DrumBeat: February 12, 2008

Venezuela's state oil company halts oil sales to Exxon Mobil

CARACAS, Venezuela (AP) - Venezuela's state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. and has suspended commercial relations with the U.S.-based oil company.

State-run Petroleos de Venezuela SA, or PDVSA, said in a statement that it ''has paralyzed sales of crude to Exxon Mobil.'' It said the decision was made ''as an act of reciprocity'' for the company's ''judicial-economic harassment.''

Saudi chief: Top oil field not in decline

HOUSTON, Feb. 12 (UPI) -- The head of Saudi Arabia's national oil company is playing down rumors the world's largest oil field, Ghawar, is declining production.

"The interesting thing is that over the last 10 years Ghawar has consistently been producing between 5 and 6 million barrels (per day)," Saudi Aramco President and Chief Executive Officer Abdullah Jumah told an international energy conference Tuesday in Houston. He added the company has increased it by another 300,000 bpd.

He said engineers are decreasing the water count to 27 percent.

Saudi oil spare capacity a safety net

HOUSTON, Feb. 12 (UPI) -- Saudi Arabia doesn't produce as much oil as it can, a spare capacity the head of the state oil firm says provides a crucial safety net.

Industry, government must tackle balance between energy use, climate change, executives say

HOUSTON (AP) - Global energy companies and governments must come together to help solve one of the biggest challenges facing the world today - keeping the planet fueled while not ruining the environment, two top oil executives said Tuesday.

Despite rising international concerns over energy and climate, the world continually deals with these issues through ''uncoordinated approaches,'' James Mulva, chairman of oil giant ConocoPhillips, told a gathering of industry executives, academics and analysts Tuesday.

Meanwhile, Mulva said, ''the U.S. has missed opportunities to show leadership because it lacks a coherent approach to either problem.''

Aramco chief: Tackle root causes of woes

HOUSTON, Feb. 12 (UPI) -- The head of state-owned Saudi Aramco said Tuesday the world must tackle the "root causes" of supply concerns to achieve energy security goals.

"If we are indeed serious about developing more effective and more enduring energy security solutions for the long term, then surely we should be targeting the root causes of our supply concerns rather than simply battling with their various manifestations like the many heads of the Hydra," Abdallah Jumah, president and chief executive officer of Aramco, said at the CERA weeklong energy confab in Houston.

Nigeria: Oil-Export Reliability At Risk

Experts in the oil industry have warned that Nigeria stands the risk of losing its credibility as a reliable supplier of crude oil on the world market.

According to them, exports that have been held back because of rebel attacks would seriously affect Nigeria's credibility in the oil industry.

Kuwait oil earnings post lowest growth since 2002 - NBK

KUWAIT, Feb 12 (KUNA) -- Kuwait's oil revenues recorded their lowest growth in the first nine months of the instant fiscal year compared to the same period of the previous FYs since 2002, the National Bank of Kuwait (NBK) said here Tuesday.

Oil earnings for the first nine months of this FY went up by 11 percent compared to 19 percent in the same period of last year, the NBK said in an economic brief.

The continued hike in oil prices was the main reason for oil earning growth, it said, adding that oil prices had averaged USD 70 per barrel, but OPEC oil output led to lower revenues.

Total to build new facility at Port Arthur

French oil major Total said Tuesday it plans to build a new $2.2 billion refining facility at its Port Arthur refinery.

Other oil nations could make up for Venezuela halt - U.S.

HOUSTON (Reuters) - Top world oil producers have assured the United States they could make up for a major supply disruption amid threats from Venezuela of a halt, a U.S. government official told Reuters Tuesday.

"Other major oil producers have assured they can compensate for significant disruptions of any nature," said the official, who declined to be named due to sensitivity of the issue.

"The world's leading oil consumers are also united through the International Energy Agency, which has a range of contingency options at its disposal."

EIA: OPEC 1Q Output 32.2 Million B/D, +600,000 B/D Vs 4Q '07

NEW YORK -(Dow Jones)- Crude oil output from the Organization of Petroleum Exporting Countries is expected to average 32.24 million barrels a day in the current quarter and stay near that level throughout 2008, according to the latest U.S. government forecast.

In its latest Short-Term Energy Outlook released Tuesday, the Energy Information Administration said the expected OPEC output level will be about 600,000 barrels a day higher than OPEC's fourth-quarter 2007 level, put at 31.68 million barrels a day.

The expected higher OPEC output projection comes despite the group's Feb. 1 decision to keep official oil output levels unchanged. OPEC is to review output policy on March 5.

Venezuela oil giant tries end run

It is difficult to glean a clear picture of PDVSA's finances because it discloses limited information to the public. However, the company seems to have the wherewithal to stay current on debts totaling about $16 billion, of which $2.1 billion is due in 2008, said Standard & Poor's sovereign analyst Richard Francis.

"Exxon Mobil is going to court not because it fears PDVSA can't pay, but because it fears it won't pay," Francis said.

But others Monday painted a darker picture of PDVSA's financial condition. Guerra said the company was paying Total of France in oil for the value of its nationalized field in the Orinoco region "because it doesn't have any cash."

"PDVSA is in a very deep crisis, both in terms of its management and its oil production, which has declined for 10 quarters in a row," Guerra said. "The Exxon Mobil court action is damaging because it affects the credibility of PDVSA."

Exxon seeks oil-project value talks with Venezuela

HOUSTON (Reuters) - Exxon Mobil Corp is interested in "substantive" discussions with the Venezuelan government over the value of the extra heavy oil project taken over last year as part of the OPEC nation's nationalization drive, a company official said on Tuesday.

Iraq says ready to review old Russian oil deals

MOSCOW (Reuters) - Iraq is ready to study the possibility of reviving old deals, including in the oil sector, which were signed between Russian firms and the government of Saddam Hussein, a top official said on Tuesday.

"We are not hiding from existing problems, such as the old contracts," Iraqi Foreign Minister Hoshiyar Zebari told a news conference, speaking through an interpreter.

Liquid coal touted as good fuel bet if ethanol fails

HOUSTON (Reuters) - Refining coal into liquids is the next logical step should it become clear that corn-based ethanol is not the solution to the transportation fuel problem, the developer of a coal-to-liquids plant said on Tuesday.

"Does it make sense to burn your food supply ... to make what is in our estimation an inferior transportation fuel?" Robert Kelly, chairman of DKRW Advanced Fuels LLC, told a questioner at Cambridge Energy Research Associates' 2008 conference.

Shell rationing gasoline, diesel in Western Canada

CALGARY, Alberta (Reuters) - Royal Dutch Shell Plc's refinery in Alberta is running at reduced rates, forcing the company to ration fuel to its own Western Canadian retail network and to commercial customers, a spokeswoman said on Tuesday.

There is no indication yet when the 98,000 barrel a day Scotford refinery near Edmonton will be back at full rates, Shell spokeswoman Jana Masters said. She declined to say how much fuel the plant is producing.

Japan likely to face LNG shortage in 2010 - report

TOKYO (KUNA) -- As the amount of liquefied natural gas (LNG) imported from Indonesia is expected to fall significantly from 2010, Japan, the world's bigget importer of LNG, likely will be seriously affected, a top-selling Japanese newspaper reported Tuesday.

Argentina Agrees to Lift Export Ban on Shell After Price Accord

(Bloomberg) -- Argentina's government lifted a ban on exports from a refinery owned by Royal Dutch Shell Plc after the company agreed to observe price caps.

Shell agreed to lower prices at the pump to Oct. 1, 2007, levels, said a government official who declined to be identified because of department policy. The accord follows similar agreements with Repsol-YPF SA, Petroleo Brasileiro SA and Exxon Mobil Corp., he said. A Shell spokesman in Argentina couldn't immediately be reached for comment.

Russia, Ukraine Reach Last-Minute Deal, Avert Gas Cut

(Bloomberg) -- Ukraine averted a cut in supplies of natural gas from Russia's OAO Gazprom after the two countries' presidents reached an agreement before a deadline passed.

Ukraine will start paying the debt for 2007 gas deliveries on Feb. 14, Ukrainian President Viktor Yushchenko said at a Kremlin press conference broadcast by Russian state television today.

Tortuous and tangled is Russian gas route to the EU

Kiev - Russia's number one export earner - natural gas sold to Europe - travels to market by one of the most convoluted and lucrative energy distribution networks in the world, and square in the middle stands Ukraine. The former Soviet republic is now locked in a dispute with the Russian natural gas monopoly Gazprom over a host of purported issues (and a few real ones), all related to updating the division of a massive income stream.

"It's the same old question," said Serhy Makhno, a Kiev-based energy industry analyst. "How do you divide up money with people you don't trust?"

World's refineries need flexibility, report says

The world's refineries must adapt to a plethora of raw materials to avoid shortfalls in meeting global demand for diesel and jet fuel, a leading energy consulting firm is reporting today.

Cambridge Energy Research Associates says its analysis of global refining capacity shows that increased ability to process a greater variety of raw materials is key to the industry's future.

Shell VP, Exploration: 'No More Easy Oil'

Shell Europe's vice president of exploration, Tom Botts, will review some hard truths at Subsea 08 when he gives his keynote address to 200 representatives from the global subsea sector.

Speaking at the major subsea oil and gas event, which kicks off Feb. 12 at the AECC, Mr Botts will focus on the global future of an industry which was developed in Aberdeen.

"There is no more easy oil," Botts will warn, "and the subsea industry is critical to unlocking more oil to meet world supply."

Venezuela ready to halt oil exports: report

CARACAS–Venezuela is ready to cut off oil supplies to the United States if necessary, the country's oil minister said in an interview published Tuesday, echoing a threat by President Hugo Chavez.

Oil Minister Rafael Ramirez told the Venezuelan newspaper Ultimas Noticias that "we're ready" to cut off oil shipments to the United States – a threat that apparently could be triggered if Exxon Mobil Corp. succeeds in seizing billions of dollars in Venezuelan assets though lawsuits abroad.

S&P: PDVSA Ratings Unaffected by Ruling

Standard & Poor's Ratings Services said today that news regarding Exxon Mobil Corp.'s moves to freeze $12 billion in Petroleos de Venezuela S.A.'s overseas assets has no immediate impact on our rating and outlook on The Bolivarian Republic Venezuela and its national oil company and related entities, including CITGO Petroleum Corp., Petrozuata Finance Inc. (Petrozuata) and C.A. La Electricidad De Caracas.

Valero says Houston refinery unit work till Feb 14

NEW YORK (Reuters) - Valero Energy Corp said Tuesday that maintenance work on an unspecified unit at its Houston, Texas, oil refinery will last until Thursday.

BP will close Sakhalin office, scraps drilling

MOSCOW (Reuters) - Oil major BP will close its office in Russia's Pacific Sakhalin island after the company decided to scrap further drilling at its two offshore projects in the region in 2008, BP's Moscow office said on Tuesday.

BP said its joint venture with Russia's largest oil firm Rosneft, Elvari NefteGaz, will only do geological exploration at Sakhalin-4 and Sakhalin-5 projects, where drilling has so far not been seen as successful.

New oil and gas reserves found in Oman

Petroleum Development Oman said it found "significant new volumes" of oil at the Budour Northeast oil field, which was discovered last year, the Khaleej Times reported.

In addition, the company may also have found a significant volume of oil in a rock formation at the Rabab-Southeast field, also near Birba.

A big oil discovery

Brazil's role as a global energy producer is likely to increase dramatically over the next ten years. The country is already a relatively important oil producer, and following recent announcements of major offshore deep-water discoveries, the largest Latin American country will move from being self-sufficient to becoming a net exporter. If the government’s early estimates are confirmed—that the broader area where the recent discoveries were made might hold as much as 70bn-100bn barrels—Brazil will be able to boast of holding among the world's ten-largest oil reserves in the medium to the long term.

Bolivia's Irresistible Reserves

LA PAZ, Bolivia -- When President Evo Morales took state control of Bolivia's energy sector nearly two years ago, critics warned that investors would abandon the country's gas fields and ultimately sink the industry.

They were half-right. Production has slowed along with investment, forcing Bolivia to renege on some of its export commitments this year. But foreign governments, often in the form of state-owned companies, have jumped in to resuscitate the energy sector.

The reason is simple: They can't afford not to.

Russian Surgut boosts cleaner fuel sales to Europe

Sales from Kirishi offer further evidence that Russian refiners are technically able to supply cleaner fuels to Western markets and take advantage of substantial premiums for low sulphur material, but face obstacles from export infrastructure.

Papua New Guines: Fuel shortage hit Bougainville, affecting transportation

FUEL outlets in the Autonomous Region of Bougainville have completely dried up, leaving PMV owners and road construction companies no choice but to ground their machineries.

Those also affected include passengers from other parts of Bougainville, who could not travel to Buka town to access vital services such as banking and telecommunication.

Once an Exporter of Products, China Now Leading Global Exporter of Inflation

Cheap raw materials and ultra-cheap labor helped China earn its reputation as the supplier of low-cost products to the world, but rising domestic prices have touched off an inflationary epidemic that is infecting the U.S. economy.

Blue China weathers the storms

More blizzards are expected this week, but China has mostly weathered the crisis brought on by weeks of unusually bad weather, including severe snow and ice storms that affected most of the country and paralyzed transport systems as millions of people were trying to get home to celebrate the Lunar New Year. Millions spent New Year's Eve in darkness.

"We have won a partial victory against the disaster of rain, snow and ice," the State Council's disaster relief centre said Saturday. "From today on, we must continue to guarantee transport, electricity and basic livelihoods."

North Korea Can Produce Instant Noodles Again

Roh Won Chul, the factory cheif was quoted as saying that instant noodles were produced and widely sold till the 1990s in North Korea. However, since then, the country has not been able to produce instant noodles like it used to.

The chief also said that the country’s noodle production lines were suspended due to fuel shortages. He said that North Korea faced difficulty obtaining heavy oil needed to operate boilers at the factory because it could not import oil from foreign countries after economic sanctions were imposed. North Korea ended up importing instant noodles from China and other countries.

Metals - Platinum hits new record as South African supply fears fuel buying

As the world's biggest platinum miner, producing just under 80 pct of total supply, South African production outages have a huge effect on the market. Unlike gold, platinum is readily consumed in industry, chiefly in car manufacturing, and is therefore more sensitive to supply outages than the other metal.

India: Cooking gas crisis hitting the poor hard

NEW DELHI: The poor people who depend on small refilled gas cylinders for their cooking needs these days have been hit the hardest by the acute shortage of liquefied petroleum gas (LPG) supply in and around Delhi. They are having to pay as much as Rs.80 per kg for the fuel -- equivalent to Rs.1,436 for a 14.2 kg cylinders -- whose real cost is only Rs.293.35.

Illinois plans for other clean coal

ST. LOUIS, Feb. 12 (UPI) -- Though the Mattoon, Ill., FutureGen plant was canceled, other projects stay.

You Vote: What Megabubble Will Be The Next To Bring Us Down

The main alternative is "Peak Oil" theory, which the world's Exxon-Mobils hate. "Peak Oil" forecasts a different end game. Janszen's theory simply predicts America's economy will "creatively self-destruct" in 2013 while Wall Street is busy creating a newer, bigger bubble. In marked contrast, "Peak Oil" forecasts:

A "not-so-creative destruction" of the oil industry. The end of Wall Street's "bubble-blowing machine." A steady decline of the oil-dependent global economy. Widespread resources wars intensifying through the 21st century.

Refinery pollution may soar

Global-warming pollution from Midwest oil refineries is expected to soar by as much as 40 percent during the next decade, a dramatic increase that runs counter to regional and national efforts to curb heat-trapping gases.

Expansion plans at the BP refinery in Whiting would boost the facility's greenhouse-gas emissions to 5.8 million tons a year, the company told the Tribune. That would be equivalent to adding 320,000 cars to the nation's highways.

Expect tight energy supply for four years

South Africans can expect tight energy supply for another four years, Public Enterprises Minister Alec Erwin said in Cape Town on Monday. The country's energy supply problems are no different from those of other developing countries, he told a media briefing in Parliament.

"We are in exactly the same position as every other developing country," he said.

Winter shortages fuel Tajik anger

Tajikistan is well-versed in hardship, but this winter has been too much.

Millions of people here are trying to survive without heat, water or electricity in temperatures that stay well below zero.

Pakistan problem: Washington's perspective

This preemptive foreign policy is driven by “Peak Oil” related anxiety. Cognizant of the fact that the world is headed towards a new type of international rivalry that will entail a scramble for world’s diminishing supply of fossil fuel, and encouraged by the U.S’s unrivaled status, the necocons embarked upon a policy to establish greater control over the world’s energy resources. As a functional prerequisite of this control, Washington has set out to establish alliances that will strengthen its created “energy order”, prevent China from emerging as a competitor of the U.S, and prevent major Asian countries from forming a multi polar power bloc against the U.S.

Bush's Administration behind Exxon Mobil assault against Venezuela

The Bush's administration -closely linked to the world oil market- has already tried, twice, to destabilize the Bolivarian Revolution and to affect the Venezuelan people through a sabotage program to its oil industry.

Pakistan: Need to focus on sustainable power generation stressed

KARACHI: A household can lit a candle or an emergency light to illuminate the house, but it does not work for the industry, as it requires uninterrupted power supply. Industry is facing a production loss due to current power crisis.

Korangi Association of Trade and Industry (KATI) President Shaikh Fazal Jaleel told The News that there was 50 per cent decline in production due to power breakdowns. When asked whom he considered the biggest enemy of investors in Pakistan; the so-called terrorism or energy crises; “energy crises,” he said.

February Symposium: World Oil Peak - Out of Gas

Dr. David L. Goodstein, Professor of Physics and Applied Physics at the California Institute of Technology, will discuss the current oil crisis and the harmful repercussions that will occur when the world's oil supply is depleted.

Future of Transportation - PART II

Apart from crossing peak oil, another major event happened around 2005 - the emergence of a new generation of batteries - Lithium Iron Phosphate (LiFePO4) - able to sustain more charge cycles and based on safe chemistry that can be put into a car. For the first time the total cost of energy for electric transportation has crossed under the cost of fuel when calculated on a per kilometer basis. The fundamental technology and economic drivers behind these two events will continue to drive the price vectors for fuel and electricity further apart in favor of the electron and battery.

Global demand lifts grain prices, gobbles supplies

But higher demand isn't all that's pushing food prices higher:

Spiraling oil prices. Food needs fertilizer, and to make fertilizer, you need energy. The cost of natural gas, for example, is one of the biggest components in the price of ammonia and potash. While natural gas prices have tumbled from their 2005 highs, the price is still nearly double its 2001 levels. And to get food to market, you need trucks, trains and barges, all of which consume oil and gasoline, which have soared nearly 70% in the past 12 months.

Government mandates for biofuels. In a bid to reduce oil dependence, many countries are requiring additional use of biofuels, such as ethanol and biodiesel. That, in turn, competes with food destined for the table — and increases the prices of what consumers eat.

Great Plains Synfuels Plant restarts after shutdown

The Great Plains Synfuels Plant near Beulah has is making natural gas from coal again, after a leak was repaired in one of the plant's processing units.

The plant resumed full production last Thursday, after being shut down for 41 days to repair a crack in a processing unit that extracts chemicals from the plant's synthetic gas, said Daryl Hill, a spokesman for Dakota Gasification Co., a subsidiary of Bismarck-based Basin Electric Power Cooperative.

NASA scientist hits out at power station plans

PLANS for the UK’s first coal power station in a generation are a terrible idea, says one of the world’s most eminent climate scientists.

Speaking on Radio Four’s Today programme, James Hansen, a director at NASA, said that the plant, due to be sited next to an existing coal power station at Kingsnorth "will destroy the efforts of millions of citizens to reduce their carbon emissions".

ANALYSIS - Solar Power Boom Faces First Test

LONDON / FRANKFURT - Prospects for the solar power sector are puzzling investors juggling on one hand a possible dotcom-style bust and on the other fresh support in Europe, home to a third of the world's market.

The solar power industry uses the same silicon raw material as the semiconductor industry and may share a similar boom-bust path, according to some analysts.

Eco-villages Prove to be Sustainable

Australians produce over 560 million tonnes of greenhouse gases annually – that is equivalent to putting 127 million cars on the road.

In an eco-village, however, life is all about ecological balance and sustainability.

Uranium, that strategic metal

India's ambitious nuclear program is based on the availability of sufficient uranium. But, do we have enough uranium resources in our country to meet the increasing demand?

Is Nuclear Energy Sustainable?

Like the, now mythical, debate about Hummers vs Priuses, nuclear power is an issue who’s pros and cons largely can’t be addressed without an LCA (Life Cycle Analysis). Sure, Nuclear reactors, without a doubt, produce fewer carbon emissions than coal and other traditional power plants in their use phase—(actually, natural gas and hydro, both of which can be considered “traditional” as well, probably beat nuclear, not to mention renewable energy sources like solar and wind). But coal is the big, dirty source of power that makes nuclear look good so let’s stick with it, for now.

Drought spreading in Southeast

ATLANTA — Georgians will be able to water their azaleas and swim in their pools this spring after the state eased a ban on outdoor watering.

Barely 400 miles away, residents of Raleigh, N.C., should be so lucky. Their city council just enacted the toughest water restrictions available, essentially banning all outdoor watering in Raleigh and six surrounding towns.

As the historic drought gripping much of the Southeast stretches into a second year, Atlanta and Raleigh find themselves in similar drought conditions but are adopting contrasting strategies.

Las Vegas Business Press - Green Supplement

Going green never sounded so good. The quicker the better. And with Simmons' disturbing predictions in mind, take seriously the subject. It's not just that our cover story is about it -- Review-Journal reporter John G. Edwards writes about Nevada's potential to be an alternative energy powerhouse, perhaps leading the world in solar and geothermal power delivery someday -- but we offer you an inside glimpse with our green issue supplement about what some local businesses and people are doing to build a foundation for healthier and greener living. We have stories from Tony Illia, Arnold Knightly, Sara Cureton, Hubble Smith and a contribution from Luxury Magazine's recent feature, Green Leaders.

Valentine's Day gifts must be politically correct these days

To be PC this year, the valentine needs to be paperless, the chocolates should be organic, the flowers must be Fair Trade-certified and the perfume — better check that it was made without animal experiments.

A politically correct Valentine's Day is kinder to the planet, poor folks in foreign lands and furry friends. "You shouldn't be hurting anyone or anything on Valentine's Day, the day of love," says trends guru Faith Popcorn. "The country is rediscovering a social conscience of ethics, passion and compassion."

Train roof riders to be sprayed

JAKARTA (Reuters) - Indonesian commuters riding on the roofs of trains will be sprayed with colored liquid so that security officers can identify and arrest them, a report said Saturday.

Electric trains linking the Indonesian capital and its neighboring towns are packed with passengers during rush hours, with many sitting on the roofs due to a lack of space inside or to avoid paying.

Peak Oil: Simmons v. Saudis, Round Two

Saleri now says in an interview that time has proven Aramco right. Simmons “was saying four years ago that Ghawar was going to collapse and that Saudi Aramco was going to go into decline….[But] that precipitous decline never occurred,” he says.

...“Abqaiq became a renaissance story for Aramco,” he says, insisting that the field’s pressure remains strong and its water content is going down even after more than 60 years in production. Abqaiq “is doing fantastically,” Saleri says.

Simmons, reached by phone in Houston, says he feels equally vindicated—and increasingly alarmed. He based his book largely on information dug up in old technical journals. In recent weeks he has hit the archives again, with thoughts of writing a second book.

What he has found, he says, “is so unbelievably scary you can’t believe it.” He claims that there is mounting technical evidence that Aramco is struggling to deal with increasing volumes of water at its hugest fields. With water production going up, he says, oil production is going down.

“It is absolutely clear as a bell now that all of those fields are heading toward being another Cantarell,” referring to the massive Mexican offshore field, which is now in rapid decline.

Venezuela wants to avoid U.S. oil cutoff

CARACAS (Reuters) - Venezuela wants to avoid cutting off oil supplies to the United States because it would be costly to the OPEC nation, a senior Venezuelan oil official said Tuesday.

Putin meets Ukraine leader as gas talks go down to wire

MOSCOW (AFP) - Russian President Vladimir Putin met Ukrainian counterpart Viktor Yushchenko on Tuesday amid crunch talks on averting a cut in Russian gas supplies to the neighbouring state.

Canadian Natural says Horizon project costs mounting

TORONTO (Reuters) - Canadian Natural Resources Ltd said on Tuesday its Horizon Oil Sands Project in Alberta could cost more than a quarter above its C$6.8 billion target as severely cold weather had slowed construction.

As of Dec. 31, the forecast cost of phase one of the project was already 13.4 percent over the target, and without an increase in productivity, that cost estimate would rise by 25 to 28 percent, the company said.

China Spurs Coal-Price Surge

China is doing for coal what it once did for oil: pushing prices to new highs, adding more pressure to the creaking global economy.

Green Ink: All The Coal In China

This is the end: A detailed look at peak oil and “The Limits to Growth,” over at The Oil Drum, posits that running out of oil could be a quicker and more painful hit to civilization than global warming. At the Energy Bulletin: More dirt on the $100,000 bet between peak-oil proponents and researchers CERA. Meanwhile, Peak Opportunities takes a close look at fast-declining oil fields in Mexico.

UK: Food and petrol push up inflation

Rising food and petrol prices pushed up UK inflation in January, figures show.

Last month's Consumer Prices Index (CPI) inflation figure rose to 2.2%, up from 2.1% in December. The rate is the highest since June 2007.

In Oil-Rich Mideast, Shades of the Ivy League

Education City, the largest enclave of American universities overseas, has fast become the elite of Qatari education, a sort of local Ivy League. But the five American schools have started small, with only about 300 slots among them for next year’s entering classes. So there is a slight buzz of anxiety at the fair, which starts with a nonalcoholic cocktail hour, with fruit juices passed on silver trays as families circulate among the booths.

Airlines Look For Savings As Fuel Costs Rise

The need for US airlines to control costs is greater than ever with losses creeping back onto balance sheets and shares slipping, but carriers are simply running out of fat to trim after years of restructuring.

The main culprit undercutting profits is high fuel prices. But overall US economic weakness is threatening to erode travel demand and make it more difficult to generate revenues.

George Monbiot: Apart from used chip fat, there is no such thing as a sustainable biofuel

Nine months ago, I asked the British government to send me its assessments of global oil supply. The results astonished me: there weren't any. Instead it relied exclusively on one external source: a book published by the International Energy Agency. The omission became stranger still when I read this book and discovered that it was a crude polemic, dismissing those who questioned future oil supplies as "doomsayers" without providing robust evidence to support its conclusions. Though the members of Opec have a powerful interest in exaggerating their reserves in order to boost their quotas, the IEA relied on their own assessments of future supply.

UN chief, NY mayor urge world action on climate change

UNITED NATIONS (AFP) - New York Mayor Michael Bloomberg joined UN chief Ban Ki-moon here Monday in galvanizing world action to roll back climate change, an issue he described as "just as important" as nuclear proliferation and terrorism.

"We are damaging our planet. Nobody knows at what rate but at any rate it is not good," Bloomberg told reporters after addressing a UN General Assembly debate on the impact of global warming.

King penguins could be wiped out by climate change: study

PARIS (AFP) - One of the emblems of the Antarctic, the king penguin, could be driven to extinction by climate change, a French study published on Monday warned.

In a long-term investigation on the penguins' main breeding grounds, investigators found that a tiny warming of the Southern Ocean by the El Nino effect caused a massive fall in the birds' ability to survive.

Global Warming: Sea Level Rise Could Be Twice As High As Current Projections, Greenland Ice Sheet Study Suggests

A comprehensive new study authored by University at Buffalo scientists and their colleagues for the first time documents in detail the dynamics of parts of Greenland's ice sheet, important data that have long been missing from the ice sheet models on which projections about sea level rise and global warming are based.

What is supposed to stop varrona mites - full plastic combs.

Downside - it seems queens won't lay in 'em - thus I lost the one hive I put the plastic in.

I attended our local beekeeper's school this weekend, and one of the big entomology experts from NC State was there to talk about various bee diseases, parasites, etc. We got a good state-of-the-art briefing. He didn't even mention using plastic combs, probably for the reason that you discovered.

Actually, plain old confectioner's sugar holds great promise. Seems that the mites can't keep their grip on the bees when they are coated with confectioner's sugar. They fall off, and can thus be removed from the bees. Since it is sugar, for the bees it is a feast.

This procedure is used on a small scale now in order to get an approximate count of mite infestation. If one were to get most or all of the bees into some sort of cage (probably using a one-way passage like what is used to clear a super for harvesting), they could then be dusted in the cage, the mites would fall out of the bottom with the extra sugar, and then you return the miteless bees to the hive. There is research going into such a scaled-up approach right now, and it looks pretty hopeful.

Using the larger cell foundations to encourage the laying of drones to trap the mites (which lay preferentially on drone larvae) - you pull out the frame before they emerge and either freeze them, or let them emerge within a cage and dust them with sugar per above before returning to the hive -- is another approach. It helps, but even repeating it almost constantly won't do much more than keep the mite population down a bit.

The screened bottom boards reduce Varroa mite populations by about 10%. That by itself is probably not going to be quite enough, but every bit helps, and it is an easy thing to do.

With each generation, some strains of bees are becoming more resistant. With a little bit of intelligent help, they can eventually be pulled through and this will become a relatively minor problem.

I went to a bee-keeping seminar this last weekend,and am getting 5 hives this april.This is the same information I have got on Varroa control,plastic comb foundation making smaller cells,confectioners sugar,drone comb destruction....the symbiosis between bee-keeper and hive is growing...

With each generation, some strains of bees are becoming more resistant.

Most small bee keepers lack the tools to do the artifical insemination, so that is not a claim I'd make.

Most small beekeepers are becoming more dependent upon professional breeders for their stock than used to be the case. Beekeeping used to be a very easy hobby. Now it is becomming much more complicated and difficult. Nevertheless, there are still people eager to have a go at it, judging from the three hundred people who attended our Western NC bee school last weekend.

IAPV, first described in Israel in 2002, came to national and
international attention in September when university and ARS
scientists showed a strong association between the presence of IAPV
and CCD.
ARS has begun several experiments to determine what factors may be
most involved in CCD. Combinations of four areas are being examined:
pathogens, parasites, environmental stresses, and bee management
stresses such as poor nutrition.
CCD became a matter of concern in the winter of 2006-2007 when some
beekeepers began reporting losses of 30 to 90 percent of their hives.
While colony losses are not unexpected during winter weather, the
magnitude and rapidity of loss suffered by some beekeepers was highly
Pollination is a critical element in agriculture, since honey bees
pollinate more than 130 crops in the United States and add $15
billion in crop value annually.
There were enough honey bees to provide pollination for U.S.
agriculture this year, but beekeepers could face a serious problem
next year and beyond if CCD becomes more widespread and no treatment
is developed.
Poor nutrition is the one area that could be adressed to effect a
cure. Meaning there has to be more then one source of food , a
solution would be that in the orchard or field the grower would have
to plant rows of wild flowers so the bees would have a source of food
other then the growers cash crop.

I know that CCD is not exclusively a problem of migratory hives, but they did appear to be the ones that got hit the worst. I am still wondering, too, to what extent the non-migratory hives that got hit might have been within contact range of migratory hives.

I really have serious doubts about the long-term sustainability of the whole migratory model. This goes beyond the energy costs of hauling hives around the country and hauling produce long distances, although that is a big part of it. The constant shuffle of hives around the country is about as far opposite from isolation and quarantine that one can get, which thus opens up efficient vectors for the transmission of parasites and disease (like IAPV). It is hard to believe that the constant relocation of the hives does not stress them terribly. Add to that the heavy exposure to a wide variety of pesticides (residues, at the least), the lack of variety of pollen and nectar at any one site, the heavy dosing of hives with antibiotics and chemicals, and it is really a wonder that any of the bees survive. We can't be going on doing things this way forever.

Six Years of College Costs

I believe that 2008 will be the approximate all time record for US high school graduates—resulting in vast numbers of high school graduates trying to get into, and finance, college.

If they go to graduate school, or if they take their time getting a four year degree, they are looking at about six years of college costs.

Consider that at our current rate of consumption of crude oil (C+C), we will burn through about 160 Gb of crude oil in six years, which is about one-sixth of our remaining conventional crude oil reserves, based on the HL method.

Furthermore, right around the time frame that they would be graduating into the workforce, around 2015, our middle case is that it would take 100% of the net oil exports from the current top five net oil exporters, just to meed current US net import demand.

Also consider the consequences of borrowing money going into an overall deflationary environment—compounded by price increases in food & energy. Following is an excerpt from today’s NYT. Their final refinancing, in 2004, was used to pay for their daughter’s college costs. They are probably going to lose their home in foreclosure proceedings.

Mortgage Crisis Spreads Past Subprime Loans

The Doyles took advantage of the housing boom by refinancing their home nearly every year since they bought it in 1995 for $275,000. Until their most recent loan they never had a problem making their payments. They invested much of the money in shares of companies that subsequently went bankrupt.
Still, Mr. Doyle does not regret refinancing in 2004. “My goal was clear: I wanted to help my daughter go through college,” he said. “It wasn’t like it was for us.”

We've already hit "peak degrees" here in Maine, with over twenty degrees where I work about to be axed.

The Great Correction is here.

My about-to-graduate niece recently informed me that she has a thirty thousand dollar credit card debt.

I'm in shock. I managed to work my way through school and incur only a 600 dollar loan debt.

30k isn't too bad if it's her only debt. A coworker recently told me his niece graduated with 100k in debt. Her major? Communications. I just looked at him in disbelief when he told me that. Also, I have a friend who racked up 70k+ in debt with a major in philosophy. It boggles the mind.

My niece's degree--goddess help us: sports medicine.

I'm encouraging her to divert into emergency medicine, but she has thought of moving to Maine and getting a graduate degree in environmental science.

Sorry, Rachel. That's getting cut.

I do know that she makes a good farm laborer.

I don't see the problem. Injuries from physical work are similiar to sports injuries. I can't do farm work because I twisted my ankle taking dirty laundry to the garage. If I had twisted it playing tennis it would be a sports injury.

I agree. Medicine is medicine. And sports medicine could be quite lucrative if the collapse is slower to arrive than many here expect.

It might be lucrative anyway. People need their bread and circuses, especially in hard times.

Oh, I agree! I just think she needs to axe the "sports" part.

I don't. There's big bucks to made there. What if BAU goes on for another couple of decades? It's possible.

Even if TSHTF...entertainment may do quite well for a long time. Hollywood did just fine during the Great Depression. People needed an escape more than ever.

It's possible for BAU to continue for decades in the same way that it's possible to run through a solid brick wall and end up whole and undamaged on the other side.

Overshoot, hundreds of energy slave hours per person, the relaxation oscillator, resistance against inertia, etc.

Then again, what with our reality containing things like the magic bullet that killed Kennedy, or buildings collapsing against the paths of greatest resistance, yeah, it's possible.

From the story above: Simmons v Saudis, Round 2

Simmons believes we may already have hit that peak. After his recent studies, he now fears he has “grossly underestimated how savage the post-peak oil reality will be.”

Do you believe CERA or Simmons ?

p.s everytime you say inertia I think you mean momentum. BAU has massive momentum, but the 'inertia' of BAU will end when the appropriate outside force is applied to it.

I think it's possible that both CERA and Simmons are wrong. The evidence so far suggests that may be the case. Saudi production didn't crash, but neither is it increasing.

And even if Simmons is right, that doesn't mean society will collapse overnight.

In short, I think it's possible that the force is not enough to overcome the inertia. At least, not right away.

It's looking like peak oil was almost three years ago. And for some people, it's certainly been as bad as we feared. But not for us. I think it's possible it will go on this way for a lot longer.

One possible hypothesis might be that the Saudis have a few aces up their sleeve (possible with robes?) that they have done a very good job of hiding. Rather than pumping all they possibly can, they are purposely holding back to conserve their resources for the long term. They might have their own SPR, one that hardly anyone knows about.

It makes little difference whether the Saudis have maxed out because they CAN'T pump anymore, or because they WON'T pump anymore. The bottom line is that they ARE NOT pumpling any more.

I think it's possible that they can't pump more...at the moment. Maybe they can raise production, but it's not as easy as just turning the spigot. It requires time, resources, and billions in investment, and they were caught flat-footed.

P.S. And I think it does matter whether they can't pump more, or won't pump more. If they can't, production may be about to fall off a cliff. If they can, the plateau could go on for a lot longer.

Yup. The difference between an inconvience [still with longer term ugly overtones] and the beginning of the TEOWAWKI.

Yes, when I think about it a bit harder, I know what you mean. I first learned of peak oil in March 05. And now, 3 years later, events in the world are nowhere near as bad as I was fearing they probably would be by now. But then again... don't forget more things happen geometrically that arithmetically in the real world.

1, 2, 4, 8, 16, 32, 64, 128....


1, 2, 3, 4, 5, 6, 7, 8....

So if 100 is calamity on the disaster scale, we might get there faster than people who think arithmetically realize...

Take prices. For instance gasoline.
Geometric, increasing 20% per year starting at $1


Has there been a paradigm shift to geometrically increasing fuel and oil prices? Perhaps, but I can understand how a significant recession might alter this trend.
Other things that ARE increasing geometrically:
World homo sapiens population, food demand, oil demand, water demand, electricity demand.....

This is also why I don't believe in production "plateaus", unless it is happening because an oil field is being produced at below it's maximum theoretical rate, due to infrastructure constraints, or, shock horror, wise production practices designed to maximize overall recovery. I believe that Saudi Arabia is at the beginning of a geometric production decline, not an artificial plateau. But I hope I am wrong, time will tell.

It's looking like peak oil was almost three years ago. And for some people, it's certainly been as bad as we feared. But not for us. I think it's possible it will go on this way for a lot longer.

A more accurate statement of the current situation might be: "it's looking like we've been on the peak oil plateau for almost three years."

Framed correctly, one naturally will ask: "how much longer can we expect to remain on this plateau?" For a nation that imports two thirds of its oil, the answer is "not long!" (three to five years perhaps).

What it boils down to is this: if westexas & Khebab are even remotely on target, it will NOT "go on this way for a lot longer."

As oil exporting nations experience both declining oil production and increased domestic oil consumption, they will reduce oil exports to the U.S. Because the U.S. is highly dependent on imported oil for transportation, food production, industry, and residential heating, the nation will experience the impacts of declining oil supplies sooner and more severely than much of the world. Peak Oil: Alternatives, Renewables, And Impacts


You're right, she needs to change majors. Sports medicine is a completely worthless degree, you cannot get a job with it. if she really likes that area she'd be much better off getting a degree in physical therapy or occupational therapy. the training is a lot better and more practical too. Medicare and many private insurers do not cover therapy even from persons with athletic trainer degrees, let alone the more generic "sports medicine". Exercise physiology is another one where many students think it's really interesting, something they enjoy, etc. but there are very few job paths available with such a degree.

Phineas Gage, MD

I'm sure a sports medicine specialist can treat repetitive stress injuries from weed pulling and wood cutting :)........ new sports in the post FF era

Think trepanning will make a comeback, Phin?

Actually, the exact same procedure is more or less still used today but we call it a "burr hole". the procedure is used almost exclusively for the drainage of hematomas. For the most part, the procedure is no longer done to release demons or spirits since the insurance reimbursement for that diagnosis is so poor ;-).

But seriously, I think we'll have to rely more on lower tech solutions. Frankly many of the higher tech treatments we do today are enormously more expensive and only add a marginal improvement over the more traditional treatment being replaced.

For example, a recent large study showed that age-old blood pressure medications (pennies a day) worked just as well at lowering BP and reducing heart attacks as the newer more expensive brand drugs (dollars a day). we need to do more of that kind of research.

My assumption was that sports medicine was a medical specialty that required an MD, intership. residency.

There's a bachelor's degree in sports medicine available at most universities and colleges. It qualifies you for essentially nothing. You cannot work as a therapist, you cannot work as an athletic trainer. You can work as a exercise consultant or personal trainer but that's about it, and frankly anybody can call themselves a personal trainer and charge $10 or $20 an hour if someone is willing to pay them to do that. It's probably not a bad degree for an athlete who plans to go into a career in coaching, I suppose.

To be a sports medicine physician requires 4 years of college, 4 years of medical school and at least 3 years of specialty training after medical school. To be board certified in sports medicine usually requires at least one extra year of subspecialty training. Many doctors (and chiropractors) will use the label sports medicine without ever doing the additional sub-specialty training. These physicians should not be using the term "board certified in sports medicine".

Of course, right now we're also at "Peak Credentials". How well and for how long the licensing laws will continue to be enforced is uncertain.

That's probably correct.

Feds, lenders to offer broader plan to help with foreclosures

WASHINGTON (CNN) -- The Bush administration will announce an expanded plan Tuesday for lenders to help homeowners by temporarily suspending foreclosures for people facing the imminent loss of a home, a source familiar with the plan said Monday.

That was being discussed today on BNN. Suspending foreclosures, or essentually a moritotium on foreclosures. The main concern was that default rates have doubled in recent months, and if the US slides into ressession that the rate will increase. The big worry is that having to many evictions and empty homes on the market that house prices will fall further, cascading into even more foreclosures. One wonders though, as the payments will have to be made up some how, the longer the foreclosure moritorium the more money these people owe. Or will it just be written off?

Also, what is the incentive to pay your mortgage if you know the bank won't foreclose? I think this would make the delinquency problem much worse, though it might solve the walk-away problem (why walk away, when you can just stop paying and stay where you are?).

I wonder if this is analogous to a consumer not wanting to open the bills from the credit card companies, because they don't want to know how much they owe.

Perhaps the banks are trying to postpone finding out--and having to report--how bad it is getting. There have already been some reports (on The Housing Bubble Blog) of some banks not making any move to initiate foreclosure proceedings in California.

As I explain in today's The Automatic Earth: Debt Rattle February 12 2008, the banks are running into ever more problems. The changes in auditing rules are one recent addition to their headaches, but there is one that comes out of left field for just about everyone, courtesy of Lee Adler. The Fed is not adding liquidity, it's withdrawing it at lightning speed.

Fed Eunuchs Reveal True Selves In Technicolor

The proof, they say, is in the pudding and the Fed has just served it up in multicolored, multi-layered glory. The Fed itself is confirming, in graphical form, the very facts that I have been reporting on [..] for the past half year and more.
The Fed has aggressively collapsed the size of the System Open Market Account, beginning slowly last July, then moving aggressively beginning in December. The effect has been to withdraw billions of dollars of what is, in essence, margin buying power from the trading accounts of the Primary Dealers.

Fresh from the press, more gaping emptiness (note that the Hope Now Alliance died today after a short and painful life in the incubator):

Paulson, U.S. Banks Forge 30-Day Foreclosure-Freeze Deal

Bank of America Corp., Citigroup Inc. and four other U.S. lenders agreed with Treasury Secretary Henry Paulson to take new steps to help borrowers in danger of foreclosure stay in their homes. Paulson and the banks offered a 30-day freeze on some foreclosures while loan modifications are considered.

The Treasury chief, with Housing and Urban Development Secretary Alphonso Jackson, said today at a news conference in Washington that "Project Lifeline" would help stabilize communities disrupted by mortgage defaults.

The Automatic Earth

On the other hand, I plan on going to the technical college for small engine repair classes. I can imagine in our decline, we will attempt to hang onto personal mobility through the eventual migration to smaller vehicles, and in many cases scooters and motorcycles. Not only that, but it will be handy for my own motorcycle.

Other courses I intend on taking will be agriculture courses.


One important point is that the worst possible case is to decide to go to college, decide that it needs to be heavily peak-prepared and pick something "useful" you don't really like and then get a poor degree, or even not graduate, because you really lack any interest in the subject whilst still accumulating a modest level of debt.

I'd strongly caution anyone thinking their area of study "ought to be x" to consider very carefully if they actually enjoy x before committing. People away from college age tend to forget how hard it is to keep continually cracking open the books even in a subject you do enjoy. Now if your interests and "what you ought to do" coincide you're lucky and have covered all bases.

(Speaking as a mathematics graduate 10 years ago, a subject that's quite useful in and to current society, but which will decline in utility the more resource constraints "deindustrialise" the world.)

It is wisest to assume that, whatever degree/career path one selects initially, one will be changing career paths in the future, perhaps several times. The person who can enter into a career path and work in it without major retooling along the way is becoming quite rare. It is likely to be even more rare in the future.

Learning how to learn may be the most important thing one can learn.

Mayor of London Unveils Major Walking and Cycling Programs; City to Spend Almost US$1B on Cycling Over Next Decade


Now we're talking. It is so refreshing that someone on the ground is actually doing something about climate change and peak oil. Despite everything that has occurred over the last several years, it still seems like most people and most politicians just see these twin problems as an abstraction. I know the two Democratic presidential politicians have set long term goals but we need to see immediate action where money is actually spent to address the problems. And all they are doing now is campaigning.

Many consider the Mayor of London as some sort of mad clown. I think he is a saint.

It is really rather simple. In order to address these problems, people need to get out of their automobiles. And the infrastructure needs to be in place so that they can walk and bicycle safely.

One of the best things I've seen regarding public transportation and bicycling is the addition of bicycle racks on the front of city buses. This way, you bike to the bus stop, put your bike on, hop off at your designated stop, then bike to your destination.

I saw this years ago in Vail, CO. Little Rock, AR recently put bicycle racks on the front of their buses, although I don't know if they're being used or not. (I'm rarely in town any more.)

This "bike 'n' bus" concept was tried in the Aspen, Colorado area back in the 90's. What sounds like a great idea was eventually abandoned due to customer complaints. The first bike on the rack got buried under a couple of others, then the bus had to wait for everything to get untangled and sorted out when a bicyclist got off the bus. People were nearly going to fisticuffs trying to be first to get their bike on and off the bus, etc. Delays mounted, buses fell behind schedule....the plan was soon dropped. Nice idea while it lasted...

If you live in a city that is large enough to require you to travel multi-modal (i.e., bike/bus/bike), maybe a better approach would be to provide truly secure bike parking at each node, plus short-term bike rentals. Thus one could ride one's bike to the closest node, park it, ride the bus, get off, and rent a bike to take one the rest of the way.

Either do that, or charge enough for carrying the bike so that the bus could be properly equipped for it (i.e., designed around the problem instead of just trying to add on a rack). Or try both and find out which is the most cost-effective solution.

Nice Idea. But just needed to be reengineered/rethought, not dropped.

We have to be resilient enough to try a few variations before giving up on an idea.

Sure. There's no reason that the whole sides of the buses can't be covered in bike racks, allowing them to be placed 1 or 2 deep to where you don't have to fight with a bunch of other bikes just to get yours off. The only problem I can see with that is that it would be more likely for other people to run off with your bike when it's at a stoplight or such. Possibly some sort of system where the racks lock until unlocked by the bus driver or some other sort of system.

Sounds lethal to pedestrians.

Most societies in the world don't use cars much - they do use busses and bikes and legs - look and see how they do it, there's no need to 'reinvent the wheel.'

Whatever works.

It might very well require reinventing the wheel, OR, as you say, it might exist in a useful form already.

The point is to give it a go, and be willing to adjust it if the fit isn't perfect, but not to stop at 'Looks Lethal to Pedestrians' like Dave up there, and let that be one's useful contribution.

It's got some challenges, but is not that hard if we want to solve it.


Denver's Regional Transportation District has been using racks on buses for around a decade. No problems that I'm aware of, except that the racks are sometimes full, so cyclists have to wait for the next bus or cycle. I have seen some flexible drivers let bikes be loaded inside the bus when the racks are full, which I think is against the rules. Express buses put bikes underneath in the luggage bins where I have seen as many as 20 bikes.
So in Denver/Boulder, this nice idea is still lasting (along with lots of other cities).

I did a bus-bike commute here in Portland for six years in the 90's. The bike racks became increasingly popular, and the only disputes I ever witnessed were for access to the rack! Nowadays, I just cycle the whole way, or use our light rail.

The problem with such racks is thay only hold a few bikes. When they're full, riders are allowed to bring them into the bus--if the bus isn't too full.

NIce to see this area doing this. maybe it can survive peak oil after all?

Bike-sharing programs peddled for Tucson

It's one BB, John, one good BB.

A long way yet to go ..


Enough BB's eventually turns into a buck-shot blast. :)

Alan was looking for a way to introduce cycling into an economic model. Perhaps London looked into it.
Household spending accounts for 70% of GDP in ther US. High energy hits consumers. Less spent GDP falls. (Car costs are far more than just fuel.)

Cycling 'wealth' availiable to be spent elsewhere.
Healthcare cost go down. (Diabetes, obesity)
Envirionmental economics good.
Work productivity positive.
Infrastructure damage is reduced.
Benefits on one hand savings on the other.
GDP goes up.
Personnally @.50 to .70 a mile saved times 3000 mi. yr. plus no med claims in 3 yrs. Ton of CO2 and so forth. Better returns than stocks to be sure. (I'm no economist can you tell?)

However, my guess the City of London has done some of the math and found the money to be well spent.

I've got an idea shopping carts at grocery stores that are battery/solar powered that could keep food at temp on the walk home and then through gps could return by themselves.The cart could have a top that could open and close.George Jetson

I'd be chasing that sucka into the alley with my screwdriver and pliers. MacGyver

Actually, having lugged up to twelve bags of groceries to/from transit lines to home manys the time, community shopping carts at bus stops would be a great thing, but dunno how to prevent theft. Maybe Neighborhood Watch would do the trick?

.. or get a frame-pack and/or one of those geeky folding Grocery Carts that you see all over Queens and the Bronx?

Where do people get these goofy ideas.

Here's how it is done in the rest of the urban world:

You have a market that is within a 10 minute walk.

You shop most every day.

You carry your load back in your hands. If you have more than that, you ask for delivery.

My Tokyo supermarket was located literally inside the train station. Pretty obvious, no? I bet it would take an American fifty years to figure that out.

"battery powered self-returning shopping carts"... wtf????

They have shopping carts that the wheels lock if they leave store grounds.I guess you're right it couldn't work to get boomer/shoppers back home in times of a senior moment naaa I'll just drive.But the next generation of carts could have a screen and mouse for the xyz generation.

Agreed that the "battery powered self-returning" part is ridiculous, but all over Europe, elderly people shop with small folding carts which they roll to and from the grocery store. My mom, in Boulder,Colorado, does the same, at 89 years old. She does not put much in the cart, but it works better than a backpack or her hands for her needs.

There are delivery services from all the supermarkets here in the UK.

The vans they use are rapidly being switched to electric, which works well for this sort of task.

I routinely help older people with fold-up 2 wheel rolling carts get on and off the streetcars. They are not uncommon.

BTW, does anyone know of a source for a real quality fold-up 2 wheel cart ? I have seen a few (Made in USA, Germany, Italy) but have never found a source.

Best Hopes,


I'm afraid you have missed one of the key fundamentals of growth economics. Benefits and savings do not make GDP go up. Only additional expenditures/consumption can do that. Moving from an automobile to a bicycle based society would be traumatic to growth based economics. (I'd personally see it as a good thing).

From what I can see of growth economics today is bubble on bubble with an investment in paper assets that are constantly going down in real terms. (Due largely to an invisible barrier out there, resource constraint.) While the environmental capital is being absorbed and most other real wealth goes right out of the reach of consumers and ends up in the export, producer nations.

To add to my fanciful vision. The cyclist makes some solid choices with his 'savings' like buys some solar panels or insulates his house better. These dollars potentially stimulate the local economy in real terms and help bring down the export deficit and borrowing.

China grown from the bicycle and still largely bike dependent. The US growing on the automobile and still largely car dependent. In real growth terms I believe China will do better.

I think you know where the leaps of faith and failures in logic are in your argument.

Let's get more to the point. Not only is growth finished in a post carbon world, it was never a good thing in the first place. Instead of making noises like we can face what's coming and keep the "economy" rolling, we should start telling the truth; we're all going to be a whole hell of a lot poorer in the future - and if you insist on measuring the quality of life in "things," then you're not going to be real happy.

The idea of wealthier riding a bike than driving a car is already circulating.

IMHO a nation like China will still move lots of goods and people around as liquid fuel becomes scarce. They do today and a lot of it on bikes and small underpowered FF contraptions. The US in the right circumstances becomes paralyzed.

In this post carbon world that automobiles are a sign of nation's economic health is exactly backwards. The traumatic part comes from trying to sustain the unsustainable until the last. BAU

I don't believe there will be anything pretty or organized about the transition except to the degree that we mitigate the impact beforehand and adapt well as it moves along.
The London program could be seen as an example of trying to do that. I still think the 1Billion will pay off if in no other way to help soften the blow.

I would buy a bike and start riding it on my daily commutes tomorrow -- IF I thought I would be truly safe. The road is OK, it is the idiots driving on it that I just don't trust. All it would take is one pickup truck full of antisocial morons to change my life very much for the worse, forever -- if I even survive the encounter.

This is the really big problem for us here in the USA, and I don't know how to overcome it.

One must be very proactive when on any kind of bike. On my motorcycle, I'm constantly on alert, and limit where I travel specifically due to the traffic patterns in those places. The differences are top speed and rate of accelleration. If necessary, I can kick it down a gear and haul-arse out of the way... Even so, it's terribly dangerous compared to a car. But, if weather permits, I ride my motorcycle instead. 80mpg is much better than 40mpg.

Motorcycles are different. Even morons know that motorcyclists have FRIENDS, and they might be friends that they definitely don't want to mess with.

I really would rather get a bit of exercise, and also have something I know I could use even if there is NO fuel OR electricity. I don't need speed for getting around within a small town. All I want is safety on the road - one thing that money can't buy in America.

Of course, should the cars all have to stay parked in the driveways due to lack of fuel, it would then be a totally different situation.

Something else the Mayor of London is going to do: Charge gas-guzzling cars a surcharge to drive in the city. The standard charge for any car is £8 per day (sounds like very high mileage cars will be exempt) while the rate for SUVs and large-engine sports cars will rise to £25 (That's fifty bucks for us Yanks). Here's how it will work exactly:

Vehicles emitting up to 120 grammes of carbon dioxide per kilometre will be exempt from the congestion charge.

Vehicles emitting more than 225 grammes of carbon dioxide per kilometre, as well as those registered before March 2001 with engines larger than 3,000cc, will pay 25 pounds per day.

The standard eight-pound charge applies to all other vehicles.


I think this new policy (taxing the bigger engines/heavier polluters)has something like 70% public support - including me. While primarily pitched as a 'green' tax to appeal to the climate lobby, the implications for cyclists are also good. If you are on a cycle and get hit by one of these SUVs you are more likely to go under the wheels than over the top. While neither is a choice option, going over the top has a better survival rate for cyclists. I cycle in town, and while there is no legislating for p*ss-poor driving, as a cyclist it is much more comfortable to cycle among small cars which you can see over and around (and be seen by), than 6'6" tall Chelsea tractors. Bring it on. Cycling in my part of town has more than doubled in the last 6 years as more folk use the bike for local journeys.
And - like many of my colleagues - if and when we buy new or used (pre-owned is how you quaintly like to put it!) cars, we look at that 'gm of C02/km' number for low figures, especially for company cars as the tax breaks are there to be had.

A rising scale of charges is an interesting idea, but perverse ... in my case I have a car that does less than 120gm/kilometre (so already I only pay half the road tax) but even though I have a free parking place in the city (a major cost saving at several £ per hour!) at £0.16 per mile running costs + the congestion charge it is cheaper and easier to take the all-electric intercity train at £22 if I am travellinmg alone ... but with this new scheme it will always be cheaper to drive!

Since Matt Mushalik is in a different time zone (Australia), he asked me if I would post his updated charts showing EIA data that was released yesterday. The overall graph shows how the recent lower peak compares to past peaks. In a way, it reminds me of the stock market, and its waves as it hits lower and lower peaks on the way down.

This is a graph of Opec 11 production. The new peak is far below the earlier peak. Saudi Arabia's production is far below its previous level, even with the recent increase.

This is a graph of production from increasing countries. It continues to increase, and is what is keeping the overall from dropping too much. Countries with relatively large increases in the last year include Angola, Azerbaijan, and Russia.

Hello Gail,

I hate to ask this, but this morning's radio had some kind of blurb that - yesterday - the insurance industry stocks went down on some news that the insurance companies don't have enough funds to cover municipal bonds....

Did I misunderstand?

Didn't you hear? Buffett has riden in to the rescue!!

My view is that his move will work temporarily for municipal bonds. The catch is that eventually, because of the squeeze of peak oil, defaults are going to move to municipal bonds as well, and then Buffet will be stuck. That may take a while - two or three years perhaps.

In my article Peak Oil and the Financial Markets: A Forecast for 2008 I say

Warren Buffet is starting a new bond insurer. Even if this insurer stays strictly with municipal bonds and charges higher rates, I question the long-term viability of the company. It will be difficult to charge a price in 2008 that will reflect the real risk of default five or ten years from now, when oil supply will be much tighter than today.

In this quote I am talking about the new insurer. Reinsurance of old municipal bond is likely to have the same problems.

Isn't the whole thing really a racket, then? What would happen if municipalities had to issue debt on the strength of their own credit ratings (the way they used to before someone thought up this racket)?

- Those municipalities that were not in good financial shape would not be able to issue debt. So is this a bad thing? They arguably shouldn't be adding to their debt burden anyway, just as a homeowner struggling to avoid foreclosure shouldn't be racking up credit card debt.

- Investors would not be buying muni bonds that are at high risk of default, because they would no longer go on the market. The only muni bonds that would be available are the ones that deservedly got their AAA (or close) ratings on their own merits. This is as it should be, for muni bonds are supposed to be a "safe" investment - safe enough to be prudent for relatively uninformed investors.

- Because there would be fewer muni bond issues going out with these phony AAA ratings, there would be less competition between them, and less supply to fill the demand for munis. Thus, the issuing municipalities could charge a lower interest rate (or sell at less of a discount, effectively the same thing), thus saving money.

I am pretty much forced to conclude that this monoline insurance racket creates no genuine value for the economy whatsoever. All it does is shift the rules of the game to create a few winners among those that would otherwise be losers, at the cost of creating a lot of losers among those that would otherwise be winners.

All of the above only applies prospectively, of course. We've got all of these munis that have been issued on these bogus insurance company AAA ratings. I'm not sure how we unwind that tangle without quite a few people ending up hurting. A delicate, gradual approach is probably the best we can hope for. I am certain, though, that trying to keep the status quo, BAU going is NOT the right approach.

If you believe the infinite growth paradigm, it makes sense to borrow, but it doesn't if the future is going to look less rosy than the present. Cities and other governments should have been paying for roads, hospitals, and all of the things they build out of current revenue ( and savings) not deferring these costs to the future.

I expect that cities will find that they can no longer borrow, because their finances will no longer support more debt. (Assuming it could support it in the past! A lot of their ability was fictitious, thanks to the bond insurers). Cities will still have to pay back the debt they have. Thanks to peak oil induced recession, their revenue will be going down, instead of up. There will be lots of defaults. There will be little in the way of new projects, since there will be no new financing, and any funds that are available will go to pay off old loans.

The problem would still be there without bond insurers. Bond insurers just make it worse.

There will be lots of defaults.


How many defaults of the "Parts" until the "Whole" is in default?

If the city/county/state/.. go bust...

I don't know. We have been importing huge amounts from overseas for years, without having exports to pay for the imports. It seems like at some point the merry go round has to stop. Maybe the value of the dollar will take a precipitous drop, so the amount we can buy from abroad will decline greatly.

As I think about it, it is possible that we will have an extension of "a" doesn't want to lend to "b". We already have the banks not wanting to lend to other banks, and the banks no wanting to homeowners. We gradually work our way up to insurance companies not trusting the bonds of municipalities. Eventually we could have other countries asking for real goods to be traded, if we want something, not just IOUs.

because of the squeeze of peak oil

because of the real estate bubble, not peak oil.

because of the real estate bubble, not peak oil.

Lack of economic growth is/will be the problem for the financial system - ultimate cause peak oil - immediate cause real estate bubble.

Even if there were enough people with a good enough credit rating, without growth the financial system as currently designed won't work properly.

We couldn't grow oil production so we increased debt production to keep the economy "growing." The ultimate source of the credit/insolvency crisis is peak oil.

Mish has some good comments about "Buffett's Kiss of Death"


Ambac's and MBIA's guarantees are worthless. The reason one monoline quickly turned down Buffett's "gracious" offer is because they know it would be the end of the line for them. So instead they cling to a miracle that will never happen.

Buffett will cherry pick the good debt and leave Ambac and MBIA with the garbage, it's as simple as that. Anyone who thinks this is a bailout for the monolines is mistaken.

Which is why everyone in the business of buying munis needs to let the monolines and the big municipal issuers know in no uncertain terms that they will be making no more purchases as long as it is BAU. Frankly, they would be d@mn fools to do anything else at this point. I suspect that the phone calls are being made as I write.

The time for miracles is past, now it is time to face up to reality and let this unwind in the least damaging way possible.

That is correct. This is the great monoline insurance crisis which you may have heard about elsewhere. In fact, ilargi and Stoneleigh over at The Automatic Earth cover this topic in detail regularly.

Simply put, the ratings agencies rated many financial instruments as AAA when they were far below this. The AAA rating earned the instrument favorable treatment (low premiums) on an instrument that turned out to be highly likely to default. The insurance companies get their capital to insure from the premiums so they don't have enough in capital to now cover the ongoing massive defaults that are occurring. Note that this is also increasing borrowing costs for cities and states so that they can do even less with the money they have and the cities and states were already cash strapped because of the current collapse of real estate prices. See California for an extreme example.

This is also why Warren Buffett is offering to cherry pick the best remaining financial instrument insurance deals from the near dead corpses of Ambac and MBIA.

Which, of course, means the monolines are toast. They will be left insuring only the very worst of the "big shitpile". Wall Street is treating this as a bailout of the monolines. It is not. It is a bailout of municipalities and the coup de grâce for the monolines.

The financial crisis seems to be unfolding pretty much as I laid it out in Peak Oil and the Financial Markets: A Forecast for 2008.

In that article, I said that most of the monoline insurers would see their ratings downgraded, and some would fail. (Item 1 of "What's Ahead"). I later say in Item 11 "Besides banks, many other players in financial markets are likely to see themselves in financial difficulty in 2008." The four points I make in this section are

The value of bonds and of structured debt held by these organizations is likely to decline, as more businesses and individuals have financial difficulty. Also, sales of securities during 2008 will help clarify the true value of some securities. Organizations will be forced to reflect market value, as it becomes clear.

Credit ratings of many securities are likely to decline, because of financial difficulties of the companies issuing bond insurance. (See Point 1 above.) Insurance companies in particular are likely to find that some bonds no longer meet regulatory requirements. These will need to be sold, often at fire sale prices.

Sellers of Credit Default Swaps (CDS) are likely to experience large losses. CDSs act like insurance policies against bond defaults. Organizations issuing CDSs have not charged enough to cover the type of systemic increase in risk that is now occurring. Organizations issuing CDSs are likely to find themselves with large losses. Purchasers of CDSs will often find that sellers are not able to make good on their promises.

Debt is likely to be less available, or available at higher interest rates. Organizations using leverage, such as hedge funds, may find it difficult to maintain the same level of debt, and may even be forced to sell some of their assets, because of the lower availability of credit.

I believe that the particular problem with AIG is the credit default swap problem - the third of the four items on the list. According to todays WSJ:

At issue was the way AIG valued credit default swaps, which are contracts that insure against default of certain securities. In valuing those swaps, AIG had benefited from what it assumed were differences in value of the swaps and the securities they were insuring. Now, its auditor has found the material weakness in the way the firm valued the swaps; AIG says it won't rely on the gains from such differences because market conditions have grown so murky.

I think that longer term, there are also going to be problems relating to the downgrading of municipal bonds below AAA. Insurance companies are limited on the kinds of investments they can hold. If large numbers of municipal bonds are downgraded, they may be forced to sell them at fire-sale prices. It is also possible that if regulators see the problem coming, they will do something to change the rules, to soften the impact.

Gail, I always find your finance-based projections a lot more persuasive than most of the posts here which assume collapse for some unspecified reason, or from resource shortages other than oil, again without specifics.

Since finance is beyond me, I have tried looking at resource constraints, and in our recent dialogue on battery technologies indicated that I was satisfied that zinc, at least, was well supplied.

Since there is little effort going into zinc technology I have been seeking to argue elsewhere that lead acid technology using Firefly's advanced formula would be sufficient to provide for light electric run-abouts for everyone, with limited range, and would be sufficient to ensure that most people could get to work and the shops, thus reducing concerns of collapse.

I was questioned on the availability of lead and confidently replied that there was plenty.

On further research I have not yet found data to support that, although I have also found nothing to contradict it.

I wonder what your take would be?

It's a darn nuisance that google can't distinguish between lead as a noun and verb!

I was questioned on the availability of lead and confidently replied that there was plenty.

Because of the recycling of lead now done to try and keep it out of landfills, the supply seems good.

A shift away from Lead in solder, lead in CRTs, and if the 'nano-lead carbon foam' batteries pan out - lead from lead plate batteries will continue to provide a source of lead.

The problem seems quite severe, Eric.

There seems to be good resources ultimately available, around 1.5 bn tons according to one source, although I would like to see more sources on that:
This is the US Geological Survey, 2002

However, it appears that in the West over 80% of our use is from recycling old batteries, and even given some improvement in resource use by Firefly technology and others, that will hardly allow us to move beyond using batteries just to fire up a car to running either an all-electric vehicle or hybrid on them.

Most new production these days is used by places like China and India, and they have a much smaller base to re-cycle, as industrialisation is recent.
StockHouse.com : KEEP THE LEAD IN

To sum up, even if we have enough resources to switch to a lead-acid battery vehicle technology eventually, we could not ramp up fast enough to supply the need for hybrid or EV batteries anytime soon, hence the easy switch to electric I had argued does not appear possible.

It's a darn nuisance that google can't distinguish between lead as a noun and verb!

Search on "Pb"...

Ugo Bardi is the TOD person with the most expertise in this area. He wrote an article called Peak Minerals, which said that lead production had peaked in 1986. He wrote a more recent article that mentions the amounts currently being extracted and the energy required.

Unless there is a lot of lead to be recycled, I would think we should be looking pretty closely at what Ugi Bardi's research has to say. It would seem like we would be talking about a lot of lead, to make batteries for millions of cars.

I don't really find peak arguments for minerals persuasive as a generality.

A lot depends on how much energy you have available to process material, and of course the situation in that repect does look like being constrained in the near future.

For some rare elements and certain minerals where there is a massive drop in density of resources once the best are used, it may be valid, but case by case seems to me best.

Having said that though, I am at the moment more concerned with availability over the coming decade or so, and ultimate resources aside it seems that neither lithium or lead will ride to the rescue in that time.

I was questioned on the availability of lead and confidently replied that there was plenty.

I can walk you out to any parking lot and pick you up a hundred pounds in about 15 minutes.

Or, Go to a gas station and ask if you can have the trash bucket from them doing wheel alignments.

I do it at my dealer and I got enough to last me.

You made an intelligent prediction (I assume, unless you read tea leaves ;-) ).

This situation amazes me because I've heard that some (seemingly reasonable) real estate agents are buying properties and spending money to renovate on the assumption that it will sell (at a higher price) if they put more work into it. It's as if they're blind to the inside info of their own industry. Is this (wishful delusion) the first symptom of a culture actually in collapse? The "economists" on radio and TV seem to have entered the same trance-like state of wishful delusion.

Disclaimer: Of course, this is just my opinion and may not reflect reality or any numerous sub-realities.

Nah, I think it's just the nature of the mammalian brain. "Optimism bias."

Agreed, Leanan. We're going to see optimism bias all the way down the ladder until we hit bottom.

Is it optimism?.. or just blissful ignorance?

Whatever it is, it's weird... and perversly entertaining. What else can I do but watch? If I try to explain or caution, they laugh at me.

I don't think I agree. After a short while even (most) mice figure out that it pays to stay away from cats, poisons, and traps regardless of what goodies are around.

Yeah, but in this case, the goodies have been lying around with no traps for a long time. Many of these people have never seen a bad market in their professional lives.

After a short while even (most) mice figure out that it pays to stay away from cats, poisons, and traps regardless of what goodies are around.

Actually, in some cases I've found the opposite with mice here. We have one trap, the tin cat, that is amazing. It's a repeating trap, so when one mouse goes for the bait, it gets trapped, alive, inside. It makes noise that attracts the other mice. They smell the bait, hear and see their friend, and head in the trap too. The last time I used it we ended up with four mice in the trap and wiped out the local colony.

I suspect it's one thing when the trap obviously kills the mouse, and others live to see their dead relative, and another when the trap doesn't kill immediately but lures the others to the same fate. Let's see, are the real estate agents immediately getting destroyed by buying these houses? Nope, so I expect this is a kind of repeating trap...

I'm optimistic long term regarding the possibility that mankind may learn from its mistakes.

I'm not optimistic long term that there will be enough people left to learn.

Recognize also that their are more and more pundits arguing that this is just the bottom of the business cycle. So, if the kool-aid pitcher is sitting empty on the counter, chances are you're expecting the recession to be over by 3rd quarter.

It is largely a matter of not recognizing that paradigms are shifting. They don't realize that this is part of something big that is permanently changing their world. Don't blame them for not seeing it, it is not like they are being told in the MSM.

Or it is a problem of thinking "Things are different this time", when they aren't.

We just don't know which yet.

I don't think that people can understand paradigm changes.

If the supply of houses is reasonably in balance with the demand for houses, and at least a few folks can afford a house with more "stuff", then it makes sense to add to the house.

If there are way too many houses, and the global recession that peak oil is causing assures that this oversupply is only going to get worse, then the best course of action is to sell now, without doing more than the minimal amount of cosmetic fixing up. I expect that a few will simply take out the maximum loan amount on the house Before putting the house up for sale, and walk away if the house doesn't sell. (This may only work in certain states, like California, where lenders are limited to house sale proceeds.)

I suspect that we will see a whole lot of loans (not just mortgages) going unpaid during the next decade of so, without any real repercussions to those walking away. In fact, I think the only real question is timing your own walk away to minimize the impact on your own financial situation.

You should read this one:

In Sense and Sensibility poor Marianne, dumped by the wicked Wiloughby in favour of an heiress, remarks miserably that one should judge people not by what they say but by what they do. It is a comment that is as relevant to estate agents as it is to errant lovers.

Why estate agents are selling up

In "Bond Insurance Turns Toxic for Munis as Rates Soar," Bloomberg's Martin Z. Braun details the latest.

Bond insurance sold by MBIA Inc., Ambac Financial Group Inc. and Security Capital Assurance Ltd. is backfiring on counties, universities and hospitals across the U.S., more than doubling some borrowing costs.

Park Nicollet Health Services in Minneapolis may pay an extra $5 million to $6 million this year, about a quarter of its operating profit, because interest on $375 million in floating- rate debt doubled in the last six weeks, said Chief Financial Officer David Cooke. The rate on $98 million insured by Ambac climbed to 6 percent on Jan. 30 from 3.06 percent on Jan. 2.

"We'll have to reduce our capital expenditure program, which means less equipment, less modernization of facilities," Cooke said in an interview.


Monday, February 11, 2008
Arrogance, Insanity and Greed

Or, if you prefer, AIG.

That was the news this morning.

And folks, it really is as serious as it sounds, and more.


Because their auditors are the ones who forced the issue.

That's right - their auditors.

So what does this tell us about "The Street" in general?

Simple - firms have been and continue to have poor internal controls, they continue to attempt to report horseshit, and the result is that what you're being told in "earnings reports" IS NOT THE TRUTH.

Is the impact of this material? I don't know - you tell me - it appears to be about one quarter of AIG's full-year earnings estimates!

We're covering both AIG and Warren Buffet's munibond offer today over at The Automatic Earth.

Expect to see many more auditors digging their heels in. Thanks to a recent accounting rule change, banks will no longer be able to indemnify their auditors for signing off on accounts they can't verify, making auditors responsible for accounts their accuracy. In addition, another accounting change - FASB 157 - will simultaneously make it far more difficult for banks to value their level 3 assets as mark-to-make-believe. Where observable inputs are available, they must be used in place of ubiquitous 'valuation models'. As more observable evidence accumulates, valuations are likely to plummet. Write-downs have much, much further to go.

As for Warren Buffet, he's offering to cherry pick the bond insurance business on the assumption that guaranteeing municipal bonds will continue to be profitable. That assumption seems quite suspect given the financial position of many municipalities - falling property tax revenue, investment losses in the derivatives market, crumbling infrastructure, more and more demand for services etc - but Mr Buffet must have his reasons. Of course, the loss of the munibond business would be the end of the monoline bond insurers, which would be left guaranteeing only toxic waste. They would be rated as junk in no time at all, and so would everything left that they guarantee. Needless to say, this would cause further downward pressure on valuation of level 3 assets, and result in more auditors playing hardball.

As I noted up the thread, I wonder if banks are talking about postponing foreclosures because they don't want to have to find out--and report--how bad it is getting.

There are two main types of loans out there:
1) Those held by the bank, or portfolio loans. These the banks can modify however they wish, and they are in many cases allowing borrowers to stay put for just the principal, and forgiving the interest.
2) Those held by SIV's and other exotics. These cannot be "managed" by the servicer (ie, the bank) due to IRS rules and regulations. These loans can only be modified within tight guidelines, and the Feds can only have a moderate impact on these. It would take a change in the tax laws to allow more modifications.
A subset of these exotics are those held by, eg Countrywide, and the terms of these special vehicles require that Countrywide make the regular monthly payments to the investors even if the loan is behind, UNLESS the loan goes into foreclosure or bankruptcy. In other words, if you fall behind on your monthly payment here, Countrywide has to front the money until you pay up-- so Countrwide has a strong cash flow incentive to push you into bankruptcy or foreclosure.
A couple of things which are being done to postpone the day of reckoning for many banks: the new FASB mark to market for third tier assets rule has been pushed off into 2009, and the ratings agencies are graciously allowing the monoline insurers to retain their AAA ratings in the face of absolute disaster.
The financial markets are trying desparately to allow the air to come out of this bubble at a slow, controlled rate, because an explosion would likely doom at least one of our big investment houses.
As someone once said, why do banks have to keep coming up with new ways to lose money, when the old ones work so well?
Ultimately, the only way to save these banks, and these loans, and many families, is to dramatically increase the long term income of the people who owe these loans-- either in real terms (by raising wages and/or lowering middle class taxes) or in nominal terms, by printing so much money (and increasing inflation) that everybody has enough to pay off all of their loans. We do not have the monetary ability to print money and target it to the needed population-- too much gets siphoned off by the financial class-- and we lack now the political will and ability to get more money to the middle class.

"Ultimately, the only way to save these banks, and these loans, and many families, is to dramatically increase the long term income of the people who owe these loans"

GM posts biggest annual US auto loss


"DETROIT - General Motors Corp. reported a $38.7 billion loss for 2007 on Tuesday, the largest annual loss ever for an automotive company, and said it is making a new round of buyout offers to U.S. hourly workers in hopes of replacing some of them with lower-paid help."

Unfortunately, along with the demise of unions, long term average incomes are falling. These defaults seem inevitable with a concommitant deflation of housing.

Some of the talking heads claim that we won't get stagflation for that reason. Unions no longer have the power to increase wages, and so businesses can't raise prices.

So, following olepossum's, reasoning loan defaults & housing deflation are inevitable because the income base just won't be there.

$14 an hour to work on the line at GM- that takes the real wage there back to maybe the early 50s.

In Arkansas, where I live, $14/hr is a good wage, assuming that number isn't including the benefits package. $14/hr is a very good wage for a non-technical job, such as assembly plant labor. There's a reason why Toyota is building plants in the south and the people down here LOVE IT. They get paid an incredible amount of money compared to competing employers in the area.

Durandal: That $14/hr is TODAY's offer from GM to new employees. GM is still a large employer and this resetting will tend to lower wages at other employers. Eventually the 14 becomes 11 and so on. One of the greatest achievements of the USA MSM is in convincing American workers that paying higher wages to other American workers is a bad idea.

One of the greatest achievements of the USA MSM is in convincing American workers that paying higher wages to other American workers is a bad idea.

An even better job was done programming him into thinking he is a member of the upper class.

Last year Circuit City layed off 3400 people making $25 an hour, then offered to let them fill out an application for the New $12 an hour job.

J6P thought he was the one they were talking about in all those commercials. Driving that new car thru the country/city without anyone else on the road. You know a member of the upper class, the in crowd.

He is about to find out he's a "Them".

One of the greatest achievements of the USA MSM is in convincing American workers that paying higher wages to other American workers is a bad idea.

No one thinks paying people more is a bad idea. The problem is paying people above where the market values the labor. You may see it as a paying people a fair wage. Others see it as taxing car buyers to pay a select set of people more than they are worth. The problem is that unless you can tax all car purchases equally,. people will choose not to pay the tax and will buy from those producers not struck in bad contracts.

If the U.S. can't compete with Japan, China, Europe or India in producing cars, then U.S. manufacturing should be shut down. Indians have as much right to wealth as Americans.

and iyo, do executives making 100's, 1000's times(including stock options, of course)as much as laborers amount to excess pay ?
or is it just the grunts that are overpaid ?

A few of them actually do create enough value for their shareholders to justify it. The ones that deploy their golden parachutes when bailing out on a corporation that is plunging to the ground in flames due to their incompetence -- those are the ones I really object to.

Or what about musicians or athletes? Why does it bother you that someone who runs a company gets paid hundreds of thousands of dollars, when Barbara Streisand probably make more than all but the top 10% of CEOs? Are they worth it? Why is a 20 something kid who invest facebook worth billions? Why should paris Hilton be able to inherit money at all? It is not nearly as simplistic as you try to paint it.

I would like to see workers around the world earn more, but I don't think it makes sense to try to tax car buyers to provide extra benefits to a small subset of American workers in unions. The extra money isn't free, you are just stealing from other people, who may make less and work harded than an auto assembler.

People talk about "the labor market" but there are actually two labor markets. There is a labor market for those with exceptionally valuable skills or talents or experience or pretty faces that are in high demand. Those are sellers markets, and the price trend tends upwards. There is another labor market for people that are pretty much interchangeable parts -- this includes any job where you can find more than just 2 qualified candidates, i.e., most of them. This labor market is always a buyers market, and the price trend tends downward. Competition among sellers (workers) establishes a ceiling in this labor market, while competition among buyers (employers) establishes a floor in the other labor market.

The simple fact is that if you are not in that top 1% or maybe 0.001%, you are pretty much screwed. Especially since the labor market you are in now includes China, India, Indonesia, etc., etc. It has been nothing but a cruel joke to mislead people into thinking that the reality was anything other than this.

It is a cruel joke that inflation is caused by unions asking for wage increases. Price inflation is caused either by commodity price increases, an expansion of the money supply (monetary inflation), or usually a combination of the two. When unions start pushing for wage increases, they are usually just trying to keep up with price increases that are eroding their buying power.

Crushing unions, and workers' wages in general, is TPTB's wet dream, so they try to foist blame for inflation on workers. Interestingly, I think that's one of the reasons for our current crisis: the economic elites thought they had figured out a way to both crush wages and have a growing economy: they'd turn the workers into debt slaves. And it worked, for a decade or two anyway.

I don't think anyone's arguing it's a good thing. If true, it means a lot of companies are going out of business. Like the airlines. They can't raise fares, so rising fuel prices are killing them. Eventually, there's going to be a shakeout.

As a support of your points, in all the "Hope/Help/Bailout" plans being proposed, NONE have said a WORD on increasing the wages of that $40,000 person trying to afford a $500,000 home.

Not one has said anything about a connection between the debt bubble and losing our MFG the last 20 years(is it the same rate as our national debt from 20 years ago?).

It's ALL about helping you make your payments to who? Don't walk away even if your 1/5 mill property/mortagage is only worth $250thou To help you make your payments. Not improving your condition.

As Jack stated above, what is most important to the USA guv (controlled by TPTB) is that Chindia prosper. The American middle class is seen as a problem child that just can't pull their weight.

People living beyond their means... Let's see, that $500,000 home is over 3x more expensive than my total home value, and I only pay HALF of that, which means my mortgage obligations are less than 1/6th of our hypothetical person, yet my buying power is greater. This is simply my opinion, but your house should not cost more than 4x your current annual income. Given that, this guy should have purchased, AT MAX, a $200,000 home.

However, my personal rule is that you shouldn't buy a house that is more than 3x your annual income. For this guy, that's $120k, which seems just about right to me. (However, when giving advice to people who think they have to keep up with the Jones', I suggest the 4x.)

Probably a lot more prudent to be thinking in terms of only 2X (which is true for us). You need to leave plenty of room on the downside for inevitable declines both in house values and wages.

The words I'm really still waiting to hear in the MSM: "Living within our means".

Those wages are not going to be increasing. Most people should count themselves lucky if they continue receiving wages, and if they only fall slightly behind inflation. For almost everyone, their future is going to be downward, not upwards. What we all desperately need to do is to start living within our means -- and not just our means right now, our means as they are going to be.

Until I start hearing this actually being talked about in the MSM, then I will continue to conclude that we're not yet operating in a "reality-based paradigm".

The economy can't cope with living within your means.
Reducing wages is an example of FYJ by business. It's human nature on a collective scale. They think if they lower wages THEY can survive.

What happens when all businesses decide to lower wages? What happens when everyone MUST live within their means?

Business are cutting their own throats by lowering wages.
When the consumer has to make do with their present car a year or two longer, not buy an iPod or TV or update to the latest George Foreman appliance, the retailers go broke jobs are lost, the supplier goes broke, loss of jobs, the importer goes broke, loss of jobs, tax revenue declines loss of jobs. No more money for the ironing lady, lawn mower man, flowers on Valentine's Day.

So if you begin living within your means you are assisting in the destruction of the economy.

The economy can't cope with living within your means.

This is almost a dead thread, but I must reply for the record.

Economics is the science of trying to figure out the optimal way to allocate scarce resources among conflicting, almost unlimited desires. In other words, about living within our means.

"To economize" is to figure out how to make the best use of one's limited resources, to make ends meet. In other words, to live within one's means.

Any and all national economies are and should be all about living within their means. It is ludicrous to think that they could ever be about anything else. The political and business leaders, the MSM, and the general public have all been living in fantasyland in thinking that any economy, including the USA, could very long operate in disregard to the absolute necessity that we live within out means, both individually and collectively.


In case you are blind or retarded and somehow missed the previous 50 links to The Automatic Earth, here is another link to The Automatic Earth.

In case you missed that one here's another:
The Automatic Earth

Got that ok? No? Ok here it is again:

The Automatic Earth

Thanks but if I wanted to read or discuss The Automatic Earth I would go to The Automatic Earth!

Stoneleigh and Ilari...we still love you!!!! Automatic Earth is part of my daily diet now. Awesome service you are providing. Might I ask what you folks do for a living?

I like the fact that they post the link when discussing something in a finance related thread. Does the link hurt your eyes or something?

“Somebody, somewhere, must be sitting on a vast nexus of undisclosed losses.” Is it Japan?
By twist

Losses, losses, who’s got the subprime losses? According to Ambrose Evans-Prichard of The Telegraph, it just might be Japan:


"Hey Buddy, can you spare $1000 Trillion?"

Let's see. We have a trillion.5 bbls of crude left.

What's that? $667 per bbl?

Kazakhstan-Russian Deal on Pipelines ?

Background - The Russian Empire (and later Soviet Union) used a 5' 3" railroad gauge. Most of the rest of the world (NOT all) uses standard gauge, 4' 7.5" (EU, China, USA, etc). Trains could take half day layovers as wheels are adjusted when they cross the border.

China wants an overland rail route to Europe (without this hassle). There are several possible routes for a new standard gauge RR, and Russia wanted an all-Russian route.

The EU is already working on a new East-West all freight rail line as well and hopefully the two will meet (memory vague on EU line, but Spain-France-Germany-Poland-Baltic States ?)

In a few months construction (Chinese financing much of it) will start on a Kazakhstan-Russia-Belorussia-Ukraine route.

I took two Kazakh students (MDs getting graduate degrees in Public Health @ Tulane, Kazakhstan is increased health care spending by about 12% every year to steadily build up capacities) out to Donna's (a local jazz club).

They claim that there was a "deal". Kazakhstan got the standard gauge railroad route that they wanted (it still passes through Russia) and Kazakhstan has agreed to ignore the pipelines that by pass Russia going West.


pdf warning

I noted with interest that the map @ the pdf did not match the words. It shows a rail route that turns south through Iran, Turkey, Bulgaria and the Balkans to Germany. I suspect that this was the Kazakh negotiating position. This route is longer and through many more mountains & hilly areas (BAD for RRs) than turning north through Russia, Ukraine & Belorussia (as described in the words). Perhaps a pdf production mix-up ?

"We are stronger than you think, learn more about us!"

The map's so tiny as to be illegible anyway, who knows what that route is?

Didn't know they had phosphates, interesting.

Near where I live there was a rail junction called Whiteson, where two lines (one standard, other narrow gauge) owned by rival RRs passed - but they refused to ever hook up.

Always loved that story about standard rail gauge having its origins in Roman wagon axle width - too bad it's just a story!

I think that should 4' 8.5" for US and most of world?

Yes, a typo. That 7 key is too damm close to the 8 key :-)


Maybe a source of bio-mass?

"The fireweed began each spring as tufts of hairy growth and spread across the seafloor fast enough to cover a football field in an hour."


A cheery cheers!

As usual, nature always has the last laugh. I wonder what this mess will do to the ideas about "solving" the CO2 buildup by fertilizing the oceans? Is anybody in government listening?

E. Swanson

Some observations concerning the EIA’s International Petroleum Monthly. that came out yesterday. (All data C+C)

OPEC, less Angola, is still down 1,400,000 barrels per day from their high of September 2005 though about 470,000 bp/d of this is due to maintenance in the UAE. So even with the recent surge in OPEC production they are still down almost 1 million barrels per day from their high.

World average production for the first 11 months of 2007 averages 73,223,000 bp/d. That is 594,000 bp/d below the average for 2005.

November 2007 production was still 582,000 bp/d below the record month of May 2005. So May of 2005 would still hold the record even if the UAE had been producing at full capacity.

Of the countries that have increased production since May of 2005, three countries are responsible for the lions share, 1,900,000 bpd of that increase. Since May of 2005 Angola is up 770,000 bpd, Azerbaijan is up 605,000 bp/d and Russia is up 525,000 bp/d. The world, less these countries, is down 2,481,000 bpd since May 2005.

Non-OPEC production is at 41,547,000 which is almost exactly their four average of 41,524,000 bp.d. Non-OPEC is on a four year plateau even with the huge increases in production from Russia and Azerbaijan.

As I said earlier, I think Russia has peaked and will show a decline in 2008. I Angola and Azerbaijan has a couple of hundred thousand barrels per day to go before they reach their peak. Kazakhstan and Brazil are the only other nations with any real possibility of increasing production very much but their increases are several years down the road.

We may not have hit the absolute peak yet but there is no doubt that we are on the peak plateau right now. We will never come off this plateau on the upside but we will definitely fall off it on the downside, most likely this year or 2009 but no later than 2010.

Ron Patterson

Hi Ron,

The EIA link gives a 'We're Sorry' message. Do you have the numbers for Canada, projected and current?


Sorry about that. This link will definitely work: http://www.eia.doe.gov/ipm/

Here are their numbers for Canada, January 2007 thru November 2007 in thousands of barrels per day, C+C. I don't have projected numbers.


Or you can find the same numbers, plus those back several years, here: http://www.eia.doe.gov/emeu/ipsr/t11a.xls

Ron Patterson

Very helpful numbers, thank you. I agree with you about Russia. Anyone who hasn't read Stuart Staniford's outlook for Russia (and the articles linked to in that piece) should give it a look: http://www.theoildrum.com/node/3139

Stuart, Westexas, Darwinian and many others have expressed concern that Russia is very close to peak and may begin to decline soon. The immediate effect is probably not an issue for Russia itself as Russia's economy seems to be booming. But the impact on the global export market will begin to be felt as soon as decline sets in, even in a recession. Heck, the immediate effect for Russia is likely to be even better, as per the ELM Russia should make even more money on slightly less oil. But here in the US and also in Europe, it's going to hurt, and fast.

This is an excerpt from a comment I made on my first post on net exports, from two years ago (January, 2006). My data analysis was based on Khebab’s work. The really interesting question for Russia is how fast the decline rate will be, if they do show an annual decline in 2008. If the mathematical model is close to being correct, the decline rate could be pretty high. Note that my 11% number the following comment was pretty much a WAG. Khebab has done some much more detailed work in our recent paper on the top five, and he is showing a projected initial 10 year decline rate of -5.1%/year plus or minus 2%.


The Hubbert Linearization (HL) method--using only data through 1985--predicted that Russia would produce 61 Gb in the 19 years after 1985.  In reality, Russia produced 57 Gb (through 2004).   Actual production was 93% of predicted.  As I noted above, I think that it is significant that actual production is 4 Gb below the HL prediction, given that everyone is so mesmerized by the recent increase in production.  . .

. . . we could actually see a year or two of rising production before production reverts to the curve (assuming that it will).   For what it's worth, my bet is that Russia will start a steep decline no later than next year.  If Russia is going to revert to the curve, if it started right now it would probably require a decline rate of about 11% per year. . .

Thank you, I never saw this article of yours and Khebab's.

The North Sea downslope post-peak point of view isn't particularly encouraging ...

The UK is now producing about the same as it did way back around 1978


Norway last produced at these levels back around 1993!

Ho-hum! :-(

And KSA is now down -9.1% from its crude oil peak in 2005!

Still, we know that 1,000,000 barrels of that decline was almost certainly voluntary. Sadad al Husseini's stated numbers match up with the comments noted above that they have between 1 and 2mb/d of spare capacity and are planning/hoping to get to around 12.5 mb/d. I'm fairly confident they can do this excepting some unexpected geological problem.

The real issue is this: why pretend this supposed cushion is meaningful? It's equal to half a year of world-wide depletion. It's a joke. For KSA to trumpet that they have been providing spare capacity for "a very long time"[sic] is misleading. That buffer has shrunk down to being basically irrelevant except in the very, very short term.

Still, we know that 1,000,000 barrels of that decline was almost certainly voluntary.

We know that just as well as we know they have 264 billion barrels of proven reserves with another 200 billion barrels yet to be found. We have their word for it, nothing more. Saudi is still 600 kb/d below their peak of the summer of 2005. We will know how much of this, if any, is voluntary in the months to come. There is strong evidence that all other OPEC nations are producing flat out because those not in decline are producing at or near their all time high. I consider it very likely that this is the case for Saudi Arabia also.

Ron Patterson

Sorry, but you seem to be discounting my supporting points: I am not relying on Aramco, but al Husseini and the myriad analyses and comments about Aramco cutting production last year by 1mb/d. They have at least that 1m less recent increases. The story posted above has the ring of truth to it: they have around 11mb/d capacity and are working to get to 12 - 12.5. This matches Husseini's comments from October. Bolstering Husseini's comments is his statement that OPEC reserves were overstated by 300 billion barrels. This pretty much equals the phantom rises in the '80's. He also has stated doubts about production ever getting a lot higher than today. (I forget if his target was closer to 90 or 100mb/d.)

These statements have a lot of internal consistency supported by external data and analysis. That is a hallmark of truthfulness. I think the KSA has the smaller capacity and is working on the higher limit of 12.5. As stated previously, I also think these numbers are relatively irrelevant and are basically an admission of a near-term peak. Whereas a neophyte might see, "Ooh! 3M more barrels a day!" an aware person sees, "Hah! Equal to a measly year of depletion!"


al Husseini is in a difficult position regarding Saudi Aramco. In any case, we can argue about voluntary versus involuntary forever. The bottom line is that Saudi Arabia is going to show back to back annual production declines, with an accelerating net export decline rate. We shall see what happens in 2008.


If China's carbon usage keeps pace with its economic growth, the country's carbon dioxide emissions will reach 8 gigatons a year by 2030, which is equal to the entire world's CO2 production today. That's just the most stunning in a series of datapoints about the Chinese economy reported in a policy brief in the latest issue of the journal Science.

If I remember correctly, Deffeyes said the World doesn't have enough fossil fuels to meet worst-case CO2 scenarios. The "Deffeyes Protocol" will win out where the Kyoto Protocol failed.

IT'S TRUE!... There IS a bright side to everything!

The Daily Telegraph, 11 February 2008


Street lights in suburban areas are to be switched off after midnight as part of council plans to save energy.

And I'll be interested in seeing the crime rate reports.

I think a greater deterrent is motion-sensing lights. If a light is on all the time, it might prevent a criminal from approaching, but if a light comes on when they approach, it's essentially a broadcast to the whole area that someone or something just approached that light.

LED based lights to allow for instant-on, combined with motion detectors that activate lights might be a potential solution. I recently saw such a thing in the frozen foods isle at my local Walmart. The lights in the freezers came on (LED based) as I rolled my cart down the isle. It was quite pleasing.

The idea of leaving things on all the time is absurd, such as escalators... A motion detector that turns the things on when people are near makes more sense.

Oh Look! Progress!
Hydrogen Fuel Initiative: DOE Has Made Important Progress and Involved Stakeholders but Needs to Update What It Expects to Achieve by Its 2015 Target.

And in case you just wanna read the hype:

Yibal, Saudi Arabia, and Berri Watering Out

The largest field in Oman was the Yibal field. Yibal was operated by Shell Oil. In 1990 horizontal drilling was begun to try to increase oil production as vertical wells were filling with water. By 1997 oil production peaked at about 250,000 barrels a day. Within six years oil production was about 80,000 barrels a day with water production of 700,000 barrels per day. The decline rate was alarming. Water cuts rose to more than 90%. In 2004 Shell downgraded its total oil reserves by 20%, and its Omani reserves by 40%.

Water cuts were rising in north Ghawar and horizontal wells were drilled similar to Yibal. A new water treatment facility was installed at Shedgum in 2003 and new water injector wells were drilled in Uthmaniyah and the south end of Ghawar where new projects were producing oil to offset declines elsewhere. Deep gas deposits below South Ghawar have been tapped and condensate production has been increased. Ain Dar has been declining in production in spite of drilling efforts there.

The fourth largest oil field in Saudi Arabia was the Berri field. A recent report indicated that if there will be expansion of new wells into the producing formation in order to boost production, they might find 50% water cuts upon contact. A previous statement by a Saudi Aramco official indicated decline rates of 5-12% in its mature fields.

A decline rate of 12% will yield a fifty percent drop in production in less than five years.

100,000 - 12% = 88,000
88,000 - 12% = 70,560
70,560 - 12% = 62,093
62,093 - 12% = 54,642
54,642 - 12% = 48,085
48,085 - 12% = 42,315
42,315 - 12% = 37,238
37,238 - 12% = 33,770

Saudi Arabia has a number of smaller fields, probable recompletions in less productive strata of existing fields, expensive EOR recovery alternatives, etc. to offset declines for some time to come. In 2007 Saudi Arabia indicated plans for peak spare capacity in 2009. There are not enough projects in the pipeline to take it to 15 mbod capacity, nor have they gaurenteed 12 mbod production. Some spare capacity in heavy oils was mothballed as a reserve for the future.

Is this from an online article? Where did you get this information? Link?

Replacing ourselves

Worrying about the declining birth rate can seem like standing against the tide. It's a worldwide trend with complex causes. It is, however, not irreversible.

The birth rate in the United States recently hit a 35-year high. For the first time since the early 1970s, women there are finally having enough children to replace the population.

That replacement rate is 2.1 children per women. In Canada, each woman will have, on average, 1.5 children. Most industrialized countries are in similar situations; the United States is an exception. But if the U.S. can reverse a decline in fertility, perhaps Canada can too.

The recent increase in US birth rates is a disaster ! Hopefully soon overturned by the Bush Recession.

Best strategy may be a quick plunge down (to say 1.3 fertility), until absolute numbers start declining, and then a rise to 1.7 fertility to minimize the distortions of an overly old population ad upside down pyramid.

All with minimum net immigration.

The days of nations needing more cannon fodder are over. Lower population reduces almost ALL of our other problems.

Another solution is, of course, reduced life expectancy.

Best Hopes for Lower Fertility,


I've been noticing more and more of this sort of coverage in Canada (and elsewhere) and it has me very concerned because it may very well lead to politicians talking fecundity and handing out big incentives for 'making babies.' There are already such programs popping up in Europe, and, if memory serves, in la belle province (Quebec).

Forget hyperinflating the currency, the easiest way to pay off debts is hyperinflating the population... at least in the twisted minds of economists.

IMO the easiest fix (which is why it is not mentioned) would be for the USA to sell permanent residency permits. A guesstimate is that an opening price of 200 thousand could easily net 10 million purchasers, bringing a quick 2 Trillion dollars in. Then I would take that 2 Trillion and plow it into a massive wind, solar and nuclear program. The USA has still got strengths (mainly a fantastic piece of real estate)- the management is terrible.

You would, but the piranhas would simply stuff it in their pocket. That class doesn't think the management is terrible; it suits them just fine. I sound like one of the those creepy wingnuts but I've been forced to conclude the US government is largely about looting. Every industry has turned into a racket at the point of contact with the Treasury: the military, health care, insurance, finance, education, prisons, trade.

cfm in Gray, ME

Dryki: Good point.

You nailed it. The Kleptocrates have suceeded beyond their wildest dreams,but guess what?The goose they just had for dinner{the middle class}was the one who laid the golden egg.Watching them fight for the scraps and the bones of our society as it collapses will be great sport.Like starving dogs fighting over road kill.To quote Heinline's Laz.Long..."The trick is to live through these things"

.... if memory serves, in la belle province (Quebec).

Your memory is correct. In la belle province, it's known as revanche des berceaux or revenge of the cradle. Historical context aside, there are serious and no doubt valid concerns over Québec's rapidly aging population, ex-migration of young adults and low birthrate (second only to Japan) and the corresponding social, economic and cultural implications this would entail. Over the past couple of years, generous provincial incentives have helped to decelerate these forces, but the problem is still perceived as troublesome.


Lower population reduces almost ALL of our other problems.

I don't think so.

Did you see the recent WaPo article on Japan's fundamental economic decline?

For Japan, a Long, Slow Slide: Declines in Productivity, Population Combining to Stifle Economic Growth

TOKYO -- As the United States frets noisily about a recession, Japan is quietly enduring a far more fundamental economic slide, one that seems irreversible.


Japan's slide relative to other major economies is not a tabloid tale of suddenly squandered riches. It is rather an insidious petering out of growth, productivity and innovation -- and of political will to stop the slippage.

The slide has dovetailed with another quietly insidious crisis -- the petering out of the population. Japan has the world's highest proportion of elderly people and the lowest proportion of children.

I'm not saying that population growth is good. But a slowing, aging, and finally, shrinking, population is not a silver bullet.

I think you missed a fundamental point in the argument - economic growth is not the unqualified good that the article you site assumes.

Also they were measuring the wrong metric, TOTAL GDP and not per capita GDP. Shrink population -1%, GDP flat = +1% in GDP person (and less crowded as well).

Less demand for new infrastructure. Next round of expansion for Tokyo subway is EXTREMELY expensive, but planners are already noted that current overcrowding will abate as the number of workers decline. So a major cost is avoided :-)

Add another 1% or 2% to per capita growth from long lived infrastructure that does not need expansion. Water, sewer, schools. roads, electrical transmission, airports, roads, urban sprawl, are all avoided costs with a declining population.

Declining population is GOOD !


Conventional wisdom says world population will top out at about 9 billion in 2050. So how does GDP growth continue after this, if every country needs a growing population in perpetuity...?

how does GDP growth continue after this, if every country needs a growing population in perpetuity...?
GDP or GDP per person?

If it's GDP per person I can see how it can be done quite easily.

What next round of subway expansion?

As far as I know there is one more subway line underconstruction and then no more planned after that.

Besides, even though the population of Japan as a whole is shrinking, it is growing in Tokyo. And more importantly it is growing in the Great Tokyo area (burbs) and it is that growth which is overwhelming the train systems specifically regional rail (not just the subways which only make up a tiny part of the total rail system).

So with Japan you are getting a greater demand on infrastructure with a declining resourse base.

I suspect if we ever abandon the suburbs like you want, we'll see this pattern in every major city.

I am aware (via Leroy Demery, the foremost authority on Japanese Rail) that the planners looked at what is required for another round of expansion (currently finishing up (finished ?) 4 tracking a 2 track subway and building a section of "ring" subway) and decided that ridership will fall about the time they finished. The migration to Tokyo will slow (quite frankly rural areas have been pretty depleted of 20 y/o from what I have been told, the children of the remaining few will be needed for farming & local support activities), fewer children will grow up and enter the workforce, and more will retire and stop riding the subway at rush hour.

Looking forward to 2030, almost half of the workforce will have "turned over", almost half retired. Children born this year and in the next few years will have entered the workforce. Look forward to 2055, and the children of the children born this year will begin to enter the workforce. If fertility does not increase, the numbers will shrink even more.

The decision by the planners to stop further expansion of the subway system seems to make sense to me from a distance.

I do not know about the regional rail expansion plans.

Subways are "long lived infrastructure".

Best Hopes for Japan,


Are you refering to the Fukutoshin line?

Do you have any references to falling ridership? That line is scheduled to open in 2012, and I can tell you from personal experience it is badly needed. That segment of Tokyo has 3 major centers (Ikebukuro, Shinjuku, and Shibuya) and only 1 very overloaded train connecting them (the Yamanote line). I can't imagine a ridership problem there.

Which line are they 4 Tracking?

Train expansion in Tokyo is done. Line number 13 (Fukutoshin) was planned in the early 70's and there's nothing else in the pipeline beyond that. There is no "next round".

My memory for Japanese rail lines is limited. But I vaguely remember that the last all new line will take pressure off of Yamanote.

I do not recall the 2 line track being 4 tracked (it may be complete by now). It was, per vague memory, a early subway line.

The drop in ridership is in future decades, shortly after a next round of expansion would have come on-line.

I was told that there were studies of "what next" and the costs were VERY high and ridership was expected to fall so they did not add anything to the pipeline.

Do you really think that the Japanese would cease planning for the future of a vital public service without a good reason not to ?

BTW, when is the working age population in Japan expected to peak ?

My inference from the statistics in about now. The largest age cohort was those born in 1947 to 1949/51 and the second largest those born in 1971-74. Those born in 1947 will soon retire# and stop riding the subway at rush hour every morning. And there are twice as many 1947/8/9ers as there are eighteen to twenty year olds entering the labor force (and rush hour subway riding).

The peak absolute population of Japan was 2004, with a drop-off from 127.77 million in 2006 to 115.22 in 2030, 105.7 million in 2040 and 95.15 million in 2050.

In 2006, 65.5% of the population was "working age". In 2050, only 51.8% of a much smaller population will be working age.


By 2040, there should be plenty of elbow room on Tokyo subways and within a decade there may be a noticeable decrease in crowding.

Best Hopes,


# My understanding is that the official retirement age is 60 in Japan, but most shift to lower wage, fewer hours work till truly retiring at age 70 or so.

I suspect if we ever abandon the suburbs like you want, we'll see this pattern in every major city.

Unlike Toyko, most of the little Urban Rail in the USA could carry 2x, 3x, and even 10x the existing ridership with modest changes (more rolling stock, bigger power supplies, staggered work hours) to moderate enhancements (longer platforms, adding 3rd tracks to enable express service).

If built for expansion from the beginning (allow for longer platforms and 3rd tracks in the original design, make allowance for more grade separation in the future for Light Rail, use wider rail cars for new cities, etc,) additional costs would be minor (say +5% to +10%) but it would save major $ and time later.

Many more will bicycle to work than now, and walk to shopping.

In my USA-2034 scenario, I noted that a quarter of Americans would stay in Transit Suburbia, down from half today.


Best Hopes,


The real question: Is "Japan's fundamental economic decline" bad for Japanese, present and future? I think the answer is no as far fewer resources will be available for the populace. This is vital as Japan is utterly dependant on massive resource imports. Planned or not, declining per capita resource use will be a future reality.

It sounds like Japan is rediscovering the cultural roots of sustainability. Now if it can actually bite the bullet on consumption...

Now if it can actually bite the bullet on consumption...

Ha! That's funny.

This attempted connection between population growth and economic growth is mega-stupid.

One of the lowest-growing populations in the world is Russia, which also has one of the world's fastest-growing economies!

To think that a supercrowded place like Japan -- which imports about 70% of all food by calories -- needs more people is gaagaa.

What "needs more people" is the Social Security ponzi scheme!

There is no connection between economic growth and population growth. In fact lower population growth is often necessary for economic growth, witness China.

The problem in Japan is not so much the low population growth or the number of old people as it is that Japan produces no oil or ethanol. Nearly all liquid fuel must be imported and paid for out of Japan's foreign earnings. This puts a strain on growth. I believe Japan is the model for the future of the U.S. if we do not increase our energy production. Unlike Japan we have resources of oil still and lots of land. Japan is leading the way into the Post Peak Oil world and we would be smart to pay attention to what happens and learn from them.

OT - Has the Sumatra thing been discussed? If so, would someone direct me to a link?

If you mean the supposed oil discovery...a link was posted the other day, but there hasn't been any significant discussion. There's really not much to go on. Just a couple of articles that didn't give any details. I suspect they are being over-optimistic, to say the least.

Thanks, I stumbled across those same links.

I assume the journalist who wrote that article either misplaced a decimal or just has no idea what s/he's talking about. I mean if 370 bln barrels of 'hydrocarbons' were actually found you'd think it would get a little more play in the media.

You know, considering the hoopla surrounding the ~8 bln Tupi find.

Not much to go on, that's for sure. I figured if anybody would know anything, it would be this bunch. Always the rumors. Deep, deep, water, methane on Titan, they don't miss a trick. Strangely silent on this one though. There is no denying that there is oil around Indonesia, the problem is that 370 Gb is an outlandish claim. Every oil company on the planet would be vying for a piece of that action, even if it were only a tenth that large. Maybe they are, that's what has me wondering...

Concerning the Simmons link up top:

Saleri says he’s convinced technology will help revive aging reservoirs all over the globe, and world oil production won’t hit peak until well after 2050.

In other words, “technology will save us.” That pretty much says it all. That is what Saleri believes, that is what CERA believes, that is what the EIA and the IEA believes and that is what all cornucopia believes. Nothing to worry about until at least mid century. So party on dudes, and ignore all those nuts who tell us oil is very near the peak or even there already.

Once I saw that quote by Saleri, I knew exactly where he was coming from. To him it simply doesn’t matter what the present water cut of Saudi fields are, or it doesn’t even matter what the rate of decline, technology will fix everything.

Simmons is correct when he says: “is so unbelievably scary you can’t believe it.” Be afraid, be very afraid.

Ron Patterson

Replace the word "technology" with "Oedipus, the King."

OtK was appealed to by the citizens of Thebes to be their savior: after all, he saved them from the Sphinx, so why couldn't he save them from plague? All he had to do was remove the "pollution" from the land, that is, find out who killed the previous king.

Now fast forward to the scene where Teiresias (the prophet) tells Oedipus:

"YOU are the land's pollution!"

Oedipus: Moi?

There you have it. The thing we appeal to is the very thing that is at root the problem. "Technology" is just another way to USE ENERGY.

(Sophocles wrote documentaries.)

Those Greeks!

They had everything figured out 2500 years ago or more, and they didn't fail because of lack of petroleum.

No one listened to Teiresias or Cassandra then, and no one listens now. Fast forward to Pogo, who is just the coda to the Human Symphony: --"We have met the enemy, and he is us."

Seems like a great idea for a PDQ Bach event.

They had everything figured out 2500 years ago or more, and they didn't fail because of lack of petroleum.

did they figure out a way not to end in tragedies? what's the script for sustainability of the mortals?

Bendz, I think your target is too vague.

It's like saying "Kings" are the poison, not just King Oed.

What do you include in 'Technology'?

Scissors? Printing Presses? Sewing Machines? Bucky Tubes? Snowmobiles? Gas Centrifuges? (Trick Question)

You're a writer, Details! I need Details!


"You're a writer, Details! I need Details!"

Nope, not anymore I'm not. Over that.

ok. Ummm..
Money, I need Money!

(Sorry about the USM events, btw. My wife is at Muskie.. crossing fingers for her job security)

Best, Bob

(Back to working on some handcranked, solar-assisted technology.. and crossing fingers for my own job security..)

Imagine an alcoholic sitting with a barrel of wine in front of him. Suppose he starts saying to himself, "Wine isn't bad for you if used in moderation. Why, they say small amounts of wine are even good for you! It won't do me any harm if I take just one little drink..." Well you know what is going to happen. Never forget that the human race with technology is just like an alcoholic with a barrel of wine.

--Theodore Kaczynski (AKA "The Unabomber")

I guess you're being cute.. but do you believe that? That 'technology', in whatever form you define it, is simply an addictive substance and we have no choice but to become winos around it?

Do you enjoy the occasional beer? Are you a wino, or a wino-in-the-making?

Do you have a computer? Does this make you a 'sinner'?

I guess moreover, do you think that there is such a thing as Moderation, and do you exemplify any forms of moderation in your own life?

Is writing and reading a form of Technology, and should we get rid of it? What about learning second and third languages?

Sincerely having a 'no sense of humor' moment, except for the absurdity of being thoroughly 'climbed' by a little girl while I try to form these thoughts. THAT must be a technology!


Much of our technology was first developed to solve problems of complexity, and then continually refined to produce new technology to "solve" the problems of old technology, without ever understanding the underlying problem. This understanding was impossible in the past, because of complexity.

As if 'Technology' as a term isn't vague enough, you are trying to make a point that conflates 'complexity' into it as well.

Apply this to something concrete that you're thinking of. It can be stretched in far too many directions to have any meaning.

"Much of our technology.." You might as well be saying 'Lots of things..'


From Dilbert:

"I did my part by reading about virtualization in a trade journal. Now you do the software part."

dilbert link

One more reason detest the suburbs/ exurbs: too many snow days!

School is called off here again due to snow even though there's only around an inch and a half. In my neighborhood everyone lives within walking distance of the local elementary school. we could put on our boots and walk the kids to school but bc/ there are so many persons living in exurban and rural settings in our school district and the roads are felt to be unsafe for school buses (very hilly around here) the entire district is called off. It is impractical to salt or clear all the roads since a mile stretch of road might only contain a couple households with school-age kids. It would be one thing if the people living in the hinterland lived there for some reason that's practical and helpful for society (i.e. farming, mining, forestry, etc.). But unlike in the past, today these people live there as a lifestyle choice which is to say they live there because- as they put it- they want to live somewhere where they never see their neighbors.

Where I'm from, Ottawa [that's Ontario, not Ohio ;)], things are setting up for one hell of a clash between the downtown population and the 'burbs. Our mayor, who was voted in almost entirely by the outlying communities, has effectively waged war on downtown dwellers and business owners by setting us up for massive property tax increases and service cuts and simultaneously (by trashing light rail plans and increasing parking rates) making it totally unattractive for the 'outlanders' to come downtown. Also, on that note, urbanites pay by far the lion's share of the transit tax because 'that's where all the buses are,' but if you live downtown already, what the hell are you taking the bus for? Increasingly with the gutting of downtown, people in the core are driving out to the 'burbs to do their shopping and then driving back only to pay through the nose for parking... it's so backwards it's infuriating.

At the same time, suburban property taxes are set to lower considerably, in spite of their existence forcing the city to spend huge amounts of money on snowplowing and extending bus and utilities service further and further out into the hinterlands.

There's already a sizeable movement from the rural areas outside of town to de-almagamate from the city (it was formerly made up of ~5 burroughs), but I think increasingly it's the core that are going to be forcing the issue.

Yes, and these are the same people who will complain about subsidies for public transportation without realizing how heavily their living/ driving arrangements are subsidized, how their children's schoolbusing is subsidized, etc., etc.

Not everywhere are they too generous with snow days. I heard today that Oswego, NY got 3 feet of snow yesterday.

Schools ran only 2 hours late today. I guess they must have snow removal down pat there.

I remember the Blizzard of '66 when Oswego got 88" in 24 hours or so. Lived in Syracuse myself at the time.

Maybe the school is closed because not enough teachers can afford to live close to the schools in these high priced suburbs.

BREAKING NEWS (seriously):

The Swedish government says no to the russian Nordstream gas pipeline across the Baltic Sea. The pipeline were to cross the Swedish economic zone, and a service platform were to be placed within sighting distance from the Swedish island Gotland. The service platform would be manned by russian military on and off. The permit submission was returned without being sent further to relevant authorities, as it was "frightfully incomplete", including not having any alternate paths, including onshore, no mapping of WW2 ammunition dumps and much more.

I have no english source for this. The text above is my own. Swedish source can be found at


Now, when will russian Backfires "unintentionally" stray across Swedish airspace to make a point vs the almost completely disbanded Swedish armed forces? This week? Next month? Time will tell.

And will the EU bitch-slap the Swedish government for delaying a pipeline to Europe, that doesn't pass through countries that Russia wants to excert pressure on?

Re Nord Stream story in DN. "No english source" :
Story here : http://uk.reuters.com/article/oilRpt/idUKL1257921820080212
And Nord Stream website here: http://www.nord-stream.com/ On the website there is a detailed map of the routing.

Regards /And

Exerting "pressure" by not having to pay transit fee extortion. Only in the west does such "logic" sound serious and not retarded. The more the EU plays master of the universe wannabe, the less chance it will have of meeting its gas needs by 2015. Basically, Nord Stream gas is going to be needed by Russia before 2020. The attempt to exert pressure on Russia by torpedoing Nord Stream is equivalent to shooting one's self to spite somebody else. And to pre-empt the knee-jerk refrain about Russia depending on gas and oil exports, do some research into what drives Russian GDP growth. Hint: it's not fossil fuel exports.

Good for Russia. Germany recently has been acting as if it's Russia's problem to supply Germany with gas. Russia gets way more foreign currency then it needs (thus third largest foreign reserves). If this will allow Russia to decrease gas sales it will be great for Russia. Gas is more valuable (long term), then foreign currency reserves. Some of the gas will probably go to China (it agreed to pay European prices for it), other will travel through South Stream and it would be best to save the remainder. Or at very least build gas liqufication facilities and sell it only when price becomes extremely high.

Now Germany will either have to put enough pressure on Sweden to accept this pipeline or prepare for huge cuts in gas supplies in the future.

Russia's previous fossil fuel export dependence was similar to that of Venezuela. The revenues would never reach Russia. Thanks to "petrotyrant" Putin this racket has been put to an end (mostly). At the same time under his "tyranny" the GDP has diversified enough to be driven by growth in other sectors (e.g. construction). The former recipients of the siphoned cash as with the current crisis around Venezuela are fuming mad.

Production has slowed along with investment, forcing Bolivia to renege on some of its export commitments this year. But foreign governments, often in the form of state-owned companies, have jumped in to resuscitate the energy sector.

The reason is simple: They can't afford not to.

Of course if Bolivia decides to seize those investments in a few years, a certain segment here will cheer and say those investors got what was coming to them because of the historical wrong-doings of Coca Cola and Fruit of the Loom.

And when the US of A government seizes property as part of a 'national emergency' - will you post to mock from England?

Oh, and you forgot Dole....I'm sure Dole did something wrong..

There's a significant new trend of national institutions outside of the West helping each other out, with credit, resources, protection, and technological expertise. It seems to have started after the disaster caused by the IMF in the Asian credit crisis. Basically, the rest of the world is sick of us, and now they have the money to tell us to go to hell.

I don't claim Chavez is wearing a Halo for his actions, but sometimes the writing has been on the wall for long enough so companies should realize they are investing 'good money after bad', or putting their seeds into tainted soil, and without imperial backing, that hedge might well tank. (Those weren't supposed to be puns.. just misplaced metaphors.. or is there a difference?)


(Let's not forget the School of the Americas and Papa and Baby Doc.. it's a small third world, after all!)

I'm not going to do that, but I am going to say that if anyone jumps into a foreign investment like this without carefully considering up front the possibility of their assets being nationalized, then they have no business making those types of investment decisions.

WNC: There is a flip side to that coin- if the USA is going to freeze bank accounts every time a political dispute arises, foreign investors need to factor this into their decision making also.

if the USA is going to freeze bank accounts every time a political dispute arises, foreign investors need to factor this into their decision making also.

The USA did not freeze anything, Exxon Mobil had their accounts seized via the court system. The US government had nothing to do with it. And it was not a political dispute, it was a dispute between Exxon Mobil and Pdvsa about the illegal seisure of property. Look at it this way, Exxon Mobil invests billions in equipment in Venezuela. Then Pvsta suddenly takes it away and offers them pennies on the dollar for their property, take it or leave it.

Companies will be far more likely to invest in foreign countries knowing that the US court system will do everything in their power to protect their investment from illegal seisure. On the other hand if the court system declined to do anything, and let Pdvsa simply take, without compensation, their equipment, that would definitely put a chill on foreign investment anywhere.

But you are correct, foreign investors need to take that factor into consideration. And from what they saw, the courts protecting their investment, they will be far more likely to invest than had those investments not been protected.

And it was not just the US courts that acted:

It also got courts in the U.K., the Netherlands and Netherland Antilles, a tiny Caribbean nation, to put a global freeze order prohibiting the Venezuelan company from selling its assets.

So if this pisses you off Brian, then get pissed at the U.K., the Netherlans and Netherland Antilles as well. They wish to protect foreign investment as well.

Ron Patterson

They did not have their accounts seized. They had their assets frozen. They can't sell them, transfer them, etc., but they haven't lost them, as the term "seized" implies.

Ron: I doesn't piss me off in any way-I was just making the point that investing in any country (Venezeula or the USA) has some risks. Don't you remember Hank Paulson's trip to China maybe six months ago trying to hawk crap subprime securities? If Hugo was doing something like that you would be labelling it as "economic terrorism". Cheating foreign investors or seizing their assets doesn't help the future flow of investment capital-on this one it appears that the USA and Venezuela have something in common.

First, US courts didn't do anything, not one of them. Exxon stated it found that it would be impossible to get an injunction under US law. That should be plenty clear: no going after Citgo US property, for instance, it can't be done. Nobody was home in the White House or Congress either.

PDVSA has offices in the countries mentioned (and for pete's sake, the Netherlands Antilles is not 'a tiny Caribbean nation'), that's why these courts were chosen. The judges assessing the case, and reading the letter of the respective laws, had no choice but to accept to proceed.

Nothing to do with "wishing to protect foreign investment'. Just a case -likely deceptively- filed as a dispute between businesses with offices within the same jurisdiction, which have to be accepted and handled according to local (business) law. Yes, local law, not international law, and not some sort of arbitration. The latter has long ago been filed by both Exxon and Conoco separately. Exxon's latest moves indicate how much success they expect from that arbitration.

This does not mean that there is any chance these judges will come to an actual judgment, for one thing because PDVSA of course did not seize anything, the Venezuelan government did, and sovereignty is an issue that is not covered by Dutch or British business law, and never will be.

If any of the judges is fool enough to let this go to court (fat chance), Venezuela will simply argue that they offered fair compensation, and no judge will tell a foreign government that under his law they are wrong in their assessment of "fair".

Moreover, if I have a sharp lawyer, I can have -all or some of- your assets frozen tomorrow morning, pending assessment of my argumentation for demanding to do so. Not easy, since I don't even know you, but not impossible from a legal point of view.

It is also important to note that the US government itself, as well as the other oil companies operating in Venezuela, Statoil, Total et al, have publicly and explicitly distanced themselves from the Exxon filings. Remember as well, that neither Exxon nor Conoco would have actually lost money by accepting the Venezuelan conditions, it would merely have taken longer to recuperate their investments. Hence, they have no case in any court of law; profit expectations are far too vague a principle.

As I earlier wrote today on The Automatic Earth, we can just sit and wait for a court in Caracas to judge against Exxon. Then you will have a Mexican stand-off, since no country's laws take international preference over another's.

*clap* *clap*

As well they should. The stability and safety of the US is considerably over-rated right now.

Bear in mind, in Chavez vs Exxon, it was a forced state buyout, not a simple taking. Perhaps that violates our laws, but it's not our country. One can debate whether the amount was reasonable. That's not the angle Exxon is taking.

Beyond that, why shouldn't the investors lose out big time? They are the ones profiting by strip mining the planet. They are the ones profiting by not settling the little detail about the Valdez. Business As Usual is the problem and the whole idiom of investing for profit everything else be damned is past due for the trash heap. The sooner we crash the better.

cfm in Gray, ME

Yeah, who the hell wants a pension anyway?

You do know that that is who it will hit, don't you?

My pension has been discontinued, effective 3/31/08. And I don't work for Exxon. Anyone who thinks that any corporation is going to continue pensions given recent legal changes and the economy, is just fooling themselves.

Pension...what's that? (jk) I've only known the retirement casino (401K) all my life. I keep wondering when it might be best to cash out early and take the penalty. So far, and I've invested pretty conservatively in my 401K, I'm down 3.6%. My company has done a cash balance contribution every year since I've been there (8 years). There is talk of discontinuing that.

They'll be coming after the pensions for any reason they can come up with. Look at the Airlines for the business model.

Is this an argument for turning a blind eye to Exxon's abuses? It makes as much sense as 'Fight them there so we don't have to fight them here.'

Internalized Fear Tactics -

Obey your Nightmares.

Forget pensions, the future is euthanasia at 60. If TSHTF in the next 10 years I will attempt to save my own skin (I'm 31) by appealing to the 15-30 year old demographic and blaming everything on the baby boomers and their parents. I mean really, whose fault is it that we have embraced such an unsustainable system? I shall be Lord of the Flies!

Since Exxon is a descendant, the most criminal descendant, of Rockefeller's old Standard Oil monopoly, I have to ask if you think Teddy Roosevelt's crusade against SO was theft. If we held Nuremberg trials for corporate crime, SO and SO-Spawn would have quite a contest with Dole and Coke.

Then again, some slave plantations grew tobacco, and some slave plantations grew cotton. How long did it take for a few unrepresentative Americans to argue that the problem was the institution of slavery itself? Do corporations really have a legal justification?

You think XOM is a monopoly like the Standard Oil Trust?
The real would-be monopoly is OPEC (with Hugo). Fortunately, it isn't run by White People, eh?

He/she did not say that XOM is a monopoly or even suggest it. OPEC is not a monopoly. And your final sentence tops off your display of ignorant stupidity. You appear to be the epitome of the type who can be led to knowledge, but not made to think. How sad that there are so many like you.

Has this article about Peak Oil from Bloomberg Markets been mentioned on TOD? I didn't find any link by searching thru the archives.

End of the Oil Age By John Lippert and Alan Ohnsman

The article was referenced in today's posting by Paul Farrell at Market Watch.

E. Swanson

Yes, it was. One of the better peak oil articles, IMO, especially considering it's from Bloomberg.

More Export Land: Now LNG

Indonesia has decided to reduce LNG exports to secure the gas for its own use in the face of a worldwide shortage and the rising cost of energy resources. Indonesia has raised the margin of the reduction from its original plan to halve its supply. Consequently, Japan is likely to see a shortfall of about 9 million-10 million tons, the daily said.

This is from the "Japan likely to face LNG shortage" link.

So, exactly where is the US supposed to get 3x the current world LNG market to meet our declining domestic supply?

Don't worry! Be happy! The (not so free) free market will fix everything! Seriously! Just trust john15!
/sarconal off

The free market will always come into play. In a laissez faire society it is a free market under the rule of law. In other places it is a black market.

For example refer to Leanan's link above on LPG shortages in India. The average citizen (as per that link ) is now paying 4 times the list price because LPG prices are artificially held low by the government.

Q: Why do governments do this?
A: Money for their cronies.

If you have political or other contacts you can get items at list price and then sell them in the black market for profit.

These are the people who arrange protests and rioting when governments try to price those items at cost, or higher - whether in Nepal, Iran, ....

Markets will indeed always come into play, but they will never be "free", because markets only exist when they are constrained by a system of law and/or custom that makes them possible. Sometimes the container that shapes the market is a Mafia code, sometimes it is the SEC, but no market is truly "free".
The term "free market" is religious/ideological propaganda used by those who want to shape markets to their own purposes, while pretending that they are following "natural law", rather than acknowledging that they are using political power to serve their own interests.

Well, the good news is that here is an import that is drying up before we've even invested the megabucks for the logistics necessary to receive the import. At least we'll save some money.

Dmitry Orlov: Money as Metaphor

At the start we might have a traditional society, with a largely non-monetized economy, analogous to a healthy working individual, who makes a bit of spending money, and uses it to get drunk (i.e., consume) after work and on holidays. His liver (economy) is in fine shape, able to process all the alcohol with no ill effects (provide the consumer goods in exchange for money).

Over time, his liquor consumption (spending) increases, and his capacity for work drops (outsourcing). He now borrows against everything he owns (equity cash-outs), his future earnings (consumer debt) and even the earnings of his unborn children (national debt) in order to continue drinking his fill every night.

Later, his liver becomes enlarged and diseased (bubble economy), is no longer capable of processing all this alcohol, generates back-pressure (commodity price spikes, energy shortages) and even causes black-outs (market crashes). He can work even less (layoffs), and becomes unable to service his debts (foreclosures, repossessions, defaults). No longer able to afford all the booze, he goes on the wagon (decrease in consumer confidence and spending), which gives him delirium tremens (recession, depression).

The Automatic Earth: Debt Rattle February 12 2008

if not seen elsewhere:





Are we there yet?


Stagflation dragon stirs as factory prices soar

By Tom Stevenson

Last Updated: 1:12am GMT 12/02/2008

Have your say Read comments

I invented a new index yesterday. From 2003 to 2007 it ran like this: 600, 1057, 1592, 1588, 1822. To be known as Stevenson's Stagflation index (SSI), it measures the number of articles in which my press cuttings database finds a mention of that unholy combination of sluggish growth and rising prices. As you can see, the SSI has been in a serious uptrend.
· Read more by Tom Stevenson
· Shock inflation rise hits hopes of early rate cut

Since the turn of the year, the index has gone exponential. The number of "stagflation" hits so far this year is 719. In the past six weeks the word has been used more than in all of 2003. At the current rate, my target for the year-end is about 6,000, a 200pc rise in a year. The dragon is stirring.
If you're worried about inflation, then this is shaping up to be a scary week. Today's consumer price index (CPI) reading is expected to rise from December's 2.1pc to at least 2.4pc. Next up, expect tomorrow's Bank of England inflation report to warn that CPI will this year very likely reach the 3.1pc "letter-writing" level at which the Governor has to explain to the Chancellor what's gone wrong.
Nothing in the rest of the week is likely to be as unsettling as yesterday's producer prices data, which showed a spectacular increase in manufacturing inflation.
Input prices at Britain's factories rose 2.6pc month on month in January, taking the annual rate to 18.9pc. If you had to read that number twice, so did I. We haven't seen these kinds of inflation numbers since the dark days of lava lamps and bell-bottoms.(LOL - REMEBER IT WELL...)



The average price of a litre of unleaded petrol is now £1.04. According to the AA, the monthly cost of filling up a car now exceeds £100 for the first time - with an average car now costing £106, compared with £90 a year ago.
In addition to fuel and food, energy bills are also soaring. Five out of the six largest suppliers have increased their customers' bills. Most rises came into force only in the past week or two, so are not reflected in the new inflation figures.
Energywatch, an independent watchdog, calculates that the average household has to spend £1,020 a year on gas and electricity - more than £100 extra than a year ago.
The inflation figures showed the price food factories are having to pay for goods is 8.5 per cent higher than a year ago - the biggest rise since the ONS began collecting data on food costs in 1986.

MySupermarket.co.uk, which compares prices across different websites, said a basket of 24 key items had increased by 11.3 per cent compared with a year ago.
A dozen free-range eggs now costs £2.45 at Tesco, compared with £1.75 a year ago; a pack of butter at Asda is 62 per cent more expensive at 94 pence and the cost of a kilo of basmatti rice at Sainsbury's has risen by 39 per cent to £1.25.
These increases equate to an extra £324 a year for an average household, or £527 for larger families that spend £90 a week on their supermarket shop.

The ONS partly blamed the soaring cost of dried fruit - a key ingredient in breakfast cereals, curries, and baked goods - for a sharp spike in prices in January

There's a conference underway today about energy issues being hosted by the Institute for Emerging Issues at NC State University. the two day conference brought together several big name folks (including the presidents of BA, Duke Power and Progress Energy) to discuss the issues. Is it possible that TPTB are finally getting nervous about energy, Peak Oil and climate change?


The Governor, Mike Easley just called for a push for electric and plugin hybrid vehicles.


Listening to the short audio clip from his speech, Easley apparently doesn't know the difference between a plugin hybrid and a battery powered car. He thinks we are going to have lots of cars with 100 to 150 mile range between charges that do 0 to 60 mph in 4 seconds...

E. Swanson

I notice that the link you give shows a "listen" option for most of the talks.


I am assuming these are the complete recordings, for those who want to hear what was said at the conference.

I was checking out Jim Kunstlers posting and found this!

World Made by Hand
Hey Jim Kunstler's new book is out.

I think there is hope for the world yet perhaps 2 things could still happen;
Kunstler could teach Billy four wheeler to read, and see how screwed the world really is,
and Billy four wheeler can teach Kunstler to eat Squirrel.

Mr. Kunstler thanks for the happy thoughts this week, perhaps things will will not fall apart if we get our "Be an American Bonus checks" in time. :)

Thanks for the link,
nice review

Dry Lake Mead? 50-50 chance by 2021 seen

What are the chances that Lake Mead, a key source of water for more than 22 million people in the Southwest, would ever go dry? A new study says it's 50 percent by 2021 if warming continues and water use is not curtailed.

"We were stunned at the magnitude of the problem and how fast it was coming at us," co-author Tim Barnett of the Scripps Institution of Oceanography said in a statement. "Make no mistake, this water problem is not a scientific abstraction, but rather one that will impact each and every one of us that live in the Southwest."

The author's also predict "A 50 percent chance that reservoir levels will drop too low to allow hydroelectric power generation by 2017." Ouch!! They also state their study is "conservative," which implies their conclusions are too.

According to the article

The system is already at half capacity because of eight years of drought.

I have driven past the lake, and it looks terrible - a puddle where a lake should be. If eight years of drought brought the system to half capacity, why should we expect that it will be 13 more years until there is a 50-50 chance that the lake goes dry? I would expect that the time would be shorter than this.

Water use is likely to keep ramping up, so this factor alone would tend to drain the lake. Also, after eight years of drought, expecting it to lift is iffy. These factors put together would argue for a date for a 50-50 chance may be less than 8 years in the future - perhaps only six years.


I am not defending the water practices of the southwest, only to point out why it may not be shorter.

This winter much of the west has been blessed with seemingly unending snow storms in January, and the mountain snowpacks are way above average, in some watersheds in excess of 200% of normal. It is these snowpacks which ultimately fill the reservoirs, and we look so much better going into this summer. California irrigation in particular appears to be skirting an otherwise nasty bomb.

Graphic illustrations of snowpack, first, and stream flow, second, are below.


Snow course data for individual watersheds here:


Hopefully it is not as bad as my guess made it sound. The low level of the lake kind of shocked me. I haven't been following the snow situation.

Water levels are still very low in Atlanta - reservoir up 6", but way below where it should be at this time of year.

"...why should we expect that it will be 13 more years until there is a 50-50 chance that the lake goes dry? I would expect that the time would be shorter than this.

Several reasons. Continuation of the long term drought although not particularly unlikely may not be even a 50-50 likelihood.

This year's snow pack in the Utah, Wyoming and Western Colorado is much better than the recent past [good years even in the middle of an ongoing drought can partially refill a reservoir.] The last eight years have seen basically unrelenting drought.

One aspect that the study probably does not address is the opportunity of downstream users to reduce usage [I know about water rights, but there is a lot of studity raising cotton & heavily irrigated alfalfa in Arizona, over watered golf courses, and numerous other uses for scarce water that make no sense whatsoever in a desert.]

As Lake Meade and to a lesser extent Lake Powell empty the surface area shrinks and with it the amount of evaporation loss.

Some of the upstream reservoirs [Powell and Flaming Gorge] and the downstream reservoirs [Havasu and ?] may be be closer to full than Meade [this may or may not be true -- I don't facts on hand but recognize that it is the Colorado drainage as a whole that matters most.]

Finally, don't bet on continuation of the trend of increasing usage. Paradoxically [and not that I necessarily believe the current population trends will continue] paving over farm land for housing developments actually reduces water consumption. A lot of what has been paved over around LA and Phoenix was agricultural land. This at least partially offsets the housing tracts in areas like Las Vegas where whole sections of desert were paved over in only a few months.

For what it is worth, I don't disagree that there is a very serious problem. In my estimation, given that periodic droughts are inevitable, the Colorada drainage is maxed out. Whether the reservoirs bottom out in a few years, or it takes another drought cycle, the water users of the Colorado River have clearly compromised the cushion necessary for riding out the inevitable droughts that are always a part of this part of the American West.

Hello Leanan,

Thxs for the info--is Cascadia getting ready for the coming hordes? Consider the recent series of earthquakes down Mexico way:

Seismologist: Quake Swarm Rattling Border

The latest quake hit Monday morning, near Mexicali. Officials said the magnitude 4.9 -- downgraded from 5.1 -- earthquake struck at 10:29 a.m. The quake was centered 24 miles south-southeast of Calexico and was felt in parts of San Diego, Imperial and Orange counties and as far away as Yuma, Ariz., according to the USGS.
Overtime these quakes only increase pressure for a Big One to hit the SW area. IMO, the infrastructure is not robust enough: canal and pipeline breakages, powerlines down, and other ill effects can cause huge dislocations. Nawlin's flood would be nothing compared to a systemic multi-network earthquake failure in the SW during a severe drought and blazing temperatures.

"Whiskey is for drinking, water is for fighting over."

"Water flows uphill to money."

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

Does anyone have recommendations on podcasts related to peak oil and energy conservation issues? There are many environmental podcasts and some energy ones but most of them seem to be focused on finding what plants we can grow to replace oil and change nothing about our lifestyles. While it would be nice to have a side effect free replacement for oil to appear, I doubt that is going to happen. Conservation, smart land use, etc seem like they're going to be much more important ways of dealing with the reduction in energy produced. There doesn't seem to be much out there about these issues beyond the standard talk about CFLs, low flow showers, and insulation (all good steps but nothing that hasn't been talked about many times before).

A while back there was a user on here who talked about modifying chest freezers into refrigerators. That's the type of out of the box thinking that I'm looking for, though I'm not sure why he didn't just go with a chest refrigerators instead of modifying a freezer. He had a great point however on why chest units (be it freezer or refrigerators) is better because the air doesn't rush out when it is opened.

Web sites are good sources but I like podcasts because I can work on other things while listening to them.

modifying chest freezers into refrigerators

Just tip the refridgerator on it's back!

In the future you will have to think 'simple', not 'complex', since it is unlikely there will be enough local resources to do everything we now do in OECD countries.

Even with the predicted less total available energy, for some time to come agriculture is likely to get enough energy - but sufficient fertiliser and water are very likely to be major resource limitations for world food production sufficient to actually fill your refrigerator!

Joking aside, I honestly gave that some thought but I don't know enough about the specifics of the compressor, coils, drainage, etc that might not work too well in that position. My guess is that since the coils need to dissipate heat, putting it on its back would put the coils underneath where they'd have a hard time dissipating heat... some of it moving back up into the refrigerated space.

I also wonder about some sort of sliding mechanism to push the fridge and freezer to the outside on those days where it makes sense to do so, without introducing a path for heat to escape from the house. It's always seemed weird to me to have homes with refrigeration equipment running when they're located in cold climates (or even warm climates during the cold part of the year). Obviously there is a somewhat narrow temperature range in which one would like to store their food... if your bottle of vodka freezes solid, it's not a good temperature for your left over squash casserole.

As far as filling the fridge goes, I'm single so that rarely happens anyway. The freezer gets filled when chicken breasts go on sale but that's about it. Other than that, the whole contraption is way oversized for my needs. A small chest fridge that slides out from under the counter would likely be perfect but not something I would have even thought about had it not been for the posting six months or so ago in the Drumbeat about converting chest freezers.

You are correct, a refigerator might not work very well if not used as designed - but modification to allow more efficient operation may be very easy.

But please consider my assertion that we are going to have to live a more simple, not a more complex, lifestyle if (as seems likely) we have much less available energy.

Refrigeration and air conditioning have only come into general use in 'advanced' countries in the last 50 years or so and are mainly the result of unrestricted availability of cheap energy - most people in the world still do not have such luxury or cheap energy, I suspect we will have to get used (once again in my case) to living like them - ie: refigeration is one of the 'not-BAU' things to consider for the medium term outlook if electrical energy is constrained.

A while back there was a user on here who talked about modifying chest freezers into refrigerators. That's the type of out of the box thinking that I'm looking for, though I'm not sure why he didn't just go with a chest refrigerators instead of modifying a freezer. He had a great point however on why chest units (be it freezer or refrigerators) is better because the air doesn't rush out when it is opened.

I wasn't that person... however, Crosley sells a very low power 10 cu.ft. chest freezer (av. 500WH/day) that can use an external thermostat to have it perform as a refrigerator with 2/3 the energy usage of 'freezer mode' - around 350 WH/day, making it ideal for PV use (caveat; when running it will require a 1000W inverter if used off-grid). See link below-

I have no affiliation (except customer status) with these folks up in Sand Point ID but do check them out for Off Grid stuff...


So how am I going to find my McCain's Pizza Pockets when they're hidden under Deep ’n delicious cake and Wonder bread? Oh crap! Who set the carton of orange juice on top of the grapes?

Kidding aside, whilst energy efficiency would be undoubtedly enhanced, storing things such as milk, bread, eggs, fresh fruits and vegetables, trays and platters, and even leftovers kept in cookware would be a bit of challenge without the regular assortment of shelves and bins. And, hey, let's not forget the Fosters! I'm not sure how smaller children with limited reach would fair either (a step stool perhaps?). Beyond the question of consumer acceptance, North American countertops and cabinets are designed to accommodate either a standard 30 or 36 inch wide refrigerator and any deviation from this form factor in height and width would have a tough go of it, to say the least.

On a more positive note, domestic refrigerators have become a lot more energy efficient over the years and all indicators suggest this trend is likely to continue. My five year old 18 cubic foot refrigerator is rated at 476 kWh/year and the 20 cubic foot model it replaced used over 1,800 kWh. Some of the better models today approach 350 kWh and experimental designs with vacuum insulation panels will further notch this downward again.

BTW, I chuckled when you mentioned you're single. Somehow, I knew as much. Remember, the kitchen is not the place for rational thought and thinking like an engineer will only get you barred for life ....it may be OK to think outside of the box, just so long as it doesn't involve this particular box.


Apparently the Japanese are trying to build a fridge that runs on hot air outside to cool the contents - somehow I think you would love it!

Hi Dave,

I'm constantly amazed by how the Japanese can refine existing technologies and come up with remarkably brilliant solutions to some tough problems... now, if only they'd hire better tanslators (e.g., http://sciencelinks.jp/j-east/article/200519/000020051905A0760112.php)

Actually, I wasn't aware of this, so I appreciate the head's up. The latest developments I had read about pertain to Toshiba's award winning design, detailed here: http://museum.toshiba.co.jp/08home/newtech131.html


That's a fine example of Japlish! ;-)

stacked wire baskets
works fine

BTW, I chuckled when you mentioned you're single. Somehow, I knew as much. Remember, the kitchen is not the place for rational thought and thinking like an engineer will only get you barred for life ....it may be OK to think outside of the box, just so long as it doesn't involve this particular box.

I've yet to find anyone to kick me out of the kitchen. It suprises me how many people can't do anything in the kitchen besides pop things in the microwave. If a woman comes into my life and wants to take over the kitchen, she's welcome to it... as long as it is for cooking purposes rather than decorating. More amazing than the number of people who can't cook at all are the number of those people who have very expensive applicances and cookware on display.

As an aside, women are pretty impressed when I cook them dinner. It isn't that I'm any type of great chef, it's that I have skills that extend past the take out menu. Tarragon encrusted chicken gets them everytime!

I hope you'll forgive me for rattling your cage; I couldn't help myself.

More amazing than the number of people who can't cook at all are the number of those people who have very expensive applicances and cookware on display.

I'm a gay man who associates with other gay men who can whip-together a twelve course meal (blindfolded and at the drop of a chapeau) as they casually delve into the most obscure details of any opera known to mankind. Me? Well, let's just say that without a can opener and ready-to-serve microwave meals, I wouldn't be alive and speaking to you today.

And I'll fess up.... this is what you'd find in my kitchen: http://www.datafilehost.com/download.php?file=5b43ded2


The braindead Chavez banging starts to look like a planned campaign. Now the masters of truth chime in. Socialism freezes the East Coast. US oil output is undermined by anti-drilling liberal socialists.

Venezuelan Oil Output Undermined by Chavez, CERA Says

Venezuelan President Hugo Chavez's policies have cut the South American country's oil output by 1.2 million barrels a day, enough to supply 80 percent of U.S. East Coast demand, according to Cambridge Energy Research Associates.

Production from Venezuelan fields has plunged by more than one-third since Chavez assumed the presidency in 1999 because of a lack of investment by the country's state oil company, Rene Ortiz, a Cambridge Energy Research Associates senior associate, said today in an interview in Houston. Another factor was the replacement of engineers with military personnel ill-equipped to manage oil fields, he said.

"What is hard to fathom is how he has all of these people advising him with PhDs in economics from American and European universities, and yet he thinks socialism will work," said Ortiz, [the former energy minister for Ecuador],who is based in the Ecuadorian capital of Quito.

Venezuela is pumping about 2.3 million barrels of crude a day, down from 3.5 million a day in 1998, the year before Chavez began his reign, Ortiz said. Oil and Energy Minister Rafael Ramirez said Feb. 2 that the country is producing 3.3 million barrels of oil a day.

The Automatic Earth

Parody Alert:

North Sea Oil Output Undermined by Major Oil Companies, CERA Says

Policies and procedures implemented by North Sea oil producers have cut North Sea crude oil production by close to 2 million barrels a day since 1999, enough to supply 160 percent of U.S. East Coast demand, according to Cambridge Energy Research Associates.

Production from North Sea oil fields has plunged by about one-third since major oil companies asserted in 1999 that North Sea production would not peak for another 10 years. Rene Ortiz, a Cambridge Energy Research Associates senior associate, said today in an interview in Houston that "The North Sea is a prime example of the kind of production response that major oil companies can achieve when they use the best available personnel and technology, with no material restrictions on drilling."

The North Sea is pumping about 4 million barrels of crude a day, down from 6 million a day in 1999.


Why did GB and Norway pump those millions of barrels of oil at $10/per when they all they had to do was pretend gross incompetence and save it for the really big payday?

Why did GB and Norway pump those millions of barrels of oil at $10/per when they all they had to do was pretend gross incompetence and save it for the really big payday?

Because they're socialist countries. Get with the program.

Why does CERA (or indeed anybody) think that producers are obliged to export exactly what some consumer requires?

Such a market does not exist - and never will - so, as usual CERA is talking complete meaningless rubbish!

Actually the North Sea is a prime example of the kind of production response that major oil companies can achieve when the Government is completely stupid/insane/incompetent. The UK allowed international oil-cos to export oil at $35 a barrel in 2004 - now, just 4 years later, we have to buy it back at $95 a barrel - does that sound like the actions of a sane person?

Does anybody have any peaceful ideas how we can stop this? - it is too important to the world to allow it to continue!

Or, do we have to wait until the system no longer works before it can be fixed?

The funny thing (seemingly unknown to the public at large) is that oil is not produced, it is extracted. Any oil not extracted today is there to be extracted in the future. In this way, Venezeula is doing the world economy a big favor by lowering present oil extraction.

As you may know, oil reserves are usually evaluated on the basis of net present value (NPV), which is the estimated future stream of income, after all costs, discounted to present value, using some discount rate, usually around 10% per year.

What is ironic is that given low current interest rates and a high probability, IMO, of higher crude oil prices, it probably makes sense to postpone production (extraction).

What is ironic is that given low current interest rates and a high probability, IMO, of higher crude oil prices, it probably makes sense to postpone production (extraction).

WT... I think you're on to something VERY big...

Of course, ExxonMobil can buy the oil from whomever Venezuela sells to, but this is still an escalation:

Venezuela Cuts Off Oil Supply To Exxon-Mobil
MyFox Dallas, TX - 5 minutes ago
Venezuela's state oil company has suspended commercial relations with Exxon Mobil Corp. and stopped supplying crude to the US-based oil company.

How convenient for Fox not to mention that Exxon is trying to seize billions of dollars in Venezuelan assets over a loss of $750 million. Exxon clearly is not part of the reality based community.

I think the Depltion Protocol proposed by Campbell and given book-form by Heinberg is the only real way.

Somewhat off-topic, how much has Blair's investment in the Iraq War cost the UK to date, not including the priceless lives wasted?

Clap! Clap! Clap! Clap!

I think CERA has just revealed its sponsors.

RE CERA: Very few people take Cera seriously.

Venezuela is already making $2 more per barrel as a result of the fracas. And if more events of this type happen and price goes up to the old 100 then he would be making 10m$/day ie 10x365days is how much?
Enjoy your evening!!!

A magazine arrived in the mail yesterday. And out fell this advertising brochure from BMW. Peak oil gets a mention.....


There's some folks in California that sell "slightly used" (i.e., wrecked or otherwise sick) BMW's for cheap. There are no titles with them, but you could buy one and transport it out of the U.S., fix it and go. That might make one feel slightly less guilty about driving a BMW, if only because it was "recycled", at least until the gasoline becomes hard to find. You might also stick it to the dealer that sent you the add...

E. Swanson

Hello Leanan,

Thxs for the toplink, "Aramco chief: Tackle root causes of woes"

"If we could proactively address the fundamental causes of our energy security challenges, many of the most pressing concerns would diminish in intensity and relevance, and in some cases would dissipate altogether."

Again, may I suggest unveiling the Google unlucky button to rapidly escalate Peak Outreach? IMO: multi-millions suddenly studying Overshoot & Dieoff, loss of carrying-capacity, MPP, Olduvai Gorge, Peak Everything, etc, is the best way for grassroots growth to tackle the root causes of our problems.

Alternatively, might YAHOO be first to unveil this strategy? Imagine how their search engine use might rapidly grow, thus forcing Microsoft to up their $$$ offer. IMO, Yahoo would have everything to gain, and nothing to lose by going this route.

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

Sorry if this has already been posted:

Pakistan nuclear staff go missing

Two employees of Pakistan's atomic energy agency have been abducted in the country's restive north-western region abutting the Afghan border, police say.

The technicians went missing on the same day as Pakistan's ambassador to Afghanistan, Tariq Azizuddin, was reportedly abducted in the same region

WBBM 780 - Chicago's #1 source for local news, traffic and weather ...
WBBM Newsradio 780 ... "Only On The Web": Bob Orr speaks with Philip Mudd, Deputy Director ... Komando, Anthony Dias Blue, Bob Lape, Charles Grodin, Dave ...

(CBS) U.S. officials are increasingly worried that the next attack on America could be carried out by Americans trained in terror tactics inside al Qaeda's safe-haven in Pakistan, reports CBS News correspondent Bob Orr

the video was an episode of Mac Gyver

Bring Them On!
BAGHDAD: A bomb struck a gas pipeline in northern Iraq on Monday, causing widespread power outages that the electricity minister warned could last up to a week.

The explosion devastated the section of pipeline in the Sebat district about 30 kilometers (20 miles) northeast of Tikrit, one of a series of recent attacks in an apparent show of power by suspected Sunni insurgents who have been driven north by U.S.-led crackdowns in Baghdad and surrounding areas.

Police officers and a gas company engineer, speaking on condition of anonymity because they weren't authorized to release the information, said firefighters had the blaze under control, but the pipeline had been shut down and would need several days of maintenance.

Electricity Minister Karim Waheed said the pipeline had provided fuel to power stations in the northern cities of Kirkuk and Beiji and the blast would mean a weeklong cut in electricity for the area.

The U.S. military in northern Iraq did not immediate respond to a request for comment on the attack.

Today in Africa & Middle East

Israel urges international action against an Iranian nuclear threat

Chad president is bolstered, but dissidents fear retribution

Kenya opposition seeks accord to share power with government

Waheed also said authorities had found a huge bomb Monday at the entrance to the electricity ministry in Baghdad. The explosives were safely defused, but the discovery underscored the continued threat to government infrastructure despite stepped up security measures.

"Today the bomb reached the ministry's entrance," Waheed told The Associated Press. "If there is no security or political stability I cannot promise people any progress in the electricity sector."

He pointed to a car bomb Sunday at a power station in Mosul as another example. Police and residents said the blast killed four civilians and had caused power outages throughout the western part of the city, 360 kilometers (225 miles) northwest of Baghdad.

The U.S. and Iraqi militaries are preparing for an offensive in Mosul, which they say is the last major urban stronghold for al-Qaida in Iraq.

Oil pipelines and other infrastructure in Iraq have been frequent targets of violence and sabotage.

Officials have predicted that the country will not see major improvements in electricity production before 2011, citing poor security and a lack of funds and fuel.

Electricity Ministry spokesman Aziz Sultan noted last month that most of the oil pipelines that deliver fuel to power stations run through "hot areas" where they are frequently subjected to insurgent attacks.

"The power shortages nationwide will continue for the coming three years due to the ongoing sabotage and the unwillingness of foreign companies to work in a dangerous environment," he said.

Many Iraqis rely on private generators for their power although rising fuel and maintenance costs have put a strain on many families.

anyone remember president George Bush's father ? If it is at all possible I would like to keep this thing of our's going for as many people as possible. We need electric cars we realy need electric cars, we need redundency in food, power and communications