine, they buy less food" when forced to pay more at the pump, says Mark Wolfe, executive director of the National Energy Assistance Directors Association. He notes the increase in gasoline prices comes on top of higher costs for heating and air conditioning, which have stressed some household budgets.

"Businesses that serve lower- to middle-income people, they have reason to be concerned," Wolfe says.

Nigerian politician's house bombed

Attackers blew up the country home of Nigeria's vice president-elect with dynamite Wednesday, authorities said, as violence escalated in the country's oil-rich south before a government handover this month.

Militant groups making an array of demands, including a greater share of government oil revenues, have carried out bombings, kidnappings and protests since 2005 that have already shut down a third of production in Africa's oil giant.

Analysis: Shell takes hit in Nigeria

Foreign oil in Nigeria suffered another setback this week when protestors attacked a remote pipeline forcing 170,000 barrels of production offline.

Venezuela tells oil companies: Obey or leave country

Venezuela has every right to take control of its energy resources and international companies which do not accept the country’s terms should leave, Venezuelan Deputy Energy Minister Bernard Mommer said.

Mommer, widely seen as the architect of renationalisation led by leftist President Hugo Chavez, said it was normal for Venezuela to strive for control over its energy resources.

“You get a globalised world of investments, but not of natural resources,” Mommer said in an interview on Tuesday. “The natural resources belong to the Venezuelan people and I don’t know one people who thinks differently.”

Russia: Oil, industrial production grow 4.2%, 7.5% in 1Q07

Oil output in Russia grew 4.2% in the first quarter of 2007 year-on-year to 121.2 million metric tons (about 890 million bbl) while industrial output climbed 7.5%, the federal statistics body said Thursday.

Crude sales on the domestic market in January-March grew 6.5% to 56.2 million metric tons (413 million bbl), and exports edged up 3% to 63.1 million tons (464 million bbl). In March, domestic sales rose by 5.4% to 19 million metric tons (140 million bbl) and exports by 3.2% to 22.3 million tons (164 million bbl).

Biofuel Production to Trigger Corn Shortage in Guatemala

Corn will be scarce in Guatemala in the coming months due to the huge demand in the United States for ethanol production, which is buying and hoarding massive amounts of the grain.

According to Granma newspaper, in the last six months, a bushel of corn (56 pounds), doubled its price on the US market, from $4 to $8 US because ethanol producers consumed 86 million metric tons, 5 million over the figure planned.

Although to date there is no biofuel production using grains in Guatemala, the prices have also begun to increase, up as much as 73 percent.

As a result, many producers believing prices will go even higher are making huge purchases of animal fodder, which will affect the availability of corn for human consumption.

Rise of biofuel crops threatens native tribes

Indigenous people are being pushed off their lands to make way for an expansion of biofuel crops around the world, threatening to destroy their cultures by forcing them into big cities, the head of a U.N. panel said Monday.

Iraq is on the verge of collapse - report

Iraq's government has lost control of vast areas to powerful local factions and the country is on the verge of collapse and fragmentation, a leading British think-tank said on Thursday.

Chatham House also said there was not one civil war in Iraq, but "several civil wars" between rival communities, and accused Iraq's main neighbours -- Iran, Saudi Arabia and Turkey -- of having reasons "for seeing the instability there continue".

New technology, salt water injection, will save us.

"No-one knows what technology will be available in future to aid production," added Dourian. "In Oman, saline water injection experiments are currently being undertaken. There are also enormous resources of oil sands in Canada.

I sure hope these saline water injection experiments work. They could double Oman’s oil production. And if they work perhaps Saudi Arabia may try this bold new technology of injecting salt water into their reservoirs to increase production. Then those enormous resources in Canadian oil sands kick in and the world will be awash it oil.

“Peak Oil,” what a silly idea.

I must add, Kate Dourian is Middle East Editor for Platts. That means she is an expert on oil production so this new technology, salt water injection, may have some merit.

Ron Patterson

Ever get the feeling we've lost the argument?

We may or may not be right (about a near-term peak and decline), but the argument -- the public argument, meant to help mitigate a crisis -- that is lost.

For example, look at the article here and the comments that follow:


This guy's article points up a couple of things:

The public is deeply distrustful of Big Oil -- so much so, that many completely ignore the fact that Big Oil has been pooh-poohing Hubbert's message. This is going to come back to haunt the oil companies. If the public is angry over $3 gas, how will they react when it hits $5 or $10 a gallon?

We live in what I refer to as The Disinformation Age. There is so much "information" that comes at us from so many sources, that it really requires a sixth sense to be able to weed out the BS. Much of the public lack effective filters and so -- not knowing what to believe -- they retreat into superstition and prejudice.

Like you told the guy: Either you prepare or you don't.

My biggest fear is that the news of peak will be swept away by something more dangerous like...(fill in the blank)

Or, with this distrust, people go beyond attempting boycotts and eventually start attacking the infrastructure - as seen in Pakistan, India, Nigeria, etc already. It's another "if I can't have it, then..." situation.

Yet another above ground concern that will likely, eventually, become reality.

Which is why we need to look at the nodes in our fragmented, network industrial society where authority is recognized and defended - religious movements particularly, since media and government are widely dismissed as noted above. Religious movements could lead us, or groups of people, in any of a variety of directions - from authoritarian to egalitarian to communal - as people seek to make meaningful declining energy per capita, unprecedented in the vast majority of people's experience (even with the 1930s depression or WWII). I'm finding myself looking at these relationships among people in areas, societies and classes already dealing with powerdown.

Yes - if there ever was a reason to be connected in some way to an organized religion its Peak Oil Powerdown

Paradoxically this may not be the best for organized religion


You never know how new technology might amazingly increase production! I mean, one of these days they might figure out how to re-inject associated gas, injecting CO2, or even drill wells sideways! Once they figure out how to drill wells sideways, they might even be able to create "branching laterals" for maximum reservoir contact! If they could do that, we could quintuple our current production rate and actually make oil magically appear in the ground!!

I think we should create a thread entirely dedicated to sarcasm.

I think we should create a thread entirely dedicated to sarcasm.

Why would you want to do that? This is a serious matter, isn't it? Don't you want people to take peak oil seriously?

You people on this site should buck up and get more professional. Like, maybe you should get somebody to write a 16,000-word article about a big oilfield, like perhaps that big Saudi field. Or a 3,700 word article about the dangers of ecological collapse. Or maybe someone can issue a report on what it would take to mitigate a "peak" in oil extraction rate.

Hey! How about if someone compiled a daily list of articles that pertain to the subject? Anyone up to that?

Yeah, that would do it. That would get the public's attention and cause a Great Transformation of Consciousness.

There just haven't been enough daily articles beamed into the public's consciousness. Someone needs to invent an electronic device that would enable folks to find this information with just the click of a button. That would be so neat.

Really, Mr/Mrs Substrate. This obsession with sarcasm is unseemly in a professional.

OK, b3NDZ3La...deep breaths...look, it's all going to be just fine...Prez Bush is on it like stink on a skunk...we got hydrogen coming...we got ethanol coming...he's told us we're addicted to oil...that will make us all stop using...right?

We got all that deep, offshore oil coming...we got mounds and mounds of oil in those tar sands up north. There's all kinds of new discoveries being announced around the world...heck even the Saudis just told us they found a new one RIGHT next to that old beast Ghawar.

Iraq is so unexplored out west, you could stick a straight pipe down 10 feet and the black gold would smack you back in the face.

So quit your frettin and go gas up the the RV...Memorial Day weekend is right around the corner

Happy Motoring!!

I long ago came up with the solution to peak oil/peak energy. It's simple really. We put windmills everywhere, and then use electric fans to create the wind that powers them. That way we'll have reliable wind power 24 hours a day, everywhere. Using this ingenious method, everybody could generate all the power they need at home. You could even run these windmills in your basement.

The problem is that Big Oil doesn't want Americans to know about this great, heretofore untapped source of energy.

I really need to get in touch with President Bush and urge him to come up with several billion dollars in subsidies to get this plan under development quickly, while there's still time.

Why ozonehole, that is so great!

I have this friend? He rents out equipment to people. He has LOTS of generators that he can't rent out except during blackouts. He would LOVE to rent out these generators to power your fans!

See what happens when Good Minds come together?

Why doesn't your friend just knock out power substations? lol.

Jeez, didn't you all know that there's free power just waiting to be plugged into upon any beach!

Since we are in need of humor today:

Please imagine the poor subject of this panel as being one that has read TOD for several years and then watched the world's response:

I'd rather be in a county lockup than someplace like that. Wouldn't matter how much you paid me. That's just inhuman. What are we doing??


Once they figure out how to drill wells sideways, they might even be able to create "branching laterals" for maximum reservoir contact!

Like oh my gosh havent you heard??? Just recently a dude from Shell got that sidewayz drilling idea from his pimply-faced kid who was using his straw to suck the last droplets of his strawberry milkshake from the side of his glass!!!11!!one!! ROFLcopter!!

We're saved!! =D

i think i detect a hint of sarcasim in your post.

I use grow lamps on my PV panels.

The sarcasim here at TOD is so thick you can mine it and process it into sarcanol.

Sarcanol, eh? Whats the ROI on that?

You dont need to mine it.

It flows freely out of Mount Teotwawki, the volcano on Hawaii.

High quality sarconol is surprisingly difficult to distill despite the copious amounts of raw material for it's production just lying around waiting to be picked up today.

Many have argued that there is a non-depleting supply of sarconol, but I would argue that when the GWB administration leaves office in 20 months, that the raw material for sarconol will be reduced by at least 75% and perhaps even more ! We may face a sudden and quite desperate shortfall in sarconol !! High quality sarconol may not be available at ANY PRICE ! and low quality sarconol will be scarce. AND no reserves stored from our current time of plenty ! :-((

To reinforce my point, just consider if Al Gore has won the Florida recount/Supreme Court case (or Nadar had not run).

Sure, there would have been a reasonable amount of low and medium quality sarconol available for use, but the bitterness (an essential ingredient of light sweet high quality sarconol) would be lacking.

No, I am afraid that we are enjoying Peak Sarconol during the second term of GWB.

Best Hopes for less Sarconol raw material in 2009,


Dear AFBE,

I have GOOD news for you!!

Word is out that a huge field of sarconol has been just discovered. I am not at liberty to disclose precisely where, but some rumors are that it is located in the Mitt Romney's brain. Given the fact that the American public is addicted to Republicans as well as oil, we could very well see exponential increases of sarconol accompanied with equivalent increases in our torture infrastructure.

It's morning in America!! Have faith!

Oh come on !

Everybody knows that Sarcanol is Abiotic and generated in the Earths Mantle!

It would be way to funny to offer some MSM outlet a press release on 'Sarconol Research'- and see how far it gets.
Best hopes for some smart ass fun.

Maybe a quote from the Chineese Premier about a newly discovered pool of Sarconal in a well explored area will be forthcoming?

How about some info on my new sarcanol refining company, Sarco! We could issue bunk press releases like Steorn! =D

It's been a long time since I saw such sparse search results, but Google has only 1 entry for "sarconol".



or is the TOD Sarconol a brand name?


The Prophet Muhammad encouraged a scientific approach to medicine, saying, "For every disease, Allah has given a cure."

Arabic Pharmacy during the Age of the Caliphs

The text is behind a paywall...maybe Stuart, Euan, F_F, can figure this out.

The text is behind a paywall or a praywall?

Don't worry. Once Congress passes the tax credit for biosarcanol we will be an the road to sarcanol independence.

But I thought that during the GWB reign, the USA was a massive exporter of the raw material for sarconol ! And we set up a fairly decent domestic production industry of the refined product.

For example, The Onion seems to fill a good % of the US market demand for sarconol and that is entirely domestic production (except for a few Canadian wetbacks).

All of Europe seems to be using predominantly American raw material for their domestic sarconol (The French have gone to 100% American supplies, forgoing their once abundant German and English reserves in favor of much richer American material).

Best Hopes for a domestic sarconol peak by January 2009,


and I also fear a sacronol glut if Romney is elected {shudder}.

The French, though, have recently discovered a promising source of a local variety, Sarkonol. And don't forget the Sarcanol Sands between Brussels and Strasbourg, that have been yielding a steady supply ever since the discovery after WW2.

Sarcanol Sands

You idiot! We'd burn all the world's cynicol to process those Sarconal Sands. The next thing you'd want us to do is to start using satiricol hydrates!!!

I give credence to claims that France has the world's largest reserves of cynicol. And with domestic production of Sarkonol just starting, France should have abundant supplies of both sarcinol and cynicol for the foreseeable future, despite any supply disruptions from the USA in early 2009.

Although I agree, mining the Sarconol Sands takes excessive amounts of cynicol with very poor quality sarconol produced. EU bureaucrats are an extremely poor source of anything except delay and paperwork. One can waste immense amounts of cynicol on them with truly minimal results. They are not even funny !

Worst Hopes for ??


Hey...you ARE in the sarcasm thread...if you don't like it...just move along...some are in need of comical decompression today.

Mercy...how am I going to be able to drive Jack and Katrina to soccer practice 3 blocks from our house with all these gas price spikes?

Oil Surges Above $63 on Concern of Below-Normal Gasoline Supply


It's almost past $65 now!

can somebody explain to me why concerns about gasoline supply are impacting crude oil prices whereas US crude oil stocks seem more than adequate for now.

Crack Spread
and Hurricanes

My WAG is that refiners know all the crude supply is going to be profitable given this retail environment and these spreads. Tomorrow's oil is still more expensive than today's and if a hurricane gets loose in the Gulf there may not be any deliveries for awhile.

can somebody explain to me why concerns about gasoline supply are impacting crude oil prices whereas US crude oil stocks seem more than adequate for now.

Over the past few years, I have asked that question many times. I have never gotten an answer that made any sense. They move up and down together, even when only one seems to be in under or over-supplied. They diverge at times, as gasoline has done recently due to the inventory problem, but most of the time they move together.

I noted this once with my former boss; a chemical engineer who also did a lot of economics. He would say that gas prices are driving crude prices. I would say "How does that work?" He couldn't explain it. But it is definitely something I have asked about as well.

OK I've got one. If WTI and Brent are moving together today which one is moving the other? I mean ,is the US gasoline market the choo-choo in this whole trainload?

My explanation is that the Saudi's have now started cutting the shipment of light crude (previous cuts were of heavy/medium crude) to Asian refineries. They (Asians) have started buying crude on the spot market to make up for the shortfall. Hence the recent increase in the price of crude.

is the following a possible explanation?

Futures contracts are fungible, which means each commodity’s contracts are completely interchangeable because they have the same quality, quantity, delivery date and delivery location. For instance, the contract size for both NYMEX’s unleaded gasoline futures and heating oil futures is 42,000 gallons, which is equal to a barrel. The unleaded gasoline contract is based on delivery at petroleum products terminals in the New York harbor, which is the major East Coast trading center for imports and domestic shipments from refineries in the New York harbor area and from the Gulf Coast refining centers. Heating oil futures also specifies delivery in New York harbor, which is the principal cash market trading center for the fuel, with traders benchmarking spot heating oil, diesel and jet fuel values off the heating oil contract.


Well it's no wonder most people think there's lots of oil left. TOD's just been working with barrels that are too small.

there is obviously a mistake in the text: 42,000= 1,000 barrels.

Hello Khebab,

I think crude prices have more to do with the fear premium over a potentially anarchic Pakistan than with US crude inventory.

Fractious, violent, unstable Pakistan stumbling towards failed state

I believe Pakistan has about 50 nukes on missiles. I don't think they are ICBMs, but a shorter range. Nonetheless, if civil war starts breaking out, I hope Musharraf invites the US and Russia to come in and safely remove the warheads before they fall into the hands of radical groups.

Otherwise, out of fear: India or maybe Israel will pre-emptively nuke this country so that they won't have to worry about a Pakistani nuke warhead flying towards them. If the nukes fall into radical hands, they could be then be covertly shipped almost anywhere.

EDIT: As a last gasp desperation measure to protect these nukes--If I was Musharraf: I would nuke my own country [Pakistan] with one warhead to gain enough time so that the US and Russia could then remove the remaining 49 warheads.

Yes, this would be a horrible cost, but it is still less destructive than having India or Israel sending in a huge volley of nukes.

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

Or maybe Musharraf trades his skin for access to the nukes ??

I would be very surprised if Pakistan could actually deliver a nuke on target w/ a missle. They are still a relatively early stage nuclear power even compared to India (which certainly can do so,albeit w/ probably a pretty low success rate). It is true that they have quite a few warheads, but this is mainly a function of the amount of fissile material they have been able to produce. Building a nuke and getting it to go off on the ground is one thing. Test firing a missile is another. getting the two to work in tandem is more difficult by at least an order of magnitude. My guess is that the most reliable way for Pakistan to deliver a nuke would be to strap it to a plane and fly it into the target.Ditto for NK if they are even that far along.


Pakistan has been exporting Chinese designed missles. Saudi Arabia bought the Ghauri from Pakistan, the missile has a range of 1,500 kilometers, based in silos in the city of Al-Sulaiyil, south of Riyadh.

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This purchase replaces the KSA's older CSS-2, or East Wind.

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In his 2003 Naval Post graduate thesis titled "Is Saudi Arabia a Nuclear Threat?" Steven R. McDowell writes:

Now that the CSS-2 missiles are nearing the end of their lifecycle, the Saudi regime may choose to replace them. During a March 11, 1997 interview with Defense News, Saudi military chief of staff, Lt Gen. Saleh Mohaya stated [referring to the Saudi’s CSS-2 ballistic missile inventory], "The [Saudi Arabian] oil kingdom is now considering replacing or refurbishing the desert missile force."

So not only does Pakistan have up to date missiles, they manufacture and export them.

Well, if the market thinks refinery capacity can eventually hit about 95% sometime soon, then that implies robust future demand for crude oil, as refineries suck in more raw material to produce more finished product. It is assumed, of course, that the demand for the finished product (gasoline) is strong, which seems to be a safe assumption.

I read a good article in the WSJ a couple of years ago about this, but I can't find it now. It would also be behind a double paywall (extra $$$ even for subscribers).

The term demand-pull inflation is mostly associated with Keynesian macroeconomics, but it seems to apply here. Also see cost-push inflation vs. demand-pull inflation.

concerns about gasoline supply are impacting crude oil prices

Assuming an environment of sufficient refining capacity, it is reasonable to hedge gasoline with crude futures.

I use grow lamps on my PV panels.

That's nothing. I put a small windmill on my car's hood.

I covered my wife's tanning salon with solar panels

Sarcasm is not without its disadvantages.

My first column on peak oil sunk like a stone, perhaps because of its freight of iron-y:

Stupid title not mine.

There's something funny about this quote, like the oil sands are a get-out-of-jail-free card that you can use in any situation.
Yes officer, I was driving the car, there is liquor on my breath, and a bottle of Jim Beam in the passenger seat, but I wasn't drunk driving. There are also enormous resources of oil sands in Canada.

Mentos aint got squat on oil sands!

Critics tell House panel that mismanagement, lack of competition are behind record prices; call for gas reserve, possible oil company breakup.

Mismanagement from the viewpoint of a consumer who doesn't like paying $3 for gasoline. Mismanagement from consumers who say "You didn't foresee my voracious demand for gasoline." But for the oil companies and shareholders? I hardly think they would call it mismanagement. If the idea is to make money, I think they are managing OK.

As far as breaking up the companies, go ahead. Then everyone can buy their gasoline directly from Saudi when the companies lose the economy of scale. They are already at a disadvantage to the NOCs.

RR, I hate to sound cynical, but do you think these rumblings are meant to extract higher "campaign donations" from the big oil lobbyists?

Yes, and just as soon as we break up Saudi into 7 principalities (my plan), things will look a whole lot better. While, generally speaking, competition is a good thing, I am not sure it is terribly relevant when it comes to oil. And, besides, I don't want prices to go down anyway because I am in the process of maximizing the ROI for my Prius. Right now, things are looking up on the efficient auto investment front.

At what point will it be politically correct to lose sympathy for those who didn't see this coming, or saw it coming but refused to get rid of their gas guzzler anyway? I bought my first hybrid in 2002, so yeh, I'm feelin' smug, so sue me.

Best Hopes for even higher gas prices.

At what point will it be politically correct to lose sympathy for those who didn't see this coming, or saw it coming but refused to get rid of their gas guzzler anyway?

I have sympathy for the former, but not the latter. Think of your parents, siblings, grandparents, friends, etc. Most of them fall into the former group. If they didn't see it coming, I feel very bad about that. But I am also angry that our government keeps pandering with shallow promises. What is needed are policies to reduce demand. What is needed are policies that will tell everyone that high prices are going to be the new reality, so you need to prepare for this.

I never thought it would be painless. One thing I have always presumed is that when fuel supplies are crunched, people are going to suffer. And I don't like to see people suffer. That's the entire reason I got involved in this arena in the first place: I hoped I could shine a light on stupid policies as well as those that made some sense. Eventually, the government will see the light. But it will be too late for a lot of people.

In terms of parents, grandparents, etc., is it really true that they didn't see this coming? I was a small child during the oil crises of the 70's and have no direct memories of those events, but I often wonder about people in the generation before me. They started to get the message, they drove less, accepted the 55 mph speed limit without too much grumbling and bought smaller cars. The oil embargo showed with some clarity that the US had a vulnerable position when it came to energy. Now 30 years later can we really say that people over 40 could not have seen this coming?

Most emphatically: WE SAW IT COMING.

My "Earth Science" class (circa 1974) taught me that it that "it" would come.

My geology for non-majors course, "Geology and Human Affairs," (circa 1981) taught me that "it" would come.

We need to document it clearly: we did the WRONG thing.

See "Hubbert," circa 1956.

Thats right. We saw it coming but got "ray-gunned" by raygunomics.

When I mentioned Peak to my Mother she said she did not know how anyone who lived though the 1970's could ever forget.

In retrospect her slight counter cultural leanings (not too much tv, growing food in the yard, recycling, no cable tv, hanging the wash on lines, no credit cards, don’t trust what the gov tells you..ect.) Was the best thing I could ever ask for

Now 30 years later can we really say that people over 40 could not have seen this coming?

Mainly, because they are receiving assurances all around that there really isn't a problem. The oil companies are guilty. The government is guilty. The media is guilty. So, if my 60-year old mother hears from the U.S. government that we have plenty of oil, and she keeps hearing that the reason prices are so high is that oil companies are just gouging and they will be punished and all will be peachy, just how much blame can I assign her, and millions just like her if they are caught unprepared? Should they know better? Just think about the message they are getting.

Now, I won't argue the point that they should be conserving anyway, but if you are Joe Q. Public what is your incentive to conserve? Gas is cheap. It doesn't cost me much to drive half a mile to MacDonalds - and I have no indications from my leaders that gas is going to become expensive. So where is my incentive to conserve. Because I am a good citizen? We don't have enough of those.

You see, Reagan told everyone that it was morning in America, and that Carter was a crackpot for preaching conservation. Then Miami Vice came along and everyone wanted to consume.

Now it's mourning in America...

Ah, but it was two short episodes, in the early and late 1970s, and only some areas had the really huge lines. In my area, people made it to meetings and the like, disruption was minor. It was never overly hard or expensive to get a fuel-guzzling flight - the jet set was well cared for. In between the two episodes there was no great problem at all. High prices were attributed to "gouging", so the Feds micromanaged the supply with their customary ignorance and incompetence, which actually caused most of the lines. Meanwhile there was nothing much any individual needed to do except to bitch to his or her Congresscritter.

And afterward, crude oil became literally dirt cheap.

So it looked like yet another of those millennialist false alarms. You know, on a par with climb up on your roof next July 17 and wait for the space aliens to carry you off to paradise. Or repent now, for the world is ending. That sort of thing.

Seriously, the message will never be absolutely clear except in the rear-view mirror. Maybe there's plenty more under Antarctica or the Mid-Atlantic Ridge or somewhere. Not many experts seem to think so, but proving it's not there would be proving a negative. That's hard, even impossible, to do. And, notoriously, experts have been wrong before, so they could be wrong again.

>If they didn't see it coming, I feel very bad about that. But I am also angry that our government keeps pandering with shallow promises. What is needed are policies to reduce demand. What is needed are policies that will tell everyone that high prices are going to be the new reality, so you need to prepare for this.

No politican (in office) is ever going to discuss those options simply because it will guarantee that they are voted out of office. Americans don't want to hear that they need to conserve. They believe the case that there is plenty of oil and that they are being taken to the cleaners by big oil. Politicans are more than willing to get behind this idea since its appears that they have the consumers best interest in mind, and it increases votes for them. Notice how many Politians have changed there tune about Ethanol. A few years ago, there were many outspoken politicans against Ethanol. Virtually all of them have gotten behind the Ethanol train because it buys votes!

FWIW: In my opinion, its very likely that these prices will begin to take a toll on the economy soon, resulting in demand distruction as businesses start to downsize and unemployment rises. This will likely by politicans another couple of years until production falls below demand again.

Yes, the way we have 'dumbed down' America, they won't know better when it comes to killing the goose that lays the golden eggs. When you create an entire nation not much different from a flock of sheep, you get what you paid for.

Lamb chops for dinner!

As you said, the idea is to make money.

Providing an inadequate supply is one great way to make money.

The question is whether that inadequate supply was part of a long term investment strategy, by choosing not to invest in the amount of refining capacity neccesary to meet future demand. (price manipulation), or were the companies unable to accurately predict this refining scenario unfolding and actually caught by surprise that this amount of refining investment would be unable to meet demand (mismanagment of the supply side).

Which is it? Mismanagement or manipulation? It is clear that there is a shortage of refining supply. Oil companies are the only ones in charge of providing that supply. Is there another explanation that I'm missing?

Which is it? Mismanagement or manipulation? It is clear that there is a shortage of refining supply. Oil companies are the only ones in charge of providing that supply. Is there another explanation that I'm missing?

Yes there is. Capacity has been added equivalent to a 200,000 barrel a day refinery every year for the past 10 years. Yet demand growth has outstripped that. Do you think oil companies possess a crystal ball and could forecast that kind of demand growth? They have been bitten hard in the past by overbuilding capacity. They are in a cyclical industry. So they tend to be cautious with their forecasts.

So, tell me how you would have managed it differently. You now have the benefit of hindsight, but let's say it's 10 years ago. Your margins suck. Gas prices are very low. Politicians are making constant noise about getting off of fossil fuels. What are you going to do? Are you going to be aggressive with your expansion plans? On what grounds? The last time that happened, you actually lost money.

I didn't say there wasn't growth, I said there wasn't enough growth to meet demand.

No company possesses a crystal ball. That is why we have a free market. The collective actions of suppliers and demanders will create the magical balance neccesary.

If they need a crystal ball to meet their supply side of the equation, they obviously are not operating under free market conditions are they?

Now they get to print money as long as they are conservative with their estimates. The more conservative the better. Unfortunately being deliberately conservative to protect profits as opposed to operating based on what they believe to be the actual demand is price manipulation. The more conservative they are, the more they are manipulating prices. Proving such things is virtually impossible but it is price manipulation none the less.

I don't really care how they manage it. I'm happy that prices are going up just like everyone else. My sense of fairness refuses to support these high prices lining oil company pockets though. If I was in charge the oil companies would have been regulated long ago and the regulations would have involved slowly raising the prices up to european levels by gradually adopting something similar to the european system.

(oil company profits do nothing to help us prepare for peak, it just concentrates even more wealth in the hands of a few elites and leaves us woefully unprepared.)

You didn't answer the question. Given the market conditions 10 years ago, when you would have been planning some of the projects coming online today, what would you have done differently? You know what demand was like for the past 10 years. Do you have reason to believe it is going to accelerate in the next 10 years?

I am sorry, people like you have unreasonable expectations regarding what they should have known. Did you load up on oil futures 5 years ago? Why not? Isn't it obvious you would have gotten rich? Well yeah, it's obvious now.

It is not the fault of the oil companies that demand has grown like it has. They have gotten killed in these cyclical markets by being too aggressive with their investments. So, you learn to be conservative. And right now they are riding the top of the cycle, earning a windfall of about 10% on sales. Woo-hoo!

My company has invested all of its earnings back into expanding the business. I think that will change this year, as we will buy back some stock to appease the analysts who say we are investing too much into the business. But what else do you want?

Oh, and it isn't "elites" who are benefiting. The days of the Rockefellers are over (well, there is still the Koch family, but they are an exception). Ordinary men and women, through pension plans and 401Ks, own most oil companies.

'Ordinary men and women, through pension plans and 401Ks, own most oil companies.'

You honestly believe that? Familiar with how proxies are voted in the U.S.? TIAA-CREF or CalPERS, for example, is the holder of that ownership, not 'ordinary men and women' - pension plans have a fiduciary duty, but they are rarely an expression of the will of their enrolled members. Exceptions exist, such as anti-apartheid activism, so it is not completely impossible, to be fair.

Though I will admit, there might be a retired person or two with some say at ExxonMobil due to their pension plan - does the name Raymond strike a chord? And how many ordinary men and women approved of his retirement package at their expense - oh wait, they didn't, as the putative 'owners' of the company weren't informed until April 2006, though Raymond retired at the end of 2005. Pesky SEC regulations, it seems, since otherwise, the company saw no need to tell its owners about it.

Among Raymond's accomplishments - 'He defended Exxon against environmentalists and human rights activists, while denying the viability of renewable energy sources and the human component of global warming.'

I am certain that those ordinary owners are to be held responsible for allowing Raymond to keep his job, due to their deep satisfaction at a job well done.

You honestly believe that? Familiar with how proxies are voted in the U.S.?

Sure. I always vote mine, as do all the other elite engineers, operaters, riggers, secretaries, and office workers who own shares. That's not to say that there aren't Lee Raymond's out there. But he is the exception that makes the news, not the norm. I am the norm.

No, I think I am the norm. I get those proxy things, and file them in the circular file. I don't think I'm educated enough on the topic to make an informed decision, and I'm not particularly motivated to change that.

Why do I think I am the norm? Because sometimes, I get the same damn ballot two or three times, with a note begging me to vote because they don't have a quorum.

As far as voting proxies, yes, you are the norm. I vote them because I know that I will keep getting notices if I don't. This was especially a concern when they always sent paper proxies. If I didn't vote, I knew they were going to waste more paper and more energy sending me another one.

I usually try to vote them also. But I recently encountered a new 'low' in proxies. One stated something to the effect that 'we encourage all stockholders to vote but it really doesn't matter since xxxx fund owns 51% of the stock and they are going to vote the board's recomendations'. That one I did not bother to return.

At least they admit it.

I have the sneaking suspicion that that's the way it usually is. A few heavy hitters determine the outcome, so it really doesn't matter how the little guy votes.

it really doesn't matter how the little guy votes

Not necessarily. Just leave it to our wonderful legal system! Apparently attorneys have figured out have to make "minority shareholder" lawsuits an awful pain. When I acquired my current corporation, I asked for advice from a very experienced owner of the same type of business -- his *top* suggestion was "don't have minority shareholders".

Your answer actually makes sense to me - that is, those people who are involved in the operation of the corporation are also active shareholders who feel a sense of ownership - not simply because they own stock, but because they feel themselves, correctly in the main, to be the company.

This does not describe a company like ExxonMobil, BP, or Royal Dutch Shell (or whatever name is correct for them currently) - in such cases, the 'owners' are anyone but common people - notice the 'Royal' for example, or the amazing number of 'Lords' associated with BP (not all hereditary, of course).

And in the U.S., TIAA-CREF or CalPERS are the owners of record when holding stock - those with pensions within such systems aren't, in any meaningful way, except in a financial sense. So at least in the case of TIAA-CREF, they don't send out proxy proxy cards. Or at least, they certainly never did to me. And according to http://www.tiaa-cref.org/performance/common/FundFacts/1010.html, TIAA-CREF is a major owner of ExxonMobil, which means, in one way of looking at it, a lot of people involved in education are also 'owners' of ExxonMobil. I am sure many of them would be surprised at how much power they hold, as individuals. Or maybe not - a good number of them understand the system we live in.

I suspect that if they were promised cheaper gas, 95% of the U.S. would happily vote to totally confiscate the oil companies. And the stockholders would get pretty near zero sympathy, much like the Enron and Worldcom stockholders got. That's just the way things are here.

Not to nitpick but I think actually filling out your proxy places you outside of the norm:) I used to work for a proxy svcs. firm (shudder) and I forget the percentages , but they were pretty low. (I've never filled-out one of mine [and i do vote]. "whatever management wants to do.")


No, I recognize that. When I said I am the norm, I wasn't referring to filling out proxies. I am probably just the typical shareholder, a mid-level employee in a large company. I just also happen to fill out my proxies. :-)

Unfortunately much (most?) stock owned by individuals in the US is via mutual funds. Funds are notorious for not voting their proxies, particularly since they turn over their portfolios so frequently.

This has led to executives running amok, running huge enterprises for their own benefit. In the good old days, executives were hired by major shareholders to fleece the customers and the workers for the benefit of the shareholders. Today, even the shareholders get fleeced.

In the good old days, executives were hired by major shareholders to fleece the customers and the workers for the benefit of the shareholders. Today, even the shareholders get fleeced.

LOL! You knew that was coming, once the unwashed masses became shareholders.

Sometimes I think they are setting us up. Get everyone to invest in stocks to pump up the value of their own shares, and by the time the collapse comes, they will have long since bailed, leaving the little guys holding the bag. See Enron.

actually globalization provided some strong insights that energy consumption would rise dramatically as the global supply chain increased in length by orders of magnitude, I don't think its fair to try and put me in the place of an oil exec though. Give me 20 years of oil company experience and the resources of an oil exec and I'll get back to you.

As far as my reasonability goes. You and a bunch of others on this board have continually rallied against oil regulation and tried to defend the profits that are coming in to oil companies. (Claiming that anything else would just make things worse) Part of being an un-regulated industry in the free market is that market for your industry needs to operate like a free-market. The most important of those attributes is meeting supply and demand efficiently. It is pretty clear that oil companies are failing miserably at that. Going from loosing money in the 90s to 10% on sales now, based primarily on their supply choices is a strong indicator of such failure.

We watched this in utilities when they were privatized. It has been marked by repeated failures to re-invest in infrastructure to protect profits, and generally higher energy prices across the board. Oil companies exhibit much of the same behavior now.

They should be regulated, and should have already been regulated. Those regulations would have protected the companies in the 90s when they produced too much gas, and it would protect consumers now that there is too little. that is the idea. I do not blame oil companies for their decisions or their actions. I think the blame lies with government for failing to regulate the markets properly.

Oh and plenty of elites are benefitting. The wealth of this country is concentrating more and more each year. With the capital shift that takes place with oil, the increased prices go straight out of the pockets of everyone equally (burdening the poor most heavily) and end up in the hands of the top 10% by and large. I know a lot of people and households that make $200k/year like to consider themselves ordinary men and women, but that is still wealthy and still puts them in a very small minority. To be in the top 10% of wage earners as of 2004, you would need to earn $99,000. Those are the folks that very disproportionately own most of the stocks and 401ks in this country.

I don't think its fair to try and put me in the place of an oil exec though. Give me 20 years of oil company experience and the resources of an oil exec and I'll get back to you.

So, you don't know enough to tell us what they should have done, but you know enough to tell us what needs to be done now? You can tell us what's being mismanaged, but not how to manage correctly? I bet you are an awesome Monday morning quarterback.

You and a bunch of others on this board have continually rallied against oil regulation and tried to defend the profits that are coming in to oil companies.

Defend profits? Yes. You demand their product - why don't you think they are entitled to their profits? Stop demanding their product, and you will take away their profits. As far as rallying against oil regulation, I don't know what you mean.

The most important of those attributes is meeting supply and demand efficiently. It is pretty clear that oil companies are failing miserably at that.

If there is a run on Tickle-Me Elmos at Christmas, and suppliers run out, whose fault is that? Why do you think suppliers should be able to forecast higher than normal demand? What kind of crystal ball do you think they have? Your position is completely unreasonable. You can't excuse very high demand growth, and you yourself, when given the opportunity above, couldn't say how you would have done things differently.

They should be regulated, and should have already been regulated.

They are regulated. There are numerous regulations. Please clarify what you mean. Do you mean regulate profits? You want the government to make the investment decisions? How did that work out in Russia?

But I had forgotten, we have already had this conversation:


pubsky, I have to say, I agree with RR here.

The more I learn about the oil industry, the more I think people should be kissing the asses of companies rather than biting the hand that feeds them.

Or, if that's too much for them, to stop using.

I try, with only intermittent success. It's like trying to do with less oxygen.

Whenever people begin complaining about gasoline prices, I have to leave the room now.

There is a case for a strong regulatory agency to be on the lookout for collusion that could violate antitrust laws. Due to the inelastic demand and the tightness of refining capacity, we're in a situation where it could be very profitable for some of the big refiners to agree amongst themselves to take a small fraction of capacity off the market and jack the price. I'm not claiming that it's happening, just that the conditions would support it.

I heard allegations that the spike in California's electricity prices 5 or 6 years ago was due to oligopolist manipulation of this sort, but I never saw the case proved. Do folks here have an opinion?


we did have this conversation, and we're no closer to productive conversation now than we were then, so I will pass on continuing with it.

Best of luck dealing Americans after they are priced out of gas and oil with no alternatives or even good conservation options in place. I bet no level of distain for their demand and rage will keep them from making life very difficult for your company and its business as usual.


I bet no level of distain for their demand and rage will keep them from making life very difficult for your company and its business as usual.

Just what the hell do you think they are doing right now? I get half a dozen e-mails a day declaring me the anti-christ.

There is one reason oil companies are getting rich. People like to drive wherever, whenever they want. They view it as a birthright. Here in the U.K., they use half the gas of the U.S. Do you know what would happen to gas prices if you cut your usage in half?

It is within the power of the people to do something about this. The government could by phasing in a gas tax. But nobody has the courage to do it. So, the oil companies will reap the benefits. And as long as you keep demanding gasoline at record levels, that's the way it will likely continue: Hate for the companies satisfying your needs, and disdain because they are profiting from it.

I said that if I were in charge the US would adopt something very similar to the european model, gas tax and all.

I also said that I think the high prices are a good thing.

My oil consumption is drastically lower than most americans.

I'm not the one you should be arguing against. I suspect we're actually pretty much coming from the same place on most of these issues.

being angry with the people that buy your products is almost as irrational and silly as being angry with the people that sell you what you buy, btw.

being angry with the people that buy your products is almost as irrational and silly as being angry with the people that sell you what you buy, btw.

I am not angry with the people. I have sympathy for people who find gas bills cutting into their budgets. I am angry at the government for not doing a better job of preparing people. Their pandering is why we are in this situation. Gas prices high? Point fingers at the oil companies and promise to punish them. How about instead, point fingers at consumers and have a nice heart to heart?

I want the oil that is left to last for a long, long time - enough time for us to come up with some solutions. I don't want to see us use it all up during my children's lifetimes. But that's exactly where we are headed. High gas prices - which make many people angry - will stem the rate at which we use fossil fuels. If that's the way it has to be - a little short term pain for long-term gain - then so be it. And even though I work for a fossil fuel company, I want you to use less of that product. I don't want to see us drive right off a cliff, but that's where we appear to be headed: Very hard times for a lot of people, and fingers pointed in my direction.

Robert and I tried to warn all of you

For about 20 years, the oil patch was a deflationary industry within an inflationary economy. Around 2000, we started transitioning into an inflationary industry, while the overall economy is now showing some deflationary trends, at least in certain sectors, e.g. real estate.

The deflationary pain in the oil patch in the Eighties was highly concentrated, and hardly anyone outside the oil business noticed--other than the fact that gasoline was cheaper. I was totally wiped out in 1986. I moved to Dallas with about $500 and our furniture.

Today, the benefits are highly concentrated--the energy producers are doing well--while the pain is very widespread, the opposite of what we saw in the Eighties.

Prior to the SHTF, Robert and I have been advocating an energy consumption tax, but that forces the country to face the reality that we can't have an infinite rate of increase in energy consumption against a finite resource base.

So, we have two ways of allocating a scarce resource: via price or by force (rationing). Take your pick.

In any case, what we are beginning to see is what many parts of Africa went through last year. We are simply seeing forced energy conservation moving up the food chain.

As I have long warned, with Robert concurring:

ELP: "Cut thy spending and get thee to the non-discretionary side of the economy."

So far, I have not heard any complaints from people who followed this advice. For those of you who failed to heed this advice, all I can say is that we tried to warn you.

You put me and a few neighbors who listened on the right side of this move in prices. For that I thank you. I'm waiting for some sniveling from those I told who didn't listen "You should have told me again", or "You should have gotten my attention better". Oh well....or is that Oil well =)

You might consider looking at diesel jetta's - nice cars - good economy 43-50 mpg- don't come in lime green however....


There is a good article in today's WSJ, page D-1, on a "growing" (pun intended) trend of developers putting homes on the periphery of working farms. Lots of advantages, among them are local food supplies for consumers and a local market for the farmers.

This would be an interesting idea to implement. You buy some agricultural land, subdivide (subject to local restrictions) and sell the lots for enough, or more than enough, to pay for the total cost of the land--so that you would own the net remaining farmland, with no debt, and with a built-in local market for food. And probably a ready supply of farm labor as times get tougher.

It's basically a win/win proposition, and it has side effect of fostering a sense of community and mutual support--again as times get tougher.

The advantage is that some % of farmland is saved out in the new exurbs, instead of covering up 100% of it.

The disadvantage is the continued growth of the exurbs. How far to jobs ? How far to essential services ?


One example cited in the paper was within walking distance of light rail in the Chicago area. It's an interesting--and IMO--potentially profitable concept.

Think of all the golf courses that could be converted to farmland (the article touched on this). Think of all the teenagers we could put to work on the farms.

Might the smaller lots of Ag land (<40 ac.) prices drop as people move closer in? At least temporarly?
Will removed rail be replaced and is it close to said property?
Alot more options, going forward.....

AH! A large "Ag related structure" internaly divided into housing units. Once TSHTF it won't matter on the zoning.

Wasn't this tried in the 1920's in California, Company camps they were called then.

Now its sell them a house, then when its foreclosed on for lack of tax payments and job loss,.. maybe you rent, .... a space. as you work for food.

In the south they were called plantations.

History, and a dosey do.

Quid Clarius Astris
Ubi Bene ibi patria

I heard of that happening during the depression era north west of here. Sold them houses, crops ran out, labor needs ended, then foreclosed. Alot like the south with a different twist.

Tennessee Ernie Ford
""You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don't you call me 'cause I can't go
I owe my soul to the company store""

There is another verse to it

""If you see me comin', better step aside
A lotta men didn't, a lotta men died
One fist of iron, the other of steel
If the right one don't a-get you
Then the left one will""

Wonder how lucky they feel???

I'm off to bake some muffins with Martha White Flour now.

LOL(duh) Like my office building!

That's foolish and backwards. Farms should surround the town for a multitude of reasons. Today we have have all these folks who want their X acres next to a farm, wanting just picure the magazines sold them, but fight constantly with the operator. "Your operation is too smelly, you wake me up at dawn on a Saturday morning, why can't my kids sled the 2 inches of snow in your wheatfield, your cows just ruined my $1000 peony patch, all that manure just attracts flies, quit spraying that stuff, " I've heard all of these, seen both pets and livestock shot both on the home dwellers and the operators land. And it all ends with new county regs to limit ag.

The old paradigm provided farm employment for town kids, whoever, if they wanted it. It buffered the farm from the village, and vice-versa. Local produce is available centrally in town and is a social magnet for all.

Not to mention implement size and consequently, farm size, will probably keep growing, peak oil not withstanding, for the near term.

>This would be an interesting idea to implement. You buy some agricultural land, subdivide (subject to local restrictions) and sell the lots for enough, or more than enough, to pay for the total cost of the land--so that you would own the net remaining farmland, with no debt, and with a built-in local market for food. And probably a ready supply of farm labor as times get tougher.

Big Problem: Too few jobs in rural regions to support these type of enterprises. This is for the best anyway since rural areas don't need a huge of influx of people moving from the suburbs or cities taking up valuable land and resources. Second this idea isn't new and people have unsuccessfully tried this method for decades.

As far as "supply of farm labor", I doubt these people would be suitable. Most Americans are overweight, out of shape, lazy, and untrust worthly. I would be concerned of my crops being stolen or being driven off my land as the natives get restless.

yep the old vw diesel's are looking great now; though i occasionally still get a snide comment at work.

elp + kunstler convinced me to sell deflated $ wise, larger vehicles(which i strongly preferred safety wise) & go for the old diesels. got a truck too; extra body & motor.at the time i read oildrum to reinforce taking the losses.

elp makes me calm now ,glad i prepared as i hear others starting to realize the implications of high fuel.

the scapegoating will be fierce. i felt that way for sometime; & was looking for someone to blame.

glad u are back RR.

..."scapegoating will be fierce"...
I suspect this will be a much worse factor than anticipated. It took me a while to sort through this PO business emotionally. Just think of the person who "wakes up to PO" when thier car runs out of gas along the road with thier kids inside. Rational is going to be situational. Some are not going to handle this well you can count on that. Katrina was very, very visual as to what can happen with large groups of people.
Given that CERA and EXXON both want to play the plentiful oil card to keep the game going for its last pennies, it will only be worse.

WT and RR
I have been following your writings for some time now, as a matter of fact they led me to TOD. Much of what you say I have taken as practical, sensible advice and adopted as such. But please explain to me how a "energy consumption tax" can be any benefit to regular people? The goverment, federal and local, have their arms elbow deep in my pockets now! IMO a federal "energy consumption tax" would only enable them to plunder some other sovereign nation for THEIR wealth. Locally, here in Meechigan, you essentially have a bunch of juveniles playing at gubbermint. Doesn't a ration card system make more sense? At least it wouldn't be brutally repressive to the poor and they could trade or sell their cards if they so choose.

A consumption tax is meant to reduce demand by increasing the price. The amount of energy contained in a gallon of gas is enourmous, but highly unappreciated. I've seen the analogy used that a cup of gasoline could transport 5 people (and the vehicle with stuff in it) one mile for about 20 cents (@$3 per gallon, in 16 MPG vehicle).

Try to get a pedicab to deliver 5 people and their stuff one mile for 20 cents. By taxing gas, you would get consumers to lessen their demand. As an added bonus, you can use the revenue to build more super aircraft carriers to ensure your global hegemony and access to oil.

As far as rationing, I think that tinkering with the market like that is probably a bad idea. Rationing occurs when there are shortages, and it drives prices even higher because people tend to hoard.

... for the convenience of TV, you can only be one of two kinds of human beings, either a liberal or a conservative. -- Kurt Vonnegut

But please explain to me how a "energy consumption tax" can be any benefit to regular people?

In the short-term, it will hurt. In the long-term, it will prepare them for energy scarcity. Face it, they are going to end up paying high energy prices anyway. Wouldn't you rather they actually knew this and prepared for it, instead of holding out hope that these price spikes were temporary and that they don't have to adjust.

To ease the transition, though, I would make the tax revenue neutral. In other words, I would reduce tax rates in the first few years to compensate.

Sorry RR, but I don't understand it either.

If there is a energy scarcity energy prices will rise.

If there is an energy tax energy prices will rise.

I, as the consumer, can't really see the difference. They both result in higher prices.

I can prepare for higher prices. But I can prepare for them just as easily if they resulted from scarcity as from a tax.

The only difference I can see is a tax can be repealed. And consumers IMHO are far less likely to prepare if they believe a simple tax cut can cure the problem.

Energy taxes are also stupid in that they give governments a new source of income, and therefore it is not in governments' interest to "cut consumption," for when you cut consumption you cut into revenues.

In fact, it's probable that energy taxes will be coupled with please to increase consumption.

The most common version of the energy tax plan is to tax gasoline, but reduce payroll taxes so that it's revenue neutral.

So gas prices will be high, but people will have higher paychecks to make up for it. (And businesses will have to pay less tax as well.) They will also have incentive to use less gas, since people who don't use a lot of gasoline will be making money on the deal.

I think this makes sense, but it's not politically possible. Maybe if Bush had called for it the day after 9/11...but now, people would be outraged at the idea of raising gas taxes. AARP would pitch a fit, because 1) they always do when Social Security is an issue and 2) retirees are the ones who would be screwed under this plan, since they drive but don't pay payroll taxes.

Rationing might be a better plan, if only because it will be more effective in cutting back demand. I think it's becoming clear that high prices are not enough to curtail demand; it was the outright shortages that led to the '70s cutbacks.

Again, using Michigan as an example, I think it unlikely to see politicians offer any revenue neutral plans, they're to busy trying to think up new ways to screw us.
As a matter of fact, MI's sales tax is somehow applied to gasoline, so when the price goes up so does the states revenue!
It is alarming to me to see such forward-looking people on this site advocate the most unfair cut of all.
Perhaps as an alternative to an outright tax, lower the speed limit back to 55mph on the Interstates and the resulting fines for transgressors will become the backhanded tax(and individually a very expensive lesson on the need to conserve).

No pain, no gain.

The tax man today or OPEC next year. The price of oil and gasoline is going UP UP And AWAY !

Best Hopes,


I've got more for you today. The Financial Times has a special pullout section called "Rail Industry" today. Haven't read it yet though.

This would be a federal plan, not a state one.

And it would have to be revenue-neutral to have a hope of passing. (IMO, it doesn't have much chance of passing anyway.)

It is alarming to me to see such forward-looking people on this site advocate the most unfair cut of all.

It would not be unfair, except to those who don't work. And it would be great for the peak oil aware, who are presumably already driving less, driving smaller cars, etc. I know I would make out like a bandit, because I hardly buy any gas, but I pay a ton of payroll taxes.

Perhaps as an alternative to an outright tax, lower the speed limit back to 55mph on the Interstates and the resulting fines for transgressors will become the backhanded tax(and individually a very expensive lesson on the need to conserve).

Lowering the speed limit really does very little to conserve. According to the FHWA, the 55mph speed limit resulted in less than 1% less consumption. It would probably be worse now, with all the trucks and SUVs on the road, since they typically have to drive at less than 45mph to be the most fuel-efficient.

Moreover, this does not encourage people to make changes. The point isn't just to reduce consumption. It's to prepare people for the future, slowly, with minimal damage. If gas prices are high, and stay high, people will buy smaller cars, move closer to their jobs, support mass transit, etc. There may be some pain, but it would be far worse if they are blindsided. Say, a hurricane takes out Houston. Gas is $10 a gallon overnight.

Now what? It's too late to do things like build walkable neighborhoods or train lines. Some people will be able to buy Priuses, but most will be stuck with the car they are already making payments on. People who just took out a mortgage on their huge McMansion 2 hours' drive from their office are screwed, blued, and tattooed.

Hi Leanan and All
Thanks for responding to what I think is a critical topic.
(deep breath) Here goes!:

This would be a federal plan, not a state one

Not trying to build a strawman here but I can't think of a worse group of incompetents/criminals to spend MY money. Remember that our tax dollars is POWER to the goverment.

I know I would make out like a bandit, because I hardly buy any gas, but I pay a ton of payroll taxes.

A-HA! I'll bet you're sitting on a secret store of sarconal as well. :-)

Lowering the speed limit really does very little to conserve. According to the FHWA, the 55mph speed limit resulted in less than 1% less consumption. It would probably be worse now, with all the trucks and SUVs on the road, since they typically have to drive at less than 45mph to be the most fuel-efficient.

I couldn't find any info at the FHWA site supporting this, do you have a link?
What I did find however was a Ford UK truck study that observed a 19.2 percentage fuel savings when speeds were reduced 70 mph to 60 mph and similar CO2 reductions as well.
The FTC concurs as well.

Moreover, this does not encourage people to make changes. The point isn't just to reduce consumption. It's to prepare people for the future, slowly, with minimal damage. If gas prices are high, and stay high, people will buy smaller cars, move closer to their jobs, support mass transit, etc. There may be some pain, but it would be far worse if they are blindsided. Say, a hurricane takes out Houston. Gas is $10 a gallon overnight.

With all the absolutely amazing analysis done by the heavyweights on this site, it's a fair bet that high prices are here to stay. A hurricane this year in the GOM would be a perfect time to phase in a ration card system that wouldn't go away.
IMO putting all the danger(price shocks, foreclosures, personal bankruptcies and spiraling job losses) facing our economy, adding a consumption tax is just the lever that can tip us into recession or worse. You're not going to want whats happening to MI's economy spread to the rest of the country. Plus rationing(going out on a speculative limb here) may have the added effect of limiting the rise in prices, so that:

  1. Our economy has time to adjust
  2. The OIL companies don't face debilitating, punitive backlash(evil conspiratory theories or not we need them!).

adding a consumption tax is just the lever that can tip us into recession or worse

Coming soon to a neighborhood near you !

With or without a gas tax.

Recession/Depression is the most effective (and default) means to reduce oil consumption.

So fear of a recession is hardly a good reason to oppose a much higher gas tax.

My plan would have little immediate effect, but would prompt people to make changes.

Best Hopes for Sky High Gas Prices#,


# $ to OPEC alone or Gov't + OPEC ?

Recession/Depression is the most effective (and default) means to reduce oil consumption.

So fear of a recession is hardly a good reason to oppose a much higher gas tax.

Really? "Recession/Depression" is also the most effective means to quash capital spending such as your light rail scheme. One thing that really bugged M.King Hubbert was how a depression(1930's) could've happenned in the midst of so much plenty.
A depression now, without the "plenty" would be an economic Katrina with no one, not even FEMA coming to the rescue.
Best Hopes for a RATIONAL Response to Fuel Shortages RATIONING
$ to stay right where they are, our wallets.

I, as the consumer, can't really see the difference. They both result in higher prices.

Except 1 is predictable, and 1 isn't. The reason I reject arguments against gas taxes is that I have seen that they do work. The primary reason Europe's consumption is half that of the U.S. is gas taxes. That is the biggest factor. But as long as U.S. consumers continue to think that price increases are temporary, they won't adjust their lives.

My proposal would maximize preparation and minimize pain.

Raise gas taxes 3 cents/gallon/month (with quarterly inflation adjustments) for 20 to 25 years. Earlier I proposed a 6 month delay before starting the tax, but today that may be a luxury we cannot afford.

Rebate part of the tax revenue to cover portions of the Medicare fees for the retired (their essential driving is relatively minimal; RV touring the continent is not essential).

Best Hopes,


Hi Robert,
Thanks for responding.

The primary reason Europe's consumption is half that of the U.S. is gas taxes.

Europe is a poor comparison to the U.S.

Geographically, we have much larger distances between our major population cemters.
As of right now there are no suitable replacements(I'm thinking rail)
Despite Alan's and others dreaming light rail had a shot in this country and failed.
It may fail again because it will be harder than most imagine to pry the avg. Americans hand from the steering wheel. I've seen studies of this but don't have them at the ready(gotta get to work now)
Despite being the crucible for the last two World Wars and never having been there myself, Europe seems more civil than the U.S.
Doesn't promoting a higher gax tax violate the "E" in the ELP plan you and WT endorse?

pubsky, you mention upthread that the oil companies "take" from the average person's pocket.

Sorry, but only the government TAKES from peoples pockets. The oil companies ASK me if I would like to trade my money for gasoline. I have the CHOICE to say yes if I find the gas worth the value.

pubsky, the oil companies have done a poor job of educating the public (assuming, of course, that such is possible) as to what it is that they do and how they do it. That said, if you have any knowledge of peak oil and how oil markets work -- you simply can't blame the run up in petroleum prices on Big Oil. This is where the public is getting it wrong (once again).

As I said up above, Big Oil is likely to take the heat but only because the public doesn't "get it." This is what you get when you have an entire society that has no concept of how it happens that there is bread on the table or gas in the car.

the oil companies have done a poor job of educating the public

I agree with you there. Every year, my company sends out opinion surveys, and we are told that our CEO reads every one. In 2005, I responded that we really need to make a push into alternatives. I said that we need to be more of an energy company as opposed to an oil company.

In 2006, I said that we need to do a much better job of educating the public on what we do. That's one reason I try to get people involved in these API calls. If you are mad at Big Oil and want some answers, take it right to the source.

Well, I can appreciate that telling your CEO that you need to diversify isn't easy to do. You generally don't get to the top of a large corporation by being an iconoclast. There are exceptions, I suppose, but that historically hasn't been the way you climb the ladder.

At some point though, someone is going to have to inject some reality into this dicussion. When a company geologist/engineer-type goes on TV and talks enthusiastically about "oil shale" or deep-water drilling, the message to the public is that this stuff is all in a day's work. I recall watching commercials decades ago in which an oil company geolgist held up a piece of rock and put a flame to it to demonstrate that the rock contained burnable hydrocarbons. But where is oil shale development today? We're still trying to figure out how to do it.

Tell people the truth: We are fiddling with extracting hydrocarbons from rock and drilling down 20,000 feet in the GOM, not because we are clever, but because we've picked the low-hanging fruit. From here, it is only going to get more difficult and expensive. Go ahead and burn it up in your SUV, if you must, but know that when it's gone, it's gone.

They are regulated. There are numerous regulations. Please clarify what you mean. Do you mean regulate profits? You want the government to make the investment decisions? How did that work out in Russia?

I actually buy your argument as you present it.

The criminal corporate actions are not limited to the oil industry, but there is little doubt that the American corporations are worse then the Russian mob and rob everyone blind with all sorts of trading, merger and futures schemes based on insider information. The sheer volume makes it unprosecutable other then the occasional slap on the wrist to maintain appearances.

Actually, I favor some form of cooperative ownership structure for all utilities, including petroleum refining & distribution. If people don't want high prices, let them put up with shortages; if they don't want shortages, let them put up with high prices. Either way, they would have nobody to blame but themselves -- it would be THEIR company and THEIR choices that determined the outcome.

Oil & NG exploration & production, on the other hand, are a whole other ball game -- much too entrepreneurial for either governments or co-ops to do a good job. Leases need to be auctioned at fair market value, though, or it just becomes a giveaway to corporate fat cats.

You know what demand was like for the past 10 years. Do you have reason to believe it is going to accelerate in the next 10 years?

Don't fall over in a faint Robert but I agree with much here. If I were to venture an opinion it would be for a fall in demand re above, but I am putting my money on Nuke so no jam for bets here. (more stridency less total demand)

Oh, and it isn't "elites" who are benefiting. The days of the Rockefellers are over (well, there is still the Koch family, but they are an exception). Ordinary men and women, through pension plans and 401Ks, own most oil companies.

and here too more agreement, they've offloaded oil and moved where? Gates is major owner of CNR, where are all the other major squirrels hiding their energy related nuts?

Hope my agreement causes you no more pain than you can pass a stone at.:-)

As a side note on FE capitalism, please don't think I agree with the game but it is presently the only one in town and we are all playing it one way or other. Some just more aggressively than others.

In leu of responding to this gibberish, I'll just say Mooo!

how do small scale growers wash baby greens? say 1 thousand pounds a week

Hi Earl,

You got me. Our main crops when we were growing were tomatoes and strawberries.

California Farmer magazine has had several articles recently about coming rule changes regarding washing greens. They have a web site I haven't looked at in a long time that might have something. It is http://www.farmprogress.com You also might want to check with your extension people about this.

You could also consider posting your question on http://www.newfarm.org since it is more small-scale farm oriented.


thanks todd

Unfortunately being deliberately conservative to protect profits as opposed to operating based on what they believe to be the actual demand is price manipulation.

Like it or not, it is the job of all western-style corporations to maximize profits for their shareholders. If this means reducing or limiting capacity, there is nothing wrong with that. It is not the job of the oil companies to meet all demand at prices affordable for all.

As far as I know, the only form of price manipulation that is illegal in the United States is explicit collusion, where several firms cooperate by setting prices or limiting output. OPEC, of course, attempts to do just that.

(Another form of price manipulation which is illegal some of the time in some parts of the United States is price gouging).

For what it worth, the U.S. also has the Robinson - Pattman [spelling?] Act the makes it illegal for a single seller to sell at a wholesale at different prices to different customers. This Act has some fairly broad exceptions including meeting competitor's prices.

Actually I'm very glad if they are lean on refinery capacity and gasoline supply is lagging demand. The very last thing we need to do is burn up even more quantities of cheap gasoline.

Probably true. OTOH, if they can't supply cheap gas most of the U.S. will probably vote to have them nationalized.

Not even 10 years ago. 2002 was still a lousy period for the independent refiners, but things were just starting to turn. Tesoro almost went bankrupt, and Valero was still able to scoop up refineries that the majors DIDN'T WANT at very low prices. Even Valero's Premcor purchase didn't happen until 2 years ago (April 2005)!

The world has changed very quickly. Now they are making money, the political pressure is just starting to take it away from them.

I think you only need to look at the history of gasoline imports--how long and how much. I seem to remember Khebab having made a chart reflecting this.

I found this pdf paper, http://www.ncseonline.org/NLE/CRSreports/04Sep/RL32583.pdf that goes to 2004. It has a chart showing the gap between domestic gasoline production and the amount of demand satisfied by imports. As I said, the data only goes through July 2004, but it provides a good picture of what I see as the price problem--we need to look at gasoline from the global supply/demand perspective instead of our narrow USA perspective as it is gasoline imports drawn from the global supply that provide the additional gasoline demanded by the US market.

As with the US need to use the savings rate of the rest of the world to finance our deficit spending, the US relies on growing world production of gasoline to satisfy its own growing demand it cannot come close to supplying domestically.

In pubsky's irrational rantings we see what is going to become common - the guy in the street ranting about a topic about which he knows next to nothing because his own behavior is biting him in the rear end.

"I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it." -- George Bernard Shaw

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

Actually, pubsky, you have that backwards. A company that that refines oil is called an oil company. No company or group in particular has been nominated to be such.

James Gervais
Hope was the last ill to escape Pandora's box.

The part a majority of Americans forgot is that while both bulls and bears get rich, pigs never do.

They just got too greedy for their own good, and rather then taking what they need and move on they wanted it all without effort.

Now the time to pay the piper is near.

Don't worry.

The sheeple are so predictable.

As soon as gas is $4.00 and the sheeple are busy howling at the moon they will let 20 million illegals through the back door and once their families get here you will have a 4th world country.

According to the BBC today... you won't have an "illegals" problem much longer...

US 'deal' on illegal immigrants


I wouldn't bet on that just yet.

They couldn't even get an immigration bill through when both branches and the White House were GOP-controlled.

Yes, why do you think I'm so upset today.

People worry about a couple of dollars at the pump, and here they are introducing a welfare/criminal occupation Army of fourth world illiterates into each major American city.

It is the last nail in the coffin as with so many diverse groups it makes it absolutely impossible for the people in the US to act in a common interest.

I think blaming a scapegoat won't help anyone act in any kind of common interest.

It will help some. It will suck for those being scapegoated.

Community is as much about those who don't belong as about those who do.

CSX Proposal for semi-High Speed Rail between DC & Miami

The US Dept. of Transportation is asking for proposals for "Corridors of the Future" (see Texas super truck toll roads). Below is a summary of the CSX proposal.

from The Free Lance-Star

CSX, THE RAILROAD that owns the tracks over which Virginia Railway Express and Amtrak trains run between Washington and Fredericksburg, wants its Washington-to-Miami line to be a ``corridor of the future.``

On that 1,200 miles of railway, CSX said, passenger trains could ``travel unimpeded at 110 mph`` and freight trains could ``operate at speeds of 50 mph to 70 mph.``

The line would be ``sealed to prevent motor vehicle intrusion.`` Some 1,700 ``at-grade highway rail crossings`` would be closed and, where necessary, replaced with bridges. There would be three tracks between Richmond and Miami and four tracks between Richmond and Washington.

This would require a huge investment, and that’s where the Corridors of the Future Program comes in.

Last year, the U.S. Department of Transportation solicited applications from interested parties to ``accelerate-ate the development of multi-state transportation Corridors of the Future for one or more transportation modes.`` The Transportation Department will select up to five major transportation corridors ``in need of investment for the purpose of reducing congestion.``

``Reducing congestion`` sounds like VRE`s mission of ``traffic mitigation,`` which in plain English seems to say that the purpose of VRE and the Corridors of the Future Program is to make driving easier. I believe that’s what federal transportation policy focuses on.

However, if CSX and the commonwealth of Virginia can get a slice of that pie and expand transportation choices, making train travel and freight movement easier and more efficient, too, let’s go for it.

The application deadline for the program was April 2, so right now the Transportation Department should be selecting up to five finalists.

If CSX is selected, it has a plan for turning its Washington-Miami line into a corridor of the future:

First, complete the third track between Washington and Richmond, except where major, expensive projects are needed--Ashland, where two tracks run down the middle of the main street; Fredericksburg, with its crossing of the Rappahannock River and elevated track above four streets; and the bridges over Aquia Creek and the Potomac River.

The second step would be to tackle those bigger, more expensive projects.

The third step would be to build the additional track between Washington and Miami and to close or create alternatives for those 1,700 grade crossings.

``The D.C. to Richmond Third Track Feasibility Study provides the path for completion`` of the project north of Richmond, said Jay Westbrook, CSX assistant vice president for public-private partnerships.

The study calls for completing the capacity-expanding projects funded in 2000. The last piece of that group of improvements is to construct about 7 more miles of third track north of Springfield and just south of the Potomac River.

The study also listed the steps needed to plan further construction.

``Federal support is the key,`` said Westbrook.

If Washington-Miami becomes a federally funded corridor of the future, then the next steps, he said, are to set realistic expectations and seek consensus on the projects to be tackled first.

The Transportation Department is showing progressive thinking to consider alternatives to highway construction as solutions to congestion. Everyone traveling north or south anywhere between Washington and Miami, on or off I-95, could benefit from a rail corridor of the future between those cities.

Best Hopes,


...the purpose of VRE and the Corridors of the Future Program is to make driving easier. I believe that’s what federal transportation policy focuses on

Unfortunately true.


And making driving easier makes people drive more, which leads back to congestion, etc. Isn't that Jevon's Paradox?

Which is why I would like to see a differnt focus on federal transportation policy. Like saving energy. If we build ANY new lanes/roads, they should be exclusively HOV lanes, etc.

Best Hopes for Rational Policies (Yes, The Impossible Dream),


One of the problems that VRE has is that their schedules are screwed up by freight trains.

In the summer, they have speed restrictions due to hot weather which also foul up the schedules.

For commuters - especially ones that work for someone anal about being at work at a certain time - this kind of thing can be a real problem.


An extra rail from Springfield to the Potomac by itself would be a huge deal in that VRE won't be fouled up by freight trains, and scheduling will be a lot easier. A 4th rail in that section would improve things even more....

These are problems with Amtrak as well. We really need to get our act together with passenger rail in this country, the clock is ticking.

Funding this CSX proposal would be a good first step. It would basically continue the NorthEast Corridor in mixed mode with freight down to Miami.

The last 70 miles are owned by the State of Florida and used for the commuter rail Tri-Rail (recently double tracked). Florida wants to extend the commuter service section up the Atlantic coast.

And I think the middle section around Charlotte NC is also scheduled for commuter rail.

Triple tracking, grade separation, semi-High Speed (almost certainly require electrification) from Boston to Miami (freight from DC to Miami) would be a very good first step in preparing for post-Peak Oil.

Best Hopes,


Don't worry. That clock is "plugged in".

cfm in Gray, ME

Oh, this is just wonderful on paper. But when we build this cheapskate Shinkansen counterfeit in real life, we close "1700 grade crossings" and - since it's how stuff like this always works - build 25 bridges. So then a few tens of thousands get better rail service, but millions have to drive miles and miles to one of those bridges just to go a few blocks across town. And the pedestrians and cyclists, well, they can go jump in a lake. Or else they can drive miles and miles too. So how many more great ways can we come up with to save gas?

Your example of "driving miles and miles ...just to go a few blocks" exemplifies why the US is in this debacle of high gas prices. WHY ARE PEOPLE DRIVING A FEW BLOCKS? Are they too lazy to walk or ride a bike? With your kind of thinking regarding use of the automobile it is no wonder most people see no logical way out of this energy problem.

What? Jeezlouise, mb, did you even read the post? Dammit, did you even read your own post? Naah!

I'm making this accusation: they're going to have to drive whether they like it or not instead of riding the bike because when they build this thing, they're going to close all the grade crossings.

Bridges are expensive. This is a shabby cheapskate imitation of the Shinkansen. In keeping with that, they'll build only a few bridges, miles apart, to replace the 1700 crossings. The bridges will be crammed full of traffic, so bikes and pedestrians will probably be prohibited to cross at all. Many towns will be divided by the wall, the halves virtually cut off from each other. This is already how freeways, turnpikes, and even non-freeway arterials are built up and down the East Coast - no place at all where it is legal for pedestrians and cyclists to cross over. And these gigantic corridor monsters will be even worse.

Biking and walking will simply be out of the question for almost any trip beginning and ending on opposite sides of the wall.

Like I said, a great way to save gas.

...they'll build only a few bridges, miles apart, to replace the 1700 crossings. The bridges will be crammed full of traffic, so bikes and pedestrians will probably be prohibited to cross at all...No more than 25 bridges

You do have the bright and shiny crystal ball !! Such perfect, and dour, vision of the future !

Since RRs were built before cities were much larger than villages (unlike interstates which plowed through and destroyed so many urban neighborhoods) and they have adapted to them (does the phrase "wrong side of the tracks" ring a bell) a limited access railroad would have much less im[act than the earlier interstates. Mainline Class I railroads do not "divide neighborhoods", neighborhoods grew up on either side of them with the RR as a "natural barrier".

Pedsetrian/bicycle bridges or underpasses are cheap and easy to build. It is the rubber tire roads that cost more $.

But this nation built about 54,000 miles of limited access interstates. I don;t see where 1,200 or so miles of railroad on existing ROW (my guess is a couple of dozen miles of new ROW would be best in special cases)are going to be prohibitive. And standards should include both ped/bike only bridges/underpasses as well as joint use (no car only bridges).

Best Hopes,


PS: My crystal ball expects about 500 auto bridges (average 1 every 2.4 miles) and an extra 300 ped/bike bridges. based in part on recent Grrenbush commuter rail line south of Boston. And every bridge had ped & bike access !

I second this.

I would like to add that there are already a number of bridges to cross the existing tracks - in fact, I am not sure how far south of DC you need to get before you hit the first grade crossing. I was playing with Google maps to try and find one, and eventually gave up...

A bit late - try looking at the interesting intersection of Burke/Springfield/Fairfax (confusing for outsiders) where there is station - it was at grade the last time I was there, though whether it still carries freight is an open question. Following the tracks down, I am certain you will find a fair number - including the one in Prince William where a fire engine got wiped out - http://www.usfa.dhs.gov/downloads/pdf/publications/tr-048.pdf

Notice particularly that it was a 'private grade' crossing.

That stretch of rail has an incredible number of crossings between Fairfax County and Manassas (and further sourth, I'm certain), and not being able to find any is a bit surprising.

The real problem is how people treat the train tracks, not the number of crossings. The same is true of bicycle riders, by the way - bicycle riding is safer in Europe because the drivers are better, not because the bicycle riders are.

You have the situation backwards. People who might walk or bicycle a few blocks to a store, will be foreced to use their motor vehicle because they must take a long detour.

James Gervais
Hope was the last ill to escape Pandora's box.

James Gervais

PS: My crystal ball expects about 500 auto bridges (average 1 every 2.4 miles) and an extra 300 ped/bike bridges. based in part on recent Grrenbush commuter rail line south of Boston. And every bridge had ped & bike access !

My read is 500 bridges for cars, but 800 bridges for car, ped & bike, I just cant reconcile that and your comment:

People who might walk or bicycle a few blocks to a store, will be foreced to use their motor vehicle because they must take a long detour.

Long segment on oil in sub-saharan Africa on today's Democracy Now. It continues Vail's post on Nigeria of a few weeks back.

cfm in Gray, ME

Yes, really worth reading or hearing:

"Untapped: The Scramble for Africa's Oil"

Historian and Journalist John Ghazvinian, who has written the book Untapped: The Scramble for Africa’s Oil, discusses his recent trip to Nigeria and the African oil boom. The U.S. now imports more oil from African nations than from Saudi Arabia.

Yeah, as you say quite rightly, it’s actually more of the same, to be honest. The situation in Nigeria is now as bad as I think anyone can remember it. Many of your listeners and viewers will be aware of the struggles of the Ogoni in the 1990s against Shell, and so on. That was really child's play compared to what’s been going on in the last couple years in Nigeria, and ironically we hear less about it.

But, you know, I was just there a couple weeks ago. Just in the sort of four or five days I spent in the Delta, there were twenty-nine foreigners taken hostage, kidnapped by militants. You know, it’s the same story, basically. It’s a battle over access to oil money and for resource control, and it hasn’t gone away, and it’s not about to go away.

But the bottom line is that Africa, as a whole, is really deeply under-explored and kind of under -- it’s not really looked at as much as it could be. I mean, there’s exploration blocks the size of France that still haven’t been given away, and it’s a very hot and very exciting destination for the oil industry right now.

Yeah, it’s really extraordinary. You know, you start to see this again and again and again, as I did, you know, as I traveled through all these oil towns in Africa. You have often hundreds, if not thousands, of oil workers from all over the world sent on four-week shifts in to work on the rigs, and they’re often housed in these extraordinary compounds with kind of -- behind these very high razor-wire walls in these kind of sprawling Southern California-style compounds with, you know, swimming pools and air-conditioned basketball courts, and so on, and, you know, kind of everything that you’d want, really, all the food flown in from the States or from Europe.

And then, just on the other side of the wall, you have people who are living without any running water, who are walking for miles just to fill up their buckets of water, people who are suffering from malaria, living on less than a dollar a day, and so on. I mean, the contrast is one of centuries, really -- the gap, the gulf, if you will, in living styles. And this is a real affront, actually, in the face of the people who are sitting there, who realize, you know, there’s a lot of oil in our country, there’s a lot of money being made, but somehow we’re not seeing any of that. And that’s something that you hear a lot of anger and a lot of frustration about just on a very visceral level.

Prostitution also is a big problem in a lot of these places. You know, obviously, you have these guys, and they’re all sort of men, really, who come and work on the rigs from all over the world and have a lot of money, obviously, that they bring with them. So you have girls coming from all over the place, you know, to kind of service their needs, as it were. And that obviously, you know, contributes to HIV and broken homes and all kinds of social problems, as well.


The Dave Cohen article at energy bulletin


linked from ASPO


Twice mentions a 7.35 million barrel figure for the Chinese field. Should be billion?

On May 3rd, PetroChina announced that the earlier number was far too low. The new estimate stated that the field contained 7.35 million barrels (1.02 million tons) of oil equivalent.

Still, it is hard to believe that a field containing 7.35 million barrels of oil equivalent (1.02 mt) was somehow overlooked.

Otherwise a good report. I love this quote

The discovery has been praised by Chinese Premier Wen Jiabao.... "The discovery of the high-quality (Jidong) Nanbao oil field is the most exciting one in more than 40 years," Wen was quoted as saying during a visit to the field on May 1. "I was so happy on hearing the news that I couldn't even fall asleep."

"I was so happy on hearing the news that I couldn't even fall asleep."

I can identify. There have been plenty of nights when I couldn't sleep, too.

Dave notes in his article that the field should provide 2.7% of Chinese consumption at its peak production, and chinese consumption is rising 7% a year (China Daily).

Its not an inconsiderable find. It seems to be between the East Texas and North Slope fields in probable reserves, but its not going to change the world.

I think that the 7 Gb reserve number they have been using is for OOIP. A BBC report put current proven recoverable reserves at about 650 mb.

petrochina announced a few days ago that they think they can recover greater than 40% of ooip. but 40% of which ooip ?
and regarding the article that follows that one, what are they talking about "new lithological theory" ? are they trying to say that it is a basin centered deposit ?

Whatever it is - it is always interesting to run the calculation.

April 2007 Chinese consumption - 6.534 MMBPD (just the CIA factbook number - probably low - but for argument's sake)

650 million barrels - 100 days (ONE HUNDRED DAYS) approx. (of Chinese consumption only - 7.6 days of global consumption)


40% recovery of 7GB OOIP - 2.8GB = 430 days!!! or 1.18 years/14.3 months. approx. (or 32 days of global consumption)

Yes, it is a big field...but it is a few giants worth, and we need 60 in a year to BREAK EVEN.

I posted a couple of links today about this. They say the field is larger than the initial reports indicated. And that it was found in an area that was considered well-explored, so maybe there's more where that came from.

However, more interesting to me was the article about how they are filling their second SPR. Last I heard, they were going to hold off until prices dropped. But prices are pretty high now (especially in Asia), and yet they are buying crude for their SPR.

There was another article the other day, about how China's oil imports are up 10.8% for the year. Booming demand...or oil going into the SPR?

In any case, they don't seem to be counting on their new oil field to supply them.

petrochina announced plans to produce 210,000 bpd beginning in 2012.

Putting oil into a SPR might be one non-obvious way to dump excess US dollar holdings without freaking out the currency markets... just a thought.

I made the edits. 7.35 billion barrels.

The latest excuse is, "Not enough refineries." So, when will even one of our gallant leaders ask the question: "If refineries are the problem, why isn't there a gas shortage?"

Boy, that guy is a real genius. If gas prices hadn't risen, attracted more imports, and stemmed demand a bit, he wouldn't have to ask why there isn't a gas shortage. And if a hurricane hits the gulf this summer, he won't have to ask.

I was going to respond to him, but you have to register. Too much trouble.

I will say, though, that I have said that I believe this is exactly how peak oil is going to play out. Gasoline is going to become very expensive, oil companies are going to be printing money as a result, and the public is going to become very, very angry. Politicians are going to be under pressure to do something, and almost anything they will be willing to do will make the situation worse.

I always worried, as a refinery worker in the U.S., that someone would snap and do something stupid. I think the odds of that are increasing.

I posted some astounding global money supply numbers last week (from Financial Sense). All of the countries cited had money supply growth numbers of 10% or more, year over year, while Russia was up over 40%.

Absent an immediate recession, increasingly I am beginning to think that we may see a ferocious inflationary global bidding war for flat to declining crude oil + petroleum product exports.

As Hubbert noted decades ago, the matter/energy world is finite, while the ability to grow the money supply is unconstrained--"To infinity and beyond."

As Matt Simmons said, "If we do nothing to address Peak Oil, Jim Kunstler will have turned out to be an optimist."

In the "It's later than you think" category, the following item on Drudge caught my eye:

Street lockdowns proposed for Baltimore: "We have to make sure we're not declaring martial law"

BALTIMORE - A city council leader, alarmed by Baltimore's rising homicide rate, wants to give the mayor the power to put troubled neighborhoods under virtual lockdown.

"Desperate measures are needed when we're in desperate situations," City Council Vice President Robert W. Curran told The (Baltimore) Sun. He said he would introduce the legislation next week.

Under Curran's plan, the mayor could declare "public safety act zones," which would allow police to close liquor stores and bars, limit the number of people on city sidewalks, and halt traffic during two-week intervals.

Police would be encouraged to aggressively stop and frisk individuals in those zones to search for weapons and drugs.

Baltimore has tallied 108 homicides already this year, compared to 98 over the same period last year. Police and prosecutors also say they are facing a "stop snitching" culture that discourages victims and witnesses from cooperating with investigators trying to get criminals off the streets.

Councilman Keiffer J. Mitchell Jr., a mayoral hopeful, said Curran's idea was an interesting concept but it raised questions about civil liberties.

"We have to make sure we're not declaring martial law," he said.

jeffery do you have a link to those finacial #'s Thanks D

I'll try to dig them out again. It was pretty amazing. 10% was pretty much the floor for the countries surveyed.

Money supply up.

Crude oil production--and especially exports--down.

Money supply per barrel, and especially money supply per barrel of exported oil up, perhaps, way, way up.

I'm basically wondering if the money supply increase is like pouring gasoline on a fire, so to speak. We could see a real price explosion. Of course, this just accelerates the rate of increase in domestic consumption in Export Land.

I found it with google, Thanks. You are right, up alot! Makes a cash position look bad.

from the economist, updated weekly


the jump off page for some other indicators


Buy yourself a Trucker cap and jacket (caterpillar or something) and pretend to be an outraged driver when in public!

A few days back was a photograph of Pakistani merchants burning a truck from the power company.

Gangs and unemployed youth often make trouble, but the issue is serious when the "bedrock" of a society is rioting.

Once the rioting starts it is impossible to have a discussion of depletion rates and consumer demand. The oil company PR people need to get ahead of this.

And Chevron's "Will you join us" is not enough.

This is a very American-centric view.

Especially this - 'Politicians are going to be under pressure to do something, and almost anything they will be willing to do will make the situation worse.'

Yes, the Swedish government with its plans to be essentially petroleum free, the Dutch government with its plans to ensure that biofuels are sustainable, or the German Greens with their renewable energy laws and dedication to conservation and localization are all likely to make the situation worse - if you are an oil exporter or oil company, since otherwise 'oil companies are going to be printing money as a result'.

What you are complaining about as 'politicians' are those who take oil money - which, is essentially every politican at a national level in the United States (I grant the odd exception or two - Sanders in Vermont may be an example).

Such observations are not at a personal level - it is merely that any political movement attempting to change how we consume resources is savagely attacked by those whose livelihood depends of such activity.

You can see this in action with the latest commonplace media observation that Greens are forcing the rest of us to use coal because they oppose nuclear power. The idea of consuming less, a bedrock green philosophy, is blithely ignored by a media financed through advertising. Or more interestingly, when EU proposals requiring concrete reduction in vampire power (if you don't know what that means, simply count up all the ready lights and transformers in your home) in electrical equipment are generally portrayed as increasing costs for consumers - of the purchase cost of the product, not the electricity consumed during its lifespan. Politicians are very much part of the problem - generally, we have the wrong ones.

This is a very American-centric view.

Especially this - 'Politicians are going to be under pressure to do something, and almost anything they will be willing to do will make the situation worse.'

That's because this is primarily being driven by demand in America. And the politicians in America, on both sides of the aisle, don't seem to have a grip at all on energy issues. That's why they end up pursuing the wrong policies.

In much of the rest of the world, saner energy policies have been adopted. But who in the U.S. has offered up a sane, comprehensive plan to deal with the issues? Windfall profits taxes are exactly the kind of knee-jerk reaction I am talking about. While it may decrease investment, which may ultimately stretch some supplies, it is incredibly inefficient. And the reason for doing it is certainly not to stretch supplies; they think that they can punish the oil companies, appease the angry mob, and then gas prices will come tumbling down.

Sorry to disappoint you on Sweden´s plans and commitment on an fossil fuel free society. That was the previously governemts plan. Since september 2006 we have a new government (right wing coalition).
They are more "traditional", subsidizing cars (even gasoline powered). And, in Stockholm, plans to shift funding from public transportation to new freeways around the city. Too bad...

The Swedish plan to be fossil fuel free from 2020 was and still is a pipe dream from the green politicos.

The Swedish Farming university(SLU) came out with a report that to substitute gasoline and diesel with biofuels from Swedens vast forrest recources would require three(3) times the swedish forrest area, and then there would be nothing left for papermills etc. Biofuels from agriculture would not even be enough for the farming machines.

So this was only political talks without any realism whatsoever.


EDIT: Now they are subsidising so called green cars with 10 000 kronas each. The ethanol to theese green cars is imported from Brazil.

Swede, it will be a 10 000 krona (about $1400), even to gasoline cars, not only to ethanol powered.

Yes the subsidy is for so called miljöbilar(green cars), but the bulk of them are ethanol cars. It is questnable if ethanol really is good for the miljö. What about ozon?

Biofuels from agriculture would not even be enough for the farming machines.

That can't possibly be right. According to my calculation, 1 acre of sunflowers (even less for rapeseed) produces enough biodiesel to supply all the fuel needs for ag equipment for a 20-40 acre farm, i.e, only 2,5-5% of total acreage under cultivation. This presumes that the oilseeds are pressed and used right on the farm, eliminating the energy-consuming round trip to the factory for processing. While straight veg oil probably won't work during the winter, most ag machinery is used during growing seasons with temps >0C, so that should not be much of a problem.

The source of your quote is either misinformed or is deliberately lying.

My source is SLU report.

Hello R-squared,

Your quote: "I always worried, as a refinery worker in the U.S., that someone would snap and do something stupid. I think the odds of that are increasing."

This is a fear of mine too. Imagine if some detrito-terrorist in California blew up the pipeline for AZ & NV. This would rapidly causes gasoline to become very cheap for CA, but skyrocket for AZ & NV. Say $1.50/gal in CA, $10/gal for Phx & Vegas. How many CA residents driving blinged-out SUVS and skyhigh monster pickups would rejoice at this turn of prices at the pump? There is insufficient tanker-rigs that could deliver fuel fast enough east to avert a crisis.

How much money could the Mafia or some other criminal org. make off an event like this? Unfortunately, the AZ & NV yahoos would probably retaliate by blowing up the canals feeding Southern Cal. Then the machete' moshpit continues from there....

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


I think if the US congress puts too much pressure on the oil companies in the way of excess taxes and other laws, they will simply relocate offshore, after all for some. 90% of their operations are offshore anyway. Uour thoughts?

hey downunder

can you contact me here: www.philhart.com/contact

where in oz are you?


"If refineries are the problem, why isn't there a gas shortage?"

Sometimes you just want to reach through the intertube and smack people...

Gas comes from Exxon. Food comes from Safeway. Electricity comes from Duke Power. And Paris Hilton is back in rehab. What else do I need to know?

Where is PeakOil Jane and is she wearing her leapord skin bikini? ;-)

You forgot to mention that Melinda got voted off from American Idol last night.

... for the convenience of TV, you can only be one of two kinds of human beings, either a liberal or a conservative. -- Kurt Vonnegut

A truely enjoyable presentation by Julian Darley over at;


Julian Darley presents an overview of the United States' unsustainable energy practices and makes the case for Relocalization from the point of business. The tale of the 20,000-mile long coal train....

A great one to share with PO newbies.(optimistic, upbeat, yet brutally realistic)

I posted a question about Minimum Operating Level (MOL) for gasoline inventories yesterday.

Robert and several other people responded. Apparently, the EIA doesn't use the MOL concept any more (they are not sure exactly what the number is). And Alan pointed out that the MOL will vary by PADD district. For example, as I (and others) have noted, current non-West Coast gasoline inventories are below levels of four weeks ago, while consumption is up. So, non-West Coast gasoline inventories, on a Days of Supply basis, have shown a pretty sharp drop in the past four weeks.

In any case, we have had reports of spot gasoline shortages with inventories in the 195 mb range. The most frequently quoted number for MOL is 170 mb. Given isolated spot shortages at 195 mb, I would think that the 170 mb number is a reasonable estimate for MOL--granted that this will vary by region.

We are currently using about 9.3 mbpd of gasoline (21 Days of Supply nationwide). If we assume that we have about a 25 mb cushion above MOL, on a nationwide Days of Supply basis, we would have 2.7 Days of Supply in excess of MOL.

Note that the industry used to keep more gasoline on hand, relative to consumption (29.6 Days of Supply for the week ending 5/10/91, for example).

In response to that question from WT I did a little checking and that from
comments by RR and Doug MacIntyre
indeed 170 million barrels was a formerly used indicator. It shows up in EIA publications.

Following the Simmons Searing Summer of Gasoline Shortages
article on energy bulletin there was this.

[*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 of a penny for California.

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 rise lately and the tight areas seem to get a retail pop pretty quickly. Today we are flirting with the April 30th high again.

A report from an organizational meeting for Houston ASPO follows (I couldn't make it because of the status of a well):


Last night Matthew Simmons spoke at the organizational meeting for the ASPO conference set to take place in Houston on October 17, 2007.

He warned that there is a 60-70% chance of gas rationing this year. That chance goes up to 90% if there is a hurricane in the Gulf of Mexico.

The above link explains the current world oil supply issues. At the end of the article is the commentary by Matthew Simmons where he explains the shortage of gas in the US.

obviously there is going to be a hurricane in the GOM so what we need to know is this:

Since the Oil companies don't want another Katrina disaster iwould suspect that they will shut everthing down if a hurricane looks like it is going to get close. So what we need to know is if they shut down refineries, how long before they are at 100% again, assuming no damage. And how much gas would not be refined if they do this.

Seems to me that if a hurricane gets close to houston/galveston then we are in Really Big Trouble!

Yeah, I've started nosing around State of Maine to find out what the plans for rationing are. That would be an interesting projects for other TODers, to do same in other states/countries.

cfm in Gray, ME

WT ?????
MOL? Is this the minimum storage so that refineries can switch between diferent products and still have ample cushion to supply/hold so that they can switch between say #2 diesel, prem, reg unlead, without absolute shortages?

MOL of gasoline inventories--but it applies to all petroleum products and to crude oil.

A lot gasoline is in transit and in storage at gas stations, terminals and refineries. Assume that we had zero inventories everywhere in the system. Think of how long it would take to fill all of the storage tanks and tanker trucks.

As I said up the thread, since we saw isolated cases of spot shortages at around 195 mb of gasoline, it seems plausible to me that 170 mb, more or less is the MOL. So, at current rates of consumption, we have less than three days of consumption in excess of the 170 mb inventory level.

As Alan Drake pointed out, if inventories decline what we will see are geographically isolated shortages cropping up around the country.

I experienced some of the outflow from Hurricane Rita. There was zero gasoline available in College Station, Texas. We had to leave town with one car's gas tank half empty, which we would have had to abandon along the road if gasoline had not been available closer to Dallas.

<3 days. Where are we on draw downs? It was building slightly right? But that was west coast only? Draw down everywhere else and in total right? How long until TSHTF?
This isn't funny anymore...

As I understand it, Delusional, Minimum Operating Level (MOL) is the quantity of gasoline in the pipelines after it leaves the refinery but which is necessary to keep the pipelines pressurized. You can't just put 1 gallon in a thousand mile pipe and expect one gallon out the other end unless the entire pipe in between is filled with gasoline too. This MOL gasoline is counted in current inventory levels but if we go below MOL, the pipelines begin to shutdown as they lack pressure. Liquids pool where the pipeline is physically lowest along its length and empties out where it is highest. Thus much of the gasoline in the pipeline cannot be reached without disassembling the pipeline.

Ergo, the pipeline must maintain a minimum amount of gasoline to maintain pressure. This is the MOL.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

Wait a minute! Wow what an expense! So there must be some way to drain it but the cost of shutdown/startup with what? CO2 or water. Good grief, that is a ton of basically locked in place and unusable fuel.

So I've heard that they ship all the different fuels in the same pipeline. So what happens if the line shuts down and sits to long doesn't the different fuels mix? Re-refining?

(Sorry for all the dumb questions)

There is basically the same problem with natural gas. This was the concern a while back (was it winter 2005-2006?) when we discussed the possibility of a cold winter driving natural gas below minimum operating levels and leaving near zero pressure in the pipes. This is part of the cost of this sort of fuel.

Also as WT notes, this includes fuel in holding tanks, etc. All in all, this is fuel that is mostly inaccessible and unusable generally without us first experiencing actual shortages.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

The problem is much worse with a liquid pipeline than a gas pipeline. Two phase flow in a liquid pipeline can shut down the entire system. Slug flow could damage a pipeline or pump. You possibly would have to travel the line and bleed off the vapor phase to restart it.

as i understand it, the products are separated with a "pig". i dunno what happens when a line is shut. maybe the pig gets stuck.

FWIW: CNBC said the two gasoline barges bound for the northeast were divered to the south to address a potential emergency shortage.

Here are the weekly natural gas storage numbers. This is the time of year - neither cold nor hot - when we get good builds.

Working gas in storage was 1,842 Bcf as of Friday, May 11, 2007, according to EIA estimates. This represents a net increase of 95 Bcf from the previous week. Stocks were 225 Bcf less than last year at this time and 315 Bcf above the 5-year average of 1,527 Bcf.

Sure looks like we are heading for another glut and maxed out storage by October/November this year.

The poor are going without sufficient A/C and Heat. Federal and State utilities Aid for the poor should be boosted; where are Charlie Grassley and Charley Rangel when you need them.

Does anyone have a good source for gasoline futures quotes? I thought I had a site for that bookmarked, but I can't find it. What I am trying to do is show the effect of this week's gas boycott. I think prices have risen every day since then. But I can't find the historical data, only a snapshot of today's data. Thanks.

The gasoline boycott raised prices in Galveston by another nickel. All the pumps are at $2.999 today

Below are the closing prices for June gasoline on the NYMEX starting on May 14th:

May 14 $2.30
May 15 $2.30
May 16 $2.34
May 17 $2.42

I don't think that's what the organizers had in mind.

"You want something to cry about I'll give you something to cry about" (price spanking in process)

Yes, and we have another week and a half before Memorial Day Weekend. Will it continue to rise until then?

"All the pumps are at $2.999 today."

Here's a silly question as the energy regime comes crashing down all around us: Gas costs 10X what it did in my youth, but they're still using that "9/10s of a cent" added to the price on the pumps. Don't they get it that 2-digit gas has been replaced by 3-digit gas, the 3rd digit now being the inflated equivalent of the old $.009?
There are 10 kinds of people in the world; those who understand binary, and those that don't.

You could just use gasbuddy.com.


Use Platts for east of the Mississippi and OPIS for west of the Mississippi. Can't get any better than what oil company traders actually use!

I get an OPIS report every day, but I always delete it after reading it. It has all kinds of pricing information. Does the site have historical data? Can I get Tuesday's closing unleaded gasoline contract?

Absolutely! OPIS is good for pricing on the West Coast. It's usually what spot gasoline is priced off of for California. If you want Gulf Coast, NY harbor, etc., use Platts, because that's what's used to price sport deliveries in those areas.

The pricing information is in terms of averages. They'll list a high and low that was priced that day, and the mean is used to price deals. For example, you'd use Platts mean to price Gulf Coast RBOB, but you'd use OPIS mean to price it in California. However, OPIS is mostly used to price product at the rack from the Gulf Coast.

It can get tricky, though. If Exxon trades Gulf Coast RBOB with Chevron in California, then the mean price they would use would be determined by the FOB point. If it was Cali, they'd use OPIS, but if it was to remain the Gulf Coast, they'd use Platts.

Information is gathered from traders at the big oil companies. Some days, there may be no market for a paritcular product, so they'll just use the prices from the day before.

For Gulf Coast gasoline FOB Explorer Pipeline (Pasadena, TX):
RBOB Unleadeded
Cash price: $2.6775/gal
Spread over NYMEX: $0.2855/gal

Conventional Unleaded
Cash price: $2.6600/gal
Spread over NYMEX: $0.2685

These are for 87 octane only! For 93 octane, you must add $0.10 to each cash price to get the spot market price.

Those are prices for yesterday.

However, the Gulf Coast prices are not NEARLY as interesting as prices for the Group right now. Any product FOB Tulsa is fetching a massive a premium. The arb has opened way up in the Group! Sellers are NO WHERE to be found.

Sort of funny Tulsa, OK has the highest priced gasoline in the country right now!

Two points to notice: Hurriances have not entered the equation, nor has the summer driving season yet.

Now, if there are no hurricanes, and there's significant demand destruction in the short-term, then the price will probably however around $3.00 - $3.50.

Add in hurriances, outages, increased demand, and possibly a full scale shortage, you'll see rack prices hit $5 EASY. Not even a question or concern.

If there's a panic, and you rush to fill your car up this summer, what makes you think the product traders at the oil companies aren't panic trading?

They are.

Either way, unless some miracle happens, we're well on our way to $4/gal and probably higher. Hell, rack prices will be that before long!

You really don't want to use futures prices from the Merc, because those aren't truly indicative of what you'll see at the pump.

You need to use OPIS for rack pricing, which will get you closer to the pump price (add $0.10 to $0.15 to get close to the pump price from OPIS rack), or use Platts (add $1 to get close to the pump price).

Every region trades at a spread to the Merc. This is called the basis. Oil companies, especially guys like Valero, have teams of basis traders that make a killing out of trading the arb in the different regions.

The Merc is priced for only a single FOB point. For example, WTI is priced FOB Cushing. What WTI trades from FOB Pasadena could be totally different.

If you truly want accurate prices that are being paid for products or crude, you must use Platts and OPIS.

Also, you can obtain barge pricing information off of those as well.

RR asked for futures. These are futures.

Platts and OPIS also have futures cash, not just rack and spot.




From there you can any futures quote....

To answer your question, though, it had no effect.

Product prices in the cash market were WAY up yesterday, as they were the day before. Check out my post on prices in the Group from yesterday. I posted one on your site, as well in the comments section.

Maybe it made people feel better, but that's all it did.

If you're trying to figure out what some fund manager in Massachusetts theoretically thought about the boycott, then look to the futures.

Futures are used by hedgers and fund managers speculating. I don't know any oil company that uses futures to price its product or crude movements. They use them to hedge, and they'll sometimes trade them speculatively, because it's a "gimme" for them (e.g., easy money).

The disconnect between futures and cash is huge, which I explained as the basis. Remember, the tail doesn't wag the dog.

If you're trying to figure out what effect the boycott had on actual prices at the pump, turn to the cash markets. You can get historical data, as well as futures, swaps, and other derivative pricing information off of Platts or OPIS.


I read today in my Wisconsin State Journal that Dane County (Madison) is one step closer to commuter rail service. For me this would mean a train ride instead of a bus ride to and from work. It would also mean for thousands of others a way to get in and out of the city without a car.

Suburban officials can't wait for a Dane County commuter train to pull into their town.

In fast-growing Sun Prairie, downtown redevelopment has included construction of condos within walking distance of a potential commuter rail station.

Just west of Madison, the city of Middleton built a 1,000-foot rail spur extending to its train-depot-themed Greenway Station shopping center.

Tom A-B

The commuter rail system would be great since I drive from Middleton to downtown Madison every day. I actually park my car 1 1/2 miles away so I can bike to work and save the $10 for parking. Here's the funny thing though. I was 10 minutes late today because something happened to one of the freight trains in Madison this morning and it blocked traffic for something like 25 mins. I was able to park my car and bike the rest of the way and miss most of the headaches, but how ironic.

Exactly as Alan has noted - the development will tend to follow the public transportation systems.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

Physical-Internet and Horizontal-Elevators

We are looking for allies in re-tooling highly repetitive travel.

Based on riders per day, the most successful form of public transportation is the elevator. We patented the use of distributed collaborative computer networks (Internet) to move physical packets (Horizontal-Elevators, JPods and CargoPods).

Initial networks will be very small. The Internet, did not start at the mega-bit transfers. We will iterate ofter. Eventually, about 4 billion of the 8 billion miles Americans drive daily can be automated at a profit of 27 cents and 1.7 pounds of CO2 per passenger mile.

Integrated solar collectors power the networks.

We need manufacturing, capital, deployment and other alliances to implement networks. The first network will likely be in Sunnyvale, CA or Pigeon Forge, TN.

Please look at www.jpods.com, comment here and contact me.

Bill James
It costs less to move less

I have been corresponding with Bill some on this concept. I told him that he can get some very good, real time peer review here. It's a very interesting idea, but I have not had the time to dig deeply into the details.

Well, I've not had time to study the concept but it seems to me that the terms "horizontal" and "elevator" are entirely incongruous.


Personal Rapid Transit suspended monorails.

For a slight variation on the theme, go to Morgantown W VA.

A slightly larger variation on the theme is running in downtown Miami. another variation @ Jacksonville Airport.

With enough effort and $$$$, some gadgetbahn can be made to work. (There are intractable scheduling problems with self directed modules. Bunching, merging, empties, traffic jams, etc.

The problem with gadgetbahn is that costs and "unresolved details" derail them. Unit costs are skyhigh and multiples of what conventional solutions would be.

The Japanese love gadgetbahn (a cultural thing) and let them fool with them. If they work out the details and get it to run properly and economically, we can import the tech in 2025 or so.

I would not have been opposed to R&D funding of gadgetbahn during the second Carter Administration, after conventional Urban Rail was fully funded and we had a couple of decades to "play around" with new technology and debug it.

But today, with the list of Ready to Go projects needing funding


I am VERY much against wasting funding on unproven transportation technology today. We simply do NOT have the decades to debug and prove out a new technology that MIGHT be slightly better.

Best Hopes for Proven Mature Technology,


PS: I found their use of "Katrina Testimonials" to support their commercial interests offensive and wrong.

I dunno if the Japanese would be that interested. If this is what I think it is, it was designed with American sprawl in mind. For the kind of community where regular trains are not feasible, because you don't have enough people traveling in the same direction to the same places.

Unit costs in transit are measured in $ per pax-miles.

The costs on this one (IF they can even get it to work) are through the roof. Automation is never cheaper (a truism so far in transit), this is uber automated. (Automation does allow for tighter headways, smoother driving and some other advantages).

If a suburb is not economic for minimal bus or streetcar service, it will never be economic for this. (And Japan has some small villages & semi-rural areas).

I have seen Japanese video of a suspended monorail for fruit picking on a mountainside. The workers hop aboard the suspended monorail baskets (knees out) and go up to work. Simple scheduling though.

Some "not though ofs' Cleaning for example. Simple spilled coke or a "working girl" has a date in one and leaves the condom and a little gooey mess in one.

A large number of light duty vehicles all sharing a common guideway. One breaks down (out of hundreds/thousands, what are the odds ? Especially with all the specialized automation). What does that do to scheduling ?

How does one evac from a breakdown ? Alone in a wheelchair ?

So far, programming for PRT has been intractable for complex routing. Some one claimed that is was not possible to find a mathematical solution under some special cases.

True story. I was driving back from CA with my "new" M-B 240D. Drove through Death Valley (flowers in bloom) and then stopped by Las Vegas to catch their new monorail. I had to wait over an hour on the platform (others before waited longer).

Why ?

On another train, someone smoked a cigarette. The fire alarm went off. Train went to next station and froze with doors open (per programming for fire). Fire alarm could not be manually reset, so they sent that monorail train to to the maintenance yard after overriding "freeze" and going manual. With one train under manual control, all others froze (DANGER DANGER Train #3 is moving but not following protocol).

And this is a simple one dimensional line with just a few (9 ?) stations, a half dozen trains and almost a half billion $ (all from memory).

Best Hopes for Mature Proven Technology,


Hello TODers,

I with Allen on building mature and proven tech: lower costs, quicker installation, lower maintenance, greater resiliency,....on and on. Time is running short, so therefore we are better off expanding present RR and transit infrastructure instead of wanting to re-invent and totally rebuild to some other design.

Failing this, I hope Allen has backup emergency alternate plans if we truly come up short on time & money. I am not an engineer, but I think my idea of mini-trains running down narrow-gauge rails, quickly bolted to already existing concrete sidewalks may have merit in some locations, or as a feeder system to the ends of existing RR & TOD. Mini-locos along a canal or river can also be used to pull small barges. Wheel traction is more efficient than equivalent horsepower sent into an underwater propeller.

Then once there is even insufficient energy to power mini-locos: the track would be ready made for human-pedaled railbikes and railbarrows. Beats deflation flats from thorns, potholes, mud and snow, etc, by a long shot.

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

I would like this system to get a wider trial (limited and positive so far).

Best Hopes,


I doubt the Japanese would have much interest also, primarily because PV solar is not so good for them, and the jpod idea doesn't seem any more energy efficient than current electric rail (currently powered by the nuclear/FF mix.)

However, it is gadgety enough to pique some interest, even if it would never be implemented in large scale.

Personally I would be more concerned with safety, weather, and maintenance. With so many individual units the required total material and labor costs would be more than the larger, but much fewer, standard rail units, even if the latter does lend itself to the sardines-in-a-tin can atmosphere that one gets on certain Japanese trains.

The jpod idea also does not address head on the key issue of American cities - too low of population density.

Additionally, many of the stated benefits of jpods do not seem to be comprehensively researched.

So, not quite a thumbs down from me, but I don't see the advantage for a place like Japan that is already highly connected by electric rail. Also, the disadvantages for implementation in the US do not appear thoroughly analyzed.

"With enough effort and $$$$, some can be made to work." Well... sort of, but not really.

The fundimental problem with "gadgetbahn" / PRT is "headway":

In order to be safe under operating conditions any transit system must maintain enough spacing between vehicles on the right of way to enable a following vehicle to come to a safe stop prior to collision with a leading vehicle that has slowed or stopped without warning.

These systems almost always propose large numbers of low capacity vehicles, as opposed to say subway or light rail which have smaller numbers of high capacity ones.

So, each of the individual vehicles can have a high design speed, and a large space between vehicles, or a low design speed and a smaller space between vehicles, but not a high speed and a small space between vehicles at the same time.

This in turn means that there is an inherent upper limit on the number of people per unit time that a section of right of way can carry, and as long as you stay with vehicles that can only carry a few people each it's just not feasable that such systems could carry anything like the volumes you see in a downtown core if they were the primary means of vehicular travel.

The only exception I can see would be some sort of cable car or ski lift type system where the inter-vehicle spacing is mechanically limited by a traction cable of some sort, or as feeders to the end of line terminals of subway or other large capacity vehicle systems that would run into the city core...

Headways will start similar to cars. Cars operate safe enough for us to tolerate them at 1.5 seconds in rush hour.

"Headways will start similar to cars. Cars operate safe enough for us to tolerate them at 1.5 seconds in rush hour."

Just because cars operate at those sorts of headways does not mean they are viable for a PRT system. I say this because we know that, in an engineering sense, such headways are too small i.e. "following too close" collisions occur all the time (in fact many sources cite it as the leading cause of collisions) rusulting in many thosands of injuries per year

For a starting point consider that Subway trains seem to have design emergency deceleration rates on the order of 4 to 5 km/hr/sec.

Lets assume that to be attractive a PRT would have to offer speeds somewhat higher than, say, a bicycle, so asume a design speed of 30 km / hr. If we assume 4 km/hr/sec emergency braking, inclusive of the time the folling vehicle requires to detect the need to stop, and inclusive of all safety margins, we would need a 7.5 second headway between cars. This would give a guideway a maximum capacity of 480 "cars" per hour

Design Speed---"Cars" per hour per guideway "lane" (if constrained only by reasonable safe headway)

20 km / hr --- 720
30 km / hr --- 480
50 km / hr --- 288
75 km / hr --- 192
100 km / hr--- 144

Earlier, the claim was made that jPODs/Taxi 2000 used "roller coaster technology" and alluded to their safety record.

Pure BS (what roller coaster uses suspended monorail, all that I know of and have seen use two rail like mini-railroads).

But what roller coaster operates on 1.5 seconds headways ?

The safety issues are substantial and there no comparables in other mass transit.

This technology is dead already. Taxi 2000 died, some promoters picked up the carcass, renamed it and are trying again.

Last Post on this, wasted too much time,


As a reply to some of the comments:
Too complex with too many vehicles - 97% of trips in the US are by car, 80% in Europe. Many small packets dominate our way of transporting. We are just constraining the variables to rails and automating them.

Safety: Mechanics are roller coaster. Roller coasters have killed 34 people in the last 26 years, 1 in 90 million. Most deaths were suicidal. Cars kill 14 of every 100,000.

Scope: Keep it simple.

Financing: Private. There is a profit in saving people time and money. Consider your interests, would you rather take a cab or a bus. In the niches we deploy in, we are automate cab. You pay more for a cab than the bus. There is a value to time.

Proven Technologies: More of what is not working will not likely work, "The significant problems we face. cannot be solved at the same level of thinking we were at when we created them." Albert Einstein

Bill James
It costs less to move less

Your project is the warmed over (I thought it was finally, and mercifully dead) Taxi 2000.

No response to cleaning, scheduling around breakdowns, costs, evac of solo wheelchair rider, etc.

I would prefer to take the streetcar over either the bus or the taxi.

If you can find some more private suckers/investors go for it. But I think Taxi 2000 burned a few million already. I think PRT has blown a fair amount of public monies so far and is unlikely to get more.

BTW, Mass Transit did not cause our current problems. The private automobile/SUV did. And, from your website:

Model after the most successful forms of transit

* Privately owned: automobiles
* Non-privately owned: elevators

So, to use your own closing quote; PRT/Taxi 2000/jpods is more of the same level of thinking that created the problem.


Its OK Alan, notice how Bill can't be bothered to explain why his plan is better than the RUF plan.

If he can't figure out HOW his plan is different than the other 'rail based' plans, the pitch is DOA.

Marge vs. the Monorail "One technician suggests cutting the power, but alas, the monorail
is solar-powered. (``Solar power. When will people learn?'')
But miracle of miracles, Springfield suffers a solar eclipse!
The train grinds to a halt, and all celebrate. The eclipse
ends, and the train speeds off again."

OK, so i'll say something constructive.

The problem is going to be "the first/last mile problem", just like with the internet. Fiber cable across the pacific wasn't the hard or expensive part, that's why it was built first. The hard part is getting your aunt connected to the local ISP (still not happening for most older people). Same thing with transit.

How does your invention get people to/from the trunk line? At what scale (urban street, suburb, country road) does it compare favorably with private cars, and if it doesn't go to your door, how to get to it? How is it better than taking a bus to get to the train?

The answer that I would suggest is very small, cheap, electric rental vehicles, and a compact way to store them when at the station.

I do not think it will start with the suburbs.

I believe you have to look at niches. Small electric vehicles will work great in many. They will not work as well at airports.

JPods can Eeliminate the shuttle buses, connecting terminals to hotels and car rentals. We are networking economic communities. Where our technology has a niche advantage.

First network in Sunnyvale, CA? Tell me more? I couldn't find specific reference on your linked website.

The oil market is up 12 cpg on gasoline and 5 cpg on ULSD so far today on refinery issues.

It is finally becoming obvious to the "experts" that we are in deep trouble on gasoline supply going into the summer driving season, and the sky is the limit on how high we may go.

Grp III pipeline gasoline is trading at $2.88/G FOB Tulsa, assuming you can even find a seller, and going higher. This is by far the highest price in U.S. history.

Up, Up and Away!

Thanks for the heads up. Figured out how to get day old FOB Tulsa quotes.

Between your insight into the finished fuels bidding war and the bit of research I did on minimum operating levels I'm convinced that Simmons is not being alarmist saying we may see rationing or spot shortages this summer. Any thoughts on this or MOLs?


This is probably cliche to some; it has been reported that Russia is constrained by pipeline bottlenecks. They have oil, perhaps enough to go to 12 mbod production if they chose and had enough pipelines to put it in. If they overbuild the pipeline system, then they will not be able to amortize the costs + interest on debt incurred to build the pipelines over a longer period and might lose money on building the pipelines.

The Caspian Sea has proved and probable, but not producing oil reserves, but lacks pipeline capacity.

There are a number of multi-national oil companies operating in Russia.

In Alaska there are potential problems as the major fields mature and it gets more difficult to find and develop smaller fields in the Naval Petroleum Reserve and Arctic Ocean Shelf. When the oil production reaches a certain minimum level, they will not be able to put oil through the Prudhoe-Valdez pipeline, for there is a minimum amount of oil required to keep the system operating. This information might be used for the timing of the opening of ANWR. Currently there is not enough spare pipeline capacity to justify large scale development of the ANWR fields, but there is spare capacity to justify limited operations and infrastructure at ANWR. The government may complain about gas prices, but they have not moved to lower the price of oil by opening ANWR. It might take ten years to develop the ANWR fields after approval. Ten years from now more spare pipeline capacity may be available.

The U.S. energy markets are bullish today on lower refinery output, growing demand, and problems in Nigeria.

It’s two weeks until the start of hurricane season, so I thought I would write a post about hurricanes and oil.

For Atlantic tropical systems to significantly impact oil production, they need to pass through the central or western Gulf of Mexico. Much of the U.S. offshore and deep water oil production is in the north central or northwestern gulf, where the output is over 1.4 million barrels per day. The Mexican Cantarell field is in the southwestern gulf in the Bay of Campeche. The list below shows the number of storms to traverse these areas from 1886 to 1980. I derived the numbers just by eye-balling the storm tracks from an old book, Tropical Cyclones of the North Atlantic Ocean 1871-1980, by Neumann, Cry, Caso and Jarvinen, published 1981 by the National Climatic Center in cooperation with the National Hurricane Center.
May - 2
June 1-10 - 2
June 11-20 - 8
June 21-30 - 10
July 1-10 - 5
July 11-20 – 6
July 21-31 – 12
Aug 1-10 – 12
Aug 11-20 – 16
Aug 21-31 – 22
Sep 1-10 – 27
Sep 11-20 – 27
Sep 21-30 – 19
Oct 1-10 – 17
Oct 11-20 – 8
Oct 21-31 – 3
Nov 1-10 – 2
Nov 11-20 – 0
Nov 21-30 – 0

The frequency of storms in these area basically track the advertised hurricane season, with a peak in late August and early September. One variation to note is that November storms rarely get far enough west to affect oil production; hurricane season ends about a month early for the central and western gulf. The late-season eastern bias is even more pronounced if one counts landfalls, as late storms almost invariably turn east before they cross the coast.

The numbers indicate that on average there are two storms per year that could have some affect on oil and gas production. This includes tropical storms and category 1 or 2 hurricanes which may only have a trivial affect. The worst case scenario for oil production would be for a strong storm to hit the Texas coast early in the season, in June, because that would disrupt supplies throughout most of the peak driving season.

There are three ways tropical systems affect oil production in the Gulf of Mexico area. First, when there is a threat that a system may move into the Gulf, oil companies will evacuate their personnel working on off-shore platforms. When the threat passes, the workers will return. This ritual is fairly common and tends to cause only a minor delay in oil production. This is a pure delay; there is no loss, as all the oil that was going to be extracted will still be extracted. Second, a strong hurricane can damage offshore oil platforms, pipelines, and other equipment. This happened in 2004 with Hurricane Ivan and in 2005 with Hurricanes Katrina and Rita. In this case, the delay in oil extraction can be very severe, lasting for many months as repairs are made. Hurricane Ivan caused a reduction in oil extraction of about 400,000 barrels per day, and it took several months to return to near the pre-storm level. The hurricane Katrina-Rita combo knocked out more than 1 million barrels per day, and depending on how production is measured, we never completely recovered. Also, there is a certain level of permanent loss of oil production, as oil companies will not make costly repairs to some installations if the rate of oil remaining to be extracted is no longer very high. In the case of Katrina and Rita, some oil extraction capability was permanently lost. Third, hurricanes that make landfall in Louisiana or Texas can damage the heavy oil industry infrastructure which is concentrated in those states. This also happened with the Katrina-Rita combo, with a number of refineries and port installations damaged.

Hurricanes impact natural gas production as well as oil production in a way that is either more or less severe than oil, depending on how we measure it. The percentage of U.S. natural gas production that is based in the Gulf of Mexico is only about half as high as the oil production. However, most of U.S. oil consumption is met by imports, while most of U.S. natural gas consumption is met by domestic production.

As of this week, water in the Gulf of Mexico has warmed up enough to where it is marginally able to support hurricane formation:
The threshold is considered to be about 26.5 degrees centigrade, or 80 degrees Fahrenheit. It will continue to get warmer through August. The adjacent northwest Caribbean Sea is warmer still, and a lot of storms originate there.

On an anecdotal level, I live in Southeast Houston about five miles from Galveston Bay. We haven’t had a major hurricane hit here since Hurricane Alicia in 1983. Statistically, we have gone longer than average without a major storm. Alicia was bad, but she barely reached category 3 just before landfall. Since then, we had minor category 1 hurricanes Jerry and Chantal in 1989, and a major flood-inducing Tropical Storm Allison a few years back. People here had a horrible experience trying to evacuate from Hurricane Rita in 2005. Rita curved east all the way to the Texas-Louisiana border, but many of my friends and neighbors were stuck on the freeway for more than 24 hours (I left a day early and it wasn’t too bad). We have an enormous oil and chemical industry here. Also, so much housing and business infrastructure has been built along the coastline recently that any hurricane strike is sure to hit us hard economically. I went to the Kemah boardwalk area last week, all of it rapidly built up over the last 20 years, and they are now building a roller coater 30 yards from the water.

Looks like the # makings for "Hubberts Hurricane Curve".

Eyeballing the data it looks like an approximation of a bell curve, probably because the total number of storms per season follows that same bell curve. I don't think there is anything unusual there. It just basically confirms that it is normal for that part of the gulf to see such storms a few times per year.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett

It is indeed roughly a bell curve. The wrinkle of a slight decrease in storms in early July as compared to June also shows up in counts of overall storms; it is not a coincidence limited to storms in the Gulf of Mexico. I think this happens because in June you get some frontal systems that move northwest to southeast across the U.S. and stall out in the tropics. The remnants of those systems can develop into tropical storms. By July, most frontal systems will not come that far south.

OK this leads me to the next question, If this looks roughly like a bell curve then how do oil prices and oil futures match up?
That would be very interesting to see how much of "Peak Hurricane" fits into pricing? I not savy in the least with charts and thier posting so maybe someone who is good at it(?)

The worst case scenario for oil production would be for a strong storm to hit the Texas coast early in the season, in June, because that would disrupt supplies throughout most of the peak driving season

IMHO, the best time would be early June, because stocks would be highest and discretionary summer driving can simply be eliminated. Use cannot exceed supply. (Remember KSA did not "fill the gap" after Katrina/Rita). Mid-September would be worse because stocks would be lower and, unless "going to school" fuel becomes discretionary (it might) there is less discretionary driving to defer.

Post-Peak Oil, the USA is not going to "make up" for shortfalls just by importing more. KSA is cutting back, so is Mexico and the North Sea. We may have to claw our way back to decent inventory levels by extremely painful conservation (recession).

The worst path would be an East to West track (Cat 4 or 5) with the eye passing 70 to 100 miles south of Plaquemines Parish (the tip of Louisiana) and then turning up the into Galveston and forcing a large storm surge up the Houston Ship Channel, flooding all the refineries and petrochemical plants with several feet of salt water.

Best Hopes for weak hurricanes,


Russia's Novosti reports (story above, "Oil, industrial production grow 4.2%, 7.5% in 1Q07"), that oil output in Russia grew 4.2% in first quarter 2007 year-on-year to about 890 million bbls ... Domestic crude sales in 1Q07 grew 6.5% to 413 million bbls, and exports edged up 3% to 464 million bbls.

Domestic up 6.5%, exports up 3% -- Looks like another vindication for the export land model.
Rex Tillerson says "the world’s oil would not run out in his lifetime". Means nothing... Rex doesn't buy green bananas.

According to the EIA, Russia has basically been on a plateau since October, 2006, at least for C+C around 9.5 mbpd or less.

As you probably know, Russia showed a year over year decline in net exports, from 2005 to 2006 (annual average, EIA).

Relative to the fourth quarter of 2006, I suspect that Russian oil exports are continuing to decline as production is more or less flat and as consumption skyrockets. And I expect Russian oil production to start declining no later than next year, probably this year.

Haven't had much time to read thru TOD yet today but has anyone linked to the study suggesting that the Southern Ocean has become saturated with carbon dioxide ?

I saw the story on cnn.com but can't link to it right now...

This does not appear to be good news on the climate change front...

Southern Ocean already losing ability to absorb CO2

One of the world's largest carbon sinks has stopped soaking up the carbon dioxide that humans are pumping into the atmosphere, according to a new study.

Global warming has caused the Southern Ocean to become windier, churning up the waters so that they are unable to absorb CO2 at the rate we produce it, the researchers say.

The implications are far-reaching, and once more imply that the Intergovernmental Panel on Climate Change's projections are conservative: temperatures are likely to rise higher than predicted.

Corinne Le Quéré at the University of East Anglia in the UK, and colleagues say their study suggests that climate feedback loops – whereby more CO2 in the atmosphere causes warming which in turn releases even more CO2 from the oceans – are happening between 20 and 40 years before they were expected.

The increasing acidity of the oceans caused by CO2 makes it impossible for many life-forms, like pteropods, to form their skeletons/shells.

It will cause a huge wipe-out of what remains alive in the waters.

More good news on the environment, the modern version of the story of the birds and the bees:

West Nile wipes out North American birds

HUNDREDS of thousands of birds that once flourished in American suburban skies - including robins, blue jays, bluebirds and crows - have been killed by West Nile virus, according to a new study.

Populations of several species have had dramatic declines across the continent since West Nile first emerged in the United States in 1999, according to research, which has quantified the effect on bird populations for the first time.

Crows were particularly badly affected with some flocks wiped out. In the area around the US capital, Washington DC, 90 per cent of crows have died.

It is estimated that the death toll for two species, crows and jays, is easily in the hundreds of thousands, based on the number of dead bodies found and extrapolated for those not reported.

The research, to be published today by the journal Nature, compared 26 years of bird breeding surveys to quantify what had been known anecdotally.

"We're seeing a serious impact," said the study's co-author Marm Kilpatrick, a senior research scientist at the Consortium of Conservation Medicine in New York.

West Nile Virus, which is spread by mosquito bites, has infected 23,974 people in the US and killed 962 of them since 1999, according to the Centres for Disease Control and Prevention.

Global warming has caused the Southern Ocean to become windier, churning up the waters so that they are unable to absorb CO2 at the rate we produce it, the researchers say.

When I did science at university, one shook up a liquid to help it absorb gas. I do not see why a choopy surface would not do the same.

More and more, I am coming to suspect that the science behind global warming (I do not say the global warming industry - but perhaps I should) is suspect, at least.

Since temperatures have been rising for 250 years, and CO2 for a mere 50, there must be some other causes for global warming, other than CO2, as well

"I do not see why a choopy surface would not do the same."

Try reading the article before calling it bogus.

"The Earth’s carbon sinks absorb about half of all human-produced carbon emissions. The Southern Ocean is one of the biggest sinks, absorbing 15% of CO2 emissions. The gas dissolves into the ocean's surface waters and is stored at cool depths where it is retained far longer than it would be at the warmer surface.

But since 1958, the Southern Ocean has become windier, mixing up the ocean waters and bringing the cool, carbon-laden waters up to the surface, where they release their gas into the atmosphere.

Le Quéré's team found that this is effectively saturating the Southern Ocean reservoir, so that it is unable to absorb CO2 as quickly as it is being emitted by human activities."

Global warming has caused the Southern Ocean to become windier

I find this strange since another person and I have independently concluded that the 'Roaring Forties' are weaker in 2007.

This is not the only relevant wind in the SH troposphere. The zonally symmetric component is "weakening" as the zonally asymmetric component associated with baroclinic eddies is increasing. The question is how much of the ocean surface is experiencing additional wind stress.

Farly big move up in crude this morning, whats up, more Nigeria fears?

Peak oil.

Coupled with Peak Panic.

Brent crude closed above $70 today.

well for one thing opec announced that they would not be increasing quotas.

Water-fueled engine appears on the horizon


This is on the front page of eetimes.com which is read by engineers. If the date was April 1, I could understand why I am seeing this. Oh, the absurdity of this, it just fries my poor mind.


I think you are jumping the gun here… there are several things wrong with the article but not what you I suspect you are thinking. It isn’t a “water-powered car”.

Firstly, the headline should really read “Zinc fuelled car"... since it requires 1 pound of zinc for every km!! The process is not dissimilar to the Zinc-Air Fuel Cell that E-P has promoted. (and where he uses bio-charcoal to reduce the ZnO back to Zn)

Secondly, I would also take issue with the”2 kW from one pound of zinc”… I can see how you might get so much energy from one pound of zinc… but the power available surely depends on how fast you pump the H2 into the (appropriately sized) ICE or FC…

Thirdly, it’s going to be pretty damned heavy… if a similar mass of water of water is also required. Zn + H2O = > etc

And finally, surely one would hope that the Hydrogen FC would be 2-3 times more efficient than a Hydrogen-fueled ICE… hence much less Zn (& water) needed for FC version?

Zinc? Zinc? Whazzat? Is this link a Web kaleidoscope? Or did you read it? The article it fetches up for me says aluminum-gallium alloy. No zinc. Not even the kitchen zinc :P

And I guess the headline writer just followed the reporter, who did write (emphasis added):

Woodall claims that several industrial process problems need to be solved before the water-fueled engine can become commercially viable.


Sorry about that... my brain got stuck on the similarity with Zn-Air!!!

(And it's not even time for the first drink of the evening out here in BC...

But my points still stand...

Anyway... Zn or Al... the principle is the same... or as Baldrick said... "Irony... isn't that just like coppery or bronzy..."

Yeah, I don't doubt that this reaction actually takes place. Conceivable it might even have some practical use, though I am very dubious about any use of gallium. But there is not even the hint in this article about the efficiency of any kind of complete cycle. And of course the "water-fueled" bit is priceless. I suppose an electric or hybrid vehicle that uses lead-acid batteries is also water-fueled. Turns out we've all been driving water-fueled vehicles all along, but we just didn't realize it!

That an engineering news source could publish something like this. OK, electrical engineers might be a bit slow in the chemistry department. But just a couple moments of thinking, please! To me it is just a sign of desparation, that people would grasp at such a flimsy straw as this.

Woodall claims that several industrial process problems need to be solved before the water-fueled engine can become commercially viable. But eventually, he said, it could be used both in engines that burn the hydrogen directly and to charge up hydrogen fuel cells.

Industrial process problems, indeed. ROTFL. And let's see, first we smelt aluminum, then we use it to displace hydrogen from water. Yowza, it must be an archetype of conversion efficiency too.

For a 350-mile trip in an automobile, it would take about 350 pounds of aluminum at a cost of about $60, since the aluminum oxide left over after the reaction could be converted back into aluminum-gallium pellets for reuse.

Transmutation of elements? No, just what happens when a reporter gets hold of a science story. After all EE Times means Electrical Engineering, not Chemical. Not to worry though - whatever the professor really did, all the gallium in the world would probably not scale it up very far anyhow.

What about Volcanic power? Or Geothermal?

If one was to design a power source to last for 10,000 years this would be it.

Why yes you're correct!

If one taps into the eternal heat comingup from the core then one can have a power source that will never go down.

And if we engineer it like the Pyramids (which have lasted 5000 yrs) we wouldn't need to keep building new ones. On the same line we should enginner a nuclear reactor that can sustain itself for 1000 yrs minimum. We aren't thinking long term here.

i read in an editorial from 321energy.com that China is graduating 40,000 geology majors a year, while the USA is graduating 500 a year. So, China is soon to flood the market with geologists, that is sure to drive the salaries down.

on a down note: The USA is graduating 40,000 Lawyers per year, while China is graduating approx 500 lawyers per year.

anybody read this?


On a side note: Amnesty is the new word of the day, any bets that Mexico will be in worse shape in a year or two? than today? Soon they will lose all the $$$millions being sent over, and Mexico oil exports will drop off each succeeding year. I can't help but think that this amnesty will do Mexico more harm than good.



I am sure that there is at least some contingent of the posters on TOD who would love to see me have to eat crow. Now, I am not feeling picked on, I am sure that can be said about any long time poster on TOD who has been opinionated and expressed strong views here. The contingent of posters who differ with them wait for the day when they blow it, and are just outright demonstrably wrong about something, the bigger the the wrong the better, and get to see their adversary have to back up a bit and get their comeuppance.

But, if your going to have to eat crow, and your gutsy enough to admit your having to eat crow, you might as well get something out of it. At least then there is a bit of satisfaction with being wrong.

So says Roger Conner Jr., the man who has written several well involved, long and well researched posts over the last several months proclaiming that Diesel fuel prices would not again anytime in the near future go lower than gasoline prices by any noticeable margin, and probably would not even be able to match gasoline prices per gallon with the advent of ULSD (Ultra Low Sulfur Diesel). This was based on the problem of increasing consumption of natural gas in the "de-sulfuring" process, and the fact that Diesel fuel was now a "bi-fuel" in the effect that it relied on pricing and supply of both crude oil and natural gas to become a marketable commodity.

Tonight, as I filled up the ancient but still trusty 1981 Mercedes Benz Diesel 240D stick shift, I looked up at the price board.

Diesel 2.74
Reg. Gasoline 3.19
Mid Grade 3.24
Premium 3.29

Yep, time to eat crow....but if you have to eat crow, what a fun way to do it!

The question remains however: (a) Where did I get it so wrong? and (b) What does the future hold?

First, to this day I still have not been able to find reliable numbers on exactly how much natural gas is required to de-sulfur Diesel fuel.

The EPA says that as the PPM (part per million) count of sulfur comes down, the volume of hydrogen used in the de-sulfuring process has to go up. The capital costs of the de-sulfuring units has been pretty much amortized by now, or the costs are already figured into the price of Diesel, but the hydrogen (i.e., natural gas) costs are continuing.

Natural gas is as of today just over $8.00 per mm/btu. While not cheap, the worst case scenarios of a return to ten dollar plus natural gas have not come to pass as of yet. The deciding factor on natural gas is weather. With mild summers and relatively warm winters, and, this is BIG, no major hurricane damage in the Gulf, natural gas seems able to hold at below $10.00 per mm/btu for sometime into the future.

But the pressure on the demand side is increasing. If coal is now considered the most evil of fuels, and from the viewpoint of carbon release, it surely is, the power provided by coal must be replaced by something. Right now, that something is natural gas. The natural gas demand will only increase in the tar sands of Canada, the distilling of grain for ethanol, and the production of fertilizer for the crops to create ethanol. The long range outlook on North American natural gas prices is bullish.

But, the refinery industry seems to have fell on it's face in refinery capacity. Oh, of course you will say, it's not all the refinery industries fault, there are regulatory issues, environmental blocks, red tape, but the end result remains the same: The refinery industry simply cannot or will not make the commitment needed to assure ample gasoline supplies. And gasoline demand is climbing faster than Diesel demand. It must also be pointed out that bio-Diesel simply does not entail the BTU per volume loss of heat content that ethanol does in comparison to gasoline.

Right now, Diesel looks ducky, and Diesel drivers are having a field day, getting better mileage and paying some 10% to 15% less for fuel than gasoline vehicle drivers.

How long will it last? That depends first on how quickly and easily the refiners can shift the mix of production away from Diesel and over to gasoline. One must presume they are already making the effort to rebalance the mix to the high mark up and greatly in demand gasoline. I would defer to people in the industry such as Robert Rapier to fill in any details. But, surprisingly, the change in mix does not seem to be occurring yet. Why?

Can it be that spare capacity simply in Diesel simply isn't there? While Diesel stocks are not to the critical level gasoline stocks are, no one seems to be saying that we are up to our eyes in Diesel either. It may be that any major rebalancing would simply run the risk of moving a gasoline shortage over to becoming a Diesel fuel shortage, that the refineries are simply maxed out on all fronts. If that is true, then the crucial issue becomes demand.

On this, Diesel has more room to give. Most gasoline consumption comes from the individual motorist. Diesel however is consumed in large part by industrial and commercial interests, who have a vested interest in reducing waste, and teams of technicians working on the job. Restructuring of transport methods, routes, and pricing can have a fairly large impact of Diesel consumption in a short period of time. Moving shipping to rail, and rationalizing routes could make a sizable difference.

Improvements in Diesel highway transport is already well underway. WalMart, FedEx, UPS and others are already developing advanced tractor trailers and haulage vans that are far more efficient than older models.

The big issue facing Diesel now is environmental legislation. As of this moment, there is only one passenger car sold in America with a Diesel engine, that being a mid size Mercedes Benz Diesel. And the rules on Diesel engines are only going to get tighter with each passing year.
As efficiency gets higher for gasoline autos and hybrid electric cars, Diesel fuel could find itself in an ironic place indeed: Plenty of fuel, but nothing to burn it in! If there is continued growth in the bio-Diesel industry, this situation could become even more pronounced.

So, what's a poor boy to do?

Well, there are a lot of Diesel vehicles out there on the used market, and if one is looking in the near future (say 3 to 5 years) a nice clean used Diesel may be the way to beat the summertime gasoline demand spike. Gasoline demand goes completely idiotic, as the American people now see the summer drives (plural, it used to be one nice vacation in the summer, many people now do several) as a ritualistic rite between Memorial Day and Labor Day.
A nice drive in a Diesel sedan, but a bit shorter to some select locales begins to look not like a waste, but almost an exercise in zen like restraint.

Think of the clatter as part of the aesthetic experience.

For me, the man who almost proclaimed Diesel as dead, there is the added joy of witnessing a bit of resurrection, complete with a gourmet helping of crow to further enhance the experience. Eating crow, as a connoisseur.

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

…Diesel fuel prices would not again anytime in the near future go lower than gasoline prices by any noticeable margin…

Well, in fairness to your prognostication, it has a lot more to do with gasoline “going higher” than diesel going lower.

The refinery industry simply cannot or will not make the commitment needed to assure ample gasoline supplies.

I am going to address this in an upcoming post. A lot of new capacity has been added. It’s just that demand growth has been so strong.

One other thing I might mention, in relation to your comments on ULSD, is that refiners have had to direct a lot of capital at this, as well as ULSG. Furthermore, making the low sulfur grades – which I am certainly in favor of – increases the refinery complexity. So, more parts to break.

One must presume they are already making the effort to rebalance the mix to the high mark up and greatly in demand gasoline.

I can hear them scrambling to do so now, and you will probably see this reflected in the diesel price before long. But yes, I would expect them to shift their production toward gasoline to the extent that their diesel comments allow it.

Picked on? Not by me.

I just don't read such long posts.

RC - A correction I might add. We just picked up a new 06' diesel jetta. VW produced more to sell in 07 while they reconfigure for 1 more piston, 10 more hp, as less economy and less emmisions for 08.
I would agree however that you are correct in that diesels are hard to find. MB & VW were the only ones we found, volvo(?) BMW(?) in passenger cars. MB 2x $ of VW. WT's post about not having your head sticking out of the sand if the economy turns south also factored in(lime green cammo volvo w/green peace stickers). We love the jetta, very roomy. I have a rather large frame being 6'6" and 250 lbs so was pleased to fit(!!). @ 40 mpg but haven't filled it up more that twice. Has a gauge that gives constant feedback on your driving style and resultant MPG. The competition is on to see who can drive most efficiently (current record holder is my wife with 60.3 mpg IF the gauge is working accurately)

I find the D/G spread interesting as well, with no complaints. I wonder if we are being led toward diesel(conspiracy???). Diesels are more popular in europe, and the very limited ammount I read on bio-fuels makes diesel looks easier(?). So if we want the US to become more fuel self suficient then does it make sense to have a price incentive toward diesel vechiles( more conspiracy!)

I suspect as you do that diesel is bussness and goods related in its use. I still don't understand the reason for the spread.

As of this moment, there is only one passenger car sold in America with a Diesel engine, that being a mid size Mercedes Benz Diesel.

VW tdi?

A few comments.

We both, as most TOD readers know, drive stick shift 1982 Mercedes Benz 240Ds (mine is white, with sunroof and much lower mileage).

I expect diesel < gasoline to last just for this summer (baring any major oil supply interruption). And then a return to a small premium for diesel.

I wonder if 0.0015% sulfur diesel takes much more NG to remove sulfur than 0.05% sulfur diesel (pre-June 1, 2006 road diesel). It would seem that getting from ~1% to 0.05% sulfur would take most of the NG and the extra step to 0.0015% would not be a major consumer.

Does anyone know ?

My key is minimal miles traveled. Currently 6 gallons/month @ 30 to 31 mpg in the city. I could cut back to 3 or so gallons without undue effort or sacrifice (hurricane evacs excepted). With a 17.x gallon tank, I typically fill up every 2.5 months or when I happen to drive by my favorite truck stop (more often in hurricane season). Add three 5 qt oil jugs converted to diesel fuel containers, and I can get by for 6 months if I have to.

IMHO, TPTB will tilt towards diesel production in an emergency due to the essential nature of most diesel usage. And I can throw in vegetable oils, filtered waste engine oil (do not drive behind me when I am burning that), new or old ATF fluid or hydraulic fluid if need be (all better if mixed with conventional diesel). And diesel does not run out as quickly as gasoline in an emergency or a panic (most diesel users are high mileage and fill up frequently anyway).

I may have 30 years of driving left for me (I am 53). Baring an accident, I hope that my current car will be my last car. I chose it as the one to last me through post-Peak Oil. Perhaps not a perfect choice, but the best available IMHO in my circumstances.

Best Hopes for old diesel M-B,


I am guessing that the amount of NG to desulphurize the diesel is only slightly higher. Before ULSD, we had LSD - about 500ppm sulphur. But if they don't try and remove sulphur at all, you end up with off-road diesel, which can run in the thousands of ppm.

If you look at the EIA pages for diesel, you can see that the production of >500ppm diesel is starting to decrease now - the next phase of desulphurization is to take place June 1 where much of the marine, locomotive, and off-road diesel must be <500ppm.