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DrumBeat: May 21, 2007
Posted by Robert Rapier on May 21, 2007 - 9:05am
Note: Leanan is on vacation, but I just realized I have the power to edit these Drumbeats. I won't be posting the extensive stories she posts, but I may throw a few out there before they take my power away. :-) RR
Gas prices: Worse than '81 oil shock
Gas now at highest level, even adjusted for inflation; AAA's reading of nearly $3.20 a gallon marks ninth straight record high in current dollars. Gasoline prices soared to levels never seen before as even the inflation-adjusted price for a gallon of unleaded topped the 1981 record spike in price that had stood for 26 years.
Note: I don't know how many times I have told people that my opposition to corn ethanol has nothing to do with my employer. As I have pointed out, my employer is one of the largest natural gas producers in the U.S. As illustrated in the next story, the ethanol boom is great for natural gas producers. RR
7 ways to invest in the oil boom
Historically, gas markets have been tied to seasonal demand for heating and cooling. Prices rose in winter and summer and fell in the spring and fall. This spring, however, gas prices have held up unexpectedly well, with prices staying near $7.50 per million BTUs. A key driver has been commercial and industrial demand, up 8 percent in January and February, according to the Energy Information Administration.
One surprising explanation is the ethanol boom. Most of the new ethanol plants dotting the Midwest are gas-fired. In addition, corn growers are using much more fertilizer, which is produced using natural gas. "That's why we're seeing $7-plus natural gas now," says Parlanti. XTO, an independent gas producer, has a P/E of 12 and is projected to increase profits 11 percent this year.
Tough decisions to ensure a low-carbon world
There is a sense of total unreality in our public rhetoric. We are continually reminded we have never had it so good - the economy is doing splendidly, the stockmarket is booming and employment is at full stretch after 15 years of growth.
At the same time we are looking at the most serious issue to confront humanity in centuries - human-induced climate change - largely caused by the unsustainable energy consumption and exports on which our prosperity is based. After years of denial, we are beginning to accept this reality and seek solutions.
Iraq's Oil Law Gives International Oil Companies Too Much -VP
Iraq's Vice President Tariq Al Hashimi said Sunday he opposes a draft oil law that is crucial to Iraq's future because it gives too many concessions to international oil companies and the country's regions. "We disagree with the production sharing agreement," Al Hashimi told Dow Jones. "We want foreign oil companies but not with big privileges."
The Energy Report for Monday, May 21, 2007
Talk about a gasoline pop top. All those people saying that gasoline had already topped got popped in last week's explosive gasoline market. With the country running on fumes for supply and another bad week for refiners with outages, (or good luck if you look at it from the profit angle) the market seems to be adjusting to its bullish destiny.
This week I expect crude oil supply to be down 2.0 million barrels. As for gasoline I'm looking for an increase of 1.5 million barrels and I am looking for distillates to be up 1.0 MB with refinery runs up 0.5%. Refineries had a run of bad luck last week. Are we in for more this week?
Brazilian Biofuels Can Meet World Gasoline Demand - Expert
Currently, Brazil uses only 0.8% of its entire territory (8.5 million square kilometres) for the production of biofuels - an insignificant patch of land, so to speak. But if it were to cultivate energy crops for biofuels on a quarter of its territory (around 212 million hectares), the country could supply the entire world's current gasoline needs (which stand at around 24 million barrels per day).
Valero can't win with regulators
Southern California air-quality regulators are fining Valero Energy Corp. $5,000 a day because the San Antonio-based company delayed upgrades to its Wilmington refinery — at the request of California energy officials.
Although the state badly needs more fuel production, the few refinery expansion projects on the drawing board face fierce neighborhood opposition and California's new goals for reducing greenhouse-gas emissions. Similar conflicts are becoming acute at the state's ports, the only lifeline to outside supplies of crude oil and gasoline.
Biofuels Producers See Big Barriers To Targets Set By Bush
"I've yet to meet anyone who thinks more than half could be from ethanol and biodiesel," Pearce Hammond, an analyst at Simmons & Co. International, said of the targets. He said total production of ethanol and biodiesel could reach 17.5 million gallons by 2017. Hammond said there could be other solutions to the conundrum, such as coal-to-liquids technology or the use of natural gas as a transportation fuel. But Hammond, who emceed some of the sessions Friday, also warned that U.S. gasoline demand is forecast to grow by some 35 million gallons a day over the next decade.
Oil steadies as US crude backlog offsets worries over Nigerian output
US refinery outages have caused a backlog of crude oil in Cushing, Oklahoma, arguably the most significant trading hub for crude oil in North America, sending US crude prices lower despite continued fears of gasoline shortages when the peak US summer driving season begins this weekend.
Expert: "Peak oil" will force changes
Pahl maintains that the most critical -- and under-reported -- issue facing the world right now is that we're approaching the time of "peak oil," the historic moment when world oil production and reserves begin to decline.
Retail gasoline prices set new record
A gallon of regular unleaded costs an average of $3.196, up from $3.178 on Sunday, according to AAA and Oil Price Information Service.
Crude Oil Rebounds, Climbs Above $65 on US Gasoline Concern
Crude oil climbed above $65 a barrel in New York amid concern the U.S. won't have enough gasoline when the summer driving season starts next week.
[Instead of posting the following as a stand-alone TOD essay, I will just throw a link here in the Drumbeat. I have received a response from Professor Jacobson, and I will post it tomorrow. RR]
The NRDC specifically sent out a "debunking Mark Jacobson" memo. Why would an environmental organization disagree with him? He has heckled me at my speeches for a while and when somebody asked him why he told them that he was upset that biofuels were taking away funding from wind research.
Here's one from me - SS:
General Electric to Sell Plastics Division
General Electric agreed today to sell its plastics division for $11.6 billion to the largest public company in Saudi Arabia, the Saudi Basic Industries Corporation.
...
Most analysts quickly honed in on Sabic, because of its access to Saudi Arabia’s vast petroleum supplies. After all, it was the ever-rising cost of benzene, a petroleum derivative and a key raw material for G.E.’s plastics products, that had sucked the profitability out of the unit for G.E. A company like Sabic, with an inexpensive and inexhaustible supply of benzene could far more easily turn a profit.
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Found this from urbansurvival.com
http://www.urbansurvival.com/week.htm
Plateu anyone?
A steep short sweet plateau....
I know a lot of people still may think PO is not here yet.
But at the beginning of such a plateau, someone somewhere must start reducing demand if other countries continue to grow. US, and Chinese demand is still growing, as an example.
So, the effects of Peak Oil are already rippling thru the third world - Parts of Africa, Asia, South and Central America.
The longer the plateau, the further up the ladder the forced conservation/demand destruction climbs.
This is reconciled against the OECD (rich countries) continuing to draw down stockpiles at a rate of almost 1MMBPD (930kbpd April). They are just deferring the climb a short while (delaying the next major bidding round) but not for long.
Hi peakTO, here is where US gets the extra oil form, Reuters-senegal , feeling guilty ?
The other day (2 days ?) they prompted Senegal has ONLY 1 week worth of diesel (fuel) to run their entire national electricity supplies..... full blackout is in the comming
Senegal are tasting the fruits of soaring fuel-costs and have "peak-oil (money-wise) in the corner of their eyes ...."
The Guinea had similar issues some time back - and it is not going away ...
A pumpkin is ONLY so big -
Just watch the MSM blank this one for a while!
Wall Street Journal 18 May:
The impact of today's energy crunch on the poor is plain in rich nations such as America: Expensive gasoline and soaring heating bills make a hard life harder. In impoverished countries such as Guinea, where per capita income is just $370 a year and surging gasoline prices have helped spark bloody riots, the energy shock has become a matter of life and death.
Global demand for oil has soared in recent years, pushing international prices to record levels. Despite a recent decline, a barrel of crude still costs about double what it did three years ago. The most powerful energy-importing nations have responded by proclaiming energy security a top policy goal. President Bush has vowed to wean America off its "addiction" to oil. The U.S. is mobilizing more ships and soldiers to protect supply lines, while Beijing is scrambling to buy oil fields from Asia to Africa.
While robust economies like America and China are withstanding the shock, the poorest countries aren't. Increasingly they can't afford to slake their citizens' thirst for petroleum -- breeding another form of energy insecurity. The pressure threatens to undermine economies and sow domestic strife, further unsettling shaky regions and presenting fresh worries for policy makers in the West. In addition to Guinea, Nepal, Yemen, Iraq and Indonesia all have been rocked by fuel protests in the past two years.
From Saildog - I picked this up from another thread here on TOD to drop into another post on FMNN (there are some real nutters over there) - so thanks to whom ever it was who originally posted it!
The 4% projected growth and 8 mbpd shortfall? Talk about selection bias. How about projecting the long term growth of 1.5% instead of selecting the high growth rate coming out of a recession. This leaves only a 2.5mbpd shortfall, roughly 3% of demand. Doubling the price of crude oil resulted in a 3% decrease in demand, how shocking!
Let's state your proposition the other way around - a 3% shortfall in meeting demand caused a doubling in price. What will another 3% shortfall cause? And another? And another?
Also, you are nitpicking. It's still exponential growth. A 4% projected growth rate results in doubling of demand in 17.5 years. A 1.5% projected growth rate results in doubling of demand in 46 years. Do you seriously think petroleum production can grow to 170 million barrels per day by 2053?
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
>Let's state your proposition the other way around - a 3% shortfall in meeting demand caused a doubling in price. What will another 3% shortfall cause? And another? And another?
It won't be linear. Once past peak production, economic growth will slow or end. This will put a crimp on demand growth. Thus the price of oil will not go to infinitely as supply slowly dwindles to zero.
"The 4% projected growth and 8 mbpd shortfall? Talk about selection bias."
Yeah, you see a lot of that type of nonsense. The problem is that it completely undercuts what is a serious problem. The fossil fuel crisis is real, but anyone with half a brain sees that type of stuff, shakes their head and turns away....move along, nothing to be seen here....
The same true of picking out these third world Diesel crisis situations and using them as some kind of evidence about the world geological oil situation.
Many of these countries have cartels that control Diesel, no home market refining of Diesel, and enough graft and corruption to bleed even a strong nation to death. How they do as well as they do is evidence of the power of human spirit and ingenuity. Half of these countries had blackout and brownout on an ongoing basis right through the '80's and 90's when fuel was givaway in the developed nations. We will leave aside the fact that many of these nations sit on the south Asian land mass or Africa, which EXPORTS oil and natural gas while the locals sit in the dark (there is a reason that developed nations went to natural gas for electric power production)
On and on the idiocy goes....as I sit writing this post, the local TV news in Louisville is interviewing people about the effect of the gasoline price....a restaurant owner is saying that he has had to raise prices due to the cost of food deliveries to his restaurant going up....."and sure, it's part of the run up in gasoline....", he says. (!!!) Are food delivery trucks back to running on gasoline now....?
(When I was in the auto service trade, we serviced food delivery trucks, tires oil changes etc., and everyone I was was running Diesel fuel)
Anytime you have a price move in anything, it goes with out saying that every grafter in the country will use it as an excuse to try to tack on and ride the coattails....they know that most Americans have no idea what kind of fuel is used in trucks, trains, barges, tractor trailers, and cargo aircraft....
and the band plays on.....
RC
Remember, we are only one cubic mile from freedom
edit: Accidental double post-second one edited out!
Doubling the price of crude oil resulted in a 3% decrease in demand, how shocking!
that was the 3% that poorer countries couldn't afford...
Sure looks like it. John
Plateu anyone?
Of course if you extend that graph back a few more years, you will see several of those.
I have to keep reminding myself of that fact because I have never watched production (I mean extraction) as closely before. But things just feel so 'peakish' of late. Over the next couple of weeks I'm going to try and find a Canadian Energy Trust with a good reserve life index:)
I own Enerplus Resources Fund (ERF). Any recommendations for other CanRoys?
Great investment.
Wow!.. that's the one that currently has my fancy. I don't have the data with me but I seem to recall that ERF has a > 13 year RLI?
Peyto has 23 years of proven reserves, 40 years if you include possible. But yes, Enerplus is my second choice, COS being the third.
My favorites are Canadian Oil Sands (COSWF.PK), Enerplus (ERF), and Penn West (PWE), in that order of preference.
I would be careful about piling into energy at this stage.
IMHO we are close to the end of a very big bubble which when it pops will take down ALL asset markets including energy. Energy may well recover but you may have a wild ride.
Have we ever been this far into a plateau before with these economic conditions - rising prices and continued flat production? And with little sign of significant growth in production and no sign of any respite in prices? The economic conditions surrounding this plateau look unique to me at first glance.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
And weren't all the other plateau's secondary to war, embargo's, and economic slow-downs?
"And weren't all the other plateau's secondary to war, embargo's, and economic slow-downs?"
That's normally true, and luckily we are not in any wars right now.....DOH! :-(
Forgot about those two in Afghnanistan and Iraq....oh well, at least everything is quite on Israeli/Palastinian front....DOH! forgot about that Lebenonese thing...
Well at least all is peaceful in the producing countries and we are getting along good with everybody there...DOH! :-(
o.k., so Nigeria and Venesuala might not be exactly perfect....
oh, and can you spell "I-R-A-N" boys and girls...ahhhh, feels like old times, wasn't the last big production collapse when things weren't going so well in Iran and Iraq (blue arrow, link below)
http://www.grinningplanet.com/2005/06-14/2-peak-oil-copyright1.gif
....the 1970's are chic again, fire up the Fleetwood Mac soundtrack
"Don't stop, thinkin' about tomorrow, don't stop, it will sooon be here...."
"It'll be better than before, yesterdays gone, yesterdays gone...."
RC
Remember, we are only one cubic mile from freedom
I fail to see the point in stating above-ground factors are producing an artificial "undulating plateaux" and then peak rather than geological. In a perfect world only the geology matters, but in reality saying "Well, geo-politics is screwing us over, but it's okay, we've not run past the halfway mark yet!" is beside the point. Much like saying we've not run off the cliff yet, so it's okay the accelerator pedal's stuck.
Either way, harsh times are coming to us and are already affecting many others. Unless someone can magick away the problems in Nigeria, Iran, Iraq and so on, the point is moot. A bottleneck exists and the world is failing to meet expected growth without cutbacks somewhere helping others grow instead.
Admiral Valdemar,
This is a discussion we have long had here at TOD:
The difference in implications and effects between
(a) logistical peak
(b) geological peak
The easiest to show is the effect of the 1970's/early "80's peak and massive drop in production (note the green arrow in the oil production history chart in my other post). This was a logistical peak.
After the logistical situation changed, (and it always will) the world was hit by a flood of cheap oil that basically sent the energy industry, both conventional and alternative energy, into a total crash.
Had the peak and production collapse of the 1970's been geological, or permanent, the long term investment situation and energy development structure of the world would of course been completely different.
Here is the issue: If the current peak is geological and permanent, then investments in energy, both conventional and alternative, are sure fire winners, and plannning for permanent high oil prices is prudent.
But, if the peak is logistical, above ground and not geological in nature, the danger looms large of a price meltdown, and subsequent energy investment wipeout is fully possible.
In the 1970's, many percieved the peak and production drop to be permanent, and invested accordingly, in speculative energy ventures and alternative energy schemes.
They were wiped out. People who invested the best early years of their careers in the belief that alternative energy would soon be needed desperately lost everything. I remember people who went into alternative energy as a patriotic calling in the 1970's because they felt bringing down oil consumption was absolutely imperative to the survival of the nation.
By 1982, the oil price went into crash, and these young technicians and small firms were left with no market, as even the Reagan administration, in a direct slap in the face to the alternative energy industry tore the solar panels off the White House and slashed research in energy conservation and alternatives to nothing.
The point: If people misread the timing, and misread the difference between a logistical peak and a geological peak, they can mis-invest accordingly and be wiped out. Trying to understand whether this is a geological peak, or a 1970's type logistical (above ground peak is absolutely critical in personal planning and investment.
Roger Conner Jr.
Remember, we are only one cubic mile from freedom
So, what you are saying ThatsIt is keep on wasting energy, don't try to control demand, just keep pumping out babies and automobiles, just in case some trader might make some big bucks during some large fluctuation in the overall trend towards peak.
Very smart.
This penchant for insisting that the peak be either observed or somehow mathematically documented when we know where we are headed will result in many extra deaths. Insanity is the insistence on continuing to do what doesn't work.
Quit being insane.
Not trying to be picky, Thatsit, but unless you have another graph posted, that I couldn't find, it is a red arrow not green. (also a darling blue arrow there you didn't mention).
But on this:
Personally I have never claimed to have the advantages of half a brain, so would you who I am sure must have one, explain? All I can see is that you don't have the same tastes in Yogurt as HeIsSoFly. (no defense of He Is So Fly's tastes, merely an eyerolling questioning glance at you both.
On my computer the red arrow shows the top now, and the arrow back in the 1970's production collapse is somewhat blue green (but I have a Mac, so it may be color blind :-) that's the only tow arrows on the chart, and only one indicates what is a large multi year valley....
What I was talking about was the type of "selection bias" that the poster I was replying to was talking about. The desperation to create a panic has taken on immense proportions but anyone who looks at the longer range production history and actually looks at statistics in an unbiased way can see that so far what we have seen is a plateau that is not that long lasting yet, and no more than measurement error given that we have a very chaotic world oil situation (Iraq, Iran, Nigeria, Venesuela, staggering corruption in Mexico, etc.) that tells us almost nothing about the world's real ability to produce oil as for as the geology goes.
am I denying peak? Of course not (although many will try to discredit anyone who doubts that possess the power of prophets by shoving words into their mouth)
We could already be past peak. But the "proof" they are using is no proof at all. History has shown many so called "peaks" that turned out to be temporary and led people into investments based on assumptions that were not valid.
As far as consumption reduction, to me, we should be on emergency mitagation right now and supporting all conservation efforts and alternatives that are promising, not because we are proven to be at peak, but for reasons of national security, balance of trade issues, and the fact that we are completely blind as to what the real situation is.
As for me, I am pretty happy with an ancient stick shift Diesel, and if I were buying a newer car, it would be another Diesel that could get well over 30 miles per gallon. I try to leave the air conditioning off until at earliest July 4th (I have succeeded at that for the last 2 years straight) and keep my budget in such a shape that I can still get around even if Diesel fuel goes over 6 to 7 bucks a gallon. (I just might get around as much!) :-)
But hurling scare stories based on stats that are bogus (does anyone really accept a year on year on year growth in consumption of 4%?, and has anyone seen an 8 million barrel per day shortfall yet? It may happen, but for now, those are pure speculations based on nothing but guesswork, you don't have to be a "cornucopian" to question those kind of numbers, do you?)
But, questioning numbers has become very unpopular here, hasn't it?
You believe the prophets of doom or you shut the fvck up....
RC
Remember, we are only one cubic mile from freedom
Do you really believe that TOD posters are trying to "create a panic"?!?
I think you meant to say the "desperation to reduce consumption".
Sure, if you look only at production data it gives no real clear evidence of peak.
But most of us around here are looking at more than that.
Look at Stuart and Euan's work on SA.
Look at Westexas's HL work.
Aces work on the megaprojects database projections.
Simmons and Bakhiarti's testimony of imminent peak.
World crude prices.
etc etc
Production data doesn't exist in a vacuum. When viewed as a whole the evidence for peak is quite compelling (but not conclusive).
What a ridiculous straw man Roger. I have yet to see an online community more critical of "numbers" that TOD. In fact your first post was a reply to a poster questioning the numbers!
Are you trying to create a panic here Roger?
No, you present a coherent, thought out, researched argument or you "shut the fvck up".
Before Reagan no one believed anyone could be such a consummate @#$% asshole as to rip the solar water heater off the White House roof. Or that said consummate MF would then be lauded for the rest of time as the greatest aid and comfort a degenerate empire ever had. And a true Saint. Saint Ron.
I was one of those who went out of business and Saint Ron's let them eat cake BS, still wildly popular, was what did it.
May he rot in Hell.
Roger: Try to remember that it is not the 1970s. A lot of oil has been burned in the last 30-35 years (approx 80% as much conventional oil as is currently remaining in the ground). That is not chicken feed, and cannot logically be dismissed with constant references to the disco era.
Most of the responders to my post simply want to fight for the sake of fighting, so fight among yourselves....
Anyone who has seen posts know that I have said longer and stronger than most that fuel consumption should come down, because to the fact that we are running completely in the blind on when peak will occur, whether it has already occured, and the exact nature of the consequences mean we are taking terrble chances by not making the push for alternatives and conservation NOW.
But that's not what folks here want to hear, is it? All they want to hear is "it's over, the story's up, there are no alternatives, it's gas and oil until the end of the world, and they control our fate and keep us from the stone age, and no other possibility will ever work.....yada, yada, yada, I swear, If I were an oil company exec I COULD NOT WRITE better propaganda....
But this time, people with any knowledge of history at all will DAMM CAREFUL before they let the energy industry and OPEC sucker them into throwing their life savings into the energy (conventional or alternative) casino to be gutted like pigs when they decide to open the gates that ONLY THEY know what is behind and ONLY THEY CAN CONTROL.
There are a lot of people who have NEVER forgiven the way in which they were led by the so called "intellectuals" into financial slaughter in the 1970's and 80's.
BrianT says, "Roger: Try to remember that it is not the 1970s."
Your damm right it's not. It's easy for some half azz intellectual to tell people to dump their 401K sell their equity in a good nieghborhood and head for the hills to live in a hut in the woods....
In the 1970's, people were stupid enough to buy into it without asking questions.....this time, we don't get suckered so easy.
Let the American fat azz SUIV'ers pay a bit over $5 or $6 bucks for awhile, they may scream like babies but they can afford it, this time the technicians and companies will make them put the money on top of the table up front before they wreck their career giving away the alternatives......and despite the oil boot lick propaganda, there are alternatives.....
RC
Remember we are only one cubic mile from freedom
(but don't expect for the real technicians, not the yakkers and panic mongers, but the real ones, to get you there for free.....)
RC, I think you are trying to take the world on your shoulders, things will work out the way they will and you and I are not going to change things all that much. Yes, of course, some people are going to run off and live in a hut in the woods because of something they hear here but I doubt that there will be many that do that that haven't always secretly wished they could. This society is not so much of a much for many people.
As far as worrying about the timing of peak oil, well that is nice if it can be done, but really very unimportant in the light of what is happening to the world by our use of fossil fuel. You say someone may lose their 401K and their and their equity in a good neighbourhood? You know quite well we are likely all to loose more than that whether or not peak oil is now, or thirty years from now.
I really have doubts that any techno fix will make all the problems disappear and we will be able to go on living in this rather strange and plastic world we have allowed to be made for us but that is an opinion and nothing to get excited about.
Now with that said and with what you have said, said, would you please let me know about that arrow, is it green? From what you were talking about, the graph with the red arrow didn't make any sense to me.
Correct. But the geologic peak seems to be expressing itself as a logistic like peak right now. You have a myriad of factors that indicate peak or more correctly slightly post peak production. First the overall price of oil is high yet consumption is still increasing in the wealthier nations and it has reached the point that this in combination with the past peak in light sweet is straining refinery capacity right now in some nations. This is a mixed geologic peak logistic effect. We are so close to peak production that we are still in a sense in echo mode of the peak of oil consumption which is in fact still increasing in some nations despite the price.
The obvious political/military factors driven primarily by the high prices associated with peak and the overshoot of demand in the wealthy countries is logistic with geologic peak as the underlying factor.
So the way peak oil seems to play out as is numerous logistic problems or issues just like we have seen in the past yet this time they all seems to happen together and world oil production relentlessly grinds downward.
This logistic expression of peak oil goes deep. For example the continued gasoline problems in the US makes it profitable to move gasoline to the most expensive areas via tanker truck. This simple response causes two problems.
1.) The truck itself is burning diesel and suffering wear and tear transporting the gasoline long distance.
2.) This is gasoline that does not enter the pipeline system or exits early degrading our ability to pump gasoline through the pipeline system.
3.) It eventually causes prices to rise in to rise in the region that is losing gasoline to internal exports.
The point is this logistic problem and response is met with an action to address the issue that is itself negative and further worsens the problem. These logistic issues follow a sort of scaling law from small local actions to large actions such as invasion of Iraq. And you have secondary effects such as delaying paving a road because of costs leading to a road thats bumpy with potholes. Driving at speed on this rougher road lowers fuel economy and leads to a slight up tick in the accident rate which generally cases the loss of a automobile made from petroleum products in addition to the time and energy used by the response crew.
Small example but again you see how and unrecognized geologic peak leads to feedback effects that in general lower the amount of oil available and aggravate the situation. Thousands of these logistic feedback effects begin to operate in essence undamped as peak oil marches forward. Initially people will focus on these logistic issues claiming that are the reason we are having problems but in time the underlying real culprit geologic peak cannot remain hidden.
So geologic peak is tightly intertwined with the logistic effects this means its correct to treat geologic peak and in general resulting logistic expression as two separate independent problems. In general as you follow a logistic effect back to the root cause its either high prices or shortages both of these are the first order effects of peak oil. But the real problem is the vicious feedback between logistic problems and peak oil this is the real killer so to speak it is what is causing snowball and butterfly effects that will I believe will cause the situation to deteriorate far faster than most believe. The reason is that the only force that can dampen these effects is relentless and real demand destruction which means some significant parts of the worlds economy must effectively cease to exist in short economic collapse must happen somewhere in the world soon to lessen the strain.
My bet is on the Philippines as being the first reasonably sized economy to self destruct and act as the required release valve for the rest of the world. I think you can model the coming decline after peak oil as a combination game of Russian roulette and musical chairs with the loser of a round of musical chairs forced to play a round of Russian roulette.
Robert has a point, but as you point out, there are other conditions to think about.
Has an earlier plateau ever coincided with such a plethora of predictions of peak as now? (Campbell, Deffeyes, Bakhtiari, etc. I'm speaking of conventional crude.)
Has an earlier plateau ever coincided with the sudden decline of so many giant oil fields (Cantarell, Burgan, Ghawar)?
Has an earlier plateau ever been accompanied by such persistent rises in oil prices?
Had an earlier plateau ever been accompanied by such a lack of "surplus capacity" as now?
Nothing definitive, or course, just "preponderance of evidence" enough to give one agita.
Robert has a point. There have been other apparent plateaus, but the difference is that the projects coming onstream all seem to have big problems. The Nigerians seem to have descended into anarchy, Iraq was supposed to be at 5 million barrels a day by now, but is producing 2 MBOPD. The Caspian sea production keeps being postphoned. Even the deep Gulf of Mexico platforms aren't coming on stream on schedule. Angola is very likely to be as anarchistic as Nigeria, they don't have a long record of decent government.
Meanwhile, the four biggest producing fields have falling production, and we have venial half-wits in control of our government.
So, while it may be technicially possible to raise production to 90 mbopd, it ain't going to happen. I believe production will fall as fast or faster than these projects come on stream, that we have seen the peak. The good news is it will stretch out the decline, may even give us a taste of CERA's famous undulating plateau, but not their 30 years.
I firmly believe in 10 years we can look and tell when the peak occured!
Did previous plateaus coincide with a period of unprecedented economic growth?
"Always keep track of your head, cos' one day you may risk find it in your armpit ....."
Oil Companies ASK for Nationalization of Arctic NG Pipeline Project
"Sources close to negotiations underway in Ottawa said the oil companies have advised the government the project is effectively dead, and are considering the merits of the government owning the pipeline with TransCanada Corp. and the Aboriginal Pipeline Group (APG), an aboriginal enterprise. TransCanada, Canada's largest pipeline company, which has financed the APG so far, may be the builder.
Jim Prentice, Minister of Indian Affairs and Northern Development, recently received federal Cabinet approval to explore the option of Ottawa taking a controlling stake in the project, the sources said."
http://www.canada.com/nationalpost/financialpost/story.html?id=da61bc62-...
Of course, National Oil Companies are the scourge of the earth and only inhibit the production of needed energy.
Alan
Alan, did you see this 66-page PDF Katrina Index?
And those Canadian journalists should make up their mind: 2 days ago the same people wrote this:
One of my friends worked for TCPL surveying for several years. I did IT consulting for TransGas, which is a provincial crown corp. subsidiary that owns most of the gas pipeline in the province (except for the TCPL mainline) as well as compressor and storage facilities. The article is a little misleading, there is a lot of gas pipeline owned by provincial governments which it doesn't mention. I also worked for Land Titles/Sask Geomatics doing GIS and oil and gas transfers. One of the major GIS/land tasks is trying to route long distance infrastructure through protected land.
I think beyond the inflation issues in this project, it wasn't approached in a workable partnership with the native landholders and maybe with TCPL and an aboriginal group it will have less resistance. It's a touchy subject involving a lot of groups. It might not matter who is running the project when it comes to local land rights.
Private benefits, public costs.
Better not to build it at all. The pain we humans suffer now will be less than if we build it.
cfm in Gray, ME
Don't be too scared of global warming, says Kjell Alleklett - there isn't enough oil, coal and gas left too pump all that CO2 into the atmosphere!
I read that new article in some Swedish media, and resolute forwarded it to the Norwegian environmental-ministry - but also to the energy-ministry.
I am SO strongly in favor to raise awareness in the Norwegian public.. AND global public for that matter to put the energy issue in the driving-seat, instead of the climate issue - BECAUSE it would address BOTH ISSUES AT THE SAME TIME... and real measures would be more easy to put forward.
...BTW isn't that the actual reason why we spend time here at TOD ... in the first place?
If the idea of PEAK OIL were explained to everyone who drive a car, in prime time MSM – THEY WOULD HAVE LISTENED UP – very carefully , because “this is actually about me …me, me, me, me, me …. and on the telly they tell ME I have to drive less …? No way Jose ..!?!?!?, but eventually ... penetration of understanding would ....I think it would .... OR?
Anyhow I believe peak-oil will penetrate MSM within short time, and then JOINED FORCES WILL COME TOGETHER – But Detroit will suffer – short term – Radio-cars next …
Fossil fuel production & consumption are peaking and will not continue to go up as the IPCC models assume, so that's good for GW. But there is still a lot of carbon sequested in the ground that will be dug up and burned, and that is bad for GW. Any burning of any sequestered carbon contributes to GW. It is the fact that it has been geologically sequestered that has contributed to past global cooling; if it had not been sequestered, our global average temps would be higher (as they are going to become).
Over-simplistic, I know, there are hundreds of if/and/but footnotes to append to the above. Yet the basic truth is that you can't bury all that carbon without climatic consequences, and you can't dig it up and burn it without other climatic consequences.
WNC Observer – Bulls Eye – Spot on –
You are nailing the nail all the way - at first hit :=)
The philosophical issues knit to this geologically pre-historical sequestration of carbons – ARE that homo-homo sapiens probable would not have evolved – due to the complexities of evolution itself ……….
And I can imagine the temperatures way back then, as the worlds oceans were slushy green from algae... now turned fossil (!) and put back into circulations - with its consequences..
BUT still, as said before, the Energy-thing should take the driving seat, so that the public can unify for the future in a controlled manor.
This above only apply if you are “not hooked on a certain book or two with fairytalish content”….
Let's not forget about the tundra...which is already melting from the current temp increases...releasing its own trapped methane. There is a LOT of tundra out there and methane is much more effective than CO2 as a GHG. This provides a good bit of inertia to the process even if we stopped burning oil and gas yesterday. IMHO, seafloor clathrates are the biggest variable; they could make everything else look like a joke if they react to what has already happened and begin to sublimate :-(
With remarks like that, it leaves one with a decision to make:
Should we disregard Global Warming, or should we disregard Kjell Alleklett?
I think you get my point....
RC
Remember, we are only one cubic mile from freedom
For as long as I can remember, mid-grade gasoline cost 10 cents more than regular and premium was another 10 cents on top of that. Recently however, I've seen many gas stations diverging from that pricing scheme, sometimes with a 25 or 30 cent spread between the regular and premium grades.
I'm just curious if this change reflects a recent, fundamental change in refining/blending costs.
Is there really a 10 cent/gal difference in the cost of producing each grade?
Maybe percentagewise there is no such big difference if at all.
It's called inflation.
Lets say you have two goods X and Y, and Y costs 10% more to produce than X.
So if X costs 1 money, Y should cost 1.1 money.
Now inflation devalues money by half.
Then X costs 2 money and Y costs 2.2 money.
This example is based on the idea of a perfect marked that does not exist anywhere in the world, except maybe in MMORPG's, but you see where I'm going.
The 10 c steps still hold here, but it follows that as prices go up fewer and fewer people will buy premium. The cost of having to transport and store premium that almost no one uses goes up.
This is a big problem for people that need premium because as it ages in the tank it isn't worth buying anymore. Mid grade is just a mix.
To the extent that the higher grade requires more energy to be used in the refining process, higher overall energy prices will bring about a larger absolute spread (i.e.: 15 cents instead of 10 cents). There are also other considerations such as the percent of ethanol in the two grades.
The Porsche drivers - and quite a few others - really need the higher octane. They would scream so loud were it not available everywhere that it is given to them everywhere.
They don't care what it costs.
Chain saws like it better too. Or so my saw shop tells me. Besides, is there really a separate tank? I thought it got mixed at the pump.
cfm in Gray, ME
Chainsaws and high octane fuel? Hmmmm.... I thought chainsaws ran modest compression ratios (7:1) so that they are easier to start, vibrate less, and are durable. Efficiency isn't exactly a chainsaw's forte.
To respond to your other comment, here in California we usually have 87, 89, and 91 octane. There are two tanks in the ground: 87 and 91. If you order the mid grade you get some (not necessarily equal) combination of the two grades.
As for this thread in general... Designing an engine for higher octane means you can design a higher compression ratio, leading to better efficiency. Here in the US all that increased efficiency goes to lugging around more weight or having more power, but at least in concept a higher compression ratio means more miles per gallon. Also, by having two or more different octane ratings, a slightly broader spectrum of distillates can be used for fuel: if 87 octane were the only goal than some fuel distillates would be unnecessarily higher octane, but if 91 (or 92, 93, 94) were the only fuel then some parts wouldn't be usable without further energy intensive refining. If the country standardized on a single octane rating, the number of blends would be cut roughly in half; instead, the country could unify local requirements to achieve an even better reduction of blends while still maintaining a range of octane ratings.
SunnyvaleCA,
Just want to clear up a few points. Stihl recommends premium fuel in their chainsaws (91). While the saw may have a static compression ratio of 7:1, the actual compression ratio is really much higher due to the scavaging effects. Volumetric effeciency can easily exceed 100% (This is how my old two stroke KTM racebikes made over 36HP from 125cc's at 11K rpm, and the compression ratio was 7.5:1)
You said "Efficiency isn't exactly a chainsaw's forte."
Consider this: I heat entirely with wood. I use less than 1 gallon of gas/oil mix to buck about 3-4 cords of wood, enough to heat the home for a winter. (I split with a maul, not a gas powered splitter) How long will one gallon of heating fuel last in the oil fired furnace?
I understand the point you wanted to make about efficiency of a two stroke engine, but please consider the efficiency of the tools use.
OPEC must add more oil to the market to avoid record prices - CGES
read more...
-C.
I should preface with, IMnotsoHO
The pilgrims should have just skipped all the muss and fuss and cut to the chase. They should have all become bankers and financial service people. Put their money to work for them, make money off other people’s money, make money off people making money off other people’s money, etc.
This way we would all be sitting pretty by now with large cars, incomes, houses, flying around the world sipping margaritas.
This is not just me getting religion or anything but it is interesting that every great religion around the world has condemned USURY, making money off of money.
I would argue that this is what is driving this massive exponential, yeast like bubble of population overshoot. GREED. The other gorilla in the room.
“Make friends not Money”
I understand that our current system does not allow for this but that does not mean we should all adopt the “if you can’t beat them you must join them” mentality. If that is your attitude then you are not really looking for a solution and you should stop wasting yours and everyone else’s time acting like you are.
WT and Alan seem to be the only ones touching on this. WT with the ELP model and Alan perhaps out of necessity and certainly out of the kindness of heart.
I am actively applying this to my daily life and I will admit it ain’t easy, but it is sooOOooo liberating. I have a small business and I have to actively choose not to amp up the concept, (been there, done that) at the expense of quality, (of my product as well as of my lifestyle) on a daily basis.
Yet the middle east still has a capital market that makes money off of lending money and they just don't call it usury. They "prepay" the profit in the same way sub prime brokers were realizing negatively amortized interst charges they hope to collect later. Can you come up with a better system that compensates those who lend capital to those who need it in an attempt to create more wealth?
I'm not saying I don't have my issues with it, but I'm pragmatic to a fault and it doesn't make any flippin sense for me to lend you money for free. I have to be compensated for my risk or no one gets any money and we all suffer. Think it through a bit and you'll find it doesn't work. I would love to read about an idea that promotes investment without interest. I've got a white paper on the steady state, but I haven't had a chance to read it yet.
I think capital shouldn't be used to set up tribute systems. Spending, hoarding, donating, investing, even destroying is all ok. But gaining more money just because you already had a lot to start with, opens a positive feedback loop that ultimately must break itself.
So, why should you invest? For fun. Out of sympathy. There isn't much else you can do with a pile of money. If you save it or give it away, either your offspring or the receiving party will use the money. Destroying it is the same as giving away your work for free. Spending it (in consumption or investment) allow other people to make a buck. All these actions disperse wealth (back) into the economy, eventually.
Lending for profit does not, and should not be considered economically beneficial.
Then you most certainly would not be here had things worked out different. How do you start with it but to acquire it through work? So if I work hard and produce something of value, then I should give away my exchange mechanism (money) becuase I'm altruistic? We will never agree since your premise is at the opposite end of the spectrum and unrealistic at best. Read some Mises, Human Action and you'll be pleased with your new found knowledge. Thanks for the attempt though.
"then I should give away"
No, you can still spend it, hoard it, destroy it. You just shouldn't be able to set up obligations so other people will work for you, or your descendants, long after you have done anything of value.
The most common way to obtain large amounts of money is theft. This business about working hard and saving is about as common as winning the lottery. The 19th century industrial moguls used corrupt business practices to build obscene fortunes. American farmers,foresters, miners and land speculators stole from the natives for three centuries. British upper classses claim to be descendents of the Norman conquerors (and they are proud of it)who stole the entire island from the natives. Today's Russian plutocrats were the kleptocrats of ten years ago.
The second best way to have a lot of money to invest is to select ancestors who stole money. Ask any current members of the Rockerfeller or Kennedy families.
Yes, some of us can put together a few bucks to invest and some of us get lucky. But the real money sloshing around in the world today was not earned by frugal workers. Even Bill Gates had a million dollar trust fund to launch his career.
Or a country.
Ask the Queen of England or the King of Saudi Arabia.
The problem isn't interest, the problem is fractional reserve banking (and even worse when it is private) that allows a elite to print money. Big difference between lending hard money and lending something created out of nothing.
Exactly. Most people don't even realise that tally sticks were one of the most successful forms of money in recent history, as they were used for over 700 years in England. The Bank of England quashed them, because they were a form of money that was not in the control of the bankers and was not subject to fractional banking. Fractional reserve banking has been the banker's cornerstone for over 300 years - private business creating money from nothing...
I notice that the current governor of the Fed, Ben Bernanke (sp?), said: "I would like to say to Milton [Freidman] and Anna [?]: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again."
Oooo, comforting thought, Ben.
"You can never solve a problem on the level on which it was created."
Albert Einstein
Even in a steady-state, zero-growth economy, all assets (including money) still need a rental value to avoid the waste of mis-allocation. Actually, it is even more important in such a steady-state economy, because waste becomes even more costly and must be studiously avoided.
On the other hand, in a steady-state, zero-growth, zero-inflation/deflation economy, capital gains become very hard to come by.
Although even within a steady state reality there won't be nothing going on with deflation/inflation since there will always be peaks and valleys that can not be smoothed away. Eventually it catches up and even in a steady state, I'm sure something could pop up and provide a temporary respite for minor growth or even a grand reorganziation. In fact in my mind, I see recycling becoming a rather lucrative business, especially if one can own the trash piles and pay someone to dig......if only I could find that capital necessary.....
I read somewhere that prior to FED charter and income tax personal savings was such that lending/borrowing was in decline, (what a nightmare huh).
Business was able to self-capitalize and or partner and pool resources to expand.
Trouble with this is that would wipe out half our current economy it seems to me.
Kind of funny how these days one has to tiptoe around what one is trying to say as some words are taboo.
But I agree 100% with what you are trying to convey. I think. :-)
I think I'm saying "Kill all stock brokers, financial advisors/planners, mortgage brokers (throw in realestate agents for good measure),loan officers, all bankers in general". Certainly kill the fed and all central banks.
Noooooo, not really, just kidding.
The black van has been dispatched.
Abu Gonzo in Gitmo
More seriously, the increasing financialization of the US is going to wreck us in any kind of major emergency. If the housing bubble pop and gas prices ever causes a GD-level hard landing and the realization of the final consequences of our national spending spree... we don't know how a post-industrial economy copes.
They will kill themselves when all of their industries shrink to a quarter the size that they are at currently.
Isn't the largest part of the population problem the population itself? While many "great" religions condemn usury, they also promote exponential reproduction of their own followers.
Fund mass transit crisis with oil gross profits tax
read more...
-C.
Howdy, all.
A couple of weeks ago there was some discussion regarding energy-efficient home construction. In an example of perfect timing, I just returned from a week-long workshop on home construction using natural building materials. We were able to make substantial progress on a small cottage using straw bales for the north wall and cob (a mixture of clay, sand and straw) for the south wall. This house is receiving a living roof with 8 inches of substrate, so the roof framing had to be quite substantial. An old piece of 10" oil field pipe was used as a central support and will be cut to serve as a flue for a woodstove.
A passive solar design consultant came out to critique our work and was astounded by the amount of thermal mass involved. The cob walls are 18 inches thick and should do a very good job of evening out temperature fluctuations. The windows each had a substantial overhang to block summer sun, and this, combined with the living roof, should make summer cooling needs minimal.
This was Westexas's ELP program in full force - the construction was handled by a team ranging from a 7-year-old girl to a lady in her 50s, and the expense was minimal. Clay was dug on site, juniper poles were cut and peeled in the woods around us, and the sand and stone (for the foundation) came from a local quarry. Only the straw had to travel more than a few miles on account of the drought we suffered last year. Even the food was supplied by a couple of local farms (and was fantastic). It was a particularly empowering week: I'm not an especially handy guy, but I now know how to build a house.
The only downside was the ticks. Greedy, bloodthirsty spawn of Satan, they were everywhere.
Where was ya'lls house built? Who sponsered the workshop?
sounds like fun !
The workshop was held, ironically, about fifteen miles from Cushing, OK. The educational and architectural leadership came from these fine people:
http://www.claysandstraw.com/
http://www.thangmaker.com/
Check out the earth floors on the Thangmaker site; it's some really beautiful work.
And it was a lot of fun. I got to play in the mud for a week instead of going to work.
I built this sheathless stucco wall last year.
more pics
This construction was: the lattice, layer of poly, layer of tar paper, wire and then 2 layers of lime plaster (scratch, brown) and then I did the color coat with a hopper gun. The hopper gun left a nice stippled finish and was relatively quick, but hoisting 20lbs of cement plaster in a hopper gun over 3000 sq ft was brutal.
Although I used dimensional lumber, this type of diagonal lattice structure without sheathing is very rigid and could be done with rough cut lumber or salvage steel. I filled the back section with fiberglass insulation for sound, but this type of idea could be used filled with wood shavings or straw as an alternative to straw bale construction.
This press release from the American Public Transit Association is a few months old, but if it was mentioned on TOD I missed it.
My daughter can no longer find a parking spot at our local Park-n-Ride. She rides a 10am bus, but the lot is always full from morning rush hour.
Denver is facing large cost over runs in its efforts to expand its light rail system, steel and cement prices have gone way up in the last two years. As a result some parts of the new system may be one track lines instead of twin tracks. There is much hand wringing and whining over how the design of the new systems should be changed to accommodate the budget limitations.
The flip side of this is that I work on the fare collecting equipment for the transit system. We are busy,busy. We are so far behind in our work that we have already used up our overtime budget for the year! We think that rider ship is up allot more than management says. The next quarter statisicts will be interesting.
This is going to get even worse after TSHTF. Building mass transit in a panic will be even more difficult because governments won't have enough ability to raise capital to build new mass transit systems because prices will continue to rise as the economy falls and tax collections fall with the economy.
Hello Capslock,
AllenFromBigEasy has been warning for some time that 'gold-plated design' for RRs & TOD needs to be avoided in order to more quickly install purely functional transport. I heartily concur.
But if the Law of Receding Horizons starts getting real ugly: I hope some towns and cities will take a serious look at my ideas of mini-trains and/or spiderwebriding. Don't forget that we have millions of miles of underground infrastructure that will have to be replaced eventually. Fuel will be so precious that the use of heavy earth-moving equipment will be limited-- IMO, we can reduce the hand-digging by installing aboveground dual-purpose pipes [fluid flow within and railbikes on top].
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Kuwait Ends Dollar Peg, Pressuring Region to Follow (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=axpON9NWC0W4&refer=home
Sorry to ask this stupid question, but what is the significance of this?
Do all the Arab nations not sell oil for dollars anyway, then invest those dollars worldwide. If they unpeg their currencies, what is the international significance?
Marco.
I think it supports the idea that OPEC countries are considering moving away from the dollar as a trading and/or reserve currency.
If you want to switch away from a currency which you consider unstable the first thing to do is to unpeg your own currency from it - otherwise your own economy may fall victum of its future volatility.
I think also because Iran has been going along this line for a year or so, it is beginning to look like the Middle East heavy hitters are starting to act more in unison and more in a self preserving manner.
Not good news for the US if they begin to make their own rules instead of following ours.
Actually, this is an EXCELLENT question Marco.
The key point here is that there are at least THREE different definitions or kinds of currency basket a country can have
1) where they restrict the currency to trading in a very tight band or moving band against another currency or basket of currencies (currency 'peg' or 'moving peg)
2) the currency basket against which they manage their reserves (eg - the UK does not control its currency - 1) does not apply and it manages its reserves in GBP (Sterling), contrast Russia manages its reserves in USD).
3) the currencies in which the foreign exchange reserves are ACTUALLY invested. Most Central Banks will farm out the management of their currency reserves to money managers who may or may not be allowed to take currency risk against their benchmark 2) above
The Kuwaitis have changed 1). This means that, in time, it makes sense for them to change 2) to match (I can elaborate on why if you like). However, 3) is the most important factor and determines how much of the Kuwaiti 'petrodollar supply' will be available to buy USD vs. GBP or JPY etc. There is no direct link between 1) ,2) and 3)
Hope this helps.
3)
Same news, different channel
The subject of Chinese birth control has come up over and over, so here's the latest wrinkle from the NY Times:
Birth Control Measures Prompt Riots in China
By JOSEPH KAHN
Published: May 21, 2007
Imagine being born in debt.
Unfortunately, this makes the Chinese government more socially responsible than ours in the US. Here the most prolific breeders are teenagers who want an AFDC check and foodstamps and crack whores, followed by simple-minded fundementalists (Redundant?). THERE ARE TOO MANY HUMANS!
I had a vasectomy after 1 child.
The best idea I have is to offer 1 oz. of cocaine, or $800 for a vasectomy or to get a womans tubes tied. Needless to say, this is politicially unpalatable. But, it sure beats unwanted children raised by abusive parents or dope damaged babies.
Will there be a free floating exchange system so the coke price can be better reflected in the cash payment? :)
Such pure racist drivel does not offer true answers to true problems.
American children are born with 1000 times more debt to their names than Chinese babies. That's why we promote having more kids: someone's got to pay off the debt.
By the way, if you compare those debts to the pay at the Wal-Mart jobs that soon will be all this economy has to offer, it becomes obvious that those American babies are born into servitude. Their yearly pay won't even cover the annual interest on the debt they were born with.
This land is your land.
You are the first one to mention race.
It was clear to me what oilmanbob was talking about, and probably clear to most other people. Play dumb enough and people will start to believe it.
Bullshit. Addiction is not a racial issue, although I'll grant you that the criminal justice system is highly racist, particularly in Texas. Neither is irresponsibility a racial issue.
Seems though that the particular drug chosen is a cultural affair. I don't know the statistics. I've heard that crack is more black while cocaine is more white. I bet meth is more white. Of course race and culture aren't the same thing, but they are correlated.
Anyway, to be even-handed, one would need to cover the dominant drugs of choice across the major cultural/racial groups.
After taking a sociology of drugs course and receiving my A I feel high and mighty so I will weigh in....j/k mostly....
Crack was a mostly black thing. It worked its way into white culture, but then it breaks down by economic status. Middle class whites don't use, but lower class whites do. Women use crack more than men. Same with meth only yeh, there isn't a whole lot of blacks messing with that, but I posit it's because of money.
One great book is Cooked. It's about a big drug dealer who was banking over 100K a month and he got busted. He became a chef while in prison and is now the executive chef at a hotel in Vegas. He was marking up his product roughly 200% and he was at the top of the food chain making crack from coke. I should have been a sociologist as I find all of this far more interesting than business....damn.
Drugs actually break down better into economic groups then race. Heroin is a predominantly white drug, but only when you're poor. Baggies can be purchased for tens and when you figure out the street price of a key of heroin and what that $10 bag costs, the original key is worth roughly ten times as much or MORE once it's broken down. At the end of the day, these are only middle of the road stats. Antyone can get addicted to any number of "drugs."
There you go wasting taxpayer money again.
Offer a dime bag of crack. :-)
Or remove the other benefits from people gaming the system.
Like, for example, the interest on big piles of money?
I disagree. People are not a fluid resource - a person in Africa or China is not equivalent to a person in America. This is obvious when written down but is worth repeating anyway.
In developed nations we actually have the opposite problem, of dangerously low birthrates. Italy in particular is really screwed. We need more babies!
It's only in places like Africa and China that they have serious problems with birth rates that are too high or too skewed gender-wise.
If we could simply transplant Chinese or Africans into our society with no problems, that wouldn't be an issue. Obviously we can't. Language issues, skills issues, racial/economic tensions and so on all mean we can't simply reallocate population growth like that.
It does lead to the question of how many people are "too many" or "too few". Right now we need to either sustain our demographics at safe levels in the developed world, or let our population slowly decline over a long period. Very rapid declines would not be safe and would trigger economic problems (think, not enough people to maintain the infrastructure let alone build new things). Hence we can say we are not having enough babies.
A better way to look at it long term is to figure out how many people we can support given the present state of our ecosystem and technology, then aim for that number of people. But bio-demographics (or whatever name you want to use) is in its infancy and is not really studied today.
We are having too many babies.
Last time we white Americans [like me] brought Africans into our society look at all the trouble they caused. And the Chinese, they were almost as bad; we had to exterminate the Yellow Peril from large sections of the NorthWest.
Yeah, there would be problems bringing Chinese and Africans and Mexicans into our society. Or leaving Native Americans a rock to stand on. Skills - yeah. That was part of the problem.
You bring up "bio-demographics". What's that? The measure of a Tutsi or a Hutu's nose?
There are too many people on the planet. *We* need figure it out together. 2 Million of every type in the ark.
cfm in Gray,ME
Can you support these assertions about teenagers and "craack whores" or do I dismiss any future post from you as pure crap?
First time I've seen oilmanbob say something just dumb. Mostly he's one of the sharpest here, and rarely comments if he doesn't have something specific and pertinent to say.
Give him a pass this once.
Be vigilant if you must.
Me, I say dumbstuff all the time. Wish I were as eventempered as oilmanbob usually is.
George Monbiot is taking calls on the Marc Steiner show on WYPR, 88.1 FM in Baltimore and Frederick MD.
http://www.wypr.org/M_Steiner.html
Incidentally, He told Marc that his name was pronounced Mon-bee-oh. Amy Goodman pronounced his name Mon-bee-aht all through last week's Dem Now interview, and George said nothing.
You want to imagine being born in debt?
What about spending 2.5 trillion of taxpayer money to let 20 million primitive unskilled third world illegals in ?
Well, I'd say they're talking about spending 2.5 trillion of taxpayer money because some employers encourage, and exploit, foreign workers.
I'm not entirely with the Dems on letting everyone in, but the Repubs have been trying to have it both ways - closing the borders to immigrants, but letting in "guest workers" that undercut local laborers, have no rights and can be exploited and tossed back across the border anytime. Seems to me if people are good enough to work here, they're good enough to live here, bring their families and enjoy the benefits of our society.
If you don't want them here, fine, but enforce the quotas, and close down *all* the illegal businesses that employ illegal workers and heavily fine the money men behind the shadow businesses that are profiting off illegal employment. They won't keep coming if there are no jobs here for them.
I would be all for that, financial and criminal penalties on businesses that hire them and enforcement of existing law, as well as denial of any type of social service except the most basic of true emergency health care.
They would deport themselves.
Where's our fearless leader? Is she o.k.?
she's wonderful--she's just on a well-deserved vacay.
What has been up with the oil price graphs recently? They are a dollar higer on our graphs (and also bloombergs website) than they are if you link through to yahoo.
the new contract starts tomorrow. we changed them a day early (as I thought it was today). oh well, early bird gets the worm and all of that.
Graphs from top two posts are apparently from http://valuesystem.livejournal.com/14190.html, as recently noted (may 18) on the Energy Bulletin.
But look more carefully at the blog, scroll down and find graph below. What looks like peak on 2002-2007 plot look entirely different on more historical plot. Peak may be now, but a 5 year trend is not a compelling argument.
Note the increase in oil production in the Seventies, as a result of high oil prices, followed by a decline in production, as oil prices started falling. The decline was principally a result of Saudi Arabia reducing their production (note that this occurred in a falling price environment).
However, the Lower 48, which crossed the 50% of Qt mark (Hubbert Linearization model) in 1970, showed lower crude oil production as oil prices went up by about 1,000% in nominal terms, from 1970 to 1980.
The world, which started declining at the same stage as the Lower 48 (at the 50% of Qt mark), is showing lower crude oil production (EIA, crude + condensate) despite a rising price environment--Brent is currently 84% above the $38 monthly average we saw in the 20 months preceding 5/05.
This one's better....
What is that quote about exponential functions being the failure of man?
THIS VERY curve-shape was fix-burnt onto all the Norwegian DNA itself – 10 years ago … THIS curve, we were told, would go straight into the heavens!
Today this curve-shape ONLY applies for 98% of the entire population … even though we are down 25% in overall production since 2001.
IT really scares me – as Norwegian MSM is just cruising along barely mentioning any production disruptions – and the info on reductions is hidden away in a minor notice.
I have to enter TOD to have a feeling of the real world, and I’m very appreciative to all YOU people who maintain this site – IT IS REALLY EDUCATIONAL …
thanx
Sorry, tate423, it's not better. Graphing a math function without data is not informative. Your frst post, which showed EIA data and a 'binomial' fit from http://valuesystem.livejournal.com/14190.html, only includes data from 2002 on. That time window is too tight. By looking at data further back in time, one might conclude fitting over 2002 to 2007 is an insufficient window to reflect reality. Arguements re peak production can be easily trashed if you fit data on too short a time scale.
It was from the same thread. Check it out...which is why i didnt' feel the need to provide any backup when it's available two links up.
Or as Herb Stein used to say, if something can't go on forever, then it won't.
BTW, if someone can tell me how to scale an image for these posts, I would be grateful, as the image above is clipped unless your window is maximized.
insert the image width, as follows:
change the "img src=" tag into "img width="99%" src="
since there are no replies yet to the graph, you can still edit it this way now
Thanks, HeIsSoFly, will try to edit but now know for future.
Electricity Crisis Hobbles an India Eager to Ascend
The article goes on to say the World Bank estimates that 60% of Indian companies maintain diesel generators.
Another example of the humble diesel generator's role as a behind the scenes miracle worker - providing modern energy to the developing world.
If India's high tech boom depends on diesel generators to keep on trucking, I have to wonder what effect a serious runup in gas prices will have on this kind of globalization.
They will not have enough diesel soon. What will they do?
I don't remember if India has any volcanoes. if they did they could start developing Geothermic magma power systems.
Kenny: For all the American MSM/corporate trumpeting of India as an ascendant "model of business efficiency", the place basically remains a third world dump. For instance, GDP per capita is $3700 and life expectancy is 68.59 years. As a comparison, Costa Rica's GDP per capita is $12000 and life expectancy is 77.21 years (and CR is facing serious grid issues).
That seems about right. This is a country where being a rat catcher is a job passed down from one generation to the next. "Serious grid issues" doesn't even begin to describe what India is facing. Its economic growth has overshot the grid by a wide margin.
You are right kenny; too bad there are no more thinly populated, resource rich continents available anymore for India to export her surplus population. Imagine if Europe couldn't export its surplus population to America or Australia. In that situation I suspect quite a few Europeans would be catching rats for a living too..........
Everything you say about India is true; but then the opposite is also true. The problem with India is that economic growth has benefited around 20 or 30% of the population. The bottom 70% are dirt poor.
In India, extreme poverty coexists with fabulous wealth and primitive 19th century living conditions coexist with high tech industries.
India is still a very poor country; but it is a lot less poor today compared to 20 years ago.
Suyog: You are correct- India is on the upswing. I guess I was overreacting to the many news articles I scan which attempt to portray the place as a model for North America to learn from (basically because it is more "business friendly" i.e. easier to exploit workers).
Workers always get exploited when there are too many of them and not enough jobs. This was true of Europe and N. America as well in the 19th and early 20th century. The solution is population reduction and economic growth. Unfortunately, India has a long way to go before the population starts falling and I don't think economic growth will last very long considering peak oil.
Not true - India's over-regulation is one of its hurdles, in particular when it comes to restrictions on firing people - something that is not a problem in the US where worker exploitation is so ingrained we just accept it as the norm.
--
When no-one around you understands
start your own revolution
and cut out the middle man
What you are saying is true only for government servants, employees of public sector companies and large private sector companies. Together these employ maybe less than 20% of the workforce. A vast majority of Indians are landless agricultural laborers, construction workers, craftsmen or small traders, bonded laborers, employees of small businesses or household domestic help. For this class (around 80% of the work force) there is no protection of any kind.
Electricity shortages in India are caused primarily because of theft of power. In principle and (ref: Paul A. Samuelson's classic Eco. text).
(1) There is considerable theft of power and non-payment of electricity bills, meter tampering, illegal tapping of powerlines, etc.
(2) Rates are set lower than what is necessary to squelch demand (assuming (1) were not true).
(1) & (2) cause the blackouts.
I cannot predict whether (1) will get resolved. However, given very high incident solar flux on the Indian subcontinent, I am hopeful that some PV technology (e.g. thin-film solar etc etc) will be sufficient to allow distributed generation of electricity for personal use.
Large companies always pay their bills and (1) is not an issue here. Centralized electricity generation could then be used to supply large bill paying users.
As for the Gentleman who called India a hell-hole. Your constructive criticisms are always welcome.
Here's the graph, scaleable with window size.
I have been expecting that. And that earns top spot in today's Drumbeat. I think I will leave that one there.
Re the article Brazilian Biofuels Can Meet World Gasoline Demand - Expert
Let's see now ... Just who would that benefit?
No wonder, GWB is so bullish on Brazilian bio-fuels -- the profits controlled by a relative few and a guaranteed pool of cheap labor!
What an atrocious feudal society!
Welcome to McDonalds! Would you like fries with that?
Obey your thirst.
I don't see how we missed it. All we have to do is help Brazil be the next KSA of ethanol and the die-off is averted. Whew... that was easy. I don't know what TOD was worried about.
Brazil can save us!
The global warming issue and that of depleting fossile energy are obviously so closely interwined that they are more or less one and the same question: How much carbon?
Let's face it: The fossile fuels are there, and they will be burnt as fast as we can get our hands on them. There is no reason to fiddle around with different scenarios pretending that somehow we will deliberately shrink our economy. The release of carbon to the atmosphere will thus be a mere reflection of the coming rates of depletion.
The global reserves are of about as follows:
Oil: 1000 Boe recoverable
Natural gas: 1000 Boe recoverable
Anthracite: 500 billion tonnes. Recoverable = ?
Lignite etc. 500 billion tonnes. Recoverable = ?
How much of the coal will ultimately be recovrable is a contentious issue, no doubt some of you could provide information regarding this.
The above is, unfortunately, the limits of my knowledge.
There are strong indications that oil will peak about 2010, natural gas about 2015 and coal sometime between 2020 - 2030.
Somebody out there with the knowledge to apply the chemistry and do the math to come up with some graphs that will nail carbon release to the coming depletion of fossile fuels?
That would be a compelling basis for further discussions on the global warming theme.
Have a look at Implications of "peak oil" for atmospheric CO2 and climate P.A. Kharecha, J.E. Hansen, and Global warming exaggerated, insufficient oil, natural gas and coal K. Aleklett.
There appear to be very few scientists trying to join the dots of PO and GW. The climate people are not willing to take on board PO because it undermines their message.
Petroleum Resources Of The Western Desert of Iraq
This is a very important post and should be included (at the very least) in the top-level of the Drumbeat. It gives a (seemingly - I'm not a PhD geologist) expert rebuttal of the IHS (CERA) study that claimed 100bn. barrels in Iraq. Many here on TOD thought that this smelled massively of horse manure, but this is a very informed and precise rebuttal of this.
Cuchulainn
Political Tide Turns Against Kuwait's Oil Minister As Resignation Calls Mount
"Kuwait has not and will not disclose the size of its oil reserves," he told Al Arabiya Television. "The Kuwaiti people are not concerned with numbers. This is related to national security."
Industry newsletter Petroleum Intelligence Weekly (PIW) said in January 2006 it had seen internal Kuwaiti records showing reserves were about 48 billion barrels - half the officially stated 99bn, or some 10 per cent of global oil reserves.
The Proved, Probable, and Possible thing again.
These stories just scream plateau.
From up where I live, an interesting piece on electric rates from the New Haven Register. Seems the Department of Public Utility Control doesn't think that the price of electricity has anything to do with the cost of its inputs. Reality will disappoint them. Excerpts as follows:
The Petro dollar question. The signficance of going off the Petro Dollar:
Reagan, or his economists, understood the Nixon bargain in a way Carter did not, in the way it facilitated globalism, and is the economic model that propelled the US economy from a 1000 Dow country to a 12,000 Dow country. We have been hitched to a rocket with the petrodollar!
Nixon had made a deal with OPEC in the early 1970s, that the price of oil would be allowed to rise to a level four times greater than it historically had been - to $10 per barrel in exchange for all exchanges of oil on the world market being transacted in US dollars. This meant that the US dollar would become the de facto reserve currency and in turn would 'inflate' its value on the world market by up to 50%.
Hence the price of oil was $10 DOLLARS. but the worth of those dollars was 50% greater. The actual cost to the US was $5 oil, and for the rest of the world it was $15 oil. Excellent bargain. It also allowed the US hegemony in our other massive project - globalism.
Iran and Iraq each bristeled at this arrangement from the beginning. And in 1978/79 through the overthrow of the Shah, and the rise to power of Hussein, they immediately began to renege on the deal. We have had ongoing conflicts with them ever since. Iran and Iraq had each separately intended to convert all of the oil exchanges to the Euro in 2003, the year the US invaded Iraq, putting the Iraqi exchange solidly back on the dollar. Iran's plans were delayed, and they are in the process of converting to a Euro exchange sometime this summer - any surprise we are planning attacks! Now Kuwait is outlining a switch out of the US dollar exchange scheme, in this instance to a basket of currencies.
The implications are huge. To use China as an example. Everyone complains about China. But the truth is the United States does not have the electricity infrastructure, pipeline infrastructure, human capital, real estate to produce the goods currently being churned out of China and sent to the US. It simply would not be possible. We are harvesting a product out of China with a much larger human capital base, and using their resources for our products. It is possible because of the dollar hegemony. And it is this hegemony that allows for the 'supply' side tax cut.
The trickle does not work the way we think it does. It is not that the wealth of the rich trickle down to the poor in this country in the form of paychecks. The wealthy got this tax cut, which was reinvested at a 50% premium in other countries of the world - notably China, as investments to manufacture goods. Everyone focuses on the wage stagnation of the United States. Stating it DID NOT trickle down, wages remain flat. But that is not how it worked. The money goes to the wealthy, it is inflated by 50% through dollar hegemony of the petrodollar, invested in third world countries, using their cheap resources, cheap labor etc. and those products are brought back to the US at severely discounted prices. So while wages may remain essentially flat the cost of all goods went down by up to 75% to 80%. In the same way the corporate/wealth dollars go further overseas to buy the factories and set up to manufacture globally, the wages of Americans are similarly leveraged to buy more STUFF. So while certain measures, wages on an inflation adjusted basis may be considered as 'flat' the buying power of wages over time has more than doubled. THAT is trickle down. More stuff.
That is how it works. That is what is meant by trickle down. And that is the supreme importance of a dollar denominated oil exchange.
It is touted as win win win. Corporate Wealth harvests greater wealth trhough lower taxes. That money is invested at a 50% premium overseas, and further benefit from low cost commodities and labor oversees (which is not even fully available in the United States). The goods are all cheaper by factors and brought back to the US and sold to consumers who get more stuff for the same wages. Is it any wonder that the cost of food relative to the american median wage is now under 10%.
Another way to put it . . .
the petrodollar system is the imperial tax that the US levies on the rest of the world. Same as any Empire tax in history, but hidden inside currencies.
So long as that tax rate was not too high, the rest of the world goes along. But like any Empire, when the tax gets too high they begin to resist.
We see what the US does when a country resists the tax in Iraq and Iran. However, in recent years the equation may be changing. The US cannot afford, as no Empire can, the enforcement of an imperial taxation scheme, when the taxes are viewed as excessive. The imperial tax must increasingly be supported through an overextension of military power, the costs of which bankrupt empire. This has played out too many times to count, and the brilliance of building it inside a global currency, is what makes it so uniquely American.
The US is now directly militarily intervening in multiple nations and heavily increasing the imperial global tax rate at the same time. Plus the commodity on which the entire scheme rests is peaking and readying to decline.
That is starting to look like an end to me.
Magma Power!
The Coso Volcanic Field is also well known as a geothermal area. Fumaroles are present along faults bounding the rhyolite-capped horst and locally within the rhyolite field. A multi-disciplinary program of geothermal assessment carried out in the 1970s defined a potential resource of 650 megawatts electric with a nominal life span of 30 years. Judged by the youthfulness of the rhyolite lavas and by a zone of low seismic velocity crust roughly beneath the rhyolite, A MAGMA BODY may be the source of thermal energy for the geothermal system.
According to calculations w may be able to power California with the energy of Mt Lassen, a volcano. If we construct enough power plants around it we could have electricity for centuries. But alas, free power doesn't make enough money for corporations...
So, the United States could surf the back side of Hubbert's Peak -- provided the US can "persuade" OPEC not to abandon the petrodollar???
You forgot one caveat about this global system. We do not eat goodies from China nor do they power our cars or light our homes or fix our health problems. The real decline in wages is felt by the lower income people (about a third to a quarter of the US population) because they spend a disproportionate share of their income on things that are not imported, such as auto fuels, food, rents and health care/insurance.
Sure this global trickle down has produced cheaper electronic gadgets and toys. But when the energy, food and health care costs are jumping by 20 or 25% per year, more people will be falling into the "poor" class. Your arguement that trickle down globalism has helped a large part of Americans is simply false.
What % of the total population is poor? One could assert that the bottom 15% (economically) are mostly low-skilled immigrants (often illegal border crossers). While that does not justify their lower incomes, it is an unfortunate consequence of the jobs that they are competing for and are taking. They are also probably exploited because of their lack of "legal" status.
What is the solution? - Deportation?; Guest worker program? Amnesty? Status quo? Others?....
Ah, that is the indication that the system is beginning not to work. Also, we do get a lot of our food from China, finished goods, etc. In fact the problem now is getting so bad that the shipping cartons are building up in this country. They never send them back empty but the flow of food and stuff into this country is now running two to one.
That is why processed foods are cheaper. The tomatoes, corn, lettuce, fruit, nuts, etc. etc. all coming from overseas at lower cost than can be made in the US and in quantities greater than we can provide here. How do you think we get those wonderful watermelons at such reasonable prices in February?
Healthcare. Much of the machinery is also made overseas. To the extent costs run out of control it does have more to do with the people from here. The answer - it has to some extent been immigration. To the extent we can't make stuff overseas, we can bring low wage workers here.
I AM arguing it is beginning not to work by the way. It is moving toward total disconnect.
Not true - we send back a lot of empty containers from West Coast ports - IIRC about a third are empty on the East to West cellular movements.
--
When no-one around you understands
start your own revolution
and cut out the middle man
Say, here's a comment unrelated to the stories above.
Just for the heck of it, this morning I bought a DEC2010 WTI 100 call option at $2400.
It would be entertaining to hear why this was stupid. Thanks in advance.
Brilliant!
So how much do you make if oil goes to $200 bbl by then?
Must not be brilliant if more people on this site aren't doing it.
Seems like in theory, IF WTI oil delivered at oklahoma can actually go anywhere, and IF the US gummint hasn't frozen domestic prices, and IF a market crash hasn't rendered the NYMEX broken, that in that case the gross profit would be 200,000 minus 100,000 minus $2400, then deduct taxes at the commodity trading rate.
Which would be significant upside. It seems to me that it also would tend to hedge against a weakening dollar in general.
But it must be stupid for some reason... hence my inviting the meat grinder to grind away.
Just remember, every time you buy and thought it was brilliant, someone had to sell....
And they think they are just as brilliant! :-)
RC
Remember, we are only one cubic mile from freedom
I certainly don't think I'm brilliant.
But I do see a lot of people out there who think economics is more fundamental than geology, and who don't get thermodynamics. If that's who I'm betting against - likely - then a bet with a $2400 potential downside and a larger potential upside seems reasonable.
A few of the airlines are doing exactly what you are doing but with jet fuel and of course on a larger scale. This has allowed them to operate in the now at costs that approach those of a few years past, giving them a significant edge over competitors.
Roger apparently forgets that T. Boone Pickens has turned $250 million dollars into about $13 billion in the last 6 years largely based on his belief in peak oil. Or perhaps Roger forgets that Richard Rainwater has made significant investments based upon peak oil as well.
I think I will trust Pickens and Rainwater over Roger Conner. Performance matters and Roger doesn't perform.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
Greenish, who is your broker? Since I have never traded commodities, I don't have a clue about how to do this. Also, where do you get quotes?
I'm a newbie at this, just the sort of person who is warning to stay away from options lest he lose his shirt.
(edit: forgot to answer your question, the broker is RMB Group, but I can't say I did due diligence in picking them, it's not a recommendation)
However, I don't have an inherently low IQ or anything, so after a bit of study I decided to commit a little $ into an options account, in the same way I stick money into my term life insurance for my wife if I croak prematurely.
There are a number of places on the web where you can get the price spread on optons at a given delivery date and strike price. In theory I could even do it through E*trade but I wanted a bit more hand-holding than that.
Seems like the bid/ask spread gives a range, but the reality is that particularly for options which are relatively far in the future, there are few sellers and they set the actual prices. For this morning's buy, I split the last bid/ask (2000 and 2800) down the middle and placed a GTC order at 2400, which got filled.
I am NOT giving advice - to the contrary, I assume there must be some reason not to be doing this if the experts aren't; hence my post here.
Don't listen to these TOD people Greenie. They all say how we are running out of oil and the peak is now and its going to get REALLY bad and the oil will be down by 13 MMBPPD in just 10 yrs and there's nothing we can do about it and oh Yeah, KSA is really Fucked so everybody kiss your ass goodbye and so on.....
But they don't buy oil futures!!!!
Why? Because they don't really believe it themselves.
If you believe it then you buy because its a one time chance to make some really BIG BIG money.
Me, I'm a buyin Dec 2012 because by then it will really be expensive (300/bbl)!! Yea HA!!!!
Lets do a mental exercise, hmmm.
Suppose you bought 2007 futures in 2005. You would have made BIG money by now, right? But everyone in 2005 would have said that your a lunatic, demand will go down, supply will go up. None of which happened.
Now its 2007 and the easy demand destruction is over (Africa, some of South America), and production is flat. So in the next couple of years when production declines and EXPORTS really decline then what? Well, the experts say the US will drive less and have to save. Really? How much? If we really went on a diet and saved 20% of gas usage that would be around 2 MMBL/day saved. And that would be the most extreme case I can think of in the next 5 yrs. The rest of the world is already being frugal with gas so not much savings there. And exports will be down on the order of 5-10 MMBPD in 5 yrs. So a lot of demand has to be destructed and that means really high oil prices.
See how smart you are now! :)
In order for US Total Petroleum imports to just stay constant, our domestic consumption has to decline at the same volumetric rate that our domestic production declines.
The pattern since about 1990 has been an annual increase of about 5% per year in Total Petroleum imports as our domestic consumption has, on average, increased, and as our domestic production has declined (Khebab's graph): http://www.theoildrum.com/uploads/28/Data_4weeks.png
Wow!
So oil will go a lot higher then since even if we wanted to save gas it would take a while to get this ship turned around. We will spend all we have to keep the gas a'comin. So what if China don't git none. I see prices going wayyyy up and then who knows what happens. And all these export figures are with NO WARS or Hurricanes or acts of God. Talk about optimistic!
I've had some conversations with a guy on the financial side, who is Peak Oil aware, who has doubts about whether all of the long crude oil futures positions will be paid off, if we do have a catastrophic increase in oil prices.
See, I have big doubts about that too, hence the caveats in my original post.
So is that the rationale for not buying futures and call options? That if oil rises to 200+ the options may be worthless?
Actually, I think that fiscal markets could self-destruct even without the oil price thing. OTOH, I'm not sure that crude tripling will necessarily shut everything down.
My general assumption is that when it comes to funds I can't invest in my home and own 'on paper', that they may be worthless. This may apply to stuff a lot more mainstream than options markets. At least with the options there's a potential of higher upside payout. And $2400 isn't a huge bet.
I'm not trying to get rich off the end of the world. In fact, I'm largely poor due to spending most of my savings on projects to save other species in prior decades. However, it seems like a mix of things is better than betting all on one scenario, so I'm actually curious about what the bright people here think about options.
Greenish: I like your bet but you need to keep in mind (if you have not already considered it) that WTI could stay under $100 in 2010 (let's say at $98) and that might possibly cause a lot of demand destruction and economic slowing. IMHO, you will make money, but it is not a slam dunk ($98 is a compounded 15% increase for the next three years).
Indeed I have considered it.
One bit of my consideration goes as follows: If crude is <100 in Dec 2010, that probably means that there has been neither hyperinflation of the US dollar or a huge bidding war for oil. Thus, even if deflation has occurred, it has done so with energy supplies below crisis levels. Thus, if I lose the option bet, my other assets are still probably largely intact. In that sense, it could be seen as similar to the hurricane insurance on my house. It's a dead loss of a good pile of money, and I pay a premium with respect to the actual calculated risk. However, if a hurricane does blow my house away and I'm uninsured, the consequences to me are assymetric; since the benefits of wealth are nonlinear.
Is this bulletproof logic? Nope. Is it odds I'm willing to take at this price? Seemingly.
Greenish: Makes sense.
I'm limiting my purchases to local and productive assets that I can watch. My dad, a stockbroker, told me to invest only in things I understand. He never invested in banks; I'd never invest in futures. If one doesn't understand what one is doing, it's only a gamble. And understanding that one can profit off of other suckers doesn't fit my concept of "productive". That might disqualify me as one of the "smart people" here. :-)
cfm in Gray, ME
I think it is a gamble, and I may well be the sucker.
I'm productive enough in the rest of my life that I won't feel guilty about making a bet. Though now that I think about it, driving up crude futures might be worth doing on general principles.
So how do they not pay up?? I mean if they don't honor your future option then that means the whole system is basically destroyed. By then you might be living in the woods to get out of the chaos of TEOTWAWKI
The EIA's International Energy Outlook 2007 has been released earlier than scheduled.
This publication gives forecasts on global energy markets through 2030.
There's obviously some egg on their faces re Mexico, but even their revised forecast will raise some eyebrows here. From CNN:
Not really looked at it yet, but EIA's reference case for petroleum and other liquid fuels still has world consumption at 118 mbpd in 2030, with OPEC producing 57 mbpd (!!??). The most interesting thing about this report will be to compare it to last year's.
As RR pointed out in his article on the Senate hearing, a federal agency has to be PC wrt their bosses (to both the executive branch and their congressional sugar daddies.) That, and the unwillingness for any bureaucracy to make radical changes in direction due to their own momentum, means it is to be expected to see only small changes in these type of predictions/documents.
Expect the bureaucrats, philosophers and theologians to be last in any movement... the artists are usually the cutting edge, and the engineers are somewhere in the middle.
EIA and Cera are acting like drunken sailors - and should be put behind bars.
In these times (e.g. PO times) it is very difficult to predict even short term - the spite this they project a growth for Mexico in the long term ....23 years down the line (Wowww). And knowing of the decline of Cantarell and lack of investments for Mexico, it is a directly irresponsible proclaim, considering their resent very wrong predictions for the same - mixed into the cocktail.
When I look at them tables and numbers - I see just that ... there is little value to it being at an undulating plateau for 2 years!
AND....... as they (BigOil) try and try & invest and invest & sour heavy & very deep offshore-stuff (jack2) & oily sands ARE BECOMING THE ORDER OF THE DAY - and even the ideas of Shale are discussed seriously (??!!?) ONE can just wonder where this may end ...
ARE these low EROEI methods supposed to "save" the worlds gluttony for energy - at least on the paper it seams ?
EIA/Cera have already proven they have lost the grip on what they are set to do - "and should be told to leave the room" .
Lesson: Do not look to what they say - Watch what they do (e.g.. watch what happens in the real markets..)
AS I see it long term projections has lately rendered into "NO value" - IT just fools & spreads false hopes to a place in dire needs of RESPONSIBILITY even if the solution has to sacrifice CAPITALISM:-)
Yet another excuse for high oil prices by an OPEC member! Ali Khatibi, NIOC director:
"The price of oil in the current year’s fall and winter will increase because of non-OPEC countries’ inability, despite their claims, to meet demand".
That's right, it's now non-OPEC producers who are to blame for the high oil prices, not OPEC. According to the IEA monthly oil market report dated 12 April 2007, OPEC has effective spare capacity of up to 3 Mb/d. Ali Khatibi's statement implies that OPEC has close to zero spare capacity.
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=/data/business/2007...
For those of you in Hurricane areas, thought you might like to know about this.
http://thestormtrack.com/
They have been following the NOAA controversy. Didn't know about it. Its getting interesting now. The website has been covering it for the last few days.
Budget cuts for Hurricane Hunter flights, resignations, changing the way its run, several million dollars for a celebration of service for X number of years for NOAA in the face of these budget cuts.
Quid Clarius Astris
Ubi Bene ibi patria
PEMEX Production #'s, Total Liquids
2006
December 3,374
2007
January 3,553
February 3,553
March 3,599
April 3,602
Affects of starting new projects to offset decline curve of Cantarell.
http://www.reuters.com/article/bondsNews/idUSN2134899920070521
UPDATE 1-U.S. slashes forecast for Mexican oil output
April figures show that the decline in Mexican oil exports has resumed, now down 13% year to date, versus first four months of 2006.
Pemex can't offset the decline in the Cantarell Field. A year ago, the WSJ article indicated that the remaining oil column of about 825' was thinning at an rate of about 300' per year.
As I have said many times, Ghawar and Cantarell are two warning beacons heralding the onset of Peak Oil.
What are the Canterall #s ?
Thanks,
Alan
Here's the link to the Pemex monthly report. The heavy oil column would represent most of Cantarell's production, 2129 kbd in April, basically unchanged from March. Exports are down 103kbd from March, or 154kbd from a year ago April.
http://www.pemex.com/index.cfm?action=content§ionID=11&catID=67&subc...
http://www.progressive.org/mag_wx051807
Another story that hasn't been reported by the majors.
Bush can proclaim HE (the Prez) is the head of all govt. in circumstances that imo don't even come close to allowing this much power in one persons hands.
This is of course Gonzo's work, and why W is trying so hard to keep him. No press though except the net in a few places.
Quid Clarius Astris
Ubi Bene ibi patria
Whoa! Enduring Constitutional Government. Must we?
cfm in Gray, ME
Wow this matches my prediction of a NeoCon takeover in 2008.
It looks like Bush is considering the option. Of course to pull it off the event would I think have to be huge like a nuclear terrorist attack.
Sounds familiar. Hitler's Enabling Act. Article 48.
http://en.wikipedia.org/wiki/Enabling_Act_of_1933
http://en.wikipedia.org/wiki/Article_48
Major difference though is that the German people adored Hitler. George W Bush would be a Stalin type Dictatorship out of necessity. I noticed he left out the part about Congress being able to say no or requiring a 2/3 vote.
My question is, How does creating a dictatorship and suspending civil liberties preserve the Constitution?
Well, Bush is adored in two countries, the only problem is that neither is the USA.
George Ure posted.
Geech.
Us senior techies are looking at peak natural gas.
Which may be worse than peak oil?
The name of the game is persistence, at some level, people will listen to you about Peak Oil(unless they get at restraining order first ;-).
Repeat that message says psych study
Repeating message with persistence...at POP (Peak Oil Plateau) now, using bottom up forecast.
World Total Liquids Forecast to Dec 2012 -Click to enlarge
We already pay more for gas than we know. Let's get country of origin information into the hands of people that buy gasoline molecules by labeling the gas pumps. Our utility bills have RPS (renewable portfolio standard) information mandating certain percentages of renewable power generation. Let's have DPS (domestic production standard) mandates on our gas pumps!
How can we reward Canadian oil at the gas pump compared to Middle Eastern oil that costs US taxpayers $200 billion plus annually in military expenditures to keep the trade routes open? Tariffs? Gas pump labels?
Ethanol uses the "E" terminology. How about "T" for terrorist oil? :>) A T50 blend could be certified to have no more than 50% Middle Eastern gasoline molcules in it for example. Seriously, anybody have any good ideas to get more information into the hands of consumers?
The California legislature is in the process of mandating penalties for the lifecycle carbon footprint of different crude oil streams at the gas pump. Too bad they can't find a way to factor in all of the other hidden costs shown in the video.
Check out my Youtube video:
Hidden Costs of Imported Oil - Need Country Choice At Pump
http://www.youtube.com/watch?v=95e0wsSorLM
here's an active link to the video mentioned above:
http://www.youtube.com/watch?v=95e0wsSorLM