Energy and Environment News Updates (and an open thread as Tapis JUST HIT $100!--see comments!)

Hi All,

I thought I'd post this here as the dumbeat is getting a bit stale.

Tapis has just hit US$100.13 at 12:20 (Brisbane time)

Justin in Brisi

I think the oil supply over the next 6-8 months will tell us a lot. No way at these prices people will be holding back regardless of what they say.

I've been checking the futures chain lately. Looking for contango while prices are rising. It looks like it's here. There is backwardation until September 2010 then starting November 2010 the future prices start rising. I've been watching for this because I feel it means that people in the energy and finance world are starting to clue in. It will be interesting to see if this pattern persists.

check it out here

Tim Morrison

Peak oil, global warming, and economic collapse are not the problems, they are the result of the problem. The problem is a collective action problem and an inability to make good long term plans.

"Our ignorance is not so vast as our failure to use what we know." -- M. King Hubbert

I think we're f---ed

I'm at home sipping the ONLY reasonable ethanol made from corn (single-barrel bourbon) -

Just got back from a lecture at UCLA given by one of the top fusion experts in the country. Title "Where in the world can we find clean, safe, long-lasting and economical energy sources for the 21st Century and beyond"

after a rather well-done presentation on the peaking of oil, nat. gas and coal, a brief discussion of renewable sources - it was on to his fantasy land - the answer to the title? H3 Fusion

Fusion that doesn't exist yet, based on an energy source that doesn't occur on earth naturally (and is only here based on the decay of tritium in tiny uber-expensive amounts)

he reminded me of the physicist, chemist and economist on the desert island joke - really, his solution was let's assume we have a working fusion reactor, and we are mining H3 (I know that should be subscript I don't know how to do that) from the MOON - that's right folks, there are millions of tons of H3 on the MOON - and we can just mine it from the regalith, ship it back to earth and fire it up in non-existent fusion reactors and we are SAVED!

he also praised LWBR's (light water breeder reactors) - but really couldn't answer my question about why they don't exist in the US if they are so useful

I spoke to another (UCLA-based) fusion prof after - he is less sanguine about the future - he thinks that fusion reactors are awfully expensive and complex (shades of Tainter) - and thinks we won't be able to sustain the development of them as things get bad...

he asked me how long I though LA would last as a city without cars - and I really didn't have an answer other than I have looked at orchards in Paonia, CO - still relatively cheap compared to homes in LA

....depressing lecture, I was hoping for the can opener to wash ashore during the talk...

I'm here in LA. I would have liked to have gone to this seminar, but didn't hear about it. If you don't mind, what was your source for the info on the seminar?

Re LA without cars, I doubt it will go "carless" in the near term, but there will likely be significant shortages. We will need some serious mass transit upgrading.

My father is a geophysics prof at UCLA - he got the email as part of their "Distinguished Speaker Seminar" series - and invited me as the family fast-crash doomer to come along and add some "reality" to the sci-fi talk....

it was interesting - the UCLA fusion prof with a much harder grasp of reality was a cuban exile originally - wonder if that gives him a much better understanding of how bad things can get - he thinks the powers-that-be will engineer a dieoff down to a more sustainable level...a scary thought...

he thinks the powers-that-be will engineer a dieoff down to a more sustainable level

We know that life is cheap to most people. (Unless it is yours - then it gets expensive) And we know that most people LIKE being comfortable.

So when you have an equation like this:

Total_Energy = Number_of_People x Personal_Energy_Useage

And Total_Energy is dropping - how do you balance the equation? Cut into Personal_Energy_Useage (and perhaps effect your comfort)? Or cut somewhere else?

Of course, if one is already using very little energy, then TPTB have very little to gain by eliminating one, do they?

Reducing one's personal energy use might be a good strategy to make oneself a little less vulnerable, on several different levels.

Odds are that the decision will be based on what is produced for the level of consumption. In that case very low consumption and zero contribution, or negative contribution, is probably not going to be a good place to be.

I'm slightly concerned about this idea of the powers-that-be engineering a dieoff down to a more sustainable level... a scary thought...

Whilst I don't like to give credence to such a wild idea, I do think the scenario isn't as blazingly insane as it appears to be. I'm not sure if this makes me a doomer, paranoid or something worse?

Historically monarchs and those in charge of countries have been capbable of the most obscene, massive and staggering acts of criminal violence directed at their own people and foreigners.

I think there is a definitely tendancy, especially in the United States, to contemplate and even condone the idea of a "die-off". I'm thinking specifically about the success of these ghastly, quasi-religious "novels" about the rapture and the wheat being seperated from the chaff... Now one can dismiss these writers as borderline lunatics and religious fanatics, but what of their readership?

Are these books just harmless crap, or do they represent something more sinister in the American psyche? Does it mean that there are a substantial number of Americans who would be aminable to the idea of genocide? Because it would appear this "God" is willing to instigate genocide, leaving only a few thousand behind. This is the "God" thing raised, or should that be debased? to the level of a ghastly, perverse, parody of Hitler. Not God the Father, but God the Annihilator! It's striking how many of these extreme, Christian cultists in the US have somehow turned the figure of Jesus into a muscular warrior armed with a sword, a figure that bears a remarkable resemblance to Nazi inconography.

If one looks back at the last sixty years one can see that there have always been fringe elements in the US that have toyed with the idea of nuclear war as a solution to the "communist threat", the point is, these extremists were always kept at arems length from the reins of power, they were counter-balannced by realists who were sane. Now, a radical, extremist, cult has taken over the Whitehouse! This makes a profound difference, and is why we are living in very dangerous times.

"Armageddon" would "solve" an awful lot of problems. The slate could be wiped clean and we could start again afresh, in a world rebourn. A new world, that will rise like a phoenix from the ashes of the old!

More then one way to engineer a die off.

The Mexican government by forcing tens of millions of their least productive citizens into the US, has in fact engineered a significant die off as far as they are concerned simply by shifting the burden to us.

The Cuban professor surely is aware of Cuba basically shipping their whole prison population to Florida. And he probably is aware that all these things can be reversed.

Two words:

Hydraulic Empire.

Thanks for playing, come again.

Hi MacDuff,

Who was the UCLA fusion expert? I know some of them there but not all...


he thinks the powers-that-be will engineer a dieoff down to a more sustainable level...a scary thought...

I don't believe this kind of thinking is too far fetched. For an "ends justify the means" type of person, this approach has obvious benefits. Reducing the population to 1/5th to 1/100th of current levels would allow the remaining resources to be stretched much further and even place us withing bounds of a sustainable population. Some might even justify it as being more humane than allowing mass starvation and war to 'naturally' correct the problem, with the side benefit of preserving infrastructure and conserving the resources a global war would entail.

My intent is not to advocate this policy, but merely point out how tempting this idea might be to those in power, especially if things become sufficiently horrible.

For what it's worth, in a private conversation on the subject of overpopulation with my Anthropology professor in 1992, he mentioned that there was a group of misanthropic biologists, from a number of universities around the world, looking into our 'options' to deal with overpopulation along this line of thinking. It could have been a rumor, but he appeared to believe it.

Hi GLT, MacDuff and interested others:

On Tues., Dec. 4 at 8:00 pm at the UC Santa Barbara Kavli Institute for Theoretical Physics, Dr. Nathan Lewis, Cal Tech professor of chemistry will speak on: "Challenges for Global Energy". Free, but requires advanced reservation.

He is supposed to "...present an overview of available fossil fuel resources and estimate the remaining years of supply of oil, gas and coal..." etc.

Here's a link to the website, though they appear to be having problems with their server.

This might be an opportunity to discuss and/or possibly inform.

You can come up to Paonia anytime and build a fusion reactor in my orchard.


Hey, I used to live in Boulder and I've spent some time visiting (mtn biking) Durango - but never been to Paonia - do you have a local micro-brewery there yet?

what are you growing in your orchard?

Some orchards are no longer, but Paonia is still a great little town in the mountains. Farmers grow hay and raise cattle, hunting is big, there are a few wineries, and a great sense of community.

Come visit!


In nearby Hotchkiss we used to distill a lot of "ethanol," if you know what I mean ...

Just curious. Who was the speaker and who was the researcheryou talked to afterwards? I know some of these researchers and I am interested in their opinions on this topic. My general assessment is that fusion researchers ( I know quite a few as I am one) have varying degrees of awareness (and realistic assessment) of the global energy situation outside their own field. Similar to other scientists and much of the public I would presume.

The speaker was Gerald L. Kulcinski - from the University of Wisconsin, Madison - he's the Associate Dean for Research, Nuclear Engineering and Director of Fusion Technology

the UCLA prof after I'll leave annon. since I'm not sure he'd want his (doomerish) opinions put out there - smart guy though, and certainly aware of how tough a future we face...

Prof. Kulcinski has been peddling this lunacy (sorry about the pun) since the mid-1990s. Living in Madison, I have been treated to his vision five or six times now. Regular WI Public Radio listeners have also heard him describe his plans to turn the moon into a remotely control solar-powered mining colony extracting helium isotopes and transporting them back to Earth to feed a growing fleet of nuclear power plants. Come to think about it, "meanwhile, back on Earth" are the first words that come to my mind--and no doubt many others in the audience--upon the conclusion of his "Mining the Moon"--themed talks.

Friedrich Schiller: Against stupidity the gods themselves contend in vain.

Ok, you asked for it..

"thelocation is...
(turns to Sulu)
Praxis. A Klingon moon. Barren of indigenous life forms but-

- Essential as a resource. Praxis is their key energy production facility.


Two months ago a Federation Starship monitored an explosion on the Klingon moon Praxis. We believe it was caused by over mining and insufficient safety precautions. The moon's decimation means an almost eighty percent loss of available energy and a deadly pollution of their ozone.

Screenwriter; Denny Martin Flinn, RIP, August 24, 2007, age 59



I agree that it doesn't seem like a particularly good time to count on unproven technologies. However, LWBR's (light water breeder reactors) have existed in the U.S. and could easily be built again. I worked on a successful LWBR project in the 1970's. Trouble at the time was that LWBR's and their fuel cycle were a bit more complex than standard light water reactors. Also uranium was cheap. Thorium Power is working on fuel assemblies that can be retrofitted into existing light water reactors to turn them into LWBR's, or at least make them come pretty close to breeding. I expect that LWBR's will be widely adopted relatively quickly - which means a decade or two in the nuclear business. Not going to solve peak oil, but might put a real dent in coal-fired power plants.

i agree this would help. lovelock recommends we embrace nookular so it probably makes sense. i havent finished reading his book yet, revenge of gaia. reads well so far.

nukes have killed far fewer people than all the other fuels combined, per terrawatt p roduced, right?

I think you mean He3, helium-3. H3: hydrogen-3 or tritium does not occur on the Moon or the Earth in quantity, though a commercially interesting bit is dumped in rivers at nuclear plants.


Chris - you are correct - it was He3, my mistake in typing under the influence of corn ethanol late at night

and something tells me that in an era of declining energy sources, we won't be lifting heavy equipment to the moon to bring back tons of He3 to fire up in non-existent fusion reactors

We have the theoretical framework in place to address the lifting end of this problem. A few years ago I came across a NASA article advocating the idea of using gas core reactor rockets to replace our conventional rockets. Apparently they think they can build something which can carry a tremendous amount of cargo and still have plenty of fuel capacity for powered reentry. As I understood from the article, the primary obstacle to implementing these rockets was political rather than technical.

This would place mining the moon within reach, although we still don't have a working fusion reactor to feed the He3 into.

Regarding fusion, I think you misunderstood something in the lecture. While fusion is a ways off because it is a difficult technology, there is no intention to bring tritium ("H3") from the moon. Tritium will be generated on-site via the interactions of neutrons from the plasma with a lithium blanket:

neutron + lithium-6 → tritium + helium-4
neutron + lithium-7 → tritium + helium-4 + neutron

That's true regarding H3, although there is a supply problem with lithium.

The intention for the "Second Generation" fusion reactors is to use a deuterium-tritium fuel (D-He3) - getting He3 from the Moon.

It seems premature to start designing 2nd Gen fusion reactors though. Wasn't the promise of fusion power "unlimited and cheap"? (This quote is still made everywhere). People are planning 2G reactors that use rare and expensive fuel. Did we run out of the unlimited cheap fuel already?

The Law of Receding Horizons...the horizon ain't just rapidly receding, we never saw it in the first place.

We already have a perfectly good fusion reactor in operation - it is called the sun.

And its waste is a long ways off. Plus, its operation is hard for humans to screw up in some way.

Not so, what about excess CO2 in our atmosphere?

Hi all, I've been reading TOD a while but this is my first post.

Mining the moon for He-3 is likely never to work. That's because it costs about five thousand dollars per pound to put something into low earth orbit. I'd love to see the hypothetical EROEI on He-3 mining/fusion production. :) It needs to be hypothetical of course because as far as I know, thus far no one has been able to get fusion to give a net positive energy return. Fusion, while we're learning a lot about it, is far away and won't help us in our present energy crisis.

Incidentally, this guy is not the only one who goes on about this, Harrison Schmitt (who was an Apollo astronaut and senator from New Mexico) also does.

Gentlemen! You can't fight in here, this is the war room!

The only feasible scheme would be to put the fusion reactors on the moon, then microwave the energy to geostationary sats to relay to earth. Even with that, the costs of building and maintaining the infrastructure would be literally astronomical - and thus of questionable EROI.

Of course it's just as likely that we will discover anti-matter di-lithium crystals and build replicators and transporters. Come on people, this is science fiction you're talking about here.

Richard Wakefield
London, Ont.

No one is ahead of their time, just the rest of humanity is slow to catch on.

You are correct. Laptops and iPods are science fiction too. Just not our science fiction.

Please turn in all your objects that were made by scientific progress. You can keep fire cause its pretty cold in London in the winter.

I'm not sure I disagree that Fusion is long way off and unlikely to save us, but your argument is weak. EVERYTHING was science fiction at one point.

Often science fiction disobeys physical laws. It's one thing to be scientifically possible and another to be scientifically impossible.

Within the possible one has to understand if it is practicle and within our understanding, what time frame and resources to implement. Mining the moon, getting fusion to run soon enough "to save us" is highly impracticle to implement, and thus is also a very week argument.

I understand the desire to want to keep the party going. I certainly would like to retire as did my father. But the reality is that this is not going to keep going. The threads are unraveling now, and the rate of that unraveling is going to increase.

To keep hoping for a magical techologicial rescue, especially such fanciful techosolutions, is, IMO, a gross misuse of resources. We need to focus on what is actually doable now. Forget moon missions, forget mars missions, forget atom smashers, and forget fusion. They belonged to a civilization that had cheep energy.

Richard Wakefield
London, Ont.

No one is ahead of their time, just the rest of humanity is slow to catch on.

Gentlemen! You can't fight in here, this is the war room!

Nice! Dr. Strangelove.

Richard Wakefield
London, Ont.

No one is ahead of their time, just the rest of humanity is slow to catch on.

5K/lb using current technology.

The energy cost to move something into LEO isn't all that great, its about the same as a 747 uses flying that same lb to Australia from Chicago. Boosting to the moon is significantly more expensive, but doable.

Since we don't have Fusion Reactors, I will simply assume that one we get a Fusion Reactor I will also have a beanstalk in place.

Electric motor up the beanstalk. Chemical rocket to moon. Rocket back to beanstalk, beanstalk down. He3+ can go via a linear accelerator ala "Moon is a Harsh Mistress"-Hienlen

Extra-Earth He3+ is a great source fuel source for the future, provided we make it through the current crises with a high level technology and civilization intact.

Then again, I look around the world and I not sure we are all that civilized.

So now we get to my favorite pie-in-the-sky scheme, the Space Elevator and other skyhook technologies.

It would help a lot with the economical feasibility of a Solar power satellite.

Also, a Space Elevator in the Moon would probably make any He3 recovery scheme cheaper.

Now, as always, these schemes will take 20-30 years.

And so it goes.

For a dose of reality, please look at Michael Dittmar's presentation on nuclear fission and fusion, from ASPO-Ireland conference in Cork last month. You can find it at:

I am convinced he knows what he's talking about.

His statement on future availability of uranium and production rates may be more controversial, but on the topic of fusion he listed a set of fundamental barriers that are not being presently addressed - including the choice of H3 / tritium and how likely it is we'll ever get our hands on enough to run a fusion power industry (hint: not very likely!). He is a very credible speaker, no ego issues, but provoked considerable debate since a preceding speaker was Bauquis from the French nuke industry.

It was clear to me that ASPO in all its incarnations may have to steer away from making nuclear (fission) pronouncements since it provokes so much heated debate and would probably alienate half its contributing members.

Dick Lawrence

I know Dittmar professionally and have seen his ASPO presentation on the web. His Uranium reserve analysis is off in my opinion, but the physics of the rest of the presentation is bang on. He is one sharp dude....

Dr. A.S. Turcot aka Flakmeister

At 03:30 GMT, Tapis was $100.22/bbl. It's interesting to compare this to past prices:

3 Yr: $48.35/bbl
1 Yr: $60.89/bbl, a $12.54 increase
3 Mo: $78.25/bbl, a $17.36 increase
4 Wk: $82.26/bbl, a $4.01 increase
1 Wk: $94.71/bbl, a $12.45 increase
Now: $100.22/bbl, a $5.51 increase

Looks like the rate of price escalation is accelerating (roughly).


graywulffe in CVO, OR

The conventional wisdom seems to be that WTI will hit the $100 range and pull back. I wonder about this.

If the inventory report shows a draw and if the dollar keeps falling, we could blow right through $100, especially since, IMO, the fundamental driver behind higher oil prices is a bidding war for declining oil exports.

Whats interesting is if the bidding war is now really between the wealthy nations I think the next real pullback point is probably around 200-250.

I googled around a while back looking at oil usage by the poorer nations and they don't use a lot of oil maybe 10mbd in total for the bottom 100 or so. This means that I think we could say squeeze at most 5mbd out of the poorest nations before they hid a hard minimum operating level. And thats generous it may be as low as 2mbd which fits with what we are seeing now.

The US could easily pay 200 for oil and so can Europe, China etc.

So I think we are in a weird situation. Potential demand overall exceeds supply. If real oil buyers decide to draw down stocks hoping that prices will drop speculators will drive them higher. If they instead decide prices are going higher and try to stock up they will driver prices higher.

I don't see anyway out of this for some time since prices basically won't go down until some of the wealthier nations cut demand.

We are I think right at the beginning of the bidding war between rich nations so who knows where this will end.
If its really on then I'm guessing 200 a barrel by this summer which means 15 dollar gains on average every month.
Which means we blow right through 100.

I just see no real price floor until we hit 4.50 - 5 dollars a gallon for gas in the US which means 200+ a barrel.

And these prices are sure to quicken export land.

Memmel: Re demand, today gas is at 4.20 US a gallon in Toronto and no one has even noticed. My estimate would be $7 a gallon in the USA for a demand drop off (just a guess).

You could well be correct time will tell I think that shows once the bidding war start for real and it may have the upper bound is way high on gasoline prices at least. The American trucking industry would be destroyed well before seven a gallon. Our use of long distance trucking is probably the biggest issue.

However the poverty stricken inner regions of the US and even Canada will have serious problems at 4-5 dollars a gallon.

Those in urban areas who commute over 100 miles a day in SUVs will be in a world of hurt at $4 - $4.50 as well.

I refilled last evening, and noticed just before I switched on the pump that the guy before me (probably with a pickup or SUV) had racked up $90 on his refill. That is a lot of $$$

However the poverty stricken inner regions of the US and even Canada will have serious problems at 4-5 dollars a gallon.

"poverty stricken inner regions" ????

The "inner regions" look pretty good to me, unless you want to count the states of LA and MS as "Inner" (which I don't.)

memmel, you wanna take a stab at when we might see initial stages of domestic shortages, how that scenario might develop? Believe you said late 2008, but now that's looking optimistic...Also, you had some interesting observations on how corrosive effect of chronic undersupply to market would magnify effects when shortages times you're one of the scariest guys here and lately the scary models have proven the best fit.

I think that things are not going faster than we thought. Pretty much right on schedule the critical factors will be if I'm right about the last 10-15 years of production increases coming from technical innovation which means the drop off this plateau will be surprisingly steep and how export land plays out.

Right now according to my original pond/wave model we will have a significant price pull back later this winter/spring probably around 70-80 in todays dollars ( given how the dollar is tanking this would need to be adjusted). So I can't see the current price increase reaching say 110-120 at most. Right now the cause would be a combination of overcapacity short term export boost from KSA maybe opening the SPR and weak economic data for the US later in the year. Best guess is this could well be engineered to occur in March/April maybe February if we get enough heating oil.

So if that prediction fails we are then in uncharted waters.
The key big factor is how we decline from this technical peak.

Short term the number one factor to watch is US gasoline imports thats in my opinion the next peak caused event.
Gasoline exports in my opinion follow a double export land model with refiners ensuring local supply is met before exporting. This will be the root cause of shortages. I think that the US will continue to get all the crude it can refine at a price. But by this summer globally their won't be enough oil to meet OECD demand in total so gasoline imports will either not grow or drop.

Next internally I think you will see a lot of city and county governments default on their bonds and go bankrupt starting next year. Underlying this is a fast drop in housing in land prices in rural areas and small towns farther than 40 miles or so from the major cities. Given overall falling home prices and high gasoline/diesel prices we will see outward migration stop. I'm actually waiting for this so I can see which rural regions manage to start practicing ELP. This should be in full swing by 2009.

After this I think things will remain fairly stable until we collapse. And I think collapse will occur from rioting in the major cities. I'm guessing now that this is in the late 2009->2010 time frame. But I don't think it will happen until we see dropping gasoline imports and problems getting crude oil. But you can see the timing is highly dependent on when gasoline imports start faltering for the US. As long as they keep coming then we remain stable.

Outside the US however given we probably will be pushing 200 a barrel for oil later next Summer we should start seeing governments collapse in the poorer nations.

The drop in property values won't impact local governments all that quickly. Most of them only re-assess every few years, so there is a built-in lag factor. A more immediate fiscal impact will be uncollected taxes due to the foreclosures. This impact seems to be concentrated in certain areas more than others - the majority of local governments will not get all that much of a hit.

What you are more likely to see first is a major hit to state government budgets due to declining sales tax and gasoline tax revenues. The sales taxes come disproportionately from discretionary purchases, and those are likely to be cut back hard. Gas tax revenues will decline as people cut back on driving, too.

Depends on the property taxes. In the bubble areas they are going down fairly quickly. Generally you can ask to have your property re appraised. Also in on this side I was including new taxes and fees from growth. And of course the big one you mention which is unpaid taxes from foreclosures. Foreclosures on over leveraged farms will soon enter into this. And I agree the first hits will be on sales taxes.

Another factor is we probably will see big cutbacks in federal aid to state and local governments. In many cases its the exact details of how taxes are collected and the local economy that will determine how things play out.

The assertion is that rural areas and smaller town government will I think be facing some tough economic times fairly quickly and then have to deal with declining revenue every year mainly from declining property values.

I think the days of the mini-farm/McMansion with 10,000 or more dollars for a acre of crappy land are over. These rural areas will now have to rebuild a real economy based on local resources and they have to do it as the overall economy is declining and the local tax base is declining. Since people will become increasingly unwilling to make long commutes and also pay a premium for houses that are declining in value I really think that all the excess population that has moved into the country will go back to the cities and closer suburbs fairly quickly.

In effect they will be forced into ELP (Economize Localize Produce).

Personally this is one reason I'm still near LA. Its impossible to make a living of a farm if you paid todays land prices and took into account expected price increases from peak oil. Very few farmers will be solvent soon. I'd like to have the option to make at least a meager living farming but land prices have to drop dramatically. And since they have too I think they will. The transition will be painful but I think that in the end the result will be good since farming will eventually be profitable.

The cities and near suburbs with a more diverse economy and better commuting logistics will I think do better in the short run. As you do the math you see big differences between 40 mile and 20 mile total commutes which generally means within 10 miles of the city center.

However the change in direction for migration back towards the city centers will in my opinion have a profound effect on the American economy which is based on ever sprawling suburbia since it causes the outlying areas to enter into a period of ever falling prices. The inner city regions went downhill quickly after WWII because of this change.

The American trucking industry would be destroyed well before seven a gallon.

They would whine and eventually get 'special rebates' on their tax forms.

Military, trains, Farms, Home heating oil, Truckers would get allocations 1st.

They would whine and eventually get 'special rebates' on their tax forms.

Military, trains, Farms, Home heating oil, Truckers would get allocations 1st.

Should they not get allocation first? Farmers grow the food, trucks and trains get it to your door. It actually makes sense to give these people first priority for oil.

I think that when the truckers really start whining you'll see this sudden flury of excitement about biodiesel. Right now it is all ethanol this, ethanol that, and biodiesel is kind of the forgotten stepchild. Expect biodiesel to become one of the big buzzwords in 2008.

(BTW, I realize that biodiesel is NOT a silver bullet. Maybe a silver BB, and certainly has its part to play as a transitional strategy. I would prefer that the buzz be about freight rail.)

The American trucking industry would be destroyed well before seven a gallon.

As will the airlines. They will be the first canary indicators.

Richard Wakefield
London, Ont.

No one is ahead of their time, just the rest of humanity is slow to catch on.

At least in the US the Airline industry is very inefficient in the since of redundant services offered by multiple carriers.
So we have a lot of room to reduce the number of carriers and clean up flight schedules. Plus a lot of flying could be curtailed. Next Airlines are big enough to hedge higher prices. So I think airlines can weather the storm easier.

Truckers are at the mercy of fuel prices and will have to move to a floating surcharge for fuel this requires a lot of changes and will be resisted so expect a lot of independent truckers to go out of business along with small firms.

A lot of these truckers actually live in rural regions in the US so as they lose their jobs they will lose their homes putting even more pressure on rural home prices.

Rail should boom.

What should really do well is intermodal shipping:

Goods into container

Container loaded on to truck

Truck drives to railyard or shipyard

Container loaded on to train or ship/barge

Train or ship/barge does the long haul

Reverse at the other end.

Hi memmel,

re: "Rail should boom."

It "should", but can it without some legislative (money) action? (or something.)

One study of gasoline elasticity said that for short term, the US, the value was as little as -.01. At that value there has to be a considerable rise in price to see much of an effect.

Of course long term elasticity is different... Still, if Americans believe a price bump truly is temporary (e.g., if perceived to last only a couple of weeks) then most will be willing to pay quite a bit more than the current $3.10/gal or so.

There has been little discussion here recently about heating oil. Would not that product be much more sensitive this time of year to changes in crude prices? Has anyone here bought heating oil (for consumption) this week? On another forum (not oil related per se) someone mentioned buying heating oil this week and paying almost 50% more than they did last year.

I paid for a delivery last week, and it was godawful expensive. That was as a member of a co-op too. We wound up paying $3.11/gallon.

Sweaters are going to be in great use this winter.

- Scott
"Winter is coming"

My last fill was September 17th and at that time I paid $0.809 per litre. My provider, Scotia Fuels, is currently charging $0.839 per litre and this year's price cap has been set at $0.889. On September 12th, 2002, I paid $0.479/litre, so my fuel oil costs are 1.75 times higher now than they were five years ago (this time last year, my cost was $0.765/litre, so the y/y increase is less than 10 per cent). Over this same five-year period, electricity costs here in Nova Scotia have risen 28 per cent -- $0.1067 per kWh versus $0.0835.

Last year, I burned 830 litres of fuel oil for space heating and domestic hot water purposes, which works out to be 220 U.S. gallons; by comparison, the previous homeowners averaged something in the range of 5,700 litres/year.

Oil is the backup to my ductless heat pump, and in hindsight, I wish I had installed a small electric boiler and electric hot water tank and eliminated oil altogether. My total space heating and DHW costs come to a little over $1,000.00 a year (~ 7,300 HDD), and with heating oil and electricity at similar price points, there's no financial penalty to going all electric.


Chances are good that this kind of bidding war will be interrupted by a serious U.S. recession.

I keep thinking about energy and packaging and how much we could save just by rethinking how we package our products. The U.S. has spun off into crazyland in the way it now packages the things we buy. I recently saw a plastic tube of prunes. Each prune was individually wrapped in its own plastic package. We really aren't buying things anymore. We're buying the things that things come in. The U.S. economy is built almost entirely on selling plastic packaging. Sliced turkey comes sealed in plastic then encased in its own tupperware container wrapped in cardboard.

Think how much better a bag of chips would be if each chip was separately wrapped for freshness.

A serious global recession could take care of a lot of this kind of lunacy.

The gasoline price here (Central NC) is rising at 10 cents per day in the last two days(since the end of last week). Gasoline prices that were $2.74/gallon on Friday are now $3.149 (at least they were last night) and we are starting to see "buy now because the price will rise before you get back again."

A noticeable change in bus ridership in the past week. Busses running half-full are now standing room only. Park and ride lots are now 3/4th full instead of 1/3 to 1/2.

So I think we are in a weird situation. Potential demand overall exceeds supply. If real oil buyers decide to draw down stocks hoping that prices will drop speculators will drive them higher. If they instead decide prices are going higher and try to stock up they will driver prices higher.

A very interesting observation, memmel.

To paraphrase: You're pointing to what appears to be a powerful feedback loop, one that could result in a rapid and unforgiving surge in oil prices until some fundamental constraint (ability to pay the higher prices among the major bidders) causes the price escalation to slow.

Could this be an initial post-peak (or peak-plateau) "nonlinear event," a concept that has been brought up here on TOD before? Like the phase transition from solid to liquid? One of the marks of Bakhtiari's Transition-1 (T1), where business-as-usual begins to erode into business-as-not-so-usual?


graywulffe in CVO, OR

I think so. However see my other posts I don't think we have really entered this phase consider the current price as a warm up as speculators inadvertently test the peak oil waters.

This summer however it will be obvious to all that their is no limit on prices. Effectively the markets will discover peak oil regardless of what the MSM says. Its funny how this little price increase which is the tip of the iceberg for peak oil is freaking people out. I think that even people that thought they believed in peak did not really understand. If I'm right this is nothing.

The bidding war has not started. Oil and commodities (eg. gold) are moving in lockstep. The problem is the dollar. When you can only get 6 1/2 barrels of oil for an ounce of gold then you'll know the bidding war is on.

It seems relentless. On the NYMEX, light sweet crude is at $97.94. RBOB is at $2.45, the highest I have seen it. Higher, I believe, than during the run up last May.

And I just checked the US Dollar: an astonishing $1.46315 to the euro. Something has got to give.

Oil prices have not risen lately in Canadian dollars- last quote for the loonie was 1.0982 US.

Re the economy, the accelerating run on the US dollar is starting to concern me a lot more than the oil price.

Hey, you ain't just whistlin' dixie...

I just watched the loonie roll over to $1.10, I see gold going through $836, the US dollar index crashing through the floor....

I called my wife in a half-hour ago and told her that I thought it was possible we might be seeing the first stages of an accelerating run on the dollar.

mind you, I'm ignorant about such stuff, but the trends are not exactly subtle.

If a rush for the doors starts, I see no reason it'll stop anywhere close to where it is now.

So, since I have no reputation to lose, I'll call it at 8pm Hawaii time: a run on the dollar this week.

Regarding $100 being a "psychological barrier" for oil. I don't see much evidence for psychological barriers in such dealings. A few weeks ago £1 = $2 was thought to be a psychological barrier by some, but passing through it made no difference at all. £1 is now worth $2.10 and it just keeps going. I think oil will do the same, even thoigh the $100 mark will make headlines and there will be usual range of talking heads in the MSM about the causes. People who trade oil futures are not usually into numerology and people still need to fill their gas tanks. The price they look at is the price of gas - some landmark there might make a difference.

I think it is more a psychological mark for journalists/MSM. They really have little clue about what they report on, in the absence of that they latch on to arbitrary marks. They are essentially story tellers, and having a discrete number provides them a plot point.

"Something has got to give"

It is

US$ 1.46315 to the euro. . . and falling

Watch the Yen. It finally went thru resistance this AM.

From 114 to 112.

The Japanese have been desperate to keep it pegged to the $.

The Carry trade is being crushed right now.

Arkansaw of Samuel L Clemens

Nymex crude now north of $98.

I'm going to be annoyed if it breaks $100 while we're down for maintenance (11pm EST).

"...down for maintenance (11pm EST)."


Just in case...

This is the price-watching thread at

Conspiracy alert,,,(insert sound of warning claxon here) TPTB are taking the oil drum down right after the release of inventory reports.
I knew they would come for you guys ...
(insert visual of the moderators trundled into the back of a gov't van by burly black suited Feds)

"Rise in global energy demands 'alarming,' IAE says" This story appeared on the front page of the online Globe & Mail for an hour or two this morning, and then disappeared. I can no longer find the original story, but happen to have a Comments window open in my browser, and submissions continue to be accepted there.

If anyone wishes to join in the G&M discussion ...

"Rise in global energy demands 'alarming,' IAE says"


Arkansaw of Samuel L Clemens

So does Robert lose if any crude spot price hits $100, or does it have to be WTI, nymex, or something else?

Front month WTI. I expect that to happen today, but if there is anything less than a big draw in crude inventories, it could shave a few dollars. But on Monday, I put the probability of $100 at 85%. After we evacuated the North Sea yesterday, I knew that was probably it.

Closing or intra-day?

Not that its going to make much of a differnce at this point.


High prices at tapis have been pulling the market higher all year because allocations to asia were cut by sa. Now 100.55.

Always a possibility that storage will surprise, if stocks rise this week there will be a savage drop, punishing my small e&p's... no matter, they are very profitable at 60, 90 more than doubles earnings.

Tapis is more expensive because it is lighter.
API Gravity: 45.5º for Tapis vs. 39.6º for WTI
(scroll down to the bottom of the page)

So hydrogen must be the most expensive per barrel :)

For what it is worth, a gravity of 45.5 degrees would actually result in a small [admittedly very small] deduction for being too light from the base / top price for certain crude oil categories per Sunoco Logistics posted adjustment factors.

Hello TODers,

Finally found some newsinfo on FF-spiderwebs in Tabasco:
Oil industry takes hit from Mexico flooding
Nov. 6, 2007, 8:39PM

VILLAHERMOSA, MEXICO — Although onshore oil fields in and around flood-ravaged Tabasco state escaped major damage, some of the people working at those wells have been left in the lurch.

Many oil workers are based in the flooded state capital of Villahermosa and have lost their homes. Meanwhile, flooded streets and washed-out roads makes getting to and from the oil fields a logistical nightmare.

"It slows down our operations considerably," said Mark Ingram, a Livingston, Texas, native who works for an oil-services company and has lived in Villahermosa since April.

"It takes all day to get to one rig," said Ingram, who was flooded out of his home and has taken up residence in one of the city's hotels on higher ground.

Although heavy storms and high seas forced Mexico to shut down some offshore wells last week, halting about one-fifth of its daily crude production for five days, onshore operations appear to have dodged a bullet. Most of the inland wells in Tabasco state are located to the north of flood-damaged Villahermosa, on relatively dry ground.

Most of Mexico's 3 million barrels in daily oil production come from offshore wells. Onshore production in Tabasco and neighboring Veracruz and Chiapas states amounts to about 471,000 barrels per day, or about 16 percent of the country's daily output.

"We can't say we are producing at 100 percent, but there has been no major impact," said a spokeswoman for Pemex, the state-run oil monopoly, referring to onshore operations in Tabasco state.

Enrique Bravo, a Latin America analyst for the Eurasia Group, agreed. while the flooding "obstructs the operation of onshore fields and will have some costs, the overall effect of this flood on the general production is rather marginal," he said.
Too bad they didn't disclose any info on natgas fields and a damage assessment on electricity availability in the affected areas.

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

Remember Cheney diverting MS Power Crews to get the Colonial up and running?

And I've seen a purposeful edit of a 16 in gas pipeline leak/explosion.

"Tuesday night's pipeline explosion occurred in the Tabasco city of Huimanguillo, state officials told local news media. Workers immediately shut down the 16-inch (40-centimeter) pipeline and were burning off excess gas that remained trapped in the ducts."

Arkansaw of Samuel L Clemens

I expect a flood of MSM stories on the energy market and PO once oil hits 100. But will it lead to a mainstream shift in attitudes? doubtful, as it didn't at previous benchmarks of 50 or 75. Basically, I don't think $100 oil is as shocking to the american public as $4 gas for the obvious reason that a far higher percentage of ppl are aware of gas prices over crude oil prices. Of course, with $100 oil, $4 gas is inevitable.

But will it lead to a mainstream shift in attitudes?

A mainstream shift in attitude happens slowly. The important thing is the perception that energy in general is a key topic and not a marginal one.

Here in Germany I've been telling my friends about energy problems like peak oil and the necessity of promoting renewable energy since almost ten years now. Once a small excotic topic. But today the newspapers are full, the radio news talk about natural gas policy in Russia, climate change, the boom in the solar industry....and at the same time big companies like BP advertise with renewable energy investments.

Perception comes slowly, and finally it is mainstream and things will change.

Maybe the problem in the USA is the strong power of your president. As long there is an oil & gas person in the White House almost now change can happen. This is a pity, because today the structures have to be created for the future.

The 100$ price signal will be in the media, now doubt and it will be palpable in all our pockets. Somewhere more, somehwere less. By time this will engender change.

mr, berlin

"no" = nein
"now" = thismomentintime

Hi cryptex,

i know the difference between now and no.... Obviously just a kind of sleepy typo this morning...


I think the first place where you'll really see some impact is in the post-thanksgiving Christmas shopping. The Friday after Thanksgiving is traditionally known as "Black Friday", because that is the day that retailers finally "go into the black" after having run at a loss all year.

It might be a different sort of "Black Friday" this time.

Between the energy price news, the falling dollar, the credit crunch & massive foreclosures, things going bad in the middle east, etc., etc., I doubt that people are going to be in a happy-go-lucky spendthrift mood this year. Frugality and belt-tightening are about to become the order of the day.

Any retailer that ordered a big inventory this fall is going to be in big trouble.

I would thus expect to see the first big wave of layoffs and increase in unemployment right around the first of the year.

Since 2008 is an election year, "Helicopter Ben" can move up to become "C-5 Galaxy Ben" -- he'll need the larger cargo capacity for the massive amounts of $$$ he'll have to dump.

When Black Friday comes
I'll stand down by the door
And catch the grey men when they
Dive from the fourteenth floor
--Steely Dan

Dudes, I might be into my second bottle of Cabernet, but I can still see that the U$S just fell off the shelf, apparently some government dude in China made a statement re getting into harder currencies.

IMO if the Mexico thing is going to hit, it's on top of this, but they probably haven't figured out how long they are going to be down yet. There is also a big story developing as far as bond insurers going down and GM took a 39b write down.

Stay tuned.

Well, my gold holdings are certainly doing well.

I remember when a billion was a lot of money

Wonder if oil and energy security are becoming bigger problems in France?

Sarkozy will be delivering a speech to the US Congress, eleven years after his predecessor Jacques Chiraq. Sarkozy will also be holding talks with President George Bush for two days.
(includes video)

On the agenda will be "Iraq, Lebanon, Syria, Middle East peace process, Kosovo, Burma, Afghanistan and Darfur, Trade, NATO, transatlantic relations, climate and energy security"

Will freedom fries be called french fries again in the US?

I previously talked about my chat with a French hedge manager at ASPO-USA. He said that, in his opinion, Western Europe would be more likely to support (at least in private) a US move to control oil from the Middle East, rather than oppose it.

Western Europe has more or less been an American protectorate since WW2, though various govenments have acted as if they were still independent nations. The British for example developed the myth that they won the second world war and didn't in fact just become an enormous US military base.

Whilst Europe may, in private, support a US move to control the Middle East's oil, the really interesting thing will be the reaction of Russia and China. Whilst Russia has a lot of oil, gas and other raw materials, it still has to consider the strategic military implications of a Middle East controlled by the US. If the US takes down Iran, that could put US forces close to Russia's exposed southern flank. Does Russia just do nothing and let this happen? What happens if Russia believes the ultimate US strategy is to go after control of their oil and gas too? Does one just let a potential ally fall?

Then there's China. China needs vast quantities of oil and gas. We all know their in a far worse position than the Russians in respect to energy. So the Chinese have a strategic interest safeguarding their access to the Middle East's energy resources. Do they just allow the US to grab control of the Middle East and thereby gain an effective stranglehold over their economy?

Europe isn't an independent region. Europe is part of the American Empire and composed of vassal states who pay tribute to the United States, much like Sarkozy is doing now. China, Iran and Russia are not part of the Empire, and there's the rub.

The trouble is that you are assuming that GWB and the puppet masters that "brief" him think that way (or maybe even just think).

In the fantasy world that they inhabit, nothing is connected to anything else.

Russia is 150 million people and a much smaller economy than China with 1300 million. The Russians are afraid of the Chinese on their border and will do China's bidding.

China often works through others and Russia is useful through its security council veto. China cannot veto in isolation since it is still in the business of selling chinese manufactured goods in the rest of the world.

Lots of happy talk about Saudi reserves, but what caught my attention was the last sentence:
For how long will oil reserves last?
By Amir Taheri, Special to Gulf News
Published: November 06, 2007, 23:13

In 1970 the Shah of Iran called oil "a noble product" and claimed that it was "a shame and a pity to burn it in cars". At that time oil prices hovered around $11 per barrel. In real purchasing power, today's oil price is cheaper than it was then. Nevertheless, and whether or not we have endless supplies of oil, it is still a dumb thing to burn it in our cars.


" One of the first things I found in the Library of Congress on John Kennedy’s effort to build Quoddy was his Dream of Passamaquoddy speech, given at a 1959 Democratic issues conference in Augusta, Maine. In this visionary speech, he foretold the energy crises we would face, and he prescribed its solution ─ water ─ the rushing water of the Bay of Fundy tides. Kennedy stated in his speech that he had begun working on his dream of building the dam in 1952, when he was elected to the Senate; however, in 1952, there was a legal roadblock in place in Maine that had existed since 1908. There could be no financial feasibility for Kennedy’s Quoddy Dam until it was eliminated.

" We do not need fossil fuel for power production; we never did. The battle between the emerging technologies of hydroelectric and fossil fuel for power production began in 1902, in the state of Maine and New York. Fossil fuel won. A group of American and Canadian businessmen formed the Maine New Brunswick Power Company to exploit the vast resources of the area’s tides on both sides of the border, and George Westinghouse began plans to use the rushing waters of Niagara Falls to power New York State. "

~ I was looking up Tide power research in Maine, and ran across this saucy article about JFK wanting to put a Tidepower dam in Passamaquoddy bay in the early 50's.

WARNING: JFK - assassination theories and Masonic History Lesson included in this lively tome. If chafing or redness appears, discontinue use and consult your doctor..


EDIT: Had to add the next Paragraph.. hope you'll all indulge me my moment of Tinfoil Millinery..

"Westinghouse employed two hydroelectric engineers, Dexter Cooper, who would dedicate his life to trying to tap the energy of Maine tides─ and Nicola Tesla, a man who is as well known for his work in electricity as Einstein is for physics. In addition to his better-known inventions — the radio and alternating current — Nicola Tesla invented the bladeless turbine. He managed to put turbines into use in Niagara’s waters in a three-phase system, and for a time lit up Buffalo and all of Manhattan. Tesla claimed that the waters of Niagara could power all of Northeast America. His turbine, ironically, is now used to pump oil."

It must be noted that there ARE outrageous claims in this article, including Tesla's 'Never Charge' Electric car.. frequently cited in FreeEnergy sites, but afaik never replicated. I sincerely hope you'll consider that 'a couple bruises doesn't prove the whole apple to be rotted'


What I've always found interesting is the little bits of "truth" (ok, some may not be actually true) that the whole cloth gets hung on.

That's the rub, isn't it? 'The truth, protected by a bodyguard of lies..'

I have heard that there was an abundance of Tidal energy at work in New England at the end of the 19th century, and this article claims that a law called the 'Fernald Bill' was enacted in 1908 to make exporting Hydropower out of state Illegal, set up as a tool to help get Oil and Gas the extreme advantage in an otherwise energy rich area.

(Fernald Reference - "In the State of Maine, the fossil fuel industry would be instrumental in winning the support of the Governor of Maine, Bert Fernald, who would pass his namesake Fernald Bill in 1908, prohibiting the sale of hydroelectric beyond the borders of Maine. Electricity produced from fossil fuel was exempt from this law. The law is an indication of the terrible threat hydroelectric posed to the early promulgation of the fossil fuel culture. The company formed to begin tapping the water resources of Maine and New Brunswick disbanded after the bill passed. " )

I do have my own misgivings about unrestrained Tidal-Hydro development, as much as any of our other industrial growths, since this irrational exuberance could easily have a disastrous effect on our Fishing Trade and the condition of our Marine life overall... to whit:

"So far, tidal power has not been the green dream that its developers believed. The new generation of turbines may show more promise but they will need to be tested first. We should not automatically assume that they are the great green hope."

But I also think there are going to be benign and economical ways of extracting wave and tide power, too. As much as that (initial) paper I linked to pointed to obvious malarky, I think it deserves to be suspected of having some wheat with the chaff, too.

Ultimately, I'm far less concerned about the conspiracies than I am with the actual potential of tapping that resource, though it would be useful to know if there are still groups or laws that want to stand in the way of that 'free-power'..


jfk's assanination is easy to understand. he made a speach about his plans to reign in the military industrial complex at the time the veitnam war was starting to heat up along with their profits. so he was just removed from the picture.

The EUR is now at 1,4706 USD, another all-time high. This is even higher than the former DM all-time high in 1995 (1 EUR = 1,4360$).

Seems like everyone is getting out off the dollar, into oil, EUR, you name it.

Regarding the fall of the USD, I have found the following site to be good for topical info:

Back in 2004, I published an article stating that crude oil will reach $100.00 before the end of 2007.

The article is at -

For verification, you can check the
posting archives at either of these links.

DocScience - (Gilbert)



Hi Gilbert,

Thanks. Very interesting. It's such a mixed feeling to be "right", isn't it?

I notice you say you welcome comments, do you have contact info?