DrumBeat: November 7, 2007

Fuelling Bolivia's crisis?

In the midday heat, truckers hang out of the windows of their trucks or sit slumped behind their wheels, waiting.

They may have to queue for hours to fill their tanks with diesel at this petrol station in the city of Santa Cruz, Eastern Bolivia.

"Sometimes you get to the front of the queue and the diesel has already run out," says Agapito Serviche from his pick-up truck.

"The Diesel does not last long enough for a day's work so I have to stop working and come back to the queue just to put food on the table."

Foreigners face oil curbs

China will prohibit foreigners from investing in small and mid-sized oil refineries under new guidelines issued yesterday, limiting access for overseas firms seeking a foothold in the world's second-largest energy market.

The restriction will also limit options for independent refineries in the coastal regions that had been hoping for alliances with foreign firms or domestic oil majors to improve their standing in the domestic market, which is dominated by a few state-run firms.

Black gold at highest level since 1980

THE last time the price of oil hit current levels was in April 1980 when the black gold, adjusted for inflation, hit $101.70. It hit another fresh record of over $98 per barrel yesterday before easing slightly.

Valero says to spend $1.4B to expand Louisiana refinery capacity

Valero Energy Corp. says it will spend $1.4 billion on a major expansion of its refinery outside of New Orleans that will increase both gasoline and diesel production.

War and Peacemakers

An exclusive conversation with Saudi Foreign Minister Saud al-Faisal about Israel, Iran and the frustrations of Middle East diplomacy.

OPEC inaction on $100 oil could sting later

OPEC's reluctance to open the spigots as oil nears $100 a barrel could backfire on the cartel as alternative energy sources and consumer conservation dig into demand.

Output curbs by the group, which controls more than a third of the world's oil, have contributed to a 90 percent rally in crude prices from last winter's lows and have helped spur investment in renewable fuels while denting demand growth.

Saudi Arabia urges other Gulf Arab countries to develop armed forces to defend oil resources

A top Saudi official urged fellow Gulf Arab countries on Wednesday to develop their armed forces to provide security to the region and safeguard oil resources.

"Because of the threats we face, we have to work hard to develop our armed forces to make them capable of providing regional stability and safety for the energy resources," the Saudi Press Agency quoted the country's deputy defense minister, Prince Abdel Rahman bin Abdel Aziz, as telling a meeting of defense ministers of the six-nation Gulf Cooperation Council.

The Saudi official did not name the source of the threats, but it appeared he was hinting at Iran when he talked about the importance of developing defense capabilities.

Oil prices' climb toward $100 slowed

Oil prices stalled in their climb toward $100 a barrel Wednesday after a government report said oil inventories fell less than expected last week while refinery utilization remained flat.

Oil investors largely viewed the report as neutral in that it confirmed a view that oil supplies are falling, but offered no real surprises. A larger than expected drop would most certainly have propelled oil past $100 a barrel for the first time.

Oil, dollar prices hint of inflation

Two runaway trends – record oil prices and a plunging dollar – are hitting consumers just in time for the biggest retail spending season of the year.

A crude analysis (review of A Crude Awakening)

The problem is that the film’s main argument—that the world is on the verge of an oil crash—is wrong. However entertaining its gallop through the history of oil and its transformation of our way of life, A Crude Awakening ignores a number of its own inconvenient truths along the way.

The theory of “peak oil,” the view that the world is on the verge of an oil crash, has been around for decades. That’s not to say it isn’t true—after all, oil is a finite resource, so the end will come some day—just that its proponents have a shaky history of predicting when the peak will happen. The apocalypse just keeps slipping by.

FirstGroup thanks oil price for rise in bus revenue

The British bus and rail operator FirstGroup said today the soaring oil price was boosting its business by forcing motorists out of their cars and on to public transport.

The UK's largest bus operator said the rising cost of fuel, which has just passed £1 a litre for unleaded petrol for the first time, had become an important influence on people's transport habits. Moir Lockhead, chief executive of FirstGroup, said park-and-ride schemes in York and Glasgow in particular had reported strong passenger growth at a time when petrol prices had climbed.

Gasoline prices threaten higher inflation, slower growth

Economist James Hamilton who writes the Econbrowser blog agrees that 'consumers cannot continue to ignore oil price increases much longer'. But he also contends that even 100 usd per barrel oil will not, by itself, push the US economy into a recession as the price shocks and supply disruptions did in 1973, 1978, 1980 and 1990.

The key difference is in that phrase 'supply disruption.' Oil's price may be soaring now but there is still plenty of it available. The earlier supply disruptions produced sudden shifts in consumer spending--away from cars, for example--and sudden collapses in consumer confidence.

Energy labor crunch looms

Nearly half the workers in the energy sector — an estimated 500,000 — are slated to retire within the next decade, industry and government leaders say.

Now, policymakers and industry executives are trying to grapple with this looming labor shortage at a time of increasing energy demand.

UK: Oil industry option for personnel

Personnel leaving the armed forces are being offered help to find new jobs in the oil and gas industry.

More evangelicals concluding God is green

The evangelical awakening to climate change is still a work in progress, but as the politically powerful movement becomes more active in environmentalism, political leaders will have to take notice or risk losing their jobs, a prominent evangelical leader said Tuesday.

In big U.S. energy bill, who will pay?

If the last energy bill was about squeezing remaining drops of oil from US soil, the newest is still a nascent, muddy legislative donnybrook over one question: Who will pay to shift the US energy mix to green and lean?

As oil prices rise, some slick ways to save

Back to my earlier question, "What can we do in the face of expected higher gas and oil prices?" To get some tips, I googled "ways to save money" and was intrigued by ideas I found among five of the top sites that popped up. From what I read at those sites (as well as the "10 little expenses" piece) and from past experience, I've drawn up a list of 10 ways to save in the face of an impending oil crisis. Here are some habit-reforming ways that keep money in your pocket...

A nuclear deal with some unanswered questions

Today the 31 units of 10 Russian nuclear power stations account for approximately 16% of the country’s electricity production. Last year, Russian president Vladimir Putin demanded of the Federal Atomic Energy Agency of the Russian Federation (“RosAtom”) that the proportion of electricity produced by nuclear plants be increased to 25% by 2030. This means that two new units are going to have to be built every year for there to be 42 new units in operation by 2030. These ambitious plans have already raised a storm of indignation on the part of environmentalists in Russia. First and foremost because Russia is doing practically nothing for the development of alternative power sources, but is following a path of least resistance and one of imperial desire to develop an industry that will be useful for military purposes as well.

Meanwhile, the press has already reported that economically viable reserves of uranium in Russia itself are enough to last only until 2015.

Shell extends biofuels deal with 'super enzyme' maker Codexis

Fuels giant Royal Dutch Shell said on Wednesday that it has expanded its development partnership with Codexis to build advanced biofuels.

Climate Change: Cars – It’s a diesel and hybrid future

Small European diesel cars lead the carbon stakes overall, but hybrid models could soon come into their own – and there are new technologies waiting in the wings

California Warns of Possible Water Shortages

State and federal water officials said deliveries to farms and cities could be restricted severely next year even if the coming winter provides normal rain and snowfall.

Non-OPEC Supply Boost Fails to Be Seen

When oil prices tumbled to $10 a barrel in 1998, the world expected non-OPEC countries to ramp up production, provided the price of crude recovered.

Nine years later, history tells a different story. Maturing assets in key producer regions, soaring costs, tougher tax regimes and a shortage of trained personnel are stymieing output even as benchmark crude prices edge closer to $100 a barrel.

High-Priced Oil Adds Volatility to Power Scramble

As the price of oil surges toward a symbolic milestone of $100 a barrel — hitting $96.70 yesterday — it is creating new winners and losers across the globe.

See also the accompanying interactive map, A Map of the Oil World

Competitively Priced Electricity Costs More, Studies Show

Retail electricity prices have risen much more in states that adopted competitive pricing than in those that have retained traditional rates set by the government, new studies based on years of price reports show.

The findings, by advocates for both sides in the market-versus-regulation debate, raise questions about the reasons market competition produced higher retail prices than government regulation.

Floods spare oil fields, not oil workers

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 make getting to and from the oil fields a logistical nightmare.

Oil shock war game pushes lobbyist message

In front of the klieg lights and cameras, nine Washington insiders sit before two video screens, each tracking the steady upward tick of oil prices and the correlating downward slide of financial markets.

Above the graphs and numbers on the screens, four cable news feeds present a silent montage chronicling the worldwide reverberations of unrest in Azerbaijan and Nigeria. Oil production has been disrupted and America’s president is counting on his Cabinet for recommendations on what to do next.

If this were television, you’d expect Jack Bauer to emerge from the shadows.

But this energy crisis war game — dubbed the “Oil Shockwave” — isn’t just about entertainment; it’s an unorthodox lobbying tool employed by Securing America’s Future Energy, a bipartisan group advocating reducing U.S. dependence on oil.

U.S. gasoline demand slows for third week-MasterCard

U.S. retail gasoline demand last week slipped for the third week in a row amid a surge in retail prices, sending purchased volumes to the lowest level in more than six months, MasterCard Advisors said on Tuesday.

It's time to wean America from oil

The supplies to feed America's voracious appetite for oil continue to tighten, and we have not yet done anything effective to reduce our dependence on this commodity that is so vital to our economy.

South Africa's demand for petroleum on the rise

The South African Petroleum Industry Association's (SAPIA) Annual Report indicates that the demand for petroleum products in South Africa has grown by at least 15% in the past five years. This represents an additional 3 billion litres a year.

Beijing should rethink fuel price controls

Mainland authorities have long contended that by keeping the price of petrol and diesel low through state controls, they are shielding citizens from inflation and maintaining stability. The policy was viable when oil prices and demand were low, but times have changed and it is time for a rethink.

Sustainability is the key to the mainland's growth. But there is nothing sustainable about the world's second-largest importer of oil artificially keeping prices at almost half the international value. Refiners have been taking the losses. Despite some government subsidies as compensation, the gap between the international and state-ordered price has been too much for a number of oil companies to bear and supplies have in recent weeks slowed to a trickle.

Bangladesh: Exporting energy?

At the end of 2007 Bangladesh faces two serious, but different, problems in the energy sector: first, a shortfall in the electricity generating capacity; second, a shortage of domestically produced fuels for firing the power plants.

The failure to provide the electricity generating plants is a consequence of the poor governance and greed of the four-party alliance government. The caretaker government is moving systematically to insure that there is sufficient generating capacity. This column examines the second problem, why the energy sector has failed to develop the fuel resources needed by the economy?

Hydrogen power lights up the seas

The Soviet Union once powered lighthouses on its Arctic coast using radioactive batteries, leaving its successors the problem of disposing of the nuclear waste. Now a cleaner technology is being harnessed to power lighthouses in remote places: fuel cells.

Carbon Capitalists Grab Gas From Pig Waste in Evangelical Quest

This plant, the brainchild of Townsend and his partner, Greg Spencer, is ready to sell its CO2, a major cause of global warming. Yet $7 million in new equipment to ship the gas sits idle because oil company BP Plc has yet to open part of a 400- mile (644-kilometer) pipeline that will take it to West Texas.

Corn-to-Ethanol: US Agribusiness Magic Path To A World Food Monopoly

Eight years of Biofuels (ethanol) policy and legislation has cemented in place the first world wide food cabal, which promises a humanitarian disaster, a famine more serious than those caused by any tsunami, earthquake or drought. This crisis is not in the dim future, it is here.

How to be a good source of environmental (or peak oil) news

Near the top – often at the very top - of every well-written news story is what journalists call the nut graph.

It is the paragraph that succinctly answers this question: “Why should my readers care about what I’m about to write?”

If reporters don’t include a nut graph, good editors will demand it.

Hoping for a new New Deal

I'm all for hopefulness, if it's warranted. But, when we make use of a historical example to build a case for a hopeful outcome to our current dilemma, it is essential that we have an accurate understanding of that history. In this case, before we can posit the emergence of a new New Deal, we had better understand the nature of the old one. Having spent the past couple of years researching the response of business elites to the Great Depression and the New Deal for a history dissertation I'm currently at work on, I think I can offer some insight in this regard.

Surging oil prices crank up heating-cost forecasts

For heating oil customers, a bad situation got even worse. Those who heat with heating oil are expected to pay a record $1,841 on average from October through March, up 25.6% from last year and $56 more than originally forecast. Heating oil bills are expected to be more than double those seen four years ago.

Where EOR Succeeds and Where it Does Not, Part 2

The questions we need to explore are: can MGI be successfully applied to a broad range of oil fields in order to extract an additional increment of original oil in place (OOIP) from the vast population of oil fields? If not, what other EOR processes can be applied across the full spectrum of oil fields?

Venezuela To Invest $10 Billion In Oil Business This Year - PdVSA

State oil company Petroleos de Venezuela, or PdVSA, said Wednesday it will invest a total of $10 billion this year in oil operations.

Last year, PdVSA officials invested $6 billion, the company said in a statement, reiterating what Oil Minister Rafael Ramirez said earlier this week.

This year's investment is geared toward keeping production volume stable, the statement said.

Next 10 years critical for global energy supply

Steps to avoid an energy crisis in the long term have to be put in place in the next decade, and global co-operation with China and India will be critical.

Surge in oil prices not just speculation

Oil prices verging on $100 a barrel are the result of skimpy supplies colliding with strong growth in China, the United States and the rest of the world, and not just the work of speculators, the nation's chief energy forecaster concluded yesterday.

Congress addresses 'Enron loophole'

Despite two years of warnings and lobbying by a Connecticut-led group, it's the specter of $100-a-barrel oil and a winter where millions are expected to struggle to pay heating costs that has Congress at last considering bills to return oversight of energy transactions to a federal committee.

Bangladesh Energy Scenario Remains Uncertain

The dry season is about to set in. Intensive irrigation will require assured supply of diesel, stable power supply to irrigation pumps. The farmers will require assured supply of fertilizer and other agricultural inputs like seeds, and pesticides. But the early signs of most of these are not very encouraging. There have been reports of fertilizer crisis from some places. Power generation which peaked to about 4000MW has again gone down to about 3500MW. Some of the ageing plants can not sustain stable generation. Plants in Ghorashal and Ashuganj can no longer be relied upon for uninterrupted generation. Now Power ministry has realized that the dilapidated Power Transmission Grid and distribution network can not handle above 3500MW.

New plants put King Coal in the cross hairs in Iowa

Proposed coal-fired power plants near Waterloo and in Marshalltown are keeping the debate over global warming burning in Iowa.

Environmentalists, NASA's chief climate scientist, industry experts and citizens are lining up to testify about the coal-burning plants, which could affect Iowans' lungs, power bills, fish-eating habits and ability to find jobs.

Coal in 3 nations could undo much of world's efforts

"China, India and other developing countries must be part of the solution to global warming, and surely they will be, if developed countries take the appropriate first steps," said James Hansen, director of NASA's Goddard Institute for Space Studies. "China and India have the most to lose from uncontrolled climate change, as they have huge populations living near sea level, and they have the most to gain from reduced local air pollution."

More from NASA's Hansen on coal

Late last month NASA's chief climate scientist, James Hansen, entered the battle over a proposed coal plan in Marshalltown, submitting testimony with the Iowa Utilities Board that opposes any new coal plant that doesn't capture its carbon emissions, a main factor in global warming.

It marked the first time the University of Iowa graduate and adviser to Al Gore's book and film "An Inconvenient Truth" chose to testify in any state's coal-plant case.

A coal state vies to share in global boom

West Virginia sees opportunity to sell mining equipment to China and, perhaps, more coal to Europe.

Sowing the seeds of uncertainty

A quarter of the world's flowering plants, for instance, are now threatened with extinction over the next 50 years. There was some reasonable coverage on the day itself (especially in the Independent), but then silence. Environment going to hell in a handcart - heard it all before; so what? Or words to that effect.

Swedish report reflects how it is no longer believable as leading nation for sustainable development

The report reflects the sad state of sustainable development in Sweden. Firstly it identifies that business as usual, even given a good dose of technology optimism will absolutely fail to meet goals. Secondly it is just another haphazard shot in the dark from the country that announced the goal to break oil dependency by 2015 and convinced many that Sweden was leading sustainable development only to deliver nothing since the announcement over two years ago except a poorly written final document published and circulated for comments.

Oil Prices: It Gets Worse

Oil prices hit a record high of $97 a barrel on Tuesday, but the next generation of consumers could look back on that price with envy. The dire predictions of a key report on international oil supplies released Wednesday suggest that oil prices could move irreversibly over the $100 a barrel threshold in the not too distant future, as the global economy faces a serious energy shortage.

This gloomy assessment comes from the International Energy Agency, the Paris-based organization representing the 26 rich, gas-guzzling member nations of the Organization for Economic Cooperation and Development (OECD). The agency is not known for alarmist warnings, and its World Energy Outlook is typically viewed by policy wonks as a solid indicator of global energy supplies. In a marked change from its traditionally bland, measured tones, the IEA's 2007 report says governments need to make urgent, bold decisions on energy policy, or risk massive environmental and energy-supply crises within two decades — crises and shortages that could spark serious global conflicts.

"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol told TIME this week. "Lots of targets have been set but very little has been done. There is a lot of talk and no action."

Oil jumps above $98 a barrel

Oil sped above $98 a barrel for the first time on Wednesday, closing in on the landmark $100 level, driven by a slumping dollar and worries over a winter fuel supply crunch.

Analysts said it was only a matter of time before oil hit triple digits, with evidence of tightening stocks aiding a nearly 8 percent rise over the past two weeks alone.

"We're going to get $100 before too long," said Kevin Norrish of Barclays Capital.

Energy agency urges India and China to cut consumption

China's and India's surging fuel consumption poses a growing challenge to the world's energy systems and, unless curbed, will strain global oil trade, push up prices and lead to substantially higher carbon dioxide emissions in coming decades, according to a report released Wednesday by an influential energy organization.

In unusually urgent tones, the International Energy Agency, which provides policy advice to industrial nations, urged advanced economies to work with China and India to cut overall growth in energy consumption.

Energy needs 'to grow inexorably'

The global demand for energy is set to grow inexorably through to 2030 if governments do not change their policies, warns a top energy official.

Nobuo Tanaka, executive director of the International Energy Agency (IEA), said such a rise would threaten energy security and accelerate climate change.

Drowning in Inflation is Never Popular

I am becoming quite unnerved by the fall in the value of the dollar, as I know that it is only a matter of time before the falling buck affects the price of imports, and especially imported oil when priced in dollars, and in an energy-dependent economy like we have, oil going up in price means energy costs going up, which means business costs going up, which means retail prices going up, which means inflation in prices, which means that a heap of big misery is in store for us.

Shell leader discusses U.S., world's energy future

Crude oil appears headed for $100 a barrel. Has world oil production peaked?

Peak oil (the theory that oil production worldwide is in an irreversible decline) is still an open question. The National Petroleum Council recently said we are a long way from peaking. You need to look at the assumptions. Easy oil production has peaked. Producers should be allowed to drill the entire U.S. Outer Continental Shelf, which holds an estimated 110 billion barrels of crude oil. And the Canadian oil sands and U.S. oil shale deposits, both estimated at the equivalent of a trillion barrels, should be developed.

Production from oil majors struggles to keep up as oil shoots for $100

Critically, the peak oil debate that has started to frame the current rally in crude futures attracted new data to consider on November 2.

A Platts survey showed third-quarter global production of oil liquids at seven key publicly traded international majors declined 6% from last year, with output down 664,000 b/d at a time when some officials are calling for increased production from OPEC.

Much higher oil prices seen in U.S. future

Steve Andrews is betting the jump in oil prices is far from over.

He's convinced oil prices are headed much higher because global oil output is at or near its maximum peak, if it hasn't already peaked.

Oil pushes ever higher

Two oil companies have already evacuated oil workers from some platforms. BP has said it will suspend its Valhall oilfield, which generates 80,000 barrels a day, on Thursday night and move 150 people off its platforms. ConocoPhillips, the US energy company, is moving 400-500 staff and may temporarily shut up to five platforms.

One report has claimed that some older platforms have sunk closer to the sea's surface following subsidence on the seabed.

French fishermen set to end strike over fuel costs

French fishermen look set to end a six-day strike over rising fuel costs that blocked ports and oil depots after President Nicolas Sarkozy promised emergency aid.

Sarkozy offered on Tuesday to exempt fishing businesses from welfare charges for six months and study a mechanism to offset diesel costs against fish prices.

Boom Times: How much oil's under North Dakota?

Thirty years ago, everyone thought there was perhaps 10 billion barrels of oil in the Bakken Formation, according to Julie LeFever, who has been studying the state's oil patch for 27 years with the North Dakota Geological Survey in Grand Forks.

More recently, one expert estimated it's more like 400 billion barrels, while others say 200 billion to 300 billion barrels, LeFever said.

Alaska: Oil tax increase is likely as session nears end

The stain of corrupt state legislators, reports of big oil company profits, and a tremendously popular governor are mixing into a potent political stew that's making it more likely legislators will raise taxes on the oil industry.

Moves to counter fuel shortage

CHINA'S two dominant state oil companies will delay refinery maintenance work, among other moves, to safeguard domestic transport fuel supply, the top planning agency said yesterday.

Diesel supplies still short in North Dakota

Mike Rud (rood) is president of the North Dakota Petroleum Marketers Association. He says fuel suppliers have been scrambling to make sure there's enough diesel for farmers to finish up harvest.

Norway ejects Vedanta Resources from oil fund

Norway has dropped British mining and metals group Vedanta Resources from its $350 billion sovereign wealth fund for ethical reasons, blaming it for environmental damage and human rights violations in India.

China Likely to Establish Oil Pollution Damage Compensation Fund Next Year

China's coastline is receiving an increasing number of large- scale oil tankers, especially those with a DWT of over 300,000 tons. Major oil spill incidents over 100 tons have occurred many times in recent years in China, causing environmental pollution as well as financial losses, Liu Gongchen, Deputy Director of MSA told reporters.

"China should follow the international norm in establishing its own oil pollution damage compensation fund in order to speed up the cleaning-up process," said Liu.

Water: Boone Pickens has big plans

You might have heard about T. Boone Pickens' plan to capitalize on the South's growing water needs by transporting Ogallala Aquifer water to growing towns and urban areas via pipeline.

But did you know that Pickens' planned water infrastructure will be pieced together using eminent domain laws?

Antarctic odyssey documents alarming retreat of the sea ice

When the renowned wildlife photographers Jonathan and Angie Scott first visited the Antarctic 15 years ago, at the beginning of the continent's summer in early November, they could see the pack ice from their expedition ship.

But when they returned in later years they had to arrive ever earlier to see the ice. And on their last visit, in 2006, the only way they could get up close was to board a Russian icebreaker. In a lecture to the Royal Geographical Society tonight, Jonathan Scott, who with his wife has spent years capturing the beauty of the Antarctic on camera for a book, Antarctica: Exploring a Fragile Eden, will warn of the devastation man is wreaking on this most remote, inhospitable and awe-inspiring of continents.

Climate bill's 60% emission cut

Prime Minister Gordon Brown has committed the UK to reducing carbon dioxide emissions by 60% before 2050 to help tackle global warming.

The Climate Change Bill will make the UK the first country to put carbon emissions reduction targets into law.

Groups to monitor whales in Beaufort Sea

Endangered humpback and fin whales swam hundreds of miles north of their usual habitat this summer in what environmentalists say is another sign of the effects of global warming and the shifting Arctic ecosystem.

Experts warn Fla. about climate change

Scientists and economists Tuesday warned lawmakers of consequences Florida faces from climate change, including more destructive hurricanes and a rising sea level, but they also said the state could be a leader in reducing global warming.

It appears there is a really good chance of $100 oil WTI/NYMEX) today, I would say at around 12 Noonish after the inventory report.

I assume everyone knows TAPIS broke 100 last nite - see

CAD$ breaks 1.10. Subprime/credit worries...the world definitely is a different place in the last 10 months...but it still is business as usual for most.

Triple Yergin ($114) probability by Jan. 2008, increased to 80%.

I have to say, hitting these numbers faster is even more disturbing than the actual number themselves. ie. 80 and 90 blew by so fast it didn't even sink in (or price up gasoline)

BTW, I suppose the crackspread is near non-existent NOW, so the prices will have to passed along downstream much faster. Going to have to crunch on probabilities of $4.00 US gasoline.

It seems like only yesterday that you could slap down a Yergin and get a barrel of oil and some change .

Get ready for a Carry Trade Hiccup...YEN down to 113.18...blew through the KEY carry trade support point of 114 last nite. (It had been fighting 114 for the last month with internal Japanese manipulations). No more.

Frankly, I don't know what this means in the short term..but just know the carry traders were afraid of that threshold.

The Swiss franc is seeing big day to day moves also. It is 1.15% stronger from yesterday as I write this. About 6% stronger over the last few months. These are big moves for the Sw Fr.
I have read the SwFr carry trade that developed because of its low interest rates( approx 1%)is being unwound also.
Anyone that borrowed the SwFr to buy dollar denominated debt instruments is getting hammered.

Cramer says oil stocks not for the buy and holder:

The stocks are "undeniably trading oriented" buy when low, sell when high. Sort of like what Will Rogers said about how to make money int he stock market: buy a stock, wait till it goes up, then sell it. If it doesn't go up, don't buy it.

Why would the Swiss drop interest rates to 1%? In 2003/04 the Swiss Franc was much stronger.

You'll know things are REALLY bad when the US$ and the Yen reach parity.

The last time the Yen got this weak was back in August. I was reading a lot about the coming catastrophe as the carry trade unwound (bankruptcies in Mumbai, hedge funds going under, stuff like that). It only lasted for a few days before the Yen went back down again. This time the movement is much more dramatic. I wonder if it will come back as quick this time.

yes the yen looks like a very good investment right now.

carry-trading(shorting yen, buying higher yielding currencys) isnt profitable in markets this volatile. it usually follows the dow jones 30 almost tick by tick. i guess you could say buying yen is like shorting stock markets with extrem leverage. and we all know where the stock markets are going, dont we?

Even though I knew this was coming and worse is yet to come down the road, the full implications are hard to grasp. Being a farmer, I'm trying to figure how much I need for crops to break even and the equation changes so fast I can't keep up.

How much is a bale of hay worth when diesel is $4/gallon?

Should I fertilize the ground when fertilizer costs another hundred dollars a ton?

What happens if I don't?

Scary times folks.

I did inhale.

Scary times indeed...

Ya know what would get you mind offa all these currency problems?

A good old fashioned war.

Whoah! Another insightful comment from deep mind:)

A whole lot of farmers here are asking the same questions.

They are unsure of anything..except forward contract and store in your own bins as need be..then ride out what comes...

Yet farmers are familiar with ups and downs and have some resilency..its the newer guys who are way way into debt that can end up dead in the hog lot with the pigs crunching away on their skeletal structure..and it can happen fast...

The older ones who own the land they farm..and not rent or share...they can ride a lot more out.

But when the banks go tits up? Then look out for the process servers will come(some say) and then?????????????

A heck of a lot of farms were gotten that way..of the court house steps at auction...brought sometimes for just back taxes.

Now ..who knows.

Finally the 'eaters' are pissed at the machinations of creating the 'farm bill' and bitching that junior and janie are obsese because of H.F.C.Syrup and the ag people are to blame...sure its never the parent!!!

airdale-watching closely as it all rides out..and it will ride out as the black stuff gets more and more expensive
Who says gas is not up? I am paying almost $3 for what a week or so ago was $2.74

Airdale – Love your posts. You got the wrong name.

Not just because I hate airdales,(airheads) but because you are more tenacious than that.

I might be so bold as to suggest JRterrierist or some such.

I have rat terriers (Roosevelt terriers) and they are better “people” than most others I hang with.


Another excellent Airdale post!

Yes, those old farmers know the score.

If I'd run my small biz like an old farmer, I'd be OK now. By running it like an old farmer I mean drive a used car/minival that's all paid for, don't use credit at all, and probably just have my "stuff' in a storage or small office and rent a room to live in, or sleep in the van.

Of course out here in N. Az. the way to do it is to own the place, avoiding renting as well as avoiding debt.

The idea is to make things fairly failure-proof, and set things up so that if there's failure it's in degrees not catastrophic.

On an agriculture related note:

Today there was milk in my grocery store for the first time in about two months. It was powdered. There were two policemen with handguns and bullet proof vests guarding the milk.

I live in Venezuela right now, and there hasn´t been much milk around for about two months. You can still occasionaly get yogurt and chocolate milk (although it is Really expensive), and the cafés seem to get enough to put in their coffee, but whole, skim, and powdered milk has been absent.

The milk industry spokesperson says its because the government fixed the price controls too low. The governments says it`s because world milk, and world cow-feed prices are very high right now. A taxi driver told me that local producers would rather sell the milk across the border in Columbia.

I don`t have any real idea about the causes, but I didn´t like my shopping experience today. The line was HUGE, people were shoving and pushing, lots of people were trying to get around the 2kg limit. The shoppers pretty much ignored the produce-boy´s attempts to keep the check-out line orderly. The police were smart and stuck to keeping an eye on the milk. It was ugly. If world agricultural production can`t keep up to world population (and world demand) I don`t think this will be the only time this happens.

-planning on investigating vegan cuisine and milk substitutes.

Wow. But with all the oil money coming in, can't the government afford to subsidize milk so it doesn't all go to Columbia, without raising the price?

On the other hand, how cheap was gasoline in Venezuela? Did they not want to drive to Columbia to buy milk?

Columbia is 12 hours drive away from the capital of Venezuela.

The road isn´t up to north-american highway standards.
There is traffic, and border hastles, and hastles with protesters on the highway in Columbia (something about a toll booth that Columbia is putting in). There are fears of paramilitarys.

But yes gas is cheap. 98 bolivares a litre. On the official market a US dollar is 2150 bolivares. On the parallel market it is 5600.

"98 bolivares a litre. On the official market a US dollar is 2150 bolivares."

This equals about 20 cents per gallon of gasoline! I think that if they would raise that price then maybe the dairy farmers couldn't afford to ship their milk to Columbia.

If you're so knowledgeable, would it kill you to spell the country names correctly?

PDVSA might be earning about 300 million dollars a day if it sells all of the crude it pulls out of the ground for 100 dollars a barrel. That works out to 12 dollars a day per capita. However when you look at things like internal consumption and international deal making it is probably less.

(An inside source told me that PDVSA produces 3.1 million barrels a day, but it is heavy crude and sells for less than a hundred dollars a barrel. One type sells for 85 dollars a barrel, which would make it 10 dollars a day per capita.)

It spends a lot of money on making infrastructure (roads, railroads, factories, housing, re-nationalization, hydro-electric dams...) So money isn´t as free and easy as you might think.

They do have subsidized milk. It comes in through Mercal, the subsidized food stores. I beleive that any milk can qualify for the subsidy as long as its under a certain price and can come from any country.

You can get it every second week at the mega-market. The line is huuuuuge (they put up tents to protect people from the sun and rain, but you have to line up for a long time before you get in under the tent). And often you hear that the milk is gone before you get there. You´re limited to 1 kg per person every second week. Not to mention that its powdered (people here are used to that, but as a pampered north american it makes me say "guakala" in disgust).

A week ago a fairly politically neutral newspaper printed an article saying that Mercal would be able to provide 40% of the national demand. But when the constituional reform goes through they will be able to force companies operating in the country to sell a certain percentage of their production on the local market. The main goal of that is in the aluminum and steel markets, but won´t go amiss in the coffee, chocolate and milk markets either.

The US bought Venezuelan crude at an average price of $64.21 in August and as little as $44.77 in January.


Thanks for posting, Synchro. I appreciate hearing firsthand experiences.

Firsthand experiences *especially* from outside the USA, are very valuable. We're really not trying to be US-centric here, it just seems that way.

There's an idea for you:

OMEC - the Organization of Milk Exporting Countries

I keep hearing that we can just switch to alternative energies as oil supply declines. What are farmers worried about?

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

IMO you will see very significant demand destruction soon.

It isn't going to come from price, at any price, even $10/gal.

The banks are beginning to see massive losses from credit card defaults, as soon as they are forced to put the funny paper on the books or can no longer insure it, they will withdraw credit (lower limits to current balances). Then the gig is up and we will have a much smaller economy where liquidity is king and paper net worth very secondary. This will weed out the non producing leeches from both the top and the bottom.

Our economy at the moment is like a car that has so much rust that it's only the paint that is holding it togeather. The problem is that the paint is starting to peel.

There is actually some logic in trying to hold on to one's suburban/SUV lifestyle, if high energy prices--as Michael Lynch tirelessly tells us--are temporary, because it is expensive in the short run to downsize. Of course, if Lynch continues to be wrong. . .

Pol/Econ: Credit Cards: The Next Subprime Crisis
Monday, 05 November 2007 Written by Garrett Johnson

Turning to credit cards to maintain a lifestyle that you can't afford is financial suicide. Credit card interest is typically more than double the most risky of subprime mortgages. Once a consumer has gone too far down this path their bankruptcy is assured.

Of course it is also suicide for the lending institution. But like the consumer, American banks are dependent on those high-yield products, despite the near certainty of rising defaults and losses.

So why is the consumer taking this self-destructive path? As Bonddad has so eloquently explained, wages aren't keeping up with the cost of living.

The consumer cannot afford the lifestyle that he/she is accustom to. They are already starting to cut back on luxuries, but that isn't enough. So instead of humbling him/herself, they are taking on debt to meet their basic needs.

I did inhale, and I did have sex with that woman, but for the sake of my children, I'm not turning a blind eye on the obvious truth.

If you are a young parent like me, give it some good, long , hard thinking how you will feed your kids 5 or 10 years hence. And the prospects they will be offered for their lives.

As the cowboy said, these are scary times. Get ready ( or pull up a chair, get a cold one etc,etc....)

I was thinking more about small productive assets like farms and fabrication shops that can provide liquid cash flow.

There are some highly educated dreamers that try to maintain a fake lifestyle on credit, and it is as you say financial suicide.

But lots of lower tranches of J6P's figured out that they are financial walking dead and are using credit with the full intent of defaulting on it, just as many 0 down interest only mortgages were entered into with the full intent to either profit or default.

IMO this is not understood in the penthouses yet, big difference between "trouble" and "intent"

Did you see the new, soon to be released, Capital One commercial?

What's in OUR wallet?

musashi, if you were the Emperor of China what would you figure? Maybe instead of converting all those Yankee dollars to Euros maybe take it out in US infrastructure? Lotsa bridges could be bought and tolls placed (slow down global warming too no doubt about it). The only fly in the ointment i see is that it would sort of take the treasure out of treasuries and then where would all that leveraged wealth be? There would be no one to pay the tolls. Hmmm must rethink this. Maybe instead of infrastructure you could take it out in mining, there is one S load of Asphalt to be had out on highway 66 for starters, pave over half of manchuria, not there any more you say? Oh well guess the party is really over. I guess it's time to put the bleachers out in the sun and have an auction on route 61.

Hello CrystalRadio,

Recall that I have been pounding away on biosolar mission-critical investing on the Yahoo Finance POT message board.

Therefore: If I was the Chinese Emperor....

I would be spending my massive, trilion dollar Sovereign Investment Fund [SIF] savings on gaining 'hen & NPK eggs' control of Elemental P & K mining resources. If I couldn't do it by peaceful financial means....well, 300 million footsoldiers with wheelbarrows will eventually get it done:


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

Hi totoneila, thanks! and actually I have been jumping in and out of the POT for a while. So far not burnt by the experience but will wait till the fire is lower before joining that Won Ton Bathing Club again. I find the IEF-UN.TO cool tub is a nice place to relax in, should make a nice sauna with the POT for the longer term.

Don't know China well enough to answer.

It's probably a good thing that I have zero chance to become omnipotent dictator of anything. :-)

I do like their policy to reward traitors with a bullet in the back of the head though.

Converting dollars to Euros is not nearly as easy as it seems. If you are talking about future investments, the only real problem is that it will further drive the Euro up and dollar down. In that case, it would be a matter of time before the Europe and the US have a common position against China: the Yuan goes up, or trade barriers do.

If you are talking about taking China's existing treasury holdings and selling them into the market to buy new Euro demonimated assets, it would involve massive capital losses for China. As soon as they started selling treasuries, their value would plunge. China's average price would be very low. Smart observers would move into Euros in advance of China and so their average purchase price of Euro assets would be high.

Then they would have to try to sell their products to a broke US or an angry Europe. And don't tell me an export oriented economy doesn't care about exporting.

Yes, the US screwed the whole thing up. And yes, the party may be coming to an end, but the damage will be much broader and harder to estimate then you seem to think.

Npr had a short talk about the effect on china if there stock market fell(likely as a result from dropping the dollar). they pointed out that due to the way the stock market is made up, mainly most of the top companys are mostly state owned. a drop of 1,000 is the same as our stock market droping 100. in other words, they won't be hurt nearly as much as we would if they dropped the dollar.

In other words, china owns us.

I think it's clear that $100 per barrel is just a way stop on a long upward rise (as well as a decline in the dollar). The two stories quoting the IEA again show just how difficult it will be to go forward, given what's happening in China and India. We all worry about short term cost and availability, yet the real problem is long term. It's becoming blindingly obvious that we must make drastic cuts in CO2 emissions, which means that coal will be a bad choice for the future as an energy source. While the cost of coal is presently low, the cost of CO2 capture will be large and the loss of efficiency would imply less net energy available.

The U.S. government has virtually ignored the energy problem for decades and our present administration has actively papered over the scientific evidence of the impacts of CO2. Even our most liberal representatives in Congress can't seem to face the immediacy of the problem, with proposals to cap emissions by industry starting in 2012, after the next President has completed his (her?) first term. Life is not run that way, as there is only today and such grand plans for the future have a way of evaporating when faced with the clamor of the crowd.

The only way to prevent an inflationary spiral and a crash in the dollar would be to ration oil, thereby handcuffing the "invisible hand" of the market before it strangles us all. Yet, the Presidential candidates still call for more growth and business as usual, promising more jobs and benefits for the working people. One can only hope that we will really see a national discussion of these problems, that this time, things will REALLY BE DIFFERENT!

E. Swanson

The only way to prevent an inflationary spiral and a crash in the dollar would be to ration oil, thereby handcuffing the "invisible hand" of the market before it strangles us all.

I'm far from a market fundamentalist, but I have to disagree with this statement. Rationing doesn't get rid of markets. Even if you outlaw trading of rationed resources, all you are going to do is hamper incentives to reduce use and increase production, as well as create black markets. This is a recipe for disaster.

Cap-and-trade is more interesting, but in general managing markets, whether by force or by finesse, is excruciatingly difficult.

Rationing won't work without a white market to iron out the differences in the distribution. Those who would want/need to use more would pay more for that choice. Those that managed to use less would enjoy extra income. Even the U.S. emergency gasoline rationing plan from 1980 included a white market. The trouble is, the present proposal for a U.S. cap-and-trade for carbon emissions puts the burden on industry, which would then use market prices to adjust emissions. The result at the consumer level would be increased prices, thus inflation in a massive upward spiral. The bottom 80% of the population, who have experienced declining real income, would shoulder the burden of the cuts, while the wealthy few continue living life as usual.

BTW, there is no such thing as a "free market" in oil, since the U.S. oil markets were regulated by the Texas Railroad Commission until 1971, then world production was regulated by OPEC. Then too, FED intrudes in the financial market regularly. These guys profess to be controlling inflation, but since 2001, they haven't been doing so, especially as they've taken to measuring inflation based on so-called "core inflation" calculation, which excludes energy and food prices. Exclude energy and food? Excuse me, aren't these the very foundation of the entire civilized world?

E. Swanson

"invisible hand" of the market before it strangles us all-----
More like the "Invisible fist" knocks some idiots awake. Superstition based economic systems (capitalism) always need reality, in this case thermodynamics, to burst their illusionary bubble.

the Presidential candidates still call for ... business as usual

I suspect that at least a few of the candidates are aware of the real oil situation. I saw a video of a speach Bill Clinton gave in Southern California 6-12 months ago where he spoke about imminent peak oil. I just think the campaigns think that they cannot get too far ahead of public understanding of this. If the MSM will not take it on, it probably is too early for the presidential candidates. Maybe someone like Kucinich, who has no real chance, could take it up.

After the nominations are wrapped up in March or so, it might happen. Events are speeding along. Matt Simmons has often predicted that Peak Oil will very soon become the most important political issue and I would not bet against him. It might be the most important issue in the US presidential election. In any case, Bush's main energy initiative, invading Iraq, will certainly be front burner.

The only way to prevent an inflationary spiral and a crash in the dollar would be to ration oil

How about simply taxing oil consumption at European levels? (Phased in over a few years, of course, to allow orderly adaptation.)

That's pretty much guaranteed to lead to enormous cuts in US oil usage. As a nice side-benefit, other taxes could be lowered to make the change revenue-neutral. That would substantially improve the financial incentives for individuals to be energy-efficient, and is probably our best bet for rapid and relatively-easy change. It also dovetails nicely with price increases, as they're much the same market signal.

Politically impossible now, of course, but still probably more plausible than rationing.

''That's pretty much guaranteed to lead to enormous cuts in US oil usage. As a nice side-benefit, other taxes could be lowered to make the change revenue-neutral. ''

That isn't what happens in Europe. We pay high taxes and social security and High duties on Fuel at the same time.

And its biting now with UK fuel at £1.00 (= $2.10) per litre.

That isn't what happens in Europe. We pay high taxes and social security and High duties on Fuel at the same time.

Well, yes, but that's because it's a different social model.

There's nothing stopping a government from using gas taxes to reduce other taxes, even though such a thing might be unlikely.

True enough, but offsetting still enables people to buy gas without the requirement for fuel efficiency because it is without a financial penalty. Europe and the UK had gas guzzlers until the Oil shocks of the 70's and 80's. Then fuel efficiency started to kick in for most as the Fuel Duty Escalator was brought in - Duty increased each year at a level greater than inflation.

Right now, I doubt it would be possible to increase fuel duty in the US. The US system is designed around cheap fuel and the increases in raw price on its own is hurting badly.

Just as we Brits wont wake up to our electrical energy problems without a few blackouts, The US wont wake up until you get lines at gas stations.

Sad, but true.

offsetting still enables people to buy gas without the requirement for fuel efficiency because it is without a financial penalty.

Absolutely true, but it provides them with an incentive not to do so. If you can save $500 a year by driving less, that's not a big deal - a cup of coffee a day; if you can save $3000, it becomes much more compelling. It's basically about making it worthwhile for people to conserve, and then letting them go find their own clever ways to do so.

A little regulation - like fuel efficiency standards for new cars - wouldn't go amiss, though. I'm a big fan of mixed solutions.

The US system is designed around cheap fuel and the increases in raw price on its own is hurting badly.

It doesn't sounds like it's hurting that badly - GDP growth is still very strong (3.5-4%, recovering from the slump earlier). There's enough excess money sloshing around in the US that I really think they'd be fine with much higher gas prices, given a couple years to adjust.

''A little regulation - like fuel efficiency standards for new cars - wouldn't go amiss, though. I'm a big fan of mixed solutions.''

I wholeheartedly agree with that: CAFE Standards are woefully inadequate. And if elevated, then it will change the types of vehicle used. It would be painful and maybe even fatal for some car makers, but $6 dollar gas would be just as painful or fatal for some. Either the US Auto industry recognises this as a fact and acts proactively or someone will come along and eat its lunch anyway.

GDP Growth? Well , not sure about that. To my mind GDP is one of the most corrupted and manipulated metrics along with CPI and Core inflation and Jobless statistics . Not just in the US, but also here in the UK and probably mainland Europe too. Here also, food and fuel and house prices are not counted. I think CPI is based upon the price of lace doilies, buggy whips and crocheting hooks...
It certainly isnt based on anything like food, fuel, energy, housing, schooling, council tax or even haircuts.

GDP Growth? ...

It occurs to me that GDP growth, as quoted by government agencies, is somewhat analogous to crude oil reserves. On some level, the figures represent a 'truth' of sorts. But the actual 'production' represented by, say, median income, has peaked and is declining. So we can tout our vast wealth and GDP growth, just as CERA touts massive reserve growth, while the soup lines begin growing longer. Obvious to me which 'reality' is more real.

GDP Growth? Well , not sure about that.

Whatever you think of how GDP growth is calculated, the number now is quite big compared to the usual number, suggesting - unless there's some evidence that there's been a substantial change in methodology within the last few months - that the economy is doing better now than it had been.

That doesn't necessarily mean the majority of people are doing better, of course, since income distribution is quite skewed, but it does mean the US economy seems to be handling the housing crisis and the run-up in oil prices surprisingly well.

There's already been a lot of discussion at TOD (with numerous links) about the reported 3.9% growth rate. Essentially, that growth rate was distorted by the high price of oil imports in relation to the temporary low price of gasoline. A more realistic growth rate after accounting for this factor has widely been calculated to be around 2%.

Philadelphia Fed President Charles Plosser told the New York Times two days ago that a 4th quarter growth rate of 1 - 1.5% was already built into his forecast.
(http://www.bloomberg.com/apps/news?pid=20601068&sid=azFp65UhAU4c&refer=e... and http://www.portfolio.com/news-markets/national-news/reuters/2007/11/06/m...)

Essentially, that growth rate was distorted by the high price of oil imports in relation to the temporary low price of gasoline. A more realistic growth rate after accounting for this factor has widely been calculated to be around 2%.


I don't find that at all credible, given what a minor part of the economy spending on oil and gasoline represents - even at $90/bbl, US oil imports of 13Mb/d account for only 3% of US GDP. How is 0.75% of GDP - what the US spent on oil imports in Q307 - supposed to account for 0.5% of GDP growth? You do realize that imports are subtracted from calculated GDP growth, don't you?

Nor do I see how expensive oil and less-expensive gasoline is supposed to provide the claimed effect. Especially considering oil prices weren't unusually high for at least half of Q3 - this price runup only started in mid-August.

Taking a look at the sources of the GDP growth straight from the BEA, we find:

"The increase in real GDP in the third quarter reflected positive contributions from personal consumption expenditures (PCE), exports, federal government spending, equipment and software, nonresidential structures, private inventory investment, and state and local government spending that were partly offset by a negative contribution from residential fixed investment."

The major contributors and annualized rates of change appear to have been:

- Exports (up 16.2% an.)
- Purchases of durable goods (up 4.4% an.)
- Nonresidential fixed investment (up 7.9% an.)
- Federal government spending (up 6.8% an.)

None of those have much to do with oil.

Real GDP flows from an estimate of price inflation. Lower your price inflation estimate and you can increase your real GDP number (you lower nominal GDP less). The same government forecasts nominal oil prices of $95 in 2030. They were quite accurate with their pre-war estimates of Iraq adventure expenses.

Real GDP flows from an estimate of price inflation.

That still doesn't explain your claim that expensive oil and less-expensive gas should cut 2% off Q3's GDP growth rate.

The same government forecasts nominal oil prices of $95 in 2030. They were quite accurate with their pre-war estimates of Iraq adventure expenses.

And those same government forecasters are telling us 3.9% GDP growth rate, so how do they support anything you're saying?

It's not that they all don't care about the problem, its that the majority don't know there is even one to begin with. Ask any american on the street about the state of the electrical grid and 90%+ won't be able to give you the correct answer. That many places are just one unexpectedly hot summer or cold winter away from rolling blackouts or load sheding(shutting off homes in favor of comapny's, warehouses, and manufacturing plants). Same goes for the water situation in some parts of the country or gas in other parts of the country.

Some will use the data of corruption as provided by Enron and claim that any problems are part of a conspiracy.

It's called the iron triangle, look it up.
Also enron was a conspiracy in that the upper management and the accountents knew what was going on and purposfully with held the information so they could milk the stock for as much as it was worth. this happened allot with more then just enron.

load sheding(shutting off homes in favor of comapny's, warehouses, and manufacturing plants)

Actually, that's exactly the opposite of load shedding - industrial customers voluntarily enroll in load shedding programs to receive a break on overall power costs in return for being willing to scale back use to smooth demand peaks.

I knew it was one or the other, i just figured the government would want to shed load from home to companys as to not hurt the economy durring the day.

Load shedding is any planned cutback - whether it's voluntary on the part of the user or not. The term "load shedding" is commonly used overseas the way we would use "rolling blackouts."

OPEC Member Algeria builds Light Rail Lines

PARIS, Nov 5 (Reuters) - French engineering group Alstom (ALSO.PA: Quote, Profile, Research) and two Spanish firms have been selected as preferred bidders for a deal to build a tramway in the Algerian city of Oran, a company spokeswoman said on Monday.

She reacted to an article on the Tout sur L'Algerie website (www.toutsurlargerie.com) which said a consortium headed by Alstom had won the 345 million euro ($499.6 million) contract.

The Spanish firms are Corsan-Corviam Construccion and Isolux Ingenieria

In Algiers, Alstom is to deliver 41 Citadis trainsets. They will operate on the first tramway line, linking the city centre with the new districts in the east. The line, currently under construction, will measure 23.2 kilometres and have 38 stations. Alstom was chosen in 2006 by EMA for the supply of a first turnkey system consisting of rolling stock, track, the power supply system, traction electrification, the signalling system, control equipment, maintenance, part of the public works and a workshop

And an indication of the world wide movement.

Algiers, Barcelona, Dublin, Istanbul, Lyon, Paris, Melbourne, Rotterdam, Tunis... 25 cities have chosen an Alstom tramway and 50 other cities have a tramway project coming up in the next three years. This boom can be explained by the many benefits that this method of transport offers, in a context of exponential urban growth and strong environmental constraints, on a global scale. Tramways makes it possible to develop sustainable mobility, ensure genuine quality of service, to rethink and bring new dynamism to urban spaces, preserve architectural heritage and contribute to the growth of cities

Best Hopes for OPEC members Algeria, Venezuela, Dubai, Iran and soon Libya for actively building Urban Rail.


For how long will oil reserves last?
By Amir Taheri, Special to Gulf News
Published: November 06, 2007, 23:13

. . . whether or not we have endless supplies of oil, it is still a dumb thing to burn it in our cars.

whether or not we have endless supplies of oil, it is still a dumb thing to burn it in our cars.

Whatever our other disagreements, I think most of us here can agree on that.

[Tramways] And an indication of the world wide movement.

Which is great news - thanks, Alan.

From a purely selfish point of view, expensive oil means less air pollution and increasingly-walkable cities. Considering a 10% reduction in driving would save dozens of lives annually in Toronto alone, I have a certain amount of trouble being terribly concerned that rich countries are being pressured to use less oil.

It's painful for poor countries, of course, where oil-fired generators are often used to provide electricity, so I think rich countries should help in the transition to different power sources (and, yes, I'd be willing to pay higher taxes to do so, although the 0.1% increase that would be needed to provide billions of dollars would hardly be noticeable). For rich countries, though, high oil prices are arguably good news.

The story above, Energy agency urges India and China to cut consumption by Jad Mouawad, has this howler:

In the next year, China will need to install 800 gigawatts of power-generating capacity, about as much as Europe has.

Since it is about as much as Europe has, does it not occur to him that there might be something wrong with that number? That could not possibly be correct, could it? This guy is the same guy who has written a number of clueless energy articles for the New York Times. The NYT is my prime news resource but it astounds me that they would leave a beat as important as this to Mouawad.

Edit: Sorry but I tried to put this out as a top level post and not a reply to Alan.

That could not possibly be correct, could it?

No, it couldn't - the EIA notes that Europe does indeed have 800GW of generating capacity, but China has about half that. Given their growth rates, an 80GW demand increase in a year is plausible, and is almost certainly what he should have typed.

Typo or not, the NY Times' energy correspondent thought it could be possible. 80GW demand growth is plausible but I doubt they could build that.

Edit: Already proved wrong down thread.

Right-- from the same article

In its report, the energy agency recognized the legitimate aspirations of China and India to improve the lives of their people.

That's big of them. And while the "advanced economies" implode in a tide of debt and inflation, the "developing economies" will choke themselves (and everyone else) to death in coal smoke.

Not much good news here. Guess I'll turn on Fox News.

You're right, it's not correct. In 2006, China installed a record 102 GW. In 2007, they will install nearly 80 GW, bringing total system capacity up to 700 GW. Nearly 80% of capacity is coal-fired.

I think he should have written:

In the next year, China will need to install 80 gigawatts of power-generating capacity, about as much as the UK has.

This Alstom company also recently bought a Spanish wind turbine manufacturer, http://biz.yahoo.com/bw/071105/20071105005129.html?.v=1 Given the info above, IMO, more DD and perhaps money will go towards owning a slice.

Why all the enthusiasm for electric trams and rail in cities?
What will they be good for when the economy collapses?
Maybe everyone sees them as being useful in a business as usual scenario post peak.

Don't cities depend on rural areas to function?
Won't cities be the first place to feel the effects of economic collapse and population overshoot?

The way I see it, if there will not be enough oil to run diesel buses or the inner city transport system as it functions now, where will the oil come from to run trucks, tractors and air transport.
What difference will the lousy city light rail make.

The money could be better spent educating the populace and providing further incentives to de-urbanize and/or change to alternative energy.

It is best to dig the well before you are thirsty.

The rail has to be laid in a sensible fashion and what we do now transit wise is not it, neither in the pattern of where we live, nor in the way in which light rail gets done today.

The rail of the future will run all through urban areas and then out to where gardens and farms are located, tying compressed housing zones, manufacturing, and agriculture together.

Notice that a lot of populated places are going to dry up and blow away - most of the American Southwest is going to let go as the water surplus from the 1950s - 1970s stored in Lakes Mead & Powell is depleted.

"I am sorry to say this, but we are headed toward really bad days," IEA chief economist Fatih Birol.

Anyone know if any IEA representatives were at ASPO-USA?

What is this from WT?

The top link on the page (at the moment).


He also goes on to blame the industry for not drilling and sure, missed targets/project dates don't help at the moment...but just another sidestep of the real problem.

"Lots of targets have been set but very little has been done. There is a lot of talk and no action."

In the US it is rather worse than that, I'm afraid. There has been very little talk amongst the top levels where it really matters, and most of that consists of misinformation or deliberate disinformation. Furthermore, instead of "no action", much of what we are getting is counterproductive action.

The IEA and others don't seem to understand that the oil has to be produced at a profit.

That means the so called 'reserves' are only actually reserves if they can be produced using today's technology and at today's prices - and, as well, if the oil is going to be used for fuel there must be more energy in a barrel of oil than it takes to extract it and get it to the final user.

So, just because the oil is in the ground it doesn't mean it will ever all be produced as fuel for financial reasons let alone above ground factors.


That means the so called 'reserves' are only actually reserves if they can be produced using today's technology and at today's prices

Only if you assume technology will stop improving and prices will stop increasing. Neither looks likely in the short term.

Simmons, who is an oil industry investment banker and has been involved in financing the development of most recent oil technology, said in an interview a few months back that there were no major new developments in technology in the pipeline.

no major new developments in technology in the pipeline.

He's entitled to his opinion; however, I'd consider THAI to be a fairly valuable potential technology, for tertiary well development as well as for primary production of bitumen deposits, including deposits that are otherwise not viable.

It's possible THAI won't work out, of course, although initial tests have been quite promising (in the "10kb/d for months from test wells" kind of way). It's still at the testing phase, though, so I'd certainly call it "in the pipeline". Perhaps Simmons was referring to technology for conventional wells; however, when THAI was discussed here, some oil folks were pretty excited about the idea of using it for reworking old conventional wells.

At any rate, the main point was simply that discounting feasible reserves which are not currently economical to forecast shortages is foolish, since shortages will inherently raise prices and make those reserves economical. (That doesn't mean shortages won't occur, of course.)

I have not been terribly interested in technology still on the lab bench as of lately...so I have a question:

Where does the energy for this process come from?

EDIT: after doing some research...it is interesting. Definitely less destructive than strip mining.

But, the upgrading process is not affected, it still needs NG.

Rise in global energy demands 'alarming,' IEA says

The report barely mentions the Alberta oil sands, whose vast reserves are second only to Saudi Arabia's. The omission was no accident. In spite of their size, the IEA thinks the oil sands will amount to little more than a global rounding error as demand, now about 85 million barrels a day, rises to a predicted 116 million barrels by 2030. "By 2015, the oil sands should produce about three million barrels a day," Mr. Birol said. "That will be only about 3 per cent of total oil production. The oil sands will not, unfortunately, change the game."

Where does the energy for this process come from?

Burning the bitumen in-place. There was a thread about the process here which answers those sorts of questions.

Hi Pitt,

Yeah...I answered my own question. The process of extracting has advantages over strip mining to be sure.

But the upgrading process will still be water and NG INTENSIVE.

So the future of Oil sands is not JUST about the price of oil.

Funny, non-renewable resources constraining the extraction of other non-renewable resources...who'd a thought? :P

But the upgrading process will still be water and NG INTENSIVE.

Based on production data from the Alberta government - which I link to in the THAI thread, IIRC - SAGD requires only a tenth the water of open-pit, and THAI requires less than SAGD, so water intensity of tarsands mining is in many ways about the choice of production method.

SAGD uses about 50% more NG than open-pit, though - to heat the steam - so it's certainly not a uniform win, but THAI promises to require much less NG than SAGD. It still needs a hydrogen source for upgrading, of course, although some level of upgrading will apparently be done in situ by the process itself. According to this presentation, upgrading consumes only 20-40% of the NG used in SAGD, so THAI is likely to cut the NG requirement in half.

Assuming it works, of course. The test wells are very promising, but that's not enough to bank on it.

The THAI process looks promising and the company will probably make a lot of the money if prices stay where they are now.

However, I don't see how it can make a significant difference in terms of flow rate:

With the current design, one well pair covering 500 meters has a lifespan of 5.4 years so 5.4 x 365 x 630 bpd of upgraded bitumen (which is the design, actual flow rates have been considerably higher and may be double) equals 1.24-2.48 million barrels of upgraded bitumen per year.

Assuming 1 new producing pair (500 m, 1.2 kbpd, 5.4 years lifetime, uninterrupted production) installed every week for 20 years. We will reach a production plateau around 0.337 mbpd after 5.4 years (i.e. 281 pairs working all the time and constantly replaced). Each installation has a footprint of 500m x 125 m= 0.0625 km2. The total number of pairs would then cover 65 km2 after 20 years.

Clearly, the THAI process is not a solution to peak oil but rather a good way to make money.

"Clearly, the THAI process is not a solution to peak oil but rather a good way to make money."

Maybe not a solution to continue BAU, but maybe a solution to save our lives?

Assuming 1 new producing pair...installed every week for 20 years.

Is that a reasonable assumption, though?

According to the THAI thread - whose html I hopefully got right this time - the projected cost is $15,000/b/d, or $18m for that producing pair, which works out to $0.9B per year for the assumed rate.

From a little googling, it sounds like that's equivalent to a single, medium-sized oil sands project, such as this one, which is projected at $5-8B over 8 years. There are, last I checked, a couple dozen projects going on at once, though, meaning the available resources for THAI - if it turns out to be as great as we're assuming - would be much larger than that. If it's head-and-shoulders better than mining and SAGD, we could see 10 producing pairs built per week, or even more - the money required to do that is already being spent on the oil sands.

Of course, even a 10x rate is only an extra 3.5Mb/d, which won't delay a production peak for more than a few years at best. The only hope of that would be aggressively applying THAI to recovery on "tapped-out" conventional fields, and I'm skeptical that even that would delay a peak by more than a decade.

But that's not the point.

The point is that THAI - if it works as advertised - would greatly increase the resource base, meaning the downslope after peaking would be much shallower, as growth in THAI projects could compensate for some of the decline in conventional projects. That, IMHO, would be a significant difference.

In a future scenario money doesn't matter anymore - only a reasonable EROEI will make those various(today strange) energy-production methods viable/plausible -IMHO

For starters I'm exited in how they will ensure and keep the hydrogen-doping-procedure running for the bitumen in "some years to come...".

As Simmons say, they switch gold for lead... (NG that is)

the main point was simply that discounting feasible reserves which are not currently economical to forecast shortages is foolish

IMO discounting feasible reserves which are not currently economical is sensible and would allow governments to plan for the future with more accuracy... if by some miracle the technology improves dramatically, and it's costs mean it is profitable, then the legitimate 'reserves' will increase.

The market is telling us that we are close to peak, and yet according to the IEA we are nowhere near half way through known sources of oil - I believe both facts are true.

At the moment it seems many of the booked 'reserves' will never be produced profitably to be used as energy - they may however, eventually, well in the future, be produced for other profitable uses for which there is no suitable lower cost alternative.


if by some miracle the technology improves dramatically, and it's costs mean it is profitable

You're ignoring the fact that an entirely predictable non-miracle - rising price - will make those reserves profitable.

At the moment it seems many of the booked 'reserves' will never be produced profitably

Such as?

My understanding was that nothing was booked as reserves until it was deemed economically viable - hence the long delay in booking tar sands as reserves.

I have no idea how the market will move in the future - IMO, when (not if) the world enters a recession because of peak oil 'net exports' the price could well fall if demand is less than the ability to supply.

There is no evidence yet of any dramatic improvements in technology (Matt Simmons agrees and he knows more about this than me) - the THAI process is a research project at the moment, it looks, at best, as if it won't save the world. Oil from shale is the same.

At the moment it seems many of the booked 'reserves' will never be produced profitably ... such as?

Such as ... at least half the countries in OPEC may have exagerated their reserves massively.

Also, you are ignoring the possibilty of rising costs being more than the rising income - which would stop profitable development - this is common in all extractive industries, IMO oil will be no exception.

By your reasoning we are are nowhere near peak - time will tell if you are correct - BTW I hope you are correct, as my pension depends upon it. You don't work for the IEA or CERA by any chance do you?


Such as ... at least half the countries in OPEC may have exagerated their reserves massively.

That's an entirely different issue - reserves which may or may not physically exist - than the one you were talking about, which is reserves which exist but are not economic.

Also, you are ignoring the possibilty of rising costs being more than the rising income

I'm doing no such thing.

If oil is in great demand, the price of oil will rise. This will increase the price of producing oil, but since producing oil produces much more oil than it consumes - by definition - then the revenue will increase faster than the cost.

By your reasoning we are are nowhere near peak

You fail to understand my reasoning, apparently.

My reasoning is that high prices will lead to (some) currently-uneconomic deposits becoming economic, exactly as they have for the oil sands, and those deposits will then be added as reserves - exactly as happened for the oil sands. That says almost nothing about the rate of production, however, meaning that I'm saying almost nothing about the timing of peak production - I'm almost exclusively talking about effects that will make the downslope shallower.

You don't work for the IEA or CERA by any chance do you?

If I do, they obviously have the wrong address for my paycheques.

My reasoning is that high prices will lead to (some) currently-uneconomic deposits becoming economic, exactly as they have for the oil sands, and those deposits will then be added as reserves - exactly as happened for the oil sands.

It strikes me that this oft-repeated mantra has some basic flaws. In the case of hard-to-get crude oil one flaw is over-simplicity. Beyond that, the second flaw is that the formula (higher prices = more reserves economic to extract) does not consider that for possibly much of the real paydirt in terms of big oil deposits, the real issue is risk assessment rather than strictly economics. Take the Caspian Sea, for example. The big players have mostly pulled out because of what they perceive as too much risk. It may be that a given deposit of oil can be extracted for a profit, even a large profit, but in IMO an increasing number of cases, this is not knowable until after the extraction is actually well underway.

I don't have a link, but I recall reading that of the available off-shore leases close to ANWR, the major oil companies have been less than enthusiastic in bidding for these. The issue seems to be too much risk in such a harsh environment, even though there may be a chance of high profits.

Don't forget "receding horizons" when thinking about this "higher oil prices will make this-or-that alternative suddenly profitable"...

The big players have mostly pulled out because of what they perceive as too much risk.

And as price increase, potential profit increases, making the risk look more appealing. A 50% chance of doubling your investment doesn't look good if the other 50% means losing it all. If you're tripling your money instead of doubling it, then all of a sudden the risk starts looking more reasonable.

I'm not saying this price mechanism will make all not-yet-economic deposits be extracted - that would be silly. I'm saying it will make some of them become economic and be extracted, a process which has already happened for decades (e.g., deepwater, tarsands, etc.).

You seem to be discounting the net-energy issue, or do you consider that it isn't a significant factor in extracting harder to get crude oil (or any other extractable resource...)?

You seem to be discounting the net-energy issue

No - I'm just ignoring any deposit that can't be extracted with positive net energy, and assuming they won't be extracted regardless of price.

That's a conservative assumption, of course, since it's not hard to imagine scenarios in which cheap electricity (wind/solar/nuclear) and highly expensive liquid fuels or chemical feedstocks makes it economically and societally worthwhile to extract deposits with a negative energy return. I don't think that's a likely scenario, though.

Indeed, net energy concerns really have very little to say about my main point: if there exist deposits for which we know how to extract resource in an energy-positive way, but doing so is not economic at this time - and that's pretty much certain - then increased prices will increase the resource base. I'm not saying it'll make all deposits viable, just a non-zero amount.

It's a simpler and less contentious statement than people seem to be expecting.

He's entitled to his opinion; however, I'd consider THAI to be a fairly valuable potential technology...

I think in general it's wiser to bet on the opinions of people with the kind of experience Simmons has with all types of oil industry technology. Simmons has made a lot of money on his insight and smart investment in future technologies.

At any rate, the main point was simply that discounting feasible reserves which are not currently economical to forecast shortages is foolish, since shortages will inherently raise prices and make those reserves economical.

I think people have been overly optimistic about the notion that higher prices will make problematic reserves economical. Prices are at a record, but so are the costs of drilling. What recent oil company earnings reports have been showing us is that additional reserves are not becoming economical at the same rate as oil production is declining.

Prices are at a record, but so are the costs of drilling.

How is that surprising?

Prices are high, so everyone wants to drill to get oil to sell at those high prices, so there's lots of contention for drilling rigs and workers, so their price goes up. Obvious, but also obvious that that can't cause the price to go so high that it throttles drilling, since then demand for rigs would drop, prices would drop, and there'd be more drilling.

What recent oil company earnings reports have been showing us is that additional reserves are not becoming economical at the same rate as oil production is declining.

Not terribly surprising. But the higher prices have made some new reserves economic, meaning that there is more oil available to be produced, meaning that the downslope after peak production - whenever that is or was - will be shallower than it would otherwise have been.

Prices are high, so everyone wants to drill to get oil to sell at those high prices, so there's lots of contention for drilling rigs and workers, so their price goes up. Obvious, but also obvious that that can't cause the price to go so high that it throttles drilling, since then demand for rigs would drop, prices would drop, and there'd be more drilling.

Unfortunately, this is overly simplistic. It isn't just competition for rigs and workers that is making the price go up. If you study recent earnings reports, you will see that the problem is that it takes more rigs and workers to get a unit of product. Also, oil prices themselves are raising the cost of drilling--oil is a significant part of the cost of mining the metal for rigs, producing the parts of rigs, and running the rigs. The energy return on energy invested has been steadily dropping in the industry.

But the higher prices have made some new reserves economic, meaning that there is more oil available to be produced, meaning that the downslope after peak production - whenever that is or was - will be shallower than it would otherwise have been.

Unfortunately again, this is not what we're seeing. A lot of the oil projects that were supposed to be coming on at this point have been delayed by many years and suffered enormous cost overruns. For an example, look at the Kashagan project, which Matt Simmons recently said is now referred to in the industry as the "Cash-is-gone" project. There is a question within the industry whether this project should ever have been started. That is discouraging the kind of drilling that has been expected to mitigate decline.

And one more point. Conventional thinking on higher prices leading to more reserves becoming economical also forgets the uncertainty principle.

When an advantage gambler is making a wager, he can't just consider the likely return on investment. He also has to consider the likely flux on the return, as well as any uncertainty about risks.

So, if you're going to make a wager on something like Kashagan, you need a much higher edge, or likely return on investment, than you need for a type of project where the likely return and risks are well known. So far, that seems to be keeping more difficult and risky prospects in constant retreat from becoming economic.

If you study recent earnings reports, you will see that the problem is that it takes more rigs and workers to get a unit of product.


I have no doubt that's true, but it's irrelevant to the original point, which was simply:

"discounting feasible reserves which are not currently economical to forecast shortages is foolish, since shortages will inherently raise prices and make those reserves economical."

You're not contradicting that point at all.

Unfortunately again, this is not what we're seeing.

You are, again, talking about entirely different things than I am.

All I'm saying is that the resource base will be larger because prices will increase. Will there be delays and problems in exploiting that resource base? Of course. But, with a larger base to work from, we'll be in better shape than if those formerly-uneconomic deposits had never existed.

Consider the oilsands, which were uneconomic deposits 20 years ago. Had those never existed, we'd currently be about 1.3Mb/d lower than we are now, and a large and stable source of future oil production would not exist. So my point - that deposits which are uneconomic at a given point in time are still important to the long-term picture - has already been shown to be true.

All you're saying is that oil production will suffer problems in the future. Of course. That has no bearing on my point, though.

"discounting feasible reserves which are not currently economical to forecast shortages is foolish, since shortages will inherently raise prices and make those reserves economical."

This is the simplistic statement. It clearly states that "shortages will inherently raise prices and make those reserves economical.

Maybe it's being picky, but I would substitute a more nuanced conditional for this 'will' in the statement. I do believe that there is a sound basis for the concept of receding horizons.

I do believe that there is a sound basis for the concept of receding horizons.

Indeed, but they don't retreat that fast.

If it takes 1J to recover 10J of oil from a hypothetical deposit, then (assuming society stays reasonably stable and all energy sources increase in price at the same rate as oil) how can a 100% increase in the price of oil translate into more than a 10% increase in the price of exploiting that deposit?

Higher worker wages due to cost of driving to work?
Already in the 10%.

Higher costs for energy to manufacture the steel?
Already in the 10%.

Higher fuel costs for tankers?
Already in the 10%.

Horizons receed, but there's no indication that they receed nearly fast enough to outpace rising oil costs. I think people are getting confused by looking at the cost overruns in Alberta and attributing those to increased oil prices, rather than to shortages in men, materials, capacity, and infrastructure.

Horizons can certainly receed arbitrarily fast as you start bumping up against capacity limits, but the effect of rising energy costs on the cost of producing energy is a substantially different thing. I'm simplifying, of course, but not by as much as you suggest.

He might be wrong. The THAI process, if it works, will revolutionize extracting oil from oil sands. ANd, as noted, price is rising, so some of the more expensive projects will get another look.

While all through the 90's activity was suppressed, rigs on cold stack, crews and oil industry people were laid off in droves.

We can hardly be blamed for that.

1. Almost an entire generation of able people were put off joining this industry.
2. Middle ranks were laid off
3. Nobody builds rigs if nobody will rent them
4. Research budgets in new equipment, techniques and methodologies were slashed.
5. Field and infrastructure maintenance was delayed or downgraded.

Basically the industry cannibalised itself while the cheap oil fiesta boogeyed through the decade.

Right now?
6. Any rig that can still turn to the right is working.
7. About 25% of senior explorationists, drillers, G and G types are about to retire in the next 5 years. 50% in the next 10 years.
8. Worse still: Platform personnel, such as production types, rig electricians etc started on platforms when both they and the platforms were new. They are due to retire now. And you cannot buy or train the dizzyingly high levels of experience and intimate levels of knowledge that these guys have. They have lived and worked there all there working lives.
9. Much of the equipment is obsolete: A platform in the North Sea recently had a top drive failure. The failed part had to be cut from steel based upon blue-prints since it had been discontinued as stock years ago. Waiting time? Two weeks. Top drives are essential for drilling. There are many stories like this now.
10. Chopper fleet is aging
11. Chopper pilots are aging and due to retire.
12. Personnel rates, rig rates, kit rates have doubled in 3 years. This eats into oil exploration budgets: higher costs equal fewer exploration wells.
13. Chasing difficult oil is not cheap: Jack II, Thunderhorse, Kashagan are prime examples so South Atlantic , Arctic and Greenland drilling will almost certainly be costly to a degree not yet seen. The last significant oil discovery was in 2000. And no, Buzzard UK is not significant.
14. Refineries and pipelines are creaking and aging.
15. Control systems are based on 1st or 2nd generation computers. Refurbishment costs are enormous.

I suppose you could put very similar points together for a number of 'big ticket' projects and industries. A bridge collapse in the US, Unscheduled downtime at 7 /16 UK Nuclear Reactors. New Orleans post Katrina. Alaskan pipline rupture. Refinery fires.

The party in the 80's and 90's were fun (for some anyway).

And we can still find the money for the £9 billion (and climbing) cost over run for the London Olympics of 2012...

But as a civilisation we made some seriously bad choices.

Its like buying a leather sofa and a plasma screen tv, but failing to get the roof fixed for winter.

At some point we had a collective breakdown in the kind of hard won common sense of the previous generation.

Some point soon we are going to relearn these things.
Some point soon, hand-me-downs will be fashionable and scraping ice off the inside of a bedroom window will be a la mode.

While all through the 90's activity was suppressed, rigs on cold stack, crews and oil industry people were laid off in droves.

We can hardly be blamed for that.

I dunno - if by "we" you mean "the UK", I'd dispute that to some extent.

Based on my cursory examination of the situation, the flood of North Sea oil that crushed prices in the 90s set the stage for the tightness in supply we're seeing now. Who wanted to invest in future capacity when oil was $15 and North Sea producers were clearly willing to drive it even lower?

Now that flood of oil is tapering off quickly, and people are scrambling to make up the difference. Explosive growth in India and China are making the problem doubly hard. Based on those two issues alone, tight supply should be no surprise (although hindsight's great that way).

So, IMHO, the governments of Norway and the UK managed their North Sea resources foolishly, and the world oil market is paying for it. Their destabilization of the oil market is a minority cause of the problems we're seeing now, though - BRIC-country growth and supply problems (geological and political) are the lion's share.

IMHO, anyway.

"IMHO, the governments of Norway and the UK managed their North Sea resources foolishly, and the world oil market is paying for it."

So husbanding hydrocarbon resouces as Venezuela's doing and OPEC overall seem to be doing--Resource Nationalism it's being negatively sneered as--is right and proper and the BAU--produce the oil as fast as possible to recoup expenses regardless of damage it does to fields or depletes the host government's endowment--process the IOCs have operated under since they lost control over prices to OPEC is now incorrect and bad practice?

We: Meaning the oil industry not taking blame for not finding enough oil now or not having invested enough in rigs, people etc.

Though your point about the UK is valid. We (UK this time) hosed it away.

Some point soon we are going to relearn these things.

It is not only an issue of common-sense. There are several other factors: 1) diminishing returns - the stuff is harder to get and takes more work and 2) "advances" in technology - like why that top-drive was unavailable (eg upgrade everything to newest MickySoft version).

Full planet

cfm in Gray, ME

apparently not if they think middle east liquids production will go from 36 to 61mbpd by 2030

Still, in the context of prior comments, it's quite a change in tone. Of course, I disagree on the timing.

BTW, it is kind of funny listening to the talking heads on CNBC breathlessly talking about the importance of the weekly EIA numbers. If this were anything close to business as usual regarding supply/demand, this would probably be a selling opportunity for oil, and oil prices will most assuredly fluctuate.

However, the key factor that is missing this time is a conventional oil supply response. We have seen this regionally, e.g. the Lower 48, but we have never been at this stage of conventional oil depletion worldwide. In ordert to understand what is going on now, economists need to study the conventional oil case histories in post-peak regions like the Lower 48.

If they were, they will have been sat quietly at the back wearing false beards

"...really bad days." is right! I was hoping for the party to keep rolling for a few more years. After all, I've got toys to buy, like my new Playstation, a new computer, and a motorcycle! I guess I'll hold off on the computer, as I already have 3, I'll buy an old used motorcycle instead of a new one, and it's too late on the Playstation. I just bought it. haha.

For Xmas/Solstice/etc, I'm buying all of my friends ammunition or alcohol. Sadly, that doesn't make a good gift for most family members. I'm not setting foot in ANY store this year for holiday shopping with exception of one gift for my roomie. A wheelbarrow. I'll have to shove that one in the back of my CRX.

~Durandal (http://www.wtdwtshtf.com/)

x2, I am really needing a new car since my old one has just about had it. With lots of inflation though now might be the time to get a loan for a vehicle. Not looking for a gas guzzler, just basic transportation a couple of years old with low miles. I am wondering if I should gamble by just getting it now. I am a professional engineer who works at a coal fired power plant, so I feel a bit more secure in my job than say a new car salesman.

x3. I think if you can hold out on your current car a bit longer, you'll be in a much better position to play hard ball when you want to buy one. One technique to use is to find and buy a car privately. Sometimes friends or family are getting rid of good cars for one reason or another. If not that, then pick out some candidates from the newspaper, look at them and evaluate them as best you can and bring cash with you for about half the asking price. It might take a few tries, but in the right down market, I bet you'll get a bite after 1 or 2 tries.


The stomach lurches as Matthew Simmons calls the current inventory liquidation the "last gasp supply."

Dear Westexas,

I've got a bad feeling about this. It's like lots of different things seem to be coming to a head. There's tension and stress in the entire international system that we haven't seen for a long time, and it needs some kind of release.

Just a couple of days ago a journalist friend of mine told me that the IEA was rapidly losing credibility because it's regarded as far to sanguine and close to the US government, that it isn't independent enough, or critical enough. He said that Birol was almost held in contempt by many of his own people in the IEA because he's been so relaxed about the world's energy situation, despite receiving muliple warnings about the true state from his own staff, who've been pulling their hair out and grinding their teeth in frustration and almost despair!

So, if Birol has been finally shaken out of his slumber, things must be really bad!

But, on a more positive side, one could begin to introduce car free days in US cities, or make car-pooling mandatory. Clearly the one area where one could make a quick and substantial change in relation to energy conumption is in the area of private transport. It's obvious and I believe it will happen. Because were not just burning oil in our cars, we are literally burning civilization away too.

Well put, and in reading what this Birol character is having on his mind - IEA has lost all credibility. He is indirectly (via Norwegian media) putting stresses at India and China, asking them to take actions. Blindfolded by his own needs, western needs that is.

The IEA need some philosophical and morally though minds who can foresee what’s coming – and start to forget about THAT silly year of 2030 and some rosy (probably false) growth up till that day.

BTW, I wonder how this Birol understand the grand $ 38billion slash done by GM today ..?

Buried on page C3 of the Wall Street Journal is a small note about two bond insurance firms, ACA Capital and Ambac Financial. Those firms have lost 69% and 83% of their value in the last couple of months, and have market caps below $100 million, yet they insure billions and billions of dollars in exotic securities for Citibank and others, enabling those banks to keep liabilities off their books. The bond insurers may not be able to honor all of their commitments, thus forcing those bonds back onto the banks' books at a "mark to market" price-- meaning, according to the article, another $3 billion write off at Merrill Lynch, and who knows how much elsewhere.

The potential for the detonation of what Warren Buffett calls "weapons of financial mass destruction" is still out there. This could, of course, be the straw that brings oil prices down temporarily, until Bernanke pumps in so much more dollars (I was tempted to say money) into the system to prop up those banks, that oil goes to 4 or 5 yergins.

And it gets worse. All the monoline bond insurance companies have AAA credit ratings. The highest investment grade. States and municipalities that insure their bonds with Ambac and the likes get to "borrow" their AAA rating.

The credit ratings of all the monolines are under review by Moodies, Fitch, et al, with downgrades expected sometime in the next two to three months. If their ratings are downgraded the cost of borrowing for municipalities will go up significantly.

Oil goes to 4 or 5 yergins, and the dollar goes to 40 or 50 European cents.

Look at the graphs here. Their going thru the floor.

Ambac, MBIA, and banks, etc.

Banking Crisis -- What Banking Crisis?

those graphs were … ehhh… interes …. Ehhh….ting...

Can we extract anything from them; I mean the steepness was beyond steepness many places.

Can we extract anything from this.../

Try this one by Mish.

Downward Spiral of Deep Junk

Here is the key paragraph.

The bond insurance industry has guaranteed more than $1 trillion of bonds issued by U.S. cities and states as well as bonds backed by mortgages, credit cards and other assets, and the guarantee allows borrowers to use the insurers' AAA rating. A loss of confidence by investors in the insurers' credit quality threatens the survival of the industry and the price of the thousands of bonds it guarantees.

Because of the "guarantee", god only knows what kind of garbage got rated as AAA. In return for the "guarantee" , companies like Ambac collect a fee. When times are good they keep collecting fees. When the proverbial * hits the fan, the guarantee is worthless. Is this a viable business model?

What we do not know is how much of that "AAA" paper banks are holding is really deserving of "AAA" status as opposed to being rated "AAA" because someone "guaranteed" it.



New 747 to be 16% more fuel efficient than Current 747

The 747-8 Intercontinental will be 16 percent more fuel efficient [per seat] and 30 percent quieter than its predecessor [747-400]


The 787 also promises to be "at least" 20% more fuel efficient than the 767 it replaces.

If one is building airplanes, it is best to be building the most fuel efficient ones possible.

Best Hopes for SOME aviation,


If one is building airplanes, it is best to be building the most fuel efficient ones possible.

That would be a plane 'parked' on the tarmac

Triff ..

correct me if i am wrong but don't they determine the efficiency of a airplane by determining it's range under a full load of passengers + cargo?
in other words they could make a more efficient plane by simply changing the ammount of people/cargo it can hold?

That was the airbus gamble, but they forgot the problems associated with scaling things up. And complexity kills.

The 747-8I will be stretched 5.8 m (18.3 ft) which would normally increase weight. However, weight savings elsewhere will keep dry weight increases down. Another major savings is new engines off of the 787 (4 instead of 2). Minor savings come from improved aerodynamics and the use of an "electric airplane" with far less air ducted from the engines and electric motors (driven by a generator on the engine) used instead of high pressure air for a variety of tasks.


Always remember, "Aluminum recycles"

Only if you have a hot enough fire to do it. the needed fuel to do that will be very much in question in the future.

The typical 'fuel' is electric power. The 'traditional' Al smelters were near cheap hydro power.

And Al is a 'valuable' material - so I'm guessing it'll still be around unless there is the WWIII/99.5% dieoff type situation.

Aluminum is often called "congealed electricity" since electricity is the most valuable input to its production.

Correct. Before the invention of electricity one could not very easially make the metal. it was untill the use of electric arc furnace more valuable then gold.
melting temp of aluminum 1220.666 f
max temp of a charcoal fed fire ~1000 f give or take 100f

"That would be a plane 'parked' on the tarmac"

Like so, perhaps:

Soaring fuel prices could ground United planes


The rich have hope for aviation. Some others will not eat, but who cares?

"the rich" will be paying for custom planes/military retrofits because the 'economy of scale' that has broght cheap planes should go 'poof' as fuel costs rise.


In the spring, Crown Prince Abdullah flew to Texas to meet Bush at his ranch. The way Leverett remembers the story, Abdullah sat down and told Bush he was going to ask a direct question and wanted a direct answer. Are you going to do anything about the Palestinian issue? If you tell me no, if it's too difficult, if you're not going to give it that kind of priority, just tell me. I will understand and I will never say anything critical of you or your leadership in public, but I'm going to need to make my own judgments and my own decisions about Saudi interests.

Bush tried to stall, saying he understood his concerns and would see what he could do.

Abdullah stood up. "That's it. This meeting is over."

No Arab leader had ever spoken to Bush like that before, Leverett says. But Saudi Arabia was a key ally in the war on terror, vital to the continued U.S. oil supply, so Bush and Rice and Powell excused themselves into another room for a quick huddle.

When he came back, Bush gave Abdullah his word that he would deal seriously with the Palestinian issue.

"Okay," Abdullah said. "The president of the United States has given me his word."

Hasn't Abdullah learned that if Bush's lips are moving, he's lying?
~Durandal (http://www.wtdwtshtf.com/)

The "This meeting is over" part scares me more than anything else.

I still don't see how Bush came through on his word....

Random question here.. hope some of the experts can answer it...

As we all know, as the price of oil rises, road construction (and maintenance costs) will increase due to rising price of asphalt. How much? I.e., how many barrels of oil are used to construct(say) a mile of a two lane road? A four lane road? A bike path?

(Haven't had much luck googling. I can do some very rough back of the envelopes to go from barrels of oil --> tons of asphalt --> volume of asphalt --> area of asphalt assuming standard thickness, but this is too rough to be of much use to me. Any sources for info would also be greatly appreciated)

Thanks in advance!

chapterwon, if I'm not mistaken the weight of the oil (binder) component in asphalt is typically between 20-40%. Aggregrate is the largest portion. Obviously that is a wide range but mixes vary.

Looks like it might actually be less than 10%. If I could find my copy of the FDOT Red Book I could check this...


There's more to the pricing than just the oil content (such as the fuel needed to run the equipment to transport and apply it).

But IME, the cost of asphalt (installed) has doubled to tripled over the past five years.

This brings up a question that came to mind the other day as I was traveling down a newly repaved asphalt highway here in Texas as to whether the state was cutting back on the asphalt percentage. I noticed the road was extremely coarse with large aggregate. You could see the individual rocks with very little asphalt to bind it together. The road looked more gray than the usual deep black of new asphalt. Made a noticeable tire whine much louder than normal. What made me begin to notice the difference was not the tire noise or coloring but the rock that came loose from the roadway and flew up from a passing truck to crack my windshield. A few days later I saw a letter to the editor in the local paper where the writer complained of a rock through his headlight on the same road.

Are you sure the road was finished?

Asphalt for highways is applied in three or four layers ("lifts"), with the coarsest aggregate on the bottom. Sometimes they will apply temporary striping on a base course, and open the road to traffic. Then they'll come back later and apply the smoother top course.

Why do it this way? Usually, because they need to open the road for some reason. Anticipated heavy traffic due to holiday travel, say.

Good question. I will check into this but I believe the road has been this way for several months at least. The road is
Hwy.69 and carries a huge amount of north/south traffic from
Oklahoma to Beaumont,TX. The portion I was on is between Tyler
and Lindale,TX.

I we were smarter here in the states we would of mixed in rubber into the roads like they do in some places in euorpe. it helps make the road more tolerant of temp swings. Of course it's a mute point, if we really were smarter and wiser in what we did in the past we would have not made this infrastrutcure in the first place.

The Washington State Dept. of Transportation has a number of charts on trends in highway materials costs, based on tracking bid prices. See the links at this URL:


It seems that asphalt, steel re-bar and structural steel have doubled in price in the last five years, and concrete has gone up around fifty percent during the same period.

The Federal Highway Administration and other state DOTs probably also have similar charts.

After the multiple hurricanes criss-crossed Florida a couple of years ago it became very difficult to get any type of construction materials to rebuild homes and commercial properties. Roofing shingles and concrete were the most difficult items to get. I waited several months for shingles and then reroofed my home with two buddies helping out. Then we reroofed their homes when their shingles arrived. The price I paid for 'architectual grade' shingles was about double what it had been prior to the storms and the prices have not gone down (last I checked). At the time all the news in Florida was that building materials were hard to get here because China was importing them for their booming economy...just a bit of anecdotal info.

I can't answer the "how many barrels in a mile of asphalt" question, but I can tell you this: a 350 foot driveway laid in one 2.5 inch layer with a decent base for light duty traffic cost me $20,000......much to my dismay. It makes one wonder how much longer we can afford to maintain our existing roadways.

the reason the prices have climbing so high is CHINA!

Good news bad news from the Mexican oil patch

“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.”
“George Baker, a Houston-based analyst and an expert on Mexico's oil industry, said that delays in moving supplies and people to and from onshore rigs could affect production. He added that Pemex will also have to deal with the humanitarian crisis in Villahermosa.
"Does it cause a problem for Pemex that some of their employees are standing on their rooftops? It probably does," Baker said.”


Summary of Weekly Petroleum Data for the Week Ending November 2, 2007

U.S. crude oil refinery inputs averaged 14.9 million barrels per day during the week ending November 2, down 43,000 barrels per day from the previous week's average. Refineries operated at 86.2 percent of their operable capacity last week. Gasoline production fell compared to the previous week, averaging nearly 8.9 million barrels per day. Distillate fuel production rose last week, averaging nearly 4.2 million barrels per day.

U.S. crude oil imports averaged nearly 9.7 million barrels per day last week, up 275,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.6 million barrels per day, or 461,000 barrels per day less than averaged over the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 1,131,000 barrels per day. Distillate fuel imports averaged 270,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 0.8 million barrels compared to the previous week. At 311.9 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 0.8 million barrels last week, and are at the lower end of the average range. Both finished gasoline inventories and gasoline blending components fell last week. Distillate fuel inventories increased by 0.1 million barrels, and are at the upper limit of the average range for this time of year. Propane/propylene inventories decreased 0.4 million barrels last week. Total commercial petroleum inventories decreased by 0.9 million barrels last week, but are in the upper half of the average range for this time of year.

CNN headline:

Oil prices hold at higher levels after inventory drop is below forecast.

Oil's march to $100 stalls

Crude comes within $1.38 of triple digit levels, but gains tempered after U.S. inventories fall less than expected.

Don't ask me what this means. I don't even really believe it...but them's the numbers (for now).

So...not a big move in inventories anywhere...kinda like a PLATEAU :P

DEMAND is 9.3MMBPD...which is .8% UP from 2006. Definitely business as usual as the crack spread evaporates(pun intended) and motorists fail to feel the impact of a $10 dollar oil rise in less than a month.

Propane and distillates are still praying for a warm winter.

Can the US still draw gasoline/distillate imports from elsewhere as the crack spread goes to zero? (of course, it can't sustain this)

Frankly the import numbers seem off, only 1.13MMBPD gasoline, and 9.6 MMBPD crude (off 461 KBPD from 2006), and Utilization is ONLY at 86.2%.

I get a strong feeling these numbers are being pushed.

Taking all this in, I can see next weeks report being a bigger *surprise*.

EDIT: $100 oil is prolly less likely today now...maybe overnight...but traders will try to keep it in check with non-threatening invetory numbers.


Something puzzles me here. If you add up the PAD District numbers, they are more than the totals for the past two weeks (this may be common, I have no idea), but the key point is if you look at the PAD numbers for the past two weeks, they are as follows: 325.3 mb last week, and 327.7 mb, for the week before, showing a drop of -2.4 mb.

Anyone have an idea what as to what is going on with how the EIA calculates the totals? Note the big drops at Cushing and the Gulf Coast.

Figured it out. Cushing is counted within the Midwest numbers.

DEMAND is 9.3MMBPD...which is .8% UP from 2006.

Are you sure? According to the EIA's data on "U.S. Weekly Finished Motor Gasoline Product Supplied", 2007 demand is lower than 2006 demand in every week in October, by an average of 92kb/d. Since crude prices moved above their 2006 level in mid-August, gas demand is down an average of 37kb/d, or a total of ~3Mb lower consumption.

It's not a huge change - demand for the most recent week in the table (Oct 26) was down only 1.5% from the same period last year - but it's in the right direction.

For what it's worth, that same data table shows US oil consumption is down an average of 620kb/d in October, and 310kb/d since prices passed their 2006 level, representing ~24Mb of oil lower consumption. Recent-week consumption was down 1100kb/d, or a surprising 5.3% off of 2006's level.

From the looks of it, high prices make people use less.

No I'm not...but I am quoting the report.

Total products supplied over the last four-week period has averaged nearly 20.7
million barrels per day, down by 0.4 percent compared to the similar period last
year. Over the last four weeks, motor gasoline demand has averaged 9.3 million
barrels per day, or 0.8 percent above the same period last year.
Distillate fuel
demand has averaged 4.2 million barrels per day over the last four weeks, down
2.4 percent compared to the same period last year. Jet fuel demand is down 1.2
percent over the last four weeks compared to the same four-week period last

I have serious doubts about the overall validity of these reports on a weekly basis...monthly and annual reports may have more accuracy?

No I'm not...but I am quoting the report.

That's good enough for me.

I wonder why I was seeing different results at the EIA website, then? I suppose the difference may be that the website doesn't have the latest week yet, but does that make such a big difference?

Hmm. This last week was the first time 2007 was over 2006 since September, but I still don't see it as being higher in aggregate. The table I linked to precisely tracks the numbers in the report WT linked, so we're obviously comparing the same things. Looking at the last three weeks of October and the first of November, though, I get:

2007 2006
9253 9298
9373 9511
9355 9499
9367 9256
37,348 37,564

Even shifting the comparison +/- 1 week in 2006 doesn't give a number lower than the 2007 number. Everything tracks with their numbers except their average for 2006 - I get 9391 rather than 9266, going straight from their data. I also get different values for total oil products - 20,699 for 2007 (vs. 20,689) and 21,376 for 2006 (vs. 20,766).

They must have revised the 2006 consumption numbers substantially, and then failed to change either the data online or the data used for this weekly report. Whatever they've done, they're not using the same data for 2006 as is on their website.


It's not made clear in the report, but the WPSR compares 4-weeks weekly data from this year to the implied 4-weeks demand from revised monthly figures from last year.

The weekly numbers can be subject to some pretty heavy revisions, so until the 2007 data have been revised, I'd take any demand comparisons in the report with a large pinch of salt.

It's not made clear in the report, but the WPSR compares 4-weeks weekly data from this year to the implied 4-weeks demand from revised monthly figures from last year.

That's kind of a ridiculous thing to do, considering that most 4-week periods - including this one - will span two months.

The weekly numbers can be subject to some pretty heavy revisions, so until the 2007 data have been revised, I'd take any demand comparisons in the report with a large pinch of salt.

Well, yes, absolutely - the data is nothing more than an estimate anyway. Still, though, from the sounds of it a direct week-to-week comparison will give a better estimate of demand movement than the week-to-month thing they're doing, especially considering that the weekly data absolutely does not add up to the monthly data.

So, based on that, it looks like a reasonably significant demand decline has been happening.

None dare call it recession.

Re-reading my comment I realise that I didn't explain it very well.

What the EIA does is have a spreadsheet with a demand number for every day of the year. So, for example, the latest numbers will be entered into the 7 days in the 2007 column that cover the week of the report. When the monthly revision is done for an earlier period, the original weekly number for every day of that month will be replaced with a single new number - the more 'accurate' demand figure.

Therefore, when they calculate the average year-on-year 4-weekly demand in the WPSR they just compare the relevant 28 days on the spreadsheet with the same 28 days from the previous year.

To my mind it's a flawed methodology. They don't smooth the monthly numbers, not even a linear interpolation. So, if month 1 demand = 8.5mbpd, month 2 = 9.0 and month 3 = 9.5, they just enter 9.0 for every day of month 2 on the spreadsheet rather than computing an interpolated rising figure throughout the month.

Inevitably this leads to anomalous year-on-year comparisons depending on the day of the month.

I dont see how any initial numbers can be taken seriously when the 'jobs' numbers and 'gdp' numbers (to mention just two) are usually revised later...sometimes by very large percentages...and usually downward. Remember, there is very heavy pressure on the people compiling these numbers to make them seem 'favorable'. My personal opinion is that the situation in the US is so dicey that we are in a 'lets take it one day at a time' mode.

YTD, 2007 v 2006:

- Production (crude + NGL) UP 224 kbpd
- Total Net Imports DOWN 369 kbpd

The difference is approx 44 Mb (145 kbpd x 305 days), ie the sum of stock drawdowns in crude, gasoline and distillates.

Since Dennis Kucinich's impeachment resolution for Dick Cheney didn't get any traction in the House I thought it might be nice to have a compulsively detailed map of energy and military facilities in the Persian Gulf handy when the shooting starts.

Persian Gulf Energy & Military

I've placed the KMZ file for Google Earth here:

The sources for this ranged from Google queries to consulting the 1959 Encyclopedia Britannica World Atlas that lives in my bedroom closet. Some, like the port locations, are gnat's behind accurate from industry specific information pages, while others , primarily Iranian naval station locations, are educated guesses coupled with satellite photo inspection.

Much of Google Earth output for this region is shrouded in a luminous green fog. This is no accident - its purposeful obscuration of potential targets. You'll notice this covers pretty much large portions of the Persian Gulf where offshore platforms might be found.

I welcome questions, comments on accuracy and Google Earth technique, and I'd be delighted with pointers to other data sources that include name, latitude, and longitude.

That will be very helpful as we watch the war on TeeVee

Much of Google Earth output for this region is shrouded in a luminous green fog. This is no accident - its purposeful obscuration of potential targets. You'll notice this covers pretty much large portions of the Persian Gulf where offshore platforms might be found.

Comments on "Google Earth technique" - right... the "green fog" is a topographical map of the seabed. Light green is shallow water. Satellite images are laid on top of this.

If you want to see where the obscured portions are, go to Layers, then select paranoia and click on tin hat.

OK, I'll buy that is bathymetric data, but then there are areas that are ... different. Unless you can point to the location for the Iraqi oil terminals? The others are relatively easily found by their size and shape, but there is nothing but a green swirl at the coordinates specified for Iraq's facilities.

Can you give me a lat/lon? I'd like to check it out. Wikipedia has a list of known obscured areas, but only one for Iraq (in Basra).

The obscurations I've seen listed elsewhere are very obvious artwork - large, colored digital "swoops", but if you look at the Mina al-Bakr and Umm Qasr terminal locations on the map near 29 48'N 48 40'E you will see ... nothing. Contrast this with Ras Tanura near 26 38'N 50 10'E where there are obvious floating piers with tankers visible.

I can't identify anything that looks like a tank farm or floating pier in southern Iraq.

Ok, I looked at the locations in your file, I can't see anything unusual. There just is no sat image for those locations. They only seem to put in sat images for "interesting" marine features like islands, they probably didn't bother for these. There is not much to these terminals, it's just a pipeline on stilts it appears. They are quite a way offshore because of the shallow depth of water, Iraq has nowhere else to load tankers.

This is a piccy of al-Basrah terminal

You've got a good list there.

If you look east of Ras Tanura you will see one of the offshore loading setups complete with a pair of tankers. I still think its fishy that they're missing such an interesting area ...

Well, that area was where some UK sailors got kidnapped by Iran, perhaps it is/was considered sensitive. They could have asked for sat images to be withdrawn, but unless someone has a capture of old data I don't know how you could tell.

There are some blogs that like to chase up this sort of thing, perhaps you could ask there.

There is also a fuzzy green area right here in southern Iowa starting about a 1/4 mile north of my house and stretching nearly to the Des Moines area. The out of focus areas probably are absent in the Google products they want you to buy.

I bought the upgrade - imagery is the same. They've just not felt the need for 1m Iowa yet ... makes me sad, as the Yahoo maps stuff is better, but still not as good as Google at 1m.

Updated Persian Gulf KML file:

Persian Gulf Energy & Military v2

And I found a global refinery map /w capacities:

The refinery map hasn't been updated since 2005. I did find a relatively inexpensive commercial product from Meridian World Data that appears to have all sorts of oil data, but I'm not shelling out the $77 for it until I go back to work ...

Load both of them and you'll see refineries and the other stuff in the Persian Gulf. I wrote a bit of perl code today to bash CSV files into KML since I have Google Earth, Whiny Lil' Bitch Edition, and it won't import more than 100 lines from a CSV file, but I did something horrible to the refinery coordinates and I haven't been able to find the bug, so you're stuck doing it manually until inspiration strikes. Sorry ...

I wonder what one gets with the Meridian product

Product Summary
Substantial core database of oil suitable for any application requiring a comprehensive list of oil. Subset of the Professional and Corporate editions.

See product details >>

6,026 oil with names, type classifications, state-level information (1st level administrative division) and country data. See product comparison chart below for more information.

A list of oil. Wells? Refineries? Spills? Slicks?

Funny people.

Google earth does so blur images, and replace images with much older photos, and have been for some time.



So its not a tin foil hat you wear SCT, but its someone telling you that you are, that is 'talking out of their hat'.

Ask BCousins to show you all the good footage of area 51 lol

correct, and it's either done on the request of governments or companys. Also as for military bases or other sensitive area's they have always gotten the images blured or altered from the company they buy the sat images from.

Oh sure, just don't let your paranoia run wild. Just because you can't locate something in GE, it doesn't automatically mean it's censored. The known list of genuinely censored areas is pretty small, and tends to be special cases.

They usually swap maps or pixellate to remove detail, but in this case it was very obviously not censored.

I wish they'd get after that stuff at 43 26' 04''N -95 05' 23''W - not obscured, but pretty annoying to me, at least on a personal level.

It is not paranoia, and i am not saying they are airbrushing out area 51. i am just pointing out that unless they want their server's seized or just the map service shut down they have to comply to not show either up to date or any pictures of certain area's like some military bases that say house nukes, area's of operation, or just anything they do not want other governments to see.

On a certain former military airbase on the SFO peninsula there is a day care center that has been there some time. Interestingly, all you see is green grass in the google earth picture. Don't know why, most would never notice but it just isn't there, and it should be.

When I first downloaded GoogleEarth about a year ago, my own house was in a hi-res section and I could see things in some detail. The nearby town was still lo-res however. About 6 mo. later, my house was in a lo-res section because they had upgraded a larger area which included a hi-res of the town but lo-res of the outlying areas. Now the larger section has all the hi-res back.

GoogleEarth is amazing in its scope and I don't think for a moment that there was some nefarious move to make my house lo-res (maybe because of my anti-Bush diatribes on the web...). It is constantly being upgraded.

An airplane sees a long way to the side, depending on how high it is flying. A jet aircraft can see both sides of the Gulf at the same time since it's 5 to 7 miles high at cruising altitude.
That means that all of the oil export terminals and all their equipment is available to anybody with a jet aircraft, private or public, in the area. It's not like telephoto lens equipment is hard to get.
So they aren't trying to conceal anything from the Iranians that is big enough for Google Earth to see. Anything too small for Google Earth to see, you just put a tent over it and don't worry about it.


I developed a while back a tool that provides a HTML editable link to any spot on Google maps. Please take a look at these examples:

Tehran's Mehrabad Airport

Damavand - the famous extinct volcano near Tehran

Aramco's Head Office (perhaps not)

Anyone can register on my site http://islandmap.co.uk and find any location, put some HTML against it and save it.

Have fun!

Ok, looks cool, but how do I use it? Feed it a KML? I don't see any information on how to apply it ...

It is really a Google Maps tool rather than a Google Earth tool. If you want to show someone on this site a place with some details, it is a quick way of doing it. I never thought about integrating it into other tools. If you have some ideas, let me know.

From Urban Survival:

The way external forces/source 'frame' your entire decision-making process is beautifully illustrated by a joke sent along by a reader (KW) who offers it as a commentary on why some of us will be 'ready for what's next', but many won't be. It's called the "Bath tub test"

"During a visit to the mental asylum, a visitor asked the Director "How do you determine whether or not a patient should be institutionalized"

"Well," said the Director, "we fill up a bathtub, then we offer a teaspoon, a teacup and a bucket to the patient and ask him or her to empty the bathtub."

"Oh, I understand," said the visitor. "A normal person would use the bucket because it's bigger than the spoon or the teacup."

"No." said the Director, "A normal person would pull the plug. Do you want a bed near the window?"

This is not really a sanity test. It's a test to determine if you have been in the public school system which, for the purpose of social control, gets people in the mode of following suggestions instead of thinking for themselves."

Yeah that's got to be George Ure's best daily update ever. Did you see his little mechanical model too? A person could build that out of wood and do a little "street theatre" presentation with it.

It's a test to determine if you have been in the public school system...

If that were valid test, almost everyone would be placed in the mental asylum. But wait, it would then be a whole lot easier to build "asylums" for those that understood the test. The asylums might be called "universities". Of course, once the lunatics running around outside finally gained control, the inhabitants of the "Ivory Towers Think Tank and B&B" might find themselves out to lunch.

E. Swanson

This 'bath tub test' is similar to the story about an 18th century protopsychiatrist who developed an infallible method of distinguishing the sane from the insane. Those to be diagnosed he locked in a room with water taps on one side and a supply of mops and buckets on the other. He then turned on the water taps and watched: Those who he considered mad ran for the mops and buckets; the sane walked over and turned off the taps.

I agree that at heart it is not so much an individual "sanity test" as it metaphorical story about our socialized inability or unwillingness to address the root of the problem, whatever it may be. Now obviously some of our problems are very complex to resolve, but as is continually pointed out by some here, it is entirely possible to address the oil tap while switching to one that isn't so blatantly harmful, but overall our cultural mindset insists on resorting to more oily mop and bucket solutions. It is becoming clearer that this socialized cultural tendency to -- without question -- try and keep the BAU oil tap flowing is ultimately insane.

Among the daily insane mop & bucket responses to this oil tap swamping us in quagmires of poo, I consider the following quote from todays' IEA report a prime example:

In unusually urgent tones, the International Energy Agency, which provides policy advice to industrial nations, urged advanced economies to work with China and India to cut overall growth in energy consumption.

No mention is made of the "advanced economies" to cut their oil use consumption; it is as if the problem here is theirs and not at all ours! That is IMHO plainly insane.

Best hopes for sane human responses matching earthly realities.

I would throw heavy objects, including the Director, into the bathtub to displace the water from the bathtub onto the floor, and then pull the plug for the negligible remaining water.

Since the floor looks like it could use a washing, and psychiatrists are all wet anyway, there's no sense in wasting good water by letting it all go down the drain.

Any sane person can see that.

Sometime in the last few days, I think, someone posted a link to the Century of the Self documentary.


The documentary is on mass psychological public manipulation, consumerism, and the impact on representative democracy over the last hundred years.

In total it's about four hours long. Very good, highly recommended.

It is a great documentary and shows almost exactly how the people in power have learned to shape public opnion. Basicly reversing the roles od democracy, instead of the representives following the will of the people the representives shape the will of the people to what they want.

I wouldn't necessarily call it a documentary, more like a video essay by an exceptionally intelligent Oxford Political Historian.

Very good food for thought nevertheless.

I would HIGHLY recommend the books written by the creators of PR Watch (I have two) - they document the rise of the PR industry and its influence over our lives. Their site good to look up quick reference stuff too...


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

From one of the main posts... hasn't Chris been expecting new oil from the majors?

A Platts survey showed third-quarter global production of oil liquids at seven key publicly traded international majors declined 6% from last year, with output down 664,000 b/d at a time when some officials are calling for increased production from OPEC.
Besides ExxonMobil, the Platts review focused only on liquids production comparisons for integrated majors BP, Shell, Chevron, ConocoPhillips, Eni and Marathon Oil. It determined those companies reported collective liquids output of 10,338,000 b/d for the quarter ended September 30, down from 11,002,000 b/d in the same period a year ago.
Liquids production fell at six of the seven companies and stood flat at Chevron, leaving Barclay's Capital analyst Paul Horsnell to question the ability of the international oil companies to respond to increasing demand and pricing.
"Barclays Capital has taken a very deadbeat view on non-OPEC supply growth in recent years, mainly due to our view that the rate of decline in mature fields was being underestimated by consensus," said Horsnell, responding by email from London to questions. He added: "The weakness appears consistent to us with what has been a long period of output under-performance."
In a short report October 31, Horsnell had noted a 9% decline at Shell and wrote: "To announce a 9% fall in crude oil output and then put higher prices down not to any fundamentals but to speculation does seem a little strange to us."
Horsnell wrote: "After years of rising prices, the announcement by a major oil company that field decline rates were enough to counteract all of the accumulated supply response to higher prices and were at the heart of a large crude oil output reduction, might be seen as a further signal that prices have not yet been bid up enough." (Well, certainly not enough to bring on more oil.)
The review comes just four months after a study by analysts at Bear Sterns revealed that 2006 marked the third consecutive year in which the major oil companies failed to fully replace production.


Hi Leanan, likely this Minyanville video site has been posted before if so feel free to delete. Features Hoofy and Boo, Bull and Bear financial(?) news.


Saudi Arabia: The Telegraph reports that for the first time, Saudi Arabia has refused to cut interest rates along with the US Federal Reserve. This is seen as a signal that a break from the dollar currency peg is imminent.

*fires up the MP3 player*
*sings cheaper crude or no more food* Badly and with Irony.

For those in the UK ITV1 10.30pm news this evening is running a piece on why oil may be running out quicker than most think.

Be interesting to see what they conclude, but won't hold my breath.

Thanks for the tip.

Well Sportsfans:

The ITN News was a brief three minute or so analysis of a Crude Awakening.

A few quick clips of Crude Awakening.

1. Why is petrol at a quid a litre?

2. Why is oil at 100 bucks a barrel?

3. Birol made it on:

The IEA has underestimated demand from Chindia

Oil production growth is unsustainable (his words)

4. David Strahan of Last oil shock.com made it on and had 30 seconds to put the case for PO.

But: Interesting map of the world showing countries that had passed peak (shown in red)

Lot of red... Including Russia (named as peaking in 1987).

I suppose this is the first time that PO made it to a half hour UK Wide News bulletin so that is something. (Note date...)

Nothing we dont know already, but not really threatening enough to get the attention of Channel zapping Darren Lard Arse waiting for 'fat sad slappers with bad singing voices and stars in their eyes'* to stop and think.

*I think we sold it to the US where it is called American Idol.

Dorme Bien

The map displayed was from David Strahan's site http://www.lastoilshock.com/map.html BTW.

Dammit, missed it!

Was it any good?

Carbon, Coventry, UK

You may let your breath out now.

For our continental cousins, it was a suprisingly frank bad news/worse news piece, with a quick clip from Crude Awakening, then the "but surely the experts feel differently, well no ..." by cutting to Fatih Birols assessment on the need for everyone to cut back (quick ROFL) a studio shot showing 85mbd today and expected 122 mbd by 2015, then the world map showing peaked countries in red and countries not yet peaked in green ... and a warning that half would peak "within the next decade". Then a quick soundbite from David Strahan who was pointing out the UK's relatively perilous economic situation, then the closing V/O over a shot of oil draining out of a plughole.

Balanced, and without a cornucupian in sight.

ITV is the second largest network on British terrestrial TV, after BBC1, so this is probably the largest audience reach of the peak message to date.

Newsnight have just run a piece on oil and where future supplies will come from (cough). They avoided mentioning peak oil but one of the interviewees hammered the point home.

Probably will be available at the Newsnight website

Wow, now that Birol has come out and nearly said "we are in a complete ju ju flop situation", it seems ok for MSM to report on peak oil. Clips from Crude Awakening as well.

I don't remember seeing this rebuttal, http://www.venezuelanalysis.com/analysis/2808 to the recent NY Times article, http://www.nytimes.com/2007/11/04/magazine/04oil-t.html?_r=1&pagewanted=... that was quite negative about Venezuelan oil production. The rebuttal is rather devastating and shows the Times item to be little more than the normal anti-Chavez propaganda. The rebuttal may also provide some answers for those thinking Venezuelan production has greatly declined.

Georgia in turmoil, state of emergency declared

TBILISI, Georgia - U.S.-allied President Mikhail Saakashvili declared a state of emergency Wednesday in the capital of Georgia, where six days of demonstrations have fueled a worsening crisis.

Saakashvili has blamed Russia for fomenting the unrest in the former Soviet nation. His prime minister, Zurab Nogaideli, said in a televised statement that there had been an effort to overthrow the pro-Western government.

The idea that the West had somehow permanently moved Georgia out of the Russian sphere of influence was always pretty silly.

Oh, the irony. CNN is running that humorous commercial that looks like a sports news show, recommending Georgia for business and investment.

Between clips of people rioting in the streets...

''Between clips of people rioting in the streets...''


I've got a geologist in there.

Better get on the phone :-(

Their lead-in: "It looks like Pakistan, but it's not! It's Georgia!"

I hope your guy is all right. It sounds like the trouble is mostly in the cities.

So far, so good.

My mom watches Flip this house on The Learning Channel. The mortgage ads during commercial break occasional catch my attention as I'm passing by the den and I have to stop and watch. They're positively hilarious.

Georgia in turmoil, state of emergency declared

Oh, it's not the water thing in Atlanta. Damn, I thought I'd missed something going on.

I've just read the review of the documentary "A Crude Awakening". The journalist (Derek Brower), who covers energy politics, is pretending to be able to criticize the methodology of the peak oil theorists:

Part of the problem is in the methodology. Peak oil theorists talk in “gross depletion.” If an oil field is discovered to have 5bn barrels of crude and a company produces 50,000 barrels a day from it, the field will deplete in just over 27 years. But that’s not the way oil fields work. Their reserves change over time, with technology and discoveries constantly adding (and sometimes subtracting) from the true reserves figure. A more accurate methodology, called “net depletion,” takes account of those changes. Extended to the total global reserve, it is the reason why the best estimations of total years' worth of remaining oil have, for the past two decades, remained at more than 40 years. That is to say, despite growing consumption and increasing extraction of oil, new discoveries have continued to keep the amount of oil we believe we have left roughly steady.

Clearly, he has a weak understanding of the issue of depletion and reserve growth. When someone is using R/P ratios in order to explain depletion, it's not a good sign.

And he finishes with a suggestion that Peak Oil is a conspiracy by the major oil companies, which I am sure is news to ExxonMobil.

In reality, Derek Brower is precisely aligned with ExxonMobil, Yergin/Lynch, et al, who are--in effect--encouraging consumers to continue buying large vehicles to drive to and from large mortgages.

Why aren't the people who are in effect encouraging more energy consumption ever blamed for higher energy prices?

In my opinion, the leadership plans to charge the costs of the energy crisis and transformation of society to the portion of the population that is ignorant enough to trust them.

Hello TODers,

State of Emergency in Nation of Georgia
Gee, first Pakistan, now Georgia--who is next? Or were Zimbabwe, Myranmar, Sri Lanka, Iran, Nigeria, etc, etc, earlier precursors to the in-country PTB trying to maintain a monopoly on terror and control? How about the global PTB in Afghanistan, Iraq, Sudan, Nigeria, etc, etc?

Isn't the myriad ways for the Thermo/Gene Collision to play out just fascinating [horrifying]? Much better than any movie or videogame IMO.

Too bad no country seems to be voluntarily moving to Maximum Peak Outreach and Biosolar Paradigm Shift. Must be tough trying to convince the topdogs to give up their energy-slave yachts, jets, limos, and many lavish estates.

Compare with Iditarod sled-dogs: more than happy to act as a team, then pull will all their combined self-powered MPP might in a singular direction.

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

Perhaps the plan is to destabilize Iran. They have famously fractured internal politics and a quick peak at the distribution of ethnic groups shows plenty of Kurds in the west and we recently saw a report here that indicates al Queda is creeping up on their east flank. We may be hiring the mujahideen again, just as we did when we wanted them as a proxy to battle the Soviet Union in Afghanistan.


And here is Georgia put in context:


So ... U.S. in Iraq, U.S. menacing Iran, and both whilst we're collapsing. Turkey ready to move into the north of Iraq to get after the Kurds, and Dagestan, just to the east of Georgia has been a thorn in Russia's side for years. Armenia really has no use for the Turks getting anywhere near their territory. Oh, and that little nameless snippet southeast of Armenia? That is part of Azerbaijan called Nagorno-Karabakh. This delights the Armenians nearly as much as Turkish visitors.

We've been exhuming carbon for a long time and as we scrape the bottom of that barrel we're starting to exhume some other things that would have been better left undisturbed. We got past the Balkan tar pit this time at the cost of a lot of cluster munitions but this round of imperial musical chairs in the Caucasus will suck us in at a time when we're in dire straights on the oil and economic fronts and with a president at the helm who is more appropriate for some West African banana republic than the world's foremost military power.

Back in the days of Sovietology there was quite a bit of ink and paper devoted to the "Nationalities Question"--the fact of there being over 90 different ethnonational groups in the USSR. For a number of reasons, I got intrigued with the Caucus and Central Asian peoples, especially the Cechens. In order to better understand what's happening there now, I think it proper to revisit some of the later studies done on the overall topic. The socialhistory questions are quite complex; for example, Dagestan alone has about 20 different etnolinguistic groups. Of interest is the historical reason the Georgians tied themselves to Moscow--to provide a bulwark against their being increasingly encircled by Islamic peoples and kingdoms.

It is a big tangle to the minds of those raised in the United States. We have occasional regional rivalries, generally tied to sports teams, but the occasional fisticuff is as far as it goes. The idea that up over the hill is someone that would shoot at you with just a tiny bit of provocation is very hard for us to get our minds around ...

We've instead got some major cultural rivalries. I suggest reading the book Albion's Seed if you're interested in understanding what they are and where they come from.

Yes, that is an outstanding work; I used material from it during my last years of teaching. I'm disappointed, however, that the series of 4+ volumes it was supposed to be the first of (although there's now a second) never materialized as Fischer went on to publish other works.

It's easy to tell which country is next, all you have to do if to listen which country the decider declares as most democratic. That's the next country that will declares martial law to 'cement democracy'. Pakistan and Georgia have been labeled as example democracies by the current US administration, so they made a move to "solidify democratic gains", nothing more nothing else. As Bush would put it "democrasy without rubber bullets or with opposition is not a democracy, but bunch of evil doers"

I also would ignore Georgia statements that there is some Russian influence involved. The TV station that government has closed is controlled by Rupert Murdoch and only Georgia would see a Russian agent in him. So not much of geopolitics as a cause just people getting tired of all this pretend democracy.

Georgia's pro-Western regime has declared a state of emergency and indicates they believe Russia is attempting some sort of coup.


Pakistan lets go, Russia pledges to support Iran, and then they move against Georgia ...

The rematch of Great Game has begun to heat up a century after the first teams left the field ...

Alright...Pakistan...Georgia...who's next for a "State of Emergency"? Take a number and wait your turn!!

Confusion on London stock market

Trading on the London stock market has been thrown into confusion after technical problems resulted in misleading information being published.

In a highly unusual move, trading on the London Stock Exchange was extended to 1800 GMT after terminals in the City displayed incorrect prices.

These showed the benchmark FTSE 100 closing up on Wednesday, even though it was sharply down for most of the day.

Hello Leanan,

I think GIGO is more likely than a technical problem. Computers work quite well unless the software is changed by someone [Plunge Protection Team doing some code-testing runs?]. My feeble two cents.

Maybe they decided to run that cyber thing four days early.

This quote from the top link "OPEC's reluctance to open the spigots as oil nears $100 a barrel could backfire on the cartel as alternative energy sources and consumer conservation dig into demand."

This is exactly where things go wrong. Reluctance. Right. So it is OPEC's fault, ain't it?

Edit: we are lucky if it "backfires" as described. More likely it will "backfire" to OPEC in an entirely different way.

It seems almost certain that oil producing nations will be scapegoated. ELM has exports declining faster than production, which will be viewed as "hoarding". Exporters will be expected to produce oil in line with their inflated reserves, and people won't be inclined to believe mea culpas that producers lied in the past about how much oil they have, but are now telling the truth. The lack of transparency among producers, coupled with rage and desperation on the part of consumers, will be an explosive mix.

Thirty years ago, everyone thought there was perhaps 10 billion barrels of oil in the Bakken Formation, according to Julie LeFever, who has been studying the state's oil patch for 27 years with the North Dakota Geological Survey in Grand Forks.
More recently, one expert estimated it's more like 400 billion barrels, while others say 200 billion to 300 billion barrels, LeFever said.

Nobody commented this article yet. What's up here, 400 Bn barrels in ND?

Note that they are talking about Original Oil In Place (OOIP) in the basin. They also talked about a range of low recovery rates. Furthermore, it is my understanding that existing Bakken Shale production (not related to Kerogen deposits in other basins) tends to be in discrete fields.

For a realistic view of the costs and complexities, read this article;


Having said all of this, does it make sense? Sure. Nonconventional oil and gas production in the US has a bright future, but I suspect that it will just slow the rate of decline in US production.

BTW, to put current North Dakota production in perspective, it is less than 1/8th of current Texas production, which has been in decline since 1972.

But what 9 out of 10 people that read this article probably think is that North Dakota could meet US oil consumption for decades.

Ironic that it's North Dakota where there are MSM reported diesel fuel shortages.

It's no longer about reserves, but flow rate.

AFAIK it's a difficult formation to work, so was previously regarded as uneconomic. With some new techniques, it can produce, but low flow rates.

It just sounded too good to be true.
Well, the slower it flows, the longer it lasts :)

They got >100,000 barrels EUR per well. It cost 4 million dollars plus to drill a well. There were land royalty costs, and government taxes and fees, there were capital costs in the form of interest rates. There were dryholes in the formation and areas of low productivity. Wells quickly declined in production during the first year, then produced at lower rates for more than ten years. The Bakken extended into Canada.

Elsewhere they were drilling 30,000 feet into the GOM only to find a thin layer of gas and that they did not have a heavy enough BOP to produce it. A 200 million dollar well was plugged and abandoned and major integrated oil companies posted lower profits than last year. Not enough money, time, and talent were available to expand production capacity. Governments providing protection for the oil industry demanded "their fair share" potentially causing further erosion of oil production expansion and escalation of prices. In Germany there was double digit growth of CNG natural gas operated cars. In China electric battery bicycles were found to be easier to ride than the traditional pedal power variety.

In China electric battery bicycles were found to be easier to ride than the traditional pedal power variety.

The same applies outside of China.

Their literally is not enough lead production in the world to put all of China on electric bicycles. We would have to start producing from dilute, distant, or difficult lead deposits to get them supplied. Think oil sands vs Ghawar to get an idea of the cost differential.
I certainly hope we do just that.
If any of you are into commodity speculation, bear in mind that while most everything from copper to tungsten has gone to peaks 10 times as high as the bottoms in the early part of this decade, the energy metals of lead (batteries) and zinc (flow cells) have not yet reached those extremes.

Their literally is not enough lead production in the world to put all of China on electric bicycles.

Are you sure? Let's check:

Electric bikes seem to be around 14Ah @ 36V, or about 0.5kWh of battery power. At about 35Wh/kg, that's about 15kg of battery per bike. So that's a maximum of 15kg of lead per bike; based on this, my estimate for the dry weight is closer to 10kg, so let's say 10kg of lead per bike. For 1B adults, that's 10M tons of lead.

World lead production in 2004 was about 7M tons of lead, of which 3M tons was from mines and 4M from recycling (97% of lead in car batteries is recycled). So it would take about 18 months of lead production to kit out every adult in China with an electric bike.

Obviously, lead is used for other things, so we can't devote 100% of lead production to electric bikes for China. Equally obviously, though, those billion bikes aren't going to be produced over an 18-month period. Given that, it seems like there's little or no practical barrier to put all of China on electric bicycles over a period of years.

Peak oil on the UK network news

Average unleaded gasoline prices have gone through £1 / liter in the UK and both our main TV news networks carried stories this evening:

The BBC - see only 3 reasons for high oil prices

1. growing demand in china
2. the falling $
3. speculation

The Independent Television News ITN (commercial station) had a somewhat more realistic view:

They presented the story in terms of peak oil in many countries with only a handful now able to increase production. They also had an interview with David Strahan, author of the last oil shock.


Chris V will hopefully have recorded the ITN piece - which should be on TOD before very long.

I found the reports interesting.

At the basis of the TV reporters position seems to be "the reserve figures are right, so its only a political problem to get it out". If that one is sidestepped then the follow up is "there are alternative that will come on stream".

In other words address these two and we can get some sensible debate about reality. Its a faintly positive position to be in since there is a logical argument to be made to shoot these down.

Here is an interesting article I found after I did a Google search for "Arab tendency to exaggerate"


Most Arabic scholars feel that this mubalagha as well as tawkid (assertion) is almost a linguistic game played between speaker and listener. In his article on the influence of language on Arab psychology, the Arab scholar, Dr. Edward Shouby, comments on mubalagha and tawkid, and his words are worth remembering:

"Arabs are forced to over‑assert and exaggerate in almost all types of communications, as otherwise they stand a good chance of being gravely misunderstood. If an Arab says exactly what he means without the expected exaggeration, other Arabs may think that he means the opposite. This fact leads to misunderstandings on the part of non‑Arabs who do not realize that the Arab is merely following a linguistic tradition."

Shouby's comments emphasize the important concept that the average Arab uses exaggeration and overemphasis without even being aware that he is doing it. It is very difficult for an Arab to make a simple statement of fact. For this reason it usually pays to be cautious about focusing on exact translations of Arabic statements such as the long rambling tirades of Gadhafi from which the emotional and inflammatory mubalagha statements are usually quoted directly by the Western press

There is also a bit of wish fulfillment in Arab exaggeration. They at times can have such a strong desire for an event to take place that they make a statement that confuses the desired action with an accomplished fact. The general vagueness of thought and ambiguous structure of the Arabic language itself also contributes to this tendency to exaggerate and substitute words for action. For example, in sentences expressing wishes such as Wallahi la fa' altu which can be literally translated "By Allah, I did not do (it) , can actually mean "By Allah I shall not do (it)." Another example is the word phrase badrab which literally translates "I want to beat," but actually means "I shall beat." This linguistic subtlety between desired actions and accomplished fact should be considered when listening to the emphatic statements of Arabs. It is obvious that time and action can have very subtle connotations in the translation of Arabic. Westerners should be wary of this.

I guess this applies to Persians too, so when Iranian President Ahmadeinejad says he wants Israel 'wiped from the pages of time' is he just talking the talk, and saying what people want to hear him say?

And as for Saudi Arabia and their 'we have 260 billion barrels of reserves'.....hmmmm.

Here's an article from 2004 full of even bigger numbers:


Saudi Arabia's approximate oil-initially-in-place totals are: oil produced to date, 99 billion barrels (bb); proved reserves, 260 bb; possible and probable resources, 100 bb; and contingent resources, 240 bb. "We are very confident these will ultimately be recovered, utilizing advanced and Enhanced Oil Recovery (EOR) technologies or processes," Saleri said. "Some of these might ultimately be recovered using technological breakthroughs that may unfold over the coming decades."
"We have a lot of acreage to explore and potential to find a lot more oil and gas," Abdul-Baqi said. "We believe we are looking at potentially recovering an additional 150 billion barrels beyond the 260 billion barrels (of proved reserves) we have booked -- an increase of 60 percent." In the last decade, Saudi Aramco garnered a 52 percent success rate in the 64 oil and gas exploration wells it drilled, he added.

Mahmoud Abdul-Baqi makes a point during the CSIS event. Other participants, from left, are Nansen Saleri, Frank Verrastro, Matthew Simmons, and Robert Ebel.
(Photo by Unknown/Saudi Aramco/PADIA)

The Kingdom's average state of reserves depletion for all its fields is just 28 percent. The oldest field, Abqaiq, is 73 percent depleted, and the world’s largest field, Ghawar, has produced 48 percent of its reserves. By contrast, Shaybah, one of the Kingdom's youngest fields, has 95 percent of its proven reserves remaining.

"Our 28 percent average is fantastic by anyone's standards in the industry. There is no other major that even comes close to that. Our typical annual depletion rate (for a field) is about two percent," Saleri said. He added that Saudi Arabia could easily pump up its production rate by using nearly 2 million barrels per day of spare capacity but that such a move is not called for by current market conditions.

Go to the homepage http://www.saudi-us-relations.org/ and use the search box to find other oil related articles.

The $64 Quadrillion Question is: Do they really REALLY believe these numbers or is this just what they pretend to themselves that they believe? Does their 'tendency to exaggerate' integrate itself so deeply into their minds that they lose the ability to be realistic?

Magus, I brought this subject up many times in the past. I spent five years in Saudi Arabia and I am well familiar with the Arab tendency to exaggerate. Also this predilection is described very well in the book “The Arab Mind”.

However every time I brought it up, or recommended that others read this book in order to understand what I was talking about, I was called a racist. However it is a cold hard fact, Arabs routinely exaggerate, and exaggerate sometimes rather wildly. They know this fact and take this into consideration when discussing things with each other. However this type of thing is totally alien to Westerners. They simply do not understand it and take everything Arabs say as literal fact, not understanding that this is simply the way they talk.

For those who doubt me, simply go to this New York Times article:

Then check the second sidebar on the left hand side of the column titled “Scratching the Surface” and check out Mr. Saleri’s suggestion of ultimate Saudi Reserves.

Then tell me that Arabs do not have a tendency to exaggerate.

Ron Patterson

Japanese now, Japanese has different vocabulary depending on your opinion of your status vis a vis your conversational partner. That's weird.
So what do we English speakers do that makes everyone else boggle?

That's actually pretty common. Spanish has tu vs. usted, for example. English used to have it: thou vs. you.

A lot of things are weird about English, it being a bastard language and all. One thing that strikes me is that so many of our verbs are irregular. Makes me glad I didn't have to learn it as a foreign language.

And one thing I remember from The Story of English: English has different words for animals, depending on whether they're on the hoof or on the table. Cow vs. beef, swine vs. pork, sheep vs. mutton, deer vs. venison. The explanation being the French nobles who ruled England after the Norman conquest used one set of terms, and saw the beasts mostly on plates on the table, while the Anglo-Saxon peasants who raised the critters used another.

While the maddening thing about English is its highly inconsisent spelling and pronounciation, its grammar and syntax are actually relatively simple comparted to a lot of other languages. English does not have the complex verb conjugations of the romance languages, but rather uses a few simple verb forms in conjuction with auxilliary words to create tenses. Nor does it (any longer) have noun declensions, such as in Latin, an extremely cumbersome language that in my view deserves to be extinct.

Though English has an enormous continuously expanding vocabulary, its overall structure has actually gotten simpler over the years, and gramatically perhaps can be viewed as a sort of 'German light' with a heavy sprinkling of Latin and French in its vocabulary.

The Normans introduced a lot of words, but I'm not sure about that meat theory, in French they have different words for hoof/table vache vs boeuf, cochon vs porc, although it is moutons vs mouton I think.

It looks like our words for the meat are derived from French, I guess we used to say cow-meat and pig-meat, so we adopted the French words for these words

Some French words have been imported more than once with different spelling, e.g. warranty and guarantee are both derived from garantie, and we also have hotel and hostel, both from hôtel.

Here is my inspirational quote for the day:

“One who knows his lot to be the lot of all other men
Is a safe man to guide them.”

- Lao Tsu

The people who keeping using the "We've heard all this peak oil stuff before" conveniently forget that the Boy was indeed finally killed by the Wolf.

And Cassandra was right, and she died, too.

Which just goes to illustrate that "Prophet" is a spectacularly unrewarding career path.

In the TMI department:

In some versions of the fairly tale the shepard boy is eaten by the wolf, in most, his sheep are eaten by the wolf.

Maybe less useless: Gasbuddy.com has a nice feature to plot oil and gas prices over a timespan up to six years, in US or Canadian dollars, where gas prices can be US average, Canadian average, or locality average by city.

For example, once you create the graph and want to post it elsewher, rightclick on graph to get the url, in dialog box under properties. See below:

Crude Oil and gasoline prices decoupled in Apr/May of this year.