DrumBeat: October 1, 2007

Kunstler: Two Clues for the Clueless

The gravest problem this nation faces, therefore, is the inability of the American public and its leaders to confront the fact that we can't continue to live the way we do -- and, by the way, when I say "leaders," I don't restrict myself to political leaders. Our failures of leadership are comprehensive, including leadership in my nominal sector, journalism. For two weeks in a row, the price of oil on the futures markets has closed above $80-a-barrel, and for these two weeks The New York Times Sunday Business Section has failed to run one story on the consequences of oil rising into this uncharted territory of high price. Are the Times editors on crack? Surely $80-plus oil will thunder through the American economy.

Australia onshore oil discovery at least 120 million barrels

Australian oil company Innamincka Petroleum Ltd. said Monday that drilling results show its Flax and Juniper discoveries in Australia's Cooper Basin together may be one of the country's largest onshore oil finds.

Results from its Flax East 1 well have confirmed the two fields are connected and point to "a substantial increase in the assessed inplace oil resource," the company said in a statement Monday to the Australian Securities Exchange.

Nigerian Leader Promises End to Niger Delta Conflict

Nigerian President Umaru Yar'Adua pledged on Monday, the country's independence day, to tackle the crisis in the volatile Niger Delta, which has seen up to 200 foreigners kidnapped since the start of last year.

The oil-rich Niger Delta is awash with militants who say they want a larger say in the way their region's prized resource is used. Yar'Adua's predecessor Olusegun Obasanjo was unable to quell the violent attacks against foreign oil companies.

Scrambling for Kazakh oil

International companies continue to jostle for position in the contest for access to Kazakhstan's diverse mineral deposits amid an ongoing dispute over the world's largest recent oil find.

Green campaign dents palm oil demand

A campaign by environment groups against palm oil is costing the product market share in Europe, a top Malaysian palm oil industry official said on Monday.

Slow, Steady Liquidation of the World Oil Industry

By 2011 or so, these companies, including Royal Dutch Shell Plc and BP Plc in the U.K., France's Total SA and ConocoPhillips in the U.S., will no longer be able to increase their production, says Charles Maxwell, an analyst at Weeden & Co. in Greenwich, Connecticut.

By 2014, their output will begin a long decline, says Maxwell, who has been involved in the industry for 50 years, mostly as an analyst. "They'll be in liquidation," he says.

The industry isn't finding new crude-oil reserves fast enough to keep up with world demand for gasoline and other fuels made from crude.

Peak Oil 10-20 Years Away, Claims World Energy Council

Global proved recoverable oil reserves stood at 1.215trillion barrels (160billion tonnes) at the end of 2005, according to the World Energy Council. It says in a new report that this is 117billion barrels (11billion tonnes) higher than at the end of 2002.

However, it acknowledges that Peak Oil may be just a few years off.

Strength Needs Energy

The real energy crisis we face today is much graver because it has ballooned into a manufacturing crisis. It is now undermining the very things that have made this country so great for so long — its economic prowess, its education system, its strong history of innovation and invention, and, last but certainly not least, its basic national-security and influence in the world.

Security Fears Keep Oil Prices at High Levels

OPEC is trying to limit the price rise to $80; its secretary general, Abdullah al-Badri, stated after the organization's recent ministerial meeting that "the price of $80 is high and is not supported by the foundations of the market." This means that OPEC is uncomfortable with this high price, and there is fear that the continuing price rise will lead to new record levels every week or so. This will produce a reduction, sooner or later, in world consumption of crude oil, and an increase in the use of alternative fuels, not to speak of the negative impact on the economies of the world, and especially those of the developing countries.

Stellar Performance with Astrophysicist at the Helm

Talisman has been in the North Sea for 11 years, and as far as Buckee is concerned, the strategic value of the province has not waned at all.

"The world consumes 30-plus billion barrels of oil a year, but is finding less than 10billion. This is unsustainable. I do believe in the Peak Oil theory. It's obvious, which means oil prices will move higher. It also means that a premium is placed on existing fields.

"In the North Sea, we have the infrastructure and we have lots of oil in place beneath. I believe we can keep on improving the recovery factor of such fields for quite a long time yet."

Saudi Aramco gets three bids for $8 bln Ras Tanura refinery

Saudi Arabian Oil Co., the world's largest oil company, has received three bids for the contract to help it build a $8-billion refinery in eastern Saudi Arabia, according to people familiar with the plans.

BP's Atlantis rig could be ready to pump early

The report said testing is believed to have started on the rig, known as Atlantis, fuelling speculation it could be up and running within weeks. BP previously said Atlantis would be producing by the end of the year.

BP's new Angola oilfield begins production

BP's new Plutonio oilfield in Angola started production this week with the first shipment expected in mid-November, trade sources said on Monday.

Deutsche Bank analyst downgrades ConocoPhillips to "Sell" from "Hold"

A Deutsche Bank analyst downgraded ConocoPhillips to "Sell" on Monday, saying the energy company is the most exposed to the two-month downturn that typically strikes in October.

Cowed, Myanmar border town longs to join protests

But trade has dried up and anger mounted with sky-rocketing fuel prices -- rises that sparked protests over the last few weeks in major cities and towns in Myanmar.

Shops in Tamu are open but largely empty, and food is increasingly scarce.

The town is almost deserted, with many homes shuttered. Soldiers are stationed in and around Tamu, police in plain clothes wander the streets carrying walkie-talkies.

Quebec slaps carbon tax on diesel fuel

Quebec is increasing the tax on diesel fuel sold in the province by 0.9 cents per litre beginning today as part of its plan to tackle greenhouse gas emissions.

Nuclear industry pushes for early approval of new plants by warning of bottlenecks

The government's plans to build up to 10 nuclear power plants in Britain over the next decade could be thwarted by a shortage of skilled project managers, industry executives have warned.

They have told ministers that the coming nuclear renaissance in Europe and in emerging economies such as Russia, China and India - driven by the need to combat global warming and reduce energy imports - could also constrain the delivery of key reactor components unless decisions are made swiftly and the planning process is speeded up.

D.C. region produces more carbon dioxide than many countries

The Washington region, with its crawling traffic and several coal-fired power plants, produces more carbon dioxide than several medium-size European countries, according to a new study of pollution.

Coal fired plants, a national Catch-22

About half of the nation's energy comes from coal-fired power plants.

They're the powerhouse of our power grid, but they're also a major source of the country's air pollution.

GM to make Volt electric car in 2010

General Motors plans to manufacture the Chevrolet Volt electric car in 2010 and will produce a Chevy version of its full-size crossover SUVs in 2011, according to a summary of the automaker's new contract with the United Auto Workers.

Weak dollar could prevent OPEC from new output hike: analysts

The weak US dollar is slashing the value of oil revenue for the biggest crude producers, leading analysts to predict that OPEC will not rush to hike output again despite tight world energy supplies.

How to Address Humanity's Global Crises? Challenge Corporate Power, Embrace True Democracy

The physicist, activist and author outlines the scope of the "triple threat" represented by the end of cheap oil, human-induced climate change, and resource scarcity.

The Shift To Alternative Fuels Is Moving Beyond Ethanol

October is the time of year when we traditionally begin to see fuels like natural gas and heating oil begin to rise and rise steadily.

Actually, they're already doing just that.

And with the subprime nightmare still unraveling and consumers being stretched to the gills, higher gas and oil prices may be the straw that breaks the Dow's back, again.

Human Behavior, Global Warming, and the Ubiquitous Plastic Bag

And the lesson for now pretty much seems to be that no matter how piddly the effort, no matter how small the bother, well, it’s too much bother.

What I Believe

I believe in peak oil and that we are now (or very soon will be) straining at the limits of production vs. consumption. I believe that much of the trouble in the world today is about securing oil reserves. Many young lives and much national treasure are being spent in the pursuit of oil. However, I also believe that if governments would get out of the way and let energy prices rise, the free market forces can solve the problem. Newer, lighter, safer, carbon fiber hybrid vehicles with efficient diesel/electric designs can go a long way towards the solution. Along with bio fuels and renewable energy and better designs we can move towards energy independence. There will be no single big solution but thousands of small ones that will add up greatly. We will still need oil but not nearly so much if we simply unleash our individual creative powers and let the free market work. The results can be inspiring.

Food shock as 'agflation' sees prices rise

IN THE 1970s it was "stagflation", the simultaneous combination of economic stagnation and high inflation. Now, in the noughties, we have "agflation" — price inflation of agricultural products, especially grains and related foodstuffs. Just last week, while announcing the Federal Government's aid package to drought-hit farmers, former deputy prime minister and Nationals leader John Anderson warned of a global food shock.

Bush struggles to stay relevant in climate debate

President George W. Bush, hosting major polluting nations last week, sought to convince skeptics that he wants to help shape the next global deal on climate change, despite his long history of shunning such efforts.

But with only 15 months left in office, his chances of becoming a major player in the debate over climate change are diminishing quickly, analysts and diplomats said.

Ah! The mendacity of governments is a wonder to behold:

Chancellor reconsiders savings pledge

The Chancellor has staged an embarrassing climbdown by pledging to guarantee only the first £35,000 of savings held in British banks and building societies rather than the £100,000 he originally suggested...

...It was the paucity of the current guarantee – which fully protects only the first £2,000 of savings and 90pc of the next £33,000 – that prompted the queues of savers at Northern Rock branches when it emerged the struggling bank had been forced to call on the Bank of England for help...

...Yet the £35,000 guarantee that comes into effect today means only an extra £3,300 of savers' money is protected

If they cannot uphold their word at this early period in the financial crisis, then what are they going to be like when the full on chaos of global financial, climate and energy chaos hits?

This is a bad mistake.

Not only do people now know the government will not bail them out if a bank or building society is in trouble; they know that the word of government officials is even more worthless than they thought it was before. They weren't exactly falling over themselves to trust it then.

Net result is any suggestion that a financial institution is in trouble and you need to get you funds out immediately.

I’m gonna open a new account , I’m walking down the street and there is a Northern Rock at my left – and on the other side of the road there is a Bank-X – Q; Where do I go ?

You covert the cash to gold and silver, then split it into multiple parcels and hide it well around your home.

There were two other banks that took a beating around the same time the whole Northern Rock thing got started. I've been using the Google for a bit and I can't find their names and I'm not having much luck tracking down a good blog that covers British banking. This sort of thing won't happen here because we simply don't save but I recall some postings indicating the infection will be most visible in the U.K. and Spain ...

http://ml-implode.com had a link to this tidbit comparing UBS's troubles to Citigroup.

How big of a price? UBS is taking a $690 million loss and firing 1,500 workers due to the $3.4 billion writedown of the value of its MBSs(mortgage backed securities) -- but I think it's curious that it still has $19 billion of MBSs with which it is "comfortable."


Economic conditions alone would make a mess of that $19B in "assets", and this is before one factors in AGW and PO ...

Alliance & Leicester and Bradford & Bingley. It was the run on A&L shares on the Monday which persuaded the government to give their blanket assurance, I believe.

Someone on another forum reckon that they are only half as bad as Northern Rock, and so won't run into the same sort of finance troubles as NR for a few weeks,


Alliance & Leicester, and Bradford & Bingley were the other two.

The initial promise of guaranteeing 100.000 pounds solved a first crack, but now that it's lowered again, Chancellor reconsiders savings pledge, who knows how people will react? They're looking for safety. 35.000 pounds does not spell safety, Northern Rock has many mortgages and pension holdings, which easily go beyond that number.

It's not realistic to think these three are the only UK banks in trouble, like NetBank will not be the last US victim.

Northern Rock, 11.42 am EDT:
LON:NRK 134.00 -45.20 (-25.22%)

Guess that set of guarantees didn't help much.

NetBank 11.58 am EDT
OTC:NTBK 0.04 -0.03 (-45.59%)

NetBank has officially filed for bankruptcy (protection).

It seems to me that one reason such a safeguard would be withdrawn, is that Brown knows that more banks are heading for trouble and he simply cannot afford to guarantee the money in all of them. Otherwise, why backdown when it would attract such bad publicity with a possible election in the offing? As mentioned above, doing this almost guarantees that there will be a run at the first rumour of trouble at any bank.

Assuming I go back to work this week (fingers crossed) I'd like to start banking in some fashion where I can use euros rather than dollars. I hear Everbank is an alternative to Netbank ... does anyone have an opinion on which bank will give me a cash card but let me store the funds in the euro? The $1,500 minimum for an Everbank account isn't such a stretch but I would probably shy away from anything much larger than that.

Actually, there's a connection here: NetBank folded after Everbank declined to purchase them. Letting them go down, and then buying assets, must have been cheaper.

EverBank to acquire some assets of failed NetBank

Less than two weeks after killing a deal to acquire NetBank, EverBank said it will acquire about $700 million worth of mortgage assets of the failed Internet bank.

The Federal Deposit Insurance Corp. and Office of Thrift Supervision shuttered NetBank Sept. 28, at the same time giving its approval for ING Bank to assume NetBank's insured deposits.

On Sept. 17, EverBank pulled the plug on its planned acquisition of substantially all of NetBank. EverBank said only that it made the decision "after it became clear that NetBank would not be able to complete certain conditions required to close and receive regulatory approval."

I have a question for some of you who are certainly more economically intelligent than I. Citibank just bought out ABN AMRO's La Salle Mortgage group. What happens to those morgages (mine included)if Citibank goes belly-up (before it sells their mortgage group to someone else, that is)?

I don't understand all this slicing and dicing of morgages enough to even imagine an answer, but it sure does worry me.

Thanks for any answers.


You occasionally see stories about people who've been "lost" as mortgages change hands. You keep a copy of every single bit of paper you get, especially canceled checks, and if your payment destination goes missing you open a separate account and keep paying into that. These stories popped up every five years or so during "normal" times and I expect we'll see a lot more of it going forward. The Mexicans blow up pipelines ... here I'm waiting for the first infowar poisoning of a mortgage lender's data pool.

To me the more interesting question is what happens to my mortgage if the the dollar fails as a currency?

One scenario I see is a hyper-inflated dollar where I pay off my 180K mortgage with a single oz gold coin.

But what happens if the dollar no longer exists, and its not just a matter of conversion into some new US currency, but perhaps the US federal gov't no longer exists?

That is a LOT of what ifs! What if a giant rock hits the earth tomorrow, or there's a massive earthquake. Can't worry about every remote possibility.


No, actually only one "if" - what if the federal gov't fails.

Ever read the classic story "When Worlds Collide?" or its follow-up "After Worlds Collide"? Great fun. And certainly an argument for not throwing away thought experiments about what might happen IF some highly unlikely event occurs.


A systemic failure like that is a potential but I think its a long shot ... at least this year.

I think it'll be a case of where "everything we know is wrong". If one person loses their house its bad luck or bad judgement, if an entire nation starts losing their homes it becomes political. Political good for the consumer in some ways, but be sure there will be some protection for those mortgage holders as well - I don't think anyone gets a free house out of hyperinflation.

The dollar is a consensual hallucination. If we all snap out of it at once ... well ... interesting times strikes, eh?

I'm not worried about me being able to pay the mortgage. I'm worried about what they will try to hold onto if they are going belly-up like Countrywide did. CW was apparently trying to hold onto the tax/insurance escrow files and people were losing their houses because the taxes/insurance wasn't being paid.

Citimortagage takes an auto payment out of my checking acct. each month that includes escrow payments, "the mortgage payment" and an extra $50-100/mo. to go on the principle This lets the taxes and insurance be paid automatically and with the extra on principle we've been able to pay the morgage down by about $2000 per year.

I worry that if CM goes bankrupt they might pull a stunt like Countrywide did. Is that usual in that sort of situation?


What happens to those morgages (mine included) if Citibank goes belly-up?

That's when they break out the UAV predator drones and/or remote mind control weapons.

All right now, Matt. STOP that - LOL.


sorry, I just couldn't resist. =)

RE: How to Address Humanity's Global Crises?

Vandana Shiva about India shows how vast our problems have become. India without the water in it's rivers? Then, what will they do? Oh yes, we forget, they've got nukes. Resource wars, anyone?

E. Swanson

On a daily basis water is priority-1b, just next to air to breath which constitute 1-a.

On the sub-continent they should stop plundering the ridiculous ideas of bio-fuel perused by other “infinity-societies” – as of yesterday (my suggestion)

BTW the more info I get hold of on GW the more worried I'm getting. This GW-stuff may actually go really fast it seems – and the grand rivers in India are really without water many places in the end of the dry-season, not to forget the watertable in the Delhi region... oh my G...
This I know, b’cos I have lived there for some years… In resent years

My wife's family is originally from Santiago Chile. I had the opportunity to visit there last Dec/Jan. The thought had been in the back of my mind that, should things go badly here, we could go to Chile - we speak the language and have family there. But, when I was there, what I saw was essentially a desert with a couple of rivers running from the Andes to the ocean that supported their agriculture. What happens when A) the glaciers melt away and B) rainfall averages drop in the area?

The Great Lakes region (where I live currently) of the US has never looked better to me as a result of that trip.

A is definitely happening already, but B is up for debate. Might get drier, might get wetter. We have little ability to predict what happens now in our relatively stable system and with the ice caps & patches going its all a big fun house and no one knows where it will lead ...

Lake Superior hits record lows

Preliminary data show Superior's average water level in September dipped four centimetres beneath the previous low for that month reached in 1926, Cynthia Sellinger, deputy director of NOAA's Great Lakes Environmental Research Laboratory, said.

The U.S. Army Corps of Engineers, which uses a different measuring technique, calculated the September level at more than 10 centimetres below the previous record, said Scott Thieme, chief of hydraulics and hydrology for the Detroit district office.

It is the first time in 81 years that the biggest and deepest of the lakes has reached a new monthly low, Ms. Sellinger said. The Army recorded Superior as also setting a record by a 1.27 centimetres in August. But the NOAA lab had the lake at slightly above its record level then.

Either way, the lake has plummeted over the past year and has dipped beneath its long-term average level for a decade – the longest such period in its known history.

It's true, but it is still a big-ass lake. And then there's lake michigan, and huron, and erie, and ontario....

It seems a better bet than Chile for now.

good pt. even if the lake draws down somewhat it's good for a while at least.

the sunbelt from CA to Vegas to Phoenix-Mesa to GA is screwed. philly faces saltwater intrusion. eventually the snowpack drinking ecotopia from NorCal to Seattle is done too. move near the arctic?

get a rain barrel going at least!

maybe figure out a 0-watt desalination system (through sun/condensation)


Many young lives and much national treasure are being spent in the pursuit of oil. However, I also believe that if governments would get out of the way and let energy prices rise, the free market forces can solve the problem...

Ha! The gubbermint is pwned. There is no such thing as a free market. They are about to bountifully reap suffering, for they have liberally sowed stupidity. I will enjoy watching the show.

That was the line my brother used yesterday to host his Rosy Future Ahead thoughts, the free market and the bottom line. If there is no profit to be made no new technologies will show up. I guess I have Rose colored glasses too. But mine are in a box in the shed waiting to get sorted and sold at a yard sale in the future to get funds to go in a jar in my yard...

Why am I replying to my Own post?
Ah you might wonder.
Read on.


Or here.

My brother in that talk up above said a few more things on topic. He works for NASA, in a round about way, Through two sub-contractors. His Main boss is a Lady of about 70 years of age that is still running her Female run Engineering company, her and a Female partner. Her husband is a Liquid Systems guy a PhD in it no less. If it is Liquid or if it acts like a Liquid he knows what it will do in a given anything, with anything and so forth and so on.

My brother has the degrees, Papers, the Breeding and the Know how to do just about anything he wants to do. Oh yeah I have the same Breeding. But I have no papers, Nothing much to show for myself. I am the Black Sheep of the family.

I have a job, it is going on right now. This very second. Opps, you just missed my paycheck fly by.

I help the Homeless in my county. Mostly though In Little Rock. They have a Rosy Future too. In about 2 hours and 10 minutes a fellow and I don't know who he is, will unlock a door to a trailer and walk in turn the lights on and feed anyone that is willing to take any of the food offered. usually there is donuts, boiled eggs in the shell, and juice , water and sometimes coffee. Sometimes there is more take away packaged fare, but not always. These fellows the ones serving are not all Christians, I have seen Hindu and I think a Muslim once or twice, I am not always there, but if I need to find someone. I go there. Or I go to the Noon day feeding station at the StewPot. 8th and Scott. Old Stone church, Up stairs, always Soup/Stew or chili, unless they run out. Donuts till they run out, 2 at a time first run. Bread on every table. And 2 side dishes. Anyone is invited, homeless or not, it is free, you only have to show up. The Mayor of Little Rock did one day a few weeks ago. I was meaning to ask him when he is due for re-election, I am thinking about running against him. I figure I'd shoot for the moon first then if that failed I would for the bread lines.

Think about this those of you reading this post.

We here are talking about the END of the WORLD as we KNOW it.

These guys and gals I hang around could care less.
They are homeless.

ARE you Homeless? Will you be soon? If you fear the future. Come on over to my neck of the woods. Seek me out.
I carry a Big stick, Not one of them call me Teddy, unless you meet a few gals I know, they think I AM a bear, big and cuddly.

I have been called, Moses, OX, Charles, Darling, dear, baby, hun, hunny, and a few names I would rather not type to you.

Cops know me as the crazy guy that keeps getting them called to push me out of somewhere, I have been arrested, get this on this past anniversary of 9-11, Yes on Sept 11th 2007 I was in not one cop car but TWO. First time without hangcuffs the second time with them on. Seems you can't just walk out of the ER when they cops take you there the first time. They send Cops out to find you. I was car less. My van was in a wreck. with me driving. To many cops know me as the crazy guy it seems.

Be careful what you plan for, be more careful who you trust, be even more careful what you read, who you tell and why you tell them. I know.

I work with some of the biggest liars on the planet.

Cops, mayors, homeless, business owners, and pastors, sinners all.

Charles Edward Owens Junior
Write in candidate for President of the USA in 2008

For me right then on that day in that booth, I am your only hope for change. I belong to the Free Right Now party.

We miss your late night posts Bob Shaw, best hopes for a peaceful life and get a new female, if you need help I might know a few willing to listen souls.

-15% Less Transportation Oil Use by 2025

A single data point of many from the first run of my scenario on the Millennium Institute T21 model. Used ASPO oil supply predictions.

The savings were significantly reduced by two negative feedback items. GDP was greater (+2.8% from memory) under my scenario vs. BAU and the added GDP was in the more oil intensive areas of the economy. And oil prices were lower, which also added to oil consumption.

More later,


This was the big news on CNN this morning:

Citigroup warns of huge subprime hit

Citigroup warned Monday its third-quarter earnings are likely to decline 60 percent, as it takes more than $3 billion in writedowns for securities backed by underperforming mortgages and loans tied to corporate buyouts.

But, they will still make a profit.


They pull money out of their a$$. Pretty hard to lose money when you can do that. Our monetary system sucks.

And while banks stocks are tanking:

10.25 am EDT

Dow 14,000.24 +104.61 (0.75%)

Yeah, funny. Money, unlike oil, is infinite.

Citigroup issues earnings warning, and is one of the biggest gainers...

Party like it's 1929

Dow closes at record high

Stocks surged on Monday, sending the Dow to a record close on the first trading day of the fourth quarter, as investors bet that Wall Street may have seen the worst of the credit squeeze after three global banks detailed expected losses from the crisis.

The surge lifted the Nasdaq to its highest level in more than six and a half years as investors snapped up shares of technology bellwethers such as Apple Inc. and Intel Corp.

Citigroup Inc warned that its third-quarter profit would fall by 60 percent, but investors took comfort after its chief executive, Charles Prince, said the largest U.S. bank would "return to a normal earnings environment in the fourth quarter." Its shares were among the biggest gainers on both the Dow and the S&P 500, rising 2.3 percent to $47.72.

LOL, go figure. Wonder if the CEO of Citibank is steady selling off his stock like the guy at Countrywide was.


Hey...we needed a good start to the 4th Qtr and dadgum...the FED is delivering...hallelujah!!

I wonder if the lowered profit projections from the banking and finance sector is being interpreted by the market as increasing the likelihood of the Fed cutting the funds rate another 50 bp (half percentage point) at the next rate-making session? In the short term, a rate cut that size could be considered to be "good" for stocks, and the short term seems to be the only way investors want to look at things.

Guess I got my question answered: Stocks Surge on Rate Cut Hopes.

Expect more of the same. Think NetBank's the only one to go?

UBS to Report Big Loss Tied To Credit Woes

Swiss banking giant UBS AG, which recently ousted its chief executive in the wake of losses at an in-house hedge fund and defections of top investment bankers, plans to write down as much as 4 billion Swiss francs, or $3.41 billion, in assets, including securities tied to U.S. subprime mortgages.

After taking a third-quarter write-down of between 3 billion francs and 4 billion francs on its fixed-income assets, UBS expects a loss for the quarter ranging from about 600 million francs to 700 million francs, people familiar with the matter said. For the year-earlier quarter, UBS reported net profit of 2.2 billion Swiss francs

Bloomberg early morning news:

Merrill's Outlook

Merrill Lynch & Co., the third-biggest U.S. securities firm, may record losses of as much as $4 billion on fixed-income assets, resulting in the lowest quarterly earnings in almost six years, Goldman Sachs analyst William Tanona said in a note to investors last week. New York-based Merrill may have to write down the value of mortgages, corporate loans and collateralized debt obligations, Tanona wrote in his report.

UBS is down 15 percent in this year's trading in Zurich, a steeper drop than Credit Suisse Group's 9 percent decline or Frankfurt-based Deutsche Bank AG's 11 percent tumble.

Companies are supposed to report quarterly results today, and many are expecting major losses due to the ongoing subprime mess. The early news seems to bear this out. And yet, at the time I write this post (10:25 eastern time) the Dow is booming, up more than 100 points and breaking 14,000 again. I'm just amazed. This looks like real bubble territory. To paraphrase (plagiarize?) one of TOD's most notable posters, I christen this the Bubble Land Model (BLM).

The US government has 40 Trillion in unfunded liabilities. Bernanke is racing the imploding housing market... He has stated unequivocally that it is his belief that The Great Depression could have been avoided if the central bank had taken more aggressive action. You can bet on deflation... Or you can bet on inflation...

Which one are you going to choose?

My money's on inflation. We shall see.

If anyone still had any doubts, then the 50bp point cut should have wiped out all delusions. By releasing the flood gates even more than the market expected Ben proved what many suspected - that TPTB are not at all interested in maintaining the value of the fiat money they issue. They are going to inflate away all the debt there is and are going to externalize all the costs of the "growth" they achieve to those that will suffer - people on fixed income, foreign creditors, savers etc. In the end game they will monetizing the debt - just as quietly as they have monetized everything else by now.

It is much easier to fix statistics than to persue financial discipline.

If there is inflation, there is more than enough money to go around to fight for the underlying resources, energy, and services that are actually necessary to make our world work, to produce goods and services, to feed people, to provide goods and services.

If there is deflation, a shrinking of the money supply relative to the already shrinking supply of resources which the money represents, the crash happens that much quicker, because while in any instance there may be enough resources, energy, and human skill, there isn't enough money to go around to pay for the resources, energy, and skill.

Inflation bad, deflation very bad.

Discipline in this moment is irrelevant. You are talking about wanting to engage in some martial arts training when the gun has already been pulled on you by a street thug. It's quite a bit too late to think about discipline.

The Dow is booming despite mixed economic news because traders are expecting another rate cut by the Fed toward 3.75% but I mean how long this effect can last? as some point, the Feds won't be able to lower rates which are already historically low.

Didn't the Japanese central bank get to 0% during the nineties? And even that couldn't get them out of the muck they were in at the time.

Yes, they went to essentially zero percent.

Back on Sept. 17, Paul Krugman came to San Jose and gave a lecture to the World Affairs Council of Northern California in which he claimed that when Bernanke was the chairman of the Princeton Economics Department, he talked extensively about how the Japanese central bank should have not only gone to 0%, but have done so more quickly and also have injected liquidity into nonbank institutions.

Unfortunately, no recording appears to have been posted online.

I think that I hear the sound of incoming helicopters.

Do they have loudspeakers mounted on them blaring Wagner?

I love the smell of helicopters in the morning.


more appear to be on there way...

Looks like we are about to sign up for acockolips II...


Bush wont respect us in the morning...

I don't think you need helicopters.

What it would probably look like is a loan to a hedge fund or major nonbank mortgage lender, perhaps with existing investors losing most of their investment.

Outside the realm of where I'd like to see our government operating, but perhaps preferable to financial meltdown.

Khebab: A continued depreciation of the dollar will provide a powerful tailwind to the Dow average. If the US dollar had kept its relative value reached against the Cdn dollar in 2002, the Dow average would be 8500 right now. I think many American citizens forget that the Dow average is expressed in rapidly depreciating US dollars.

I don't think the point you're making here holds much water. Yes, the Dow (and the SP500) are expressed in US Dollars, but they represent shares of companies that earn mostly USD as their revenue. Hence when the value of the USD goes down (relative to some other benchmark) the revenues and hence profits earned by the companies in the Dow and S+P goes down. Thus one shouldn't a priori expect the Dow and S+P to hold their value relative to some other benchmark currency (why the CDN for example?) when the USD goes down - they are USD assets.

Now, at the moment, what is obviously happening in the real world is that 1) the USD is going down and 2) the S+P and Dow are going up. And I struggle to explain that, to be honest - it doesn't make alot of sense to me.



Cuchulainn: No. Expressed in US dollars, the revenues of these companies do not arbitrarily decrease when the US dollar loses value (as you state). Revenue earned in US dollars would stay the same and revenue earned in foreign currency would increase (in US currency). Does your personal revenue decrease in US dollars when the dollar depreciates?

Perhaps I was slightly unclear - what I mean was that when the value of the USD goes down - relative to some reference currency - the value of (most of) the revenues earned by US corporates goes down (relative to the same reference currency). This is because most US corporates earn predominantly USD revenues.

I thought it was pretty clear that I was talking in terms of value in some reference currency, but obviously you didn't think it was clear enough.

Hence your comparison of the value of the S+P 500 or Dow in Canadian dollars is not relevant. There is no reason whatsoever to expect the Dow or S+P to retain their value (in some foreign currency) when the USD depreciates against that foreign currency.


The tailwind provided is not actually tailwind. The Dow Plane isn't getting higher.

The Dow Plane only looks like it's flying higher, because the ground we're standing on is actually sinking.

If you relate the Dow average to actual physical commodities, oil, gold, consumer goods, etc., physical things you could actually get at the time for shares in the Dow, the Dow peaked in value and "buying power" back around the year 2000.

Another point: there are valuable US companies that will be bought up by foreign money as the dollar slides- this will help to support the markets (expressed in US dollars).

If the dollar falls by half ... and the Dow doubles ... that is functionally no change, right? The dollar valued assets are worth no more in exchange than they were when the process began ... but there is that nagging problem of the "full faith and credit of the United States" suddenly being worth a whole lot less ...

The Dow hitting 14,000 strikes me like the passengers on the fantail of the Titanic looking at each other and saying "It can't be that cold, now can it?" All of the cheerful talk(and numbers) in the world does not counter atmospheric physics and geology.

when does the dollar sink to such a level that foreign creditors rebel against u.s. dollar assets?

Or should it be "When does the dollar sink to such a level that foreigners can't resist US dollar assets?"

A weak dollar should make US assets attractive to foreign investors. However, a perception of further weakness would make them unattractive.

Actually this can also be looked the other way around: Is the US willing to sell enough real assets to foreigners to support the dollar?

That Post article about DC's CO2 emissions strikes me as somewhat suspect, though I can't quite put a finger on why.

For example, considering that essentially no manufacturing is done in the region, and that the DC region is much like other parts of that Bo-Wash corridor (haven't heard that for a while - Boston-Washington as a single urban stretch), it just doesn't feel right.

DC also has a huge airport.

Re: "Weak dollar could prevent OPEC from new output hike"

Notice how the reasons for lower OPEC production and lower exports are constantly changing?

Yes, I've noticed. This must be the most successful propaganda strategy for lying and cover-up available.

Note that reasons to invade and occupy Iraq have kept changing.

Note that reasons for invading Iran are now changing, as is the initial military strategy to get our toe in the door of that war. Once we are in, we are in.

But OPEC is using the same smokescreen strategy to talk about its lower production and exports.

Do they employ the same public relations company as the USA is using to sell war?

This is a negative side effect of our electronic media-saturated ADD society: people's attention spans are so short that they can't keep track of all the constantly shifting lies.

The Bush Administration has proved this conclusively on a bigger scale than we had previously seen, others have learned from their example...

Beggar, Havent you heard? OPEC now has hired new PR firm...Green_pan & R_ve.

Actually, your guess is not that far off - K Street is open for business globally, and the Carlyle Group's Rolodex is likely up to date with all the information you need. ( http://en.wikipedia.org/wiki/Carlyle_Group ) Unfortunately, as you are merely an American citizen, and not a former president or prime minister, nor a member of any royal family, and as your name doesn't end with 'bin Laden,' they aren't going to be opening any doors are your behalf. To paraphrase a certain modelling industry joke - Carlyle won't even pick up the phone for less than 10 million dollars.

A good link for some of the weapons connections, though a decade old, can be found at http://fas.org/asmp/library/handbook/KStreet.html

Or you can just start reading places like counterpunch.org with a critical eye, or bone up on Das Kapital - not much really changes, except for the details. And after a while, even he details tend to get lost under the corpses, who we never really seem to notice - the dead being anything but squeaky, and certainly not requiring any oil after being greased.

(For the non-American audience - K Street is the area of Washington DC where the lobby firms are located, and there is an expression that the 'squeaky wheel gets the grease/oiled' - however, 'grease' also means to kill someone.)

Two Drudge Report headlines:

John Bolton: Attack Iran, 'remove' Ahmadinejad...

HERSH: Plans for possible air strikes against Revolutionary Guard...

Shifting Targets
The Administration’s plan for Iran.
by Seymour M. Hersh October 8, 2007

In a series of public statements i recent months, President Bush and members of his Administration have redefined the war in Iraq, to a increasing degree, as a strategic battle between the United States and Iran. . .

. . . The shift in targeting reflects three developments. First, the President and his senior advisers have concluded that their campaign to convince the American public that Iran poses an imminent nuclear threat has failed (unlike a similar campaign before the Iraq war), and that as a result there is not enough popular support for a major bombing campaign. The second development is that the White House has come to terms, in private, with the general consensus of the American intelligence community that Iran is at least five years away from obtaining a bomb. And, finally, there has been a growing recognition in Washington and throughout the Middle East that Iran is emerging as the geopolitical winner of the war in Iraq. . . .

. . . The former intelligence official added, “There is a desperate effort by Cheney et al. to bring military action to Iran as soon as possible. Meanwhile, the politicians are saying, ‘You can’t do it, because every Republican is going to be defeated, and we’re only one fact from going over the cliff in Iraq.’ But Cheney doesn’t give a rat’s ass about the Republican worries, and neither does the President.” . . . .

. . . “They’re moving everybody to the Iran desk,” one recently retired C.I.A. official said. “They’re dragging in a lot of analysts and ramping up everything. It’s just like the fall of 2002”—the months before the invasion of Iraq, when the Iraqi Operations Group became the most important in the agency. He added, “The guys now running the Iranian program have limited direct experience with Iran. In the event of an attack, how will the Iranians react? They will react, and the Administration has not thought it all the way through.”

That theme was echoed by Zbigniew Brzezinski, the former national-security adviser, who said that he had heard discussions of the White House’s more limited bombing plans for Iran. Brzezinski said that Iran would likely react to an American attack “by intensifying the conflict in Iraq and also in Afghanistan, their neighbors, and that could draw in Pakistan. We will be stuck in a regional war for twenty years.”

The plan is -- and always has been -- to engage in a war that will last indefinitely.

This Resource War will last at least twenty or thirty years, unless catastrophe weakens the warring parties to the point of being unable to continue the war.

Any notion that the USA will reduce military presence in the Middle East is daydreaming. No one in politics today can achieve that.

The political Establishment is deeply and irreversibly committed to this Resource War.

As noted above, the reasons for carrying out various attacks will change constantly. The strategies employed may be altered to be made more publicly palatable for many people. This makes them an easier political product to sell.

The overall objective and strategy in the Middle East is to "own" the Middle East oil supply in every way possible.

Kissinger alluded to this -- again -- recently in the WaPo, didn't he?

We are also ramping up an Africa Command to "own" the supplies there as well.

Latin America....?

We -- the USA -- are all about war for oil right now.

The overall objective and strategy in the Middle East is to "own" the Middle East oil supply in every way possible.

It's insanity and not even intelligent insanity. It is dumb, incompetent insanity.

We already have as examples:
1. Venezuela, where Chavez broke the corporate control over the oil fields and production has not recovered since.
2. Iraq where production is likely to never recover to pre-invasion levels, much less the fantasy levels projected.
3. Nigeria where a ragtag bunch of revolutionaries are cutting significant percentages from oil production. If the government reacts with a heavy(er) hand, expect oil production to drop even more.

and on and on.
The basic principle seems to be that one might be able to 'control' the oil in terms of taking forceful possession of the land under which it lies, but this very control and the conflicts engendered by it preclude production of the oil, at least to anywhere near what it could be if peace prevailed. I don't think there is a snowball's chance in hell of 'controlling' Iran's oil in any sense.

I don't understand why Kissinger keeps popping up. He's a businessman, not in government since Ford. How he emerged unscathed by Watergate is another mystery; his world is intrigue. It's the same names for the last 30 years. Anyone recall Carter's NSA? Zbigniew Brzeziński. Press rarely finds him, even in Clinton's forays into Bosnia. I guess you need a starlet entourage and quotes of "Power is the ultimate aphrodisiac."

Kissinger has the international law firm in DC with the most and best connections. Paul Bremmer, former head of what it is in Iraq, works for Kissinger. Kissinger rarely travels abroad...because about 27 countries have subpoenas waiting for him.

Yes the same names come back.
Until we put a stake thru the heart

WRT Iran, Peter Galbraith has a great article in the NY Review of Books:


Right now, the US is in the worst possible position. It is identified with the most discredited part of the Iranian opposition and unwanted by the reformers who have the most appeal to Iranians. Many Iranians believe that the US is fomenting violence inside their country, and this becomes a pretext for attacks on US troops in Iraq. And for its pains, the US accomplishes nothing.

It's pretty long, but very informative and well worth a read. I'm also going to order a copy of Trita Parsi's new book
Treacherous Alliance: The Secret Dealings of Israel, Iran, and the United States.

Saw this the other day. Hersch was always right ahead of the curve with Iraq couple years ago, he and Scot Ritter led the credibility factor.

Lately I'm not so sure. Seems he's been crying wolf on Iran too long. Could be that his insights, etc are being muffed by administration turmoil. Hard too say what the administration will try before they relinquish power.

I don't think Hersch has taken a position re what may or may not happen. He's merely reporting what people are saying - and it seems that talk and action is tilting more than ever to a bombing raid. There has got to be some serious dissent in the military and the administration against an attack. It likely has taken, and will take more, time to either convert them to the idea or to remove them from influence.

The main debate now is likely re the timing of an attack.

Perhaps the administration has tried to set up Iraq-style war provocation scams several times, only to have them fall apart. I recall before the invasion of Iraq there were months of speculation about when it would happen, most of it premature. Now the logistical and strategic difficulties are far greater. Most of all, with conventional terror-bombing, there is no certainty. At least Bush knew once he sent troops into Iraq the public would deform its own values to justify any sacrifice in a heroic conventional battle. With troops on the ground, you can create any lie you like, and that's where Bush operates comfortably. There will be none of that in Iran, just that same antsiness we saw during the bombing of Serbia. Strategic bombing is a black box, it always has been. You bomb for month after month and you're still not sure whether you've broken the will of the population to fight. All that before we even get into the consequences.

Seymour Hersh is a very entertaining and exciting writer. He seems to be something of a creative writer though, and this was epitomized in his book, "The Samson Option." I was semi-believing what he wrote in that book until it got to the point where Israel bombed the Saudi nuclear facility with pig carcasses. I would take his war forecasts with a grain of salt.

Just a little thing to be proud of: a student affected by my assignment on peak oil:

Painting A Whole New Future--Without Oil?

A teacher like you cannot be found!

Keep up the good work b3NDZ3la.

Teaching kudos to you b3NDZ3la!

Hey, b3....

Just wanted to give the old thumbs up as well.

BTW -- a teacher friend of mine borrowed my pedicab today. His class was going on a bike ride around a nearby lake. One of his students has a brittle bone problem and cannot ride.

But she did the ride on the pedicab, and he said that she just loved it!

Keep up the good work! Some students catch on when teachers are honest and passionate -- it seems like this student of yours sure did.


Hi b3ndzdLa,

Congratulations! It's a nice article, too.

I just posted (on yesterday's drumbeat http://www.theoildrum.com/node/3034#comment-244518) a couple of references. One is an article in Sunday's LA Times (made page 1) - on how ag schools are hurting for students. This may mean they have more scholarships available, too; I don't know. Also, there are actually a fair number of grants and other opportunities for young persons to check out and/or begin education/work in organic farming. ATTRA is a good site to start with. Sometimes it takes a little hunting, but I was amazed at how much is out there.

The Bloomberg article by David Pauly is an interesting read, but there are things that don't make sense to me.

Right or wrong, oil executives hold back on exploration, insisting that the risk of finding and producing more -- even with crude prices of $80 a barrel and more -- is too great. Weeden's Maxwell says the rule of thumb in the industry today is that $45 a barrel is about the breakeven point.

While Exxon Mobil will spend $21 billion this year on exploration and plant improvements, that's considerably less than it will spend on buying back its shares.

This sounds like oil companies have given up looking for more because it may affect the price. Yet wouldn't any new find have to be HUGE to have any significant long-term impact on price? Can somebody explain to me how that might make sense?

And then there's this:

If oil proves to be a finite commodity, as many analysts say, OPEC eventually will run out, too. The production of one member, Indonesia, already has peaked and Libya's will in about five years, Maxwell says.

IF oil is finite... Is this still a hotly debated issue in financial circles?

But generally the article makes interesting points about the future of IOCs, based on their current behaviour.

Jussi: You misunderstood-the guy is saying that the risk they want to avoid is spending money looking for oil and subsequently not finding the oil they went looking for, thus wasting shareholder's money. No one is worried about finding oil reserves so gigantic they would drop the price of oil-they would love to have such a problem. Re the finite comment, what is interesting is that over the last 2 years, the cornucopians and MSM have moved their position on peak oil a great distance-here is a journalist that is about as ignorant as a human being can be on this subject ("if oil is infinite") and he is sounding the alarm.

I'm sure you're right, the wording deceived me. After all, "the risk of finding more" really does sound like not finding more is preferable, at least to me... But now that you have pointed it out I can see the ambiguity.

Your second point is good as well. Mainstream oil people have assured us over and over that there is plenty more to find... except it turns out there isn't, and now they appear to say so quite explicitly.

Jussi, sorry I should have posted my post on this same article as a reply to yours but I was typing it while you were posting. But several other OPEC nations seems to be at or near their peak production.

Venezuelan production has been dwindling, bit by bit, for several years now. And they are claiming to be producing about half a million barrels per day more than they are actually producing. And as I pointed out below, the UAE is producing at an all time high. I think it is obvious that they are producing flat out.

Algeria, I believe, is producing at peak. At any rate, Algeria like the UAE, is producing at maximum. Iran appears to be in decline. Kuwait may be able to increase production slightly, but not by much. Their largest field has peaked and is in decline.

This third quarter will tell the tale. Clearly some of the OPEC nations will not be able to increase production to their newley alloted quotas. I think this was what Saudi Arabia had in mind when they insisted that the .5 mbd increase be spread out over all 10 nations as a percentage of what they actually produced in August of 07. I think they are breaking the news gently to the world. And that word is: "Don't count on OPEC to keep world oil production increasing for the next few years. OPEC is either at or very near peak. And that news must be let out piece by piece in order not to cause worldwide panic.

Ron Patterson

There are many vying to replace Yergin

"You take out all the fluff and the fear and the speculation, and $35 to $40 is where the price of crude ultimately belongs," he said.
Gheit said no.

"Investors reward the rate of change, not the level of profit," he said. "No one thinks oil prices can triple again in the next five years."


It's no wonder no one wants to discuss peak, when they think this nonsense will fill their tanks.

IF oil is finite... Is this still a hotly debated issue in financial circles?

Sure it's debatable. After all, we have abiotic oil. All we have to do to find it is dig a little deeper.

Peak oil is for wimps. Ditto for global warming, which (as Rush Limbaugh has explained) is a myth concocted by America-hating environwackos and liberal scientists who are just trying to milk the government for more research grants.

Everything will be fine. Have faith in God, President Bush and Fox News. For inspiration, read My Pet Goat. Smile, be happy. Remember the president's advice after 9/11: "Go shopping."

Right or wrong, oil executives hold back on exploration, insisting that the risk of finding and producing more -- even with crude prices of $80 a barrel and more -- is too great. Weeden's Maxwell says the rule of thumb in the industry today is that $45 a barrel is about the breakeven point.

.... sarconol alert....
Why don't oil companies get into a more lucrative trade that has lower risks, like banks have done in laundering drug money.... sarconol off

The article above, Slow, Steady Liquidation of the World Oil Industry has one very interesting comment:

Daily production outside of OPEC already has peaked in Mexico, Russia and the North Sea fields owned by the U.K. and Norway, analyst Maxwell says, and China's output will peak in about 2010.

If it is true that Russia has peaked then the party is indeed over. Since the world crude production peaked, so far anyway, in May of 2005 Russian production has increased by 573,000 barrels per day, the most of any nation.

World crude production, since May 05, as of June 07 is down 1,475,000 barrels per day. But without Russia's increase the decline would have been 2,048,000. Russia, along with production increases from Angola and Azerbaijan, has kept peak oil from being blatantly obvious to the world with increases of 510,000 and 484,000 bpd respectively. Without increases from these three nations world crude production would be down over three million barrels per day since May of 05.

Canada was fourth in increased crude production since May 05 with an increase of 220,000 bpd. China, whom they say will peak in 2010, was fifth with an increase of 215,000 since May 05. And sixth was the UAE, up 208,000 bpd since May 05 and is producing crude, despite so-called OPEC cuts, at an all time high for the United Arab Emirates.

Ron Patterson

Several of the quotes from this article are attributed to Charles Maxwell. Mr. Maxwell is a keen observer of the oil scene and does not shoot from the hip. He draws from a wealth of experience. About a year ago he repeated his warning about the changing oil paradigm and the new energy trend that is not a cycle, but a function of geology, geopolitics and miscalculations (e.g. ExxonMobile and other majors eyes wide shut attitude about the growing oil storm). This classic piece complements well what is referenced in this article and supports the illuminating analyses that has been performed here by many exceptionally talented and selfless contributors. Kudos to the The Oil Drum.

Barron's Oil Prices: A Pause, Then Up
by Sandra Ward Dow Jones Newswires Monday, October 16, 2006

Oct 16, 2006 (Dow Jones Newswiresfrom Barron's)
Interview with Charles Maxwell Senior oil analyst, Weeden & Co.

You want an independent and informed appraisal of the outlook for energy? Then Charley Maxwell's your man. For almost 50 years, Maxwell in one way or another has been involved in the oil and gas industry: from when he started working for Mobil in 1957 to when he moved to Wall Street in 1968 and was routinely lauded as the No. 1

oil analyst throughout the 'Seventies and 'Eighties. For more than 20years, he's belonged to an elite group of industry executives and OPEC members that meets at Oxford University twice a year to assess trends. We dialed him up last week at Weeden & Co., the institutional trading company in Greenwich, Conn., that he's called home since 1999. Here are Maxwell's thoughts on the current energy scene.
Barron's: Did somebody say energy crisis?

Maxwell: We often say there are not a lot of advantages to getting old except that we have seen it all before. After a big move upward, there is always some counterreaction. We saw it during the 1973-74 crisis, in the '79 to '86 crisis and then in the two wars with Iraq. These crises were manipulations of the oil market by human beings. War, economic problems, but particularly military considerations, were creating, as they say, facts on the ground that worked into shortages that were real, but they were shortages created by the actions of man not nature. It is terribly important to differentiate between past periods and now.

Q: How is that?

A: There are four huge impediments to expanding production in a world in which we need to do this. Hubbert's Peak, the theory that says oil production will peak on a global basis, is a natural impediment. It is not yet the predominant factor but as these crises continue it is the one growing exponentially and by, say, 2015 or 2020 I expect it will dominate the outlook.

Q: What then is the biggest problem now?

A: About three-quarters of the world's production of oil today is lifted by national oil companies. Companies like Saudi Aramco, Petrobras, the Iran national oil company, the Iraq national oil company, the national companies that operate in Algeria and Libya, produce conservatively 75% of the world supply. Most of them were nationalized in the '70s and early '80s and they have real structural problems today. They bring in a lot of money but most of it goes to support the national Treasuries and the various political constituencies that are in favor in the various countries, whether it's the army or a host of other bureaucratic ministries. In the end, in the political battle for budgetary support the national oil companies tend to be a constituency with little or no political influence. All in all, the national oil companies have been shortchanged and held on a poverty diet for a long time.

Q: What are the other structural challenges they face?

A: What came out of the 1986-1987 collapse in prices was a huge overcapacity of about 20% in the world's oil production system. The international oil companies began to adjust their capital spending quickly to adapt to that and they more or less serviced a 1% increase in demand each year. The capacity surplus began to come down naturally. We have now had 20 years and taken that surplus down to about 2% to 3%. For efficiency in the energy industry, given the weather factors and political factors and so on, we need something in the 7% to 8% range of excess capacity in order to cover the mountains and the plains of demand and weather and political events. But when the surplus got down to those levels between 1997 and 2000, the companies didn't add to capacity at a fast enough rate.

Q: Bring this back to your point about the national oil companies.

A: The national oil companies didn't react at all. At least the big international oil companies were producing the 1% to 2% each year that was required, but the national oil companies just tooled along on the backs of the surplus while it got smaller and smaller. The big international oil companies saw all this and didn't prepare for possible future tightening. One reason the NOCs, as the national oil companies are called, didn't respond was lack of money. Also, the NOCs, because of political patronage, have a shortage of skilled workers and experienced managers. Only Saudi Aramco is quite efficient and they are doubling and redoubling their efforts to find oil in the peninsula. They've gone from 10 rigs to 100 rigs and are headed to 125 rigs. They are modern and up to date. They've got a core of around 3,000 expatriates that are well paid and doing a helluva job. But this is unusual.

Q: Where does this lead?

A: I don't know how we get around the problem of the NOCs. They control so much of the world's production and they are bloody helpless. They don't have enough money and they don't have prestige and they don't have professionalism. These are big factors, any one of which would have been a strike against them and with all three it is a difficult situation.

The multinationals have the money but they haven't been that willing to spend it.

That's another big issue: the problem for the oil companies is coming to grips with the size of the production problem.

Q: Can you elaborate on that.

A: The oil companies, as a group, seem to believe the future production potential of the world is very large, very wide open and yet their production numbers don't indicate this is so. ExxonMobil (ticker: XOM) took out an advertisement earlier this year saying oil is not peaking, nor is there any peak visible that's going to impinge on production in the next 20 to 30 years and claims there is no practical limit to the oil it can find and there are new supplies that are developable. They are not alone in this thinking, though Dave O'Reilly [Chairman and CEO] of Chevron (CVX) has come around. But John Browne [CEO] of BP [INTV-ANS](BP)[INTV-ANS] is in the Exxon camp as is industry consultant Cambridge Energy Research Associates.

Q: The technology-will-save-the-day camp.

A: I'm not downplaying technology at all. But technology will save General Motors, too, if you believe that. Technology can't do everything. I'll give you an example of the vision of the oil companies.

Q: Go for it.

A: As we understand it, Exxon is not taking on any leases for deep-water drilling after 2008. They haven't leased anything. If you think deep-water leases are going to be very important, and the recent big discovery in the Gulf of Mexico suggests they will be, you would have contracted for the future use of rigs. But if you think the deep-water leases aren't going to be important because the oil found will be more expensive than the common garden-variety Texas oil from 6,000 foot down, and that you will have lots of oil coming from sources like that then you don't need these high-cost leases down the road. On the other hand, many major oil companies have taken these rigs to 2010 and 2012 and 2014 and are pre-empting Exxon's ability to get these rigs. Exxon is putting itself at a huge disadvantage if there should be a need for this type of deep oil. I find that remarkable.

Q: What's the gamble there?

A: The gamble is they won't need the deep-water leases because there will be big and lush supplies of oil spilling around at $30 a barrel and people will relinquish the rig contracts they've signed. Then Exxon would have the choice of picking up some of these contracts at 50 cents on the dollar, or maybe they won't need to pick them up at all. I think they are dead wrong.

Exxon has gone out of its way to take out advertising and make speeches saying there'll be plenty of future supplies. It verges on the irresponsible because it says to the government there is no problem. It says to the media there is no problem. It says to the public there is no problem. So we are now likely to march with fife and drum, banners flying, into the maw of destruction without so much as a sideways glance because Exxon tells us that the problem is resolved.

Q: It has been suggested they benefit from talking down the price of oil.

A: There is all kind of speculation on that. Another obvious thought would be if they wanted to buy, say, Yukos, which they had hopes of two years ago, they certainly wouldn't want to indicate they thought that the price of oil was going to go much higher down the road because of shortages. Some people think Exxon is cynical. I don't. I really think they believe what they say. It's a lack of vision. Last year, they spent more money on share repurchases and dividends than they did on exploring and developing oil reserves. Most big oil companies tend to be backward looking. They were slow, for instance, in seeing that sulfur standards for gasoline and diesel would be required in this country and getting their refineries set up to meet them. That's why we've had these advances in gasoline prices in the summers of 2005 and 2006 -- fear that the refining system in America and in Europe would be unable to handle these new standards. Oil companies will find it difficult to solve a tightening oil production problem if they don't recognize that it is tightening around their necks.

Q: That's the third impediment of four. What's left?

A: We as Americans think that because we want more oil these other countries should produce more oil. But there are increasing issues, brought on not just by President Bush and his policies, but also by a feeling that the developed world is imperialistic by nature and is intent on leaving the undeveloped world without resources. All these claims are greatly overdone, but nevertheless, it is a fact that if you live in Iraq you believe the oil companies, or the Americans, are there to get the oil. My point is the people in the Middle East are sophisticated enough to understand this could be Bedouin-to-Bedouin in Saudi Arabia in five generations.

Q: What do you mean by that?

A: Well two generations ago, many of these people were Bedouins. The majority of people working in the petroleum industry in Saudi Arabia today -- the supervisors and the drillers and so on -- had grandparents who were herding sheep or camels. They fear their great grandchildren could end up doing the same.

Q: Because?

A: Because the oil will be all gone. The image we have in this country of tumbleweeds running down the streets of abandoned Western mining towns is now beginning to stalk the public consciousness in the Middle East. About three months ago, they realized the second largest oil field in the world, Burgan in Kuwait, had peaked. They didn't expect it and they couldn't believe it. The No. 1 field in the world, the Ghawar, is pretty close to peaking if it hasn't already. These are people who have long believed that Allah was bestowing these oil gifts on them in perpetuity and there would be infinite production. The concept of Hubbert's Peak has only penetrated the Middle East in the last five years in the same way that it has only penetrated Europe in the last five years.

The non-OPEC world, 175 countries, of which only 30 produce meaningful amounts of oil, will peak around 2010. Then we become dependent on OPEC for all future growth in barrel needs and that should put us in a pretty difficult situation and the price of oil will begin to rise a little faster.

Q: Are the non-OPEC countries that close to peaking?

A: Eleven of the non-OPEC countries have peaked already, representing 34.3% of non-OPEC production. There are three on the cusp of peaking, and one of them is Mexico which may have already peaked and represents 7.9% of production. China will probably peak this year, or next, or in 2008. But they are at flat production levels now so it doesn't matter and they contribute 8.5%. More than 50% of the non-OPEC production will therefore have peaked. There are all kinds of issues as to when the whole world peaks. I use a range from 2015 to 2020, which depends on when the rest of the world wakes up to the need to conserve, which could delay the peak.

Q: What about a peak in gas production?

A: That's much, much further out. There is a lot of what they call stranded natural gas, big discoveries that are not tied to any local needs, or any local distribution system, and they will be tapped and brought in, in liquefied form to our country and to Europe and to Asia. The peak of natural gas now roughly looks like it will be in 2035 to 2040. There is a finite supply that is being drawn down, but it hasn't been exploited nearly as much as oil. The run-up in natural gas prices in the past year or so was because production in this country has peaked, and natural gas is more expensive and difficult to move from one continent to another, and we don't really have the means to do that yet. We are getting there and the big liquefied natural gas expansion is starting, and soon we are going to have interchangeability between continents. When one continent is short we can move gas there, which will keep prices down.

Q: Where are oil prices headed?

A: We are now getting a reaction to the higher oil prices. It is translating into slower economic growth and, of course, it is allied with a rise in interest rates. Don't think that it is just that rising oil prices equal lower economic growth. It is a question of rising oil prices and less liquidity and higher rates that's a triple threat. The bottom could be in the high 40s, though that wouldn't be sustainable. On a yearly average, we will stay in the 60s, but we'll spend a lot of time in the 50s. Then they'll start up again in 2008-2009 and go up for some time. When we get to 130 or 150 there will be another pullback.

Q: How do you get to those numbers?

A: In 1930 we found 10 billion new barrels of oil in the world and we used 1.5 billion. We reached a peak in 1964 when we found 48 billion barrels and used approximately 12 billion. In 1988, we found 23 billion barrels and used 23 billion barrels. That was the crossover when we started finding less than we were using. In 2005, we found about 5 billion to 6 billion and we used 30 billion. These numbers are just overwhelming.

Q: How are you advising people when it comes to the oil stocks?

A: You want to buy companies that have long- life reserves and are developing them, it's as simple as that. The average oil company, because they are all in the non-OPEC world, will by definition peak around 2010 or thereabouts. I estimate Exxon will peak in 2011. BP will peak in 2012. Total (TOT) in 2012. ConocoPhillips (COP) in 2013. Marathon Oil (MRO) in 2009. Royal Dutch (RDS-B) in 2009 and Hess (HES) in 2010. But a company like Suncor Energy (SU), which operates in the Canadian tar sands, will peak around 2045. It is a completely different world. EnCana (ECA), the big Canadian gas and tar sands producer, will peak around 2020. Canadian Natural Resources (CNQ) is another. I also like Nexen (NXY), another Canadian tar sands producer, and Lukoil (LUKOY) of Russia. The only one I'm recommending at the moment is EnCana because it has a large component of natural gas. The gas market is at a bottom now, whereas I see the oil market bottoming in the spring or summer of 2007, or even early 2008 if we have a recession.

Q: Why Lukoil?

A: Lukoil isn't owned by the Russian government. They've adopted Western accounting standards because they want to be listed on the New York Stock Exchange and raise capital and become a regular oil company. Lukoil has about 20 billion barrels of reserves and Exxon is No. 1 in the world with 21 billion. But the capitalization of Lukoil is one-sixth that of Exxon. So you are getting a huge advantage in oil barrels per share for a lot less money.

Thanks, Charley.

ParadigmShifter...Thank you for a most excellent and informative post.

Hubbert Linearization Analysis of the Top Three Net Oil Exporters
Posted by Prof. Goose on January 27, 2006
(ED: This is a guest post by westexas.)

Following is one of my comments in the early 2006 discussion thread:

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?

Russia Cuts Loadings For October Ahead of Anticipated Tax Hike
Monday, October 1, 2007

Russia is cutting back crude oil exports ahead of another tax increase in October while also shifting flows away from its flagship Baltic outlet, Primorsk. Russian oil pipeline monopoly Transneft has penciled in seaborne exports of 2.964 million barrels per day (12.534 million tons) in October, down in daily terms from 3.043 million b/d (12.455 million metric tons) in September.

Note that Reuters put Q3 2007 Russian crude oil exports to non-FSU countries down about 9% from Q3 2006.

Without increases from these three nations world crude production would be down over three million barrels per day since May of 05.

Exactly. Good point. This extraordinary growth in a couple of countries cannot continue for ever. The underlying decline rate in crude oil production - at country level - is somewhere between -3% and -4%. Once the growing countries go flat, that'll be the slope.

Anyone see the 2:30 commercial from Chevron last night on 60 Minutes (elsewhere?). The next "shot" in the "don't blame us becuase we have a problem" debate as well as an appeal to the "can do" attitude.

Nice music.

go to www.chevron.com at click on "Human Energy"

I do blame Chevron-Texaco, I do blame Exxon-Mobil, I do blame the Big Three auto makers. I blame the CONgreffs, I blame the past five or six presidents, I blame OPEC, I blame the bankers. I blame the makers of jet skis and leaf blowers and I blame Miss Budweiser too. This will be a fun show.

I still blame Reagan.

I think blaming the actor for simply following the script is very ungracious of you.

And look what happened when Reagan ad-libbed -
"My fellow Americans, I'm pleased to tell you today that I've signed legislation that will outlaw Russia forever. We begin bombing in five minutes."

Luckily, Reagan was never given a director's chair.

Idiots abound and there is plenty of blame to go around.

I still blame Carter. Although apparently much revered by many on this site, Saint Jimmy of Plains cried "wolf" [not "I see a wolf on the horizon" which would have been appropriate] and did great damage to the credibility of those who were calling for relatively near term [15 to 40 year] peak oil back in those days.

No single raindrop believes it is to blame for the flood.

No-one here is as innocent as they would like to believe so they can sleep at night.

Quit placing blame, look in the mirror, swallow your pride, and take some action.

I just viewed the anthem untapped at Chevron.

Great image at the very end of the video.

Did you catch it?

Recipient of AA, Alberta Advantage

Are you referring to the "great tottering backwards " at the end? Or the mountaintop scene?

I just looked at the press release and apparently it was only shown on 60-Minutes last night. From the press release it's a next step from the "Will You Join Us?" campaign.

I give Chevron a lot of credit.

At least they are coming forward and trying to start a sensible dialog rather than burying their head in the sand like Exxon has been doing. Chevron has the most visible efforts of any US oil company.

I think that Exxon is slowly coming around though . . .

For many months now, Chevron has been running a sponsorship announcement on NPR News Hour. It is about Peak Oil, but they don't use the words Peal Oil. The words, as best I can remember are, "Some say that by 2020 we will have used half the world's oil. Others say we already have used half the oil. ..." The visuals are an hilarious take on determining whether half the oil is gone. Highly recommended for a good laugh.

The article PEAK OIL 10-20 YEARS AWAY, CLAIMS WORLD ENERGY COUNCIL contains the same old myths.

The Middle East remains the principal location of oil reserves with 61% of the global total, followed by Africa with 11%, South America and Europe (including the whole of the Russian Federation) with 8% each and North America at just under 5%.

But the Middle East does not have 61% of the global total. They have less than half that. We know that Kuwait has only one fourth to one third of the 102 billion barrels they claim to have. And the same is likely true for the rest of the Middle East. And when the world realizes that those vast Middle East reserves have been vastly overstated, that news will explode like a bombshell upon the financial world.

Ron Patterson

Read again ASPO Newsletter #46 from October 2004:

OPEC's reserves are overstated by 80%.

And here is an interesting interview the Australian ABC TV had with Abdul B. Atwan.

Different Middle East by 2020


[Abdullah al-Badri, stated after the organization's recent ministerial meeting that "the price of $80 is high and is not supported by the foundations of the market." This means that OPEC is uncomfortable with this high price]

They've said the exact same thing, in mostly verbatim language for the last 3 years: prices are high and don't reflect market fundamentals. But if the last half of the statement isn't sufficient to justify their non-action (okay, relative non-action: they did put back 500k of the 1.7m of production they took away earlier), they always follow up with how the prices are caused by alternatives, lack of demand security, national fuel taxes, refinery bottlenecks, etc., etc. Who are they trying to convince?

Putin says could head future government as premier

Russian President Vladimir Putin said on Monday that suggestions he could head a future government as a prime minister were "realistic".

Speaking at a congress of the main pro-Kremlin force, United Russian, Putin also announced he would head the party's list for December's parliamentary elections, guaranteeing him a place in the Duma (lower house of parliament).

Putin's term as president ends next year and he is barred from running for a third consecutive term by the constitution

And then run for president again in 2012. Putin plans to keep his hands firm on oil, gas, and weapons systems.

I've been expecting him to replace Alexei Miller as the CEO of Gazprom. Surely that's one of the most powerful positions in Russia, and perhaps Europe.

After all, there has never been, nor will there ever be, another company like Gazprom...

Yesterday while reading the Milkman thread over in one of the other TOD headliners, I got to thinking and posted part of an Essay to my blog. While writing that I called my brother who makes between himself and his wife 145,000 $US a year. Which kinda blew me away just thinking about that one. Then reading today's headlines here, I can see where people are getting their wires crossed.

My brother and I talked mostly about how rosy the future was going to be. I let him tell me the rosy future and I just listened, throwing in a point here or there, but generally speaking his point of view is ROSY Future AHEAD.

10 to 20 years till the Peak. OPEC knowing something is going to give, but they aren't saying they will Pump more Crude, they are fine with the $80 or so price of the stuff they have pumped. Was it not just a few months or so ago when they said the same thing about $70 oil? Ethanol is so plentiful that there is a risk of a Glut of the stuff and prices could crash, because we don't have the users for it yet. Food Prices going up, Harvests in some countries not what they expected, generally gloomy food futures and all just ready to be read in the day's headlines.

My bet is that Gail's post of her 3rd part of essay is more than timely and we are seeing the first fruits of the Peak that happened a while ago, and that we are on the back side of the mountain going down a bit.

"Ya'll be careful now, that last bit was steep, but there is big ole nasty drop off just beyond those trees, it sneaks up on ya, and you will fall to your deaths if'n ya don't watch it."

Charles E. Owens Jr.
Write in Candidate for US President 2008

This is a link to Part 3 -What's Ahead? that Charles E. Owens refers to. In it, I talk about the current credit bubble collapsing, and one scenario of possible consequences.

OPEC quotas?

Does anyone have the new OPEC quotas, or a link to them? They used to be here:

But this link no longer works.

Thanks a million if anyone has them and can post them.

Ron Patterson

Try here.

I have linked to an excellent five page essay at ATOL entitled: 'Credit Bubble Bulletin' ... 'Clash Of The Paradigms'... Below I have linked to some Q & A from the seminar prior to the writing of this essay. I have excerpted a couple of comments and in order to save bandwidth I have eliminated the answers to the questions but they are available if you wish to visit the link, definitely worth your while.


...snip...'Currency Watch
September 25 - Financial Times (Krishna Guha, Eoin Callan and John Authers): “The dollar closed at a record low on Tuesday after data showed US consumer confidence fell and the overhang of unsold homes grew. The figures intensified concerns that the strain in the credit markets was affecting the economy, although the severity is hard to gauge. The reports also made investors more confident that the Federal Reserve – which cut interest rates by 50 basis points last week – will reduce rates further to offset economic weakness. Bond markets rallied with the yield on the two-year note falling 5 basis points to 3.99 per cent. With yields falling, the dollar’s appeal diminished and measured against an index of major currencies, it finished at its lowest level in New York trading since the benchmark was initiated in 1973.”...snip...

'Commodities Watch
September 28 – Bloomberg (Millie Munshi): “Commodities headed for the biggest monthly gain in 32 years, led by wheat, crude oil and gold, as the dollar’s slump enhanced the appeal of energy, grains and precious metals as a hedge against inflation. The 19-commodity Reuters/Jefferies CRB Index was up 8.7% this month, the most since July 1975. Wheat climbed to a record in September amid a global grain shortfall, boosting corn and soybeans. Oil also hit a record, and gold reached a 27-year high. The Federal Reserve cut borrowing costs to bolster the U.S. economy, sending the dollar tumbling.”...snip...

...snip...'The request would bring total US military spending for fiscal 2008, which begins in October, to $671bn. If approved, the budget would equate to spending almost $21,300 a second and would rank the Pentagon ahead of the Dutch economy, the 16th largest in the world, in terms of size."

Answers to questions below are to be found on page 5 of the essay at ATOL...

Question: For starters, why don’t you provide us a framework for the analysis behind your provocative title, “The End Game for the Credit Bubble.”?

Question: Can you provide a brief explanation of “Bubble Economies,” “Credit Bubbles” and some of your theory behind these concepts?

Question: You have discussed in the past a concept that you refer to as “The alchemy of Wall Street finance.” Can you describe it for us and relate it to our current environment?

Question: So where are we today, and what are the ramifications for the current economy?

Question: There’s a lot of talk these days about the GSEs – their roles in market excess, previous financial crises, and the potential for GSE liquidity to come to the market’s rescue once again. What’s your view on these matters?

Question: So, it is your contention that the current crisis marks a major inflection point for the Credit system?

Question: Can you wrap thing up with some summary comments?

The Kunstler article is a great read (as always) but the situation is that guys like Romney are not stupid, they are very very sharp. The problem is they have all been purchased (with notable exceptions like Ron Paul). What is good for the future of the USA is way down the priority list (one can see how obvious this is in the latest pronouncements from Hillary). Kunstler can talk openly about what would be the best choices for the country as a whole because he is not a viable candidate for President. If he was, he would quickly do as he is told just like every other candidate (IMHO).

Hillary Prods Bush to Go After Iran

So let me see if I’ve got this right: Hillary Clinton, the Democratic frontrunner for the presidential nomination, is demanding that George W. Bush take a more belligerent posture toward Iran.

In her view – and that of 75 other members of the U.S. Senate – President Bush hasn’t been aggressive or hasty enough in designating a large part of the Iranian military, the Revolutionary Guards, as an international terrorist organization.

The Senate resolution, approved on Sept. 26, recounts allegations that elements of Iran’s Revolutionary Guards have supplied Iraqi Shiite militias with “explosively formed penetrator” bombs that have shattered U.S. armored vehicles and killed American troops.

In response, the Senate resolution calls on President Bush to list the Revolutionary Guards as “specially designated global terrorists.” In opposing the resolution, Sen. James Webb, D-Virginia, warned that the move could be tantamount to a declaration of war.

Bush was always a joke- Hillary is more of a disappointment. Power can seduce anyone (obviously).

I'm going to write in Frank Zappa if Hillary gets the Democratic nomination. We need a lion in 2008, not a mangy cat used to digging scraps out of corporate dumpsters. That applies to all of the Democratic front runners - Edwards' rhetoric comes closest to what needs to be done, but it will take a flood tide to clean the Aegean stables inside the beltway.

Oh ... look ... tide is rising :-)


It's only a matter of time before the Canadians are added to the "Axis of Evil" list, with the Royal Canadian Mounted Police designated as "global terrorists."



I do not know how to take your post. Either it is your dumbest post ever - or, you are trying some satire on these kooks. I guess I'll go with the satire, unless you say otherwise.

jbunt -

If you don't immediately recognize this as a good-natured spoof, then either you need new batteries in your sarcasm detector, or you irony meter is out of calibration.

"death to America, eh. Have a nice day."

Not necessary...the US has managed to schnook Canada by way of legislation into surrendering its resources without a shot (nafta).

Yay! Someone found a day and half worth of oil in Austrailia! (drumbeat above)

Yep, and they are going to sell it for somewhere around 11 cents US, per cup.

Wow! 120 million barrels - the find of the century, worth being mentioned even on the Schlumberger web site.

This time they're gonna be prudent and sell it as grease, not burn it in motors :-)

Ah, but its also a seven billion euro asset that is likely to double in value over the near term.

(note my new commitment to stating oil value in euros ... 'cause the dollar is dead)

now , now,

nations have been 'democratised' for stating such treason...

120 million bbls eh?

Puddle sucking is becoming the norm.

Alan Greenspan was interviewed on Britain's Channel 4 news tonight. Towards the end of the interview he says 'now it's very evident that the dollar is losing part of its hegemony, and the euro is coming up...'

See: http://www.channel4.com/news/articles/business_money/alan+greenspan+the+...

Green utopians are even more excited about getting steam from granite beneath that same sedimentary basin http://www.geodynamics.com.au/IRM/content/home.html
Don't expect to see either oil or steampower for at least a decade. By then we could be grateful for anything.

Not sure if this was discussed before:

One Molecule Could Cure Our Addiction to Oil


In fact, about two-thirds of what we throw into our landfills today contains cellulose and thus potential fuel. Better still: Cellulosic ethanol yields roughly 80 percent more energy than is required to grow and convert it.

Getting energy out of stuff we'd normally trash is a fine thing, but how do they calculate an EROI of 1.8? I would think it would be far too hard to tease that information out when the feedstock comes from a complex thing like a waste stream.

Meanwhile, you do not need a license to be a entreprenuer.

Building indoor climate (85 F)controlled waterparks is the new growth industry. Note that the hotels cannot survive on their own, the waterparks cannot survive on their own, but somehow synergy kicks in when they are together.
Or is it because of cheap money and cheap energy?

Targeting the industrial/agricultural waste stream may be an important part of any future energy strategy. However this article is wildly optimistic, given the need to replace 40 million barrels a day within 20 years or so.

Another possibility is bio-butanol, which can be made from sugar beets and similar crops, and blended with gasoline or diesel more easily than ethanol.

As the pattern becomes more intricate and subtle, being swept along is no longer enough.

6 die from brain-eating amoeba in lakes

PHOENIX - It sounds like science fiction but it's true: A killer amoeba living in lakes enters the body through the nose and attacks the brain where it feeds until you die.

Even though encounters with the microscopic bug are extraordinarily rare, it's killed six boys and young men this year. The spike in cases has health officials concerned, and they are predicting more cases in the future.

"This is definitely something we need to track," said Michael Beach, a specialist in recreational waterborne illnesses for the Centers for Disease Control and Prevention.

"This is a heat-loving amoeba. As water temperatures go up, it does better," Beach said. "In future decades, as temperatures rise, we'd expect to see more cases."

Leanan, is it mere coincidence, or are you foreshadowing a brain-eating amoeba in our modern waterparks?

From the waterpark musing:

That's why it helps to have a nearby attraction like an amusement park, a ski resort, a natural wonder -- or even a casino.

Natural wonder or a casino? 6 of one, half dozen of another! Arggh

Cheap money, cheap energy and cheap chlorine

Nasty. I do remember from 30 years ago that my brother-in-law talked about being able to culture amoebas from most sink drains that would cause amoebic meningoencephalitis. (spelling a guess)

The future beckons with upraised digit.

Sorry if this is considered off-thread BUT there was a posting here about a public source/declassified study on the likely damage to Iran when the US attacks it. IIRC, it was about a 90+ page report in a pdf file. About a couple of weeks ago? Sorry I forgot the author.

With the neo-cons beating their war drums ever louder, it would be useful to get some realization of how bad this is going to be.

Flavius Aetius

Excuse me Flavius Aetius

.....study on the likely damage to Iran when the US attacks it.

There will be no attack on Iran – its all empty threats and hot air (period)

One thing is to feel/believe someone deserves a serious round of spanking – another thing is to spank yourself by the factor of 10 in actually doing so …

And finally Iran did nothing wrong apart from stupid rhetoric’s (agree) from a narrow-minded leader , but lets take one step back …. Concerning stupid rhetoric’s …. Ehhh …what’s his name again.. …war monger ..No… ehh Bush something..

Are you willing to bet money on Iran not being attacked, Paal? I am sure there are people who would take you up on that bet and with this administration, as irrationally as it has behaved thus far, that is not a bet that I would make today.

"The greatest shortcoming of the human race is our inability to understand the exponential function." -- Dr. Albert Bartlett
Into the Grey Zone

I'll bet 1$ just for the thrill of it ...

Doesn’t the US have some experimentations on preemptive attacks from recent years .. ? I’d say Iraq was 100 times better off with the bastard Saddam than now.

When I try GWB's shoes I feel stupid, so I'm out of them … so should he ;-)

My point is – don’t we(they) learn from our faults ?
And isn’t there a Democrats majority which can refuse such an action?

"My point is – don’t we(they) learn from our faults?
And isn’t there a Democrats majority which can refuse such an action?"

No, and no. You really don't understand the situation Paal - the game has changed far beyond what you can imagine using tests of reasonableness, or the logic of decades past.

But you understand Twilight?
Well, then we will have to enter the waiting game and see!
BTW do you have a certain date we should focus on..?

My money is on Boy George and that crazy Air Force general bomb, bomb, bomb, bomb, bombing Iran before Jan. '09.

Sorry, Paal, but you're dead wrong on this one. The United States won't attack Iran, but the Bush administration will. Our spineless Democrats have the tools necessary to stop one war of choice but instead let us stagger towards another one.

I do agree about spanking - Leahy holding Bush whilst Waxman wields the whip is the scenario I like best.

While this is interesting, that isn't the report I was trying to find.

As a US citizen, in view of the following facts, what would you expect of your President and administration:

Petroleum is the life blood of the US economy,
The US is near the top in per capita petroleum consumption,
The US imports over 60% of the petroleum it uses,
The US has 5% of the World's population,
The US uses 30% of the World's exported petroleum.

Would you consider it his duty to try and secure access to petroleum supplies for the country and, if need be, by use of force if it looked like access would be compromised?

I'd say that might sell with much of the population, but its totally short sighted. Why is petroleum harder to get? Because we've just passed peak oil and the following clutch of effects are inevitable?

So, having restated the problem its first wrong to go about trying to steal from others, as we're learning the hard way in Iraq, and its plain stupid to try and steal something to support a way of existing that isn't going to last much longer when the effort to steal could be applied to the effort to build something usable going forward.

Makes too darned much sense, doesn't it? No political career for me ...

Hank: There is no way you could possibly believe such nonsense. Their boy Saddam was willing to provide all the oil the USA needed at market prices. "Secure access"-what a laugh. No wonder FOX is so successful.

Did I miss a year? Its coming up as first of October 2008

That was weird.

Here is another first.


water will crawl up/out of its beaker and meet up with an opposite beaker (whose water has also climbed up and over (cathode/anode) at high voltage. The water forms a floating bridge.

More arctic meltdown:


apologies if its a repeat