DrumBeat: February 15, 2008

Analysis: Does storing oil raise prices?

To date, the SPR holds 698 million barrels of oil, but the DOE has been actively working to increase the reserve's size in order to meet the Bush administration goal, announced by the president last year, of doubling its contents to 1.5 billion barrels by 2027.

But with oil prices reaching records highs of $100 per barrel this year, some congressmen say the administration's actions are worsening the load on consumers and adding to market instability. Last week Sen. Byron Dorgan, D-N.D., introduced a bill calling on the Department of Energy to cease adding oil to the SPR for the rest of 2008, or until prices fall below $50 a barrel.

"We need to use a little common sense here," Dorgan said in a statement. "I believe maintaining the current reserve is important for our economy and national security but the time to stock up is not when prices are highest."

CERA sees a dozen reactors under way by 2015 in US

HOUSTON, Feb 15 (Reuters) - Challenges facing a nuclear revival in the United States seem only to increase, but industry experts at the CERA conference expect to see a dozen new reactors under construction in the next decade, they said Friday.

Ark. congressman introduces energy bill

A plan introduced by U.S. Rep. Mike Ross to encourage alternative and renewable energy relies on oil drilling in Arctic wildlife lands and the Gulf of Mexico to meet its goals.

Ross' bill, the "American-Made Energy Act of 2008," also would create tax credits to build new nuclear power plants throughout the United States, with an aim of having 40 percent of the nation's power come from nuclear sources.

New Zealand: Low lakes pose risk of power cuts

The security of the electricity supply is on a knife-edge and power cuts are possible this winter.

Energy Minister David Parker yesterday admitted the supply situation was becoming dire, although he still believed the country would get through winter without blackouts.

Earlier yesterday, however, Meridian Energy chief executive Keith Turner told a select committee at Parliament that New Zealand would avoid cold showers and brown-outs only if nothing else went wrong.

"It is a very fine margin, finer than I have seen it in my career," Turner said.

Senator Feinstein asks Energy Secretary Bodman about Oil Transparency

On February 11, 2008, California Senator Dianne Feinstein sent a letter (see below) to Energy Secretary Samuel Bodman inquiring about the Department of Energy’s activities concerning peak oil.

Experts debate whether oil crisis looms

HOUSTON–Are the lackluster production and reserve replacement rates reported by the largest oil companies precursors to a looming oil crisis?

The largest oil companies have had increased difficulty meeting a range of challenges to increase their production, including mature oil fields with declining production rates and restrictive regimes that have tightened their hold on their resources as commodity prices have.

The issue was much debated by oil executives and industry watchers at the CERA energy conference this week.

OPEC Finance Chiefs to Discuss Dollar Oil Pricing, Khelil Says

(Bloomberg) -- OPEC finance ministers will meet to study a proposal from Venezuela to price oil in a currency other than the U.S. dollar, the group's President Chakib Khelil said.

Eni ups estimate on Russian reserves by 20 pct to about 1.5 bln boe

MILAN (Thomson Financial) - Eni SpA chief operating officer Stefano Cao said reserves of its Russian assets are estimated at about 1.5 bln barrels of oil equivalent (boe), a 20 pct increase compared to the company's previous assumptions.

What is it for?

Once again, Gazprom has threatened to cut off Ukraine because of overdue bills, and once again the issue has been fudged.

The Kremlin is clearly, and deplorably, trying to intimidate Ukraine into dropping its newly revived ambitions to join NATO, and into quashing any thoughts that it might host American missile-defence installations. Vladimir Putin’s loose talk about nuclear targeting is particularly alarming. But the real point of the story is bad government and corruption.

Chile's Gener 2007 net falls to $81 million

SANTIAGO (Reuters) - Aes Gener CHG.SN, a unit of U.S. power company AES Corp, said profit fell 47 percent last year on big cost increases resulting from higher fuel prices and cuts in natural gas supplies.

Nepal strike hits petrol supplies

Nepalese petrol stations have been hit by severe fuel shortages, largely triggered by protesters blockading key roads in the south of the country.

Most petrol stations have shut down and those still serving fuel have attracted queues of thousands of motorists.

Sierra Leone: “Enough Petrol Now, More On the Way”

“If only people stop hoarding petrol and if only consumers stop panic buying of the commodity, we will all realise that there is enough petrol to last until the next consignment which is just round the corner,” the deputy minister assured.

Put Up Your Dukes: Venezuela Wants $110M in Taxes from Exxon

The battle ensues in international courtrooms, as Venezuela and Exxon Mobil duke it out over lost compensations concerning the Orinoco Belt and the country's nationalization of oil and gas projects.

Now, the Venezuelan municipality Independencia claims that Exxon Mobil owes $110 million in taxes for production in the area between 2000 and 2006, reports Dow Jones.

OPEC to mull backing Venezuela in Exxon dispute

QUITO (Reuters) - OPEC will consider taking action at its next meeting to support Venezuela in its legal dispute against U.S. oil giant Exxon Mobil Corp, Ecuador Oil Minister Galo Chiriboga told Reuters on Friday.

"Any actions that the OPEC could take will come from a legal analysis from member countries' lawyers," Chiriboga said in a telephone interview, without specifying possible actions. He said OPEC member lawyers will meet on March 4.

Expert Says Chavez Is in Over His Head

Venezuelan President Hugo Chavez doesn't have the tactical advantage he thinks he does when it comes to controlling his oil-rich country's resources, an energy security consultant told oil and gas executives Wednesday.

Chevron's Pascagoula refinery back in operation after fire

PASCAGOULA, Miss. - The Chevron Pascagoula Refinery has resumed production in a crude oil unit damaged by fire last summer.

Lester R. Brown: U.S. Moving Toward Ban on New Coal-Fired Power Plants

In a report compiled in early 2007, the U.S. Department of Energy listed 151 coal-fired power plants in the planning stages and talked about a resurgence in coal-fired electricity. But during 2007, 59 proposed U.S. coal-fired power plants were either refused licenses by state governments or quietly abandoned. In addition to the 59 plants that were dropped, close to 50 more coal plants are being contested in the courts, and the remaining plants will likely be challenged as they reach the permitting stage.

Insight: The next crisis will be over food

I used to think that the fastest way to become worried about markets was to stare into the bowels of a monoline. No longer. A few days ago, I happened to hear Goldman Sachs discuss the state of the global financial system with European clients.

And what struck me most forcefully from this analysis – aside from the usual, horrific litany of bank woes – was just how much trouble is quietly brewing in corners of the commodities world.

After the coal rush

Spiking global prices of coal should make energy experts rethink the wisdom of depending on it for long-term fueling of electricity plants.

The asymmetry of economic war

Away from these areas of direct combat, however, another strategic dilemma faced by the architects of the war on terror is becoming increasingly visible. This involves developments in asymmetric warfare - the ability of the weak to take up arms against the strong - which are already changing the global pattern of armed operations and counterinsurgency in ways still largely unrecognized. The United States army, and other powerful armies, find this form of warfare particularly difficult to cope with, as it can utilise in highly effective ways the advantages of an imbalance of forces and a surplus of targets..

Ensuring energy security is a costly affair - KSA

(MENAFN - Arab News) Oil is a costly affair. When US Energy Secretary Samuel Bodman was last here in Riyadh, he stressed on the need to invest "billions of dollars" in the industry annually, so as to achieve "global energy security."

The International Energy Agency estimates that $22 trillion of investments would be needed between now and 2030 if the world is to meet expected energy demand.

Scramble for South Africa coal underway

SOARING international energy prices and Eskom’s desperate need for more coal to feed its overworked power stations have stoked southern Africa’s coal sector as investors scramble to bring new coal mines on line.

Partners in pilelines, but not in energy exports

Though connected by two pipelines that convey Caspian Basin energy to Western markets, Georgia and Azerbaijan are having trouble working out a long-term gas-supply deal. Price appears to be a major sticking point.

The crippling hours of load-shedding in Nepal start affecting the industrial production

The energy-crisis is starting to have all-round effects. From common consumers to business enterprises, the lack of energy has triggered a cascading impact everywhere.

Among the worst sufferers include the industries and businesses. From manufacturing to service industries, all have been subject to swelling hours of power cuts.

Bolivia tries to avert looming energy crisis in Argentina, Brazil

LA PAZ, Bolivia: Bolivian President Evo Morales said Thursday he will meet with the leaders of Brazil and Argentina to try to resolve a possible energy crisis because the Andean nation may be unable to supply enough natural gas to meet the needs of its power-hungry neighbors.

While Bolivian officials have said they can meet the needs of Argentina and Brazil this year, increased demand by the two nations could mean shortages in 2009. Natural gas is a key energy source for Brazil and Argentina, which have South America's largest economies.

Kosovo PM Rebukes Energy Utility

Kosovo’s Prime Minister Hashim Thaci has lashed out against the management of the local energy utility, blaming it for shortages of power and demanding greater accountability.

Talking of a “national energy crisis,” Thaci accused executives of the Kosovo Energy Corporation, KEK, of “steering the energy sector as if it was their private property and letting millions of euros leak without any sense of responsibility”.

Shrinking timeframe to prevent dangerous climate change?

A growing number of scientists are echoing the concern raised in the latest Intergovernmental Panel on Climate Change (IPCC)’s Fourth Assessment Synthesis Report that climate change is happening faster than at rates predicted by earlier IPCC reports.

A recent paper published in the US Proceedings of the National Academy of Science (PNAS) suggests that the Earth’s land and oceans are losing their capacity to absorb the excess carbon dioxide from anthropogenic emissions, accelerating the build-up of greenhouse gases in the atmosphere.

Reports of the oil industry's imminent death are greatly exaggerated

I am utterly perplexed by Jeremy Leggett's attempt to foretell the impending demise of the oil industry (The great fuel folly, February 5). Unless, of course, he contemplates such a development as being highly favourable to his Solarcentury company. I am one of the economists who, he claims, "tend not to see the problem". But Leggett seriously understates the ability of the many oil-producing countries to sustain provision of oil and natural gas.

Goodbye gasoline? Not so fast

Spreading car culture will push gasoline demand ever higher, but experts say it will need some help to meet the world's growing energy needs.

The door to Iraq's oil opens

Peak oil - when global oil production will reach a peak and then begin to fall - is a real possibility sooner or later. It has happened in the US; it is happening in Britain, the North Sea and Indonesia; it is expected to happen in Mexico and some other major oil producing countries during the coming five-year period.

In this scenario, the criticality of Iraqi oil production cannot but be overstated. Furthermore, Iraq is particularly blessed in certain other ways. Apart from its massive reserves of oil and gas, the cost of oil production in Iraq at US$1 to $2 per barrel is very low. Second, the oil fields are dispersed evenly across the country. Third, Iraq's location itself is a boon. Unlike, say, the Caspian, Siberia or the Arctic, it is easy to develop oil export routes out of Iraq heading in several directions simultaneously - the Persian Gulf, Saudi Arabia, Kuwait, Jordan, Syria and Turkey. All this means that rapid expansion of Iraq's oil production and the arrival of substantial amounts of Iraqi oil - exceeding 10 mn b/d - in the international market is an attainable objective.

Venezuela's oil minister says Exxon demands excessive

CARACAS, Venezuela — Exxon Mobil Corp. is demanding more than 10 times the compensation the company could rightly deserve from Venezuela for the nationalization of an oil venture, the country's top oil official said Thursday.

Oil Minister Rafael Ramirez said Exxon Mobil's losses and past investments stemming from Venezuela's nationalization decision last year "wouldn't even reach 10 percent" of the $12 billion in assets the company has sought to freeze in court.

"They ask for too high an amount for their compensation," Ramirez said.

Who benefits when airlines merge? Who gets hit the hardest?

Call it collusion, monopolizing or whatever you want, but banding together provides them a competitive edge that will help stabilize a battered and teetering industry, dampening what has for decades been a wildly cyclical pattern of highs and lows.

It's also a hedge against future catastrophes such as a terrorist attack, a severe recession or continued spikes in petroleum prices. If, as many are predicting, the so-called peak oil crisis hits in the next five or 10 years, massive consolidation will be the only means of survival. Best to start now. The eagerness to merge is in many ways a survival tactic.

DoD energy strategy: "More fight - less fuel"

When Undersecretary of Defense Kenneth Krieg asked Defense Science Board to form a Task Force on DoD energy strategy he specifically used two words very often – identify and assess.

The DSB released its report called DoD Energy Strategy: "More Fight - Less Fuel" on February 12, 2008. The title of Section 2.2.2 is Peak Oil. Not surprising, because James Schlesinger was the co-chairman of the DoD Task Force.

Barack Obama: Old package in a new wrapping

One of his foreign policy advisers is Zbigniew Brzezinski, who goes back to the Carter Administration. Zbig is as imperialist as they come...

The last thing Zbig wants is what Peak Oil and climate change is now demanding: more political localism and local control of resources by the people of whose land they are a part. When this book was published in 1997, Big Oil thought it had discovered in the Caspian Sea basin oilfields that would be greater even than those of Saudi Arabia. However, soon thereafter, the oil companies found out that there was not nearly the amount of oil there that they thought and they canceled projects.

A Better Way to Capture Carbon

Researchers have developed porous materials that can soak up 80 times their volume of carbon dioxide, offering the tantalizing possibility that the greenhouse gas could be cheaply scrubbed from power-plant smokestacks. After the carbon dioxide has been absorbed by the new materials, it could be released through pressure changes, compressed, and, finally, pumped underground for long-term storage.

OPEC Hints At Output Cut If Supply Rise Continues

LONDON -(Dow Jones)- The Organization of Petroleum Exporting Countries said Friday weakening world economic growth and demand prospects and ongoing increases in U.S. and European crude and gasoline inventories could soon force the producer group to pare back its own production to avert a drop in crude prices.

"These unfolding developments in the world economy and the oil market warrant close monitoring in the months ahead to ensure a timely response to changing conditions," OPEC said.

Oil prices approach 100 dollars per barrel

LONDON (AFP) - World oil prices advanced on Friday towards 100 dollars per barrel, briefly topping 96 dollars, as geopolitical jitters stemming from Nigeria and Venezuela stoked global supply concerns, traders said.

Those market fears overshadowed a gloomy warning from Federal Reserve chairman Ben Bernanke, who predicted "a period of sluggish growth" ahead for the energy-hungry US economy.

Peak Oil: The Next 5 Years

I suppose this post should be titled, "Why you want to own long term oil futures." The following graph of "all liquids" supply and demand going forward five years gives us an basis to compare recent observations on peak oil by Matt Simmons, Charlie Maxwell and Chris Skrebowski, three very astute oil observers, and draw some conclusions.

Improving Our Green Job Prospects

On the one hand we have a deepening economic recession, a mortgage and debt crisis, and rising unemployment. On the other hand is the growing energy and climate crisis, shadowed by the specters of peak oil and planetary meltdown. Rising prices for energy, food and health care are hitting the poor and middle class hard. We have ourselves in quite a mess.

No one has all the answers to these problems, but there is one answer that everyone with any sense embraces as a necessary first step toward a permanent solution: we must create green jobs in the renewable energy and energy efficiency industries. But despite that clear path forward, somehow the political will is not there yet and our prospects for a green jobs program in 2008 do not look very good.

Beijing petrol stations to close

China is closing 10% of Beijing's petrol stations to improve air quality ahead of the Olympics in August.

By the end of May, 144 will shut because they are not expected to meet higher environmental standards, according to state media.

Siberian field to produce cheaper oil than Saudi crude - Rosneft

KRASNOYARSK (RIA Novosti) - An oil deposit, which Russian state-controlled crude producer Rosneft is developing in East Siberia, will produce cheaper oil than Saudi crude, the company's president said on Friday.

OPEC lowers its oil demand projections for 2008

VIENNA - The OPEC oil cartel on Friday lowered its projections for growth of oil demand this year in response to a slowdown in world economic momentum.

The Organisation of Petroleum Exporting Countries in its February report said demand would likely grow by 1.43 percent this year rather than its previously estimated 1.52 percent.

Chavez Uses Exxon Legal Battle to Stoke Anti-American Sentiment

(Bloomberg) -- Venezuelan President Hugo Chavez has seized on a legal battle between the state oil company and Exxon Mobil Corp. to drum up backing for his campaign against the U.S. and President George W. Bush.

Oil and Energy Minister Rafael Ramirez called the dispute an ``economic war'' with the U.S. and urged Venezuelans to march in the streets to protest court orders that freeze more than $12 billion of Petroleos de Venezuela SA's assets. Oil workers planned to hold a vigil at the company's headquarters near downtown Caracas from last night to this morning.

Coal Doesn't Have to Be a Dirty Word, CEOs Say

Coal is no longer an ugly, dirty stepchild in the shadow of oil and natural gas now that the world faces unrelenting electricity demand growth in emerging nations including China and India, which are gobbling up the abundant fuel.

But coal's environmental issues often overshadow perceptions of its value at home, where it is the one fossil fuel America has more of than anyone else.

Next US president will take action on climate change: Stiglitz

PARIS (AFP) - Joseph Stiglitz, the Nobel laureate economist, declared himself "almost certain" Thursday that the next US president, whoever it turns out to be, will get tough on climate change.

"I don't want to be over confident, but I'm almost certain that the new president will come (through) on this issue," Stiglitz told a conference in Paris.

Business chiefs vow to lead fight against global warming

TOKYO (AFP) - Some of the world's top companies vowed Friday to step up their efforts to cut greenhouse gas emissions, saying governments were failing to show sufficient leadership in the fight against global warming.

The declaration reflects a growing trend by global corporations waging war on climate change by taking steps to reduce or offset the amount of carbon dioxide belched out by their offices and factories.

Gore warns on 'subprime carbon' industry

UNITED NATIONS - Al Gore advised Wall Street leaders and institutional investors Thursday to ditch businesses too reliant on carbon-intensive energy — or prepare for huge losses down the road.

Venture to Use Sea to Fight Warming Runs Out of Cash

Planktos, a California company that is trying to turn a profit by fertilizing the ocean with iron dust, canceled planned field tests on Wednesday, citing a lack of funds. At the company’s Web site, planktos.com, a notice blamed a “highly effective disinformation campaign” for the cancellation.

Crunch Time for Mexican Oil
Political Will Lacking For Production Overhaul
As Output Tumbles
February 15, 2008; Page A9

Mexican oil output has declined steadily from its peak of 3.4 million barrels a day in 2004 and is expected to fall to 2.8 million barrels a day by the end of this year. If that continues, Mexico will likely stop exporting oil within seven years (2015). The country relies on oil exports for about a third of government revenue. And Mexico is the third-largest supplier of oil to the U.S., behind Canada and Saudi Arabia.

Mexico, like the UK and Indonesia, had relatively high consumption as a percentage of production, at recent peak production, in the vicinity of 50%. The UK went to zero net exports in seven years, Indonesia in eight years. I estimate that Mexico will be approaching zero net exports by 2014.

BTW, Brent Blend Spot is well over $97. Tapis and Bonny Light are at or over $100. I wonder if the decline in Nigerian oil exports combined with a falloff in Russian oil exports is causing refiners to bid up the price of crude.

"No one has all the answers to these problems,"

"Mexico will likely stop exporting oil within seven years (2015)."

It will stop long before then.

Positive feedback loops (oil, grain, power grids interacting) insure that oil exports will encounter "Fat Tails"
and a Six Sigma Event.

Thus when data naturally arise from a fat tail distribution, shoehorning the normal distribution model of risk - and an estimate of the corresponding sigma based necessarily on a finite sample size - would severely understate the true risk. Many - notably Benoît Mandelbrot - have noted this shortcoming of the normal distribution model and have proposed that fat tail distributions such as the stable distribution govern asset returns frequently found in finance.

The Black-Scholes model of option pricing is based on a normal distribution and under-prices options that are far out of the money since a 5 or 7 sigma event is more likely than the normal distribution predicts.

(Too bad Citigroup didn't read this, eh?)

A Six Sigma Event was coined from observation of the normal distribution to describe extreme movements in market prices that contradict normal distribution assumptions.

"I estimate that Mexico will be approaching zero net exports by 2014."

"Approaching zero" is a good stand in for the Fat Tail Distribution and...

The Maximum Power Principle (MPP) states that all open systems (Bernard cells, ecosystems, people, societies, etc.) evolve to degrade as much energy as possible while allowing for the continued existence of the larger systems they are part of. "

The structures and storages that operate our world of humanity and environment are sustained against the depreciation of the second law (of Thermodynamics) by productive inputs for replacement and maintenance. Maximizing the products and services for growth and support appears to be a design principle of self organization as given by Alfred Lotka as the MPP."

As we approach zero grain stocks, the price of grain will accelerate, perhaps as much as six fold.

And Mexico's Electricity Grid could go at anytime:

Electric power systems are frequently nonlinear and, when faced with increasing power demands, may behave in unpredictable and rather irregular ways. We investigated the nonlinear dynamics of a single machine infinite bus power system model in order to study the appearance of coexistent periodic and chaotic attractors, characterizing multi-stable behavior. The corresponding basins of attraction present fractal boundaries, for which we have determined the uncertain fraction scaling in phase space. The bifurcation diagrams are studied with respect to variations of the mechanical power input and may lead to voltage collapse under certain circumstances, which we relate to a boundary crisis suffered by a chaotic attractor.


It's not often that I am accused of being too optimistic. . .

But I am beginning to wonder if the debt markets are basically on their way to virtually disappearing. IMO, there is simply not enough exported energy out there to enable most borrowers to pay off their loans (in the absence of hyperinflaiton of course).

Other than things like food & energy investments, why would anyone want to borrow and who in their right mind would lend?

And the same thing is true of equity investments. IMO, markets are mispricing most equities because there is not enough exported energy out there to generate the projected earnings.

BTW, I think that Nigeria is a prime example of what happens when a regime tries to maximize net oil exports, while to some degree ignoring what their citizens want to consume.

Good time then to get a home with land out of the city. My son just bought his first home with 2 acres, small bungalow house (heated with a new GSHP, a WaterFurnace) in the middle of a farm field, no one around for a kilometer. It has a few other buildings one can use as barns, plus a fair sized pond and a huge garden area all for $200K. We're chipping in some of the money. He wants to get chickens and a couple goats.

The GSHP was running and it hardly makes any sound at all. Nice unit. Definte must for us this year (see the price of NG lately? Rising.)

That sounds so great. Very happy for your son.

As a lifeboat, there are some interesting implied assumptions.

Food will become a problem, Canada will not be able to import wheat from Western Canada, grind it and bake it in Eastern Canada BUT Canada will be able to keep all parts of the rural electrical grid operating.

Since one cannot make a living off of farming two acres, so I assume that he commutes some distance to a city or town (some few can telecommute). And he needs this income to pay off the loan and taxes and insurance, he expects enough fuel to afford exurban commuting for long enough to pay off his debts. And he expects that the electricity will stay on and roads cleared in the years that he is commuting. An implied assumption is that shortly after he cannot drive to work & shop, there will be a sudden collapse where even urban residents will not be working or getting to work.

If there is a multi-year time gap between exurban commuting stopping and urban collapse, hard times will come to him many years sooner. He will be a survivalist, depending on the next crop and the weather and good health (unless that tax or loan man comes) whilst Urban Dwellers are still drinking their coffee.

A social collapse, where no neighbor can be trusted is the primary and largest risk, and the risk of needing medical care (see cleared or snowed in roads), the fire department or other social services are MUCH less of a risk.

IMHO, the exurban commuting choice is bad for society and the HIGHEST personal risk. Separating oneself from society, with it's benefits, support and the efficiencies of urban living (live without using ANY oil directly) and even separating from fellow exurbanites is a risk. Break a leg in the field and ???

The rural areas will be the first without snowplows, the last to get linemen to repair the lines, long distance commuters will be squeezed first financially (many will find their lifeboats foreclosed on and a later mover will get them).

IMO, there is no risk of Canada not being able to distribute minimal food (see bread) in urban areas. There is a risk of support for rural areas, particularly in winter, being cutoff.


The two acres sounds very nice - and realistic. However I recommend he consider sheep rather than goats. Sheep will unfailingly eat grass, and keep his "lawns" tidy, whereas goats may not, and can be rather picky.

"No one has all the answers to these problems,"

"Mexico will likely stop exporting oil within seven years (2015)."

It will stop long before then.

mcgowanmc, you told us that Mexico would end exports by the past new year. Is that still your position? I thought we would be standing in breadlines right now in the midst of the great depression? Just saying careful with your predictions, you lose a bit of credibility with each incorrect one that passes. WT may be right, only time will tell, but he could be wrong, like I have said many times, predicting the future is a most dangerous game just ask JHK, the King of Bad Predictions.

The caveat:

That Mexico's Ruling Class has adopted DC's Disaster Capitalism.

That the Status Quo will exist until it doesn't. Note that
I haven't mentioned City police commanders being killed.

Entire city police dept's being replaced by Federales.
And who will replace them?

The facts bare me out.

Mexico's production HAS fallen as fast as WT, Khebab, Ace,
others have predicted.

Mexico even now is talking about using Indian Refineries instead of US.

Does no one here on TOD think this is Bat Shit Crazy?

West Coast Mexico oil shipment to SoCal have stopped.

We are in the Great Depression. Citi just announce an $18 BILLION
writedown. Brand new.

Right after USB did the world's largest only yesterday at $13 B.

The CDO's have frozen. There is zero counter party risk!

Gasoline at $2.50 NYMEX.

Wheat over $10, even with margins doubling.

Soy just hit $14.

Platinum over $2000.

Question. How high does Platinum have to go before it's more
profitable to mine than coal?

And BTW-2008 has just started.

And Venezuela's solution to this?
Venezuela, Argentina to trade food, oil

Venezuela and Argentina have reached an agreement to exchange food for oil, it was reported Wednesday.

Under the agreement, Argentina will supply 1,000 tons of beef monthly and in exchange Venezuela will provide all the crude needed to ensure Argentina's "human and industrial development," Mercopress reported.

Venezuelan President Hugo Chavez said Argentine needs "no longer to worry about the energy issue." Similarly, he said, "the Venezuelan families are grateful to Argentina for its efforts in making everyday life easier."

I thought this was coming. It's not a good time to be both a big net food & energy importer.

Oh good - that makes me feel much better!

WT, this is not a new ploy for Chevez. He has said for several years that he wants 'fair trade' not 'free trade'...This statement is directed at the IMF and World Bank. His aim is to replace these organizations in SA and the islands. Everyone in SA is aware of the history of the US on their continent and Chevez is making an attempt to end US envolvement there. If one is to believe 1/2 of what is written in 'I Was An Economic Hit Man' it is easy to see why...but, that book aside, there is ample evidence of very bad conduct on the part of the US in SA for a very long time.

WT, this is not a new ploy for Chevez. He has said for several years that he wants 'fair trade' not 'free trade'...This statement is directed at the IMF and World Bank. His aim is to replace these organizations in SA and the islands. Everyone in SA is aware of the history of the US on their continent and Chevez is making an attempt to end US envolvement there.

If you stood up at the UN with all the cameras on you live and you told the whole spanish speaking world(and every other language) to go out and buy this book, Noam Chomsky’s “Hegemony or Survival,” a critique of American foreign policy

I'd say the secret is out, and the curtain has been raised for many.

It sounds like Senor Chavez is setting up his own little bartering system. Yet another way to circumvent using the U$D during oil transactions.

I agree with you and Westexas--the bartering will turn out to be the start of a trend.

From the start I had a gut feel that this pissing contest between Exxon Mobil and Venezuela would develop into something far beyond a mere dispute over money.

For Venezuela it appears to have become a matter on national honor. And what worries me even more, is that Venezuela appears to have a great deal of sympathy among those who like to see Uncle Sam's beard get tweaked.

Venezuela appears to have a great deal of sympathy among those who like to see Uncle Sam's beard get tweaked.

So it would appear from OPEC's comment that it might support Venezuela.

I can't imagine that NOC's would take kindly to the idea of behavior like Exxon's.

I can't imagine that NOC's would take kindly to the idea of behavior like Exxon's.

On the contrary, I think they would be far more pissed at Venezuela than Exxon. Virtually all NOCs use foreign contractors. When Venezuela kicked Exxon out, they offered them pennies on the dollar for all they had invested in Venezuela. Imagine the president this sets. NOCs need foreign contractors and the behavior of Venezuela will make it more expensive to hire foreign contractors if they think there is a chance of being kicked out and leaving their investment behind.

Foreign investors will now demand a higher return because of Venezuela's behavior. They must now face the prospect that it could happen again in other countries. Other NOCs cannot possibly be pleased at this prospect.

I am absolutely astonished that so many people on this list think Exxon is the villain in this case. No, Exxon invested billions in Venezuela and when most projects were up and running they unceremoniously kicked them out and offered them a pittance for their investment. And that kind of behavior simply cannot be accepted by other NOC or those who are contemplating further investment in those nations.

Ron Patterson

Ron: Reality check- the country of Iraq was invaded, destroyed and not one penny of the oil revenue derived has been spent to rebuild the destroyed country. If it wasn't done to specifically benefit XOM they are certainly on the "home team" (unlike virtually all Americans not to mention the godforsaken Iraqis). Nothing against XOM, but when you have people killed for money sometimes people will consider you to be a "villain".

Bryan, we are talking apples and oranges here. I know Iraq invaded Kuwait, then Kuwait pleaded for help from the US and got it. Then Bush 1 left and things were back to normal. Then Baby Bush tried to be a hero. I do not defent Bush 2 in any shape or form. I am backing the Democratic cantidate because McCain is just another Bush and wishes to continue the Bush policy.

But that has not one frigging thing to do with the Venezuela-Exxon debate. Please stick to the subject and if it is apples don't try to make it oranges.

Ron Patterson

Ron: I disagree. You say (in the Venezeula situation) that there should be a world of rules and they are breaking the rules, which is a bad thing. The same company (XOM) that is supposedly getting the short end of the stick here (unfairly according to you) stands to benefit from the use of the schmuck taxpayer's money not to mention the loss of life in the Iraq situation. According to you, this is the proper working of the "free market". Whatever.

uh huh,

Ron, the argument BrianT makes IS about apples and oranges.. but they are all Oily, Nationalised Apples and Oranges. Have a seance, ask Mossadegh about his Oily, Nationalized Oranges.


Jokuhl, it would be helpful if you would just make a point instead of just expressing silly hyperbole. I am not a psychic and do not hold séances therefore I cannot ask Mossadegh anything. You obviously know that therefore you put your post out of reach of normal refutation. That is a cheap rhetorical trick. I am unimpressed with such silly tricks however others may have a different opinion of your verbiage. However is does give me a chuckle. Being a student of silly rhetorical tricks and always enjoy a new one. Thanks for that anyway.

Ron Patterson

3 Vulnerable Regimes, Nationalizing or Threatening to Nationalize their Oil Supplies.
2 Down,
1 To go (OK, a lot more than 1 to go, but they're working on them too, I'm sure!)

I can't believe that my point was all that obscure, though I realize my writing can be far from Literal. You seem to have a way of not even trying to get the point being made..

I don't think 'Hyperbole' fits, but 'Rhetorical Device' would be fair enough.

Bob Fiske

ps, I held a Seance, and 'Mossadeq' referred me to this Wikipedia page.. let me know if it's way off in it's conclusions..

"The Dulles brothers had worked for Sullivan and Cromwell, a prominent law firm that represented Standard Oil of New Jersey. Standard Oil had wanted to gain oil interests in Iran for many years; but the AIOC had a monopoly on the region. The Dulles brothers saw a chance to give Standard Oil the ability to set up operations in the region, when the British asked about a coup. The British, no longer the dominant power, knew they could not remove Mosaddeq without the US, which meant that the US would be entitled to a portion of the Iranian Oil, which they were okay with, because 60% is better than nothing. After the Coup, 40% of Iranian oil was owned by US oil companies."

related NYT article:

The NOCs have zero need for foreign investors or contractors. Zero. Nada. They have boodles of money, and can now call the shots. Smart IOC's like Total are adapting. Stupid IOC's, like Exxon, are pulling plays like this. They are dooming themselves.

The NOCs have zero need for foreign investors or contractors. Zero. Nada.

Wrong, wrong, you could not possibly be more wrong! I was a contractor in Saudi for two years and an Aramco employee for three more years. Aramco is totally dependent on foreign employees and contractors. Many of my friends were former contractors in Iran or Kuwait. Every oil company in the Middle East is totally dependent on foreign contractors.

Schlumberger, Halliburton, Brown and Root and dozens of other contractors are in the Middle East because they are needed there to drill and service oil wells. I was with Dravo Utilities, then a contractor to ARAMCO, for two years in Saudi. We built the first Gazlan power plant there. A second has been built by another contractor since I left.

To say that NCOs have no need for foreign investors or contractors shows an unbelievable amount of naiveté as well as a total lack of knowledge as to how NCOs actually operate. Do you actually believe that ARAMCO could build gosps, power plants, refineries, petrochemical plants, install water seperation equipment and drill and then pour horizontal MRC wells without foreign help? Goodness man, try to study up on what is really going on over there.

If they did not truly need those contractors they would not be there. That is just plain common sense.

And it must be noted that when the four oil companies that built ARAMCO, (The Arabian American Oil Company) left Saudi in the late 70s and early 80s, they were adiquately compensated for their investment. Saudi did the honorable thing and paid those that had built the company a just sum for their labors and investment. Venezuela did not. That is the point of contention.

Ron Patterson

I am absolutely astonished that so many people on this list think Exxon is the villain in this case. No, Exxon invested billions in Venezuela and when most projects were up and running they unceremoniously kicked them out and offered them a pittance for their investment

Agreed, But this battle is also causing the price of Oil to rise. Exxon profits from higher oil prices. If VZ does shut off the taps to the US, oil prices will head much higher. Why I understand Exxons desire to get back its investment, this battle will result in further geopolitical deteriation with Oil exporters.

As a taxpayer and energy consumer it probably would had made better sense for the Us gov't to re-imburse Exxon for its losses. Now all americans will suffer as the price of oil rises again. Exxon may win the battle, but everyone else stands to lose.

TechGuy, sorry but you are a bit off on this one. Chavez is not really as dumb as he lets on to be. He clearly realizes that oil is a fungible commodity. And his oil is heavy and sour, meaning that almost any oil is better than his. His oil can be replaced with any oil from anywhere in the world. If he shuts off oil sales to the US then those that he does sell his oil to will just buy less oil from someone else. That oil will go to the US.

Chavez can only hurt the US by not selling oil at all. That would drive prices higher and wreck his budget in the process. But that in turn may help the entire world by pushing oil prices to a more reasonable level, pushing out the date when the oil supply will sharply decline.

Ron Patterson

If Chavez still owns the CITGO refinery, he could sell his gasoline from that refinery to Mexico, which, as noted above, is considering sending it's oil to India for refining. Chavez is not saying he would not MOVE his oil to the U.S. only that he saying he won't SELL his oil to EXXON or the U.S...

E. Swanson

Third option, PVDSA "creates" new demand. Long term (several years) deal with China (and India ?) to fill their SPRs at much faster rates than they are currently being filled.

India has two new (last couple of years) heavy oil refineries. Eash was built in just one year. India, China co-operation to build a Venezuelan oil "upgrader"for long term storage ? Remove metals and sulfur, take the asphalt and bunker fractions and crack them while adding some hydrogen and end up with a few different syncrudes that can fit various refineries. Perhaps sell some of the asphalt locally instead of storing it.

Three or four years of 250,000 b/day (first deliveries 1/1/2009 ?) specifically for the SPRs (much faster fill than currently) would have an impact.

And after the SPR contract was over, the tankers could still keep coming.


Good thoughts, mcgowanmc.

Just one quibble:

"The facts bare me out."

I sure hope not! How about:

"The facts bear me out."


Seriously, though. There are many changes taking place. Market volatility is a sign that the anarchic and corrupt so-called "globalized free market is in fact lawless. Those with wealth and power use this as leverage to get more, largely at the expense of the planet and other people (other nations) and now even at the expense of the entire economic system.

I think that there are those who do not care if the system has to bear the costs of their corrupt and unethical ways, and may not even care if the contribute to bringing the system down around them.

In fact, according to "The Shock Doctrine," the NeoCons want to do exactly this: bring the system crashing down and impose a new, blatantly authoritarian fascist system to replace the softer corporatism that is still a bit stifled by old pieces of paper -- the Constitution, debt notes, things of that sort.

Just one quibble:

"The facts bare me out."

I sure hope not! How about:

"The facts bear me out."

That's why we call it Doomer Porn, beggar ! :)

Mac, you are right but you left out a couple of items on your list:

1) Occasionally Mexican pipelines and pumping stations are blown up by some organization with skill, timing, and the ability to recognize what disruption will cause the most damage to foreign investors and the Mexican economy.

2) Posted on Drum Beat recently was a list of how many illegal taps were found on Mexican pipelines in 2005 vs 2006. There was a large increase indicating lots of oil and gas is being stolen and I see no reason that the amount stolen will decrease.

As FF prices rise for Mexican citizens and businesses the amount of gas and oil stolen will increase. See Iraq (Basra) for an example. At some point in the oil export decline the Mexican Government will face a total collapse of their economy, followed quickly be a collapse of the government. Imo, it will not take another seven years for these events to occur.

Hey, antidoomer, where were you on the little Mitsubishi car? George Asebius had to put up the link. You're falling down on the job, man!

Fancy language for reminding us that Murphy is alive and well -- and was probably an optimist!

From my own review, economics seems to be based on ordinary Variational calculus. A not particularly powerful thing. I have been wondering if the assumption that resources (energy) are essentially infinite is essentially the same as saying that the curvature of resources is flat. If one allows curvature (Curl) in resources, could one then not redevelop economics using Riemann geometry instead of Euclidean geometry wherein the unstated assumptions of infinite availability and substitutability become explicit as curvature in the universe of economics?


I thought Shell had declared force majeure regarding a production problem in the Bonny field - some 400kbbl/day worth of production. Is that not all of the field, or was the problem resolved?

I see among Leanan's list that some insightful and hardworking journalist is predicting that Mexican oil production is going to hit peak during the "coming five year period". Moreover peak oil is happening [even as we breathe today's air] in Britain and Indonesia. To give our intrepid reporter the benefit of the doubt, I suppose the first draft of this article might have been written several years ago. Still he does risk the opinion that "peak oil...is a real possibility sooner or later."

From the article:

The door to Iraq's oil opens

Peak oil - when global oil production will reach a peak and then begin to fall - is a real possibility sooner or later. It has happened in the US; it is happening in Britain, the North Sea and Indonesia; it is expected to happen in Mexico and some other major oil producing countries during the coming five-year period.

Yesterday, there was some discussion about TOD press releases, predictions and what not. It was pointed out that a press release should have a 'newsy' angle.

How's this?

February 15, 2008, INDONESIAN OIL PRODUCTION HITS PEAK - Rumours in the Palace that UK oil production may be peaking

Houston, Pulitizer Prize Winner(PPW) and possible nobel laureate Yan Dergin shocked a gathering of oil industry executives today when he leaked confidential data, until now closely guarded in the IHS vaults in Geneva, revealing that Indonesian oil production has unexpectedly begun to tumble. "I couldn't in good conscious keep this from the world's jounalists any longer", said the surprise whistleblower.

The Guardian Weekly:

Palm oil burns Sumatra's future

The developers have destroyed 100sq km of virgin forest in a remote spot. But this is a far from isolated case. It happened in Riau province, an area larger than Portugal and home to one of the world’s last expanses of primeval forest, which once covered most of Sumatra’s 443,000sq km.


Bid adieu to the orangutan.

Then how can they remake 'Every Which Way But Loose'?


Japan, the European Union and the United States would each need to cut greenhouse gasses by more than 80 percent for the world to meet a goal of halving emissions by 2050, Japanese scientists said Thursday.

A summit last year of the Group of Eight rich nations agreed to "seriously consider" halving global emissions by 2050 in hopes of halting global warming.

To achieve such a goal, Japan -- which is already far behind in meeting its current commitments -- would need to cut emissions by 85 percent by 2050 from 1990 levels, said Norichika Kanie, assistant professor at the Tokyo Institute of Technology.

His joint research with Yasuaki Hijioka, researcher at the National Institute of Environmental Studies, found that the United States would need to cut emissions by 88 percent and the European Union by 83 percent.

Who's you? Who's me?
What's gonna be?
Terra Firma's under me
Blue Sky so far that I can see

Bush and Cheney they are the man
Got their big fat neocon plan
The oil in Saudi and in Iraq
That's what's got them onto my back

My mortgage is done and I'm on the run
Greenspan and Bernanke it's some sick bad pun

Rich man sitting pretty putting up his feet
Wall Street ate up the whole of Main Street
Now I say that all just ain't fair
Fatcats sitting in their golden armchairs
Lord of all that he can survey
Just borrows the funds that he can't pay

Yankee doodle American, big bad assed man
Says “all you foreigners go on back to your own lands
If we catch you doing what we don't want
We'll nuke you there too, in your own haunts”
Waterboarding Arabs in Gitmo jail
Across the fence is workable Cuban transport rail
Hillary, Obama and McCain too
It’s all a sick joke and that’s too bad, ‘cause you can't sue

What were once cheap goods from our US Wal Mart
Were slave made by Chinese so my dollars from me could part
So every day earning less and spending more
I’m getting so desperate, feeling so forlorn

Peak Oil has come and nobody cares
I guess you'd better all start saying your prayers
Peak Freaks wanna hide way out in a cave
But for that count me out, I'm just too stupid or brave

“Let’s just grow the fuel and make a clean tech world”
Oh yeah - to keep our planet on the same path we are hurled
The ethanol and nukes and the windmills and the solar
That all turns a profit for “the man” - so “yippee” he’ll holler

Our atmosphere it’s getting way too hot
That polar icecap up there is going to pot
All those habitat unadjusted animals dying
All those poor hungry people they’re a crying
World deserts keep right on growing
Soon there won’t be no freshwater flowing

The CO2 problem won’t go away soon
Except if we move out to live on the moon
Turn off your cars and all electricity
You’ll be back in the stone age, it’s pretty shitty

I'm the poet rapper who chilled out the scene
I'm little, I'm white, I'm boring , I'm lean
I can't get my head around all this crap
Maybe I'll just go home, lie down, and take me a nap

Ain't got no solutions
No money to burn
Can't give no suggestions
Just learn, learn, learn

Very fine, Galacticsurfer -- I take it that this is your own creation?

Re: Odell

Perhaps, he can send TOD his data?



I got inspired from reading a poem anthology.

Youu can spread it around and call it "Who's you, who's me".

It should be part of PO culture to entertain not just teach and preach. Not everyone can read a graph. Maybe someone can put this to music and make a good rap. I don't play any instruments unfortunately.

Fleam, are you game? Maybe a recording and upload it as an MP3 somewhere forus allto listen to. Cool idea, why not.

So Long, Hydrocarbon Man was asking for submissions of peak oil related art and poetry awhile back. Dunno what happened to that site; it's 404 at the moment.

Roadkillbill has some great post-peak apocalypse drawings. My favorite is the ruins of the Mall of America.


I have about 40-50 Peak Oil poems - was waiting for April Fools and was going to post them here....

I like this Peaknik songwriter idea! Go, galacticsurfer!

Meanwhile I heard this ballad for the first time the other day. The PO message in the lyrics blew me away. I don't know when it was written, but very prescient IMHO. Lyrics attributed to Archie Fisher.

Men Of Worth Lyrics, sung by Mary Black

Leave the land behind, laddie, better days to find
The companies have the money and they'll soon teach you the skills
Green fields fall away, the forties and the brae
Be a madman or a roustabout, they'll soon teach you to drill

Please link to lyrics, rather than posting the whole song. Just as with news articles, posting more than an excerpt is a copyright violation. (The exceptions being if it's a song you wrote yourself, or if it's a song that's old enough that it's in the public domain.)

Cool. I don't have musical or compositional skills for collaboration, but why not contact oilycassandra -- isn't that the person who put the recent video on YouTube? There was some discussion of it awhile back,

Your lyrics would sound good just set to a beat. Find someone with a digital video camera, find someone to tap out the rhythm, and maybe someone to dance. (Definitely add that visual aspect to hold the attention -- most people need interesting movement to keep attention.)

Then open a YouTube account and upload it for all the world to see!

Why not?

I think Hoonose - Oil on Youtube has a nice beat.



A carbon price close to $100 per tonne of CO2 - more than three times higher than it is today - is needed before industry will invest in the thousands of carbon-capture-and-storage (CCS) schemes needed for reducing greenhouse gas emissions, Shell warned yesterday.

$100/tonne CO2 corresponds to $350/tonne coal. Now add $100/tonne for the coal. I get $450/$45 = 1000% of the fuel cost to a power plant, relative to the situation last year. Are you ready for $0.70/kWh ?

The $100 is at the top end of the estimate. In the article they actually reference over $50 - not too far from what Europe already plans.

Better insulation, air source heat pumps (now good for up to -30C) and nuclear power should keep costs reasonable.

The problem is the time for the nuclear build, but conservation should help us get there.

Better insulation, air source heat pumps (now good for up to -30C) and nuclear power should keep costs reasonable.

Hi Dave,

Even something as simple and inexpensive as caulking and weatherstripping or 3M window films can significantly reduce heating costs and, at the same time, enhance overall comfort. Most of us, be we homeowners or renters, can reduce our energy use by 5 to 10 per cent at little or no cost and with a few minor lifestyle changes could notch this up further. If some of these savings are subsequently re-invested in other improvements such as replacing older, inefficient white goods with EnergyStar/A label models, the results can be dramatic.

This is what puzzles me. By now, all of us should be well aware of the many options available to us and yet, surprisingly, so much is left undone. One example: a friend of mine spends $4,500.00 a year to heat his home and yet won't spend $250.00 on a home energy audit that would identify the things he could do to reduce this expense and grant him access to federal and provincial funds that would pay for much of it. I've done everything I can short of paying for it out of my own pocket and it still hasn't happened. This is an otherwise bright man, but I'm dumstruck by the sheer stupidity of the situation.


Well, Paul, I have a little confession to make here for the good of my soul. I am a guy who goes to local civic clubs and schools and gives hellfire and damnation talks, full of numbers, on how important it is, and how easy, to save money on heating and cooling. But I myself live in an old farmhouse with medium bad insulation. This summer I finally got some pretty good insulation in (R50 attic, etc), and was AMAZED at the instant improvement- wow! what I had been preaching was actually true!

And this winter, moderately colder than recently, I am putting a measured half as much wood in our stove to keep us nice and overheated (maybe 23C), causing me to not use my sweater much.

Jeez. If it took me so long to overcome sheer inertia-there was no other impediment- I can sympathize with your otherwise bright friend.

Thanks, wimbi, I actually feel a little better myself. Maybe there's some truth to that old expression about the cobbler's children requiring new shoes after all. In any event, you've probably benefited from this experience in a couple ways. In addition to completing the work, you've likely gained a greater appreciation of the human dynamics at play and, if you so choose, a story you can share in future outreach which may help your audience connect with you at a deeper level. Many years ago, when I was tasked with helping my colleagues adjust to the "new computer age", I was never shy about admitting my own struggles, insecurities and failures as it related to this transition; I had a pretty good sense of they were coming from (having just experienced it myself) and that helped me, personally, on so many levels. It also made everyone else feel much more at ease and it fostered greater interaction and more open dialog.


air source heat pumps (now good for up to -30C)

How do you keep the evaporator coils from frosting up if the dew point is > -30°C?

I have no idea - I am not technically literate enough, but here is a link to the site of the Canadians who build it:
Hallowell International: Technical Data

And here is a link to the new Eco-cute form Japan, good for up to -15C and in full production for the Japanese market:http://www.jarn.co.jp/News/2003_Q2/30620_Eco_Cute.htm
"Eco Cute" CO2 Heat Pump Water Heaters

Technology and Market Development of CO Heat Pump Water Heaters ...

If you look back a couple of days to the thread here on ground source heat pumps the technology for low-temperature air pumps is also extensively referenced.

You might also mange to persuade HereinHalifax to give you an explanation - he is really well informed on the subject.

Defrost mode circuit is standard nowadays.

Demand defrost is the most advanced feature of the demand circuits.

OPEC's latest Oil Market Report is out this morning:

Some nations had slightly increased output and some slightely lower output. Overall it was exactly the same as last month, December. Total OPEC 13 production for January was 31.99 mb/d.

Ron Patterson

Ron, I don't follow OPEC 13 numbers very closely. What is the record for a month?

Robert, the record is 32,242,000 barrels per day in September of 2005. That is using OPEC's numbers, not the EIA's and that is C+C. Angola was not a member of OPEC in 05 so I am using the EIA's numbers for Angola (and Ecuador) in 05. So right now the OPEC 13 are 252 thousand barrels per day below the record with a January production of 31,990,000 bp/d.

However most of the increase has come from Angola. The record for the OPEC 12, not counting Angola is 30,882,000 barrels per day in September 2005. January OPEC 12 production, (sans Angola), was 30,130,000 barrels per day. That is 752,000 barrels per day below their record. OPEC 12 production was down 50,000 barrels per day December to January. That means Angola was up 50,000 bp/d December to January since total OPEC production was exactly flat.

Ron Patterson

Thanks Ron.

Asia times has an interesting article on Iraq.


Iraq's proven reserves of oil are only smaller than those of Saudi Arabia and Iran - and Iraq is only about 30% explored. Experts are generally of the view that Iraq's actual oil reserves could well turn out to be at least double the 115 billion barrels of proven reserves. Beyond that, it is anybody's guess as to the scale of Iraq's as-yet-untapped gas reserves.

The author goes on to suggest that Iraq could produce 10 mmbd in a few years at very low cost per barrel.

Is this credible? If so, are these mmbd included in the current production predictions?

Sounds like a lot of oil that could be coming on line in the near term.

Great article, thanks.
I second the call. There are many rumors out there. What do we truly know about Iraqi oil reserves?

Bakhtiari thought Iraq might have 80-100 billion barrels, and he did know a wee bit about the area, I think. It's a huge amount, but I'd take any suggestions of there being much more than that with a grain of salt. But ultimately it's impossible to tell right now.

Indeed, IRAQ is the black box. Not one single oil forecast model does include Iraq, that's scary. Not even Simmons is mentioning Iraq. IMO this could be a big mistake. Whether Iraq has 100 billion or 250 billion of reserves doesn't matter. But what DOES matter is the probable prospect of 6 to 10 mbd production within the next 6 to 8 years. As all know, the security situation has improved decisively in the last several months. All those Bush and Cheney bushers could be dead wrong the other day.

I decided this week to invest some money into a new Iraq equity fund (also as a hedge to my long positions in energy and agriculturals) The market value of all listed companies on the Baghdad stock exchange is approx. 1/1000 of those in Saudi Arabia. A good entry point for medium term investment, I guess.

"As all know, the security situation has improved decisively in the last several months."

This is SO wrong, I don't know where to begin. Perhaps going to Juan Cole's blog and reading the last two months worth of entries, http://www.juancole.com/

ASPO had an article awhile back about Iraq. Supposedly, the U.S. conducted a survey of Iraq's oil reserves after the war. It is classified. It was supposed to be made public in 2004, but here we are in 2008, and it's still classified.

But the "whisper number" that has leaked is only 47 BBL. Not the 112 BBL claimed.

Why so low? Partly, for the same reason all the OPEC reserves are in question. When OPEC decided to base quotas on reserves, everyone juiced up their numbers. Partly, because the oil fields have been severely damaged by the way they were produced during the ten years of sanctions.

Presumably the survey was done using the latest techniques. Color me cynical but I suspect the large US Oil companies DO have access to the numbers. According to the article:

In fact, Iraq may host the largest untapped reserves in the world. There is a strong likelihood that Iraq's reserves may turn out to be exponentially higher than the current estimations, which are based on old-style seismic surveys. All said, unsurprisingly, the world oil market is in a tizzy when Shahristani says something, anything. He is about to sign the contracts for these and many other large Iraqi oil-producing fields.

I'm not knowledgeable enough to know what the latest "non-seismic" techniques are being used. Maybe someone here could shed light on that.

I also recognize that there's a lot of money to be made by selling exploration and leasing rights to the majors so this could be a case of pump and dump.

I'm not sure that I understand that correctly. "Old style seismic" I take to mean using seismic to look for structures and then assuming that some percentage of the structures had oil, and some percentage of that oil was recoverable.
"New style seismic" I take to mean using the difference between shear and pressure waves to test if those structures actually have fluids like oil, gas, water, etc, in them.
Since both old and new style seismic are much cheaper (and in Iraq, much faster and safer) than drilling, we really ought to know if those structures mapped in the fifties and sixties by seismic actually do have fluids in them. We have been running that country for some time, after all.
Drilling to find out if it's light, sweet, oil, is a whole nother thing. Not to mention producing the oil and transporting it to the Gulf or the Med.

I know about this "whisper number" that has leaked is only 47 BBL, OPEC quota reserves, damaged oil reserves...but on the other hand:

- they have been producing way far below capacity for years, thanks to the Americans

- only 30% is explored

Expect big discoveries within 12 months... by American Oil companies. Yes, I don't like this, but it could be a big hit against "peak oil". Peak oil is still here, but including Iraq it will be postponed another 8 years.

Hey, where are you? You end of the world as we know it doomers? Where is your depression? And above all: Where is your analytical work about Iraq oil reserves? Why not to include Iraq in your doom scenarios? Because your energy long positions could get hurt? Come on guys. Do your work.

BTW: I'm sure, that the super doomer Kunstler never heard anything from Iraq.

I don't expect big discoveries.

Deffeyes' first book has a section where he talks about being in room with a whole bunch of petroleum geologists. Turns out that no matter where you pointed on a map, someone in the room had been there, drilled there, looked at the cores, etc. Even the most obscure valley in Iraq or Iran.

He says the only place that hasn't been explored is that section of the South China Sea where "political considerations" have prevented exploration. And it's looking like that is mostly gas.

On page 126, item 3 he says:

Iraq and Iran are the big puzzles. .... Which country would discover the most oil if serious exploration, using advanced techniques, were to resume? I had been saying that it was Iran, because Iranian oil fields are located on spectacularly visible surface anticlines. A retired petroleum geologist told me, "Nope, it's Iraq. We plugged and abandoned any well that wouldn't make 5,000 barrels a day. Threw 'em back in the water."

From that I have to conclude that Deffeyes is agnostic to hopeful that large amounts of undiscovered oil exist in Iraq.

I think the question is how you define "large." Large as in could make you rich if you invested in it? Sure. Large as in enough to make a difference in Hubbert's Peak? No.

That's not my concern, Leanan. The Alaska and North Sea discoveries probably didn't shift the peak all that much either. But they surely did force energy prices down for a decade. This resulted in a market distortion that erroneously convinced investors that energy exploration and substitution was not a good use for their cash.

My big unanswered question is about what we can expect from the "advanced survey techniques" that Deffeyes references. If they are as improved as the MRI is to an XRay, their use could result in some significant discoveries. For all we know the "whisper numbers" are a subterfuge by the players in the know to keep competitors off the trail.

It's a crap shoot any way you look at it. But 8 mmbd of incremental production from Iraq would make quite a difference short term. Bear in mind that, if the security situation doesn't deteriorate, a well in Iraq can be drilled quickly and cheaply. Nothing like offshore.

LJR: IMO, the assumption that increased oil supply from Iraq would necessarily flow to the USA is a stretch. China is going to be demanding an enormous amount of oil and they have the money to pay for it. The oil companies that control Iraq's oil supply have no particular obligation to support the USA economy (Haliburton is typical in this regard).

Prudhoe Bay is about 12 Gb. The North Sea, about 60 Gb (C+C).

Let's assume that we missed an entire Lower 48, 200 Gb. If we use Deffeyes' estimate of 2,000 Gb (C+C) for the world, it would boost URR to 2,200 Gb.

I don't now long it would postpone the peak, but not for long, as I discussed below using the Lower 48 example.

The Alaska and North Sea discoveries probably didn't shift the peak all that much either. But they surely did force energy prices down for a decade.

I don't think it's really an analogous situation. There was no oil shortage. Alaska didn't shift peak oil USA at all - but peak oil USA wasn't the problem. The oil embargo and Iran were the problem.

Back of an envelope, if you get 8 mbpd (extra) out of Iraq starting tomorrow, oil prices would fall to roughly $40 to $45. (That would be a lot of oil suddenly on the market, but you'd also reawaken a lot of demand that recently dropped out as prices rose.)

That would discourage virtually all exploration and even a lot of marginal current production, including, for example, some of the difficult projects coming on in Siberia, some of the deep Gulf of Mexico stuff, etc.

And the decline rate in the rest of the world would go on unabated.

So, we'd reset to $40-$45, and then see prices increasing sharply, at a faster rate that the rate at which they've been increasing over the past few years.

It would still be helpful, if we saw it as a lucky break and acted with vision. But if it comes to it, I'll lay you odds that we won't act with vision. We'll just party on the oil.

But even if there's a potentional to get an extra 8 mbpd out of Iraq, or wherever, it's highly unlikely that it's just going to pop into existence that fast. You'd have to gather all the people, all the equipment, analyze all the fields, even if the wells are relatively easy and cheap to drill.

In real life, it would likely just stretch out the plateau a bit.

If the oil is brought on later, rather than sooner, psychological and political forces would inhibit it being brought onto the market. For example, by the time we actually drill ANWR, I bet you most of the oil will be reserved for fighter jets.

Moe_Gamble -

While a sudden flood of freshly developed Iraqi oil would of course depress the market over the short term, I suspect that the Bush Regime is thinking along quite different lines. Which probably go something like this:

- Through continued military coercion, the US will eventually be able to control almost all of Iraq's oil production (got to leave some for the locals, you know).

- It is in the best interest of the US to invest heavily in order to create at least a two-fold increase in Iraq's production capacity and to secure the ability to realize that capacity.

- This production capacity can be utilized or held back to whatever extent is required to create favorable market conditions for the US.

- If the US can secure real Iraqi oil reserves of at least 100 billion bbls, then at $100/bbl, those reserves have an imputed value of roughly $10 trillion.

So, I am sure that Bush, et al, view spending a trillion or so dollars on the occupation of Iraq (and the death of several thousand US troops and the permanent maining of many thousand more) as a real bargain.

Such a deal!

I suspect you're right. I suspect that's the plan, I suspect you're right that the oil wouldn't be flooded onto the market, and I believe Bush and Co. truly believe they're doing the best thing for the home team.

You guys have an enormous amount of confidence in the US government-I hope you're right in that regard.

Jeez, pretty hard to have confidence in that crowd, if for no other reason than Katrina (and there are plenty of other reasons). More just trying to understand what they're thinking about themselves.

Joule, your synopsis of the current administration plan for Iraqi oil exploitation is reasonable. However, there is always the possibility of a fly landing in the ointment and a couple of the flys circling the ointment now is the US economy and the world economy.

If the US Fed and other central banks continue to debase currencies (lower interest rates) there is the possibility of miscalculation that could lead to hyper-inflation. Last month US exports were up because a weak dollar makes US products abroad look a bargin. Some other countries will counter by devaluing their own currencies to shore up their own industries to compete with US exports. The countries that engage in debasing their currencies to compete with other exporting countries are at the same time attempting to reinvigorate their own 'consumer driven economies' by placing more debased currency in the hands of consumers. A 'currency devaluation' competition between countries, if carried too far, will trigger hyper-inflation. Big oil importers such as the US and EU are among the most likely candidates to trigger hyper-inflation. Once hyper-inflation strikes a currency the issuer of that currency is out of the game. Once the citizens of a country realize that the currency is going to continue to inflate and never stabilize they will refuse to hold the currency and they will be willing to dump it for anything of any value. Right now, the condition of the US and world economy is so shaky that no one can predict what straw will set off hyper-inflation. Bernanke, Paulson, et al, are playing a very dangerous game. On the other hand, what are their other choices in the face of declining oil and increasing oil prices? But, the more the currencies are debased the higher the price of oil (partially because of debased currencies) and the higher the price of oil the more consumer prices rise. Soon, the citizens will become aware of what is going on, if only on an instinctual level.

For America, GB and possibly the remainder of the EU, Iraq represents the brass ring. If Iraq can be secured enough to allow US control of exports, through a proxy government and oil ministry, the economies of the US, et al, can live on for a while with miles of smiles...happy motoring, iow. But, a slight error on the part of any of the participants in this game can lead to economic catastrophy. Every move by every player has to be carefully weighed. Imo, its nothing less than a table stakes poker game for the future of the world economy as we know it. The huge disadvantage for the US is that the longer the game continues without Iraqi oil production on line, the nearer to economic disaster we approach...and all the players are aware of the US situation. The baiting by Venesuela and Iran, Russia occasionally stirring the pot, the huge soverign wealth funds, all are calculated moves by countries that we have treated poorly in the past and they wouldnt mind seeing the US go down the tubes.

Ludwig von Mises 'Inflation can be pursued only so long as the public still does not believe it will continue. Once the people generally realize that the inflation will be continued on and on and that the value of the monetary unit will decline more and more, then the fate of the money is sealed. Only the belief, that the inflation will come to a stop, maintains the value of the notes.'

Good summary Joule. It is a high stakes poker end game.

Nice said. My point:

Most of your "world oil forecasts" do not include Iraq. But Iraq is the key point. Including Iraq, peak oil would be years away. And it will be years away. You missed one point, the one most important one!

Missing one single point can cost you a fortune.

euro, Iraq having whatever amount of oil you wish to assign won't change the peak because of the following simple calculation:

Eight years from now, Iraq adds 10Mbd; depletion from most of the existing sources at CERA's rate of 4.5% means that 78 - 78*(.045*8) = 49.92Mbd or 28.08Mbd less than now.

Of course, this does not account for the few known increments to the current production, but their total will be nowhere in the ballpark of the difference.


That is why Prudhoe Bay didn't make a difference in the US peak:

It was a bump on the backside of the curve, that's all.

Also note that though production began in 1977 and was ramping up nicely by 1979-1980, it was not enough to smooth out the effects of the Iranian revolution. Oil jumped from $14 to almost $40, despite rising production from Prudhoe and the North Sea.

As Leanan noted, you have to keep "large" in perspective. When Hubbert did his Lower 48 projections in 1956, he found that a one-third increase in URR delayed the peak by five years, from 1966 to 1971.

According to this article:


Russia may reenter the W. Qurna field and develop 600,000 barrels per day of production. Cheney had indicated Iraq might produce 4 million barrels per day. Kuwait was debating whether or not to use EOR technology to boost its production to 4 million barrels a day similar to what the Mexicans did when Cantarrel started to weaken. The UAE has EOR projects in progress and is yet increasing production that is expected to peak early next decade. OPEC cut back in 2006, not due to depletion per se, but due to wanting higher oil prices and with knowledge that they cornered the export market. There is very little danger of a major oil price collapse in the next few years.

And as I reminded people on ace's thread today, there is also a good possibility that, given the chaos, the production from Iraq 6 years from now will be 0 mbd.

euro -

I hope you're right, but investing in Iraqi stocks at this stage of the game, strikes me as a bit like investing in Confederate dollars during the latter days of the American Civil War. They were dirt cheap, but there was a very good reason why they were.

But what DOES matter is the probable prospect of 6 to 10 mbd production within the next 6 to 8 years.

What is so great about The Oil Drum is when things get really boring you can skim the messages and always find a little comic relief somewhere.

Seriously though, what some people have been touting are the possibilities of great new fields in th "Western Desert" of Iraq that borders Saudi Arabia. Well, it has been explored, many years ago, and found to be just like the desert on the Saudi side of the border, empty.

Ron Patterson

That is what I don't understand about claims like those of euro - Iraq was one of the earliest areas explored for oil - under the British regime post-WWI (Churchill's idea of gassing the tribesman from the air and all that).

And I am rather sure exploration continued after that for a very long time right up to the time of sanctions - so why does anybody believe that there are "large unexplored regions of Iraq"?


YouTube threw a coming out party of sorts to hundreds of top ad industry execs in New York City this week. The event was called 'Videocracy,' |and it's the largest ever advertiser event thrown by Google (NasdaqGS:GOOG - News) which bought YouTube for $1.6 billion dollars two years ago. This event--a kind of meet-and-greet for the ad community--was for execs to get to know what YouTube has to offer.

Maybe they should call it an "idiocracy."

They can't because it's already taken.

In the guardian article posted today, Peter Odell claims more oil is discovered than used every year. I was under the impression this was not the case, can someone confirm or deny this with some stats?

Thats not quite what he claimed. He said reserves are going up. I took this as largely due to OPEC reserves never going down (despite pumping approx 10 billion barrels a year and finding very little).

He also said IOCs wouldn't increase production as it would reduce their profits.

Hard red wheat is limit up again (i think thats 9 days out of 11) and is at $19.80 a bushel. When it broke $6 a bushel last summer that was an all time high. I have to believe there are going to shortages. I know I can't buy in bulk at local bulk food store right now - orders are backlogged. Ticker symbol MWH8. I don't know enough about the differences between soft and hard wheat other than the hard has more protein and is used in breads, bagels etc. Wow. $20 a bushel....

If you like good pasta, this is not good news---

Barille (Brand) pasta at the local air-conditioned AND Heated (season dependent) (semi-gourmet)grocery is $1.19 for a 1 lb box; often $0.99 on sale. Has been so for a long time.

Will it list for 10c more in 2009 ($1.29 for a 1 lb box)?

Time will tell :-)

I would bet that the wheat used to make that pasta is $0.05 (bulk price)

There is a lot of semi-prepared food wasted in chain-type food service places everyday. At a sufficiently high prices, perhaps less will be wasted.

People in poor countries (Third World for some of you) will starve though.

A bushel is 56 pounds (Wikipedia). Therefore, a pound of pasta will have 35 cents of wheat price in it (19.80/56). If it was 5 cents in the good ole times, the price will increase 30 cents. This is IF they JUST pass through the price, but nobody does this these days. A good gross margin is usually 40%, this means if you buy something for 60 cents, you sell it for 100 to pay for staff, air conditioning etc. If they pass this on with a 40% margin in the sale price, it will be 50 cents more expensive, or 1.49 instead of 0.99 ... 1.69 if not on sale.

35c in bulk wheat cost in that pasta is quite a lot. I have to agree that if prices stay at $20/bu, or if $20 is the average purchased cost for the foodgrain processor/pasta-maker then the price will go higher.

The 2004 End of Suburbia (EOS) DVD laid it all out for us:

Deflationary trends in auto, housing & finance.

Inflationary trends in food & energy.

So, what is the prospect for things turning out materially different from the EOS outlook going forward?

There is always this confusion about the real meaning of the terms 'inflationary' and 'deflationary'. Here they seem to indicate that the cost of autos, houses, and the cost to borrow money will decline, while the cost of food and energy will rise.

I wonder about the cost to borrow money in oil importing nations. Why would it trend down, if, implicitly, the risk that money will be employed profitably is increasing?

In regard to the technical terms, that's why I used adjectives, instead of calling it deflation or inflation.

The Federal Reserve is trying to lower short term interest rates, but the rates that a lot of borrowers actually have to pay is going up.

I do have a question for the audience regarding the eternal debate between deflation and hyperinflation. I agree that deflation has arrived big time. However, there have clearly been instances of hyperinflation, e.g. Germany in the Twenties and Zimbabwe currently.

If the Fed/Federal Government is determined to hyperinflate, how would they do it?

WT: Lots of options-you can run a massive fiscal deficit and monetize the debt, you can expand the business of Fannie Mae and dump it on the taxpayer. Any government spending not paid for in taxes is inflationary. One of the wrinkles in the USA of 2008 is that a lot of this created money is going to flow into relatively few pockets-it expands government agencies (including the military) and directly benefits the connected financial firms. Re commodity inflation, the strongest currency in the world (Chinese Yuan) is increasing in supply 19% YOY and is still severely undervalued.

The US government can't actually print up new money. Only private bankers can do that. The Federal Reserve works closest with the government, but even the Fed can only really loan money (because all money in a fractional-reserve fiat-currency system [FRFCS] is debt). Who is going to borrow the money? The only borrower I can see is the US government. So, I would think if we're going to have hyperinflation, it would have to be because the government borrows a huge amount of money (I saw one prediction of nearly a 1 trillion dollar deficit for 2008).

But the government would have to continue to borrow an ever-increasing amount money. Money in a FRFCS is inherently deflationary, because loans have to be paid back (which destroys money) with interest (and the money to pay the interest doesn't exist yet). The deflationary tendencies can only be counteracted by an ever-expanding money supply, which is necessary to create the money to be used to pay interest on loans.

Of course, most money is not created by the Fed. It is created by banks when they make loans. Right now, it is going to be hard to goose bank lending. The banks don't want to lend, and no one wants to borrow.

IMO, because of these trends, monetary inflation is going to be very hard to engineer, and it will be even harder to sustain. Price inflation, on the other hand, can happen even in monetary deflation. It happens when demand outstrips supply by more than a shrinking money supply reduces prices. I do think we'll see price inflation in food, energy, and other scarce resources, even if we have prolonged deflation.

Peter Schiff has a good handle on the situation http://www.financialsense.com/fsu/editorials/schiff/2008/0215.html

Schiff has good insight to what is going on. But in a land that has the "Super Bowl" and the "World Series", few in America are going to want to play in the minor leagues, even if it would do us all a bit of good. John

If rates are zero then as much money will not have to be created to repay higher interest. You lay out the case for the Fed to get to 0% ASAP.

They are talking but still dragging their feet!


See my reply below...I should clip it out and just keep the thread here-Didn't notice yours before I posted.

It is scary the height that wheat is climbing, but I still think we will see sufficient production this year. I have read of even potato acreage going to wheat this year.. And unlike corn, it grows in so many other areas. Still called "the desert rose."

Doug Fir
Could you explain in a paragraph or two, (if you have time) the difference between hard red wheat (spring wheat, traded in Minneapolis and KC) and soft wheat (winter wheat) traded in Chicago - there is currently a $9 per bushel price difference. When are they planted/harvested? Do they need certain fertilizers/pesticides? What are they used for? What land can be shifted to either, etc? I know winter wheat is planted in the fall and starts to sprout and then goes dormant under the snow and harvested following summer fall - here in WI, some people (due to high wheat prices) took corn out of the rotation next year and planted winter wheat (which so far is looking like a good call). I don't know much about the difference between hard and soft wheat however. I know Jason Bradford has been growing some 'himself' on small scale. Anyone else with info pls chime in. Thanks

Hard = high protein (gluten)content
Soft = High starch content

You want hard wheat for bread flour

With soft wheat, you can "let them eat cake"


So is corn"bread" crumbly as cake because of lower gluten content?

Would this mean that for instance Irish brown breads [slightly crumblier than typical 'white' breads] have lower gluten wheat, but Italian and French breads would have higher gluten wheat?

All grains have some sort of gluten in them. Wheat is the "perfect" one for the consistency of bread we expect. All of the others are either heavy or crumbly. If you fool around enough you can get a decent tasting loaf with a good texture, but it never hangs together like wheat bread does.

As a former professional cook, who has done some baking, I can explain the basic difference between hard and soft wheat. Hard wheat has a high gluten content, and soft a low.

When bread is kneaded, the gluten forms long molecules with a higher tensile strength. This gives bread its characteristic texture.

When you bake cakes, biscuits, or scones, you don't want long, tough molecules. You want a crumbly, "cakey" texture. Soft wheat gives that, assuming it is not kneaded too much.

As an historical note, biscuits became big in the US South, because the southerners couldn't grow the hard wheat that made good bread, and it was expensive to import it from the north.

Wheat is generally planted where the soil does not get enough moisture during the summer to sustain corn in the case of winter wheat or the season is too short for corn as in the case of spring wheat. It is the short growing season up north that is the reason spring wheat is traded in Minneapolis IMO.

I am no expert on commodities but do follow the charts and commentators somewhat. The situation regarding wheat it seems me was a classic short squeeze on the Chicago break out above $10.00 coupled with a normal post breakout pull back to close gaps which is market mythology that frequently happens. It should run for awhile now to ration the wheat supply until harvest IMO.

From what I have heard and my interpretation of the situation on the Minneapolis Grain Exchange with spring wheat is that farmers have pre sold their crop for 2008 due to the high prices. The buyers were mostly commercials covering their needs for 2008 and not speculators. Thus there are few speculative sellers to offset buyer demand and few short sellers were willing to bet against the trend. Buyers in this situation can and did run up the contracts to whatever, in this case $20.00, as the shorts must cover or meet margin calls. The shorts were desperate to get out but couldn't due to limit up and were locked out of covering there positions.

Getting back to TOD this morning, I see the question was pretty well discussed yesterday.

With wheat, there are 7 major classes-hard vs soft, red vs white, spring vs winter and durum. Durum is a spring wheat, with a yellow color, producing seminola flour, preferred for certain noodles. Color, red vs white vs yellow, refers to the color of the bran.

In general, the softs have a lower protein content and a lower strength of the gluten. They are usually the cheaper-ie more are grown, and used for cakes and pasta, whereas the hards are used for breads. Springs are generally the harder wheat, and more costly than winter.

There is a movement now to grow more hard white-it can give higher flour yields, and is preferred by some for color. Australia is primarily hard white for export. But it doesn't seem to have caught on in the US.

I called an old acquaintance, a miller with General Mills. Fascinating work-they must tell the protein and gluten from rubbing flour on their fingertips-and not too many of them around. He's been paying over $17/bu this week for local winter wheat, up to $22 for Minneapolis hard. I was surprised in that I figured most large milling operations were contracted, or stored their own. Not so. Although both practices are used, they are into the market almost daily. So expect even higher bread and pasta prices. From his perspective, it's never been this bad for 60 years. He doesn't forsee the old $3-3.50 prices ever returning. Those are the prices we all are used to, like $25 oil, gone for good.

Food is where peak oil and global warming intersect.

Yeah, there are problems with hard red wheat, but don't some of these moves look stretched a little thin to you for the short-term? A lot of the commodities looked really creaky by the end of the day. I thought the end of the day in beans looked like a bad bluff.

Enough mixed metaphors. Could be wrong...

RE: Insight: The next crisis will be over food

I received this this morning as an email. My reply was ---Starvation has been presented in the modern world as a problem of resource distribution, not production. Unfortunately, we have few ways to differentiate this, other than grain stocks at present.

I think the food crisis will supercede oil, though they are so interconnected. To use a musical analogy, our old guitar strings are tuned up to the limit. It still plays, but it won't take more than a light strum. I don't think we'll break a string this year, but it doesn't sound right.

National production costs for wheat are estimated for this year at $240/ac. My gut feeling is still that cash wheat will fall by harvest, to the $6-7 range, major calamity excluded. At 40 bu/ac ave, once again only the best will be making money. We are shifting alot of production to wheat, but when prices fall back to cost, this will cease.

And phosphate will be the limiting factor
in wheat.

"As noted by the Sarasota Herald Tribune

"there is a natural and unavoidable connection between phosphate mining and radioactive material. It is because phosphate and uranium were laid down at the same time and in the same place by the same geological processes millions of years ago. They go together. Mine phosphate, you get uranium."

Phosphates shot to $300 and then to $400 a ton last year, and are now on track to break $800 ... Out of 50 billion tons of potential phosphate rock reserves worldwide, the USGS estimates the U.S. holds only 3.4 billion tons. Morocco owns 21 billion, China has 13 billion. All are keen to closely manage the resource.


Another article on the Iranian Oil Bourse, this time from Bloomberg:


Iran plans to trade oil in more currencies than in its own rial to offer diversity, the ambassador said. The exchange will open Feb. 17, the country's official IRNA news service said this week. Iran has planned to open the exchange since 2005.

``I don't think it would have any impact on the oil market at all,'' said Kevin Norrish, an oil markets analyst at Barclays Capital in London. ``I think it's more political than related to oil market prices or dynamics.''

The ruble should be used as a ``regional reserve currency,'' Russian First Deputy Prime Minister Dmitry Medvedev said earlier today in Krasnoyarsk, Siberia. Medvedev, who is also chairman of Russian gas exporter OAO Gazprom, is the front-runner to replace President Vladimir Putin in March 2 elections.

Researchers map human impact on world's oceans

Oceans cover more than 70 per cent of the planet, and every single spot has been affected by people in some way.

Researchers studying 17 different activities ranging from fishing to pollution compiled a new map showing how and where people have impacted the seas.

From CNN:

Mao offered U.S. 10 million women


Amid a discussion of trade in 1973, Chinese leader Mao Zedong made what U.S. Secretary of State Henry Kissinger called a novel proposition: sending tens of thousands, even 10 million, Chinese women to the United States.

"You know, China is a very poor country," Mao said, according to a document released by the State Department's historian office. "We don't have much. What we have in excess is women. So if you want them we can give a few of those to you, some tens of thousands."

A few minutes later, Mao circled back to the offer. "Do you want our Chinese women?" he asked. "We can give you 10 million."

Not published was Kissingers reply: "Yes, but I can only handle three."

Hilarious. Thanks for the laugh. Now I can go and shovel last night's snow off the rink charged not only with some fine Iranian energy exports (dates and figs), but with a smile.

Hello everyone,

I am writing with a request: Can anyone provide me some good links regarding the effects of Peak Oil on tourism in coming years and decades?

Many thanks....

A little while back I commented that all you really needed was a mass produced little electric shitbox and suburbia is saved from extinction.


Mitsubishi's Electric Car Achieves 160km Cruising Range

Compared to the model used in the preliminary test conducted in January 2008, the latest model has a longer cruising range. Mitsubishi will provide a fleet of 40 cars to five electric companies.

Mitsubishi aims to launch mass-production of electric vehicles in 2009.

The whole article is fascinating despite the usual corporate hype. Note especially how much the vehicle has improved over the last little while.

We rightly grumble that our governments are slow to act. The corporate world, however, is moving rapidly.

If they make the batteries remotely modular, you may be able to trade-up to a higher capacity battery bank to extend range after a few years. (After a few years of use, most laptop batteries lose their ability to hold as good of a charge, so when you replace them, your replacement likely will be of a higher capacity.)

I would guess that the electric car and battery scene is changing too fast for there to be much chance of that.
For instance, ultracapacitors are starting to come in packed with the batteries, to assist regenerative braking, provide a power boost for hills and so on, and to increase battery life by reducing deep discharges, although that mainly applies to weak hybrids.

All this means that the battery management would need to change a lot for latter batteries, making an upgrade impractical.

Similar considerations likely apply to other upgrade proposals.

It will be interesting to see whether Auto Industry or Computer Industry assumptions are going to prevail in electric cars (which I am somewhat confident that such will emerge).. Whether modularity and 'upgrades' will be prepared in an auto's initial design, such that the Power Management, Charging Particulars and such will be presented as software and firmware updates, replacement Chips and Boards, or if the manufacturing paradigm of 'Just get a new Car' will continue.. not that I think it 'Can', but stubbornness is ever a force to be reckoned with.

If i were to ride in that, it would definitely need a sun roof, and I would look like Magilla Gorilla.

You might be surprised Nate.

It is a little known fact that European and Japanese manufacturers have cracked Dr Who's technology, and they now have Tardis-like qualities.

Time travel capabilities are still somewhat limited though.

And here I thought the sasquatch moniker referred only to excessive hairiness and a tendency to lurk nude in the woods! :)

Myself, I'm not that big, but not small either. My spouse, who is tiny, has always maintained she is the way of the future.

Maybe, as our vehicles get very small and light, folks will be able to brag: "I lost 50lbs and now my car goes 10% further on a charge."

If i were to ride in that, it would definitely need a sun roof, and I would look like Magilla Gorilla.

I've heard that (false) excuse many times before from Americans, why does size matter so much?

Do you really think manufacturers would make cars that people can't fit into? - so, how tall are you?

I'm 5' 9" tall, and I have sat in numerous cars in which my hair is touching the roof (with the seat in its lowest position). Since I do not have a bouffant hair-do, that means only about 5 cm clearance. I can't imagine how a 6' tall person could drive one of those.

I also find it difficult to find a car that I can get far enough away from the steering wheel. I watch other drivers, who look like they could lick the wheel with little effort, and wonder how they can be comfortable driving that way. I have yet to sit in a Japanese car (other than a minivan or SUV) that didn't cause me to drive with my knees bent at near a 90 degree angle. This is a problem for me, as I seriously broke my ankle about 15 years ago, and I just can't have it bent up at the kind of angle a 90 degree knee bend requires to work the accelerator.

I have the same problem with nearly every American small car. The only small cars I've ever been able to drive comfortably are German. My old Scirocco was small, got good gas mileage (~37mpg), and was very comfortable. So it is possible to build a comfortable small car (comfortable to me, anyway). Most manufacturers just choose not to do it.

I never fit into a Scirocco - I hate that forced-reclined driving position and the lack of headroom (I'm 6'). It kills my back and neck. Note that most of the really small cars allow an upright driving position and have been moving to higher rooflines. A well designed small car can fit 4 adults comfortably, especially ones subsisting on the diets that will become normal soon. But I don't really believe people will be buying many new cars of any type for quite some time.

OY!!! Tilt the seat back... Be all ghetto blaster style and grab a knitted hoodie thingy and do a bit of new york lean! Be all cool and shit.

I'm fairly tall and it seems much of that height is in my legs. I can't drive a lot of small or even mid-size cars without my knees bumping the steering wheel whenever I engage the clutch or brake. Previous generation SAABs had amazing head and leg room -- I could literally throw the seat back to the point where I could no longer touch the pedals. Unfortunately, that doesn't change the fact that it's still a SAAB. :-(


"Since I do not have a bouffant hair-do,..." doesnt marge simpson solve that problem by opening the sun roof ?

This American is 183 cm and considers that the original Morris Mini Minor/Austin Mini was one of the most comfortable driving cars ever built. Fiat Topolino also very very good.

I seem to be missing the American "find something to complain about" gene and the "More! Bigger!" gene.

Cultural issues apparently override any factually based ergonomics.

Im 6'6 250+ (not hairy tho)

6'6 ? sounds like hybrid vigour coupled with a good diet :-)

I'm sure there are many small, high mpg, cars into which you can fit (probably not made in the USA though!) ... of course, in my experience, then there would be a whole lot of other reasons (that are unique to Americans it seems) why you wouldn't be able to drive one :-)

BTW I understand why people don't want to have a perceived reduced standard of living ... but what people want and what they eventually have to have are probably going to diverge sharply when the available energy in any particular country rapidly declines.

Actually, I think the only person who cares what vehicle a person drives is themselves.

I think the only person who cares what vehicle a person drives is themselves

I get quite a few comments on my white 1982 M-B 240D in excellent condition.


Explosions at south Texas gas line

Multiple explosions are being reported at a south Texas gas pipeline. Authorities say some people are injured.

How the explosions happened isn't immediately clear.

Authorities are working to cordon off the area and put out a fire.

The explosions were reported near McCook, a town near the U.S. Mexico border.


Oil pipeline in south Texas explodes, sending flames nearly 400 ft. into the air; no injuries

McCOOK, Texas: An oil pipeline exploded near the U.S.-Mexico border on Friday, sending flames nearly 400 feet into the air, authorities said.

Firefighters shut the flow of crude oil distillate about 10 miles down the pipeline and were waiting for the rest of the crude to burn off. Officials said it had nearly burned itself out three hours after it began.

Any word on whether this is an accident or a structure hit related to the troubles in Mexico? The extremely brief article says its right on the border.

Here's an interesting article about creating fuel from the CO2 in the atmosphere.


At the heart of the technology is a new process for extracting carbon dioxide from the atmosphere and making it available for fuel production using a new form of electrochemical separation. By integrating this electrochemical process with existing technology, researchers have developed a new, practical approach to producing fuels and organic chemicals that permits continued use of existing industrial and transportation infrastructure. Fuel production is driven by carbon-neutral power.

If this could be done with some kind of renewable energy, it could provide an expensive, but potentially limitless supply. I'd like to know what efficiencies are involved, though.

I posted a note about this a couple of days ago. The obvious problem is the energy input, but it would seem to be a way to store energy from windpower.

Any details about how the process works, and what the fuel is?

They are talking about making synthetic diesel and jet fuel.

I saw an article on this a while ago - I mean back in early 2007. I think it was Scientific American or Discover. They use some sort of gadget, I think with a sodium salt in it, and air is forced through it. The CO2 ends up in solution and gets extracted later.

If you're going to do this that is all well and good, but you still need to break H2 from water which is energy intensive, and the question is whether the yield exceeds what you'd get with ammonia. I'll check into it further but I canna tell if its a good thing or another techie bait distraction from the problems at hand.

Let's see, we get the energy from carbon based fuel by breaking the carbon bonds, and CO2 is one of the main things you get left over. Therefore, if you've got a bunch of CO2, all you need is a bunch of energy to make carbon based fuels out of it. Given that most of the machines that use such fuels are not too efficient at using the energy released when those carbon bonds are broken, it does not seem like a very good storage scheme either.


You can keep looking, keep hoping, but it won't help. We used that energy stored so long ago - it's gone. The best you can do now is to learn to use less energy.

We used that energy stored so long ago - it's gone. The best you can do now is to learn to use less energy.

Many times I've wished that were true as it wouldn't hurt at all for us to be cut down to size a little (for long term sustainability and an antidote to hubris).

But it ain't. To get a feel for why not, compare the total energy of the sun striking our planet with the total fossil fuel endowment we can access. (not even considering what's fissionable or fusionable)

“The amount of solar energy that hits the surface of the earth every minute is greater than the total amount of energy that the world's human population consumes in one year. ” Sandia National Laboratories


I'd like to see the calculations behind that quotation, though.

I think that is one of those statistics that is at once impressive and irrelevant. You have to be able to capture it in real time, and store it and convert it forms that are useful. And I suspect they may not have considered that a large amount of that energy is already used - it is used by the trees I cut for firewood, and it heats the planet to whatever temperature it is already at thus reducing the energy I must use to heat my house, for example.

It's like those statements that the earth will never run out of (fill in you favorite material) because the oceans are full of it, neglecting to recognize that it is diverse and very difficult/energy-expensive to extract. So what - how does it help?

I think the problem is, to oversimplify, that the solar energy hitting the earth is highly diffuse, while the energy in fossil fuels is highly concentrated.

It takes a lot more energy to collect that highly diffuse solar energy than it does to exploit the highly concentrated fossil fuel energy.

But, as has been pointed out by about a billion posters here, including you, George, we don't really need as much energy as we're using.

The question is whether we can come up with the amount we truly need.

Well, speaking of Sandia (who I quoted above)....they just broke a record...

Sandia, Stirling Energy Systems Set New World Record of 31.25% for Solar-to-Grid Conversion Efficiency

They are talking about the efficiency of capturing sun energy for use as electricity on the power grid.

The conversion efficiency is calculated by measuring the net energy delivered to the grid and dividing it by the solar energy hitting the dish mirrors. Auxiliary loads, such as water pumps, computers and tracking motors, are accounted for in the net power measurement.

So, more than 30% of the sun's power goes onto the grid even after considering the power used to maintain the system.

Yes, of course, solar energy is diffuse and hard to concentrate. But with a bunch of mirrors you can do it. Everything seems hard (manned flight for instance) til it's done.

Agreed, we don't need what we are using. Can we get what we need? Undoubtedly. Though the transition could be a little rocky.

The person who can build a briggs-stratton size stirling engine (where the user just supplies their own heat/cold sources) would make a million.

I would love to have one. I can pump in my own hot water/steam? to one side and cold water in the other. Each person can figure what heat source is best for them.

THAT is the invention I would love to see. That and a cheap B/S size diesel. (Yes, there is ONE company that makes one of those)

Home Size Solutions. Tailored to Location Resources.

(Did I ever show you what you can do with an old TV Satelite Dish?)

George Aseieus -

A solar-to-grid efficiency of over 30% is damned good!

As I see it, while PV may be ideally suited for small, non-centralized electrical generation, if you're going to have something approaching the output of a typical fossil fuel power plant, then a solar concentrator/sterling cycle system appears to have a lot going for it.

And another good feature of converting solar into heat prior to the generation of electricity is that it is ties in quite naturally with thermal storage, such as there molten salt, graphite, or other systems for storing heat energy during the off-hours and low sunshine days.

However, comparative capital investment and overall life-cycle cost will probably be the main deciding factors as to whether it will win out over PV systems.

>A solar-to-grid efficiency of over 30% is damned good!

One thing I noticed is that it took basically 20 years to break the old record by only a couple of percentage points.

So, I'm not sure we can expect massive gains in the future efficiency-wise. We can expect gains cost-wise, though.

Okay, so if you can really consistently get that 30%, you're getting 30% of the energy falling on that spot.

But the energy falling on that spot is very tiny in relation to the amount of energy we're getting from fossil fuels.

The first article you posted said that the solar energy falling on the entire planet was greater than the energy we consume each year in fossil fuels.

But is 30% of the energy falling on the entire planet greater than the energy we consume each year in fossil fuels?

And are you going to be able to cover every inch of the earth with these panels?

And have you accounted for the energy required to manufacture, install, and maintain these panels?

So, those are the things that concern me. But I actually agree with you that we can probably get what we really need, which is much less than we're using now. I'd very much like to see more numbers on this stuff. And I appreciated the info you posted on the Mitsubishi car.

Moe, we have to get the magnitudes right.

The first article you posted said that the solar energy falling on the entire planet was greater than the energy we consume each year in fossil fuels.

But is 30% of the energy falling on the entire planet greater than the energy we consume each year in fossil fuels?

And are you going to be able to cover every inch of the earth with these panels?

However, the original quote from Sandia says that amount of solar energy hitting the planet in a single minute is greater than the total energy we use from all sources in a year.

Ahhh. Point taken.

Yes, stirling engines using concentrators are efficient. They also require 2 axis tracking and don't work when the sun is hiding behind clouds and that high efficiency won't be obtained during an overcast sky either, such as one might expect in non-desert areas. Concentrators can not capture the diffuse sunlight, whereas a PV system may do so.

There is a large advantage to 2 axis tracking in that the output can be nearly constant while the sun is up, whereas a fixed position PV system will have a sharp peak near local noon, provided the weather is clear. This advantage becomes a disadvantage when the dishes are spaced far enough apart to be able to capture sunlight in early morning or late afternoon, as the land area required can easily be 4 or 5 times the dish area because of shadowing problems.

E. Swanson

So Black Dog, if you were running the world, or even your local community, how would you start deploying these things and how would you deploy PV?

That's a very good question. Of course, I don't have that sort of influence on either the world or my local community. And, I'm am elected member of the local "governing body", such as it is. I get to drive the snow plow on our private road...

As a matter of fact, I did propose a concentrator system to the government back in 1975, in which I wanted to use some 10 foot diameter satellite dishes to make steam for a steam/electric generating system. While the efficiency of the would not have been great, I wanted to use the low temperature heat to provide space and water heating needs. The same sort of solution would be easy to implement with single axis concentration onto a high concentration PV array with a single pipe providing the cooling. The actual concentration would not be that great, maybe 10x solar, instead of the 100x one might achieve with a parabolic dish. This approach would cut the per watt cost of the PV section by about 10, while the single axis tracking using parabolic trough concentrators would be easy to achieve.

As they say, if only I had found the money years ago...

E. Swanson

Yes, the 70s. Having lived through that gives you a different perspective, doesn't it?

So you were thinking of installing this on a government building?

Does the local governing body discuss anything like this now?

I think it's good that venture capitalists are putting big bucks behind the types of systems George posted in this discussion, but I'm also interested in bottom-up, community-based stuff. It seems to me important just to get the knowledge base expanding, and to get people breaking through the initial hurdles. Right now, it's hard to know where to start, so I feel inclined just to get going, even at the risk of blunders.

For example, I live in a little village of about 100 families. Great group of people, with a mix of incomes from very little to very high, but very progressive, very easy to work with. There are reportedly zoning laws that restrict it, but a number of families are already raising chickens. Lots of big organic gardens, with gardeners willing to share their knowledge. We have local water, and some of the people in town are constantly monitoring the water levels and keeping people informed.

I am extremely interested in installing some kind of solar, but I keep feeling inclined to start something community-based, rather than just installations for my own house.

I had hopes that I might find enough money to build the first one. It never happened. I tried to go back to graduate school, but that didn't go well either.

Our "local governing body" has been concerned with only road maintenance (so far). Some of the locals won't even pay their $100 per year road maintenance fee to keep the gravel road in some sort of decent shape. Our community is just a subdivision with a few houses built by individuals, like me. There's little in the way of community spirit.

E. Swanson

Considering "you" can't buy them, PV would be the choice of the moment.

WhisperGen of New Zeland - has $10K gensets - not solar powered. (They were $35K at one time)
Solo of Germany had a 50% local gov. 50% you buy plan for a small dish unit - not shipping
Energy Technologies were pimp'n a 250 watt solar 'sunflower' - backed away now does concentrated PV
An Omnicron Tech was claiming a Nitrogen charged 2,500 hours to a rebuild 1 hp $80 (bought in 40 foot shipping container lots from China) press metal design. Claims that 9/11 brought an end to the project.

All the other gens I am aware of are small lot, big $ units.

Wimbi (a poster here) is a big Stirling pimp - but when asked about shipping units becomes quiet.

If one was going to 'do' solar concentators - visit www.redrok.com (Duawne's site) 1st. Then consider a oil heating unit like I have in my .sig for heating oil for cooking then a big oil heating unit to power a steam boiler. Bonus points if you find the design winner that had a $450 cost that was a oil heater that could gen power or power a pressure cooker to provide 'the rural poor' with the ability to store food.

I have always wondered what would become of those fancy mirrors in a hailstorm. Not your wimpy little split-pea hail, but a Texas hailstorm with stones the size of grapefruit.

Dunno what would be done with Sandia's units. With Infinia's dishes, the idea is that the dish would be inverted. In the inverted position, it's supposed to be able to handle 73kg per meter2 of snow. But can only handle 1/8 inch of ice accumulation. That seems pretty wimpy. I wonder why it can't take more ice??


No specific mention, though, of hail weathering abilities!!


To get an idea of the power of solar consider this:

That solar collector above is about 15ft in diameter. It produces a peak output of 3.5 kilowatts.

You can actually do a lot with a single kilowatt!

3 or 4 of those dishes and you are in good shape while the sun in shining. Your daughters may be able to use their hair dryers at the same time!!!

You can actually do a lot with a single kilowatt!

Is powering a single home a lot? The average power draw of a US household is a tad more than a kilowatt. Given that the sun shines on average 1/4 of the time at peak power, the dish you displayed is going to produce 3.5/4 = 0.87kW on average. So it wouldn't be enough for an average home.

Now if the price of this dish plus the batteries I will need would cost me less than 20K, I may consider buying one. Which leads me to wonder, if even I am in doubt of buying one, how are you going to sell it to all those people in China, India or Bangladesh. Or Russia. Or even Sweden. It ain't gonna happen.

Excellent point, LevinK. There can't be a solution without a financing solution. It might have to be a government-based financing solution, or we may be able to work out private solutions, or most likely a combo (something similar to the way mortgages were financed in the U.S.--think of how it worked before the bubble).

The developing world isn't going to be selling these units to individual families. But at least part of the developing world has built up a lot of reserves at this point, much of the rest of the developing world has a pretty good stash of commodities that are constantly going up in value, and there are people like Chavez who are proposing alternative approaches to the old IMF solutions (like barter systems).

It does look promising.

How much do these things cost, George?

Are they actually available for installation, or will they be soon?

They are not in mass production yet. I read somewhere that they will be priced at 20K each with the price falling over time. Not cheap at this stage!! Which is why we still burn the dirty stuff. But not impossibly expensive either.

Big names such as Vinod Khosla, Paul Allen (co-founder of MSFT), Bill Gross (the bond guy) and others just a couple of days ago put up 50 million to build the facilities.


So what's the thinking? Power plants, or units in back yards?

Grid connected in large numbers, if I recall.

Here's an article from the Wall Street Journal.


Very much appreciated, George.

That has to be one of the most encouraging articles I've read in a long time.

One of the things I particularly like is the way they're revamping auto parts manufacturers to make parts. That seems very sharp to me.

Like all solar-power firms, Infinia is still struggling to close the cost gap with traditional power sources.

I believe this kind of thinking will change when people truly understand that the fossil fuel price increases are not going to stop. Obviously, Bill Gross, Paul Allen, etc. already understand. It completely changes the investment equation.

Thanks again, George.

No problem.

Another thing I like is that the company emphasizes that they do not make use of silicon or specialized metals and exotic materials. Glass, copper, aluminum ...that's what they use. So, they are less likely to be affected by scarcity issues that may affect the new generation of makers of PV generation stuff.

As you say, it's thinking smart when you design a product whose parts can be made by existing industrial facilities. In contrast, if you are working with bleeding edge materials and processes, you set yourself up for supply problems.

Good point. Now I see where you were going with your comments on glass, copper, and aluminum in your posts yesterday.

Looking at their design a bit, I don't think that what you are seeing is a real system. For starters, where's the two axis tracking? Then too, consider that a 15 foot diameter dish would have an area of about 16.43 square meters. With a solar insolation about 1000 w/m2, that's about 16.4 kW of power. Maybe they can turn that into 3.5 kW of electricity, but what happens to the other 12.9 kW? To make this thing work, that extra thermal energy must be dumped to the environment, so there needs to be some sort of heat rejection system. There's no way that I am aware of that this much heat could be dumped from that head end of the concentrator. Think of the average 1.5 kW space heater times 9. The picture looks to me like a fabrication for sales purposes.

In other words, more hype and bull shit.


E. Swanson

Well, Sandia National Labs is saying that with mirrors and a Stirling engine, they get 31% efficiency (in ideal conditions). Sandia is not a normal commercial operation and I doubt they are bullshitting us.

Infinia says in a product spec for a claimed marketable system that they get 24% efficiency which is not that far off from your calculations.

On this spec they mention an option for using 6 kilowatts for hot water.

>>Think of the average 1.5 kW space heater times 9.

But don't forget this is outside with moving air in most cases.



Yes, I was somewhat aware of the work done by Sandia. My point was that the graphic shown is likely to be a fabrication, in which I mean, it's not a working system. I do think that the low grade energy could be put to use, but, if it's not, it must be dumped to ambient one way or another and I don't see any mention of this on the Infinia web site or in their tech specs. the heat exchangers might be rather large and the fans to move the air thru them might eat a fair amount of electricity. Then too, there's the plumbing problem, which involves moving the fluid with a pump thru flexible couplings or hoses. Freezing in winter might be a problem at night and leaks of antifreeze chemicals coule be expected to also be a problem.

I actually think that all that low grade heat would be very useful, but it would be available only as a local resource. One might see these built over parking lots at malls or MalWart, with the thermal energy used to heat the Big Boxes in winter. That thermal energy might also be put to use for A/C in summer. One counter advantage of PV for electric production is that PV might be installed over flat roofs of the Big Boxes, thus provide shade for the roof areas in summer. One may recall pictures of the Google HQ PV installation, where the panels are installed horizontally, which would be rather bad for producing electricity in winter when the sun is nearer the horizon.

E. Swanson

My point was that the graphic shown is likely to be a fabrication, in which I mean, it's not a working system.

No doubt the photo is doctored. I, for one, have never seen promotional materials put out by a tech outfit that weren't prettied up in many ways. Some of the uglier parts of the apparatus could have been easily photoshopped away.

The image, assuming it represents some reality, shows the engine unit glowing rather intensely. Wouldn't that ambient light be a way of dumping energy?

Exactly as I posted above(abeit mine is a DIY backyard type) minus the Stirling?

From my above post:

(Did I ever show you what you can do with an old TV Satelite Dish?)

Is the electric power from a stirling engine to generator/alternator?

As I said, I wish I could buy a briggs-straton size stirling(ie heat to mechanical energy conversion) and I would provide the heat & alternator.

That's very impressive. And people somehow think solar power is whimpy!!!

Unfortunately I don't know much about stirling engines.

There's gotta/oughtta be something you can rig up with homegrown projects.

I've searched the web and can only find "Demo/Toy" models.

Just build me a device(stirling I guess) that turns heat into mechanical energy(linear or circular) I will supply the heat source and alternator.

For the alternator,


look what you can do with a used disc break rotor and some NeFeB supermagnets. These are the types of the things you Don't need 20 million dollar seed money to build a big factory.

I'm not against keeping the grid up, but that seems to be the only direction all these thing seem to head.

Central Control. Yes I know about cost and scale, but I don't think that should be the only goal. Home size energy solutions. Wind, Solar(thermal), Microhydro. Matched to the area.

These are the types of things that can be mfg'ed LOCALLY by LOCAL machine/Fabracation shops. LOCAL JOBS.


To add a couple favorites to the links above, and hearing Moe_Gamble's thoughts on getting something started in his immediate locality, here are a string of solar heating designs, most of them variants on the same thought, just different layouts and materials..

I am also watching out for systems that can be built with locally available source materials, and then noting what are then the 'exotic, complex and high-energy' elements in these plans which we need to stockpile now while they're cheap and underappreciated -

Glass, Aluminum, Mirrors, Mylar, Magnets, Semiconductors like MosFets, Thermistors and Comparators (To build control equipment, tracking motors, thermostatic switches, etc..

and to know what is required to assure that these (or your own list) can be produced, and preferably in your country, your region, so as to avoid what could become MUCH more precious imported goods..

(Search that page for Bill Kreamer to see the design I am making..)
"Solar space heating can be 25 or more times more cost effective than solar electric (PV) systems, and the systems are excellent DIY projects. Payback periods can be as little as one year."


(Get that firewood cured up faster!)


Bob Fiske

Thanks for the link, there's lots of good ideas there. One should also note that Home Power Magazine sells back issues on CD ROM, for those of us who "do it ourselves".

One problem I did not see mentioned in Kreamer's design was condensation of water vapor. Since the collector is plumbed into the living space, there will be a tendency for water to condense on the glazing. Multilayer polycarbonate will help with this problem and also improve the efficiency of the collectors as well. Which ever cover is used, one must plan for drainage of the condensate away from the wood on the bottom of the collector box, else there will be problems with rot over time. There is also a problem with dirt and insect accumulation on the bottom of the boxes, so some method of cleaning will be needed, which may require removal of the glazing on occasion.

Best of luck with your project!

E. Swanson

Ah, the amazing motility of decimal points.

In your link, Infiniacorp actually says (hyphen in the original):

Think about it - this means that on a given day, the earth receives over 10,000 times more energy from the sun than all of man-kind will use during that day.

That's about right and it means that it takes almost an hour - not just a minute - for earth to receive what we use in a year. (If your Sandia quote is accurate, and it may not be, then the common habit of using 1,000 lines of complicated and potentially buggy code to do tasks needing one line has caught up with them.)

Then we have to remember that Infiniacorp's implied insolation number is for gross receipts (about 165 PW IIRC, of which around 135 would reach the ground without clouds and haze.) More than 60% is bounced away by clouds. 70% hits the oceans, where we aren't about to capture much of it for direct use. On a huge scale and in the real world, we're only going to catch 20 or 20 percent for actual use even if we get more in shiny, new, carefully babied pilot projects - over time, solar panels wear out, mirrors become dull, and mechanical systems become less precise and efficient. So our potential net receipts are only around 3% of our gross receipts. It would actually take more than a day to capture what we use in a year.

Putting it another way, we'd be needing around 0.3% of the world's surface, which is also about 1% of the land surface, or around 600,000 square miles. That's one hell of a lot of mirrors and/or panels to build and keep dusted, polished, and shiny.

Now, what I don't see in this world is any sort of plan - to say nothing at all of actual construction - that's anything other than a sick ineffectual joke in the context of the magnitude of even a fraction of such a monumental task.

Thank you for these numbers.

In considering he energy of the sun striking the planet:
1. It does not take into account the unintended side-effects of the rest of the biosphere being deprived of that energy
2. It is completely irrelevant in the short and medium term for a society utterly dependent on stored terrestrial energy.

We do not run on solar. We overwhelmingly run on coal, methane, petroleum, and uranium, and we built our infrastructures and grew our societal systems to require these specific energy sources in a specific mix.

Had we used our stored energy to build a society that required solar energy, then this wouldn't even be up for discussion. Instead we would be discussing unmanageable complexity and other biological resource depletion.

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The requested URL /no_flash.htm was not found on this server.

(It seems they don't care about using the internet to provide information, just marketing 'flash'. All sizzle, no steak and been like that for over a year)

Chemically you have to put back in more energy than what you get out.

H2 + O --> H2O + Energy

Energy + H2O ---> H2 + O

That's as simple as it gets. All other exothermic reactions are the same way.

Aluminum Foil + NaOH(lye) ----> ENERGY + Na2Al2O4

Lots of energy(heat) but to break the sodium aluminate up, it will take the same amount.

You get less than what you give. The innate bitch of the second law of thermodynamics I think.

Alright you organic chemistry wizards.

Is there a way to make hydrocarbons? Say blending hydrogen with sequestered carbon to remake fossil like fuel?

Is there a known field of study or process to which I am referring? It seemed like an original idea to me on my coffee break - patent pending of course ;)

I think we can make lots of hydrogen, just how do we store the stuff and use the infrastructure we already have? Sorry Kunstler if this un-ends suburbia.

cowpoke -

While I am hardly an organic chemistry wizz, I do know a little bit about thermodynamics, and I will say quite flat out that any attempt to convert CO2 from the combustion of fossil fuels back into some sort of hydrocarbon will require an input of at least as much energy as you will get out when you burn that fuel (at best). Where does that energy come from?

In this regard, you should view the CO2 as sort of an energy storage medium. You can put energy into it, and you can get energy out of it, but you can never get more out than you put it. It's sort of like a mechanical spring.

This CO2 scheme is no better than hydrogen .... which (on planet Earth at least) is really not an energy source at all, but rather no more than an energy storage medium.

When you get right down to it, CO2 is sort of the 'ash' that you get when you burn fossil fuel. This 'ash' has essentially zero value (at best), and in reality has a very definite negative value.

The basic problem is not to find a source of carbon, but to find a source of carbon that is in a 'reduced' form, that is, a form that still has some energy left in it.

When you get right down to it, CO2 is sort of the 'ash' that you get when you burn fossil fuel. This 'ash' has essentially zero value (at best), and in reality has a very definite negative value.

You must like flat beer.

Or merlot, chardonnay, vodka, whiskey, tequila, schnapps, or brandy.

This is why the Icelanders, when looking at methanol production from the gases from a steel smelter, chose to (in modeling) to separate the CO from the CO2 and synthesize methanol from that. Significantly less energy required with CO.


Is there a way to make hydrocarbons?

Sure, but that's not the problem.

Cowpoke, read my post again. It doesn't matter. It costs as much as you get.

You only can beat it for a while if, say, someone gives you a cubic mile of FF a year for a real cheap price.

If you have that for about 50-100 years you could even get to be able to support(for a while) 6 billion people.

Energy Returned on Energy Invested.

There are ways. You do need a power source, of course.

These can involve solar thermal towers, but the link I will reference is to Los Alamos' proposal for fuel from nuclear, as it provides diagrams of the energy pathways which would apply to any fuels whatever the energy source:
Green Car Congress: Los Alamos Developing Process for CO2 Capture and Stripping from Air for Synthetic Fuels Production


There are also proposals to use solar towers to turn zinc oxide into zinc, this is then put into a car as a slurry where it is oxygenated giving energy and making zinc oxide.

At the filling station you then pump out the zinc oxide and put in more zinc, and the oxide is returned to the thermal tower, so you end up with a system very analogous to using gas, but re-cyclable.

where is Chris? he has been writing about this for a while, e.g. Jet Fuel of Dec. 4, 2007.


The ELM model seems to have taken off with a vengence in the Coal producing countries.

Global coal supplies are also constrained by China's halt to exports until April following the worst snowstorms in 50 years. Vietnam, China's largest coal supplier, said today it plans to cut shipments of the fuel by 32 percent this year and gradually eliminate the sales to meet rising domestic demand


Eskom Holdings Ltd., the state-run power utility in South Africa that's unable to meet demand, is seeking to buy export-quality coal from local mining companies to cover a shortage of lower grades used in its power plants.

Producers will decide whether to increase production to maintain exports


Which I suppose begs the question here in the UK, with an increase in coal electrcity generation, what turns our lights out first, lack of gas or lack of coal?

Hello Sangiovese,

Thxs for this info. It appears ELM is now kicking into gear for NPK:

Fertilizer prices to go further up

KARACHI - The recent move of China to increase export duty on DAP fertilizers would cause a further rise in the prices of DAP, as Pakistan mostly imports DAP from China, said a report. China has decided to increase export duty on Di-Ammonium Phosphate (DAP) fertilizers to 35 per cent to secure fertilizer availability to the domestic market in the backdrop of surging food inflation and recent snow storms, curtailing the country’s power supply and limiting its DAP production. It is expected that the next round of Chinese fertilizer imports may reach USD900/ton CFR from the current price of USD810-815/ton CFR, an international fertilizer publication said.
Morocco's P-reserves are rapidly increasing in value. Is it any wonder the US AFRICOM HQ is located here at the very nexus of 'Life's Bottleneck'? Recall my earlier post whereby I speculated that I-NPK price increases could be much faster than the price of crude.

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

Here's an article about how water shortages will lead to power shortages. And in CNN, too boot. Good to see the mainstream outlets getting on board.

In California, the water pumps that keep the Los Angeles area hydrated are the single largest users of power in the state, according to Gleick. Running a hot water faucet there for five minutes uses as much energy as keeping a 60-watt light bulb on for 14 hours, he said.

Gleick said that California could achieve 95% of its energy conservation goals 58% more cheaply by targeting water consumption rather than power consumption.

"Water and energy are tightly linked, but these links are poorly understood and rarely used in policy," he said.


What a whopper of a lie!
Los Angeles sells, sells, hydroelectric power from it's aquaduct to the Long Valley!
Now if you are using electric heat to heat your water, sure, it's going to take electricity. But they talked about water pumps, not water heaters.

"Bolivia tries to avert looming energy crisis in Argentina, Brazil"

Well, it is finally rainning at Brazil. So count it out of the countries that may have eletricity shortages by 2009 or earlier.

But until we know if the lack of rain that happened this year is related to global warming (and until our government finaly starts doing something about the problem besides talking - what won't likely happen before 2010), we can't put blackouts out of our concerns.

IEA worried about oil cuts to Exxon-Mobil

The spokesman of the International Energy Agency (IEA) said that he was worried about the Venezuelan decision to stop selling oil to the US company Exxon Mobil, and noted that the agency was closely following the situation, reported the news agency, Reuters.

"We are concerned about the physical side of the event and we are carefully following its development," told the executive director of the IEA, Nobuo Tanaka, to the journalists.


I found this link, by following a link from Calculated Risk. It's a TV clip about a ransacked luxury home in the California exurbs.


U.S. gasoline demand is 9mbpd or 279 million gallons per day.
Now if regular gasoline was $1.50 per gallon, instead of the current $3, consumers would have an extra $420 million dollars each and every day to spend on other things. Correct me if I am wrong but is this not $3 billion per week? And OPEC are talking of cutting production because they foresee a reduction in demand for oil, yet the high price of oil that they are supporting by (apparently) withholding production is causing the gasoline price to be way way up. There is no way that oil above $50 is good for any oil importing nation, yet it has been since February 2005. Where is the outrage from the oil importing countries politicians and media? If OPEC are questioned, they just spout any old bullshit and get away with it every time!!

Note that one barrel = 42 gallons, so 9 mbpd is 378 gallons per day..

IMO, OPEC is producing virtually at capacity. If I were you, I would plan on $8 plus for gasoline. We are just seeing a bidding war for declining oil exports.

Has Citibank admitted to Peak Oil?

An article by George Monbiot in the UK's Guardian newspaper, http://www.monbiot.com/archives/2008/02/12/the-last-straw/ contains the following information on a report emanating from Citibank:

A report published last week by Citibank, and so far unremarked by the media, proposes “genuine difficulties” in increasing the production of crude oil, “particularly after 2012.”(1) Though 175 big drilling projects will start in the next four years, “the fear remains that most of this supply will be offset by high levels of decline”. The oil industry has scoffed at the notion that oil supplies might peak, but “recent evidence of failed production growth would tend to shift the burden of proof onto the producers”, as they have been unable to respond to the massive rise in prices. “Total global liquid hydrocarbon production has essentially flatlined since mid 2005 at just north of 85 million barrels per day.”

What is striking about the, admittedly, very limited quotes from the report are their departure from the standard Iron Triangle line, i.e. "supply tightness over the next few years", "lack of investment when oil was cheap", "above surface difficulties", etc. On the contrary they suggest that things are liable to get worse rather than better after "the next few years". Moreover, the empirical evidence of the enduring production plateau means that the "burden of proof" is upon the opponents of Peak Oil Theory, not on its adherents.

Monbiot references the original article, but it's not on the Web(I imagine such material would not be deemed suitable for the hoi polloi). Can any of you TODers dig out this article, which should make interesting reading?

Filling the USA SPR

President George W. Bush has set several goals during his Presidency, to be fulfilled by later Presidents.

Among these goals are peace and democracy in Iraq, putting a man on Mars and more than doubling the SPR (currently 698 million barrels of oil) with a goal of 1.5 billion barrels of oil by 12/31/2027.

I calculated that there are 7,305 days from 1/1/2008 to 12/31/2027 (5 leap days). This implies an average fill rate of 109,788 barrels/day for twenty years.

I will leave it to others to rate the relative probability of meeting the various goals.

Best Hopes for taking oil out of a hole in the ground and putting back into another hole in the ground,