DrumBeat: July 10, 2007

Prediction #1 (of 3) from Oil Expert Matt Simmons: ‘Real Risk’ Gas Pumps Run Dry This Summer

“You won’t see it until it’s happened,” he said. It could start in any region of the U.S., he added, and once the media gets wind of it, Americans everywhere will rush to “top off” their gas tanks, exacerbating the situation until it becomes a full blown emergency.

Prediction #2 (of 3) from Oil Expert Matt Simmons: World to Soon Realize Oil Production Peaked

Matthew R. Simmons, head of Simmons & Company International, a Houston-based energy investment bank, doesn’t just believe that peak oil has already happened. He told EnergyTechStocks.com that in another year or so the world will wake up and say – in Simmons’ words – “Oh, damn. We peaked in May 2005.”

Kurt Cobb: Napping on the railroad tracks

Napping on the railroad tracks sounds risky on its face. But it may not feel that way if you don't know you're napping on the tracks.

Humans seem programmed to believe that the future will look pretty much like the past. But the narrative of history is the narrative of unexpected events. And, so it is surprising that when it comes to resource depletion, cornucopian thinkers love to refer to history. Daniel Yergin, chairman of Cambridge Energy Research Associates, likes to say, "This is not the first time the world has run out of oil. It is more like the fifth." But even though Yergin admits that oil is a finite resource (and that therefore its total quantity is declining), he invites us to snooze with him on the railroad tracks because history has shown that so far that it's been safe to do so.

Russian oil supply threat - Europe can't choose between more or less

Russian oil producers have been losing oil output at Russia's onshore fields since February of this year, and a combination of tax, investment, and technical factors has led to a forecast of "dire straits", according to a new report by Moscow's Alfa Bank.

But these straits appear to be deeper and direr for oil consumers, than for Russia as a producer; especially since new oilfield developments are likely to swing the direction of oilfield growth in the direction of China. Korea, and Japan.

Alfa Report Sees Trouble Looming in Oil Sector

Alfa Bank warned on Monday that "production stagnation is unavoidable" at the country's oil fields and further downgraded its target prices for shares in most Russian oil companies.

The dramatic worsening in its outlook was the result of the government's reluctance to consider lowering taxes on oil firms and a higher proportion of water in the declining output, the bank said in a research report.

IEA Sees Oil Output Plateau

Russian oil production may level out from 2010 to 2012 and stall until the middle of the decade, the International Energy Agency said Monday.

The IEA, adviser to 26 industrialized consumer nations, said it had based its forecast on a study of the top 20 development projects through to 2012 and an assumed 3 percent annual net decline rate for baseload production.

Air conditioning, gadgets drive up energy use

By now, it should come as no surprise that Americans like their houses big, and they like them comfortable. That is boosting demand for energy providers — especially, as is the case now, when heat waves envelope large swaths of the country.

We'll Need a Good Recession to Avoid Higher Energy Prices

The International Energy Agency released their "Medium-Term Oil Market Report" a short time ago - it looks like we're going to need a good recession to avoid much higher energy prices over the next few years.

Thought you might like to hear that - here's why:

Green future demands a radical shift in lifestyles for British

MEAT-FREE menus, battery- operated cars and an end to affordable flights.

These are among the radical visions outlined in a report which says Britain could be carbon neutral within 20 years - but only if major steps are taken to change our lifestyles.

Tumble-dryers would disappear and an "armada" of wind turbines would need to be built around the coast to achieve the goal, says the research by scientists from the Centre for Alternative Technology (CAT).

But there is scepticism as to whether any of the scenarios suggested in the report are achievable.

Egypt needs renewable energy for growing industry

Egypt, a significant natural gas exporter, needs to develop renewable energy including wind generation if it is to power its growing domestic industries, a senior Egyptian official said on Monday.

Botswana: Coal Production to Increase Ten Fold

The Permanent Secretary in the Ministry of Minerals, Energy and Water Resources has said that coal based projects will increase coal production for the country by more than ten folds by 2012.

Research must continue on biofuel technologies, says panel

Despite recent questions over the feasibility of biofuels, research into future biofuel technologies must go ahead. In order to reap the quickest and most sustainable results, an integrated approach involving all stakeholders should be taken. These were the resounding messages from a panel discussion on future research needs at an international conference on biofuels, which took place in Brussels on 6 July.

30 companies bid for Kuwait refinery

Kuwait state refiner KNPC said on Monday around 30 companies have submitted preliminary bids for Kuwait's planned 615,000 bpd al-Zour refinery, the Middle East's biggest refinery project.

Oil and gas interest bubbling in Yukon

The Yukon's oil and gas industry is suddenly seeing signs of growth, as more companies are showing interest in energy exploration in the territory.

Russia to begin China oil pipeline in 2008

Construction work will begin next year on a much-anticipated pipeline to deliver crude oil directly from Siberia to China, Russia's energy minister said Monday, according to news reports.

Shell, Rosneft agree oil, gas cooperation accord

Royal Dutch Shell PLC and Russian energy group Rosneft have reached a strategic cooperation agreement covering projects in the oil and gas sectors, Rosneft said.

Shtokman offers hope of turning tide for big oil

It may be only a small success but the Shtokman field looks like a victory for international energy companies.

IEA chief urges OPEC to increase output - Le Monde

The head of the International Energy Agency urged OPEC on Tuesday to increase its output immediately, saying there was a risk that stocks of refined oil might not suffice.

"OPEC knows the situation. The market is not well stocked. It should quickly increase its production," IEA executive director, Claude Mandil, said in an interview with Le Monde daily.

Canada 'to reclaim Arctic waters'

Canada has announced plans for six naval patrol vessels and a deep-water port in the north to assert its claim to territorial waters in the Arctic.

Other countries, including the US, say the waters are international territory.

The Coming Warfare of Oil Shortage

If the conflict-ridden and oil-rich Middle East today is crucial to the national interest of superpowers and stability of the global economy, future worldwide dependency on the region for oil will push the international system into new frontiers of conflict and chaos. The region has been a vital source of oil not only for western but also eastern powers. China, Japan, and India have been and will be as much depended on Middle Eastern oil supply as the United States and Western Europe.

End of cheap-food era bad news for poor

The era of cheap food is over. The price of corn (maize) has doubled in a year, and wheat futures are at their highest in a decade. The food price index in India has risen 11 per cent in one year, and in Mexico in January there were riots after the price of corn flour (used in making the staple food of the poor, tortillas) went up fourfold. Even in the developed countries food prices are going up, and they are not going to come down again.

Cheap food lasted for only 50 years. Before the Second World War most families in the developed countries spent a third or more of their income on food (as the poor majority in developing countries still do). But after the war a series of radical changes, from mechanization to the Green Revolution, raised agricultural productivity hugely and caused a long, steep fall in the real price of food. For the global middle class, it was the Good Old Days, with food taking only one-tenth of their income.

The source of the crude: Scenes from the wellhead in oil country

First in a three-part series that explores the production - and the costs - of gasoline.

Gresham’s Law and the Indian Coin Shortage

Gresham’s Law is popularly known as, “Bad money drives out good money”. In effect, people will hoard valuable money but will spend (and thus get rid of) money that is relatively more worthless.

The case in point that JMR Ben thoughtfully provided was a link to the news.bbc.co.uk report titled “Sharp Practice of Melting Coins“. It seems that inflation in prices in India (due to the Indian central bank creating so damned much money and credit every freaking day, just like all the other stupid central banks of the stupid world) has made the rupee almost valueless, but the little bit of metal in the coins is so valuable that “Millions of Indian coins are being smuggled into neighbouring Bangladesh and turned into razor blades”.

How much more valuable is the metal in the coin? The conversion ratio is a one-rupee coin can be made into seven razor blades, worth 35 rupees!

Fuel shortage brings Zimbabwe to halt

Zimbabwe's economy was approaching paralysis yesterday as petrol stations across the country ran dry.

President Robert Mugabe's regime has ordered all retailers to cut fuel prices by 60 per cent, a move that forces them to sell petrol at a loss.

As a result, filling stations across the country have stopped selling altogether and petrol is only available on the black market, at five times the official price. advertisement

Without fuel, the entire economy is steadily shutting down.

For fliers, airline fares are still ascending

According to the trade group Air Transport Assn. of America, the airlines' costs rose 10% in the first quarter of 2007, mostly as a result of a 12.6% increase in the cost of fuel.

To compensate, airlines have been raising fares and jamming more passengers on fewer planes.

Panda Ethanol Withdraws Private Offering of Convertible Redeemable Senior Notes

Panda Ethanol Inc. today announced that it has withdrawn its offer to issue $140 million aggregate principal amount of 6 percent convertible, redeemable senior notes. Panda officials felt that current market conditions were not conducive to achieving a per-share valuation which reflects the long-term value of the common stock.

First China-Made Generator Began Operation At Three Gorges Dam

The first China-made 700,000-kw turbine generator began operating at the Three Gorges Dam on Tuesday, Xinhua news agency reports.

The No. 26 turbine generator, made by Harbin Electric Machinery Company Ltd, began producing its first kilowatt of electricity at around 11 a.m. after passing a 72-hour trial period.

U.S. Looks to Canada for More Oil - Pipelines Reverse Flow As Imports Slow From Latin America

The future of the U.S. oil industry arrived last year in Cushing, Oklahoma, moving along at three kilometers an hour.

It was the first crude from the Albertan oil sands to reach as far south as the giant Cushing pipeline hub, one of the locations where global oil prices are set. To get there, the crude traveled through a pipeline that for decades carried oil in the opposite direction.

Iran needs nuclear energy for its economic survival

Three days ago I returned from Tehran where I witnessed how introduction of petrol rationing resulted in riots which in turn signalled crisis point in Iran’s energy problems which can no longer be denied or ignored. This in the context where billions of dollars of Iran’s oil export revenues is spent importing refined oil from Russia and elsewhere and the government having difficulty expanding oil refining industries because of well placed reluctance in refining for domestic use the oil that is meant to be for export.

Iran Won't Allow Extra Gasoline Buying

Iranian President Mahmoud Ahmadinejad made clear Monday that drivers who use their fuel rations won't be allowed to buy more gasoline at higher prices, calling suggestions to do so a "killer poison" that would worsen inflation.

Before rationing started last month, officials had suggested that drivers would be able to purchase extra fuel at a higher price than the low, subsidized cost for rationed fuel, but Ahmadinejad said that won't happen.

Costs Surge for Building Power Plants

General Electric called in reporters yesterday for a briefing on a nuclear plant it is trying to sell in partnership with Hitachi, a plant it said can be built faster than before, operated reliably and have a vanishingly small chance of an accident.

But what will it cost? After some hemming and hawing, company executives gave figures by the standard industry metric, dollars per kilowatt of capacity, but in a huge range: $2,000 to $3,000.

“There’s massive inflation in copper and nickel and stainless steel and concrete,” said John Krenecki, president and chief executive of GE Energy. The uncertainty is not just in nuclear plants, he said; coal plant prices are now similarly unstable.

Makansi Warns Of Looming Energy Crisis

Jason Makansi warned the Chattanooga Engineers Club on Monday that decisions must be made soon if America is to avoid a looming energy crisis that he said could cripple the world’s economy.

Mr. Makansi said his new book, Lights Out - The Electricity Crisis, The Global Economy, and What it Means to You, presents, in layman terms, a foundation for understanding just how complex power generation and its delivery truly is.

Spitzer on NYRI route: 'It's not going to happen'

Gov. Eliot Spitzer said Sunday he's confident New York Regional Interconnect will not build a power line that will cut through the heart of Upstate New York communities.

"It's not going to happen," Spitzer said in an exclusive interview after completing the Carbone 5K Training Run on Sunday morning. "I think the folks who are from NYRI need to understand there's overwhelming community opposition. We have an energy crisis, but that's the wrong way to deal with it."

The world has two energy crises but no real answers

The world is, in fact, facing two energy crises. The first is rooted in scarcity and traditional power politics. It involves the struggle by the world’s largest and most energy-hungry economies to get hold of the natural resources they need. Just yesterday the International Energy Agency warned that the world oil market would be “extremely tight” over the next five years. Demands from China and other emerging economies are rising. But Mary Kaldor – co-author of a new book called Oil Wars (Pluto) – points out the struggle to find new oil is a familiar sort of conflict, reminiscent of the 19th century “great game” or earlier imperial clashes.

The second energy crisis is new. It is driven by climate change. It demands international co-operation rather than competition. While the first crisis leads politicians and businessmen to search out ever more oil and gas, the second demands that they radically reduce their economies’ dependence on hydrocarbons.

U.K. Parliament Members Form `Peak Oil' Group to Study Reserves

The U.K. parliament formed a group to study peak oil, the theory that world oil production is approaching its zenith, as British lawmakers face up to the country's future as an energy importer.

...It aims to collate predictions for when production may peak and consider the implications for energy policy, rather than push a particular view, said the group's chairman, John Hemming, a Liberal Democrat MP for Birmingham Yardley, central England.

The Fundamental Things Apply

In 2002 oil was $20 per barrel. In 2004, $50 per barrel. Now it is $72+ per barrel and demand is still increasing at 2% per year (which exceeds growth in supply). The world is adjusting to a higher cost of energy, but it is functioning like a global tax, which is beginning to bite into US consumers.

In the future, oil will be even more critical to global prosperity, as it will be more and more coveted by every nation on earth, both sellers and buyers. The arrival of Peak Oil will likely be the most critical and defining event of the 21st century. Energy and other tangible assets will form the mirror opposite of the global currency glut, as the particularly debased currencies become less and less coveted, as time goes by.

Norway: Energy Minister admits knowledge of energy crisis

Oil and Energy Minister Odd Roger Enoksen admits that the authorities were aware of the approaching energy crisis, and that too little has been done to prepare for it.

Head of Hurricane Center Replaced - Inspectors Perceived 'Anxiety and Disruption' at the Agency

The embattled director of the National Hurricane Center was replaced here today after a brief but turbulent tenure in which he publicly criticized his bosses and then lost the support of much of his staff.

Buenos Aires has first snow since 1918

A government minister, Alberto Fernández, called on people to conserve energy and said gas exports to Chile would be reduced while the cold weather continued, La Nación newspaper reported.

China's energy and pollution woes need urgent attention: Wen

China's Premier Wen Jiabao has reiterated that China needs to urgently face the challenges of climate change by curtailing its polluting inefficiencies, a government statement said Tuesday.

"Cutting energy consumption and pollutant emissions and dealing with climate change are urgent, critically important tasks," Wen said in remarks posted on the central government's website.

Australia fights jet-flight guilt over global warming

Australia's tourism authorities Tuesday launched a campaign to fight claims that long-distance air travel is a major cause of global warming.

With long-distance flights virtually the only way of reaching "Down Under", guilt over climate change is seen as a threat to the country's 75 billion dollar (62.7 billion US) tourism industry.

Cows that burp less seen helping in climate fight

Using modern plant-breeding methods to find new diets for cows that make them belch less is a way to reduce greenhouse gas emissions, scientists said on Monday.

Crude surges as producers slash discounts

The actual cost of crude oil has surged to a record high through a combination of world benchmarks rising and a sharp reduction in the discounts that large producers, such as Saudi Arabia, Iran or Mexico, are offering to refineries.

The latest in a series of cuts to discounts – known as "differentials" in industry jargon – has cut the most important markdowns to the lowest level since 2004.

The reduction has gone largely undetected outside the refinery industry because financial markets pay more attention to the price of the oil futures traded in London and New York, where prices have come within $2.50 of record highs. The reduced discounts reflect a tighter oil market after two cuts in production by the Organisation of the Petroleum Exporting Countries in the past year and its recent rejection of calls from industrialised nations to increase supplies.

If it smells like peak oil, it probably is

Demand for oil products -- primarily transportation fuels -- is growing fast. You can blame all those developing countries whose populations are approaching the critical $3,000 per capita GDP level -- that magic moment when, according to the IEA, "a middle class usually emerges, eager to purchase cars, fly in aeroplanes, install air-conditioners and, more generally, use energy-consuming appliances." Don't blame a lack of refinery capacity -- the IEA says investment in refinery upgrades is proceeding apace, and is not likely to be a problem in the near future. But overall, supply of the raw product -- oil and gas -- is having a harder and harder time keeping up with demand.

This would seem to be the definition of a world approaching "peak oil" -- that moment when supply stops growing and begins to decline, while demand continues to chug along. But it is not until Page 30 of the IEA's very detailed 82-page report that those all important words are even mentioned. Here are some excerpts from the critical section...

IEA wakes up and smells the Peak Oil

That Polyanna of energy price prediction, the International Energy Agency (IEA), issued a new report today which, while it still does not acknowledge peak oil, predicts a supply crunch in the 2010-12 time range.

Dear oil is here to stay, so let's explore what that means

The latest report from the International Energy Agency makes scary reading. You don't have to be a "peak oil" doom-monger to believe the world faces an energy crunch. Investors, and everyone else for that matter, need to think through the implications of a significantly higher oil price.

Oil Experts: ‘Extremely Tight in 5 Years’

When scientists say oil production could peak soon, the reports are met with skepticism, especially in industry. When economists talk, industry pays more attention. That makes Monday’s forecast from the International Energy Agency (IEA) significant.

Plains states waive trucking rules

Minnesota and South Dakota have waived hours-of-service restrictions for fuel haulers, while Kansas has waived restrictions because of flooding.

Play peak oil before you live it

On April 30, 2007, an oil crisis shook the world. Supply chains were interrupted, and in the ensuing weeks the price of gas pushed higher and higher, peaking around $7 per gallon. The American economy sputtered to a halt as shortages spread -- Detroit's car factories cited lack of demand and shut down for the duration, trucking fleets scrambled for fuel to move their cargo, supermarkets jacked up their prices, and commuters bitched and moaned and grudgingly changed their lifestyles. Looting broke out, along with the occasional riot.

A month later, good news began to emerge. When gas hit $7 per gallon, America didn't disintegrate into chaos with warring clans jealously guarding their oil tanks. No further Middle Eastern countries were invaded, although there was a surreptitious scuffle in the oil fields of Alberta, Canada. The U.S. government hastily invested in public transit and alternative energy, and the grumbling populace began making lifestyle changes. People carpooled and bought bikes. They moved out of the exurbs. They planted gardens in their backyards, and religiously visited their local farmers markets.

10% Reduction in US Oil Use in 10 to 12 Years

A cut down (and better I think) version on ASPO-USA.


It was mentioned yesterday down thread.

Several things left unsaid.

I have come to the conclusion that a crash Electrification of Transportation program can accommodate a -1.5% annual decline in available oil (in addition to other measures that are their own wedges). Accommodating a -2% annual decline is certainly within the realm of possibility. And -2.5% on my optimistic days.

Electrification of Transportation alone cannot deal with -3.5% annual decline in available oil for a decade or more.

Rail has "elasticity of supply" when our economic system is stressed by lack of oil.

I have come to the conclusion that bicycling has the greatest elasticity of supply and is an essential part of the solution.

OTOH, improved fleet fuel economy is absolutely essential (NO MORE HUMMERS !) but is limited in how fast it can be implemented (especially if we do not waive safety & pollution requirements) and it has VERY limited elasticity of supply in the short and even medium term.

Best Hopes for Electrification of Transportation,


Alan-- Please comment again (you have posted this info before, I know)

Suppose intra-city and inter-city passenger rail were suddenly electrified, and people started using existing electric car technology-- plug into the grid for battery charge, maybe a backup small gasoline engine-- for as much of their individual travel.

Would that overstress the grid? Would it increase or decrease carbon dioxide generation? Would it help or harm, or would it make any overall difference? Also, what would it take to electrify Greyhound busses? Could they be designed to plug into the grid for charge?


DOE's Pacific Northwest National Laboratory researched that and came up with these results:

For the nation as a whole, about 84% of the energy needed to operating cars, pickup trucks, and SUVs (or 73% of the energy of the [Light Duty Vehicle] fleet) could be supported using generating, transmission, and distribution capacity currently available. This would require power providers to use the available electric generation, base-load and intermediate generation, at full capacity for most hours of the day. If charging periods are to be constrained to a 12-hour period starting at 6 pm and ending at 6 am, the technical potential would be reduced to 43% of the LDV fleet.

--Impacts Assessment of Plug-In Hybrid Vehicles on Electric Utilities and Regional U.S. Power Grids.

Rail and bus travel constitutes a fraction of one percent of vehicle miles driven in the U.S., so complete electrification of rail and bus alone would present no difficulty for the U.S. grid.

Assuming the current mix of electricity generating plants and fuels, electrification of the U.S. light vehicle fleet would reduce greenhouse gas emissions 27%, VOCs by 93%, CO by 98% and NOx by 31%. All emissions in urban areas would be improved. However, in rural areas where coal generating plants are located, particulates would increase by 18% and SOx would increase by 125%.

Plug-in hybrid buses are technically feasible and have been rolled out in a number of applications such as school buses.

Electrifying the current level of public transit would be nice, but rather inconsequential. To adapt to declining oil supply we need a massive shift from single-occupancy motor vehicles to other forms of transport, and there are many obstacles to achieving that, including:
* electricity for such greatly expanded service
* money and energy for the manufacturing of such vehicles
* the time it takes to do it even if resources are available
* social and political obstacles

That's all very true. We have the electricity to make the shift, but it's available at night. So it's actually electricity storage that is an obstacle.

Rail uses a small fraction of U.S. energy -- a total of 659 trillion BTU, or 0.66 % of U.S. energy consumption (see Table 2.4).

About 10% of all U.S. rail is electrified, which means the other 90 percent can make the 250%-300% efficiency gains from electrification that Alan mentions. At best, present rail energy use could be reduced to 264 trillion BTU, or 0.26% of U.S. energy consumption.

[EDIT] (659 * 0.1) + ((659 * 0.9) / 3) = 264

The Pacific Northwest National Laboratory report says we can add 3.1 quads of (mostly) nighttime load to the existing grid. That means we could increase the energy consumption of rail by something like 900% using existing grid capacity (assuming use of a storage scheme like pumped hydro which has a 78% efficiency ratio in the U.S.).

[EDIT] Increasing the energy consumption of rail by 900%, combined with a 200%-300% efficiency gain from electrification, would enable a 18-27 fold increase in the work accomplished by rail, using existing grid capacity.

Unfortunately, the vast majority of that electrical generation not "used" at night is natural gas fired; some of it inefficient single cycle NG turbines.

We do not have the NG to fire these plants 17 or 20 hours/day.

The demands placed by switching 90% of current inter-city truck ton-miles on electrified rail, plus as much Urban Rail as we could build and finish in a half dozen years equal about one or two years growth in electrical demand. A recession plus higher prices could free up that much and more.

However EVs much larger and with greater ranges than GEMs http://www.gemcar.com would pose a problem. I wonder if NG fuel cars might not be a better choice for several reasons for at least a decade.

One reason is not to crash the electrical grid for other purposes than recharging EVs. A decade of wind turbine + HV DC lines + pumped storage construction could satisfy the EV demand (I think) with minimal NG use by the grid.

I have a larger picture in mind, but which path to take "depends" on several variables.

In all cases, installing tankless NG hot water heaters to replace older NG water heaters and more insulation are VERY GOOD things.

Best Hopes,


I'm more and more suspicious of any proposal that depends on switching where switching involves much in the way of rebuilding. Because if it takes something like 25 barrels of oil to build a prius and then maybe a barrel a month to run it the barrels to convert will themselves be too much. All of society will be trying to invest oil now to reduce future demand for oil. [I know because I'm doing that personally.]

It won't be only one sector of society, eg automobiles, but it will be the grid, food, industry - all at the same time. The recognition of peak oil is going to drive any entity willing to prepare into a spend-it-while-you-have-it mode. Sort of a pre-hurricane rush to the store.

Duct tape!

cfm in Gray, ME

The flaw in many of these reports is that they report energy usage as oil consumption when in fact most of the steps either can or even already are not done in oil. What such reports should honestly say is barrels of oil equivalent in energy, but they do not.

For example, there is a large myth on this website that most mining can only be done with fossil fueled machinery. This is simply not true as almost all underground mining is done electrically which means that above ground mining could be if necessary. And the manufacture of an automobile in the assembly line is very electrically oriented, not fossil fuel oriented.

This is precisely why we could change how we live. Fossil fuels are not how many people portray them. We have many other energy sources that are close enough in cost that we could use those instead. The problem is not can we do this but rather will we do this?

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

Or we could just encourage carpooling and vanpooling by barring one driver cars on the interstates, and refusing them a parking place in inner cities. Make the sale of new gasoline engines illegal, diesel and hybrids only. Stop road construction and repairs, instead put light rail on the right-of ways, tax internal combustion engine cars at $5,000 each as a license plate fee-call it an energy security tax.
The obstacles are the car companies and big oil, and the whores at the car companies could be persuaded by the idea of all the new diesel and electric cars.
Our country just lacks the political will because of the corruption from corporations.
Bob Ebersole

You don't need to go so far as call it "corruption". It's simply corporations protecting their own interests. After all, they're legally bound to provide maximum profits to shareholders and all that. In principle, there's nothing wrong with this, providing there are sufficient corporations of equal power and influence all excising their own differing agendas.
Unfortunately certain corporations have become far too big and powerful, argubly more powerful than governments, which are at least democratically elected.

wizofaus my Aussie friend,

Maybe your government was democraticially elected, but ours was appointed by the Supreme Court. The New York Times-Miami Herald recount in 2000 showed that Gore won Florida, and hence the election. In 2004 the exit poll didn't agree with the results in a couple of states with Diboll computerised voting. Kerry won that one.

All corporate contributions should be illegal. They are not persons. And the disgusting amounts of money raised for each of the US presidential candidates should make anyone question who is buying what. I see the broadcast airwaves as public property, and the electronic media should be required to give back time to the candidates.

I guess I'm just old fashioned, thinking votes should be counted honestly,and that media have a civic duty in a Democratic society.

Bob Ebersole

Still, if 70% of the population were unhappy about Bush as president at around election time, he wouldn't be there.
But if 70% of the population are unhappy about the way oil companies manipulate or otherwise influence governments and corporations into decisions that are ultimately deterimental to society as a whole, there's relatively little they can do about it. Yes, in principle, they can stop buying oil. But that's hardly a fair comparison with being able to tick a different box on the ballot paper.

"In principle, there's nothing wrong with this, providing there are sufficient corporations of equal power and influence all excising their own differing agendas."

Ah, the idealistic view. How quaint.

Pity we don't live in that world. And even if we did I still would argue that the corporate structure would have an overall negative impact on society. As it happens though, those differing agendas are things like:

A) It's your right to have the freedom to drive wherever and whenever you like in the biggest SUV around, even if it is just to take little Molly to her friend's house, one block down the road.

B) Don't worry if you're getting fat from a poor diet and the refusal to even walk one block down the road, it's not your fault, your sick and we've got this appetite supressing pill that'll do the trick.

C) Be eco-friendly like us, recycle those cans and plastic bottles - it saves energy and it saves the environment - then come in and check out our latest HD 50 inch screen!

D) Housing bubble? What housing bubble? We can finance your next purchase for 5.75% with zero deposit!!

E) Your kid is high from eating processed sugars and preservatives, never mind take a Ritalin.

Oh, and did someone say "lobbying"?

"You can never solve a problem on the level on which it was created."
Albert Einstein

I agree entirely. There is more than ample proof that a system of competing corporations on its own is not likely to provide what society as a whole needs.

But in principle, it's possible, if we had more John Mackeys in the world:


In principle, anything is possible, including: The road to Hell is paved with good intentions.

Which pretty well sums up our principal 'in principle' problem.

If you know what I mean.

Mark Twain did: “What gets us into trouble is not what we don't know, it's what we know for sure that just ain't so.”

What's interesting is that Mackey sincerely believes his flavour of "ethical capitalism" will win in the end, because profits-first capitalism is not competitive in the long-run. I hope he's right, but I suspect he has a rather more optimistic view of human nature than I do (Note: TOD is about the only place I've ever been accused of excessive optimism. Indeed I used to think of myself as a dyed-in-the-wool pessimist.)

In principle, I like to agree with you and like to hope too for what's right, but what I see actually happening reminds me not to. Call it the precautionary principle. ;-)

Frankly, I'm worried that we won't even be able to maintain the grid at current capacity in the post-carbon age, let alone expand it.

Electrifying current commuter trains would not do much. For example, let's suppose you electrified the Chicago METRA's Northwest line. It sees 64 commuter trains per day, the maximum size is 10 cars per train, shorter in off peak, suppose each railcar weighs 100 tons. That's a maximum of 64,000 ton-miles per mile you would be powering by electricity each day.

Put that same mile of wire above some of the more heavily traveled freight lines, such as those hauling coal out of the Powder River Basin, they often see 37 100+ car unit trains of around 12-15 thousand tons each, or 444,000 ton miles per day (plus another fourth or so for the empties moving back) per mile electrified.

Gallons of diesel saved per dollar of investment in overhead wire (or gallons of diesel saved per pound of copper overhead wire) would be much greater on freight lines.

(Yes, there are some other factors involved, like making the passenger service faster with better acceleration, etc., but this is just a crude analysis)

Better yet, just increase the average MPG on all light vehicles by 5 mpg, and you'll save a lot more gallons

Yes, the Powder River coal lines (3 and 4 tracks BTW) are low hanging fruit.


But that does NOT mean electrifying the Chicago commuter rail lines is not worth doing.

Figure 10% shorter trip times (rule of thumb), means more riders. Shorter trip times also means existing rolling stock can carry more people (needed when gasoline hits $6, then $10/gallon and then ... ?)

Electric locos also last longer, don't waste time refueling or warming up on a cold morning, cost less to run (whats to break ?) and the number of trains that can be run on an electric rail line is greater than on the same line with diesel locos.

It is NOT an "either/or" regarding increased auto fleet gas mileage. It will be the MAXIMUM for both !

Best Hopes for the WILL to do something !


Put that same mile of wire above some of the more heavily traveled freight lines, such as those hauling coal out of the Powder River Basin, they often see 37 100+ car unit trains of around 12-15 thousand tons each, or 444,000 ton miles per day (plus another fourth or so for the empties moving back) per mile electrified.

The perverse thought occurs to me that if this coal is being burned for electrical generation, some of which is going to drive this newly electrified train, why not burn it directly in coal-fired steam engines. Dirty as hell but probably no dirtier than your typical coal-fired power plant. Especially if you consider what nifty new coal-fired steam engine technology we could come up with.....
[/ end perverse fantasy]

I have seen the construction of 24 streetcars for the Canal Line in the New Orleans 1892 Carrollton Barn.

The trucks came from Brookville Equipment in Brookville PA, the a/c units (modified bus units) from the Czech Republic (Carrier compressors from the USA). All else within 100 miles.

End caps (complex curves) from local boat building company. Local Iron Works companies made body sections that were assembled in the barn. Mahogany seats built by local furniture company. Mahogany trim and many "bits & pieces" made by transit workmen, as well as final assembly and painting. Outside workmen came in and did the wiring and controls.

NOT EASY ! But it CAN be done !

Best Hopes for the WILL to do it,


I will quote my article

Twenty BTUs of diesel fuel consumption replaced by one BTU of electricity is the energy trade by shifting from heavy trucks to electrified railroads. Replacing 2 million barrels/day of heavy truck diesel fuel would take just 1.4% of US electricity.

Transportation uses 0.19% of US electrical demand today. The gasoline-saving equivalent of a dozen new DC Metros would likely double that 0.19% figure

More later when I have time.

Best Hopes for Trading 20 BTUs of diesel for 1 BTU of electricity,


There is plenty of hope for a better world after Peak Oil. Political and financial will are not presently in view -- but that can change pretty fast


Here is a thought for you:

Since we all know that no single thing (even EOT) is going to close the gap by itself, how about adapting the "Stabilization Wedges" idea developed by S. Pacala and R. Socolow for greenhouse gas reduction, and applying it to the future energy "gap"?


They would be different wedges, of course. Some overlap, but some of the wedges that reduce carbon do nothing for energy; they might be fine things to do in the interests of combatting global warming, but they would be useless for our purposes. We would also need to have much more aggressive energy efficiency and renewable powerup options than the above authors have in their system (which is relatively conservative and pessimistic about the extent to which energy efficiency and renewables can be developed in the short run).

While the "stabilization wedge" model is interesting, the main thing I dislike about it is configuring each strategy to same "size". In reality, different strategies have different dimensions of impact when fully deployed.

Maybe a better approach would be to use a pie metaphor. We come up with our best estimate of the projected annual rate of decline in total energy supplies from present levels that we need to make up to sustain society. Each strategy (like EOT) would be a slice of the pie. Different strategies might be different sized slices. The trick is to come up with a mix that adds up to 100% and fills the pie. Add estimated cost data, and you then have a tool to understand tradeoffs and to begin to build consensus around public policies.

I think this is the one really good thing about the Stabilization Wedges model. Say you really are opposed to nukes. Fine, but if you are not going to include that red-colored wedge, then you need to identify what other wedge you are going to use instead -- an other wedge among the ones left AFTER you have alread picked your initial six. It won't do to just blow off nukes with a vague claim that there are "other, better" strategies that can replace it. The same thing applies to energy; people say they don't want this or can't do that, but when they fill the circle with what they can accept and see that a big gap still remains that needs to be filled and the number of strategies left unused on the table, then perhaps they can start getting serious about making hard choices.

Wish I could develop this myself, but I just don't have the time. I hope someone can take this idea and run with it.

I have thought about this but:

1) It takes a lot of work to develop each wedge

2) I cannot quantify many wedges (bicycling for transportation, what are the possible growth rates ? What is the maximum ?)

3) What can be quantified is subject to so MANY variables (oil prices, economic activity, changes in urban form, how fast can we build EOT in the real world ?)

As to the last question, I would point to the overproduction of WW II. We built many more planes than thought possible in 1941 for example.

False numbers and accuracy do not help the debate IMHO.

I thought long and hard about my 10% claim. I think that CAN be done as a lower limit (I gave myself two years wiggle room, i.e. 10 to 12 years) and more than 10% can be done.

But I, at least, cannot quantify the upper limit.

Best Hopes for Hand Waving,


One way that the motor vehicle fleet could adapt quickly is throught the use of retrofits. A high-efficiency continuously variable transmission alone has been shown to improve the gas mileage of an SUV by nearly 20%. Regenerative braking could also be done as an aftermarket add-on, and might yield an even greater benefit in urban driving. Of course, that would not be sufficient for the long term problem, but it would greatly ease the pain of the early decline without replacing the whole vehicle fleet.

Mark Folsom

I appreciate Alan’s posts and have learnt much from them.

Considering fossil fuels as a whole, not just ‘oil’ and transport, the goal of 10% fossil energy use reduction in US use in 10 to 12 years is absurd.

That goal could be accomplished in a few weeks, with far more achieved in 6 months.

Electricity. New light bulbs, turn off the lights at night. That includes the sparkling Jesus and Mary on the lawn at Xmas. No lit spaces without ppl in them carrying out activity. Easy..

Transport by truck. Centralize and rationalize. There is a huge amount to be done there, no empty trips, or as little as poss. Computers and statisticians are *useful.* Easy...

Industry and manufacturing, savings could be tremendous, varies by type. Too complex to go into right here.

Transport of ppl. Various car pooling and official hitch hiking schemes, bike lanes, rehabilitate walking, etc.

Cars. Get rid of the clunky gaz guzzlers immediately, off the road, by law, this too is not difficult...

Buildings. Well everyone here knows about that. Federal directives and laws. Air conditioning should be cut, that is, forbidden, wherever possible. Heating turned down 3 degrees, and no heating of unoccupied spaces.

Food waste. In Britain, a third of the food bought is thrown out. Telegraph, for ex.

Agriculture. Fill it in.

Transport by boat, barge. Encourage, rehabilitate.


tot it up - what, 20% savings? In a few weeks? (for those measures that could be implemented quickly..)

Can’t happen.

All imply ‘communistic’, ‘socialistic’ measures; or cooperation for the common good, or Gvmt. crack down in various ways, ppl obeying strictures that they refuse to even consider in any way. The American, -Western-, way of life stipulates that rapine is legitimate, greed, growth, and waste, are fabulous and glitzy, oh not not just that, they are a right, GDP must rise, others owe us a living.

Cooperation for the common good? Hey, what an idea. Why didn't I think of it- Commie plot, that's why.

Then I think back on WWll, Imagine, no cars for us ordinary folk for an entire duration. Instead, Detroit made bombers, tanks, guns and other very hard ware.

And we accepted it without any gripes at all. Just think what real leadership could do now with the stuff that goes into making those damn cars for 4 years. Pave the desert with solar thermal power, make all the windmills and pumped storage we can use, Electrify transport, make people happy doing good work.

Maybe even learn how to and want to do less with less.

Nobody talks about what is a proven and obvious fact- people who are on a crusade toward a worthy common goal with good leadership, FEEL GOOD ABOUT THEMSELVES. Hard work and sacrifice can make you happy and fulfilled. Being greedy, fat, lazy and dumb does not. God! who doesn't know that?

(Ah, for the good old days of dragging bombs around the deck of an aircraft carrier, feeling good, heroic, irresistible to females, and hungry for icecream.)

So now we have this tremendous opportunity to do some hard work and make some sacrifices, be heroes and feel good, and what are we doing?- sitting around moaning about how awful things are gonna be when we get to where we are going.


I hope things do go somewhat as you are describing... it'll be interesting to see how far things have to deteriorate before enough people are willing to make that a reality though...

"You can never solve a problem on the level on which it was created."
Albert Einstein

That goal [-10% fossil fuel use] could be accomplished in a few weeks, with far more achieved in 6 months

I tend to agree, but that would not be believed by the target audience for my proposal. In a BAU world, how much could be saved with the changes I proposed ?

Even then, -10% is on the low end. But I lose creditability if I make "wild" claims at first. I want the concept of EOT as a solution to spread, rather than specifics (although I supply specifics).

Best Hopes,


Oh Alan I understand that, my brain just latched onto 10% and tried to turn it into 30!

If you ever come to Switz. send me an e mail, I’ll show you our new trams and we can take a ride in funiculars. A few months back I read that the Vaudois Gvmt. was offering a stipend, quite considerable, more than 150 dollars, to those who would buy an electrified bike. Their city, Lausanne, is built on a horribly steep hill and is not bikable in the up direction, and tough in the down as well. There was also a rumor that some main streets would be equipped with a sort of conveyor belt in to which any human with wheels could latch onto to be dragged up. The press didn’t follow up on either, though there were safety objection to the second (eg. lady with rollerskates and a pram.) Anyway there is plenty to see.

Best hopes, Noirette

hush the noise the Lord said and god said in verse Let there be light.
Hush the pain and god said in verse it is finished
Hush the rush and god said .......You have the spirit of fire, tongues of fire.
Hush the rush and vote for the new presidental canidate.
He runs for the F.R.N party
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his friends call him Charles
He goes by that mostly,
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Vote only once, and do it only once, the main election, write in his name or not
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If he does not win so be it
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Author at Large,
Charles E Owens Jr.

Rising fuel prices hits Air Force, other services hard

The cost of a fill-up for a B-52 bomber, an eight-engine behemoth that holds nearly 48,000 gallons of jet fuel, can easily surpass $100,000. A sleek F-16 fighter sucks up more than $300 worth of fuel a minute when it kicks in its afterburners and blasts through the sound barrier.

"We burn a lot of gas," acknowledged Assistant Air Force Secretary Bill Anderson, who oversees fuel consumption for the service.

The skyrocketing price of oil is causing a strain on the Defense Department, the largest petroleum consumer in the nation, if not the world. With combat forces deployed in Iraq and Afghanistan, U.S. strategists are struggling to keep up with burgeoning fuel costs for a war machine that includes uneconomical fuel-eaters such as ships, tanks, helicopters and an array of fixed-wing aircraft.

...Aviation fuel accounts for more than 80 percent of the Air Force’s total energy bill. In 2006, the service spent more than $5.8 billion for jet fuel, more than twice the $2.6 billion spent in 2003.

This seems to be part of the reason that the cost of the Iraq War is shooting up.

The article finishes with a note about switching to coal-based fuels:

Closer at hand, the Air Force is already aggressively testing the use of synthetic fuels in military aircraft and is working toward a goal of certifying the entire air fleet for synfuel use by 2011. The objective is to fly military planes with a blend of traditional oil-based fuel and synthetics derived from coal or natural gas.

The service has successfully conducted a synfuels test on a B-52 and plans to deliver more than 300,000 gallons of synfuels this year for further tests.

A recent National Academy of Science report found that the U.S. "probably" has a 100 year supply of coal at current consumption rates. If a large-scale coal-to-liquids program goes forward, how many years will U.S. coal reserves be able to meet demand?

How ironic. WWI got started in part because Churchill converted his country's warships from coal to oil! And the rest is history.

Yes, I know it is simplistic, but the return to coal smacks of desperation.

The increasing cost of oil, declining US dollar, and likely economic slump mean the $3/4 trillion "War on Terror" debacle is unsustainable. Of course, even without these factors, Bush's current popularity rating and GOP defections indicate at least a partial withdrawal from Iraq is imminent.

Bush's current popularity rating and GOP defections indicate at least a partial withdrawal from Iraq is imminent.

Which of course will be (mis)named: Operation Coitus Interruptus.

The quote of the day must go to the "Oil Experts: ‘Extremely Tight in 5 Years’" article that Leanan posted up top:

When scientists say oil production could peak soon, the reports are met with skepticism, especially in industry. When economists talk, industry pays more attention.


Then, in the category "explain it to me like I'm a six-year-old", a short recap of some IEA numbers, just to see if I understand what it says:

  • We need to find an additional 3.2 mbd every year for the next five years "just to stand still", to offset declining fields.
  • Demand will be at 95.8 mbd in 2012.
  • Today's demand is about 86 mbd?! 88?

That would mean needing to find and produce an additional (and/or new) 20-25 mbd by 2012. Which may still be a conservative estimate, because there are plenty numbers out there that suggest the 3 mbd decline rate is "a tad" low.

So do we know where the IEA sees those 20-25 mbd come from in 5 years? Do they explain it?

Of course, "Oil supply extremely tight in five years" can be interpreted in different ways, but this looks like a wild understatement. If I'd tie my shoes that tight, that'd be painful.

One more thing: the IEA remains blissfully unaware of Jeffrey Brown's Export Land Model, so we should consider that on top of their numbers. The most important statement I've seen here so far this year was Jeffrey saying HL seems to inducate that no more than 25% of the remaining URR from the top 5 producers will ever be exported.

The 25% number is just a guesstimate right now, but consider the hypothetical ELM. From Peak Production and Peak Exports in Export Land, with 50% of production going to consumption, the model shows that only 10% of future production from Export Land would be exported.

For the real life top five net exporters, 25% of their production in 2006 went to consumption, so a rough guess that only about 25% of future production will be exported seems reasonable, especially given the advanced state of depletion of the top three, based on HL.

In any case, Khebab is working on the actual HL plots for each country.

Right, thanks.

I think that is a shocking and very important stat. Throw that in with IEA's admitted decline/replacement number of 3 mbd every year, plus their 95.8 mbd demand in 2012, and you get a nasty brew.

Do you have a ballpark guesstimate of the number of barrels per day that this "ELM 2.0" would take out of the oil available in the market?

The math is basically something out of your worst nightmare.

Based on HL, Saudi Arabia is about 60% depleted, Norway about 70% depleted, Russia (at least mature basins) pushing 90% depleted, which is why the recent references to rapidly rising water cuts in Russia (with a materially worsening production picture in only four months) caught my eye. This is why I was so adamant, in January, 2006, that we were facing an imminent problem with net oil exports.

In 2006, these three exporters accounted for about 40% of world net oil exports.

The HL models for production, combined with rising consumption, will show horrific decline rates in net oil exports.

I respectfully submit that this is why the HL method is so controversial. People do not like the projections it provides. I am sorry, but frequently reality sucks.

IMO, the only real chance we have of saving some semblance of a civilized society is a crash program to implement Alan Drake's Electrification of Transportation plans. In my opinion, it is that simple.

If we did it in 1908, why the hell can't we do it in 2008?

What i fear will happen is that oil exporters will suddenly reserve all their production for their own refineries and ony export products to maximize their revenues. As I remember, Saudi has a couple of million barrels per day of excess refining capacity. If they were to cut their crude exports by 25% tomorrow and only export gasoline and finished petrochemicals, what would happen to the world price of crude as all the refiners started panic buying?
Bob Ebersole

I think the only reason they don't do that Tomorrow is that they are so desperate for cash. Cash to service their debt, the one with which they've been buying loyalty. Lots and lots of young people there with not much to do. If S Arabia stopped the flow, they'd implode, most likely faster than we would.

"Economic interconnectedness" seems to me to be the only reason these countries don't just turn off the taps. They don't, because they really can't.


I think the approach they will take is similar to what your saying. The will cut back significantly on efforts to maintain or increase oil production. This money will be redirected into efforts to create a full economy based on their remaining oil supplies. Oil Exports will probably fall at a faster rate then the simple ExportLand model indicates while on the flip side I think your right that finished products exports will increase but note its much less that the original crude exports. This should also fuel faster increases in internal consumption.

The end result is the former oil exporting nations that exported crude for fuel will become plastic fertilizer and expensive finished fuel exporters of the future. The need only compete with natural organic feedstocks for these products. And natural sources have a fairly high price floor.

The remaining reserves in these countries are probably good for a 100 years once they quit exporting large quantities of oil for fuel use. Since they will also be the center for general economic growth you will also see a lot of secondary industries either move or get closely coupled with their economies.

The key point is they need not waste money trying to maximize production post peak since they have plenty of time before they need to worry about recovering more oil from the peaked fields. Later they may even stop infield drilling programs and leave these fields for more advanced technology that would be available in 50-75 years.

In any case I'm pretty sure WT's model is too optimistic by a pretty good amount he is also not including other above ground factors in the model.

In general once peak becomes well known I'd expect the various oil exporting nations to continue to sell crude but only at a price indexed to what they get for finished products. So you can either buy crude from them or gasoline they make more money selling you crude directly. You can see that they have total control of the market at this point since a barrel of gasoline from them would be priced equal to a barrel of crude. The only reason they would continue to sell crude for a time is simply because they don't have enough finished product capacity. Expensive renewables are the only thing keeping prices in check at this point.

I've figured this works out to about 10-15 dollars a gallon for gasoline. So the only reassuring factor is their seems to be a maximum it its bad but not horrible at most 20 dollars a gallon.

Note that if you switched to a very lightweight short distance plugin hybrid with a fuel cell it would average say 100-200 mpg or more and cut your driving distance to say 5-10 miles max daily you can easily live with these prices.

The issue is actually road maintenance not creating transports that can operate in this high cost environment.
Also it seems air travel is still quite viable although you would want to have high speed rail for the shorter routes and probably high capacity efficient flying wings for other routes. Slow airships and sailing ships would also be viable for people that want to travel but have time.

Extensive commuter rail networks are a must but other than the fact that suburbia gets hammered we actually can get through peak oil easily if we just become aggressive with alternatives. The point is the maximum prices would require us too at a least double our efficiency to keep transport costs constant and we can afford for them to take more of our income if we gave up some in other areas.

The need for lots of high speed rail at least between urban centers is blatantly obvious. A emergency commuter rail campaign yesterday is critical without it we are toast.

"In any case I'm pretty sure WT's model is too optimistic by a pretty good amount he is also not including other above ground factors in the model."

ELM too optimistic????????

Reminds me of a tired old saying from the total global destruction via NUKs era;

Put your head between your knees and kiss your a$$ goodbye!

Funny you mention nukes I had a good talk with my parents over what happened during the 1970's oil embargo and also the Nuk era.

In the case of the oil embargo the big issue they had seemed to be the extensive black market I found that interesting. With the disparity in wages or wealth in a America today I suspect hoarding by the wealthy will cause violence.

Next about the nukes we talked about all the people that had created shelters etc and also the fact that we now know that we came very very close to nuclear war on several occasions.

So even though we managed to survive that era looking back and looking at the declassified papers I don't see that the "kooks" where unjustified in creating shelters. We came way to close to war in my opinion.

Now to ELM in particular whats missing from the model is shocks and political maneuvering. I see no reason we won't have oil shock like events as in the 1970's going forward this will be on top of the general ELM model or in addition to it. The political power of oil will be at its zenith during the time between when oil supply does not meet demand and the economy converts/downsizes. I can't imagine we won't see some countries take advantage of this opportunity to further their own interests. I figure soon drops of just 1mpd in production by a country could send oil up by 10 too 50 dollars per barrel.

Consider a strike by Pemex workers as an example. So shocks of various sizes from 1-4mbpd for external or above ground factors should be included.

Right now we already have OPEC supposedly withholding 2mbpd in production I'm not sure this is real but we can expect them to consider at least another 2mbpd cut in the near future. Venezuela is prob only waiting till after the 2008 elections to play some games. Nigeria will erupt once its clear the new president will not do anything.

And of course a hurricane is sure to strike.

The point is at least one or two of these crisis conditions are bound to happen over the next two years. So this should be folded on top of ELM. It seems that on average the world has between 1 and 4 mbpd offline for above ground reasons my opinion is that it will push closer to 4mbpd soon.

And easy way to include this in ELM is to add and additional 2-4% decline rate on top of the pure ELM model to act as a proxy for all the possible above ground factors.

This I think will give you something close to the real oil supplies we can expect to see over the next five years.

I don't see any reason to carry ELM out past five years at most if that. In my opinion the model is only good for three years before other factors will control real oil production.

Understand you have to consider the double blow situation also. A hurricane in the gulf leads to a cry for oil from OPEC and they fail to increase production. You can imagine what this will do.

In any case I see no reason not to try and model this since we can use the 1970 oil shocks as a template and simply overlay it on top of ELM.

I think that combo is a much better model for what will really happen over the next few years.

In any case if the 2mbpd production cut actually includes depletion effects OPEC needs to make additional cuts soon so they have some sort of buffer to handle crisis situations.

This means KSA will probably be forced to show what they can do within the year next year at most. After that 1970 style oil shocks from above ground factors are a forgone conclusion. You know Chavez will do all kinds of tricks once KSA's bluff is called.

If they really do manage a sustained 2mbpd surge for more than 90 days then this embargo model holds just the timing moves out.

I just feel the model is not complete without including these factors. In my opinion the turmoil caused by these above ground factors will actually be the driving force in how much oil actually ships each year not the underlying ELM model it simply sets the stage for effective use of oil exports as a weapon and thus it should on average be considered a optimistic model depending on the nature of the above ground factors its over estimating oil supplies by anywhere from 2% per year to 30%. A double header type situation of a major hurricane or Mexican/Nigerian meltdown coupled with a war with Iran represents the maximum effective loss from above ground factors.

These are of course the big ones but serious underinvestment in maintaining production coupled with urgent redirection of income and oil into creating diversified economies and protecting the remaining resources will also almost certainly happen.

At least a smooth additional 2% decrease is needed to represent this risk. A better way might be with 2,4,6.8% external factor curves to understand how these above ground factors could effect oil supply. 2% at the minimum IMHO.
With the chance for a 2-4% reduction from above ground factors lasting at least six months being 100% within the next 5 years.

Hi memmel,


re: "So even though we managed to survive that era looking back and looking at the declassified papers I don't see that the "kooks" where unjustified in creating shelters. We came way to close to war in my opinion."

I was looking into the "near-launch of a nuke from a Russian sub" incident a while back, so agreed on the "way close" - in terms of accidental use of weapons, if not for war itself.

About constructing shelters, though, I wonder if the time would not have been/not be (even today) better spent in prevention efforts. I suppose it depends on what people expected in terms of conditions "above ground" once they emerged, not that I want to resurrect the nuclear discussion. (We've been through this already!)

re: "So shocks of various sizes from 1-4mbpd for external or above ground factors should be included."

I agree w. the idea of above-ground factors.

It seems to me that one might also be able to take the flip side of this and come up with some positive plans.

The "redirection" into "...diversified economies and protecting the remaining resources" also seems like a goal for some planning now. (And have you given this some thought, as well?)

Most of the positive factors are effectively wiped out by the lack of investment that seems to be taking place. We need to invest trillions to soften the blow of peak oil. Last time I did the math the US was bankrupt and a good bit of the world is in a perilous financial condition.
Good news costs money.

As far as diversified economies goes in the oil producing nations they are just as culpable in squandering their oil wealth as the consuming nations. If you consider that most of their governments are not well liked by the population and that the population of most of these nations is young you can see that they will need to divert a lot of the future earning from oil into diversifying their economies to simply stay in power. The result is that you can expect the national oil companies to receive any significant funding over the next few years. This will only increase as knowledge of peak and world peak becomes more pervasive.

The other choices they have is to start a war or deal with internal insurrection neither of these are likely to increase oil supplies.

Back to the ELM model once we are down 5% in exports the situation will be obvious to all and at that point the chances of reaching even the dire results of ELM are slim.

Look around you right now we have just barely started into peak oil foremost we have Iraq. We have project after project delayed or canceled we have oil producing nations such as Venezuela already aggressively gutting their oil industry. Nigeria, Mexico and Iran heading for disaster.
A third US carrier group heading for the gulf. Turkish troops massed on the Iraqi border, and last but not least heavy fighting in Gaza and Lebanon. Don't forget hurricanes and terrorist acts.

The chances of a serious above ground event having a crippling effect as ELM deepens is 100%. The problem is with ELM any major event will have a immediate and strong effect on real and perceived threats to oil supplies. ELM works to ensure on of the above issues is certain to cause escalation and probably trigger other simmering issues to explode.

Although ELM is the driving or underlying force its the least of our problems. Consider where we are right now and then simply consider this same world 5% down in exports.

ELM is I assure you a best case scenario.

Memmel, you're both spot on and absolutely not.

Now to ELM in particular: what's missing from the model is shocks and political maneuvering.

And then Mexico blows up today, as referenced elsewhere in the thread.
We will see much more of that, large numbers of people get into ever deeper trouble while their resources are used for others' profits. Can't go right.

An easy way to include this in ELM is to add and additional 2-4% decline rate on top of the pure ELM model to act as a proxy for all the possible above ground factors.

No, there's no easy way to include things you can't foresee. Just grabbing a number out of the air would make ELM a point of easy ridicule, and it's far too valuable to run that risk.

What you can say for sure is that there will be major disruptions, both from civil unrest and from natural disasters, and that this can ONLY make the situation worse than ELM describes.

And then there's what I half-jokingly nicknamed ELM 2.0 earlier today, that will have to sink in a bit. For what I can see now, Jeffrey (scary man, him) is saying that the top 5 exporters, responsible for some 50% of all oil coming to market, will move from exporting 75% of their production now, to just 25% of their remaining URR. As I said, it has yet to sink in, but I think it means that they will withdraw 66% of their exports, which would be 33% of all oil presently in world markets.

We will see much more of that, large numbers of people get into ever deeper trouble while their resources are used for others' profits.

That's when the soccer moms take out Dad's chainsaw and knock down the transmission lines sucking power from the local muni. Or the local tribe blocks the railway carrying coal.

I'm helping out with some Underground Railway history this weekend in Portland Maine. What blows me away is how important a role "women's sewing circles" played. One wonders what sort of hamburger Garrison and the other abolitionists might have made were it not for the protection of these very radical women. Who'd have thunk it? [And they didn't waste their time voting or writing their congresscritter, either.]

Unpredictable is the only thing predictable. That means that any system lacking resilience is going to get hammered and the failure will cascade. Suppose the grid goes down and the local union refuses to repair the transmission line taking power away?

Can't go right.

cfm in Gray, ME

The 2-4% was a smoothing of events such as the Iran/Iraq war etc. Its not quite pulled out of the air I actually had to reach behind me for that one :)

If you consider peak oil a signal what I'm saying is we also should have a strong 1/f or Pink noise component in the signal.


This is various above ground factors related or driven by ELM.

Another way to look at it is ELM sets up a stochastic resonance condition which is closely related to pink noise.


So by equating ELM to a power or driving signal its easy to see that the with a complex system we will get this sort of spike response.

A while back I used a simple pond wave model with a rough estimate of the frequency of the waves based off the simple observation that you have about a 6 week lag time to move oil via tanker to predict a unprecedented spike in oil prices in this fall and a move to three major price peaks it seems this is coming true. Even though its hard to model this spike effect that does not mean its not real.

Whats important is these events will drive prices not ELM and people will focus on them. By extending ELM to at least explain how these spikes are probably related and driven by ELM even though the coupling is complex we can relate these above ground factors to ELM.

For example the current problems with gasoline production in the US are probably related to all the upgrades done to handle heavy sour crudes because of the price spread this same price spread is related to demand for light sweet and this is related to peak oil. So you have a potentially complex relationship between peak oil and "real" effects.
In general real production probably won't follow a smooth curve post peak as various above ground factors effect oil production and price.

What peak oil does and in particular ELM does as serve to amplify and provide feedback mechanisms that make these events take on ever greater significance. The simplest example is to consider a airplane running low on fuel.
If it makes it to and airport then it lands if not it crashes. The real reason its crashing is because it runs out of fuel but people will point out a unusually strong headwind or some other factor as the reason. If it has started with enough fuel then the headwind would have been irrelevant. We know that ELM underlays the problems but most people will have a hard time looking past the superficial reasons to understand the real problem.

In fact I happen to think that ELM will barely play out before these pink noise events overwhelm the effect of peak oil. By at least recognizing the above relationships I think it goes a long way to helping people understand how ELM causes a nasty coupling with traditional events that effect oil supply. This coupling is vitally important since its what is going to "get us".

Re: If we did it in 1908, why the hell can't we do it in 2008?



If you were fortunate enough to live in Plano between 1908 and 1948, then you most likely had an opportunity to experience the rollicking, clickity clack sway of riding on a Texas Electric Railway Interurban Car. This second generation of rail transportation extended from Denison to Waco, with connections to Fort Worth, Cleburne, and Denton possible through the "hub" station in Dallas. Rail transportation powered by steam first arrived in Plano in 1872 and forever changed the agrarian lifestyle of early settlers who had traveled to this area by covered wagon.

While steam engines guaranteed the survival and likelihood of growth to a community and transported farm crops to distant locations, the laborious process of producing enough steam to drive the train forward limited the frequency of stops along a line. In the late 1880's ingenious inventors discovered the wonder of electricity and devised ways to harness this marvel into driving trolley cars previously drawn by mules or horses.


Entrepreneurs, capitalizing on ways to market this new transportation, developed systems throughout the United States that connected small towns and outlying farms to a large, regional city. Overnight, farming families isolated from society by distance had easy and affordable access to opportunities and amenities available to urban populations.

Located in downtown Plano, the Texas Electric Railway Station served as an early form of the Internet bringing people, goods, newspapers with worldwide coverage, and traveling salesmen together in a timely fashion. A contract signed with the United States Post Office in 1914 permitted mail to be carried and delivered to the many towns along the line via the Texas Electric Railway System. Three interurban cars were refitted with bins, sorting tables, mail slots and cancellation stamps enabling two postal employees, in a secured rear compartment, to process mail as the car traveled north and south on its daily schedule.


The Interurban building in Plano was also an electric sub-station that converted the high voltage alternating current to direct current in order to power the line. This is the only remaining sub-station example on the Interurban line, which served as a primary stop on the Texas Electric Railway, linking Denison and Dallas beginning in 1908. The Interurban's impact on rural life was dramatic as it ended the isolation of distant farm families. Not only did it bring the mail, salesmen and new products to small towns and their stores, but it gave rural residents a means to explore the bright lights and big city cheaply and safely. Trains ran hourly from 6:00 a.m. to 12:00 p.m.

The advent of the automobile contributed to the closing of the Plano station on December 31, 1948, when the Denison to Dallas Interurban made its last run. The building was used in a variety of ways until 1982. It was then closed until 1990, when a complete restoration of the building was completed by the City of Plano. The dedication of this Texas Historical Landmark was held on June 17, 1991 and was opened to the public as a museum.

If we did it in 1908, why the hell can't we do it in 2008?

In 1908 the US had TR as President. In 2008 the US will (presumably) still have GWB as President.

Need I say more?

If we did it in 1908, why the hell can't we do it in 2008?

I've seen this quote of Alan's a number of times and have always wondered whether we could do this even if we wanted to.

Presumably a crash electrification program would require massive amounts of copper, steel, aluminum, concrete etc to build the new overhead electric distribution infrastructure, a huge increase in the miles of track, and a vast amount of new rolling stock.

In 1908, we were still in an environment of essentially limitless resources and no environmental concerns about the side effects of their extraction and processing. The rail network buildout wasn't remotely constrained by available materials and energy.

Today, with the exploding costs and looming shortages of these materials, and the energy to extract/process them, can we really repeat the rail build up?

[ Note the item in this very day's Drumbeat about "Costs Surge for Building Power Plants" I assume that the "raw ingredients" for electric rail construction/expansion would be quite similar; i.e. copper, steel, concrete, etc. ]

Consider the resources that we are still putting into suburbia and fantasy lands like Las Vegas.

In any case, as Alan has said, if we don't at least try, we are certainly doomed to failure.

In 1908 the US population was a mere 88 million. Today is near 300 Million. Back in 1908 much of land was undeveloped. Its much harder to build new infrastructure in areas that are already heavily developed. The combination of NIMBY, environmentalists etc, will make it impossible for any large scale changes.

>Presumably a crash electrification program would require massive amounts of copper, steel, aluminum, concrete etc to build the new overhead electric distribution

I would also like to add, that US is largely dependent on imports since much of the steel mills of the 19th and 20th century were shutdown. Our core workforce has shifted away from manufacturing and heavy industry to services and high technology. The existing workforce has unsuitable skill and is soft (ie, very likely unwilling to consider manual labor jobs). The US would be forced to import workers that are capable and willing do the dirty work. I seriously doubt the US will be able to continue massive trade deficits after the energy crunch begins. Financing a massive re-investment of our infrastrucure during a crisis seems highly improbable, especially with the massive roll over of boomers from workers to retires beginning next year.

Its much harder to build new infrastructure in areas that are already heavily developed

The vast majority of the streetcar lines were built in developed areas (a few were built to attract people to new development in the suburbs. Today, developers bribe politicans to have the public build the roads).

Details had to be worked out back then to. Sewer collectors on either side of the road instead of a central collector so the streetcar could go down one lane and not prevent sewer maintenance. Etc. etc.

Today, the French can go from a vague idea of a route (often a heavy bus route) to a ribbon cutting in 3 to 4 years (Lyon built two tram lines in 3 years 5 months).

The French secret is the same as the American one of a century ago. TAKE LANES FROM OTHER TRAFFIC {SHOCK ! HORROR !!) Give the streetcar priority (in most cases).

The French, when they do share lanes with rubber tires, have an interesting trick. The other lane is smooth, but the streetcar lane is rough (often faux cobblestones. sometimes real). Rubber tires can use it during rush hour, but they generally avoid it.

The USA has two rail mills operating today. Last I heard (perhaps 4 years ago) they both had a fair amount of slack. Expanding capacity at these two mills and building at least one more (probably two or three more) would be required.

We make both concrete and composite (recycled plastic) ties domestically. We draw copper trolley wire here at home as well (all of those pre-1982 pennies + nickels (75% copper) could be useful. Not to mention quarters & dimes). Later copper from abandoned McMansions could be used.

Towers to support the wires could be built from steel, concrete, aluminum or wood (trees will not stop growing post-Peak Oil).

However, I do agree with you on one significant point. The Americans, with their terrible bureaucratic tradition and paper shuffling ways, can NEVER hope to equal the French, with their renowned "Can Do" spirit and "Just Get It Done, It's Important" attitude !

Best Hopes for learning from French bureaucracy,


That reference to making streetcar lanes rough, intentionally, is interesting.

When I lived in Toronto in the early 70's, most of the streetcar tracks were set in rough cobblestone. Toronto motorists seemed to accept that as a fact of life, but there were complaints. I'm sure those picturesque cobblestones gave aid and comfort to all those who wished to dismiss Toronto's trolleys as a hangover from the 19th century.

Visiting Toronto in recent years, I notice that the car tracks are now all set in nice smooth concrete. I assume this change was deemed necessary for public acceptance of retaining the streetcars.

The problem I have is it seems with ELM and esp with my ELM+Above Ground Factors model we don't have 3-5 years plus the additional time to deal with NIMBY crap to implement a functional electric rail network.

More ominous on the political side I expect the response of OPEC to a serious attempt to move off of oil will be embargo.

They are expecting a golden age of 200 dollar a barrel oil to enable them to deal with peak via economic diversification I don't think its wise to think they will take kindly to use ripping this opportunity out of their hands.

Overall I think its a missed opportunity in the short run and we won't see extensive rail networks until much later.

To at least add a bit of hope this is simply considering rail networks on a national scale enlightened cities that choose rail won't cause these problems and probably can execute a lot of the needed work before real problems start to arise.

I think its a decision that needs to be made quickly at the city and town level and implemented asap trying to do it nationally is not going to work either for external in internal regions. In a sense this is simply ELP in action on a regional scale the political side of ELP is cities towns and counties need to take control of their own destiny and not rely on the state and federal governments.

Only the first cities that wake up and convert are probably going to have time to successfully cushion themselves for peak oil the others are probably toast. Getting peak oil and esp the ELM situation in front of local governments is probably doable. Making them understand that they have one chance to do a conversion and it needs to start yesterday is critical. The competition for simple survival of our cities and towns has already started and they don't even realize it.

I would also like to add, that US is largely dependent on imports since much of the steel mills of the 19th and 20th century were shutdown. Our core workforce has shifted away from manufacturing and heavy industry to services and high technology. The existing workforce has unsuitable skill and is soft (ie, very likely unwilling to consider manual labor jobs).

You read all that in Newsweek?

Construction still thrives and will continue to do so for the right price. You might have to worry about deflationary effects, but we have huge cusions compared to 1908.

And manufacturing has grown year over year nearly every year for the past century in the US... even as employment in manufacturing dwindles. Automation and productivity improvements sure are a bitch for the dream of the empowered proletariat industry worker.

While obviously increased productivity (through better technology etc) has contributed to decline in manufacturing employment (in all developed economies), I was reading a couple of articles yesterday that questioned exactly to what extent this was responsible, at least in the last few years:



But it may well be a short-term blip, given the now highly competitive U.S. dollar - which is definitely hurting manufacturing in Australia.

In 1908, we were still in an environment of essentially limitless resources...

Actually not. Access and production was SEVERELY limited by technology.

Coal was mined by hand (see recent Heading Out article here on TOD) and hauled out by pit ponies. I have no doubt that we produced FAR less steel in 1908 than today (but with more workers) Etc.

Do *NOT* discount just how primitive technology was in 1908.

It would be easier, not harder, to build as much today as it was back then.

Backhoes take relatively little fuel to run and one backhoe can dig as much as 100 men with shovels, etc. etc.

Best Hopes for the WILL to do something !


The power of our technology has increased in tandem with the amount of regulation and red tape involved in building anything. People will talk about things for years before anything is done. Barring a major change in the quality of our society's consciousness, is it reasonable to expect a sudden improvement in our ability to rapidly build major public works and implement social change on a massive scale?

Why should we expect a decreasing resource base to result in better government or a more informed electorate?

"I am sorry, but frequently reality sucks."

And if it doesn't we invent fantasy to satisfy our needs.

such as the fantasy "nondoomer," eh?

Hello HeIsSoFly,

"explain it to me like I'm a six-year-old"

No problem:

Daddy's car is out of gas!

I flip the switch, but nothing turns on.

Mommy, I am so cold and hungry.

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

So Bob,

Am I right in my 6-year-old's math that assumes that the IEA implies we will produce 20-25 mbd in 5 years that are not there today?

And that they're not entirely clear on where that about 30% increase (once the 5x3 mbd depletions are included) from today's production will come from?

I'm starting to think I am. But that means I don't see why they would release such numbers, because it doesn't add up no matter how I try. I mean, come on, 30% in 5 years.?! Have you seen any article (there's too many out there) that points this out?

Mind you, this comes from someone who still believes in Santa Claus, and even then....

Try this.

The Ziocon-neolibs raped the middle class with a bubble for the ages.
They realize the bubble is about to blow.

All of a sudden peak oil (or the lite version) is in the media controlled by same.

TSHTF and it is Iran's and Venezuela's fault.
The sheeple buy it. The criminals walk.

Anything else you want to know. LOL.

One of the many "interpretation" that may be made is a hard-nosed examination of"all"the numbers being used is in everyones best interest.About time to examine what the Hirsh report really,truly,ment by the word "Disruption"
Its starting to look like end-game now,both for those who have a belief in santa claus,and those of us who have a belief in the 4-horseman.
Jeff Browns export land model is one of those exquisite surprises that peak has in store for CERA and other Daydream belivers

Poet ethanol (formerly Broin) has successfully tested a process to make ethanol out of corn cobs.

Corncobs to Ethanol

By adding cellulosic production to an existing grain ethanol plant, Poet says will be able to produce 11% more ethanol from a bushel of corn and 27% more from an acre of corn, while almost completely eliminating fossil fuel consumption and decreasing water usage by 24%.

Relax, I am not pumping the stock; it is a private company.

Cellulosic ethanol has one big downside; this will cause the price of calories to plummet as ethanol producers move away from using corn kernels for ethanol. This will only increase the global obesity and diabetes epidemics.

Here is yet another story, this one from South Africa:

Obesity major health risk for kids

Another one of the study’s findings was that obesity in black girls increased from 11,9% at six years to 21,8% at 13 years. White girls, in contrast, were at 25,4% at six years and 14,5% at 13 years

These are ridiculously high obesity rates for children. We are doomed!

Why don't you think about why people are so prone to obesity? If it's such a health risk, why is it so widespread? Why wasn't the obesity gene weeded out by natural selection?

I think it's pretty obvious that the opposite happened: it was selected for, not against. And the reason is likely that humans evolved to deal with periodic famine. A genetic legacy many may have reason to be grateful for in the not too distant future.

In some populations you are correct about the genetic predisposition to obesity especially the Lapita culture that gave rise to the modern Polynesians. These populations today are extremely susceptible to diabetes and obesity. The inability to metabolically adapt to the modern, high calorie diet is also common among indigenous North American populations and many others. However, Caucasian and the closely related semitic populations of the middle east are more adapted to agriculture and the surfeit of calories that come with it. These populations tend to be less obese than others with a comparable diet and lifestyle, but even they are commonly obese.

This is an irrelevant point because there will be no mass starvation due to peak oil. None. Even populations around the world that are poor by American standards are very fat. The revolution in farming techniques means calories are the cheapest they have ever been, and if a dirt poor population can be fatter than the richest population of a 100 years ago, then your preoccupation with cataclysm is pure fantasy. The danger is not starvation but obesity and diabetes.

You're either delusional or disingenuous. There are people starving to death right now. The problem is not lack of food, but lack of the infrastructure to get the food where it is needed. Roads, fuel, trucks, etc.

That is not going to improve in the post-carbon age.

While infrastructure matters in regard to food distribution, I think income distribution is the key limiting factor when it comes to how much people eat. Poor people cannot buy enough food, regardless of where they live. Well-to-do people can and do buy enough good food, regardless of how roadless an area is.

My personal problem is too much income and a tendency to imbibe and to eat too much--something in my genes. My father did not get married until he was thirty-six years old because he had to support his parents and brothers and sisters . . . because they did not have enough food in the house (Chicago, 1920s and 1930s).

With the amount of fossil fuels being produced now there is more than enough food produced to feed everybody in the world quite adequately. The problem is that a billion people are too poor to eat much, and two billion are too poor to eat well.

Unfortunately, I think Peak Oil will make the poorest of the poor much worse off than they are now.

Don - I'd be more than happy to help you out with your "too much income" problem. It meshes beautifully with my personal "too little income" problem. Email me for my address: cash, check, or Money Order would be just fine.

In the olden days, when I was a student in college, I had no car, no phone, no TV, no private bathroom--and I did fine, perhaps because I was a good cook and always had plenty of good food to eat. Also, I discovered that to attract young beautiful women, you don't need a car--a single-cylinder two-stroke motorcycle works just fine and tends to attract adventurous types;>)

Now that I've got plenty of stuff and a big house and a boat, not to mention a phone and even a computer, it becomes a good question as to what to do with excess income. I don't invest it, I give it away to The Nature Conservancy.

Some time I'd like to see a thread devoted to charities that are especially appropriate in times of Peak Oil and abrupt climate change. My own nominee is above, but I'm sure there are others that just as good. (BTW, my kids know that when I die they will get not one nickel, because everything goes to The Nature Conservancy. Thus they do their best to keep me alive and in good health . . . .)

Excellent and commendable! Anyway, I'd just use it to buy heating oil...

The only real use for money, in the end, is that it provides access to (previously abundant and relatively cheap) energy resources. When we can't get gasoline and natural gas and electricity and heating oil and, ahem, food, money will be useless.

There are people starving to death right now. The problem is not lack of food, but lack of the infrastructure to get the food where it is needed. Roads, fuel, trucks, etc.

Absolute right as far as the former goes, there is no lack of food, but dead wrong as far as the latter goes. People are starving, not because of a lack of food or a lack of infrastructure. People are starving because they are very poor and cannot afford to buy food.

More and more people are trying to eek out a living on smaller plots that are drying up and blowing away. More people are moving to the city shanty slums and have no means of support except begging and picking trash piles. If we had the best roads in the world, and lots of trucks to deliver food, it would not help these people one iota because they have no money to buy the food.

The problem is massive poverty, and it will get a lot worse.

Ron Patterson

But we are wealthy enough to give food to those who are starving, and we do. The problem is getting it where it is needed.

And of course, this may change in the future. Already, international aid groups complain that the higher prices of food and fuel mean they must reduce their food purchases for the hungry.

But we are wealthy enough to give food to those who are starving, and we do. The problem is getting it where it is needed.

We are wealthy enough to give food to those who are starving but we do not! Only governments give away food, people do not. The amount of food donated by governments, the US being the largest giver of all, is but a tiny fraction of enough to feed the world's two billion hungry people.

Governments have aid programs that give away food but the amount of food they give away, if distributed to the world's two billion hungry people, would stop their hunger only for a day or so. However no one with money to buy food goes hungry! And that is true no matter what kinds of roads or trucks their country has.

The world feeds the rich and starvs the poor. That is just how things work. Even if we could feed all the poor hungry people we would only, in the long run, make the problem much worse.

If there is ever a time of plenty this very fact will automatically lead to an increase in population until the natural state of starvation and misery is restored. ...Richard Dawkins

Ron Patterson

Only governments give away food, people do not.

I think you're dead wrong on that. People do give away food. The owners of the businesses and farms who participate in Second Harvest are people. The members of the local CSA give away a lot of produce to a local charity that provides vegetables to the inner city poor. Americans give a lot of money to charities that feed the hungry - and curiously, it's poor and middle class who give the most, percentage wise, not the wealthy.

The cases where people actually starve to death - which is what we are talking about - are almost always an infrastructure problem.

That may change in the future, of course.

People, thru NGOs, give food. But the point I want to make here, is that not just infrastructure, organisation, transport, etc, which often remain little detailed (a la Susan George, whom I admire) but world geo-politics that play a role.

This little chart shows that in 2006 the Funding Shortfall for Hunger crises was:

For Afghanistan, planned beneficiaries, 3,316,000 - zero percent. All the funding was obtained. Distribution is another matter, but without the funding nothing can be attempted.

For Iraq, planned beneficiaries, 2,788, 250, shortfall 87%.


Global Policy Org

Bless his heart but Dawkins is just paraphrasing Malthus

It gets quickly into Chicken/Egg here, but this massive poverty is also, in many of the starving places on Earth a politically created situation that can be traced right back to classic colonialism, or tied more directly to present-day 'economic colonialism', so that warlords handle food and drug distribution in Afghanistan, Ethiopia or Colombia, farms get 'reallocated' in Zimbabwe and falter in their outputs while tyrants put their attention on controlling 'elections' ..

Yes, it's poverty, but the poverty is not just some pure cause, but also a direct effect of many factors, including World Bank shenanigans, Corporate 'professional disregard' for humanitarian side-effects, etc..

and yes. This poverty will get worse.

Bob Fiske

It gets quickly into Chicken/Egg here, but this massive poverty is also, in many of the starving places on Earth a politically created situation that can be traced right back to classic colonialism, or tied more directly to present-day 'economic colonialism', so that warlords handle food and drug distribution in Afghanistan, Ethiopia or Colombia, farms get 'reallocated' in Zimbabwe and falter in their outputs while tyrants put their attention on controlling 'elections' ..

Tha's a crock! Poverty is just another word for “no food and no way to get any”. Poverty has been around since the dawn of man. The Native Americans knew poverty. European nations knew poverty in the days before colonialism. The Chinese people knew poverty three thousand years ago. There are a thousand causes for poverty, drought, war, plague, floods, and pestilence being chief causes. But the primary causes of poverty are all Malthusian, people breeding more people than can be supported their parents or community.

Yes, it's poverty, but the poverty is not just some pure cause, but also a direct effect of many factors, including World Bank shenanigans, Corporate 'professional disregard' for humanitarian side-effects, etc..

Yeah right! The world bank is the blame, and those damn corporate guys, you know, the elites as they are often called. If they only had a heart there would be no starving people in the world. No, capitalism, the World Bank nor those damn elites are to blame for the world’s hunger. It is the very nature of Homo sapiens to breed to the very limit of their existence. If it were not so then we would have gone extinct thousands of years.

And if there were no limits to human existence, then there would be 50 to 100 billion people on earth and no other animal life other than rats and roaches that can co-exist with Homo sapiens.

The destruction of the natural world is not the result of global capitalism, industrialization, 'Western civilization'or any flaw in human institutions. It is a consequence of the evolutionary success of an exceptionally rapacious primate. Throughout all of history and prehistory, human advance has coincided with ecological devastation.
John Gray, "Straw Dogs"


As for pointing to our mental failures with scorn or dismay, we might as well profess disappointment with the mechanics of gravity or the laws of thermodynamics. In other words, the degree of disillusionment we feel in response to any particular human behavior is the precise measure of our ignorance of its evolutionary and genetic origins.
Reg Morrison, The Spirit in the Gene

Ron Patterson

"It is the very nature of Homo sapiens to breed to the very limit of their existence."

Typically absolute, Ron. I would adjust the above to read ".. to the limit of their available food/energy supplies." - at least this has been the case while we've been in the afterglow of finding such a ridiculous abundance of easy energy. We have decided that it's because we're intrinsically unstoppable. There have been societies who have had to live within limits, and been much more conscious of how many children their supplies could sustain.

Take a pill. Stop shouting, please.


There have been societies who have had to live within limits, and been much more conscious of how many children their supplies could sustain.

I doubt that seriously, not for very long anyway.

Rather than asking, Can any group of foragers stay in ecological balance for an extended time? The real question should be, Can EVERY group of forgers in a region stay in ecological balance? I believe the answer to that question is unlikely, if not downright impossible. Once one group gets out of balance, competition would ensue.
- Steven A. LeBlanc, "Constant Battles"

Even the Preacher of Ecclesiastes knew a lot more than most modern day folks about the laws of nature, (5:11): "When goods increase, they are increased that eat them."

Ron Patterson

There have been many cultures where the population understands that resources are limited and that only so many can exist - BUT the ones I have seen do it by exporting their surplus manpower. Irish, Greeks, Portugese, Turkish, Scots, Poles etc. These people understand that the eldest inherits the farm. The rest go to the 'developed' other places. AFAIK, strict birth limit cultures are rarer than hens teeth

And if there were no limits to human existence, then there would be 50 to 100 billion people on earth and no other animal life other than rats and roaches that can co-exist with Homo sapiens.

We'll get there eventually, or our robot overlords will get there first.

But Ron, capitalists are the current most successful, most rapacious variant of homo sapiens. All our tools, from the Maxim Gun to the post-Reagan World Bank, are used to attain our goal of maximum surplus profit. Yet the entire beauty of the theory of evolution is that variants that are too successful tend to wipe out their supplies and go extinct, while the environment eventually recovers from their damage. So we do not in fact live in the world of the most rapacious species, because they've long since ruined themselves. It's the species that stumble into a relatively prolonged equilibrium that surround us - but is that alternative irrevocably closed to all homo sapiens?

There have been a few more rapacious variants of homo sapiens, like the Nazis, who wrecked themselves in only a generation by their nasty habit of being so good at war that everyone else had to ally against them. We American capitalists may look like angels next to them and the Soviets, but by process of elimination (extinction), we're now at the top of the destructiveness list. We actually had developed a sort of man-made ecosystem for our large communities called Balance of Power, which tended to work for about a century at a stretch until something went awfully wrong and it had to be reconstructed again. Like any good evolutionary strategy, it had mechanisms like diplomacy and alliances to prevent final monopoly. But technology has made the violent breakdowns more and more intolerable, and America for a while championed the idea of more formal organizations to preserve not only peace between nations, but reduce the extremes of poverty and injustice that threatened to put destabilizers in charge of nations. That all seems to be out the window for America now - seems it wasn't profitable enough a racket.

Now we could say that all the forms of mass organized humans, including Nazis, Communists and us, are just one exceptionally rapacious variant in a universe of social possibilities. Meaning our variant could go extinct, and if enough of the world is not despoiled, alternative variants might continue on. The Aborigines had managed not to wipe themselves out in 40,000 years. If you argue that they did breed to the edge of their existence, you're making an assumption about where that edge is. Seems more likely that they had developed practices, "culture", that helped keep them further from the edge on average than sheer Malthusian logic dictates. But that culture involves practices alien to us Malthusian capitalists (he was a Scottish contemporary of Smith). Many hunter-gatherer societies, for example, have a practice that mothers nurse their young for several years, which happens to suppress the mother's fertility and thus space out pregnancies in time. Our bodies seem to have built-in mechanisms for survival that require learned behavior to activate - "culture".

But we're the variant that chose to employ learned behavior for only one purpose - the seizure and control of every atom and electron we can detect for expansion of surplus wealth. I'm betting 1000 years from now something like the Aboriginies will be here and we won't.

Yet the entire beauty of the theory of evolution is that variants that are too successful tend to wipe out their supplies and go extinct, while the environment eventually recovers from their damage.

Where on earth did you get that nonsense? I have studied evolutionary theory for forty years and that is the first I have ever heard such a silly theory. There is no such theory that the most successful tend to wipe out their supplies and go extinct. The exact opposite is the true; the most successful multiply to the limits of their food supply. The most successful wipe out all opposition not their food supply. If the very successful run out of food they just expand their territory and take food from other species. That is exactly what the most successful species (of megafauna) has done. We are, by any stretch of the imagination, the most successful large species that ever existed. I say large because I wish to leave out rats, roaches, bacteria and such.

So we do not in fact live in the world of the most rapacious species, because they've long since ruined themselves.

And what species was that?

It's the species that stumble into a relatively prolonged equilibrium that surround us - but is that alternative irrevocably closed to all homo sapiens?

We did not stumble into any relatively prolonged equilibrium. There is nothing that even remotely resembles equilibrium in our current situation.

There have been a few more rapacious variants of homo sapiens, like the Nazis, who wrecked themselves in only a generation by their nasty habit of being so good at war that everyone else had to ally against them.

There are no variants of Homo sapiens. We all have the same nature, the same innate characteristics.

Ron Patterson

I love every thing you write, I'll hide and watch and laugh later. Of course I will be able to laugh much more at Danny Boy Yergin, However he is currently laughing each week on the way to the bank.

There is little genetic diversity among any population group on earth today becuase of the Toba Supervolcanic Eruption about 75,000 years ago. The entire population of the earth crashed from an estimated 3 million to less than 10,000 people, which accounts for the lack of genetic diversity in todays human population. Therefore, I doubt your characterization of modern Polynesians being genetically predisposed to diabetes and obesity, this is simply supposition. I suspect if you look a bit harder you will find another reason for obesity and diabetes in the Polynesian population.
I also doubt your claim that todays Polynesians resulted from a single source population like the Lapita. The Pacific Islanders live in a natural paradise rich in food and fish protein but the area is also prone to more hazards than any other place on earth, encluding tsunamis caused by sea floor uplift, tsunamis caused by meteor or astroid impact in the wide Pacific, huge volcanic eruptions, drastic rises and falls of sea level, marauding sea warriors from other islands, et al, so the area has been populated and repopulated as disasters befell the various islanders. The lineage of the SE Pacific Islanders is not as straight forward as many assume. It is a fact that the SE Pacific Islands were populated long before the Lapita arrived although it is possible that the Lapita displaced or interbred with the people that they found on the islands.

Leanan, that is exactly right. One of my favorite subjects is evolutionary biology. And that is exactly what most all evolutionary biologists say, the fat gene was selected for, not against. Those who had the ability to store fat in times of plenty had a much higher survival rate when things got tough than those without that ability.

Native Americans in the American Southwest are particularly subject to obesity because of the history of times that went from feast to famine in that area. The survivors today all inherited the ability to store fat in times of plenty. And when those times of plenty just keep going and going and going, the people just keep getting fatter and.....

Ron Patterson

what is fatness, the instructions from the fat gene?

just, "grab hold of the energy and don't let go."

makes perfect sense to me.

no wonder I can't get rid of me gut.

Hello Darwinian,

In that case: I am postPeak toast. I am 6 ft, 5 inches, 190 lbs, and have always been able to consume mass quantities of food with no weight gain. I have never had to worry about dieting because of my high metabolic rate.

That's just great, perfect timing for food shortages. =(

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

Hi Bob,

Well, my prediction is you (and your "clan") will be fine, because Tiger will suddenly recall who all those emails were from, call you up for organic ag conversion advice, and there you go...

One complicating factor is that many humans are eating things that they could never eat before. High Fructose Corn Syrup (HFCS) has only been in the food supply since about 1980, yet it is in very many foods now. Evolution has not had time to deal with HFCS, nor to a meat-intensive diet (in most human populations), nor to drinks with large amount of sugar in them. Throw in television, which is certainly a sedative (it is possible to make a young child hold still for hours with a TV), add a lifestyle where Westerners don't have to sweat much, and here we are....

Here's another take on our overdependence on Corn (and related) Products..


Myth: Heart disease in America is caused by consumption of cholesterol and saturated fat from animal products.

Truth: During the period of rapid increase in heart disease (1920-1960), American consumption of animal fats declined but consumption of hydrogenated and industrially processed vegetable fats increased dramatically. (USDA-HNI)

Myth: Saturated fat clogs arteries.

Truth: The fatty acids found in artery clogs are mostly unsaturated (74%) of which 41% are polyunsaturated. (Lancet 1994 344:1195)

Weston is "flat-earth" nutritional theory.

Between 1994 and today there have been many studies clearly linking consumption of animal fats with heart disease. The composition of artery clogs is not necessarily equivalent to the dietary factors which cause them.

Why is the Mediterranean diet so healthy?

Clearly trans-fats are also bad.

Either way, a meat-heavy diet will only support a fraction of the humans that can live from plant sources. Most plants fed to animals end up as inedible feces. Eating the plants directly wherever possible is inherently efficient and healthy too (One small win-win).

While I agree and am mostly vegan, with some occasional cheese on a pizza when I eat out, human beings are not wise and will just expand their numbers and consumption to match the amount of additional food and land available from a more vegetable oriented food system.

We need cap and trade for population. Nature is becoming more and more marginalized and, for all practical purposes will largely end with the increasing mass extinction of species.

Price was not flat earth, just because he went to pretechnical communities to see how their diets helped them avoid some of the amazing range of nutritional disorders we enjoy today. As a dentist, his main focus was initially tooth-decay, and he found kids in backwater Swiss villages with green slime on their unbrushed teeth, but with no cavities. Something they were doing was working, while we have brushing, flossing, fluoride and semiannual visits, and mouths full of mercury and gold. Sometimes you have to backtrack to find the path again. Doesn't make you a luddite.

They are in full support of eating fresh fruit and vegetables, while also encouraging a balanced intake of dairy (non-homogenized, no hormones, etc) and animal products for the Bvitamins and other benefits Man has gotten from animal sources for ages. It's not quite the 'meat fest' that the Atkins diet was celebrated for.. But they caution against processed vegetable oils, which having been processed with high heat become (allegedly) more susceptible to rancidity (excess free radicals resulting).. and they claim that our intake of veg oils is far out of proportion to what our bodies are ready to process.

Here is their main summary of his work. I'm not a doctor, biologist, or nutritionist, and would be happy to hear specific problems with their conclusions.. As you realise, there are countless claims out there about nutrition, always contradicting each other and keeping us guessing.

Bob Fiske

Thanks for the site. it provides a interesting read.

...High Fructose Corn Syrup...

It is really very, very easy to stay away from such stuff.


ps eat your veggies!

People in all income classes in the U.S. are overweight, but the problem, ironically is greater for the poor. This is in part because high density, high fructose, high fat shit is the cheapest food. This is because corn and soybeans are subsidized, which, more irony, make them popular for ethanol. We should quite subsidizing all foods or start subsdizing fruit and vegetables to give then an even playing field with the high calorie crap that is primarily a function of corn and soybeans.

I am very much into the fruits and vegetables part of the spectrum and resent that the nutritionally deficient crap is the cheapest.

Despite all the data on the energy and water intensity of meat, it is more expensive to be a vegetarian. Not fair and not smart.

Oh well, you win some, you lose some.......

Let's just say Americans are more compact.

Are You One of the Shrinking Americans?

Junk food diets and shoddy healthcare are making Americans shorter than Western Europeans.

According to a new study, white and black Americans have been shrinking dramatically relative to their European counterparts since the end of World War II.

Researchers say a population's average height is a "mirror" reflecting the socioeconomic health of a society and speculate that Americans' worship of "market-based" social policies may explain why we're now looking up to the Germans and Swedes.

It's a dramatic reversal. We had always been giants, with the tallest men in the world, going back as far as the data exists (at least to the mid-19th century). During the First World War, American GIs still towered over the Europeans they liberated. But for three decades beginning at the end of World War II, Americans' average height stagnated while Europeans continued the growth-spurt that one would expect to see during a period of relative peace and rising incomes.

Now, with an average height of 5'10", American men are now significantly shorter than men from countries like Denmark (6-footers) or the Netherlands (6' 1"). In fact, Americans -- men and women -- are now shorter, on average, than the citizens of every single country in Western and Northern Europe.

I'm not sure I buy that. I do think Americans are getting shorter - I've heard this from other sources - but it could reflect a shift in demographics more than anything nutritional.

Yes, I know they tried to avoid this problem by using only "non-Hispanic whites." But how do they determine that? I suspect it's self-identification, and people in our society may have reason to want to be identified as white rather than Hispanic.

Also, "non-Hispanic white," even if it's an accurate description, covers a lot of territory. Irish and other northern Europeans are among the tallest people in the world. So an increase in other kinds of whites - Italian, East Indian, etc. - would decrease average height.

There's also some interesting stuff that has come out of the recent fad for DNA analysis. A surprisingly large percentage of white Americans are actually not 100% white. Turns out that a lot of Americans who honestly believe they are 100% white have significant American Indian, Latino, and especially African ancestry.

Fun fact, in 1900, half of babies born in the US were blue eyed. In 2000, only 1/6th of US babies were blue eyed. That is a huge genetic shift to edit out of the data. A more accurate measure would be comparing heights of fathers and sons, both measured at age 18. But then you would still have the problem of the large number of northern european ancestry men who married southern european, hispanic, or asian women to consider.

I've seen this study reported but not the way it was sampled. My only comment would be if it is a general population study 15 million Mexicans and several million Asians could not of helped our statistics from a height perspective. We did a sample at our 4th of July get together and out of 7 families all the boys or at least 16 years or more were at least as tall or taller than their dads. All families had at least one male in that category. Ok CNN where are you when I need you?

several million Asians could not of helped our statistics from a height perspective.

Unless the Asians were Yao Ming...

Don't become a Buddhist. The world doesn't need more Buddhists. Do practice compassion. The world does need more compassion. -- Dalai Lama

Growing your own vegs is the way to go. Our grocery bill has dropped substantially since our gardens have come into production. Even for those that are not vegetarians, I can guarantee that keeping up with all the produce of a garden will help you cut down on your meat intake.

Anybody got another recipe for Zucchini?


Hi W,

Do you already do fresh-grate into salad?

No, I've heard of it but I'm not a great (or grate!) fan of uncooked vegs (aka "rabbit food") - prefer mine cooked. Thanks for the thought, though.

Hi NoLogos,

re: "it is possible to make a young child hold still for hours with a TV"

I didn't learn to sit still until I started reading TOD. Now I've gained weight and find it hard to tear myself away (both). And the subject matter makes sweets more attractive, (for some reason the ev psych folks seem to have have noticed).

Walk 3 1/2 miles every morning and eat anything you desire in reasonable portions and you will not gain weight. Walk the same distance and cut your calorie intake to 2000 per day and you will start losing weight.

Hi River,

Thanks, I appreciate your encouragement.

"By adding cellulosic production to an existing grain ethanol plant, Poet says will be able to produce 11% more ethanol from a bushel of corn and 27% more from an acre of corn, while almost completely eliminating fossil fuel consumption and decreasing water usage by 24%."

Yeah, sure. Also, some outfit in Ireland has developed a working perpetual motion machine. Life is good!

The fundamental problem with cellulosic ethanol is the bulk of the feedstock. Most here do not realized how concentrated corn energy is. Poet Ethanol has a plant 14 miles from my house at Hanlontown, Iowa. A nearby road to the plant is nicknamed Ethanol Alley because of the heavy traffic of semi's loaded with corn. An average ethanol plant around here takes about 100 to 150 semi loads of corn per day. A new plant by Harvest Biofuels at nearby Garner, Iowa is expected to receive 150 semi loads per day. This is shelled corn with the cobs removed. No farmers around here would even consider saving the light bulky cobs. To use the cobs means a complete replacement of the farm equipment and storage infrastructure. I would estimate that cobs would be at least 3 to 5 times more bulky than shelled corn. Instead of 100 semi loads to each ethanol plant, perhaps 400-500 semi loads per day would be needed. In an eight hour day, this would mean about one load per minute, 8 x 60=480. The logistics of this boggles the mind. The price of the cobs would have to rise to be greater than the corn to accommodate this madness. In any case, cellulosic ethanol removes land from food production just as corn for ethanol does. Arable land is a finite commodity just like oil. Whether corn or a any other cellulosic feed stock is grown, arable land is removed from food production. Food prices must rise so food out bids the ethanol plants. Until that happens, corn will go for ethanol.

The ideal solution would be to scale the technology down so that mini plants could be located to service just a couple dozen farmers. The question is whether this is possible to do without too bad a hit to the economies of scale inherent in the more centralized larger plants. In any case, the cost of feedstock transport has to be included in that calculation.

I don’t see it discussed often, but in the run up to, and aftermath of PO, there will be an incredible amount of money to be made and lost as the market begins to understand the constraints of PO and ultimately peak energy. It seems to me that being PO aware is just like having the newspaper for the day after the superbowl at the beginning of the season (Back to the Future II…anyone). Place your bets early (now) and you could make a tremendous amount of money, which will enable you to thrive in a post peak world. And make no mistake… money will buy prosperity in a post peak world, it just won’t be cheap. Money will buy land, money will buy equipment, and money will buy renewable energy. The TODers who have already taken the plunge may have better estimates than me, but I would think that in most areas of rural America, a basic farm that can support your family can be had for around 200,000 if not less. For 500,000, you could get one hell of a farm and a PV solar system large enough to run your AC, your big screen, and your electric oven at the same time. For someone who already knows the point spread of the 2008 superbowl, these numbers are in no way insurmountable. Stocks of most US oil companies have quadrupled or more since 2003, I think they could do it again when the financial powers that be become PO aware. It wouldn’t take much. If profits doubled and the PE of oil stocks doubled from 10 to 20, we’re there. Amazon.com has a P/E ratio of 120, so this doesn’t seem extraordinary to me at all. Coal companies, solar companies, wind companies, and even precious metals are also good bets. And that’s just the beginning. Given the vast array of financial instruments available, the ways to profit are limitless (options, futures, short trades ect…) You might have to take your gains before the democrats try to tax them away, but the point is that the potential profit is virtually unlimited. Industrious people with capital will prosper post peak. So cheer up TODers, maybe we can’t save the world, but we don’t have to go down with them.

The trick will be timing when to spend your new-found riches before...

a) inflation makes it useless.
b) the basic rules of US currency change invalidating the new-found riches.

Inflation only devalues currency. Once you buy that tangible asset (gold, farmland, pv-solar sysyem ect...) you are immune to whatever inflation does from that point foreword. As for timing, perfect timing would be difficult, but getting out in time to preserve your wealth shouldn't be too difficult if you are paying attention. I agree that US currency is a sinking ship. Don't buy bonds, 5 year CD's, or hide cash in your mattress. And if you don't beleive energy stocks will prosper due to regulation or windfall profits taxes.... short sell industries you think will fail, like restaurants and hotels.

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

If we're both starving, and I have an apple, and you have a bar of gold, I'm keeping my apple.

[sarcasm]Forget that. I'll take the brick of gold, and hit you on the head with it and take my apple back. Then when I'm done with the apple, I'll cook you up. ;) I'll just stay away from eating spinal columns and brains. Otherwise I might end up with Mad Durandal syndrom with a sponge for a brain.[/sarcasm]

Except that by my wife and I working in what you would presumably consider the "discretionary" side of the economy (both in IT) we can earn, hmm, maybe 3 times what we would otherwise, giving us almost 10 times the discretionary income, allowing us to pay off our not-inconsiderable debts at a decent pace (1 year vs 10 - not including mortgage). Unless you recommend filing for bankruptcy...
I do have a land to find a job in the renewable energy industry in the next few years, but I'm not expecting my job is likely to be under much threat that soon.

Using ones knowledge to amass the resourses to survive what may be a terrible century does not strike me as greedy. Not using that knowledge would be foolish and wasteful. The way I see it, I have an opportunity to greatly improve (though not guarantee) the chances of my family and the generations that follow, and I'm going to make the best of it. I won't take joy in the misery that engulfs the world, but I won't feel guilty about being ready either. If making money off of PO strikes you as improper, use the wealth to help rebuild your community and provide for those who were not as prepared as yourself.

Richard Rainwater discussed all of this back in a Fortune interview in December, 2005. He made no secret of his plans to go long on energy, but he was, and is, deeply concerned about the implications of Peak Oil.

I wrote him a letter asking him to speak out more publicly on Peak Oil, and he responded that while he appreciated the kind things I said about him, the Fortune article was a one-shot deal. He was, and is, seeking less publicity, not more.

But he did issue a very clear warning. As far as I know, Rainwater has never been wrong regarding a major investment decision.

You will note that he is increasing his ability to grow his own food and integrating himself into small town life.

Published on 12 Dec 2005 by Fortune. Archived on 13 Dec 2005.
The Rainwater Prophecy
by Oliver Ryan

The next blowup, however, looms so large that it scares and confuses him. For the past few months he's been holed up in hard-core research moderating books, academic studies, and, yes, blogs. Every morning he rises before dawn at one of his houses in Texas or South Carolina or California (he actually owns a piece of Pebble Beach Resorts) and spends four or five hours reading sites like LifeAftertheOilCrash.net or DieOff.org, obsessively following links and sifting through data. How worried is he? He has some $500 million of his $2.5 billion fortune in cash, more than ever before. "I'm long oil and I'm liquid," he says. "I've put myself in a position that if the end of the world came tomorrow I'd kind of be prepared." He's also ready to move fast if he spots an opening.

His instincts tell him that another enormous moneymaking opportunity is about to present itself, what he calls a "slow pitch down the middle." But, at 61, wealthier and happier than ever before, Rainwater finds himself reacting differently this time. He's focused more on staying rich than on getting richer. But there's something else too: a sort of billionaire-style civic duty he feels to get a conversation started. Why couldn't energy prices skyrocket, with grave repercussions, not just economic but political? As industry analysts debate whether the world's oil production is destined to decline, the prospect makes him itchy.

"This is a nonrecurring event," he says. "The 100-year flood in Houston real estate was one, the ability to buy oil and gas really cheap was another, and now there's the opportunity to do something based on a shortage of natural resources. Can you make money? Well, yeah. One way is to just stay long domestic oil."

"But there may be something more important than making money. This is the first scenario I've seen where I question the survivability of mankind. I don't want the world to wake up one day and say, 'How come some doofus billionaire in Texas made all this money by being aware of this, and why didn't someone tell us?'"


I'm in basic agreement with you. You can use the information to profit and then use the profit to either prep yourself or prep or your community or both. This topic has been discussed quite a bit here and many, perhaps most, are in agreement with the idea. But there is something coming through in you posts that reeks of greed and "this is my lottery ticket, I'm gonna get mine bitches!!!" sort of thinking endemic in our culture.

Perhaps the comparison to betting on the superbowl or something is what's doing it. Don't know exactly what it is, but it's the "vibe" of your post more than the basic ideas that people finding off-putting.

As far as profiting, I think it's assanine not to profit when you can. As an example, consider Craig of Craigslist.org. He refuses to take advertising, even non-intrusive and non-objectionable advertising. The estimates of what he could be making are into the tens or hundreds of millions.

I guesss refusing the money people are practically throwing at him buys him street cred with all the San Francisco hippies or something. My thinking is take the money and then use it to create some jobs for people in the crime ravaged and undercaptizlied mission district where Craig has his offices. But I guess Craig is more concerned about his image than actually helping his community. To many folks not taking the money makes him some sort of community hero, to me it makes him a selfish ass.


While you might not be able to accuse Craig of selling out himself, craigslist isn't all craig's anymore.


There are lots of people around who simply do not believe our current growth-forever system is beneficial. To me it's quite understandable that some people are not willing to be part of it. You can certainly argue that they could do loads of good stuff by making money, but doesn't this ultimately lead to the paradox that "economic growth is absurd, but in order to get my point across, I will have to do economic growth!"

What would be the point of creating jobs that are totally unsustainable? Here I find your thinking rather contradictory: If you think it's great to create jobs in underprivileged areas that nonetheless are totally FF-supported, isn't that even worse than leaving these people unemployed rather than doing sustainable stuff, like farming without FF?

I have no idea what you have personally done to help your community (aside from telling everybody they are doomed), but unless you have practical suggestions, nobody will listen to you.

While I respect your views, I do have a problem with your doomerism; at the end of the day some of us may just survive!

It's not the word greed that made me post that graphic, greedy people never call themselves that anyway. It's the words underneath it.

Few people understand either what money is in our present economic system, or what is about to happen to both the money AND that economic system. But I can assure you, it came from nowhere, and will return there very shortly.

The collection of financial articles that Stoneleigh gathers up twice a week in the Round-Up at TOD:Canada should be obligatory reading material for everyone. Even the Wall Street Journal is starting to take notice..

Trying to amass money by being smart inside a system that is about to collapse, is not smart at all, the Titanic provides all the metaphors needed.

The only thing that makes sense on this particular sinking ship is to organize your life in such a way that your dependency on wealth is minimized as much as possible. All tangible possessions can and will be used against you in a court of your peers (or is that "a court of your poors"?).

that's another issue too. The time to use this info to "get yours" via playing the markets may have already expired. I'd guess that as the info is breaking into the mainstream, that period either has expired or is about to. The minute MSNBC is running articles "how to profit from Peak Oil" the gig will soon be up.

The folks who will be the ones to have profited will be the ones who started moving their money around in light of these issues back in 2001 or 2002.

@ "MoneyMan": If it took you this long to wake up to this stuff, I seriously doubt you are swift or smart enough to make a killing using the info. You'll probably end up losing everything as the smart money was moving in 2001-2002. Those who follow the coattails of the smart money like the subscribers to Stephen Leeb's newsletters were moving in 2003-2005. It's now July 2007. You're at least 2 and a half years behind the curve. There may be a brief period where folks like you can turn a profit but the great "harvesting" is likely to begin soon.

Ouch chimp!! I think you googled the wrong moneyman. Those actually are not the vibes I was going for. I was trying to convey that if one beleives the evidence points to PO being soon, there are rational financial moves one should take accordingly. There are also irrational moves that one should avoid. Someone with a lot more money and a higher risk tolerance than myself could probably make a killing. That's not my goal. I'd be happy with a sustainable farm with solar-PV system on the roof of my barn. Some (certainly not all) here beleive that when PO arrives, we're all screwed. I disagree. If rural farms are as affordable as my limited research suggests, I'm going to be just fine. So, what would ya'll estimate the cost for "40 acres and a mule" is in your neck of the woods?

I live in Pittsburgh. If you go 50-100 miles north or northeast, you can get 40 acres for under 50K, and 20 acres and a house for under 100K.

No clue on the mule.

Currently over $8,000 USD for an old donkey in Iraq. Shipping costs to your new farm not included.

This idyllic vision of life on the farm is just that, go work on a farm for a while before investing all of your money in the purchase of one. I grew up on a farm and have owned farm land since 1993, I can tell you the farm does not take care of itself, be prepared to work.

BTU, I totally agree, but you are wasting your words on many here. Most of them have never worked on a farm but have this idyllic mental picture of 'life on the farm surrounded by a wonderful community of helpfull neighbors.' Dont get me wrong, I like these folks and they are mostly smart and have some good ideas but the majority dont know squat about a farm. They would probably shoot the rooster if it woke them at daybreak. Just humor them. BTW, there is one person on here that thinks modern technology would be all it would take to build a duplicate of the pyramid of Cheops...all 2.2 million stone blocks, the polished facing stone, the 200 ton perfectly round cylindrical plug, you know, the whole thing...just humor him too...but they are on the right track with GW, PO and economy.

Not sure if you're referring to me or EngineerPoet, but certainly I don't see any reason modern technology should NOT be able to recreate the pyramid of Cheops.

Presumably you believe it was created by aliens.

Well hello there wiz, whatever made you think I was refering to you? Oh yeah, there is no doubt that modern technology could reproduce a pyramid like that of Cheops. Let me know when you are finished with the project. I would like to see how your pyramid stacks up to the original...get it? stacks up? Sorry, couldnt resist. Your faith in modern technology is amusing, especially in the face of peak oil, which this board is about. Since you seem so positive that modern technology could do the trick I have included a description of the 2.2 million stones that comprise the pyramid...

'Amazingly, the outside surface stones were cut within 0.01 (1/100th) inch of perfectly straight and at nearly perfect right angles for all six sides. They were placed together with an intentional gap between them of 0.02 inch, a feat difficult to duplicate with modern technology. The 0.02-inch gap allowed space for glue to seal and hold the stones together. A white cement that connected the casing stones and made them watertight is still intact and stronger than the blocks that it joins.'

Do you have an estimate of how long it would take to build your pyramid using modern technology? You wouldnt want to start a project like this without a time and materials estimate, would you?

I have never mentioned aliens on this board, or any other. Why would you bring up such a bizarre topic? Do you believe we have been visited by aliens? I suppose humans are the most alien beings that I have encountered.

I believe that the pyramids were built by very dedicated egyptians that toiled harder than you can even imagine under the broiling sun of the desert. In addition the workmen were very skilled craftsmen, not slaves under impressed servitude. Quite a lot has been learned about ancient Egyptian workers in recent years.

Believe it or not I typed out an extensive reply to this TWICE and lost it both times. I'm insufficiently motivated to do so again, but I'll happily defend my "faith" in modern technology by pointing out the structures we can build today both dwarf the pyramids, and exhibit accuracy to 6 orders of magnitude greater than anything observed in the pyramids.

I apologise for accusing you of belief in aliens, but honestly the only people I've ever seen claim we couldn't build the pyramids with today's technology are the ones that go on to state this is proof they were built by visitors from outerspace.

I do know how much work and knowledge is required.

I have advised others to plant a variety of fruit and nut trees (hopefully time still allows for that) and berry bushes.

This is, IMHO, the best "crop" for older folks without a lifetime of experience farming to manage. Still problematic, but a good diversity to go with row crops and "something to trade".

Best Hopes for farming diversity,


Don't forget the bird netting

Perrenial passive food producers....lots and lots of diffrent types of fruit trees,some years some wont bear.grapes,kiwi vine,raspberrys,strawberrys ...my biggy is fruit trees...I have several types of asian pear that do well every year seed,storeed @40 degrees...learn the secrets of seed production and be a true hero...

...vs. Altruism!!

Who's keeping score?

I think Alan has the top score in the Altruism column.

Other than when he says New York, San Francisco and New Orleans should be saved at the expense of other cities. With tax dollars. Obtained from the temples of altruism - The IRS and Congress.

A friend of mine has actually said "I don't care what happens in the world as long as I can make a buck from it" (somehow I don't see him as often as I used to...)

Research credit for that sucker? ;)

If you checked the CB's copyright policy, you'll note that reprinting it on a website will run you $800. Which is why I only posted a link at LATOC the other day.

Research credit for that sucker?


If you checked the CB's copyright policy, you'll note that reprinting it on a website will run you $800. Which is why I only posted a link at LATOC the other day.

I didn't see it. I never visit LATOC because, as I've mentioned before, it is completely unreadable on my computer.

And I only posted a link, too. Look closely - it's linked, not archived here.

IE tab is the only way I can read LATOC.
That's with FF

Where IS that 'Theory of Everything' ?
it is !

well alrighty then. seems you put me in my place. did you happen to get it off reddit? I submitted it to reddit on Sunday and posted it to LATOC under "Humor" on Monday.

have you tried visiting latoc recently, in the last few weeks? I think I fixed what was causing it to look screwy on some computers.

did you happen to get it off reddit?

No. I don't visit Reddit, either.

I can't even remember when I first saw that cartoon. It's older than the hills. It's a classic, like that one about how on the Internet, no one knows you're a dog. I'm pretty sure the first time I saw it was long before I got into peak oil. It's been posted to PeakOil.com about a million times over the years, and I'm sure it's been posted here before, too.

I just checked, and LATOC is still wonky. :-(

the one about the books about the end of the world is damn funny too:


I've written to you before about this. Unfortunately you have based lifeaftertheoilcrash on an html system written by idiots. Increasing the font size even one step causes the pages to be unreadable. Some of us have aging eyes.

Last night on Mad Money, Cramer talked about all the money to be made by the Bush administration's penchant for drilling and general disregard for the environment. I immediately switched channel.
This is what happens when everything on the freaking planet gets monetized. The end of nature is being sped up by the likes of Cramer.

Jim Cramer doens't necessarily think it's all a good idea, but he does have an opinion about what is likely to happen and will instruct people how to profit. He's a cynic.

His former CNBC partner, Larry Kudlow, on the other hand is a 100% confirmed kool-aid mixing pro-Republican propagandist tweaking on Ayn Rand.

The old standard for supporting a family on a subsistence farm is 40 acres and a mule. A great-grandfather of mine in Lawrence, Massachusets did it on 10 acres and a job in a shoe factory.

As far as peak oil profiteering, I think the best way is investing in U.S. production.
Bob Ebersole

Bob; (topic shift..)
I didn't get to respond further the other day (7/4?) about your estimates for solar panels, but I took great exception to the calculation that someone offered, telling you you'd have to spend $70k for Solar power. I'm sure his math added up fine, but what wasn't said was that BEFORE you install panels, you define what usage is reasonable to cover with electricity, and what can be covered in other ways. Solar electric is a BB, not a silver bullet, and any installer worth his salt will advise you to economize your usage carefully before you calculate how much PV to get.

For most of the draws on a typical home, a 2 to 4 kw Solar system should make sense to invest in. It can always be expanded upon, and similarly, the homeowner will soon be taking stock of their electrical usage and finding new ways to draw less, in order to see that Utility meter stop spinning or start turning backwards.

I thought this should be said, since the other advice was akin to the comments which try to say 'don't expect ANYthing from solar because it won't do EVERYthing we expect of our power sources today.' You know what? It's expensive, it is. But setting up even a small amount today is a reasonable, if a little bit painful- hedge against the likely chance that it will be worse tomorrow. You may not get A/C from it, but you'll have lights, phone, fridge, computer, radio, battery charging, ceiling fan..

my two bits..

Bob Fiske

Bob, that sounds a lot more reasonable. I have a 1500 sq. ft house built in 1895 and added on to in the 1920's. Its comfortable w/o AC 9 months a year, and I work out of town a lot staying in hotels. I'm looking at brown-out protection. The house was built long before AC, and hopefully will last past AC being affordable.
Bob Ebersole

I read somewhere that if you have a grid-tie system, power will be unavailable to you in the event that power from the grid is shut down. This is to protect powerco workers from being electrocuted from the power generated by your system going back to the grid. Maybe someone could confirm or elaborate on this...

Don't become a Buddhist. The world doesn't need more Buddhists. Do practice compassion. The world does need more compassion. -- Dalai Lama

Yes and No.

You can get inverters/chargers that allow a dual-system, being grid-tied, but still getting power in isolation when the grid goes down. Up until recently, grid-tied systems were protected as you said, and many systems still will be set up that way, saving the buyer a chunk of change for Batteries and related components.

That said, I believe it makes sense to get even the simple grid-only setup for starters, if that's what you can afford. (or just barely afford, or not really afford) The panels will be generating power in the sun, regardless of what your inverter is set up for. You could wire in (or have it done) a breakout where your panels can be charging car batteries or whatever, running DC appliances, etc.. if the grid were down.. there is 'Some' shock and fire danger involved, but if you're smart enough to drive on a highway at 75mph, I'm sure you could figure out how to access your PV's in a 'situation'.

But if you wait for that 'situation' to happen, how likely will you be to get your panels, when all your neighbors are clamoring for them too? In the meantime, they will work for you in a quiet, reliable way with their grid-tie inverter, not even boasting about how well they will work during more critical times..

just saying..

Hi Phree and Bob,

I heard a talk by Paul Savage, and "believe" I "may have" gotten exactly this bit of info from it. So, yes, you can still get power when the grid goes down.

see http://www.nextekpower.com/

Perhaps you can figure out a way to do this on a larger scale, i.e., if there were more people purchasing.

BTW, Phree, I like your reminder for more compassion.

I have a rough price guideline from a regional solar PV installer (http://www.solarwrights.com in New England) of $8.00 to $8.75 per installed watt before incentives. That comes to $16k to $35k for a 2 to 4 kw system. They said incentives (tax credits, rebates, etc.) would come to about one-third of that amount. I believe this is for a grid-tied system.

In Colorado, the total subsidy for most people is $4.50 per watt plus the $2,000 federal tax credit. One quote I have received is for a 3.15 kw system for a net price of $7600. This seems quite doable for most people.

There is currently a development in process in Arvada, Colorado which will provide zero net energy for several hundred homes. The total monthly bill for mortgage and energy will not be more than a conventional home.

The need for ac, of course, will depend upon a number of factors, including where one lives. A poorly insulated, poorly sited, large home with little conservation, of course, will cost you an arm and a leg for ac and, therefore, solar electricity. As for myself, I do not need ac and should be able to take care of most of my needs with the system I am currently in the process of purchasing.

Unfortunately, in my neck of the woods, or the mountains, as it were, the only credit available is the one from the fed. I am going to install a modest system anyway for my own sanity and, hopefully, to set an example for others. Let us not give up yet.

Hi oilman,

re: "...investing in U.S. production."

Did you have something particular in mind?

Moneyman: This is what I have been doing. It has been fun so far (cross my fingers). Good luck to all comrades in this quest.

I don’t see it discussed often, but in the run up to, and aftermath of PO, there will be an incredible amount of money to be made and lost as the market begins to understand the constraints of PO and ultimately peak energy.

That is because arguing economic models is alot of "how many ghosts of Adam Smith can invisibly glad-hand on the head of a pin". Kleptocracy, kensian, mises, whatever the present system in the US of A is.

While software exists to model eMergy and the technocracy movement exists - not alot of discussion on either of those topics - both of which might be workable models for you to pick the long term winners. For long term winners to 'be profitable' however, the present system of ownership of capital would have to continue to exist.

You don't need fancy economic modeling software to predict what will happen when the price of energy increases and the supply of energy decreases. Granted, the game changes if the present system of ownership collapses, but that's what weapons are for.

Set up "rules" that make the rich richer and the poor poorer, and back the rules up with violence. That's exactly why we're in a pickle. Money is everything to you, moneyman. Ever heard of justice?

Justice??? sounds good... sign me up. Look, I don't make the rules and I didn't invent the game. It seems like I'm getting a lot of heat because of my screen name. I chose Moneyman because finance is my area of expertise, not because I want to steal from the poor. My motivations are simple. I don't want my children and grandchildren to starve because of oil related food shortages. It so happens that have knowledge and expertise that I can use to minimize that risk. Therefore I have an obligation to act, as does everyone else. To not do so would be immoral.

You're dead right on this one - my mother wishes to retire from her 3.25 acre (1.5 hectare?) farm on the Iowa/Minnesota border. I think I'd like to have it and I'll install a vault to hold a hoard of silver coins ...

And where exactly will this vault be located?:-)

Which points out perfectly the drawback to focusing on 'what can peak oil do for me?'

I don't have a problem with doing some leveraging and setting yourself up, but these guns and money are not exactly the guarantees of security, are they?

Some of our attention has to be of holding things together, so our own preparations aren't little islands or oases of 'have' in a tumultuous sea of 'have not'.. some of what we do here has to make sure as the tide rises, everyone is at least a bit seaworthy, or the boats that aren't rising will be tossing their anchors onto your decks to get a lift.

Now is when we can be buying the million 1 ounce bottles of prevention, instead of trying to deadlift the million 1 pound concrete blocks of cure, and hoping our ships still have some buoyancy left for us..

Amazon.com has a P/E ratio of 120

But Amazon has an very inefficient use of energy in its distribution system - direct to each customer with a truck. When oil prices double again (2008?) I suspect Amazon will be one company, along with airlines, in really deep trouble.

But Amazon has an very inefficient use of energy in its distribution system - direct to each customer with a truck.

Yeah but that truck is going to be full; it will carry not only your package but also the packages of many other people in your neighborhood. So delivering goods by UPS, Fedex or USPS is more energy efficient than everybody driving to the mall. And note that it shouldn't be too hard for UPS, etc. to convert their fleet to hybrid or plug-in hybrid models.

When oil prices double again (2008?) I suspect Amazon will be one company, along with airlines, in really deep trouble.

I think it is the other way. When oil becomes very expensive or gasoline shortages develop, people will buy more online. So amazon.com will do even better. The airlines are a different story.

They may well buy more online, but will they be buying books and DVDs? Also while centralised delivery to a large enough consumer base is more efficient that consumers individually driving to stores, I doubt it would more efficient than consumers using public transport or cycling.

That delivery system could "easily" expand to pick up packages from other sources than Amazon. Think of a physical implementation of packet transmission. Only "here's a packet going your way... add this to the load". That would turn UPS and FedEx and USPS into some variant on common carrier. It would be pretty kool if I could order things online and have them show up at home later. Or if I could stop into the store and buy them and have them show up at home later. All the same freight stream. People who live on islands often have this system set up now; store puts stuff on boat, they get it at the other end.

cfm in Gray, ME

If someone here has the time, interest and expertise, it would be fascinating to see an in-depth study of what sort of business models are likely to survive an extended global recession due to an energy crisis.

Others here disagree, but I don't expect to see the electricity grid collapse (though it may well become less stable), or the Internet (though again, it may well lose reliability). Clearly if they did, all bets are off.
But otherwise, in general, how will huge multinationals fare? How will businesses that provide "trivial" services like entertainment fare? The Great Depression of the 30's might be a useful starting point, but obviously the world is very different place now, and nature of the economic downturn considerably different, especially if a long slow squeeze, rather than an initial precipitious crash followed by a very slow recovery period.

How will (fare) businesses that provide "trivial" services like entertainment fare?

Please be very careful about what you call « trivial ». For example, during the siege of Leningrad (1941-43, when a single city suffered more deaths than the combined losses of the USA, UK, and France in WWII.) the libraries remained open 24/24 and « poetry readings » were the major distraction from the hell that was life. During the thirties, cinemas thrived while Hollywood’s dream factory wanted every film to have a happy ending. On the downslope I would expect reding to increase as the banality of TV becomes insupportable with the resurrection of sewing groups and a reader of the classics - e.g. « gone with the Wind » after the defeat of the Confederate states.

Hence the quotes. Libraries are not businesses, so I don't see an issue there. I'd love to think there might be a return to more "substantial" forms of entertainment, but I'm not sure exactly what would trigger it.

I haven't read down yet for the ridicule and critiques I anticipate to this posting, but I shall shortly - wanted to post before reading them.

Cos I have a view that is sorta thinking along your lines... that is that I think any job I can get right now (I am a high-tech start-up executive, have been for years, not exactly non-discretionary skills) is gonna be at risk... I have a son with special needs... and ultimately making money during the start of the fall, and banking it quickly into assets that have value during and after the fall makes sense...

so, putting my meager skillset to use I am working at the moment on a business that provides valuable services that are likely to be in demand in the coming years, that is relatively low-cost to start-up, but that should turn reasonable profits (won't be a billion dollar company but should do okay), but more importantly that if everything collapses quicker the WCS is getting left over with assets of value after the fall...

Yes it is an supplies play, but with enough of a twist to be viable - so not yet another "get your foodstuffs here"... I'll post more on it once we are off the ground - but before that I have to focus on getting the day job done, and putting food on the table... god i hate not taking peak oil seriously when i first came across the concept in the late 90's working at Halliburton (and yes it made sense then, just didn't take action needed seriously)
When no-one around you understands
start your own revolution
and cut out the middle man

Most people, when it comes to food production think 'farmers'. In reality they need to think 'agribusiness'. If Ethanol is more profitable than food, what do you think their business plan will be? British merchants that controlled food production in Ireland during the potato famine continued to export food throughout, even though Ireland starved.

Business is business. If Americans can't meet the highest bid, does anyone think ADM will feel a sense of 'civic duty' and forego their profits or that the current US government would take any effective action against agribusiness to make them do so?

If Americans can't meet the highest bid, does anyone think ADM will feel a sense of 'civic duty' and forego their profits or that the current US government would take any effective action against agribusiness to make them do so?

I think they might. IMO, that's the risk of investing in farmland. The government might decide to claim it via eminent domain, and turn it into a "poor farm." (Poor farms, where able-bodied indigents were required to work in return for room and board, were quite common in the U.S. in the 19th and early 20th centuries.)

Poor farms survived into the 1940s--often called "the county farm." Counties were responsible for looking after poor people, and what they would do is to put them out of sight in rural areas--all sorts of poor people together, the elderly, orphans, the mentally ill, those who had failed in business or lost their own farms. A visit to the poor farm was considered educational and cautionary for children: "Save your money, so you don't end up at the county farm when you are old."

In addition to gardening (not really farming), a number of the poor would also do handicrafts. It was not all sweetness and light, however. A good source is "In the Shadow of the Poor House." Another very good description of a poor farm is in James Michener's autobiographical novel, "The Fires of Spring." Generally speaking, conditions at the poor farm were kept unpleasant enough so that if there was any alternative at all to going there, you would stay away--and would leap at any opportunity to leave.

Has anyone considered what companies like ADM, General Mills and the thousands of other huge land owners will do with all their farmland that will be fallow after PO renders huge farm machines idle? After slavery was abolished many large plantation owners in the south divided up their land into small parcels and leased the parcels out to 'share croppers.' The deal was usually a 50/50 split on the crop so the share cropper and his family were always subsistance farmers. Many times the share croppers were forced to purchase any merchandise they needed at the 'company store' owned and operated by the land owner, for it was the only place that would sell to them on credit. Share croppers remained virtual slaves. I dont know the percentages but there were many white share croppers working the fields for the land owners as well as blacks. It was a grinding, miserable life but from it sprang the great blues music that later became rock and roll. Share croppers usually planted a cash crop of the owners choice plus they had a garden along with chickens, a few hogs and a milk cow to provide for themselves. Share cropping ceased suddenly when the motorized cotton picker was invented and came into general use. The largest mass migration in American history took place when both black and white share croppers moved north to the factories in Detroit and Chicago after the introduction of the cotton picking machines. Share cropping might come back into vogue.

Hi River,

re: "Has anyone considered what companies like ADM, General Mills and the thousands of other huge land owners will do with all their farmland that will be fallow after PO renders huge farm machines idle?"

I think this has been covered previously, and that the percentage oil use for farming is rather small. We still have the fertilizer, transport and export issues, though.

Modern agriculture is completely fossil fuel dependent, as the price of all oil related farm inputs rise, farming will no longer be profitable, even with the current farm subsidies. If anyone has stats on land ownership by ADM and the like, please share them.

Peak Oil has arrived in the German MSM. DER SPIEGEL reports about IEA 'ringing the alarm bells' and writes about a possible 'new oil crisis' (in German).

Pretty misleading, though, since 'new' assumes an oil crisis like those of 1973 or 1980, which clearly is not the fact.

Brent is currently above the last record nighing on 79$/b.

Check latest prices here.

It seems that today's record oil prices are being partly helped by a strong fall of the US$, which is likely to have broken the early 1990s record low, now below 81 points.

As Marc Faber said, "The world's worst investment is the 30 year US Treasury bond, held to maturity."

BTW, imagine what will happen to the dollar if and when the US fully or partially pulls out of Iraq.

But consider the plight of the officers and enlisted personnel. The Drudge Report had a story about a guy being sent to his fifth deployment to Iraq/Afghanistan. In the Vietnam War, soldiers were only obligated to serve one deployment. If you are sent to Iraq enough times, sooner or later you run a very high chance of being killed or maimed. Compound that with the dawning realization that you are there to defend the dollar and to keep the oil flowing to the US.

There are no good choices in Iraq. I think that what will finally force some kind of resolution will be something approaching a de facto mutiny in the US military.

I think you are right on. Your plan combined with westexas is my "bug out" plan. Have you looked at the canadian energy trusts? Most near their five year lows and geat dividends to boot. When you look at the PE's of the energy stocks, trusts, etc, I couldn't agree with you more that these present times are a gift to those Peak Aware.

Canadian energy trusts have bad Canadian tax problems. Look at US royalty trusts instead
Bob Ebersole

This is very correct. However, you would get a bit of a currency hedge by investing in Canadian energy trusts. They were slaughtered very very badly a few months ago when the government changed the tax laws, and the haven't really come back.

Perhaps your best bet is to short the entire S&P 500!

WT, the latest plan that I read about for pulling our troops out of Iraq was a withdrawal through northern Iraq and into Turkey. That plan poses several problems. Our troops are not equipped for manuver warfare on such a large scale that would require so much fuel. The Turks are massed on the N Iraq border ready to invade 'Kurdistan.' Will the Turks grant us passage through Turkey to a port. How many of our troops will be lost in such a long withdrawal. I have linked to some comments by William Lind about just such a withdrawal through Turkey...full article at link.


While dilettantes believe the attack is the most difficult military art, most soldiers know better. Carrying out a successful retreat is usually far harder.

One of history's most successful retreats, and certainly its most famous, is the "Retreat of the 10,000." In 401 B.C., 10,000 Greek hoplites hired themselves out as mercenaries to a Persian prince, Cyrus the Younger, who was making a grab for the Peacock Throne. Inconveniently, after the Greeks were deep in Persia, Cyrus was killed. The hoplites' leader, Xenophon, the first gentleman of war, led his men on an epic retreat through Kurdish country to the coast and home. Surprisingly, most of them made it. Safely back in Athens, Xenophon wrote up his army's story, cleverly titling it the Anabasis, which means the advance. It was not the last retreat so labeled.

If the above scenario sounds familiar, it should. America now has an army, not of 10,000 but of more than 140,000, deep in Persia (which effectively includes Shiite Iraq, despite the ethnic difference). We are propping up a shaky local regime in a civil war. Our local allies are of dubious loyalty, and the surrounding population is not friendly. Our lines of communication, supply and retreat all run south, to Kuwait, through Shiite militia country. They then extend on through the Persian Gulf, which is called that for a reason. If those lines are cut, many of our troops have only one way out, the same way Xenophon took, up through Kurdish country and Asia Minor (now Turkey) to the coast.

There are over a quarter million of "our" forces in-country right now, if you count the mercs, er, contractors. I don't see why their way out wouldn't be through the well-fortified Southern route, into Kuwait.
This is about the retreat of an occupying army, and the IP's want us out, period. I think they'd mostly be busy celebrating, throwing flowers and chocolates, rather than blowing themselves up to bag one more GI.

Nelsone, perhaps you should read the link? Hint...the Persian Gulf is part of our supply lines/route of withdrawal...they dont call it the Persian Gulf for nothing.
Err, after we have killed about a million Iraqis and displaced at least four million more, blown up their towns and infrastructure, etc, what gave you the idea that they would let us withdraw without taking revenge? Try putting yourself in their sandals for a moment.

Y'know, after that first statement about "140,000," I kind of skimmed it from there. How can Mr. Lind not acknowledge the second-largest contingent of occupying troops there, the mercs, numbering around 120,000?

I think an attack on Iran would be launched with the intention of occupying Khuzestan, so many of the troops would have been drawn to the South and pre-positioned prior to the attack.

Then there's Turkey and the Kurds - what a rat's nest. Like Sy Hersh says, the US and Iraelis have been behind the Kurdish incursions into Iran that have been going on for a couple years now, maybe more. The Turkish population was dead-set against the US invasion from the start, and they perceive that the result has been worsening security along their Southeastern border. You really think they'd okay a massive exodus of US heavy armor through their ports? I don't. And there isn't nearly the capacity for air cargo, either, compared to the huge facilities in Kuwait and SA.

And then there's the feasibility of cutting the supply lines at all. An insurgency isn't well suited to attacking hard points, and you can believe that the exit lanes would be one hard target, continuously patrolled from the air.

Ooops - according to T. Christian Miller, there are now 180,000 mercs in Iraq, outnumbering the soldiers!

The US Military has become so incredibly reliant upon Mercenary support you may as well declare them the fifth arm of the US military. One you can ignore at the political level especially any Greystone losses. Greystone is the foreign employment arm of Blackwater Security. These employees aren't even from the US making their losses completely transparent to the US public. Blackwater will list US citizen deaths when pushed but it is very hard to find out anything about greystone casualties.

The other amazing thing is that they are getting newer better equipment much faster than the regular troops. For example mine resistant vehicles have been operated by blackwater for three years now. In fact the US Military is having trouble getting limited runs of test vehicles because Blackwater is buying for cash today whatever rolls off the production lines.

I found it amusing that the total run of Australian Bushmaster wheeled APC's with serious mine protection was about 450 vehicles and the US is starting to build 1500 in the first purchase order for Iraq deployment. Apparently the first 50 from the builders though were already bought by Blackwater and the US army has to wait a few extra months.

'Continuously patrolled from the air'...except during sand storms, rain, and night attacks such as those that occured in Viet Nam. The VC quickly learned to get in very close very fast to make air support useless.

The Brits were occupying Basra, the only port city of Iraq and the city that controls the supply line from Quwait. The Brits are no longer in control of Basra. Forget SA, we will not be returning to 'holy ground'...remember, we were asked to leave and we did so.

'An insurgency isnt well suited to attacking hard points'... Tell that to the people that are dying daily in the Green Zone.

I dont know if Turkey would grant us a right of way to exit. They are a NATO ally so they might but it would probably depend on how they were getting on with the Kurds when we wanted to leave Iraq.

I dont think our leaders have an exit strategy. When we exited Nam in 74 we left behind $7 billion of armor, vehicles, and artillery...in 1974 dollars. That does not include many billions of construction, port facilities, and other equipment such as aircraft and helicopters. Unless we can negotiate a withdrawal it might be a debacle.

An exit through Jordan (or Jordan/Israel) seems equally plausible. Mainly desert, but that has advantages to a modern army.

Short enough to drive in one day.

The King of Jordan is not so strong that he cannot be pressured

However, you underestimate the airlift power of the USAF (222 C-17s to start with) and they only have to get as far as friendly territory (British bases in Cyprus) before commercial carriers take them the rest of the way home.

Armies are not easily overrun by insurgents. My father (USMC private 1st class) helped take the surrender of the Imperial Japanese Army in China. The Japanese Army knew that if they surrendered to the Chinese, none would get home.

Chinese Communist insurgents harassed the Japanese until surrender process, but they let the US Marines alone in my father's province. So the Japanese were safe once under Marine guard. But an occasional sniper shot or mortar round at night was about all the Chinese insurgents did except when one post refused to surrender on the appointed day. Two nights later it was overrun. (No support from neighboring outposts which did surrender).


so old xenophon had a banner made "MISSION ACCOMPLISHED" ?

Xenophon, just one in a long line of revisionist historians.

Revisionist? Sure, Xenophon got to write the story, so why not warp it around a littie to make it interesting, and maybe even profitable?

Haven't read it for a long time, but I think I remember the part where he, a junior officer, is lying in his tent listening to the whoopla being made by the victors, and he thinks something like " These guys are all drunk and having a good time, but when they sober up, the first thing they are gonna do is wipe out all of us Greeks, and here we are, just lying around waiting for them to wipe us out. We gotta get up, get going and go fast, or we are birdfood." So he gets going and they go RIGHT NOW, he taking all the credit for initiating the move, after all, author's privilege.

Has Petreus read Xenophon?

One story is that Gen. Andrew Jackson had just arrived in New Orleans to prepare to defend the city (as The US Army once did). He was invited by a prominent family for a dinner/banquet. Quite a feast was prepared. Andy took one bite of his dinner, when a courier interrupted him to announce that the British were preparing to land just south of Chalmette in the dark.

Andy leapt from his seat and said "There is not a moment to lose", gathered up a couple of hundred men (whoever he could get, including some locals), marched downriver in the dark and had a brief skirmish with the landing party.

The British were unwilling to make an opposed landing in the dark and waited till daybreak, giving the US Army + local militias + "any citizen willing to bear arms" + Jean Lafite's pirates a few more hours to prepare defenses.

Best Hopes for Quick Response,


Luis: Does not seem to be a link where highlighted ("here"). Brent price on the BBC Business/commodity website (http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/commoditi...) - presumably at London close - was $75.90.

I've not noticed any comment on the stock exchange falls today in the Dow Jones (about 140) and FTSE100 (nearly 100) - would the IEA report have triggered this?

Is TOD being watched for stories? This was being discussed a number of days ago.

New Car Smell
That New Car Smell May Be Hazardous to Your Health

Ah, that new car smell, that eau de car-logne; it does an ego good while it does a wallet bad. And now it turns out, it can do bad things to your health, too.

All these years, while we were being offered safety first, last and front, side and rear ways, hardly anyone in the vehicle industry had given much thought to what actually was in that perfume de profit, the new car smell that car buyers sought and bought. As everyone knew, pollution related to vehicles originated from the exhaust pipe, not the shifter knob. It was spewed out the back of the rear, not the back of the rear view mirror. Well, what everyone thought they knew was wrong.

It turns out -- take a deep breath -- that most of that new car smell is not some carefully-compounded, luxury, feel-good incense to the Mammon Gods. But the new car smell comes from toxic gases. Not only that, but like a two dollar cologne, the effects can linger and linger for years, stinking up not only your shiny new car, but the reputation of the entire vehicle industry itself.

Makes sense why the "new car smell" always made me sick. I prefer used cars for that very reason. (Actually, it might be because I'm cheap.)

Well I'm glad that somebody read it, since most of my posts seem to be assiduously ignored. Not that it was relevant to the thread anyway, but the phthalate story at least gave me the chance to actually contribute.

The feminizing of H. Sapiens is a mounting problem, so to speak, leading us in the direction of the eerily prescient "Handmaid's Tale." Phthalates in your plastics, alkyl phenol ethoxylates in your cleaners, and diethylstilbestrol in your beef all contribute to lower male fertility. But those most affected are in the already low-reproducing industrialized world, at least so far.

So let's hear it for offshoring our industries; Maybe we can sterilize the Asian hordes as they knock out plastic crap for our consumption.

Hi nels,

Well, re: "...seem to be assiduously ignored" -
I noticed it. There's so much here, my guess is people read and often don't comment.

I'm just curious, though my q is trivial given our usual subject matter: do you recommend not using plastic containers for food storage, even if not re-heated? (ie.,. would you suggest against taking lunch in plastic containers to work/school?)

And (sorry if this was in your previous post) - is it the case that the phthalates end up in the water supply or somehow otherwise ubiquitously distributed? Or, is it possible to avoid exposure? (practically speaking).

I also remember reading nels' comment with interest--and not commenting...

I use a big plastic Brita filter, even though my city has fine water, my building is pre-war and the piping gives it a "taste" that I'd rather do without. The brita filter takes the taste away--but occasionally when I leave it out of the fridge without the AC on, and then come back and lazily poor myself a glass after it has been sitting there for hours in the summer heat--it does taste sort of "icky-plasticky"... Seems like at a cool temperate the plastic doesn't "leech" into the water--but when it sits in the summer heat of my apartment for a while, watch out!

See, this is why I didn't comment before. My point? Not really sure. Just thought I'd throw my two cents in...

Pulled an interesting quote out of the WSJ article re Canadian Oil to the US:

During the past year, Canadian crude has pushed deeper into the U.S. than ever before, capturing new markets, as traditional sources of supply for the giant Gulf Coast refining complex fall off.

Mexico, a major crude exporter, is facing falling output levels, led by the rapid decline of its giant Cantarell field. The growing Mexican economy is demanding more fuel, lowering export levels further.


The last sentence certainly sounds like an indirect endorsement of WT's export land model.

Matt Simmons' predictions posted at the top are chilling. I'm afraid to see what #3 is (gotta wait 'til tomorrow...) His point about everyone topping off their gas tanks as soon as they catch wind of shortages is spot-on.

(One last edit before I head off to the Cumberland Mine...) and after everyone tops off their gas tanks, I'll bet more than a few will head over to Costco and BJ's to "stock the larder" a bit.

Occasionally I like to ask somebody how much they'd be willing to pay for gas if they couldn't get any? (yes, it's a "trick question")

But I don't think TPTB will let it go that far. Remember, we have to "blame the Arabs" for taking away our "freedoms". I have to wonder if "Betsy Cheney" is stitching up a few False Flags...

(I'm gonna get on a list somewhere for that one...)

CNN breaking news:

Bernanke says energy price spikes have not led to persistent inflation or a recession in recent years.

Don't worry, they've got it under control...

Leanan: Ben is great with semantics. "Spikes" implies a temporary situation that will be resolved shortly (don't worry).

A "spike" has to have a down side on both sides, and can only be determined after the down side is reached. That "rear-view mirror" thing again...

Or they imply nails in coffins. . .

And here's the article:

Bernanke: Energy price spikes less toxic

Swings in volatile energy and food prices will have minimal impact on inflation as long as inflation expectations are held steady, Federal Reserve Chairman Ben Bernanke said on Tuesday.

"If inflation expectations are well anchored, changes in energy (and food) prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy," Bernanke told the National Bureau of Economic Research.

He added that sharp increases in energy prices in recent years have not led to persistent inflation or to recession, in contrast to what happened in the United States in the 1970s.

Anybody have any idea what "inflation expectations" are, and how they are supposed to function? He means low expectations, right? If I say I expect 10% yearly inflation, I poop his party, I'm sure. "If inflation expectations are well anchored" means close to zero?!

Who does the expecting? Me, you? Or is it Ben? What are your expectations worth? Is he just saying that as long as enough people suffer from the same delusion, all's going to work out fine?

Maybe he's just implying that so far, we're all stupid enough to buy into the fabricated inflation numbers that come from the BLS. No matter where energy prices are headed, they can't affect inflation, since they were taken out of the model. Which makes it sound extra weird to state that they have relatively little influence on 'core' inflation. Just put them back in, Ben, you'll see where that anchor is really secured.

And what happens to my inflation expecting when he decides to double interest rates tomorrow morning? Will he prove my delusionally high expectations wrong, or are there more hedonic measures up his sleeve?

I often feel the highest paid people at the Fed are the script writers.

"Swings in volatile energy and food prices will have minimal impact on inflation as long as inflation expectations are held steady"

- as long as we all wish upon a star, our dreams will come true...

Seriously, the "core inflation" thing is just veiled talk about whether working people have any power to demand higher wages, or not. With the jobs all moving to China, the answer is not, and thus the cost of doo-dads can be kept constant or falling even as food and fuel prices rise. Thus, globalization keeps on chugging in the race to the bottom. The rich keep on get richer for as long as then can, then move to Dubai or Paraguay.

As long as everyone continues to believe that everything will be just fine, everything will be. Perception over fundementals. I'm sorry, fundementals win out in the end every time.

In the speech, BB clarified that by "well anchored inflation expectations" he means that market participants don't adjust their future expectation of long-term inflation based on new data as it comes in. I expect what he really meant to say is that he believes entities are applying a stronger low-pass filter to inflation data... but of course data is only one half of the expectations picture, the other being the models observers plug the data parameters into (whether formal or gut-feeling based). If he's asserting that there's more long-term stability of those models as well, he's basically saying that the financial system has become less able to adjust to underlying changes in the economy (such as a reversal in century-long commodity production trends). He says that this is good because uncertainty about future inflation makes investment decisions complicated.

That's fine from his perspective -- simple decisions with small ranges in future assumptions mean much greater willingness to accept risk and pursue leverage. Personally, I'm not sure that it's really the Fed's role to encourage people to believe that large-scale changes in basic economic inputs/controls can be absorbed away by the the modern financial system.

Inflation expectations are easy to measure. Look at the yield on a TIP (Treasury Inflation Protected) bond and compare it to a conventional treasury bond of the same maturity. The difference in yields is the measure of inflation expectations--the expectations of highly intelligent and motivated financial types with no reason to distort or hide their expectations.

It is correct to say that as of this date inflationary expectations are low--roughly a weighted average of the past five years rates of inflation as measured by the GDP deflator or the Consumer Price Index.

I think this situation will change. I expect to see TIPs yielding 2% while conventional bonds must pay 12%, as happened back in the early eighties, when at one point the prime rate went to 22% and even touched 24% briefly. Back in those days my money-market mutual fund paid 17% with essentially zero risk. Thus it is pretty safe to say that back around '80-81 the expectations of inflation were well into the double digits--and conventional wisdom at the time held that there was a "core" of inflation of at least 6% that could not be melted down--and that double digit inflation was here to stay for years and possibly forever.

Then came Volker.

So Sailorman: do you think that investing some money in TIPs is a good idea right now? How about investing in a mutual fund that holds TIPs?

Do invest in a mutual fund that invests in TIPs.

Vanguard gets my nod for low costs and good service.

It's Bigger Than Just the Dollar!
by Ty Andros
Editor, Tedbits Newsletter
July 10, 2007

The Crack-Up Boom series is exploring the unfolding “Indirect Exchange” (as detailed by Ludvig von Mises), that dollar holders will be using now to exit their holdings and eventually will be followed by all holders of fiat currency holdings, no matter which country is perpetrating the “fraud” of confiscation of wealth through the printing and credit creation process that all such monetary schemes evolve into. The “Crack-up Boom” will drive an inflationary global expansion to inconceivable heights over the coming years. Asset prices will skyrocket as people do what they always do when threatened; they will modify their behavior and do the things necessary for “SELF PRESERVATION” of their families, countries, economies and their wealth. Let’s take a look at von Mises’ description of the CRACK-UP BOOM once again:

This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.

But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against "real" goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last. Thanks again, Ludvig.

Unfortunately, for us all this is now NOT an isolated currency policy as detailed in the last paragraph, because globally virtually “ALL” governments are pursuing this policy at this point in time. So first we will see the biggest offenders suffer from their hubris, AKA the “UNITED STATES”, and then it will rotate to all countries which follow such monetary policies. Public Servants always and every time have become Public Serpents, robbing their constituents to further their personal ambitions and collection of power and wealth. . .

. . . M3 has now been reconstructed by a number of private economists and is now widely reported at 13.7%, and acceleration of over 50% since march 2006. Using the rule of seventy-two; 72 divided by 13.7 the US is doubling the money supply every 5.25 years years. Last October at an International monetary conference Treasury Secretary Hank Paulson “GUARANTEED” that the US sub prime and housing bust would not evolve into a global liquidity crisis, now we know what he meant as this is its definition. Ben's helicopters are now patrolling the banking industry dropping money into the holes as they occur. . .

. . . In conclusion, there’s a lot of people that are just waiting for a deflationary collapse, I urge you not to hold your breath for this. This boom has a long way to run, the US may be broke, but the rest of the world is in the pink. US money printing reconstructed at 13.7% growth demonstrates to you the Federal Reserves play book for handling coming banking crisis.

'There is an increased risk of enemy activity in your area...' Admiral Kimmel read from the telegram, as he gazed out over Pearl Harbor.

Saw the Press Conference. His main message, which he repeated over and over, was money supply is only weakly linked to inflation. Yeah, Right! Pretty much he was saying we can print all we want, no problem, no inflation, my experts say so. The reason is very complex, you wouldn't understand.

Rivers number one rule: Anything that they take the trouble to deny, believe it with all your heart.

Dom De Dom Dom

S&P May Cut $12 Billion of Subprime Mortgage Bonds

``S&P's actions are going to force a lot more people to come to Jesus,'' said Christopher Whalen, an analyst at Institutional Risk Analytics in Hawthorne, California.

``When a ratings agency puts a whole class on watch, it will force all the credit officers to get off their butts and reevaluate everything. This could be one of the triggers we've been waiting for.''


Don't worry!

Americans' real national pastime is shopping: When the going gets tough, the tough hit the malls

I don't know how it is in your household but in mine, the quickest way to chase the blues is to go shopping. Yes, fans, shopping, not baseball, is the national pastime.

And thank goodness for that, otherwise the economy would really be in a funk.

Interestingly, the unhappier people profess to be, the more they head out to the malls. In spite of such headwinds as rising food, energy and health care costs and declining home prices and savings, consumer spending contributed mightily to the second quarter's rebound in economic growth.

How did they do it? Nothing more mysterious than cash and credit.

So you see, bad news is good news. Unhappy people shop more!

WTF? They can do that?

Is that anything like Papal Encyclical?

Out of the frying pan, into the fire. Price controls to control hyperinflation in Zimbabwe have the inevitable result:

Zimbabwe has been engulfed in a macabre and tragic frenzy this week and frankly, it beggars belief. Across the country what has been called a "Taskforce" has been unleashed by the government to force shop owners and businesses to cut their prices by 50%....

They go from shop to shop and simply pick on items they want reduced : SLASH THAT PRICE, is the phrase we are hearing again and again and then products have to be sold for less than they were purchased for...

Outside a major wholesaler, groups of young men stood around waiting for the "militia taskforce" to arrive so that they could buy up everything as the prices were slashed. The car park was nearly full of luxury vehicles - pajero's, twin cabs, SUV's. even a Lexus ... vehicles already bulging with 'slashed price' goods, many pulling trailers also stuffed to overflowing...

I went to one almost empty supermarket and stopped near a young policeman in a pick up truck without number plates that was loaded to the hilt with 'slashed price' goods...

The result of it all, inevitably, is rapid collapse and many goods and foods have now become completely unavailable including all the staples which were already difficult to find...

This week in my home town, all types of meat have become completely unavailable as butchers were ordered to sell for less than half the price they had paid...

One supermarket in the centre of the town was empty of all goods by mid week, another two were not far behind - both saying they expected to be out of business in the next few days - a week at most...

All week as the situation has deteriorated people have been comparing what is happening now to shops and businesses with what happened to farms. A huge crisis seems just a few days or perhaps a couple of weeks away, as stocks dwindle, warehouses empty and we simply run out of food.


I think we're going to be seeing the worst national implosion since North Korea's famine in the 90s.

No need to put it in the future tense. We are watching (remotely via the internet) the collapse in near real time.

InJapan said;

"No need to put it in the future tense. We are watching (remotely via the internet) the collapse in near real time."

I say;

The future is already here, It's just not uniformly distributed yet

Hello Alan,

Thxs for the info, but I bet the Mugabe Govt. Did Not Slash Prices on guns & ammo, machetes', and crossbows so the poor can more readily arm themselves for what lies ahead.

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

Japanese Views on Energy, Minerals and Mining in an Age of Short Supply


"As a result, refining capacity in Japan has decreased by 10% during 2002 and 2006. This has caused large declines in the number of employees in the sector, from about 36,000 in 1994, which can be see as a period of "peak" employment to about 20,000 today. These numbers show how market liberalization has enhanced the competitiveness of our domestic oil industry."

Last month, I created a “peak oil index” that combined the information we have about oil inventories with prices. I’ll update it tomorrow after the weekly report from the EIA.

It occurred to me that the same kind of index could be created for U.S. natural gas, so here is a peak U.S. natural gas index graphed from December 2001 to the present.

A falling index points to a growing peak natural gas concern, while a rising index points to less concern. This index bottomed out in February 2006 following the severe hurricane season of 2005. It has been rising slowly since, due to mild winters and the fact that natural gas production has not yet begun to drop sharply. The current value of the index is 172.6.

It seemed useful to me to combine both price and inventories together rather than focus on just one. The reason is that if we have rapidly increasing prices, we might attract a lot of supply, causing inventories to hold up quite well. On the other hand, if we ever get to a rationing type situation, prices would be depressed, but inventories would likely drop.

This is the way the index is calculated: U.S. natural gas inventories in terms of days of supply are multiplied by an inverse of price. That way, if supplies drop or prices increase, the index drops. If supplies increase or prices drop, the index increases. When the line goes down, it points to a more severe natural gas problem. A high value shows a relaxed supply situation. Both inventories and prices are calculated as 12-month moving averages, to smooth out seasonal variation.

(1) Prices are 12 month moving average of natural gas wellhead prices adjusted for inflation (CPI).
(2) Storage is natural gas underground storage by all operators.
(3) Consumption is “Total Products Consumed.”
(4) This is built automatically from an Excel spreadsheet, with the EIA as the source of all of the natural gas data. The Bureau of Labor Statistics provided the CPI calculator.
(5) The calculation of the most recent three months is provisional and subject to change, because the consumption data lags a few months behind price data.

I plan to update this index monthly.

Thanks for the index. The problem with it is that all gas storage is currently pretty full, and storage capacity isn't being increased. At the same time there are very few shut-in wells, although some that have been drilled haven't been hooked up yet. We're basicially drilling flat out in the US, with at least 90% of the prospects being gas prospects.
Unless there is a big supply disruption, a hurricane in the gulf, we won't see big spikes in gas prices for a couple of years. Gas use is decreasing because of the switch to coal in electric generation and the offshoring of domestic heavy industry.
At any rate, I hope your predictor works!
Bob Ebersole

Simmons also has this today:


Click on 'Launch slide show'


It's a good thing we only reserve the ban stick for the dissenters......

Hello TODers,

Recall my posting in the IEA keypost thread: basically, food prices will quickly over-ride cheap heat & A/C. The human body can withstand a remarkable temperature regime if insulative clothing is available for cold-protection, and ice and/or a wet washcloth plus periodic shade and rehydration in a hot climate.

I have discussed this before: expect and encourage your employer to super-insulate and do other energy savings. Additionally, encourage your employer to remain profitable as long as possible by shutting off the heat or A/C when the postPeak time arrives: the employees should be eager to dress appropriately for continued job retention versus unemployment.

Ask your employer to take advantage of volume buying power and large scale solar-powered cooking facilities to provide simple, local, and cheap meals on-site. This should be preferred over the normal practice of employees jumping in their cars to hit the restaurants and drive-thrus. For example: cooking a big pot of hearty soup at one time for all, hopefully with a large solar-cooker, is much more energy-efficient than providing storage refrigerators and microwaves for a huge number of special energy-required lunches.

Anybody who is a 'picky eater' will be free to bring a non-refrigerated, non-heatable meal of their choice.

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

Several drumbeats ago, Leanan opined that a post-Peak US may well split across racial lines. I was a bit doubtful, but articles like this seem to support her opinion:

Six black students at Jena High School in Central Louisiana were arrested last December after a school fight in which a white student was beaten and suffered a concussion and multiple bruises. The six black students were charged with attempted murder and conspiracy. They face up to 100 years in prison without parole. The fight took place amid mounting racial tension after a black student sat under a tree in the schoolyard where only white students sat. The next day three nooses were hanging from the tree.

A few days after the nooses were hung, the entire black student body staged an impromptu demonstration, crowding underneath the tree during lunch hour. ... The school responded to the protest by calling police and the district attorney. At an assembly the same day, the District Attorney Reed Walters, accompanied by armed policeman, addressed the students. ... And so, District Attorney Reed Walters, ... He held a pen in his hand and told those kids that, “See this pen in my hand? I can end your lives with the stroke of a pen.”


Interview with Ralph Nader on the Corporation as Fascist State and on Presidential candidates Clinton, Obama, Edwards, Giuliani McCain, Bloomberg and Thompson:


Donal, Amy Goodman of 'Democracy Now' devoted 45 minutes of the show today to the story of the 'Jena Six.' The DA prosecuting the six advised them, while holding up a writing pen, 'I have the power to end your lives with a stroke of this pen.' He made this statement in front of a large gathering and before any of the young men had been arrained for any crime.
The good folk of Jena, Louisiana are exactly the reason that I will never live in Louisiana. Unfortunately, I was born there but grew up traveling the world with my dad.
Jena, and thousands of places just like it, are the reason that Henry Ford became so rich so fast. People could not wait to get away from communities where narrow minded bigots rule and if you dont go along with their agenda you will be ostracized and maybe much worse.

I listened and thought how different the MSM responded when it was white lacrosse players on trial.

Hello TODers,

Mexico Group Claims Responsibility for Pemex Blasts (Update3)
Looks like WT's Exportland Model may be picking up the pace the hard way. Can you say Iraq and Nigeria?

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

Oil holds near $73
Tensions between Iran and U.S., supply woes and big rise in speculative investment help push crude, Brent higher.
July 10 2007: 6:47 PM EDT

European oil stocks data showed gasoline inventories fell 2.1 percent last month as exports to the United States bolstered lower-than-usual stocks of the motor fuel there. Industry monitor Euroilstock also reported a 1.2 percent drop in Europe's crude oil stocks in June.

World Oil Outlook:  China & US Remain Primary Contributors To Consumption Growth
7/10/2007 11:38:00 AM

Although OECD commercial crude oil inventories are higher than the 5-year average, crude stocks in OECD-Pacific, a region where OPEC crude constitutes a higher import share than in OECD-North America or OECD-Europe, are near the low end of the 5-year range.   OECD commercial inventories declined by almost 1 million bbl/d in the first quarter compared with a 5-year average inventory draw of 280,000 bbl/d for that quarter. Preliminary data indicate that OECD commercial inventories experienced a below-normal seasonal stock build during the second quarter. EIA estimates that OECD commercial inventories rose by only 300,000 bbl/d in the second quarter, compared with a 5-year average build of 900,000 bbl/d.
Through the 2007-2008 projection period, a further reduction in OECD commercial oil inventories (on a days supply basis) is expected.  EIA projects that OECD commercial inventories will be at the bottom of the 5-year range  by the end of 2008 (Days of Supply of OECD Commercial Oil Stocks).  Assuming that EIA’s consumption and non-OPEC supply projections materialize, total OECD inventories at the end of 2007 would be in the lower part of the 5-year average range if OPEC increased production by 1 million bbl/d in the second half of the year.  If OPEC production is below EIA’s projection or the group delays a decision to raise output in the second half of this year in response to declining inventory levels, then the likelihood of additional upward price pressure could emerge.

Areas not covered by OECD statistics:

Bond holders did pretty good today. Don't think the fed has orchestrated any money drop so far, as implied further up this thread. Just the current account deficit working its magic to boost global liquidity as China and others print their own currencies like crazy to buy up dollars which they then recycle back through the U.S.. Volume way too huge for sterilization to be effective at this point. No significant inflation of consumer goods during this incredible boom of the last ten years (gasoline excluded)? That signals deflation ahead if their is a major global recession. Not sure the fed has the ammo, the foresight, or the relevancy to prevent this.

Write Articles, Not Blog Postings

This article by usability guru Jakob Nielsen has an interesting take on the blogsphere.


To demonstrate world-class expertise, avoid quickly written, shallow postings. Instead, invest your time in thorough, value-added content that attracts paying customers.

Prof. Nielsen aims this article at, "Elite, expertise-driven sites" which "are the exception to the rule." Naturally such sites want "to demonstrate world-class expertise."

The Oil Drum strikes me as a hybrid site, expert articles followed by blog comments. Should we take Nielsen's advice seriously? Can we make this a better site using it's recommendations? Good read, enjoy.

I happen to agree with him completely, but I'd hardly consider the keyposts the kind of short shallow posts Nielson is writing about. That said, there has been some discussion around repackaging the best of the keyposts in a format that reflects a more finished product distanced from the comments somewhat. That sort of evolution toward an formal content area might add to this resource's aura of credibility and move it beyound Blog status.

The first rule of the US Navy: If its working, dont fix it.

From today's keypost:

Play peak oil before you live it

...A month later, good news began to emerge...People carpooled and bought bikes. They moved out of the exurbs. They planted gardens in their backyards, and religiously visited their local farmers markets...

My, my, I hope nobody's basing policy on this result, but I suppose some fools will. According to the article, "in the game, one real day equaled one fictional week." So in only 30 weeks, people did all those things and more. Really?

I wonder who was the sugar daddy that bought up those exurban houses so their owners had the means to move into the expensive city. I wonder what investment in public transit could possibly make a difference in 30 weeks, when 80 years hasn't been enough to get us the Second Avenue Subway. I wonder how all those people who can't get up to the second floor without stopping twice for breath suddenly started riding bikes for distances of miles. I wonder how that alternative energy appeared so quickly when the Ted Kennedys of the world can block facilities indefinitely.

Oh, right, I'm forgetting. It's all cheap, pixellated, on-screen sentiment, people 'riding bikes' and buying new housing by pressing cost-free buttons in their comfortable air-conditioned living rooms.

What a load of rubbish.

Oh, and if this sort of thing is a major tool the Pentagon uses to plan things, our enemies have nothing to fear from us.

Your absolutely right in your comments. Reality is well, real. I am volunteering my time on an start-up 800-acre organic farm with a limited budget. In exchange, I was able to plant 7 acres of vegetables by hand with some help by a tractor, tiller, Mexican family and friends. It's very challenging, hot and sticky, riddled with weeds, deer and woodchucks. Today I became Dr. Kevorkian of the woodchucks with a recipe passed down to me by my mother. Fill a bowl with 1 C. coke and 1/2 C. fly bait (Bluestreak). Woodchucks and racoons will drink the stuff and because they are unable to burp it up, will only walk about 20 steps before meeting their maker. My mother garnered about 20 in 2 months. Is that in the game?

'Oh, and if this sort of thing is a major tool the Pentagon uses to plan things, our enemies have nothing to fear from us.'

Our enemies have already figured that out.

Our enemies are cunning and resourceful and so are we, they are always looking for new ways to harm our people and damage our way of life and so are we.

Has anyone been preparing the 50m high 'We told you so' banner?

Yeah - i'm using all that woodchuck blood from the above posting to make the letters stand out
When no-one around you understands
start your own revolution
and cut out the middle man