DrumBeat: March 3, 2008
Posted by Leanan on March 3, 2008 - 9:37am
UK mulling fuel poverty voucher
The government is considering a voucher scheme to help the poorest people pay their gas and electricity bills, the BBC has learned.Treasury ministers raised the idea in a meeting with executives from some of the biggest UK energy firms on Monday.
Energy firms have been criticised for raising gas and power prices when they are seeing their profits increase.
More than four million people in the UK are fuel poor - spending more than 10% of their income on energy bills.
Shell likely to miss Canada tar sands
Hopes that Royal Dutch Shell would be allowed to include oil reserves from a huge project in Canada in time for a major strategy announcement later this month have been dashed.This will disappoint the City and raise concern about the Anglo-Dutch giant's ability to grow profits from its multibillion-pound expansion into unconventional sources of oil such as Canada's tar sands fields.
Chevron-led Russian Port Ships 25 Percent Less Oil in February
(Bloomberg) -- The oil terminal operated by Chevron Corp.'s Caspian Pipeline Consortium in Russia's Black Sea port of Novorossiysk shipped 25 percent less crude in February compared with the same month last year.
Russia's oil fund garners $160 billion so far in 2008
Russia's oil funds accumulated $160 billion by March 1 as the world's biggest energy exporter benefited from oil and gas sales.
Two three-letter words sum up Russia’s economic good fortune under Vladimir Putin: oil and gas.Russia was bankrupt just a decade ago, its economy in meltdown after the Government defaulted on its foreign debt and the stock market lost two thirds of its value in a single day.
Inflation in South Africa & the Global Commodity Cycle
The trouble today for governments that subsidise food and petrol is that it's getting really expensive. With oil over $100 and grain prices soaring, paying wholesale rates on the global market is going to be a drain on local currency reserves. Sooner or later these governments will have to allow prices to rise. As we've seen in Burma, China, and even Italy and other places, suddenly soaring food prices are not a political winner.
OPEC MEETING Ecuador to propose OPEC unity in Exxon-Venezuela dispute
VIENNA (Thomson Financial) - Ecuador is to propose OPEC presents a united front in support of Venezuela during its dispute with oil giant Exxon-Mobil, when the cartel meets this Wednesday in Vienna to discuss production quotas.
Nuclear Watchdog Presses Iran on Weapon Reports
The director of the International Atomic Energy Agency said Monday that intelligence reports that Iran secretly researched how to make nuclear weapons were of “serious concern,” adding that his agency was determined to fully investigate the claims.
The president-elect will quickly realize that the number one problem is not that Americans can't afford health care -- it's that they can't afford anything, because their income is evaporating in terms of both lost jobs and a dollar that is racing toward worthlessness. They'll be hard put to pay for food and gasoline, nevermind Grandma's emphysema treatments. They will be walking away from home ownership -- or yanked kicking and screaming by default-and-repo -- and any government scheme devised to abridge their mortgage contracts will only undermine basic contract law that has made mortgage lending a credible thing in the first place. And that too, of course, would redound straight to a real estate sector already in price free-fall, with no one willing or able to think about buying a house.
Old North Church goes modern with LEDs
The 18 strips of LEDs inside church's sanctuary — replacements for old-fashioned incandescents — may seem an anachronism at the most visited historic site in a city with a rich Revolutionary War legacy. But the lights are tucked into crown molding, illuminating the graceful white ceiling arches while the lights themselves are hidden from direct view by tourists and worshippers below."What we've added is light, and beauty," said Ed Pignone, executive director of the Old North Foundation of Boston, which oversees the 285-year-old church.
Okla. fight over poultry waste escalates
At stake is a practice thousands of farmers have employed for years: Taking the ammonia-reeking stuff — clumped bird droppings, bedding and feathers — and spreading it on their land as cheap fertilizer.However inexpensive, decades of mass-dumping of the litter has wreaked havoc in the 1-million-acre Illinois River watershed, turning it into a murky, sludgy mess, environmentalists say.
The cosmetics producer Lush is setting up a forum to find alternatives to palm oil, a crop regarded as unsustainable but that is still found in many everyday products such as soap and moisturiser.
Oil jumps to a record above $103 as dollar drops
NEW YORK — Oil prices surged to a record high Monday as the dollar weakened to another low against the euro.Light, sweet crude for April delivery was trading up $1.93 to $103.77 on the New York Mercantile Exchange after earlier rising as high as $103.95. That's higher than the $103.76 many analysts say would have been the price of oil in 1980, if it was adjusted for inflation into 2008 dollars.
Heinberg - Beyond hope and doom: Time for a peak oil pep talk
Awareness of Peak Oil, Climate Change, impending global economic implosion, topsoil depletion, biodiversity collapse, and the thousand other dire threats crashing down upon us at the dawn of the new millennium constitutes an enormous psychological burden, one so onerous that most people (and institutions) respond with a battery of psychological defenses-mostly versions of denial and distraction-in an effort to keep conscious awareness comfortably distanced from stark reality.I discuss this in "the Psychology of Peak Oil and Climate Change," chapter 7 of Peak Everything, where I conclude that the healthiest response to dire knowledge is to do something practical and constructive in response, preferably in collaboration with others, both because the worst can probably still be avoided and because engaged action makes us feel better.
At any given moment we face as a society an enormous number of problems: there’s the mortgage crisis, the health care crisis, the endless war in Iraq, and on and on. Maybe we’ll solve some of them, and doubtless new ones will spring up to take their places. But there’s only one thing we’re doing that will be easily visible from the moon. That something is global warming. Quite literally it’s the biggest problem humans have ever faced, and while there are ways to at least start to deal with it, all of them rest on acknowledging just how large the challenge really is.
One of the major shortcomings in last year’s admirable energy bill was its failure to extend vital tax credits to producers of wind, solar and other renewable fuels. This was entirely the doing of the Senate, which caved in to the oil companies and their White House friends.The House had approved the credits but insisted — under the Democrats’ pay-as-you-go rules — that they be paid for by eliminating the same amount in tax credits for oil and gas producers. Industry (which is rolling in cash these days) howled, President Bush lofted veto threats, and the Senate caved.
UK gas terminal shut Monday, damage probe continues
LONDON, March 3 (Reuters) - Royal Dutch Shell's UK gas terminal at Bacton remained closed on Monday afternoon as investigations continued into the extent of the damage caused by a fire on Feb. 28, a spokesman for the company said."The plant is still shut down and investigations are ongoing," the spokesman said, adding that it was still unclear for how long the terminal would be closed.
Ukraine's Naftogaz Ukrainy says Gazprom has cut shipments by 35 pct
KIEV (Thomson Financial) - NJSC Naftogaz Ukrainy said OAO Gazprom has cut natural gas supplies to Ukraine by 35 pct, 10 percentage points more than the supply cut announced this morning, Interfax reported.
Venezuela, Exxon in refinery supply talks: minister
CARACAS (Reuters) - Venezuela is in talks with Exxon Mobil over supplies to the Chalmette refinery, the oil minister said on Friday, amid an escalating legal battle between the OPEC nation and the U.S. oil giant.
Arabian Gulf tanker rates likely to increase due to lack of vessels
London: The cost of shipping Middle East crude to Asia, the world's busiest route for supertankers, may advance for a sixth day because vessel supply is constrained in the Atlantic.
Papua New Guinea: Fuel crisis hits Bougainville
MOTORISTS in Bougainville are resorting to kerosene to run their vehicles as the region experiences fuel shortage .All fuel outlets have been hard hit with most completely dried up.
It is expected that there would be no vehicles moving about this week.
Romania: Price for French nuclear tech may prove too high
With France pushing for greater cooperation on nuclear power with Romania, the Canadians who first introduced nuclear tech to Romania argue the Gallic technology comes at a cost the country may not be willing to pay.
Cops probe fires in development near Seattle
WOODINVILLE, Wash. - Four large model homes are burning at a multimillion-dollar development in a suburb north of Seattle. An official says a sign found at the scene had the initials of the Earth Liberation Front.
EU energy commissioner says oil could reach 200 dollars a barrel
MADRID (AFP) - Oil prices could reach 200 dollars a barrel, the European Union's energy commissioner said in an interview published Monday in Spain, two days ahead of an OPEC meeting to decide daily output levels."When I arrived at the European Commission in 2004, a barrel of oil cost 52 dollars. It has doubled in three years. We can't rule out that in 2011 it will be at 200 dollars," Energy Commissioner Andris Piebalgs told business daily El Economista.
Krone Is World Beater With Norway Oil, Rates, Surplus
(Bloomberg) -- Foreign-exchange traders searching for refuge from mounting losses in the credit market are heading to Norway.The krone is luring speculators attracted to the highest interest rates in five years and a trade surplus that is bigger than any of the 30 most-developed economies thanks to oil prices that now exceed $100 a barrel. Since the start of the collapse of the U.S. subprime-mortgage market in June, the krone's 15.5 percent gain has trailed only the Japanese yen and Swiss franc among the world's 16 most-actively traded currencies.
Saudi arrests Qaeda suspects planning attacks
RIYADH (Reuters) - Saudi Arabia said on Monday it has arrested 28 people suspected of seeking to regroup al Qaeda's wing in the oil-exporting kingdom to carry out a "terror campaign".
Saudi Arabia Is Not a Puppet State: Saud
RIYADH — Saudi Arabia will never change its domestic or foreign policies under pressure from the United States, Foreign Minister Prince Saud Al-Faisal said here yesterday.Addressing a closed session of the 150-member Shoura Council in the capital, Prince Saud said the Kingdom’s policies were steady and not dictated by the superpower or any other country. “We have never been a puppet state,” a Shoura member quoted Prince Saud as saying.
ALGIERS (Reuters) - U.S. based private investment firm Colony Capital LLC's deal to buy a controlling stake in Libya's European refiner Tamoil is off, the Libyan Investment Authority (LIA) chairman said on Monday."There is no deal," Mohamed Layas, chairman of Libya's state investment arm, told Reuters by telephone from the north African OPEC member country.
Kadhafi: Ministries abolished, oil revenues to be distributed directly to Libyans
According to him, the cabinet is not needed as it had failed to manage the the country's hugel oil earnings. He stressed big projects were behind schedule and so ordinary people should themselves devise a new way of sharing out oil revenues. "All citizens have the right to benefit from the oil funds. They should take the money and do whatever they want with it," he said, according to Reuters.
Russia reduces natural gas to Ukraine by a quarter
MOSCOW and KIEV — Russia's gas monopoly Gazprom reduced supplies to Ukraine by a quarter on Monday, just hours after its chairman and Kremlin candidate Dmitry Medvedev won Russia's presidential election.
EU considering calling urgent gas coordination group for Gazprom/Ukraine dispute
BRUSSELS (Thomson Financial) - The European Commission said it is considering calling an urgent gas coordination group meeting to be held over Gazprom's latest dispute with Ukraine.
StatoilHydro Sleipner T Output to Resume in 24 Hours
(Bloomberg) -- StatoilHydro ASA, Norway's largest oil and natural-gas company, will start production at platform T at the Sleipner gas and condensate field in the North Sea within the next 24 hours.The resumption of output at platform A will ``take longer,'' spokesman Gisle Johanson said today by telephone, without elaborating. The two platforms have a capacity of about 39 million cubic meters of gas a day, of which platform T accounts for more than 50 percent, he said.
Production was halted after a gas leak at platform A, which was discovered when an alarm sounded at about 3 a.m. local time today. The 228 personnel on site were moved to lifeboats for about 1 1/2 hours before returning to the platform. The cause of the leak remains unknown, Johanson said.
Greek power utility says strike disrupts production
ATHENS (Reuters) - A strike at Greece's electricity utility Public Power Corp (PPC), has disrupted energy production throughout the country and may lead to partial power cuts, the company said on Monday.
Russians look for continuity in Putin ally Medvedev
MOSCOW (AP) — Russians on Monday looked to Dmitry Medvedev, the man they overwhelmingly chose as their next president, to continue Vladimir Putin's policies of asserting this resurgent country's power abroad and keeping a tight grip on society at home.
SANTA CRUZ, Bolivia — South America was on the brink of war yesterday as Venezuela and Ecuador amassed troops on the Colombian border in response to the killing of a Marxist rebel leader.Venezuelan President Hugo Chavez threatened to join the rebels in a war to overthrow hard-line Colombian President Alvaro Uribe, a key ally of the United States, deploying tanks, fighter jets and thousands of troops along the Colombian border.
Experts say the world may soon reach peak oil, meaning there won't be any more "easy, light, sweet oil" left to extract, and from then on, until fossil fuels run out completely, it will become increasingly expensive to produce oil.During this time we will rely on Middle East supplies. Natural gas is also stressed, as we use half of Canada's output to satisfy 15 percent of our need. Although other energy sources are being sought, it is hard to see how they will power cars and planes.
Inflation and petroleum depletion
The Central Bank Governor in agreeing that fiscal policy provides a special challenge for natural resource based economies demurred by saying that higher oil revenues provide these governments with the opportunity to increase public spending on priority economic and social goals. However, these "fortunate" governments are faced with the trade-off between pressing development needs and the limits of the countries' institutional and absorptive capacities. The Governor also warned us before of the slippery slope of economic decline after a 10 per cent inflation rate. We only need to look at the success of Botswana (a resource rich country) to see that our Executive (as hinted by the Governor) lacks the policies and institutions required to manage a resource rich country.
Congestion charge has increased life expectancy of Londoners
The Central London Congestion Charging Scheme (CCS) has led to a modest increase in the life expectancy of Londoners, according to a joint study by King's College, London and the London School of Hygiene & Tropical Medicine, which is published in Occupation and Environmental Medicine journal.
Ethanol giant ADM is bullish on fuel’s future
CHAMPAIGN, Ill. - On a conference call back in early November, Archer Daniels Midland Chief Executive Patricia Woertz sounded like an ethanol bull on the prowl for a bargain.
Agriculture's new 'golden age'
Peter Brabeck, CEO of Nestlé SA, the world's largest food company, foresees a struggle between the food and biofuel industries over arable land as fresh water supplies diminish."We will not find sufficient water to produce all the crops," Brabeck said while reporting his firm's financial results last week. "There will be a fierce fight for arable land."
Arable-land acreage is indeed shrinking, even factoring out its conversion to production of fuel feedstock. Several million hectares of farmland disappear each year, as growing economies convert it into residential subdivisions and industrial parks. Declining fresh-water supplies further diminish the amount of land available for farming.
Water to be the next commoditised resource
As the world's population soars, economic growth and the resulting demand for energy have led to a growing consensus that the days of unfettered and unregulated extraction and usage rights will come to an end.Neil Eckert, chief executive of Climate Exchange, the carbon trading system, believes a cap-and-trade system like the one Europe has established to regulate CO2 emissions could be a solution. "If there is not enough of something, you ration it. Once you ration it, you create a secondary market, and it starts to be traded," he said.
As head of the world's largest wind turbine manufacturer, Mr Engel has an interest in water being assigned a price. Wind generation requires just five litres of water to generate five megawatts, the average amount of energy consumed by a household per year. Coal requires 10,000 litres, while nuclear needs 12,500, to produce the same amount of power.
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Without using the phrase Peak Oil, Warren Buffet basically endorsed it this morning on CNBC. He asked the following rhetorical question (as we don't replace the production from older, larger declining fields):
IMO, the key point to keep in mind is that financial markets are still assuming that high energy prices are temporary, i.e., that we basically can have an infinite rate of increase in our energy consumption. IMO, there is not enough exported energy available to pay back all of the loans and to generate the projected earnings. Therefore, the markets are still mispricing most equity and debt.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/03/ccview...
The Federal Reserve's rescue has failed
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 12:43pm GMT 03/03/2008
I recommend MELP--Maximize ELP
ELP Plan (April, 2007)
http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-prod...
Mish has a long list of things we don't need:
http://globaleconomicanalysis.blogspot.com/2008/03/is-belt-tightening-th...
Things We Don't Need
Yeah, I read Mish's column earlier and especially liked 'If this truck driver had not been taking his family to Sushi Restaurants for $150 outings he could probably afford to buy his daughter a prom dress.' FOMALOL
All those things we don't need more of would employ millions of people. As we know from the concept of overshoot, these people aren't really needed, either.
However, we will need a larger proportion of the remaining society involved in cleaning up the billions of overshot dead bodies lying around.
Drumbeats like this make one more doomerish by the day
Bob Brinker on the "Money Talk" radio show (nation wide) openly talks about us being on the "downside of Hubbert's curve". Who needs code talk by Buffet when others are already saying it direct?
Umm, maybe because I do not know who Bob Brinker is, and Buffett is the third richest man in the universe (and cousin to Jimmy)?
It only takes a few thousand dollars to open up a commodities options account. I assume that everyone here has already considered what is going to happen to oil prices over the next five years, and has already committed funds to 2013 oil options.
Five years ago, I calculated how much oil my immediate and extended families would need over the next forty years, and for a relatively modest price (then) I was able to purchase nearly ten times that amount of oil in the stock market. Along with ELP, it would seem to make sense to be doing that now. It is, in my opinion, far better to spend $3,000 to control a large block of oil five years from now, than to spend $3,000 in a mutual fund in an IRA. Of course, if I had credit card debt or an unaffordable mortgage, I might spend that $3,000 elsewhere. But it is cheap insurance.
As part of ELP, I think it is important to turn paper into hard assets-- and the liquidity offered by cash can nowhere near match the liquidity of WTI crude.
Appreciate the validation, possom. Curious- what did you calculate as 10x oil for your family?
I figured about 1400 gallons of gasoline per person, equivalent, per year, which meant 4200 gallons per year for a family of three, which translated into (surprise!) 100 barrels per year. Multiplied by 10, that was 1000 barrels. So, I needed to control 40,000 bbls worth of production in a long-lived reservoir, such as heavy oil. Our actual consumption is much less than that now.
I assume that that 1400 gallons was taking into account a whole range of energy uses, not just transportation. Certainly hedging against natural gas is as important (certainly in the UK where power generation is so dependent on it). I'd worked out that 250 gallons was more than enough car wise, not sure about other uses.
Anyone know where to source good commodity options figures for distant times? It would be interesting to do the calcs to determine what investment would be needed now to hedge against future movements. Might be a better place for money than the stock market. Would also be interesting to determine how you could hedge against food prices.
Hedge against food prices? Buy lots of pasta and grains now. Dry goods, if stored properly, can keep for a good while. Pasta, rice, beans, and Textured Vegetable Protein. You can even venture into freeze-dried vegetables and fruit if you like.
That's not a hedge, that's just preparing a backup plan.
What I'm saying is can you buy REAL futures in foodstuffs such that if the price of food goes up, your options increase in value as well and the net effect is to remove the price risk?
As I noted just above, I have not found options to be readily available far-out. There seem to be very few who are willing to sell naked calls these days, not least since those who have done so for the last couple years have "gotten their asses handed to them" in the words of one broker.
Here's one link which I don't think is proprietary... but just because something shows up here doesn't mean "you" could get it; apparently the 'settlements' between large institutions show up, but that doesn't equate to the "street value" of what someone in the NYMEX pits will actually sell you one for.. IF they'll sell you one at all. At least that's what I've been given to understand. These charts show very few options during trading hours, and not all of those are 'available'; after hours the settlements will be included and give rough values, except that there's a premium added to those values if you were to buy...
http://man.barchart.com/pl/man/ib/optqte.asp?sym=CL&mode=i
Lotsa luck... and if anyone can correct any wrong impressions I have, please do!
Do not depend on the counterparty to be there to honor the contract.
But right now I can buy gasoline for $3.05.
NYMEX wants $2.72.
No one can ship gas, much less make it. for .33.
$103.30 and gas retail at $3.05.
That's command economy folks and it'll work just as well as the Soviets'.
CBOT Wheat up $1.73. Corn up $.13 Soy up $.43
The gas stations make it up by selling coffee and soda pop.
I spoke of this before, the April railroad contract diesel price is $3.79/gal, now that is without road taxes. I think the cost of goods will be going up once more, very soon.
Maybe. But I'm talkin' about the refiners.
Refiners can turn $103 crude into a profit with $3.05 gasoline?
According to all the top notch petro engineers we have here,
isn't that some kind of a miracle?
Some other factors.
Refinery utilization and crack spread are way down.
Gasoline inventories are up.
There are some large subsidies at work for big oil and ethanol.
Likely changes coming later this year include $4 gasoline because.
Increased refinery utilization and crack spread due to seasonal demand.
Possible repeal of some subsidies.
Dollar fall continues (OPEC Russia act to support $100+ floor).
Slumping exports higher duties from places like Russia (MELP)
Seasonal additive shortages.
Retailers adjust to new paradigm. (next refill surprizingly costs more (lack of expected end of season price relief), fewer value added customers)
Election outcome becomes factored in.
If you think that the price of oil will continue to rise for several years then the future is definitely NOT BAU, many things may not be working as they do now - including derivative and futures markets - especially if the counterparty is heavily out of the money!
This has been my concern. I have a lump of cash, where to house it? commodities contracts? Foreign currency? Gold? What markets are most stable and likely to have the contracts executed and not leave you with empty paper. If I want that I can keep it in greenbacks. Any thoughts? And just to keep this oil related, I need to protect my assets so I can buy oil in the future don't I?
Well, if you'd be OK with a half-assed opinion, I have arbitrarily assumed that NYMEX will function through 2012 and perhaps through 2013, I wouldn't buy farther out than that. As I say, that's an arbitrary call.
Before it all falls apart, there could be some spectacular money change hands.
I don't think about money much... like Forrest Gump said, one less thing to worry about... since one can live fine at present on a tiny fraction of what the 'normal' american takes in and spends. But I can relate to it as a game, and I do want to see my family do alright. I also find that having a bit of $$ can be useful to jumpstart advocacy programs. Plus, if buying up options actually DOES raise the price of oil, GREAT... let's all help send a price-signal to the conspicuous consumers.
One does not really have to depend on the counter-party much in futures trading, as far as I understand it. Every day the value of my account is recalculated based on the settle price. I am then free to remove the excess money above my margin requirements, and do so on a frequent basis. The person on the other side has to move money into his account every day to keep the margin above the 7.50 per barrel margin limit or his positions are liquidated. Above, someone mentioned a 3,000 dollar margin requirement, but that has been raised to about $7500 per 1000 barrel contract in the last few months. The only money you would stand to lose would be a sudden move of oil more than $7.50 in one day, which could theoretically wipe out the conterparty and put him so far under water that even the margin money on hand wouldn't make you whole. My broker assesses a small (cents per trade) charge which is kept in escrow for such events and has reinsurance over and above that. There are a lot of risks in playing commodities, but counterparty risk is pretty far down my list of worries. To the guy above who said he's holding the equivalent of 40000 barrels of oil, or FORTY long contracts, hope you are literally keeping a mountain of cash on hand because you are controlling like 4 million in underlying oil assets. A 10 dollar retrenchment is going to cost you 400 grand to keep your position open--and that would only take the price of the 2012 contract back to the high eighties. There were a lot of guys who were peak aware that got washed out last January on that big plunge. No conciliation in being right long term if you go bankrupt in the intermediate time frame. I have ten long contracts with about half a million cash in immediate demand accounts, yet it still keeps me awake at night sometimes worrying if I have enough set aside. Good luck and hope it all works out for you.
Good points, especially on counter-party risk (which I agree is not an issue), but I believe the poster who was hedging his future oil needs was using options, which limit his downside risk to the price of the options.
Thanks Johno that does answer some of my commodities trading questions, but I think it is the bigger societal structure questions that I really have. Maybe these are questions ala Orlov or the changes coming are just to big to have answers. But in past upheavals what markets or bourses? ( If I am using that correctly) are most likely to continue to exist, as we are seeing banks can go belly up, sometimes even cities as alluded to above.
Yeah, my biggest concern is not so much counterparty, but more that the government will step in and help themselves to my 10000 barrels of oil, which I could physically claim when my contracts come due. Either that or just put the exchange of indefinite holiday. I bought my contracts in the low 70's, and have putting about a third of the profits into untraceable gold and silver, while using the rest to buttress my cash reserves in case of a price downtun. When oil hits $150-200 I'll probably close out entirely and put the whole thing in PM's, even though I may be leaving a big part of the oil run-up on the table. Also, I have "sold short" some of my gold on the exchange to earn interest income. Partially shields me from gold's fluctuations while allowing me to keep all the gold in my physical possession. Only way I know to earn a guaranteed income without having to use the banking system. 5% isn't gonna let me retire to Monaco, but at least I don't have to depend on the FDIC to make me whole.
A concern that I have about planning too far into the future with oil contracts is Force Majeure and how it could apply.
Have you considered this risk, and can you recommend anywhere to find out more?
(for example Shell's Nigeria ops have declared this in the last year or so)
If this is an ignorant question please go easy on me :-)
"A concern that I have about planning too far into the future with oil contracts is Force Majeure and how it could apply."
The NYMEX crude contract specifies only Cushing, OK as the physical delivery point. The exchange has rules for Force Majeure - e.g. alternative delivery points, delayed delivery, etc. Natural gas delivery during Katrina in 2005 was the only time Force Majeure was declared by NYMEX.
The precedent is 1933 when Roosevelt outlawed gold bonds, bonds that required payment of interest in gold.
Your contract may be taken over by the government, or just the oil that is produced in the US. Don't know how they would handle it.
The NYMEX website states "Transactions executed on the Exchange avoid the risk of counterparty default because the NYMEX clearinghouse acts as the counterparty to every trade. "
johno, who is your broker? I've started with Lind-Waldock and use the online trading tools which seem to work pretty well although maybe not as good as having a man on the floor during open outcry trading. But I save a few dollars on trading and I might miss a cent or two on the bid-ask spread, but we peak oilers are long termers so its not really material. I'm in at 6 contracts now but I want to get up to around 10 to 12. I'd like to see enough of a correction to be able to get back in cheaper. Right now I'm in long from the 80s with Z10s and Z11s. The backwardation sweet spot seems to be in that time range. The later contracts are progressively more expensive (but not much). The 10s and 11s also have more liquidity than the later stuff. Question: (touched on earlier) I understand marking to market upon each closing trade day and I understand force majeure. What happens if a producer sells x contracts for delivery in y time, anticipating production to cover the contracts written, and then is unable to deliver due to failing production? Let's assume that the contracts reach the due date and each party has to deliver. I'm not totally clear on the possible outcomes there.
I use MF Global (Mann Financial). I set it up and funded it through Etrade. I wouldn't call myself an active trader, I pretty much bought an amount of contracts roughly equal to my total net worth, stuck 40-50% of that amount in cash and short T-bills, and plan to hold them to near expiration, when I may roll them further out. I have been selling a bit as oil has run up (I started with 14 contracts and am down to 10). I've been pleased with the platform and with the customer service (I have to call them when I wire money in or out--mostly out up to now ;>). The trading fees are nominal, and I keep an Etrade saving acct linked to it so the wire fees are only 7.95 out of Mann and free to transfer in. My only gripe was when NYMEX rose the margin requirements. The way I found out is when Mann called me for a 100,ooo dollar margin call. An email, or call or some kind of fore-notice would have been nice, though I guess one could argue that if you don't have the cash on hand you shouldn't be trading commodities in the first place. I don't have any experience with options. I don't know all the rules on delivery, as I don't really plan to take physical possession (I guess I could put in my swimming pool...). I do know it varies with the commodity, most of the mini contracts actually specify a financial rather than physical settlement. In most cases the counter-party would have to buy in the open market to cover their contract. Futures contracts represent a pretty small percentage compared to the total spot monthly activity, so I wouldn't think it would be a problem for them to cover, though they make not like the price at the point (he,he). I also think financial settlement is also possible in extreme circumstances if both parties agree, but don't quote me on that. Pretty sure it happened with silver back in the early 80's when the Hunt brothers tried to corner the market, people were allowed to buy their way out of their contracts rather than driving the market higher chasing the diminishing amount of bullion on deposit. Silver bulls have been screaming since, but it was way before my time.
But right now I can buy gasoline for $3.05.
NYMEX wants $2.72.
The $2.72 is for the April delivery, so the pump price will go up. I think the March contract expired around $2.50 or so last week, and the Feb. contract expired 10 or 20 cents below that in Jan.
Hi Olepossum.
I pretty much followed your same logic RE hedging my family's future by picking up some oil options, and haven't regretted it.
However, while futures contracts are available quite far out, options don't seem to be. My broker can't get me any out-of-the-money naked crude calls past 2011 and those are pretty hard to come by.
Is he right, or are others here finding options available for sale in farther-out years than that?
I prefer options since the amount of risk is stable and the cost relatively low if you buy them out of the money.
cheers...
Financial writer James Stewart was just on CNBC complaining about how investment banks are handling the auction rate mess. They sold these instruments as basically being equivalent to cash. Since the market has collapsed, people can't get their money out, and the banks are offering to loan their customers money against their holdings, and charge interest. So, the banks are charging interest in order to allow customers access to their own money. Stewart is on the customer list.
I love the smell of class action lawsuits brewing in the morning. . .
How much longer do you think people will hang onto their cellphones? (the business I'm in) ... thinking of moving to the country and raising sheep, but that doesn't look like a sure thing either (I don't know much about sheep except they are cute and fuzzy).
So, what to do, what to do?
My experience is that as long as someone has a income they keep the cell phone even if they move to pre-pay cards. Also as the economy weakens the mobile providers can and will lower rates or go to low unlimited calling.
Mobile usage varies country to country but I've been in a lot of different countries 3rd world 2nd world etc. And mobile phones are widely used prize possessions.
Now with that said growth may slow considerably esp in Asia where mobile phones are status symbols and often changed every six months. But overall I think the industry will remain sound.
Also as people take more public transport they tend to use the data features of the mobile. Right now a lot of subway systems don't have networks but I think over time this will change.
Also for that matter I think people will be surprised how many people keep their internet connections regardless of status since email and the web are now critical for finding jobs and keeping abreast of industry changes.
But again I think the providers will have to slash costs and reduce profits. Also the hardware manufactures. This will leave MS in a interesting situation as Linux based cheaper web devices may become viable.
But you don't need your own computer and Internet connection to do that. You can share one with a friend or relative. You can go to a library or school.
That article I posted yesterday about people struggling to find employment had a photo of one of the people interviewed for the article, sitting at a local job center computer, checking online job listings. I would guess she was doing that because she can't do it at home.
Interesting that you mention cell phones. I have about a year left on a contract with AT&T (formerly Cingular) and was talking with my wife about getting rid of them. We have 2 phones, 2 numbers, bill about $84 per month and dont use them often. She agrees that we dont need them for we still have a land line with home phones and dsl for two computers. We will miss the stored phone numbers but we will get over that.
Sheep? Well, they come in various colors...and the Border Collies that herd them are great dogs. Thats about all I know about them.
Come to think of it, I already have a Border Collie. She's getting kind on long in the tooth but I've never had a more devoted companion / pet. If it means getting more of them, I just might do it. :)
Border collies are smart, loyal, generally good natured and highly energetic; these are true work dogs and need plenty of exercise. Their full size counterparts share many of these same qualities but are more docile and a little more akin to the class clown than the Rhodes scholar (a perfect fit for moi). ;)
I would encourage anyone who can offer a loving home to a pet to first consider a rescue dog or pound adoption. Two of my five collies were rescues and they were the greatest gift imaginable. For more information on collie adoption, see: http://www.collierescuenetwork.com and http://www.collierescue.ca/
Cheers,
Paul
DIYer,
If you're going to get a border collie for sheep herding, get one whose parents have won some obedience and work trials. A lot of work dogs like collies and shepherds have been bred for looks and their mental faculties aren't there anymore. Herding sheep is both physically and mentally taxing on the dogs, so you'll need dogs that are strong, healthy, smart, and trainable. Talk to some champion breeders of either border collies or australian shepherds (my mother is a champion breeder in CT). I recommend you attend some work trials to see what the dogs do.
Border Collie:
http://www.youtube.com/watch?v=5q5SeHVHk_w
Australian Shepherd:
http://www.youtube.com/watch?v=I3vdBBDW4RM
And watch the movie Babe, if you've not seen it.
Makes me wonder how many TOD posters have border collies. We do, and in addition to being heavily trained as my wife's hobby, we put 'em to work gathering avocados and coconuts from the back of our lot which is a heavily-sloped jungle of solid food trees. The soft foods we have to go down and pick, but after a bit of wind we can just set out some large buckets and encourage the borders to race down the hill and back, snuffling around in the weeds for freshly-fallen avos, and then running up to fill the buckets with them. Just a word or two of praise will keep them running their hearts out. Indeed, if we had more land we could gather commercial quantities with border collie energy.
We do border collie rescue, too... ever since the movie 'babe' came out, people have been buying border collies as pups and then putting them down because they're unsuited to most homes and owners. In most cases we see, the borders are saner than the humans...
On phones... the only cel phones we use are those cheapie TracFone's. You get the phones free with a $20 time card, and then can maintain 'em for about $5/month on average if you use them sanely as a way to be in touch while on the go, and save your long talks for the land line.
Most people ditch the land line and keep the mobile. A lot of the people I know that are single under 40 don't have land lines. I will go the opposite and ditch my land line first. I think that mobile phones will become quite competitive with land lines over the next 4-5 years.
Also I might add for the mobile industry the US is basically a third world country and not that important. Asia and Europe are the primary markets.
In my work I look at Asia/Europe then South America and the ME. I've never even considered the US market as it tends to tag along several years behind everyone else.
In general the US has reasonable voice land line support but another projection is that as time goes on this will degrade and wireless communications will become more important even in the US but to be clear I don't really care about the US market its pretty much irrelevant.
I don't know about the situation in the US, but in the UK a land-line comes out noticeably cheaper if you spend lots of time on the phone, but if you don't make that many calls (basically arranging to meet up with people, etc) the mobile phone is almost the same cost because the fixed charges (line rental, etc) are quite high. (Also, the convention is that someone calling your mobile number pays whereas the US has the callee picking up the bill.)
A mobile is particularly attractive if you move relatively frequently as you get hammered even more by charges to reactivate or install a telephone in your new address.
Not my area, but it seems that mobile networks are not as reliable in cases of power outages and crises (e.g. 9/11 - when everyone wants to dial). I'll hold onto my land line, in addition to my mobile.
You have a point. Cell coverage went out during the blackout of 2003, because the towers had no power. But the land lines worked fine.
"In an effort to keep phone and wireless networks online during natural disasters, the FCC is now requiring telecom and wireless companies to provide backup power for cell sites and remote telecom facilities. The new measures, prompted by an FCC review of telecom outages in the aftermath of Hurricane Katrina, are likely to increase demand for generators, batteries and other power protection equipment. The rules also pose a challenge for carriers with equipment in locations that may not easily support backup equipment due to space constraints or environmental considerations."
http://www.datacenterknowledge.com/archives/2007/Dec/10/fcc_ruling_may_s...
I imagine it will be only short-term, though.
Many of the radio stations around here had generator or battery backup. But as the blackout dragged on, they had to go off the air. It was kind of creepy, really. They counted down how much time they had left, then told their listeners to tune into another station that still had power, and went dark.
Yup, I think the FCC mandate is only for eight hours. In the comment on the article someone suggests a bigger problem is refueling once you've burned through what you had stored. I worked a community radio station transmitter for a number of years, the cell site on the same mountain, had a propane generator and about 50 100lb propane tanks we had to drop with a chopper. We'd load the empties in a net, then the chopper would take them to the base of the mountain where a truck was waiting, once filled it was back up the mountain in the net. Very odd standing under a net full of propane cylinders swinging from a chopper. Not so easy to refill for sure. Lots of chinks in the armor.
Don
I'm moving to a small cabin and garden in the Ozarks and keeping my cell phone. Otherwise, off grid--no electric line, no mailing address, no water line, no phone line, no cable. The cell phone and service are already paid for (TracPhone pay-as-you-go). It's for emergency use and brief calls to my relatives.
And as my neighbor and fellow doomer said: "When the cell phones stop working, it'll be time to park my vehicle for good."
Well, you and River are obviously beyond-three-sigma curmudgeons, so I won't put much weight on these remarks. Hopefully people will hang onto them for a couple more years, anyway... but yeah, when the signal from the towers is turned down, it's time to plant turnips for sure.
Thanks for the compliment!
Tho', I wonder if after the last few weeks that may now be 2 sigmas. (3 sigmas = <.01, 2 sigmas = <.05)
I recommend Golden Ball turnips, not as productive as Purple Top turnips but better flavor. ;-)
I am amazed that you have cell phone service in the Ozarks. Here in southern Indiana, not far from Louisville, we have no service at the house from any carrier, even tho there is a tower down the street for State Police communications that they could use for a relay.
That's the summary reg. capital markets I ever came across :
"there is not enough exported energy available to pay back all of the loans and to generate the projected earnings. Therefore, the markets are still mispricing most equity and debt"
The New York State Dept. of Transportation distributed this memo to their employees today:
(No link yet.)Wow, recognition from a fairly large governmental body. That's a start.
I love the quote about Saudia Arabia never having been a puppet state. It is a statement on a par with "I am not a crook" or "I did not have sex with that woman." The very need for the statement to be made indicates that it is probably false.
I suspect that in the future, the Saud Family is going to need more, not less, protection from the United States, and be more, not less, susceptible to pressure from Washington. It is only the very wealthy families who have to hire private security guards, and I believe that the family of Saud falls into that category.
And oil hasn't budged on the rumors of war in South America.
If I was the prez, I'd do a lot better than Monica!
I agree that SA will need more protection from the US, unless they decide to switch sides and get protection from Russia or China. That's the problem with mercenaries, they will usually go to the highest bidder.
The last president who did better was kennedy but that was in the good old days when kennedy was able to slip out to NV and stay at the Cal-Neva in Tahoe and Sinatra and other mob-connected friends would set him up with Showgirls (Marilyn Monroe was one of many). Poor Bill was forced to prowl where he could...
"I did not have sex with that woman." I love the way people change that quote. He do not say "sex", he said "sexual relations" which is a synonym for intercourse. But the actual quote has the disadvantage of actually being true as far as we know. So, voila, we just change the quote to make it say something that is not true! And then call him a liar.
Most wives would consider oral sex to be sexual relations.
And President Clinton DID lie, under oath, in a federal civil rights case and lost his law license as a result. That lie was not as pithy as the one used here.
Just because GWB is *SO* bad, does not make the lies of President Clinton any better.
ALan
Perhaps, but that it not what is in the dictionary. I think that when you call someone a liar, you should not do it by changing a quote from one that is technically true to something that is not. That's sort of the pot calling the kettle black.
There are lots of sites where the 'blue states' argue with the 'red states' over all manner of trivial bs.
You are right. We have plenty of our own trivial topics here.
American Heritage Dictionary
sexual relations
pl.n.
2. Sexual activity between individuals.
Dictionary.com Unabridged (v 1.1)
sexual relations
–noun
2. any sexual activity between individuals.
http://www.theoildrum.com/comment/reply/3692/311450
Dictionary.com Unabridged (v 1.1)
ped·ant /ˈpɛdnt/ [ped-nt]
–noun
2. a person who overemphasizes rules or minor details.
:)
Right, we must weigh one wrong against another. Bush got us into an unnecessary war that has, so far, cost the lives of 4,000 American servicemen and women and tens of thousands of Iraqi citizens. Clinton got a blow job then tried to lie his way out of it. Hell, any fool can see Clinton's crime was so much worse.
Ron Patterson
Committing perjury in a federal civil rights case (or even rape) is a lessor but still serious offense.
Alan
One must be under oath to commit perjury. And we all know he was not under oath so what is your point? But I think we can all agree that an illicit blow job is far more serious than causing the deaths of upwards of 100,000 people. After all this is a Christian nation.
Ron Patterson
He was under oath when lying to prevent liability in a federal civil rights case. He did lose his right to practice law as a result.
If Sen. Vitter (R-LA) wants to lie about not getting enemas from prostitutes, that is one thing (as long it is not sworn testimony).
Lying under oath to deny just compensation to a victim of his is another.
I agree. NOT as bad as Iraq, etc. but still bad. And MUCH worse than Sen. Vitter's lies (to date). Which was my point.
Alan
My friend from New Orleans once told me that while up here we suspect our politicians are corrupt, in Louisiana they demand it.
It was a question that should have ever been asked. There was no Reason and it is impossible not to consider that fact when weighing his response. We have held the Supreme Court too much less standard.
Do I have to supply links or "Do hold these truths to be self evident"?
Rockport shoes are still made in Massachussetts. Saucony running shoes used to be made in Bangor, Maine, but they might be made in China these days, I'm not sure.
Here's an interesting site about how to buy stuff made in the USA:
http://www.usstuff.com/index.htm
Oil Deadline March 8th in Ecuador
The companies will have the option of agreeing to be paid for getting the oil out of the ground, as the government wants, or to continue under present terms and pay the government a 99 percent tax for windfall profits above contracted prices.
Companies also may leave, in which case the country will pay them for investments carried out to date, said Correa, a U.S.- educated economist.
http://www.bloomberg.com/apps/news?pid=20601086&sid=aHi90riLiNEk
Interesting that Colombia violated Ecuadorian Sovereignty and caused this incident, just ahead of this important deadline.
Want to bet the US is behind it?
This isn't about FARC, it's about Ecuador nationalizing it's oil fields on March 8th.
Could this be the 'incident' Chavez warned us about?
US, Columbia plotting 'incident' to spark war with Venezuela
President Hugo Chavez on Saturday charged that the United States and Colombia were plotting an incident that would spark a war with Venezuela.
"I alert the world of the following," said Chavez, speaking at the Bolivarian Alternative Summit of the Americas (ALBA). "The US empire is creating conditions to generate an armed conflict between Colombia and Venezuela."
"I accuse the government of Colombia of devising a conspiracy, acting as a pawn of the U.S. empire, of devising a military provocation against Venezuela," Chavez said.
"A military aggression is being prepared," Chavez added.
But he warned Colombia not to attempt a "provocation" and said Venezuela would cut off all oil exports in the event of a military strike from the neighboring country.
"In that scenario, write it down: the price of oil would reach $300, because there wouldn't be oil for anyone," Chavez said. "The invaders would have to step over our dead bodies."
http://www.southcoasttoday.com/apps/pbcs.dll/article?AID=/20080126/NEWS/...
Noticed the US/Western Media Propaganda light is now lit and aimed at Ecuador's President Correa.
A Viper in their Midst
Eloy Alfaro Base Manta, Ecuador
The Eloy Alfaro base is used to rotate U.S. troops in and out of Columbia, and to house an immense network of private corporations who do most of the military's dirty work in Columbia. According to the Miami Herald , U.S. mercenaries armed with M-16s have gotten into fire fights with guerrillas in southern Columbia, and American civilians working for Air Scan International of Florida called in air strikes that killed 19 civilians and wounded 25 others in the town of Santo Domingo.
The base is crawling with U.S. civilians—many of them retired military—working for Military Professional Resources Inc., Virginia Electronics, DynCorp, Lockheed Martin (the world's largest arms maker), Northrop Grumman, TRW, and dozens of others.
It was U.S. intelligence agents working out of Manta who fingered Revolutionary Armed Forces of Colombia leader Ricardo Palmera last year, and several leaders of the U.S.-supported coup against Haitian President Bertram Aristide spent several months there before launching the 2004 coup that exiled Aristide to South Africa.
“Privatizing” war is not only the logical extension of the Bush administration's mania for contracting everything out to the private sector; it also shields the White House's activities from the U.S. Congress. “My complaint about the use of private contractors,” says U.S. Rep. Jan Schakowsy (D-IL), “is their ability to fly under the radar to avoid accountability.”
The role that Manta is playing in the northern part of the continent is what so worries countries in the southern cone about Mariscal Estigarribia. “Once the United States arrives,” Argentinean Nobel Peace Prize laureate Adolfo Perez commented about the Paraguay base, “it takes a long time to leave.”
http://www.fpif.org/fpiftxt/2939
Question – Will recession cause oil pricing to increase?
Reason for Question: Oil exporters are as addicted to their current revenues as importers are to oil. Exporters are becoming aware that they can cut production to maintain revenues at lower quantities. Long-term benefit is that revenues from depleting fields can be sustained years longer.
Question 2: Would it be better for importing economies to purposely drive the effective price of oil to $200 a barrel on a schedule to remove uncertainty?
'Will resession cause oil pricing to increase?'
I think the right question to ask is will recession cause oil pricing in _____ (fill in the currency or commodity) to increase.
The dollar has been dropping against every first world and some second world currencies recently so I would not consider pricing oil or evaluating oil 'increases or decreases' in dollars (unless one uses a real world inflation adjusted dollar). I think a better evaluation of the 'price' of oil would be to gauge oil against a basket of more stable currencies or better yet against a basket of commodities. If one looks at a graph of oil priced in gold over the last century you will see that the relationship is fairly stable. BTW, there are many such charts available on various economic sites.
Your second question is related to your first question. First, 'uncertainty' is never going to be completely removed when oil is concerned because of many factors, not the least of which is the uncertainty of wars. There is also the very real possibility that oil will soon be at $200 bbl if the Fed continues on its current course of cutting interest rates...Meaning that we can do what we are currently doing, relying on Fed actions while we drive our SUVs merrily along, and oil will soon reach $200 bbl...or more.
There is also the very real possibility that oil will soon be at $200 bbl
Question: Where would it be if OPEC decided the US didn't deserve any oil from them, that they were 'on the wrong side' in too many conflicts with OPEC nations?
It appears that Israel is about to strike Iran. They have determined that all the longer range missiles striking deeper in Israel are from Iran. Since they intend to take out Iran's enrichment facilities anyway, they will use this provacation as justification. The US has been informed. Also, it is feared in Israel the pro-western elements in Lebannon are about to lose control and a pro-Syrian government installed. This could turn into a region-wide war. Have seen where Iran, Egypt, and Saudi Arabia have been having 'discussions'. All are in support of the Palestinians. Egypt has decided not to push Hamas back into Gaza and are looking the other way as Hamas establishes a base of operations in the Sinai. We may be seeing the opening phase of a new Arab-Israeli War. This would explain Saudi Arabia's declaration of not being a US puppet and saying they would not be pressured by the US with regards to 'Arab Unity' and foreign policy. Saudi Arabia has, of late, been extremely cold, and even confrontational, with the US.
Venezuela, Ecuador and Iran are all OPEC nations.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2004/01/02/MNG8G427D61.DTL
China has stepped in and said they can buy all of Venezuela's oil.
If a deal comes through, it would mean China soaking up nearly all the Venezuelan fuel oil exports and raise term imports by the world's second-largest oil consumer by a further 20 percent over a year, traders said.
"If prices are really attractive, yes, we do have the appetite to take more fuel oil. But that also means PDVSA cutting back supplies to other buyers as that is about all they can export," said a PetroChina trading manager, who declined to be named.
I am currently in Baltimore, staying with George Tyson (The Father of Baltimore's Light Rail Line) and commuting via MARC (electrified commuter rail) to Washington DC and the Millennium Institute and WIREC conference. I have promised to stay until our first paper is completed.
Anyway, the local paper had an article on one of the last cobblers in Baltimore, "a dying breed".
A dying breed ? My cobbler and his assistant in New Orleans (I resole or repair perhaps 3 pairs of shoes/year) are always busy and he even has a competitor a block away on Magazine Street (5 miles of small shops & businesses).
Is this an index of how much Americans walk ?
Best Hopes for Cobblers !
Alan
The Wall Street Journal has an article today about how an American shoe manufacturer in Florida could no longer succeed because he could not get parts from the US or service or support for his machines in the US. All of the manufacturing infrastructure-- suppliers, repair techs, etc.-- was in China. Our manufacturing base has been hollowed out, and will need to be completely rebuilt. On principle, I buy only Allen Edmonds, and have them resoled half a block from my office. And my feet feel great in them.
Welcome to Maryland, Alan!
If you will be around long enough this spring/summer, check out the big farmers market on Sunday mornings at the bottom of I-83 in downtown Baltimore.
urbangardener
I went to the one Saturday morning with George and got some local milk and bread, QUITE breezy !
Alan
I'll be at WIREC tomorrow and Wednesday.
If you don't have plans, head over to Room 154B at 12:20 tomorrow.
Freedom From Oil - a review
Event: Good Energies presents David Sandalow's Freedom From Oil and 3TIER's REmapping the World
Tuesday, March 4, 2008, 12:30 - 2:00 PM, Room: 154 B
Organizing Partners: Good Energies, Inc.
Event Description: This will be a business lunch event with a book signing by David Sandalow who will discuss major points from his book Freedom From Oil. In addition, Ken Westrick of 3TIER will present their new initiative, REmapping the World. Richard Kauffman will make remarks on behalf of Good Energies, Inc.
Proposed Speakers: David Sandalow, Brookings Institution; Ken Westrick, 3TIER; Richard Kauffman, Good Energies, Inc.
Room 153 will have Hans Herren et al Tuesday 12:20-2 PM, and I will be there.
Alan
Who the heck repairs shoes anymore?
American's just go to payless and pick up another pair for $9.99 made in china.
Andris Piebalgs appears to be starting and increasing the heat on a PO awareness campaign. He's careful not to make a specific prediction, but wants people to consider what life would be like in 2011 if oil were indeed $200 barrel. It's another in a series of announcements geared toward moving people slowly but steadily towards a PO understanding. Having to look 3 years into the future at a doubled-price oil shock is not alarmist when presented as a half-joke, though it is effective because the other half is clearly serious. On top of his starting a blog, it appears that Andris formulated and engaged a concerted awareness campaign with attention-getting headlines that don't pin him to specifics. Kudos, Commissioner, and keep turning up the heat on this campaign.
Isn't it curious that AMD is bullish on ethanol, but they just cancled a $200 million ethanol plant in just the last couple of weeks? That's doubletalk if I've ever seen it.
I was looking at a price forecast we produced back in 2006:
At that time, this forecast looked impossibly pessimistic and in fact prices collapsed at the end of 2006 but look where we are now:
Khebab, this looks interesting -'How Much?' is probably the 2nd most asked question after 'When'!
Can you tell us a bit more? Does it include Inflation adjustment?
Hey, look at the mini graph CLJ08.NYM -its shot up to $104, that looks a bit steep, what's going on!
Nick.
No, It's not inflation adjusted.
The run-up in prices for 2008 was pretty impressive however I doubt that it is sustainable. In my opinion, there several forces at work:
1. Dollar fall against other currencies.
2. Slow down in the US economy
3. OPEC quotas
For now, it looks like the first and the last factors are driving prices.
This would be a good time for an update. It would be also interesting to overlay your price projections with Ace's, as he's also been pretty close to the mark so far.
If you take yearly averages it removes a lot of the 'noise' in the data - according to the trendline, in 2008 the average price should be somewhat lower than it crrently is - I guess the trendline works until it doesn't!
Inflation adjusted ?
Or just do it in dollars and Euros.
I think your break is from the falling dollar.
Good ideas, I'll try them. I think it's possible that pricing crude in US dollars is giving an increasingly (exponentially?) misleading picture for the rest of the world where the currency isn't tied to the dollar.
I'm not sure if this has been posted here before but I was looking for a national debt clock and ran into a peak oil clock a co2 clock a price of addiction to foreign oil clock and others at www.http://zfacts.com/p/196.html
They even have a link to theoildrum on one of their energy pages.
RichB
Page 1 story in WSJ:
Everyone has their models built based on BAU. There will be lots of waste wood. Everyone (simultaneously) can use it. It doesn't take very long for the models to prove false.
I saw that this morning. I didn't post it, because it's behind a paywall. But you can get in through Google News for free. And it has this bit:
Hey, that's interesting.
Perhaps HO could make a techie talk about wood in wells, if HO is still around and well (I hope so because we haven't seen a post lately by him).
Good luck finding that ingredient for composting toilets.
We have experimented with dried leaves instead of sawdust in the sawdust toilet...chop them in a covered trash can with a weed wacker(hole cut in lid). The only downside was that they need to be kept dry or they make a rapidly decomposing slurry. Being dry, they are not quite as effective as damp sawdust for odor control so you tend to use a little more but urine(especially from guys) tends to settle them back down, so it is pretty much as wash. Sans a weed wacker, the leaves could probably be crushed manually(or more likely footually) in a canvas/burlap bag.
The lead page 1 story in today's WSJ:
Americans Start to Curb Their Thirst for Gasoline
Look for SUV sales to drop through the floor.
I totally agree. Now if we just had pure electric offerings instead...
Of course this affects the assumptions behind the price of 'Co-Generation', which in lumbermills up here in Maine, I understand there to be a considerable amount of CoGen as an internal energy-recapturing process, but the economic pressures will still be unavoidable.
It also would affect Wood Pellets and similar products, as well as cellulosic's basic price equations, I'd guess, while still in the realm of 'imaginary can openers' at this stage.
Looks like the folks that bought corn or wood pellet stoves ate going to get hit with higher prices. In addition to the quote above about the increase in the price of sawdust, here's another couple of quotes from the article in the WSJ:
So, is cellulosic ethanol made from biomass really going to "save the day"? Not when there aren't any left overs to "harvest". And then, what will happen to the top soil as all that "crop waste" is burned or otherwise processed?
E. Swanson
Not only will this deprive the soil of nutrients it will deprive it of organic matter and protection from runoff. I contend that no ecosystem will survive PO in anything like a functioning, semi-intact condition. This is just the beginning.
'And then, what will happen to the top soil as all that "crop waste" is burned or otherwise processed?'
it not only provides nutriments & prevents runoff it leaves spaces in the soil for oxygen - a necessary part for the plant's life.
Naw, how could the pundants telling us how "It looks like it's going to be harder and harder to keep technological civilization down, oil or no oil." be wrong?
http://ergosphere.blogspot.com/2005/06/zinc-miracle-metal.html
Hi Black Dog,
In the co-generation thread I made a reference to "peak sawdust" and offered this example: http://www.dhonline.com/articles/2008/02/15/news/local/3aaa02_mill.txt
Locally, the price of wood pellets has increased by 50 per cent over the past two years and there have been occasional spot shortages, particularly towards the latter part of the heating season. Transportation costs are high, so bringing in additional supplies from other regions can be prohibitively expensive and redirecting supplies can also negatively impact price and availability in these adjoining markets.
Pellet stove sales have always been a boom-bust proposition and these cycles are largely driven by consumer reaction to short-term movements in the price of this fuel and those with which it competes (hardly surprising). In an ideal world, a more stable and predictable marketplace would allow pellet manufactures to better plan new capital investment and secure the necessary financing and resource agreements that would allow them to expand production and thus better serve the needs of their customers. But we don't live in an ideal world and given the growing uncertainty in the energy marketplace, I don't ever expect supply to smoothly match demand.
Cheers,
Paul
It might bear repeating at this point..
As such 'scraps and surpluses' become increasingly scarce, finally seen for their once disregarded value, stock up on Glass and Mirrors, two High Energy products that can help capture sunlight for years and years. Glass Jars for long-term storage, plate glass and mirror for any number of lighting, heating and cooking possibilities. (Many of the other components in such projects might become precious, too, but there's not much can do what glass can do, as steadily and for as long.
Bob
- I stash other stuff too, of course.. you can picture my basement, I suppose.. but those two are particular favorites. Dimensional Lumber, Aluminum and Steel are also perennially useful and valuable.. Fasteners(!), Adhesives(!!), Casters, Wheels, Fabrics, Films(Polytarp, etc)) And so on..
Industrial Waste and Magic
Interesting point, Bob. I've never given much thought to the things I should be squirreling away in the basement just in case. My luck, after they cart my cold dead body out the door they'll find something stupid like tens of thousands of those little plastic crimps off the end of bread bags. I'm reasonably confident I can cope with most short term contingencies (i.e., the three to thirty day stuff), but I'd be hopeless at anything beyond that. It's not just a matter of ignorance or poor planning, but an unwillingness to give in to my darkest fears -- you know, the scenarios where the living are truly envious of the dead.
Cheers,
Paul
I'm very handy, not shy about admitting that.. I just have to make sure they don't find my body crushed prematurely under a pile of my wisely stashed Patio-door Windows!
Even the sawdust is overcommitted.
Isn't this general mess more or less what the economy would look like if returns went from positive to negative? I've been doing a lot of reading on "growth theory" in economics of late - well, for the past three or four years actually - and it seems to me like we've shifted into a new phase. Diminishing marginal returns since maybe the 70s and diminishing absolute returns now. Does that observation even make sense to anyone else? It's easy to see that virtually everything the PTBs suggest as a solution makes things worse. But is it possible that we've reached the point where any increase in activity makes things worse, almost irrespective of what that activity is? Thermodynamics would suggest that we would inevitably reach that point.
This interlude brought to you by a short section on Marshall, where positive growth is predicated on increasing returns. Just a little beyond me and still out of focus.
cfm in Gray, ME, buried in snow.
I agree with your observation and add that the rapacious finance capitalism and corporate globalization's "race to the bottom" we've seen since the early 1990s are additional portents indicating we are in overshoot and worse is yet to come. Your last question was answered in the affirmative by Lovelock in an interview I'm sure he's tired of giving. I found it very revealing to read that interview and then Heinberg's "pep talk" esaay. I'm very much reminded of Orwell's description of the Proles' seemingly upbeat indifference/ignorance to their situation in 1984; it's quite like us all being Winston Smith, knowing/understanding the reality of it all, but with no one to enlighten aside from himself through his diary--sort of like writing on this blog.
Wind generation requires just five litres of water to generate five megawatts, the average amount of energy consumed by a household per year.
The average British home consumes five megawatts?!? Gosh, do you folks leave a lot of lights on?
I know I'm being picky, but I wish writers and their editors understood the difference between kW and kWh and MW and MWh. If you can't express this properly, how can we take anything you say seriously? It could have been a typo and I should give the writer the benefit of the doubt, but I see this same mistake made time and time again and it's one of my pet peeves.
Cheers,
Paul
Irritates me too. And I'm sure it's not a typo: this is standard for journalistic coverage of such. My "favorite" is the standard line: "The proposed ________ powerstation will generate XXX megawatts, enough to power YYY homes for a year." I suppose when the year ends it's designed to blow itself up? (Anybody seen the movie "how tasty was my little frenchman"?)
Hi vtpeaknik,
I confess I'm not without sin, as I would often say something such as "the boiler is rated for 500,000 BTUs", which likewise begs the question: well, what happens when those 500,000 BTUs are used up? I'm a lot more careful in what I say now, knowing how irritating and potentially misleading this type of mistake can be. For example, when someone says "[w]ind generation requires just five litres of water to generate five megawatts" the logical/literal interpretation is that just five litres of water are consumed in the manufacture and installation of a 5 MW wind turbine. We know intuitively this doesn't make sense, but you can easily see how such poor wording can steer us off in the wrong direction.
I hadn't heard of this movie prior to you mentioning it. The reviews on Amazon are quite positive, but the graphic nature might be a little too much for my tastes (a certain part of my male anatomy recoiled in horror). =:0
Cheers,
Paul
I mentioned the book previously, and I have a review in the queue, but Gusher of Lies
went on sale today. It is a very good book, but everyone will find something they don't like about it. I highly recommend it though.
RR (as of this morning living in Arnhem, in the Netherlands)
Read the two reviews posted at your link; both appear to be peak oil illeterate, with Malloy calling Powerdown and other books detailing Peak Oil "apocalyptic screeds." He seems firmly planted in the Cornucopian universe. Unfortunately, I have far too many items in my inbox already, and I already argee with the author's thesis that Energy Independence is a chimera. However, I do suggest he be invited to present his facts at this years ASPO-USA conference.
My aunt lives there(in Velp). You like the trolley buses, I suppose. Do you plan to stay for a while?
At least 3 months, but then I may be here a week a month for the next several years.
WT posted upthread...'The Federal Reserve's rescue has failed
By Ambrose Evans-Pritchard, International Business Editor'. In this UK Telegraph article Mr Evans-Pritchard makes some points about the state of the Western economies that should frighten everyone but he also seems to misunderstand the power of the US Fed and especially what Fed actions can be taken under Section 13 of the Federal Reserve Act. Mr E-P writes 'Section 13 of the Federal Reserve Act allows the bank - in "exigent circumstances" - to lend money to anybody, and take upon itself the credit risk. It has not done so since the 1930s.
Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?'
Does the Fed really have the power, or the will, to 'loan money to anyone'? Argueably, they do not, but then some would reply that rules were made to be broken. As Mish points out below the Fed is a business, like any other, and is unlikely to give away money or make purchases of financial instruments that they are certain are worthless.
'The Fed Can Provide Liquidity NOT Capital
Three Key Sentences made by a Fed Governor
The Fed can provide liquidity support but not capital
The Fed does not have power to deal with a solvency problem.
Should a solvency problem arise with any of the GSEs, the solution will have to be found elsewhere than through the Federal Reserve.
The Fed cannot provide capital to Fannie Mae (FNM), Freddie Mac (FRE), Citigroup (C), Washington Mutual (WM), JPMorgan (JPM) or anyone else. For all this talk of "helicopter drops", Poole seems to be calling Bernanke's Bluff.'
To find out how little the ECB and Fed are really doing a thorough reading of this link might be helpfull. Hint, the ECB did not 'inject $500,000 into European Banks, the week that the report made headlines the ECB actually drained 3 Bil Euros from the system.
http://globaleconomicanalysis.blogspot.com/2008/01/no-helicopter-drop-fo...
The Fed can be the "lender of last resort." But they still need someone willing to borrow the money. Right now the only people willing to borrow are companies who need the money to stay afloat.
What they need is a "borrower of last resort." That is the US government. However, the US govt. is already having trouble: Bush Deficit at Record as Treasuries Deter Pensions. Basically, no one wants buy 30-year treasuries at 4.1% interest rates. I can't blame them.
The Fed is driving long-term rates up even as it lowers short-term rates. If the US gov tries to borrow and spend our way out of the current recession, the bond market will tank, the deficit will explode, the dollar will drop through the floor, and people will be talking about hyperinflation being here, not just a future possibility. And, if the Fed tries to raise rates to deal with the hyperinflation, it will put us right back where we are today, except we'll be even worse off.
The alternatives are ugly, and I do not believe the Fed is capable of engineering a good outcome.
shargash, I couldnt agree more. Anyone that buys 30 year treasuries at 4.1% is going to get flattened. The Fed has stated that their 'targeted inflation rate is 2%' and the real inflation rate according to Shadowstats is about 11-12% and rising.
I think the Fed will stay on their current course, cutting rates, untill it becomes obvious to even the tortoises that it is not working. Then they might try what Volker did to avoid hyperinflation...or, they might just let it rip. Of course, hyperinflation will change the psychology of at least a generation of the population. Savers and others (retirement funds, state funds, etc) that have made rational decisions about investments, savings, retirement, homes, etc, are going to suddenly be FWOs if they are all in dollars and have not spread their risks with commodities. In any case the Fed is definitely between a rock and a hard place.
Recently there have been some stories about the IMF selling gold but it is not clear if the sales would be to central banks or to the genereal public. Should be interesting, maybe hilarious, to watch the sale if it takes place...and is not just another bluff.
One article I read pointed out thet the US will almost certainly elect an inflationary canidate for President this November. So bonds are a bad idea. Did one US polititian say the idea of bonds was to borrow dollers and pay back wooden cents.
Can't save? Blame your brain
"Can't save? Blame your brain"
Phew! That rules out some gland or something :-)
Now I know whom to have a stern talk-to with.
As Economy Lags in U.S., Oil Nations Rethink Cuts
http://www.nytimes.com/2008/03/03/business/worldbusiness/03opec.html
Another look at potential OPEC cuts vs. production increases. The quote at the end, does not make much sense:
“It might seem counterintuitive,” said Antoine Halff, head of commodities research at Newedge, a brokerage firm, “but OPEC should be increasing its production now that prices are dropping. This would provide a lifeline to the world economy. OPEC knows it can’t afford a recession.”
Where are these dropping prices? The article itself points out that prices have just today exceeded inflation adjusted highs.
About the above linked story:
Well yes, it could the ELF (Earth Liberation Front) that is responsible, but I have an alternative theory. Given that the market for multimillion-dollar homes has collapsed, wouldn't the builder have an incentive to torch the homes and collect the insurance?
I won't be surprised if a new wave of ELF-sponsored "terrorism" sweeps through unoccupied model homes across America.
I have to say, that thought crossed my mind, too. A couple of years ago, people were setting fire to their SUVs to get out of making payments. Wouldn't surprise me if houses were next.
I've been expecting that sort of thing to start cropping up as well. This is apparently the first in what promises to be a steady surge of news stories. This is a lot like when the first stories of copper wire stripping started appearing earlier last year.
What really worries me is the possibility of an arson spree combined with severe drought this summer.
Thats really sad but not surprising. Local governments are cutting services, including fire departments, to match falling revenues and we might have a flock of arsonist builders out to collect insurance on unsold homes. Are home insurers to be the next victims of economic collapse? Watch for large rate increases if this is a trend.
This article that I wrote nearly two years ago for insurance executives doesn't quite go as far as talking about arson. I talk about large homes losing value and standing vacant for long periods.
One good indication might be whether or not you find the carcasses of burned appliances in the ashes.
The whole eco-terrorist strawman is largely an invention of those whose various independent interests it serves to have such a threat scaring people. That isn't saying that there aren't a few outliers on the radicalism bell curve - there are for every issue - but in significant numbers these people simply don't exist.
An interesting ecological niche in human culture-space is the phenomenon of spontaneous symbiosis developing without communication between a radical-but-ineffectual individual and those whose interests are served by the spectre of fire-breathing radical movements.
For instance, if some idiot made up a new group name and claimed credit for this rash of underwater-mortgage fires, he/she would immediately become a famous underground sensation, would seem to have troops everywhere, would command top media attention, and top the FBI's wanted list; yet since there was no actual connection between the individual and the emergent acts of mortgage-induced arson, the person would not even be convictable in court. Moreover, the government might well decide that capturing or killing this person would be counterproductive to its own interests, prefer the high-profile focus on a specific demonized target to a vague opponent, and damn! they just can't tie the person to the crimes with evidence anyway and the person can take the 5th... and the legend grows of an ecoterror mastermind with legions of troops. Presto: an apparent ecoterror arson movement with a celebrity wanker leader, fear stalks the land, and all it is is some putz who wanted attention and put out a press release.
This would NOT be a conspiracy. Each actor would be maximizing its own 'perceived fitness'. The "ecoterror kingpin" idiot would get laid more, be famous, and get donations from all over the world due to the free publicity. The actual arsonists would get off clean with someone else claiming responsibility. The police and military would get bigger budgets and crowd-control toys to deal with the new "war on ecoterrorism". Those who like to see government have more heavy-handed control would welcome it. Those who dislike environmental rules would demonize them as being "tools of the ecoterrorists". Honestly, this is kind of how the world works now and I won't be a bit surprised to see it play out in such a way. Hell, I'll probably be waterboarded on general principles for having 'known' it would happen. Anyone who doesn't understand that Osama B.L. is a symbiote of the neocons won't understand what I'm saying here.
Nobody's driving this bus, and even organized crime ain't that organized. It's all emergent, see?
Your scenario reminds me of Earth First! back when David Foreman started it. He was traveling around the country in his VW bus and happened to roll thru town, giving a talk to the local environmental activist, which I attended. He/they are still at it decades later.
http://en.wikipedia.org/wiki/Earth_First!
If the ELF didn't exist, TPTB would have to invent them to counter the effects of the real radicals. The knuckle draggers' military mind needs targets to attack and destroy.
http://www.earthfirst.org/
E. Swanson
It could easily have been the cops too. Budget slashed? Need money? Create some terrorists. That's fairly standard behavior for authoritarians.
cfm in Gray, ME
Isnt it...creepy...watching not only Peak Oil hit-the-fan, but peak fresh water, peak food commodity prices, peak metals, not-so-peak USdollar vs. anything. Just another day for "free-marketeers" and the chief bobble-heads in DC.
Regarding ADM and the corn-based ethanol hoax....look at their website(admworld)...except go to Europe. There, they are the biodiesel titans.
With the #1 transport fuel(diesel) hitting $4 retail, is it true we are actually exporting this stuff?
I used to think I saw things differently from other people.
Then I became PO aware about a year ago.
Now sometimes I wonder if they all know what I think I understand, but somehow are dealing with it better then I do.
I'm getting a feeling the end of the consensus trance is imminent.
You guys didn't get the early 2008 memo from Larry Kudlow:
SELL OIL!!! BUY FINANCIALS!!!
I don't think they liked his memo.
http://www.arabtimesonline.com/kuwaitnews/pagesdetails.asp?nid=13094&cci...
Kudlow is a fool of fools.
As with Yergin, there is serious Money To Be Made from being counter-Kudlow.
Thanks Larry!
All your Goldilocks are belong to us. (sic)
The cover story in the March 10 edition of Macleans, a Canadian newsweekly:
Why your grocery bill is about to hurt
"The End of Food"? Maybe a more popular title would be "Eat This Book".
The next stage of the collapse will come when the masses lose confidence in their leadership. Right now they still believe the existing power structure can best deliver the goodies, more so than any alternative. When that changes (its just a matter of time) things will go from bad to worse.
Solar--
I agree, check the link below.
http://survivalacres.com/wordpress/?p=1187
I have some issues with this analysis, as I don't believe the State will even have the resources to answer the phone, but it will be nasty or a while until the survivors (if any) actually start putting things back together.
SolarDude: The next stage of the collapse will come when the masses lose confidence in their leadership.
What leadership? (Ba-da-boom!) (sorry you set that one up)
-or-
If these leaders lead any faster they'll bump into our caboose.
Orlov writes about that - illegitimacy of government - on his blog. So does Sara Robinson of Orcinus. Probably a matter of short time. Revolution preposterous? Maybe. A counter-revolution, as in Pinochet, strikes me as much more likely.
[update: my blog post on same.]
cfm in Gray, ME
Richard Heinberg is a world treasure! What a wonderful and realistic pep talk!
Hello TODers,
Has the biosolar mission critical process of hoarding I-NPK started? Stock-ton-- is it aptly named?
http://westernfarmpress.com/news/fertilizer-storage-0303/
-----------------------------------
Yara North America to build Stockton gateway fertilizer storage, distribution facility
--------------------------------
I wonder if they will offer the banking service of storing personal I-NPK stockpiles and facilitate direct NPK trade for grain or flour. I sure would like to trade just 200-300 lbs of I-NPK for my year's supply of grain. Recall my Hell's Angels Gas Station postings for safely hoarding and arbitraging gasoline.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob, I had almost forgotten your 'Hells Angels Gas Station' scheme. With resolve and self control I had almost driven it from my mind...almost. Am I to understand you are going to revisit that biz model and lambast us with it eternally? Once, long ago in a rambling post, I explained to you that the HA do not have biz partners (for long) and are not into arbitrage. :)
BTW, we appreciate the info on fertilizer and companys related to same. Its a winner for us.
Hello River,
Thxs for responding. I just gave my storage idea a lurid 'Hell's Angels' name so it would stick in peoples' minds; it is just basically a local cooperative for safely storing gasoline much like a farmer's market cooperative is for food. Beats accidently burning down the house, which I am sure we will see a lot of once people start hoarding gasoline. :(
More of my thinking on my original linkpost upthread:
What I like about a postPeak 'I-NPK bank' is that any potential bank robbers will be dissuaded by:
1. the sheer weight & bulkiness of the stolen 'cash-fertilizer'.
It will be very hard to run and fire a gun at the same time if your hands are full with a 50-100 lb sack of I-NPK. The police or guards will have no problem catching up, then collaring the exhausted crooks. Same with a pickup truck laden down with a stolen ton of I-NPK--it will not easily motor or handle very well at all-- the cops or local posse will have no problem dis-abling the vehicle with the nailsticks across the road.
2. If they steal it-- to get full value: they need to apply it to seeds and soil, then wait weeks or months for the 10:1 harvest. Most likely, if you're a criminal, you don't own any land to garden/farm anyhow.
3. Trying to sell powdered NPK will be very difficult: does the NPK ratio match up with the farmer/gardener soil test optimum ratio?
When I-NPK prices are skyhigh, these people will want custom-blended NPK for their specific crop and soil [more on this further below].
It is already a huge industry to validate and guarantee NPK ratios, purity, and potency, and this will become even more critical postPeak. Nobody wants to buy potentially adulterated I-NPK [even at the stolen 1 penny to the dollar], disperse it on their soil, then have their crop fail a Liebig Minimum much later.
4. Farmers/Gardeners are mostly a hardworking honest bunch; they will be glad to turn in to the local sherriff or posse anyone trying to sell I-NPK who seems shady.
5. Dumb robbers trying to steal ammonia will probably kill themselves in record time from the HazMat dangers--compare to the Africans trying to steal gasoline from a pipeline torching themselves. Powder I-NPK bags can be serialized and dated, just like currency: you better have a certified receipt that matches the bags' serial #'s.
Other pluses to postPeak I-NPK banking:
6. The very first, ancient banks were granaries, but bugs, mice, rats, and bacteria were always working on the vault's contents to reduce the reserves. If you can keep moisture away from I-NPK--> no shrinkage from vermin; the 'I-NPK banking reserves' are safe, as long as your banking employees are honest. Recall that bat guano in dry caves is still potent after hundreds of years of piling up and aging.
7. Just like FFs, geologic depletion applies to I-NPK too: your personal deposit will be rising in market demand value over time; it generates its own 'interest' that can probably be partially sold to the holding 'I-NPK banker' to more than offset the storage cost, with you keeping the profit to increase the direct trading of I-NPK for personal grain or flour.
In other words, the farmer's potential, resultant higher yield will roughly match the market demand increment of I-NPK's higher margin value as compared to the 20:1 transport weight offset of general organic O-NPK.
8. If only educated, registered farmers and professional master gardeners are allowed to make 'I-NPK withdrawals' from the 'I-NPK bank': it will help guarantee proper and timely topsoil application to help reduce/eliminate river and ocean runoff pollution and anoxia.
IMO, The millions of amateur and beginning permaculturists will welcome the professional master gardener expertise, soil testing, and custom blending; when I-NPK is priced at near Unobtainium levels--nobody will want to waste this precious commodity. My hope is that the 'Victory Compost Pits' will be the default home gardener choice to help offset the need for I-NPK.
If I-NPK goes as high in price as I think it will because there are no substitutes [or any amount of labor!] for these Elements: any withdrawals will probably be escorted by armed guards. Recall my earlier posting showing the calculation that the true value of I-NPK is $210,000/ton, but the price will never get this high; it will force much more O-NPK recycling.
Remember, it hit $10,500/ton in 1914 when the US population was much, much less, and most farmers were organic. Another example: think of the 7-fold price increase in Russian sulphur-- the sulfuric acid is essential to liberate/activate the phosphorus for quick plant/animal absorption.
Hopefully, other TODers can further elaborate or refute this I-NPK Bank speculation. Perhaps Warren Buffett, Vinod Khosla, or Richard Rainwater could be the initial postPeak venture capitalists to kickstart banks that truly make sense.
The Federal Reserve of NPK?
We will weap at what we didn't sow.
Too bad our politicians don't seem interested in my long ago postings asking for legislation for the stockpiling of fertilizers.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
What if the police are the thieves? The farmer's cooperative then becomes community protection against the racket. We're going to need coops to protect all sorts of local assets from the piranhas.
cfm in Gray, ME
repost from yesterday:
Wondering if anyone knowledgeable can help?
I'm currently doing my best to highlight the over-use of disposable plastics and I keep getting the same response from the petro industry that "the grade of naptha used to make low density polyethylene is an otherwise useless by-product of the refining process that would be flared off if it weren't turned into grocery bags"
Does this sound accurate to you guys or are they spinning me a polymer yarn?
Would love some pointers to the facts if anyone has them.
Thanks
Other uses for LDPE:
http://plastics.dow.com/plastics/ap/prod/polyethylene/ldpe.htm
And burning naptha can be a perfectly good use of the stuff.
Even if it is true, I'm thinking they should figure out something else to do with it then make plastic bags that will be with us for the foreseeable future. At the very least, they could burn the naptha to provide electricity or something...
Naw, as I said to this question yesterday, enough burning already. Use the LDPE to make durable products, things we WANT to have with us for the forseeable future.
As fabrication's energy costs become more and more precious, I expect that we'll start valuing products that endure, and the fantasy of 'throwaway convenience' will itself be 86'd. (US for 'Thrown Away')
Bob
Naphtha is a perfectly good boiler fuel. But mostly it is used in refining, increasing the octane of gasoline. In Saudi we used it as a boiler fuel at Ghazlan power plant,but not too often. But it can also be used to thin #6 bunker oil. #6 bunker oil is what is left over after all the good stuff has been removed. Bunker oil is used in boilers, especially on seagoing ships.
Naphtha is used as dry cleaning fluid and Colman fuel for Coleman lanterns and stoves. It is also Zippo lighter fluid but obviously very little naphtha is needed for that. Naphtha is, to my knowledge, never flared. It is far too valuable for that. But it is also used to make plastics.
Ron Patterson
Ron, raw naphtha is a pretty crappy blendstock. You can blend it in very small quantities, but the octane is pretty low - 50 or 60ish. It is only after running it through a reformer that it is used to increase octane - and then it is no longer naphtha, it is reformate.
Pete Seeger
From the same issue of YES magazine as the Bill McKibben article..
SARAH: One of your most famous songs is "Turn! Turn! Turn!(To everything there is a season)." What kind of time do you think we're in right now?
PETE: " We are in a crisis time. I don't give us a chance of -- well, you never can tell. There might be a little tribe somewhere in the world on some isolated island, but I can see the human beings wiping each other off the face of the Earth. We've invented such weapons - not just nuclear weapons, but chemical weapons and all sorts of things."
" I've been saying for years, it may be that climate change is a wake-up call for the whole human race. It's going to be a multi-trillion dollar disaster for the rich countries, and a human disaster for the poor countries. Where's Bangladesh going to put 45 million people? And Calcutta, and other cities? It's going to be a disaster like nobody's ever seen- and I hope people like Bush and people from the oil industry are still living so that they can see what a mistake they made..."
"... If there's a world here in a hundred years, it's going to be saved by tens of millions of little things. The powers-that-be can break up any big thing they want. They can corrupt it or co-opt it from the inside, or they can attack it from the outside. But what are they going to do about 10 million little things? They break up two of them, and three more like them spring up!"
www.yesmagazine.org/pete (photos and a link to a purchasable copy of the interview)
Bob
"I hope people like Bush and people from the oil industry are still living so that they can see what a mistake they made..."
I've thought about this a lot. I think people without mirror neurons are not capable of empathy in the first place.
Sadly, the people who pay George's price will be, and have been, the innocent.
The Senate knuckles under to big oil on production tax credits for renewables? We're doomed.
I got a call a while back - job offer in New Zealand. I think I'll give up on trying to fund wind driven ammonia here and just get out before teh st00pid gets me, too.
You cannot escape teh stoopid! It is everywhere!
SCT;
I had a fortune cookie which said 'Always accept interesting Travel Plans' or something to that effect. From a geographical standpoint, I'd give NZ better odds than the Plains, at this point.. but as I've always thought about work choices, it's a matter of finding the one with the kind of BS that you can deal with. Your return trip could be by sail!
Wow.. that Tax Credit story is the icing on the Yellowcake. There's only one pithy quote I can come up with..
"This business will get out of control,
and we'll be lucky to live through it."
-Candidate/Admiral Fred Thompson, Hunt for Red October
(The next line seemed appropriate, too.. "The bird's loaded down
with enough fuel to get you there, but Dallas may not be there." )
I've recovered from my little temper fit - I have two names in my rolodex who can call up Al Gore's staff, my federal reps' have staff who call me back, and there are ten counties worth of Iowans who are going to be baying for blood once they understand the implications of this.
With any luck we'll have a 12/31/2008 - 1/21/2009 PTC gap ... not enough for the turbine guys to shut down ... and if we screw the pooch here they'll keep working, but the product will end up exported. This is not a good time to be a politician of any stripe - people are crabby and they have yet to realize what the mortgage scam truly means.
Mexican Natural Gas Production Rising
While Mexican oil production may have peaked, natural gas production was growing rapidly.
From 2003-2007 production grew from roughly 4.5 billion cf/day to 6.5 billion cf/day.
http://www.pemex.com/files/dcpe/petro/eprodcrudo_ing.pdf
Non-associated natural gas from marine and northern areas were tapped for greater production; while associated natural gas as a byproduct of oil production was declining.
That's actual good news. Any idea what the prospects are for the next couple decades? We've got a big hole to fill as US and Canadian gas output decline.
Looking more closely at the numbers, I notice that 2004-2006 had stagnant production of associated natural gas, and then a big jump in associated natural gas in 2007.
I wonder which field that's from...
Do you mean Cantarell?
Maybe someone can clarify. But I thought the nitrogen injection precluded "blowing" the gas cap at the end of the fields life. Which for Cantarell would be for a while yet wouldn't it?
That is not much when compared to U S consumption of 22 trillion Cu Ft per annum, or 60 billion Cu Ft per day.
New Mexico has a program not to let the poorest people freeze to death.
The winter moratorium on disconnections of heating service by utility companies is scheduled to end March 15.
The Public Regulation Commission on Thursday approved language for notices that utilities statewide may voluntarily send customers to notify them to arrange payment plans in advance to avoid disconnection after March 15. Under a state law passed in 2005, utilities may not disconnect customers eligible for the federal Low Income Homes Energy Assistance Program for being behind on payments from Nov. 15 to March 15. However, that protection ends with the moratorium.
Fax or e-mail your New Mexico business briefs to (505) 823-3994 or tfsldeabaJoumal.com.
Albuquerque Journal Friday February 8, 2008
cheers
From our from legal project too.
Tapis is almost at $107. It sure does seem to me that we are seeing a bidding war for available crude, especially light/sweet.
The rise in crude oil prices is happening as oil and gasoline inventories are increasing. The oil companies bought during the winter off driving season and are stocking up in anticipation of summer demand. That demand will be supplied at higher prices to draw stocks out of inventory. The same thing happens with corn and soybeans. The prices decline in the fall when inventories are being depleted before harvest and then, after harvest when everything is safely put away and inventories are high, prices rise. The strong hands holding the stocks on hand then demand a nice gain for buying or holding at the low. Happens over and over in commodities.
So, I guess that explains the fact that oil is over $100 in March, 2008 versus about $60 in March, 2007.
"The rise in crude oil prices is happening as oil and gasoline inventories are increasing."
You must have a secret data source. Try as I might, I can't find inventory data for the countries providing about 90% of the new demand for oil for the past several years. What is your source?
x---
Ah yes, the "invisible fist" of the market. Capital is God, and The Free Market is the Chosen Path.
I wonder why those pesky prices keep rising? Must be a communist plot to deny me of my god given right to prosperity. And of course, that second law of thermodynamics, another marxist plot to keep my standard of living down.
EIA has posted Dec Ethanol production
2,006 Per day Per month in barrels
Jan b 288 b 8,928
Feb b 302 b 8,456
Mar b 301 b 9,338
Apr b 289 b 8,656
May b 293 b 9,093
Jun b 318 b 9,532
July b 316 b 9,804
Aug b 329 b 10,185
Sep b 333 b 9,992
Oct b 333 b 10,308
Nov b 343 b 10,279
Dec b 356 b 11,023
2,006 Barrels 115,594
2,006 Gallons 4,854,948
all *1000
2,007 Per day Per month In barrels
Jan b 375 b 11,621
Feb b 386 b 10,795
Mar b 384 b 11,892
Apr b 391 b 11,716
May b 406 b 12,573
Jun b 418 b 12,553
Jul b 421 b 13,051
Aug b 434 b 13,458
Sep b 441 b 13,222
Oct b 452 b 14,018
Nov b 479 b 14,356
Dec b 487 b 15,161
2007 Barrels 154,416
2007 Gallons 6,485,472
all *1000
Hi dipchip,
This looks like a 33% annual increase, up to 420,000 barrels per day.
This looks pretty good, considering, all the bashing corn ethanol gets here.
Dave
You can make all the corn ethanol you want as long as you have the necessary fossil fuel inputs to produce and process the corn. As any Appalachian native will tell you, it ain't rocket science.
Jim Rodgers US Out of Control
Blistering. Soft commodities comments. Sorry if already posted.
Hello Xburb,
I couldn't get your link to work.
Try this:
http://business.timesonline.co.uk/tol/business/economics/article3451136.ece
http://business.timesonline.co.uk/tol/business/economics/article3451136.ece
Hello TODers,
http://biz.yahoo.com/ap/080304/opec_meeting.html
-------------------------------
OPEC Unlikely to Raise Output
..."Stocks are very high ... and we are going to have less demand in the second part of the year."
-------------------------------
I wish when something like this is said that they would be required to finish the sentence by adding the words:
..."Stocks are very high ... and we are going to have less demand in the second part of the year because of the decimation of people."
The demand for energy never goes down-- it just that people cannot afford it any longer. I am sure that globally: millions of desperately poor parents would love to buy the food & medical products to save their dying children that crude priced at $10 bucks per barrel would provide.
These pundits give the wrong impression that the poor 'purposely and consciously decided' not to 'demand' that their kids be saved from their agonizing end.
EIA Annual Energy Outlook 2008. I've seen no comments about this even though it was released in December. It basically supports collapsing crude oil prices in the next 5 years. What is their source?
Link here: http://www.eia.doe.gov/oiaf/aeo/