DrumBeat: January 21, 2008

Whether or not Peak Oil Imminent, Bush’s Allusion to it heightens chance of ‘Peak Shock’ on Wall Street

Unless you read The Oil Drum, a web site dedicated to the discussion of “peak oil” – which is the point at which global production can only go down because it has reached its physical limits – you probably didn’t hear what President Bush told an American television correspondent last week.

...Intentional or not, it sounds as if President Bush thinks peak oil is a clear and present danger, the effect of which is raise the chances of a “peak shock” hitting Wall Street in 2008. If this happens, it will likely start with a headline-grabbing report from a big investment banking firm, probably one that is already forecasting that oil will soon shoot through $100 a barrel. Goldman Sachs, CIBC World Markets and Raymond James & Associates are the most likely candidates.

Analysis: U.S. puts Kurds on terror list

WASHINGTON (UPI) -- The U.S. National Counter-Terrorism Center says it was a mistake to include the symbol of the Patriotic Union of Kurdistan -- the political party headed by Iraqi President Jalal Talabani -- on a list of "terrorist logos" that police should be on the lookout for during traffic stops and other contacts with members of the public.

BP suspends pension payments

BP has taken a pension holiday, suspending all payments into its two UK pension schemes for a year with effect from 1 January.

This makes the oil group only the second FTSE 100 company to stop payments into a pension fund in five years. Rival oil and petrochemical company Shell announced it was stopping contributions last October, but would not say how much its main fund was in surplus.

U.S. sees nuclear energy as global alternative

ABU DHABI (Reuters) - Gulf Arab oil exporters and countries around the world should look into nuclear power as an alternative to hydrocarbons, U.S. Energy Secretary Sam Bodman said on Monday.

"Nuclear power should be an alternative for Gulf countries and other countries around the world," Bodman said in the United Arab Emirates during a visit.

Prospecting for gas and oil in Lake Geneva

Lake Geneva and the Jura mountains may soon be reverberating with sounds of drills and pumps as small prospectors try to take advantage of spiralling energy prices.

This year Swiss firm Petrosvibri hopes to start drilling for gas deep beneath the lake's crystal-clear waters opposite Montreux's Chillon Castle. And French specialist oil companies are eager to begin looking for oil close to Geneva.

Tough sledding on other side of peak oil

Peak oil is similarly hard to grasp without statistics, and that's probably one reason people have had a hard time accepting that the oil we use to run our cars and trucks and to heat our buildings is soon to become increasingly scarce. In some ways, peak oil is hard to grasp even with statistics. When world oil production reaches its peak and begins declining permanently, no statistics can confirm it until a few years after it's happened. Right now, oil analysts examining the same numbers debate whether the plateau in world oil production since 2005 represents a rounded peak before a permanent decline or a "false summit" that precedes another rise in production.

Gaza in darkness as border closed

GAZA CITY (CNN) -- Residents of Gaza on Monday were coping with power cuts which led to long lines at bakeries and darkened hospital wards, but Israel said reports of a humanitarian crisis were exaggerated.

Gaza goes dark in standoff

Israel is Gaza's only source of fuel, and since October it has reduced supplies of gasoline and industrial diesel used by the power plant in an effort to press Hamas to halt militant rocket attacks from the territory on southern Israel.

Gaza: Five patients die in hospitals due to power shortage

Four hours after the blackout started, Hamas said that five patients died because of the cutoff of electricity in hospitals.

U.N. agency says might have to suspend Gaza food handouts

JERUSALEM (Reuters) - A U.N. agency said on Monday it will have to suspend its food distribution to 860,000 Palestinians in the Gaza Strip as early as Wednesday unless Israel eases its closure of the territory's border crossings.

"Because of a shortage of nylon for plastic bags and fuel for vehicles and generators, on Wednesday or Thursday we are going to have to suspend our food distribution program to 860,000 people in Gaza if the present situation continues," said Christopher Gunness, spokesman for UNRWA.

Cellulosic ethanol to power fertilizer demand

It sounds all too perfect for grain producers. Not only are grain prices going through the roof but now a significant end user of crop wastes like corn stover and wheat straw is emerging - the cellulosic ethanol industry. This offers the additional promise of even more financial windfalls in the game of crop production for farmers. But there will be major ramifications for the sustainability of grain production once we commit to remove not only grain but every skeric of plant residue our crops push out of the soil. There will be a major and significant increase in the amount of fertilizer nutrients farmers annually mine from the soil substrate.

Questions Congress Need Ask Before Authorizing Bush's See, Hear, Speak No Evil Saudi Arms Deal

Early in 2007 with the price of oil hovering about $50/bbl, Saudi Arabia as the leader of OPEC, organized a production cut of 1.7 million barrels a day from OPEC's production quotas. Since then the price of oil has escalated by 100% touching $100/bbl just some two weeks ago. Such an increase in price is virtually unprecedented and is beginning to wreck havoc on world economies, especially the poorer nations. Obviously the 500,000 barrels production a day that were reinstated in November are a far cry from what is needed. Why, in spite of this dramatic price escalation has Saudi Arabia not mandated OPEC to reinstate, at the very least, the full 1.7 million barrels of production?

Arabian Oil Tsar to President Bush: 'Get Lost'

For at least a decade now, Saudi Arabia has favored pliant reporters and editors and oil industry sycophants and lobbyists with its "secret potion" for oil power, the reason it is Sampson to OPEC's Delilah — namely its mighty "excess" production ability.

Saudi Arabia is the producer of last reserve, we are told. It can pump it up when necessary, which is why we in America must extend protection and alliance to the kingdom against all enemies. Indeed, all the Saudi satellites in the region — Kuwait, the United Arab Emirates, and Qatar, too — could pump it up but won't, opting for higher prices while panting after American protection.

Power looms large for Irish business

Energy represents the biggest cost increase for small and medium sized enterprises globally over the last two years, according to Irish provider C Infinity. Referencing research from analyst IDC and partners IBM, the company said that smaller businesses in Ireland need to adopt a more green approach to IT, as highlighted recently when oil reached $100 a barrel.

The Incandescent Light, It Must Go!

The question is...just what can we do to create the biggest energy lowering change with the least amount of effort ? The first culprit that comes to mind is the incandescent light bulb.

Kenya: Petroleum Prices Now Triple in Western Region

Consumers of petroleum products in western Kenya are paying nearly three times the market price as the region grapples with an acute shortage in the wake of the political turmoil.

Eskom stops exporting electricity

Eskom has stopped supplying electricity to neighbouring countries amid the dire shortage in South Africa, it said on Sunday.

South Africa: Eskom's Call to Country - Use 20 Percent Less Power

SA must cut its overall electricity consumption 20% as soon as possible to cope with a power shortage which has led to a spate of blackouts in the past week, a senior Eskom official has said.

Ideally the cutbacks should be shared across all sectors of the economy - residential, business and industrial - as the utility expands its capacity, said Andrew Etzinger, Eskom's GM for demand-side management.

Irregular energy makes hens and milk cows grumpy

Cape Town - The country's largest poultry producer has joined the clarion call for Eskom to give adequate warning about planned power cuts, while dairy farmers have warned that there could be a new milk shortage.

Across Asia, food is the new oil as prices surge

BEIJING (Reuters) - From India to Indonesia, governments across Asia are scrambling for solutions as it dawns on them that sky-high food prices might not fall any time soon.

China seen facing tapioca shortage for ethanol

BEIJING/HONG KONG (Reuters) - Guangxi, China's top tapioca producer, may have to downgrade its ethanol ambitions due to a raw material shortage, casting doubt on the country's plans to double its capacity for the alternative fuel by 2010.

Even the country's first tapioca ethanol plant, expected to start full-operations in February, is likely to face difficulties in getting enough material to produce 200,000 tonnes of fuel ethanol a year, officials and traders say.

Green Technology, Low-Cost Upgrade for Commercial and Residential Refrigeration Means Big Fuel and Dollar Savings Now!

DUCTED AMBIENT AIR COOLING is a breakthrough method for big energy savings in cooler climates. Used in walk-in coolers and also targeting home refrigeration this system uses the seasonally cold air outside of buildings and homes to bypass energy-intensive compressors used in normal refrigeration.

How the coming home heating crisis could threaten the grid

Resource economist Douglas Reynolds, a specialist on North American natural gas, has told me that once the natural gas decline begins, he expects a 5 percent per year drop-off in total production. Reynolds believes such a drop could begin as soon as this year. While imports of liquid natural gas (LNG) could ease the situation, the U. S. currently has only five such ports, and Canada does not anticipate opening any until 2011.

...So, this raises a second question: Will there be enough electricity for all those who want it? The short answer from Toronto is "no." Based on my admittedly rough calculations for the United States, the answer may be "no" here as well. If Americans who heat with natural gas substituted electricity for a mere quarter of their home heating, they would add about 6 percent to total electrical demand. Doesn't sound like much, does it? However, that 6 percent would not be added continuously throughout the year, but concentrated in the coldest months. That could cause a pronounced spike in demand, especially during deep freezes. Add to this the fact that about 20 percent of U. S. electricity is generated from natural gas-fired power plants that will be competing with homeowners for the same dwindling supplies of natural gas.

Anxiety as US oil fields dry up and prices soar

Now that the price of crude oil has crossed the $100-a-barrel threshold, and then retreated slightly, what direction will it take?

Many experts say it will go up, then down, and then maybe up again. That, anyway, has been the pattern of the last several years of volatile prices.

'Energy is politics and politics is energy' (interview with Thierry Vandal, CEO of Hydro-Québec)

Has $90 oil totally changed your business?

I think our generation will see the end of the internal combustion engine. It will be present but not as omnipresent as today. And Hydro-Québec will play a role. People talk today of plug-in hybrid autos taking the next step - to cash-back hybrids that connect to the power grid but also become a source of power certain times during the day. Using the Internet and GPS, these moving power plants could be attached to our grid in an efficient way.

'20-Year-Olds Need To Know They're Going To Grow Up In A Warmer World'

More frequent heat waves in summer. Fewer hard freezes in winter. More prolonged periods of drought. Worsening air quality. More extreme individual rainfall events.

That's the forecast predicted for the year 2100 in South Texas - a region already known for its unforgiving climate - in The Changing Climate of South Texas 1900-2100: Problems and Prospects, Impacts and Implications. Co-edited by two research professors at Texas A&M University-Kingsville (http://www.tamuk.edu), the book features chapters written by leading scholarly authorities on the effects of climate change on the region's coastal areas, water resources, air quality, ecology and wildlife.

Oil falls below $89 as stock markets plunge

LONDON (Reuters) - Oil slid almost $2 to a six-week low below $89 a barrel on Monday, as stock markets plummeted and concerns mounted over an economic slow-down led by top consumer the United States.

Stock markets across the world took a battering as anxiety spread that a fiscal stimulus plan proposed by U.S. President George W. Bush last week would not be enough to prevent a recession.

Pipeline fire, tanker blast in southern Nigeria: sources

LAGOS (AFP) - A major oil pipeline belonging to Italian oil company Agip caught fire and a tanker truck exploded in separate incidents Monday in southern Nigeria, military and industry sources said.

Middle East tanker rates could drop as vessel supply increases

Oslo: The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may drop for a 17th day as the supply of carriers accumulates and oil companies cut cargo demand.

Refineries ordering crude cargoes may be assuming a US recession will crimp fuel demand, and the volume of oil being ship-ped "looks less," than in December, Per Mansson, a tanker broker at Nor Ocean Stockholm AB said in an e-mailed note.

Sinopec fuel output undershoots as China revs up

HONG KONG, Jan 21 (Reuters) - Chinese refining giant Sinopec Corp undershot its fuel processing target in 2007, it said on Monday, highlighting the tension between China's need to supply its hungry economy and its desire to keep a lid on prices.

Iraq Suspends North Oil Exports On Pipeline Repair - Official

Iraq has suspended crude oil exports from its northern oil fields due to a fault on the pipeline that carries crude from the Kirkuk oil fields to Turkey's Ceyhan port, an Iraqi oil official said Monday.

Nigeria: Groups Petition National Assembly On 2008 Gas Flaring Deadline

Civil Society leaders and community representatives have petitioned the National Assembly, asking for a legislation compelling oil companies and the government to end gas flaring in 2008. In a public memo, endorsed by 13 organisations, the groups said previous deadlines set for gas flare-out was disrespected because they were not legally binding.

US energy chief pleads for more Saudi, OPEC oil

ABU DHABI, Jan 21 (Reuters) - U.S. Energy Secretary Sam Bodman repeated his plea on Monday for more oil from top exporter Saudi Arabia, undaunted by OPEC's cautious response to Washington's request so far.

Peak Oil debate is now over, is "Peak Capital" next?

The debate over Peak Oil is largely over, even if there is no firm consensus whether the world has already reached the point of diminishing oil production in 2007, 2008 or shortly thereafter. The central thesis that we will soon produce less and less oil(and increasingly more expensively) in the coming decade(s) is now adopted even by the mainstream media--with the possible exception of some diehard FMFf (Free Market Fundamentalist freaks)!

The next Great Debate--especially in view of the fast developing Capitalist Credit Crunch, whose sub-prime mortgage catastrophe is only the tip of the proverbial iceberg--is now squarely centered on the $100 Trillion Question: have we reached the era of Peak Capital(ism)?

Future thoughts: taking advantage of change

Mauldin writes that just as the world switched from whale oil to kerosene and from coal to diesel, we will see a change in how we find and use energy.

"That is inevitable. But the transition will not necessarily be easy or smooth. And there are some surprises along the way. The things we ‘know’ and the assumptions we make about the conservation of fuel and peak oil are probably wrong, and we need to get some key concepts down as we consider how the world will adjust to rising oil demand but at some point potentially falling production."

Peak oil: Why is it so difficult to explain/understand?

After several years of partial success in explaining the physics-based phenomenon sometimes known as “Peak Oil”, this author has come to one conclusion: Peak Oil is difficult to explain, and it is difficult for most people to understand.

The battle for America's soul

And what about Peak Oil, the theory supported by numerous geologists and petroleum experts, which states that in the very near future the total world demand for oil will outstrip the total world production capabilities, thereby adversely affecting the commerce and lifestyles of all nations, especially in America, the greatest consumer of petroleum? Do you believe that this theory is actually relevant and that America and the entire world must drastically change their ways, undertake conservation programs, develop alternative energy strategies to replace fossil fuels? Would you personally make some sort of positive sacrifice such as trying to limit your use of autos, by refusing to ever again purchase a large gas-guzzling SUV or pickup, and think seriously about purchasing a hybrid auto? Or do you, again, think that this theory of Peak Oil is yet once again nothing more than a hoax that will damage our economy and our lifestyles for no viable reason? Yes, one more big question in the battle for America's soul.

South Africa: Power Crisis Threatens to Sink Major Projects

CONCERN is growing that SA's electricity crisis could tarnish its appeal to investors, after news that several new mining projects and a ferrochrome expansion project had been put on the back burner because Eskom lacked the power needed to run them.

A R22bn aluminium smelter -- the biggest foreign direct investment secured by the country to date -- also may be under threat, with Eskom confirming yesterday it may be delayed by supply constraints.

South Africa: Blackouts Result in the Bad and Bizarre

The rolling electricity black-outs continue to play havoc with the lives of Capetonians as going through robot intersections, doing the shopping or even pulling the car out the driveway has become a daily lottery.

The latest round of load-shedding was implemented from Sunday and the Cape Argus has received numerous SMSes and phone calls from increasingly angry residents.

One resident in Penlyn Estate, Athlone, who did not want her name mentioned, said she was "very angry with Eskom" after her daughter missed her first day at school because they could not pull the family car out of the garage.

Sun Rises Slowly on China's Solar Energy Sector

A bevy of US-listed Chinese firms such as SunTech Power and foreign players such as Applied Materials Inc are starting to expand capacity in China, ploughing billions of dollars into factories across the country to capitalise on Beijing's intention to generate a tenth of its power from renewables by 2010.

Japan follows Europe by tapping offshore wind for power

KORIYAMA, Japan (Reuters) - Overlooking a mountain lake a few hours drive from Tokyo, dozens of tall wind turbines spin in the breeze creating carbon-free power for the world's fifth-biggest emitter of greenhouse gases.

A sudden change in breeze spins the turbines in a different direction, an apt symbol of Japan's efforts to shift away from fossil fuels for renewable energy such as wind power to help cut its greenhouse gas emissions under the Kyoto Protocol.

Call to abandon biofuels targets

The EU should abandon its biofuels targets because they are damaging the environment, a committee of MPs says.

The Environmental Audit Committee says biofuels are ineffective at cutting greenhouse gases and can be expensive.

Royal Society issues biofuel warning

Britain’s august scientific academy, the Royal Society, has called for better research and policy development on biofuels to ensure they make a positive rather than damaging contribution to the fight against global warming.

The Society has published a 90-page report, ‘Sustainable biofuels: prospects and challenges’, acknowledges the potential value of biofuels to displace the use of fossil fuels but identifies a host of complexities that bring into question whether biofuel production and use can be sustainable economically, socially and environmentally.

Big oil, ethanol producers fight over gas-blend rules

A fight is brewing between oil companies and ethanol producers over a proposed change in Arizona's gasoline blend rules.

The state has asked the U.S Environmental Protection Agency to shorten the winter gasoline blend season by two months, having it span from November to January instead of to March. The EPA was supposed to act on that application last year, but did not. The lack of federal response could lead the Legislature to make adjustments to state laws governing the fuel blending.

Funds threaten U.S. security

It is widely known that Saudi money is being deployed in the USA to influence opinion about the Middle East and Israel. Saudi investors have bought a foothold in a media company that shapes public opinion, and Dubai tried to take over the management of several ports. Consider also the loud voice of oil money in Middle East university programs and the energy industry.

EU nations chafe as the climate change bill comes in

BRUSSELS (AFP) - Less than a year after challenging the world to a race to stop global warming, European Union nations are bickering over who should carry the biggest burden in the EU's push to cut greenhouse gases.

Now starkly aware of the cost their commitments could imply, the 27 nations have been lobbying the European Commission hard as it prepares to unveil Wednesday a package of measures meant to achieve Europe's climate goals.

German farmers cultivate ways to fight global warming

The image of a farmer in harmony with nature has long prevented a hard look at the sector's contribution to climate change, notably when farming is compared with much more visibly polluting activities such as the chemical and steel industries and their iconic smokestacks.

Greenhouse Gases at New Peak in Sign of Asia Growth

TROLL STATION, Antarctica - Atmospheric levels of the main greenhouse gas have set another new peak in a sign of the industrial rise of Asian economies led by China, a senior scientist said on Saturday.

"The levels already in January are higher than last year," said Kim Holmen, research director of the Norwegian Polar Institute, during a visit to the Troll scientific research station in Antarctica by Norway's Prime Minister Jens Stoltenberg.

Renault to build electric cars for Israeli venture, on the road in 2011

The first national network of charging stations will be, logically enough, in a small, high-tech country.

Nissan and NEC will build the battery packs

A battery breakthrough by Stanford researchers, with a possible several-fold increase in energy density:


Over the years, I have seen at least 100 announcements like that.

Little Hope for the Just-in-Time Technology Fairy,


I'll second that - if half of the fantastic announcements we saw had come true I'd be writing this from the promenade deck of a cruise ship ... docked at the Martian moon of Phobos, awaiting my shuttle to the surface .

At least they have a working prototype of it.

I don't really think your post is the best response Alan, although I certainly know where you are coming from!
Ballard comes to mind, with their technology for fuel cells in cars, of which many of us had high hopes and it came to nought.
We have to accept that cutting-edge technology is high risk, and that most initiatives do not work out.
If we allow prior judgement to cloud our thinking we will miss out on the one in a hundred which does work - and it is that one which makes all the difference.
This is hardly a 'wow, if not for this coming along, we would be screwed' technology anyway.
Battery technology already to hand can make a substantial difference, and improvements are moving along on a broad front, so we are not dependent on one particular breakthrough.
To give a couple of examples, neither Toyota nor Caterpiller are known as unrealistic dreamers, basing their successes on solid engineering, and both have new technologies in the works, in Toyota's case they are confident enough now of the reliability of Lithium Ion technology to announce that they are going to be using it in cars, and in Caterpillers case with their Firefly improved lead acid technology.
This silica nanotechnology will be great if it works commercially, but it is not the only game in town for improvements, and there are plenty of others who are looking at improving anodes and cathodes.
I haven't come across anything with so many scams as renewables and advanced energy systems though since I was offered a deal on the Brooklyn Bridge!

Your top story at the moment: "Oil falls below $89 as stock markets plunge"

I think it really shows us that we are on the peak oil plateau when the FTSE in London can fall more than 3% amid stories of jitters in the city and we are still knocking on 90 dollars a barrel.
It looks as if demand destruction at higher prices is reversible and buyers will return to keep the floor price up if the price softens.

Carbon, Coventry UK.

Yeah, that's what struck me, too. So far, it's looking like those who predicted demand from developing countries would prevent a big drop in oil prices are right.

Hang Seng down 16% over last 2 days

Dow futures down 595.

Don't know if oil demand will drop. If we lose 50% worldwide over the next week, there maybe nowhere to go but up from there on out.

I paid everything I could electronically overnight just to get it in before morning, and tranferred funds everywhere I could so all my money isn't in one basket.

India's Finance Minister P Chidambaram has urged Indian investors to "remain calm" and advised them to "stay invested".

Glad I've been out of the Markets for months now. Does not sound good and the CNBC message all night has been the same "stay invested". Right. If I were in I'ld be selling everything I got.

The Post-Bush Regime: A Prognosis

I suggest that we can see the focus of the next US administration by paying attention to Al Gore. He’s going around preaching the gospel of climate change, and that is rapidly becoming the new cause celebre for the ‘international community’. It’s more than a campaign by Gore, we’re seeing a campaign being supported by the mass media, by the powers that be. We are clearly being prepared for a ‘new show’, after the ‘Bush show’, and the ‘new show’ is going to be about carbon taxes and credits, new energy sources, more efficient cars, biofuels, and all those other things that are allegedly related to climate change and peak oil.


The only way the industrialized North can continue on this path is by taking over more and more of the third world’s land, water, and resources for its own use. As the industrial appetite for resources continues to grow at a rapid rate, and as our global resources are increasingly stressed, we are going to see a very rapid expansion of third world hunger and starvation -- the globalization of African-scale famines. This is inevitable while the North stays on this basic path, whether we have Gore-like policies or some other set of policies is of little consequence.

This ‘inevitability’ of mass die-offs in the third world is well known to those who run the industrial nations. From the perspective of the heights of power, the question becomes, “How can we manage these die-offs so that they cause the least disruption in the global economy, and so that they don’t arouse too much public outcry?” Of course once you begin managing die-offs, you are then engaging in genocide, ie, arranging for particular populations to die in preference to others.


The rest of that read is grim.I think of our current society as having more than just One tight group...it consists of many competing groups with varying amounts of power.Now that the "elephants are fighting"we the grass suffer,as the Thai would say

The problems of the third-world are in the main due to unsustainable
population growth, and rampant corruption.
Something drastic needs to be done, and quickly.
Our political systems in their present form are not capable of resolving the many rapidly approaching crises, and I certainly hope
that there are indeed intelligent and powerful people working behind
the scenes who are prepared to take the necessary (unpopular) action.
I fully accept that I also am dispensable, but my great desire is to
know before I die that some attempt has been made to preserve this
beautiful planet by reducing population levels to match available
Even in my younger days I was alarmed at the many clearly evident
adverse trends, but never in my most pessimistic moments did I envisage how rapidly things would start to fall apart.

Oil falls below $89 as stock markets plunge

Weren't we supposed to have a breakout last week? :-)

Seriously, those who continue to argue that oil prices are headed straight to the moon need to consider the impact of higher oil prices on the economy. That, plus the effect higher prices should have on demand, will provide resistance as oil prices try to advance. Long term? Yes, oil prices going mauch higher. Next six months? Hard to predict, as marginal consumers will continue to drop out of the bidding.

We also need to take into consideration the impact that the "recession" will have on the oil markets, as in less demand.

I see a vicious cycle occurring if oil prices drop. Does this not effect the R&D side of oil production?

Yes, I must admit my prediction(P=.6) for a triple yergin by Jan. 31st, is pretty much out the door.

But, I thought that the financial markets were volatile enough to crunch sooner, that is why I only gave it 60%.

I guess the next question, is how low will it go, and what will it get to in May when crunch time comes again.

With fresh kills all over Europe, Canada and the US, I think the damage from the markets to the oil price still has some downside (if not significant).

Even if the price falls, It will still be $100 in essence.

As my mother told me about 1932, "There was stuff to buy and it was cheap, but no one had any money"

Expensive/Cheap are relative terms when viewed to the money in your pocket.

That's exactly right.

Watch the inventory number continue to drop.

What's a bottle of beer cost.

A pack of cigarettes.

Toilet paper.

I agree. The next 6 months are very hard to predict. I suspect that prices will generally soften, unless geopolitical factors intervene. War is an old fashioned way of distracting people from economic troubles, and I believe the Bush & Cheney still really want to go after Iran.

The conventional wisdom is that oil prices will collapse as demand weakens and oil producers pump more oil to make up for revenues lost as prices weakened. I don't think that's going to happen, because I don't think anybody can increase production significantly, except maybe some heavy sour crude. Some production may, in fact, go away (I'm thinking of the boost that occurred Oct-Dec of last year).

I'm guessing oil will trade between 80-85 dollars per barrel for the next few months, with occasional spikes above and below that.

"We are deep in one of the biggest financial/banking collapses in history. Like the 1873 panic, this one is heralding a new economic matrix, a new world order. Like the great 1929 crisis, this one will reach deep into the system and disorder many nations."

I'll wager that this is the first time in my life, 52 years,
that world markets have fallen 5% across the board while US
is "on holiday".

That fact alone should send shivers down the spine.

And war is no longer possible to "fix" these things.

Fracturing will take place now.

Note BP stops pension fund contributions.

While nothing on the "Bank Runs" on Scottish Equitable
or Scottish Widows.

Hi Robert,

You say "need to consider the impact of higher oil prices on the economy". Any suggestions on how to predict that in an analytical way? (I am not being sarcastic or smart. I am posing this as a real problem. How should my city budget for fuel?)

We have elasticity of demand to predict price. We could calculate what that has been each year and how it changes over time. It should get more elastic with higher prices if economic damage is happening, yes?

The big issue is smoothing the data. Looking at the price graphs you can see $10.00 and $20.00 swings. That make it hard to tell if the current drop is just a swing or real damage to the economy.

Anyway, if you have any thoughts on how to build a more accurate prediction than what we have seen from CERA and IEA I would like to hear them.

We had a breakout. The breakout was down to the next lower trading range. We haven't even revisited the early December lows yet--I wouldn't be surprised if we do. The posters above are correct, the drop is nothing in view of what is happening in the markets, and the amount of money the Fed has essentially been pulling out of the markets.

Oil = wealth. So, you can temporarily scare out some speculation, but you really can't change reality. The recession is the market's way of bringing down demand to the current supply level. To think that demand will continue to drop below that is very naive. (If the price were to continue to fall, demand would simply go up again due to the reduced price, and raise the price.)

I've noticed that the people who believe that oil prices are about to take a big drop tend to be people who've really never followed the data about price and demand.

The reason that oil prices will continue to head up is because of the production decline rate, and because demand continues to head up. Demand is still not actually dropping, not even at a steady price around $90 a barrel. When people talk about a drop in demand, they're talking about a decrease in the rate of increase of demand, not an actual drop in demand.

It takes a 10-15% increase in price to get a 1% decrease in demand. If the price comes down 1%, you get a 10-15% increase in demand. And that's pretty much like clockwork. The only way to disrupt that would be to totally destroy the world economy, and we're truly nowhere close to that.

The IEA is still forecasting something like a 2% increase in worldwide demand in 2008. This was their number after their adjustment for a slowing world economy. A 2% increase in demand, if production were to stay flat, would mean a 20-30% increase in price.

De Margerie of Total just pointed out that the annual decline rate in recent years has been running at approximately 5-6 million barrels per day. Most estimates of production for 2007 were between 85-86 million barrels per day. That means we're talking about roughly a 6.5% decline rate--roughly in the middle of CERA's amateurish calculations and Schlumberger's remarks about an 8% decline rate. A 6.5% decline rate, assuming no additional production, and no increase in demand, would equal a 65-95% increase in price.

So, we'd be looking at something like an 85%-125% increase in price in 2008 if we didn't have additional production coming on. But we do have additional production coming on. Based on past predicted increases in production relative to eventual actual increases in production for that time period, we're probably looking at very roughly around 4 million barrels per day coming on in 2008, or roughly 4.5% of 2007 consumption.

If you combine the effects of increased demand (with the increase reduced to allow for a recession), the decline rate, and new production coming online, we're looking at a price increase between 40% and 80% for 2008.

The price won't go straight to the moon--it will move up in steps (trading ranges), and there will be a lot of noise in the move up those steps--enough noise in general to keep most people from recognizing what's happening until it's over.

If the price drops because marginal customers drop out, the marginal customers will re-enter the market when the price drops. It's really pretty simple.

Also, people should be aware that in the very short term prices are heavily influenced by poker moves. Chinese oil companies and refineries, for example, are on short-term strike from heavy buying since the gov't announced its freeze on fuel prices. And U.S. refineries are closing for early maintenance until either oil prices drop or gasoline prices rise, or both.

There was some increase in production at the end of 2007, plus the price hit the long-awaited $100 a barrel, which was guaranteed to trigger at least a short-term sell-off. (Look at what happened when the price crossed $78 in August 2007: a hedger smash-down to the $69 area, only a few weeks before the start of the rise into the upper $90s.)

Even though most people won't understand the poker moves, you should be aware that they're happening.

2 very good posts, Moe. John

No argument from me.

BTW, ExxonMobil's estimated decline rate for existing wells is 4%/year to 6%/year.

Which is really bad news all by itself. In the Hirsch Report they projected their three scenarios on the basis of 2 - 2.5% annual decline rates. I heard Roger Bezdek (co-author of the report) say at a conference in Orlando in 2005 that their modeling showed there was no way the world economy could cope -even on the 20 year head start mitigation effort- with decline rates of 4 - 5% (or above). If ExxonMobil is right, then it's crash city.

Simmons defines the gross decline rate as the decline rate from existing wells and the net decline rate as the gross decline rate + production from new wells.

I suspect that Hirsch is talking about the net decline rate. The net post-peak decline rate for the Lower 48 has been about -2%/year. For Texas, about -4%/year.

...and then there's your net-EXPORT decline of -what- 1mbpd -that alone is worth 10-15% a year here on in...

I am wondering how much of the internal consumption of the importers is reliant on funding (borrowing) that might get slashed if there is a slump. For example, all those apartments in Dubai are not simply being financed by oil wealth so if external funding where to dry up perhaps internal consumption would also be reduced by some fraction...

Regards, Nick.

True, Jeffrey. I read your posting too quickly and completely glossed over the "existing wells" part. Even so, if the head of Schlumberger is correct, (and if he isn't well connected enough to know, can anybody be?) and the decline rate globally for existing fields is running at about 8% annual... 8% of 86,000,000 barrels is 6.8 million barrels per day that will be roughly the decline just this year. To knock that down into the 2% range overall would require over 5 million barrels of "new" oil just this year. To actually increase production would require something on the order 7 million, no?

As I have said before, the price of oil will have its ups and downs. But there will be more ups than downs, and the ups will be more up than the downs will be down.

By "marginal consumers", I assume you are referring to the unemployed.

As a follower of Stoneleigh's Financial Round-up, I think it is strange how something even more telegraphed than peak oil could come as such a surprise to the Bubblevision crowd.

I wouldn't bet on higher oil prices for a while. Although, I wouldn't bet against either...

@Bob Shaw
Mobile filtration bike. Fits perfectly in your spiderweb

Hello PaulusP,

Thxs so much--a brilliant innovation! Kudos galore to the inventors. Hope they sell them soon in the US before our kitchen taps go dry in the SW and SE. Hopefully the filter can be easily cleaned and reused many times before needing replacement, otherwise maybe a sand & charcoal filter is the cheaper option for poor people.

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


Take a look at bakfiets. Either google the term or try www.bakfiets.nl or www.workcycles.com. Basically a wheelbarrow with pedals.

My problem with the filterbike is that it will be expensive. So expensive that setting up 100,000,000 or so could pay for rebuilding public water infrastructure right around the globe.

Also there will be a permanent option for diverting the chassis to a more versatile cargo trike and leaving the filter to be handpowered or whatever. And it doesn't even look that serious as a cargo trike.

I help you with hope Bob.Being to far away to offer anything else. Us and our kids will have to squeeze through this bottleneck, somehow.

Oil falls below $89 as stock markets plunge:

Stock markets across the world took a battering as anxiety spread that a fiscal stimulus plan proposed by U.S. President George W. Bush last week would not be enough to prevent a recession.

What slays me is the degree to which MSM are clueless (perhaps pretending to be clueless?) as to what's going on in the market these days. There's a big pink elephant dancing around the parlor and the dinner guests are talking about anything else but the obvious.

America went on a happy building spree supported by happy motoring. Why isn't anyone noticing the logic? Build too many houses, the housing prices go down. Build a financial system premised on continual growth in the housing sector and whamo, watch out when that sector becomes saturated.

Borrowing without any reference to reality means pay-back time down the road.

Importing a majority of your energy resources from elsewhere without reference to reality means pay-back time down the road.

You don't need to take Economics 101 to figure that out. A kid at a roadside Koolaid stand could tell you.

Folks, it's pay-back time.

Financiers may be greedy, self-absorbed, and capricious, but they're not stupid. Bush's rescue plan is trying to feed the very same elephant that's crowding out the comfort and safety of the dinner guests.

We'll see, in the next couple of days, how many further parlor tricks (rabbits out of hats, helicopter drops of cash, etc.) will be used to distract the guests from the elephant standing on their toes.

As I was commenting yesterday, this week will be possibly historic! (not in a good way)

But, I forgot that today is a trading holiday in the USA. Yikes! 4%-6% losses overseas.

It could set the stage for a horrifying Tuesday.

I, too, forgot about the U.S. holiday in January. Gives the rest of the world time to make a statement.

Tuesday may be horrifying. Won't be pretty. A Dow Jones under 10,000 sometime soon?

The number to watch is 10,587.59, which is where the Dow closed the day before Bush took office.

BTW, it's been under that relatively recently. It was at 10,518.54 on August 16, 2005.

I'll admit to a skimpy understanding of this stuff, but if the Dow is at 13,000, but the dollar has slid 30% last year, aren't the dollar valued assets it measures now really worth 0.7 * 13,000 = 9,100?

Yes. Just like the "Bottom" 80% have never recovered from/to
the 1975 peak in real buying power (which is also why
"adjusted for inflation" oil prices is also BS).

DAX off more than 7%. This is Germany folks, not an emerging market.

Bloomberg has stopped showing futures.

How can you tell Bloomberg futures have stopped? I'm not a sophisticated market watcher ... the URL still works, but it is stopped at -514 on the Dow.

I was talking TV.

Ticker watchers are seeing it and you can bet that people are getting called into offices.

I've seen Bloomberg "on holiday" mode. They just run a loop.

But I've seen them break into the loop to carry "big" stories
like getting a new pope.

The only thing referencing today's world wide crash was a scroll-
E.ON, Germany's biggest utility, drops most ever.

They've since even modified that to "E.ON drops".

That the Crash of 08 heralding the Greater Depression happened on MLK
Day is so utterly appropriate.

America is out of the loop now. Our fate is in the hands of the World.

"America is out of the loop now. Our fate is in the hands of the World."

Seems just as profound with the phrase reversed so I doubt it's that simple.

Hardly any coverage of this on TV. The biggest story on CNN today is movies. Sundance, and Cloverfield.

"The revolution will not be televised."

But when I close my eyes, all I see is spinning Tydee Bowl.

I would also think the left wing political blogs would be all over this, but NOOOO! They are too interested in candidate squabbling and name calling.

The only people worse with numbers than journalists are politicians. They literally cannot see the problem. Yet.

It's the main story on CNN International.

UK Closed down at 5.48% or 77 billion in sterling down tonight.

You guys are still on holiday. Maybe MLK gets the last laugh...

UK is now way below where I got off, but this will hurt everybody , especially pension funds so I will still get stung. But I always reckoned that 'pensions' were a twentieth century aberration.

I doubt if tomorrow will be pretty, or a good example of the human race in its finest hour.

good luck.

May as well wish all luck; since we gave up on planning , foresight and fiscal rectitude a decade ago. Your Nation and Mine.

FTSE suffers biggest loss since 9/11

LONDON (Reuters) - The FTSE 100 fell 5.5 percent on Monday, suffering its largest one-day loss since September 11, 2001 as the index tracked global markets lower on deepening fears of a possible U.S. recession.

The FTSE 100 closed down 323.5 points at 5,578.2, its lowest close since June 2006 and wiping nearly 77 billion pounds from the value of its constituent stocks.

CNN Link.

Not a pretty picture at all.

I get the idea our governmental authorities, even given the power to print fiat currencies instead of gold standards, stand by like a bunch of kids peeing on a house fire.

We may have given them a hose, but no one has the authority to use it.

If the system blows, its going to be interesting how the government handles a very lackluster set of 2008 form 1040's at the same time it handles heavy assistance claims from people who used to have a taxable income.

I think we are past the point a signature could have averted this.

The DOW is already at 12000 as of Friday, not 13000. It has fallen from a recent high last year of over 14000 to 12000 now and is trading near 11500 in "after hours" trading right now.

A quick update -

Canadian markets following rest of world. Opening more than 4% down - more than 500 points.

Ugly....er...or buying opportunity. Metals, Oil service cos, and even Potash are all being hammerred without regard to demand.

Hmmm...think I will keep the powder dry at least until after tomorrow.

I think based on the global market reactions to the 'Stimulus Package', I put the odds of an INTERMEETING RATE CUT at better than 65%.

And a better than 50% chance that it happens tomorrow morning JAN 22.

50 bp, or better. Better than 50% chance of 75 bp now.

Not pretty, but the sooner the Fed takes some action, better the chance of slowing the slide...won't stop the outcome unfortunately.

Why Bernanke shouldn't cut rates

Politicians are scrambling to offer a stimulus package, and Fed Chairman Ben Bernanke is slashing interest rates. But they may be paving the way for a bigger calamity down the road.

I read that article a bit ago. The gist was that we don't know that things are all that bad, so Bernanke shouldn't be hasty. However, I think it is all that bad, and so do the markets. At the least, it would be entertaining (in a detached sort of way) to see how the markets react if Bernanke keeps rates where they are.

Still, I'm not sure the article is wrong in its conclusion, even if it is wrong in its reasoning. I think it is too late to stop the economic collapse. I'm more interested now in what the world looks like post collapse. If we keep lowering rates, we're likely to wind up like Japan (i.e. in a depression with declining worker wages at the same time that inflation creeps up). What we need is savings, both to pay down private debt and to provide the foundation for real investment, but that ain't gonna happen with rates near zero.

He has only two tools left.



He will have to do BOTH NOW JUST to keep the US out of depression before the end of the year.

BOTH mean INFLATION and USD debasing.

After that, a hyper-inflationary depression is being cast with little wiggle room.

The "D" word is being used significantly in the last month - google '+economic +depression"

But, a little late...the BIS warned of a Great Depression in a release August 2007.

A whiter shade of pale.

The holiday would be the perfect excuse to let it crash given the drops in Asia and Europe when the market was closed.


A golden window of opportunity to administer the needed shock treatment with no bail out for anyone and plausible deniability, ie overtaken by events

IMO the Fed will not cut tomorrow. There may be a token 0.25 or 0.5% cut at the end of the month at the regular meeting, otherwise their intransigence becomes too obvious. The MSM - CNN-Money article was planted to prepare the hoi polloi for the lack of a cut.

Unfortunately the Fed is not answerable to the people and is too entrenched. It would take a super majority (2/3) of both branches of Congress to take control of monetary policy from the Fed.

Given the vast amounts of money sloshing around, and the difficulty of getting elected without funding, transfer of control of monetary policy to a body that is directly answerable to the people, namely Congress, is unlikely.

It would be nice to be surprised otherwise!

I don't think Bernanke is all that worried about the economy yet. He's looking at all his economist and academic numbers, and the things that the market is worried about aren't showing up in those numbers yet.

I think we'll get a half percent rate cut at the end of the month, but I think the market guys predicting more are delusional. And Bernanke doesn't seem alone in his indifference to what's happening in the markets--it was like a day ago that the ECB was still talking tough on inflation despite all the crashing.

I think almost no one really gets what's happening with oil, and what it means, so I think it highly unlikely that there will be any kind of useful policy response from anyone, even someone as smart as Bernanke, in any kind of useful timeframe.

The more the Fed waits the deeper they will have to cut. The economy tanking is going to affect employment this time around and that will force politicians to take another look at Fed incompetence/worse.

In 1992, Bush Senior lost not directly because of 2-3% extra unemployment. It was because the other 95% knew of someone who was unemployed and it got them pissed off.

Surprise, surprise.

Yes and the futures markets ate that up (the 3/4% emergency rate cut) like it was nothing and resumed their previous drops. Still looking like down 4-1/2 to 5 percent on the big three.World indicies fell a lot more than that. No buyers. Money coming out of commodities to pay for the losses.

Yes - a pleasant one.

Yeah, I think we will see a 50-100bp cut announced pre-market open on Jan. 22. BTW the dollar is stronger - 1.44 or so vs. the Euro.

Yeah, returning after a week away I see I've bought some POT when it fell through my limit buy price of 119. Will get more if it falls through 101. Of course it may be heading for 20, but it ain't going to zero.

Well, roll yourself up a fat one. you're gonna need it Tuesday morning.

I bought Nortel all the way down in the Dot Com!! This time I've sold POT at 145 and here I sit watching Hang Seng drop 2000 pts, wondering if you may be right about 20. I think I will wait till I see gladness in those Chinese eyes again.

Its going badly overseas,and traders here are scared witless.That term "historic"is the one that scares me...

Gail the Actuary pointed out this article:

U.S. Warning Signs Point Toward a Deep Recession

(The WSJ doesn't have a dead-tree version today, but they are publishing new articles online.)

Stocks Plummet in Germany, Hong Kong, India, Brazil in Rout


``This is a stock-market crisis,'' said Alberto Roldan, head of research at Inverseguros SVB in Madrid. ``Investors believe that neither a government package nor a huge rate cut is going to help evade a recession in the U.S.''

White House spokesman Tony Fratto said in Washington today the government doesn't comment on daily market moves.

``We're confident that the global economy will continue to grow, and that the U.S. economy will return to stronger growth,'' Fratto said in an e-mailed message.

Does anyone else see a disconnection here. What are they smoking at the White House lately? It must be good.

BTW, the really said ROUT in the title.

BTW, the really said ROUT in the title.

So did Reuters:

World stocks routed on economy fears

And the headline on the stock market story at dKos:

Finally, Some Good News for the US Stock Market

It's closed today.

Not sure any White House would ever announce that, "yep, we are totally goin' down the toiler".
Gotta stay positive. Anyone with half a brain would not be listening to the White House for investment advice; it is questionable enough to listen to CNBC.

I am convinced that Kunstler finally has it right. I have restructured my investments accordingly.

I am convinced that Kunstler finally has it right. I have restructured my investments accordingly.

Good luck with that guy, I for one am not basing my financial decisions based on a guy who's been awful at it:


Dow futures are around 11720 at the moment which is circa 380 points lower than Friday's close. They were near 11600 at today's low which was 500 points lower than Friday's close.

A sleepless night on Wall Street I suspect for many.

A sleepless night on Wall Street I suspect for many.

I wonder what kind of night the Plunge Protection Team had?

''I wonder what kind of night the Plunge Protection Team had?''

Probably quite a good one.

How often do bankers get the opportunity to strip to shirtsleeves, grit teeth and cigars while saying 'wall street is hell'.

Think of the sweat, stale aftershave and cigar smoke; The Grim visages illuminated by the glow of computer screens, the steely , knowing looks across the room.

They will be fine, dont worry about them. Crisis can be a lot more fun than you give it credit for.

Especially if you personally bailed a while back...

US markets are closed today, but take a gander at the Futures numbers. May need a crash helmet tomorrow.



DJIA INDEX 11,765.00 -341.00
S&P 500 1,279.20 -46.10
NASDAQ 100 1,794.00 -55.50

Take another look; Dow now at 11650. That's 450 points down and still falling.

Yikes...anyone else getting that sick vertigo feeling today?

Time to go to my local ATM and withdraw the maximum allowable...$300 and add it to little stash I have at home.

Dow futures down over 530 points now. Looks like tomorrow is make or break then. If TPTB can't hold the line tomorrow then it's going to get really nasty. I hadn't been expecting financial meltdown to occur quite this fast...

I agree this is faster than ANYONE would have predicted.

But it may bounce back with reflation attempts...we will see.

Canadian markets down 610 points.

Black humor time.

I posted a note a few days ago about a guy who killed his girlfriend and then proceeded to eat her.

A few of us had the same reaction: So soon?

Sauces please

and also

recipes please.

"Cornucopian Stew"

With a nice Chianti?

Pot luck supper

He obviously ate her with relish. .... :-0

Breast or leg sir?

Ok , I think we have mined this out now...

If I use one of these vegan vegetarian folks to make my soilent green soup is it vegan?


She's what's for dinner.

She must have been just right!

Ambac is dead. If the people who write insurance on all these bad loans are dead, then the entire $700 trillion dollar house of cards is subject to revaluation - downwards.

I was just saying the same thing 10 minutes ago to someone in the office.

As far as I am concerned, this is just the warm up.

When the other shoe(CDS) drops, we skip recession and JUMP feet first into inflationary depression.

If anyone didn't read my article a while back, this is a link: Peak Oil and the Financial Markets: A Forecast for 2008. So far things seem to be right on track with my article.

Given the pricing assumptions behind the bond insurers, it is difficult to see how they can remain solvent. The bond and mortgage insurers are regulated by the state insurance departments, but with few exceptions, the insurers are not subject to state guarantee funds. Because of this, there is really nothing in place to bail the bond insurers and mortgage insurers out if they run into financial difficulty.

Someone asked me whether the federal government could bail out the bond insurers. There is no obvious route for this to happen. It does seem possible, however, that Congress could pass legislation putting these insurers under federal regulation and adding some sort of bail out plan. If there are real failures coming through, though, the cost of this bail out would ultimately be very high, and cause additional problems.

You strand three grifters on a desert island and all you find a year later is a diary with a recipe for long pig and one intact skeleton. There just isn't anyone left for them to rob in order to socialize the losses.

"long pig" - finally I get it. I kept thinking it was some sort of slow roasting technique.

Cramer is calling for the government to outright buy the bond insurers (http://www.cnbc.com/id/22728371).

What a clown. Government buys bond insurers, taxpayers get hung with another $250B in debt, culprits skate away with their take. The only restoration of confidence to be had will be an honest accounting ... and then restoration may not be possible.

Yes and that will drive rates through the roof and the government absorbs all available capital to service its newfound debt load. Remaining capital will skyrocket in cost due to simple supply and demand. A real deflationary fall would make that even worse but an inflationary policy leaves you at the same door, broke, just with lots of paper instead of a little bit of paper.

Not a bad idea, as I was mentioning yesterday...fractional reserve in the US (and elsewhere) means they only have less than $200 per person in REAL cash...then its done...gone...over.

That is why bank capitalization and bank runs are scary.


this is all happening at the same time that UKGov decided to float bonds to pay for Northern Rock.

Some facts:

1. Every UK tax payer is now in hock to Northern Rock to the tune of £2000 each.

2. Risks have been socialised to the UK Tax payer over a further extension of at least 5 years.

3. Profits are now corporatised (assuming the deal goes ahead).

Some more facts:

This bailout is larger by far than the bailouts given to British Steel, or the Car Makers: British Leyland. These two bail outs were made at the height of stateist intervention in the 1970's.

At least Brit Steel made Steel, and Brit Leyland made (crappy) cars.

At least they were tangible assets that you could push off the forecourt and fix at home...

Northern Rock make bits of complex paper.

Problem is, we dont know just how many Northern Rocks there are out there. There could be a few more and we have already blown more than the annual operational budget of the UK Min of Defence on Rock.

No point in even discussing how many Nukes, Wind Farms, well equipped schools or public transport upgrades £60 billion could get you...

I trust you on this, but I with you had provided some refs. What you are saying is astonishing (ly bad)

Here's one reference:
Note that this is dated 20.12.2007 - plenty of time since then for costs to rise by a trifling £3bn or so!

At least we have Alfred E. Neuman in the WH.


Probably tell us to go shopping tomorrow.

But if we hold out a little while we might be able to say, "Save us Hillary, save us!" Its something how rudderless we are.

Realize this is primarily related to housing/banking, however, the timing, shortly after the Saudi's basically gave Bush the finger when he pleaded for more oil is also curious.

The more I think about it the primary failing of the mortgage backed securities has been that it allowed for the bypassing of the conservative restrictions that have traditionally guarded bank solvency and peoples money. Or put more simply, it was a shell game.

Put even more simply you could distill the current crisis to one word, "greed".

Hey ChaseBank, or who ever runs those stupid adds, "What's in your wallet?".

Most of the legislative changes that allowed this bubble to grow are from the same package that created the Enron debacle - passed by a Republican congress and enthusiastically signed by Bill Clinton. This has not occurred suddenly which is why sites like ITulip.com have been able to call the real estate bubble years in advance (and they are not the only ones). Bush being given the finger by KSA is only coincidentally related to what is happening right now.

-514 when I looked ... awaiting wire transfer for my latest job and then I'm going to empty my account, too.

I'm going to empty my account, too.

Yeah, a lot of people have the exact same idea. This is all electronic trading as the market is closed today in the US. The Dow is down 4.43 percent and the S&P down 4.76% and the NASDAQ down 4.29%. But the big drop is Dow Jones Europe, down a whopping 7.79 percent.

And this would all have to happen on a day CNBC is not running their usual fare. We are unable to see the panic in their faces.

Not to worry however! The Plunge Protection Team is about to swing into action. Oh...but wait...they are all off today, a holiday. Damn! ;-)

Ron Patterson

My living expenses for the month are currently a bundle of bits on spinning media in some bank system somewhere. I prefer the comforting feel of the stack of 26.73 gram 1921 silver dollars that sit on my monitor stand, reminding me every day of what I should be doing.

Dow Jones Europe is now down 9.19 percent. Dow Jones, S&P 500 and NASDAQ futures in the US have not updated in three hours. I have no idea why but apparently trading has been suspended for some reason.

Ron Patterson

Ron, I think it is due to the US markets being shut. Trading in Europe has ended and Asia is not yet open. I think the German bourse is open later than the others which might explain the Dow Jones Europe index update.

Just a guess, might be wrong.

Just like any Mob run casino, if it looks like the House might lose, or a major player with part-ownership or something in the casino, the playing is stopped.

The stock market can be compared to a casino and the analogy holds up well. It can't be compared to a free market, the analogy falls apart under any close examination.

I found this linked out on mortgage implode-o-meter:

A new Black Monday, by far the worst in years

Beyond the recession fears, in the world Stock Exchanges behaviour most analysts see a very critical approach to the extraordinary measures devised by President George Bush to stimulate the economy through consumption. His plan for an injection of some 145 billion dollars, one per cent of the Gross Domestic Product, would virtually put some 800 dollars back in the pockets of US taxpayers, ready to be spent to re-launch the economy. Not a small figure (it’s far more that the average 300 dollars injection after the 9/11), but still an obviously unconvincing way in the eyes of economists and experts.

They were probably expecting some more substantial financial intervention. And, as evidence of this critical approach, all over the world bank shares were the most severely hit.

Yes...but we have to fear BLACK TUESDAY. This will likely continue overnite...making the likely hood of an early close on the US markets likely tomorrow. (5% down).

About the stimulus package, cash does nothing except deliver the freshly printed Bernake bills, they need to stimulate industry(which creates jobs)...like 2003 with tax cuts and incentives.

This time, I don't know if they can(credit collapse). That is what makes this really scary.

Plus Oil, Food, Water continue to dwindle, and population continues to grow.

Black Tuesday, hmmmmm.

Tomorrow is the first full moon of 2008. Where I live (Atlantic Canada) viewing the full moon clearly in winter usually means it's a frosty cold night.

This may not be a Frost Moon. This may be a Deep Freeze!

January 22nd may be known as F___ Tuesday, as in Frosty Tuesday or Freezing Tuesday or any other F word you might want to throw in there.

Scary stuff, indeed!

In 1929 the United States was on the gold standard. Stock prices fell and did not recover for years. Real estate prices remained depressed for years; too many interest only balloon notes were defaulted on.

In 1971 the gold standard was eliminated as the cost of the Vietnam War and Cold War skyrocketed and "Tricky Dick" Nixon was in command. Values might not remain depressed as long as during the 1930's. Monetary inflation and rate cuts do not really heal a malfunctioning economy.

The Afghan War is seven years old. The Iraqi War five years old. Prices rise. A post WWII type boom is nowhere in site.

Peak conventional oil is inevitable. Peak coal, gas, and uranium are yet to come. Asian spot LNG prices are quite high this hour.

I'm not certain what the above reference to the US being on a gold standard in 1929 and the stock market crash of the same year have to do with one another. By any proper reading of economic/monetary history, particularly involving the various state powers beginning at the turn of the century (i.e., USA, England, France, & Germany), the gold standard itself had little to do the stock market crash and the ensuing depression.

Rather it was human folly of WW I, harsh reparations, and abuse of the gold standard (and their fiat brethren at the time) suffered at the hands of governments and central bankers before, during, and after this time period that brought on all the ensuing monetary/fiscal and speculation imbalances preceding the crash, and not the US gold standard per say as the culprit.

In his classic work The Great Crash: 1929, J K Galbraith, attributes the decline to the bad distribution of income; the bad corporate structure; the bad banking structure; the dubious state of the foreign balance; and the poor state of economic and political intelligence. Apparently these same features reign today, not the least of which is economic ignorance, particularly its history lessons. None of it has anything to do with a gold standard except as we refuse to understand it and abide its legacy of financial (and political!) virtue.

Despite his lack of understanding with respect to Peak Oil, F. William Engdahl does otherwise provide some relevant historical perspective on the period in question here and here.

With respect to understanding a true gold standard and its merits (along with its corresponding Real Bills doctrine), there is no one better than Professor Antal E. Fekete

It does appear that we will only learn our lessons from repetition; if not in the exact same way certainly by confounding us with the same crack-up result despite the lack of a gold standard, and yet all the unfettered control that an unhinged fiat regime grants! Ha! Yep, them CB's of the world have sure got this tiger by the tail and will soon wrestle him into submission. And our governments, why they'll do their part too. The rest of us are just disenfranchised spectators to the economic historical drama unfolding and will no doubt be left holding the bag -- with nary a cent in it. Ain't it always so?

BTW, I'm not picking on you, rainsong, so please don't misunderstand this post as such. Just wanted to add my 2¢ upon this topic.


Dow at 11584 as of noon CST.

Holy crap. Down 522 points?

These are just futures contracts. Only a small percentage of people have access to the futures markets. If the market was open, it would likely be a lot worse.

Also, a lot can change between now & 9:30 tomorrow morning.

Yeah, like...8:30 am - Intermeeting Rate CUT 75 bp.

Frankly, don't think that will even keep the market out of the red column tomorrow.

It may cause more panic, signalling a lack of leadership and fear on the part of the FED.

Dang, were you ever spot on with that call!

Can I borrow your crystal ball?

We see what HSI and NIK do tonight.

IMO the way the Yen goes tonight will telegraph the market move direction and degree.

Hi Musashi, For those that don't have the sites, they can be fussy to get, here are the NikKei,


and Hang Seng


Hang Seng opens later than the Nikkei

glad you mentioned them I watch them religiously lately. Drop is -421 on the nikkei right now and the site is slow as molasses, keeps timing out, everyone and their dog must be on that site, like flies on a sows back. Shaping up for an interesting fight, will the DOW punch it's way back?. Nice to have ring side seats,eh?

The Yahoo live sites are working fine.

Earlier the Yen was in the 105's but came back a little into the low 106's

The Nikkei broke below 12700 for a bit while I was watching but came back some. HSI down over 1100 almost another 5%




China -6.77%, Taiwan -6.41%, Seoul -3.89%, Shanghai -4.47% Jakarta -7.54%, Nikkei -4.41%... Asia crashing again Tuesday. If Europe follows, I don't see how NY can rise unless it's on cocaine fumes.

It's a bloodbath.

Trading halted as India's benchmark index plunges 9.5 per cent on opening

MUMBAI, India - Trading was halted on Indian stock markets Tuesday as shares dived on opening with the benchmark index plummeting 9.5 per cent.

The 30-company benchmark index of the Bombay Stock Exchange, the Sensex, fell 1,716 points, or 9.5 per cent, to 15,888 points seconds after the market opened. On the rival National Stock Exchange, the 50-share S&P Nifty index was down 630 points, or 12 per cent, at 4,578 points.

Tonight feels like the night before Katrina hit New Orleans.

Great sale continues... Dax just opened with -4.5 %

Yee ha
Yee ha

The best way to trade next week is going to be sitting on the beach with a Glacier Bloody Mary.

In recent weeks we have seen billion of dollars worth of money from OPEC countries coming to the rescue of US financial institutions. No doubt high oil prices resulting in huge petro-dollar surpluses have enabled the OPEC countries to take this sort of action with little strain.

One aspect about this situation makes me wonder whether the people who run the political and financial show in the US are really all that upset about high oil prices. It appears to me that the flow of at least some of the money streams goes something like this: from US energy consumer to OPEC, and then from OPEC back to US government and/or US financial sector.

Perhaps I am being overly simplistic, but does this not appear to be a defacto partial bailout of the US government and financial sector by US consumers, via OPEC ..... all without the messiness of having to increase taxes? The question 'Qui bono?' is always worth asking.

I don't pretend to be a financial expert, so if this if off the wall, don't hesitate to pile on.

James Howard Kunstler has released his Clusterfuck Nation Chronicles for January 21st
appropriately entitled, “Fullblown Panic”.


This is going to be a rough week. Fastening your seat belts may not be enough
for this ride. Better superglue yourselves to the floorboards and pray for God's mercy.

Oh my...the Kunstler-man is in rare form with this one. He paints a rather grotesque visual at times.

And, of course, there are the genius wonder boyz and Wall Street playerz whose algorithms and turpitudes underwrote the script of this horror show -- for all I know they'll end up laughing into sugary skull drinks on a beach in the Cayman Islands, or doing Chinese fire drills in federal prison (or simply ass-f*cked on the granite countertops of their Tribecca aeries by mobs of angry, repossessed, swindled former American dreamers pouring into Manhattan from the tract house dormitories of New Jersey and Long Island).

Nothing better than a Kunstler rant on a Monday morning.

The United States is so broke, its people at every level from the Federal Reserve on down don't know whether to shit or go blind. The homeowners cringing in the media rooms of their 5000-square-foot personal family resorts don't know how long they can stay put microwaving pepperoni hot pockets with the default clock ticking.

Thank goodness I live in a smaller house and have indoor plumbing! John

Giggle! , nice one!, but do you have a white cane?

Old Testament prophet grade.

But will they open the city gates to him?

I love Kunstler. He says things that get my posts deleted here and lots of people read him :-)

SCT, did you get my email from last week?

Got several messages from TOD regulars, didn't respond to all - I had some life stuff come up Tuesday that has got me totally distracted. If I owe you a response you should probably resend ... I've looked through the TOD oriented mail and I don't see one from you specifically.

Apologies to Ginsburg and Kunstler

I saw the worst playerz of my generation destroyed by
panic, starving hysterical, praying for Helicoptered fixes at dawn

Guardians of wealth lay in the drainage ditches bleeding from their ears and eyes. Who poverty and tatters and hollow-eyed and high sat not knowing whether to shit or go blind.

Homeowners cringing in the media rooms of their 5000-square-foot personal family resorts who broke down crying in naked and trembling before the paddling a leaky tub in a sea of troubles every bit as wide, deep, and polluted as the one the mortgage junkies and their enablers.

Who developers of malls, office parks, and power centers are weeping into their filing cabinets as the harsh daylight of insolvency stops the orgy
of "consumption" and the retail tenants pack up their unsell-able goodies for the liquidators, and the rent checks stop arriving in the mail, down by the drunken taxicabs of WestTexas's Absolute Reality

Who where ass-fucked who let themselves be fucked in the ass by on the granite countertops of their Tribecca aeries by mobs of saintly TOD'ers, and screamed the scream of angry, repossessed, swindled former American dreamers pouring into Manhattan seeking visionary extra-planetary high priests of a Star Trek episode -- the batteries having run down in their laser wands

Even that imaginary, clodhoppers the hedge funds, representing trillions and trillions of dollar-denominated hallucinatory, the millions of maxed-out credit card holders and the issuers of their plastic are stuck together paddling a leaky tub in a sea of troubles every bit as wide, deep, and polluted as the mortgage junkies and ended fainting
on the wall with a vision of ultimate sliced-and-diced collateral and
come eluding the last gyzym of debt,nothing but a hopeful little bit of hallucination

What sphinx of cement and aluminum bashed open their sugary skull drinks on a beach in the Cayman Islands and ate up their brains and imagination?

Hooverzilla!!!! Exhortation! Salad Shooters! ! Unob
tainable Euro's !Hooverzilla!

Superglue yourselves to the floorboards and pray for Allah's mercy......

Howl & Junk Silver

Howl & Junk Silver

Tuesday Morning Trading in Asia

CNBC: Bloodletting Continues as Asian Markets Plummet

Asian markets were mauled at the start of trade Tuesday with Japan falling below the key 13,000 level and Australia dropping over 4 percent. Selling was across the board with financials and resource stocks particularly hard hit.

And the beat goes on. John

Oh come on. NBC is owned by GE, who sells everything imaginable, but only if there are buyers.

ABC is owned by Disney, which needs happy Mouseketeers to buy DVDs and theme park tickets.

They're all owned by companies who need the sponsorship of other companies who only have advertising dollars available when there are sales.

So really, what are they going to be allowed to say? Tomorrow will be all about the bottoming of the housing market, oversold rallies, tax rebates, and lower interest rates. And my favorite, buy on the dips.

They're hardly stupid. They're doing exactly what the billions spent on sheep research is telling them to do. Happy happy joy joy.


Also GE sells a lot of big ticket items, (in fact the small appliances fans etc. the cr*p with the GE imprint are actually from third party vendors who bought the name rights a while back), Those big ticket items Jet engines etc. are in many cases bought with OPM (other peoples money) with the credit crunch GE will also feel the pain. And with the housing crunch they will be selling fewer large appliances even more pain. All the money spent on buying NBC and the Olympics will be wasted if no one can buy the goods advertised by their networks. I wonder if Joe Kiernan has started to believe in PO?

Theory I have regarding Peak Oil, I refer to as 'The Post Peak Oil Spiking & Skidding Descent of the World Economy':

Peak production of crude oil extraction occurred in 2005, and therefore we are now in a Post Peak world economy. Let the arguments regarding whether or not we are conclude, and the conjecture regarding the implications ensue.

We can see this from this recent spike in the price of a barrel of oil ($100) it was followed by leading indicators of recession, leading to a temporary reduction in the price of oil ($89).

As production fails to meet demand, oil prices will spike causing a reduction in economic activity (skidding), a recession, in turn causing oil prices to
drop, which provides economic opportunity for increased economic activity (expansion), that will further erode oil reserves, causing a spike in oil prices and the whole process continutes to cycle in a downward spriral.

The bottom line result of this dynamic will be a sort of dry heaves descent of the World economy, and at more chaotic levels of that descent, rioting for food caches will spontaneously lead to resource wars erupting.

My advice is for people to start moving towards energy self-sufficiancy, by adding solar to your homes for electricity to power applicances and charge your future electric car. Those that do not will be sitting in dark homes with no transport. Also, start growing fruit and vegetables and make trades with neighbors doing the same. Don't wait for the bullet to hit the bone, to take action on behalf of your survival.

That term "dry heaves"is one of the better descriptions of what the effect on the world economic system peak,and the poisonous financial antics of the banker class is having these days.Unlike its namesake,these may never end...

Why no comments allowed on Stuart's article?

There are several comments to the article. I had no problem when I clicked on "Post A Comment".


When I posted my question, at the end of Stuart's article it said no comments being accepted.

I liked his taking that issue on, but have some 'agrees and disagrees' to add, if I get the chance.

A particular Disagreement was the creation of a label for people who see a reverse or want one.. enough 'isms' already! Far too many shades of gray and complicated interplays there. Some of them described, like the 'Trolleys' would hardly be equivalent to 'banjos' as simply some kind of nostalgia trip. Some are the 'RE-invention' of tools that never got less useful, but a return to them might be very advantageous, while a new generation of them should well use interim discoveries in materials, mfr processes or other combinations with current technology to bring the game forward.


Love Stuart's analysis Fallacy of Reversibility. Over the last 50 years land ownership has been consolidating here in North Iowa. Today the country side except near larger towns is largely abandoned compared to 50 years ago. These new mega farms are often not connected to each other and a casual observer would not know that a piece of land was part of a 2000 acre spread owned by one individual or corporation. I call them the landed gentry. They have abandoned the building sites or torn them down often by burning the buildings. The pressure of low commodity prices and an ill conceived farm policy based on production rather farmers has caused this. This is not reversible as land prices are sky rocketing along with commodity prices. The idea that fuel costs are significant in grain production is baloney. The most significant cost is land, next comes seed and fertilizer, then equipment, next taxes and then fuel. With genetically modified grains, herbicide and tillage costs have been reduced dramatically. Anyone wanting to reverse the situation now would have to confiscate property ala Zimbabwe and redistribute it by force. This will not happen in my opinion. As fuel prices rise, ethanol and bio-diesel prices should also rise. This means that farming as done today will become ever more profitable just as in the situation with oil extraction post peak oil.

Why not post this as a comment to Stuart's article?

Comments were prohibited when I read the article and wanted to respond.

Copy your comment over Stuart's thread, and I'll delete this version.

I don't know how to copy. Just delete it. I made another comment over there later on little different idea before I knew I had screwed up here. I don't know much about computers. Just enough to get by most of the time. Please delete this too.

Farmers get crushed by the state in an emergency.

Happens every time.

Just like confiscation of gold.

See Stalin Kulaks for details.

One of the articles above is Kurt Cobb's How the coming home heating crisis could threaten the grid

I would agree with Kurt that there is an issue here. We have several contributing problems.

1. US natural gas production is likely to start decreasing fairly soon.
2. Some parts of the US depend very heavily on natural gas for electricity production (Northeast, California, Texas, Florida)
3. It is very easy for people to switch from gas to electric heat, or augment gas heat with electric. All one has to do is add an electric space heater.

To me, the area of the country that is most at risk from the type of disruption Kurt Cobb talks about is the Northeast. Within that area, the highest risk states are Maine, Massachusetts, and Rhode Island.

The Northeast is at the end of the natural gas pipelines to begin with. In addition, its winters are cold, and it is very dependent on natural gas for electricity (40%+ in the "problem" states listed). A shortage in natural gas would be likely to disrupt electrical power in the these areas, even without the potential for switching from gas to electric heat. When you add the potential switch from gas heat to electric, it makes the potential for electrical outages even more severe.

We've already had power emergencies in the northeast in winter. (We used to only get them during the summer.) Basically, we've been lucky. The weather's been pretty mild since 2000, when the natural gas crunch started.

P.S. IIRC, the state that seems to have the most trouble with winter power is Vermont.

I haven't really looked at the adequacy of the current power supply by state. I am not sure if there is a good data source.

I was looking at the fuels used for power generation by state. According a chart I put together from an EIA database, none of the power generated in Vermont comes from natural gas. Vermont electrical production in 2006 was mostly nuclear:

Other Renewable__6%

If natural gas is used for heating in Vermont, and there is shortage, people could switch to electric heating, as Kurt Cobb says. If there is an electric shortage to begin, the increased use of electricity for heating will make it worse, even if there is not a direct problem with electricity generation.

I would also expect that Vermont imports some of its electric power from other states, and electric power generation in these states would likely be impacted by gas shortages, so there might be an indirect impact of a gas shortage on Vermont's electrical supply.

The entire northeast is on the same grid (along with parts of Canada). Hence the huge blackout in 2003, thanks to untrimmed trees in Ohio.

I remember a couple of times, during hard freezes, the governor of Vermont getting on TV and asking people to conserve or face rolling blackouts. Not really sure why they would need to conserve and not the other states on the grid. I assume it must be some kind of infrastructure limitation.

Actually no, Maine wasn't effected by that, we have our own seperate ties to Canada and we are adding more.


I live in Vermont. I don't rememeber such pleas in Winter. Several time in the worst heat waves in the summer, and then it's always described as a plea from the New England grid operators, not a Vermont-only thing.

The breakdown listed above is for electricity generated in Vermont, not consumed in Vermont. Vermont get about 1/3 of the electricity it uses from its nuke plant, 1/3 from Hydro Quebec, and 1/3 (peaking power) from the New England grid (i.e. from Natural Gas).

With the cost (per BTU) of propane and heating oil now about equal to electricity here, I think that the danger of a shift to more electric heat is real. Especially given the way the competing fuels are delivered and billed: electricity generally is "on credit", you get the bill later, and can put off paying for a while. NG is still cheaper here, but that will change. On the other hand, electricity in Vermont will become abruptly more expensive (at least double, I expect) in a few years, when the current contracts with the nuke plant and Hydro Quebec expire.

I am quite thankful for my wood stove and woodlot.

Here's an example, from a CNN transcript dated January 16, 2004:

Listen, it's brutal, as you said, here in New England. In Boston, they are breaking records. We're talking 7 below zero, real temperature, and with the wind chill that's exactly 35 degrees. As I said, breaking records -- not temperatures we've seen since 1920, anticipating that over 350 school districts in the state have cancelled classes today, not wanting students to be out walking or waiting four those buses.

And another big concern is energy. There are some real concerns in Vermont. The governor there is warning residents to conserve or face possible rolling blackouts.

Most of VT imports are from Quebec(hydro generated).

Well, I guess that would explain it.

Sources of electricity in New England:

Gas 38%
Oil 24%
Nuclear 14%
Hydro 10%
Coal 9%
Other 5%

From http://www.boston.com/business/globe/articles/2007/08/02/study_hints_pow...

From what I have read, natural gas delivery to homes would be about the last thing to be disrupted. First, businesses with interruptible electricity and gas contracts would be cut off per their supply agreements. If it came down to a choice between cutting off all electricity or cutting off residential natural gas, my understanding is that priority would be given to maintaining residential natural gas delivery due to the issues with combustion appliance pilot lights going out and then having to be relit.

Another factor is that in the north east many if not most homes are heated by oil, while cooking is done by electric range. Many poor folks can not afford to heat their homes for a full winter using oil. If they can not afford to pay for oil it is not delivered. However the electricity is kept on even if they can not pay as it is regulated and not cut off in the winter, this is why to keep their homes somewhat warm they crank up their electric stoves, and possibly a space heater or two, this will become more frequent as heating oil becomes more and more expensive.

The 'Law of Unintended Consequences'

Is more common than you may think.

I have heard stories of people warming houses with ovens in the US - is this true?

Here in the UK, Pubs were banned from allowing smoking, so Publicans organised outside smoking areas. These smoking areas were then equipped with Patio Heaters. At one point, Ireland came close to running out of bottled gas.

Patio heaters are of course one of the best ways in adding carbon for no reason and speeding up entropy.

I have heard stories of people warming houses with ovens in the US - is this true?


Where Once Brooklyn Triumphed, a Tragic Scene

In some cases, it's because they can't afford heating oil, or the gas has been cut off. In this case, they had heat, but used the stove to heat the house anyway.

The stove still works when the electricity is out. We used our stove for heating over a three day period in 1997, when 6" of wet snow fell with absolutely no wind, knocking out power for most of the city. Oh, and we had gas fire places, too - a treasure in a situation like that.


I cannot help but think of Dr. Zhivago with a few shards of fencewood falling from beneath his greatcoat.

'One man stealing firewood from a fence is pathetic. Five million is a disaster'.

Got to go. My daughter taped Three Days of the Condor. She should at least stick around for the last scene.

dorme bien.

Warming apartments with the oven and with the burners on top of the oven is a venerable tradition in America. Extremely common.

Yes, it's inefficient. Yes, it causes fires.

Most American cities have laws requiring landlords to give tenants a certain minimal amount of heat. Were it not for pressure from the fire department I doubt there would ever be enforcement. Any enforcement that does occur these days is a shadow of what it was twenty or thirty years back, so yeah, renters heat with the oven.

Yes I'll second that, it's a very popular and time-honored way to heat the home in the US.

Many things about the way the poor, the vast majority of us, are set up are inefficient as hell. Heating with the stove burners, apartments like caves so you have to run the lights all day, etc. You need a car to get to work but the only car you can afford is an older American built gas-guzzler etc. Since this is how at least 50% of the US lives, it's significant and at times I wonder if it's intentional.

"it's significant and at times I wonder if it's intentional."

One of the beautiful things about the system is that it is, well, a system. Stuff happens that looks conspiratorial and such, but the system just got it all set up so it could really go no other way.

I.e., there's no "one" to blame. The setup just generates this crap relentlessly.

It's really nothing more than Reaganomics - "if everyone is just as greedy and selfish as possible, it will all work out for the best".

And here we are.

As for heating the dwelling with a gas stove, yes it is dangerous and yes it is efficient as in 100%. There is no venting to the outdoors so all of the heat stays inside along with all of the combustion gases, don't do it!

Its happening all over it seems.


There are severe shortages of gas and heating in parts of Uzbekistan, as the region experiences some of the coldest winter weather in years, reports say.

The state-controlled gas supply has not been meeting demand in many areas - including the second city, Samarkand.

Central heating in many apartment buildings - which is also controlled by the state - has been turned down.

Much of Central Asia has been experiencing gas shortages as the cold weather has increased consumption.

Uzbek fire officials have been warning of the dangers of using electric hotplates for domestic heating, as they say it is a common cause of household fires.

For some weeks, nightly temperatures have dropped regularly to below -20C.

Samarkand and regions including Jizzakh, Kashkadarya and Surkhandarya have been particularly badly hit.

I would add my state to that...Michigan.


I'm wondering what a emergency plan to install geothermal heat pumps could do - that would greatly reduce the energy costs of homes powered by electricity.
I really have no idea of how quickly large numbers could be installed if push came to shove.
Anyone any idea?

What about an emergency plan to insulate buildings, this will accomplish the same thing for a fraction of the cost.

I've absolutely nothing against programs to insulate houses better, and it should be noted that, for instance, Sweden, where I believe some 97% of new builds now have geothermal built in, also insulate to very high standards indeed.
However, a geothermal energy program would focus on those who heat their home via electricity, and the projected shortfalls - I believe some 6% was mentioned in this thread, should not be beyond the capacity of an emergency program to reach in a year or two.
If you are talking about higher insulation standards you should also note that many of the poor is they have their houses better insulated are actually selfish enough to stay warmer rather than reducing their energy use!

What I'm saying is, proper weatherization and insulation of a building will lower the demand for heating fuel, whatever the type. Insulation is far cheaper than new equipment, especially ground source heat pumps. Reduce the heating demand to the absolute minimum before considering expensive heating systems, this is how the smart money does it.


I am looking for material for HVAC/R class.Would you email me ?

Email is on user bio page.


Fury as fuel poverty soars close to a 10-year record

One in six British households is living in fuel poverty, the highest for almost a decade, according to new figures that threaten the government's target to eradicate the problem in England by the end of the decade.

Fuel poverty is defined as when a household spends more than a tenth of its income on utility bills. The consumer group Energywatch said yesterday there are now about 4.4 million of these in the UK, with just over 3 million in England alone.

Charities and other groups, led by the Association for the Conservation of Energy, are preparing a legal challenge in the next few weeks to force the government to meet the 2010 target, to which it is committed by law.

The figures came at the end of a week in which the UK's largest energy supplier, British Gas, said it was increasing bills by 15 per cent. This month EDF Energy and Npower raised prices by up to 27 per cent, and two-thirds of British households will have to pay higher tariffs. Other suppliers are likely to follow suit soon.

Just checked at weather.com, it's 43 in London but won't be that cool again the next 9 days. Highs around 55, at which point when it comes down to it, you don't have to heat at all.
After a cool December, Europe is having April in January. Reducing demand for heating oil and NG.
And still there are problems.

Regarding the "Questions Congress need ask" Article. and the quote at the bottom "(as if OPEC's Saudi led collusionary production cutbacks were an act of nature)" I would hope people reading this article might just make the mental leap to, "what if they are an act of nature?" Wishful thinking I know.

A general question:

When does oil become so valuable that it no longer makes sense to burn it?

Saudi Arabia is building a huge plant to convert oil into plastics. They also just bought up GE plastics.

There are lots of things that one can burn, but feed stocks for chemicals require complex inputs or else the process becomes very lengthy and expensive.

Burning oil always seemed one of the dumbest things to do to me...

When does oil become so valuable that it no longer makes sense to export it?

I did a quick calculation from some plastic parts I have numbers on:

Oil at $100 per barrel = $1.61 per pound

Structural plastic = $5.50 per pound
Formed plastic part = $12.50 per pound

Now, which would you rather sell?

Mexican oil production for December has been published:

Production in December was 2.954 million barrels per day. This is up slightly on November, but well below the average for 2007. August and November were the only two months in 2007 with lower production, and both of those were weather-affected according to Pemex, whereas the December figures were not.

Here's the Reuters story:

Mexico oil output, exports wane in 2007

MEXICO CITY, Jan 21 (Reuters) - Storm disruption and the decline of a major oil field left Mexico's crude oil output and export volumes lower in 2007, although soaring global oil prices ensured record foreign oil sales.

Mexican Crude Production up slightly while Crude Exports plunge.

Mexican C+C was up 53,000 barrels per day in December to 2,954,000 barrels per day while Crude exports were down 376,000 barrels per day to 1,496,000 barrels per day. This is not as bad as it looks however because exports were up 369,000 barrels per day in November. In October exports were 1,503,000 barrels per day.

Mexican C+C average production was down 174,000 barrels per day in 2007 or 5.3 percent. This is slightly higher than CERA's 4.5 percent decline rate which they said was the average for all existing fields.

Ron Patterson

It's worse from an ELM basis!Ref prod down 30m bl/da in 2007 and imports of refined products up 130m in 2007(exports stable at 180m bl/da))

Mexico is in the "red zone," i.e., consuming around 50% of production at peak production--same as:

The ELM (peak net exports to zero in 9 years);

Indonesia (peak net exports to zero in 8 years);

The UK (peak net exports to zero in 7 years).

According to my figures exports were down 107,000 barrels per day or 6 percent in 2007. 1,793,000 barrels per day in 2006 verses 1,686,000 in 2007. Of course that is crude oil without counting refined products.

An interesting note. December exports of 1,496,000 barrels per day in December was the lowest since well before their peak. In 2004 exports averaged 1,870 barrels per day. If the December figures hold, (they will probably go lower), that will be a drop of 20 percent. This compares to a drop of 12.7 percent over the same period for crude oil production, (2004 to December 2007). I know, December is not the average for 2007, but I am just making the comparison to compare production with exports. And that comparison is a 20 percent drop in exports compared to a 12.7 percent drop in production.

Ron Patterson

Marine prod up 30m bl/da in Dec over Nov.Cantarell was doing 1.28mm bl/da in Nov(Dec ??)Cantarell rebounded(stabilized??) at 1.58 till Jun/07 from 1.5 in Dec/06.I think we have seen the end of the magic from the MRC horizontal wells they drilled in 2006 and 1st part of last year.Below 1.0 by Jun/08??

Crude exports were down 376,000 barrels per day to 1,496,000 barrels per day. This is not as bad as it looks however because exports were up 369,000 barrels per day in November. In October exports were 1,503,000 barrels per day.

On the other hand, October exports were forced low due to bad weather holding up shipments, if I recall correctly. So those shipments were bumped into November, leading to the spike there. So it's best not to compare with either Oct or Nov figures, which makes it a pretty significant shortfall over the previous months averages.

I believe Mexico also imports around 400kbpd of imported refined gasoline, which needs to be subtracted from that 1.5mbpd to get a true net export, is that correct? That is a pretty significant chunk of total exports, and incorporating it would amplify the apparent decline in exports. Or is that already taken into account in the figures?

The 2007 averages compared to 2006 indicated loss of production and exports of crude + liquids. The refined products + natural gas and LNG export-import balance on a yearly average was tilted in a way that more products were imported into Mexico than exported out of Mexico during this time lowering the total net crude-liquids-natural gas products export number. The product gap seemed widened to Mexico's greater reliance on BOE product imports over time.

There is a US law which has us on the hook to defend Saudi Arabia.

Andrew Willis: When hedge funds become shareholder activists

Look at TransAlta, the big Calgary utility. CEO Steve Snyder has to deal with a U.S. hedge fund that's demanding he take on $2 billion of new debt, simply to buy back shares. The hedge fund is totally comfortable with the fact that this would leave TransAlta as a junk bond utility. Mr. Snyder is totally opposed to wrecking his balance sheet. So there's going to be an expensive and distracting fight.

As this affects oil companies (another is mentioned in the article, and there are no doubt many others), I assume this gets lumped into "above ground factors"?

The more I look the more I see interconnected failures imminent... or, given the last week on the markets, perhaps already underway.

And thusly the hedge fund fantasy world intrudes upon the real world in ways we are all going to find ... interesting. The quicker those things implode the safer real world businesses are going to be ... although they will drag some genuine sources of production down before the government gets involved.

I'm personally fascinated by what will happen when the need to liquidate unsustainable housing becomes urgent. TransAlta's CEO has a problem? Only financial folks care. A third of the houses on your street go empty and yours is next because those people were patrons at your business? That is a little different story.

The EU should abandon its biofuels targets because they are damaging the environment, a committee of MPs says.

The Environmental Audit Committee says biofuels are ineffective at cutting greenhouse gases and can be expensive.

Cool, more available for China to use

Highly skilled and out of work: Long-term joblessness spreads in the middle class

Once concentrated among manufacturing workers and those with little work history, education or skills, long-term unemployment is growing most rapidly among white-collar and college-educated workers with long work experience, studies have found, making the problem difficult for policymakers to address even as it grows more urgent.

I watched my father, an engineer by training, struggle through many years of underemployment, starting in middle age. My suspicion is that there are millions of folks out there doing much the same - working just enough to keep the creditors at bay and not showing up in the Fed Gov's official unemployment numbers.

Been there, done that. There is light at the end of the tunnel (or at least there was for me), but no pot of gold at the end of a rainbow. One learns to adjust to realities, lower expectations, abandon youthful ambitions, and become content and grateful with what one has. The good news is that after seeing one's career go down the drain for the 2nd or 3rd time, it ceases to be such a traumatic experience.

Yup me to, sold a business I created for a good sum, now the people who bought it are about $250,000
behind in payment. When you're close to 60 nobody really wants to hire you no matter what you know.
Now I clean toilets in banks after they are closed. Good honest labor. Now its up to the lawyers.

Now it's up to the lawyers.

Sounds like you did not "sell" your business.
Instead you handed it over to a bunch of strangers in exchange for their "promise" to pay you.

This world is full of "promises".
CERA promises us the price of oil will plummet.
Maybe they will be right.

Once the price of oil plummets, no rational business concern will keep exploring for the hard-to-extract oil. So in turn, the Peak Oilests will also be right. We've seen the max in production and we've seen the max in price.

It's a downhill ride to hell from here on forward.

Yee ha.
Yee ha.

Yep that's me, fresh off the consulting for the mfg housing market, down sized, why???

Hey on the good news side, I am going for a new job designing biofuels system.
But like my wife says you'll only be an LTE there too.

Like I will be building any Wal Mart's anytime soon.



Hello TODers,

WILD & CRAZY? or Plausible?

I am certainly not an economic guru, but I think it would be fascinating if Bernanke & the Boyz did a 'PsyOps 180' and immediately raised the interest rate to 10% or higher ala Volcker.

Bernanke, with the MSM and Govt., could go to full-on Peak Outreach, encourage true biosolar mission-critical investing [at every scale], and reward savers and investors in essential commodities and services. The overall goal is to instantaneously eliminate short-term discounting and thoughtless consumption, then moving ahead to real Foundation planning for the next seven generations of humans and other species.

Of course, pointless stocks like Disney would go to zero overnight, but bicycle and wheelbarrow mfgs, railroad & windturbine mfgs, seed & NPK companies, etc, would skyrocket to reflect their fundamental value to the paradigm shift.

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

Definitely WILD & CRAZY. Less plausible than space based power backing a biosolar permaculture based society that sings Kumbaya nightly.

You're suggesting Republicans will tell the truth!

Do you know how crazy that sounds?

You are too simple and honest of a man, Bob. The rest of society is not like that though.

It's doomer porn night on The History Channel. Life After People debuts tonight at 9pm ET. (Looks like it has some nice FX.)

Right now, they are airing "Doomsday 2012: The End of Days." The web bots are predicting escalating crises that peak in 2012.

"Nuclear Power plants will shut down safely in as little as 2 days"

Where are you Ron?

Now, why is it you are asking about follow-ups, yet you seem to never be around when asked for follow-up?

Interesting bit of posting on your part.

Hey Eric, whats up. Anyway just defending LevinK who basically said this the other day and was ridiculed by ron. Best hope for less fear of nuclear power.

Rather then 'defending' what others have to say, why don't you plan on defending what *YOU* have to say. VS not defending what you say and thus showing the lack value in your own words/positions.

Interesting. The first thing they cover is what happens to the electricity.

Eco-risks loom as arctic oil activity grows

OSLO (Reuters) - Exploitation of the Arctic's huge oil and gas wealth poses a growing danger to an icy wilderness that can recover only slowly from heavy oil spills, a report by the eight-nation Arctic Council said on Monday.


Food in the city.
Link to the book:

(Come on gang - a 1.7 Meg file all about growing edible plants in the city)

Suppose that money is a tool created by humans, a kind of technology.

Further suppose that the technology of money is a symbolic representation of the underlying flow/exchange of energy and resources which supply the necessities of life and make a human society function.

An economic crash would be a failure of that technology to aid the exchange of said energy and resources, and would instead impede the exchange. The effect would be a system-wide decline in available resources.

Hypothetically, what happens when a species in overshoot suddenly experiences a decline in available resources and energy?

What you are describing is a medium of exchange for humans, but it's effect is a lifeblood for corporations. The inability to engage in international labor/manufacturing arbitrage due to soaring fuel costs and the dramatic reduction in fiat currency valuation due to system wide fraud coupled with the overall deflation of the U.S. currency, so dependent on our failing ability to secure the global oil supply, are all going to conspire to do for corporations what the Manson impact did for the dinosaurs.

Not a slate wiper like Chicxulub, but a cracking good housecleaning they will not avoid. I see all of these plans put in place to manipulate and control the populace, but I think Kunstler (it was him?) said the government will be lucky to be able to answer the phone. The same goes for corporations, who will perish in great numbers; consumer spending is their food, and we all know where that is headed in short order.

We are at the end of an age. People and institutions respond by playing their strengths against the projected issues we face going forward, but there are far too many wild cards in the deck for this to work well. Who would have guessed twenty four months ago that the American southeast might be facing load shedding just like Pakistan and perhaps the evacuation of a major population center due to water shortages? On the same day two years prior who would have guessed that arctic summer sea ice might disappear in not a handful of decades but instead in a handful of years? The wise already knew our oil supply had already peaked, but at the top level this is a smoke screen for a thousand evils we've not yet seen.

If it is the lifeblood of corporations, then isn't it necessary for survival for most people? How much food, electricity, fuel, and water pumping is provided for how many billions through the corporate form?

I'm asking whether a shortage in available money, whether a malfunction in this pervasive and widely misunderstood technology, is like a Leibig minimum for the human population in overshoot.

Maybe we're about to find out.

Money began as portable items perceived to have value and it morphed into a symbol for stored productivity, yes? That is until electronics and matchstick men came together, first with the internet bubble, and then we fell for it again using our homes and businesses instead of our savings; foolish beyond belief in retrospect. Some value to humans was created, and by value I mean water, food, and shelter. There is an immense amount of nonsense out there, most easily escaped by not owning a television; one opts out of the homogenized, medicated, manipulated tribe by ignoring the screenelders' meaningless pronouncements (yes, Cramer, I mean you).

We know we're in overshoot. 2108 might see a third of the population we have now ... if we're lucky. And one sixth or less if we're not. If we cling to the tribal elders (includes Paris Hilton and Britney Spears! Do you suddenly feel the need for a shower?) then we go the harder path, as ten will die so that one American may live a nonnegotiable (but meaningless) lifestyle.

Neofacism won't help in this situation and that goes double for the neofascism of the disloyal Christian Right, with their end of days mumbo jumbo, and their Aryan concentration camp guard Jesus, fiercely defending overweight housewives serving microwave apple pies barefoot inside their Chinese made (but Italian labeled) strappy shoes.

No Liebig minimum here, integer, ideology has hauled us over the cliff like the famously resilient coyote, but no cell by cell artist will reanimate us after the puff of dust arises from the dusty canyon bottom. End times indeed, but no supernatural save, just sad eyes when tribulations run four score past predicted seven and the meaning of hardness just gets harder.

Many things will not help, and reading bits of Howl interspersed with examining international stock market results is one of those behaviors.

This is going to hurt someplace.

Hong Market
not much in the last 2 days 12+%, but 30+% from November.

But then again the market will adjust it's self, but not in a nice way.....

I was hoping that this was published in "The Onion." Alas, no.

So are these threats they describe really external ones?
Careful hammering at those nails, boys, they're pointing right into our own heads!

"The five commanders argue that the west's values and way of life are under threat, but the west is struggling to summon the will to defend them. The key threats are:

· Political fanaticism and religious fundamentalism.

· The "dark side" of globalisation, meaning international terrorism, organised crime and the spread of weapons of mass destruction.

· Climate change and energy security, entailing a contest for resources and potential "environmental" migration on a mass scale.

· The weakening of the nation state as well as of organisations such as the UN, Nato and the EU.

Nice way to wake up.. now to get the girl dressed and off to school. cuz' don'cha know, the Children are the Future, let them grow and help them find the way..


I mean someone tell me that what was sold to us as a 'Deterrant' wasn't actually the most effective 'Incentive Program' to arm the whole world with this crap?

I can only hope that energy becomes so precious that those warheads continue to get reprocessed into fuel rods (yes, that's ME saying that).. and never have to get fired. But has the insanity of the 'Nuclear Brass' evolved into a new kind of Military Industrial Godzilla? What do they think this first strike actually buys them(us)?


Bloodbath and Beyond Clerk: Mr. Simpson, I'm sorry but there's a 3day waiting period to buy a Handgun.

Homer: But I'm angry NOW!


"In more recent years, the Pentagon has also expressed interest in using HAARP to mitigate the effects of high-altitude nuclear explosions."

Fed cuts rates 0.75% in an emergency move before US markets open. Breaking News on financial sites now.

Oh, that is just a case of market jitters, silly. Nothing is breaking.


Fed slashes rates

Spit has officially hit the fan, I guess.