DrumBeat: July 13, 2007

"Peak oil" advocates blast U.S. industry study

Proponents of "peak oil" -- the theory that global crude oil production has hit its zenith and is headed for a steep decline -- are steamed with a U.S. oil industry group's findings that the world has plenty of oil.

Next week the U.S. National Petroleum Council -- a board of high-level U.S. oil industry executives -- releases its study titled "Facing the Hard Truths about Energy," conducted at the behest of Energy Secretary Sam Bodman.

According to the report's executive summary obtained by Reuters, the world is not running out of oil but there are "accumulating risks" to securing supply through 2030.

Peak oil theorists say such findings gloss over Bodman's request to study the issue in detail.

"They've labored mightily and come up with a mouse," said Randy Udall at the Association for the Study of Peak Oil and Gas, whose group dismisses the report as "petro Prozac."

"Give me four college students and two weeks, and I could do better," Udall said.

BP finally relents, counts oilsands in global tally

Oilsands skeptic BP PLC has finally caved after years of ignoring Alberta's oil-soaked dirt in its influential tally of world energy resources.

The oil giant, one of the few super-majors in the world without a significant oilsands project under development, has long been reluctant to count the number of potential barrels in the unconventional, economically challenged oilsands in its annual Statistical Review Of World Energy.

The London-based company pulled a quiet about-face late last month, however, and its highly regarded publication now lists Canadian oilsands as containing 163.5 billion barrels of undeveloped reserves - oil that could be produced using today's technologies and in today's economic climate - among a total of 1.37 trillion barrels worldwide.

Brent oil price surges to 77.45 dollars per barrel

The price of London's Brent crude oil hit another 11-month high on Friday, buoyed by speculative buying and concerns over tight US fuel supplies, analysts said.

Iowa: Culver offers plan to combat fuel shortage

Gov. Chet Culver has temporarily lifted limits on how long gasoline and diesel truck drivers can work, a move designed to combat fuel shortages that have prompted higher prices across the region.

"This was a necessary step," Culver said. "Supplies were tight to begin with, and then after the Coffeyville, Kansas, refinery was flooded last week, supplies became very tight."

Minnesota, Nebraska, Kansas, North Dakota and South Dakota have also lifted limits of drivers' shifts.

PetroChina pulls out of Canadian oil sands pipeline development project

PetroChina is pulling out of a US$3.8 billion (€2.76 billion) Alberta to British Columbia pipeline project that would have supplied crude oil to China from Canada's oil sands, a Canadian newspaper reported Thursday.

At an oil sands conference in Calgary, Alberta, Yiwu Song, vice president of China National Petroleum Corp., PetroChina's parent company, said the company was tired of the lack of Canadian government and producer support for their business, and was dropping the project, according to the newspaper report.

Global oil demand to grow in 2008

World oil demand will grow more quickly in 2008, although higher production and refinery capacity should ease pressure on supply, the International Energy Agency (IEA) said today.

International Energy Agency: Oil Supply/Demand Trends For 2007-2012

The Medium-Term Oil Market Report [MTOMR] by the International Energy Agency was just released. The IEA is about as "non-kook" as you can get, being a stuffy starched-white-shirt group of 150 researchers funded by the OECD – 30 countries representing mostly what you'd think of as the developed capitalist world: North America, the EU, Japan and Korea.

In the report, they take a hard look at where the oil market is headed between now and 2012. This is an important timeframe often missed in discussions of energy: plenty of folks will tell you what's going to happen next month, and even more will sing you songs of fear and greed that start, oh, in 2020. But five years is an extremely useful time frame for investors to follow.

When the wells dry up

“EVERYONE else in Britain hangs on what the Bank of England does with interest rates,” says one proud Aberdonian. “Up here, we don't care about that. We're much more interested in what OPEC does to the oil price.” An exaggeration maybe, but Aberdeen is the Houston of an offshore industry that has long made Britain a big oil and gas producer.

Energising Russia’s geopolitical goals

Enhancing Russia’s role will be its rejuvenated military power, largely financed by taxes and royalties from the oil and gas sector, which the World Bank says accounts for 20 percent of the country’s GDP, over 60 percent of its export earnings and 30 percent of all foreign direct investment.

Deadlocked Sunni, Shiite Factions Block Political Progress, Iraqis Say

Iraqi politicians on Thursday struck a more pessimistic tone about Iraq than did the White House assessment, and said the deadlock between warring Sunni and Shiite factions makes major political progress unlikely in coming months.

New Study Says Wind A Cheaper, Efficient Alternative To Nuclear

A report commissioned in the Netherlands and leaked to a Dutch newspaper confirms that wind power will quickly replace nuclear energy as the fossil fuel alternative of choice. The researchers concluded that not only will technological advances in the coming years make wind financially competitive but also security costs tied to nuclear energy will further add to the value.

Ethanol mix opposed by auto industry

The auto industry has stepped up its efforts against putting more ethanol in regular gasoline, joining a coalition of vehicle and engine makers calling for more studies of how much damage such fuels could cause.

Dave Cohen: Peak Oil Down Under

Australia serves as a microcosm of a world entering the peak oil era.1 It can be shown beyond a reasonable doubt that Aussie oil production has peaked. As their oil companies struggle to offset production losses as demand grows, Australians must face up to the stark choices these circumstances present. One road, taken by the United States long ago, creates dangerous, ever-growing dependencies on imported oil to fill the supply and demand gap. The other road, leading to energy independence and security, spawns alternatives that allow Australia to move beyond oil. Will the Land Down Under seize the opportunity they now have to make the right choice?

North Korea's use of oil aid

What can North Korea do with heavy oil aid? This is the question of the moment as the energy-starved communist country is set to receive much-needed fuel oil assistance this weekend in return for shutting down its nuclear reactor.

Police impound buses, gas shortages spur commuter chaos in Zimbabwe

Harare police have impounded minibus taxis and fined drivers who had not complied with government orders to cut fares, stranding commuters on the way to work, state media reported.

Vietnam: Cao Ngan power plant activates 2nd turbine, shortages still likely

At present, the oil field can only supply 5mil cu.m of gas daily as opposed to the average 15mil cu.m.

The fuel is being equally distributed to generators at the Phu My power complex, Hai said.

However, with increasing demand for energy for production and daily activities, shortages are very likely.

Is it really for my own good?

My issue is not whether we should be taking steps, including radically improving the fuel economy of our automotive fleet, to protect the environment but rather the true motivation of many its so-called protectors. Originally, crusaders against smoking claimed they were merely trying to protect innocents from the ravages of second-hand smoke, a quest with which no one can argue. More recent bans, however, preventing smoking in open public venues point to a far more sinister intent, namely that their true motivation has always been to simply outlaw cigarettes and that second-hand smoke was just a convenient ruse.

Platts Survey: OPEC Oil Output Up Above Target

The 10 members of the Organization of Petroleum Exporting Countries (OPEC) bound by the group's crude oil output agreements boosted production by 40,000 barrels per day to 26.6 million in June, from a revised May level of 26.56 million b/d, a Platts survey showed July 11. This is well above the 25.8-million b/d production target set in February by the so-called OPEC-10.

Exxon breaks $500-billion barrier

With Wall Street's big bull run Thursday, Exxon Mobil Corp. became the only publicly traded company currently valued above half a trillion dollars.

Rising prices could end wasteful gas flaring

Dwindling energy supplies and rising gas prices could soon make gas flaring unprofitable, say researchers, saving billions of dollars' worth of natural gas from going up in smoke.

Some Argentine Oil Cos To Sell Liquid Fuel At CNG Price Government

Some oil companies operating in Argentina agreed Thursday to supply liquid fuel to industrial clients at the same price as compressed natural gas, in an effort to alleviate the country's worsening energy crisis, a government press officer said Thursday.

Energy crisis hits citrus

The energy crisis in Argentina is affecting the citrus sector and will have an impact on lemon exports, sector leaders warn.

A lack of rainfall is being blamed for shortages of hydro electricity, while extraction and transport problems and lack of supply are having an impact on natural gas availability in the South American country.

The knock-on effect is that full supplies to industry and agriculture are limited to 16 hours in 24. Productivity across all sectors is therefore running at only two-thirds. “The impact is being felt back along the supply chain,” said agronomist Bartolomé Del Bono, who is also the general manager of Tucumán citrus association, ATC.

Taiwan donates 30 million dollars to Nicaragua for energy

The government of Taiwan granted Nicaragua a donation of 30 million dollars on Thursday to purchase thermoelectric plants that help solve the Central American country's severe energy crisis.

Breaking bonds with oil won’t be easy or quick

U.S. energy consumption is based on oil — a multi-billion dollar industry — and changing that is going to take investments in technology, as well as a change in consumers’ attitudes.

A Citizen's Wake-Up Call: Six Problems We Can No Longer Afford to Ignore

Problem #2: Our national oil addiction. America has more than doubled its oil consumption from 8.8 million barrels per day in 1977 to more than 21 million in 2006. Of course Americans are not the only people who have needs for greater amounts of oil. By 2004, global oil production exceeded 80 million barrels per day for the first time. Fortunately, as fossil fuel supplies become more and more depleted, breakthroughs in alternative energy sources are happening every day.

Damage to Petrobras from Fraud Scheme Still Unclear

In total, the Federal Public Prosecutor's office has accused 26 people of manipulating the tender of contracts to build several oil platforms. One method, according to Brazilian press, was to send bidding instructions to incorrect addresses to reduce the number of competitors.

The Effects of Peak Oil: Panic from the Oil Crunch

The reality of peak oil will set in over the next few years. But once the world realizes the serious effects it'll have, the real panic will start.

Biofuels have the potential to be "life changing"

"Power through renewable energies is, and will be, a major tool for developing countries, particularly for rural populations. The potential is enormous, I think it will be extraordinary if the model is replicated in other parts of Africa, it will have life changing effects," said Sir Bob Geldof at a press conference in South Africa yesterday (11th July).

What they didn’t want you to know: oil’s dirty little secret

“IT’S the end of the world as we know it”, sang US rock band REM, a sentiment that seems to sum up the ‘hard to live with’ realities that Peak Oil will bring to civilisation’s most affluent cultures.

And it definitely echoes the view of former BBC journalist David Strahan, who admits he knew nothing of the oil industry before starting his research and now wishes the world knew more about geology.

Fayetteville Shale Testing State Law

The lucrative gas exploration of the Fayetteville Shale Play has predictably led to more business for oil and gas lawyers in the state.

It has also exposed some gaps in Arkansas law that confuse mineral rights and might someday surprise landowners who don't realize how little control they have when gas companies invade their property.

Iraq: of course it's about oil

THE PRIME MINISTER's hasty retreat from the admission that oil has anything to do with the US-led invasion and occupation of Iraq is both puzzling and revealing.

Oil experts put kibosh on Cullen's road empire

This week's medium term oil report by the International Energy Agency should be the kiss of death for Michael Cullen's $1.5 billion spend up on roading, Green Party Co-Leader Jeanette Fitzsimons says.

Peak Oil, Global Economy Shifts Away From US Towards Asia

“Are we really running out of oil? Greg Palast discusses this at length in ‘Armed Madhouse’ and I’m inclined to agree with his assessment. We are running out of “cheap” oil i.e. it don’t [sic] cost much to pull it out of the ground but at the same time the high price of oil has made the harder-to-get-at oil economically viable and profitable. Enter Venezuela with 1.36 trillion barrels of heavy oil that is now worth pulling up not to mention Canada with significant oil reserves in tar sands. It’s not a supply problem in the sense that the Earth is running on empty. It’s a supply problem in the sense that production is limited in the pursuit of higher prices. Oil reserves are a measure of oil you can pull up at a certain price, the higher the price the greater the level of world reserves. At US$15 a barrel oil reserves are small indeed. At US$70 it’s a whole new ballgame.”

Venezuela Oil Min: Drilling Ops Normal as PdVSA Retakes Rigs

"All operations, all of our rigs are operating normally," said Rafael Ramirez, who is also the president of PdVSA, in a television interview.

Ramirez denied media reports that rig operators are resisting the change in management as PdVSA starts operating 46 of its rigs that it had put under private management. PdVSA says that the staffers working on these rigs will become part of its payroll.

Brookside farmers point the way to post-oil world

Both Jason Bradford and Christoffer Hansen, who are working full-time at Brookside Farm, are firm believers in an apparently rapidly approaching phenomenon known as Peak Oil which they and other believe will mean the end of cheap fossil fuel energy. Consequently they believe that people will have to localize, that is, create the essentials of life locally, using affordable energy sources. They also acknowledge that one of the most basic of the essentials of life is food.

Opponents outnumber supporters (Powell River, BC, Canada)

Yrainucep Development Corporation has a development proposal for the land, which includes an airport, residential homes, a golf course, and an equestrian centre.

...Many of the people opposed to the application promoted agricultural values and the importance of viable local food production in the face of global warming, peak oil supplies and Powell River's geographical isolation.

How green is your valet?

For an epicenter view of the USA's burgeoning "green hotel" movement, steer your hybrid rental car (or better yet, take rapid transit) to the Chinatown gate.

Actor promotes tax breaks for hybrids

Rob Lowe, who portrays a member of Congress on television, appeared before lawmakers Thursday and promoted tax credits for people who add a plug-in feature to hybrid cars and trucks.

China glaciers melting at alarming rate

China's remote Xinjiang region is home to nearly half of the nation's glaciers that supply the rest of the country and other parts of Asia with water.

However they have shrunk by 20 percent and snow lines there have receded by about 60 metres (200 feet) since 1964, the Chinese Academy of Sciences said in a report, according to the official Xinhua news agency.

Guyana criticizes carbon credit scheme of Kyoto Protocol

Guyana's President Bharrat Jagdeo on Thursday criticized the Kyoto Protocol on climate change for failing to allow countries like his nation with pristine unharvested forests to earn carbon credits.

A new Round-Up has been posted at TOD:Canada.

In the fields of finance and energy, there have been some remarkable developments this week, particularly with institutions that reverse their stated views, and probably their tactics and policies.

The IEA earlier released a report that said, though not in so many words, that peak oil is near. Then its CEO Claude Mandil gave an interview to Le Monde, in which he said Russia has peaked, and OPEC is not telling the truth about world oil supplies.

S&P and Moody's, Wall Street's preferred rating agencies, changed their approach to the ongoing mortgage malaise by downgrading, or threatening to downgrade, many mortgage-based investment grade bonds. This shift will be felt throughout the credit markets, and there may be much more to come. And the UK is now joining the mortgage mayhem crowd.

No such shift for NAR: they predict US home prices will rebound in 2008, though foreclosures rose 87% and a record number of ARM's will reset this fall.

Meanwhile in Canada, the sovereignty that our government seeks to defend in the Arctic is being undermined at an SPP meeting in Montebello, Quebec.

Texas oil man Boone Pickens made a new prediction on oil prices this morning. "I think you're going to see 80 dpb before I'm 80. I'm going to be 80 next May," Pickens told "Squawk Box."

It wasn't too long ago he was saying $75.00 before $55.00. :)

I've just put the video on YouTube:

Pickens on Oil and China

Highlights of the latest Oil Market Report is out this morning.

They omitted any mention of world oil production for June however. If you remember last month they had world oil supply down 565 thousand barrels per day to 84.9 mb/d in May. This month...silence.

They show, on the sidebar chart, supply for the second quarter at about 84.9 mb/d. This means that if April was at about 85.5 and May at 84.9 and the average for the three months at 84.9....well, you do the math. Of course this is just speculation but I am betting June oil extraction will be well below that of May, while May was well below that of April.

Hey, how else do we explain this surge in world oil prices?

Ron Patterson

Well, what can you expect from OPEC? The price of oil continues to hover around record highs, and what is a poor oil exporting cartel to do but cash in?

And yet, and yet ... OPEC has had a long tradition of bludgeoning any long term efforts to move away from oil by increasing oil production enough to lower prices significantly.

And of course, according to Saudi sources, the world is swimming in oil, so no need to raise production beyond the quota. As a matter of fact, the world has so much oil available that various markets are having their shipments cut, for what is it now, a half year? Except OPEC is still producing above the quota, and the price stays high, with customers seemingly having enough capacity to buy what is offered. Again, nothing new - OPEC has essentially always produced above its quota, bar an embargo or two.

It might just be that the game has changed, and a lot of the players just don't want the paying audience to realize it.

I expect a lot of 'controversy' over the next several years, lots and lots of 'controversy' about OPEC's motives, oil company profits, etc., etc.

What I don't expect is a flood of oil. Or an honest, rational explanation of geology.

The invisible hand now takes center stage - and you know things are bad when a metaphor is the centerpiece of America's strategy to deal with the next 20 years, having squandered the last 20.

Friday July 13, 2007 08:48


Mr O'Connell:

Now that I've an opportunity to think about the two more imporant foils presented at the Elecrtric IRP, I have a request for information. But first let me explain my request...

Edited for bandwidth reasons. Please post just a link and an excerpt.

Yeah its disturbing how much ABQ has grown since I was in highschool... I do not even recognize the town.. I moved away for 10 years and just recently came back its sad...

Effective immediately, Iran wants Yen for oil to Japan, not dollars. Understandable. http://www.bloomberg.com/apps/news?pid=20601087&sid=aLaColVYu5LA&refer=home

Makes sense for them:
1. Not much they can spend these dollars on. Trade restrictions and such.
2. Transactions with USD can be more easily monitored by the US government, so definetly a minus for Iran.
3. USD has been sliding for a while now.

I would be interested to see oil price relative to say euro. Has price of oil really went up or is just reflection of weaker dollar (in other word inflation for dollar priced goods)?

Hi: If the US dollar had kept its high value against the Canadian dollar reached in 2002, oil would be $47 right now.

Dollar-euro? It's the yen, stupid

The greenback may be hitting record lows versus the euro but the more worrisome problem - a big drop against the yen.

From the article:

The dollar hit a record low against the euro this week, but the bigger story for many currency watchers was the greenback's slip against the yen.

That's because a sharp rise in the yen could have nasty consequences for millions of investors around the world.

Well, that's not the whole truth.

For this entire millenium, the yen has been handed out at every street corner in Tokyo to whoever could fog a mirror, at 0%-0.5% interest. It stands today at 0.5%: Bank of Japan keeps interest rate unchanged. (After a decision like that the yen should have fallen, says Econ 101)

It's a rising interest rate in Japan that could have real nasty consequences, certainly for institutional investors, especially hedge funds, who are leveraged up to their eyeballs, so deep they will soon no longer be able to fog that mirror. Many have borrowed $billions at the 0.5% rate, and will see their interest payments rise by 300% if the BOJ raises rates to a mere 2%, or 600% at a 3.5% rate. In the global picture, not really shocking rates, we can agree.

And with the yen rising vs the US dollar, who do you think will soon be clamoring for such a hike? Exactly, the US Congress.

Those big boy investors know this all too well, but have nowhere to go, they're strapped down to the merry go round: prime rates in the US and EU are much higher than in Japan.

Oh, and by the way, know what the hedge funds bought with those cheap yens? Mortgage and credit securities, such as CDO's, that are now swiftly being downgraded by Moody's, till they're worth pennies on the dollar. If Japan would go to the present Fed interest rate levels, they would be stuck with paper that had just lost 90% of its value, and have to pay about 1000% more in interest. That is how you define a bubble.

Subprime problems are no more than a nice breeze in hurricane season.

So for the second time in 18 years, America rips off Japan to stave off its own financial mismanagement.

Maybe it's about time ordinary voters in democracies all over the world start demanding a voice in banking policy. It seems whenever America gets in a jam, the elites of the capitalist democracies, and also the Arab monarchies, bail it out with cheap loans, a fishy carry trade, or mass purchases of America's latest gimmick derivative. The citizens, who are net savers, don't even realize their central banks are sending their savings away, never to be seen again.

Is this the imperial tribute?

Is this what Bush means by democracy? It has been the custom in democracies to leave foreign affairs and bank policy largely in the hands of expert elites, on the grounds that they were too complicated for the masses to understand. What better way to corrupt a state than to seduce its elites into an American-run global investor class and leave the voters without a say? So now in democracy after democracy, the public finds no matter what party it votes in, it will obey America on everything that matters against the popular will.

I recall that the definition of corporatism I originally learned was a society in which the regular folks were divided between institutions united only at the top - and the top was a brotherhood dedicated to control of everything. This was the internal model for Italian and Spanish fascism. Seems we now do it on a planetary scale.

And now you get what has been going on for decades...

...and why the US spends more on military than everyone else in the world combined yet acts like it is the victim of a hostile and treacherous world out there...

...see, the second world war wasn't a defeat for fascism. It was a set-back in a multi-generational battle for ideological control of the world. The fascists intellectually de-camped to the US, where there was already a lot of sympathy in elite circles, and slowly steadily built itself up to where it is today - attempting a final coup de gras.

As an aside - communism really wasn't the main enemy here, though those who were ideologically supportive of communist ideals were, as communism's authoritarianism was fine... it was and is the open society that is the enemy... the European masses taking "democracy" too literally and genuinely trying to set the rest of the world on track, was a huge threat that took some serious management by the US.

This is why services such as Blackwater are naturally exploding (if you'll excuse the pun)... there is no longer any need for state-run and democratically-interfered-with armies. Get the world's elite soldiers into a private framework where they are well paid as the enforcers of a global elite. In particular get the top soldiers in other countries to disobey their local elites and take orders from the US elites, to ensure the local elites become regional overseers, or else!

This is why the war on the middle class since the 1970s has picked up speed of late... you only need a small middle class to act as a buffer zone of aspirational (or desperate, depending on which end you sit) overseers to the slave class - a class whose freedom is fictitious, whose luxuries are trinkets and shiny things that will slowly be taken away as distraction becomes less important as self-empowerment becomes more and more distant, whose self-determination is a laughable illusion, and whose lifecycle - birth, life, work (most important of all work) and death - is commoditized, devalued and dehumanized.

Which brings us nicely to Peak Oil... Peak Oil... the words that make one look forward to death's sweet embrace [irony not literally]...

You see, one of the biggest problems for fascism was that cheap energy actually made it a lot harder to control vast numbers of people... not in theory... not in the long run... but in practice... it's like ball bearings in one of those childs games (before they had handheld video games)... you move it slowly you can control them... you add huge amounts of energy by shaking and they bounce around and it's very hard to settle them down... so pumped up on free energy the elites were kinda coddled anyway so weren't too fussed, and the middle class ballooned...

...problem is they started to want to control things... so anyway - long-story-short... peak oil represents a wonderful opportunity for these elites. Play the end game.

Use the levers in place - like the banking systems, the US military, all of the corrupt vassals - to seize that control and wait out the fall. If the crash comes soon enough they can hold out, as the masses will be too busy going all Post-Katrina on each other to spot what's happening. 20,000 acres in Paraguay is enough space to chill out and wait out the die-off.

...no i don't believe there is some grand conspiracy controlling this shit - there doesn't need to be - it's just memes drifting this way and that, evolving in a darwinian back-and-forth - enough self-interested parties with the right mindset, at the top, to apply a nudge here and a nudge there in the right direction... would take a lot to shake them loose now... and ultimately they'll fail... because the authoritarian control mindset - the centralism they crave - just won't work in the long run... and the crash will be harder and more chaotic than they expect... but for those of us heading for the lifeboats... just remember, when we come up for air - some of these folks will still be around... and they may put up quite a fight for what's left...

(Yeah - I'm cranky and having a bad day!)
When no-one around you understands
start your own revolution
and cut out the middle man

So for the second time in 18 years, America rips off Japan to stave off its own financial mismanagement.

No. Japan started printing yen because of the collapse of combined real estate and stock market bubble of the late 1980s. It keeps printing yen to keep the exports flowing and to monetize the huge government debt it amassed trying to pave its way out of the 1990s recessions.


Japan is "ripping off" itself in the long-term to keep the economy going in the short-term. Its the same choice politicians make everywhere. America has benefitted only as a byproduct.

Except the Yen is falling just like the U$S, almost like they are willing to eat a loss to politically split Japan from the US.

Otherwise they would require a strong currency like the Euro.

Iran demanding Yen for oil is purely antagonistic. It's irrelevant. If they sold oil to Japan for dollars (which Japan has plenty of) they could in turn liquidate the dollars into the global FX market in a millisecond.

China focuses on Venezuela.

China National Petroleum abandons Canadian energy strategy

China has abandoned its Canadian energy strategy out of frustration with federal policy and with the country's oilsands producers, turning its attention instead to "friendly Venezuela" as a way to feed new Chinese refineries.
He said during the next five years, China's imports of heavy oil from Venezuela will grow to 600,000 barrels a day, volumes that will be used to feed two new upgraders, refining-like facilities that process heavy grades of oil such as those found in Venezuela and in Canada's oilsands, into refinery-ready feedstock.

Hmmm...let me think...if Chavez is not substantially increasing production, then those 600Kbpd have to come from someone else...no?

I don't think plans to expand the Panama Canal will be moving forward...

Agreed, as soon as oil is reported publically to be peaking, the project will already have been scrapped.

Actually good reason to.

Very little oil transits the canal now. Chavez wants to sell more oil to China, which will require using either the canal or a pipeline (already in place).

I could see a Chinese-Venezuela financing package for Panama to complete the new locks for the Canal.

The Panama Canal is a major strategic asset, and having "influence" (say holding the mortgage and getting a % of tolls) is hardly the worse use for 0.5% of Chinese dollar holdings.


It is beginning to look like we have three canarys in the PO/GW coal mine (hmmm literally??).
Australia may be the first sophisticated casualty of both GW and PO.
Mexico the first major exporting country to suffer PO collapse.
Argentina seems to be another sophisticated victim of PO and climate change too.
I think these three deserve close watching for a hint of when we should be doing the equivalent of evacuating the mine.
I am going to try and build and maintain an E-book "news letter" compilation of key links related to all of them. Many links will be to the excellent work and discussion here on TOD. Any suggestions would be welcome.

I wish we could afford the life we are living.

Sorry, why do you think Australia may be the "first sophisticated casualty of both GW and PO"?

Yes, GW has probably had some influence on the current extended drought, but the drought is by no means unprecedented or unmanageable, and appears (fingers crossed) to be breaking this year, at least in SE Australia (I had to empty out water from our swimming pool today!). At any rate, so far it is had no serious impact on our food-producing ability, or economy as a whole.

As far as PO goes, we still produce ~75% of our own oil, and while there is a substantial percentage of the population that have little alternatives to driving, and will be hit hard by spiking petrol prices, most of us do have other options, and there is an ongoing trend towards small vehicles and increasing public transport utility already. As I've commented before, I expect our economy will be dragged down by the U.S.'s or China's before our own is critically hit by declining imports.
It's true that neither the current government or opposition parties really have a vision of how to deal with our need to import more and more oil in a flat or declining world supply market, but there is awareness of Peak Oil at various levels of government, and my suspicion is that after the forthcoming election, we should being to hear of more a comprehensive plan to reduce our oil dependency. I'd love to think we might hear it before the election, but it's too hard of a concept to sell to the average voter, given the myriad other issues the election is being decided on.

Also, I have always thought Argentina a very diverse, bountiful place [though I haven't been myself].

I suppose the long shape works against it. In the long run it's not how much oil you have, it's how useful the place is without it. I always liked the thought of Argentina to live in..

Argentina is a great country with great people. I highly recommend visiting if you ever get a chance.

That said, their energy issues are concerning and it will be interesting to see how it plays out.

I found this article about Gore Vidal's travails to get a PV system fascinating, http://www.truthdig.com/interview/item/20070706_gore_vidal_sounds_off_on...

Here is a voice even more authoritative than that of Trilby Lundquist to tell a fascinating tale of energy freedom. He wants a PV system in part because the electric grid is using up what's left of the oil. Oh, that and he couldn't live without air conditioning, a telephone, or electricity during an extensive black-out.

If this author and scholar, legendary for the research and time that he puts into his work, can't handle getting a PV system properly installed and permitted, and his tale is as incoherent as this one, we truly have an infathomably long way to go in getting our story out and sustainable systems in place.

I have a PV system, as does my brother in law and several friends. None of us had had any real problem at all..

We are in Northern California, Bay area and Sacramento area.

While I respect Vidal for his researched work, this article did his standing no good. He came off as petulant, and offered no concrete reasons why the utility was off-base, except that they had missed an earlier, scheduled inspection. Never had to wait for the cable-guy or a Fedex delivery? Come on..

Utilities do have to insure that anything attached to the grid is fully compliant, protecting owners and their neighbors from electically caused fires and protecting line workers from electrocution. As far as I know, there have been no Solar Electric Caused electrocutions so far. Their safety record is extremely good, and I am fully in favor of keeping it that way, and making sure home systems are installed with the safety measures that are common in all home wiring, known as the NEC, or National Electric Code. Conversely, there have been a number of deaths caused by home-based Emergency Gas powered Generators, both to Line-workers and to homeowners.

If Vidal wants to make a claim, there are probably plenty of areas where utilities have been complicit in bad-behavior, but this one sounds like Red-tape, not utility protectionism.

I found one of the BlogAds served up in the left margin of TOD rather ironic:

Endless Pools. Perchance to dream...

Well, you've seen stationary bicycles, treadmills, rowing machines and stairsteppers, right? Endless Pools are the same idea. The pool creates a flow of water while you swim to stay in the same place. They are really good for coaching stroke mechanics because a - you can put a mirror on the bottom and watch your stroke and b - your coach can sit next to you and give instant feedback.

I've been trying to design an Escher version where the water naturally flows around and around.

It wasn't the actual product itself but rather the phrase "Endless Pools" in the context of peak oil--and perhaps why TOD readers would be a target market. Perhaps "swimming upstream" describes trying to get the message out. Google is trying to tell us something.

"I've been trying to design an Escher version where the water naturally flows around and around."

That's either wonderfully subtle humor for which I applaud you, or depressing beyond words that it's posted by a reader of TOD. Assuming the humor, I wish you great success in your design efforts and humbly suggest you insert a waterwheel into your working prototype. :)

"Let us wrestle with the ineffable and see if we may not, in fact, eff it after all."
-Dirk Gently, character of the late great Douglas Adams.

No, Pode,

He knows those Escher things won't work.

Actually, he's going to cheat... He's going to get one of those Irish perpetual motion thingies to pump the water around...


Got some serious sarcoholics around here, it seems.

For $37,000 one put a jetflow pool in a backyard. Swam for twenty minutes with one's nose towards the jet flow and moved less than a foot, like on a treadmill.

Like drilling faster and not getting anymore oil than before.

For $37,000 one could get the vast majority of one's electricity from PV...

Well, looks like BP has decided that mining is just like drilling for oil - not to mention adding roughly 10% to world's reserves in its eyes, at the touch of a few keys.

And it will be a fine way to help drown out any of that pesky noise about 'peak oil' - after all, if you can increase world reserves by 10% so easily, imagine what a truly innovative company could do.

I think Enron had the misfortune of making up its numbers just a few years too early.

And besides, now that biofuels seem to have a fairly restricted future, it might just be time to get 'Back to Petroleum.'


Rail industry admits that it’s often greener for families to travel by car

It can be greener to drive than catch the train, according to a rail industry study which reveals that trains are losing their environmental advantage.

Modern diesel-powered trains are so polluting that a family of three or more would be responsible for at least double the carbon dioxide emissions on many routes when travelling by rail compared with driving in a typical medium-sized car.

The study concludes that the Virgin Voyager, the most advanced diesel train on the network, has the highest emissions of any British train and that its performance compared with cars is steadily worsening as motor manufacturers improve efficiency.

The study, commissioned by the Rail Safety and Standards Board, urges the Government to electrify key sections of the rail network to allow greener electric trains to replace diesel ones. On several long-distance routes, such as London to Hull, diesel trains run long distances under electric wires because short stretches of track have not been electrified.

BP Energy holds Canadian Oilsands leases.

I'm pretty sure that the article stated that they had sold off most of their insterest in the Canadian oil sands and only have a small interest in one area.

I don't know the subtles in the market quotes but the upstream data shows:

Brent Blend (perhaps different than Brent which caught up today and now is 79.66) - 79.15

TAPIS - 79.57

Alaska North Slope - 75.73

Louisiana Sweet - 80.72

and Bonny Light holding around 81.05.

More here: Upstream quotes

What the differences are between this and Bloomberg I don't know, but there certainly are a number approaching 80 or beyond.

Certainly looks like 90+ is a possibility by crunch time this fall.

If you take, the IEA's report, PRICE increases, lack of market supply and overall production decreases...all facts and a matter of record.

Add in TODs analysis on KSA. It would seem that another one of Robert's conditions for declaring KSA in decline. Specifically, price increasing and market shortfalls.

The IEA's own statements:

"OPEC knows the facts: the markets are not sufficiently supplied".

While it doesn't seem to be apparent in the US(and maybe a large part of the OECD) on the crude side yet, but the price seems to be signalling there is a growing shortfall somewhere, as KSA reduces Asian shipments for the 10th month in a row (of course, voluntary).

Edit: We could also choose to interpret the IEA's and EIA's calls for OPEC to increase production as KSA instead of OPEC as the rest of OPEC has NO significant production capacity remaining.

According to the link from the IEA item up top: "World oil demand will grow more quickly in 2008, although higher production and refinery capacity should ease pressure on supply ... Demand will rise by an average 2.2 million barrels per day (bpd) in 2008, up from this year's expansion of 1.53 million bpd."

So even without any ELM effect, someone somewhere has to find 2.2 mb/day of extra output. Work in modest ELM effects and you need more like 2.5 - 3.0 mb/day extra.

Well, KSA, the spotlight is on you! This could be read as a not-very-subtle hint to them well ahead of their September meeting. If prices reach an all-time nominal high which is likely in the next few weeks, then expect more.

Great point...looks like we will need that Phantom 2 MMBPD that the KSA has been holding in reserve (actually should be about 3 MMBPD given the reductions over the last 10 months).

Let's keep in mind also that those taps have to open at least 45 days in advance of the need due to transit times, that's 6 weeks or 1.5 months.

So, if Ace's analysis is close - they need to open those taps between SUNDAY and August 15th(giving one month shock front window, neglecting hurricanes).

Or those shipments will not arrive in time to stop a Oil price shock from occuring.

Who wants to wager they will never open those spigots?

As I said before: Far as I can see, there's an expected demand/supply rise from about 86 mbd now to 95.8 mbd in 2012 (IEQ document earlier this week). But that's not all. We also need to substitute for 2-3 mbd every year till 2012 in depletion.

So broadly, we need 20-25 mbd in 2012 that is not presently produced.

And that is without the Export Land Model's in/output.

I disagree that there will be a shortage of oil. In market economy there should not be a shortage. Just like during dot-com there was a talk of shortage of programmers. That was not true. There was a shortage of programmers at a certain pay-rate but if company was willing to pay 110% of any competitor's pay there there were plenty to choose from. My point is price will balance the demand. The big issue though is that at least in US, oil represents a small fraction of the cost for many things. Which means that oil cost will have to go up many, many times higher (500$ per barrel?) before energy inflation will flow into the core inflation and will finally and eventually decrease to demand for goods thus tampering demand for oil. Until energy prices will significantly increase core inflation, there will not be a sufficient consumption drop-off.

I guess that eating, heating/cooling, and driving just don't matter as long as the phallacious "core" inflation remains limp.

I'd call it "fellatious." It really sucks! ;-)

...and I was headed the other way...as when someone "sticks it to you." Seeing that we 2 women are making these comments, is there a hidden message here?

This would not apply to anybody but I just looked at myself:
Heating is done with natural gas, so oil price does not bother me there.
Gasoline is still very cheap. My Odyssey take 20 gallons and it lasts for over a week (so that's about 65$ with current prices or so). It's nothing compared to my mortgage, what I spend on food or salary in general. Current incremental increases only add few dollars a week, hardly noticeable amount. Even if gas prices double I can easily offset that increase by going to restaurants few times less (more then manageable, probably not going to discourage me from driving)

When the price of crude rises, the price of natural gas, coal, electricity, propane, ethanol also rises.

If crude rose and natural gas remained the same, then eventually oil shale would become profitable because it uses so much natural gas. It ain't gonna happen.

What a lame analogy, programmers and petroleum.

The market can not make something from nothing, no matter how hard the believers believe.

OF COURSE supply will equal demand... when no one can afford the supply. Ultimately, "demand" is "what the market will purchase at a given price" (which will NEVER exceed supply, by definition), and there's "demand" as in "what the world needs to carry on its business as usual", which is looking a bit dubious.

See "demand destruction".

I propose we seek a word other than "demand" to describe the obvious gap that is shaping up between production and, ummmm, demand.

OF COURSE supply will equal demand... when no one can afford the supply. Ultimately, "demand" is "what the market will purchase at a given price" (which will NEVER exceed supply, by definition), and there's "demand" as in "what the world needs to carry on its business as usual", which is looking a bit dubious.

My point exactly ("price will limit the demand"), but it only works in the market economy. In the planned economy (where price is fixed) there is nothing that can limit the demand so that kind of economy can have "unsatisfied demand".

In a June 14, 2007 Star Tribune article, CenterPoint Energy
said a third of it's natural gas customers (208,000) businesses and households were behind in their natural gas bills. Half of these delinquent customers were at least 2 months behind and owed an average of $1,500.00 according to CenterPoint. This tells me that natural gas is no longer affordable to the masses, conservation must be the next step.

There is no "market economy." Never has been. Never will be.

All economies are command economies.

Free Market Capitalism is like Santa or maybe more like Mickey Mouse.

I propose we seek a word other than "demand" to describe the obvious gap that is shaping up between production and, ummmm, demand.

Maybe "desired consumption" is a more appropriate word than "demand".

Sorry, gonna have to call BS there. This is so wrong it isn't funny. Actually it is funny as it is wrong on both ends of the analogy - does that make it right? ;-)

I had a dot.com - I run a start-up today.

All programmers are not equal. A good programmer is not a bit better than an average one - he/she is 10x as good. The argument about there only not being enough at a certain price has largely been made in the context of fighting to reduce the H1-B visa cap.

Now, while there was some H1-B abuse, the key fact remains that there were often programmers available - but they just weren't good enough. That's why we sometimes had to go outside of the country to broaden the talent pool.

I often had crap alternatives here, but couldn't get my decent programmers in from England through lack of visas.

The problem with oil and the Greg Palast line of argument - that ultimately price will make oil sands and oil shale viable - is that that argument is bollox because of the EROEI problem. Price cannot sort that issue out!

And it still runs out eventually (on an EROEI basis first) after which it isn't available at any price. You get that bit right?

Besides, no-one here argues that price won't impact demand - it is a deeper issue than this. It is that there is increasingly not going to be enough oil to cover basic functions of society - including at some point those necessary to feed the people on the planet - at which point a lot of people die. Price won't make more food grow per acre of arable land starved of their current petrochemical inputs.

Economics is not magic.
When no-one around you understands
start your own revolution
and cut out the middle man

As we discussed in this thread, the markets are in fact well supplied at the CURRENT MOMENT. This may/may not change this fall.

We are "well supplied" at $70 range oil, and then net oil exports fall again, and it takes $80 oil, then $90 oil, etc. to make the markets "well supplied."

The pattern we are seeing worldwide is the same pattern we saw in the Lower 48 in the Seventies--higher crude oil prices & lower crude oil production.

For all you oil trader types out there, I noted a strong "buy" signal on June 28, 2007, when CNBC quoted Daniel Yergin as saying that oil prices next year would be down to $60. Based on prior performance, I suggested that we would probably see $120 oil within a year or so.

Since Yergin's "buy signal," Brent spot prices are up about 11%, in only two weeks.

It would be downright funny if it weren't so downright pathetic. . .

How about some kind of Yergin index?

Funny you say that - after a similar suggestion in yesterday's thread I put together a nice format for it, but I was meaning to ask: what's the best source of his historic predictions?

If I can find a bunch of his predictions vs. actuals it would help... I am sure someone here can suggest best place - googling didn't seem very focused when i did a quick search yesterday.
When no-one around you understands
start your own revolution
and cut out the middle man

The markets are odd at the moment - oil is up over a buck across the board, heating oil is up over a penny, but gasoline has DROPPED 4 cents. I gave up trying to figure out the money side of all this long ago. But however you slice it this ain't lookin' good. We'll never hit the 88mbpd demand projection for Q4. The expectation that prices will drop this winter "like they always do" (sigh...) may go aglimmer this year.

This fall is the first of two Oil shocks in Ace's bottom analysis.

Ace's latest update (June)

At this point, it looks like he is going to be accurate.

We definitely are confirming the plateau at this point.

Edit: damn, now I am bummed after reading that thread over again. Ace plus ELM is an elephant sitting on our laps...we are so stupid.

Wouldn't it be a rich irony if history were to end up recording TODAY, this very day, FRIDAY THE 13TH, as THE day that production peaked, prices began to soar, and demand forever exceeded supply?

Today is the one year anniversary of "Daniel Yergin Day"

"Odd" is putting it lightly - the markets are nuts. I'm looking at the Dow right now - it's at 13,902, a new all-time record. Meanwhile, virtually all the economic news is negative. Oil up, dollar down, subprime mortgage mess spreading, housing prices down, consumer retail spending down, trade deficit up.

Can anyone say the word "bubble"? I'm sure that this is what it was like in 1929. I hate to make stockmarket predictions, but I think at this moment, I'd put my money elsewhere.

Oh wait, there has been some positive news. President Bush gave a report to Congress today and said that Iraq is making "satisfactory progress." Whew! For a minute I was getting worried. Now I know everything is OK. Think I'll go out and buy some stocks.

Check out the cover of this months Vogue magazine. The charming young lady looks excactly like a flapper. I noticed this last night while in the drug store. Interestingly, I had just mentioned to my spouse that I thought I should throw in the towel along with Richard Russell. We then noticed the magazine cover ... Well they say the market has topped when the last bear throws in the towel. I wonder.

P/E ratios are about average, so the high stock market reflects high earnings. Real estate woes mean that people looking to make more $ are having to look at something besides real estate. So except for the not so insignificant problem of oil production, the investment climate is not bad.

things aren't going well in zimbabwe, yet as they fall into hyperinflation, their stock market has been leading the global pack. similar performance has been noted by marc faber in weimar germany and in brazil during periods of high inflation. when do the foreign creditors of the u.s. quit playing inflationary old maid?

They dont call then multinationals for nothing. The big boys are making a lot of money overseas....excerpts below...


The greatest economic boom ever
A lot could go wrong. And it may not feel like a day at the beach to most Americans. But for your average globetrotting Fortune 500 CEO, right now is about as good as it gets, says Fortune's Rik Kirkland.
By Rik Kirkland, Fortune
July 12 2007: 9:46 AM EDT

(Fortune Magazine) -- Just how red-hot is the current worldwide expansion? "This is far and away the strongest global economy I've seen in my business lifetime," U.S. Treasury Secretary Hank Paulson declared on a recent visit to Fortune's offices.

"I helped make my career by being very disciplined about opening offices," he says. Yet in nine months Blankfein has announced or opened offices in São Paulo, Moscow, Tel Aviv, Mumbai, Qatar, and now Dubai. "We've never done anything close to that before," he marvels. "The week before Dubai, I was in Turkey, and before that, Russia and China. I'm really living the BRICs-plus-Middle East kind of life."

These days more and more CEOs are livin' la vida BRIC. GE's (Charts, Fortune 500) Jeff Immelt devotes 12 weeks a year to foreign travel and is looking for his company to grow "twice as fast outside the U.S. as inside - 12% a year, vs. 6%." Immelt expects to see even more robust growth - 20% a year - in emerging markets, which last year accounted for $30 billion of GE's nearly $170 billion in sales.

Not really......the news is yesterday and today BP Whiting is restarting the 250kbpd cdu and Coffeyville has restarted some of the units there.....Means more crude demand and more gasoline produced.. Hence crude up and gas down...

However these days you have to stay away of the very prompt as at all about knee jerk reaction to headlines.....take a longer term view......

The most important development from my perspective has been the crude curve moving from steep contango to flat in the last few weeks...

Flat...now how do you interpret that?

Oil is the same in the front month as the last(years out)?

Either people don't want to gamble (too risky) or ?

I am talking WTI here. Up until a few weeks ago the market has been in steep contango, the prompt being cheaper than the deferred (having been this way since 2004 except for a brief period during Katrina).....this encouraged people to store. Buy now use later when it is more expensive. The fact that the market has gone flat MEANS THERE IS NOT A SURPLUS OF BBLS THAT FOLKS CAN BUY CHEAP TO STORE.The market will now use the bbls it bought and tanked because the market is not paying me to keep in storage..So we should see stocks rapidly decrease from here. The next stage is backwardation where the prompt is more expensive than the deferred, only buy what i need now because I can buy cheaper in the future. However if there is a true surplus of bbls (the OPEC line) then we will quickly see the market fall back into contango as prompt surplus goes unsold. If the market continues to strengthen and goes back into backwardation then OPEC are wrong, and when they fail to deliver come September then you have a pretty good argument that evidence exists they cant increase production..otherwise they would take advantage of the high prompt prices. Thats the theory at any rate

It is a mis conception traders gamble...they might as well go to Vegas...They buy and sell oil whether physical or futures because they think they have an edge on the market through superior information or analysis that will give them a return.

This also means that traders believe that oil will be priced lower in the future. Traders can't know the future so they can be wrong, but consensus is that this price increase is temporary. Probably because current problems in the North Sea are temporary in nature.

Anybody who believes that oil will be higher in the future can buy future delivery and then sell that contract before delivery is due (and make money on the difference). I also believe that many of the contracts are designed to be settled in money (no actual delivery is taking place).

Why does it mean oil traders think it going to be cheaper in the future??? Since the back end of the curve has not really moved suggests otherwise, it would be sold off if that true..The point about the flattening curve is the market has been bid up in the prompt a sign of a stengthening market. Opec claim the market is over supplied. Now crude is strengthening and going into backwardation suggest the market is lacking prompt barrels, especially if the front end of the curve goes ito steep backwardation and the cash is higher than the futures. So OPEC should supply more bbls come September to stem the rising prices. The question is can they?

If right now NYMEX oil is priced at 74 spot and September delivery is priced at 73. Price is lower in the future. Storage that you mentioned can be used to arbitrage price difference. But primary factors are supply, demand and speculation/hedging.

I will say it once more ... read slowly...

The front has been bid up...the back end has not been sold. It is the the front end that is stronger not the deferred that is weaker....Its the whole bloody crux of the argument...OPEC are stating the market is well supplied and while the market was in contango they had a point...Now real strength is coming into the prompt which means demand is picking up, if the trend continues and strengthens then OPEC will be under pressure to increase production...will they or indeed can they???

Thanks...that helps. How does that look from a pricing perspective? Does the price remain same for multiple contracts?

Isn't this slightly contrary to even this weeks IEA statement?

I wasn't trying to suggest that they gamble as a rule, but that the current environment may be deemed risky and therefore a gamble.

Sorry maybe I am being a bit thick but not sure I understand the question(s)....

Forget weekly stats and headline noise.....Look at the big picture...

We have seen a fundamental shift in the curve over the last few weeks where the market has bucked a contango trend which has been with us for the past few years. The market is flat suggesting prompt strength which will be confirmed if we trade in backwardation...This means in theory stocks will be reduced as folks use the oil they bought cheaper earlier than pay for more expensive prompt barrels. If the market falters and moves back in contango then OPEC are right and the market is over supplied evidenced by the prompt surplus. However if the market moves in backwardation and stocks are being reduced at the same time means the market is very strong and OPEC will under pressure to raise output.

That is the traditional interpretation of a contango market. It might be valid but what if it is not? What happens if reality is different for the first time? What would the market look like if supply was actually constrained for the first time rather than expandable again but demand growth remained roughly constant? I suspect that this is a new situation the market has never encountered before and that the market is still figuring out what this means. We have reached a state where oil has risen constantly over the last several months on the front month. Regardless of contango, this would seem to indicate a shortage of oil despite OPEC's protests to the contrary.

I'd be more likely to believe the traditional interpretation of contango more if prices were falling or constant during this time but they have not been. Instead prices have gone from just above $50 per barrel to almost $75 per barrel - a 50% spike in price in a very short time. So we have two trends that mean opposite things - rising front month prices and a contango market (which has finally just given way to backwardation).

I am not at all convinced that traditional analysis is going to yield the right answer here. So if we step out of the traditional box, what other hypothetical scenarios could cause this sort of behavior, especially as the vast majority of traders do not fully believe in peak oil even if it is occurring (or has occurred or is close to occurring). What role is psychology playing here plus faith in traditional interpretations in the average trader's efforts to understand these trends?

Ghawar Is Dying as we slide Into the Grey Zone
"The greatest shortcoming of the human race is our inability to understand the exponential function.

I think you might be looking for something that isnt there..

If supply is constrained and demand continues to grow then i think it fair to say the price goes higher...

The only strange thing about the market over the last few years is how the market has managed to rally 40 to 74 bucks in contango which is counterintuiative.

Exfoliation produces lighter, cheaper solar cells

James Zahler from Aonex Technologies, together with colleagues from the California Institute of Technology and EMCORE PhotoVoltaics made the device by replacing the relatively thick semiconductor substrate normally used in solar cells with a thin "wafer-bonded" substrate. This means the new device is considerable cheaper and lighter than conventional solar cells.

Zahler's team says the photovoltaic characteristics of the new device are better than those of conventional cells deposited on bulk substrates. Such bulk substrates are normally several hundred microns thick, while wafers are just hundreds of nanometres thick.

If only these sort of advances had happened 10 years ago. Or even 5. Still, if we can get one or more of these recent advances into mass production, we might be able to do something with it. (Big if, I know, but I'm allowed to have some hope, right?)

The reduced need for indium in this process could be very useful.

The real blastoff in solar PV will come when the nonsilicon sputtered multilayers come to fruition. Companies like Nanosolar are so achingly close right now, using III-V compounds in a submicron sandwich that is roll-deposited, flexible, and more efficient than silicon, maybe even more so than GaAs.
The last time I talked to them about a job, they were hung up on electroding, since they can't use an interdigitated design and still preserve that great efficiency. Their only choice is a transparent top electrode, and because of the current densities, that means gold. Not much, of course, but it's a bigger deal than using Indium! The problem may have been basically one of wetting, since the gold won't cooperate with most intermetallics, and they absolutely must have an ultrathin, ultra-uniform top electrode for their app.

Do you know how a thin metal surfacing like that behaves in terms of elasticity? My only experience is with sheeting materials, like gold leaf, which is extremely brittle. I'm just curious here, since the elasticity would have to be intrinsic to the conductor, and not supplied by some other compound, in order to maintain consistent conductivity.

Bob Fiske

In regards to "The Market"...

I continue to be amazed, but no longer surprised, when the market marches upwards in the face of all sorts of ominous news. One factor I consider is that there really is A LOT of money sloshing around looking for a big return.

The $$'s are from inheritance, home appreciation, mortgage refinancing, borrowed off credit cards, previous market gains, etc. So even while the dollar's value is dropping/succumbing to inflation, the market spirals upwards.

I do take consolation, upon seeing all the shiny oversized gas-guzzling vehicles around, that most owners are in serious debt (as most US residents are).

So here's my question:

Where is a safe place for a bit of wealth going forward?

I trust the E-L-P idea. I'm NOT out to make a killing in the market. But must one convert all their savings into farm land, toilet paper and silicon now?

I have a happy little home In Portland, OR. 1/2 block from excellent public transport (with much more funded, planned, and under construction, BTW)

What I've done with my small savings (inheritance, never really enough earned to save...) Is get it ALL out of the dollar into energy producer/holders and energy service providers. Australian coal and wind. Canadian energy trusts. Singapore and Finnish oil and energy companies. Even a little uranium.

Recent coal articles make coal seem safe for now. Uranium probably OK-? Oil seems a winner.

Any thoughts out there?

I think a good place to park liquid assets over the next several years is in TIPs (Treasury Inflation Protected securities), and to be a bit more precise into a mutual fund with low fees that invests in TIPs.

IMO investing in your own and you family members' skills makes more sense than accumulating hard assets now, because it takes years to acquire (e.g.) gardening skills. Reading some of the many sources listed on TOD can help a person develop his or her thinking abilities in regard to Peak Oil and what to do about it. Thus I emphasize both general education (books, especially) and also specific training in a wide variety of skills, from fixing bicycles to carpentry. I think skills at fixing things will become of great value in years to come, as we will no longer be able to afford to throw things away when they break.

TIPs seem OK in the US I guess. In Canada they suck big time, especially the mutual fund version with very high MERs.

I think a high interest savings account with no service charges or a money market fund with an MER of less than .5% is the best bet for liquid assets now.

For commodities, maybe gold or silver coins. You can play with them too. Build little fortifications, or use them as checkers. More fun, and safer, than playing with uranium or coal.

But what do I know? I shorted the S&P 500 two months ago:

S&P hits record as stocks extend gains

IMO investing in your own and you family members' skills makes more sense than accumulating hard assets now, because it takes years to acquire (e.g.) gardening skills. Reading some of the many sources listed on TOD can help a person develop his or her thinking abilities in regard to Peak Oil and what to do about it. Thus I emphasize both general education (books, especially) and also specific training in a wide variety of skills, from fixing bicycles to carpentry. I think skills at fixing things will become of great value in years to come, as we will no longer be able to afford to throw things away when they break.

That's precisely why I started up my site. I'm hoping an accumulation of knowledge can occur with plenty of like-minded people posting their knowledge regarding various topics such as non-petrol farming and post-peak employment. Learn to farm now while it's easy so you'll be good enough when your life depends on it. :)
~Durandal (http://www.wtdwtshtf.com/)

U.S. TIPs don't make sense to me for two reasons:

1) Inflation is a lot higher than whatever measurement the Treasury is calculating it at.

2) I don't care at all to support the present US govt./military madness beyond what I have to in taxes.

IMO, a mutual fund basket of foreign currencies is a better choice.

OTOH, all so-called "liquid assets" of paper are just that -- paper. They'll one day make very fine toilet paper, so if you're holding a bunch of such liquid assets I wouldn't worry at all about the tp in the future. ;-)

Don't forget to discount market moves for inflation. I think inflation is a least 5-10%. Discounted for inflation the stock market isn't doing much. The NASDAQ is off about 50% from its high.

I read somewhere that Turkey's stock market performed very well while the country had rampant inflation. In the end the big gains bought less than before in real terms. I think the same thing is happening in the U.S. now.


Those who are accustomed to analyzing stock returns are getting the nominal value of the stock market confused with the real value of the stock market.

All of the central banks are inflating their currency (many at double digit rates)! As long as all the liquidity from excess money is looking for a home to earn a return, the stock markets will continue to increase in nominal value. However, when you compare the returns priced in terms of real assets (gold, silver, oil, gasoline, art, etc), the market is doing horrible.

It is this inflation/liquidity that is making the stock markets go up with no rhyme or reason and dispite the bad news looking forward.

Those who sat around waiting for the market to crash and pulled out all their money into cash will be waiting a long time and with a pile of worthless bills.

Everything is good.

First stay in Portland and don't move. Unless you have had a history of working on a real farm don't move. The largest problem we have is the simple fact that is hard to be a farmer. - you may want to invest in a food co-op or some other food collective.

Coal and Uranium are good but don't forget precious metals.

Good luck

But must one convert all their savings into farm land, toilet paper and silicon now?

Umm, I voted yes on this (though not so much on the toilet paper aspect, it turns out that the leaves of hazelnut trees are a sustainable, local, natural alternative). I also happen to live in Portland, though today is one of those days where I regard that as a somewhat temporary sitation. We should get together sometime; I'll tell you all I know about land, toilet paper, and silicon, and you can tell my wife where to put her 401k, since she is peak-oil-aware-but-reluctant-to-plan-for-it.


..."you can tell my wife where to put her 401k, since she is peak-oil-aware-but-reluctant-to-plan-for-it".

Please, we need to start a thread on this whole "how to not ruin your marriage once you start making life changes to prepare for life after P.O."

Gee. This is a tough one. I am trying to convince my wife to at least diversify some of our investments. I feel doomed, doomed, doomed, with my standard 401k company plan options. All are heavy into bonds and stuff I feel has no real value.

Our illusion of savings is already being eaten away by inflation. I am resolved to letting inflation be my friend. Like my father saw his fixed-rate home mortgage payments slip into irrelevance in the late 60's and 70's during times of inflation. Bring it on! But my retirement savings will evaporate unless it is in assets that don't crash with the US dollar and the real estate market.

My wife and I have started seeing a therapist largely in part so we can talk through some of this stuff. Once you see P.O. everywhere it changes your world view and the things that you value. How can you explain to someone not P.O. aware that a $200 solar oven is a great investment?

I have asked her to at least consider IF the P.O. elephant is really in the room, shouldn't we at least sell some of our stock holdings (which are all in IBM employee purchase stocks) so we don't see them crash AGAIN like back in 1987!?!?! All us IBM'ers back then were in shock over the loss of all our equity in just a few days. After that one, I promised myself to not repeat the same error. But her reply now is: "the market is climbing, why would I want to sell?" I plead.. just some of it. Diversify at least.

Oh well... it's all part of the P.O. aware and ELP life change pains.

How are you all doing with sharing this with your spouses? Are most of you single or what?

My ideal would to really have a partner who understands this and is working with me on preparing instead of questioning my sanity. I guess I am jealous of how Sharon Astyk and her husband are doing as described over at http://casaubonsbook.blogspot.com/ We each are responding in our own ways and time lines but once TSHTF there will be a lot of family stress too as we try to make sense of and understand the chaos we are in.


Yes, those are some great questions. In light of all the doom hanging around, what is one to do? Hence my questions as far as the investment/savings side of things.

If informed people can't agree and are diametrically opposed, what's an average guy or gal to do?

PO awareness definitely progresses in stages: Interest, overwhelmingness, despair, apathy, action, etc.. I've found, as it sounds many others have as well, that you just can't discuss it with many people. They just think you're nuts.

Marry Well! That's my advice.

I don't want to end up with a pile of worthless currency, stock, or (inedible) metal either.

My stock investments are diversified around general energy themes.

1) Oil stocks, diversified by production area
2) North America natural gas stocks (some overlap with #1)
3) Foreign hydroelectric producers (geographically diversified
4) US & Canadian railroads (have done as well as #1 & #2) Will buy only Canadian from now on
5) A couple non-energy medical device companies
6) Swiss mutual fund
7) Mutual funds that invest in foreign bonds
8) Heavy engineering firm (benefits from oil refineries, railroads, weak US $, etc.)

Sold Boeing some months back. 787 a winner, but customers are iffy.

IMHO, the last bastion of capitalism if things fall apart will be Switzerland.

Best Hopes,


BTW, it may be worth doing the Mormon thing, keep a year of food and other essentials. Inflation hedge, useful if TSHTF.

Alan, I have bought quite a bit of GE stock over the years, especially when it is down. Now they are getting into wind generators. Overall the company is so spread out that it resembles a 'basket of stocks.' It has been supporting me with dividends for a long time and if GE goes belly up the whole damn country will probably be finished. I have also been buying Krugerands and Maple Leafs and bags of silver coins since the 70s. If the wife and I dont need them we can pass them on to the kids without taxes. Then there is the empty bedroom that has more canned goods than a well stocked convenience store... We call that hurricane preparedness.

I still own the GE stock I bought with lawn mowing money as a kid :-)

However, I could not recommend it at today's prices. Their jet engine business is much bigger than their wind turbine business. They are shopping for a buyer of their subprime mortgage business (what guarantees did they make for loans they originated and resold ?). They are sitting out the next generation of nukes it appears, but they make very good diesel-electric locomotives.

The issue is complex with GE. I would rather have a Canadian hydro company, or a Swiss hydro utility.

After the price shakes down, I would consider GE as a part of a larger portfolio. But very large segments of their business will not do well post-Peak Oil, and that is not part of the valuation (yet).


Decide on amount that you will "invest" in post-peak-useful materials. If you have $200,000 of paper investments it is not to hard to argue for $10,000 of "diversification." $10,000 can buy you a LOT of useful stuff.

For example:

An outfitter's tent with wood stove suitable for long-term habitation (and car-portable) www.cylinderstoves.com
20 gallons of gasoline in 5-gal cans
Coleman stove (runs on auto gas)
1 year of food for two
Water purifier (Berkey)
Seeds and simple farming hand tools
simple fishing/hunting equipment
shortwave radio
lotsa books
basic medical supplies (disinfectants, bandages)
etc. etc.

All this above might run you $2500.

Plus I'd keep another $10,000 minimum of gold and silver coins, plus $2000 or so cash (dollar bills).

As for IBM, sell some and buy something more "diversified" like EFA

All this above might run you $2500.

Unfortunately I don't think this kind of "insurance" is worth anything, even if cheap, two main reasons :

- After TSHTF big time it is no so much the equipement which will be of value than the "trade and procurement" networks.
Equipement alone with no sources of food and other commodities will only last a few weeks, that's NOT gonna be a holiday camp!

- The most dangerous time will not be after TSHTF but during the downslide and there is not much you can predict about the true necessities for this period.
In most cases it will be more a matter of luck than anything else, which doesn't mean one shouldn't try to have some preparedness, of what kind?
This is anyone's guess.

I've been doing similar thinking - but from a slightly different point of view - trying to figure out how best to restructure what i do for a living to deal with Peak Oil, without experiencing a huge income discontinuity that has my family going under in the face of likely upcoming shocks.

I've settled on putting my meagre money, and more useful skills and relationships to bear in the start-up world. I've decided to build a company that benefits from the slide - not in an egregious way - not looking to profit from misery - but which, if things go tits up quicker, leaves me with useful assets.

I just trust that better than investing in other people's businesses at the whim of market ups and downs...

Just my 2c worth - but before I can kick any of that off still have to do the day job enough to free up some time... I really hate having left it so late to take Peak Oil seriously, despite being a believer for many years...
When no-one around you understands
start your own revolution
and cut out the middle man

Rooftop Solar hits main Yahoo news, Largest Florida utility looking for rooftop vs. centralized system.

"We're not look at Arizona-style or Nevada-style solar fields as a primary target," said Sole. "We're looking at rooftops."


Thanks for the comments (so far) folks!

I've been out trying to tame the garden for the last couple hours...

The tomatoes are going crazy and over-running their neighbors - time to stop watering them maybe? Squash, beans, peppers very happy too. Greens getting a bit cooked, threatening to bolt.

Don will appreciate that I'm taking the Summer off from my 'real job' to work on the (new in-laws') family farm an hour East out in the country...last of the cherries down in the basement. Will wine grapes be valuable in a decade? It also happens to be the North American windsurf/kiteboard epicenter. Kiting has a steep early learning curve but I'm looking forward to riding the wind rather than cursing it. I'll look into TIP's.

Mr Rototillerman - I could probably tell you all the actionable investment info. that I know in about as long as it would take me to drink two or three cold local IPA's (not very long). Contact Info? Didn't see it on your page...

I've put an email link on my theoildrum personal page. Yeah, our tomatoes went nuts the last week when we were gone, too.

Our garden is overflowing too. :-) I am praying our big haul of tomatoes comes in before we go on vacation in August for a family visit. Here in Colorado I have my first group of tomatoes ripe and red. We'll have them with some fresh mozzarella and basil tonight. This ELP thing ain't all bad!! We sure are eating much better since even making modest increases in urban gardening.

I told my father recently that our huge family garden in the 1970's taught me a lot more valuable information than what I learned in grad school. I just didn't realize it at the time.

You can learn some gardening from books but a real apprenticeship with elder gardeners is invaluable. That will be one more benefit of ELP and energy scarcity: tighter family units and multi-generations living and learning under one roof. I don't see our kids and older parents necessarily being pushed out of the nest as quickly as we did throughout the last 3 decades.

For those Big picture types out there.

ML-IMPLODE is at 99 this evening.

Check out http://www.raptureready.com/rap2.html if you are waiting, I kinda hope their right it would make things a lot easier but assuming for one reason or a thousand they might not be its looking like bad news.

its looking like bad news.

Yes, but this is at least an usefull "nuttiness index".

I am no economist, but things don't look right.
Oil is pushing $74 a barrel, the stock market seems to be going up daily, the dow is pushing 14K.
Yet i read this:

where retail sales have posted their sharpest dropped in 2 years. What gives? or as the young generation would say WTF?

Geez, it's hurricane season, oil is pressing $74, the dow is at an all time high, airline stocks are not retreating, despite the concept of a passenger slowdown of travel in the future. There are hints in the wind of peak oil from EIA, and I am just wondering IF we (collectively) in denial? or was I right in my prediction that like a train we are headed straight into a brick wall?

sorry, just trying to understand!

Google "plunge protection team" and read up. Lately it looks like they've been pumping "blue chip" stocks, including GM even as GM's sales plunged over 20% in June. (I think it was actually 29% but that's just from memory.)

You also have to remember that a large subset of US companies are actually multinationals and even if their business sucks at home, they may be doing well elsewhere. The boom is still on in the "BRIC" nations. So while the US is sliding towards economic stagnation (or worse), the rest of the world is not doing too badly yet. In my opinion, the global situation now is similar to that when Great Britain passed the leadership torch to the US. GB was fading, the US was rising, but they still both suffered through a nasty depression together. Today the US is fading, China is rising, but if the credit bubble pops, both the US and China will take down the global economy with them.

So in short, a great deal of the DOW's giddiness may be due to overseas earnings and the expectation that those earnings will somehow also help the US, or at least a few financial people I know say this.

Ghawar Is Dying as we slide Into the Grey Zone
"The greatest shortcoming of the human race is our inability to understand the exponential function.

Hello TODers,

ISLAMABAD, Pakistan - Thousands of troops were deployed to Pakistan's northwestern frontier to try to dissuade outlawed Islamic militants from launching a holy war against the government for its bloody attack on a radical mosque, military officials said Saturday.

As the troop movements proceeded in at least five areas of the North West Frontier Province, a suicide bomber struck in another region of the border, his explosives-laden vehicle killing at least eight soldiers in a military convoy, army spokesman Maj. Gen. Waheed Arhad said.

Local security officials said as many as 12 soldiers died and another 20 were wounded in the attack. The region along the Afghanistan border has seen increased activity by both local militants, the Taliban and, according to a recent U.S. assessment, the al-Qaida terror network.

"With help from local tribal elders, we are trying to ensure that militants lay down their arms, and stop issuing calls for jihad against the government," said a senior military official who spoke on condition of anonymity because he was not authorized to speak to the media.

Recall my earlier postings on Pakistan. It appears the war refugees from Afghanistan, the deaths and destruction from the recent flooding, the power outages caused by FF-prices, and the recent fighting for control of the Red Mosque is all coalescing into a much more volatile situation. Hope somebody is safely watching the nukes.

EDIT: http://www.kansascity.com/451/story/186031.html
Al-Qaida: Wage holy war against Pakistan

Muslims of Pakistan: your salvation is only through Jihad," al-Zawahri said in the video, which was subtitled in English.

"Rigged elections will not save you, politics will not save you, and bargaining, bootlicking, negotiations with the criminals, and political maneuvers will not save you," a bespectacled and white-clad al-Zawahri said.

"Musharraf and his hunting dogs have rubbed your honor in the dirt in the service of the Crusaders and the Jews," he said, referring to Pakistan's President Pervez Musharraf, who has come under strong internal criticism for his handling of the clashes at the mosque.

WASHINGTON (Reuters) - The U.S. Senate on Friday voted to double the bounty on Osama bin Laden to $50 million and require President George W. Bush to refocus on capturing him after reports al Qaeda is gaining strength.

By a vote of 87-1, the Senate set the reward for the killing or capture, or information leading to the capture, of the mastermind of the Sept. 11 attacks on the United States.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

There was a rumor that the French Intelligence learned Osama was dead of typhoid fever on the evening news some time ago. Have not seen him on any recent videos. Zawahiri did appear on video since the report surfaced. Have not seen Osama on video since the report surfaced.

Reliance on fuzzy intelligence has cost many lives. There were reports the U.S. was spending the highest percentage of U.S. GDP on the military since WWII, with poor results. Conditions were deteriorating in Iraq since the troop surge. The war in Iraq was a huge mistake. The current administration lacks all credibility.

The FOX news last night indicated the video of Osama was taken from a video 5 years old.

There were reports the U.S. was spending the highest percentage of U.S. GDP on the military since WWII

Completely false, and detecting that falsehood took all of 3 seconds with Google.

The US's military spending - even if you throw in anything related, like Homeland Security, part of NASA, huge amounts of interest, and so on - is only $930B for 2006, or about 7.2% of the $13T GDP.

By contrast, the Department of Defense only portion of US military spending was a larger fraction of GDP than that in the 50s and 60s.

The war in Iraq was a huge mistake.

That part, at least, is true enough.