DrumBeat: July 12, 2007

Energy for China: More diversity of supply, but demand is growing fast

China's energy challenges are monumental. The economy is in the midst of a highly energy-intensive stage of growth, but domestic reserves—especially of oil—are far from adequate to meet burgeoning demand. As a result, the government faces a series of policy challenges: to expand supply while increasing efficiency, to allow fuel prices to increase and risk more social unrest, and to acquire energy assets overseas while China's international conduct is under close scrutiny. If the government fails in any of these delicate tasks, in the medium to long term the resulting energy crunch could pose a serious threat to China's economic growth and political stability—and hence to the global economy as well.

Peak Oil Politics in Kuwait

In a world of Peak Oil, oil-rich states like Kuwait and their OPEC allies would rather string us junkies out as long as they can by promising bountiful future flow.

Patting us on the back and saying the oil won't run out any time soon is paired with threats of supply reduction if major consumers like the United States pursue other energy options, like renewable energy and other alternative sources.


Meet the Future of Flight

If the Dreamliner really does prove to be 20% more fuel-efficient than the aircraft it is replacing, U.S. air carriers will have a built-in competitive disadvantage every time a pilot advances the throttles and spools the engines of an older model aircraft.


Water World: Slipping Toward Climate Catastrophe

The IPCC predicts that sea levels could rise by as much as 59 centimeters this century. Hansen's paper argues that the slow melting of ice sheets the panel expects doesn't fit the data. The geological record suggests that ice at the poles does not melt in a gradual and linear fashion, but flips suddenly from one state to another. When temperatures increased to 2-3 degrees Celsius above today's level 3.5 million years ago, sea levels rose not by 59 cm but by 25 meters. The ice responded immediately to changes in temperature.


Gasoline prices on the rise; fuel shortage due to flooded refinery

By the end of the week, prices could reach $3.25 to $3.50 a gallon in the Midwest, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service. He said Tuesday that the prices consumers pay in the next 10 days could be the highest of the year.

...“Coffeyville lit the fuse,” Kloza said, adding problems at a Valero refinery in Ardmore, Okla., and the BP refinery in Whiting near Chicago also are contributing to high wholesale prices. “Ardmore was a basic hiccup for a U.S. refinery. But having a hiccup on the backside of kind of a major organ disappearing is pretty serious.”

(The comments under this article are kind of interesting.)


Coal plant: Process worked, so now what?

First, we still face an uncertain energy future. All of the "alternative energy" sources discussed to date simply will not meet our community's growing energy needs. There is no simple answer, no magic potion or easy fix. We may wish that compact fluorescent light bulbs, smart thermostats, biomass plants and solar panels will fill the ever-growing void in our projected needs. But they simply will not. Each of those solutions provides single-digit answers to triple-digit questions.

Second, we have to choose something, and we need to do it soon. If we don't, we could see our utility bills skyrocket beyond their already high levels and find ourselves having to buy power (and yes, coal-generated power) on the open market or suffer rolling blackouts and power shutdowns similar to what we saw in California a few years back. Our near-singular reliance on a petroleum product, natural gas, has near-term calamity written all over it. The something (or combination of somethings) we choose must provide real power in large doses in order to meet our growing needs. While our ultimate mix may contain experimental and burgeoning technologies, the bulk of power must come from a reliable (and affordable) source.


Media Help Keep Power Supply Switched Off

Sweltering heat is sweeping the nation, ushering in fears that the “slammed” power grid won’t be able to meet the demands of consumers desperate to keep cool.

But as much as journalists are now focused on that threat, they have largely ignored nationwide power issues while rabid environmentalists have battled nuclear and coal power plants.


Biofuel Boom Driving Up Pasta Prices

Mamma mia! The price of a plate of pasta is expected to rise 20 percent this summer as a bad wheat harvest and increasing competition from biofuel manufacturers send the price of delicate, delicious durum wheat skyrocketing.


Death To The SUV?

General Motors is abandoning plans for its luxury Cadillac Sixteen could be the first in a long list of large cars, light trucks and SUVs scrapped by automakers, as they face more strict fuel economy standards in the near future.


Castro decries squandering of resources in Cuba

Cuban leader Fidel Castro has warned that the squandering of fuel and other resources is threatening Cuba's viability and sovereignty.


Pipeline explosions show weakness in Mexican industry

A series of gas pipeline explosions triggered by a leftist guerrilla group has rocked Mexico with a powerful warning about the vulnerability of the nation's oil and gas industry.


Diplomat says U.S. would support Chile nuclear energy

“We know that Chile needs energy. We have invested $5 billion dollars into the investigation of clean energy, and we can cooperate on this issue,” said Burns. “There is a debate going on right now in Chile, and we do not want to intervene. But, if they decide yes, and this is what I was talking to Minister Tokman about on Monday, of course we could help them. We have experience and expertise on this issue and there are many American companies working in nuclear energy.”


Nebraska: Some Gas Pumps Run Dry - Governor Declares State Of Emergency Related To Fuel

Truckers spent more than an hour waiting to fill up with fuel for delivery as some gas pumps ran dry across the state on Wednesday.

Nebraska's governor has issued an executive order that will allow gasoline truck drivers to alter their hours of service.

Gas supplies in the state have been tight after flooding in Kansas last week. Industry experts said high waters submerged a Coffeyville, Kan., refinery and waters could keep the 108,000-barrel-a-day facility shut down for most of the summer.


Blood for oil

Brendan Nelson’s admission that Australia has to help secure oil supplies at least brings some honesty into the rhetoric about our ongoing military involvement in Iraq. However, it also reveals a dangerous and blinkered vision of how the oil have-nots expect to secure preferential treatment from the oil haves when the peak oil crunch finally comes.


Interview with King Abdullah II

You know the funny thing is, three years ago we went to the States and said our national agenda, which is a reform program we've sort of outlined for ourselves in Jordan, had stipulated that we need to look for alternative forms of energy and one serious one is nuclear energy, because we don't have natural resources here. So we went to the West 2½, three years ago and said okay now, this is one of our priorities, and nobody said: "Fantastic. We will work with you." Only [when] I was interviewed in an Israeli newspaper and it was like this – the last question in a very complex interview about the peace process – that I said, yes we are interested in an energy program. The next day we know is headline news: Jordan talks nuclear power.


Brookside Farm a one-acre success

Both have political and philosophical concerns that go far beyond the traditional farmer's squinty-eyed lookout for prices, weevils and weather. Both are interested in the implications of "Peak Oil" the culmination of world oil production which, some experts say, is already upon us and which must necessarily lead to a decline in global oil production that could fundamentally alter the American way of life. Both are laboring to demonstrate what life will look like in a post-oil world.


KBR wins Ras Tanura deal

The US' KBR has won the project management contract from Saudi Aramco and Dow Chemicals for the construction of the Ras Tanura petrochemical plant, Aramco and Dow said in statement. KBR beat Fluor and Foster Wheeler to the project management contract, while the three companies were also competing for the front-end engineering and design contracts, according to Reuters.


Devon Energy Wagers $100 Million on Repeating Chevron's Success

Devon Energy Corp. is making a $100 million bet on a potential oil bounty this week, drilling an exploration well 33,000 feet below the seabed in some of the Gulf of Mexico's deepest waters.

That's a lot to lose when the chance of success hovers around 30 percent, said Tony Vaughn, vice president and general manager of the Oklahoma City-based company's Gulf division.

But potential from discoveries near Devon's Chuck field about 240 miles southwest of New Orleans, most notably Chevron Corp.'s Jack field, makes it worthwhile.


Canadian households a paler shade of green

Canadian households have gone green in some areas, but still have a few bad habits to break, according to a Statistics Canada report made public yesterday.


U.K.: 'Smart meters' get £10m trial

The government has announced a two-year trial of 'smart meters' it hopes will help consumers monitor – and lower - their energy consumption.


Prof's hydrogen research draws Chrysler's notice

A University of Windsor chemistry professor may be holding the keys to hydrogen-powered vehicles of the future.

David Antonelli's breakthrough in hydrogen storage research is attracting worldwide attention -- and investment from Chrysler.


National Grid Admits Mistake

Rensselaer County leaders have directed the New York State Public Service Commission to investigate why National Grid, hoping to avoid bigger power problems, chose to shut down power to Troy customers on Tuesday.

A National Grid spokesman admits the power company could have done a better job communicating with municipal leaders during the power outages.

At one point, those outages left 80% of customers in Troy without power.


The Vatican to Become World's First Carbon Neutral Sovereign State

By agreement with the Vatican, Planktos/KlimaFa is now pleased and honored to announce that the Holy See plans to become the first entirely carbon neutral sovereign state, and it has chosen KlimaFa ecorestoration offsets to achieve this historic goal. In a brief ceremony on July 5th the Vatican declared that it had gratefully accepted KlimaFa's offer to create a new Vatican Climate Forest in Europe that will initially offset all of the Holy See's CO2 emissions for this year.


News Analysis: Why does Kuwait keep its oil reserves secret?

Asked whether the 100 billion barrels represented exploited and unexploited reserves, Al-Olaim, also Minister of Electricity and Water, said, "What is invested at present is not part of oil reserves ... there is no doubt that Kuwait has not exploited its oil reserves."

But industry newsletter Petroleum Intelligence Weekly last year said it has seen Kuwait's internal records showing reserves were about 48 billion barrels - half the officially stated 99 billion. Former Oil Minister Sheikh Ali al-Jarrah al-Sabah, who resigned in late June, refused to disclose reserves during his tenure saying this is related to the country's security.

Kuwait's analyst Jamie Etheridge said in an article published here that there's sound logic in keeping the real figure secret. First of all, within the energy industry there is a significant difference between proven, probable and possible reserves.


The Peak Oil Crisis: A Tale of Two Reports

In the last few days, two important reports on the prospects for world oil production were “released.” While these reports reach diametrically opposite conclusions, each of them, in its own way, is likely to make a contribution to the debate over just when the economic troubles occasioned by the peaking of world oil production will occur.


South Korea sends oil as hopes rise on North Korea

A South Korean tanker left Thursday with a first shipment of fuel oil for North Korea, a delivery expected to prompt the North to start shutting down its nuclear weapons programme.


7 kidnapped oil workers freed in Nigeria

Gunmen have released seven kidnapped oil industry workers — five foreigners seized from a rig a week ago and two senior Nigerian managers taken captive last weekend, police and company officials said Wednesday.


Kurds speak out against key oil law

Kurdish leaders spoke out Wednesday against a key oil law, raising further doubts over efforts to pass one of the political benchmarks sought by the United States at a time when the Bush administration is trying to fend off critics of its Iraq policy.

The political wrangling in Baghdad is having an impact in Washington, where a growing number of Senate supporters of the president's strategy are now pressing for a change — pointing to the failure of Iraqi Prime Minister Nouri al-Maliki's government to make political progress.


Gazprom Chooses Total as Shtokman Partner

"Gazprom has made a decision on the choice of a foreign partner to implement the initial phase of Shtokman field development, and named French Total S.A. as such. A respective agreement is to be signed in Moscow tomorrow," declared Alexey Miller, Chairman of OAO Gazprom Management Committee.


Don’t peak? Sorry, the oil crunch is inevitable

With gas prices rising again and global warming still in the headlines, a new Washington County group is looking at the issue of our dependence on crude oil.


The gauges do not lie: oil pressure is building

Now the International Energy Agency tells us demand for oil will grow at 2.2% a year, not 2% as previously estimated, as China and India consume more. The result, says the agency, is a supply "crunch" in five years' time and, in the end, insufficient supply can only be balanced by a drop in demand.

That may be the eventual result - in other words, a proper recession - but in the very short-term, it is hard to see how the pressure can be relieved.


Northeast faces flood risks from global warming

New York's Wall Street, Boston's historic areas and Atlantic City's casinos may all suffer frequent devastating flooding by the end of the century unless the world sharply cuts greenhouse emissions, a new report said on Wednesday.

"The very character of the Northeast is at stake," Peter Frumhoff, director of science and policy at the Union of Concerned Scientists, said in an interview about the report, called "Confronting Climate Change in the U.S. Northeast." UCS collaborated with 50 scientists and economists to produce the peer-reviewed report about climate impacts to the Northeast.


Lawmakers unveil anti-pollution proposal

The nation can begin to address the risks of climate change while avoiding harm to the economy, senators said Wednesday in unveiling anti-pollution legislation.

The bill would establish a mandatory cap on carbon dioxide emissions from power plants, refineries and industrial plants but allow companies to trade emission credits and avoid making emissions cuts if the costs become too high.


Edwards wins online poll on climate change

John Edwards has the best approach to fighting climate change of any 2008 Democratic presidential contender, according to an online straw poll of members of the liberal activist group MoveOn.org.


U.K.: New topics to be taught in reformed curriculum

Students will soon be taught climate change and how to manage their finances as England's school secondary curriculum is overhauled to make it more interesting and relevant to children.


Florida to introduce tough greenhouse gas targets

Florida, the fourth most-populous U.S. state, will impose strict new air-pollution standards that aim to reduce greenhouse-gas emissions by 80 percent of 1990 levels by 2050, according to draft regulations released on Wednesday.


Think tank: Families should have no more than two children

Families should have no more than two children if they want to help combat climate change, according to new research by a thinktank.

According to the report, published by the Optimum Population Trust, Britain's high birth rate is a major factor in the current level of climate change, which can only be combatted if families voluntarily limit the number of children they have.

The report calls for a 'two-child' policy in the UK that would reduce the nation's population from 60 million, as it currently stands, to no more than 55 milllion by 2050.

Read this one by Joe Bageant, This guy is a GREAT writer, give him a listen to...

The Ants of Gaia

It's only the end of the world, so quit bitching

[snip]

When forced to look at catastrophe on this order of magnitude, we either go numb in shock or look in delusion to something bigger, or at least something with more grandeur than Mother Nature flushing humanity down the toilet. Otherwise, one must accept the both ugly and the weirdly beautiful prospect of oblivion.

Meanwhile, we begin too late to "make better choices." Grim choices that do nothing but postpone the inevitable, which are called better ones and sold to us to make ourselves feel better about our toxicity.

Burn corn in your gas tank. Go green, with the help of Monsanto. But not many can be concerned even with the matter of better choices. Few can truly grasp the fullness of the danger because there is no way they can get their minds around it, no way to see the world in its entirety.

The tadpole cannot conceive of the banks of the pond, much less the wooded watershed that feeds it. But old frogs glimpse of it.
[snip]

http://www.joebageant.com/joe/2007/07/the-ants-of-gai.html

http://www.joebageant.com

John Carr

Too much thinking, too much cleverness on the monkey's part leads it to believe it can come up with rational solutions for what ration itself hath wrought.

I have seen the sentiment above written in many ways, but this version is quite good. Great article.

I just finished Joe's book yesterday. He's a very entertaining writer who isn't afraid to "tell it like it is" and has seen both sides of the track along the way. His book repeats many of the ideas from his essays, after most of the language is cleaned up for that portion of Middle America that still thinks one's mouth needs to be washed out with soap after uttering a four letter word. We need him and many more like him to break thru the Disney World TV delusions that most of us have as a world view, given that we may be only one hurricane away from a revolution. There's a story in today's NYT about the lives of some former residents washed out of New Orleans, people who find their former lives completely gone and no hope of anything other than being kept in a Federal warehouse for the lost.

http://www.nytimes.com/2007/07/12/us/nationalspecial/12exile.html

The hurricane season is just winding up for the first big pitch. For the past 3 days, the minimum temperature at Key West set records at around 85 F. Key West is located out in the Gulf of Mexico very near the Florida Current, which drains the Gulf. Those air temperatures are close to the water temperatures seen from satellites. All that thermal energy in the Gulf can be expected to fuel some big storms, when they roll in, producing major damage in their wake. Better get ready and batten down the hatches, as the old saying goes. I'd say we're in for another rough ride.

E. Swanson

There is a quote in a fictional novel I am currently reading (Pompeii: A Novel - Robert Harris) that I found particularly interesting...

Men Mistook measurement for understanding. And they always had to put themselves at the center of everything. That was their greatest conceit. The earth is becoming warmer - it must be our fault! The mountain is destroying us - we have not propitiated the gods! It rains too much, it rains too little - a comfort to think that these things are somehow connected to our behavior, that if only we lived a little better, a little more frugally, our virtue would be rewarded. But here was nature, sweeping toward him - unknowable, all-conquering, indifferent - and he saw in her fires the futility of of human pretensions.

Don't misunderstand me - I'm not saying that we don't have something to do with global warming, but at the same time I do think it's a tad conceited to think humans control the planet, that we have all the answers, that the earth is just another large building needing us to manage it's climate control systems...

Food for thought!

Garth

humans control the planet

Now that is funny! AGW has absolutely nothing to do with us controlling anything!

Read all words in a sentence, please...

Actually I did read all the words in the sentence. What got me is that nobody is claiming that humans do control the climate of the planet, it would indeed be conceited to claim such. However, whether we affect it, is beyond doubt.

This is a logical fallacy. What we can control is our net carbon footprint. We control us, not us controlling the Earth.

Or rather we fail to control ourselves...

Re: Why does Kuwait keep its oil reserves secret?

If you are a major oil exporter with flat to declining production, facing an ongoing or imminent permanent decline in oil production, do you: (1) Tell the truth to the world, and thereby encourage emergency conservation and alternative energy and transportation efforts or do you (2) Tell the world that you "choose" not to increase production and/or that your production is only "temporarily" down for a number of reasons (fill in the blank)?

The latter course of action would tend to encourage consumption (because high oil prices are temporary) and to discourage emergency conservation and alternative energy and transportation efforts (because high oil prices are temporary), thus maximizing the long term value of your remaining oil reserves.

Net Oil Exports From Top 16 Net Oil Exporters:
http://bp2.blogger.com/_kdcZbozWthI/RnbjgrSk5YI/AAAAAAAAAOU/NwFg57zOqd0/...

OECD Days of Supply Commercial Oil Stocks:
http://www.eia.doe.gov/emeu/steo/pub/gifs/Slide25.gif

I think that "Mr. 5%" did the top 16 monthly graph (87% of net oil exports in 2006), showing about a 5% (coincidence?) decline in net exports since the monthly peak in 2005.

Philhart posted the OECD graph yesterday. Note that the vertical dashed line is the dividing line between actual and projected data. Apparently, OECD data cover about 58% of world oil consumption.

Questions:

(1) Are non-OECD countries poorer or richer than OECD countries?

(2) Wouldn't poorer consumers be more likely to be forced to reduce consumption as oil prices increase?

(3) As poorer consumers are forced out of the oil markets, and as net oil exports continue to decline, does the bidding for declining net oil exports move up "the foodchain?"

Jeffrey,

Maybe the Kuwaitis would like to come clean, or at least some of them. After all, they have diversified their investments much more than for instance KSA.

But if they do admit to bungled reserve numbers, there'll be a media and industry frenzy clamoring for the rest of OPEC, too, to explain why their numbers shot up so much in the 80's, and to explain and prove the numbers.

It doesn't seem like there's much reason to doubt that last year's leaked report was real, but the consequences of admitting all this are stupendous, and dangerous for many in power in the region. What would happen internally in some of the countires is impossible to foresee, but it likely won't be a celebration of national unity.

The Saudis must be following this very closely, and be involved too. Somehow they've managed to hush the fall-out for about a whole year by now. While the Kuwaiti parliament has been discussing it behind closed doors. For a year?! The veracity of the report was established within a week, I bet.

Deserts are full of rocks and hard places.

In Jerome's new piece on a Claude Mandil (IEA) interview with Le Monde, Mandil accuses OPEC of, well, lying...

IEA boss denies and confirms peak oil in same breath

Q: "OPEC refuses to produce more, saying that the market is well supplied. Are they responsible?
A: "OPEC knows the facts: the markets are not sufficiently supplied".

They've had enough excitement for one week, I think. The walls are crumbling, and power may be more of an issue than money at this point.

Kuwait's consumption increased by 17% from 2005 to 2006, and in 2006, their consumption was 20% of production.

I applied my "what if" 5%/5% model: 5% decline rate in production and 5% rate of increase in consumption. Kuwait's exports would be down by 60% in 10 years.

What if Kuwait and most other OPEC countries implement rationing just like Iran?

Kuwait's consumption increased by 17% from 2005 to 2006

Them ungrateful bastards, who do they think they are using our oil after we liberated them.

I agree, Power trumps money issues at present.

Yesterday the dollar jumped from descending 80.4 to a whooping 111.45 in a few min. Then back down to mid 80's.

I still can not find out what happened.

Just a glitch?

Sending a message?

Anywhoooo, I think the political situation is tougher to make disappear.

I know I need to get a tinfoil fedora. Will aluminum foil work?

Brillo pads spun and crocheted into a toque?

I had a WTF moment yesterday as I checked the US$ index also. I also got all tinfoil hattish too.

I'd guess that someone influential was able to sell their dollars when they were high.

I am not sure what "Mr. 5%" refers to. Concerning the exports graph, what is the source (or sources) of this data?

I know that overwhelming simplicity is highly valued by some commenting here at TOD, but how does the export data (assuming it is any good) correlate with the OPEC cuts? — disregarding for the moment the issue of whether these cuts have been voluntary.

He is using EIA (Total Liquids), except for BP, where noted:
http://netoilexports.blogspot.com/2007/06/net-oil-exports.html

In any case, Rembrandt showed the same pattern, for total net world exports, using annual data.

Actually, I think that the combination of numerous exporting countries at advanced stages of depletion and frequently rapid increases in domestic consumption in exporting countries does result in an overwhelmingly simple conclusion: rapidly declining net exports. The math regarding the net export outlook has been very clear to me since early 2006.

Eyeballing the spreadsheet, it appears that my view regarding OPEC is in part correct. I'll have to do a more thorough analysis, but the data only goes back to November, 2006.

Russia -- slightly up in that period.
Nigeria -- accounts for a lot of the loss
UAE down -- this must be due to OPEC cuts
Etc...

Re: The math regarding the net export outlook has been very clear to me since early 2006

Well, it's certainly good to know that you're entirely on top of things. What would that math be? Is it this?

   Exports = Oil Production - Internal Consumption

You are aware that there are refined product imports and exports all over the world, right?

What did you do, get up on the wrong side of the bed today?

I agree that the HL method combined with the Export Land Model are both simple, and I never claimed to be doing completely original work. As I have said several times, I was building on work by Simmons & Deffeyes, and of course indirectly, on work by Hubbert (using Khebab's graphs).

Having said all of that, I recall lots and lots of vigorous disagreement last year with my conclusions, and I don't recall a whole lot of people joining me in predicting an imminent problem with net oil exports.

You might want to check out Khebab's comparison of Mexico's production, consumption and exports to the ELM, on the Mexico thread.

I think that most of us understand the definition of "net exports."

You might want to go back and read some of your comments regarding my original post on the subject in January, 2006: http://www.theoildrum.com/story/2006/1/27/14471/5832

One of my final comments on the January, 2006 thread:

http://www.theoildrum.com/story/2006/1/27/14471/5832#210
January 30, 2006

The following is based on Khebab's excellent work (as noted above, Khebab has some doubts about my conclusions).

The Hubbert Linearization (HL) method--using only data through 1985--predicted that Russia would produce 61 Gb in the 19 years after 1985.  In reality, Russia produced 57 Gb.   Actual production was 93% of predicted.  As I noted above, I think that it is significant that actual production is 4 Gb below the HL prediction, given that everyone is so mesmerized by the recent increase in production.  

Can anyone think of any other method that would have been this accurate?  Remember, the data cutoff, used to generate the plot, was 1985.   Currently, it appears that production is about 5 mbpd above where it should be based on the HL plot, but 5 mbpd is 1.8 Gb per year, so we could actually see a year or two of rising production before production reverts to the curve (assuming that it will).   For what's worth, my bet is that Russia will start a steep decline no later than next year.  If Russia is going to revert to the curve, if it started right now it would probably require a decline rate of about 11% per year.  

Note that if Russia had followed the curve, and if current production was about 4.5 mbpd, total cumulative production would have been 4 Gb higher than current cumulative production.  I suggest that you read that again.

I guess my basic question is if the HL method was 93% accurate in predicting the incremental cumulative production from 1985 to 2004, why are we so distrustful of the predicted production in the next couple of decades?   The model predicts that production in 20 years will be down to about one mbpd.

IMO, this plot reinforces my concern that we are facing an immediate crisis in net export capacity.   What if the Saudi plot is 93% correct?

If anyone missed it:

http://www.themoscowtimes.com/stories/2007/07/10/042.html
Tuesday, July 10, 2007. Issue 3695. Page 5.
The Moscow Times: Alfa Report Sees Trouble Looming in Russian Oil Sector
By Anatoly Medetsky
Staff Writer

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. . .

. . . The increasing proportion of water in total output was a major source of concern, the bank's analysts wrote. This causes a quickening in the rate of natural production decline at most fields.

If anyone missed it:

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...

This emphasis is supported by the rest of the article:

Alfa Bank first downgraded its projections in the sector in March, saying that oil majors were depleting existing fields while heavy taxes on the industry were preventing the development of new fields.

The article you quoted suggests that Russia's oil industry will start having problems due to high taxes preventing development of new fields, not due to lack of oil.

I know what the bank's opinion was, but I think the key point of the article was their observation that production was declining because of rising water cuts. Note that the situation has materially worsened in four months.

I think the key point of the article was their observation that production was declining because of rising water cuts.

And I disagree - the article talks roughly equally about heavy taxes and increasing water cuts, and uses phrasing like "Combining these observations" to make it clear that their conclusions are based on both of those factors.

Your link has gone behind a paywall since yesterday; the full text of the article is available here.

Note that the situation has materially worsened in four months.

Well, yes. As the article quotes an analyst, "taxes in the oil universe [are] high, but [it is] unrealistic to expect the government to lower them in the run up to State Duma elections in December". Similarly, "[t]he increasing proportion of water in total output [is] a major source of concern".

i.e., they see closing windows of opportunity on both fronts, and do not appear to tag one as "the key point".

Overall, it's sort of silly to say that production declines are "because of" only one factor or the other. Mature oil fields decline in production - that's always been true, even in regions with growing production. The key is to add new fields faster than the old ones decline, and any decline or growth in overall production is due to the difference between those two factors, not just one or the other.

Now, it might be worth focussing on only one if the other one was artificially constrained, such as new fields would be in the case of serious geological constraints. The article, however, doesn't even hint at such a situation; it lays the blame for insufficient new supply at the feet of the tax structure (and, to a lesser extent, inflation and cost increases).

So the article suggests that Russia's oil production is likely to stop growing or even decline soon, but does not support the contention that Russia's oil production has reached any kind of geological peak. In that way, it's in perfect accord with the IEA's recent analysis suggesting a near-term Russian peak (3-5 years), a shallow decline, and renewed growth thereafter.

It's possible you're right that Russia is geologically peaking, but that article doesn't support you one bit.

Interesting to note that Russian C+C production was down 104,000 barrels per day, March to April. March was the all time peak so far, (since the collapse of the Soviet Union). I am betting Russia has peaked, or at least very, very near her peak.

and I don't recall a whole lot of people joining me in predicting an imminent problem with net oil exports.

I have always supported your position WT, but you were just so good in explaining your position that I felt there was nothing constructive I could add.

Ron Patterson

If memory serves, I don't think that you and I have ever varied our positions on Russia and Saudi Arabia to any significant degree.

In the interest of full disclosure, I should add I did slightly amend my Russian position to be a predicted decline probably in 2007, no later than 2008. In truth, predicting a Russian decline was not nearly as controversial as predicting a Saudi decline. And I did concede the point that areas in Russia that are highly depleted are the mature basins in Russia.

What was controversial about the Russian prediction was not so much a near term secondary peak; it was the implied decline rate, which the HL model suggests will be horrific.

If you look at the totality of the HL predictions versus production data so far, inclusive of the Mexican prediction that Khebab made, it makes a pretty compelling case for the HL method, which in turn suggests that the export predictions based on HL are probably going to be reasonably accurate, i.e., we are in deep do-do.

No, I did not get up on the wrong side of the bed this morning. I have had a problem with your simple exports model for a long time now, and I am just now saying so.

It is way too simplified view of how things work so as to depict reality accurately. What is needed is a sophisticated model of oil/products exports over time to capture what is really happening.

You have not countered the objections I have brought up because you can't. Take a country that devotes some part of their produced oil to internal refineries, and then exports the refined products (gasoline). Does that count in your world-view? Take Russia. Suppose they took away their small subsidy on internal gasoline consumption. That would affect their usage. Suppose, as an example, that they decided to tax gasoline over the "world" price just as the European OECD nations do. That would certainly cut their consumption. They might do this for that very purpose, to increase exports and state revenues. Where in your model does such a thing occur?

I have no problem with the hypothesis that exports will decrease as oil production decreases — that seems right. I would like to see a serious study that I could believe that demonstrates it. I don't have the time or inclination to do it myself, but since you apparently do, why don't you make a serious effort?

Do you actually think that peak oil outsiders versed in economics would believe the Export Land model? I don't.

Do you actually think that peak oil outsiders versed in economics would believe the Export Land model?

To be fair, I think the model is meant to be qualitatively illustrative, rather than quantitative in any way. It's a good way of making the point that internal consumption can make the rock to declining production's hard place, with exports squeezed in the middle.

It's too simple to use for calculating anything meaningful, but it's valuable as an explanatory tool.

Do you actually think that peak oil outsiders versed in economics would believe the Export Land model? I don't.

Dave,

As Pitt pointed out, the ELM basically asks a hypothetical question for a hypothetical country (consuming 50% of production at peak production): What happens to net oil exports if production declines at 5% and consumption increases at 2.5%?

The answer is that net exports go to zero in 9 years, and only about 10% of remaining production would be exported. In any case, I suggest that you check out the ELM versus real data in Mexico post that Kkebab did. Also, the UK went from peak exports to zero exports in about six years.

In regard to statistics, the EIA tracks production and consumption in terms of total liquids, which generates the net exports numbers. I fail to see why this is such a hard concept.

In regard to economics, my premise is, and was, that once net exports started declining, oil prices would rise, generating increasing income for the exporters, even as their net exports fall. This would tend to have the effect, in short term at least, of increasing domestic demand in exporting countries. This is precisely what we saw in 2006. For example, the top five showed a 1.3% decline in production, a 5.5% increase in consumption and a 3.3% reduction in net exports (EIA, Total Liquids from 2005 to 2006).

In regard to your Peak Oilers comment, I think that you are basically right. Almost everyone (Matt Simmons being a notable exception) in the Peak Oil community has been focused on the wrong thing--total production--when what counts is net exports.

In early 2006, when I looked at the HL plots of the top exporters, combined with my expectation for increased consumption in exporting countries, I was convinced that we were quickly headed for a net oil export crisis.

First Contract to Enlarge Panama Canal

http://uk.biz.yahoo.com/08072007/323/first-bid-widen-panama-canal-awarde...

This will unplug the bottleneck of the Panama Canal (@ 100% capacity for decades) and allow substantially larger ships to use the 3rd set of new locks.

Larger ships are more fuel efficient/ton of cargo. Panamax container ships will go from 5,000 containers to 12,000 containers. There is only one container ship currently in service that will be too big for the new locks.

And New Orleans is the US port closest to the Panama Canal :-)

Best Hopes for Speedy Completion,

Alan

Tampa, Pensacola, and Mobile are closer, per NOAA's "Distances Between US Ports" 9th ed, 2002.

I was told that New Orleans was 4 nm closer (a trivial delta) than Mobile with no mention of Tampa or Pensacola.

The Port of New Orleans stretches for several miles up the river, and I do not know which part of the port they measured from.

What were the distances losted by NOAA ?

Alan

Alan, the ports of Houston and Galveston aren't that much farther. I hope we're all going to benefit!
Bob Ebersole

While it's true that larger ships are more efficient, a considerable amount of environmental damage is caused by deepening/widening harbours and other bodies of water to allow them through. Plus it means a hellavu lot more is at stake for each individual ship - witness what happened with the MSC Napoli back in January.

They're also less flexible, meaning that if oil price spikes significantly alter the economies of global trade, it would be difficult to make rapid adjustments in the types and quantities products that would be shipped by sea if all we had were 15,000 TEU ships like the Emma Maersk.

Consolidating 2.4 old Panamax ships (which include container ships, oil tankers, bulk cargo and probably break bulk) into one new Panamax ship does not seem excessive "eggs in one basket" on a global scale.

Excessively large oil tankers are not as sea worthy as somewhat smaller tankers, but it appears (naval architecture not my thing) that the new Panamax container ships should be at least as sea worthy as the old ones, if not more so.

Given the volume of world shipping, any opne ship is a drop[ in the bucker.

One interesting note is that 12,000 TEU (the new Panamax) container ships MAY be marginal for nuclear power even at today's oil prices. Bigger is better for ship based nukes.

Speed is of value to container ships (more so than other types) and I think new Panamax will still be smaller than Suezmax (need to check).

A series of new Panamax nuke container ships (spreading design and start-up costs over several ships) would be interesting.

Best Hopes for greater energy fficiency in all things, from housing to shipping,

Alan

BTW, greater effiency with ship size (all things being =, they never are) should be the cube/square law. My that calculation, a 12,000 TEU ship should use 25% less fuel/container than a 5,000 TEU ship.

You've got to look at the 'Don't Peak' article. The Forest Grove's Sustainable page opens with an ad for the $687 Non-stop flight from Seattle to Paris!

Maybe I don't get out enough.. I'm doing some camerawork for a local network affiliate, and basically had to admit I didn't see the last one we shot, since I don't watch 'much' TV. I saw it this morning.. my humble contribution to the MSM, but only after staggering through the advertising and the news, such as it is. Yikes!

I have a 'zero-emissions' commute, though, using a 2-wheelbarrow of sorts to carry my Steadicam rig the 12 blocks downtown to their studio. Both the Cart and the Steadicam are essentially built from recycled materials, street-scraps, dumpster-diving, etc.. all in the service of our Nation's TV addiction.. alas!

I think the most important news of the day is the IEA chief admitting that Russia has peaked.

Demand for oil will increase in the coming years and, taking into account the decline from non-OPEC country production (Russia, Norway, UK, ...), OPEC's share of the world market will increase in absolute value by 2050. As to biofuels, OPEC knows that substitution is impossible. They will never make up more than 10% of world production. This should not cause them nightmares.

Of course his admitting that biofuels will basically make little difference should be news as well. However admitting that Russia is in decline puts the IEA at odds with CERA who puts Russia at the very top of its list of 15 countries that CERA expects the lions share of new production to come from over the next ten years. CERA’s O15:

Just 15 countries are expected to account for up to 84 percent of the net growth in global oil production capacity over the next ten years. This is a group of countries that CERA, borrowing from the G8, calls the "O15"—the Oil 15. CERA’s O15 includes, in order of absolute growth in capacity, Russia, Saudi Arabia, Canada, Iraq, Brazil, Kazakhstan, Iran, Kuwait, Algeria, Qatar, Libya, Nigeria, United Arab Emirates, Angola, and Azerbaijan.

So we have the IEA chief saying that Russia is in decline and CERA saying that Russia will lead the world in new oil production in the next ten years.

Of course the fact that Saudi Arabia is number two on the list makes me snicker a little as well.

Things are getting very interesting.

Ron Patterson

thanks Ron for putting that news so succinctly. I think CERA has been marginalized and the fact that we keep referencing them as supposed gurus only lengthens the time to when their views are thoroughly discredited.

A stark contrast between IEA and CERA indeed.

I think that you guys are being unduly harsh on CERA and Danny Yergin.

Yergin historically has served as a critical contrary indicator of oil prices (do a Google Search for Daniel Yergin Day).

On 6/28/07, I posted a "Red Alert on Oil Prices." I noted that CNBC was reporting that Yergin had predicted that oil prices would be back down to $60 next year. Based on Yergin's prior performance, I suggested that oil prices would be at or above $120 within a year.

As of this morning, Brent spot is up by 8.5% since 6/28, from $71.96 to $78.07.

WT: The change in cornucopian price targets is fascinating-from $5 in 1998 now you have dirt cheap oil priced at $60 (as represented by the Yerginizer). Up 12X in 9 yrs. Wow.

BrianT'
Do you think Yergin is a closet peakist? You've outed him!
Bob Ebersole

Bob:Danny hasn't conceded defeat, but he is definitely in full retreat (while claiming victory all the way). He reminds me of a certain world leader.

EIA Washington has fresh data out this AM, their International Petroleum Monthly (IPM)
http://www.eia.doe.gov/ipm/supply.html

I keep select data from this series, and also IEA Paris and OPEC on my Front Page:
http://www.gregor.us/

Meanwhile, the Platt's Podcast this AM on Bunker Fuel Stocks absolutely disappearing from myriad European and Mediterranean points was alarming, though instructive:
http://www.platts.com/Oil/Resources/Podcasts/europe/index.xml

Finally, we never saw much of a typical shoulder season in Oil this Spring, and I'm now wondering if we may get the first Autumn in several years where the same outcome unfolds. To be sure, it's very hard for Oil not to fall after the seasonal high(s) in late September. Especially from a spike. The NYMEX traders (who increasingly allow their own fallibility now in making short-term price calls since the advent of all the electronic trading) often cannot control their urge to sell the historic, seasonal pattern.

If Oil does fail to fall from the seasonal spike after September, that will be telling to say the least. (In conjunction with the signals from the term structure of the Oil Futures Curve, out to 2015)

Gregor

Re:new April data for EIA.

Russian production dropped 100,000bpd compared to March (9.473 to 9.369 in April). Only one months figures to be sure, but the lowest production this year, and worth keeping an eye on given Westexas's views on their status.

The 'provisional estimates' given for UK production for both March and April look way to high compared to what the Bank of Scotland has been coming out with - expect big downward revisions there...........

Ron, Nate,

I'd say the big one this week is that IEA, for a reason we can't fathom, has started to move away from its cheerleading role. The report earlier this week admitting to peak oil, and now the Russia quote, and the accusations of blatant lies about supplies directed at OPEC by Mandil, it's all unprecedented.

That has got to be a huge blow for the steady as she goes crowd. Then again, it could also be a first step towards preparing the world for much bigger news to come soon, in a divide and rule kind of tactic. After all, if Mandil would say such things without having discussed them first, you'd think he puts himself in danger.

Tom Whipple has a very plausible explanation for the IEA shift in his weekly Falls Church News-Press column:

The IEA’s new religion is easy to understand. The organization is responsible for supplying energy information to 26 member countries, only one of which is the United States. The preponderance of the IEA’s members are in Europe which so far are taking global warming and peak oil far more seriously than we are in the United States. Oil production from Europe’s North Sea fields is declining rapidly so that shortly their economies will be dependant on Russia for energy. In this environment, the IEA got serious very quickly.

They both could be valid opinions. It possible that CERA looks at what's possible and IEA looks at what's actually planned. In other words it's possible that while Russia could (with large investment) increase it's oil output it is not planing to do so.

This would make a lot of sense economically. The only way that Russia can continue it's fast economic growth is by creating more value added industries. While pumping of oil is very profitable, the amount of money that oil generates can depress other industries in the country (flow of petro-dollars can either increase ruble's value or spark higher inflation). If I was running Russian economy I would be trying to slow down oil exports. Russian economy already has a lot of petro-dollars and there is not much of value that you can buy with it (many good companies or technologies might not be for sale).

It possible that CERA looks at what's possible and IEA looks at what's actually planned.

'Whats possible' isnt useful nor is it whats conveyed when they portray Peak Oil as a 'myth'. Its 'possible' that I could be a swimsuit model (mens), but I spend time gardening and writing on TOD and other places so while I have the physically necessary inputs to accomplish this task, Im missing most of the required inputs (time, trainer, fecklessness, etc. ) CERA misunderstands multicriteria analysis. (They may however be right on oil prices, as a CDO led recession/depression will offset more demand than depletion will)

I wouldnt be so harsh on them if they werent't dangerously misleading policymakers and at the same time saying that the "peak oil crowd" are the dangerous ones..

While pumping of oil is very profitable, the amount of money that oil generates can depress other industries in the country (flow of petro-dollars can either increase ruble's value or spark higher inflation).

Sounds like this might apply also to my "home and native land", Canada.

You are jumping the gun here friend. The article only says that Russia will be in decline by 2050. Read it very carefully:

Demand for oil will increase in the coming years and, taking into account the decline from non-OPEC country production (Russia, Norway, UK, ...), OPEC's share of the world market will increase in absolute value by 2050.

Lets keep a little perspective, shall we? We already know the UK and Norway are in decline. The only 'big player' that is not in OPEC at the moment is Russia, and as WT has stated numerous times, they might peak very soon.

Jerome a Paris, who gave the interview and who also translated it from the original French, says:

Beyond the now familiar criticism of biofuels (boy has the wind turned on that topic!), the most interesting thing to note here is the inclusion of Russia in the list of countries in decline. While his statement is slightly ambiguous as he only mentions the 2050 date, I believe that it is a significant acknowledgement.

http://www.eurotrib.com/story/2007/7/11/18610/6036

Paris acknowledges that the statement was slightly ambiguous, nevertheless he takes the statement to mean that the IEA boss believes Russia is in decline.

Now I was not there and do not speak French, so I must take the word of Jerome a Paris, who was and who does.

Question: I know beans about French but is this guy's name Jérôme Guillet who lives in Paris or is his name Jerome a Paris and Jérôme Guillet is an entirely different person? Help me out here someone.

Ron Patterson

"Jerome a Paris" means "Jerome in Paris," and is just Jérôme Guillet's screen name. Kinda like "Darwinian" is your screen name.

Or Alan from Big Easy :-)

The only city with better food than Paris >:-)

Alan

Ron,

Same person, the TOD:Europe copy is under the a Paris name.
Yeah, sinister...

We should get a better translator, though.

Thanks guys.

Ron in Pensacola

So I'm a bit confused here, let me try to understand it all. He admits that the statement was ambiguous, but he, and he alone, has divined the true meaning of the ambiguous statement that just happens to state that Russia entered decline because their production was down for one month? And you just happen to agree with his opinion on th matter and agree that it must have meant they are in decline?

I would assume that Russian production ebbs and flows in a seasonal manner just like everywhere else...

. . . and large water drive oil fields in Russia and elsewhere--for example, Daqing; Cantarell; Ghawar; Burgan, etc.--are on track to where the East Texas Field is now, basically a skimming operation, where they are producing saltwater with a 1% oil cut.

http://www.themoscowtimes.com/stories/2007/07/10/042.html
Tuesday, July 10, 2007. Issue 3695. Page 5.
The Moscow Times: Alfa Report Sees Trouble Looming in Russian Oil Sector
By Anatoly Medetsky
Staff Writer

The increasing proportion of water in total output was a major source of concern, the bank's analysts wrote. This causes a quickening in the rate of natural production decline at most fields.

PartyGuy, let me assure the Russian assessment was not made on the basis of one month's decline. Russia declined in April according to the EIA. But we have had May and June since then.

There have been several articles in the media about Russia's declining production and extensive water cut. I do not have the URLs at my fingertips but perhaps someone else can post them.

Russian production, growing by leaps and bounds in the last several years, has slowed to a crawl in the last year or so. That, combined with all the political problems in Russia, has convinced all but the most uninitiated that the Russian explosion in new oil production has come to an end.

Of course those who have not been following Russian oil production for the last few years would be unaware of all this. You have some catching up to do.

Ron in Pensacola

I thought they placed new duties on oil pipeline exports in April, and that was the reason for the 0.1% drop in utilization?

Okay, for starters, 104,000 barrels per day is 1.09 percent of Russian production, not 0.1 percent.

Above ground problems do affect oil production in every nation in the world, and Russia is no exception. But these all average out. Also pipeline utilization is not oil extraction, unless the producers choke back because of the fact.

Ron of Pensacola

divined ? havent heard that term much since ......oh.....about 2000 and it turns out the supreme court divined (by a 5 to 4 vote) that el' befuddleoso would be king.

A frozen peat bog covering the entire sub-Arctic area of Western Siberia, the size of France and Germany, contains billions of tonnes of greenhouse gas that is melting for the first time since since it was sequestered more than 11,000 years ago before the end of the last ice age.

http://www.terranature.org/methaneSiberia.htm

In Ireland it was much cheaper to heat a home with a peat moss stove than to use other means of heat.

http://www.planetark.com/avantgo/dailynewsstory.cfm?newsid=33566

I think that if highlands people were given a choice between freezing to death and global warming, they would burn peat.

It seems to me, as I peruse through the daily news, that large areas of the planet - both Northern and Southern hemisphere - are currently experiencing weather extremes. Occasionally, crop damage, crop failure and lower yields are reported as a result of the exceptional weather conditions. I suspect the situation is far worse than reported.

I wonder; is what we are witnessing the result of the Earth's weather system trying to rebalance itself? Both hemispheres simultaneously affected, regardless of their winter/summer configuration.

I don't bother about the arguments regarding who or what is responsible (if it's man, at least we have a chance to do something). What I do know, is whatever is happening has never happened before with 6+ billion people on the planet.

Slowly, the systems that maintain our civilisation are being stressed to breaking point and something out there is homing in on our Achilles heel. But what is it? We have so many.

From what I'm witnessing here in Europe, I tend to agree with the increasing clarion call that the time for theorising has ended and the time for individual action has come (if not passed). Time to ELP before it's too late. As time passes it will become increasingly impossible to take action of any kind.

Triumvirate of collapse - Economy, Ecosystem, Energy

A copy of a post I made on the Mexico thread follows. One other thing that I would add is that I recommend that people start thinking about contingency planning, for consolidating an extended family in one location, presumably with land that can be used to grow food. Think of "The Waltons" http://en.wikipedia.org/wiki/Image:Waltonsdvd.jpg

Someone asked me the other day what to do, in the context of ELP, if you are currently making a good salary in an industry that you know is doomed.

Probably the best answer is to ruthlessly (very small one bedroom rented apartment?) implement E & L, while continuing to work at your current job, but while also training to be a producer of essential goods and/or services in a post-peak world.

A very good idea is probably to get a small group together to buy some farmland, preferably not too far from a mass transit line. In the short run, if nothing else, you could lease it out to an organic farmer. The key point is to try to lock in access to a food supply. Remember the billionaire who is expanding his ability to grow his own food?

If you don't have the money yourself to buy the farmland, I would suggest trying to option a tract of land, and then get three partners, with each of them paying one-third of the acquisition cost, with the ownership split four ways. You get carried for 25% in exchange for putting the deal together.

The title "Handyman" could well take on new importance in the days ahead. For those wishing to try their hand at gardening, renting a garden plot is an option. There is one such operation close to where I live and I often ride bike past there. The owners of the land also supply water in a tank for use in watering the rented plots. This rental system has been going on for many years with some folks raising truly nice gardens and some just a fantastic crop of weeds.

EIA International Petroleum Monthly covering April released.

Total liquids worldwide production:

Highest year was 2005 (84542)despite the hurricanes, followed by 2006 (84502), with 2007 (84148) dropping well behind 2006 so far.

Comparisons of first 4 mos of each year:

2005 84420
2006 84230
2007 84148

I would be willing to bet that Coffeyville will be down longer than they think. DSC_0038.jpg
DSC_0049.jpg
DSC_0027.jpg

$10 says that at least one of those external floaters shifted off its ring.

It appeared to me that they got a pipeline tender once they were shut down, but I haven't heard anything concrete.

Woodychuck

Re: Water World: Slipping Toward Climate Catastrophe

Leanan,

That is a July 3 article by Monbiot for the Guardian, that was earlier posted by you in the July 4 Drumbeat, as "Stop doing the CBI's bidding, and we could be fossil fuel free in 20 years"

I referenced it as well on Monday, July 9, at TOD:Canada in the key post:

7-7-7: The Launch of Global Warming Inc.

It is difficult to guage the sea level rise. Some measurements have suggested 3.2 mm per year. That is about an 1/8 inch per year.

One part of California was moving pst the other at about 50mm per year along the San Andreas fault.

Part of Tibet was rising at 8-30 mm per year.

Some ocean basins were sinking mm's per year.

Some land over an oilfield sank at a rate of about 400 mm's per year as the oil below was pumped and out the intense pressure above crushed the oilfield.

Beach erosion occurred with and without sealevel rise and was worse where new sand was not being deposited by near shore currents or from onshore stream sediment transport. In other areas new land was being created by sediment load transport such as the Mississippi Delta as seen in comparative analysis of time lapsed satellite photos. Below sea level cities such as New Orleans and Galveston are accidents waiting to happen. What lured people to build cities under the sealevel anyway?

Some of the worse solar flaring on record occurred within the past few years making spectacular aurora borealis displays preserved in photogalleries across the internet.

During the most recent Ice Age Iowa and Indiana were covered with massive ice sheets, global warming destroyed that. How much carbon dioxide was emmitted to make a windmill for a 10,000 sq ft mansion? Sustainability?

After reading this board, it seems that if oil production does not peak soon it might have already peaked. There were trillions of BOE of partailly developed heavy oil, NG, coal, peat, wood, cellulose, all hydrocarbons with the carbon in them. We do not have accurate estimates as to how much warming the earth can withstand. One might as well try to call for limits to population growth and see how popular that is compared to how difficult it is to get people to live without energy. They might try to close brothels and eliminate porn from the internet.

Rainsong, Galveston is above sealevel. After the seawall was built, the whole town was raised by dredging sand and digging a canal several miles, then unloading the sand. We're vulnerable to flooding only if the bay rises about 8'.

In 1903 the government actually helped people. Too bad New Orleans can't get a little 1903 technology-a fourteen ft thick concrete and granite seawall 17' high and huge amounts of fill.

Alan,

A link to a "reprint" of your article about rail from ASPO USA Peak Oil Review for 9 July 2007 has been on (and still is) on the front page of http://www.evworld.com/ Also a mention of TOD.

Stop Ignoring Rail, America
By Alan Drake
http://www.evworld.com/article.cfm?storyid=1287

Open Access Article Originally Published: July 10, 2007

This article is reprinted from the ASPO USA Peak Oil Review for 9 July 2007. We also recommend reading Local Rail on The Oil Drum.

Step One – Electrify US Freight Rail Lines and Shift Freight to Rail
Japanese and most European railroads are electrified. The Russians recently finished electrifying the Trans-Siberian Railroad, from Moscow to the Pacific, and to the Arctic port of Murmansk. So there are no technical limitations. Electrifying railroads and transferring half the truck ton-miles to rail should save 6.3% of US oil consumption.

perhaps a brilliant pundit here can predict whether u.s. natural gas would be expected to rally from this low level? don't people turn on air conditioners as temperatures rise? where is the natural gas cliff that i was reading about in 1997?

We're still near the top of the natural gas plateau - not headed over the cliff yet. Supplies this year are in good shape. From this week's EIA natural gas report:

Working gas in storage was 2,627 Bcf as of Friday, July 6, 2007, according to EIA estimates. This represents a net increase of 106 Bcf from the previous week. Stocks were 64 Bcf less than last year at this time and 374 Bcf above the 5-year average of 2,253 Bcf.

Fred, no brilliant pundit but I would like to point out a couple of things for you. First, only about 18 percent of the electricity on the grid is produced by natural gas. Second US natural gas production is down more than 1,000,000 MMcf since we peaked in 2001.
http://tonto.eia.doe.gov/dnav/ng/hist/n9070us2A.htm

Also, Natural Gas, back in 1997 was well under $2.00 per MMBtu. It was still under $2.00 in January of 1999.
http://futures.tradingcharts.com/chart/NG/M

It is now around $6.50 for summer gas and about $8.50 for winter gas, (February 08 delivery).
http://futures.tradingcharts.com/marketquotes/quickquote.php3?sel=Crude+Oil
Click on the above URL, (crude oil), then click on "Oil/Energy" then on "Natural Gas NYMEX".

So Fred, winter gas has gone from under $2.00 to $8.50. Now you might call that a "low level" but most folks would not call a four fold price increase a "low level."

Ron Patterson

Oil tanker grounded off New York City

A tanker carrying more than 19 million gallons of fuel oil grounded off New York City on Thursday but was not leaking, the U.S. Coast Guard said.

The White Sea ran aground off New Jersey's Sandy Hook at approximately 6:30 a.m. EDT after losing steerage, said U.S. Coast Guard spokesman Bob Laura.

BBC Radio 4's Friday play is about peak oil this week:

http://www.bbc.co.uk/radio4/schedule/2007/07/13/day/

'21:00
Friday Play
A Second to Midnight

A contemporary thriller set in Nigeria in two parts.

Western Governments and global oil companies have long predicted that the 'Peak', when oil reserves become finite and the markets begin to panic, is as far off as 2030. But oil company geologist Dr Rob Turner wrote a report trashing this timescale, saying that we had already reached the 'Peak'. But then he was forced to bury it.

The worst possible news comes from Nigeria.'

Bonny Light blew thru 80 this week, and is at 81.13 today.

Looks like Brent will be the next thru 80...79.28 today.

Upstream Crude quotes

I guess 80 isn't that much of a barrier anymore (at least for some - probably Europe and Asia)

See my "Yergin Indicator" comments up the thread.

Let's hope 120 is a while away.

But if we are at 80 before hurricanes and a supply shortfall starting in October(Oil Shock).

Maybe 100 is possible for a short period this year after all.

Ugh.

Hang on, I'm seeing Brent Crude at ~$76 at everywhere I'm looking.

BBC
Reuters

Yep. It's not clear what is being shown (is it a spot price there or is it a future?). But if it's spot then it must be wrong.

Bloomberg has different data (and that's what most traders use so it's usually very reliable):
http://www.bloomberg.com/markets/commodities/energyprices.html

There is recent shut-in capacity in the North Sea after a gas pipeline for associated gas failed, they cannot process the oil from whence the associate gas was produced, because they need the gas and the oil.

http://www.reuters.com/article/topNews/idUKL1290972220070712?rpc=44

FYI, these are some of the areas (J-Block) that are within my group's responsibilities. I have been aware of the situation for several days, but couldn't say anything until it hit the press. My guess is that the long-term fix will be engineered in my group.

This has not affected our stock price, which has absolutely exploded lately. I just checked this morning, and our average annual return for the past 5 years has been 28%, and for the past 3 years has been 30%. I am not one to come on here and pump my own company's stock (in fact, I would guess that many/most readers don't even know what company I am talking about) but that has been an impressive run. I don't give financial advice to people, but I have been telling people within the company for the past 3 years that our stock was undervalued relative to our peers.

Now I probably need to brace for an onslaught of comments about conflict of interest. (FYI, I am deep into negotiations with the company to allow me to work on a cellulosic ethanol venture on my own time. They have concerns, but it looks like I will get the green light provided the proper IP protections have been signed).

Confuses me too, I believe there is a Brent contract traded on Nymex, and a different Brent contract traded on IPE (London). The Nymex price is higher than IPE (different delivery point?).

There must be an expert in the house?

This is too precious. Just found a story about "The Goldwaters," a "rock group" (use the term loosely) who went on tour with Barry Goldwater to help with his campaign. They cut an album, now long defunct. The band broke up when Goldwater's presidential bid failed, but there is an interview with one of the band members. He's still around, and is in the radio business, but not in music:

The Goldwaters

Maybe they should change their name to the Paulettes and issue a reunion album! I hope they enjoyed Viet Nam.
Bob Ebersole

You cannot blame the Vietnam War on Barry Goldwater. The Vietnam war was a joint JFK and LBJ production.

I do believe that Goldwater knew enough not to get involved in a land war in Asia. Too bad that Bush did not get the message, which goes back about 100 years at West Point and other places:

Do not become involved in a land war on the Asian landmass.

Last time I looked, Iraq is in Asia.

Do not become involved in a land war on the Asian landmass.

How about, do not become involved in a land war.

Or in any war at all if you can help it.

Tenants File RICO Suit on New York Landlord

Here in New York, a group of tenants have filed suit against one of the city’s largest landlords, Pinnacle Group. The suit cites the Racketeer Influenced and Corrupt Organizations Act -- RICO -- to accuse Pinnacle of employing illegal tactics to evict tenants and increase rents.

http://www.democracynow.org/article.pl?sid=07/07/12/1334211

Juan's theories on urban relocation aren't in the print transcript, but this article from 2 Jun 2006 covers much of the same ground as I heard today:

JUAN GONZALEZ: Well, I think what it is, is first of all, it would be a national story in its own when you have thousands of people suddenly being forced out of their homes in New York. And despite all the press that we have in this city, nobody has been covering this. But I think that there is a national significance to what is going on, and it's a theory of mine that I’ve been developing now as I report on it and analyze the situation in urban America -- is that increasingly, especially now that we've reached a peak oil crisis, there is a concerted move to move the middle class and the upper classes, that moved out to the suburbs back in the ‘60s and the ‘50s and the ‘70s, back into the cities, that there are many people who are living in the exurbs who don't want to have to drive one-and-a-half hours to work every day in the city and now to spend so much more money on gas. And so, that real estate speculators --

AMY GOODMAN: And also older people.

JUAN GONZALEZ: And older people, as well. So what’s happening is real estate speculators are realizing that the market is ripe to re-grab the inner cities and to, in essence, create urban America as more in the European models, where the middle and the upper classes live in the central cities and the poor live in the suburbs, on the Parisian model, for instance. The immigrants or the poor in Paris live in the suburbs, not in the city.

And our city, as developed throughout the ‘50s and ‘60s, was basically the central city as being the place where the poor lived. And so now there is a concerted effort to recapture the cities and to displace and to move out the residents that are there. And why so many of the black and Latino political officials are now getting up in arms over this is because they also realize it has political significance, in terms of their political bases are now being dramatically changed as more and more upper-income people and upper middle class people are now replacing their original constituents.

So I think that -- and the problem is that government policy, rather than try to assure affordable housing and a good mix of poor, working class and upper class within urban America, the policies that local governments are pursuing now are really to assist these landlords and developers in pushing people out and driving up prices. So I think that it's -- I do not believe that what's happening in New York City is an isolated situation. I actually believe it’s happening, and I’ve been receiving emails from people in other parts of the country, in Chicago and other places, in the Southside of Chicago and others, that the same thing is happening.

http://www.democracynow.org/article.pl?sid=06/06/02/1414248

I'd say the land grab that is happening in New Orleans is a big part of it, too. Although Inner Harbor is booming, Baltimore's drug culture and extremely high murder rate seems to be slowing down gentrification elsewhere. Nearby Charles Village, developed by more or less the same company that first developed Inner Harbor, is simply not selling because of the crime in that neighborhood.

Of course it is happening. If one keeps his eyes open one can see it also in places like Los Angeles and in cities around Phoenix.

It is a reversal of when they moved specific groups into the city centers and converted them into crime ridden slums forcing the middle class into suburbia.

The part that they don't understand is that the owners of the property are the ones that will determine how it is used, they can't have rights to property that they don't own.

It's like a carjacker taking your car and claiming to have a right to it.

Comment on Saudi and the IEA on Tim Iacono's new blog "Bad Macro" (Ex "The Mess Greenspan Made") fron the Econobrowser blog

"But conspicuous by its absence is a discussion of the production decline in Saudi Arabia. The report lists 2007 Saudi production capacity at 10.8 mb/d, but does not offer a theory as to why Saudi production is currently only 8.6 mb/d and has dropped by a million barrels a day over the last two years."

More here

http://badmacro.blogspot.com/

Alex

Regarding the "Two Child" Policy in the UK.

I have often wondered what the best, and most humane method of population control might be. China has cracked down heavily on multiple children in each family with their one child policy, but this has lead to a massive gender disparity as parents abort the 'unwanted' female child in favor of a male child. The end result is mounting social unrest and a very large, angry, and potentially homosexual male population.

The UK seems to think a 2 child policy will be enough, but a drop of 5 million people in 43 years? Thats no where near enough! I think that a "one.point.five" child policy would be the best 'fit'. Each person is allowed by law to have 3/4ths of a child. When you get married, be it in a civil or religious context, you would be allowed to have 1 and a half children. Your remaining half could be sold to other couples seeking to have two children, kept, or you could yourself seek to buy the rights to another child.

In essence, you would cut down on the risk of gender disparity, while seeing a rather dramatic reduction in a countries population. England might have 35 million people instead of 55 million by 2050. Of course, they could much less if the worst scenarios come true.

Thoughts?

Male children have always had more value, being physically stronger, and most fathers want sons to pass on the inheritance to...

lots of men and no women wont magically make them homo. sure at sea sailors might go at eachother, but when they hit port they go straight for the women. lots of men is means china has the largest standing army in the world when you include those disgruntled men. (the dishappyness comes from not being able to pass on ones genes and have children). War will bring raping and pillaging and many bastard children. exactly what the men in that situation want.

also quit with copying Heinleins ideas about children.

A fertility rate of 2.1 is roughly what is needed for maintenance. 2 children per family with a couple 3 children families every now and then.

futhermore, if people have less babies, their reproductive fitness is lessened, ergo people who throw away their lives for salary and neglect having children are actually LESS fit than those who spawn crotchlings every other year.

my advice to the smart is to have many children. overpower the lazy with a tide of good genetics, its all about genes in the long run anyhow.

my advice to the smart is to have many children. overpower the lazy with a tide of good genetics, its all about genes in the long run anyhow.

Apparently this guy is way ahead of all of us... Humorously enough, they are the Green family.

Man, once surrendering his reason, has no remaining guard against the absurdities the most monstrous, and like a ship without rudder, is the sport of every wind. -- Thomas Jefferson

I'm sorry...but what is the point to having THAT many children?

I guess he is exercising his "reproductive fitness". The Church of Latter Day Saints (the Mormon Church) sanctioned polygamy (you'll notice that five of the women in the picture are his "wives") until the late 1800's when the US federal government created a series of laws to dissuade the practice.

It is now officially banned by the church, but as the picture demonstrates, there are still members of offshoot sects which keep the practice alive. There are many problems with polygamy as practiced by fundamentalist Mormons. It is inherently sexist and frequently leads to child abuse as young girls are forced to marry and have children before they are 18. There are never enough women to go around, so young men are routinely forced out of these communities. These communities drain state and federal resources by "bleeding the beast", that is to say, using welfare and cheating on taxes get the most out of the governments that they despise.

In the well-publicized case of Tom Green and his five wives in Utah, the state documented that the Green family received $647,000 between 1989 and 1999. Then they estimated that the grand total was more than $1 million – just for one family.

Mormons in general seem to have very large families. I guess they are using Gilgamesh's theory of "outreproducing the lazy".

Man, once surrendering his reason, has no remaining guard against the absurdities the most monstrous, and like a ship without rudder, is the sport of every wind. -- Thomas Jefferson

I'm sorry, who is Heinlein? I am not familiar with his work. If it was his 'idea', then I apologize! I honestly had no idea.

As for your other comments, I am well aware that the replacement value is 2.1. My whole point was that forcing everyone to only have 2 children will not reduce the global population fast enough! As for your additional comment about the work-a-holics, what is to stop them from selling their child rights if they have no intention of reproducing? Obviously, the right would be very, very valuable...

Male children have always had more value, being physically stronger, and most fathers want sons to pass on the inheritance to...

Not true. Not all societies have preferred sons, and in many societies, inheritance doesn't pass through sons. Many societies have practiced matrilineal (uterine) descent. The king's son didn't inherit, the son of the king's sister did. This ensured that the heir actually was related to the king, since before DNA tests, only a woman could be sure a child was hers. Mama's baby, daddy's maybe.

The preference for male children is likely a consequence of overpopulation, because the number of females determines a group's fertility. What does a farmer do, when he wants to increase his herd size? He kills or sells the males. You only need a few males to keep all the females pregnant. So you eat the male calves and chickens and lambs, and keep the females. So clearly, it's not "natural" to prefer males.

A society that prefers males over females has the opposite goal of the farmer: it's trying to reduce population growth, not increase it. If you think females are inferior to males, it's easier to practice female infanticide.

The supposed "drawbacks" of what's happening in China actually serve the goal quite well. If you want to reduce the population, a scarcity of females will do it. (A scarcity of males will not.) And the violence that results from males fighting for scarce females will also reduce the population.

Robert Heinlen is one of the classic scifi authors

'The UK seems to think a 2 child policy will be enough, but a drop of 5 million people in 43 years? Thats no where near enough! I think that a "one.point.five" child policy would be the best 'fit'.'

I think that is probably the best solution that is practical - but it will still fail eventually.

The downside to allowing megalomaniacs to breed further [as Gilgasmesh is baiting us with] is that you alter the genetic balance. We already have this with VOLUNTARY contraception. This cannot fail but lead to more women wanting to reproduce more times. You could distract the baby-farmers from riots with an 'Orwellian' govt lottery - the right to have extra. Or you allow breeding only 1 year in 10 or whatever. You need to keep the random parameter, or apply strict limits to everyone or it will lead to exactly the same end as no restrictions.

Population explosion in the USA explained. Quite compelling! Amnesty for 15 million is not the answer. There needs to be control! An interesting presentation about USA population growth vs world population growth.

https://www.numbersusa.com/video/

Neat video! I saw that about 1-2 years ago though. He explains the situation perfectly.

Big news here in New Zealand. The EIA report and peak oil were the LEAD story on the evening 6 o'clock news on Channel 3. They gave it 5 minutes and had various peak oilers and the Greens etc have their say:

http://www.tv3.co.nz/VideoBrowseAll/WeatherEnvironmentVideo/tabid/316/ar...

I guess the equivalent in the UK would be the nine o'clock news leading the story......dont know what the US equivalent is.