DrumBeat: March 10, 2008

Gas prices near records, oil sets new record at $108.21

NEW YORK - Gasoline prices were poised Monday to set a new record at the pump, having surged to within half a cent of their record high of $3.227 a gallon. Oil prices, meanwhile, surged above $108 to a new inflation-adjusted record and their fifth new high in the last six sessions on an upbeat report on wholesale inventories.

...Light, sweet crude for April delivery rose $2.75 to settle at a record $107.90 on the New York Mercantile Exchange after earlier setting a new trading record of $108.21.

Shell seeks oil supply amid Alberta plant woes

CALGARY, Alberta (Reuters) - Royal Dutch Shell Plc lined up alternative supplies of upgraded oil sands crude for its Alberta refinery on Monday as its own upgrading plant underwent unplanned maintenance, a spokesman said.

Meanwhile, Shell and Imperial Oil Ltd (IMO.TO: Quote, Profile, Research) kept rationing fuel supplies to their retail networks as both their Edmonton-area refineries suffered unspecified operational problems which came to light last week.

Energy crunch hinges on Bolivia

Facing blackouts and a looming South American winter, energy-gobbling Brazil and Argentina have an urgent message for their longtime natural gas supplier Bolivia: Step up production, and quick.

The two countries depend on their poorer neighbor for gas to power homes, businesses and cars. But Bolivia's gas industry, stagnating after a decade of falling foreign investment, can no longer keep up with demand from the continent's two largest economies.

S.D. panel OKs $5.2B oil pipeline permit

The state Public Utilities Commission's staff is recommending that the three-member commission approve a construction permit for the $5.2 billion TransCanada Keystone Pipeline.

The panel will decide Tuesday whether to approve construction of the crude-oil pipeline that would slice through eastern South Dakota on its way to refineries in Oklahoma and Illinois.

CO2 output must cease altogether, studies warn

The task of cutting greenhouse gas emissions enough to avert a dangerous rise in global temperatures may be far more difficult than previous research suggested, say scientists who have just published studies indicating that it would require the world to cease carbon emissions altogether within a matter of decades.

Their findings, published in separate journals over the past few weeks, suggest that both industrialized and developing nations must wean themselves off fossil fuels by as early as mid-century in order to prevent warming that could change precipitation patterns and dry up sources of water worldwide.

UK plans to cut difference in energy tariffs

LONDON (Reuters) - Britain will announce on Wednesday plans to reduce how much households on prepaid meters spend on power and gas in a bid to reduce fuel poverty, a government source told Reuters on Monday.

Finance minister Alistair Darling will use his first budget to announce plans to narrow the gap between rates charged for energy on prepaid meters and cheaper direct debit deals, after rejecting other proposals to help those least able to pay.

Vatican lists "new sins," including pollution

VATICAN CITY (Reuters) - Thou shall not pollute the Earth. Thou shall beware genetic manipulation. Modern times bring with them modern sins. So the Vatican has told the faithful that they should be aware of "new" sins such as causing environmental blight.

Let’s shift the tax burden to reflect the true environmental costs

From the temples of international finance to Eugene’s City Hall, the people running the world’s economies systematically have been groomed and conditioned to believe that the wise and invisible hand of the free market is the most appropriate mechanism for determining how goods and services are produced, distributed, sold and ultimately disposed of.

There is certainly something to be said for the regulatory mechanism of supply and demand, but the trouble is that many costs are not accounted for by this supposedly “wise hand.” Indeed, the market remains fully oblivious of the sometimes staggering environmental and social costs of the economic activity that it supposedly does such a good job of regulating.

The Greenhorns: A New Breed Of American Idol?

While some of us moan and groan about the unmitigated awfulness of industrial agriculture and our craptastic food chain, others are literally sowing the seeds of an agrarian revival. The idealistic young farmers and gardeners fueling this ag-revolt have been christened "The Greenhorns" by one extraordinary, exuberant young farmer/filmmaker, Severine von Tscharner Fleming, who's documenting their horticultural heroics in a film by the same name.

Oil: More Demand, Higher Prices

After the price of a barrel of oil hit a new high last week (almost $105), President Bush asked the Organization of the Petroleum Exporting Countries (OPEC) to increase production to drive prices down. Instead OPEC officials said they'd maintain current output levels, a move that could lead to prolonged economic sluggishness for the United States. The cartel's denial looked like political bickering between oil-rich countries—like Saudi Arabia, Kuwait and Nigeria—and their biggest consumer: the United States, which cartel members blamed for economic mismanagement of the resource. But some analysts say that output may not be so easy to increase, even if the producers wanted to. NEWSWEEK's Daniel Stone spoke with J. Robinson West, chairman of global consulting firm PFC Energy, on where the global oil market might be headed.

Milford Haven Oil Terminals Close on Severe Weather

(Bloomberg) -- Oil terminals at refineries operated by Chevron Corp. and Murphy Oil Corp. in Wales were shut because of severe weather that brought winds of up to 80 miles an hour and heavy rain to southern Britain.

All terminals along the Milford Haven waterway in southwestern Wales have ``suspended operations'' due to poor weather, Milford Haven Port Authority spokeswoman Mariam Moazzen said in an e-mail.

Sinopec Acquires Australian Oilfields

In the latest cross-border natural resources deal by a Chinese company, the oil and gas outfit will spend $557 million to acquire control of proven oil reserves in Australia's Puffin and Talbot of oilfields.

Iraq: Oil and electricity ministries won't mix

Lack of electricity is still a big problem in Iraq, and there's lots of blame to go around. Much of it goes to the usual suspects: too many insurgent attacks, too few experienced engineers and technicians.

But there's another factor, big and getting bigger, which you probably haven't read about. It's one that Prime Minister Nuri Kamal al-Maliki and his bureaucrats could solve quickly, if they wanted to: Iraq's Ministries of Oil and Electricity are at loggerheads.

Ivory Coast sees '08 oil output at 80,000 bpd

LONDON (Reuters) - Ivory Coast expects its crude oil production to rise to 80,000 barrels per day in 2008 from 48,370 last year, its mining and energy minister said on Monday.

The West African nation hopes to benefit from record high prices for oil of more than $106 per barrel on world markets.

Browne joins green business

John Browne, the former chief executive of BP, has underlined the growing commercial value of tropical forests at a time of global warming by joining a business that claims to mix "ethical" conservation with selling carbon credits.

Browne's appointment at Sustainable Forestry Management came as oil giants Shell and ExxonMobil announced they might sell their joint venture in biofuels business, Infineum.

Climate and food will shape future

At present, there is growing evidence that global warming is proceeding at a more alarming pace than previously forecast. But there is also evidence of a more rapid political response. Both mean the economic consequences will accelerate.

The second trend is in soft commodity prices, which have turned a corner that is likely to be not merely cyclical but possibly the most fundamental change since the beginning of the industrial revolution. For decades, real food prices have been falling as the gains in farm productivity – the “green revolution” – outstripped demand growth. The prospect now is for a steady rise in real food prices, farm incomes, land prices – and third-world hunger.

China: Crude imports at record levels

The mainland last month raised crude imports to record rates at 3.6 million barrels per day, preliminary customs data showed on Monday, as state refiners rushed to boost inventories after a severe diesel shortage late last year.

US Vice President Dick Cheney to visit Middle East

In a statement, Cheney’s office said US President George W Bush asked him to discuss issues of mutual interest with key partners in the Middle East.

Most likely issues on the agenda will include record high oil prices with Saudi King Abdullah and regional tensions in Turkey.

Energy boom fuels need for delay cover

The rise in oil prices coupled with increased demand has seen a boom in global energy construction projects.

This boom has put a huge strain on the availability of skilled contractors, raw materials and specialist machinery, leaving contractors and owners looking for extra construction insurance against delays.

La Niña threatens copper mining in Chile

Chile faces an energy crisis that threatens copper mining - its economic mainstay - as hydroelectric dams gasp over the worst drought in 100 years and natural gas supplies are cut off in the mineral-rich north.

Flat Pa. gasoline tax revenues may take toll on state finances

Just 16 months ago, an 11.5-cents-a-gallon gas tax was how Gov. Ed Rendell's transportation funding commission proposed generating much of the $1.7 billion a year it said was needed to maintain roads, fix bridges and underwrite mass transit.

But a bleak future for gasoline tax revenues was a central part of the argument that House Majority Whip Keith McCall, D-Carbon, has been making in defense of last summer's I-80 tolling law. McCall said it was not as if even a 2-cents-a-gallon gas tax had a prayer of making it through the Legislature.

He thinks tolls will be a more reliable stream of future revenues as gas prices soar, sales of hybrids account for more of the total fleet and people drive fewer miles.

Working on the railroad

At a time when ethanol-fueled hybrid vehicles are all the rage, a more traditional mode of transportation is experiencing a quiet resurgence.

Railroad operators say increased business and a graying workforce are about to create a shortage of locomotive engineers and conductors in the United States. Seeing a field that needs workers, Bucks County Community College is trying to launch a basic training program in locomotive engineering and conducting.

Chase Manhattan Predicted Peak Oil in 1956

After the world peak in total petroleum liquids occurs, we will likely be told that the permanent energy crisis we are experiencing was a result of our not understanding energy or perhaps ignoring some obscure experts. We will likely be told that our energy policy of the past really was not an energy policy but that no one really knew what was happening at the time - that it was all just misguided, unorganized optimism and that we could not have done anything differently given the circumstances of the time. This is far from the truth.

In reality, all the information was on the table in the decade of the 1950s. Recoverable resource estimates in 1950s - which have proven to be highly accurate - indicated that we needed to be very careful with how we planned our future. Various experts including Hubbert, Pogue and Hill of Chase Manhattan Bank, and Andrew Crichton predicted that U.S. oil, natural gas, and coal resources could not possibly support a high growth economy for any reasonable length of time. A rational review of the recoverable resource estimates of the time suggests that we needed to begin a long term plan to create a sustainable society based on proven renewable energy sources.

Sasol to spend R300m on coal-to-liquids feasibility study

Showing its commitment to the proposed new 80 000 bl/d coal-to-liquids plant, project Mafutha, the Sasol board has committed R300-million to the feasibility studies for the project.

Corning putting lots of eggs into emissions-filters basket

Corning Inc. has survived for 157 years by betting big on new technologies, from ruby-colored railroad signals to fiber-optic cable to flat-panel TVs. And now the glass and ceramics manufacturer is making its biggest research bet ever.

Under pressure to find its next hit, the company has spent half a billion dollars — its biggest wager yet — that tougher regulations in the U. S., Europe and Japan will boost demand for its emissions filters for diesel cars and trucks.

Before the flood

The countries of Europe must devise urgent strategies to deal with the consequences of climate change, as our report clearly shows.

Remembering Marie Antoinette

Converting food into energy is a technological solution to the fuel crisis, but raises grave moral and ethical questions.

Overwhelmingly white, the green movement is reaching for the rainbow

"What's a nice black guy like me doing in a movement like this?"

Van Jones strides the stage at the Langston Hughes Performing Arts Center, a charismatic lawyer who grew up in rural Tennessee, graduated from Yale Law, and founded the Ella Baker Center for jobs and justice in Oakland.

Tall, 39, his pate shaved, he cuts a striking silhouette in a black turtleneck and blazer, but it's his daring message that electrifies the crowd. He's in Seattle to talk about "The Unbearable Whiteness of Green" and how the environmental movement needs to include people of color and the poor if there's any hope of slowing global warming.

Shake-up could be coming in electricity

SACRAMENTO – Eight years after San Diego's long, hot summer of soaring power bills and blackout scares, the issue of electricity deregulation is back.

Despite opposition from legislative leaders, the California Public Utilities Commission has begun a process that could allow businesses and homeowners to bypass utilities and buy power on the open market.

View from the peak

Oil has fuelled the expansion of industrialised societies for 100 years, and it is an excellent source of energy for production, transport, mass tourism and trade. Rising standards of living in many countries over the past 50 years have depended on cheap oil, and it seemed that the supply was nearly endless. But oil was a windfall gift to us from the Earth's geological history and it is finite, not renewable. We will consume most of the remaining oil within the next few decades.

We are entering, or are close to, the so-called "peak oil" period, when production will level off. Despite intensive exploration, discoveries have been dwindling in most regions of the world since the 1960s, even as demand for oil continues to rise. After worldwide oil production reaches this peak period, probably before 2010 according to many analysts, oil production will eventually begin to decline. There will be some fluctuations, but the longer-term decline is inevitable, and irreversible. It has been estimated that, within 40 or 50 years, we will have a post-oil economy.

A Primer on Oil Prices

“The tripling of oil prices since the summer of 2003 has unleashed forces that within the next two or three years will bring oil prices tumbling back down to below $50 a barrel.” So said John Cassidy, writing about “The Coming Oil Crash” in the January issue of Conde Nast Portfolio. Yes, the price of oil will come down, though no one knows exactly when. It has topped $100 a barrel and there are indications it could go higher.

There are vast forces at work regarding the price per barrel of oil and one of them is the speculation that has driven up the cost despite the fact that there are ample supplies. The problem is not lack of oil, but whether it can be shipped to a waiting world. The potential for conflicts in the Middle East and elsewhere worries the marketplace.

UK business secretary to offer guidance to Ofgem on fuel poverty

LONDON (Thomson Financial) - The UK plans to give fresh guidance to the energy regulator on how to combat fuel poverty in the UK, the UK business secretary said.

In a speech to the Future of Utilities conference at the Adam Smith Institute, business secretary John Hutton said he plans to renew the current guidance given to Ofgem in 2004 to eradicate the number of households living in fuel poverty in the UK.

Oil is Canada's ace in any revisiting of NAFTA

NAFTA's energy section broadly unfetters energy trade between the U.S. and Canada. But it adds a virtual guarantee of U.S. supply. (Mexico got a "pass" on energy.) Neither country may reduce the proportion of its energy exports to the other relative to the "total supply" of the exporting country during the prior 36-month period. The rub is that "total supply" includes shipments to its domestic and foreign users.

But if you look at the current energy landscape, China wants to buy Canadian energy. Canada imports more than 55 per cent of its oil needs. Canada continues to be the largest oil and gas supplier to the U.S. Let's assume Canada continues to consume the same quantities of its own energy production and importation. If so, could Canada sell energy to China, or any country other than the U.S.? No. The proportionality maintenance obligation prevents that.

California Needs More Urban Density

As any of us who have lived in the area realize, rents are nearly unaffordable in the urban center of LA - the place where it's easiest to live without a car. Lazarus opens his column with the story of a single mother who makes $38K as an admin assistant and who can only afford a rental way out in Lancaster. This is a familiar story to me - I know a LOT of Californians who make a similar commute. And as oil prices soar toward $4/gal, it is becoming more difficult for working Californians to get around.

Canada to Impose Additional Greenhouse Gas Rules, Globe Reports

(Bloomberg) -- Canada will require new oil-sands projects and coal-fired electricity plants to capture and store most of their greenhouse gases as part of new climate-change regulations to be introduced this week, the Globe and Mail said.

'Gusher of Lies' Argues Persuasively That Energy Independence is an Impossible Dream

Lt. Gen. Russel L. Honore', who famously admonished reporters covering Hurricane Katrina on Sept. 20, 2005 not to get "stuck on stupid," retired this past January. The native of Louisiana, who describes himself as an African-American Creole, could have a great second career telling the politicians -- including all the Presidential candidates past, present and future -- not to get stuck on stupid about "energy independence."

As Robert Bryce points out over and over again in his "Gusher of Lies: The Dangerous Delusions of 'Energy Independence' (PublicAffairs, 384 pages, $26.95) there is no way a nation that consumes fossil-based energy at our rate can become self-sufficient in energy. All the Toyota Priuses in the world won't change the stark fact that there is no substitute for oil, he writes. We've been an importer of petroleum since 1913, and we get most of our imported oil these days from NAFTA neighbors Canada and Mexico.

India: Tax holiday withdrawal to hurt profitability

NEW DELHI: Indian Oil Corp on Monday said the move to withdraw tax holiday to new refineries will result in lowering of profitability of its Rs 24,000-crore Paradip refinery in Orissa.

"The rate of return on capital invested in the 15 million tons a year refinery cum petrochemical plant will be lower by 1.5-2 per cent," IOC Chairman Sarthak Behuria told reporters here.

Oil groups suffer Gulf of Mexico setback

Disappointing oil exploration results in the Gulf of Mexico are upsetting the hopes of US oil majors for big new findings in an area free from interference by foreign, state-owned oil companies.

Wood MacKenzie, the energy consultancy, said in a new report that findings in the Gulf in 2007 were the lowest of the past decade. With a total of 553m barrels of oil equivalent, these new reserves were less than half of what was found in 2006.

The age of triple-digit oil is here to stay

I don’t think they have learned their lesson.

Brokers are STILL chasing the oil price higher with their forecasts. Last week, Barclays Capital upped its 2008 West Texas Intermediate price forecast to an average of $97.70. This is more than $10 a barrel higher than its previous forecast. It also upped its forecast for Brent to $96.40 a barrel. This is better… but I think they could still end up red faced.

Oil spike to last through 2008: OPEC president

ALGIERS (Reuters) - Oil prices will stay at current high levels for the rest of this year due to speculation and geopolitical tensions, Algerian state media on Monday reported OPEC President Chakib Khelil as saying.

Prices could retreat in 2009 with a recovery of the U.S. dollar in foreign exchange markets following the election of a new U.S. president, and as fundamentals reassert themselves as major market forces, he was reported as saying by government newspaper El Moudjahid and state news agency APS.

Cost of gas rises to record, and could go higher

NEW YORK - U.S. average retail gasoline prices have reached a new high of almost $3.20 per gallon and will likely jump another 20 to 30 cents in the next month, worsening the pain of consumers struggling to make ends meet in an economic downturn.

Investing in the petro-loonie

Can you connect these economic dots: the U.S. dollar, world oil supply/demand, the world price of oil, Canadian oilsands, the Canadian dollar, and Canadian energy stocks? It may seem simplistic, but here is my spin.

America's hottest export: Coal

St. Louis-based Peabody Energy Corp. shipped more coal overseas in the first six weeks of this year than it did all of last year, said Chief Executive Gregory H. Boyce.

"The globe — and we look at the whole globe — is short of coal for the needs of demand," Boyce said in an interview. "That is now pulling huge amounts of exports out of the U.S."

Solar Energy Firms Leave Waste Behind in China

Because of the environmental hazard, polysilicon companies in the developed world recycle the compound, putting it back into the production process. But the high investment costs and time, not to mention the enormous energy consumption required for heating the substance to more than 1800 degrees Fahrenheit for the recycling, have discouraged many factories in China from doing the same.

Russia, Nigeria Cut Gas Sales, Raising Importer Costs

(Bloomberg) -- Russia is forcing Exxon Mobil Corp. to abandon plans to export natural gas to China. Nigeria is requiring explorers to share output with its citizens. Indonesia will cut sales to Japan.

Countries holding almost half the world's gas are curbing shipments to meet growing domestic use, hurting importers from the U.S. to Japan. Prices for the heating fuel may rise 50 percent within five years on the New York Mercantile Exchange as a result, said Chris Jarvis, president of Caprock Risk Management in Hampton Falls, New Hampshire. He anticipated the rally in gas prices during the past month.

UAE becomes third largest oil exporter

Steady capacity expansions have turned the UAE into the third largest oil exporter in the world although it lags behind in production capacity. Estimates by the International Monetary Fund (IMF) and official US sources showed the UAE was the third largest oil exporter in 2006 and was expected to have maintained that position in 2007.

Yemen to increase oil production up to 500,000 barrels

Yemen will increase its oil production to 500,000 barrels daily by 2010, advised Minister of Oil and Minerals, Khaled Bahah, last Wednesday.

In a statement to Saba Bank, Bahah said that the ministry is still working to improve the current production blocks and develop new exploratory wells to raise the production in addition to attracting further international oil companies to invest in the country.

Dubai plans $200m oil storage terminal

Dubai: Dubai Multi Commodities Centre (DMCC)Dubai Multi Commodities Centre (DMCC), Star Energy Resources and Tropicana Trading DMCC on Saturday announced the signing of a framework agreement to build a world class oil products storage facility at Techno Park in Dubai.

The proposed oil storage terminal will involve an estimated investment of $200 million.

The facility will store a wide range of oil products, including gasoline, gasoil, diesel and jet fuel, as well as offer complementary services such as blending.

Australia comes in from the cold on climate change

SYDNEY (AFP) - Australia will end years of chilly isolation on climate change when its ratification of the Kyoto Protocol comes into force Tuesday but remains one of the world's worst polluters for its size, analysts say.

Tony Blair to attend G20 meet in Japan: official

TOKYO (AFP) - Former prime minister Tony Blair will visit Japan this week to discuss climate change at a meeting of the world's 20 biggest polluters, officials said Monday.

The so-called Group of 20 brings together government officials as well as members of the private sector and non-profit organisations to discuss climate change, clean energy and sustainable development.

Southern Baptists fight climate change

NEW YORK - In a major shift, a group of Southern Baptist leaders said their denomination has been "too timid" on environmental issues and has a biblical duty to stop global warming.


Solar Company Says Its Tech Can Power 90 Percent of Grid and Cars

Solar-power-plant company Ausra has released a paper claiming that solar-thermal electric technology can provide 90 percent of U.S. grid electricity, with enough left over to power a fleet of plug-in electric vehicles. The company estimates that such a changeover would eliminate 40 percent of the country's greenhouse gas emissions with a land footprint of 9,600 square miles, about the size of Vermont

I recently came up with a very similar figure:

Running the U.S. on Solar Power

My calculator indicates...an area of 9,531 square miles, which is equivalent to a square of just under 100 miles by 100 miles (which would be 10,000 square miles). That's a large area, to be sure. But the possibility is there. A lot of "land" is available right now of rooftops.

A couple of caveats. First, this calculation does not make a provision for a mass migration to electric transport. That would clearly require (a lot) more power.

However, note that my calculation - based on an actual solar thermal plant - did not include anything extra for electric transportation.

I believe I've seen stats comparing land usage of solar versus land usage for coal. Coal usage of course is not just the land where the plant is, but land where the coal is stored before transit, and the land that is mutilated upon mining as well. Large amounts of train cargo capacity is taken up by coal transports as well. Water usage from coal and nuclear is also an issue.

As the main article points out, there is a lot of available "land" in the form of rooftops and also parking lots. A parking lot with solar panels above vehicles would provide shading while charging cars or dumping power into the grid. A win-win by many measurements. In hot environments, having solar panels on the roof to allow air space between the panels and the roof allows the roof to be shaded, and less cooling requirements for the building.

Interesting comment about the reduced cooling requirements. In computing solar output, I guess solar companies should start talking about imputed output as well, from the cooling effect. On the other hand, what would the effect on heating be on sunny days in the winter.

This is worth considering, and has a number of useful combinations that can make Lemonade out of this in either seasonal extreme.

Here in a Colder climate (Coastal Maine), the shade on my roof ought to have barely a marginal effect on my 'Well-insulated' Attic, while the sun originally hitting that rooftop better NOT be considered some piece of my Passive Solar Heating Scheme, since surely some 95% or more of the heat of Sun hitting shingles is reflected or blown away, and never gets inside. In addition, the colder air keeps the PV functioning at a higher efficiency than a "hot" panel in warmer climes.

In Hot Climates, (perhaps all), it could be useful to Water Cool the panels, and let that be a preheating stage for your domestic Hot Water or Other Heating Needs. If PV gets to the point of being a Status symbol, I've even advocated putting 'Dummy' Panels up on one's Phoenix rooftops (my father-in-law, anyway), and get the benefit of the shade, plus the Cache'!

I'm eager to cover my rooftop with PV and Heating Panels of one sort or another, to keep these shingles young and fresh, and keep my attic from 'sweltering up' every summer. The Hot air panels that oftentimes have to get covered in the summertime, I have considered keeping active and ducting them to the Dryer, switching off the heater coils.. and to a Food Dehydration center in the basement. (I know, I know, clotheslines, yada, yada.. but we have very little, not too sunny- yard space, and the passage from Washer to yard is a challenge)

Antidoomer.. you got good discussion started today. Good work!


New solar-panel technology coming later this year will combine a solar PV panel with thin-plate back panel with fluid channels that absorbs most of the thermal energy of the PV cells (which isn't converted to electricity). With a single installation, there's kilowatts of electrical power to net-zero the electric bill, and all the hot water the family needs. This has the additional advantage of cooling the PV silicon so it's about 10% more efficient - that is, a typical Sharp, Sanyo, or Evergreen panel goes from 15% to about 16.5% efficient.

If you're interested in this, send me private email or look me up at the American Solar Energy conference & trade show in San Diego 5-8 May.

Dick Lawrence
dlawrence2 (at) gmail (dot) com

Sounds interesting and exciting Dick. Can you post a link concerning this technology?


Potential Limits to Solar Cell Manufacture

Solar power is all the rage2 in the energy markets because of the thin film revolution, which promises low-cost mass production of photovoltaic (PV) cells (Technology Review, July 27, 2007). Leading the way is First Solar, which uses cadmium-telluride thin-film PVs in its solar panels. Scientific American's solar "grand plan" cites cadmium telluride as the cheapest option today.

To provide electricity at six cents per kWh by 2020, cadmium telluride modules would have to convert electricity with 14 percent efficiency, and systems would have to be installed at $1.20 per watt of capacity. Current modules have 10 percent efficiency and an installed system cost of about $4 per watt. Progress is clearly needed, but the technology is advancing quickly; commercial efficiencies have risen from 9 to 10 percent in the past 12 months...

First Solar has its detractors, who "assert that the company could be hurt by limited supplies of raw materials in the future and increased competition." It turns out that tellurium is one of the nine rarest elements on Earth. Here's the smoking gun from altenergystocks.com—

In 2006, First Solar's 60 megawatts of production consumed 4% of the world's annual supply of [tellurium]. In 2008, analysts expect revenues of approximately 4x the 2006 number, meaning they will need approximately 16% of new annual Tellurium supplies.

60 megawatts is nothing, a drop in the bucket. So much for cadmium-telluride thin film. But what of the many other alternatives?

For four years now, purified silicon has been in short supply. See the Wall Street Journal's The Silicon Shake-Up (subscriber only, September 21, 2007). Polysilicon prices soared from $25/kilogram in 2004 to around $200/kilogram in 2006, and PV production growth has come to a virtual halt. Sharp, the largest solar cell manufacturer in the world, "produced panels that could generate 434 megawatts of electricity [in 2006], or the equivalent of a single gas-fired power plant, about the same amount it made in 2005." The shortage has spurred the thin film craze because investors are leery of the polysilicon supply & demand imbalance, even though thin film PVs are only 7-10% efficient in converting sunlight, as opposed to about 15% for commercial silicon PVs.

In the case of depletion, as with cadmium telluride, the optimist might also respond that there are other alternatives, such as the copper-indium-(gallium)-diselenide (CIS or CIGS) thin film technology being pursued by Siemens, Nanosolar or Global Solar Energy. The risk is that the current bullish commodities market may become a permanent feature of the economic landscape. Take the indium used in thin films. Resource Investor reports that—

The Earth is estimated to contain about 0.1 ppm [parts per million] of indium which means it is about as abundant as silver. However, bullish supply-demand fundamentals have propelled the price from US$70/kg in 2001 to over US$1,000/kg today.

Indium is produced mainly from residues generated during zinc ore processing but is also found in iron, lead, and copper ores. In recent years, supply has decreased after a number of Chinese mining concerns stopped extracting indium from their zinc tailings.

At present, about 75% of the indium in the world is used in the manufacture of Liquid Crystal Displays (LCD’s), in computer screens and the new generation of flat screen TVs. The LCD industry is expected to achieve growth rates exceeding 30% over the next three years.

Looks like the solar cell industry will not be efficient for the campaign to...........


Wow, Cherenkov, thanks for not providing something helpful on my question and posting a unrelated answer, thanks! Anywho, here's a article on how indium could be replace by carbon nanotubes.


To be fair, what Cherenkov just did, pulling a grand (in this case negative) conclusion from a single article, as if that said it all, is the same tactic that a number of your posts get so attacked for. I think there's an implication in them that says 'So there. Here's an alleged solution. What energy problem?' Even if that's not really your intention, it is the subtext that I sense from them again and again, and it doesn't usually offer much beyond a sort of Adamant Triumphalism, as opposed to simply hopefulness.


Anti: All this talk about the GIANT solar power industry. The solar power industry is a shrimp predicted to be a giant. This shrimp has been predicted to be a giant for quite a while now. Cherenkov was making a good point-a shrimp growing quickly does not a giant make.

Cherenkov is happy any time he can howl about Cars being evil.

I generally find Alan Drake's way of putting it much more convincing and productive, which is to say that Electric rail and Bikes make more sense than EVs. Adding a lot of exclamation marks and bold-type makes cherenkov's arguments weaker, not stronger. Misspent Energy, if you will.


As far as potential limits to solar cell manufacture, I found this report: Future State of the PV Industry - Trends and Technologies to be instructive.

First Solar has its detractors, who "assert that the company could be hurt by limited supplies of raw materials in the future and increased competition."

There may not be enough tellurium to cover all our rooftops with solar panels made from them but I'm sure there is enough for First Solar while we attempt it.

Sounds like a great idea, but likely isn't. Given that one needs 2 (that's two) layers of glass for minimal thermal insulation, the PV output will be reduced about 8% for each extra layer. Also, is the PV layer going to exhibit different spectral characteristics in the infrared (reflecting) vs. the visible (absorbing)? Otherwise, the infrared emissions will reduce the efficiency of the thermal collection side of the efficiency equation.

I saw a posting last week about a system using air cooling, without any insulating cover plates. That one looked like a complete waste of effort to me, since the thermal efficiency would go to zero when the ambient temperature was low. The result, no hot water in winter.

E. Swanson

There was a very popular exposition of this idea in Scientific American a few months ago. My question is, supposing the political decision is made to switch over to solar panels, and the appropriate funds would be found in a combination of public (tax-supported according to those authors) and private investment -- and that is some politics! -- what would be the environmental cost of building all those solar panels? Is it really that simple?

No, of course it isn't really that simple. I only did the calculation out of curiousity. I wanted to know if it was remotely feasible. The answer I got was "Yes, it is technically feasible from a land usage POV." You get a much different answer if you try to calculate whether we can run our present transportation system on biofuels. The answer to that is "No."

That is a great comment -- and the start of a useful political discussion that might actually advance the argument.

Here's the way I look at it.

Photosythesis is 4 to 5 percent efficient.
An ICE-auto is 15% efficient (maybe).

.045 * .15 = .00675

That's right. Less than 1/10 of one percent is translated from the sun to actual motive power. Now... why on earth would we consider depleting the soil and our aquifers, raising all food costs... for 1/10 of one percent?

Where are you kdolliso? There are limits to growth...

Photosythesis is 4 to 5 percent efficient.

Its less than 1% efficient in converting sunlight into sugars, starches or cellulose.

0.007 * .15 = 0.00105 (~ 1/100)

Everyday the world consumes 400 years of stored global sunlight. To become sustainable, we need to reduce our total global consumption by about a factor of 1/150,000.

That's just about the same figure National Geographic used in Aught Five. Technology is more efficent now.

With solar now providing less than one percent of the world's energy, that would take "a massive (but not insurmountable) scale-up," NYU's Hoffert and his colleagues said in an article in Science. At present levels of efficiency, it would take about 10,000 square miles (30,000 square kilometers) of solar panels—an area bigger than Vermont—to satisfy all of the United States' electricity needs. But the land requirement sounds more daunting than it is: Open country wouldn't have to be covered. All those panels could fit on less than a quarter of the roof and pavement space in cities and suburbs.


Solar Energy Firms Leave Waste Behind in China

Made from the Earth's most abundant substance -- sand -- polysilicon is tricky to manufacture. It requires huge amounts of energy, and even a small misstep in the production can introduce impurities and ruin an entire batch. The other main challenge is dealing with the waste. For each ton of polysilicon produced, the process generates at least four tons of silicon tetrachloride liquid waste.

I still wonder if mass production of silicon cells will have un-anticipated consequences. And solar-thermal will create some massive distortions in water supply. Not that it can't be done -- but there seem to be some major exclusions from the theoretical calculations.

Have you heard of Nanosolar?

They are already producing photovoltaic cells at about a tenth of the cost of traditional silicon photovoltaics, making the cost equivalent to the cost of coal produced electricity.

Nanosolar has been mentioned somewhat regularly here.

I think they are sitting in the 'Wait and See' box right now, to see if they can live up to their claims. Even if they are producing and delivering product now, my particular concern is that a much lighter, thinner, cheaper material might end up having a consequently abbreviated lifespan, thereby unhinging the presumed price or energy-input advantages.

As MFR energy becomes more dear, I hope to see a renewed emphasis on building products that will last, and get away from our Disposable/Replaceable Product model.

These 'Expensive' panels that we know can last decades might turn out to be worth the investment. I am glad that new developments are happening, just the same.

Bob Fiske

Solar Energy Firms Leave Waste Behind in China

The most important tidbit of information in this story is,

...more than 20 Chinese companies are starting polysilicon manufacturing plants. The combined capacity of these new factories is estimated at 80,000 to 100,000 tons -- more than double the 40,000 tons produced in the entire world today.

The cost of modules should drop precipitously with this amount of poly hitting the market.

"The cost of modules should drop.."

Not if demand remains strong.

For what they can do, I still say they're worth buying at today's prices. I tend to doubt tomorrow's costs will be better.


Lets be clear here. What is being talked about is solar thermal. In fact, for those wondering go look at that old popular science magazine. Solar thermal won't be on anyones roof or pavement space in urban areas. It is an array of mirrors that focuses the suns heat onto, usually some form of salt. The salt is super heated until it melts. The heat is transferred to make steam that drives turbines to make electricity.

This is not your mothers solar panel that turns the sun right into electricity on the surface of the panel. These are large scale set ups that would be constructed in desert areas, and maintained by governments or utilities. Their efficiency is amazing, and they can run 24/7 as the molten salt from the day time can continue to heat and drive steam turbines through the night.

The view of them is amazing. There is a sort of carona that forms at the top around the center. It looks like floating fire. Temperatures generated are amazingly hot, so do not try this at home.

Power towers are only one of a bunch of solar-thermal technologies that are in the marketplace. All of them have the advantage that they produce electricity more cheaply than photovoltaic panels and are easier to manufacture. Some of them, like Stirling Energy's tracking dishes are compatible with other uses. It will be interesting over the next few years to see which solar thermal approach proves to be the most common.

Don't Try this at Home

They all ready are. Look what you can do with an 8ft satelite dish.
Melt aluminum or lead, produce steam.

Take a look at the site

Point that thing at a Stirling engine, eh?

I wish I could find a Stirling engine the size of a Briggs&Stratton that worked.

Maybe a http://www.greensteamengine.com/

"—to satisfy all of the United States' electricity needs."

That phrase also has to be kept well-salted in these discussions, since these hypothetical numbers don't mean that the great majority of Solar Electricity Advocates are really proposing to satisfy ALL of our current current just with PV or CSP, and so that square milage is already a great deal smaller, as Solar shares the load with Hydro, CoGen, Wind, Tidal, some say Nuclear, whatever.

On top of that, or I should say 'Off the top of that' also comes all the countless reductions we can implement, whether it's efficiency, removing silly redundancies and luxuries, etc. How much can we cut out of this fatty energy demand of today? It's 25degrees out, but my fridge and a separate freezer are both still running, in a house that I PAY to heat around those chilled boxes. How many homes in the summer are being 'Heated' by that same fridge's compressor, as they spend money to cool that house? There's so much we can do that wouldn't even be a major change.. and then, there are the major changes..


It was in the upper 30s here last night and at least four or five people in my building were running their air conditioners. It got warm enough during the day that those people turned on the AC and it probably didn't occur to them at all that after the sun went down, they could have cracked a window.

These numbers are silly. Look at it this way: each household's electrical needs can be supplied by about 12 120W solar panels. The cost of that would be about $12-$25K, depending on whether substantial storage (batteries etc) would also be necessary. Compared to the cost of a house, that is not very much. There would be commercial needs too, but there is also lots of commercial roof space available. Add a bit of wind and existing nuclear/hydro capability, and you have a perfectly functional electrical system.

This idea that electricity needs to be some massive project hundreds of miles from people is based on expectations for existing coal-fired plants, where there are great economies of scale.

from Backwoodssolar.com:

$18,000 to $33,000

When Backwoods was off-grid, we ran 4 computers 10 hours a day, 3 answering machines, fax, 3 wireless phones, office and stockroom lights, work bench and shop tools. We also had all the usual residential power described in example #4, including several solar electric design refrigerators. A true Sine Wave inverter runs washing machines and power tools. Stereos, ceiling fans and appliances don’t hum. Includes automatic generator start as batteries or loads require. Battery voltage of 24 volt or 48 volt is recommended. 24 volt battery bank requires 6-volt batteries set up in multiples of 4, while 48 volt requires multiples of 8. This is simplified by factory assembled equipment.

SOLAR 2080 WATTS: (sixteen KC130 watt modules on two mounts of eight)
BATTERIES: (12 - 16 Trojan L-16HC or larger Surrettes, and cables)
OUTBACK Flexware 500 POWER SYSTEM: with 1 or 2 inverters
Recommended Generator: Kohler 10ERG

That's like saying ending the obesity epidemic in the US would just require everyone to eat differently.

I'm disturbed about that people are coming up with the same numbers talking about photovoltaics and solar thermal systems. Is this accurate?

I noted that once as well. I think the overall area required is similar, though. I had done a calculation of solar PV once before and came up with something like a 50 mile by 50 mile area, but there was nothing in there for infrastructure. The solar thermal plant has a lot of infrastructure associated with it.

A couple of caveats. First, this calculation does not make a provision for a mass migration to electric transport. That would clearly require (a lot) more power.

would it?


The problem is that you are trying to recharge when solar output is well past daily max. Without a good storage solution, this is a problem.

I am not basing it on us having 100% solar power but you do make a good point. cars could charge at work like Google's solar groves.

We can replace all heavy truck & railroad oil use with 2.x% of current US electricity use via electrified rail.

0.19% of US electricity is used to power the NYC subways, the Northeast Corridor, Long Island RR, subways in DC, Chicago, Philly, Boston, LA, Atlanta, Miami, and light rail in a couple of dozen cities.

Increase that 21 fold (twenty-one NYC subways, twenty-one LIRRs, twenty-one DC Metros, etc.) to 4% of current US electricity demand and such a massive build-out would truly transform the United States !

The lost growth and reduced demand of a severe recession could supply that much (6.x%) "surplus" electricity.

EVs are NOT the best solution, Urban Rail is.

Best Hopes for a de-emphasis on EVs,


Alan this argument is very compelling. And as for de-emphasis yes but...
Because of where so many people live unfortunately they likely never will see rail again. I'm talking about those 'outlying areas' where the tracks have long been hauled away and sold. If moving into urban areas is not a desirable option for everybody to do and frequent long commutes in FF vehicles will not be happening, we have some options, which also will not result in much added strain on the grid.

For those who still require individual or community transportation the time to begin mitigating for the perfect storm was a while back. Still amidst the scramble there is a growing group of us willing to adopt a minimalist approach. A successful strategy may include some EV use and look something like this.

We will plan and coordinate our trips very carefully with our neighbors. We will size the vehicle we use to the job being done, including where appropriate walking and pure cycling. We will anticipate whether or not something can be carried both directions. We will take our time to maximise efficiency and to plan and coordinate as oppotunity arises in route.

With this background and depending on which sphere of distance one is talking about there are some good niche markets for EV's imo. There is a growing group of enthusiasts playing around with the availiable lith-ion 'nano phosphate' rechargebles out there now with some very workable machines both in the two and three wheeled camp. These handle many recharge cycles and have great energy density. There are some of us loading up our Priuses and other small vehicles with substantial fare doing work that can be done by EV's or minimal hybrid machines.

When it becomes obvious to the average person that their transportation energy allotment is about to become a small fraction of it's former self, it is unlikely that government and industry will provide every thing needed fast enough to prevent a chaotic transition. I think this is where the tinkerer and innovators will continue to step in and have a role. The 'big wing' is definately urban rail but the small solutions aided by lifestyle are notable in their own right.

I generally agree.

BTW, I am reaching some tentative conclusions. Cost effective spending of $60 billion/year (perhaps 3 to 4 years to ramp up) will expand Urban Rail ridership by 28%/year (not compounded).

$400 billion would expand & electrify the intercity railroads MORE than required to replace existing truck shipments (speed & reliability + ton-miles).

This compares to French budget of 21 billion euros for new trams in the next decade and Swiss 31 billion Swiss franc rail improvements over 20 years (adjust for population & currency and this is > $1 trillion for USA).

Best Hopes,


In the US at least, we need to figure into the total cost of either wind or solar the cost of upgrading the electrical grid. The grid has been neglected for years, under deregulation. This article from EnergyBizOnline has the following to say:

The average age of power transformers in service is 40 years, which also happens to be the average lifespan of this equipment. Combine the crying need for maintenance with a shrinking workforce, and we may find that the 2005 blackout that affected parts of Canada and the northeastern United States might have been a dress rehearsal for what’s to come. Deregulation and restructuring of the industry created downward pressure on recruitment, training and maintenance, and the bill is now coming due.

Upgrading the grid isn't an issue if each user produces (and uses) his own. If the power is stored in a central location, or even shared among users, then a working grid is essential.

First, I agree with Duncan using the Grid as a main theme of things.
I don't think it will be up everywhere/all the time like today in 10-20 years

Upgrading the grid isn't an issue if each user produces (and uses) his own. If the power is stored in a central location, or even shared among users, then a working grid is essential.

Yes, but the grid would only have to be a town or a few houses. Think of "The Grid" as the internet, think of a single town or developement as a local network.

Carrying on the analogy, I can have just a few PC's to form an office network, I can have a "Local Network" of an electrical grid just for a whole farm, a group of houses, a town, and up.

I have seen a microhydro(24/7/365 charging) run a small neighbor hood in NC. Neat stuff.


Can solar thermal plants make use of existing roof surfaces or are those two separate trains of thought?

They are different trains of thought, in that you won't have any solar thermal on your roof. That will require dedicated land. But I think the solar capture per square foot is similar to PV which can be on your roof.

That depends. There are folks offering both heliostats and concentrating solar collectors to drive absorption chillers.

Anything it's possible to rig up on the ground, it's possible to rig up on the roof.

Whether it is economical is another question - one which IMO has to deal with not only the difficult-to-decentralize factor and the additional-construction factor, but the expert-install factor and the surveying for cloudcover & terrestrial obstructions factor. Concentrating optics require good alignment, a proper mounting, and non-diffuse light, while non-concentrating PV can simply be plopped up on any equator-facing surface if need be.

Is that bit about solar capture per square foot remotly true?. According to other posts it will take an area of 10,000 sq miles to supply the US electricty demand. I read somewhere that to meet it with solar panels would require half the country to be covered with pv cells. Which is right?

I read somewhere that to meet it with solar panels would require half the country to be covered with pv cells.

Not correct. I did that calculation prior to doing the solar thermal calculation. They are the same order of magnitude:

A Solar Thought Experiment

Considering only the square footage for the cells - no infrastructure - I came up with the following as a first pass:

I have been browsing through some performance numbers for solar cells, and I am finding pretty consistently that one square foot of solar cell can generate about 12.5 watts at peak power. Here is an actual cell from GE (PDF download) that produces 200 watts in 15.68 square feet (12.75 watts per square foot). So, let's conservatively say 12.5 watts per square foot. To match U.S. electricity capacity would then require square footage equal to 882,125 million watts/12.5 watts/sq ft, or 70.57 billion square feet. This is equivalent to 2,531 square miles, or an area of 50 by 50 miles of nothing but solar panels.

And there's this other good news:

Greener Green Energy: Today's solar cells give more than they take

In the 1970s, manufacturing a solar cell required about as much energy as the cell could produce over its 20-year lifetime, so using solar power provided little if any energy gain. Also, as recently as 10 years ago, total emissions from solar cells were about twice what the new study shows. "Solar power has been criticized in the past" for requiring too much energy to produce, says Vasilis M. Fthenakis of the Brookhaven National Laboratory in Upton, N.Y. "But what we find out is that those criticisms are not true with the new technologies."

Although I had little doubt. I think the panels of the 1970s had more than a 20 year lifetime.

The key to the scenario, however, is developing the ability to store energy for 16 hours, thus creating a stable power source through cloudy periods and the night, a feat that has so far eluded engineers.

Also, no mention of the cost.

I think solar is the solution, but better be realistic about it or it won't get done.

I actually did the cost calculation as well in a previous post. I came up with $6 trillion.

$6 trillion - wow, that's 3 Iraq Wars!

Is the Iraq war over?

Maybe only one.

I know... :-(

I put it in terms of how much oil we use. At today's prices, we will go through $6 trillion of oil in less than 8 years.

Thank you for that figure, that is helpful.

I've thought some more about the $6 trillion--you realize the only people with that kind of money these days are the Gulf sovereign wealth funds...

The US could easily spend $6 trillion over the next ten to 20 years to completely overhaul its energy system. As Robert mentioned above, it is only eight years of oil supply.

US 2007 GDP was about $14 trillion. Spending $6 trillion over a twenty year period would require about 2% of GDP (assuming the cost grows at the same rate as GDP).

As Robert mentioned above, it is only eight years of oil supply.

Now closer to seven, at today's oil price.

"a land footprint of 9,600 square miles"

If my arithmetic is correct, the entire world's population, with all infants prone and all others standing would if tightly packed require an area of about 500 square miles.

I can remember Terence Corcoran, the main doofus at Toronto's Financial Post, in another of his Julian Simon inspired columns arguing the fanatics' case against population growth alarm by stating that the entire worlds population would not even fill the bottom of the Grand Canyon.

Anyway, the point is that the ecological footprint is a great deal larger than the sum of the area humankind occupies at any given moment.

What is the footprint of solar power, thermal, panel or whatever?

The original claim was by Ausra. They use linear parabolic mirrors. As mentioned before, this is an on the ground application. The economics favors large systems and a good climate, such as the mojave. Clearly to power the US, that would require a very robust grid be built. Thermal storage is supposed to be relatively affordable, concrete or crushed rock can be used. Of course the storage really only covers a single overnight period, a week of cloudy weather would present problems. For smaller sites I suspect PV would be favored, as huge scale isn't needed to be economic. Some of the proposed concentrated PV schemes claim they can get to low cost, but that still needs to be demonstrated.

For storage, what about mating solar-thermal with that in-ground system under that town in Canada?


Deflation to Hyperinflation in Practically No Time at All?

As I understand the deflationists’ argument, we have had the inflation (expansion of money & credit), and we are now in deflation (contraction of money & credit), and we won’t see hyperinflation until foreigners largely stop lending money to the US government.

One of the “benefits” of a recession/depression is that prices generally fall as the economic excesses of the inflationary period are corrected. What happens as we continue to see rising food & energy prices in nominal and/or real terms in a deflationary period?

My position for some time has been that rising oil prices (contributing to rising food prices) was the match that triggered the mortgage forest fire. What if continued increases in food & energy prices is analogous to air tankers dropping jet fuel on to a forest fire, instead of fire retardant?

Since the US government and US consumers are the biggest debtors in the world, the “attraction” of hyperinflation will probably prove irresistible. One of the things discussed on CNBC this morning was the Fed buying mortgage bonds directly. Regardless of the legal niceties, I suspect that we are going to proceed quickly from deflation to hyperinflation.

So, how long before foreign creditors start becoming reluctant--or outright refuse--to buy US government debt?

Countries imo and if they are looking out for their interest will use those trade surplus dollars to buy energy and food supplies.

hyperinflation, stagflation, inflation or deflation we(the masses) are headed for a lower standard of living. as eddie chiles used to say "if you dont have an oil well, get one".

My position for some time has been that rising oil prices (contributing to rising food prices) was the match that triggered the mortgage forest fire. What if continued increases in food & energy prices is analogous to air tankers dropping jet fuel on to a forest fire, instead of fire retardant?

To continue that analogy, perhaps we should look at combustion theory and chaos theory -- The giant Ponzi scheme that underlies the U.S. "service" economy simply sucks in greater and greater fuel supplies (money) as the conflagration proceeds and the fire just gets hotter and hotter as more is drawn in by the vacuum at the center.

I suppose it has to burn itself out, just like a forest fire -- there is only so much a fire retardant can do. Many will suffer. Lowering the price of oil at this point won't likely change much -- if it was a factor, it was only kindling.


Whatever "price" oil gets, everything else
relates to that price.

Ergo:" Some ask how low the U.S. Dollar could go and that answer is simple. The U.S. Dollar could go to zero because it is a fiat currency with no real tangible backing. Every fiat currency in the history of man has been replaced or collapsed and there is nothing fundamentally different between the U.S. Dollar and these other fiat monetary systems of the past.

"Bad things happen. Things go big-time wrong.

The Federal Reserve is stuck between a rock and a hard place. If they raise interest rates to the point where holding U.S. Dollars can outpace inflation they would need to raise them to around 20%. This would hurt not only the American people but the elite financial interests as well. As a result, the Federal Reserve is attempting to manage a slow inflationary decline of the U.S. Dollar which will allow the financial elite to more easily reposition themselves. Inflation hurts the poor and the middle class far more than the financial elite where as a deflation like what we saw during the Great Depression would hurt everybody across the board.

As this financial calamity continues, the corporate controlled media will likely say we are in a recession even though it will resemble more of a depression."


I have said a few weeks ago that I was firmly in the hyperinflation camp (after a massive reflation post liquidity crisis).

However, now I am unsure. It seems that FED/GOV operations are having little effect on the liquidity(solvency) crisis. This is horribly deflationary.

And in a deflationary depression related collapse, tied with price inflation due to commodities, all bets are off. Who has seen anything like this before??

PS - TIPS went NEGATIVE yield last nite. Which normally would look inflationary(and technically is a response to out of control inflation)...this is the paradox of what is going on right now!

I don't want to speak for Stoneleigh, but I was basically outlining my understanding of her position, although I think that she thought that hyperinflation may be years away (she might want to post a note).

In any case, if we take the foreign creditors stop buying US debt = hyperinflation as a reasonable proposition, my argument is that rising food & energy prices are acting as an accelerant, bringing forward in time the point at which foreign creditors largely stop buying US government debt.

Yes...however, would this scenario ever happen? The USA is NOT alone in this MESS...by far and wide.

Then we would have Asset deflation, internal monetary hyperinflation, and commodity inflation.

Hmmm...pretty sure that has NEVER happened before.

Two questions I have asked before:

What is the intrinsic value of the 100 largest financial institutions without the 100 largest oil fields?

What is the intrinsic value of the 100 largest oil fields without the 100 largest financial institutions?

Which produces a third question: Who is more important for your daily survival, the food/energy producer or the banker?

You can't eat oil but you can eat a banker :)

mmm...slow roasted banker with side of stewed Fed chairman and grits.

And there should be alot of banker brisket to go around.

Bernanke Burgers...

Every time i see Ron Paul and Ben go at it, this is what i think of.

I get the joke, but the reality is
that we do eat oil.

No oil. No food.

I'm pretty sure people ate food before 1859.

Population in 1859?

1.3 Billion +/-.

Today 6.7 Billion.

5.4 billion extra mouths and growing.

No big deal :P

Point granted. Yet, committed folks have shown that you can grow up to three tons of food on a tenth of an acre. There are millions of acres of lawns in the US. See www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2002/04/13/HO... and www.pathtofreedom.com/about/urbanhomestead.shtml). A lot of work converting those lawns, but hunger is a great motivating force.

Stephen Hren

Point granted. Yet, committed folks have shown that you can grow up to three tons of food on a tenth of an acre. There are millions of acres of lawns in the US.

Some Committed Folks can run a 4 minute mile too, but if you sit out side a Walmart or Target in a couple sections of town for a half hour and just look at the people, really look at them, you will conclude Many Many would NOT be expected to be That Committed.

Maybe I'm wrong about my average cul-de-sac neighbors, But I don't think so.

No oil. No food.

The major inputs are not oil but natural gas and electric power(in the US that would imply coal to a first approximation).


Puts the 'Green' in Soylent Green.

No, I think the phrase would be;

"Hungry? Dress-out a Bankster for the barbie"

Hi Jeff,

As you said, my position is that we'll see deflation first (a collapse in the supply of money and credit, mostly credit), followed by hyperinflation once international debt financing is no longer an option. While the governments are still dependent on international debt financing, the power of the collective through the bond market will prevent them from inflating. Any obvious attempt to inflate would result in sky high government borrowing costs (and therefore huge increases in longer term interest rates across the board, which would crash the economy very quickly). Of course I would expect institutions like the Fed to try to inflate surreptitiously, as they appear to be doing through the dumping of bad debt on Fannie Mae and Freddie Mac, but I don't think they have a snowball's chance in hell of being able even to keep pace with the destruction of credit that's already underway.

I couldn't tell you when we might go from deflation to inflation, although my feeling is that it could take some time. Deflation supports depression and depression supports deflation in a vicious circle of positive feedback, which means that phase could last for several years. The last time the deflationary phase lasted from 1929-1933, then there was another downward phase from 1937 that led directly to WWII. It depends on how long the credit collapse phase turns out to be, but my guess is that it would last at least as long as last time.

Ilargi and I are discussing the recent spate of margin calls (and subsequent defaults) over at The Automatic Earth. IMO we're about to see margin calls go systemic, igniting a firesale of distressed collateral. Over-leveraged hedge funds would be first in line, but the effects are likely to reach down the financial food chain over time, and perhaps quite quickly. Unfortunately, sales of distressed collateral depress prices, so that large amounts of collateral would have to be sold to meet much smaller amounts owing. As assets prices fall, more margin calls are issued, followed by defaults, more sales of distressed collateral, more margin calls. The potential for this to pick up momentum very quickly is considerable.

thanks for your efforts at TAE. I read it every day, one of four critical reads along with calculated risk, sudden debt and roubini's blog... and sometimes ft.
I find your (and roubini's/CR/SD) deflation vs. inflation views compelling, and continue to guess that following 1Q08 oil will decline under the pressures of US recession, reduced shoulder season demand, and possible increased world supply... no doubt, we will see higher energies later, maybe in 09 and certainly in/after 2010. FOr now, IMO commodities are the next bubble, won't last nearly as long as housing did - indeed, hedgies will shortly have to sell all, including those positions. Nevertheless, betting on small US E&P's was very good for me until I went short financials/builders last fall, the latter in large measure on account of roubini's and others' blogs.

best wishes.

I read TAE every day and I am very grateful for the work. I would suggest that if more feedback is desired it should be solicited. The current approach is very thorough and very ... scholarly? If the sort of flow of discussion found here is what is missing perhaps a final section each day with the top five unanswered questions would get the ball rolling. Oh, and not being able to see the original story when commenting is rather clumsy ... not sure how you fix it, but it is an impediment.

not being able to see the original story when commenting is rather clumsy ... not sure how you fix it, but it is an impediment.

It's easily fixed. Click on "show original post" (from the "post a comment" page), and the original post will appear. You can show and hide it at will.

Agree with you, all of it is great info. I'm going to keep holding some PBT for the great dividend income, otherwise I've gotten out of oil services etc. for the time being. I too have been short the financials and tech stocks for awhile with some of the Ultrashort Proshares (SKF, QID), these blogs and TOD have helped me tremendously in understanding the current markets and I am grateful. I will need any and all profits to help me literally "buy the farm"

WT, a couple of things to keep in mind when considering OPEC countries that have fixed their currencies exchange rate (pegged their currencies) to the US Dollar...

1) Some oil exporting countries only accept dollars for oil.

2) Pegging a domestic currency to another currency can work only if the foreign currency is fairly stable...the dollar is not stable.

3) The main criticism of fixed exchange rate (pegged currencies) is that flexible exchange rates serve to automatically adjust the balance of trade. When a trade deficit occurs, there will be increased demand for the foreign (rather than domestic) currency which will push up the price of the foreign currency in terms of the domestic currency. That in turn makes the price of foreign goods less attractive to the domestic market and thus pushes down the trade deficit. Under fixed exchange rates, this automatic re-balancing does not occur.

4) Can you imagine how high the price of oil (in dollars) would be if all oil producing countries unpegged their currencies from the dollar and oil became 'less attractive' to purchase in dollars?

For more on fixed exchange rates (pegged currencies) see link below...



An interview with John Williams of shadowstats.com. He sees depression, hyperinflation within two years, and possibly sooner.

I think shadowstats is one of the most important sites out there.

Aside: it is information/projections such as this that make all the future-looking posts here seem so absurd. Stuart's latest, for example, just blows away to dust in the face of such projections. I see a great need for inclusive modeling/projecting future events. We've got to get down to lookin at the system as a whole.

I.e., if we go into a massive depression coupled with fuel scarcity, rampant inflation, environmental disaster after environmental disaster... are any of these scenarios viable?

A perfect storm cometh... and my son will be the one riding it out. For his sake, and all other children today, we'd better get a handle on this and build a boat big enough to ride out the storm. Right now, I see a bunch of intellectualizing with little relevant, real world solutioning. (<-- new word!)


I don't think you need to see foreign central banks opting out of holding dollar reserves to see serious inflation.

M3 is exploding (16.8% growth), and this study from the European Central Bank shows an association between M3 growth and inflation: http://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp033.pdf

Austrian monetarist economic theory defines inflation as "growth in the money supply."
Only the Keynesian camp has to search for a correlation between increasing M3 and increasing costs of goods.
The 2 economic philosophies defining the word inflation differently causes a lot of confusion.

Austrian monetarist economic theory defines inflation as "growth in the money supply relative to goods and services."

It is amazing how often the second part is omitted, given that it is at least equally important as the first part. Even with a stable monetary policy we could have inflation if production shrinks.

Keynsian view is no different than that, they just seem to emphasize production not money supply. Pretty much like an argument which side of the coin is more important.

I think there an important distinction: monetary inflation v. rising actual cost of goods. An extreme version of the first is what happened in Weimar Germany. The rising cost of food and energy right now is (mostly or in part) a reflection of actual costs, just as was the drop in the price of computers.

The rising cost of energy is certainly causing a huge (bigger than huge) asset devaluation here in the US -- our whole suburban infrastructure (and suburbia R US) is turning into kaka. JHK is right about that. This devaluation is the opposite side of the coin of the energy rise and is still not monetary inflation.

What happens (is happening) next? The gov't has already told us: the printing presses will (in effect) run overtime. So declining asset values and rising costs (and prices) for consumer and other goods will be swamped by monetary inflation.

In other words, I think we may be able to achieve the unachievable: depression, runaway inflation and wider war -- simultaneously. Quite an accomplishment.

I should add: the one asset class that is not declining, just the reverse, in value is the hydrocarbon reserves. Simultaneous with the debasement of the dollar (held by the world public) will go the wars to retain or obtain control of these assets, more than protecting their private holders from the ravages of hyper-inflation -- until the wheels come of the chariot altogether.

Sovereign funds are using US dollar reserves to buy America. The best place to spend US dollars is the US. If they are going to be worthless in the long run anyway, why not use them to prop up Citigroup or B of A, or Merrill? Keep the game going a little longer. In the meantime, foreign reserves of US Dollars are dwindling. They are ALREADY not showing up for the US debt auctions. They are trying to get rid of it, not buy more. Americans tend to have a blind spot when it comes to themselves. America is bankrupt. America is in default. The world no longer is willing to lend to you. America is on the way down the tubes and NO ONE has an interest in bailing you out. This last little bit has just been getting the best use out of the reserves of US dollars they've been stuck holding. Feeding those US Dollars to US banks is like feeding them to a furnace making them evaporate instantly. That way you can dump all you want without an immediate crash of the dollar.

So, how long before foreign creditors start becoming reluctant--or outright refuse--to buy US government debt?

Before foreign creditors stop buying our debt they must first
a) stop accepting our dollars for their stuff, or
b) use the dollars they earn to buy our stuff rather than our paper.

There is some indication that the weaker dollar is encouraging the latter... meanwhile, foreign economies are tanking at the frightening thought that we might not be able to buy their stuff.

Two notable DKos links:

It appears a poster by the name of The Big E is running a weekly series, competing with the daily drumbeats :)

And also a post that I think captures the indignation inherent in the current mainstream American psyche quite well.

Sadly, the DailyKos is blocked at my work.

You should have the sense to tunnel via ssh to a squid proxy at your house, sir :-) Not so hard to do with FreeBSD ... unless you have no control over your desktop?

Search for "open proxy" and the method SCT describes will work in Linux, OpenBSD, osX, and even windroids with putty.exe. Good googlin.

Generally, places that block political sites also block open proxies. There are millions of kids trying to get to MySpace.com from behind school net filters, so the net filtering companies have gotten pretty good at blocking proxies, even though there are always new ones.

Virtually all ports are blocked to the outside, with all port 80 traffic going through an internal proxy. I can always pull it up on my personal laptop. Tunnelling through to my home box is something that a friend of mine does, but is not an option to me. I take my internet with me when I'm on the road. (Aircard.) I don't have a dedicated broadband connection at home, due to the fact that I'm almost never there. :)

A small shout about TOD and Yergin from The Truth About Cars.


Re: Dubai's oil storage terminal...

How do the costs work out for very large tanks like this? Obviously they're doing it for load levelling as much as anything else, but is this the most practical way to invest in a future with expensive oil? How far out do commodity futures go?

I tried to do an estimate, but I was mostly just averaging estimates for water tanks in the US, and it came out to most of a dollar per gallon incremental cost floor. What's this like internationally?

The blog Greater Greater Washington is concerned with land use in the DC Metro area, and the blog itself is quite entertaining. They got a series of posts publicized through the local newsradio institution, WTOP, for a day or two on a transit fantasy map for Metro and DC streetcars (looped morning report got me up and online the third time I heard it). This is the first time I've ever heard something like this smeared over a news feed, especially a relatively conservative one.

This article in the times UK is well worth a read:


Geoffrey, this is serious ELM stuff at the scale they are talking about!
More road for all those extra cars, steel concrete, energy use during construction.


Good deal of the Russian territory has permafrost. And the rest has long cold snowy winters.

I would think rather of Canadians and Americans who would be able to build roads suitable for such conditions.

But the British are the first in the queue...

Maybe if Condeleeza had wiped that grim reaper look off her face last time she sat opposite a Russian then America might be first in line for those contracts!

The top story at the McPaper this morning:

Mortgage lenders see more borrowers give up

On the front lines in the mortgage foreclosure crisis, lender and loan servicer Dennis Lauria says his deepest losses are from borrowers who owe more than their homes are worth and simply mail in the keys, rather than try to work out a new payment plan.

Also, the WSJ has this story:

Crude Awakening: Analysts Adjust: Predictions Revised As Prices Stay High; A Call for $200 Oil

Behind a paywall, and I haven't been able to find it on Google News. But it looks like Shell has picked it up.

No worries, prices are coming back down. Concluding paragraphs from the WSJ story:

Yet the surge in prices isn't as endless or as inevitable as it's looked lately, brokers and analysts say. Should the dollar find its backbone -- even briefly -- oil could come crashing back down, said Michael Korn, president of Skokie Energy, a Princeton, N.J.-based brokerage firm.

The effect of high prices on the economy also has the potential to eventually counter the impact of the dollar, a long-predicted threat that has so far yet to materialize. Mark Waggoner, president of Excel Futures in Huntington Beach, Calif., sees crude falling about $10, to $94 a barrel. But that will be a short-lived correction, as oil heads toward $120 by June, he said. After that, enough negative economic data will have accumulated to finally put the brakes on the rally. "I don't think it gets much past that," he said. "It will pull back."

New record of $107 just set. Meanwhile the Dow is hovering around the open trying to decide which way to go.

Oil traders need to watch for an announcement from Daniel Yergin that oil prices will soon be back below $100. I would view that as a strong signal that $200 oil is not too far away.

Out of curiosity do you think Yergin knows about his own currency?!!

Also the Yergin is tanking against a basket of major currencies!


The one year running average of ten of eleven benchmark crudes has exceeded 1.5 yergins and the eleventh is on the cusp.


Isn't one Yergin $38? I'm guessing you meant to say that ten of eleven are at 2.5 Yergins.

Truly amazing how influential he has been, with no particular substance to him. He has gotten so much mileage out of winning a Pulitzer. "The Prize" is pretty lightweight stuff, unlikely to impress any serious historian. And his "Commanding Heights" documentary is equally light (should I say "lite"), the sort of thing that you might consider showing to a high school class, if you aren't too picky a teacher. So many journalists are intellectually light that he is perfect for them.

But sorry, he has been discussed to death. Rant over.

No, I meant what I said. I was pointing to the one year running average.

By the way, the first (to my knowledge) benchmark crude to hit $110 is Louisiana Sweet; that's almost 2.9 yergins. I was betting on Tapis, but that horse let me down in the stretch and is now a nose behind Bonny Light and head behind LS.

Still, given today's activity, Tapis might be the first filly over the 3 yergin line tomorrow. Curiously, I can't find any odds being posted from Vegas. You'd think the bookies would be all over this race by now.

I should have been reading more carefully! The spot prices all nearing and clearing 2.5 Yergins had me reading what I was thinking, as opposed to reading what was on the screen.

Speaking of gambling etc. it's interesting to read what John Tierney wrote in August 2005 in the NY Times, after making a $5000 bet (actually, he put up $2500, Rita Simon, Julian's widow put up the balance), with Matthew Simmons. Here's a quote from near the top of his piece:

"After reading his prediction, quoted Sunday in the cover story of The New York Times Magazine, that oil prices will soar into the triple digits, I called to ask if he'd back his prophecy with cash. Without a second's hesitation, he agreed to bet me $5,000."

And a quote from the end:

"I'll extend Julian's challenge and consider bets from anyone else convinced that our way of life is "unsustainable." If you think the price of oil or some other natural resource is going to soar, show me the money"

Here's the link:


Simmons doesn't have his money yet - oil needs to average $200 (inflation adjusted) over the course of 2010. But I wonder if John Tierney is still taking bets.

Now more than 108 $/b.

In just a few days a plus of more than 10 $/b.

Just a few years ago this would have been a plus of 50%.
I don't want to imagine what will happen to be beyond 2010...

GAS INDUSTRY 2008: International trading faces an uncertain future

(This may be behind a paywall)

Natural gas trading continues to expand rapidly both globally and regionally, but there is a problem on the horizon. After the current wave of pipeline and liquefied natural gas export projects have been completed, additional export projects do not appear to be a high priority for most countries.


There is no short-term crisis of global gas supplies; projects under development will take the industry through the mid-2010s. But lead times mean the next generation of pipeline and LNG projects will need to be signed in the early 2010s. At present, aside from those few countries [...Australia, Turkmenistan, Libya, and Russia, and possibly Azerbaijan, Kazakhstan and Nigeria...], it is difficult to see other sources of substantial additional internationally traded gas.

Peak gas and ELM in the Financial Times today. The article is by Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies.

I saw a piece yesterday -- and can't remember where it was -- that the LNG import terminals in England and Wales are getting very little product. Not for lack of British demand, but for lack of supply. Does anyone know about this?

BTW "NeverLNG" refers to LNG importation in the Columbia River -- not to the potential utility of the process under some circumstances.

Climate change may spark conflict with Russia, EU told

European governments have been told to plan for an era of conflict over energy resources, with global warming likely to trigger a dangerous contest between Russia and the west for the vast mineral riches of the Arctic.

The NATO lemmings are being conditioned for another glorious drang nach osten.

The last EIA International Petroleum Monthly is out:


Category Dec 2007 Dec 2006 Dec 2005 12 MA1 2007 2006 2005 Share Peak Date Peak Value
All Liquids 85.73 84.21 84.70 84.63 84.63 84.60 84.63 100.00% 2007-12 85.73
Crude Oil + NGL 82.26 81.08 81.62 81.22 81.22 81.33 81.46 95.95% 2007-12 82.26
Other Liquids 3.47 3.12 3.08 3.41 3.41 3.26 3.17 4.05% 2007-07 3.81
NGPL 8.05 7.86 7.35 7.91 7.91 7.79 7.66 9.39% 2007-12 8.05
Crude Oil + Condensate 74.20 73.22 74.27 73.31 73.31 73.54 73.81 86.56% 2005-05 74.30
Canadian Tar Sands 1.52 1.18 1.16 1.42 1.42 1.12 0.97 1.77% 2007-03 1.57

New records have been set, December 2007 production for C+C is now very close to May 2005 (~97 kbpd).

Khebab would you be willing to tell me what you think the error is in the numbers. I use +/- 2mbpd as a sort of rule of thumb.

The reason I'm asking is my simplest model has broken down. We should have been heading towards 80 a barrel even adjusting for the falling dollar.

Given that the US economy is visibly slowing and demand seems to be slacking. And that we are close to the high level something is simply not adding up.

1.) KSA is right and a lot of speculators have entered the market.
2.) Export Land is going like gang busters.
3.) Real oil shipments are significantly less than reported.
4.) 1, 2, 3 are true but reporting is lagging well behind the current situation.

I doubt that these global numbers are all that much better than global reserve figures and they depend on the good faith of the reporting governments.

I'm of the position that the current "real" oil production seems to have taken a turn for the worse and that the current figure probably will be revised downwards some. But more important will be the totals coming out over the coming months since price is indicating that crude supply is having problems now.

On the speculation side way to many financial institutions are starting to miss margin calls if speculation is to blame then some people will start profit taking any day now and this current price level will crash.

If you look at the Commitment of Traders report, you'll see that although there has been a great increase in speculative buying of contracts, the net long speculative position and net short commercial position are not at records. They're high, but they actually decreased after the brief March 4 dip in the price.

So, we won't have the numbers for after March 4 until Friday, but the net spec long position is probably less than it was when oil was nearing $78 last August.

One thing we know for sure is that China has greatly stepped up buying.

But that alone is also not enough to account for the increase in prices. And neither is the dollar--that's worth about $2 of the price increase.

Production and/or shipments have either declined since the date of the EIA report, or they were never as high as the EIA reports.

On the speculation side way to many financial institutions are starting to miss margin calls if speculation is to blame then some people will start profit taking any day now and this current price level will crash.

If you look at a chart of oil prices, you will see a big dip on March 4. That was a day of profit-taking such as you describe. But what happened was that the inventory report the next day (March 5) showed a significant drop in crude supply, especially at Cushing. The commercial shorts got squeezed and the price shot up somewhere around 5% that day.

Since then, every dip has been met by an unloading of shorts, and the price has continued to rise.

We'll settle into a consolidation sooner or later, or maybe even have a short correction, but the upper 90s have now been tested twice, and are looking pretty strong.

Also, if you read around the trading blogs, you'll find that the sentiment is not all that bullish. All the TA people think commodities are in a bubble and due for a big fall. I think they're wrong, but that's not the point. All this bearish sentiment means we're probably not at the top, at least for crude.

One other thing, memmel. If you're actively trading crude contracts or something like USO, practically the most important rule is to not try to outguess the market and cut your profits short. Let the thing run until the market itself tells you to sell with clear price signals. If you don't have a trading system that provides clear buy and sell signals, you might want to pick up a book on the basics of timing techniques in commodity futures markets.

There's certainly no sell signal yet today.

Do you have a book you can recommend?

Thanks :)

The uncertainty on total production is probably around +\- 1 mbpd (look at the differences between agencies).

About speculation, I have not found any smoking guns so far. Speculative pressure is the simplest and more popular explanation but it does not seem to be supported by the numbers (http://www.theoildrum.com/node/3157).

Looking at the numbers, non commercial traders are trend followers and do not lead price increase so speculation is a very unlikely cause for the recent price increase.

Well, those two net export guys offered an explanation. . .

Hi Westexas (and others who might know),
Is it possible to find out if the total amount of oil for sale and actually delivered by these markets is decreasing due to your net export theory?
I am guessing (but do not know for sure) that the trading volumes are unconnected to the actual volume for sale, as people trade paper back and forth, but cannot actually take delivery.
I have unsuccessfully tried Google to find this info, but do not know the correct search phrase.
Best wishes, fringy

Fringy, there is nowhere you can get information on actual delivery made on NYMEX contracts. It is probably far less than 1% of all contracts traded. Most contracts are settled in cash and even those that are open at expiration seldom result in any oil delivered. It is a myth that either shorts or longs can be forced into either delivery or accepting delivery. If you are still open at expiration you can still settle for cash.

Ron Patterson

True but the key point is you have to settle. Which means you have to pay real money or get real oil. This makes it difficult to do one of the important parts of a bubble which is supply credit to unworthy market participants.

Think of it like poker and forcing everyone to settle the debts periodically.
Makes it hard to run up large gambling debts.

So the old rule of two standard deviations means a real number makes my +/- 2mbd pretty good.

In anycase we will see as we get more data over the coming months. Right now price seems to be indicating that things are starting to change maybe in a fundamental way compared to the past.

What I think we are seeing for what ever the reason is a bidding war starting to develop between the wealthier nations for the current supply. Once the richer nations become supply constrained I expect prices to have a strong floor that steadily increases with quit a bit of spiking.

Its a good time to keep a eye on stories from Bangladesh, Indonesia and the Philippines we should start seeing serious supply issues begin to develop. South Africa and Egypt also as well as South America.
I think this year will mean real and serious shortages start to show up.
Outside of Chindia/OECD.

I agree. Rich countries that use less oil per capita--and pay more per gallon (or liter) are still doing OK vs US economy. The people in the USA by and large have no alternatives to their cars and are getting into a global price competition over oil that they can't win I'm afraid.

I was wondering where you get your Canadian tar sands numbers from. I have been using this December letter from Statistics Canada that seems to say 2007 tar sands production for 2007 increased by 2.2% between 2006 and 2007 (increase from 180,000 cubic meters a day to 184,000 cubic meters a day). Are there more recent estimates out?

I don't have the link handy but it's coming from the EUB or the NEB. I'll send it to you.

The topic of margin calls I brought up yesterday has triggered a lot of questions all over the web, amongst others here at the Oil Drum, at Sharon Astyk's site, and of course at The Automatic Earth. Much of the subject is still poorly understood, I think. And it doesn't seem to be a good time to focus on the wrong issues.

Therefore, in today's Debt Rattle, I try to make things a bit clearer:

While it’s not yet time to jump out of the window, neither is it a good idea to sit back comfortably with your eyes closed.

Never meet a margin call.

Of course, this axiom would force you to get out of your position before an MC occurred.

And always assume that your position is being targeted
and that the other side knows exactly where your stop loss

Finally. Once you have exited your position expect
the market to turn. ;}

Yes...I agree.

As I posted in yesterday's drumbeat on the subject...
"we have been put on Notice".

Grim things this way come. But no need of ledges just yet :P

For more than a few decades now, credit has been as good as real cash. This has affected investment as credit was a good way to start a business, including businesses aimed at renewable energy.

One very real outgrowth of a massive credit collapse will be the loss of apparent capital from investors looking to start businesses. This financial crunch will seriously impair the ability of the "free" market to respond to ongoing environmental and resource pressures.

Continued credit collapse, if it goes on too long, will ultimately even impact the IOCs in their search to find more oil and gas. Likewise with new ethanol plants, nuclear plants, wind power plants, solar power plants, etc.

Thus, a disaster of our own creation (the credit crunch) may seriously impair our ability to mitigate peak oil, climate change, and other oncoming problems.

"Thus, a disaster of our own creation (the credit crunch) may seriously impair our ability to mitigate peak oil, climate change, and other oncoming problems."

I would argue that this is exactly PO.

Money is only a representation of energy.

And the surest sign that positive energy inputs
are not entering the system.

One thing I've been meaning to ask...

Some banks are obviously in serious trouble, and may go bust. I've been looking on the Internet to see if there is any information on the financial health of various banks. What I've learned is that the US government (and other governments) publishes nothing on this. Some private agencies do their own evaluations, but this info seems to be mostly myth and fancy. One bank rating agency I found says that Bank of America is top-rated, when in fact most believe it's one of the most vulnerable to collapse (especially since they bought Countrywide).

Does anyone know of a source of reliable bank ratings?


Ozonehole said,
"I found says that Bank of America is top-rated, when in fact most believe it's one of the most vulnerable to collapse (especially since they bought Countrywide"

It may be helpful to remember that Enron was top rated only a month before it went down the tubes.
Bank of America must have been thinking the worst was getting behind us when they bought Countrywide (!?), and may have mistimed this thing badly. Citicorp recently found a cash injection from the United Arab Emerites (UAE), but now needs more, and the UAE investors say they are not going to pony up, given that Citi still faces huge outlying losses.

Of growing interest to the financial community is the condition of the big LLP's, Blackstone,Carlyle,and KKR, all of whom are facing difficulties to say the least, possible liquidation to say the worse, KKR and Carlyle facing an inability to deliver ontime payments to paper holders. This means that any injections of cash will have to come from the few remaining prosperous individual firms (such as Buffet,etc., but there are not many Buffet's out there) or from outside the U.S.

The non-U.S. investors have been beaten up before for trying to buy American firms, so they are going to wait until (a)the Americans come begging and (b)the prices are dirt cheap, literally "blood in the street" investing when things are at the absolute worst. The OPEC bankers can afford to wait, they are selling oil at wildly inflated prices. But they will come. They are sitting on mountains of dollars and Euros, and one is about as good (or bad) as the other when you get to the fundamentals. The OPEC money flood will be astounding when it comes pouring out of the Middle East, purchasing any and everything with a pulse that is selling cheap. And why wouldn't they? The paper is useless, but firms selling at giveaway prices in major developed and developing countries are worth something. Maybe not worth as much as they thought they were, but worth something.

The question is, how low can we go, and how long will it take? For those of us who grew up in the 1970's, this feels like old times! If you had told folks then that a family named Fiyad would be the owner's of Harrod's, and the son of the family would die in a car crash as the lover of the Princess of Wales....money makes strange bedfellows, literally. And in the meantime, Prince Bandar watches it all from his fortress palace in Colorado. The price of our addiction to oil comes home to roost. We will run out of money, freedom and dignity long before we run out of oil.


A bank's stock price can give you a hint, though it may not give as much advance warning as one would like. Over the past year, Bank of America has dropped from 51 to 36, Citibank has gone from 50 to 20 and Fannie Mae has gone from 55 to 20. These could indicate trouble, as the drop is much more than the broad market over the same time period, though a collapse may not be imminent. In more distress would be organizations like Countrywide Financial, which has gone from 38 to 4. (Countrywide is in the process of being acquired by Bank of America)

Something like this:

these are morguage lenders.


Did I say merangue? I meant mortgage. Might as well be merangues!

I read it as morgue :)

It would be hard to find a bank that does not have significant risk right now. And in a panic, a rush of withdrawals from a perfectly sound bank could cause it to go under. A small bank in Missouri was shut down this weekend - immediatlely reopened and all deposits up to the FDIC insurance limits immediately available. But the FDIC has a relatively tiny amount of reserves relative to the potential risk of widespread bank failures.

No guarantees, but I believe the govt. would step in and back all FDIC insured deposits in any bank if it comes to that. And my feeling, for now, is that the bigger banks like BOA are indeed considered "too big to fail". The impact on the country of a suddenly non-functioning BOA would be catastrophic, it will be propped up by any means necessary to prevent that from happening.

Best bet is to keep funds in more than one bank, and under no circumstance keep any amounts above the FDIC limits in any bank.

"Best bet is to keep funds in more than one bank, and under no circumstance keep any amounts above the FDIC limits in any bank."

the depositors above the fdic limits in the s&l meltdown of the early '90's didnt make out too bad, the federal govt covered(with borrowed money) all the losses. those damn so called conservatives know how to run up the national debt, if nothing else.

If it really catches fire we face things like withdrawal limits, reduced FDIC benefits, the inability to buy precious metals, and maybe treasury agents being present when safe deposit boxes are opened to confiscate gold and silver.

I hope it doesn't go that way quickly ... but I think we get there sooner or later. One of the things I want to do is get a functional gold & silver exchange going in the area ... among my many other problem solving efforts.


As posted last week.
Two sources to check bank ratings are listed in this article:


For publicly traded institutions, check the latest EDGAR filings and read all the footnotes.

If reading between the lines of financial reports are not your forte, retain an expert you trust.

I visited my local credit union, read the latest balance sheet and had a frank discussion with an officer.

IMO, all financial institutions are infected and at risk. Its only a matter of degree. I am in the process of converting assets into tangible preps that will have practical value going forward.
Gold is not very edible.

Trying to understand the recent run up in oil futures. We are at all-time inflation adjusted records ($107.50/bbl as I type this) despite:

1) A slowing economy (if not a U.S. recession)
2) Decreases in oil and gasoline demand from last year (one estimate shows a 3.4% decline)
2) End-of-February gasoline supplies at their highest since 1999 at 25.8 days (EIA data)
3) End-of-February crude supplies in-line with 5-year average at 20.9 days (EIA data)
4) Crude futures prices outpacing declines in the US Dollar against the Euro and Yen by a significant %
5) Crude futures price increases outpacing price increases in gold futures (the "real" inflation hedge)
6) Crude futures prices outpacing increases in the petroleum products (RBOB, heating oil)

The only explanation is pure, rampant speculation by the funds. The strongest evidence of speculation is in the fact that we still have a crude futures market in backwardation (near-expiration contract higher than distant contract). If the crude futures price increases were based on anything fundamental, you would not have a shoulder-period Spring contract (April at $107) exceed the price of a hurricane season summer contract (September at $102) by $5/bbl.

Am I missing something very obvious here? Opinions would be appreciated.


Most things priced in US$'s are increasing in price.
It is fair to ask, is the commodity increasing in value or is the currency's value decreasing?
The fiscal irresponsibilty displayed by our political "leadership" over the past 10 years is reprehensible.

Yeah, but the % increase in oil prices is much more than the % decline of the U.S. dollar against foreign currencies. The dollar declines account for about 25% of the run up from $90/bbl over the past 6 weeks. There's got to be more to it than that.


Be careful with percent declines and percent increases. They are not the same thing because of the shifting base problem. They are apples and oranges and can not be compared or added up or averaged.

My favorite example is the mutual fund that had these results after an investor put in $100.

First year decrease 50%=$50 in account at end of first year.
Second year increase 50%=$75 in account at end of second year.
Third year increase 25%=93.75 in account at end of third year.

The mutual fund advertises that the 3 year average return has been 8.3%. Yet it is obvious that the investor lost $6.25 not counting opportunity cost. Logic rules, not numbers.

The most egregious offenders however are those who add up stock market average returns per year and try to suck investors into the market as an inflation hedge. These "analysts" deserve the reputations their have brought down on themselves. I think some should be in jail for fraud. Oh wait, they always put disclaimers on their advice don't they. Maybe they do know what they are doing after all. Sorry.

What you're missing is that oil is a world market, and China has been buying like crazy after a pause for the Lunar New Year and terrible blizzards of early February.

What shocked the market on March 5 was that imports had declined despite a significant increase in the price. That caused a lot of commercial traders to close out short contracts.

Further shocks came from Fed actions and statements that indicated the dollar could be expected to continue to fall.

You are incorrect that the only explanation is rampant speculation by funds. There is definitely a sharp increase in fund speculation, but there is an increase in speculative buying of shorts as well as longs. The net long speculative position is high, but it still has a bit to go before hitting any records.

Also, the reality is that we have a serious oil production decline rate, while projects such as the 500,000 barrels per day Khursaniyah (which was supposed to come online in December 2007) keep getting postponed.

IMO another factor is that OPEC has made the bulls bolder by showing a willingness to defend a continually rising floor price for oil. IMO if the price falls to $90 OPEC will be loudly talking production cuts and they are not afraid to do it.

I think it might be FAIR to say (if not understated) that the traders don't know what to believe now.

If they encounter short-term tightness of supply coupled with increased summer demand, they bid up.

At the same time, I think some still think that more supply will come to the rescue, AND that maybe recession will curb/slow demand growth.

That might explain some of the futures contract issues...USD destruction has something to do with it as well.

Personally, I think the US stockpiles of supplies are beginning to have little effect on the overall pricing...as new emerging customers are siphoning as much as they can, irrespective of US slowdown...at least for the moment.

When BushCo is sending Oil Slick Dick to SA for talks, even traders can see this is not a good thing.
This guy is toxic to everythung he touches, and this is not a secret amoung traders.

Ya...what is odd is that he was over there not that long ago. Between these trips and Bush's recent exchanges with KSA, there is a smell of desparation in the air. Someone is yanking someone's chain, me thinks. I wonder what Cheney will offer this time?

The last time Cheney visited Saudi Arabia...(11-29-06)...On the same day Vice President Cheney was meeting with King Abdullah, Saudi Oil Minister Ali al-Naimi proclaimed 'that OPEC might cut oil output again when it meets later this month if the group's 1.2 million barrel per day cutback agreed in Qatar last month failed to balance the market (read prices slipping under $60 barrel).'



'Saudi Arabia and other Arab countries on the Persian Gulf are also deeply concerned over the West's confrontation with Iran over that nation's suspect nuclear program.

Gulf countries worry about the possibility of a nuclear-armed Iran and its attempts to expand its influence in the Middle East. But they also fear the West's attempt to force Iran to rein in its program could bring Iranian reprisals.

Palestinian President Mahmoud Abbas, of Fatah, is trying to work out a new unity government with Hamas, but Arabs hope the U.S. will be flexible with how much Hamas must moderate to allow a resumption of the peace process with U.S. ally Israel.'


Bush and Cheney are at odds with King Abdulla over the Palestinan/Israeli conflict. I read, after the last Bush/King Abdulla meeting, that Abdulla was adamant about the west brokering a peace deal and that Bush made promises he subsequently did not keep. Tomes could, and have been, written about Palestine/Israel...I dont want to go there...Literally or in person.

I'm beginning to think the statement "Demand is decreasing" is fast taking on the context of the 4th biggest lie...I keep hearing this in the context of talking down the market. However the fact remains demand is not decreasing....maybe the rate of increase is declining but overall not decreasing and that is supported by all the data.
My guess is that speculation is contributing in a small way the primary factors remain flat production, the dollar, and continued delays in the mega projects. Also don't discount the rising awareness of what oil is truly worth. Understand Goldman has a new forecast out anyone seen it?

I've just seen reports like this.

I just sent the Goldman report to your email at peakoil.com.

This is pretty much all it says:

$100 oil: focus on E&Ps with growth and exploration catalysts

2008-2010 oil price forecasts way ahead of consensus
We have raised our 2008-2010 WTI oil price forecasts to US$95/bbl, US$105/bbl and US$110/bbl, up from US$80/bbl, US$90/bbl and US$80/bbl previously. Our new oil price forecasts are significantly higher than the consensus average forecasts of US$81/bbl, US$77/bbl and US$75/bbl for 2008-2010. Oil prices have reached US$100/bbl without much political turmoil and with the prospect of a US economic recession. This move has been driven mainly by secular factors, including: 1) increases in the marginal cost of oil production, 2) disappointing supply growth, 3) limited spare capacity, and 4) generally price inelastic demand growth. With the prospect of further cost inflation and non-OPEC supply potentially flattening out, we believe there is upside risk even to our bullish oil price forecasts. Please refer to the Goldman Sachs’ US Oil team’s March 7, 2008 report “$100 oil reality: Super-spike phase 2 ushers in a period of chronically high and rising prices” for our detailed oil price view.

Energy risk-reward attractive, underpinned by robust macro
We believe the energy sector in general provides investors with robust growth prospects amidst the current environment of weakening economic growth and earnings uncertainty. We have an Attractive coverage view and our price targets imply average upside potential of 21% for the sector overall (excluding A shares) and 20% upside for our Asian E&P/integrated
oil stocks.

The rest is company recommendations

Yes, I think I have had this discussion a couple of times over Wednesday' EIA reports.

DEMAND is NOT decreasing...DEMAND GROWTH is.

Year-Over-Year we still are seeing increases...but they are slowing.

I thought you guys would enjoy this, if it hasn't already been posted: http://www.ft.com/cms/s/0/c56c0aa8-e93f-11dc-8365-0000779fd2ac.html

At $100 a barrel, the total proven reserves of the oil exporting countries is about $104,000bn – equivalent to the combined total value of publicly-traded equities and bonds in the world.


The latest spike came as the White House said Monday that Cheney would next week urge Saudi Arabia to push OPEC to boost output in an effort to rein in sky-high prices.

Good luck with that.

Amazing, because normally a story like this triggers selling. (And there was a brief flurry of selling early today.)

I think we're seeing commercials close out shorts on every dip.

America offers Saudi some Dick! But I don't think the'll bend over somehow;-)
The Saudis know who is getting shafted now. (some UK colloquial in there)


Cheney's going to the desert, and the US Senate has been calling for a review of Iraq oil revenue, which has me thinking: isn't this price run up a grand thing for financing post-war reconstruction? Is it too convenient?

Hi TODers!

I found an interesting new Anti Peak Oil Site. There's a discussion tab where you can leave your comments!


Choice selections:

Interestingly, world estimates of oil reserves have been growing, not decreasing, as we've been extracting. In 1920, the world estimate was 60 billion barrels of reserves. In 1950, 600 billion barrels. From 1970 to 1990, estimates increased from 1,500 to 2,000 barrels. In 1994, the USGS estimated world reserves at 2,400 billion barrels. In 2000, the same estimate was raised to 3,000 barrels.[8] Note that these estimates are not limited to "proved reserves" and only cover conventional crude. In short, we've been finding conventional crude faster than we've been taking it out of the ground, and faster than we've been expecting to find it -- at least in the long term.

Hubbert was wrong, wrong, wrong:

The US peak was at his "high" model in the 1970s, and this was reasonably accurate at the time. However, US production has consistantly outperformed his model's estimates since then. In 2000, US production from the lower 48 states was 1.7 times what Hubbert estimated. Hubbert's natural gas prediction, also, was grossly wrong. US production in 2004 was 2.4 times higher than what Hubbert predicted in 1956. The only peak that followed Hubbert's curve correctly is anthracite coal -- not because the supply was exhausted (even at it's peak production rate, there would be 190 years left just from known reserves at current coal prices and with current technology), but because people stopped heating their homes with coal.

Oil sands means peak oil anytime soon is impossible:

The latest meme that's been going around by those who realized that things like bitumen fundamentally make peak oil any time soon impossible goes like this: there's not enough water in the Athabasca river, so all bitumen production can't scale, so no syncrude can scale, so the world will soon encounter peak oil. This is, of course, silly on the face of it; the Athabasca tar sands are just one bitumen deposit, and bitumen is just one of many syncrude sources that can be tapped. Most oil companies are well below their water allotments as it stands.[24]

But let's say that they hit their alotments. That's the end, right? Hardly. Just look at a map of Canada. Northern Alberta and the Northwest territories are practically covered with water. This is an industry that builds heated pipelines thousands of miles long built to not spill a veritable environmental catastrophe (crude), and you think they can't ship in water of all things? The Athabasca deposits are only hundreds of miles away from the ninth largest lake in the world -- the Great Slave Lake (11th by volume). It has almost three times the water of Lake Erie. Think they could drain Lake Erie? Even closer is Lake Athabasca, which "only" has 55 trillion gallons of water. At a pessimistic water usage rate of five gallons per barrel of oil, you could produce Alberta's 1.7 trillion barrels and only use up 1/32nd of the water in the lake assuming there was absolutely no refilling of the lake in the process. On top of all that, there's a whole network of large rivers in the region.

As I said before, it's a great time to unload highly energy dependent assets on the true believers in the Yerginite Community.

if the Yerginite's can still afford an SUV and a big McMansion.

Nice to see you coming around. ;) I think your email from Deffeyes welcoming you to the Hubbert society is enroute!

Couldn't resist, sorry. It's good to have opposing views. Thanks for your contributions.

Amazon just recommended a book for me that will be released next month. The topic: how to make money off of peak oil. I hate to take advantage of the more feeble minded but at this point it almost feels like a moral imperative to do so. I don't have much in the way of high energy assets (don't own a car, my condo isn't tiny but it is well insulated, etc) other than perhaps too large of a fridge but I suspect the author of the book is going to be correct in his premise that there are going to be incredible investment opportunities in the decline. Of course, he might not be correct in identifying what those opportunities will be.

I never cease to be amazed that people can't grasp the simple fact that peaking of anything (not just oil) is about the profitable rate of supply of it, not the amount of resource.

Why can we not get this message across to people?

They obviously reached peak traffic, I can't reach their website :).

Arclite, In the early days of oil drilling in Texas, we got out approx. 22 parts of energy (oil) for every 2 parts needed to extract that oil. With tar sands 3 parts of energy (oil) are extracted for every 2 parts needed, so the energy received is much lower as we move past Peak Oil. Also, tar sands oil is a low grade oil which must be mixed with light sweet crude to make it usable. However, there is one major hurdle for tar sands and that is scale of production. How do you convert all that crappy oil into the quantities that are coming out of Saudia Arabia? Fact is, even scaled up most experts believe the maximum that can be extracted on a daily basis is 5 Million barrels.

Its not the panacea that many people might think, however in this period of Peak Oil it represents a secondary source that is helping to alleviate supply concerns somewhat. That is until crude extraction starts to dip below its current plateau, and then all the tar sands in the world will simply be a big pile of goo.

Yeah, that's not my site. I've been in several arguments with the author over at dailykos. Whenever there's a peak oil post over there the author tries to debunk it. I have been spending a lot of time arguing the exact same things that you are. See this exchange for example:


Dailykos is one of the most visited political blogs on the planet, with millions of visits per day. It's been instrumental in getting publicity for some issues which would otherwise go ignored like the FISA telecom immunity. I'd hate for users of that site to get the idea that peak oil is nothing to worry about and oil sands are going to save us. The author thinks that we'll pipe water from the lakes and build nuke plants so we can get an oil sands flow rate of 50mbpd going.

The thing is the author is very knowledgeable, and I'm strictly an amateur. I stay up in the middle of the night researching to get the right info to counter his/her arguments. I think that some others could do it more easily than myself.

U.S. leads in preparing for war in space

WASHINGTON: It does not take much imagination to realize how badly war in space could unfold. An enemy - say, China in a confrontation over Taiwan, or Iran staring down America over the Iranian nuclear program - could knock out the U.S. satellite system in a barrage of antisatellite weapons, instantly paralyzing American troops, planes and ships around the world.

Space itself could be polluted for decades to come, rendered unusable.

The global economic system would probably collapse, along with air travel and communications. Cellphones would not work. Nor would ATMs and dashboard navigational gizmos. And preventing an accidental nuclear exchange could become much more difficult.

Yeast accept the confines of the Petri dish. But us stoopid humans feel compelled to use resources for a very limited fight outside the planetary petri dish to help accelerate the blowbacks inside.

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

Bob, the end result may be the same -- population crash -- but to prove our superiority, we have invented an economic system which will allow some to (temporarily) profit from our mutual demise. Clever little buggers aren't we?

Leanan - You note that, "Space itself could be polluted for decades to come, rendered unusable."

Well, at least I agree with much of what you post, but not this one. To suggest that humans could render space itself unusable is kind of beyond the pale. What part of space? Space is trillions of light years cubed. What "space use" would become "unusable?" One of the strategies for human survival involves the possiblility of "nuking" incoming meteors. On the other hand, if a war in space errupted, I would assume that the war on the ground was pretty severe, and therefore, mankind would be in no position to revisit space again for centuries.

The statement was dubious but pretty much correct. Of course a war in space won't render "the whole space" unusable, but could result in millions of randomly moving high speed debris that circle the Earth on the usable orbits for many hundreds or even thousands of years. That would put an immediate end to any commercial or military use of space that we have now.

JBunt replies "To suggest that humans could render space itself unusable is kind of beyond the pale. What part of space?"

I think she's referring to the economically viable part of space just outside our atmosphere. Near earth space would be polluted with zillions of small bits flying around that will penetrate the hull of just about anything. That makes future satellite survivability difficult.

The part of space that would be rendered "unusable" is the area considered "low earth orbit". Compared to all of outer space it's vanishingly small, but compared to the operating environment of virtually all man-made satellites it's the only space worth being in.

Space junk and debris, whether created on purpose or not, is lethal to objects travelling around the earth at speeds upwards of 25,000 mph. A single nut or washer colliding with a satellite at that speed would be more than enough to put it out of commission permanently.

There's an organization (whose name escapes me at the moment) that tracks every piece of space junk in earth orbit down to the size of a BB. The primary reason for doing this is so that operators of satellites, and even NASA, can take evasive measures when their orbiting hardware is threatened by junk and orbiting debris.

It would not take much to pollute the desirable space in low earth orbit - on purpose or as the result of smashing enemy satellites into small bits of debris - and thus render space "useless" for most practical purposes.

There is a difference between LEO (low earth orbit on the order of a few hundred miles) and GSO (geosynchronous orbit out at 22,000 miles) but the ramifications of "pollution" are the same.

The part of space that would be rendered "unusable" is the area considered "low earth orbit".
There is a difference between LEO (low earth orbit on the order of a few hundred miles) and GSO (geosynchronous orbit out at 22,000 miles) but the ramifications of "pollution" are the same.

No, the pollution effects are not the same:
1) objects in LEO (Low Earth Orbit) decay in months or years
2) objects above LEO stay up for a VERY long time and do not spontaneously decay.

In fact objects above LEO can participate in Kessler Syndrome or Ablation cascade.

The destruction of Fenyung-1C that China performed 11 Jan 2007 was bad exactly because it was above 300 mi. and its destructive components will a) stay up for a bloody long time and b) overlap with human space flight paths.

The more recent American knockdown of USA 193, the failed American satellite, was much lower and its components have probably all re-entered by now.

Lastly, it's easier to track an object closer to the earth-based radar (power laws), so small objects in GEO are the worst to track. As you say anything moving 18,500/hr is going to make a dent; 1/2 mv^2.

Only recently (1990s) countries were getting very tidy about explosive bolts, and straps, and garbage especially in interstages for GEO and interplanetary flights. And old sats were to be transferred to garbage parking orbits.

[edit: s/2006/2007/]

If the Sh|t ever really hits the fan, the first thing to happen is a lot of Eyes in the Sky will get poked out. All three countries that can, will get in on the act. China played a year or so ago with it. Debris would be flying all over.

Don't count on Cell phone service after a few years after that. Junk wizzing around. Imagine a ball bearing size chunk moving at 5-10 feet per second hit those things?

Hi Samsara,

The vast majority of domestic US cell service has not much to do with satellites.

You can tell because of the distinct lack of GEO time delay while conversing.

GPS, television backhauls, point-to-point Internet, rural television.

That would be more believable.


To review the article (where do they get this stuff):
1: The global economic system would probably collapse (who knows? let's say possibly due to head start)
2: along with air travel and false, but it would slow down significantly
3: communications wtf? like the Internet? false!
4: Cellphones would not work. false
5: Nor would ATMs and false
6: dashboard navigational gizmos. mostly true (except for plastic Jesus')
7: And preventing an accidental nuclear exchange could become much more difficult. very true

4 falses
1 possibly
1 mostly true
1 very true

Since accidental nuclear war (enjoy reading: The Logic of Accidental Nuclear War) is a Bad Thing one could argue it cancels out the other stuff. Or not.

We're at critical mass in low earth orbit thanks to those Chinese messy Bessies. Their satellite interception "test" splattered all sorts of fast moving crap in a fairly random fashion. Orbital dynamics are such that the amount of stuff up there will steadily increase going forward for a long, long time due to collisions. The bits up there will punch out stuff, working and dead, causing a steady increase in overall debris in orbit. I forget what the half life is but as I recall its measured in centuries.

They couldn't complete on an even footing so they made it miserable for all parties involved. A few more of those and the satellite business is wrecked for good.

Eh- 10 feet per second = 6.82 mph.

A table tennis bat would suffice to deflect your ball-bearing size

I think what the poster was referring to is some hostile party launching a load of pea gravel into an elliptical orbit.

Its traveling thousands of miles per hour, and traverses all useful orbits.

Our GPS, communications satellites, earth monitoring satellites, everything, would get pummeled by gravel "bullets" and rendered useless in short order.

Its not a pretty picture, but much like someone contamininating a communities' water supply. Its much easier to make a mess than clean it up. Much more so in orbit.



That's why all the talk about weapons in space is such a joke.

In order to obtain complete coverage of the Earth, very many "battle stations" would need to be build, perhaps thousands. It's one hell of a lot less expensive to defeat all those orbiting battle stations than it is to build and launch them, as you noted. Any country with the launch capability could place a bunch of "space mines" in orbit, which might not directly threaten another country's satellites in other orbits, but which could be triggered to explode and spread clouds of satellite killing bits of metal. Goodbye ISS!

In a crisis, the country with the greatest launch capability might be the "winner", but everybody would still lose access to space for quite a while.

E. Swanson

One of the main reasons a barrel of oil is trading for so much is because of the devaluation of the dollar against foreign currencies. Exacerbating that dynamic is the cost of money which is dictated by interest rate level. So each time the Fed lowers the interest rate to get the economy moving out of a recession, the dollar loses value and oil goes up. Now read this:

"We've got a Fed(eral Reserve) meeting on the 18th that could see a sizeable rate cut," said Brad Samples, an analyst with Summit Energy Services Inc., in Louisville, Ky. "So, it's not over."

Yes, that quote, "So it's not over" means that as soon as another interest rate cut takes place, the dollar will plunge farther down and oil will continue to increase on the commodity excange. In this regard, someone was on TV yesterday was predicting oil would surge to 130 dollars a barrel! Ouch!!

I have been reading TOD so long I can remember when posters would try to spin the argument that a declining US dollar would work wonders to right the current account deficit, that the devalued dollar would work wonders for the US economy, bringing back manufacturing and booming export jobs. You don't hear that spin anymore. You also don't hear the one about the "ceiling" price for oil-once it gets to $100, solar, wind, CTL will take over. CTL has to win the award for the best vanishing act.

Well, you clearly didn't spot:

Sasol to spend R300m on coal-to-liquids feasibility study

in the drumbeat above. An indication perhaps that it's still on the cards?

IMO it is pretty underwhelming. Is the amount of investment in CTL at $108 what was predicted? I don't think so-when does it become a major influence? $300? $500?


what is the explanation for the steepening backwardation in the nymex crude futures curve?

i have 1 explanation: traders are treating oil as a hedging instrument. with near term interest rates lowering, traders expect the long term interest rates to be higher and thus oil becomes a less desireable hedging tool in the long run, say year 2016.

of course this is what i think is going on. if so, i think traders are going to be disappointed. a $99 2016 oil is such a bargain!

now i'd like to hear oildrummers thoughts.


Well, I think that I can say this with a large degree of certainty, but not backed up by millions of $'s of research - "Oil traders are NOT trying to predict interest rates in 2016 nor trying to evaluate oils' then usefulness as a hedging tool."

Backwardation invariably occurs as a means to get people to sell the commodity (any commodity) now, rather than store it and then sell it in the future. It takes away most of the incentive to hold a product off the market, precisely because the future price is lower. This usually happens in connection with a REAL shortage, and sometimes with a perceived shortage. The NORMAL state of affairs is that the future price should be higher to cover storage costs and an imputed interest cost. In any event follow the news, such as Saudia Arabia announcement this weekend that its new 500,000 BBL/day field will not be producing in April, but rather months in the future.

The fast money gang has said that oil is going up when everything is going down so people keep piling in.

oil is very transparent, it's not an MBS. I bet it's perceived as safe.

I've also heard it's trading almost like a currency.

But, there's no crude shortage now. That's what's so confusing. IMO, and as BillyT pointed out, the April contract should be trading at a discount to the driving/hurricane season months (July through September).

What might we expect as the April contract approaches expiration? Will the speculators roll positions over to the May contract? Or pull out entirely?


Lehman Brothers Laying Off 5% Of Global Workforce

Jeb Bush was hired as a consultant last August, right before GWB publicly spoke about a mortgage meltdown solution, I wonder if Jeb has been axed.
Anybody in the know?

Are commodities prices topping out here?

Over the last five days, the Dow Jones Oil and Gas Index (IEO), has dropped about 5% from 71 to 67. This as oil prices have shot up from 100 to 107. The index is comprised of names such as Andarko, Occidental, Valero, Devon, Apache, etc.

The Dow Jones Basic Materials Index, which mostly represents non-energy commodities, has fared even worse. This index includes the big names in agriculture (Monsanto), gold (Newmont), copper, aluminum, etc. It's down around 7% over the last 5 days.

This is classic topping action for commodities. The stocks representing the commodities plays tend to top out and decline slightly ahead of the commidities themselves. Look out below?

This could just be the Spring of 2006 all over again. If you'll recall, early 2006 we started seeing lots of articles in the mainstream press about the bull market in commodities. Between march and July prices shot up (gold by $150 or 25%, silver by $4 or 40%)only to settle to a price about half way down to the previous level (indeed, silver only broke out of that $10-14 range in the last 3-4 months).

What drove that mini-bubble was the entry into the market of a lot of speculators not usually involved in trading those commodities. I believe that much of the recent commodity run up is similar. So, don't go selling all your gold eagles just now, but maybe holding off on buying more is appropriate.

This could just be the Spring of 2006 all over again. If you'll recall, early 2006 we started seeing lots of articles in the mainstream press about the bull market in commodities. Between march and July prices shot up (gold by $150 or 25%, silver by $4 or 40%)only to settle to a price about half way down to the previous level (indeed, silver only broke out of that $10-14 range in the last 3-4 months).

What drove that mini-bubble was the entry into the market of a lot of speculators not usually involved in trading those commodities. I believe that much of the recent commodity run up is similar. So, don't go selling all your gold eagles just now, but maybe holding off on buying more is appropriate.

Good to know USA taxpayer dollars are being spent wisely-Spitzer obviously stepped on the wrong (too powerful) toes http://ca.news.yahoo.com/s/reuters/usreport_newyork_spitzer_dc

He picked a fight with the monoline insurers, or more correctly their customers, and he got handed his hindquarters. I gotta say the guy is just as dumb as a stump - if you're a pimp or a whoremonger what the hell are you doing running as a Democrat given the bent Department of Justice Bush has presented to the American people? You're just asking to have your choices limited to two - the top bunk in the cell, or the bottom.

I hope Obama wins for two reasons: 1. He is the best candidate 2. It will be fun watching how easily the MSM turns the sheeple against him if he even tries to step out of line (IMO).

Remember spitzer going after people and making waves?

This is the modern way of getting "Rubbed Out" by the boyz.
No Blood, Just put in your place. Any Wire/phone tap on anyone, anytime, for any reason.
Stalin would have given his I-Teeth for that.

"Hey, Da boss sez ya been gettin a little too big for your britches, ya needs ta be slap'd down around a little"

Also it sets the tone for any future 2bit DA's ambition and what their future may be like if they step on toes. Do you think the head people at JPM, GS, CITI, etc would be tapped for this reason?

What an idiot. He plecked off all the voters as well as the Democratic party with his newbie blunders. And now this. It wouldn't be so bad, except he came into office as Mr. Law and Order. He's probably going to be forced to resign over this.

He is an extremely horny idiot. My question is: how long has the FBI sat on this, and what else are they sitting on (on who else)? I wasn't aware the FBI was focusing on hookers-I guess it is good news for all the heavy hitting grifters pulling the USA economy down the tubes.

Looks like they weren't sitting on it, nor were they investigating hookers. He was even dumber than I realized. He created shell corporations to hide his payments to the escort service. In short, it was money-laundering that drew the FBI's attention. They thought it was a case of bribery.

Inexplicable. A guy with his money could have walking around cash in all kinds of places (home safe, safety deposit boxes, etc. etc.) This is a curious one.

AP is now reporting that Spitzer was a repeat customer who may have spent $80,000 or more on call girls. That would explain the need to launder the money. Especially for a public official like him, who might be expected to make his finances public.

So he paid Kristen $4,300 at a rate of $1,000 per hour.

It must be said that the man has staying power that I can only envy.


As the country teeters toward a full-blown recession, the rising gas prices and a ballooning value for gold have prompted more people than usual to sell their belongings or get loans from one of California's 600 state-licensed pawnshops.
Interlicchia never asks why a person might be pawning their belongings, but customers usually volunteer the back story.

"A lot of it's gas money," he said. " 'I need to put gas in my car to get to work.' "

Looks like we'll do anything to keep driving. I'm going to take a wild guess and say that buying that Volt will not be an option.

ALGIERS (Reuters) - Oil prices will stay at current high levels for the rest of this year due to speculation and geopolitical tensions, Algerian state media on Monday reported OPEC President Chakib Khelil as saying.

Chakib Khelil predicts that oil prices will stay high in 2008 and then retreat in 2009. Since he believes that speculation and geopolitical tensions are causing the runup in oil prices, he must believe that speculation and geopolitical tensions will continue unabated throughout 2008 and then ease in 2009. How can he make such a confident prediction on two factors that are by their very nature so unpredictable?

According to the United States EIA, China imported an average of 3,428,000 barrels per day. Recent record Chinese imports of 3,600,000 posted in an article above show growth from 2006 to early 2008. This growth 172,000,000/3,428,000 was about 5% over the course of more than a year, but less than two years. While auto sales in China have been reported as high, the growth in imports has slowed substantially, unless the data provided are false. High prices might not sustain oil consumption growth.

There is evidence that hihger oil prices have allowed oil exporting nations to afford increased consumption of oil internally that likely decreased the amount of oil for export externally.

CNN just broke in to say oil passed $109 a barrel.

Wonder if this had anything to do with it?


The U.S. economy will suffer as the slumping housing market eats away at job creation and consumer spending, but the nation should avoid slipping into a recession this year, according to a new economic report.

Yeh, and stocks (and futures) are way up across the board. Seems there is a rumour that the Fed will announce something (maybe another emergency rate cut) or else cut by far more than expected at next meeting. The rumour seems to be having an effect so it probably doesn't need to be true... Oil at $109.67 now


``Hopes of further rate cuts, and more imminently, direct actions by authorities to ease problems in the credit markets have given sentiment a nice lift,'' said Richard Scott, who helps oversee about $2.4 billion at Iimia MitonOptimal Plc in Exeter, England.

Edit: Breaking: Fed makes multiple announcements.
Fed to Auction as Much as $200 Bln in Treasuries, Boosts Swaps

By Scott Lanman

March 11 (Bloomberg) -- The Federal Reserve will hold auctions to lend as much as $200 billion in Treasury securities and increase swap lines with two foreign central banks to try to ease renewed turmoil in credit markets.

The Fed said in a statement it is establishing a new Term Securities Lending Facility to, through weekly auctions, lend as much as $200 billion of Treasuries to primary dealers for 28 days, instead of overnight as it currently does. The loans may be secured by collateral including agency and private mortgage- backed securities, the Fed said.

The Federal Open Market Committee also authorized increasing currency swap lines with the European Central Bank and Swiss National Bank to $30 billion and $6 billion, respectively, increasing the ECB's line by $10 billion and the Swiss line by $2 billion.

Well Jeffery looks like you hit another one squarely on the head.
Here I thought terrapreta would be a positive....
Now we should log our forests and burn them for electricity, instead of coal, because it is cost effective and has less ash and sulfur.


Lets burn every frickin twig before we look at changing how we live.

Pass this to Jim if he doesn't read it.


Gasoline in China is subsidized to well under $1 per gallon (couldn't give you the exact #), and what the consumer pays isn't influenced by the world price, so the world price doesn't influence Chinese demand.

I don't think your conclusion is correct. Chinese demand is affected by the capacity of the Chinese economy to absord the world price of oil.