DrumBeat: March 8, 2008

The Triumph of OPEC

For much of its 47-year existence, the Organization of the Petroleum Exporting Countries (OPEC) has been a cartel in name only. It could not, in practice, control oil prices because many of its members regularly breached the production quotas that were intended to regulate the market. So OPEC generally followed oil prices up and down, as supply and demand conditions shifted. But now OPEC may be the real deal: a cartel that works. If so, that's bad news for us.

Senate Committee Seeks Audit of Iraq Oil Money

Two senior members of the Senate Armed Services Committee have requested a full accounting of how Iraq is spending its soaring oil revenues, amid starkly conflicting estimates of how much the country has invested in rebuilding its broken infrastructure and providing basic services to its citizens.

Belarus cuts Washington off over U.S. sanctions against against oil company

MINSK, Belarus - The Belarusian Foreign Ministry told the U.S. ambassador on Friday to leave the country and recalled its own ambassador from the U.S. over economic sanctions Washington imposed on the former Soviet nation last year.

State Offers Help After Waterbury Oil Company Abruptly Closes

WATERBURY, Conn. -- The state is offering to help 12,000 customers of a Waterbury oil company that abruptly went out of business and left many people with pre-paid contracts in limbo.

Official: China to put into use two more oil reserve bases

BEIJING, March 8 (Xinhua) -- Another two strategic oil reserve bases will soon be put into use, a Chinese official said Saturday on the sidelines of the annual session of the country's top political advisory body.

"Two oil reserve bases in Huangdao (of Shandong Province) and Dalian (of Liaoning Province) is near completion," said Zhang Guobao, vice minister in charge of the National Development and Reform Commission (NDRC), without elaborating how soon.

The two oil reserve bases located in Zhenhai and Zhoushan of Zhejiang Province have been put in operation.

Oil-filling at the two bases is worthwhile in terms of oil prices, and the timings have been well chosen to prevent major impact on international oil price, the official said.

Colin J. Campbell - The first ever oil database: the history of Petroconsultants

Naturally an oil company has every reason to track the activities of its competitors which can have much commercial significance. In earlier days in the United States, they used to employ people known as "scouts" who would keep rigs under observation, sometimes with binoculars.

Bangladesh oil company sees nearly one billion dollars loss

Bangladesh's state-owned oil company will post a record net loss of nearly one billion dollars in the current fiscal year due to sky-rocketing global crude oil prices, its chairman said on Saturday.

The Bangladesh Petroleum Corp (BPC), the nation's monopoly oil importer and distributor, sells fuel at prices set by the government that do not reflect the purchase cost.

Cameroon ups state wages, cuts prices after riots

YAOUNDE (Reuters) - Cameroon's President, Paul Biya, has raised state salaries by 15 percent and suspended customs duties on basic foodstuffs like fish, rice and cooking oil to ease discontent over high prices which provoked riots last week.

In two presidential decrees broadcast on state radio late on Friday, Biya increased the wages of civilian and military personnel from April 1 and raised their family allowances by 20 percent of the monthly basic salary.

High coal price may cost you

The cash price for coal that utilities burn to generate electricity exceeded $101 per ton this week at a West Virginia mine served by Norfolk Southern Railway.

...High-heat, low-sulfur coal from Central Appalachian mines is popular with utilities because it burns cleaner and helps them comply with federal clean-air rules. Five years ago, the same coal was selling for around $30 per ton.

With half the state's and half the nation's electricity produced from coal, the price trend could mean higher electricity prices for Virginians. Utilities generally are allowed to pass along the increased cost of fuel for their power plants.

Running out of gas

EDMONTON -- A mysterious problem at Imperial Oil's Strathcona County refinery continued yesterday, choking off gas supply to Esso stations across Western Canada for the second day in a row.

In addition to several local service stations, fuel shortages have also been reported at Esso stations in B.C., Saskatchewan and Manitoba.

Mexican Interior Minister Defends Earlier Energy Contracts

Mexico's embattled Interior Minister, Juan Camilo Mourino, has vowed to remain in his post despite criticism over two energy contracts he signed years ago during a stint as an adviser to the Energy Ministry.

Seventy years since oil expropriation

This coming March 18 marks 70 years since General Lázaro Cárdenas nationalized Mexican oil, a conquest of the ancient country of the Aztecs that, given current efforts to reverse it, in 2008 has become a call to struggle for the political opposition and the 80-plus% of the population that opposes the so-called structural reform of the state oil company, PEMEX.

South Africa: The consumer is dead ...

Diesel generators are a great deal more expensive than electricity and once the electricity rate hike of 14% combined with the 2c KWh comes into affect, it will be inflationary along with the 10% increase in the cost of petrol.

South Africa: The energy hoax

Did the Government deliberately prevent Eskom from building new power stations and fail to curb multinational coal exports to China and India etc, in order to perpetuate the impression that SA lacked energy and to convince us that newer more radical vectors of energy, such as nuclear and biofuels were required?

The perils of the 'Great Game'

The 'Great Game' planned towards the end of nineteenth century was aimed at challenging the nineteenth century belief that 'European Civilization had its beginning in Middle East' and to establish global supremacy of Europeans. “The European powers at that time believed that they could change the Muslim majority Asia in the very fundamentals of its political existence, and in their attempt to do so introduced an artificial state system into the Middle East that has made its way into a region of countries, many of which have not become nations by definition even today.”

Better mileage than a Prius? Not so fast

VW's new diesel-powered hybrid gets great mileage - better than Toyota's top-selling hybrid. Its price-tag is another story.

Thinking green

Some think going green means going lavish. Paquette says that’s not the case. A house built, by design, with state-of-the-art energy-saving features costs nominally more than one without such features. However, he says, reduced fuel use of 20 percent to 40 percent on the energy-efficient house quickly recoups its cost.

“I think going green will become standard fare. I think people will turn their focus toward it and ask their builders to include these elements in the house they want to live in.”

Solar-power paint lets you generate as you decorate

A lick of solar-power paint could see the roofs and walls of warehouses and other buildings generate electricity from the sun, if research by UK researchers pays off. The scientists are developing a way to paint solar cells onto the steel sheets commonly used to clad large buildings.

Surprise Friday: Matthew Simmons (with video)

Following is a summary of the main points made by Simmons during his interview with the Fast Money traders.

You’re predicting $378 a barrel!?

“We never understood the value of oil (domestically), replies Simmons. In England they’re paying the equivalent of $9 a gallon. That translates to $378 a barrel and it’s having no impact on England, right now. The cost of oil is going up, he adds, it’s getting scarcer." We’re not going to run out but we are peaking.”

Life after oil (review of World Made By Hand)

Oil has now climbed past $100 a barrel for the first time in US history. Some folks believe this is merely the result of market speculators driving up the price so that they can cash in on some serious profits. But for James Howard Kunstler, the astronomical prices are just one more sign that oil, the liquid foundation of techno-industrial civilization, is entering into a long state of emergency.

Daylight saving time uses more energy, not less

WASHINGTON — For Benjamin Franklin, daylight saving time was about saving candles and for modern lawmakers, it's about electricity — but a recent university study found it might actually cost more energy when the nation resets its clocks Sunday.

Venezuela's coal moves may cut exports - analysts

HOUSTON (Reuters) - Coal exports from Venezuela this year could fall because of government moves to take greater control of the industry, U.S. analysts and traders said Friday.

The cut in Venezuela's premium grade coal exports would come as the world runs short of coal, prices skyrocket and buyers scramble for supply.

Iran gas: China waits as India wavers

NEW DELHI - China is emerging as a potential partner in the proposed multi-billion dollar, 2,700-kilometer gas pipeline originally intended to link Iran, Pakistan and India.

Iraq desires to improve co-op with Turkey in energy sector

ANKARA, March 8 (Xinhua) -- Visiting Iraqi Minister of Oil Husayn al-Shahristani said on Saturday that Iraq desired to improve its cooperation with Turkey in the energy sector.

...He said that Iraq wants to provide gas to Turkey and considers Turkey as a transit country as well.

Ukraine president again blasts PM on gas row

Ukrainian President Viktor Yushchenko issued a new denunciation of his prime minister on Friday over her stand on gas trade with Russia ahead of new talks to resolve long-running price and supply disputes.

Analysis: Uzbeks, S. Korea eye natural gas

While Russia's Gazprom dominates Central Asian natural gas exports through its pipeline monopoly, the leaders of the "stans" are unhappy about the arrangement, as Gazprom buys cheap and sells dear to European consumers. Seeking to break the deadlock, Uzbekistan has been investigating alternatives, and on Feb. 25 state-owned Uzbekneftegaz signed an agreement with a South Korean energy consortium led by state-run Korea Gas Corp. to develop a gas field in western Uzbekistan and construct a gas-chemical industrial complex.

Biodiesel producers could shutter without state subsidies

Pennsylvania biodiesel producers said without help from the state they could go belly-up by the end of this month.

The companies are urging the Legislature to pass a bill to increase the amount of subsidies per biodiesel gallon produced. Without that boost, many of the state's producers could go out of business in less than 30 days, said Ben Wootton, president of Keystone Biofuels Inc. based in Silver Spring Township, Cumberland County.

"We've all been running on fumes and bank loans," he said.

US dumping of biofuels will ruin us, says UK firm

The US is flooding Europe with subsidised biofuels that threaten to destroy Europe's domestic refining market, the head of the biofuel company D1 Oils warned yesterday as its shares lost a third of their value.

David Keith and Thomas Homer-Dixon: A win-win-win solution

What should we do with the carbon we produce when we burn fossil fuels? Some experts say we should fight climate change by putting the carbon back underground, whence it came.

Oil rally may be economy's undoing

NEW YORK - Preoccupied the last few months with shrinking credit and a slumping economy, Wall Street has all but ignored the relentless rise in oil prices that has taken a barrel of crude to a once-unthinkable $106.

But the market may not be able to look the other way much longer — especially when consumers, already hurting from the soaring cost of gasoline, find themselves paying even more to fill their tanks come spring.

Peak Oil Passnotes: Knock-Through

We have long talked about the various impacts of higher oil and energy costs. The way that inflated energy prices knock-through into other commodities, for example by hiking transportation and extraction costs, is one of them. From commodities they then knock through into your pocket, maybe making you feel poorer, or if you bet on their rise, possibly richer.

Other impacts aside from your personal well-being or otherwise have included the run-up in food prices, also linked to transportation and manufacturing, but also to the way biofuels have been so badly mismanaged. All along we have pointed out that there is a correlation between general all round inflation due to rising energy costs, but with a significant time lag.

The Gold In Automotive Green

Whether world "peak oil" comes within a decade or several, traditional petroleum production will eventually not meet demand, especially with economies such as China and India in the early stages of an auto boom. It is becoming increasingly difficult and costly to retrieve marginal oil, and many deposits, such as the oil sands in Canada, pose formidable environmental challenges.

'When Will Peak Oil Strike' – The Renewable Energy Centre UK Comments on the Debate

Peak Oil has been the subject of debate for many years and has largely been ignored by industry optimists but has continually worried many industry experts.

The big question has it seems, finally been answered with new projections placing the point of peak oil occurring within the next 10 years.

CT Lawmakers push for clean energy department

HARTFORD - A group of lawmakers, including state Rep. Terry Backer, D-Stratford, yesterday called for the creation of a new Department of Clean Energy to help the state reduce its dependence on oil.

"The days of plentiful, cheap oil are drawing to an end," Backer told reporters during an afternoon news conference. "It isn't a question of whether we will switch to a clean-energy economy, but when."

Norway's oil capital seeks new image for post-petroleum era

STAVANGER, Norway (AFP) — Long considered the oil capital of Norway, the small southwestern town of Stavanger has begun hunting for a new image that will keep the money flowing in even after the oil wells dry up.

"We really have to take advantage of the wealth we have in this town now to give us more legs to stand on going forward. We know the oil isn't going to last forever," said Helge Solum Larsen, the deputy head of the Stavanger council for city development.

Dependence on Russian gas worries some – but not all – European countries

Two years later, rumors of a common European energy policy are again circling Brussels. Russia rattled the European Union this week when it cut Ukrainian shipments by half, prompting Ukraine to threaten –briefly – to siphon Russian gas sent to Europe via Ukraine. Gazprom announced Wednesday that it was resuming full shipments.

But individual nations continue to make deals that make them reliant on Russia for the long term. This tension between the recognized need for a common market and nations acting in their own long-term energy security interests is at the core of a growing European rift over how to deal with Russia.

Iran sees pre-election US bid to reduce oil price

TEHRAN (Reuters) - A senior Iranian oil official said on Saturday he expected the oil price to fall ahead of November's U.S. presidential election, suggesting Washington would seek to push it down for political reasons.

Hojjatollah Ghanimifard told the Fars News Agency that "those in political power in the (United States) will try to (influence) the market through various factors to create interest in voters to elect individuals of their preference."

Iraq vows to block oil contracts signed by Kurds

ANKARA (AFP) - Baghdad will block any contracts signed by foreign oil companies with Iraqi Kurdish regional authorities, Iraq's Oil Minister Hussein Chahristani said on Saturday.

"All contracts will be handled by the central government," he told a joint press conference in Ankara with his Turkish counterpart Hilmi Guler.

"No contracts signed by any regions in Iraq will be recognised by the government of Iraq. Companies will not be allowed to work on Iraqi territory unless their contract is approved by the central government in Baghdad."

Iraq's parliament faces big challenges revisiting delayed laws, speaker says

BAGHDAD: Big challenges are ahead of Iraq's parliament when it resumes work March 18 and revisits controversial measures including an oil and gas law and a bill to set up provincial elections, Iraq's parliament speaker said Saturday.

A measure aimed at regulating foreign investment in Iraq's underdeveloped oil sector, and distributing its revenues among the nation's Sunni and Shiite Arab communities and the large Kurdish minority, has been bogged down in parliament since February 2007.

Kuwait-China $5bn oil refinery stalled

TOKYO (KUNA): Pollution concerns in the Pearl River Delta region in southern China continue to stall the approval of an evaluation on a planned Sino-Kuwait $5-billion oil refinery and chemical plant, the state-run China Daily reported Friday.

Climate change a new factor in global tensions: EU

BRUSSELS (AFP) - The risks of climate change have turned from a threat to reality impacting the conflict in Darfur, migration from flood-prone Bangladesh and hopes for stability in the Middle East, according to a new EU report.

From Africa to Asia, and from pole to pole, climate change has become "a threat multiplier which exacerbates existing trends, tensions and instability," warns the seven-page report on "Climate change and international security", to be presented to a European summit in Brussels on March 13-14.

Climate Watchers Place Own Big Bet On Alaska's Thaw

The Ice Classic has given them a rare, reliable climate history that has documented to the minute the onset of the annual thaw as it shifted across 91 years. By this measure, spring comes to central Alaska 10 days earlier than in 1960, said geophysicist Martin Jeffries at the University of Alaska, Fairbanks -- and that trend is accelerating. "The Nenana Ice Classic is a pretty good proxy for climate change in the 20th century," Dr. Jeffries said.

The EIA’s latest International Petroleum Monthly came out last evening. I think it came out well after hours so someone must have worked overtime to get it out.

May 05 is still the record but by only 96 kb/d. December 07 total C+C production rose 451,000 bp/d to 74,202,000 bp/d. OPEC production was up by 678,000 bp/d while Non-OPEC production was down 227,000 bp/d. OPEC production was driven by the UAE as they recovered from their maintenance program to be up 417,000 bp/d. Saudi Arabia was up 100,000 bp/d to 9.1 mb/d. Other OPEC producers showed lesser changes with Iraq up 50 and Angola up 46 kb/d. As far as yearly production goes, 2005 is still the high year by half a million barrels per day.

Of Non-OPEC nations Azerbaijan and China had the greatest losses, down 248,000 bp/d and 120,000 bp/d respectively. Canada was down 79,000 bp/d as the third biggest loser. Russia was down another 25,000 bp/d to 9,425,000 bp/d and down 95,000 bp/d since they peaked in October. Reports have them down another 100,000 barrels per day or so in January.

Non-OPEC big gainers were Brazil up 95 kb/d, US up 66 kb/d, Australia up 56 kb/d and Mexico up 53 kb/d. Norway was down a bit and the UK up but the North Sea as a whole was down 29 kb/d.

Looking to January and the rest of 2008, reports have OPEC showing little change in January but down in February. OPEC, in my opinion anyway, is pretty well maxed out. Among Non-OPEC nations the big gainers in the last two years were Russia and Azerbaijan were the big gainers with China not too far behind them. Russia and China seemed to have peaked and I am not sure what is going on with Azerbaijan. Brazil will continue to gain but not any more increases like this past month.

According to the EIA’s weekly reports, the US is down in production in January and February. Though Atlantis is now on line depletion in other areas are offsetting any gain there. It looks like the US will be stuck at around 5 million barrels per day until Thunder Horse comes on line late this year or early next year.

In conclusion I don’t see any huge gains in either OPEC or Non-OPEC in the near future. Non-OPEC production now stands at 800 kb/d below its peak last February. And with the previous big gainers now in decline, we appear to be very near the high water mark. We are still on the plateau but it looks like we may be walking off it soon. I also believe this is reflected in the current price of crude.

Ron Patterson

May 05 is still the record but by only 96 kb/d. December 07 total C+C production rose 451,000 bp/d to 74,202,000 bp/d.

I told you it would be close. They could always revise downward, but it looked to me like May 2005 C+C was in some danger of being broken in December.

In conclusion I don’t see any huge gains in either OPEC or Non-OPEC in the near future.

I agree with that, although Khursaniyah will add a little to Saudi's capacity. I don't see them boosting production when it comes online though.

Other than OPEC, I think most everyone is pumping all out at these prices.

They waited pretty late in the day to release it. It is close.

Agreed. Crude is about at max. All liquids can only rise from other liquids. Peak crude has a good shot of standing as May 2005. Peak all liquids is either here or getting pretty close depending how biofuels plays out.

May 2005 is still not safe but it's very clear now that crude is going to have a rough time breaking that number and even if it does, it won't last. Everyone is maxed out in the petroleum business.

Peak all liquids in 2009, Robert? Or later? What's your gut feel (and NOT a prediction)?

Last check, Ace was predicting Peak All Liquids somewhere around 2009...I think May by his last graph.

2009 - 2010...and All liquids, it's sadly amusing to see how we watch these numbers (me too) all the while, the mess is already unfolding.

I wonder if anyone in the future will care what the final numbers were?

Peak all liquids in 2009, Robert? Or later? What's your gut feel (and NOT a prediction)?

Gut feel? 2009/2010. But we have been solidly in the Peak Lite era since 2005/2006, and for all practical purposes you are seeing what true peak is going to look like. My own belief is that these high prices are a blessing, because they will force us to start changing behaviors pretty quickly. Soon enough? No. But any preparation is better than none at all.

I don't agree with Matt Simmons on his comparison between high gas prices in the UK and the US. Their per capita oil usage is half of ourse. High prices won't impact them as much. We are seeing impacts now, and I believe would see even more significant impacts if people understood that these higher prices are here to stay.

Could we possibly see another peak when KSA brings Manifa online? I haven't followed that closely, I just recall articles about a new refinery due to a seriously sour crude supply (vanadium?) Or will they manage expectations by bringing it online and giving Ghawar a break?

This close, we could see a new peak for any of several reasons. But we are extremely unlikely to come off the present plateau on the upside.

Saudi is fighting depletion from her giant fields while trying to offset that decline with new projects. We may see a bump in Saudi production but the general trend will continue downward. Remember Saudi is still half a million barrels per day below her peak in the summer of 2005.

But with OPEC pumping everything it can possibly pump and non-OPEC clearly post peak, (in my opinion anyway), the best we can hope for is to keep the plateau going for another year or so. We have been on this plateau for almost three years and the non-OPEC plateau has lasted for almost four and one half years. Non-OPEC peaked in February 2007 and we are now 800,000 barrels per day below that peak.

Ron Patterson

But with OPEC pumping everything it can possibly pump...

But of course we now know for certain that this has not been the case. If it was, Saudi production should be falling month after month as fields deplete. The fact that it isn't proves that they have reserve capacity. The only unanswered question is "How much?"

I would alter your last question to "How much of their spare capacity can be processed?" (At a decent rate / EROEI etc..)


Think about your question. Each month, fields are obviously depleting. Each month, they are obviously able to replace that depletion. So all of the spare capacity they have been bringing online can be processed, since their capacity has been steady (after recently increasing) and it is being sold to their customers. If it couldn't be processed, they couldn't sell it.

But "Spare capacity" is the oil they are NOT bringing to market. Spare capacity is what they are claiming they have 2+ mbd of. If it was "spare" then sure as hell the world needs it now at $106 a barrell and sure as hell we have not got the refinery capacity to process this sour heavy stuff they claim as spare.

But "Spare capacity" is the oil they are NOT bringing to market.

They have to bring some of that spare capacity online each month - as fields are depleting - if they are maintaining their production at a steady level. Between February and October of last year, when production was steady over the entire time, they had to bring on enough spare capacity to cover for the fields that depleted over that time period.

But my argument is that there is only so much of that spare capacity that the world can accept due to processing problems so really they are supply constrained which effectively is the same thing as demand constrained, which ever way you look at it. If it was more light sweet they could bring into play oil would not now be at $106 a barrel and Saudis would be pumping more as this is above even their 'desired' price.

If you think about it. If heavy sour is indeed all they can bring into play and the world currently cannot process any more of this stuff then the statement from the Sauids "pumping more would not bring the price down" is in a round about sort of way a true statement. pumping more of what they are offering would help diddly squat.

The only thing I am trying to puzzle out is why so many plans for heavy / sour processing seem to be getting delayed or cancelled.


If you think about it. If heavy sour is indeed all they can bring into play...

I understand that this is your argument, but it isn't accurate. Let's think about what would have happened last year if Saudi had no spare capacity. Saudi production - 8.6 million bpd in February 2007 - would have fallen to maybe 7.9 million bpd by year end (and this was predicted by some here). Instead, production at year end was 9.1 million bpd:


What does this mean? That in February of 2007 they were setting on at least 1.2 million bpd of spare capacity (which if you recall was the argument I was making at that time); capacity they brought on line during the year. What was the quality? Quality that their customers could process, obviously, as they bought it.

And if you look at the quality of crude inputs to U.S. refineries, you see that at least in that case the gravity change over the past 12 months is very small:


In fact, crude in 2007 was lighter than it was 2 or 3 years earlier. So I don't see any evidence of the argument that they only have spare capacity that is heavy and sour. Some of their spare capacity is certainly in that category. But clearly they have been setting on spare capacity that is light and sweet.

Well Robert, at the risk of you crying Troll once again, I would point out that you again are making an argument that is not sustainable by any information that I can locate and certainly not by the data to which you link.

KSA provides about 15% of US imported crude imports and an even lower percentage of the oil inputted to US refineries, given domestic production. Where is there any information on the quality of the KSA oil imported? Where is there data on the quality of the crude supplied by those accounting for 85% of US imports?

If there was a change in the quality of Saudi exports to the US, it could be easily hidden by a compensating change in the quality of the other imported crude (85%) or of domestically produced oil. Even if Saudi exports to the US have not changed in quality, the quality of the rest of their oil production (~80% of total) could have changed. Do you have data that precludes this possibility?

You simply can't conclude, as you do, that "clearly they have been setting on spare capacity that is light and sweet."

As for our previous disagreement regarding the validity of inventory data as a useful indicator, I note with interest that the non-OECD countries are since 2004 accounting for all the increased consumption of oil (complete data only available through 2006, though OECD consumption through to November 2007 is available and it indicates flat to declining consumption). There are some bumps and shifts within the OECD during this period, but nothing that supports the use of inventory data to explain Saudi behaviour, which as I recall is what you try to do from time to time.

There is no inventory data for the non-OECD countries that I've ever been able to locate.

Otherwise, I greatly appreciate most of your posts, especially your ongoing contribution to the ethanol debate.

In support of Roberts I'd say what I call the micro data which is incomplete information is still open to interpretation. If it was clear cut then Saudi Arabia would be under a lot more pressure than they are now.

If we had real inventory problems and say oil was 200 dollars a barrel then KSA claim that the world was well supplied would be met with serious resistance.

Looking outside the monthly data we are clearly in far worse shape now than we where in 2005.

And KSA has not really responded.

Well Robert, at the risk of you crying Troll once again...

If you recall, you were called Troll when you opened up with a gratuitous insult. Challenging my arguments is not what I consider trolling - except when you toss in insults.

KSA provides about 15% of US imported crude imports and an even lower percentage of the oil inputted to US refineries, given domestic production. Where is there any information on the quality of the KSA oil imported? Where is there data on the quality of the crude supplied by those accounting for 85% of US imports?

I almost put this caveat in there. The point is, there is no evidence to support Marco's argument. It is conjecture. Furthermore, 1). We know they brought spare capacity online - spare capacity that I argued at the time (an unpopular argument) that they had; 2). It was obviously good enough for their customers to process, as they bought it. If you can't process it (Marco's question "How much of their spare capacity can be processed?") then you don't buy it.

So my argument is simply that their spare capacity - whether it was of a slightly different quality or not - could all be processed.

There are some bumps and shifts within the OECD during this period, but nothing that supports the use of inventory data to explain Saudi behaviour, which as I recall is what you try to do from time to time.

No you are presuming not only that the hidden inventory information supports you, but that Saudi sells to these customers. As always, the transparent data has favored my argument. Yours relies on the data we can't see. You know which one I think is a stronger argument (and once again, I point out that my predictions on their behavior were in fact correct - which I presume you must think was a lucky guess).

"No you are presuming not only that the hidden inventory information supports you, but that Saudi sells to these customers. As always, the transparent data has favored my argument. Yours relies on the data we can't see. You know which one I think is a stronger argument (and once again, I point out that my predictions on their behavior were in fact correct - which I presume you must think was a lucky guess)."

First of all, Robert, please point to the gratuitous insult you are attributing to me. It isn't my normal practice to give anything away freely, even insults. My memory tells me that I interjected that you were again presuming to use inventory data where it was not warranted.

My argument is not about Saudi behaviour, but about YOUR claim that the data to which you pointed supported YOUR contention regarding KSA behaviour.

Your statement that the transparent [inventory] data has favoured your argument is patently ridiculous in the face of the quality of evidence you have marshalled --vague references to anecdotes regarding non-OECD stocks-- and the quality of your logic, in which you claim that US and OECD inventory levels (as I recall you began with only US data) can explain supplier behaviour in a market in which massive new demand and virtually all new demand is coming from elsewhere.

The problem with your use of limited quality of oil data and limited inventory data in YOUR argument regarding Saudi production history is the potential effect it has on your more reasoned and well-supported arguments, such as on the ethanol matter. It reflects very poorly on you that you make this quality of argument in what seems to be a juvenile pissing contest to establish who is the most accurate prognosticator on TOD. Are readers going to be forced to verify every reference you make, because they have detected elsewhere in your writing a habit of using poor and/or irrelevant data and making spurious arguments with it for seemingly egotistical reasons.

My view on Saudi Arabia is that the regime has every political and financial incentive to mislead the world with respect to their petroleum production capacity, including their domestic population. That doesn't make it so, only likely. Also based on what I read on TOD from people who know a great deal more than myself about oil production, including yourself, I doubt that they will ever be able to arrest the historical transformation situated at the end of the 2 millenium of the common era and rooted in the 'end' of the fossil fuel era. I have concluded that even their capacity to increase their own crude oil production to 2005 levels is very doubtful.

If I was part of Saudi Arabia's inner circle, I would argue that in any case it doesn't matter whether the Kingdom raises production, the tide is not for the turning; the Kingdom should look after the Kingdom's long-term interests. Hoard as much as is sustainable politically and economically: a value that is being actively tested almost daily.

Such behaviour, is in my view, another one many characteristics of the peak oil period, and like the others ultimately attributable to knowledge of physical factors, such as declining resource quality, declining reservoir pressure, etc..

It isn't my normal practice to give anything away freely, even insults.

I am not going to spend time going back and pulling that up. You know there was an insult. Whether you think it was warranted is beside the point. If you open with an insult, I consider that trolling. It isn't necessary, and adds nothing.

My argument is not about Saudi behaviour, but about YOUR claim that the data to which you pointed supported YOUR contention regarding KSA behaviour.

This argument has gotten beyond silly. Of course the data supported me. I showed the OECD graphs. The inventories were at record highs and rising. The OECD makes up most of the oil consumption in the world. The Saudis sell a lot of oil to the OECD. Those facts are indisputable. It makes sense that high and rising OECD inventories mean that their purchases are going to have to slow down (or their sales increase). All you are doing is saying that maybe elsewhere, someone, who may or may not be a Saudi customer - may have had falling inventories to offset the OECDs increasing inventories – and therefore Saudi could have sold to them. That's what I consider a very weak argument. (The anecdotes on non-OECD stocks were not vague, but that's beside the point.) Furthermore, the Saudis certainly benefited greatly from making these moves.

And I note that you can't help yourself, and go right back into the insults:

"juvenile pissing contest" "using poor and/or irrelevant data" "making spurious arguments"

This wastes my time. When you accuse me of making poor arguments, it isn't a pissing contest to point out that 1). I made predictions based on those arguments; 2). Those predictions came true; 3). Those who made arguments such as yourself - pointing out that I was using a partial data set - turned out to be wrong in that Saudi production didn’t continue to fall. Perhaps it is time for YOU to step back and say "Maybe there was more to that than I really understood. Maybe you can gain a lot of information from looking at OECD inventories. Or maybe I am the one who was using a half-baked logic, and I should re-examine where my own argument may have fallen short." Or are you one of those who thinks it is only significant when OECD inventories are falling?

The irony is that you fail to realize that it is you who is engaged in a pissing contest - one in which you have already lost.

You never demonstrated a statistical relationship between OECD inventories and Saudi production. When you provide data which accounts for time lags in information availability, I will believe that you are least trying to do so.

If, a statistical relationship can be established, you have to demonstrate that it is not accidental. You have not done so. Among other things, you have to provide some evidence that any growth in OECD inventory is not a result of a new attitude towards reliability of supply (cost of supply disruptions, etc) and that the Saudis were unaware of this shift in attitude, if it indeed occurred. I recall referencing at least one industry analyst who claimed that such a shift in attitude was the case.

You have to demonstrate, that the Saudis considered growth in demand from the non-OECD countries (1 million b/d in 2005 over 2004, 1.3 mbpd the following year) to be temporary or irrelevant, or at least try to explain why their production behaviour appears to be completely disconnected from the reality that demand growth in world markets is overwhelmingly accounted for by non-OECD countries.

And I could go on.

You appear to believe that to challenge the validity of your assertions, amounts to an insult. You might want to think about that.
You also appear to deny a personal predilection for pissing contests, and then go on to declare victory.

You never demonstrated a statistical relationship between OECD inventories and Saudi production.

You really crack me up. Sit in the popcorn stands, never show even a tiny sliver of data yourself, and heckle me when I showed 1). A graph of OECD inventories that supported Saudi's claims; and 2). I accurately predicted Saudi's moves on the basis of those trends. What was your prediction? Oh, I am sure you were one of the masses who expected Saudi production to fall all year. Right?

Tell you what, Champ. You win. You know all about inventories. You are the best at interpreting invisible evidence.

Here are two 25 minute interviews with Matt Simmons. They are about 6 MB each.


They shocked the hell out of me. It is startling to come to find what many of us have been expecting is indeed here, now... and the really scary thing is the "new and improved" oil well extraction methods he speaks about, prolong the output volume but at the cost of severe depletion rates once the end nears. So, this means we will go along business as usual and all of a sudden, depletion hits hard and fast... add to that our nation's essential bankrupt financial status and climate destabilization and... even after being at this place for 14 years now and all that I have done (solar PV, solar hot water, super insulating the now zero energy house, heat pump, greenhouse, large garden, increasingly larger orchard, 50 MPG Prius) I still feel very uneasy about what is coming.


Damned ! Twilight in the desert part 2: Nightfall....

Meanwhile, the ELM marches on.

Saudi net exports fell at about -5%/year in 2006, with the 2007 net export decline rate probably doubling to about -10%/year.

The Saudis produced 11.1 mbpd total liquids in 2005. I estimate that if they wanted--and were able--to match their 2005 net export level, they would have to boost 2008 production to about 11.7 mbpd.

In any case, the key question regarding the apparent 2005 Saudi crude peak is whether they will ever again match or exceed 9.6 mbpd (C+C) on an annual basis.

Just ran some Top Five Net Exporter numbers. Assuming that total liquids looks like C+C, and assuming a +5%/year rate of increase in consumption, the top five net export numbers would look like this (EIA, Total Liquids, estimated for 2007):

2005: 23.5 mbpd
2006: 22.7 mbpd (-3.5%/year)
2007: 21.7 mbpd (-4.5%/year)

One of the oddities of Net Export Math is that the net export declines tend to approximate a linear decline, i.e., an approximately fixed volume per year (which is an accelerating decline rate). If we average the 2006 and estimated 2007 declines, we get -0.9 mbpd. If we divide the 2005 peak by 0.9 mbpd, we get 26 years of remaining net exports by the top five. 2005 + 26 = 2031.

Our middle case projection for the top five collectively approaching zero net exports is 2031:


Am I correct in describing ELM as 1.) declining stock leading to 2.) swiftly rising prices causing 3.) more domestic use because they have need for it and means due to rising prices?

I need to do an ELM page for our FAQ ... http://strandedwind.org/FAQ

The ELM is a simple mathematical model with the following conditions at peak production:

Production = 2 mbpd
Consumption = 1 mbpd
Net Exports = 1 mbpd

Production declines at -5%/year, and consumption increases at +2.5%/year. This sounds relatively benign, but it results in a vicious--and accelerating--net export decline rate, with net exports hitting zero in 9 years, and with only about 10% of post-peak production being exported.

The three key factors are: Consumption as a percentage of production at peak; the rate of change in production and the rate of change in consumption.

I have suggested Phase One and Phase Two net export declines.

Phase One: The cash flow from export sales increases, even as export volumes go down, because of rising oil prices.

Phase Two: The cash flow from export sales goes down, because rising oil prices can't offset the decline in production.

We would expect to see a positive feedback loop in Phase One declines in exporting countries, which would cause the rate of increase in domestic consumption to accelerate.

I hope I'm not lying too much here ... feel free to correct me:


I have reworked it as follows:

We have seen discrete regions, such as the US Lower 48, peak and then show a gradual decline in production. However, once oil exporting regions peak and decline, the resulting net export declines have tended to be very sharp.

The Export Land Model (or ELM) is a simple mathematical model, proposed by petroleum geologist Jeffrey J. Brown, which assumes that a region--producing two million barrels per day (mbpd), consuming one mbpd and exporting one mbpd--peaks and then shows a -5%/year production decline rate, with a +2.5%/year rate of increase in consumption. This results in an overall net export decline of close to -30%/year, hitting zero net exports in nine years. The UK and Indonesia showed similar declines, hitting zero net exports in seven years and eight years respectively.

Current data suggest that world crude oil production may have peaked in 2005, and we have seen two years of slow declines in crude production, based on EIA data. However, the available data indicate that the top five net oil exporters--Saudi Arabia, Russia, Norway, Iran and the UAE, accounting for about half of current world net oil exports--are on track to approach zero net oil exports around 2031.

The expectation of a bidding war between importing countries for rapidly declining net oil exports is why we must build wind driven ammonia for fertilizer and fuel as soon as possible; we're energy hogs and we're going to be priced out of that market.

The full details of the Export Land Model were first aired on The Oil Drum in this post by Brown himself.

An Introduction to the Export Land Model

Does this meet with your approval?


And way below the November 1980 peak of 10.414 MMBPD.

Everyone kinda forgets that 2005 looks more like a secondary peak rather than the primary.

You would probably appreciate the fact that Al-Naimi almost certainly took classes from M King Hubbert. Probably one of the most significant events of the 20th century in my opinion.

The fact that the EIA report was released late Friday evening is consistent with the Bush Administration's policy of releasing unpopular news or decisions in that time frame, as far from market reaction as possible.

Based on production data through 2005, in the following article we supported Deffeyes' work on world crude oil production and we noted that Saudi Arabia was at about the same stage of depletion at which Texas peaked (using the total Texas data set):

Texas and the Lower 48 as a Model for Saudi Arabia and the World (2006)

Following are initial two year exponential annual decline rates for four regions:

Lower 48 (post-1970): -0.8%/year
Texas (post-1972): -1.3%/year

World (post-2005): -0.3%/year
Saudi Arabia (post-2005): -4.9%/year

The long term Lower 48 decline rate has been about -2%/year, for Texas about -4%/year.

Although it is true that December lags the record by 96,000 barrels daily, Azerbaijan fell by 248,000 as you point out.

I believe (but can't verify directly) that there is maintenance going on at the ACG megaplex as they get ready to put phase III (deepwater Gunashli) on-stream. Production fell from 1.005 million b/d to 0.757 million b/d in one month, which points to a restructuring in their production infrastructure.

Azerbaijan will likely be around 1 million b/d this year, which includes an additional 120,000 from the ACG.

Speaking of the FSU, Russia can not be said to have peaked based on 4 months of EIA or IEA data (total oil, including NGLs).

If OPEC keeps up their current production level, the May '05 record will likely be broken later this year, as I have expected all along. That's no big deal. I do not expect to see 75 million b/d (C+C) this year.

See my article These Are The Good Years for a detailed analysis of the EIA's non-OPEC outlook for 2008/2009. Overly optimistic, as usual.

-- Dave

Regarding Russia, based on EIA (C+C) data, they have been between 9.4 and 9.5 from October, 2006 through December, 2007, and since May, 2007, excluding Sakhalin One, their production has been showing a year over year decline.

Speaking of the FSU, Russia can not be said to have peaked based on 4 months of EIA or IEA data (total oil, including NGLs).

I would never base anything on only four months data. What I am basing it on is reports out of Russia that they expect a flat to down year in 2008. Over the last several months I have seen a number of articles such as this one:

In 2008 the project Sakhalin-1, run by American Exxon Mobil, will reduce oil production more than by 25% due to the exhaustion of oil field, RIA Novoati reports. In 2007 in the framework of the project there was produced 11.2 mn tons of oil.

That is an expected drop of 58,000 barrels per day just from one field! A 25% drop in one year due to depletion is absolutely alarming. And Sakhalin-1 is a new field, reaching peak production in 2007.How many other Russian fields are about to decline at that rate?

Ron Patterson

Sakhalin-I peaked in 2007 at 250 k b/d. It will be about 200 k b/d in 2008, which was anticipated.

FYI, Sakhalin-II will soon have year-round production. Up to now, production stops in December each year for six months due to impossible weather conditions. But a new pipeline is due to change that.

I'm not trying to be difficult, Ron, but you can't base Russia peaking on an expected decline at Sakhalin-I, which is deep offshore while ExxonMobil is drilling record-setting wells to produce more at the Chayvo field. Almost all Russian production is onshore.

So, what else do you got on Russia production declining this year? If I've missed something, I'd like to know about it.

-- Dave

Dave, I news.google search every day and post some, but not all, on this list. Both Jeff and I have posted many of those pessimistic Russian predictions here. I don't have time to do a search and dig them all up again but just a quick search found this:

Russia oil firms need to shape up to grow abroad

Depletion of oil and gas resources means that far more efficient cost management and more investment in exploration and new production is necessary if Russia wants not only to grow but even to maintain its current level of production.

Oil and gas production is expected to remain flat in Russia in the years to come.

And this is one of the more optimistic reports. However you may have a different opinion, and I respect that. I think we will just have to wait and see. But I would bet good money that the trend will continue downward as it has for the last four months.

Ron Patterson

I don't know quite where this comment belongs in the general thread concerning the EIA monthly report, but here goes my humble offering. I tend to think that the Energy Watch Group report on oil supply projections that was released last October is correct, and that we are already past peak worldwide. I know that this differs sharply from the IEA monthly reports from October 2007 to now, but I think that either the IEA is lying, or the countries which report to the IEA are lying, or their data collection process is faulty. From here on, I am only going to accept the figures from the EIA. Also, even though OPEC "officially" left production unchanged at their recent meeting, I seem to remember reading that actual OPEC production figures show a decrease of around 200K barrels/day in February. I think that by the end of this year we will have conclusively fallen off the bumpy plateau, and that reporting agencies will not be able to cover it up any longer. I am not a technician on the order of many of you, but I would appreciate your comments. Am I off base in believing this?

Anyway, this afternoon I am headed to a few stores to pick up mulch, food storage containers, and other odds and ends useful for surviving a sudden hard crash...

Next month at the EIA Energy Conference, I'd like to find out what medication they are using. I looked at the preliminary AEO that was released last week and wondered just where they think all this increased oil production is going to come from.

Just for fun I went back to their 1997 document to see how they did and the 10 years really worked out...You guessed it, overly optimistic.

"Food crisis will take hold before climate change, warns chief scientist· Pressures from population growth and affluence"


"In his first major speech since taking over, Professor John Beddington said the global rush to grow biofuels was compounding the problem, and cutting down rainforest to produce biofuel crops was "profoundly stupid"."

Good, the food 'crisis' will finally alleviate the real crisis the world is suffering: obesity.

Obesity 'is challenge for world'

More than a billion adults around the world are currently overweight, and at least 300 million of them clinically obese. Those figures could more than double by 2015, with Asian populations, who are especially prone to putting on abdominal fat, especially at risk, said Prof James.

Being obese is a major cause of ill health and greatly increases the chances of suffering high blood pressure, heart disease, diabetes and cancer. Globally the number of people with diabetes is expected to double to 366 million by 2030, said Prof James.

Good, the food 'crisis' will finally alleviate the real crisis the world is suffering: obesity.

Lots of people don't suffer from obesity. So a food crisis may see obese people slimming down, and slim people dying. Personally, I don't have as much of a problem with obese people as I do with slim people dying. Of course I say that as a slim person.

The poor are the obese ones these days because they can't afford personal trainers and gym memberships. A food 'crisis' if it exists would be a helpful thing.

By the way, why doesn't anyone ever talk about all the farm acres that would turn to food production in the event of a real crisis? The US alone has over 300,000 acres devoted to tobacco farming. The rest of the world has 100s of thousands of acres too. This would not exist if there is a food crisis.

There is no crisis and the third world has the same obesity problem we have.

Obesity is a sign of poverty.

The human is genetically programmed to
absorb and retain all fats, sugars, and salts.

Deriving from the fact that pre civilization
all three were hard to obtain.

Indigenous peoples especially bear this
point out.

The link to poverty?

In our time, fats, sugar (corn syrup),
and salt are in all "cheap" fast foods.

Fruits, veggies, proteins are expensive,
take prep time or are not available.

70% of California kids have rotted teeth.

FOXNews.com - Survey: 'Startling' Number of Parents in Denial That ...
Dec 26, 2007 ... Among parents with an obese, or extremely overweight, child ages 6 to 11, 43 percent said their child was "about the right weight," 37 ...
www.foxnews.com/story/0,2933,318391,00.html - 49k - Cached - Similar pages

Overweight Kids Often Become Obese, Unhealthy Adults
Dec 5, 2007 ... In the United States, 19 percent of kids between the ages of 6 and 11 are overweight. Being overweight or obese puts you at risk of heart ...
health.usnews.com/usnews/health/healthday/071205/overweight-kids-often-become-obese-unhealthy-adults.htm - 21k - Cached - Similar pages

USC report finds obese, overweight kids more likely to live in ...
Sep 14, 2007 ... USC report finds overweight, obese kids more likely ... Rural children (16.5 percent) were more likely to be obese than urban children (14.4 ...

If Gary Taubes (Good Calories, Bad Calories) is correct in his analysis of nutrition research, the obesity problem (epidemic?) is largely due to an imbalance in diet favoring sugars and processed carbs and a much higher carb to fat ratio in the diet.

Protein and fat are nature's 'premium' foods and we would likely be healthier and less inclined to obesity with a higher ratio of these in the diet. Unfortunately, these are the expensive foods both in $$ and in energy.

A decrease in food supply will likely lead to the counter-intuitive result of increasing obesity as people go for the cheaper carb calories.

It's unfortunate that you, as do many others, believe Poverty has much, if anything to do with money. It is all about education, and that cost nothing, in the truest sense of the word.

Or should I follow the Dogma of the Politically Correct as You do.


If you are making the case that obesity is a function of poverty, why don't you post some data that show this relationship directly. Eating good food at home is much cheaper than eating junk at MacDonalds or other similar places. I used to do a lot of work with Southeast Asian refugees, mostly poor, often on assistance. They ate very well, with healthy, delicious food. They would get fruit that tasted great but didn't look fabulous. They would get 100# bags of rice. They would cook whole chickens, not parts. They grew or bought from farmer's markets many different fruits and greens. Meat and fish would be in modest portions with vegies, sauces, broth and eaten with rice. Yum!

Your statement would imply that we should be seeing skinny people at MacD's, Taco Bell, etc and fat ones at home because they can't afford to eat out. THis has not been my observation. The problem is food is very cheap here and people have forgotten how to prepare it. Processed foods are flying off the shelves, poor people and the rest of us eat them because they are easy and appealing, and they are basically cr#p.

I had a homeless cousin, wouldn't accept handouts, he was very thin (no drugs or alcohol). He would wander and collect cans. He had disdain for many of the panhandlers who were not thin. "They're not hungry" he would say. He felt they were just scamming. No one was poorer than he and he had no fat on his body. When he ate, his activity burned it off.

When he ate, his activity burned it off.

Numerous studies on both rats and humans show that this is not true in the general case. It all depends on how your body metabolizes the food you eat. If you eat a lot of carbohydrates, especially sugar, your body stores the food as fat, even when it is needed for energy. This causes the obese rat/person to consume muscle tissue, even as the body is storing fat. There have been experiments on obese rats in which the rats starved to death, even as they gained fat tissue.

The idea that the body is a simplistic eat-more/gain-more-weight machine is simply untrue. The body is homeostatic. If you eat less, your metabolism slows down. If you eat more, your metabolism speeds up, unless you eat a lot of refined carbohydrates, in which case you become hyperinsulinemic and insulin resistant, which causes the body to store food as fat rather than deliver it to muscles for energy.

The conventional wisdom on obesity is unsupported by the scientific evidence. Read Good Calories, Bad Calories to understand the science behind obesity.

I wasn't wanting to imply the simple ratio. In his situation, he didn't eat much, and he walked 8-9 hours or more a day. But you don't find obesity in the third world farmer, even if their dietary calories are almost entirely white rice.

sorry it's been proven that when your body needs energy it turns to fat for energy and muscle for water(if your also unable to get water). fat is not stored and then left there.

Hey Slim, I would worry more about the thick factor if I were you! ( BRB ... barracks room banter and therefore not to be taken seriously:)

I don't think the problem is the excess of food, but an excess in the wrong kind of food fueled by a corn based agricultural system, especially garbage like corn syrup. The wrong kinds of foods are subsidized which should be reversed so we encourage fruits and vegetables and not so many grains and meat.

Obesity should, however, put a small dint in the population problem.

the real crisis the world is suffering: obesity

Well, I must say, I don't suffer being obese...I enjoy every minute of it! Good dark microbrew ales and porters, thick grass-fed steaks on the BBQ, pasta carbonara with fresh backyard eggs and locally raised bacon, winter kale from the garden braised with butter and home-grown garlic...yum. Anyway, it's not fat...it's stored energy that can't be (easily) looted or confiscated.


And hey, it might even be good for you. I happened to come across this article a few days ago:

Fears of a fat planet overblown, skeptics say

In 2005, Katherine Flegal of the United States' Centers for Disease Control and Prevention published a study in the Journal of the American Medical Association, finding that overweight people typically live longer than normal-weight people. More than a dozen other studies have come to the same conclusion.

Outrage ensued. Prominent health experts called the research flawed and worried that people would gleefully supersize their meals.

"I think some experts found it disturbing that we actually said that overweight people have a lower death risk," Flegal said. In other research, Flegal and colleagues found there to be almost no link between death rates and weight.

With all due respect to the good Dr.

Obese people have all sorts of health issues and quality of life issues that are unique and expensive.

One of the reasons they don't die faster is because we spend so much more money on them keeping them alive with compounds and surgeries.


But this will all sort out. No society can have 40% of its population obese for long. And the next generation is starting obesity in childhood, which should explode diabetes just fine.

If you read the article, you'll see that one of its points is that "overweight" is not the same as "obese," though the two categories are often lumped together. And that the so-called obesity epidemic may be overblown.

Since reading Good Calories, Bad Calories, I've become a lot more skeptical about the conventional wisdom of health and nutrition.

No, I don't think there's any intention to deceive (though the article points out that there's a lot of profit to be made in the obesity industry). Rather, whenever human health is involved, science is suspect. You can't do the kind of experiments on people that you can in other areas. Correlation is not causation, and it's hard to tease the two apart when you're dealing with human health.

I did read it Leanan, at the risk of my head exploding.

These articles conflate so many orthogonal concepts simultaneously, I wonder if they use some sort of word blender? What is the purpose of this article except to make the reader feel better?

Oliver is a political scientist. Not a researcher, not a doctor.


Adults who are overweight or obese have substantial medical care expenses: in 1998, the direct medical costs of obesity accounted for 9.1% of all U.S. medical expenditures.

(That's something like 1.2 trillion dollars!).

Not to pick on middle-aged women, but this is just one study of hundreds on cohorts of people. Large studies, done by real researchers, not poly sci majors:

We estimated that when compared with the non-overweight cohort of 10,000 women, the cohort of 10,000 women who had a BMI of > or = 29 incurred excess costs of $53 million over a 25 year period (discounted at 3% per year) and 497 excess deaths. The cohort of 10,000 women who had a BMI of 25-28.9 incurred excess costs of $22 million (discounted at 3% per year) and 212 excess deaths, compared with the non-overweight cohort. CONCLUSIONS: The results of this study indicate that an estimated $16 billion will be spent during the next 25 years treating health outcomes associated with overweight in middle-aged women in the United States. Thus, a substantial health burden is associated with the increasing prevalence of overweight women in the United States.


One reason the stats get weird around morbidity is we, as a society, spend so much darn money saving peoples' lives when they go off edges of reasonable health practices. But the costs betray the real energy society allocates to compensating for poor eating habits.

incurred excess costs of $22 million (discounted at 3% per year) and 212 excess deaths,

Yes, but how much money did the 212 lucky winners of the excess death lottery save us? You die 10-20 years early, you save lots of money.

If they really wanted to get serious about reducing health care costs, they need to get the whole population smoking. Think how many trillions we can save if most people die in their 50's.


I wanted to thank you for bringing my attention to that book. It was a real eye opener, an amazing read.

There does seem to be a moralizing streak about weight, especially in America. If you are not thin, you are a glutton, and so you must suffer for the sin of gluttony. The idea that it might not be so bad to be overweight is very hard for the moralists to accept, and the same goes for the idea that you can lose weight without discomfort by eating fewer carbohydrates.

Glad you liked it. I really think Good Calories, Bad Calories will prove to be the first marker of a paradigm shift. (Assuming the world doesn't collapse into Mad Max barbarism first, of course. ;-)

And now it seems like every other day, there's a report about how cholesterol-lowering drugs don't work, but they can't figure out why...

I think Good Calories, Bad Calories is one of the books that Michael Pollan (of Omnivore's Dilemma) cites in his latest book regarding institutional lipophobia. But he also warns against using that as an reason to do the same with carbs.

The book is an expansion of this essay:


His own diet suggestions dovetail nicely with an ELP program. ;-)

Pollan spoke at Stanford to a overflow audience Monday night.
You are right, he is very skeptical of "nutritionaism".
If you get a chance to see him do his thing in person, I highly recommend it.

Leanan, I'd like to thank you too. Great book. I don't think I'll ever look at 'mainstream science' reporting without a large dose of skepticism. Unfortunately, I'm afraid Taubes book wont appeal to a very large audience. This book points out people much prefer hype to boring old facts.... Sound familiar to anyone here at TOD... I have difficulty recommending it to others unless I know they are a science geek like me.

As a thin person I'd like to particularly like to second this comment, both the thanks and the moralism part - I also read the book after seeing the another discussion of Taubes' work on a Drumbeat. I've been a vegetarian in the past, but never been entirely convinced that it was the healthiest way to eat. I first heard about the Weston Price society a decade ago, and upon reading some of his findings I figured that there was something to it... I have NO sweet tooth at all (I have never much liked sweets), and while I tried not to blame people who put on pounds for doing so, I unconciously did until I read Good Calories, Bad Calories. Now I'm totally convinced it is sugars and carbohydrates that drive weight gain.

I read, "In Defense of Food" by Pollan too. His footnote critical of Taubes' work falls down in my mind because Taubes does not prescribe a specific diet. He doesn't even say, "eat less carbs". All he does is present the evidence that has thus far been gathered and then call for a rigorous test of the carbohydrate hypothesis. If such a test is done and the results are inconclusive, then I'll buy Pollan's argument... And I even agree with much of what Pollan had to say about obsessive nutritionism, bla, bla, bla.

As an experiment I tried cutting almost all carbohydrates out of my diet. I'm 5'10" and 148 lbs, so I'm skinny to start with. In two weeks I was down to 142-143 without so much as a pang of hunger, and it just so happened that I had my blood drawn for my annual health screening after about a week on the very low carb diet. My doctor told me that I had "perfect" cholesterol (low triglycerides, good HDL/LDL ratio, and low total). In an effort to read more widely I've googled numerous articles and time after time I find that reducing carbohydrates in the diet improve serum cardiac markes associated with heart/vascular disease. And while on the cholesterol topic I should mention "The Cholesterol Myths" by Uffe Ravenskov. The link between cholesterol and heart disease as tenuous at best, so even if I didn't have "great" cholesterol numbers there is no way in hell I'd go on a medication to lower my serum cholesterol.

I agree completely. We also confuse weight and fitness. A fit person who is "overweight" has a better health outcome than a completely out of shape thin person. However, it is difficult for a very obese person to achieve fitness. It drives me crazy when a person trying to lose weight gives up on exercise because the scales aren't showing the pounds melting off. That shouldn't be the point in the first place. We are a sick society when it comes to food, weight and activity.

I'm part of that 40% that are overweight ... 1.82 meters, 84kg in this photo, so (84/(1.82^2)) = 25.4, and the proper male body mass index is 23.0 - 25.0. There is overweight and then there is overweight

Note that doing epidemiology on weight is notoriously difficult because the question you want to answer is "To what extent does weight level THAT'S NOT A RESULT OF ANOTHER DIRECT CAUSE affect mortality rates". But some medical conditions cause weight loss (or more rarely gain), some things like smoking affect appetite, etc. The very first studies back in the fifties had a very strong "extra weight is decreases mortality" correlation that became very much more minor when smokers were removed from the cohort. Studies now control for smoking but it's incredibly difficult to decide if, say, some disease would have had an effect on weight in some way significant enough to warrant removal from the study.

It may well be that being above average weight is beneficial, but all the studies so far are inconclusive.

Well, yes, and that's precisely the problem. Since the studies are statistically dubious, there's no possible excuse for all the moralizing that goes on over weight. If weight were the earth-shattering problem that the moralizers make it out to be, it would have been blindingly obvious long before now. Clearly, the source of the moralizing is nothing to do with any genuine concern about peoples' health and everything to do with bloated governments overstuffed with overpaid elf'n'safety jobsworths who have nothing better to do than capriciously boss people around.

There is a hell of a lot of money being made in the business of weight loss-if this money making opportunity didn't exist, all the media surrounding body weight would quiet down pretty quickly. Like everything in the USA, it is all about the Benjamins.

You will suffer when it becomes too difficult to scratch your own ass.


I guess I am only over-weight/obese not "morbidly obese"...ass-scratching/shoe tying; no problem! Besides, if you are thin, you really can't take in your belt very much...I can probably manage ten one inch notches before I hit hips...by the time I look like a cadaver, all the skinny folks will BE cadavers!

"I'm not fat; I'm big-boned" Dennis Leary

Not so. They will be still able to catch their food:-)


Yeah, I suppose. But the trigger weight on my air-rifle is only three pounds...even my fat lazy ass can manage that. The squirrel I shot off the power line yesterday ran way faster than me; speed did not help him much. Plus, a net and some patience gets me a nice fat muscovy drake out of the backyard which gets turned into Duck and Andouille gumbo; see, it all comes back to eating too good! ;-)


I have some very good news in this area - we're working on a 200+ MW wind farm and we're going to use it to drive a 50kton - 75kton/year ammonia facility. One of the surprise (to me) benefits came up the other day ...

The process guy says "Where will the 200 employees for the greenhouse operation live?

I say "What greenhouse?"

He says "The one you'll feed with the 23mBTUs of heat coming off the ammonia plant."

I say "You must have mistyped, you meant 20 jobs."

He says "Nope, I meant 200."

That is a crazy big employment win for a town of less than 1,000 and our economic development people are ecstatic over 50+ decent paying plant operator type jobs and 200 hourly jobs. We're planning on running buses to two local population centers - a 9:00 - 3:00 "mommy" shift, and then the same buses will do a 4:00 - 8:00 high school kid run.

The market has room for ten of these things just in Iowa just for corn fertilization and if we expand to using ammonia as fuel we'll see a 5x or greater expansion. I don't know how many Iowans get fresh vegetables year round from 200 acres of organic hydroponic growth but I feel its a huge step in the right direction, keeping our eating standards high, increasing local employment, and dropping food miles traveled dramatically.

And they're building these things in your area, too - they're going to trickle charge an ammonia storage facility and use it to fuel a peaker style generating plant, firming hydroelectric storage. If people in your area get after industry to start using ammonia as a fuel you guys will see similar year round green house operations ...


Why not use that left over thermal energy for district heating?

While you are at it, why not plan to build some "company" housing that is super efficient and solar heated? I like the idea of building 2 story row houses aligned east-west with south wall solar collectors and solar thermal hot water on the roof. The shared walls reduce the energy losses and building row houses minimizes the land per house. Please don't waste any more of that good Iowa farm land building one story cracker boxes on 1/2 to 1 acre lots! You might get some funding for a eco-friendly green development. With people living this close together, the transport situation would be much easier to cope with. Add a small local store nearby and you've got the beginnings of a village.

E. Swanson

There is a potential to build a similar setup in Superior, Iowa, less than a thousand yards west of the town of 142 people colocated with an existing ethanol plant. There has been some discussion about piping the waste heat to the roughly seventy homes nearby but there is some sort of barrier - long term contracts with ... the municipality(?) I'm not totally up on that.

The home heating scheme won't work here because the plant must be built on top of the wind farm to avoid the $0.02 to $0.03 in T&D charges per kilowatt hour for the electricity. This means it'll be six miles away from town. I imagine the greenhouse will have a dorm type arrangement available - it isn't unusually for a bus stopping snow storm to blow up quickly. They won't build housing there, they'll run buses to the two population centers, one roughly ten miles south of there, the other fifteen miles northwest.

Here is a KML file - the land around the chicken confinement is the most likely candidate for ammonia & greenhouse duty.


Well then, build solar heated dorms or slightly larger spaces like a solar heated motel with one bedroom and private bath. That might be a good start for people moving into the area that needed a place to live during the transition. I suspect that some people might find that they didn't want to stay at the job, after trying it out. Turnover is likely to be a problem out there in the middle of Small Town America. I would bet that the greenhouses might be rather seasonal anyway, with too much heat in summer and not enough in the middle of winter. The waste heat from the ammonia plant could heat the living quarters during the coldest months or on cloudy days when the solar wasn't available, and in summer the thermal energy could be used to drive AC systems.

Whatever happens, keep up the good work.

E. Swanson

Location? Location? Location? This wind-NH3-greenhouse combination is fascinating.

Tipper, this is incredibly interesting. Do you have some links that I could learn a little about it? Somehow, this whole ammonia, thing, has flown completely under my radar.

The genesis of my interest in this can rightly be credited to user nh3, and the techies working on the details are present due to the machinations of a fellow named Jerome, whom some here may recognize :-)

The details I have accumulated can be found at this URL:


On the left you will find a FAQ, external resources, etc. It isn't massaged into a coherent message yet, but its only really been moving as a web site for about two months. So please pardon the mess during our expansion and do have a look around.

The 'middle class' of the world is growing at a rapid pace as pointed out by this article posted at Automatic Earth...Can the World Afford A Middle Class?...'Homi Kharas, a researcher at the Brookings Institution, estimates that by 2020 the world’s middle class will grow to include a staggering 52 percent of the global population, up from 30 percent now.'


'The middle class will almost double in the poor countries where sustained economic growth is lifting people above the poverty line fast. For example, by 2025, China will have the world’s largest middle class, while India’s will be 10 times larger than it is today.'

Homi Kharas and I differ about the increase in middle class being a 'good thing'...Unless Homi is hoping for a 'fast collapse' scenario...


Our local gas station ran a nostalgia special from 15:00 - 17:00 yesterday - all you can pump for $1.99/gallon. I guess they were mobbed. Had I had the time I should have filled a few more gas cans, but life took me other directions.

Maybe they'll do it again next year ... with a nostalgia price of $3.99/gallon up to the limit of one's ration card?

A BTW from Leanan's Drumbeat above-Canadians are allowing "mysterious" problems
not to be reported?

" In addition to several local service stations, fuel shortages have also been reported at Esso stations in B.C., Saskatchewan and Manitoba.

"Nothing has changed. We're still working on addressing the issue and fuel shortages will be sporadic," Imperial spokesman Gordon Wong said yesterday.

Imperial -- Canada's biggest oil producer and refinery -- has be reducing the amount of fuel sent to its retailers since Feb. 24.

Yesterday Wong again declined to offer any details on the nature of the problems at the refinery."

"Wong said Imperial is looking at several options to tide them over during the shortage, which could include shipping gasoline from other areas of Canada and from the United States."


Other than that, gasoline is plentiful?

Something astonishing! Average all liquids production for the last three years has been almost exactly the same! Yearly all liquids production in thousands of barrels per day:

2005 84,631
2006 84,598
2007 84,635

2007 wins the horse race by a nose, 4 thousand barrels per day.

Ron Patterson

With the way inflation is going, rather than burning oil it might just be cheaper to burn dollar bills.

That raises an interesting question.

What is the EROI of a dollar?

I guess it depends on what sort of combustion is used, and what the final work product is.

At what point to the Europeans and oil exporters start using dollar bills as toilet paper?

Geez, that one is easy - after they've been circulated enough to be nice and soft. Oh, and do ignore all the studies on bacteria found in paper currency if you feel this is in your future.

With the way inflation is going, rather than burning oil it might just be cheaper to burn dollar bills.

I very much hope they make new dollars edible to render them inflation proof.


"I very much hope they make new dollars edible to render them inflation proof."

We are fast approaching that point: have you priced a box of ice cream cones lately?

All that is required is to change the injection molds so an image of George Washington appears on the cone's exterior.

Damn hard to carry in your wallet. :(

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

Indonesia was once the largest exporter of LNG in world; currently their LNG export capacity is in a long term decline.


Indonesia has been considering plans to build regasification facilities for LNG import to some of their areas. Natural gas is cheaper than gasoline per BTU as a transport fuel. In the United States some metro area public buses used natural gas. UPS had the largest private fleet of natural gas powered delivery vehicles. As oil peaks, associated gas production is expected to peak in parallel. More non-associated gas production will be needed to keep natural gas production from declining.

To Whom it may concern,

In the recent past, someone made a comment on the drumbeat about needing enough corn to feed a person for a year, to fill one SUV gas tank with ethanol. Ron Patterson (Darwinian) asked for some references, and someone posted 3 links. Does anyone have those links bookmarked, or know them? If so, could you please post them here, or email them to the address listed in my profile? It would be much appreciated.


Information acquired. Thank you.

A bushel of corn makes three gallons of ethanol, per a recent ethanol plant open house I attended. So 56 pounds corn per bushel times five three gallon increments to fill a typical SUV tank is 280 pounds of corn or 3/4th pound per day. This is enough for carbohydrate calories for a human and another tank would contain the needs for three or four free range chickens.

Re: Matthew Simmons

This is the umpteenth time Simmons is scaring reporters with $300+ barrel prices. Problem is he's comparing crude oil with finished products but does that in a way that fools most of the audience, including (as you can see) CNBC's Erin Burnett.
I don't think he's doing a service for himself since years from now people will refer that Simmons said oil will cost $300/bbl, when in fact he was referring to finished products. I don't really know why he's parroting this message, guess it's because of the shock value and that most people are easily fooled. Nobody else is comparing the price of a ton of pulpwood with a ton of Stradivarius violins..

Possibly you missed his point.

He's saying oil will rise in price until people use less. They aren't using less at an equivalent cost of $378/barrel in Britian, and neither (he suspects, and I agree) will we.

The really disappointing part was his rap on Club of Rome, which I won't even give the glory of a repeat. He must have to say stuff like that for all his macho consumption friends.

Simmons is a hero for saying anything at all. With what he knows and knew he could just as easily have made a few billion dollars and kept quiet. What he's doing now has to be much more tedious.

We're not used to it, but sometimes Really Rich People will try to give back to society before dying. I think he's one of them.

How high can oil go?

For Canadian $, about $600.00 per barrel. At that price the cost of a barrel of oil is equal to the GDP value created by burning the barrel.

You can calculate the energy in each dollar by dividing the GDP of a country by the Mtoe (millions tons of oil equivalent) used by a country. And then convert Mtoe to barrels of oil. I happen to have the numbers for Canada handy. Feel free to add other countries.

Mtoe of all energy sources used in Canada from the BP statistical review 322e6
GDP from Canada stats web site 1.4e12
7.3 barrels per ton.

= 612 Can $ per barrel of oil. (Granted, this is a super rough measure).

If the price rises above that value, then Canada would be exporting energy in dollars for every barrel purchased.

$100.00 barrel oil is only 1/5 the GDP value of the energy in the barrel. There is still 4/5 to be used by the importing country. This is why ELM happens. It is always worthwhile for an exporting country to find a way to get the whole 5/5 of value out of a barrel of oil instead of settling for 1/5.

Interesting I came up with between 600-800 trying to include some inflation effects a while back. I figured it on a personal use basis but that that point most of the use cases for oil don't make a lot of sense. I think this is just a micro version of your GPD calc. Good to see someone get a similar number a different way.

Also I that point oil would cost the same as edible vegetable oil in todays dollars so whatever use cases remain substitution using other organic products vegetable sources coal etc are viable. And I'd assume that the volumes needed would decline.

On one hand it looks like oil or substitutes would be available where needed but the real economy under these conditions would be a lot smaller than today in my opinion
maybe 50-75% less. So what your missing with these numbers is how much the economy would have to shrink to handle these prices.

Yes, the shrinking is missing. I think you have to segment the economy into 3 pieces. The first piece is the GDP dedicated to extraction cost (cost not price). That money is "lost" as the economy expends energy to get energy and natural resources.

The second piece is the GDP dedicated to paying for imported fuel and natural resources. That piece is accounted for as if it was a gain, but it isn't.

The third piece is the GDP left over after the two other pieces are subtracted. That piece is the local wealth.

What I think will happen is the first two pieces will grow, giving the impression of economic health, while the third piece contracts. It is probably already contracting. But I am not sure those changes will cause demand to reduce. I think demand may just shift to economy needed to create GDP to pay for imports.

I'd say its pretty easy to equate the third piece with ELP. Economize Localize Produce. So the third half of the economy could be broken into to parts. A resurgence of the local economy where it is viable. This is local goods and services sold locally. Generally this would consist of two parts food production and hopefully a increase in local lite manufacturing and repair. As costs increase a return to long lasting durable goods makes sense.
As a example consider Cuba which has kept its fleet of cars running for decades. Probably another part would be local or regional manufacture of windmills and if possible solar cells.

The second half is exports of something from a region. This can run the gamut of goods and even services like design engineering and of course people.

But ELP does not mean some sort of nirvana you can have ELP and still have a lot of misery. Look at India for example. ELP does not solve resource/carrying capacity issues for a region nor does it address the political climate. However a return to local economies might result in a more equitable distribution of wealth and local involvement by the wealthy but this need not happen.

So it seems to me that if we move to a ELP like economic model you can in a sense keep the economy growing be recycling more and more cash with a region so its concentrated then re-invested. The way things work now cash tends to flow out of regions and into major power centers.

But the problem I have is that localization leads generally to smaller scale and thus higher costs this means that transportation costs have to rise dramatically to even make it worthwhile. It makes more sense to keep the status quo and just allow more people to slip into poverty.

If you think about it its a lot more sensible to take say 5 middle class people with a energy usage of say 10x each and convert this to 2 using 10x and 3 using 1x. Its the easiest way to increase the efficiency of the system. Plus the new 1x energy users would work for a 10th of their former wages and still have reasonable productivity. This allows the two remaining 10x users to increase their wealth to handle increases in energy costs.

So you see that the formation of a poverty stricken pool of potential workers results in the highest return for energy invested. As long as enough of them are kept from starving and they continue to breed this can be sustained practically indefinitely. ELP like principles can be used to provide basic needs and if crop failure happens they can simply be culled by allowing starvation to remove the weak and old.

It just seems to me this style of economy is a lot better fit for a energy starved world then some sort of gentleman farmer/ lite engineering economy that more equitable. You get a much higher return treating humans as smart horses vs allowing them to use energy that could be concentrated to allow a rich lifestyle for a few. Now if the population was a lot lower this would not make sense but humans breed like rabbits so ...

Sounds reminiscent of the feudalistic societies of yore...

Well they worked in a energy constrained economy. The greatest amount of wastes is not directly in transportation or fuel usage but in the GDP result of this usages.

For example paying a real estate agent to drive a large car around to show hair dressers houses they really can afford is a complete wasteful cycle. All energy inputs and outputs are not needed. The easiest solution is to eliminate this sector of the economy and reduce these people to effective slavery. Your energy gain is tremendous with this approach. Plus it has the effect of pulling down energy usage of say a factory worker since these people could be retained to be competitive for more productive jobs. Thus you can lower wages even for jobs that are useful.

The point is that the easiest way to get conservation is not to allow energy costs to increase in general since the effects everyone but to lower the wages of the least productive parts of the economy so that current energy prices become untenable.

This approach is much better for the status quo then changing the energy usage pattern to allow overall lifestyles to remain similar to the current ones except with more energy efficient transport.

Its a lot easier to make people poor than it is to invest in major infrastructure changes and its actually for more efficient. Turning a former Realtor McMansion/SUV home flipping/ home owner into a 10hr burger flipper living in a cheap one room apt with a roommate saves tons of energy. And it builds a local well of desperate people so you don't have to use globalization anymore to get low wages. Overall we really don't have to make a whole lot of changes outside of removing welfare supports.

So I think this sort of restructuring to a leaner meaner economy will occur well before we try to make any fundamental changes.

In a sense, it has already happened. China is now the worlds manufacturing center. And the labor is China is paid a fragment of what labor in the US is paid, which means a Chinese worker gets a fragment of the energy usage of a US worker.

Its a lot easier to make people poor than it is to invest in major infrastructure changes and its actually for more efficient

Exactly. Game Up. BTW, we(sic) can eliminate about 90% of you and not feel a thing.

So maybe GWB and his neocon advisers (more probably the latter) are onto something. Maybe they are not "teh stoopid" as you guys make them out to be. If memmel (no offense meant) can think up this scenario, I am sure that the neo-con economists could have seen this just as clearly.

The big problem they will have is to convince the new poor that this is going to be their lot for a long time. When you've seen the good things in life, it is probably harder to accept poverty on a going basis ( a reasonable hypothesis). Most Indians have seen only hardship and so think it the natural state (again a reasonable hypothesis - if this were not true, you would see large scale rebellion and uprisings all over rural India).

You would need to have a strengthened police and prison system to quell any sort of uprising. I read on LATOC that the US is investing in huge prison facilities - Haliburton's subsidiary Kellog Brown and Root got this contract.


I don't know what the status of this one is or how reliable the information is.

Bush also signed the John Werner Defence Authorization Act that apparently makes it easier for the President to declare martial law via changes to the Insurrection Act (again got this from LATOC)


See Sen. Patrick Leahy's comments on this - http://leahy.senate.gov/press/200609/092906b.html

But the scenario is not far fetched. The US (just like India, China and all the communist countries of yore) is of the elite, by the elite and for the elite - George Washington be damned.


And remember, Corporations are Virtual People. Placebos. Form without content. Phantoms, Ghosts. Try to nail one, and find nothing is there.

They are merely place keepers to funnel wealth. Enron, Pensions, common worker shares? Gone. One or two were given to the rabble to make them feel the laws work. Where is the money? where is the wealth? Very cleanly siphoned off before the fall. Who lost? Yes, the rabble who actually believed that a corporation has a soul. "Enron Cares" T-shirts were discarded while packing cardboard boxes on the way out the door.

Millions of nail salons, phone stores, video stores, walmax stores.
Circuit City laying off $25 dollar/hr workers and telling them they can re-apply for $7-$10 hr job.

Game Up.

Gut Wrenching deflation is on the way. As my mom said, "There were things to buy during the depression for pennies, but, No One had any pennies."

Remember, "If you are Hungry? Dress out a Bankster for the Barbie"

From LATOC. Virtual People, Phantoms, Ghosts existing in name only.

Halliburton Subsidiary Kellog, Brown, and Root Skirts Taxes by Setting Up Shop in the Cayman Islands

More than 21,000 people working for KBR in Iraq - including about 10,500 Americans - are listed as employees of two companies that exist in a computer file on the fourth floor of a building on a palm-studded boulevard here in the Caribbean . Neither company has an office or phone number in the Cayman Islands . The Defense Department has known since at least 2004 that KBR was avoiding taxes by declaring its American workers as employees of Cayman Islands shell companies, and officials said the move allowed KBR to perform the work more cheaply, saving Defense dollars.


J6P - You've been had.

It's Matt Simmon's turn to get one of my scorching critiques today.

In his video he said he first read "The Limits to Growth" in the 1990's. Now I feel more qualified than ever to attack since I'm senior in reading it in 1975. It was one of the factors that made me decide I had move out of Minneapolis and back to the farm which I bought in 1977.

Anyway, Matt repeats his infamous Cup-o-crude argument which I love because it illustrates how it is oil and not corn ethanol that is driving up food prices. His 15 cent cup of crude at $100/bbl oil is weight wise the equivalent to a 5 cent cup of corn. Which should be higher priced? He repeats that we do not value oil sufficiently which is convenient for him being in the business of financing oil. If you are a farmer, as I am, I see his argument as an indication of how cheap corn still is even at over $5/bu.. But he ignores that and condemns ethanol not in the video, but elsewhere. Why should corn be priced so cheaply? Posters bemoan corn's use for ethanol saying that it is more valuable when used for food and that $5 corn will result in starvation. Why doesn't $100 oil result in starvation since we know oil is critical in nearly every facet of food production per the TOD. It is the price of oil, not corn, that is the bigger factor in rising food prices. If corn is so important, the market should price it appropriately.

He goes on then to make one of the most common logic errors by making a false analogy between the retail price of gasoline in England and in the U.S.. $9.00 gas in England is not the same thing as $9.00 gas here, because taxes in England are in the area of $6.00/gal. or more. He is comparing apples and oranges. He says the $9.00 gas does not affect the economy in England, which is true because the high taxes are returned to the people in social services such as nationalized health care. England also has a good railway system, which negates the impact and which we do not have.

In order for a comparison to be valid or an analogy to be true enough to be able to deduce anything with confidence, the items being compared must be very much alike with the characteristic in question nearly the only one that varies. No conclusions can be made when comparing unlike and unlike without leaving oneself open to gross error. Be forewarning if he or anyone else posts doing this stuff and I catch it, I will attack again.

It is the price of oil, not corn, that is the bigger factor in rising food prices.

You keep telling yourself that, and maybe it will help you sleep better at night. After all, not only are you making money off of this scam at the expense of everything else, you are actually defending the practice.

My Dad is a cattle rancher. Not a very lucrative way to make a living. Similar to your complaints about the corn farmer. Yet now money is being siphoned out of his already empty pockets and put into yours - all because of misguided government policies. But hey, your happy with that, right? I mean, you are getting yours, courtesy of suckling at the government teat.

"England also has a good railway system..."


As long as you like paying a fortune to be wedged into an airline-coach style seat, on a train incessantly delayed by The Wrong Kind Of Leaves (or Snow) On The Line, or halted outright by ill-conceived and never-ending Engineering Works - and generally subject to every excuse and whinge ever invented since the dawn of humankind. Not that others are perfect, but I'll take the French, German, Dutch, or Japanese railways over the awful English ones.

If you're writing from the USA, your comment just shows just how execrable our intercity rail is. When Jim Kunstler says it would embarrass the Bulgarians, it's an insult to the Bulgarians. Of course, there's a reason why it's so bad - no one in the USA gives the proverbial rat's behind about intercity trains since virtually everybody (so far) flies or drives.

I spilled my tea when I saw the railway comment as well. As someone who has spent about two hours cumulative time on the internet trying to find the 1 day window between when the small number of "discounted" rail tickets on a particular journey are released for bookings and have been bought out (the default rail ticket prices are frickin' ridiculous), you may have a point about the National Health Service, etc, but railways are as far as I can see still more expensive than car travel accounting for petrol+taxes on the car. (When you account for parking charges in big cities it probably becomes marginally cheaper by train.)

Its a relative thing.

Relative to the US, we have a good rail system. Now shudder in horror at just how bad the US system would have to be to make that true...

Now shudder in horror...
Precisely. The Northeast corridor isn't utterly awful if you pay a fortune for an Acela ticket, but in general you can scarcely believe it without experiencing it. And nowhere on the system is frequent or reliable service the norm.

It is the price of oil, not corn, that is the bigger factor in rising food prices. If corn is so important, the market should price it appropriately.

Again with this line of BS.

With respect to grain prices, if it was indeed oil costs that were driving them higher, then one would expect this to result from farmers planting fewer crop acres because their margins were getting squeezed by inputs. That is not happening, of course. It is being driven at the demand (read govt. mandated) side.

Exactly. It illustrates the problem with not explicitly stating ones operating assumptions. Matt thought it was obvious that before long oil price will be determined by how much people are willing to pay. Those in the know know that the UK retail price has a large tax component. I think what price people are willing to pay for fuel may be not so easy to determine -especially given enough time for infrastructure/investment decisions to factor in. $300-$500 per barrel won't stop people from driving to work, but it will probably influence their choice of car next purchase cycle.

The really disappointing part was his rap on Club of Rome, which I won't even give the glory of a repeat. He must have to say stuff like that for all his macho consumption friends.

What! He did not rap the Club of Rome. Listen to the video again, you must have heard it wrong the first time. He said other people said he must be a "Club of Romer". He had no idea what they meant so he got the book and read it. He said there was nothing in the book about running out of oil in 30 years. He said the authors were a group of futurists who made some predictions that we were going to start running out of things starting about 2070. He then stated that they were probably 50 years too late. He is saying that they were too conservative. That is not a rap. If he said that they were too early with their predictions, then that would have been a rap. They would have been crying wolf when there was no wolf.

Matt Simmions, as the guy on the show stated, is a believer in the Club of Rome. I have heard him defending them before from people who falsely accuse them of predicting that we would run out of oil in 30 years, (from 1972).

Ron Patterson


I just quoted from the linked article, which has an alleged quote from the video. Here's the quote from the article:

What’s the Club of Rome and how does it factor into oil production?

“It’s a book that was written in 1970 by some futurists that were really worried that by 2050 we were going to start running out of things,” explains Simmons. “There was nothing in the book about running out of oil. That was just something people made up."

Sorry Mr. Simmons! Sorry Ron! I should know better than to post before my morning coffee.

Here's a paper Simmons wrote in 2000, basically bashing those who bash the Club of Rome: http://www.greatchange.org/ov-simmons,club_of_rome_revisted.pdf

Revisiting The Limits to Growth: Could The Club of Rome Have Been Correct After All?

Poor Matt Simmons. He's such a creative thinker, such a solid and intelligent writer. I love his PowerPoints. But every time he shows up on television he is awful. He's nervous and flustered and comes off looking like a quack.

"We should never have let India and China grow." I understand where he's coming from because he's been talking about China's growth potential and resource consumption potential for a decade, and his argument makes perfect sense. But again, filtered through television, it just seems crazy.

Crude oil consumption (reacted with free oxygen ;-)) is ~ 1.5 million barrels per day.


That is not a large amount when compared to their population (61 million) - by comparison the US (pop 300 million or 5 x) is burning 21 mbpd or (13 x).

So the US consumer will respond to higher prices via more fuel efficiency. The number of 6000 lb personal transport vehicles on the road is still astonishing - and they still sell well and are purchased by Cashiers, Mall employees, government funded employees (Healthcare workers do particularly well) and of course those that are self-employed and have sufficient income to put these behemoths as a business expense and therefore pre-tax. Plenty of room to cut. The Chinese (IMO) could easily deliver a $4000-5000 functional small car to the US market if there was a demand for it.

The traffic jams on M-25 around London are horrendous.

He's saying oil will rise in price until people use less. They aren't using less at an equivalent cost of $378/barrel in Britian, and neither (he suspects, and I agree) will we.

Of course, the global situation is more complicated than a simple supply-demand curve. It's easy to find reports of electricity shortages in third-world countries that can no longer afford the diesel to run their commercial generators -- clearly they are using less. It's well established that in developed countries, short-term demand for gas/diesel is pretty inelastic -- not surprising, as changes that would allow for sharp decreases in consumption like replacing a vehicle, changing jobs, or moving are quite expensive. The long-term historical price differences between, say, the US and the UK, and the average consumption by each, seems to suggest strongly that long-term adjustments get made.

thats the 2nd time I heard that about Britain not using less. These things take time, and oil has only been expensive for a year or so. Oil demand is known to be inelastic in the short term. I would expect British oil consumption to fall significantly in the next few years.

On a wholesale basis, there isn't much difference between light/sweet crude and gasoline. On Bloomberg, light/sweet crude is $105/barrel, and gasoline is $113/barrel (before taxes and transportation/storage costs).

IMO, we are looking at a geometric progression in oil prices per barrel:

$50, $100, $200, $400. . .

Which will produce a geometric progression in product prices per gallon:

$2, $4, $8, $16. . . .

As Matt pointed out, demand in Europe is still pretty high at a product price north of $8 per gallon.

As I have said ten zillion times for going on two years now, I recommend that Americans assume a 50% drop in income and (at least) a doubling, or doublings (plural) in food and energy prices.

"As Matt pointed out, demand in Europe is still pretty high at a product price north of $8 per gallon".

In Europe we have seen the price of gasoline more or less flat for the last 6 months. Even now with crude prices well over 100 $, retail prices for gasoline are much the same as they were when crude was in the range between 78 to 83 $. The declining US$ is the reason for that.

Gasoline & diesel prices have also been flat in Canada ever since the $Cdn & $US dollars reached parity or as you put it, since the $US started declining. All the more reason for people not to take the Peak Oil situation seriously as they don't see fuel prices increasing directly. Only indirectly, food prices, inflation. My sense is that our tar sands are insulating us from the full effects of peak oil for the time being. Small consolation!

same in Japan. Around $6-$7 per gallon. For months now. The yen goes up vs dollar and we don't feel the oil price going up that much. People don't drive long distances either. We have the trains for that.

Yet I'm seeing economic problems here anyway as Nikkei plunges.....a few shops, car dealerships closing etc.

I have never seen an analysis of how much the drop in oil production caused by the oil crunch of the 1970's delayed Hubbert's world peak oil projection. Has anybody done this?

The wheels have come off. The Automatic Earth looks at where they're headed. Gravity suggests there's one way only: downhill into the abyss.

Also today: The Fed nationalizes the banks. Covertly, step by step.
Yet, is the Fed the government?

IMO, the markets are still fundamentally mispricing debt and equity instruments since their is not, IMO, nearly enough exported energy available to generate the economic activity necessary to pay off the debt and to generate the expected earnings.

Yup, this is all going to let go with a bang. It seems a very good time to be a wind project developer in Iowa, as investors have apparently lined up large scale artillery surrounding the region and they're firing diamond tipped platinum shells at anything that has a chance of moving. I guess if you can't have a commodity yourself the next best thing is to be doing something key to the production of the commodity.

I very much fear that we'll end up with plenty of electricity ... and not a toaster oven in sight on the local stores' shelves when the natural gas peak hits :-(

It is the 3rd time, that you made this statement. This is ONE sentence and it is the most important one for anybody reg. investment decisions.

Jim Rogers couldn't agree more.

"Agriculturals and Energy is going to explode".

Too bad I had a typo: "their" should be "there."

In any case, I have repeatedly stated that I am building on work by others, e.g. Simmons & Deffeyes, and indirectly on Hubbert's work, but if you accept the whole ELM premise, the world economy is basically going to crash far faster than most Peak Oilers think, with the side effect, as you noted, of skyrocketing food prices.

It's almost comical that some obscure geologist is apparently one of the leading proponents of the Net Export story. At last count, four out of the top 10 listings for Net Oil Exports on Google are the result of my joint work with Khebab.

I don't want to clutter you up here, but I thought some people here might be interested in this update to the Debt Rattle:

Banks face "systemic margin call," $325 billion hit: JPM

Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co, said in a report late on Friday.

I called yesterday The Day The Wheels Came Off, and I wasn't kidding.

It's game over.

I thought this kind of thing was always, you know, a few years out. Oh hellz!

So what is your prediction for Monday? More margin calls certainly, but how about ending trading for more than just the companies feeling the pinch? Another frantic rate cut? Another "liquidity" plan which is code for liquidating what the taxpayers have left to benefit those who've profited creating the problem?

I am going to go stock up on microwave popcorn and settle it to watch the ... fun isn't quite the right word to put there, is it?

Margin calls are very much subject to gravity, they trickle down. Basically, till you find someone at your doorstep, asking you for more collateral for your loan. Imagine a flood rushing downhill, gathering up speed and volume, and leaving nothing standing in its way. For more, come to my digs.

Chase is practically frantic over my auto loan - one day late and I'm getting incomprehensible robodials on the hour from them. Tomorrow will be soon enough to suit me ... for getting the money order made. I may dangle them a bit more, now that I know what triggers repossession, thanks to my lovely ex wife. I suspect given trends here I'll soon be able to encourage my local banker to finance about 80% of the face value of the note and I'm going to give them a settlement offer for that amount. We'll see if they bite.

On the other side my local prepaid cellular carrier let me slide six weeks ... they canna afford to lose folks given the market they face.

Feels good to be back to work after my miserable start to the quarter.

Oh, and I'm that slightly paranoid Iowa fellow in your comments, in case you hadn't connected the two.

What gets missed in a lot of the discussion on how high oil can go is the cyclical nature of oil as a hard investment asset. This moves oil pricing apart from physical supply and demand problems. This cycle force is very strong and deeply entrenched in economic history:

Since the mid 80s, downturns in the economy and stock market have been countered by a Fed loosening, investor money build on the sidelines, and a redeployment of that money back into the stock market because problem inflation was nonexistent. But with the '08 downturn, the problem the Fed is fighting is a loose money, debt induced problem created by the decades old buildup of the debt house of cards. So the Fed finds itself having to fight loose money with yet more loose money in this downturn. The inflation induced by this is boosting a secular bull market in commodities already in progress. The money on the sidelines, now at the historically high levels typically seen at stock market bottoms like '98 and '03 is starting back into the market again - but this time it is being derailed from stocks to commodities because of the inflation problem. This is going to intensify the commodities bull and further aggravate inflation, which in turn will cause more money to leave stocks for the sidelines, from which it will go into commodities and so on and on - a vicious money derailment cycle precipitated to a large extent by the climb in oil prices and the ensuing inflation.

The last time this kind of thing happened was the 70s, and it was defused by several things including a quick return to very cheap oil in the mid 80s. We are going through the very same investment money derailment effect now, but this time instead of going back to very cheap oil, we are going to very much more expensive oil. This will make defusing this derailment cycle much much more difficult this time.

In the 70s version of this, there was no peak debt and there was no peak oil. There is much more investment money out there now than in the 70s, so this derailment process will probably go further and faster than in the previous cycle.

Add to this the strong tendency of the cycle to increase its amplitude to higher gold/commodity ownership since Nixon decoupled gold and currency in 1971, and you have a recipe for a stronger bull market in commodities than even the 70s.

Right now oil has opened a big lead on gold in the commodity races:

If the geophysical condition of oil supply will be setting the pace for this investment money derailment thing, it may be a hum dinger.

Rogers Says Sugar, Other Agricultural Commodities to `Explode'

By Dave McCombs

Feb. 28 (Bloomberg) -- Jim Rogers, who predicted the start of the commodities rally in 1999, comments on the outlook for sugar, cotton and other commodities.

He spoke today at the CLSA Japan Forum in Tokyo.

On the outlook for agricultural:

``If I told you how bullish I am about agriculture, you'd ask me to leave the room. Prices of agricultural commodities are going to explode. Inventories of food are the lowest they've been in over 40 years. The number of hectares devoted to wheat farming has been declining for over 30 years.''

``All of you should get all the sugar you can. The price of sugar is going to explode.''

``I'm bullish on cotton and have been for a while. A lot of people in the textile business are starting to convert from synthetics to natural fibers again because it's so much cheaper'' given the rise in prices for oil used to make synthetic fibers.

On prospects for the Japanese yen:

``I own the yen and it's another thing I'm buying these days. I'm convinced the carry-trade is going to reverse and when it does the yen is going to go through the roof.''

netfind- fantastic chart.

Interesting link from Drudge on a $80K PHEV sports car, based on a US military Delta Force drive train:


OK, this is juicy. Bank of America chose to purchase market stinker Countrywide Financial Corp, not because of their value, but to conceal the nature of their loses by converting from public disclosure to internal reporting. Now the FBI has many questions about Countrywide, yet BofA continues to move forward on its acquisition plans.

Countrywide is on the wrong side of the bailout line - they're scapegoat #1 and their public flaying will serve as cover for the rest of the roaches running for cover, but woe unto all who were involved in their activities. Got'um BofA? Get'um cashier's check & new bank.

First rule of business: Don't stick your neck our unless there is a reliable scapegoat.

Hello TODers,

'Perfect Storm' Causes Fertilizer Price Spike
The article goes into great detail on what is causing this perfect storm, and IMO, I expect it to get worse postPeak, especially when you consider my prior postings on sulphur into the equation. Too bad my speculative 'Federal Reserve Banks of I-NPK' are not up and running: participants could have tripled their investments by now.

ELM will hammer us, but the need for NPK and other minerals goes on if we wish to eat. Most of the crap we own is worthless to a farmer/gardener; they will not be interested in trading grains/vegetables for a big screen TV or a plastic salad shooter, but they will gladly trade grain for I-NPK for their next planting cycle.

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

Thanks much - do you have any more of these? Care to share your sources?

Hello SCT,

Nothing special--I just stay alert to what I read on fertilizers, then regularly google like hell for more info, then apply my imagination. Same crude technique I earlier used to find the Aramco Ghawar Oil-Sat 3D graphic that TopTODers SS, F_F, and Euan had so much fun analyzing.

If I had inside sources and/or influential contacts: I certainly wouldn't be cursed with such small net worth and no land ownership [renting a bedroom]. I couldn't even get my former neighbors interested in helping to stop a vacant piece of city-owned land from being paved over for a pointless Senior Center, instead of a community garden. My hundreds of emails to Tiger Woods, National PTA, city officials, govt leaders and orgs, etc, etc, are ignored, and the Google unlucky button seems to have gone nowhere to promote Peak Outreach.

I guess I get a kick out of trying to hold back the incoming tide: aren't most TODers trying the same thing to hopefully optimize our downslope ride and minimize machete' moshpits?

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

We've never spoke but I hope your realize what an influence your writings are on my activities. You talk NPK, spiderweb riding, and the like. I read, ponder, then I set out and map these concepts to what I can actually get my neighbors to do - wind driven ammonia first to keep things fertilized(NPK) and moving(spiderweb), once this is done on to Alan Drake's rail electrification concept(thicker web strands), and I've dipped my toe into the waste water treatment, uhh, waters here(NPK). I'm very worried about that - was it you that posted the municipal waste stream recovery article? There was something about crazy high thallium levels poisoning land and dairy cattle output. Maybe this is something that will work for small towns without a lot of nastiness in the waste stream?

I spend a lot of time in my kayak going up and down our little waterways - I have a training to attend this spring, then I am probably going to take up monitoring of the West Fork of the Des Moines, Jack Creek, and perhaps some of the nearby lakes and ponds. I'll drill a few holes in the kayak, rig a mount for my GPS, notebook, water sampling vials, and then off I go.

These guys coordinate and train volunteer water monitors for the area ...


Bob Shaw did provide a crucial piece of information that REALLY solidified the Euan Mearns/Stuart Staniford debate/analysis of North Ghawar (and dutifully mentioned at the ASPO-Houston presentation). Just diligent Googling, but VERY useful !

kudos to Bob Shaw,


FWIW, I ran across the following in this month's issue of a dairy trade magazine:

International Transport Forum Web Debate: Moving away from fossil fuel: are biofuels the answer?

If this site is already well known to TOD, apologies.

The comment from Ron Steenblik, Director of Research, Global Subsidies Initiative of the International Institute for Sustainable Development, Geneva, is particularly interesting in light of the above post about tough times for biodiesel:

In the U.S. State of Kentucky, a medium-sized producer of biodiesel from virgin agricultural materials (e.g., soybean oil or tallow) benefits from a state subsidy of $1.00 per gallon ($0.26 per litre), the normal federal tax credit of $1.00 per gallon (paid to blenders but raising the price at which the producer can sell its biodiesel) and the small producer's tax credit of $0.10 per gallon. Adjusting for the lower energy density of biodiesel compared with mineral diesel, that adds up to $2.33 per gallon ($0.62 per litre) of diesel equivalent — or 90 per cent of the average, pre-tax, wholesale (excluding distribution and marketing margins) price of petroleum diesel in the United States as of 10 December 2007.

Peak IQ?

Reverse in trend for high IQ scores

During the second half of the 20th century average intelligence, as measured by IQ tests, increased significantly throughout the developed world. But there are now signs that this rise - known as the Flynn Effect after James Flynn of the University of Otago in New Zealand, who first documented it in the 1980s - is going into reverse.

The latest evidence comes from Thomas Teasdale of Copenhagen University and David Owen of the City University of New York, who analysed the IQ scores of young men assessed for military service in Denmark. The 25,000 men tested in 1998 had a two-point increase compared with a similar cohort in 1988, but the scores of the 23,000 men tested in 2003-04 fell back to the 1988 levels.

This apparent decline in intelligence matches a similar observation made about Norwegian conscripts, the authors say. Their analysis appears in the journal Intelligence.

The reasons for the Flynn Effect - and the extent to which it represented a real increase in intelligence rather than an improved ability to do IQ tests - remain controversial.

And it is just as uncertain what might have put the effect into reverse. The authors speculate that changes in the Danish education system may be responsible.

teh st00pid radiates from the Bush administration ... this trend will reverse in ten short months.

Tainter. :-)

US Senate to investigate Iraq for excess profits. Yeesh, the Iraqis are making too much money off high oil prices! Stuff like that in the New York Times - I dunno - I need whatever drugs our Senators are taking, then everything will be fine. That might or might not be an argument for expanding national health care so that everyone gets "care like our congresscritters". It's really hard to tell where to put the point of the argument.

cfm in Gray, ME

If you're talking to a Congressman and you're looking for a point? Look on the top of their head!

This is why I say what if we don't use lithium ion batteries in cars.

Hybrid vehicles growth opportunity for lead industry
Associated Press Writer
Mar 07, 2008 - 11:20:01 CST
ST. LOUIS (AP) — Once the technology is refined, lead-acid batteries for hybrid vehicles will provide a growth opportunity for the lead industry, The Doe Run Co.’s president and chief executive officer said Tuesday.

The St. Louis-based company, one of the world’s leading integrated lead producers, helped sponsor a 100,000-mile test drive of a hybrid car powered with a lead-acid battery, already a mainstay in most vehicles.

The test showed they are as durable, more efficient and less expensive than nickel metal hydride technology, used in some hybrids, Bruce Neil said. Neil was the opening speaker at the International Lead Conference in London, sponsored by the trade publication, Metal Bulletin.


there are pros and cons with lead batteries and lithium ion batteries but that's just the way things are for anything.

We'll need all of the lithium we can muster to control psychotic episodes from cornucopians. They'll be wandering into their doctor's office, bleeding and incoherent after trying to buy a pack of gum at a grocery store where the rest of the shoppers had, uhh, other priorities. Or maybe I'm wrong and the $140 in staples I just toted in will end up sitting here until I donated it to a food bank ... but somehow I just don't think that is going to be the case.

So, the people who won't be able to afford to buy these fancy new cars that they couldn't drive on the roads their municipalities can no longer afford to maintain will find a biological purpose for the chemical needed for the batteries. Simple, no?

roads their municipalities can no longer afford to maintain

they'll be able to maintain roads, but taxes might go up or they'll hike tolls. have you factored reduced road usage reducing the amount of maintenance munis need to do? less cars will mean less wear.

Nope, wrong again, in this part of the world completely unused roadways go to pieces in a season or three without attention - freeze/thaw cycle. And we'll still have large vehicles for delivery and that is where the real pain arises.

Have a look at Vallejo, California to see what gets cut when times get hard.

Deteriorating roads are the big reason I’m considering building a “Baja buggy” type of vehicle to negotiate the crumbling asphalt and gravel roads in my rural county for the future. Last week I rode over a six mile stretch of Illinois Route 45 in Will County that had to be one of the worst roads I’ve seen in a long time. It was so bad even my off road Toyota pick up truck had to travel at forty miles an hour; cars drove on the shoulder to avoid the deep ruts. The road has to be completely rebuilt and is indicative of the crumbling infrastructure in the US. My Central Illinois farmette is at the dead end of mile long stretch a gravel road that could be difficult to maintain in future, but I suspect not nearly as bad as the paved roads are going to be.

I got to thinking about this - U.S. 71 over in the lakes area being the lovely stretch of bumps separated by the occasional smooth bit that prompted this.

Here we have a hierarchy: U.S. and state highways, county blacktops, and gravel roads. Gravel itself has a curious, three tiered pecking order, too. Some of them are labeled "level B maintenance - no snow removal", and one lucky strip over near Everly, Iowa is actually labeled "level C" - I guess that is "We'd prefer you stop using this?" Among the maintained roads there are those that get maintained, and those that are maintained. There is a five mile stretch over by Terril that saves you four miles of highway driving if you're headed west. Its broad and smooth, receiving very regular attention.

I suspect that as oil gets more dear and vehicles get fewer we're going to see an abandonment of the paved roads in favor of gravel. Paved road repair only lasts so long, then its expensive, disruptive resurfacing using lots and lots of oil. Gravel roads are simply and incrementally maintained with some biodiesel, some gravel, a dump truck, and a road grader - things we already have or produce locally. I'm concerned about what a steady flow of semis would do to gravel - right now they get a bit of that during harvest and otherwise there is no heavy (mass wise) traffic.

It could be we'll see that return to rail freight more quickly here in rural spaces with local straight truck delivery taking on the role currently held by the dock to dock semi mode of transport.

Nope, wrong again, in this part of the world completely unused roadways go to pieces in a season or three without attention

not everyone lives in your area. not everyone lives in a tough climate. not every road is not going to be cared for. don't overstate your case. some roads won't be well-cared for for a period of time. that doesn't mean EVERY road will be like that. roads will probably be cared for but they won't be repaved as often and they'll be patched more instead. other roads just won't get to the drawing board. I know this, you should see my road. it was paved almost 20 years ago and they just patch it now.

Brian Samuelson wrote the peice 'Triumph for OPEC'. He has been a syndicated columnist for Newsweek for as long as I can remember and I can remember a long time. I read the peice but before I even started the first paragraph I knew the nature of it would be more or less information he might have heard around the water cooler. I have attached my comment:

" Samuelson - Did you figure this all out sitting in your air conditioned cubicle commuting to work in your Suburban, hibernating in your 3500 s.f. ranch house in the subsurbs? Do you understand that when they start harvesting crops and Canada's oil sands that that means that 85 mbd (million barrels a day) might be the maximum liquid fossil fuels there is?

Why don't you read Twilight in The Desert by Matthew Simmons and then rewrite this peice of graffiti you call a collumn."

I know that it is an utter waste of time to expect anyone from MSM to consider facts!

I'm not sure how regulars here have discovered it, but there is a sort of "Drum Beat" for electricity - used to be energyshortage.blogspot.com, just moved to their own domain + Drupal - http://energyshortage.org. I have no idea who this guy (gal?) is, but he(she?) is putting in the work in that area. There was a request for comments and I would think more than a few here might find some interest in that stuff ... I made and account and left a couple of comments. There is nothing lonely than writing and writing and getting no sense that anyone is looking long enough to appreciate the work :-(

It is a site I check daily---
Great source for news beyond the BushCo stenographers.