DrumBeat: March 12, 2008

Oil crosses record $110, despite supply rise

NEW YORK (CNNMoney.com) -- Oil prices rebounded to another record high Wednesday afternoon after initially plummeting when a government report said supplies of crude and gasoline had risen much more than expected.

In afternoon trading, U.S. light crude for April delivery surged to a high of $110.20 before closing at $109.92. Oil had traded as low as at $107.09 following the report's release on Wednesday morning.

ConocoPhillips lowers long-term production guidance

HOUSTON — Oil major ConocoPhillips on Wednesday lowered its long-term production growth rate to 2 percent from a previous forecast of 3 percent, saying the company's goal was value not volume.

Survey: Talent not surfacing in oil, gas industry

The talent pool is drying up for some oil and gas companies, according to a survey released Wednesday.

Ernst & Young LLP and Rice University surveyed human resources executives at 22 international oil and gas companies, and found that nearly 90 percent say the talent shortage has become one of the Top 5 business issues facing their companies.

Landmines Block Egypt's Access to Oil and Gas

Some 22 million landmines and unexploded ordnance have lain hidden in the northwest of Egypt since World War II, Fathy El-Shazly, national project director for mine clearance and development at the Ministry of International Cooperation, told United Nations news service Irin.

Many of the mines are near the battlefield of El-Alamein, where the British Eighth Army forced the Africa Corps of "Desert Fox" Erwin Rommel to retreat all the way back to Tunisia.

... The former battleground is a treasure trove of raw materials such as oil, natural gas and ore. Egypt used to be seen as a minor oil player but experts now estimate that 4.8 billion barrels of oil lie under the sands of the north west -- enough for the country to draw level with OPEC member Angola in terms of oil production.

Gunmen hijack vessel in Nigeria, take hostages, demand ransom

LAGOS, Nigeria: Gunmen hijacked a vessel carrying six Nigerians on Wednesday in the restive southern oil region, security officials said.

A private security official said assailants attacked the vessel on a creek near the oil hub of Port Harcourt and were demanding ransom for the hostages. The official spoke on condition of anonymity due to company restrictions on dealing with the media.

States await word on new air pollution rules

WASHINGTON - States and local officials across the country awaited word Wednesday on whether they will have to further cut air pollution to protect millions of people, especially the very young and the elderly, from respiratory illnesses.

The Environmental Protection Agency is planning to announce whether it will tighten the federal health standard for ozone, commonly known as smog, and leave several hundred additional counties falling short of what the federal government considers healthy air.

Al Gore's fund to close after attracting $5 billion

GENEVA: The sustainable investment firm run by Al Gore, the former U.S. vice-president, is about to be closed to new investors, having raised close to its $5 billion target.

The new geopolitics of crude oil

In essence, if Chinese austerity and US demand weaken or if the Group of Seven central banks intervene in the foreign exchange markets to buy dollars against the Euro and the Japanese Yen, then crude oil prices could easily plunge to $80. However, the Wall Street credit meltdown has scared the Bernanke Fed and the Chairman’s helicopters are dropping billions of new liquidity in the money markets, meaning US interest rates have plunged 200 basis points since September. The last thing Saudi Arabia, the UAE and Kuwait need is $125 crude oil in November, with their largest customer and security underwriter in deep financial distress. Saudi Arabia has been hypersensitive to its image in the US, since the kingdom was demonised in the media, Congress and the court of public opinion after 9/11. If oil prices do not fall, Opec and Saudi Arabia could well become the focal point of the presidential election in the US. The bitterness of the Bush White House’s reaction to the last Opec conclave in Vienna is a premonition of autumn follies.

IEA to convene meeting on surging oil prices

LONDON (Thomson Financial) - The International Energy Agency will convene a meeting of oil industry experts in Paris on Monday on the current surge in crude prices, which have leapt from record to record in the last 10 days, an IEA spokesman said Wednesday.

'There will be a meeting on prices with experts, both from the financial and (oil) trading sectors, as well as with representatives of the production and refining sectors,' an IEA spokeswoman told Agence France Presse.

Iran encourages gas cartel

Iran has stated that it believes an Opec-style cartel for natural gas producers could help cut production and costs and benefit customers.

"Iran supports setting up a body that would guarantee the rights of both consumers and producers," vice minister at the Oil Ministry Ali Kordan, told the Iranian daily Ettelaat, according to Reuters.

"Trading in gas has grown so much internationally that a policy-setting body is needed. Setting up such a body would cut production costs and this would help protect the rights of consumers," added Kordan.

Venezuela's Orinoco Output Exceeds 600,000 bbl/d, Topping Estimates

State oil company Petroleos de Venezuela Tuesday said its four oil upgrading ventures in the Orinoco basin produce more than 600,000 barrels of crude a day, more than the company's own estimates.

Uganda: Government has no petrol reserves

THE Government does not have petrol in the national oil reserve in Jinja, Julius Bitature, the depot manager, has disclosed. According to Bitature, the 550,000 litres of petrol in the reserve belong to private fuel companies.

Nigerians pull half of claims in Chevron suit

Nigerian villagers who are suing Chevron Corp. in a San Francisco federal court have quietly moved to withdraw half of their claims that the oil company was responsible for military attacks on protesters in the late 1990s.

Scottish power

Scotland wants to become a global force in marine energy - a market that could be worth billions.

Why Food Shortages Are Our Problem Too

British farmers should be cheering about the prospect of markets booming. Instead, the dairy sector is only just moving into recovery, while pigs and poultry are still in intensive care, vegetables and horticulture are in decline and beef and sheep are ailing. Why? Partly due to higher feed prices, or the better profitability of growing cereals or biofuels, but also because the marketplace has been dominated by the multiple retailers and their refusal to pay fair prices that cover the real cost of producing chickens, pigs and so on, and allow enough profit for farmers to invest for the future.

Crude Bull Run May Be A Long Ride With Capital Constraints

WASHINGTON (Dow Jones)--As oil prices threaten to spike above $110 a barrel Tuesday - daily setting new inflation-adjusted records - some industry experts say the bull run is in for a long ride and crude could surge even higher.

While in the short term, traders are concerned about inventory levels heading into the summer, Jeffrey Currie, chief strategist and managing director of global investment for Goldman Sachs (GS), says bottlenecks in global capital investment flows into new oil production will likely continue to put upward pressure on oil prices in the mid to long term.

Australia: What kind of future will our kids inherit?

This is what Minister McNamara had to say on the subject of growth and sustainability.

“Population distribution, standard of living and sustainability are linked inextricably,’’ he told the Brisbane Institute.

“A long-term study pointing out the appropriate population distribution for Australia, including modelling of the impacts both of climate change and peak oil, must now become a priority.

“In the 21st century, the human race must finally confront the reality that in the closed system that is planet Earth, there are limits to growth.

“No matter how clever we are, there is no escaping the physical limits of the world’s resources. The laws of physics trump the laws of economics every time.”

Mexico energy debate plays out in soap opera, show

MEXICO CITY (Reuters) - A fierce debate in Mexico over oil has found its way into a soap opera and an entertainment show as the country grapples with whether to allow foreign companies a place in the energy sector.

Myanmar's nutty scheme to solve energy crisis

PYAW GAN, Myanmar, March 12 (Reuters) - They may look leafless and lifeless, but Kyaw Sinnt is certain his nut-trees are the key to Myanmar's chronic energy shortage.

Others are less sure, saying the junta's plan to turn the country into a giant plantation of biofuel-producing "physic nuts" is yet another example of the ill-conceived central planning that has crippled a once-promising economy.

India: Only degraded land for bio-fuel crop

New Delhi (IANS) Jatropha, a bio-fuel crop hailed by some as the answer to India’s oil shortage and reviled by others as the bane of its food crops and forests, will be grown only on degraded forest land, parliament was informed Wednesday. Two MPs had asked if the government had assessed the impact on the environment of large-scale cultivation of bio-fuel crops that are seen by many to be the solution to high oil prices and also to emission of greenhouse gases (GHG) that is leading to climate change.

Nuclear power: Getting attention?

With crude oil settling at $100-plus per barrel, gasoline reportedly heading to $4 per gallon, fuel prices spiking across the energy spectrum and worry about greenhouse gas emissions and pollution, interest is renewing in using nuclear power to generate electricity - at least to a degree.

That's a bet nuclear power advocates are apparently making, at any rate. Some 34 applications for new reactor plants in a dozen or so states, most of them in the southern U.S., have been announced.

Gas prices soar

Nathan Craig, an anthropology professor, said he refuses to own a car.

He said riding bikes and walking can save money and help solve the nation's obesity epidemic.

"It's a part of my war on terror," he said. "I'm interested in reducing my country's dependency on foreign fuel."

The Cruelest Tax Increase of All

So, what exactly does H.R. 5351 mean for America? And, what does it mean for working families, seniors and entrepreneurs struggling to make ends meet during this time of economic hardship?

In short, it means higher energy prices across the board and greater dependence on foreign oil.

Michael Klare: The Bad News at the Pump

Oil prices are high today not due to a temporary disruption in the global flow of petroleum but for systemic reasons that are becoming more pronounced. This means news headlines with the phrase ‘record oil price’ are likely to be commonplace for a long time to come.

...So here's the bad news at the pump: The inability of the global energy industry to keep pace with rising demand is only likely to become more pronounced as, in the years ahead, the world reaches maximum sustainable daily petroleum output and commences what just about all energy experts now agree will be an irreversible decline. No one can be sure when exactly this will occur, but a growing chorus of specialists believes that we are moving ever closer to that moment of "peak" oil output -- with some specialists placing it as soon as 2010-12.

Analysts: U.S. economy won’t stem oil demand

NEW YORK - Strong global demand for oil will keep prices high despite a downturn in demand in the U.S., two prominent forecasters warned.

The U.S. Energy Department and the International Energy Agency said Tuesday there is unlikely to be much relief from high oil prices because of brisk demand in China and other emerging markets.

$4-a-gallon gas forecast in some areas

WASHINGTON — Gasoline prices in the coming months are likely to top $4 a gallon in some parts of the country, and perhaps nationally, the government said Tuesday.

Iraqi government defends budget handling

BAGHDAD - Iraqi government officials on Wednesday expressed "regret" about what U.S. officials said was mismanagement of oil revenues.

U.S. auditors told Congress on Tuesday that Iraq is not spending much of its own money, despite soaring oil revenues that are pushing the country toward a massive budget surplus.

UK: Ecotricity urges Chancellor to turn windfalls into wind turbines

While companies like Shell and Centrica hope they are still holding onto their record profits after the Chancellor’s first budget later today, Ecotricity is one energy company sharing the sentiments of green groups, in hoping that Alistair Darling will tax these windfalls.

Dale Vince, MD of Ecotricity, said: ‘Taxing the windfall profits of energy companies is plain common sense.’

Taking On Congress' Favorite Biofuel

For a young company, Virent Energy Systems seems to lead a charmed life. The Madison, Wis., biofuels outfit has pulled in more than $30 million from venture capitalists while striking strategic relationships with the likes of Cargill, Honda Motor and Royal Dutch Shell.

Watch Virent Chief Executive Eric Apfelbach's crisp PowerPoint presentation on the company's business, and you'd probably want to get a piece of this action too. Virent has a low-temperature, low-pressure, catalytic process for turning carbohydrates (sugars) into gasoline, diesel and other fuels. Its 70 employees now make a gallon or so daily. Targeting gasoline as its first fuel, Virent hopes within five years to raise that production to 10 million to 15 million gallons annually.

Nippon Oil seeks first fuel export term deals

TOKYO, March 12 (Reuters) - Top Japanese refiner Nippon Oil Corp (5001.T: Quote, Profile, Research) is close to clinching its first long-term fuel export deals with oil majors and traders as shrinking domestic demand forces it to step up overseas sales, industry sources familiar with the talks said on Wednesday.

Chevron can't offset reserve fall

NEW YORK–Chevron Corp., the second-largest oil company in the United States, expects oil and gas reserves to increase about 5 per cent over the next three years, but says the growth won't offset a 7 per cent decline in 2007.

Nigerian oil delta under threat of new violence

LAGOS (Reuters) - The risk of renewed violence in Nigeria's oil producing Niger Delta is increasing because militants are frustrated by a lack of concrete results from peace talks, a key negotiator said on Wednesday.

Experts To Discuss 'Peak Oil And The Future Of Energy' March 20 At CU-Boulder

A cross-disciplinary panel of noted scientists and experts will discuss "Peak Oil and the Future of Energy" at the University of Colorado at Boulder on Thursday, March 20.

Panelists include CU chemistry Professor and CU Environmental Initiative Director Carl Koval, Association for the Study of Peak Oil-USA President Steve Andrews, Colorado Governor's Energy Office representative Morey Wolfson and National Renewable Energy Laboratory Biofuels Group Manager Jim McMillan.

Energy Efficiency: A Passing Fad?

With gas prices skyrocketing, conservation is back in style. Here's a look at how the trend is playing out and whether it's here to stay.

India: High oil prices to hit common man hard

MUMBAI: As stocks surged and salaries grew, urban India almost breezed through the dramatic rise in world oil price, from $50 a barrel to $100 in just two years. But chances are that it may now begin to hurt. Crude prices touched a new high of $109 a barrel on Tuesday and Wall Street’s biggest bond house Goldman Sachs (which got its earlier forecast right) on Tuesday talked of a ‘Super Spike’, that could take prices up to $200.

Choppy markets and a high oil bill could be double whammy for the economy as well as Indian consumers. Even if politics postpone any big hikes in petrol and diesel prices, air travel could turn out to be more expensive and power bill could make you sweat.

World `Squandered' Decade in Climate Debate, Top Scientist Says

(Bloomberg) -- World leaders wasted a decade debating whether global warming is happening, and now need to act quickly to limit its effects, a former chairman of the United Nations Intergovernmental Panel on Climate Change said.

The pace of greenhouse-gas emissions risks locking in thousands of years of higher sea levels, as well as damaging marine ecosystems such as coral reefs, melting sea-ice and acidifying the oceans, said Robert Watson, now chief scientific adviser at the U.K. environment ministry.

Oil Group to Press Canada to Postpone Emissions Rules

(Bloomberg) -- Oil-sands producers will ask the Canadian government to delay new greenhouse-gas rules to give scientists time to figure out how to halt their emissions.

``We'll be talking to the government about their timeline for this,'' Pierre Alvarez, president of the Canadian Association of Petroleum Producers, said yesterday in a telephone interview. ``This is going to take a bunch of work.''

Climate alarmists pose real threat to freedom (by Vaclav Klaus, President of the Czech Republic)

I am afraid there are people who want to stop the economic growth, the rise in the standard of living (though not their own) and the ability of man to use the expanding wealth, science and technology for solving the actual pressing problems of mankind, especially of the developing countries. This ambition goes very much against past human experience which has always been connected with a strong motivation to better human conditions. There is no reason to make the change just now, especially with arguments based on such incomplete and faulty science. Human wants are unlimited and should stay so. Asceticism is a respectable individual attitude but should not be forcefully imposed upon the rest of us.

Global warming to affect transport

WASHINGTON - Flooded roads and subways, deformed railroad tracks and weakened bridges may be the wave of the future with continuing global warming, a new study says.

Climate change will affect every type of transportation through rising sea levels, increased rainfall and surges from more intense storms, the National Research Council said in a report released Tuesday.

Complicating matters, people continue to move into coastal areas, creating the need for more roads and services in the most vulnerable regions, the report noted.

WSJ: Qatar Rethinks Dollar Peg Amid Gulf-Wide Inflation
March 12, 2008; Page A17

Qatar, the world's largest exporter of liquefied natural gas, may revalue its currency or end its peg to the dollar as soon as next month, Qatari Central Bank officials said.

"Everything will be clear by the end of this month because our fiscal year ends on March 31, so by April the central bank will make an announcement," a central-bank official said.

On the other end, EADS will pay contractors in dollars:

This ties a lot of European companies to the dollar. Wonder if that was thought about in awarding the contract? Nah.

Sending dollars out of the country weakens the dollar. And the scale is so small as to be meaningless. The top end figure that I have heard over the life of the contract is $100bn, much of which would stay in the US. Finally, this doesn't tie European companies to the dollar in any way. They are certain to hedge and can just convert to what every currency they want when they receive the fund (and can lock in the rate now, the $-Euro market is very deep).

I don't think there is any currency implication in this at all other than that companies that get paid in any given currency will seek to take in debt or expenses in that currency. However, you could make an argument that EADS pursuing dollar denominated contracts shows confidence in the dollar.

westexas, with the price of the crude oil ‘net exports’ obviously accelerating, especially in rapidly depreciating US$ which no sane exporter would want to hold for very long, I think there are some extra wrinkles to add to ELM.

I saw your comments on demand destruction starting with the poorest, and as the very poor drop out of consuming those people still consuming will have much more purchasing power so the price has to rise even more steeply to destroy some of their demand - I agree with your point of view. This will stress the price at the same time as the 'import land' countries such as the UK start to suddenly massively increase demand for 'net exports' as their own production declines sharply post their own peaks.

From a supply point of view, clearly ELM is already coming into play as exporting nations look after their own people first - putting a severe strain on available supply even before peak (ie:peak lite) - however now prices are rising steeply I expect the supply situation to become much worse due to hoarding , not just by exporters but by all producers, countries and consumers.

Why hoarding by producers? ... This is my scenario ... once we are past peak oil and supply is always constrained by very steep depletion rates and lack of adequate alternatives the price will probably always increase despite recessions. If this is the case it would be wise for any producer to make the resource last as long as possible to maximise profit and income – the exact opposite of normal economic theory.

For the case of countries like KSA they must make the oil last as long as possible by hoarding it, since without it they are literally dead.

For the case of individual oil companies such as Shell (or indeed a ‘good ol’ boy’ with a couple of ‘nodding donkeys‘) they are also economically dead once their reserves run out - so I would not expect them to pump at the maximum possible rate as economists seem to predict.

Since it is normal human behaviour, I expect producers to hoard as much of the oil underground at minimum cost for as long as they can get away with if the oil will be more profitable to produce in the future rather than producing it now.

Shareholders are trying to maximise profit. Hoarding pushes up the price today and tomorrow more than the costs, makes the reserves last longer, keeps the share price higher and avoids risky, hugely expensive, deep-water exploration until it is really needed.

As a ‘by catch’ not producing at maximum rate could be justified morally to the world at large by reducing the impact on climate change, saving some oil for our children and also by not making exceesive profits (subject to windfall taxes) this year but spreading the profits more thinly over a number of years.

IMO, you are correct about the wisdom of oil producers electing to defer production (much more common onshore than offshore of course), partly because it is hard to find quality production.

Oil reserves are valued on a Net Present Value (NPV) basis. You estimate the annual production, throw in the operating costs and a price projection and then discount the stream of income to present value using some kind of discount rate (most commonly 10%, but it depends on whether you are buying or selling).

With low current interest rates and the expectation for rising oil prices, IMO it makes sense to develop a field and fast as possible and then to produce at less than the Maximum Efficient Rate. In many reservoirs, this will also result in somewhat higher recovery factors.

At Matt Simmons' predicted price of $200, in constant 2005 dollars, each incremental 10 bpd of production would generate a gross cash flow, before operating costs, to the working interest owners and royalty owners of about $15 million over a 20 year period. The big factor is operating costs.

The Lower 48 fields I'm talking about will produce several hundred thousand to several million barrels, and take years to decades to fully deplete--and meet world crude demand for a time period measured in minutes and hours.

But what about competition? Surely, there will be some between exporters.

My working guesstimate is that total world net oil exports will have dropped by at least 75% from 2005 to 2031. It's really more of a competition between importers for declining oil exports. As noted above, IMO, the bidding will get more aggressive as forced energy conservation moves up the food chain.

what about competition? Surely, there will be some between exporters.

The important thing is to maximise profit - there will be competition, but that does not mean that they will produce more oil in the short term (or, more especially, enough oil to permit BAU economic growth) - profit means minimising cost/risk and maximising income. Profit is overridingly important to a producer, not the customer's/world's actual total needs.

The more efficiently a producer extracts oil the greater the depletion rate, the less time to make a profit - oil will be more expensive/difficult to extract in the future which is what causes global peak oil, since as prices rise (in order to make a profit) demand falls - as opposed to an individual oil well which peaks due to geological reasons.

Post peak we are in a new paradigm since, sadly, there appears to be no adequate alternative to oil for the forseeable future - on average expect constant declines in volume but constant increases in price - the lower the world total volume the higher the profit if you have an existing well. If the supernormal profits attract 'windfall' taxes there is a definite disincentive to produce.

Peak oil is bonanza time for producers but disaster time for consumers - the poorest consumers suffer the most - are people with the largest debts the richest or the poorest?

The economic theory, politics and energy sources used to run our 'exponential growth' world will have to be rethought I suspect.

xeroid said: "The important thing is to maximise profit - there will be competition, but that does not mean that they will produce more oil in the short term (or, more especially, enough oil to permit BAU economic growth) - profit means minimising cost/risk and maximising income. Profit is overridingly important to a producer, not the customer's/world's actual total needs."

This is oligopolistic behavior.

Yes -it is

This is oligopolistic behavior.

It is how the world in general works, but especially the world of oil - a very large percent of exported oil comes from OPEC (a known price setting cartel) or from nationalised oil companies working to a domestic political agenda.

Most people try and get the maximum pay for the minimum amount of effort, if it costs more to go to work than you get in pay there is no profit so you don't do it - it is normal human behavior.

Shareholders of any large company pay the company directors to maximise and grow profits - things like paying interest on savings and pensions depend on this.

Hi xeriod,

Interesting discussion.

re: "...the price will probably always increase despite recessions. If this is the case it would be wise for any producer to make the resource last as long as possible to maximise profit and income – the exact opposite of normal economic theory."

Wouldn't this depend on all producers being "in sync" with one another?

Also, how does this relate to WT's point below about 1) Difference between onshore and off-shore and 2) the declining number of exporters in total (I think this is what he's saying)

Also, it seems like - (not to me to use words like "elastic" or "inelastic", but) - the needs that are hard to replace will remain so or increase (agriculture?). And, at the same time, there is also (as of today) continuous growth in the war machine (arms exports and imports).

Since the demand/consumption generated by this machine can grow quite rapidly - in a kind of discontinuity with previous use, we might say - then there are additional consumption pressures that may work in ways that may offset (what we might come to see as) the relatively benign market picture. (Just a hypothesis.)

re: "...not producing at maximum rate could be justified morally"

Definitely, and it would be nice if there were to be some kind of "natural" way - (even in the more or less artificial world of human economic interaction) - this might come about.

Wouldn't this depend on all producers being "in sync" with one another?

Yes, that is what OPEC is all about! Post peak, OPEC is able to control the price of the marginal 'net export' barrel of traded oil.

Cartels, oligopolies and monopolies can be controlled by law in individual countries such as the USA, but there is no enforcable world law able to control such behavior - when it comes to international trade we have to live with it!

Once the price of a large proportion of the traded oil is controlled (ever upwards at a % rate more than you can earn by saving in a bank) it makes sense to leave as much oil in the ground as you can since having somebody pay you to burn it tomorrow is more profitable than allowing them to burn it today.

Deepwater oil is very costly and risky to produce relative to onshore but, once you have started, the oil has to be extracted as quickly as possible because the offshore saltwater environment is so hostile (if you want to hoard the production it will have to be in onshore tanks like the SPR) - we can see this in action in places like Mexico and the North Sea with post peak decline rates ~20% and rapid economic depletion.

Oil Group to Press Canada to Postpone Emissions Rules

I suspect the scientists will discover how to limit the emissions much faster if they are prohibited than if we do it the other way around. Perhaps because huge sums of money would become available for the research were oil company profits to depend upon its outcome.

Just a reminder to those who can get The National Geographic Channel, a show about oil is coming on tonight.

Explorer: Alaska's Last Oil [TV-PG Ratings N/A]
Wednesday, March 12, 2008, at 08P

The world is addicted to oil. But now the easy pockets of oil are gone and the race is on to find new sources. Nowhere is the battle more intense than in Alaska - source of nearly 15% of America's domestic production, and home to the nation's largest wildlife preserve, the Arctic National Wildlife Refuge, where companies are pushing to drill. EXPLORER travels back millions of years to see how oil was created, and looks to the future to ask how far we'll go to find every last barrel and at what cost.

It comes on at 8 Eastern and 7 Central time. Don't know about the rest of the country. But it sounds interesting, especially that part about "how far we'll go to find every last barrel and at what cost."

Ron Patterson

Thanks Ron.

Quite by accident I happened to flip to The History Channel's "Oil Apocalypse" last Monday night 11:00PM EDT.

"The oil that our world runs on won't last forever. The gap between supply and demand is ever increasing. Will alternative energy save us or is it already too late? What would happen to the world as we know it when our oil dependent industries come to a grinding halt? A worldwide depression is a certainty but a power struggle for the basic necessities of life would be complete chaos."

Look Here

Quite ironic that this is part of their Mega Disasters series. It does not seem to replay in the next two weeks. It first aired 22 Feb 2008.

I am realtively newly awakened to this building disaster and having lurked here for just a couple of weeks found the show dealt at a very high level with many topics discussed in depth here.

The last five minutes dealt with possible social and inter-nation breakdown including a - perhaps over the top - mushroom cloud over some unspecified oil field. But then humankind is capable of so much "bad - and good".

Too bad THC and HGC are cable-only channels. The masses need to be exposed to more of this "straight talk".


I associate THC with something totally different than cable TV :)

Yes, of course, it stands for thermohaline circulation.

It's good to be able to hash out the facts and weed out joint misunderstandings.

I'd tell you about the 60s but I can't remember them save for some vague recollection of premium gas around 50 cents a gallon.

As long as there is not a Peak THC crisis we might just make it through - or not suffer as much trying.


Northern Indiana, 1972, about 10 miles south of the big Standard Oil Facility....$.299...regular leaded....

60's were a little soon to have it at $.50 a gallon


Venture stations, northeast Kansas, early '70s $.19 a gallon.

Obviously I can't remeber the 70s either and it could be the 80s are at risk too.

So, exacly when was (premium) close to 50 cents a gallon?


i think that was about the mid 70's, i would place it at about 1975. 74 -75 was a time of major inflation in commodities. i remember asking the ceo of texaco if we would see $ 1 gasoline in the near future, that was '75. i forget what he said, but it was $1 a few yrs later.

On the northeast corner of Nineteenth Avenue and Ortega in San Francisco is a Standard (Chevron) gas-station. I worked at that gas-station from January, 1972 to October, 1976; I was at San Francisco State at this time, so I worked weekends during the school year and full-time for most of the summer.

When I first started working there, gasoline fluctuated between 25.9 and 35.9 cents per gallon, (for Premium, or Ethyl, as it was then often known, Regular was a three or four cents a gallon cheaper) as, if I recall correctly, they had for the past decade or more. The price fluctuation was due to the ongoing “gas wars” conducted by local gas-stations. I could come to work one weekend and gas prices would be at the bottom of the range, and we would be quite busy, the next weekend the prices would have gone up a few cents, and the weekend after that we would be at or near the top or the scale, and business was quite slow. Then, the next week, prices would have plunged down to the bottom of the scale again, and the whole cycle would continue.

But, although none of working at the gas station were aware of Peak Oil, or the fact that the US had hit its peak back in 1970, this last fact undoubtedly was behind the unexplained minor shortages that started appearing in mid to late 1972, the first of the long lines at the station, and the price (temporarily, as I recall) rising to an unprecedented 40 cents a gallon. But the optimism of that era was deeply entrenched, I recall at the time gas hit the 40 cent mark sitting around with four or five co-workers at the gas-station on a slow day, and asking how long it would take gas to reach a buck a gallon. Everyone looked around, thought, then the unanimous verdict was: “Naah, never happen.”

Anyway, I don’t know if we made arrangements with the Saudis or others for increased imports, because, as I recall, this 1972 mini-crisis seemed to melt away after a few months. But this didn’t last long, as the Arab Oil Embargo came down in mid-October of 1973, and its effects begin to be felt at the pumps only several weeks later. At first this consisted of price rises, to what were for the times, unprecedented levels. I recall going out to service a car, and the old guy in it looked at the price on the pump, a mind-boggling 50 cents a gallon. He looked at me and said “F**k you, I’m not paying you rip-offs” He started to drive off, but before he left, I snarled back at him, “Well, Asshole, you’ll run out of gas before you find anything cheaper, the price is the same everywhere.” And the price WAS the same everywhere, from now on it would only move upward or at best hang steady, the era of the “gas-wars” between service-stations was over, forever.

And the gas-wars were not the only long-standing business practice to end, forever. Before the Arab Oil Embargo, gas-stations, grocery stores of all sizes, and other retail outlets gave away trading stamps. People born this side of the late ‘60’s probably have never seen these, but they were a regular feature at retail outlets throughout my childhood and teenage years. On the West Coast, the trading stamps were Blue Chip Stamps and S&H Green Stamps, with Blue Chip being by far the more widely offered. Each stamp had printed on it “Cash Value One Mill.” (A mill is one tenth of one cent.) These were actual stamps, about two-thirds the size of an ordinary postage stamp, and gummed on the back, and you pasted them into booklets which, when a sufficient quantity was amassed, could be redeemed for stuff like toasters, vacuum cleaners, etc., mostly household appliances and stuff, as I recall. Anyway, these vanished from the entire retail scene, not just the gas stations shortly after the Arab Oil Embargo really started kicking in. Gas-stations in general, as far back as I remember, also offered free state and local highway maps that they gave away to their customers. Maps didn’t disappear, but they were no longer free as a price-tag of from 50 cent to a buck was now charged. And, of course, the Embargo was the beginning of the end for the true “service-station”, before, “self-service” was rare, but from this point in time on, it expanded, while the full service stations continued to diminish in numbers over the years.

When the Oil Embargo was first announced, the first effect were the price rises. Most people must have (incredibly, naively, from to-day’s vantage point) thought all this would be quite temporary, as for the first week or two of the Embargo, business was slow, as, I suppose people, like the guy who buzzed me off over 50-cent gas must have thought that prices would soon come down. It takes about six weeks for a tanker to sail from Saudi Arabia to the U.S., so six weeks after the Embargo was announced, the effect became quite noticeable, and the real gas lines became an everyday feature. This was when the government installed the odd-even (based on your car’s license number) sort of “Rationing Lite” system. And the oil companies practiced their own rationing, as each service station received a specific monthly allotment of gasoline. Scotty (Scotty Petrie, the operator of the 19th and Ortega station at this time) calculated that if he sold every car all the gas they wanted, that he would exhaust the monthly allotment that Standard Oil granted him in slightly more than two weeks. So Scotty instituted a limit of 8 gallons to every car coming into the pumps. Business hours were also cut back, and this created problems with the long lines of waiting autos, which backed out of the station and went up the street, frequently curling around the block and extend up most of that block. So, a couple of hours before closing time, we would take a large cardboard sign that said “Last Car”, go out to the last car an the line and inform the driver he was lucky, as he would be the last getting gas here to-day, then hang the sign on the back of his car. One day, I went out with the sign, and as it turned out, the last car sort of stood out, an almost overwhelmingly bright yellow VW Bug. I put the sign on the car, and returned to the gas-station and continued pumping gas. A couple hours later the yellow VW comes up and I sell it its gas, and went on to service the next car after the VW departed. It wasn’t until three or four cars had bought their eight gallons that I flashed on the fact that the VW was supposed to be the last car for the day. There were several cars still in line with the sign now on the last of them. It turned out that after I left the sign on the VW, the next car came up, and offered the driver of the VW $5 to take the sign and put it on his own car; he then sold the sign to the next car coming behind him, and so on. Ever after that, an employee of the gas-station had to simply stand by the last car, and slowly walk with it as it inched towards the station, and waving off all would-be customers.

After five months, King Faisal of Saudi Arabia felt he had wrested as much as he could out of the US and the West insofar as seriously addressing the (at the time) 25 year old Arab-Israel conflict. So the Embargo was lifted, and the oil flow resumed. But before the Embargo, the Saudis were getting something like $2.80 per barrel, afterward, as part of the price for restoring production, Faisal insisted on, and got a price of $11.65 per barrel. And the era of 25-35 cent gasoline, along with free maps and trading stamps, was over….Forever.

Anyway, thanks for the trip down Memory Lane. A lot of it just seems unbelievable now, free maps and trading stamps and getting cussed out behind 50 cent gas. Definitely, it was another era.

Antoinetta III Posted on Oil Drum 3-12-08

Nice recap of a bygone era.

My father had a service station from the time just prior to the embargo to the mid 1980s.

Early on, 25.9 cents to 32.9 cents per gallon for regular depending on the state of the gas war from all out war to armistice. Dad had a mind like the proverbial steel trap and told me that locally, that had pretty much been the pricing structure going back to well before WWII.

During the gas war era, many small retailers did not own the gas in their tanks. The refiners would operate on a "tank wagon" basis and adjust the wholesale price of the amount pumped / billed to the retailer based on a participation factor that allowed, [but did not compel the small retailer] to lower prices in response to a "gas war." IIRC , at 32.9 there was about 4 cents in margin and at 25.9 there was about 2.5 cents of margin.

My dad's service station was in Utah, which had no real connection in the supply chain to imported oil, but after the embargo was subject to all the rules on allotments to retailers. In general there were no lines locally, but allotments seemed to based on political pull or at least some formula known only to some bureaucrat with a weird sense of humor. Most stations never ran out. My father's place was capped price wise below the prevailing price, "alloted" much more premium than he really wanted when compared to regular [but sold out of the premium as well], and sold out of all grades for as long as two weeks at the end of every month. The overall effect reinforced my already reasonably well developed belief that Government even if attempting to do the right thing, will screw the pooch most of the time.

Also from today's WSJ, a pretty good article about diesel:

Diesel Demand Remains Strong

Oil and gasoline prices are again at new highs. But many in the U.S. refining industry are focusing on prices for another key liquid: diesel.


Diesel has followed the petroleum surge, ending yesterday at $3.82 a gallon, based on government data. Much as gasoline has pressured consumers, diesel is pressuring businesses that depend on the fuel.

But some in the refining industry see an opportunity. Their bet: Diesel is poised to take off. While skyrocketing prices have weakened demand for gasoline in recent months, global diesel demand has been growing.

The article goes on to say that diesel is taking market share away from gasoline in many parts of the world, including the U.S.:

For 2008, the DOE's Energy Information Administration is expecting demand for diesel and related products, as well as gasoline, to grow less than 1% from the previous year. But in 2009, the EIA sees diesel demand growing 1.6%, twice as fast as gasoline.

So when we start looking at demand destruction for gasoline, we need to take a look at how much of this demand has simply shifted to diesel rather than been eliminated entirely.

While I am not arguing the merits of biofuels, a critical point to keep in mind is that, as I understand it, virtually all diesel engines can easily handle 100% biodiesel. And biodiesel does not have the distribution problems that ethanol has. My point is that for maximum fuel flexibility, a diesel engine makes more sense than gasoline. It all goes back to the reason that Rudolph Diesel designed the engine in the first place--so that farmers could run mechanized equipment on vegetable oils.

Untreated bio-oils & fats (straight cottonseed, rapeseed, waste grease etc.) can work as fuel at higher temperatures (hot enough not to thicken) IF the diesel fuel injection pump is strong and robust enough (many diesel fuel pumps use fuel as the lubricant).

For extended use, there have been reports that bio-fuels tend to create excessive carbon deposits in the combustion chamber.

Treated fuel can involve a couple of processes involving lye or methanol. More at http://www.greasecar.com

My 1982 M-B 240D has what is reported to be the strongest fuel pump, "strong enough to push pureed bananas for fuel" and lubricated by engine oil. And with the smaller engine and manual transmission it can get 30 to 31 mpg in the city. Highway mileage is heavily dependent upon speed (35 to 43 mpg in my limited experience).

Most bio-fuels have slightly lower mpg reported.

Best Hopes for Old Mercedes Diesels,


Best hopes for finding spare fuel pumps for a 1982 car when you have switched to bananas.

Put this reply near the top of this thread.

I was at the National biodiesel conference last month and listened to pipeline operators explain why biodiesel is not put in pipelines in the U.S.. While technically you can put biodiesel in the pipeline in reality it doesn't happen.

The pipeline operators/owners (oil companies sometimes) claim that biodiesel mixes more with various petroleum products more than petroleum products. So you can run Jet A:Ultra low #2diesel:#2 diesel and not worry about contamination of the JetA with odd things. But apparently you can't run Jet A:#2diesel:B100 and not have concerns. Also the interface cuts are bigger so people lose money.

My and other proponents of biodiesel stated that you know when you contaminated JetA with biodiesel because there is something different to test for. But mixing various grades of petroleum has no effect as long as you meet the spec of the petroleum product, Jet A for instance. So there can be lots of cross contamination between #2 diesel and Jet A but as long as the Jet A meets spec it is okay to sell. As long as there is 10 ppm methyl esters the Jet A is considered out of spec (0 ppm allowed) even if that level of methyl ester is not an issue in performance of Jet A at 30,000 feet.

One more reason biofuels are at a disadvantage in transportation.

Chip Fat Landys:


Wont save the world, but good for fun.

To make it work well, you must first strike up a relationship with the daughter of a Fish and Chip Shop proprietor....

There's just one small problem with vegetable oils for diesel: there is not enough of it and the sources such as soybeans are roughly 2.5 times the price of corn. As for historical justification, Henry Ford intended that his Model T would run on ethanol so that farmers could ferment there own fuel to drive to town. Virtually all gasoline engines can handle E85 with factory add ons costing about $100.00. My experience and reading indicates any modern gas vehicle which has been well maintained can handle E20 and others have tried higher levels with some success.

Locally here in North Iowa we have 2 biodiesel plants, one at Mason City and one at Algona. There are are at least 6 ethanol plants nearby close to the towns of Lakota, Albert Lea, Mn., Hanlontown, Mason City, Charles City, and Fort Dodge. The ethanol out put is so much greater than bio diesel as to make bio diesel look puny.

Regarding ethanol subsidies, you might want to check out the comments by the Pilgrims Pride CEO at the bottom of the thread.


We've talked about biodiesel a lot over the past few months. A while back, Robert Rapier did a post which IMHO set forth the definitive arguement for why biodiesel cannot and will not be the long-term silver bullet. Stuart's article on the huge implications of the large-scale diversion of crop land to biofuels put the final nails in the coffin.

Nevertheless, it is true that the EROI of biodiesel is, or can be, generally more favorable than for ethanol. This is certainly the case for ethanol from corn (maize), though in the case of tropical sugar cane ethanol the EROIs are more closely comparable. The choice of oilseed feedstock does matter. Crops that are higher yielding and that require fewer energy inputs will obviously have better EROIs. Thus, while I would agree with Robert that this is a dead-end that we don't want to travel down to any great length, if we are going to travel any distance at all on any biofuel dead end, the biodiesel route would be the preferable one.

I have also been arguing, though, that while we don't want to be thinking in terms of biodiesel as a general transportation energy supply, there are a few specific and very limited niches where it still might make some sense and could be done without too disasterous of an impact on global food supplies or global ecosystems. First and foremost among these would be to supply fuel to agricultural equipment. It is quite feasible for farms to grow enough oilseeds to supply all of the biodiesel that they need to fuel their equipment, and according to my calculations, it appears that they should be able to do so without having to dedicate more than 5-10% of their total cropland at most. One can even envision ways in which this could be done on a small-scale, appropriate technology basis right on the farm. We repeatedly see people here worrying about the whole world starving because all the farm tractors are going to grind to a halt when the oil gives out. Nonsense! It is quite feasible for all farm equipment to be fueled by biodiesel that is grown right on the farms, and there is no reason to think that any farmer in their right mind wouldn't do exactly that if that is what it takes to stay in operation. It clearly would be better to sacrifice that 5-10% of cropland for biodiesel production for the farm equipment than to risk losing 100% of it. Thus, while we have many things to worry about, fueling the tractors need not be one of them.

It clearly would be better to sacrifice that 5-10% of cropland for biodiesel production for the farm equipment than to risk losing 100% of it. Thus, while we have many things to worry about, fueling the tractors need not be one of them.

Without in any way trying to pretend to knowledge of farming that I do not possess, I would like to remark that those who were informed said in discussions in this forum that using animals instead to do the heavy lifting on a farm takes up around 30% of produce, so the bio alternative seems to be way ahead.

You may find this story interesting on a biomass cooperative for farmers fuel in Austria:

Austria opens first cooperative biomass service station


The Austrian state of Carinthia, in the south of the country, has opened its first cooperatively managed service station for biomass. 7000 small farmers are members of the energy cooperative, which collects residual wood and turns it into finished products ready for combustion in large biomass power stations and small heating units. Biomass users come to "tank" at the station. The collection point is located in Feistritz/Drau and offers technical assistance as well as machines to the farmers. By cooperating, the farmers achieve scale, a stable supply, and a new market which allows them to increase incomes by an estimated 15 percent.

That's a long-winded way of describing a big pile of wood chips. I spend a fair amount of time in Carinthia. I'd say almost everyone heats with heating oil,although I know a few people who have installed geothermal systems. One friend has one of those high-efficiency wood chip furnaces that heats his own house and a house next door. It's a beautiful system with a big hopper that feeds the chips into the furnace. He gets the wood from his own land although he lives less than an hour from the wood chip pile described in the aerticle.

I think that comparing bio-fuel driven farm work to animal-driven farm work is an important comparison, but we need to make sure that we're looking at the full spectrum of input costs.

While it may only take 5-10% of cropland to fuel the farm equipment, what percentage of the crop land is required to fund the purchase of that equipment (combines and tractors aren't cheap). How much will that percentage of cropland increase as the costs of fossil fuel and metals inputs to tractor and combine manufacture increase dramatically?

Farm animals, by comparison, have the remarkable ability to reproduce themselves. Of course, breeding animals for farm use may require more input than simply maintaining a healthy adult animal, and there's vet costs, etc. There is also evidence that animal-powered farms do less damage to soil structure through compaction than do tractors. And while animals eat feed, they also produce manure, something tractors don't do.

I don't know the end result of a fully-inclusive balancing test--industrial farm machinery may still be by far the better choice--but we need to account for all the inputs and externalities before making that determination.

All true, but remember that horses or other beasts of burden pull equipment, too, so you are going to have some of that "overhead" in any case. Cyrus McCormick was mass producing farm machinery long before the first tractors appeared on the farm.

Excellent points, Jeff. I also think that some support is needed for the 25% and 30% numbers that are being used. I recall reading material claiming that 25% of farmland in the US was dedicated to 'horsepower' (including no doubt mules, etc) sometime around the beginning of the last century. But horses then were widely used off-farm.

Is anyone able to reference studies attempting to estimate current farmland requirements for animal power dedicated to food production?

Also, look at Stuarts graph on yield increases. When horses were used it was before the major use of fertilizer, dwarf breeds, herbicides, and other such things cited in the article. With yields 2.5 to 6 times more than when horses were used, the 25% value is probably outdated. With horses eating Wheats (and soy) which yield 3 times more 25%/3 = 8.333% - not too bad.

Also in terms of reliability Veterinary medicine has improved in orders of magnitude as well (dunno about tractors improvements - as a kid (only 15 years ago) the farmer next door had a tractor (Oliver?) from the 40's. Certainly a durable good.

So alot needs to be updated to fit the _current_ perspective, imho.

Horses would'nt survive on wheat and soy. They eat grasses, and when working intensively, oats. I am not aware that pasture and hay yields have grown as exponentially as grains and soy over the past 100 years. The oat crop also probably hasn't received the intensive treatment yet.

The Land Institute did some work on the horses vs. tractor debate a few years ago in their Sunshine Farm project. My recollection of the verdict was that it was a six of one, half dozen of the other type.

Here's another issue with horses. Even an 8-horse hitch, which I think was relatively rare, cannot do the same amount of plowing in the same amount of time as a decent-sized tractor, and I'm not talking the monsters out there now. Also, fewer people have the ability (even if taught intensively) to handle a multiple-horse hitch than can operate a tractor. Horses just aren't for everyone.

Another problem with horses is that they require attention 24/7/365. The tractor requires maintenance and repair, but will spend the winter in its shed without the need to be filled with diesel a couple of times a day.

No wonder farmers switched to tractors just as fast as their pocketbooks would let them.

I expect that tractors will be some of the last machinery produced. If we will be pushed eventually to move back to tractors, I suggest that the gov subsidize heavily the conversion, because it won't happen in time otherwise due to the difficulty in working with animals, the fewer acres the horse may work per day, and the need to increase the number of animals drastically. The conversion would be a huge, long-term project.

I think these are all points well taken - and add in the value of the manure (can't spread any tractor outputs on fields), the value of reduced soil compaction, etc... I'd be fascinated to see someone do a real land analysis of tractors vs, animals - like Jeff, I don't know how it would come out, but it would be interesting, and likely closer than the figures tossed around probably indicate.


I wouldn't bet on soil compaction being one of the benefits of horse-powered agriculture.

A 1000 horsepower engine weighs as much as 1 horse.

If farmers judge compaction to be a problem, redesign of the tractors and cropping patterns is the easiest step, as well - more wheels, tank treads, longer and more decentralized vehicles can largely solve the problem.

I think most modern farmers would find switching to no-till agriculture much easier than switching to horsepowered agriculture.

EROI of sugar cane alcohol is considerably enhanced when you consider that the energy input (besides sunlight) is near slave labor of sugar cane workers. If Iowa corn has to compete, it will need petroleum to do so. How about a combined cycle? Grow enough oilseeds to power the agricultural machinery to grow corn for ethanol?

The Iowa corn crop most certainly does not need petroleum with the right investments. Wind driven ammonia is moving forward nicely:


And if they fractionate the inputs every hundred gallons of ethanol producing corn also contains six gallons of corn oil. We can use the corn oil as the diesel starter, it turns out you can inject ammonia right behind the turbocharger, lean the diesel input out, and agricultural engines get along just fine without any other mods. So its literally one feed line and some controller work to convert each machine in our current fleet to a renewable fuel.

Good times here in the heartland ... if only James Inhofe (R-Exxon) doesn't screw me, my kids, and everyone else in the country ... counting the days until our new President takes office.

What's the EROEI of ammonia?

Good point! And I'm sure the farmers would rather set aside 10% for biodiesel production vs: 25% to feed the horses. The thing about a tractor is that, unlike a horse, you don't have to feed it when you're not using it! And that's most of the time. I wouldn't be surprised to find that the acreage for producing the fuel for a tractor comes in at even less than 10%.

Jatropha can be planted on otherwise fallow land and requires modest irrigation, as I understand. While requiring hand harvest, the equipment required to extract the oil is downright primitive. The oil can be filtered and run directly in old, low-tech diesels.

I think the tractor will be around for a long while. When stocking up on gold, consider buying some old diesel farm equipment if you have the space to store it. Lots of the old diesel tractors have service lives of fifty years or more. I suspect that they'll appreciate in price dramatically. By buying them we are preserving equipment that otherwise might be sent to the junk yard. In addition, they're just lovely things. Unlike gasolline engines, an old diesel can sit around unused for years. Change out the fuel every couple of years and start it up for a few minutes. I bought a 1985 Dayton diesel generator recently and asked the seller when he last changed out the fuel. He said he never had since it was new - only used it ten or twenty minutes a year for his welder. The fuel stunk to high heaven and the exhaust was smokey but it ran fine with twenty year old petrodiesel fuel - if I'm to believe his story.

LJR said:

Jatropha can be planted on otherwise fallow land and requires modest irrigation, as I understand.

True, but it should be noted that jatropha is a tropical plant. That's fine for certain countries such as India and much of Africa and Latin America, but it's not going to help the USA, Canada or Europe. Even in the tropics, I do have some concern about how much jatropha planting will affect soil fertility, erosion and water resources. Still, every little bit helps.

Jatropha Curcas aka the physic nut, (and its competitor Pongammia Pinnata, aka honge/karanja) is a nitrogen fixer, so planting it should enrich the soil.

And it makes headlines not for being a rainforest plant (Oil palms do, and are viable in that circumstance), but for being a desert tolerant plant - and the US has plenty of unused desert. We also have plenty of friendly 3rd-world countries with unused desert that would love a major export. We'd need to pick relatively stable ones with constitutional rights ideally.

Jatropha is a Euphorbiaceae and is NOT a nitrogen fixer. No Euphorbiaceae is. The green manure of the plant is, however, relatively high in nitrogen and can be used as a soil improver.

Nor is the plant "desert tolerant", where deserts are defined as areas with less than 10" average rainfall per year. The biophysical limit has been found to be 300-1000 mm (12-39") per year. In lowest rainfall areas, the plant will go drought deciduous and will not bear or bear only sparsely. This would not be compatible with the pressure to maximize yields if you were to commercialize the nut.

It is also a pest and noxious invasive in some areas such as Western Australia, where its growing is banned.

I'll take your word for it. Is this your area of expertise?

Persistent rumor I guess. Any idea why it's got that reputation? I've read it many times, and it fits with the reputed tendency to thrive in poor soils.

I've also read varying reports of the drought-tolerance - "thriving in 10 inches of rainfall a year" is a common claim. Nevertheless, my point was that we as a country, and as a world have plenty of land that is of marginal utility to agriculture due to its low rainfall, whether or not it is technically desert.

I do specialize in growing Euphorbiaceae among many other things I'm into :)

Jatropha does grow in poor soil, and prefers sandy, well-draining, low-nutrient soils. But water is a limiting factor to its performance. "Growing" vs thriving is very different, and water availability has dramatic effects on the yield of the nut, if that is what you are out to maximize. It's a tropical plant, so won't grow in the US or any temperate climate areas. I think the "rumors" about jatropha stem from non-horticulture type folks translating "grows in arid conditions and poor soil" to "it can be grown as a high-yield commercial biofuel crop" under those conditions.

It can be useful to people in small-scale settings. It often grows in disturbed lands in some areas of Africa and India, and in Mali, for example, villages have been introduced to harvesting the nuts and using the oil to run a small generator, providing light at night when there was none before. That seems perfectly reasonable to me--that it could make a dent in the commercial diesel supply seems more like a fairy tale.

"Land of marginal utility" to agriculture provides important environmental services to us and to other living creatures. It would be a shame to destroy that for the sake of our liquid fuel addiction.

This thread regarding the use of Biodiesel is probaly the most relevant article i have read here in a while. Biodiesel for use localy has a great future and will mean farmers will have a fuel supply at a slight inconvenience With out resorting to manual labour/draft animals. A lot of pople here are getting hung up on the need for new equipment and EROI. Most of the eqipment is already bought and paid for, And as pointed out An oil press is very basic equipment.As for the Tractor capable of using this fuel : They all can The only modifcation realy needed is for cooler cliamates is an in line fuel heater to keep the oil thin and and start/stop the engine on regular fuel,and proper filration.(Trans esterfication using Methanol gets a better more customer friendly fuel but on the whole is not required)
As for the machinery breaking down. We only recently got rid of my fathers Ferguson 20 Grey. His since new 1954.( kept for sentimental resons) Never had a major mechanical break down in those years. and would still start by starting handle when the battery was flat if you were up to it.

what is used most for biodiesel and is switch grass even a biodiesel? switchgrass can yield 3-4 times as much ethanol per acre as corn can. can we convert farms to run on switch grass?

In the US, the main feedstock is soybean. In the EU, it is rapeseed. For imports, it's mainly palm oil.

Switchgrass is a native prairie grass. To convert it to ethanol, we'd first have to invent a commercial cellulosic ethanol industry, which isn't quite there yet :)

It's doing fairly well though:

Using a conservation cellulosic conversion value, researchers found that switchgrass grown on the marginal fields produced an average of 300 gallons of ethanol per acre compared to average ethanol yields of 350 gallons per acre for corn for the same three states.


Unlike ethanol from corn, I like this technology a lot.

Well, not exactly. What this study (you can get the original from the PNAS website) details is the yield of switchgrass from 12 plots in NE and SD grown over 5 years. There are no plants to process the switchgrass into ethanol, so the study authors used the UC Berkeley EBAMM model to plug their yield numbers in to get an estimated output of ethanol. Then, if you go dissect the EBAMM model, you'll notice that the model adds up all the inputs in the field, adds the inputs for the cellulosic processing (which doesn't exist on a commercial scale, so the numbers are estimates), then credits the entire energy content of the switchgrass back to the ethanol. By magic, you get 540% yield! If you delete the "credit" in the EBAMM model, however, you end up with an EROI of 0.97. Just about where corn ethanol is. (And this is logical, since the alcohol concentration of the initial mash for fermentation is less than half of what it is when corn is the feedstock, yet the inputs to switchgrass growing are lower).

The local paper sold near my lifeboat had quite a lively debate concerning the merits and drawbacks of switchgrass farming.
Some highlights:
Switchgrass could be pelletized and burned in devices that were hopper fed.
Produces a lot of ash.
It takes years to establish a productive field and then they were vulnerable to fire.
Is invasive.
Large plantings could affect the local ecology and attract and harbor pests detrimental to adjacent holdings of other crops.

Thanks for the info - there are so many things to keep track of, and I have never met a field with so many miss-statements and exaggerations as renewable energy, so a heads-up like yours is more than useful.

Many thanks.

Soybeans are a lousy biodiesel feedstock. The only reason they are using it is because they are already growing so much of the things. Rapeseed yields much better, sunflowers slightly less (but these could even be harvested by hand if necessary).

A tiny patch of switchgrass works better than a tiny patch of corn at the benchtop scale. You try to run that stuff in the volumes we run corn and we have the same pesticide/herbicide problems we get with corn.

There is no magic bullet. If cellulostic ethanol ever takes off it'll come from a simultaneous multiculture crop or from waste from a monoculture crop being harvested for its seed.

And this is a dead issue, anyway, as peak oil is going to kill car culture before we can possibly adapt such things. Electric rail, delivery vehicles, and We, The People experience a life change like the one that comes upon a single human when he/she experiences a stroke; reduced mobility and changed expectations.

What percent does that grow to if you include the energy needed to:

- mine the ore and produce the steel and other materials used to make the tractors
- power the factories used to make the tractors
- transport the tractors and their spare parts to the farms
- power the industrial civilization that needs to exist in order to permit any of the above activities to take place in an organized fashion

'power the industrial civilization that needs to exist in order to permit any of the above activities to take place in an organized fashion'

This is how I've been thinking for some time! Solutions that imply the continuing existence of the problem they are supposed to solve don't work. Relates to the Einstein quote - problems cannot be solved by the same level of thinking that created them. Also relates to Jeff Vail's idea of bootstrap EROEI.

It's, actually, better than that. By fractionating the corn, something more, and more, ethanol refineries are moving towards, you get a little over a gallon of corn oil/bu.

Since you get, at present, a bit over a hundred and fifty bushels/acre -about 25 gallons of corn oil - and, it only takes 8 gallons of biodiesel to grow/harvest an acre of corn, and since the distillers grains are a better product with the oil removed (more digestible, easier flow) It's a big Win/Win all around.

Distillers grains (waste left after ethanol fermentation) are worse than raw corn in quantity.

Above a certain % they cause scours (diarrhea) in cattle and there are limits for pigs, chickens and turkeys as well (unsure about catfish). And these limits are being reached today.


Its not F#$%$%@K 10% its 90% if it was only 10% you could close the farm gate and export energy out THIS IS NOT THE CASE. If you remove ethanol subsidies production would crash and burn even with oil at $110 a barrel go figure...

But don't let facts get in the way of a fell good story.

We cannot go back to horses there is no way we can go to bio fuels...

For maximum fuel flexibility one may also consider a car with a small gasoline engine (like say 1.6 liters) and an LPG installation.

Edit: though I would not recommend to by a new car.

I have a question concerning diesel production. When a barrel of oil is refined, is the ratio of gas to diesel limited? Or can a refiner shift to a higher percentage of diesel at the expense of gas production?

This year should be the start of more diesel engine offerings in the States and I'm wondering if the refiners will be able to increase diesel production... not to mention that the ultra-low sulfur stuff requires ng. It would suckith to end up with a diesel-powered vehicle, only to find that diesel production would not be able to keep up with demand.

So should I cancel that order for a Unimog? :)

2. From American Petroleum Institute (API) statistics an average barrel (42 gallons) will produce 46% gasoline, 22% diesel, 10% jet fuel, 5.5% heavy fuel oil, and the remaining 16.5% would be everything else including lubricants, asphalt, petrochemical feedstocks, etc.

1. How much diesel can be refined from a barrel of crude can vary widely and is very dependent on the type of crude, the refinery configuration and the refinery's desired product slate. Some crudes yield a relatively small amount of diesel while others can yield relatively high amounts. Some refineries are capable of producing more diesel from the same crude then another refinery may be able to through more advanced refining processes such as hydrocracking. Finally, a refinery may be capable of extracting a relatively high amount of diesel from a barrel of crude but may choose to further process the diesel material into gasoline and jet fuel.

Generally speaking though, most crudes yield between 10% to 30% diesel and most refineries produce in this range but there can be significant deviations. North Sea Brent produces about 15% to 16% diesel range material.


Byron, Robert is best qualified to answer your refinery questions because he is our "Refinery Man" in residence. But in the case that he don't show up I will give you what information I have, which is admittedly not a lot.

Simple refining only separates the carbon chains that are already in the crude oil. See the example here: http://science.howstuffworks.com/oil-refining2.htm

As you see from that example a refinery simply boils the crude and taps off the different length of carbon atoms, which constitute the different kinds of fuel. So the simple answer to your question is "no" you cannot distill less gasoline in order to get more diesel.

This is particularly true in the case of diesel because the diesel molecule has 16 carbon atoms while the gasoline molecule has only 8. In a refinery you cannot join short strings to make longer ones.

However there is this thing called a "cracking tower". That can take long strings and crack them into shorter ones. That is, I think it would be possible to crack diesel into gasoline but not vise versa. And very long strings in such things as bitumen can be cracked into shorter strings such as gasoline or diesel. However I am far from a cracking expert so I will leave that subject to someone more knowledgeable than I. However here is the "cracking page" of "How Stuff Works".

I sure hope this helps. Also note that when a long molecule is cracked into a shorter one, hydrogen must be added at the points where the carbon atoms were previously attached to each other.

Reading the cracking page I see where they do join longer strings together in blending gasoline and naphtha. I did not know this was possible however I don't think you could ever join two gasoline molecules together to make diesel. However if someone else has better information on this I would welcome your input.

Ron Patterson

When a barrel of oil is refined, is the ratio of gas to diesel limited?

Packing to go to India for a week, so very quick answer. The typical refinery has at most about 5% flexibility. If they had more flexibility, they would all be making diesel just as fast at they could at the current diesel prices. You could build a unit that could build gasoline up into longer chain molecules, but it would not be efficient to do.

Wow! Thanks guys. This has gotta be the only site where a lump such as me can have a virtual brain trust for consult. Certainly does make me reconsider the viability of a diesel-powered car. Might end up being jacked by thristy long haul truckers looking for a spare gallon or two.

I keep hearing that Europe is shifting towards more diesel cars, aver 50% last I heard. I also see that the US is building gasoline inventories (and relatively low retail prices) while diesel as far as I can see is getting relatively more expensive.

If we put those 2 together, is it possible that US gasoline prices are benefiting from a suplus of gasoline from diesel hungry Europe?

Annecdotally, twice in the last month I have been filling my gasoline car at the pump while an adjacent customer complained that the diesel pump was dry.

The full text of the WSJ diesel article is freely available here:


Chevron and the other IOC's are clearly in a pickle. Their reserves will continue to fall, with no replacements available; this portion of their business should really be considered as a royalty trust. Their downstream businesses becomes less and less valuable every day, as refinery capacity will soon exceed the oil production capacity. With their stock buybacks, it looks like the IOCs are more and more like tontines that pay a small dividend and really mess up our political system. Shell, Chevron, and Exxon have all had major shocks in their reserves: Shell in the massive downgrade, Chevron with the admission that new discoveries and additions are nowhere near production, and Exxon with its game of replacing crude oil in the western hemisphere and democracies with NG, LNG, and NGLs in Qatar.

I think they are hoping for one big, final push deep offshore and in the arctic. After that, they're done. Oil sands and oil shale are more of a mining business than an oil drilling business.

regarding Chevron and other IOCs, WNC Observer said...

I think they are hoping for one big, final push deep offshore and in the arctic. After that, they're done.

Maybe another way of putting it is that the CEOs of these IOCs will do anything to push up their stock price, cash in, change the dollars to gold coins, and retire in Paraguay in their well-guarded estates to keep from being lynched, as sea levels rise and flood the coastal cities.

Meanwhile, Rush Limbaugh (from his bomb shelter at Clear Channel, Paraguay) will continue to tell the American public that global warming is a hoax, the sea level rise is caused by Liberals, and that the global oil shortage would be solved if it wasn't for "environmental whackos" trying to prevent oil drilling on the moon.

Insightful, both of you.

Appropriate that you responded to that, Moe.. "one big, final push" sounded a lot like a bit of Vegas dialog to me.. not just that they are gambling, but they're buying lottery tickets again and again, to be able to get that big break, and buy their 'ticket outta here'..


Does sound Vegas-y, doesn't it? In Vegas you would call it a "case bet".

By the way, looks like WTI is finishing strong again today. If we get another day up tomorrow, a number of traders would consider it a short-term sell signal.

I know oil price increases being due to speculation is overplayed these days, but I've got to believe today's increases after the optimistic EIA report is mostly speculation.

Either that, or there are a lot more peak oil aware investors taking a long term view than I had previously thought.

Hi Earth, Moe,

re: "...or there are a lot more peak oil aware investors taking a long term view"

It's bound to happen at some point, isn't it? Or, no - ?

Complement or snark? I am so unused to the former, that I have come to expect the latter.


55 mph speed limit today and the 70's 55 limit has one big difference Traffic cameras.Today tickets can be mailed without a traffic stop/many more can be written.Falling revenuse to states and local govt's on falling home prices can be made up by slowing down traffic and also conserve energy.Since I have a lead foot a 15 mph non-notify clause to insurance companies would be nice.I lived thru the early 55 mph and on trips under 300 miles didn't make much difference in time.

If they are going to do this, then it really should be made possible to add in a device that will automatically set to the speed limit and beep at you if you exceed it. If they are going to put in the cameras, they could also install a little radio that would broadcast a signal that these devices could read, indicating the speed limit along that stretch of road and allowing the device to set automatically. Maybe it could even be rigged up to automatically reset your cruise control when the speed limit changes.

I drove around New Zealand for three months in a Japanese after market sentra that chimed at me everytime I exceeded 100kph, not only doable it is done.

Actually, my Dad drove a Rambler in the 1950s that had such a device (manually set, of course, not automatic). As a kid I thought that was just the coolest thing. I've never seen a car with such a device since, nor even a device you could add on.


I'm a Chryco guy but I've always had a soft spot for AMC and the '74 Ambassador wagon in particular (why I love this particular car I have no clue, but I do).

Anyway, you might enjoy this: http://youtube.com/watch?v=bLHQj4V4XOQ

A cute commercial for the Rambler's little brother: http://youtube.com/watch?v=xgLZ1wfGkSo

And the car AMC introduced 50 years too soon: http://youtube.com/watch?v=XyaJxigm5Bk


Look out for that truck!

Thanks for that HiH!

Hi Spaceman,

I have to admit, that clip cracks me up everytime. Keeping with the AMC theme, you can play "spot the Pacer" here: http://youtube.com/watch?v=IeuGQNuPhGs

And since this is the Oil Drum: http://www.youtube.com/watch?v=y-jc-R9ClvI (check out "Frank Cannon Diet" while you're there).

I'm thinking Alan might approve of this one: http://youtube.com/watch?v=4Ik_JUw3NMw


My grandmother's 1965 (or was it '66) Buick LeSaber had a manual dial on the speedometer that you could set like an alarm clock. And it made that awkward sound like electric clocks do. Very low tech. Of course, all you had to do was turn the knob to make it stop.

And a school bus I used to drive had a governator (sp?)that kept it from being driven over the limit. What a riot that thing was to drive, full of screamin' kids!

You can set a speed on Peugeots so that the car wont' go over it - which is OK but it is not always clear what the speed limit is supposed to be.

The number of pensioners in the UK who have speeding offences is unbelievable - the problem is usually that they go too slow, not too fast by any rational reckoning.

Money talks, and at a fixed £60 most authorities are only too willing to cash in, in the interests of safety, of course!

In the UK at least ferocious enforcement of the speed limit is a big money spinner, and there is no interest in helping people to stay under the limit.

German studies indicate that speed limits actually make little difference to gas consumption, and why anyone should want to create still more levels of very expensive bureaucracy escapes me.

If the price of gas goes up people are quite capable of making their own decisions and driving accordingly.

You mean like the way the cost of everything, especially gas, went up the last 5 years and Americans dealt with it by loading up with home equity debt until mortgage bonds froze up, and then loading up with credit card debt until the banking system began to collapse? We've made a very complicated world to service our greed, and we no longer understand the consequences of our actions. Let's see how long the house of cards holds up when people go broke from the cost of their commutes to work.

If you want to say that you can't cope, fine, but it is pretty unwise to generalise about a substantial body of people whose individual circumstances you don't know, and who may have a difficult time just trying to get through.

And anyway, most people who make that sort of comment don't mean themselves, they mean someone else.

When you analyse the behaviour of the moralisers, it rarely differs significantly from those to whom they preach, at least for anything which they really want - plenty of people who are 'concerned citizens' about Global warming will still jet off for their holidays, although at least in the case of the standards body in the UK for organic food they are quite prepared to destroy livelihoods in Kenya on the grounds that they disapprove of market produce being airlifted to the UK.

We can do without massive bureaucracies to enforce speed limits which will make little difference - if you want to go slower and save gas, fine, go for it, but please try to avoid the temptation to legislate on others your own particular take on things.

It is a matter of statistics that as oil as increased in price, savings rate has gone negative and personal debt has increased. People having a difficult time just trying to get through have, statistically, done so by taking on more debt. It is perhaps not enough to declare a causative relationship between oil and personal debt, but the correlation is a simple matter of numbers - no moralizing involved.

Yeah, a lot of people have been trying to hang tough and make do, but are coming to the end of their string.

I suspect there are more of them than greedy yuppies, although of course human folly is never to be discounted.

Saying that slavery is wrong is an opinion. It used to be legal. Radical troublemakers spoke out against it. Now it's illegal. So we damn well have the right to argue for legislation if we believe it's a matter of life and death. And I take the bus to work in Houston and I would if gas were 10 cents a gallon. I'm poor. It's not fun. Don't smear me when you don't know my situation either. But if you haven't lived in Houston you have no business saying that untrammelled capitalism produces rational market actors who have full awareness of the consequences of their actions. A decade ago I warned that legalizing home equity loans in Texas would lead to disaster, and now the disaster is here and worldwide.

I had no idea nor would I intrude on your personal situation.

It was your wording that I thought unfortunate, as it seemed to blame people who are, as you now make clear, in similar situations to yourself, and so far from denigrating them, I was supporting those in your position.

If you look at the figures though it is by no means clear that petrol consumption is greatly reduced by speed restrictions on the open highway, and just like you I can only speak from my own experience, and here in the UK we have ferocious enforcement of speed limits, at massive cost in bureaucracy and at great expense to everyday people.

If you introduce a similar system where you are you will have voted for further impoverishment, if the British experience is any guide.

If the goal is to reduce energy consumption and global warming. All speed limits should be eliminated and people should be encouraged to drive as fast as possible. This will increase traffic fatalities and all the fuel consumption associated with those people will be forever stopped.

That would be even more true if death rates actually tracked with speed.

Compare the rates on the German autobahn to most other countries and the correlation doesn't actually appear as they have build their system to cope with high speeds.

Engineering also improved to cope - cars would be far worse engineered if someone had not avoided fads and allowed decent speeds.

Petrol savings are also slight, so to some of us it appears as yet another attempt at heavy handed interference with no actual thought or knowledge behind it.

If you are talking about speeds in residential areas, it is a different matter, and a much lower speed limit than is common would actually greatly reduce injury and deaths.

Sensible policies rely on consideration of the real data, not prejudice.

"Let's see how long the house of cards holds up when people go broke from the cost of their commutes to work."

energy is still a very small part of our incomes.

In the aggregate, that may be true. Out where I live there are a lot of formerly employed fishermen driving 50-100 mi each way every day to a low paying job now that we have passed "peak fish." Anything they can get. Budgets are pretty tight, and there is beginning to be real pain.

Those fishing boats are also monster diesel/gas guzzlers.

There's a way of looking at it in which energy takes up a small part of our incomes. For example, the average American spends a smaller percentage of his or her income commuting than in the 70s.

But if you consider the energy embedded in everything we do and consume, energy is probably a large percentage of our incomes already. And the more energy becomes the limiting factor in production, the higher the percentage of our incomes that it will claim.

People living from paycheck to paycheck, already deep in the red, only need one more thing to go wrong. Then they are ruined for years. This was the reason for much of the anger of the poor in laissez-faire America before WW2, which grew with each boom-bust cycle until you literally had radicals marching in the streets. But it seems all this was erased from our national consciousness for some reason...

With the recent passing of my father I had the opportunity to 'relive' this period in our history through writing, pictures and accounts. The deep seated hatred of the banking institutions of the day were well earned, that and racial and class injustice did indeed have them marching in the streets, organizing in the factories, and pounding the pulpits.
My dad was one of those born-in-a-tent roustabouts. (circa 1913)
Anyway I agree with you about the house of cards. It has just about become impossible for many people in this country to support the mass of it's topheavy institutions on their backs much longer. Every cost rising around us. With most households under the $50K median ,a lot way under, and the value of that being eroded further with each passing day and each new manipulation it's only a matter of time. And then we have the PO/ELM/commodities juggernaught.
Faced with this we are right to try and design humane, fair and sensible regulations to try and relieve the inevitable hardship of the situation which is now being thrust upon us.

While that would be a big plus if it were true - IMO - somehow in America it is not true. Remember the woman complaining about her $500 per month elec. bill on a 1500 sq. ft property (last weeks drumbeat).

I do believe that the rest of world is able to respond to price signals when the free market & the rule of law are allowed to function.

"I lived thru the early 55 mph and on trips under 300 miles didn't make much difference in time."

-Probably because you were still going 70 just like every one else. While it works on paper, I doubt that reducing the speed limit would have much affect at all on total consumption. What it would do is increase inner city congestion. Right now, I can zoom out of the city (Houston) at 3:30pm going 70 and getting 34 mpg as long as I am on the road by 3:30 ish. Reduce the speed limit by 20%, and that window would probably shrink to 2:45 or 3:00. When I left at 3:30, the highway would already be backed up and instead of going 55, I'd be going about 7 in stop and go getting maybe 20 mpg, turning my 15 minute commute into an hour or longer. No Thanks!! That, of course is assuming it's enforced.... which it won't be. They tried this in Houston a few years back. After a few months, they sent crews back out to replace all of the 55mph signs with the old signs (or probably brand new ones). There are simply much better ways to reduce consumption.... like a revenue nuetral gasoline tax, big gas guzzler taxes and tax credits for efficient vehicles. If we don't have the political will to start with the low hanging fruit, why even try to kid ourselves by going after feel good, but negligible gains? We've already tried that with ethanol and the unintended consequences seem to be canceling out whatever negligible benefits were expected in the first place.

The highest fuel economy comes from not driving. Making driving more unpleasant and longer can induce people to drive less (simple behaviorally economics).

Changing a 15 minute commute to an hour long commute is one way to induce people to move closer to work.

Public policy SHOULD be to discourage driving as much as possible at every step.

Better a little pain now (extra 1.5 hours/day in car) than more later.


About the supposed benefits of the 55mph speed limit...

At the moment I am on a road trip across Texas. My vehicle is a 2007 Toyota Yaris, Toyota's smallest car. It has a conventional engine (not a hybrid) and a 5-speed manual transmission.

In much of western Texas, the speed limit on the Interstate highways is 80mph. I drove at about 80mph average and got 47mpg. Slowing it down to 65mph produced no savings whatsoever. I've had this car for over a year, and that's been my experience - I can detect no difference. The car is pretty aerodynamic, and that may be a factor. But back in the 70s, I had a similar experience with a Chevy pickup truck - it seemed to get 18mpg at either 55mph or 80mph on a long trip, and it was not a very aerodynamic vehicle at all.

Both of the above vehicles were manual transmission, with overdrive. Not sure if that would make a difference (as opposed to an automatic transmission).

I don't know what to say about this, but my experience regarding speed is that it isn't any significant factor. The one thing that really seems to make a difference is engine size - the engine on the old pickup truck was nearly twice the displacement of my current Toyota passenger car, and of course there is a big difference in weight. The Toyota uses less than half the fuel of the truck to travel the same distance.

Slowing it down to 65mph produced no savings whatsoever.

Your car is a scientific wonder and contravenes all known aerodynamic models. Please report to an appropriate scientific research institute. And we'll all be saved from fuel worries. I am so relieved the oil problem has been solved by Toyota.

As far as Toyota goes, I'm still pissed at them (and GM) for canceling the electric car project that was so promising in the late 1990s (see the movie "Who Killed the Electric Car").

But as for gas mileage - I'm just telling you the reality. The same was true with the pickup truck, a bulky and heavy Chevy. I'm very diligent when it comes to checking gas mileage. I don't fudge the figures.

There is quite notable difference between city and highway driving. The Toyota drops to about 43mpg in the city, while delivering 47mpg on the highway.

Wind speed is a factor too. I once had to make a highway trip on a very windy day and mileage dropped to around 40mpg (I was driving into a head wind most of the day, or at times it was hitting at a 45 degree angle, and I could feeling it pulling the car). According to the weather report, it was gusting up to 80mph. That was in western New Mexico.

I get a significant difference with my Prius--@ 53-56mpg at 55mph and 47-49mpg at 65mph+--on LEVEL or slightly undulating ground. Throw in hills/steep mountain grades at 65+ speeds and mpg goes down to 43-45. And if the gas is E10, deduct another 10% for all situations. Last years road trip to the ASPO conference was 7,000 miles almost all at 70+ with E10 most everywhere for 43.7 MPG, my worst ever over 60,000 miles on 2004 Prius. New tires' higher rolling resistence didn't help either and probablly accounted for 5% decrease in mpg.

Agreed, I have measured a rx440h and it is quite sensitive to the speed above about 50 mph.

Apparently the drag supplied by the car rises as v^2, *unless* the flow is laminar. I wonder if
the Yaris "retains laminarity" at a higher speed.


Reported drag area ranges from the 1999 Honda Insight at 5.1 ft² (.47 m²) to the 2003 Hummer H2 at 26.3 ft² (2.44 m²). The drag area of a bicycle is also in the range of 6.5-7.5 ft².


At low Reynolds number, that is for small objects, low velocities or high viscosity fluids, the flow around the object is laminar, Cd is no longer constant but depends on velocity, and Fd is proportional to v instead of v2.

Neat about the bike.

The wonders of the (built) universe.

Yes, the drag force goes with v^2.
But we don't care about force; we care about power.
As your references indicate, power goes with v^3.

Your earlier comment about your mileage across Texas failed to mention the wind. As you noted above, the wind can make a big difference. If you had a tail wind while crossing Texas (as I once did), the mileage can improve considerably.

To perform a proper test of the mpg, one should do a test run on a windless day. Or, better yet, run a test in one direction on a stretch of highway and then turn around and travel back the other way, then average the two results. You would need a fuel flow measuring system to make the proper calculations, or a very accurate way to measure the amount of gasoline consumed.

I once participated in a gas mileage contest that Toyota sponsored back in the early 80's. They used Corollas and each dealer had a car setup with a 1/10 gallon container for gasoline and a valve to switch from the main tank to the little one. The salesman who ran the test let me drive out of town on the freeway, then turn back around. After I was rolling, he started the flow from the small container. The idea was to see how far one could travel on that 1/10 gallon of fuel. With careful driving, I managed to go over 6 miles, for 60+ mpg. I was not, however, attempting to drive at a constant speed...

E. Swanson

maybe that west texas wind was at your back, reducing your aerodynamic speed to zero mph ?

A lot depends on how cars are geared - modern cars tend to be optimised to cruise at 70-80, and you really have to put your foot down to start hitting the fuel economy heavily.

DaveMart, I think that you are onto something. Gearing is probably a significant factor.

Hitting a 55 mph head wind would be different than hitting a 75 mph head wind. The force of wind drag had a measured effect on mileage. Every year auto accidents caused more than a hundred billion dollars worth of property and medical damages. Driving at higher speeds required much greater following distances and stopping distances, especially for larger vehicles such as trucks and SUV's that required more stopping distance than lighter cars. A train is so heavy it might take a mile and a half for it to stop. Failure to stop might result in significant legal liabilities in excess of state insurance minimal coverage. You might find more damage to the economy at higher speeds. I do not believe you will find any greater gas economy at higher speeds, but you might find more medical and auto body shop bills, especially as some people wanted to go 90 when the speed limit was 80 and practiced tailgating.

Aerodynamic drag has risen a few notches in the vehicle development process.
What used to be an afterthought, "fudging the numbers" is now a must hit target to be met before a vehicle proposal can be validated.
The last time I worked in our wind tunnel, full size clay models were aerodynamically verified at 55mph, 3/8 scale models were verified at 150mph.

There are some heavy truck results showing aero, rolling, and internals, going to 600+ horsepower just to overcome those drags at high speed.
More fuel, more CO2, more new parts.

Goodyear Study pdf. warning

Anecdotaly I have already seen trucks 'training' up together(like intercity rail) and moving slower on the interstates as for them the fuel savings are significant. As an old cyclist I know that aerodynamic drag is a big part of the ballgame. For the Prius ,on a good day and no E10, it's about -5mpg for every 10 mph above 45-50mph @ 60mpg+. Learn a lot from that constant readout.

Bullshit. He will be burning more fuel per second, but not necessarily more fuel per mile. In the same car, at 2mph you can get 10mpg, and at 150mph you can get 10mpg. The peak efficiency is somewhere in between.

Where it falls depends largely on the aerodynamics of the vehicle. While tires have changed only slightly since the 70's, aerodynamic design has made serious advances.

Thus far, we've translated these and other advances into larger and heavier SUVs, or ignored them(see: Hummer, which has as much drag at the same speed as six and a half GM EV1's driving abreast); In an expensive-fuel future, however, everything's going to be streamlined, and lots of things are going to shrink. 55mph is not a magic number, and you'll see the average peak efficiency point go up over time.

Since you sound like you know about aerodynamic drag, why are you suggesting that it will decrease as speed increases? That's the only way one might expect see mpg increase with speed in future. Don't you mean that in future, we won't be seeing so many over powered monster SUV drag generators with massively large motors? Those are so inefficient at lower speeds that the increase in mpg with speed may be due to the fact that their engines are operating at a higher fraction of the possible power at those speeds. With a well designed car, the maximum mpg is likely to be at a speed where the transmission has shifted into the highest gear.

E. Swanson

Relatively new to TOD... but here goes.

A car's fuel economy is best at mid-range of the engine speed (2500-3500 rpm) at which point the torque is maximum. In a manual transmission car, you need to shift so that your tachometer is in that range (regardless of road speed) to get the best "local maximum" fuel efficiency. So if the prevailing traffic speed is say 30mph you change to the gear where the engine is revving at 3000 rpm or thereabouts.

When on an open road you can shift into a higher gear and the same engine revs translate to a higher road speed and the fuel economy tends to go to it's global optimum (to use some calculs terms).

I would assume that today's auto transmissions try and mimic what a good driver (in fuel economy terms) would do in different traffic conditions.

Discounting aerodynamics, the best fuel economy in most modern cars (with the above mentioned torque characteristics) with a final drive of 3.5:1 and 16 inch rims with a 195/60 tyre would be at about 70mph.

However air resistance comes quickly into play as it depends on the square of the speed of the car and the projected frontal area. It would be = Cd * A * v2 where Cd is the drag coefficient (lower for more streamlined car). Cd*A is known as the drag area of a car and it varies from 3.95 for a GM EV1 to 26.5 for a Hummer. (About 60% of a car's fuel is used,while cruising, to overcome air resistance).

So there are two dynamics at work. Improving fuel efficiency (decreasing fuel consumption) as the engine goes towards mid revs and increasing air resistance(increasing fuel consumption)as the car speed increases. Where these two curves meet will be the optimum speed. Of course this misses the other point that we first need to overcome inertia as well to reach that speed and spend 1/2*m*v2 amount of fuel energy to get there which brings me to the next point

The other factor that seems to have gone unmentioned - the appalling car weights (or masses) that one sees.

Your Prius weighs 1300 kgs (about 2900 lbs). BMW 525s weigh in at 1600 kgs. From a pure efficiency point of view, it is simply ridiculous that to transport a human being weighing 75kgs or 2 @ 150 kgs, we also transport 1500 kgs of dead weight (would you ever take an iron suitcase into a flight and check it in with just a tooth brush inside?). And why are they so heavy - because they need to pass safety tests so that they can be driven fast safely!

If most of the driving is done at cruising speeds then the inertia component comes down. But in stop and go traffic, it plays a big role, which is why your city MPGs are so much lower.

In the future, when oil gets scarce, my thinking is that speeds would have to come down as cars get lighter.


Very comprehensive. Thanks for that. BTW I agree with your conclusion.

My Prius's curb weight is just under 2100 pounds. One of my greatest mpg variables is headwind and temperature here on the Oregon coast where I live. The terrain is essentailly flat, but we can have very strong winds either from the north or south depending on season and weather pattern. Temps below 45F affect battery charging performance with more ICE usage to maintain charge level. The main hwy is US101, with a speed limit of 55 except when transiting towns. Under normal summer conditions, I average 54-56mpg. Our regular gas is now universally E10, and I'm about ready to conduct a comparison experiment between it and the nonE premium grade to see which is the best buy (Prior to its introduction, I got 48-51 during the winter). When the experiment's done, I will post the results.

I got the weight from here and it gives 2932 lbs for the curb weight. This is for the 2008 Prius.


Most ICEs give better fuel economy with cooler air as more mass gets in for the same volume. This helps the fuel combust completely. Not sure what happens in extreme weather though.


Right. The new "touring" version of the Prius is supposed to weigh more, but 900 pounds seems excessive. The spec. I gave is from my owners manual. Oh, yes, and welcome to theoildrum!

Terrific posting. Informative and thoughtful. I'm glad I decided to revisit this discussion. Hope to hear more from you.

I disagree.

While there is a lot of truth in what you write, I think there is still some basic misunderstanding. Modern cars sold in the U.S. are not designed for maximum fuel economy, but for performance. For example, I think a final drive ratio of 3.5 is rather high, especially with 16 inch tires. Are you including the overdrive effect of the highest gear, say, 5th? A more comprehensive comparison between vehicles would be a computation of mph/thousand rpm in high gear.

Your comment about max torque being the point of best efficiency is likely to be about right. All engines have a minimum idle gasoline (energy) flow to run, so, at V=0, there is still fuel consumed. As low speeds, the added increment of fuel is small, so the basic idle rate of flow dominates the mpg number. For a gasoline type engine, the maximum efficiency of conversion from energy in gasoline to energy at the flywheel is going to be at full throttle, which one never sees at constant low speeds. The best mpg won't be until the vehicle is in highest gear, which can be in the 40 to 50 mph range. However, for most of these cars, the design and gearing is not optimized for maximum mpg, since they can still travel much faster than the usual 70 mph speed limit.

Your notion of the two curves meeting at some optimum point ignores the fact that the engine has many such curves, which are a function of throttle setting. You are correct that the intersection of the maximum throttle curve with the aerodynamic curve might give best mpg, but the gearing must be selected appropriately as well. Traveling 30 mph in 3rd gear (with a 5 speed) isn't going to produce as many mpgs as traveling 50 in 5th gear, even though the rpms might be the same, since the throttle setting at 30 would be near idle.

E. Swanson

Aerodynamic drag will always increase with speed.

Mileage, however, will not always decrease with speed, because it is a function of more than aerodynamic drag, and the drag force is stretched out over distance. Whereas the power wasted on drag will increase with V^2, since the distance will increase over that time, the total amount of energy wasted on drag will only increase directly proportional to V. To counter this, you've got waste heat in the powertrain, which increases to 100% of energy used as you approach V=0.

The cars of the 60's and 70's that the government based its 55mph decision on are no longer used. Aerodynamics are different, engines are different, and the locking in 55mph could potentially constrain cars that could operate efficiently faster, wasting gas.

When I say "peak efficiency"...

vertical axis - miles per gallon
horizontal axis - speed

At V=0, MPG=0. There is a unique distorted bell curve involved for each model of car. Most of them happened to be declining from 55mph to 65mph in the 60's/70's, and that provided the basis for the speed limit.

You are making some basic errors. The drag force due to aerodynamics increases with V^2. The power increases with V^3, but, since the vehicle is moving faster, the fuel useage increases with the square.

Your discussion about cars of the 1970's vs cars of the 2000's misses a basic point. In either situation, smaller engines would produce better fuel economy, as the best economy of the engine vs rpm happens at maximum throttle. A car with a small engine and proper gearing such that the car's speed could not exceed 55 mph would give better mpg than the same car with gearing adjusted for a maximum speed of 70 mph, assuming the engines were also adjusted for maximum efficiency at the appropriate ratio. That's because the drag forces are always going to be greater at 70 than 55.

Sure, one can find many examples of new vehicles which are not designed for maximum efficiency at 55, because their engines are so large that running at 55 requires barely a tap of the throttle. They are running almost at idle.

E. Swanson

The EPA highway rating is 36 mpg, so I am doubly mystified by your results.

Ratings are set in very artificial circumstances. I am not familiar with EPA, but it probably includes an arbitrarily set city mileage driving component, and sitting in traffic jams and stop start really burn the fuel.

That is why it is pretty silly to focus on top speed - there is no way it can be economic, as you need to pay for a massive bureaucracy to enforce it for a start.

Minor improvements like having cars do better in handling stop start situations do far better.

It is not co-incidental that Germany has some of the finest roads and builds some of the finest cars in the World - both are designed for speed.

Cars from countries with overall speed limits got stuck in the stoneage, and so did their highways.

Plug-in hybrids will do just fine at speed too.

Examine the current methodology the EPA now uses which is clearly more realistic than what they used before. Obviously,your mileage may vary, but I still find it amazing that one can get better gas mileage on the highway than EPA if one is going faster than the standard used.

I get slightly better mileage than the EPA standard in my Prius but then I drive more conservatively than the standards they use.

But here is a guy who is getting far better mileage at 80 mph. I still find that mystifying.

The Prius and hybrid cars in general are going to do exceptionally well in city driving - that's where the system kicks in.

Most cars get hit hard by the city route but make it up cruising.

Until recently, the EPA mileage standards had separate ratings for city and highway driving.

And they were ridiculously optimistic. It was very difficult for ordinary people to achieve them.

Not sure about the new EPA numbers. I know they're supposed to be more realistic, which means mileage went down for most cars.

The EPA still does have separate ratings for city and highway driving. They also provide a combined average at their web site, www.fueleconomy.gov

You can adjust the percentage of highway vs. city driving you do to get your own average.

And the old numbers were not ridiculously optimistic. They were readily achievable without undo effort. Having the car at operating temperature is a major effect, which means it's tough to measure the city mileage because who but taxi drivers and pizza delivery guys drive for hours on end in the city?

But on the open highway, you should have gotten that mileage unless there was some problem, like your car was poorly tuned, you were climbing a mountain, driving over 75 mph, running into a strong headwind, etc.

I know my car, that was rated 40 mpg highway back in 2001 when it was built, has always gotten 40 mpg on long trips for me. Even at speeds slightly over 70 with the air conditioning on. At times when I've driven 60 with no AC, I've gotten up to 44 mpg.

The old EPA numbers weren't ridiculously optimistic at all. They were just what you should be getting in your car. Though I agree the new numbers are probably closer to what drivers get on average (mostly due to shortish trips where the car isn't fully warmed up for a significant portion of your drive). I liked the old, best case, numbers better. They gave me an achievable target to try and reach.

DaveMart, yes you're going slower in town and regen which other cars can't.

But Atkinson means lower exhaust temp due to the intake valve being variable. Short compression long expand better heat use. High fuel efficiency. Low torque. The 300 ft lbs. availiable from the electrics means light rotating mass, sloppy rings and, weak little valve springs. It's a criuser engine. That's all it has to do so the highway mileage is improved too.

Motor gen 1 and 2 are kicking in and out constantly and that engine is OFF a surprisingly good deal of the time on the road. Ultra-milers have found ways to maximise engine off glide black arrows, green arrows and orange arrow time.

Last summer I averaged just a tick under 60mpg for a 1200 mi. highway trip loaded with very little city and lots of mountain passes. Pretty good for a 2900 lb car.

I'm more mystified by the EPA itself, to tell you the truth.

Aren't they the ones who just told California, Maine and others not to dare mandating MPG and emissions standards?


“It appears that EPA’s efforts to regulate CO2 emissions have been effectively halted,” said U.S. Rep. Henry Waxman, D-Calif., “which would appear to be a violation of the Supreme Court’s directive and an abdication of your responsibility to protect health and the environment from dangerous emissions of CO2.”

You're making the assumption that the EPA is out to do something for the American people.

Two possible explanations come to mind:
1. they're doing this out of spite, simply because the political appointees at the top of the EPA like making environmentalists unhappy
2. the political appointees want to make Cheney's rich friends richer, and having Americans driving inefficient vehicles during at time of fuel scarcity is a good way to make this happen.

I may feign that Assumption, to make these 'incredulous' posts, but no.. I'm not unaware how their bread seems to get buttered..

EPA - Environmental Prostitution Agency
BLM - ?? (got one, I'm just too tired)


'Natural Resources- Smoke 'em if you've got em!'

BLM - ?? (got one, I'm just too tired)

I'll grab the low hanging fruit... Bureau of Land Mismanagement.

Nah, it's Bureau of Livestock and Mines.

Business Loyal Minions

I think we have a winner.

good morning everyone, I have been lurking on this site for a while. first, the information and analysis on this site is amazing. so thanks to all those that put out all the effort. what I've been wondering is when the people, companies, or nations realize that the oil that they have in the ground will be worth more in money if left there and sold later, rather than sold now and the money invested. plus the very act of not selling it today would steepen the price rise. I realize some can't really do that for political or military purposes. but many can, and small withdrawals of production can change the margin drastically. so won't this lead to a feedback loop as others join in?

Hi Randy, Your question is related to the ExportLand model (ELM) devised by Westexas and Khebab and is already ocurring, as witnessed by the growing internal demand of exporters like Russia and KSA that lessen the amount exported.

It would be surprising to see that actually play out.. maybe well into the downslope.

"A bird in the hand is worth two in the bush"

Self-restraint is a tough sell in this economic system. Smacks too much of poverty, which scares the hell out of the Market crowd, and people who think they deserve to 'live the Rich-American dream'..


except that the oil in the ground is the bird, the money is the promise to give you a bird.

Dick Cheney likes to go bird hunting... better to sell all that oil now and buy oneself some anti-ship missiles just in case.

So how does that go now, ?

"Birdshot in the face is better than an enemy in the Bush Administration.."

Yep--oil is now becoming an appreciating asset, and those that have it in the ground are in the best position to hold it for speculative purposes. Would you rather hold dollars that are turning worthless before your eyes, or crude oil that's rising a percent a day? Some clever sheik must be able to figure this out. However, in holding back some of their production, the oil producers are helping us in the clueless West, as well. The worst thing that could happen to us is to have them produce all-out until they hit a wall and then have production crash--much better they should squeeze us slowly, until our "leaders" wake up.

Mark Folsom

Freddie CEO says house values have 2/3 more to fall

50 ways to leave your lender. A million or 5 more under water. I saw another here somewhere this morn questioning the 'single family home concept' in america.

Condos or apartments on public transport to increase?

There are many more brogans to drop in all markets...Not just housing...But housing is bad enough. Since past Fed actions have failed to restore credit markets, it now seems that momentum is growing at the Fed to bail out all the mortgage holders through Fannie and Freddie. Guess who will pay for this one? All money from tax payers flowing one way, all bad debt flowing the other way. We will all be the owners of some bad debt that we did not originate...unless you happen to be a beneficiary of the bail out.

...snip...'According to The Wall Street Journal, Goldman Sachs estimates as many as 30% of American mortgages could be upside down by year's end. But the Fed can't just come out and announce it's going to start buying up delinquent mortgages; chaos would ensue. Already, many are criticizing the Fed's actions. Mike O'Rourke at BTIG had this to say:

"The Fed has moved beyond the realm of moral hazard monetary policy to tee ball monetary policy, where nobody loses. Don't get us wrong, we will be the first to say that the banking and financial system must be protected. We don't want to see the world fall apart. However, there must be a level of accountability for what has transpired."...snip...


"So as early as next Monday we can expect to see the first plans to just start buying the piles of stinky paper outright, with taxpayers' money, the so-called "nationalization of debt". Fannie and Freddie look like the ideal instruments to do that." (today's debt rattle)

So if I am upside down in a mortgage and can't/wont pay and I receive this bailout, what does that look like at the ground level? Does it likely help the lender to renegotiate the loans? Or does this just apply to a lender that has already foreclosed?
And (pressing his luck) at what % valuation will such paper be bought?

As I stated previously, the rumour was that BOA was guaranteed a bailout if they took over Countrywide-we shall see.

Pelican Homestead, the biggest S&L in Louisiana a couple of decades ago, got a guarantee from FSLIC if they took over some failing S&Ls.

FSLIC went bankrupt and RTC refused to honor the prior federal agency commitment. So Pelican went under as well.

But they did get an ex post facto apology from Congress.


Summary of Weekly Petroleum Data for the Week Ending March 7, 2008

U.S. crude oil refinery inputs averaged 14.6 million barrels per day during the week ending March 7, down 246,000 barrels per day from the previous week's average. Refineries operated at 85.0 percent of their operable capacity last week. Gasoline production moved slightly lower compared to the previous week, averaging 9.0 million barrels per day. Distillate fuel production fell last week, averaging about 3.9 million barrels per day.

U.S. crude oil imports averaged 10.5 million barrels per day last week, up 1.1 million barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged 10.0 million barrels per day, 687,000 barrels per day above the same four-week period last year. Total motor gasoline imports(including both finished gasoline and gasoline blending components) last week averaged 745,000 barrels per day. Distillate fuel imports averaged 133,000 barrels per day last week.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) rose by 6.2 million barrels compared to the previous week. At 311.6 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year. Total motor gasoline inventories increased by 1.7 million barrels last week, and are above the upper limit of the average range. Both finished gasoline inventories and gasoline blending components inventories increased last week. Distillate fuel inventories decreased by 1.2 million barrels, and are in the lower half of the average range for this time of year. Propane/propylene inventories decreased by 1.3 million barrels last week. Total commercial petroleum inventories increased by 6.6 million barrels last week, and are in the upper half of the average range for this time of year.

Over the last four weeks, motor gasoline demand has
averaged about 9.1 million barrels per day, or 0.4 percent above the same
period last year. Distillate fuel demand has averaged about 4.4 million
barrels per day over the last four weeks, down 4.2 percent compared to
the same period last year. Jet fuel demand is 0.4 percent lower over the
last four weeks compared to the same four-week period last year.

Again, motor gas demand up 0.4% over last year. I'm still waiting for the week when motor gas demand is reported as less than last year.

Here, the EIA shows falling gasoline demand: http://tonto.eia.doe.gov/dnav/pet/hist/a103600001m.htm

Which is correct?

Your gov't at work.

Yes, that is quite curious. Didn't this get mentioned last week too? Looking at the data:

Feb 2007 = 57,178.0 thousand Gallons per day, or 1.3614 million Barrels per day???

But, gasoline production was 9.0 mbbl/d and total imports were some 0.74 mbbl/d for a total of 9.74 mbbl/d. But, add in 3.9 mbbl/d of distillate and you get 13.64 mbbl/d. Did the EIA misplace the decimal point?? Curious.

That's The Shrub for yah!

E. Swanson

From the top CNN article posted about oil prices exceeding $110:

Gas demand much lower. Still, oil's rebound is somewhat surprising given continued low demand for gasoline. Gas demand held steady last week, still averaging 9.1 million barrels per day over the past month. Demand is 0.4% higher than the same period last year.

In one paragraph, they contradict themselves three times. First they say demand is much lower, then they say it's the same as last week, then they say it's 0.4% higher than last year.

How is up 0.4%, or even holding steady, construed to mean demand is lower?

Sometimes I want to be able to e-mail the author of an article and ask them what the hell they are talking about.

Not to mention the fact that we are not the world although our demand makes up a great deal of the world.

We aren't even we. The Oil Drum is not made up of only people from the US, although it does seem that way sometimes.

Yes, well you're not even you, either. You are not only the thoughts in your brain, you are the collusive, cooperative conspiracy of trillions of individual skin, muscle, bone, organ, and brain cells to be you for a while.

And here's what was expected:

The U.S. petroleum stockpiles report is expected to show that U.S. crude oil stockpiles grew 1.6 million barrels, gasoline stockpiles grew 300,000 barrels, and stocks of distillates, which include diesel fuel and heating oil, fell 2 million barrels.

Wow, I guess some oil was actually held up by the fog a week ago (AFAIK, that is the first time that cat Flynn has called it right since July). Crude imports were up 1.1 million barrels per day over last week.

Does the report show how much oil Cheney is putting into the spr each week? Or, is the addition to the spr a sporadic event? Or, is it considered a 'national security risk' to publish spr info?

It would be nice to know if filling of the spr has increased recently. I am curious because of the resignation of Adm. Fallon and the timing of Bush's visit to KSA...er, substitute anxious for 'curious'. :)

The DOE announced that they are going to fill the SPR to current capacity. Their announced plan is to have it done by October.

API complete opposite.Inv all down.Brent shrugs it off.Distilates are the real story worldwide.Timing is everything.

So what's your best guess, Maven? Inventory about flat? That seems to be how the market sees it.

Inv OK here.Falling in other parts of the world.

IMO this is at least as large a factor as speculation in oil prices. But there's zero press coverage on inventories outside the US.

Timing the arival of ships that is.New high for WTI.

Isn't that just a bit curious given the inventory build? Everybody is still filling up furiously it seems at $109. China/US SPRs?

What inventory build? Have you got numbers on oil stocks in China and the other countries accounting for all the new demand in the world?

Yeah that's what I'm asking. The US numbers exclude the SPR and there's been speculation it's filling fast which would also drive up demand. The US for now is not the story appearently the actions of traders are focused elsewhere. This morning hardly moved the needle.

The weekly inventory report always includes the SPR, which hasn't been filling to any degree at all for months.

peakearl, thanks I was just looking at that when you posted.

One clue is tanker bookings. Tanker rates to Asia were declining sharply, and now I believe I saw that they were climbing again.

can we see the API report? where do i find it at?

Is it just my imagination, or has the crude inventory level been in the middle or upper half of the range or otherwise "adequate" ever since $45/bbl?

The Fallacy of Market Debt

The essential act of creating money consumes energy and resources,
and creates debt.
The money-value of consumption adds to the debt, exeeding the initial value of the money, thereby creating inflation, neccesitating Growth and the generation of Profit.

The act of spending money partially destroys the money, increasing entropy, thereby neccesitating consumption of resources and energy for re-creating the partially destroyed money, thereby creating inflation and making growth neccesary, creating more debt.

To Use a thing is to partially Destroy a thing.

Also, the act of Creation or Consumtion requires
the Use of a Tool.

Using a Tool partially destroys a Tool.

The Act of Consumption is always bound
to an act of Destruction.

To spend a Dollar will cost you more than a Dollar.

A Steady-State Economy Cannot Exist, if it uses Money.

The Act of Using money consumes energy, creates entropy,
energy must be bought with money, requiring Growth.

for shame

The Central Bank Creates Money,
where does this money come from?

It comes from the Future, we borrow from there,
creating debt there.

When we arrive in the future,
we shall have to repay our debt to it , with interest.

If we arrive in the future and have not made a profit, we can only repay the initial debt, not the interest, making ourselves slaves to the creditors.

If we should arrive in the future having lost,
spent or squandered the money we borrowed from it,
the future will be very poor indeed,
as we have robbed it of money
and many things of greater value.

to spend a dollar costs >> than a dollar. that dollar spent is after taxes.

Current american consumption and wastefulness is criminal on a generational scale.
The generations of our children and grandchildren will grow to loathe us.

Well, our fearless leader suggested that we need to do our patriotic duty and shop till we drop:

Onward, Consumption soldiers,
Marching as to war.
With the banner of Paris Hilton
Going on before!
Paris, the royal Master,
Leads against the foe;
Forward into battle,
See Her banner go!

It's so much more than just Americans. The entire world is fixated on "growth." We all want a bigger salary, bigger house, more (or any) food, etc. In a finite world, it is impossible to maintain growth indefinitely. Even if our children and grandchildre are fine, what happens one hundred generations down the line or a thousand?

If you are worried about a hundred generations down the line, I would research the oil supply situation. This current growth paradigm might hold together for another 35-40 years IMO.

If we have already peaked, say in 2005, and are on a downward production curve and on an upward demand curve, I don't see how growth can continue more than 5 years.

I might be wrong about the timing-I expect global GDP to continue to increase as the USA flounders. At this point I assume it will be driven by the increased use of coal and NG and by maybe 2046 the whole FF trip is finished basically which means a totally new (smaller) game IMO.

I'd be lot more worried about the next twenty years than the mid-century.

Solar, nuclear, and geothermal have all got great potential, and if we get the technology right should cover our needs, but we aren't there yet and there is an energy gap.

Personally, I find the whole "we need to hit bottom first" logic rather unconvincing. Someday, when things get depleted enough, those three will bloom like a rose in the desert. A bookie would say that each year we wait the odds of a successful transition go down. I guess when oil hits $1000 magically things will change and these will take over (overnight). Possibly.

You seem to be conducting a debate by yourself, as nothing I said could remotely be construed as indicating that we need to hit bottom first.

It is apparent though that many of the technologies we need are immature, and I don't think anyone seriously argues that we can't do better than at present in a few years in producing, for instance, solar power, as the industry trends are clear.

Doing better than at present in a few years won't cut it, as I would assume you are aware.

There will certainly be grave difficulties, but the jury is still out on the exact outcomes, which may well be different in different areas of the world.

Certainly things do not look good though.

'grave difficulties'...Yeah, will anyone be left to dig them?

We can build solar to supplement natural gas, wind to supplement hydro, and nukes to supplement coal. What more can we do?

I don't think anyone seriously argues that we can't do better than at present in a few years in producing, for instance, solar power, as the industry trends are clear.

There is a lot of oil in the world - we just can't profitably get at it at a rate adequate for BAU any more it seems.

The same is almost certainly true for all the proposed alternates to fossil fuels such as solar PV - what will be the Liebig minimum for solar PV, for example, if we try and ramp it up to adequate levels? ... I don't think anybody knows!

I am mostly focussed on getting from a to b rather than the ultimate limits of the system - as you are correct, and we can't know what the limits are at this time.

I'd tend to go along with Stuart, and think them probably pretty high, but in the short term we certainly have a lot of issues to deal with.

There is only a limited amount of land area on this planet. That is the Liebig minimum for solar.

Using one's brain doesn't destroy it.

"Slavery" to debt isn't an inherent part of debt, but is related to human laws. I suspect that the vast majority of debt, in value terms, can be written off fairly easily in the event that a profit is not made on it. People can walk away from mortgages with only damage to theior credit rating, which is far from slavery. Project finance is non-recourse. The projects fails, the creditor just gets the project.

Too much debt is of course bad, but debt itself can be very good.

Michael Klare's analysis of the challenges facing the major western powers, especially the United States, which consumes and imports such vast quantities of oil, are thought provoking.

There are enormous, historic, consequences for the United States which has based it's civilization on access to readily available and very cheap energy supplies. For many decades one got oil almost for free and now it's over $100 dollars a barrel!

I've a terrible feeling that instead of investing in alternatives to oil and other fossil fuels, we're going to opt for a crude and probably counter-productive military solution to the problem of access and availability. I mean more wars for oil.

Klare is certainly of the opinion that we are going down that route. Strategically, without cheap and easy energy it's doubtful whether the United States can maintain it's position as an unrivalled and fearsome super-power. The question is, will the US elite and the Pentagon accept the fading power of the United States gracefully or will they fight tooth and nail to maintain and protect their non-negotiable way of life?

As I pointed out on another comment board where this article was posted, Klare omits decline rates and the ELM. I think the answer to your question is Yes, as Iran hasn't been attacked. IMO, Adm. Fallon wasn't the only inpediment; the financial elite know that war with Iran will sink their ship.

'the financial elite know that war with Iran will sink their ship.'...I don't believe the debate among the finiancial elite has concluded. Does anyone believe that the resignation of Admiral Fallon calmed any nerves among oil interests across the world? I apoligize for the long post but I consider recent events a war warning.

Here is the lead story from todays Asia Times On Line...

Fallon falls: Iran should worry
By Gareth Porter

'Fallon's greatest concern appears to have been preventing war with Iran. He was one a group of senior military officers, apparently including most of the Joint Chiefs of Staff, who were alarmed in late 2006 and early 2007 by indications that Bush and Vice President Dick Cheney were contemplating a possible attack on Iran.'

'Colonel W Patrick Lang, a former intelligence officer on the Middle East for the Defense Intelligence Agency, told the Washington Post last week that Fallon had said privately at the time of his confirmation that an attack on Iran "isn't going to happen on my watch". When asked how he could avoid such a conflict, Fallon reportedly responded, "I have options, you know." Lang said he interpreted that comment as implying Fallon would step down rather than follow orders to carry out such an attack.'

'As Inter Press Service (IPS) reported last May, Fallon was also quoted as saying privately at that time, "There are several of us trying to put the crazies back in the box." That was an apparent reference to the opposition by the Joint Chiefs of Staff to an aggressive war against Iran.'

'The publicity that followed the article - titled The Man Between War and Peace - accelerated the pressure on Fallon to resign.

'But "Fox" Fallon almost certainly knew that he would be fired when he agreed to cooperate with the Esquire magazine profile.'

Fallon is a Navy man, he knows full well that carriers in the Persian Gulf are sitting ducks. This was demonstated to any rational person's completer satisfaction by a US war game:


This link reports the results in a snarkily humorous manner.

Errol in Miami

Hi River--A debate of sorts has existed between those using Sy Hersch's exposees as proof of immanent war with Iran and those who use Hersch and other sources to posit there won't, with those in the latter camp supported by Chomsky. I read Atol daily and was heavilly criticized for posting the works of Henry Liu here 2 years-ago, so I'm very familiar with Porter's and Afrasiabi's Iran writings. The US Empire is as unpredictible as Stalin, so everyone should worry, even allies! When you look deeply into the huge exposure of US financial entities to highly leveraged dirivatives, you discover that the whole mecahnaism is very dilicate and complicated, as proven when the ABX index was heavilly shorted this creating the straw that burst the housing bubble. Like Stglitz in 2003, I wrote about the very large and largely misunderstood financial stakes involved with waging war of Iraq and their likely effects on the US economy. Both Stiglitz and I were correct. IMO, the fastest, surest way to destroy the US Empire is to wage war on Iran. Now it's well known that I covet the rollback of the US Empire, but not at the expense of any other country(ies). The 1Trillion dollars saved yearly could finance a whole slew of renewable and alternative energy sources and transport modes and give humanity a fighting chance to mitigate climate chaos. When you look at the whole banana, Bush/Cheney have done a great deal to destabilize the USA along with the Middle East and South Asia. IMO, the quid pro quo is they won't be impeached and tried for war crimes provided they don't wage another "open" war.

And if you read the Vanity Fair article that caused all the hoo-haw, Fallon saw the Iranians as "ants" easily "crushed," which IMO is very hubristic given Iranian capabilities and US weakness, so he really cannot be considered a "dove" at all.

I want to know what Cheney's saying. Rice's trip and Bush's trip and pleas failed. What is there for Cheney to say that hasn't already? Especially given the extraordinary charge by the Saudis that it's the US's fault for higher oil prices because they "mismanaged their ecconomy."

We shall see and discuss it on the next Drumbeat!

I really hope that the US is not headed for war in Iran, but...

"The resignation of the top U.S. military commander for the Middle East is setting off alarms that the Bush administration is intent on using military force to stop Iran's moves toward gaining nuclear weapons. In announcing his sudden resignation today following a report on his views in Esquire, Adm. William Fallon didn't directly deny that he differs with President Bush over at least some aspects of the president's policy on Iran."

Dick Cheney's trip to the Middle East has five stops: Israel, Oman, Palestinian West Bank, Turkey and Saudi Arabia. Dick Cheney has been peak oil aware since at least May 2004 when he said "By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? " I'm guessing that Dick Cheney will be asking Saudi Aramco "How much oil really remains in Ghawar?"


Perversely, a US attack on Iran could temporarily solve a few problems for the US:

One, potentially secure Iran's oil production, in addition to Iraq, for import to the US.
Two, prevent Iran from developing nuclear weapons.
Three, increase US military expenditure, acting a massive stimulus to the slowing US economy.

How would China and Russia react to a US invasion of Iran?

There are some reports that claim Russia has offered protection to Iran if an attack by a third country were to happen. As here...

Attack Iran and you attack Russia


China's reaction to an attack on Iran? Inscrutable, as Sun Tsu would have it, but some insight might be gained by reading this white paper made public to the world by China on 7-1-05. Briefly, China does not want a unipolar world dominated by the US. I believe China would rather wait patiently for the US economy to crumble than to fight a war anywhere. But, China has made large investments in Iranian FFs.

''China's Geostrategy: Playing a Waiting Game''


And last...I am not convinced that a war on Iran by the US would 'secure Iran's oil production, in addition to Iraq's, for import to the US.'

Climate alarmists pose real threat to freedom

Human wants are unlimited and should stay so. Asceticism is a respectable individual attitude but should not be forcefully imposed upon the rest of us.

I think it is really interesting that "rich" people perennially use "poor" people as props to explain why they should be allowed to continue doing all the things they do -- even when they have been shown to be maladaptive or counterproductive.

Havel (President of Czech Republic) seems to be a Czech Bjorn Lomborg. He has certainly seen the results of deprivation forced on people by oppressive government. It seems to me that things are a little different this time around -- we may soon see the result of deprivation forced upon us by geology and physical chemistry.

The outside chance is that Lomborg and Havel are correct -- just let people do whatever they want to, and the market will bring the maximum happiness to all of us. Since that is the default position -- when central governments and central banks fail -- it is at least tautologically correct. Whatever we get as a result of free market forces is the best we can get because there is no other force to constrain it. (Dr. Pangloss would be proud)

Edit -- I can't make the link to The Australian work above--http://www.theaustralian.news.com.au/story/0,25197,23358915-7583,00.html

Since 2003 Havel is no longer Pres. of the Czech Republic. Vaclav Havel is no Lomborg

Current Czech Pres. Klaus on the other hand appears to me to have arrived at the free-market party a few years too late, truly showing the colors of a Bush corporate puppet. Skoda (Czech for pity).

"Skoda (Czech for pity)."

Back in the 80's, I traveled all over Finland in a Czech car called a Skoda. Now it all makes sense!

The old, socialist-times Skodas were indeed very pitiful tinplastic cans. I remember them burning more engine oil than gasoline.

Things changed dramatically after VW bought Skoda, and the new Skodas are great reliable cars, very popular in Europe and especially in Eastern Europe.

Thanks. My bad. I typed Havel when I clearly intended Klaus-- it was right there in front of me. Stuck in the 80's, I guess.

But you bring up an interesting point -- nearly everyone I have known who has escaped oppression (Communist or other) swings far to the opposite extreme. Only natural, I suppose, but it certainly makes the countries of Central Europe prey to a "mad cowboy" virus that destroys good will and common sense.

Skoda does mean pity, but it is also a fairly common family name in CZ, hence the car manufacturer (now fully owned by Volkswagen) which was named after its founder.

Anyway, Klaus is disliked by the majority of people in the street as a populist, but manages to hold onto power due to the precarious political balance. It's also pretty obvious that now CZ is recovering from communist dictatorship they do not want to give up on the newly acquired riches. "Let some else do the CO2 reducing". The lowest point in CZ is about 600 ft above sealevel.

Edit: By the way, Skoda is a big manufacturer of streetcars(trams), locomotives, tanks and other arms.

Asceticism is a respectable individual attitude but should not be forcefully imposed upon the rest of us.

Somebody's been reading that great sage, Dick Cheney.

Nah, it was Spitzer, and they mangled the quote - 'Asceticism should be forcefully imposed on everyone else, but not on my disrespectful individual attitudes.'

It's true. Greenery is the ultimate form of class war. The middle classes maintain there lifestyle while the lower orders are told to lower their asprirations as they are destroying the planet. That leaves air travel, motoring etc for the inhabitants of Hampstead and places. Clear roads,no crowding in overseas holiday resorts etc. Just like the old days.

Klaus is an economist. You will note that he doesn't mention any environmental problems or resource depletion in this excerpt of his presentation at the so-called 2008 International Conference on Climate Change put on by the professional denialist crew.

For starters, Klaus states (without proof) that CO2 emissions are directly tied to economic growth times population, i.e., he claims that economic growth can not continue without increasing CO2 output. He's bought into the "Growth is Good" assumption of economics and can't see the negative impacts of economic growth. His speech sounds like what the Chief Cancer Cell would say before a crowd of the Cancer Booster Society, extolling their successes at rapid growth. Trouble is, the cancer crowd is Hell bent on killing the larger host within which they exist. Klaus, apparently, can't see "outside the body". He is so used to living within the bubble of city/civilization that he doesn't see that there is any need for anything outside the bubble.

E. Swanson

I don't imagine that cancer cells are bent on destroying their host -- they just eat because they are hungry, but they don't have any controls on their behavior--that's what makes them cancer cells. Sort of like rich Americans in the "free market." The result is the same -- the host will die, whether the intent is conscious or not.

This was the article that struck me the most today. So incredibly short sighted and the thinking is truly dangerous.

I see the greatest loss of "freedoms" and "progress" stemming from an inability to accept limits and live within the bounds of the Earth.

No stable climate = no stable economy = no stable government = no stable food supply = no peace and security = no money = no markets = no beer = no sex = no rock and roll....

I for one am perfectly willing to curtail my consumption for the greater good, future generations and hope for a living planet. Others would be willing to do so too, but it has to be a broad social contract, reinforced by leaders of all kinds.

I think it's useful to read the whole article to get a better sense of his point of view.

I still disagree with his conclusion, and the way he uses 'Climate Alarmists' or something like that every time he mentions them.. Don't shoot the messenger, eh? Nonetheless, he makes a useful point about the Unintended Consequences of massive political programs. He clearly lived through some perfectly terrible ones, and is being reasonable to try to protect against THAT happening again. As someone else said, his reaction seems to have thrust him to the opposite extreme, while the truth and a useful course of action probably lies somewhere inbetween. We seem to be due for some big policies and programs to deal with some big problems, and would be wise to create them with our attention to the dangers of either extreme.

I would start with a revival of a real Antitrust/AntiMonopoly legislation, to put a Negative Feedback on another area of oversized and unrestrained power that is affecting our freedoms, health, government and livelihoods.


Over at PO.com, someone posted a response to this article saying ecological disaster and dieoff was preferable to a "treehugger police state."

That's taking "Live free or die" to a whole new level...

New Hampshire has always attracted me as a place to move for the very reason that "Life Free or Die" is their state motto. However, between die-off and a controlled descent via a police state, I think I'd be likley to lean away from the police state. Power is always abused. Always.

It's the starkest version of the good of the many vs. the good of the individual. Live free or avoid extinction?

But if that recent National Geographic special is correct, extinction of the human race would not be a bad thing for the earth.

But if that recent National Geographic special is correct, extinction of the human race would not be a bad thing for the earth.

You will also note that at the end of the special they asked the question, What would be the point of a world where there was noone to think about it, nooone to fathom it.

The earth doesn't have a point. It just is.

And who says there would be no one to think about it?

The Universe is self-aware. We are just beginning to understand that. Also, the dogs would miss (some) of us.

The premise of that thing was pretty silly. I think its real value was in demonstrating how quickly things fall apart, and how long things hold together, absent constant maintenance. Relevant thoughts when pondering various collapse - or even just decline - scenarios. What hapened to the NPPs after the diesel for the backup generators gave out was pretty sobering.

I'd sooner be in hell than suffer the company of the (self)-righteous.

Dying is not the worst thing that can happen.

You haven't seen self-righteous if you haven't lived in Bush's Texas. The normals here are self-righteous about having total liberty for themselves and total suffering imposed on anyone different from them in any way at all, whether by big government or "laissez-faire", by capitalist excuses or Christian excuses.

If we all used that sort of argument, then no comment by anyone who had not had the same life-experience as ourselves would be accepted, as all our experiences are unique.

I have some sympathy though, as I am no great fan of laissez-faire.

In the UK we have had the perhaps unique experience of laissez-faire under Thatcherism, followed by a rather peculiar version of post-modernist socialism or whatever they would term themselves as practising, which consists of laissez-faire for any important strategic consideration, for instance on energy and it's reliable supply, combined with inveterate micro-management, with umpteen targets and absolutely no central theme.

Far from giving any input to safety, the thousands of speed cameras in this country probably cause more accidents as everyone speeds between them, then when they spot one slam the anchors on.

They are however very useful for raising money for local government, if that is the objective, although of course there are far cheaper and more effective ways of doing that.

Dave - I think you are being economical with the truth! Government stats show a clear reduction in traffic fatalities resulting from speed camera monitoring. Petrol heads of the world like to think they drive more safely than the rest - unfortunately human response times are limited by physiology and thus more (and more serious)accidents occur at higher speeds. It is a shame to cut down on your fun, but that is the reality. And for the record, when I drive at 55mph I get about 10-15% better mileage.

Government stats show all sorts of things, most of which I don't believe.

Cameras are typically placed at accident black spots, and are often a substitute for straightening out blind corners and so on which would often have been the effective treatment for the traffic problem.

I don't in any case believe in a total free for all on the roads, and indeed in residential areas think that the present usual 30mph figure is too high, and that 15-20mph is more suitable.

However, that is a totally different matter to the freeway, where if you compare the German autobahn figures to other nations it is very difficult to show that speed as such kills people - poor highways and vehicles, or poor driving do.

Since you evidently live in the States, compare the road death figures there to Germany's.

Travelling at 55mph is indeed rather more economical that higher speeds, but I don't think that we should legislate for it.

German's made superb cars because people could use them, and I agree with the pursuit of excellence - we may have to crimp our styles a bit for a time, but I find the whole 'I drive a VW beetle' syndrome deeply depressing.

I have nothing against your driving at 55mph, providing that I can move at a more reasonable speed as long as I can afford to!

Power is always abused. Always.

I always wonder what prompts such absolutist and easily-disproved statements. In my own life I can probably come up with thousands of examples of power that is not abused, from the near-volunteer local government to many concerned and involved teachers who used their power appropriately to educate me and other students, to relaxed and friendly local cops. So far I have not seen Leanan abuse the power of moderating the drumbeat, but in this world-view we only have to wait until she cannot resist the urge to "abuse" her power any longer and we can be confident that this will always happen.
Of course abuses of power are common, but "always" is such an unfounded and nihilistic generalization, disproved with a single counter example. Do all parents abuse their power?

Here is my platitude.

A persons view of the world is largely a projection of their own internal state of mind. In other words one who believes 'Power is always abused. Always.'

The projected rephrasing is 'I always abuse power if/when I have it'

I encounter it among those who think friends, others, coworkers are trying to keep secrets. It can be rephrased as the projection 'I am keeping secrets'

Listen to a persons world view, and you have a mirror into their soul.

I wouldn't trust myself with absolute power. (Oh, I think I'd be a relatively good world dictator, but undoubtedly I would take advantage of my position.) Then again, neither did the founding fathers of the United States of America. Without checks and balances, abuses will occur. (Heck, they do even WITH checks and balances..)

Yes, but what you have seen so far is severely limited power. You have not yet been among those unfortunates that have experienced first hand the full weight and fury and horror of truly unlimited power being exercised.

I have not seen Leanan abuse the power of moderating the drumbeat

Leanan's obviously very good at it then!! ;-)

Try posting something negative about abortion.

That is not an abuse of power, but an appropriate use of authority.

Why would you post *anything* about abortion?

Because abortion and infanticide are sometimes practiced for population management.

Your definition of "abuse" also has plenty of bearing, in my opinion.
"Do all parents abuse their power?"

In my definition, a parent abusing his power would be a parent making a decision on behalf of his child that is not in his child's best interest, but is instead, the best interest of the parent.

In my definition of "abuse" of power, it always boils down to when someone in a position of power makes a decision for those he is in power over that is not in the best interest of the people, but instead is in the best interest of him.

It might be something small, something that nobody would really "think" much of, due to its general triviality.

The mayor gets pulled over for speeding, the cop lets him off because he's the mayor, and the mayor didn't protest at not receiving a ticket. The mayor did not initiate the abuse, but the mayor permitted it.

People who might otherwise be considered traditionally moral people would be more likely than not to take advantage of their position if a family member was in a dire situation. I don't know about you, but I have family members that I would do damned near ANYTHING for. (Can't make absolutist statements here can I?)

Anyone who might claim that they have *NEVER* abused their power (be it in your employment, parenting, social status, etc) please stand up. I want to hear about all the times that you were tempted but thought twice about it, even the most trivial times.

Lastly, I likely should have rephrased my post to be something more along the lines of "At some point of time, a position of power will be abused." As opposed to my statement which might confuse some into thinking that a position of power is CONSTANTLY abused, which was not my intention. (Nor do I feel that someone should rationally interpret it that way.)

Hi tommy,

The point about power, as I see it is - it's a "knowing" and "defining reality" problem. If the power is absolute, who is there to witness, let alone to decide?

So, in a way...the answer - given only two choices, in stark yes/no mode- is "yes, always"...because there is no way to know, or to mitigate, mediate, define or stop it, when the means for same are lacking. (Checks and balances, we might call them.)

Which relates to...your excellent question,

"Do all parents abuse their power?"

....which is why it "takes a village to raise a child"...or, the "input" and wisdom of aunts, uncles, grandparents, concerned friends..

if they're brave :)).

New Hampshire has the better motto, but don't you think Vermont does a better job of walking the walk? Besides, I've been told that New Hampshire is being invaded by Massachusetts.

A "treehugger police state." Now that will be the day.

I'd much more expect a "damn the environmental consequences, we'll do as we (business interests) damn well please, police state."

This was always a favorite subject of Garrett Hardin. He wrote;

In the arrangements of nature, freedom is relegated to an operational position that is secondary in importance to survival…. In a competitive world of limited resources, total freedom of individual action is intolerable.
- Garrett Hardin, The Ostrich Factor

If people have total freedom to reproduce and take all the resources they possibly can, then you will always have the destruction of nature and conflict among people. But this is human nature. It may be possible to form a social contract among nations that regulates all these things but it would be impossible to enforce.

Ron Patterson

Garrett Hardin is a very complex subject. Ultimately, he was concerned with "carrying capacity" and population control. And he didn't really think that could be reached through and "market" solution -- he seemed to rely on some kind of strong central authority. It's not clear just who would control his strong central authority -- I guess he hoped it would be benign.

I think that human societies alternate between conservative ("tribal") groups that preserve the "commons" (like North American and Australian native populations) and liberal ("free market") societies that convert the commons to private holdings.

The two are mutually incompatible, but their oscillation is what provides the human culture such strength and resilience. The "free market" is soon to be replaced by some kind of rigid tyranny, I believe.

I think that would be "Live free and die"

I overheard a resturant conversation that went approximately like this:

...I'll be damned if I'm going to use less stuff, all so that someone else can simply use it up, or worse, have more children who will simply use it up. Global consumption is a zero sum game at this point, I'll use less Only if it results in a net decrease in Global consumption patterns, Not simply a transfer of consumption pattern from develop nations to less developed.

If every country had an agreed upon consumption level (by international treaty) each country could decide within it's own borders if it wanted many people living on very little per captia OR a small population living on a very high per capita basis.

Until there is an internationally Enforced treaty on consumption PER country, nothing will happen on the global consumption of resources front.

Western countries will finger point at the third world for having too many people (babies) who all strive for a high consumption lifestyle.


Third world countries finger pointing at high consumption Western countries, why don't you use less per person.

I see No progress global until this core compliant is addressed by international agreement. I'm not holding my breath.

Trying to address per capita consumption as individual global consumers instead of per capita consumption Within countries (as units) is a losing idea. It's losing now, it will always be a Non Starter.

I see No progress global until this core compliant is addressed by international agreement. I'm not holding my breath.

Trying to address per capita consumption as individual global consumers instead of per capita consumption Within countries (as units) is a losing idea. It's losing now, it will always be a Non Starter.

how can you totally disregard the market in your equation?

John, you maka me laugh!

The market is completely impersonal. Yes consumption will change with price and availability, but from the 'Market's' point of view, a famine is just a 'robust correction', a 100-car pileup gives a shot in the arm to the economic indications.

'Just what makes that little old ant, think he'll climb that rubber-tree plant..?'

But your high hopes are cheering, just the same!


"Yes consumption will change with price and availability, but from the 'Market's' point of view"

that's what I was saying. a few years ago you could have been dismayed that people were buying ever larger houses and how it looked like that would never stop. guess what, it did. we are now building smaller homes. nothing goes on forever.

losthorizon also forgot God in the equation!

Don't worry, she'll come around in the end. Even the Southern Baptists are making noises about Saving the Earth.

E. Swanson

Here you go:

I think it is also important to point out that the president of the Czech Republic has little political power. Although Klaus likes all the attention he gets with these sort of opinions, he has little say on the decisions taken by the Czech government, which is a coalition of his party and the greens.

He is elected by the senators and members of parliament, not by the public. And most people on the streets here don't agree with his opinions on GW. It's just a pity he was re-elected for another term just last month!

Was Klaus leader of the party that wanted to help Bush start Cold War II by letting in American Star Wars systems? Sounds like he was under the delusion that America's little stooges will always be guaranteed cheap oil to burn.

The op/ed by Matein Khalid reads like it was written to please Dick Cheney, especially the disrespective rhetoric describing Iran and Venezuela. As a result, I think his main point--that KSA/OPEC cannot have $125+ oil this November--is bogus. I would also question his point that the USA is "their largest customer," which futher degrades the item's cerdibility. Merely more jawboning, IMO, by a neocon ally.

Does anyone in the Saudi media dare discuss the possibility of shifting Saudi clienthood from Washington to Beijing? Because it presents some interesting, if nauseating, advantages for the Saud clan, who know Beijing isn't too picky about the internal policies of its allies. In a world where intercontinental ballistic missiles sit uselessly in silos while children with suicide vests hold an undermanned superpower paralyzed, I would rather have an ally who can supply limitless infantry to protect my cities and oil fields. But then, Saudi has the special problem that letting in any kind of infidel troops damages the rulers' religious credibility. A legion of Chinese Muslims from Sinkiang, perhaps?

I didn't notice anyone mention this apparent discovery in Iran: http://www.presstv.ir/detail.aspx?id=46646&sectionid=351020103

Is it legitimate? What's the story behind this if there is one? Thanks.

I think someone linked it yesterday. It may have been linked before. 2.2 billion barrels isn't really worth commenting on. That's less oil than the world goes through in 4 weeks.

That would make it 8% of one year's consumption, or enough to offset a year worth of decline.

It is not a game chnaging find, but not insignificant, especially for Iran.

Based on December 2007 EIA data,
o Oil exporting countries produce 65% of the world's production (56/86 mbpd).
o Oil exporting countries export 74% of their production (42/56 mbpd).
o Oil exporting countries retain only 26% of their production (14/56 mbpd).
o Oil exporting countries exports are about 50% of the world's production (42/86).

Our outlook for the top five (about half of current net oil exports):


I estimate that the top five showed a 2007 net export decline of about one mbpd in 2007, versus 800,000 bpd in 2006 (Total Liquids). This puts them on track to approach zero net exports around 2031, which is the middle case in the captioned paper. Some smaller exporters, like Angola, are showing some net export growth, but this is offset by smaller exporters like Mexico, which is on track to approach zero net exports around 2014.

IMO, importers bidding for declining net exports are causing a geometric progression in oil prices:

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

Crude up $1.20.

RBOB basically unchanged.

And the dollar is looking like a 98-pound weakling. We should start a betting pool on whether it breaks below 72.

My continuing oil price prediction is that oil prices will fluctuate, with an upward bias, but it looks like we might be getting close to Triple Yergin territory pretty soon ($114, one "Yergin" = $38; for more info, do a Google Search for Daniel Yergin and click on "Daniel Yergin Day.")

On Triple Yergin Day, when it occurs, I suggest that we have nationwide house parties to "celebrate" Yergin's continued--and by all acconts successful--efforts to, in effect, persuade Americans to hang on to their suburban lifestyles, thereby driving more and more of them into insolvency.

On Triple Yergin Day, when it occurs, I suggest that we have nationwide house parties to "celebrate" Yergin's continued--and by all acconts successful--efforts

It will merit a TOD press release, that's for sure. Something comparing TOD price and production predictions against Yergin's. Be sure to send it to Bloomberg and the Wall Street Journal.

By the way, TOD is officially a non-profit, now, isn't it? Where do contributors donate?

Hello WT,

Your Quote: "On Triple Yergin Day, when it occurs, I suggest that we have nationwide house parties to "celebrate" Yergin's continued..."

I would hope all participants will individually shoutout 'Peakoil' when the glass of their favorite yeasty beverage reaches half-empty.

My fondest Peak Outreach dream is to walk into a pub where everyone shouts out Peakoil, and if you forget, you have to buy the next round for your group.

I believe that the 'upward bias' will be very strong if an attack on Iran ensues. Remember the recent remarks by Goldman Sachs that a sudden crude oil spike to $200 bbl could not be ruled out? I wonder exactly what GS had in mind as a trigger for such a spike? Want to speculate, WT? :)

o Oil exporting countries produce 65% of the world's production (56/86 mbpd).

This may be the case as far as all liquids go but not for Crude Oil. In December of 2007 the 20 largest exporters produced 52.8 mb/d while the total for the world was 74.2 mb/d. That is 71.16 percent for the 20 largest exporters.

Ron Patterson

From one of my Wall Street correspondents (no link):

Pilgrim's Pride to Shut Chicken Plant, Cut 1,100 Jobs
By Choy Leng Yeong

March 12 (Bloomberg) -- Pilgrim's Pride Corp., the world's
biggest poultry processor, will close a U.S. chicken-processing
plant, six distribution centers and cut 1,100 jobs because of
surging feed costs that have put the industry into ``crisis.'' . . .

. . .``Our company and industry are struggling to cope with
unprecedented increases in feed-ingredient costs this year due
largely to the U.S. government's ill-advised policy of providing
generous federal subsidies to corn-based ethanol blenders,''
Chief Executive Officer J. Clint Rivers said in the statement.

``Based on current commodity futures markets, our company's
total costs for corn and soybean meal to feed our flocks in
fiscal 2008 would be more than $1.3 billion higher than what they
were two years ago,'' Rivers said. . .

IMO, this is the similar to the problems facing conventional farmers and refiners. They have to respectively balance the cost of fuel & fertilizer and crude against the volume of the finished product that consumers can and will buy.

Interesting. This implies they are unwilling or ? to pass these increased costs to consumers, which doesn't make any sense because PP is in an oligopolistic market. Perhaps this is actually a political message to the congressdolts who legislated the mandate? Or is it that CAFOs will be unable to compete against actual free-range operations? Whatever; that middle extract sure is choice!!

I've wondered about that, too.

There have been several articles lately saying that the difference between the current energy crisis and the one back in the '70s is that the labor movement has been eviscerated. They no longer have the power to demand wage increases to keep up with rising costs. So instead of inflation, we're getting companies shutting down or consolidating, because they are unable to pass on their costs.

The airlines are the most obvious example. High fuel prices are killing them. It's surpassed labor as their largest cost. But they're having a hard time raising fares. They keep trying, but keep failing, because people just won't pay more. They sneak in a fee here or a surcharge there, and are jamming more and more people onto fewer flights. But even small fare increases are rejected.

But they're having a hard time raising fares. They keep trying, but keep failing, because people just won't pay more. They sneak in a fee here or a surcharge there, and are jamming more and more people onto fewer flights. But even small fare increases are rejected.

no problem in 2007 with raising fares. might not happen in 2008 because of the economy.

S&P said airlines have been raising fares to offset higher fuel prices and "were able to do so very successfully through most of 2007."


A couple of cruise lines - more to come - just got spanked for retroactively charging a fuel charge on already booked cruises.


I wonder when that industry will roll over and sink (figuratively) and if/when it does Southeast Florida is gonna hurt even more.


Speaking of Florida hurting...and, it's gonna get worse.

Economists say housing problems hammering state finances

Tallahassee Bureau Chief

TALLAHASSEE -- Florida's budget picture became even more bleak Tuesday when economists said the state faces an additional $2.9 billion hole in its tax collections.


"They no longer have the power to demand wage increases to keep up with rising costs."

I remember Reagan and PATCO.

Crushing the Union was Job 1.

And now here we are, debt slaves because we couldn't make ends meet
any other way.

While wealth disparity rivals the Roman Imperium.

"In a nation of outsourced blue-collar jobs, shrinking incomes, vanishing medical insurance, rising fuel and heating costs, and net-zero personal savings, the anxiety level of the struggling classes has to be appeased politically, and one way to minimize the current cost of that anxiety is to charge it off to posterity and the public interest."


"...which I have taken to calling the "Long Emergency."

In this new era, coming soon to a 21st century region near you, the formerly industrial nations will have a great deal of trouble keeping the lights on, getting around and feeding their people. Vocational niches by the hundreds will vanish, while the need to make up for a failing industrial agriculture, with all its oil and gas inputs, will require a revived agricultural working class in substantial numbers. This is, in effect, a peasantry, and the word itself obviously carries unappetizing overtones, especially among those who used to be certain that the perfectibility of both human nature and human society were at hand."

We're here.

"When the most dedicated servants of the system awaken to the realization that they are not benefitting from their service as they'd once believed, that their near-religious faith in the System has been bruised by the grim knowledge that the few are benefitting from the lives and sacrifices of the many, then they simply quit, or move down the chain to an undemanding position.

You can still work in law without having to bill 80 hours a week. You can resign your commission at 20 years and go live on a farm and leave all the headaches behind. You can resign from the commissions and boards and "career-enhancing" stuff you've crammed in after your regular hours. You can refuse the offer of the position of supervisor, or manager, or head of sales, because you now see the extra pay and phony prestige isn't worth it.

In a way, a belief in the value, transparency, trust and reciprocity of the System is like a religious belief."


We're here because you can't eliminate refineries or
their workers and then recall and restart when gasoline
crack spreads get large enough.

But raising gas to $5 will crush the economy.

What would you do?

You can still work in law without having to bill 80 hours a week. You can resign your commission at 20 years and go live on a farm and leave all the headaches behind.

Perhaps you can point me to somewhere where anything remotely like this has taken place when the economy has got into trouble.
People, at least in any substantial numbers, aren't bout to tune in, turn on and drop out.

They will work harder and ever longer to try to keep up their living standards.

Countries with the 'revived agricultural working class' you hypothecate have not got the resources to fool around like that.

If anything like this takes place, people will be working all hours to provide for food, energy and medicines for their children.

"Perhaps you can point me to somewhere where anything remotely like this has taken place when the economy has got into trouble.
People, at least in any substantial numbers, aren't bout to tune in, turn on and drop out."

Me. Exactly what I did back in 2003.

Before that really. They kept promising me raises,
entitlements while pushing me to come up with increased numbers immediately.

I was able to do that all the while cutting back my responsibilities with each failed promise on management's part.

Of course I saw this coming with the Stolen Election of 121200.

Got to plan ahead!

For your amusement:

Cheney Warns Disney/ABC To Stay With Republicans Or Else

Burbank, California - The stakes in the ongoing battle over the airing of The Path To 9/11 grew even more acrimonious today when Vice President Dick Cheney openly threatened Disney with retaliation if they back down in the face of intense criticism over the gross inaccuracies and outright distortions of the miniseries.

Apparently, the White House and top Republican leaders were concerned that their alliance with Disney was in jeopardy due to the disclosure that the highly partisan fictional docudrama was financed and planned by right-wing groups intent on influencing the elections in November. This has placed even more pressure on ABC and its parent company Disney to pull the deeply flawed and politically motivated program. Fearing that eventuality, the White House decided to act by personally confronting Robert A. Iger, the President and Chief Executive Officer of The Walt Disney Company.

Sources close to Iger tell Assimilated Press that Cheney cornered the CEO of Disney during a board meeting and, in a heated exchange, told Iger that if he backed down and canceled The Path to 9/11, there would be severe consequences. The next morning, Iger awoke from a sound sleep and found the bloody head of a mouse under his sheets.

Asked to comment on these reports, Cheney smiled and said, "When I ran Halliburton I learned that you had to break a few eggs to make an egg salad sandwich."

I live in the great frozen north and up here, "free ranging" is not an option for several months of the year. I once met the owner of a well-known local poultry operation and he was telling me (three years ago!) that feed costs were about to break them. I wonder how they are making it now.

You ain't seen nothin' yet.

All across the board, livestock herds are being sold off.

The reason for "cheap" meat now.

The "crack spread" is non existent.

"Parallel with the higher ethanol production, corn production increases with higher crude oil prices, and Tyner says corn production for ethanol reaches nearly 12 billion bushels when crude oil reaches $120 per barrel. But ironically with the federal mandates promoting ethanol production, corn production reaches 12.68 billion bushels at $40 oil since higher oil prices diminish corn profitability. Their analysis says the 51¢ subsidy will push corn prices to $5.65 at $120 oil, and without the subsidy it would be $4.60 at $120 oil. They contend the federally mandated Renewable Fuel Standard does a better job of supporting corn prices because the subsidy at low oil prices is much higher.

At $120 oil, Tyner’s analysis shows the 51¢ subsidy would cause 52% of the corn to be used for ethanol production, and less than 1.5 billion bushels would be exported. Under that same scenario nearly $9 billion would be paid by the government to subsidize ethanol production. They conclude there are large differences in corn production, use, exports, and value all determined by the price of crude oil, as a result of the brotherhood between ethanol and oil. Consequently, the type of subsidy provided by the government to foster more ethanol use has a substantial effect on the corn market."


CBOT May wheat $12. Up $.59 MGE Wheat $15.16 up $.80

Smithfield Foods announced when they sold their beef operations that they would be reducing thier pork production by 5%. (they are numero uno in the U.S.) The Canadian gov't has recently paid their producers to reduce their sow population by 10%.( Canada is a primary supplier of feeder pig and hog production for the U.S.) All this is resulting from Ethanol and is as mentioned earlier driving herd liquidation and lower prices temporarily. We are headed for a train wreck in pricing late summer unless prices severely ration demand. The cross elasticities for meats are price driven so with the poultry producers, the pork producers, and the feedlots all singing the blues and cutting production you must expect to see some ugly prices on the way and not a lot of substitution capability. My advice keep your freezer full.

When this happens in Africa the relief workers get very, very, very nervous. Livestock prices crashing this year presages famine the year after. Does this apply to the industrialized west as well as sub-Saharan Africa? Ask me again in the summer of 2009 ...

Re: Live stock herds being sold off:

Livestock raising, especially my nemesis hog factories, has been over done in the U.S. because of government subsidies which made corn unbelievably cheap over the past 50 years. The de facto result is that food has been subsidized because factory hog and chicken producers had an almost unlimited supply of cheap inputs.

With Peak Oil energy has become multiple times more expensive than in the past and now the energy value of corn is greater than its value as animal feed. It is a waste of energy to feed animals to produce human food since animals are inefficient converters. It is better to use the land to directly produce vegetables and fruits than grain for animals. Of course some animals like cattle are suited for grazing poor land and will take over from the animal factories (I hope). This will free up corn for ethanol which is the higher economic use at the moment.

As time goes by and the animal factories are shutdown, meat, eggs and milk should become more expensive due to high priced corn. This will facilitate the partial return of smaller more labor intensive farms which many here long for. We can not have a rural farming renaissance without a viable economic base. High priced meat, vegetables and so forth partially caused by high corn prices due to Peak Oil will provide the means. But first we have to adjust and that means shutting down meat factories until food prices rise enough to reopen them or give incentive for people to return to the land. The starving in the world will be helped by higher food prices in my opinion because so many are engaged in food production. Those who have been packed in the cities had better return to the land and start scratching. Peak Oil is here IMO and we are experiencing its repurcusions with much higer grain prices and a decline in grain use for animal feed.

Keeping food prices low is how you keep the population happy, especially if their standard of living is stagnating. This system of subsidies is going to experience a lot of strain in the near future and is not likely to survive.

This weekend I helped a local egg farmer sow spring wheat.

Internalizing production to lower external costs is going to be really important from now on I believe.

My little farm is setting up systems for internalizing what is normally purchased. We grow and produce our own compost, we plan to grow and save our own seeds, we have a tool set and methods that don't require fuel inputs or complex replacement parts...etc.

The frequently mocked "they" have created a better Prius battery.

Milpitas company OEMtek says it can double your Prius' mpg

Always interested in this stuff.

It's "a 200-pound pack of lithium-phosphate batteries."

Cost: $12,500

So, if you drive 20,000 miles per year, and you assume gasoline prices will be going up 50% per year, you're breakeven after 5 years.

As a gambler, I'd say that's a lot of risk to take for a breakeven payout.

It hasn't been crash-tested. It comes with only a 1-year warranty.

And another balloon goes pshsssssssssss....

Damn facts.

No, John15, they are adding more capacity to make the Prius into a plug-in hybrid. Why not just go out and buy an electric car and then you could have infinite mpg, right?

E. Swanson

Hello TODers,

Fertilizer costs soar - 3/12/08

...But, worldwide, the demand is just too high for the current supply. Brazil and other South American countries, along with India and others, he said, snap up all of the phosphate, potash (or potassium) and nitrogen they can get their hands on.

...Although it might appear farmers are making money on corn and soybean crops, “the inputs,” like fertilizer and fuel, “are wiping out the gains.”

...Now, however, “There is a world grain shortage and stocks are low on wheat, corn and beans.”

The only thing that Gilliam foresees as a means of slowing the rising costs would be a “big bumper crop of grain worldwide.”

“Some fertilizer material may not be available at any cost” in the near future, Day said.
I hope readers see the disconnect between future bumpercrops and NPK shortages. Have you hugged your bag of NPK today?

Hunger's global hotspots: 11 Mar 2008
Any predictions on when the US and Europe is added to the list linked above?


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

Wild & Crazy Speculation ahead!

Since our clueless leaders don't seem to be moving towards Federal Reserve Banks of I-NPK: I was trying to figure out a way for people to participate on their own, especially if they don't own land to garden [like me :( ].

Since the govt. is making it legislatively difficult for the average consumer [farmers too] to buy NPK, and nobody really wants to postPeak protectively sleep on top of a one ton personal hoard of I-NPK, perhaps the following text is a better idea:

You find a farmer that is financially pressed to buy the thousands and thousands of dollars of NPK he needs for his next planting cycle.

You offer him cash now so that he can lock in his purchase sooner at the lower price, then store it on his property. When he applies the NPK to his field: he splits the NPK savings 50/50 with you.

For example: $500/ton early purchase price using your money, $1000/ton is the going market price the day of field application.

You make $250/ton for helping the farmer, he saves $250/ton on his NPK costs. Both profit, and farmer has less stress, therefore can concentrate on maximizing harvest yields.

When TSHTF: you would take your profit, not in cash, but in grain, or veggies, or meat, milk and cheese; whatever product that farmer specializes in. Also, if it gets really ugly: you would grab your gun to help protect the farmer and your multi-ton personal NPK stockpile on his property.

Perhaps other TODers can see pitfalls, or hopefully, even better improvements to this idea to help BOTH the consumer/investor and the farmer/gardener increase postPeak food security.

EDIT: this could also work for the farmer's pesticides and herbicides too, as they are basically FFs rising fast.

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

Some more thinking:

If a farmer and a bunch of investors stockpiled a cheap, 10 yr supply of NPK on the farmers land, then WTSHTF: a farmer might potentially have 1,000 investors ready to defend him, his land, and their mutual NPK stockpile. That would be a pretty formidable militia to any thugs leaving the postPeak city.

Now expand this thinking:

Imagine Cascadia, Great Lakes, or other potentially survivable watersheds being the first to legislatively mandate that all citizens need to stockpile NPK, plus other relocalized permaculture strategies. I think they would be powerfully incentivized to keep the starving, desperate Southwestern US multi-million hordes out when the situation gets bad.

Hi Bob, I like your concept of the 1,000 investors defending the farmers land and the investors capital. I do see one fly in the ointment...who is going to feed the 1,000 investors camped out on the farmers land? I suspect that the horde of 1,000 would be akin to a herd of locust at harvest time, picking the fields clean of anything edible. :)

It 8 pm so I am off to watch a tv documentary about PO that Darwinian Dave advised about...Thanks Dave. Back after show if it doesnt put me to sleep.

The problem with any stockpile if there is starving masses, is you can expect the GOVERNMENT to come take that excess fertilizer, and distribute it among the masses. Never mind the fact that you had the forethought to prepare. That doesn't matter. If you have stockpiles, make sure they are hidden. In your house doesn't count, unless you have some secret compartment. WTSHTF, your rights will likely go out the window.

Hello Leanan,

Thxs for the toplink on Al Gore's Sustainable Investment Fund. I would like to see him take Zimbabwe to full-on Peak Outreach, then build a huge SpiderWebRiding, plus a bicycle & wheelbarrow network, in Zimbabwe for I-NPK and O-NPK movement to create jobs, increase health sanitation, and the rejuvenation of their agricultural system using a non-FF system.

IMO, this would be better than the status quo of newborn corpses clogging sewers and the mass-migration to South Africa and other countries.

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

The Governor of our 2nd most populated state resigns, and evolutionary psychologists are interviewed. This would not have happened a decade ago (the interview part...)

If he had just sexually assaulted his unwilling female coworkers, and catered to the heavy hitters pulling the strings, not only would he still be in office, but he would be universally loved by the MSM and the public (just like the governor of the FIRST most populated state.)

Saudi Arabia to bring on 1.2 million bod capacity in 2009.

UAE ramping up as much as 1 million bod spare capacity by 2011.

Now I have learned Qatar is planning to increase its own capacity in 2009:

Iraq planned to try to double production to more than 4 million barrels per day in two years.

Iran is continually adding more production capacity.

Kazakhstan was planning a new field development of more than a million barrels per day early next decade.

Azerbajain is yet ramping up production.

Nigeria has about 1 million barrels a day capacity offline.

Brazil and Canada are growing in production.

Indonesia has some fields under development.

China has not declared a peak yet.

Russia is expected to grow production slightly this year.

This past year Tullow Oil discovered more than 250 million barrels of oil off the shore of Ghana of all places. In 2005 they used about 65,000 barrels a day and produced about 6,000 barrels a day.

South Africa has some untested offshore oil prospects.

More to come....

The real estate bubble occurred when people's expectation of inflation exceeded the actual inflation occurring. Now there is housing deflation and it has Ben Bernanke worried.


I suspect that a lot of countries are not planning on high and probably accelerating decline rates.

This is a good article that has some real life examples of North Sea declines:


BTW, Texas is continually adding new production too.

as you point out rainsong, some are added BUT some are also just dwindling away ..

-An underlying decline rate per year according to Cera is at 4,5%.
-Annual global crude extraction at some 75 mb/d .

This is a reduction of 3,3 mb/d per year or about 10 mb/d in the span of 3 years.
Some of your verified fields may match and even out this for a couple of years - agree
BUT after that much gets blurred (at least to me)

Bummer for the Hummer:
Hummer H2 Reaches End of the Road: Will be Terminated
by Michael Graham Richard, Gatineau, Canada on 03.11.08
Last year, we reported on a rumor that GM was thinking about killing the Hummer H2 (after killing the Hummer H1 two yeas ago). It seems like that rumor is now being confirmed: HummerGuy.net has been informed by official sources that there will be no "next generation" refresh on the H2 and that within a few years - not fast enough for some of us - it will finally fade to black ("Reports have the H2’s end of production between 2011 and 2014").

If history is any indication (our post about Ford killing the 19-foot Excursion had 74 comments), we will hear from people who claim to have legitimate uses for the H2. It's possible that they do, but we're not talking about them individually; What we rejoice about is the death of a symbol for GM.

There's no doubt in our minds that the vehicle that a car company picks as its iconic product has an impact on both the company itself (how it targets advertising, what the other models are like, what ideas it will reject as not fitting with a certain image, etc) and on what customers of that company expect, since the whole point of a halo product is to put a little of its DNA in the more affordable models.

GM seems to be trying to make the Chevy Volt its new halo car. We hope they are serious about it, because it's certainly better to aim for a fun to drive, very efficient plug-in series hybrid than a military-style gas guzzler that will mostly be driven in urban centers.

Update: We've learned that the original source for this story was Jalopnik, so here's some link love. They've published a correction and apparently the end will be 2014 rather than 2011. Too bad.

We should erect H2 carcases like the Easter Island Heads.

I guess we'll have to wait a bit longer for that nuclear renaissance.

here stands the only plant in the world, a survivor of Allied bombing in World War II, capable of producing the central part of a nuclear reactor's containment vessel in a single piece, reducing the risk of a radiation leak.

Utilities that won't need the equipment for years are making $100 million down payments now on components Japan Steel makes from 600-ton ingots. Each year the Tokyo-based company can turn out just four of the steel forgings that contain the radioactivity in a nuclear reactor. Even after it doubles capacity in the next two years, there won't be enough production to meet building plans.
It would take any competitor more than five years to catch up with Japan Steel's technology, said the company's chief executive officer, Masahisa Nagata.
``There is definitely a bottleneck,'' Van Dorsselaer said. ``It's a real issue for us.''


James Kunstler was on On Point Tues. Nothing we haven't heard before, but he did rattle the host a bit.