DrumBeat: March 5, 2008

Oil Rises Above $104 to Record on OPEC Output, Venezuela Tanks

(Bloomberg) -- Crude oil rose above $104 a barrel to a record in New York after OPEC gave no indication it will increase production, U.S. fuel inventories declined and Venezuela sent tanks to its border with Colombia.

Crude oil for April delivery rose $4.89, or 4.9 percent, to $104.41 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures touched $104.64 a barrel, the highest since trading began in 1983. Prices are up 74 percent from a year ago.

Bush urges electric vehicles, saying U.S. must 'get off oil'

WASHINGTON -- President Bush said the United States must "get off oil" and urged automakers to build fully electric vehicles like the concept Chevrolet Volt.

"We want our city people driving not on gasoline but on electricity. And the goal, the short-term goal, is to have vehicles that are capable of driving the first 40 miles on electricity," Bush said in a speech today at the International Renewable Energy Center.

Bush disappointed by OPEC decision: White House

WASHINGTON (Reuters) - The White House on Wednesday said it was disappointed that OPEC chose to hold output steady in the face of record-high crude oil prices.

Bodman Says High Oil Price Caused by Low Supply

(Bloomberg) -- Tight world oil supplies, not speculators, are driving up the price of oil to record levels, U.S. Energy Secretary Samuel Bodman said in an interview on Bloomberg Television today.

Exxon Raises Budget Above $25 Billion as Costs Climb

(Bloomberg) -- Exxon Mobil Corp., which recorded the biggest profit for a U.S. company last year, will raise 2008 capital spending to more than $25 billion to cope with escalating costs for drilling rigs and engineers.

The Irving, Texas-based company will increase spending on exploration, refineries and chemical plants by more than 20 percent from $20.85 billion in 2007, according to a presentation Chief Executive Officer Rex Tillerson provided for analysts today in New York.

California cows start passing gas to the grid

RIVERDALE, California (Reuters) - Imagine a vat of liquid cow manure covering the area of five football fields and 33 feet deep. Meet California's most alternative new energy.

Ukraine to pay gas bill, end crisis

MOSCOW, Russia (CNN) -- Ukraine's government will force the company that manages its natural gas supplies to pay off its debts to Russia's Gazprom to resolve a crisis that reduced the flow of gas supplies into Ukraine and threatened to disrupt European gas supplies, Ukrainian Prime Minister Yulia Tymoshenko said Wednesday.

OPEC will 'support' Venezuela in Exxon Mobil row

VIENNA (Thomson Financial) - OPEC members have pledged their support to Venezuela in its dispute with US oil giant Exxon Mobil, at today's production meeting in Vienna.

'The conference expressed its support to the Bolivian Republic of Venezuela and Petroleos de Venezuela SA (PDVSA), in the exercise of its sovereign rights over its natural resources, in accordance with international law,' the cartel said in an agreed communique from the meeting.

Venezuela moves tanks to border

Venezuela has nearly completed its deployment of thousands of troops to states along the border with Colombia, a top general said Wednesday.

"Between 85 and 90 percent of the troops are situated," Gen. Jesus Gonzalez Gonzalez told reporters at a news conference, saying soldiers were largely sent to the border states of Zulia, Tachira and Apure.

Group Seeks to Halt S.C. Nuke Plant

COLUMBIA, S.C. - An environmental group has asked South Carolina regulators to halt Duke Energy's request to include planning costs for two new nuclear reactors in its rates.

South Carolina Friends of the Earth contends nuclear power isn't safe, costs more than other energy alternatives and there is no solution for handling the waste generated.

Richard Heinberg - Post carbon living: beyond technofix

On January 12, The Guardian quoted departing chief scientific adviser Sir David King as saying, “any approach that does not focus on technological solutions to climate change — including nuclear power — is one of ‘utter hopelessness’.”

It is useful to have this view so succinctly stated, because it is nearly the reverse of the position I will be exploring in this column, which is that there is an overwhelming need for non-technological responses to our global environmental crisis.

Ukraine: No reduction in transit gas

KIEV, Ukraine - Ukraine's premier said Wednesday that the former Soviet nation would fully meet its obligations on transit supplies of Russian gas to European customers, denying a claim by Russia's state gas monopoly.

"Ukraine will carry all gas to Europe which Russia sends for transit," Yulia Tymoshenko said at a news conference. "We can't give or take, we only transport. If Russia wants to decrease its export volume, it does so."

Gazprom Spokesman Says It Expects to Announce End to Reduction of Gas Supplies to Ukraine

MOSCOW (AP) -- A spokesman for Russia's Gazprom state gas monopoly says it expects to announce an end to reductions of gas supplies to Ukraine soon.

Pemex to boost output in declining Cantarell field

Average output at Mexico's Cantarell oil field will decline by as much as 20% this year as the field matures, a Petroleos Mexicanos executive reported.

Carlos Morales Gil, Pemex exploration and production director, said the state firm will reverse the decline when the company installs new production equipment at the field. The energy ministry has said investment in Cantarell would reach $5 billion this year.

Morales said output at Cantarell will range from 1.2-1.3 million b/d this year, compared with an average of 1.5 million in 2007.

Australia: Petrol 'will go to $3 a litre'

IT is a petrol company's dream and every motorist's worst nightmare - fuel prices soaring to more than $3 a litre.

As ridiculous and outrageous as it may seem, the country's biggest petrol company says it will happen, and believes Australians should think themselves lucky they aren't already paying more to fill up their tank.

$3 petrol prediction a 'scare tactic'

A prediction by Caltex that motorists could be paying more than $3 a litre for petrol within 10 years is an attempt to soften up consumers, Australia's peak motoring group says.

Eskom to Block Power to Some New Building Projects

(Bloomberg) -- Eskom Holdings Ltd., South Africa's national power utility, won't approve some construction projects for four to six months as it assesses an electricity shortage that shut most of the country's mines for five days in January.

Recent electricity blackouts: The coal paradox

As the number one thermal coal exporter in the world, Indonesia should not be facing a coal crisis.

Averting a biofuel food crisis

The big winners currently are in the oil industry. The US grain industry is heavily subsidized and dependent on oil. Environmentalists are telling us that once you include all that oil and all those subsidies in your reckoning, biofuels do nothing good for the environment at all, in addition to the social havoc of food shortages in countries like Mexico.

Things need not be this way. Renewable energy from biofuels need not compete with food production, but two key campaigns need to happen...

Food shortage unnoticed

Although most global attention has been riveted on the continuing falling dollar and new records set by gold and oil, little notice has been taken of the looming food disaster just around the corner.

The greatest economic mistake made by the current administration has been turning the world's most bountiful food basket into a failed attempt to alleviate the energy crisis.

The Nuclear Option

The debate over using nuclear fission as a primary source of energy has raged for decades, but it has resurfaced more strongly than ever as petroleum prices reach new highs. Many European countries, particularly France, already rely on nuclear power as a primary source of electricity. France generates nearly 80 percent of its electricity from nuclear power. The debate continues in the United States, where nuclear power plants generate only 20 percent of electricity.

BP, GM see hydrogen in their future

WASHINGTON, D.C. (CNNMoney.com) -- Top executives of BP and General Motors Corp., two of the world's largest corporations, outlined on Tuesday their visions for the future of renewable energy.

They came to the same bottom line: Hydrogen will likely fuel the cars of the future, although it could take 50 years to get there. Until then, each company will pursue different strategies for developing new energy sources.

Gasoline could go from 10% ethanol up to 20%

WASHINGTON — Key backers of ethanol fuel are starting a push to double the amount of ethanol commonly blended with gasoline to 20%. The move would boost the market for grain alcohol, while skirting problems and controversy surrounding E85, an 85% ethanol fuel.

Blending ethanol — alcohol typically now made from corn — into gasoline is a way to cut petroleum use. A 10% ethanol blend, called E10, now is standard at many gasoline pumps across the USA. It can be used by virtually all gasoline vehicles, which is not true of the E85 being promoted as a fuel of the future.

Studies by the University of Minnesota and Minnesota State University at Mankato suggest that ordinary vehicles could burn a mix of 20% ethanol, called E20, as routinely and harmlessly as they now burn E10. Minnesota Gov. Tim Pawlenty is to announce the study results at a conference here today.

US Won't Meet Ethanol Goal Due Cellulosic Shortfall

WASHINGTON - The United States will not meet Congress' mandate to produce more ethanol from waste products over the next 15 years, resulting in an overall shortfall in ethanol production requirements contained in a new energy law, a government forecaster said Tuesday.

Sinar Mas, Partners Halt $5.5 Billion Biofuels Plan

March 5 (Bloomberg) -- Indonesian palm oil growers including PT Sinar Mas Agro Resources & Technology are halting or amending plans to make biodiesel after the commodity's surge to a record made the projects unviable, executives said.

Nanotechnology's role in next generation biofuel production

Years of engineering research and design, together with uncounted billions of dollars from government and industry, went into the development of the modern petroleum industry. It would be unreasonable to expect that we can replace this industry with greener alternatives without a similarly expansive and sustained effort. Point in case is a recently published roadmap to 'Next Generation Hydrocarbon Biorefineries' that outlines a number of novel process pathways for biofuels production based on scientific and engineering proofs of concept demonstrated in laboratories around the world. The key conclusion from this (U.S.-centric) report is that "while the U.S. has made a significant investment in technologies focusing on breaking the biological barriers to biofuels, principally ethanol, there has not been a commensurate investment in the research needed to break the chemical and engineering barriers to hydrocarbon fuels such as gasoline, diesel, and jet fuel."

OPEC, Mindful of Politics, May Informally Cut in Coming Months

Mindful of the political challenge of slicing oil production at a time of triple-digit crude prices, OPEC may opt to informally trim in the coming months as it seeks to act ahead of an anticipated slowdown in energy demand.

Mexico closes main oil ports due to bad weather

MEXICO CITY, March 4 (Reuters) - Mexico closed its three main crude oil exporting ports on Tuesday due to bad weather in the Gulf of Mexico, the government said.

The Gulf ports of Dos Bocas, Cayo Arcas and Coatzacoalcos, which together ship around 80 percent of Mexico's exported oil, all were closed, the transport ministry said in a statement.

Oman Crude Rises on Speculation Traders are Buying More Futures

(Bloomberg) -- Oman crude oil, a Persian Gulf benchmark for Asian refiners, gained on speculation traders are buying more futures contracts to hedge against potential shortages in the physical market.

Heralding The End Times: Review of World Made by Hand

Leaving aside the half-baked geopolitco-cranko-economic analysis that "informs" Mr. Kunstler's vision of a Peak Oil Ragnarok, it's hard not to occasionally feel something like that same distaste for our dense, messy way of life. Say it happens when you're stuck in traffic, surrounded by honking imbeciles, or when you see a sea of unsightly bodies at a too-crowded beach littered in cigarette butts and candy wrappers. But eventually you appeal to your better self and take a deep breath, and think: It could be worse. The moment passes. But not if you are James Howard Kunstler: In that case, you take what are essentially aesthetic judgments — ungenerous ones at that — and allow them to collect and fester into a unified theory explaining why a near-apocalyptic thinning of the human herd might be just what the doctor ordered!

Michael T. Klare: The China Syndrome

On February 4, President Bush announced a baseline military budget of $515.4 billion for the next fiscal year, not including funds for operations in Iraq and Afghanistan. This is the largest one-year Pentagon request in real, uninflated dollars since World War II. This Fiscal Year (FY) 2009 figure represents a 7.5% increase over the 2008 appropriation of $479.5 billion and is expected to be the first of many rising requests supposedly needed to replace equipment lost and damaged in Iraq and to gear up for the security threats to come. As Chairman of the Joint Chiefs of Staff Adm. Mike Mullen explained last October, “we’re just going to have to devote more resources to national security in the world we’re living in right now.”

At first glance, all these additional funds will be used to sustain the Global War on Terror (GWOT, in Pentagon shorthand) and replace equipment destroyed or rendered inoperable in the wars now under way. “The Fiscal Year 2009 Defense budget request sustains the President’s commitment to growing U.S. ground forces that are needed to prevail in the current conflicts in Iran and Afghanistan,” a Pentagon press release notes. Additional funds are allocated for “Operations, Readiness, and Support” – troop training, replacement parts and equipment, combat supplies, and so on.

But a close examination of the FY 2009 request indicates that the principal sources of future budget growth are not the GWOT or other such low-intensity contingencies but rather preparation for all-out combat with a future superpower. Probe a little deeper into Pentagon thinking, and only one potential superpower emerges to justify all this vast spending: The People’s Republic of China.

We should all support NAFTA renegotiation

"So while agricultural and food exports from Mexico are concentrated in a small number of lavish products for the U.S. elites, Mexico has lost its ability to feed its population and has increased its dependency on the import of basic goods," de Ita continues.

In Canada, the Obama-Clinton NAFTA intervention has pulled our energy sellout into the light. To scare the Democrats away from touching NAFTA, the Harper government is warning Americans that their privileged access to our oil and gas could be disrupted, a bogus threat since this Alberta-centric government would never touch the Oil Patch's sacred cow.

Australia: You can afford the house, but the bills’ll send you broke

Well, for starters, the dark roofed, eve-less, concrete boxes that people have bought are heating up as another record-breaking summer arrives and there is no immediate alternative but to crank up the air-conditioning. At a time when Kevin Rudd’s emissions trading scheme is coming into play, raising energy prices, this is very unwelcome. To make matters worse, the price of oil will still be steadily rising and petrol prices going through the roof. The housing developments on the urban fringe have all been planned around freeways which are reaching gridlock, and, without any serious public transport infrastructure, there is simply nothing for commuters to do but climb into their cars each day.

Mortgages and rents might be more affordable, but people will really struggle to pay higher bills for transport and energy.

Traffic crashes cost $164B a year, study shows

WASHINGTON (AP) — Traffic crashes cost American motorists more than $160 billion a year while inflicting a staggering per-person toll on small cities such as Little Rock, Columbia, S.C., and Pensacola, Fla., according to a AAA research report.

The study, to be released Wednesday, found that traffic crashes have a much more damaging impact on society than the bumper-to-bumper congestion that riles commuters in many metropolitan areas.

'Big shift' to rail urged for UK

A train journey can produce about one tenth of the carbon emissions generated if the same trip is made by air.

The report's authors say substantial investment in the railways is needed.

Lessons from the Skeptics’ Conference

Considering how many false alarms have been raised previously by scientists (the “population crisis,” the “energy crisis,” the “cancer epidemic” from synthetic chemicals), I wouldn’t be surprised if the predictions of global warming turn out to be wrong or greatly exaggerated. Scientists are prone to herd thinking — informational cascades– and this danger is particularly acute when they have to rely on so many people outside their field to assess a topic as large as climate change. So I’m glad to see contrarians raising awkward questions and pointing out weaknesses in predictions made with computer models. As S. Fred Singer, the editor of the skeptics’ report, said at the conference yesterday: “Models are very nice, but they’re not reality and they’re not evidence.”

Famed Hurricane Forecaster William Gray Predicts Global Cooling in 10 Years

Prominent hurricane forecaster Dr. William M. Gray, a professor at Colorado State University, told the audience at the 2008 International Conference on Climate Change on March 4 in New York that a natural cycle of ocean water temperatures related to the salinity (the amount of salt) in ocean water was responsible for some global warming that has taken place. However, he said that same cycle means a period of cooling would begin within 10 years.

“We should begin to see cooling coming on,” Gray said. “I’m willing to make a big financial bet on it. In 10 years, I expect the globe to be somewhat cooler than it is now, because this ocean effect will dominate over the human-induced CO2 effect and I believe the solar effect and the land-use effect. I think this is likely bigger.”

Warming Climate May Cause Arctic Tundra To Burn

Research from ancient sediment cores indicates that a warming climate could make the world's arctic tundra far more susceptible to fires than previously thought. The findings are important given the potential for tundra fires to release organic carbon -- which could add significantly to the amount of greenhouse gases already blamed for global warming.

OPEC keeps oil output steady in face of $100 oil

VIENNA - OPEC ministers on Wednesday agreed to keep output steady and said record high prices had been driven by factors that were beyond their control.

...Washington has said even a token supply increase from the Organization of the Petroleum Exporting Countries would help to tame prices and contain any impact on a fragile world economy.

But OPEC ministers have repeatedly said the oil market has been driven upwards by factors such as a weak dollar, speculation and political strife, and not by a lack of crude.

Jeremy Leggett: The crude fact

Peak oil is no academic debate: the $100 barrel is a harbinger of the energy shortage to come.

Oil's Wakeup Call

If you want to dream about oil prices long term, the go-to guy is Matt Simmons, chairman of Simmons and Company International. Simmons' thesis called "the Peak Oil Thesis" is awesomely simplistic: The elephantine oil fields of Saudi Arabia peak out in a few years. Unfortunately, this is only a working hypothesis.

Saudi Aramco technocrats won't let Simmons near their reservoirs or seismic research data. They claim a reserve margin of several million barrels a day. Simmons' competition, Cambridge Energy Research Associates in Massachusetts takes the Saudi side of the argument, but the market these days is siding with the bears on net worldwide incremental production possibilities.

Peak Oil is a Cost Issue

Underlying nearly all discussions of the oil price is a standard economic concept: supply and demand. It seems so elementary that there is no doubt of it. It says that demand has been growing more rapidly than supply recently and that at some point the world will reach Peak Oil and the price will zoom northwards.

But the reality is more complex. Peak oil is not just a point in time or even a plateau when oil supply becomes unable to expand to meet demand. We need a more nuanced model for oil prices that includes several other factors.

Forecasts for Crude Oil Rise to $105 on New Trading High

Just three years ago, Goldman Sachs shocked the investing world by sharply raising its oil price forecast for 2005 to an average of $50 a barrel. Two months ago, the investment bank predicted that oil prices would average $95 a barrel in 2008.

Yesterday, even that price was already starting to look a little conservative.

Gazprom says Ukraine starts taking transit gas

MOSCOW/KIEV (Reuters) - Russian gas export monopoly Gazprom said on Wednesday Ukraine had warned it is taking gas from transit pipelines to Europe to compensate for lower supplies for its domestic needs.

The world's largest gas company, chaired by Russian President-elect Dmitry Medvedev, said Ukraine planned to take 60 million cubic metres (mcm) a day, or almost 17 percent of the total it sends to Europe from Russia.

Nigeria charges oil delta rebel Okah with treason

ABUJA (Reuters) - Nigeria has charged Henry Okah, suspected leader of the rebel Movement for the Emancipation of the Niger Delta, with treason and he risks the death penalty, the country's top prosecutor said on Wednesday.

The MEND was behind a wave of attacks on the Nigerian oil industry in early 2006 that forced the closure of a fifth of oil output from Africa's biggest producer, contributing to the surge in oil prices on international markets.

Being self-sufficient a solution to the collapse of civilization

In the last 100 years, our entire society has become totally dependent on non-renewable oil, whose production has now reached a plateau, after which the supply will fall, which means - there are no ifs or buts here - our current way of life will disappear, perhaps rapidly.

We must prepare ourselves for that, mentally first. Become familiar in your mind with life after the oil crash and act accordingly.

A look at world events you haven’t heard about - water woes and overpriced oil

Jim Hansen, an investment consultant and UW alumnus, said he’s not a fan of price predictions because if they are wrong, then people discredit the entire argument. Even so, he acknowledges that while price specifics and rates of increase are uncertain, the trajectory is headed up, not down.

“We have a better chance of seeing $300 [per] barrel than ever seeing $30 again,” Hansen wrote in an e-mail.

Russia's oil output down 0.5%, gas production up 0.8% in January

MOSCOW, March 5 (RIA Novosti) - Russia's crude production declined 0.5%, year-on-year, in January to 41.35 million metric tons (830,000 bbl/d) while gas production went up 0.8% to 61.19 billion cubic meters, the industry and energy ministry said on Wednesday.

Russia exported 20.46 million metric tons of oil (410,000 bbl/d) in January, or 1.7% more compared to the same period last year, the ministry said.

US voices support for renewable energy

WASHINGTON (AFP) - Top crude oil consumer the United States said Tuesday it is "imperative" to expand the use of renewable energy such as wind power and biofuels to reduce its dependence on foreign oil and slow global warming.

MPs urge Treasury to increase green taxes: report

LONDON (AFP) - The government's desire to combat climate change is being undermined by its reluctance to raise air taxes, a report by MPs said Wednesday.

The Commons Environmental Audit Committee (EAC) has pressed the Treasury for a significant rise in green taxes and urged it to follow the recommendations of the Stern Review into the financial impact of climate change.

OECD: World must act on climate change

OSLO, Norway - The world must respond to climate change and other environmental challenges now while the cost is low or else pay a stiffer price later for its indecision, the Organization for Economic Cooperation and Development said Wednesday.

A new report by 30-nation organization looks at "red light issues" in the environment, including global warming, water shortages, energy, biodiversity loss, transportation, agriculture and fisheries.

EPA: No timeline for high court request

WASHINGTON - Nearly a year after being told to do so, the head of the Environmental Protection Agency said Tuesday he couldn't say when he would comply with a Supreme Court directive and determine whether greenhouse gas emissions from vehicles should be regulated.

Hi Leanan, I found very interesting the quote from the memo distributed by the New York State Dept. of Transportation that you quoted yesterday, do you have any source for that?

Re: EPA: No timeline for high court request

Johnson again defended his decision to deny California permission to implement its own law regulating greenhouse gas emissions from new cars and trucks. He said the decision was his alone and the right one, even though more than a dozen states have sued him over it and internal documents have emerged showing his career staff advised that the waiver should have been granted.

Is it possible that the head of the EPA has time to sit in jail for contempt of court?

E. Swanson

Not this court.

Why do I get the feeling they're not going to be able to comply until after the end of the term for El Presidente. I wish there were a way to sue them for malpractice, the EPA has been a disgrace under these guys.

From the Jeremy Leggett article linked uptop:

Herein lies the biggest fear of all. If peak oil hits, and the slumbering industry awakens from its endemic over-optimism - in the west and in producing countries alike - what do we do if the producers start keeping their fast-dwindling resources in order to power up their own fast-expanding economies? An oil shock then risks turning into an energy famine.

if the producers start keeping their fast-dwindling resources in order to power up their own fast-expanding economies ... an oil shock then risks turning into an energy famine.

In other words ELM ... and it's happening now if you believe published data!

A chart of overlaid 'World C+C' and 'Net Exports' trendlines (to smooth the data) shows steady ~2% growth ending around 2005 and, not surprisingly since ELM predicts it, 'net exports' starts to fall away - peaking in 2007.

Interestingly, projecting the trendlines forward slightly predicts a peak of 'World C+C' in 2008/2009. ACE predicts a peak of 'World Total Liquids' in the same timeframe! http://www.theoildrum.com/node/3623#more

Bear in mind that post-peak these trends are likely best case, as above ground factors almost certainly will make things worse to some extent.

March corn $5.58 and May $5.70 2/8
puts corn, our other fuel, in the record books.

March soy at $15.38 and May at $15.52 records as well.

Wheat, will then rise off of this.

See my colleague Warren Karlenzig's assessment of Major US Cities' Preparedness for an Oil Crisis.

Cities you want to be in if oil prices rise far and fast.




I find it rather amazing that Los Angeles ranked 12 in this survey. I would have expected it to rival San Jose and Las Vegas, 35 and 34, respectively. Perhaps looking at the whole LA metro area would be more practical. The top ten able to withstand $4 gas/$100 oil:
1. San Francisco
2. New York
3. Chicago
4. Washington, DC
5. Seattle
6. Portland, OR
7. Boston
8. Philadelphia
9. Oakland
10. Denver

$4 gasoline is nearly here in silicon valley. Relative to the cost of housing, $4 is nothing. Anyway, if energy costs (of all sorts) were to double or triple, I'd rather live somewhere that doesn't require heating or cooling of houses and where bike riding and walking are reasonable all year. With 75% of the vehicles removed from the roads (due to fuel costs) and the multi-lane roads partially blocked off for bicycle use only, bicycling would be a great way to get around much of silicon valley. I'd rather be in San Jose (or Sunnyvale) than any of the cities listed above for those reasons. I turned off my heater last month and probably won't turn it on again until November; I don't have air conditioning.

#9-Oaktown wouldn't be my first choice in the event of a major crisis-#18 Honolulu seems as amenable to a car-free, low energy lifestyle as anywhere I've seen.

Brian- you're referring to the large pockets of violent crime and poverty right? Otherwise, Oakland is mostly flat for bicycling and has both bart and rapid bus transit.

The study didn't consider crime. ;)


OPEC says it will keep oil output steady

The Organization of Petroleum Exporting Countries announced Wednesday that it decided not to pump more — or less — oil right now because crude supplies are plentiful and demand is expected to weaken in the second quarter...........


``While the OPEC agreement was expected, al-Naimi did say a couple things that are boosting the market,'' said Brad Samples, commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``He said OPEC doesn't want inventories to rise above the five- year average, which indicates they'll have to manage supply soon. Al-Naimi also said he doesn't sense that demand is weakening.''


And China has been buying again, after the pause for the Lunar New Year and bad weather.

The political war begins as the IEA blames the high price of oil on OPEC's not raising quotas, http://www.reuters.com/article/reutersComService_3_MOLT/idUSL05151405200...

The NYTimes also attacked along the same lines, http://www.nytimes.com/2008/03/05/business/worldbusiness/05cnd-opec.html?hp

The OPEC counterattack was led by its president Chakib Khelil: "If the prices are high, definitely they are not due to a lack of crude,” Mr. Khelil said in Vienna. “They are due to what’s happening in the U.S.”

He added: “There is sufficient supply. There’s plenty of oil there.”

And the Times backs his statement with this: "Most energy analysts agree there is no physical shortage of oil today. Commercial oil inventories are at relatively high level and that refiners are not lacking oil."

The contradictions in the Times piece I will leave for others to see on their own. I expect to a lot more OPEC bashing as oil price continues to rise as the dollar maintains its fall.

Wasn't it just a few months ago OPEC was blaming the high prices on poor refinery utilization? I think these guys should just give it up and say they don't have the capacity... but what do I know.

I think these guys should just give it up and say they don't have the capacity

They can't do that as everybody would know it's the end of growth - and things that depend on growth to function properly, like the financial system, would falter ... Oh! ... wait a minute!

I have questions that someone here can answer:
Why is #1 distillate kerosene(jet fuel) and #2 distillate(home heating oil or with red dye and tax, diesel fuel) now more expensive than gasoline? Until the last few years gasoline has alwaws been more expensive.

How is gasoline produced, before, after or from the distillates?

Why is #1 distillate kerosene(jet fuel) and #2 distillate(home heating oil or with red dye and tax, diesel fuel) now more expensive than gasoline? Until the last few years gasoline has alwaws been more expensive.

A lot of capital equipment has been installed to produce ultra low sulfur diesel. Not only does this increase capital costs, it increases operating costs (hydrogen) and decreases the overall diesel yield.

How is gasoline produced, before, after or from the distillates?

Gasoline tends to get more processing. Diesel and gasoline are both cuts from crude oil, but then there are a lot of heavier cuts that are further refined and converted into gasoline. Gasoline used to be clearly more expensive to make; not sure that is still the case with the ULSD requirements.

Thank you-I should have known Government was involved, of course, on the other hand, Government can take valuable paper and make it completely worthless.

My limited understanding was that diesel is a less refined product, and typically a larger part of the crude pie and that gasoline is a smaller part of the crude pie and more expensive to refine than diesel. However, with "cracking", more gasoline can be had from crude oil. I would assume that the cracking process increases the price of the gasoline. So what gives? What exactly is happening and is the newer low sulphur diesel that much more expensive to refine/produce?

Gasoline has about a 2 to 1 yeild over diesel. Thats why we consume 9.5 million barrels of gas per day and about 4.5 million of diesel.

In a word, the answer is "yes" that ULSD costs more to refine.

The undesirable "stuff" like sulfur, nitrogen, metals, etc. tend to stratify out into lower grades as one distills crude. The nominal reduction of sulfur from the previous levels of less than 500 ppm is a reduction of about 97% and that takes energy and an investment in capital equipment. The ULSD fuel is a requirement for the new diesel engine designs. Note: if you burn degraded diesel (blended in a manner that increases the sulfur content) in the new engine design, the engine dies.

In the aftermath of Hurricane Katrina, with the refineries and pipelines out of commission, there was a temporary exemption from the fuel requirements to burn "off-road" fuel in diesel trucks (to move stuff). One of the downsides is that won't be an option for the new engines, and they will have to be parked until their fuel shows up.

Note that cokers have been a most consistent upgrade to refineries...cokers allow upgrade of the residuals to other lighter grade blends. But they also come with a hefty price tag and hefty energy requirements. This allows some heavier grades (lower API gravity) to be refined into a broader spectrum of refined products.

It has been my experience (2008 Freightliner w Cat engine) that the engine survives use of higher sulfur fuel just fine. However, the ARD in the new Federally mandated emmisions system goes to pot relatively quickly. The computer is constantly sensing the backpressure through the ARD and will progress through 4 states. 1- Attempt to do an Automatic Regen of the exhaust system on its' own, 2- Failing to do so flash the Manual Regen light on the dash warning you to pull over and do just that, 3- Failing that the Check Engine light comes on along with the previously mentioned light warning you that the engine has been derated to be soon followed by 4- Engine Shut Down.

There were problems with this system on all of the manufacturers engines that I have heard of, even when using Ultra Low Sulfur Diesel. The latest fixes within the last few months do now seem to be working as long as you keep to ULSD. Stray from ULSD however and you are back to square one, lol.

I am not aware of any changes to the actual engines themselves that could be harmed by using the previous iteration- Low Sulfur Diesel or LSD (love that acronym). Obvious spots of trouble might be injectors and exhaust valve seats, but injectors have been unchanged and exhaust seats should actually benefit from higher sulfur.

Maybe I have missed something though.

In addition to what Robert said: There is a finite amount of gas and diesel in a barrel of crude. The demand for diesel has increased at a much higher rate than gas. I suspect that world wide stocks of diesel are drawing down while gas stocks are building. This is due to increased rail traffic, diesel vehicles and colder than usual temperatures, while world wide gas consumption has been rather flat.

Bush has just said at the WIREC (renewable energy) conference (live at CNN.COM now) that "it should be obvious to all that (oil) demand is outstripping supply and that's what's causing high prices"

Of course Bush is going to point his finger at oil producing nations...Did you expect him to utter the words 'a weakening dollar'?

Bloomberg just asked Sam Goldman directly if the falling dollar was the biggest factor in the price rise. He replied "that's a factor obviously but the main factor is very low global inventories. It's not true when OPEC say the world is well supplied" (I'm quoting from memory but that's roughly it).

He added (again approximately from memory) that we've spent about three decades getting into this mess and it will take us decades to get out of it.

WTI just hit $104.44 as he spoke.

recently said on a Orlando radio station (in GWB voice): 'We're going to print the dollar on bigger paper, to make it seem worth more'

Maybe we'll do different size bills like the Euro.

'We're going to print the dollar on bigger paper, to make it seem worth more'

Toilet paper sized, supposedly

I met a lot of interesting people at WIREC yesterday, most of which was the Saudi delegation. They are planning on turning SA completely into a solar electric based nation. I was tempted to ask them for their position on PO and their reserve numbers.

If you're in the DC area right now, come to the WIREC - http://www.americanrenewables.org.

Well, then, you shouldn't have signed an economic stimulus (demand) package, should you?

Executive Summary of Minnesota E20 Test:


Note that in a Blind Test utilizing average, and professional, drivers the operators were unable to distinguish power, or performance, differences.

It appears that your commitment to a population Die-Off is unrelenting.

Lately I've been thinking about the similarity in outcome between the ethanol boondoggle and the U.S. sickness care system: a less efficient and productive economy.

What a waste.

Not to mention the effect on somewhat older vehicles that might have fuel lines eaten by the increased ethanol content. Of course, that could just be an urban legend... *shrugs* I wouldn't have too much of a problem with E15, but I don't think we should jump right to E20 without extensive testing to make sure it won't damage vehicles that aren't designed to run on ethanol.

Again. This is impossible.

Our grain stockpiles are gone.

And everyday we push ethanol is a day of $.11 corn
increases and $.40 soy.

DC is going to make this a Black Swan if they keep
pushing it.

"Says Biggs in his conclusion, "By definition the next black swan will be some form of total breakdown of civilized society and the social and financial infrastructure as we know it." He then asks, "What can you do?" His answer,"Have a farm or ranch somewhere far off the beaten track. The control of food-producing land is a basic instinct of mankind. You should assume the possibility of a breakdown. It is expensive to move early, but it is far better to be early than to be too late."

"Have a farm or ranch somewhere far off the beaten track."

For the U.S., this means west of the Mississippi in a state with low population density and a location with abundant water and many hours away from the urban areas from whence the golden hordes will issue.

IMO it is not early. It is late. The alarms are all around us while most suffer from the "boiling frog syndrome".

Boiling frogs/black swans - an interesting soup.

The flag is up in the public arena.

CNN: Great Depression Coming

Make your moves now and get what you need.
When the public awakens, essentials will fly of the shelves and disappear.

There may be a better link over at the automatic earth:

Someone may want to post the CNN video here. I am somewhat digitally impaired.

BTW, see this article on looming bank runs and how to check your bank's safety rating:

There have been four margin call defaults in the last 3 business days and the margin calls are just starting. Margin call defaults were part of what caused the crash of 1929. Two were mortgage companies that are trying to negotiate with their creditors. Two were hedge funds that are now dead. Instantly dead. $3 billion in Peloton and $1 billion in Focus Capital and its gone. Vanished. Poof. The sales of assets to cover the margin calls were bringing 10% on B rated securities. The sales of A assets were bringing 12%. Investors in both funds lose everything, gone, vanished. And the creditors? They don't have $4 billion as a result. They have about $400 million after sales of assets.

Let the immortal words of Larry Kudlow ring out from sea to shining sea:

Sell Oil!!! Buy Financials!!!

To the uninitiated...

How much can the market usually tolerate before losses like this trigger a positive feedback, and send the whole market spiraling downwards?

How often does this happen?

Is this, to put it gently, *it*?

I don't think so. It takes time for losses in financial markets to move out to the real economy. The economic slow down from either expensive loans no loans etc is probably 6-8 months out. Right now a lot of these losses are in a lot of ways "funny" money. It was not invested directly into the real economy.

Think of it as gambling losses. Sure when you get home you won't buy a new lawn tractor but the economic slow down is time delayed vs the gambling loss. Of course you no buying that lawn tractor will cause the real economy to slow which squeezes the leveraged speculator which causes him to lose more etc.

GreyZone’s “...crash of ’29.”

Jesse Livermore was arguably the greatest trader to walk down Wall Street. He called the crash of ’29, went short and rode the cascading margin call defaults to a great fortune.

Crashing markets, driven by fear, fall faster than the long buildup to the bubble which is driven by greed.

Fear trumps greed in human propensities. Livermore was a master in playing off the emotions of the herd.

Is there an opportunity in here? It takes a lot of guts.

Most investors lose big in this climate because they are conditioned to the upside by the pablum of the Street.

Whereas a trader like Livermore who is at home on either side of the market and requiring only liquid movement, either up or down, has a shot at a great fortune.

For us ordinary mortals however, it may be time to run for cover and live to trade another day.

Unfortunately, if you do not have enough to pay the mortgage, you need to do something quick.

The banks are getting to the point where they do not have the required capital reserves, and will need to quickly find more money from other people, or go bankrupt themselves.

Is this, to put it gently, *it*?

We're rapidly approaching the point where the decline reaches critical mass and we see a cascade to the downside IMO. There may not be much warning.

With huge inventories building up, housing has nowhere to go but down for a long time, with inevitable knock-on effect on commercial real estate and the default rate of the loans that supported it. The leverage that carried the global economy so far to the upside will soon crush it to the downside in a devastating credit deflation.

The Fed is pushing on a string, pay option ARMs will have far more impact than subprime, bank writedowns are still in the very early stages, credit card debt is maxed out, margin calls are beginning, the ratings agencies reputations are in tatters, Fannie Mae and Freddie Mac are being loaded up with dodgy debt, the monoline bond insurers are flatlining, the auction rate securities market has dried up, the restructuring of Canadian ABCP is dead in the water, the ABX indicies are telling a frightening story, problems appear to be looming in the $45 trillion credit default swap market, and with non-borrowed reserves gone, the US banking system is essentially insolvent.

A large scale mark-to-market event, instead of mark-to-make-believe, is approaching - a firesale of assets at pennies on the dollar. The implications of this are dire - IMO a second Great Depression (destined to be more severe than the last one) is already underway.

These are the issues that we cover seven days a week at The Automatic Earth.

Stoneleigh: Congrats on your site-it is a must daily read-Ilargi's comments are often filled with gallows humour as a bonus. Re the USA economy, IMHO the size of bailouts by the taxpayer will be absolutely stunning. The first shot-145 bill wasn't even the appetizer-I expect the next shot to exceed 500 Bill, possibly 1 Trillion. The obvious irony is that proper long term economic planning would dictate that the trillions of taxpayer dollars fund alternative energy (if they are to be spent at all). I expect alternative energy to make up a relatively small % of the bailout money but I am relatively confident that the monster bailouts are coming, and the effect on the US dollar will be dramatic.

Stoneleigh - after 3 weeks of silence I was worried about you - Glad you are still posting! Your essay on "A Credit Primer and the Resurgence of Risk" back in mid-August was priceless! It was not what I expected upon visiting the oil drum that day but it was EXACTLY what I needed. Thanks for the big head start and you have my eternal gratitude.

Stoneleigh, you have a great site...I read it daily. Thanks to ilagri as well.
'the US banking system is essentially insolvent.'...and yet, this week Bernanke asked the banks to write down principal on home mortages in another attempt to keep underwater home owners from walking away.


A prime question, and impossible to answer. There's almost no experience with some of the "financial engineering" (sic) that has taken place.

No single human or team has modeled (or probably could understand) the interlinked, recursive totality of all of these instruments. Even if they did, how could they even handle nonlinear isochronous events (hurricanes, wars).

So let's just call it a "Giant Uncontrolled Experiment" or GUE?

(as an aside I'd like to cast in Perspex the person who invented the phrase "financial engineering" and mount them on Wall Street somewhere).

The systems weren't designed so much as squeezed into the voids of regulation like peanut butter. A number of the regulations which might have helped us (if only at the edges) were destroyed when the US dereg fanatics took over. I know some quants and they see the market as such a big pool that no individual quant fund would alter the pool itself. Problem is everyone did the same dang things.

I know this doesn't answer your question. For myself: when the rate of change (1st derivative) is parabolic I start checking my backup plans to make sure they can work.


Your materials concerns may be warranted. Ethanol is corrosive to some metals and quite hygroscopic.

Years ago I conducted some anhydrous ethanol/gasoline fuel tests on a Chevrolet Suburban. It ran well up to perhaps a 50/50 mixture with no change in carburetor settings - very quiet and smooth. However, a lot of rust was stirred up in the fuel tank resulting in clogged fuel filters and replacement of several fuel pumps.

I have used E15 in some motorcycles, when nothing else was available, while riding in the Mid West. My gas mileage dropped off significantly, 30-40%...It was a surprise to me that mileage dropped so drastically but I dont think Harleys are designed to run on E15...Maybe the new Harleys, 2003 or later, would get better mileage than my bikes. Mileage is a concern for bikers because of smaller fuel tanks, typically 4-5 gallons for Harleys, and the distance between gas stations in some areas.

And we are currently producing ethanol at a rate of 7.5 billion gallons per year. That is enough to provide E-10 for 50% of current gas consumption. Any blend sold above E-10 should be considered a waste, as ethanol is becoming uneconomical at current corn prices. IMO you will see ethanol production go flat some time this year.

If ethanol becomes uneconomic at current corn prices, some of the the smaller, less efficient plants or newer high cost ones will shut down temporarily which will drive ethanol prices higher especially if gasoline prices increase as expected. The current situation with corn prices and ethanol is not permanent nor is the relationship between any two markets ever set in stone. The corn/ethanol price relationship is one of the major risks of ethanol producers who hire commodities managers who do little else but hedge the risks on the futures markets if possible.

Regarding E20, I tried it in my 97 Escort and 95 Crown Vic with no problem. I have read reports that E30 can be used in late model cars with fuel mileage actually increasing to equal gasoline mileage in some cars. This occurs only at around 30 percent ethanol for some reason and mileage drops down again at higher or lower ethanol percentages. The ethanol glut in the Midwest and the stiff resistance to it outside the Midwest is behind the push in Minnesota for E20. It is a feasible solution to burn up a product, which so many resent, near where it is produced. Why push ethanol on those who would rather pay foreigners for oil? Using the ethanol in the Midwest saves just as much oil as using it on either coast without the political bitterness. The national mandates are met without the conflict. I would like to see 30% ethanol state mandates in Midwestern producing states. It saves transport costs and rewards those who produce. ELP is the model and it works. Let those who reject it figure out their own model for the post Peak Oil world.

There is not enough corn in the world to switch from gasoline to ethanol. Due to grain shortages wheat went from $5.00 a bushel to about $24.00 a bushel within a year. U.S. soybean production has been falling as farmers switched from soybeans to corn. Corn was higher than four years ago. Duram wheat was in short supply in Europe after farmers switched from duram wheat to crops for biofuels. Ethanol distillation required large natural gas energy inputs and might trigger a natural gas shortage.

Using electic cars is likely to cause blackouts. There are not enough power plants and transmission lines for people to plug into. Peak electric power generation required more natural gas. Communities and states were reluctant to approve new coal or nuclear power plants. The railroads will not carry enough coal for all the plug-in cars that might be needed. If you get blackouts then people will need gasoline or diesel powered generators causing a larger pull from oil stocks. As energy prices rise conservation measures become more profitable.

The 2008 Toyota Prius gets 46 miles per gallon (combined). There were rumors of technology being developed for higher mpg vehicles. The average U.S. passenger vehicle fleet miles per gallon was closer to half the mpg listed for the new Prius.

Using electic cars is likely to cause blackouts. There are not enough power plants and transmission lines for people to plug into. Peak electric power generation required more natural gas. Communities and states were reluctant to approve new coal or nuclear power plants. The railroads will not carry enough coal for all the plug-in cars that might be needed. If you get blackouts then people will need gasoline or diesel powered generators causing a larger pull from oil stocks. As energy prices rise conservation measures become more profitable.

where are your figures for this?

The 2008 corn crop is looking smaller than last year due to $15 soybeans.

I talk to a lot of farmers in Eastern Nebr. and they all say the same. "I laugh all the way to the bank but I ain't investing in any ethanol plants."

BTW Ethanol is mandated in all gas blends in Houston, Dallas, and San Antonio. And IMO corn prices will continue to scale up at a faster rate than Liquid fuels and NG.

So you keep pushing a morally criminal agenda and we shall keep raising corn in Nebr. It's also looking a little dry in Minn. and the Dakota's


Note that in a Blind Test utilizing average, and professional, drivers the operators were unable to distinguish power, or performance, differences.

And this is E20. Isn't that the blend that you were claiming got higher fuel efficiency than gasoline? Yet I note that while they comment on the power and performance, there is a distinct lack of any mention of efficiency or mileage. What does that lead you to conclude?

Robert, if you glanced at the tests I linked you noticed that 3 of the 4 cars they tested got slightly better mileage with E20 compared to straight gasoline. Don't you think it would be very unusual for the average person to get in the company car, drive around town for a day, and notice a two, or three percent difference in mileage?

Anyway, I doubt if mileage was a factor they were testing for. It seems to me like there would be too many variables to make any results scientifically meaningful. I'm sure that will be tested for using the EPA Cycle, as was done by Mn State. Wouldn't that seem reasonable to you?

Do you honestly believe they didn't track the mileage? All of these checks, and not the mileage? I would be stunned had they not. And if they did, and it was better, it would have been reported. After all, this is from the pro-ethanol Minnesota government. They tracked mileage, and the answer wasn't consistent with the other study. That is my interpretation. But as you say, the truth shall come out, so no need to go conclusion-jumping on that earlier study. I have seen studies like that overturned because of a systematic error (GC was once calibrated to the wrong concentration and made it look like fermentation concentrations were much higher than they were. The error wasn't spotted for quite some time.)

I'm going to shock you, and say that I think you're probably right about that. We'll see.

In fact they have tested the mileage. Well, the least I can say that the reported result doesn't show any difference between E0 and E20. This isn't commented in the study but reported in the appendix section. The study wasn't designed to measure the efficieny. I think the least would be a cross-over design in such a test but the best would be a thorough lab-test, which really would't be difficult from a methodology POV but rather costly given the price of the things involoved ...

Thanks, Neuroil

The Money Shot:


11.9 straight gasoline vs. 11.8 E20. 0.6% That's Six-tents of one percent, kiddos.

That's 97% the efficiency of straight gasoline in current vehicles. All of these vehicles, obviously, aren't 07' vehicles. I'll betcha that if you separated out the one year old "cars" with smaller engines the results would be even better. Dang good, as it is.

Dang, I was hoping that link would go to the proper page in the appendix a, but it didn't. You'll just have to scroll down. It's near the bottom.

Hi and sorry, but those 0,6% don't mean anything. If it were only for the basic statistics of this sole comparison, the confidence intervals do really overlap and so this result is a reflection of sample fluctuation. Then if you would really try to interpret this result you would have to rule out dependant variables like mileage, type of vehicle etc ... . Further the study design doesn't control for other dependant known variables like driving habits, location of the driver and others which would have been better adressed in a cross over design.

With this study, all I can say is that I can not reject the hypothesis that there is no difference between E0 and E20 with respect to mileage.

In all honesty.


I agree; but, this test, plus the Mn State/Univ. of N. Dakota test, do, I believe, tend to drive a stake into the heart of the "Only 2/3 the value of gasoline" argument.

You cannot conclude at all that this study drives a stake into the "only 2/3 the value of gasoline" argument. I tried to explain that the -0.6 value was obtained by chance.

Quite the contrary, it is well known that there are huge differences between efficiencies if you compare >E85 and E0, around 30% (source : Renault in Brasil like here - link in French). Of course, E20 still has about 95% of the energy of E0 so the differences won't be that easy to demonstrate if you don't perform a controled study, and a blind test won't help if you don't adjust for key variables, most of which are the number of miles driven and the driving habits as well as the pattern of the roads used.

Just accept the idea that ethanol is less energy dense than gasoline and even if you could get more power with E85 you will get really less mileage.

11.9 straight gasoline vs. 11.8 E20. 0.6% That's Six-tents of one percent, kiddos.

With one person reporting that they got 66% better fuel efficiency on the E20. Skew the results a bit? And note that they only threw out a couple of outliers (which your 0.6% includes!) and kept such reports as an increase of 28% and 24%.

It's these sorts of comments from you that keep me suspicious as to what you are really up to. I have never seen any objectivity from you at all on this issue. You cherry pick results that you like, and then just repeat them. Everything is accepted; no grain of salt required just as long as it is favorable to ethanol. And a lot of people won't go there and look at the actual data; they will just take your word for it that they were the same. And you didn't even report the result with the outliers thrown out. Do you really believe that someone got 66% better fuel efficiency on a blend with 15 or 20% fewer BTUs? Well, you must, because that's the result you reported.

I take one look at those results, and think "What a load of crap!" Look at Row V versus Row W. Same vehicle. On person reports that they got 22% better fuel efficiency, and one reports they got 18% worse fuel efficiency. It's not hard to figure out which one was being driven by the corn farmer. But your skepticism, it seems, only runs in one direction.


It Was a BLIND TEST! No one knew which fuel they were using. One could have been on a road trip, the other one driving around town.

Even with the outliers excluded it was only 1.4%. That's a difference of seven percent efficiency.

I'm Giving Results; what are you giving?

Day after day, you mock test results, and then cite articles that give little more than "Maybe's," "Could be's," "Might be's," and "Probably's." I think, maybe, it's not ME that's not entirely "Objective."

I'm Giving Results; what are you giving?

No, you are cherry picking results. When you only give the results you like, that's cherry picking. When you only pick the portions out of studies that you like, that's cherry picking.

Day after day, you mock test results...

If warranted. I actually started reading those test results thinking "That's pretty interesting." Then I saw the results in the table and I just started laughing. Even more so, considering the fact that you reported the best version of results - with the outliers. No caveats. That's not objectivity. That's the behavior of a person with an agenda.

...then cite articles that give little more than "Maybe's," "Could be's," "Might be's," and "Probably's." I think, maybe, it's not ME that's not entirely "Objective."

Which articles would those be? The ones that show skyrocketing food prices because of mandates that we turn food into fuel? The ones that show that we are essentially just recycling natural gas into ethanol - and paying huge premiums to get it done? The ones where the USDA hid energy inputs by stashing them in the coproducts? Or the one where the dead zone in the Gulf of Mexico continues to get bigger?

The Final Result was 0.6%. PERIOD!

BUT, What IS Wrong with 1.4%? It certainly beats the dickens out of the Five Percent that would have been Predicted by the "67% of btus w/o considering octane" Crowd.

The last two examples would be the articles that were commissioned by Exxon, and Conoco, by way of the Nature Conservancy where they have permanent board seats.

The USDA, as well as I, maintain that inasmuch as the corn is being grown for cattle feed, with, or without ethanol, we should charge that amount of the nat gas that's used for fertilizer that goes to the growing of cattle feed to be charged against the cattle feed. To claim otherwise, seems to me, to be illogical.

If you disagree, you disagree. But, that DOES NOT mean that the USDA Hid the inputs. It means that they acted in what some of us would say is a Logical Manner.

Robert, I greatly Respect the work you've done; but, I really believe that you should be more tolerant of other people's viewpoints, and, most importantly, Their "Motives." I'm merely a retired man with a desire to see my country do well; and, I do think ethanol (even corn ethanol) is a valuable technology toward this end.

Rant Off/

The Final Result was 0.6%. PERIOD! BUT, What IS Wrong with 1.4%?

This is my point exactly. You have already accepted these results. PERIOD! Yet when the results are not to your loking, you discount them. PERIOD!

If you disagree, you disagree. But, that DOES NOT mean that the USDA Hid the inputs. It means that they acted in what some of us would say is a Logical Manner.

Replace "Logical" with "Political" and you have it nailed.

I'm merely a retired man with a desire to see my country do well; and, I do think ethanol (even corn ethanol) is a valuable technology toward this end.

When you take a BTU of natural gas, turn it into a BTU of ethanol plus some animal feed (which is the only reason the energy return is much above 1.0) while driving up the price of food and directly subsidizing the venture at $0.51 a gallon (note, that's per gallon, not per BTU of energy creation; the subsidy is also subsidizing natural gas usage) then I can't see how it's doing the country any good. In fact, I think it is doing tremendous harm, and we will look back on this time period as an enormous mistake. That's the only reason I argue so strongly against this.

Robert, if you don't take that little dab out for nat gas for fertilizer for ddgs you still come up with a tad less than 35,000 btus of nat gas in the newer plants (and, as they move to more, and more biomass for process heat this will become even less.)

And, we've already seen that in, the proper blends, ethanol will, essentially, do the same work as gasoline (at 116,000 btus.)

So, what's wrong with 35,000 btus of nat gas to replace 116,000 of gasoline? And, you know danged well that without the $0.51 tax credit ethanol would never have gotten a foothold. Even if the oil companies couldn't have managed to kill it off, no one would want to take a chance on them being able to, and invest in the biorefineries.

And, as for food prices; well, corn is still $0.10/lb, and a large part of the wheat price runup is from weather related issues (plus the fact that Europe held 10% of their wheat land out of production last year.)

Oil Co's love ethanol it drives up the price of diesel, herbacides, pestacides,and NG for both distillation and fertilizer.

So, what's wrong with 35,000 btus of nat gas to replace 116,000 of gasoline?

Because it's simply wrong, that's why. It's just more of you latching on, and hanging on, to results you liked. You aren't counting all of the energy inputs - again, cherry-picking. Your 35,000 BTUs would have the EROEI at greater than 2 to 1. That's just not true. The pro-ethanol USDA says it isn't true. Not even the ethanol lobbies say it is true. But you do. You provide a steady stream of pro-ethanol propaganda, but you are just a retired insurance salesman who loves America....

No, it's NOT wrong. I said the "Newer" plants. USDA uses all plants. BTW, those older plants are steadily increasing their efficiency, also.

At least I'm Honest about MY motivations. I believe in something, and advocate for it.

I see THIS as being a valuable addition, NOW, not 5 - 10 years from now.


Read RR's post again. They are not increasing their efficiency, they are hiding energy inputs.

Its fuzzy math.

Your motivations might be honest. But I think you are confused about the real figures involved.

Speaking of Cherry Picking.

You seem to have ignored line H. Or, did you not find it unusual that a F450 would get 37% worse mileage on E20?

That's what I don't like about the "outlier" Game. It's obvious these heavy-duty trucks are being used for different things. One, perhaps, for towing heavy machinery; another, to haul the "Chief" Engineer around. Where do you draw the line? Or, do you just let the anomalies average themselves out?

Turning food into fuel is a crime against humanity. It doesn't matter whether you get slightly better mileage or not from it. And like most crimes, which are usually committed to achieve some mind numbingly stupid end, burning the world's food to keep entire populations unnecessarily on the move is about as stupid as it gets.

What on earth is your motivation for wanting increased ethanol usage?


We can produce Enormous Amounts of this Cattle Feed. We're, currently, paying farmers NOT to plant 36 Million Acres. The problem has been that no one could afford to raise this stuff if they weren't subsidized. Prices are getting, now, where it will be feasible for non-subsidized farmers to start planting cereal/grain crops. BTW, corn is still, as of today, $0.10/lb. A kewpie doll for anyone who can eat a pound of field corn in one day.

"The Conservation Reserve Enhancement Program (CREP) is a voluntary land retirement program that helps agricultural producers protect environmentally sensitive land, decrease erosion, restore wildlife habitat, and safeguard ground and surface water."


This program recognizes that the greatest economic value of the land in question lies in the natural production of environmental services.

Using land for ethanol production on the other hand is more in the strip mall and mcmansion league in terms of economic efficiency.

It's E20 vs. E10, not E0.

Round and round we go
That corn grows far too slow
We want to go fast so
Let's burn all the food

No NervousRex,

If you'll go to appendix a, scroll to the bottom for the test results, you'll see that E0 was the Baseline.

Scroll to 36 (35 of 43)

Thanks for the pointer, the executive summary seems to contradict the actual study! From the exec:

"The drivability study showed that E20 provided similar power and performance to 10 percent ethanol blended fuel throughout the entire calendar year, which included a broad range of ambient weather conditions."

The real study does indeed use E0 v. E20 everywhere. Odd.

In any case, starving people by driving is passe.

No more food for fuel.


Eight of 11 oil benchmarks above $100 for the first time, I believe.

Summary of Weekly Petroleum Data for the Week Ending February 29, 2008

U.S. crude oil refinery inputs averaged nearly 14.9 million barrels per day during the week ending February 29, up 244,000 barrels per day from the previous week's average. Refineries operated at 85.9 percent of their operable capacity last week. Gasoline production moved higher compared to the previous week, averaging 9.0 million barrels per day. Distillate fuel production rose last week, averaging 4.0 million barrels per day.

U.S. crude oil imports averaged 9.4 million barrels per day last week, down 521,000 barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 9.8 million barrels per day, 760,000 barrels per day above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 800,000 barrels per day. Distillate fuel imports averaged 186,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) fell by 3.1 million barrels compared to the previous week. At 305.4 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories decreased by 2.4 million barrels, and are in the lower half of the average range for this time of year. Propane/propylene inventories decreased by 2.7 million barrels last week. Total commercial petroleum inventories decreased by 4.5 million barrels last week, and are in the upper half of the average range for this time of year.

And here's what they were expecting:

Prices were also pressured by expectations that U.S. crude inventories rose 2.3 million barrels last week, according to analysts surveyed by Dow Jones Newswires. The Energy Department's Energy Information Administration will issue its weekly inventory report on Wednesday.

EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to US$57 a barrel by 2016 as exploration and development expands and brings new supplies to the market.

"EIA Administrator Guy Caruso on Tuesday predicted crude prices will fall to US$57 a barrel by 2016 as exploration and development expands and brings new supplies to the market."

This is beginning to have the air of fanaticism. "It said so in the holy book (standard econ. textbook) and thus it will be so!"

But it is more likely desperation.

Are Guy Caruso and hurricane forecaster William Gray on the same meds? Inquiring minds want to know.

Sounds like a wonderful subject for the tabloids to cover. :)

It's fanatical desperation, or desperate fanaticism, or possibly a 85%-15% blend that gives better mileage.

By 2016 a gallon of gas or loaf of bread might cost $57 if one factors in the falling dollar, ELM, and unknown unknowns...like above ground chaos.

Anyone that makes such predictions in the media should be required to wager a large percentage of their salary to insure they truly believe what they are saying.

Agreed. Caruso's opera is eerily out of sync with the background music. We just took out the NYMEX all time high again.

Anyone that makes such predictions in the media should be required to wager a large percentage of their salary to insure they truly believe what they are saying.

So are you wagering a large % of your salary that the above will happen? If not shouldn't you follow your own advice?

If the poster isn't wagering a large % of his salary, I'm sure he wishes he was.

I think that Caruso and the gang are making an organized effort to keep the average citizen defenseless against inflation. It's easier for the government to rob the defenseless.

I think that Caruso and the gang are making an organized effort to keep the average citizen defenseless against inflation. It's easier for the government to rob the defenseless.

Do you think they are that clever?

I am embarrassed to have these jokers drawing federal salaries.

Hammers have more neurons.

theantidoomer, I have been out. 'Bike Week' is in full swing here. To your question. Yes, I always wager on what I believe is the likely outcome. Who would wager that oil will sell for $57 per bbl in 2016?...I wager with stocks, gold, commodities, stockpile hurricane supplies, have defense capability, fuel, have a generator, have water tanks, etc. Long ago I was a Boy Scout and their motto is 'Be Prepared'...that advice has served me well...If you were hit by four hurricanes in one year I suspect that you too would be prepared by the next hurricane season. Of course, you could always move, then you would be wagering that the location you moved to would be catastrophy free. Lots of people left Florida after the hurricanes. Many moved to the Atlanta area. Guess what?

I'm getting great mileage from fanatical desperation here on TOD!

And here's link for the other products:

Although US crude oil stocks are likely to have risen for the eight time in a row last week, this time by about 2.07 mln barrels, distillate stocks, which include heating oil, are expected to have dropped 2.1 mln barrels, which would keep inventories at low levels.

Elsewhere in the report, analysts expect to see a 344,000-barrel gain in gasoline stocks.

I'm convinced that either the analysts that are providing the data for these surveys or the ones interpreting the results of these surveys are nuts. For one thing, they seem to always bet on increasing stocks if prices are up. This might make some amount of sense if supply and demand were the only factors, but with oil that's not true. For another thing, why on earth would they think that a prolonged trend of increasing stocks make it likely that this will continue? If we ignore yearly trends for a minute and just look at statistics, you can say there's a 50% chance the supplies will increase or decrease in a given week. Thus if you've got seven straight weeks of increasing inventory, each subsequent week of increased stocks makes it increasingly unlikely that you'll continue the trend. I don't have the link, but Bloomberg once published the statistics for how often these analysts are right and they might as well just flip a coin because they're only right about 50% of the time anyway.

I gather these experts base their predictions only on what's typical for this time of year. They don't take current events into account (fog closing ports, storms shutting in production, technical difficulties with pipelines, etc.).

Ahh I see, thank you. Well that would make a fair bit of sense and why they might expect to see eight weeks of increasing stocks.

And again, motor gasoline demand increased 0.4% YoY. Just saying. I think demand is as important to keep aware of in the current recessionary environment.

speek, do you happen to know how the .4% demand increase for gas compared to the number of new drivers yoy? Thanks.

No and I can't imagine why I'd care how many new drivers there are.

The number of new drivers is interesting because it can reveal problems that are missed at the micro level. For instance let's say average fuel economy improves this year but a few million new drivers are added to the pool. The result might be a more efficient fleet on a per vehicle basis that is still consuming more total gasoline than before simply due to sheer increase in numbers.

In terms of oil price, inventory levels, potential gas shortages, etc what matters is aggregate demand, and it is still rising, for whatever reason.

Agreed! But many people focus on the individual efficiency gains without looking at aggregate demand, simply assuming that aggregate demand will decline. Yet even in the best case UN scenarios, global population is going to rise from 6.7 billion now to almost 9.5 billion in 2050. That's a nearly 50% rise in population in the next 42 years so efficiency gains have to be extraordinary just to stay even on demand. This is why, globally, efficiency gains in ICE engines are irrelevant.

If there is to be a future for technological society, that future must be electric. Mandating higher CAFE standards is great for the short term but ultimately we must get rid of the ICE entirely.

Why does TWIP say that gasoline demand is down, while the special file says that gasoline demand is up .4 percent?

Hello Michael,

That is because formerly non-map reading, hopelessly LOST drivers using new-fangled GPS-equipped vehicles are finally getting to their destinations in the most energy efficient manner, but are now so DELIGHTED at their traversing success that they are now easy-motoring everywhere at every opportunity.

Rant off/

Well, I'm probably just reading something wrong. The special file says this:

Over the last four weeks, motor gasoline demand has averaged about 9.1
million barrels per day, or 0.4 percent above the same period last year.

If you look at TWIP, on the Gasoline tab near the bottom is a chart.:

Gasoline Demand (Million Barrels per Day)

Four-Week Averages Year Ago Week Ending Year Ago
02/15/08 02/22/08 02/29/08 03/02/07 02/15/08 02/22/08 02/29/08 03/02/07
9.000 9.027 9.065 9.143 9.125 9.045 9.071 9.191

This Week in Petroleum which is a summary of all the inventory data that came out today has a very interesting graph on the "Summary" or front page of the report. They show a graph of US oil production, Lower 48 onshore, Lower 48 offshore, and Alaska. They show Lower 48 onshore producing over 8 million barrels per day in 1970. The graph shows a perfect slope downward from there until it hits about 3 million barrels today.

But guess what, the downward trend stops today, or this year. It then gradually increases gradually before hitting its peak at 3.5 million barrels per day in the late 2020s. They show Lower 48 offshore increasing more dramatically. A slight decline stops this year but then at about 2010, the graph shows Offshore production increasing quite dramatically, from about 1.5 mb/d now to almost 2.5 mb/d at around 2015. Alaska continues to slowly decline.

Does this seem overly optimistic to anyone? What causes the Lower 48 onshore to stop its decline and suddenly start to increase production? Have we figured out how to stop decline? Or, have any great new fields in the Lower 48 onshore been discovered that will not just offset the decline but deliver an increase in production as well?

Ron Patteson

Was there a TWIP last year at this time. Wonder if the long term downward trend stopped last year as well.

Yes there has been a TWIP for years, and for years they have been making optimistic projections concerning both oil production and the price of oil. And for for just as long they have been wrong on both.

Ron Patterson

At home once again watching crude supplies fall (3.1 MMBBL), gasoline increase (1.7MMBBL) and distillate fall (2.4 MMBBL). The spike in crude prices is interesting. We'll see how it plays out in the next hour or so. Waiting for Robert

Got to give Sec. Bodman a couple of kudos for setting the estrogen choir on CNBC straight again. I don't know what kind of happy pills they give these kids but the are always cherry picking the numbers to find a positive inventory number and then thats the party line they all croak. IIRC... Ditzy blonde... Sec. Bodman what do you have to say about these prices in light of the increasing gasoline supplies and decreasing demand. Bodman...well I don't think demand is decreasing...supplies are very tight. Demand growth is slowing in the U.S. but in the rest of the world its still growing and supplies remain very tight... How can these young ladies one of which seems exclusively dedicated to the energy markets remain so freaking clueless. It takes all of 15 minutes to look at the EIA numbers and conclude that total petroleum inventories even in the U.S. remain at best slightly lower than last years inventories which were lower than the previous year. Sure gasoline inventories are higher but the rest of the complex is lower. Now after this interchange has CNBC changed there rhetoric....sorry dumb question

Pigs replace pesticide in battle against beetles

As part of a research experiment believed to be among the first of its kind, Koan is using pigs to help protect his fruit from a tiny insect that is among the most destructive apple pests.

More than two dozen porkers patrol his orchard, gobbling down fallen, immature apples containing the plum curculio's larvae. After a successful trial run late last spring, he and some researchers at Michigan State University are preparing for year two of the experiment at Almar Orchards and Cidery in eastern Michigan.

This is why livestock were always allowed to graze in the orchards -- back when farms were diversified and grew livestock and field crops and orchard produce.

My Father always ran hogs under fruit trees while the fruit was ripening. Any fruit with worms that fell to the ground was eaten and the worms could not reproduce.


In the mid 1990's I was working on my master's in Ecology and read David Tilman's work on algae. What was interesting about his work was that by carefully manipulating the system's parameters, he could get a desired species of algae to become the sole species in the test tube, repetitively. However, as complexity (temperature differences, currents, spatial heterogenity, herbivores) were added, a single species was unable to dominate.

The point is that industrial agriculture focuses on single varieties to allow uniformity in treatments and therefore enjoy economies of scale. This uniformity allows for devastating plagues and blights as the rapidly evolving and reproducing pests exploit the uniform environment and devastate crops.

The industrial response is new and different pesticides. These have their own cost in direct costs (expensive pesticides) and indirect cost (bad for farm workers and possibly for you). But you don't have to go down that route. You can add natural complexity, it just costs in efficiency. Crop rotation, multiple crops, multiple varieties, use of ducks and predatory insects to control pests have all been used in the past but they have a cost in lowered efficiency. In this case you have to raise and take care of the pigs in the off season. However, since the orchard owner was thinking of expanding into organic meat, the pigs on a small apple orchard are an example of a very low cost complexity. The question is whether they would scale up for the truly monster sized apple orchards. And can you use pigs in a spray orchard? Probably not.

These are topics and strategies that need to be studied soon, if only to save the remaining family farms. I really do think that industrial agriculture was a bad choice for investment and the pattern of farm failures seems to support this. The only family farms that seem to be making it are the Mennonites, Amish, Organic and the Hutterites.


My Father Preached This Sermon all his Life. He passed on 35 years ago. When farmers got rid of Chickens, Hogs, and cattle, and went to only grain or containment livestock farming, he said it would ultimatly come to a nasty end. He received an Ag degree from the U of Nebr in 1912.

RE: Famed Hurricane Forecaster William Gray Predicts Global Cooling In 10 Years...

I dont know why Mr Gray is 'famed' when his hurricane forecasts over the past 16 years are no better than a forecast each season of 'average number' would have been as accurate as Gray's predictions. In some bygone years it is very possible that Grays predictions of 'an above average number of storms' gave insurance companies an excuse to raise rates, only to see a year of below normal storm activity. Of course the insurance rates were not lowered in subsequent years. So Gray has already made a bet about future weather but with our insurance premiums. He lost our money.

How can a person with Grays record of storm prediction be taken seriously when he makes a 10 year prediction on global cooling? This guy is a loser that has a swollen head because his name shows up in the MSM often. Trouble is, Americans seldom check the records of those that make predictions. Leading to reinforcement of the old saw 'there is no such thing as bad publicity.'

Link below is to a WSJ article detailing Grays predictions and how the 'prediction team' has used various 'hindsight models' to predict hurricanes...none of these models has been successful in predicting future hurricane quantity...so now they are going to a new model.


A Hurricane Forecast’s Poor Track Record

'Imagine a baseball expert predicting the Mets’ win total each year of the team’s history. If he did no better than a prediction every year that the Mets would win 76 games — the average in their 46 seasons — he’d have no credibility. That’s essentially what has happened with a well-known annual hurricane forecast, but it nonetheless continues to get lots of press.'

Just a note to remind folks that a long-term global warming trend does not preclude the possibility that there could be some short term cooling episodes along the way. Not to endorse this guy's predictions, just to recognize that the possibility of a short-term cooling episode cannot be dismissed out of hand. Also, such a short-term episode does not serve to disprove the global warming hypothesis.

Yes, that's one of the things that worries me. The Medieval Warm Period was followed by the Little Ice Age (or so we are told) even though the larger trend was one of warming. The onset of cooling was disastrous in regards to agriculture, plus the health of animals and humans (ie. the Black Plague). Interestingly, at that time there was also problems with over population, energy and food production.

It appears to me, as a layman, that the overly warm Spring in 2007 caused some kind of tipping point which resulted in cooler, wetter weather throughout the Summer and into Winter. Dissident and Samara posted some interesting thoughts regarding the possible mechanism behind this on Friday's DrumBeat.

We've been seeing in the last two years the El Nino/La Nina event. This time it's especially pronounced because the multi-decadal oscillations in Atlantic and Pacific sea surface temperatures are in the same phase. La Nina should last until the beginning of this summer or so. So let's see what the hurricane season does this year (important for relieving the drought in Atlanta and the SE U.S.) and next year. Here's a link explaining it:


When it gets cooler, why does everyone point to La Nina and say that is the reason, and it is obvious? But, during the warmer years NO ONE pointed to El Nino's (which were frequent and strong), but rather pointed to AGW and said that it was obvious.

In meteorlogical circles La Nina is referred to as the cold phase, and ElNino as the warm phase. La Nina's are associated with below average global temps, and ElNinos with above average. I think it is really heat exchange between the oceans and atmosphere. 1998 was still the warmest year on record globally -it had a very strong ElNino. Jan 07 was the warmest January ever, all of these people touting current global cooling have cherry picked Jan07 as the start. Some current causes:
(1) return to trendline from the very warm 07.
(3) the jet stream was right for good asian snow cover this year, which means a bit more sunlight is reflected.
Now we have just passed solar minimum, the ElNino is likely to end, and the seasonal snow cover will melt. After all these things warming is likely (but not guaranteed).

Correct. Global warming is the driving force. Climate change is the result. The highest probabilities appear to place warmer climate as the result of global warming but there is a low probability possibility of even longer term colder climate as a result. That's the problem. We are forcing change and don't have any freaking idea where it is going.

To help folks grok this, I tell them to visualize the Inuit game where they throw a person into the air with a bunch of folks heaving a blanket. Civilization developed in a climate that had a bunch of average Joes manning the blanket. But civilization itself has caused the switchout to a bunch of body builders doing the heaving. Do we hit our heads first on the ceiling, or crash through the floor, or just lose control and go flying off the blanket? Hard to predict, other than that it'll be a wild ride.

A higher amplitude of the oscillations of the different systems.

Watch for more "Freak" high winds as an example.

Other anomaly's will present themselves.

"Who ever heard of a Hurricane hitting Rio De Janeiro"? (or south america period).

Jet Stream changes as Dissident was saying.

In some bygone years it is very possible that Grays predictions of 'an above average number of storms' gave insurance companies an excuse to raise rates, only to see a year of below normal storm activity. Of course the insurance rates were not lowered in subsequent years. So Gray has already made a bet about future weather but with our insurance premiums. He lost our money.

I just received my windstorm (hurricane) insurance bill for 3/08 thorugh 3/09. With no change in coverage and no claims ever, and no storms in Southeastern NC in two years, my premium (from a government pool) has increased 40%! 40% in one year!

Gray must have a hotline to the NC Rate Bureau.

The skeptic's conference article is about the conference held by the Heartland Institute. The Heartland Institute, which was previously funded by the tobacco industry and now currently partly funded by ExxonMobil, seems to pander to a largely uninformed audience.

The intellectually bankrupt tactics should be no surprise given the claims made that there never was (suggesting that there also never will be) an energy crisis or a population crisis.

Some posters beneath the article seem to be getting a clue, however.

People need to understand that the Tobacco Institute was a model for an entire economic system that seduces consumers with addictions and must necessarily lie about long-term consequences. Everywhere you look now, the mortgage crisis, the junk debt crisis, the obesity epidemic, carbon dioxide levels, Peak Oil, you see the exact same pattern. For the Heartland Institute to have gone from lung cancer denial to climate change denial is entirely appropriate. The only question that remains is whether I attack anti-business scientific findings because I'm one of the pushers making excuses, or one of the pathetic addicts looking for an excuse. Curtis Mayfield had the right idea about what should be done with the Pusher Man.

Yes, the wonderful world of corporate science. Welcome to the 21st century. You are immersed in its propaganda. All bow to the new Church and pray at the altar of carefully selected statistics...

Vanity Fair has obtained confidential documents, since corroborated by sources in the U.S. and Palestine, which lay bare a covert initiative, approved by Bush and implemented by Secretary of State Condoleezza Rice and Deputy National Security Adviser Elliott Abrams, to provoke a Palestinian civil war. The plan was for forces led by Dahlan, and armed with new weapons supplied at America’s behest, to give Fatah the muscle it needed to remove the democratically elected Hamas-led government from power.


Although I don't associate "Vanity Fair" with investigative journalism, I don't think it is that far fetched to believe that BushCo plotted to overthrow the much hated Hamas-government.

(My apologies if this has already been posted.)

And VF was fed this by Israeli sources.

Note how the Americans come off looking worse than the Israelis.

But this was all so self evident.

Fatah was out-couped by Hamas.

Lots of Dahlan info that Hamas captured BTW.

Want a head's up?

Israel must capture Mt Hebron by the end of this year.


Mar 4, 2008
Egypt leaks information about an American military action against Syria

Jordanian newspaper Al-Arab Al-Youm reported today, through sources that an American message leaked by Egypt to Syria shows that the United States is ready to launch a broad military operation against Syria if it insists on its position on the Lebanese crisis and this is the real reason behind the deployment of “USS Cole” in front of the Syrian - Lebanese waters

The source said that the official announced reason of Condoleezza Rice’s visit to Egypt is to push the Palestinian - Israeli peace process forward but the real reason is to explain the American military actions and the presence of the American ships to the Egyptian leadership.

Right on, about the VF article.

The Americans are made out to be stumble-bums (as usual, incompetence, lack of foresight, planning, knowledge, lousy intelligence, etc. etc.) The Israelis are left in the shade...Most of this stuff was known, isn’t really new, though the refs. and interviews, details, give it extra credibility. VF pulls it together.

Provoking a civil war in Palestine (divide and conquer) has been a long time aim, possibly not even supported by the Israelis (who are on the ground), but that all depends on whom one calls ‘Israelis’ - the ppl, the Gvmt, the Military wing, the business community, etc.

on edit: one word, one comma.

Michael T. Klare: The China Syndrome

But a close examination of the FY 2009 request indicates that the principal sources of future budget growth are not the GWOT or other such low-intensity contingencies but rather preparation for all-out combat with a future superpower. Probe a little deeper into Pentagon thinking, and only one potential superpower emerges to justify all this vast spending: The People’s Republic of China.

The Chinese are not stupid or backward. Looks like they've figured out the scheme.

Arms race anyone? Perchance the outcome of the oil/commodities race?

Or yet another manifestation of the military-industrial complex's perennial search for a bogey man?

Reality sux.

The idea that China will build a superpower military of its own, in addition to lending the U.S. another trillion so they can buy more hardware, all to play "ninja vs. GI-Joe" in the oil fields is pure MIC-porn fantasy.

More likely, China will continue to build roads and schools in the developing world, donate a few rocket launchers, and stand back while the U.S. continues to bankrupt itself in Iraq-style conflicts. More like "Sun-Tsu vs Bubba".


I think it far more likely that a pragmatic Chinese military establishment will simply pour its efforts into improved surface-to-air and anti-ship missile technology to render our fancy, shiny new jets and carriers into so much twisted scrap metal.

Sun Tzu would advocate this because the Chinese would be getting maximum return on their investment. Is it better to have 100 bleeding edge antiship missiles at $50 million a pop or a couple aircraft carriers at $5 billion?

25 billion. It's called a "Carrier Group" for a reason. You need destroyers, cruisers, attack subs, supply ships, port and training facilities, etc.

Tom Englerhardt(?) over at tomdispatch.com has a good read on current military spending. The GWOT supplementals have become a great vehicle for all sorts of military lard, that wouldn't be likely to survive the scrutiny if they were in the normal military budget.

Hello TODers,

I am still trying to find out more supply chain info to help explain the rising price of sulphur, as that has a direct effect on future NPK costs, and many other basic goods. It is very puzzling that stockpiles are not being moved on a timely basis.

Farmers brace for steep rise in fertiliser prices

In the past 18 months, sulphur prices have "gone through the roof".

The price of sulphur last year was $US50 a tonne, it's now trading at $US900.

San Jose, California (PRWEB) March 3, 2008 -- Broad discrepancies exist between global sulfur supply and demand. Large stocks of sulfur are piling up at oil refineries around the world. The trend is expected to continue in future as several governments enact still stringent air pollution control regulations and make laws to further reduce sulfur content in diesel, gasoline and marine fuels.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Recall that cutting off oil to Japan started the US involvement in WWII--> Could the 'panic buying' of sulphur imports for China, as posted by me earlier, start a march to WWIII?

EDIT: Melted, liquid sulphur looks and flows just like freshly spilled blood--How ironic would that be?


Corn is also our heaviest phosphate feeder. In the latest available numbers (Excel file) -- before the massive ethanol-induced corn crop of 2007 -- corn farmers were laying on about 1.7 million tons of phosphate every year. That's more than the next-most phosphate-intensive crop (wheat) by a factor of three.

Not surprisingly, the ethanol boom has sparked a jump in phosphate prices.

According to the above-linked Investors Business Daily article, Mosaic saw the average selling price of a ton of its phosphate jump about 70 percent in the past year -- a price increase of $174 per ton.

And that represents a massive windfall for Mosaic. IBD reports that Mosaic is "the world's largest phosphate producer, producing roughly 11 million tons annually." For those keeping score, 11 million tons times $174 equals $1.9 billion. Naturally, the bonanza is inspiring the company to expand and intensify its phosphate mining operations, which are concentrated in Florida.


Hello Mcgowanmc,

Recall that lots of sulfuric acid is required to chemically activate P & K rocks for quick plant/animal uptake.

As posted earlier by me: China should have long ago willingly installed a lot of coal scrubbers to harvest a ready sulphur supply and to reduce smog and acid rain, plus have a convenient local supply of sulfuric acid for their local phosphate mining beneficiation process.

Maybe Russia, the US, and other countries are purposely constricting sulphur movement to force China and other countries to install this pollution equipment. Or maybe it is purely unintentional--I am not sure, but I sure get suspicious seeing these sulphur prices skyrocket [supposedly the invisible hand should make prices rise smoothly, not this black swan event].

The other side effect of constricted sulfur movement is that mining and metals processing get very expensive, very fast. A subtle plan to restrict the growth of China's military?

Question: If Chindia cleans its air--does global dimming kick our global collective ass, or are other enviro-factors in control?

Maybe Russia, the US, and other countries are purposely constricting sulphur movement to force China and other countries to install this pollution equipment.

Sulphur is a powerful anti GW element.

Russian academic Yuri Israel claims that we can at any time reduce the earth temperature by 1-2 degrees by using 200,000 tonnes of sulphur as part of air jets fuel (would take an year or so).

Watch out for arctic ice and situation with sulphur - it might be we are heading not for GW but for full blown IA

Hi Myxomop,

With respect to what this would do to our waterways, forests and aquatic life is the cure not worse than the disease?


Sulfur is relatively short-lived in the earth's atmosphere.

Volcanic eruptions which put a lot of sulfur into the upper atmosphere can, and occasionally do, reduce the earth's surface temperature significantly. The effect vanishes within a few years after the end of the eruption.

To actually use sulfur aerosols as a means of counteracting global warming, we would need to emit much larger quantities than we do now, do so into the upper atmosphere, and continue to do so on a permanent basis. Doing so would both be incredibly expensive in terms of effort required, and in terms of the environmental consequences of the acid rain formed when the sulfur comes out of our atmosphere.

I don't know the figures, but by injecting it into the stratosphere, where it has a residence time of a year or two, rather than perhaps a couple of weeks for stratospheric injection (normal pollution). It requires only a small fraction of current emissions to get the cooling effect. It is claimed to not be outrageously expensive. The effect of stuff like acid rain would be small, but there would be more atmospheric scattering of light -good for sunsets, but bad for astronomers.

IMHO I think you've over extended. The only plan
is- to get what's most important for(insert TPTBruler here) continued growth.

Giving too much credit to geo strategic.

We, the world, are now operating at "our limits."

As such, eveytime there is a non linear shift in
our MO-As in, the US is ramping up ethanol-the chain reaction
shows where the "weak link" is.

In this case -sulphur.


The above link shows just a sample of what sulphur is
used for.

Freeport McMoran got it's start by mining Sulphur in LA
in 1933. See Pt Sulphur.

The resource grab is on.

Liebig's Law operates across the resource spectrum.

Justus von Liebig, generally credited with being the "Father of the Fertilizer Industry", propounded the "Law of the Minimum" which states that if one crop ...
microsoil.com/liebigs_law_of_the_minimum.htm - 10k - Cached - Similar pages

Law of the Minimum
Justus von Liebig's Law of the Minimum states that yield is proportional to the amount of the most limiting nutrient, whichever nutrient it may be. ...

More research.

Wheat's the culprit.

We've never needed to put sulphur down.


“An 80-bushel wheat crop will take up at least 20 pounds of sulphur,” notes Messick, “making adequate sulphur fertilization necessary for optimal yields of grain and forage.”

Record high wheat yields in 2000 provide a glimpse at the efficiency of Georgia's wheat growers. “We produced more bushels of wheat on 350,000 acres in 2000 than we used to on one million acres,” says Lee.

Lee credits two factors for the yield increases: first, experienced growers committed to producing high wheat yields through nutrient management; and second, nutrient suppliers who recognize the need for sulphur in the fertility program.

Fears of a commodity crash grow

The "culprit" is the new breed of commodity index funds. Each week over the last two months, between $5bn and $10bn of fresh money has been pouring into the Goldman Sachs Commodity Index, the Dow Jones-AIG Commodity Index, and other funds, according to a UBS study. Together, the indexes now hold $200bn.

"Some commodities have leapt into the stratosphere over the last year: they've been pushed higher than the fundamentals merit," said John Reade, head of the UBS metals team. The buyers are typically big institutions such as Calpers (the California retirement fund), or the Dutch pension funds.

The bit I found interesting in this article is the possible mechanism (investing in commodity indices) that is causing finance to distort commodity pricing.

Mr Steel said inflated oil prices were automatically spilling over into gold, since energy makes up 65pc of the index baskets. The funds have to buy non-oil commodities to keep the [commodity index] weighting constant. Gold would normally fall in February for seasonal reasons. There is a 'buyers strike' for jewellery in India. Yet gold hit a record $984 an ounce yesterday.

Unlike shares of stocks, commodities contracts are settled with physical delivery.

If there were some massive disconnect between financial markets and physical demand, then the commercials who arbitrage this and can take and make deliveries would be making a mint, if the financial price greatly exceeds the producer spot price at delivery points.

They're probably profitable, but there isn't any evidence there is a ginormous disconnect.

Speculative trading can change things at the margin but I think these commodities have to be connected to fundamental demand much more strongly than stocks or real estate speculation.

Imagine if you were an owner of a pets.com stock in the 2000 bubble. If it were like a commodity contract, then every month SOMEBODY would have to take delivery of thousands of pounds of pet food and sock puppets and have to shell out hard cash at a high price to do so. Obviously in that case the stock would have never gotten as preposterously high as it did.

I'm puzzled by what's happening in commodities and not sure of what to make of it.

"Speculative trading can change things at the margin". As I understand it, prices are set by trading at the margin. Which brings us to the question of who is actually pricing the market, commodity consumers or speculators? If what we are seeing is a speculative bubble, then I assume the commodity consumers will simply stop buying if prices exceed a certain point causing stocks to build and the bubble to pop.

In the article, it mentions stockpiles of sugar with no buyers. Also, I assume the funds investing in commodity indices do not take possession of the commodities yet still have financial ownership of the underlying produce. It seems to me that what we are seeing is a speculative panic which will probably be brought down to earth by a buyers strike. But, in the meantime, I'll fill up my storeroom with some additional supplies, just in case.

OPEC Won't Raise Output, Cites US 'Mismanagement'

The 13-nation Organization of Petroleum Exporting Countries said it opted to pump neither more nor less oil right now because crude supplies are plentiful and demand is expected to weaken in the second quarter.

Conveniently, they keep rising the oil price zone of comfort:

Key cartel members said this week that prices in the $85-$90 per barrel range -- not over $100 -- would be optimal.

One year ago, $50-$60 was optimal!

Key cartel members said this week that prices in the $185-$190 per barrel range -- not over $200 -- would be optimal.

Item reporting progress of the Iran-Pakistan-India gas pipeline and its new China angle, http://www.atimes.com/atimes/South_Asia/JC06Df03.html

I'm trying to find a ballpark figure for electricity demand to produce a gallon of drinking water for a municipality. I live in a region that is susceptible to drought, is clamoring to build more coal fired electricity plants, and has some of the worst air quality in North America (probably enough info to pinpoint where I'm located.) I'm trying to put together a presentation for my city council regarding a water conservation program to improve air quality, save money for the city and its residents, and guard against the very real possibility of water shortages that are close to happening in Atlanta. My city uses a filtration system through sand, gravel, and coal after chemical treatment to produce on average 190 million gallons per day. With some WAG estimates, I see the potential for significant savings. But I’d like to shore up my numbers with some specific data. Can anyone point me in the right direction? It amazes me how much energy conservation can occur by saving a little water. Thanks in advance.

look to the west for all things water and energy. we've been fighting about it for years. maybe a google search "ca. water energy"
"whiskey's for drinkin, waters for fightin" Mark Twain

I think the answer to your question partly depends on where you get the water from. If you are forced to build a desalination plant in the nearest ocean, and pipe the water uphill to your location, the energy cost will be very high. If lots of water is available, then energy costs are low.

This is a recent article I ran across on Platts.com that talks about drought having the power to destabilize the grid.

Long-term droughts in California, Southeast seen as threat to grid stability

Record droughts in 2007 forced utilities in California and the Southeast to cut hydropower output in half and awakened a transmission system operator and regional reliability entity to the possibility that the grid might not easily sustain another couple of years of dry and hot weather.

"It's not a trivial issue," said Gerry Cauley, CEO and president of SERC Reliability. Following the worst drought in more than 100 years of recordkeeping, SERC asked utilities in the Southeast to prepare rain operation scenarios for summer 2008.

I live in an Atlanta suburb -- this is scary.

Hello Markegg,

From memory:

A recent LA Times link posted here on TOD, stated that running just a couple minutes of hot water was equal to a sixty watt bulb burning for 14 hours.

The other famous H20 quote: "Water flows uphill to money".


I currently work in the Water Efficiency field (specifically industrial, commercial, and institutional) and you are spot on in connecting water to energy - an all too often overlooked connection that I cite when promoting water efficiency to companies. I too am working on the numbers for our local government on energy cost and CO2 emissions based on our Provincial electrical generation makeup for a value on a /Litre basis.

My first question to you is this: how far down the rabbit hole do you want to go with calculating the associated energy costs? By this I mean, are you going to look at the electrical bill only? OR are you going to include the energy and emission cost of delivery of the chemicals... etc etc.?

I would assume that you should be able to request information on your local government electrical bills, and you should be able to gather the information on your local electrical generation makeup and from that information put together your city specific information.

I know of a group that is working towards developing a program that will help municipal governments calculate/approximate that energy and emissions cost. They are currently collecting data from multiple Canadian municipalities and are expecting to put something together in the near future. If you want to message me at "peakoil"..."at"..."execulink"..."dot"..."com" (hopefully that will keep the email spam bots away) I will try to keep you apprised of the status of that project.

In the meantime, here is some information I have been able to dredge up for you.

Olympia, WA
Drinking Water Utility – 6,120,000 kwh/year (source: http://www.ci.olympia.wa.us/community/sustainability/greenpower.htm )
Olympia Population:
2007 estimate* 44,460

Sorry I couldn't find the pumping capacity of their water system, but that can give you an approximate value on a per-capita basis and possibly some starting data

Hi ET,

If my memory is correct, 16 per cent of California's electricity is consumed in the delivery and waste treatment of water. That's a staggering number when you stop and think about it. [I can try to find the report if you wish.]

Our two person household uses anywhere from 82 to 181 litres of water per day (the higher number when we have visiting guests). Low-flow showerheads, low-flush toilets, a water and energy efficient BOSCH dishwasher and front-load washer are all part of the equation. We're also pretty water frugal so, for example, the first five litres of water drawn off before each shower waiting for the water to turn hot are captured in a watering can and reused to flush toilets. Simply put: less water = less energy.


"A prediction ... more than $3 a litre for petrol within 10 years is an attempt to soften up consumers, Australia's peak motoring group says."

- peak motoring. Hmmm.

Everything's gonna be just fine Down Under. The new Labor Government appointed Australia's first petrol commissioner today, to oversight and control those gouging oil companies. Peak policy.

So which is the quote of the day?

(from the $104 oil CNN Money article)
"It looks like some oil was lost in the fog," said senior Alaron Trading analyst Phil Flynn.

(from Bush ethanol CNN Money article)
Critics say Bush can hardly take credit for promoting renewables when he has held up incentives like production tax credits and refuses to cap carbon dioxide emissions.
"It's like Jamie Lynne Spears giving a talk on abstinence," said Daniel Weiss, director of climate strategy at the Center for American Progress,

With apologies for a possibly stupid question...

I've seen fog in the gulf mentioned before as a cause for delay in oil shipments. Is this meant literally? How can fog affect navigation in the age of $200 GPSes? How could it affect onloading/offloading, given that visibilities in the thickest fog are easily 100 feet or more. Airplanes routinely takeoff, land, and fly through fog-- isn't that much more difficult than shipping?

I understand that Flynn's tongue may be planted firmly in his cheek in this case, but the "fog in the gulf" seems to get mentioned a lot.

Ship pilots don't always carry their own GPS-enabled maps, and each ship has its own system with a different interface -- kind of like different models of airplane have different cockpits.

There was an oil spill in San Francisco Bay a few months back when the pilot, who didn't have his own GPS system, and who didn't understand proper use of the ship's one, allowed the Cosco Busan to hit a bridge.

I'm guessing that we're talking about concerns about similar situations.

They close down the Houston Ship Channel when it gets too foggy. You can actually see the waiting tankers on Google Earth. And see the pea-soup fog on the Galveston Bay webcam.

Try and drive through thick gulf coast fog on I-10 one night. GPS or no, it will scare the pants off you.

It's even more than that. You don't mess around with big ships in restricted waters when you can't see what's in front of you. That's just asking for problems.

Sorry but I've been in fogs were visibility is like 5 metres.

Operating ships and planes in dense fog is not done lightly. I've done both and it is not fun.

For ships:
1. The bridge and pilot house on tankers are located on the superstructure at the aft end of the ship. In a fog with 100 yard visibility the bow of a large tanker, 600 feet away from the bridge, will not be visible. With a lookout (or camera) posted at the bow and the ship moving at only 5 knots, there will be about 38 seconds from the time something in the ship's path becomes barely visible until the ship hits it. If the ship is in a restricted shipping channel, maneuvering to avoid the object is generally not possible and stopping a loaded tanker in 38 seconds is not going to happen.

2. All navigational charts in use today contain inaccuracies. In fact, one of the side effects of increasing GPS accuracy is the identification of more chart inaccuracies.

3. The latest commercial GPS units provide excellent position information, reliably accurate to 10 meters. But, the position is that of the GPS unit. If the GPS unit is on the bridge then the crew will know fairly accurately where the ship's bridge is. The bow may be 600 feet away.

4. GPS doesn't show other ships. There is a system whereby ships can broadcast their own and receive other ships' GPS positions. Its use is not required in all areas or by all ships. And, the information displayed is the location of the other ships' GPS units. See (3) above.

5. Radar doesn't always show other ships or obstacles due to ground clutter, surface ducting, interference, weather, aspect and target spacing and distance. It has built in range and bearing inaccuracies, and target return sizes are affected by relative headings, and the radar's operating characteristics.

6. Visual cues can sometimes provide critical information faster than it is available from a GPS or radar display or that is not available from those displays.

US maritime law generally holds the operator and owner of a ship that is operating in reduced visibility (fog) at fault for any accidents. And, if other ship owners incur added expenses as a result, the offending ship owner/operator is often liable for those as well.

Fog generally lifts in a few hours or a few days. Unless absolutely necessary, most ship owners would rather wait out the fog before transiting a shipping channel.

For planes:
If planes and crews are certified for ILS Cat III or GLS-PA (a form of GPS) operations, there are a number of airports certified to allow takeoffs and landings in heavy fog. Many planes and crews and most airports are not so certified. Most airlines are more amenable to landings in poor visibility than takeoffs, primarily because a plane has to come down at some point. Takeoffs are more elective, and the concern is for the case where a problem develops on takeoff necessitating an immediate return to the airport. In such a situation the crew is likely to be dealing with a major emergency in the cockpit so the last thing they need is to also have to execute a precision low-vis landing.

Supposedly infrared cameras can see through fog. I think some luxury cars have them. I suspect that the fog still limits (infrared) visibility. Presumably you can see further that way. Does anyone have an idea how much further? I would think a few hundred bucks for a couple cameras (bow and stern at least) would be a prudent investment.


‘Guru’ gives hope to energy future

Mr. Dabrowski is referred to as the “Insight guru” for a system he has developed that can get as much as 100 miles per gallon from the Honda Insight, a hybrid electric automobile the company stopped making in 2006. The car had an EPA rating of 57 mpg. He said about 60 Insights in the United States, England and Australia use the $750 system, and that there is a waiting list.

Once again this guy proves that it is possible to do what car companies so far are just unwilling to do. He is increasing the MPG of a car by almost 100% for 750$. Again its not a matter if can we do these kind of things its a matter of will we do these kinds of things. Best hope for getting things done and less hope for those ready to throw their arms up in despair waving the flag of eyore.

My Honda hybrid has an EPA rating of over 50 mpg. It actually gets about 40.

The Honda Insight rating has been changed to 52. (http://www.fueleconomy.gov/feg/findacar.htm) (click on link "Compare to official EPA window sticker MPG")

I don't know about your Hybrid, but the 2008 rating for a Honda Hybrid is 42. This is based upon the revised EPA test which has caused ratings to go downwards. You may be looking at the old EPA rating, not the adjusted new rating.

My VW TDI(diesel) goes from 53mpg in the summer, and 48mpg in the winter.

So it could be like my car and change with the times of the year.

Hope is not a plan. Doubling gas mileage on a poorly-selling car isn't good enough. Even if it were good enough, there's no evidence it could scale.

Now, don't get me wrong. I think there are could have been solutions to our problems, given enough money, enough energy, enough will, and enough time.

Unfortunately, it doesn't look like like we have enough of any of that, especially will. All I see are denial, heads in the sands, and cheery optimists that everything will work out. And that is why I'm pessimistic. It is the cheery optimists that make me most pessimistic. They have some idea of what we're facing, but seem unable to grasp the urgency.

That's because the cheery optimists assume that they represent the leading edge of the genius of the marketplace, and thus if they care about something, vast armadas of Silicon Valley billionaires must be ready to move on these wonderful solutions that the cheery optimists in fact can do nothing about themselves.

Note that cheery optimists rarely talk about government mandates.

"Once again this guy proves that it is possible to do what car companies so far are just unwilling to do."

Sorry, what Mr Dabrowski proves is that it is possible to do what car DRIVERS are so far unwilling to do. Drive efficiently.

The MIMA system requires the driver to manage the battery and electrical assist functions of the Insight in a way that the car itself cannot..the car cannot look ahead, the driver can. Most drivers on the American road won't compensate for a red traffic light 100 feet ahead, much less manage a the electrical boost system.

Scaling is hardly the issue if the driver of the car is clueless.

For the record I drive an Insight with the automatic transmission. My lifetime average MPG for this car is 59.2 mpg.

The MIMA system is most effective when used in the stick shift version of the Insight, that is the major reason why I don't have it in my Insight.

Cars like those are going to be "hangar queens". Sure, they get a zillion miles to the gallon, but if the major banks are no longer making car loans (recent news here) and the real financial troubles have yet to hit, who will be able to afford one? Not so many people.

When municipalities go bankrupt roads are what take a hit first. How will a cutesy little high mileage vehicle perform? I may wish my Versa away and the Jeep it replaced back before too much longer; the Jeep will keep going in things that stop the Versa cold.

When oil prices and finances put cars out of reach for a big slice of the population do you think they'll be willing to pay property tax so those who can afford a car can drive? Not me, and I bet I'm not alone in this.

Long term independent vehicles will be specialty items for police, fire, and rescue. Delivery will be a hodgepodge - whatever runs will be used until (if) a market develops for a rough road worthy delivery van.

If we get to a point where there is no funds to repair the roads, I wouldn't put that much faith into personal trucks either. Trucks may be good for a few extra bumps than a car, but it will still catch up in the end. If people want good roads, they will likely vote in a local fuel surcharge, which a truck will end up paying more, regardless.

Maintaining roads is cheaper than building them. Maintaining roads is going to be where your gas tax goes when you stop building them.
Roads need to be maintained because of weather (freezing and heaving of soil) and overloaded trucks. Weather is going to be present in the future, but overloaded trucks may fall victim to computerised ticket systems.

Car dealers are selling fewer minivans and large sport-utility vehicles. In fact, only small cars and smaller, more fuel-efficient SUVs, are showing a rise in sales. Small-car sales in January were up 6.5 percent from a year earlier, while sales of crossover vehicle grew 15.1 percent, Autodata Corp. says.


Building a smaller stone.

Congratulations to those of us who properly said that oil would reach $103/barrel before it would reach $83/barrel back when it passed $93/barrel.

Seems like a new poll is in order.

The Starship Trooper

Yes, Yes. Looks like the Triple Yergin is in sight again :P

Thanks to the US dollar, some tanks, and general supply tightness.

I wonder when they will add 'monkey pee' to the ALL LIQUIDS numbers. Prolly soon.

Non-OPEC Oil Production Likely to Disappoint Over 2008, Analysts Say

11:02 03/05 (CEP News) Vienna – Non-OPEC oil producers were unlikely to improve their production over 2008, in a year when the market most needed their output to rise and make an considerable impact, analysts said on Wednesday.

Russia seems to bear the brunt of analysts’ ire. Kevin Norrish, commodities research analyst at Barclays Capital, said, “The latest data from Russia revealed that oil production was at 9.79 million barrels barrel per day (bpd), unchanged from 9.78 million bpd in January and down year-over-year for a second consecutive month.” Norrish said disappointments were not limited to Russia as the recent flow of data suggests continued positive demand conditions yet parallel non-OPEC supply weakness.

Non-OPEC production has been flat since November of November 2003, 52 months ago. Every year, during the last four years, the EIA and the IEA has been predicting Non-OPEC growth, and every year this grwoth has failed to materialize. When Non-OPEC finally comes off this almost four and one half year plateau, it will be in the downward direction.

Russia and Azerbaijan have been the only two Non-OPEC nations with any great gains during the last three years. Without Russia and Azerbaijan Non-OPEC oil production is down 1,665,000 barrels per day since May of 2005. Now that Russia has peaked, it is highly unlikely that Azerbaijan will be able to make up for declines in other Non-OPEC nations. In fact, though Azerbaijan has certainly not yet peaked, her years of great gains is clearly over. Azerbaijan will probably increase production in the next few years but not even close to the pace of the increases in the last three years.

Non-OPEC, in my opinion, has clearly peaked. This year Non-OPEC production will be down from 2007. OPEC production in 2008 may or may not be be slightly above above 2007 production, but it will be well below 2005 production. We are post peak, end of story.

Ron Patterson

We are post peak, end of story.

One story ends, another story begins. So far this next story is looking like a nightmare.

Interesting article!

It also says that

Lehman Brothers forecast that non-OPEC supply was likely to record a growth of only 650,000 bpd or 1.3% in year-over-year terms, and would not do much to alleviate the burden on OPEC crude. Furthermore, 70% of the 650k bpd growth is coming from non-crude liquids such as biofuels, condensates synthetic crude and other conversion supplies, and only 30% from crude oi

In other words, even if non OPEC total liquids production does grow, it will be from mostly non-crude.

OPEC's forecast of non-OPEC total liquids growth in their Feb 2008 Oil Market Report, table 34, was 1,070 kbd.(Brazil 410 kbd; FSU(Russia, Kazakhstan, Azerbaijan) 440 kbd)

In OPEC's press conference for 148th meeting yesterday,
I think I heard that OPEC has now revised downwards non-OPEC growth to 900 kbd.

Non-OPEC total liquids production growth is likely to be minimal or zero from 2007 to 2008. These non-OPEC forecasts probably do not include planned maintenance shutdowns, hurricanes or other interruptions to supply.

Perhaps the coming food disaster, which has seen most staples - bread, milk, cereals, feedstock - rise 50 percent or more, is not as catchy as industrial commodities, but its repercussions will be a lot worse.

When untold millions are on the edge of starvation, the already shaky global peace will give way to a collapse of law and order in many parts of the globe.

I suppose what's being said here is that the 3 billion people in the World that live on less than 2 bucks a day, will be the first to suffer the consequences from rising fuel costs as a result of peak oil.

Those countries who do not have appropriate defensive weapons, and the will to use them, will get conquered. Conquests are not unusual, there have been several brutal ones in the 20th century. The 21st is shaping up to be equally nasty.

Will your government shoot at the hordes of unarmed (or maybe armed) starving people that want to stream across the border into your country? Will you welcome them with open arms, or will you realize that that may cost you your own life? Moral choices will have to be made. It won't be fun.

This has been discussed. It raised a few comments in yesterday's Drum Beat, mostly pointing out the major impact of the current La Niña on east coast summer rainfall - increased rain means lower daytime temperatures. The overall impact of Global Warming in Australia - with respect to drought, agriculture and flora and fauna - remains pretty grim, notwithstanding the rare but welcome La Niña event.

A question-
I recently heard a lecture about "a third industrial revolution". Has anyone heard of ideas surrounding decentralized power distibution/generation via renewables useing fuel cell storage and a "smart" grid as a means of trasitioning from FF? My understanding to date was that hydrogen was a net-energy loser...is it good for storage? Is such a plan possible and/or one that can be debated realisticaly?

My understanding to date was that hydrogen was a net-energy loser...is it good for storage?

Hydrogen has to be liberated from some compound which requires energy. No system can extract and consume hydrogen at 100% efficiency. Using hydrogen is a net-energy loser.

Hydrogen also has some severe issues:
1. H2 has the smallest molecule and its difficult to seal, and it can't be compressed into a liquid unless its cooled to crygenic temperatures.
2. H2 causes hydrogen embrittlement to most metals. The small hydrogen molecules work there way into metals causing them to become brittle.
3. Gaseous Hydrogen can be explosive if it comes in contact with an oxidizer.

The only real practical energy storage is pumped water using gravity to spin turbines. But this of course requires land and water, and the land must have a gravity potential large enough to push turbines. Flatland would not be an option. This presents issues in water challenge regions such as the southwest. Water in these regions is already being consumed by large populations and irrigation for crops. While the water could be recycled, evaporation and seepage remains an significant factor.

Chemical batteries are not a long term solution because all batteries react with the metals used for the anode and cathode terminates. All chemical batteries degrade with time, and many use toxic chemicals. Many high capacity batteries also used exotic materials that contain rare earth elements. (ie. there would be enough raw materials to mine to satify global demand).

Common PEM Fuel cells also have problems because they must be periodically be rebuilt because the membrane degrades. (ie high maintaince). They also use platinum which is already selling above $2000 USD an ounce. There is insufficient Platinum available for large scale production of fuel cells.

Decentralize power production is a bad idea because the efficiency and economy of scale is lost. The only reasonable case for decentralization is for those that believe that the grid will become unreliable in the future and want to have backup. I suspect the big drive behind decentralized power is for business selling them to make big money. Its unlikely that decentralization will provide any costs savings.

Thanks for the info. It would seem then that challenges of hydrogen are often ignored in favor of "what could be". In terms of "decentralized power" the idea was that a "smart grid" would function much the same as the internet - linking many small computers was compared to everyone having there own way to generate power via some renewable tech. Would you say that too is non-realistic?

Bush urges electric vehicles, saying U.S. must 'get off oil'

WASHINGTON -- President Bush said the United States must "get off oil" and urged automakers to build fully electric vehicles like the concept Chevrolet Volt.

"We want our city people driving not on gasoline but on electricity. And the goal, the short-term goal, is to have vehicles that are capable of driving the first 40 miles on electricity," Bush said in a speech today at the International Renewable Energy Center.


4 years ago it was hydrogen.
2 years ago it was ethanol.
Now it's electric car.
In two years time will be ..... ? (Horses?)

My father rode a camel, I drive a car, my son flies a jet plane, his son will ride a camel.


Yep, Camels--
A good donkey would not be bad, and much friendlier.
I go for a walk in the redwoods, and when I return oil is over 104.
Maybe a backpacking trip is in the cards, the weather has been warm in Nor Cal-
Pt Reyes maybe?

You've probably misunderstood my post. The thing is, GWB used to take photos in front of experimental cars powered by hydrogen. That was appr. 4 years ago. The hydrogen is the future! Yeep! Then, somehow, the whole hydrogen story vanished, and there was a lot of buzz on ethanol and biofuels. Problem solved! We'll have ethanol cars! Again, GWB was full of enthusiasm. But somebody discovered that ethanol is not so good when it comes to arable land, food production and other stuff, so we need a new 'savior' - electric car. Yeep, yeep. Huge electric-powered Hummers and 4W drives are already on the drawing board. GWB happy again.

Why is Bush suddenly in such a rush to change the fuel vehicles use...again? I think I will skip the electric car and go straight to a horse...Perhaps a small horse that can sleep in bed with the wife, me, and three twenty pound cats...Should be cozy on cold, dark nights with heat and lights out...because the people with electric cars crashed the grid. :)

Hello TODers,

Our Westexas has posted much on ELM, and how precarious it is for a country to be both a FF and grain importer.

Now recall my previous postings on Morocco, phosphates, and how the FAO says North America is headed into a phosphate deficit, then read on:

March 5 (Bloomberg) -- Morocco reaped 481,700 metric tons of soft wheat since June 1, 80 percent less than a year earlier after late rains cut yields, the Ministry of Agriculture said.

[The year before that was even worse--BS] Morocco's wheat imports more than doubled to 3.7 million tons last year, when the harvest slumped 77 percent to a seven-year low of 2.54 million tons.

Rabat, Mar. 5 - Morocco's oil bill has rocketed 92% in January with an amount of around USD 340Mn, though the volume only progressed 18.9% (489,000 MT) in comparison to January 2007, the Office des Changes said.

Oil and wheat are on the top of the list of Moroccan imports, the exchange office said in its January report.

Morocco's total imports have thus stood at almost USD 3Bn, of which oil and wheat represent 59.4%, the document said.

Earlier, from the Council On Foreign Relations:

U.S. Africa Command (AFRICOM)

... Defense and Foreign Affairs Strategic Policy argues that Morocco is the only “geographically and politically viable” location for headquartering Africom because it is a neutral Muslim state that has proven willing to work with the United States to combat the growth of radical Islam in Africa.
Time will tell. Please feel free to further elaborate or refute.

EDIT: If NA wants to grow crops for the next hundred years: doesn't it make sense to stockpile huge quantities of sulfur to chemically activate phosphate rock from Mo-rock-oh? IMO, this is much more effective than importing 3.5 million 'immigrants' per year as Britain did so long ago. NA is geographically much, much larger than the British Isles--you can do the math, if you can bear the thought.

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

Rock the Casbah! Rock the Casbah!

In regards to the last option in the poll (about the declining dollar). Maybe instead of making a statement about the price of oil it should be referred to as compared to the value of the dollar -
"The dollar fell today against the saudi barrel"

Also regarding the poll: Questions 1 and 5 are not mutually exclusive.

Am I correct in assuming that home heating oil and deisel fuel are still the same, except for the tax?

Ethanol is for civilian use to free up more of the good stuff for military use. Tanks and bombers don't perform to well on ethanol, even poorer on solar, especialy at night.

SUV's are much more comfortable to live out of than a Civic and where would you recharge an electric car? Hummers even better.

Hi Roysyl,

The sulphur content in home heating oil far exceeds that of on-road diesel -- upwards of 5,000 ppm whereas ULSD is limited to 15 ppm or less. In the case of marine diesel or "Bunker C" it can reach as high as 45,000 ppm.


Wnen I was stationed in Germany in ths early 70's the Authorites were watching for diesel car owners using untaxed heating oil in their Mercedes.It would appear that home heating oil is still about the same stuff but diesel engines have been changed to require the low sulfur fuel. Home heating oil should be cheaper than gasoline but is(futures price) 30 cents more expensive than gasoline. Gasoline here in the CCCP(Currupt Communist Commonwealth of Pennsylvania) is 70 cents more than the futures price. Diesel fuel is about 80 cents above heating oil futures. It dosen't add up by the old math.

I think you're right when you say they're pretty much the same thing, except for their sulphur content; at least that's my understanding. I take it most diesel engines are fairly forgiving in terms of what they'll burn but this latest generation of pollution control gear is not. Mercedes' Bluetec engines with their oxidizing catalytic converters and particulate filters are the cleanest diesels ever built and meet the Euro 4 and Euro 5 emissions standards as well as the EEV requirements -- none of which would be possible without ULSD.

BTW, I have many friends in Pennsylvania and always enjoy my time spent there but never realized it was a hot bed of left-wing, commie-pinko thinking.... ever been to Vermont or Massachusetts? ;-)


The rural areas are ok but the cities, especialy the two big ones, are Socialist bastions. Always vote against Philly and Pittsburg. Our current Governor, from Philly, is rapeing the hinterlands to support his cronies in Philly.

I would rephrase that as "The current governor is not taxing the high income people in the Philadelphia metropolitan area and paying off the voters in the rural areas as much as we think he should, the scoundrel!"

In your particular CCCP prices are not set by the local Central Committee, but by the marketplace. The price is what the market will bear. The cost of producing the fuel is a second order consideration, so to speak.

Australian Oil Production Now Reduced to Almost Half of Peak Production

Australian production is expected to reach 450,000 barrels a day this year, before advancing next year, then continuing its decline thereafter:

see: http://www.bloomberg.com/apps/news?pid=20601081&sid=aNA4w4BcWspQ&refer=a...

The longterm outlook for Australian oil production is bleak.

More bad news revealed today in Leanan's post about Russian oil production having entered a 12 month decline phase.

Canada, Brazil, West Africa, the Caspian, the Persian Gulf and some other nations may yet be capable of substantial production boosts going forward. Numerous nations cannot stop the decline of their oil reeserves and this was showing in their production figures.

Diesel in San Rafael CA--
4.09 dollars a gallon.
I have noticed lighter traffic lately

The solution for those who are not currently near mass transit infrastructure;