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DrumBeat: March 20, 2008
Posted by threadbot on March 20, 2008 - 9:37am
Obama Eyes Active Role in Oil Markets
WASHINGTON (Reuters) - Democrat Barack Obama would take an active role in U.S. oil markets as president, tackling concerns about the dominance of large oil companies and eyeing the Strategic Petroleum Reserve as a potential weapon to combat high prices, his top energy adviser said.
ADVERTISEMENTThe presidential hopeful's adviser, Jason Grumet, told Reuters that an Obama administration would crack down on any competition lapses in the sector that have resulted from big corporate mergers.
Globe and Mail: Oil and gas reserves don't much matter any more.
You arrive at that conclusion after listening to Royal Dutch Shell's strategy presentation in which the company this week finally allowed investors to have a look at the gauge on its fuel tank.Reserves on their own don't matter. What matters is the cost of getting the reserves. Shell's investment per barrel of oil and gas has increased fourfold in just three years, a period during which the oil multinational's output has not increased. The company displayed another chart showing the average spending of the big oil companies. Per barrel of hydrocarbons, spending rates were pretty static during the 1990s at between $5 (U.S.) and $6 a barrel. In 2003, the rate of investment began to escalate and is now shooting higher, rising at an alarming pace. Last year, the average investment per barrel was just shy of $15.
On top of that, you must load the daily cost of operating wells and pipelines and the colossal overhead of running a big oil company. Moreover, we know that the $14-to-$15-a-barrel average investment is just an average and it is rising. Every new barrel is a more expensive barrel because in order to get the oil, Western oil companies must push the technology envelope even further, into deeper water and more heavy oil, such as Alberta's oil sands. The only giant discovery of the past decade has been Tupi, the eight-billion-barrel oil field discovered offshore of Brazil in water depths of two kilometres.Technology is expensive, but it is the materials, manpower and energy cost that hurts. Shell estimates that the operating cost per barrel of the Athabasca project is between $20 and $25, of which a third is energy - the cost of natural gas used to heat water to extract bitumen from sand. Shell won't reveal the capital cost of an Alberta oil sands barrel, but it is certainly a lot higher than its average of $7 and likely near the top rate of $15 to $20.
The point of all this is that it helps to explain the current $105-a-barrel oil price and its extraordinary resilience to weakening demand signals. Oil price speculators know that the U.S. is heading into recession and they can see the signs of weakening gasoline consumption, but they are maintaining long positions in West Texas Intermediate and Brent, the benchmark futures contracts. If they remain bullish, it is not because they believe oil is running out but because they believe the cost of producing the marginal barrel will remain high and will continue to rise, regardless of a U.S. recession.
That doesn't mean the oil price won't dip or suffer a short-term plunge. There will be temporary gluts of gasoline as America works through its credit crunch, but it is the cost of producing extra barrels and the price of alternatives such as biofuels that will determine what we pay for oil in 2012.
The firm plans to triple output by 2015 and it says Russia produced 3,413 tonnes of uranium last year. This year it will mine 3,580 tonnes and start prospecting with leading uranium miner Cameco Corp.
The two firms plan the first investment in two separate joint ventures to explore for uranium in their home countries of Russia and Canada, Atomredmedzoloto said.Russia holds more than a 10th of world reserves of uranium and is positioning itself as a major player in meeting growing demand from the fast-growing nuclear industry, which is paying record-high prices as uranium demand outstrips dwindling supply.
The top three miners, Canada, Australia and Kazakhstan, together account for more than half the world's uranium production, the World Nuclear Association says.
Long considered an abundant, reliable and relatively cheap source of energy, coal is suddenly in short supply and high demand worldwide.
An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50 percent or more in the past five months, surpassing the escalation in oil prices.
The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java.
Meanwhile mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation.
In the United States, the boom in coal exports and prices has helped lower the trade deficit, which declined last year for the first time since 2001. The value of coal exports, which account for 2.5 percent of all U.S. exports, grew by 19 percent last year, to $4.1 billion, the National Mining Association said. An even bigger increase is expected this year.
That means that, in a small way, higher revenues for U.S. coal exports indirectly helped the U.S. economy cover the cost of iPods from China, flat-screen TVs from Japan and machinery from Germany. The still-gaping trade deficit of the world's largest industrial power at the dawn of the 21st century was slightly eased by a fuel from the era and pages of Charles Dickens.
Bloomberg: Oil Falls Below $100 on Concern U.S. Slowdown May Limit Demand
An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50 percent or more in the past five months, surpassing the escalation in oil prices.
The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java.Meanwhile mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation.
In the United States, the boom in coal exports and prices has helped lower the trade deficit, which declined last year for the first time since 2001. The value of coal exports, which account for 2.5 percent of all U.S. exports, grew by 19 percent last year, to $4.1 billion, the National Mining Association said. An even bigger increase is expected this year.
That means that, in a small way, higher revenues for U.S. coal exports indirectly helped the U.S. economy cover the cost of iPods from China, flat-screen TVs from Japan and machinery from Germany. The still-gaping trade deficit of the world's largest industrial power at the dawn of the 21st century was slightly eased by a fuel from the era and pages of Charles Dickens.
Crude oil fell below $100 a barrel in New York on growing concern a U.S. economic slowdown will hurt commodity demand.
Oil has fallen 11 percent from a record this week, tracking declines in gold, wheat and metals, as the dollar strengthened, reducing the need for hedges against inflation. U.S. gasoline demand in the past four weeks averaged 3.2 percent less than last year, the Energy Department said yesterday.
``Investors have taken money from the capital markets and bought oil futures, but there's nothing changed in the fundamentals to make oil worth $100,'' said Gerrit Zambo, an oil trader at BayernLB in Munich. ``Now these investors may think it's time to get out.''
Crude oil for May delivery fell as much as $2.95, or 2.9 percent, to $99.59 a barrel in electronic trading on the New York Mercantile Exchange. It was at $100.41 at 11:43 a.m. London time. Oil is up 77 percent from a year ago.
Petraeus, who as commander of Multi-National Force-Iraq overseas all coalition troops there, said Prime Minister Nouri al-Maliki asked him to convey the message to companies.
"The prime minister is very keen on getting large Western corporations re-engaged in the oil and electricity sectors," Petraeus said Monday at a news conference in Iraq with Vice President Dick Cheney and U.S. Ambassador to Iraq Ryan Crocker.
OPEC will probably have to increase production ``not much more than 2 or 3 million barrels a day'' by 2012, John Waterlow, a principal analyst at the Edinburgh-based firm, said in an interview in Sydney today.
Demand will likely rise by about 10 million barrels a day over the next five years, barring a ``major recession,'' Waterlow said. Most of that will be met by suppliers outside OPEC and by gas liquids and non-conventional supplies, such as oil sands, he said.
``Over that period we don't actually see there to be much of a problem in supply meeting demand even if demand grows relatively strongly,'' Waterlow said.
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Coal Can't Fill World's Burning Appetite
The NYT has been running a series of good articles on coal, including yesterday's article on the emergence of the U.S. as a major coal exporter and today's article about the distribution of coal, nuclear and natural gas electricity production in the U.S. and the political difficulty of building new coal-fired plants in the U.S.
States' Battles Over Energy Grow Fiercer With U.S. in a Policy Gridlock
http://www.nytimes.com/2008/03/20/us/20energy.html
The NYT coal article index:
http://topics.nytimes.com/top/reference/timestopics/subjects/c/coal/inde...
If US judges and regulators keep vetoing the building of coal fired power stations then US mines will have nothing to do with their coal but export it. The US could become the Saudi Arabia of coal because of a reverse Land Export Model. Ironic.
The environmentally driven political resistance to new coal-fired electricity capacity in the U.S. cannot win out. Coal is the only way to ramp up capacity quickly, and Americans will choose coal over rolling blackouts any day of the week, particularly if there's a crisis in the natural gas supply.
The USA installed 5.25 GW of new wind turbines in 2007, we can hit 8 GW this year if we try (i.e. renew 1 cent/kWh tax credit for renewable electricity). Add geothermal., solar PV, new hydro, etc.
We can also save quite a few GW of electrical demand each and every year via conservation and greater efficiency.
Alan
According to to this, US net electricity generation was about 4 million GWH in 2006, which comes to around 500GW on a 24/7/365 basis. Meanwhile, that 5.25GW of new wind is presumably nameplate capacity, so we can divide it by four for reasons of normal wind conditions, maintenance, runaway rotors spinning into shrapnel, etc. In other words, realistically, it's maybe a whole 1.3GW, or 0.26%, addition to actual generation, and a smaller addition, if any, on hot, humid, still, health-threatening days. Except for hydro, which is noticeable in the table but has little room to grow, the other items can be dismissed as immeasurably small for now.
So next year we get a whole 0.35% if we "try", and less if Congress, this being an election year, focuses mainly on celebrity steroid use. Meanwhile, population is still headed skyward at just under 1%, three times as fast, and I wouldn't be surprised if that fails to guesstimate illegal immigration sufficiently. And said population, on the whole, is slowly but surely becoming ever older and frailer, increasing demand an extra bit, for extra heating, cooling, elevators and other gizmos, nursing facilities, etc.
So the original point probably stands - artificial, politically created electricity shortages seem likely to cause at least regional ructions in the near future. Angry citizens may suddenly attach less importance than they do now to whining about imperceptible effects of coal that only show up when they are teased out by statistical methods that, in the end, are only incomprehensible magic.
For now, politicians are responding to the whining by thumping on evil, wicked "big" business that unjustly tells people they have to get out of bed in the morning. And it's that thumping itself that most whiners are gleefully seeking. However, once the consequences inevitably thump directly on said whiners - as in, for example, "constantly repeated blackouts = no wages = no income" - the glee will continue on for about as long as a snowflake in Florida.
Instead of looking at nameplate capacity we should be looking at actual generation:
- from 2001 to 2007 (the years of the wind "boom") wind power has increased from 7TWh to 32TWh or 25TWh
- total electricity generated grew from 3,736 to 4,160 TWh or by 424TWh so wind power is accountable only for 5.8% of the increase. The additions by the other major sources are as follows:
- natural gas - +254 TWh (60%)
- coal - +116 TWh (27.4%)
- nuclear - +35 TWh (8.3%)
- hydro - +31 TWh (7.3%)
So... in case you just moved to the US and are wondering where the extra electricity you are using came from, you should visit the natural gas or coal power plant serving your area (accounting for 87.4% of it). Not really the local wind farm.
Given the high rates of increase in wind during that period, your analysis is almost meaningless. You are making an arithmetic average of an exponential function.
Assume, say, 8 GW this year, 11 GW in 2009, 15 GW in 2010, 20 GW in 2011 with 35% capacity factor and the numbers from wind look much more significant.
The 1 GW in new nuke from Watts Bar 2 (started in late 1970s) should almost be complete by 2011.
Add the negawatts from conservation and the number can become significant. These are our two best hops before TSHTF.
Best Hopes for a Rush to Wind,
Alan
The problem of switching to wind (something we certainly need to get cracking on BIGTIME) is compounded by the fact that it will likely correspond, at least partially, with a switch the plug in hybrids and (hopefully, if they can be manufactured effectively) electric cars, which will put alot of extra demand on the power grid.
I disagree with this. During world war II we cranked out planes and tanks ... but no passenger automobiles. We're getting knocked back to a 1940 standard of living which means street cars or walking for most, and with the economy the way it is who is going to finance a new PHEV? They won't be prevalent enough for us to want to keep up the roads - could be we'll have police, fire, and ambulance, all moving to high ground clearance platforms to get around decaying roads, and those would be PHEV.
The turbines we need to maintain a civil society will be built the way we went at war goods sixty years ago. The PHEVs? Not a chance ...
8 GW is good, but I think we used 3.3 TW on average in 2005 year. And I think peak was 4.7 TW. Since wind only generates at about 30% of its max rating, those wind turbines will only generate about 3 GW on average or 0.1% of our needed energy.
You are comparing one year's installations vs. the generation from the total installed base (1960 to date for FF, 1910 to date for hydro). Since we do not have to solve our problems in the next 12 months, this is a false choice.
35% capacity factor is closer for new installations. Bigger WTs go higher and get better winds (even 1 mph delta is significant). And newer seems to have fewer maintenance outages.
For the next 3 or 4 years (5 years to build a new coal plant today I think, XX years for a new nuke), conservation and negawatts are our biggest potential source of power. Wind #2.
Geothermal has great potential in the US West. I learned quite a bit about secondary cycle geothermal to exploit lower heat sources (use a working fluid other than water/steam) at WIREC. Unfortunately geothermal competes with oil & gas for drilling rigs.
And solar is coming along, with $1 billion solar PV manufacturing plants under construction.
It is *NOT* a given that much more coal is required.
Best Hopes for Conservation,
Alan
Actual wind output per hour for a 2 year period for Ontario can be found here:
http://www.ieso.ca/imoweb/marketdata/genDisclosure.asp
When you consolidate the number of hours of percent of name plate you get this graph.
Thus wind in Ontario 50% of the time is below 14% of nameplate. It never achieves nameplate output and spends 5% of the time generating nothing.
Something that has not been discussed here on the OD is the inverse volatility between price and production. Perhaps I missed it.
If you look at a chart of production starting in 1970 or 1980 to the present, you will see considerable volatility until about Oct of 2004. Production then becomes flat at about 85MM brl’s/day +/- 500K.
See Khebab Fig. 1
http://www.theoildrum.com/node/3439
However if you look at price it seems to be much more volatile after Oct 04.
This seems to indicate supply meeting demand until Oct 04
Supply always meets demand. If supply is too low and demand too high, then the price rises, dropping demand, until they meet again.
I think you meant Dipchip, that until Oct 04 supply was high enough to keep prices low, then after that prices had to rise to keep demand low enough to meet supply. Demand is a function of both price and availability.
Ron Patterson
When there is no more to supply, supply does not meet demand. That's what Peak Oil is all about.
Wrong! Peak oil is not about running out of oil. We have stressed that point, here on TOD and other palace, over and over again. Even if the world produces only one million barrels per day, the price will be high enough that this small amount will meet demand. That price will likely be over one thousand dollars per barrel and that price will drop demand to one million barrels per day.
There will obviously become a time when there is no more supply. But that time is far in the distant future, far beyond the lifetimes of anyone on this forum. In the meantime we must deal with rising prices cause by a declining oil supply, after Peak Oil.
Peak oil is about the declining availability of oil in the huge EROEI paybacks which we expect, and which our system is designed for. Eventually it also means the declining production of oil, coupled with rapidly decreasing EROEI.
Which means that for some people the oil is no longer there. Which means for those people that the oil has run out.
Running out of oil does not happen uniformly. People who can't afford the necessities that $100+ oil provides them have effectively run out.
It's a recession when your neighbor is out of work. It's a depression when it happens to you.
It's depletion when it's happening in the oil fields and the markets. It's running out when you can't get the oil-dependent support that you need.
Collapse occurs as a result of the cumulative systemic needs previously satisfied by oil not being met, which impose cumulative costs on the rest of the system. These costs come in the form of providing food, water, or other resource aid, or in the form of social chaos, war, disease, famine, and disposal of the deceased.
Terminal depletion is not far in the future, just a few decades and the oil will stop flowing to and within the U.S.long before terminal depletion. You can read all about it at my website.
You're not getting it.
Just like so many people who think that money creates energy.
It does not.
Without energy there is no money. See Bear Stearns for details.
As we enter the Olduvai Gorge, all it will take is a 3% drop in
supply and the electric grid will crash.
1930's. If we can't hold that 1886, then 1750.
Billions will die above the background rate.
Such very stupid hyperbole has no place on this list. Visitors might think we all are of such a mind. And someone might say, as they did yesterday about a possible Iran war, that "TOD predicted that if crude oil supply dropped 3% the electrical grid would crash." TOD made no such prediction, only one very uninformed poster made such a prediction.
The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once.
Petroleum generates 1.6% of our electricity! A drop of 3% in world oil production would hardly affect the electrical grid at all.
http://www.eia.doe.gov/cneaf/electricity/epa/epa_sum.html
Ron Patterson
Oh Fck you.
"Visitors might think we all are of such a mind."
Where? From Mars? I hate that "beyond the pale" BS. With you of course being the judge and jury. No proofs advanced.
Don't get patronizing. Judging what has merit.
And this is garbage.
"And someone might say, as they did yesterday about a possible Iran war, that "TOD predicted that if crude oil supply dropped 3% the electrical grid would crash." TOD made no such prediction, only one very uninformed poster made such a prediction."
A smear on me that you think someone might have said. And again. You the thought
police here? The message you're trying to get out is...?
"The world crude oil supply dropped 15% from 1979 to 1983 and the grid did not even dim once."
Source that and then note how the embargo was to the West.
And only the West was affected. And only certain parts of the West.
In the Memphis/LR/New Orleans area, I never paid more than 79 cents and never dreamed
of standing in line.
So far us Dirty Fckn Hippies have been right on the mark.
And yet, still the Cramers of the world can say the subprime's been contained, don't pull your $$ out of Bear (a week ago!), Iraq was a success, we did
Iraq because of 911, and still get camera time.
Every chart from Khebab, Ace, shows us doing just exactly this-the Olduvai Gorge by 2012
at the latest.
"Petroleum generates 1.6% of our electricity! A drop of 3% in world oil production would hardly affect the electrical grid at all."
And this shows the completeness of how your genre does not understand non linear.
Just as US Ag uses only 2.2% of fuel.
Only a very narrow description of both and the ignorance of Self Organized Criticality allows people to make this remark.
South Africa, Kenya, Argentina, Chile, Pakistan, Tajikistan.
All the above have seen both percentages repudiated.
This was not an embargo, the embargo was years earlier. This was due to the Iran-Iraq war and the resulting "Tanker Wars" as well as the Iranian Revolution. All the world was affected.
World Oil Production: http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcfYha0oIYWXRg&hl=en
1979 62,674,000 barrels per day
1983 53,257,000 barrels per day
Difference
9,417,000 barrels per day or 15.025 percent
West (OECD) Oil Demand: http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcfVVh3xItXZIA&hl=en
1979 44,838,000 bp/d
1983 36,906,000 bp/d
Difference
7,479,000 bp/d or 16.85 percent.
The undeveloped world was down just under 2 million barrels per day but that also includes most exporters who actually increased their consumption during this period. The oil importing third world was down even more than the West.
Ron Patterson
Never argue with Darwinian on numbers.
"Never argue with Darwinian on numbers."
And that's the problem.
Even if he (and Stuart -
"it is worth noting that in fact, according to Bill McKibben’s Deep Economy, generally speaking, energy used in agriculture is a tiny portion of the whole – the 2.2% that Staniford cites does not take into account, say, the fact that it takes 10xs as much energy to get a package of frozen peas into your freezer as it does to grow them, or 7xs as much energy as is contained in the food to get a box of breakfast cereal on your table – which might be the beginnings of an answer to part C of Staniford’s question (McKibben, 65)), or political ones that interrupt the flow of oil in a collapse situation."
-are correct with the numbers they use, the numbers themselves aren't
showing the reality of the situation.
That's what I am arguing.
That our power supply uses 1.6% of the petroleum, that US Ag uses
2.2%? W/o these two components, civilization does not exist.
So something is bad wrong when only 3.8% of our energy is (said to be)
used for these two components.
I say that we have completely leveraged away (the Ultimate 32:1 Hedge Fund!)
from reality here.
Which is why we're seeing these developing nations, described above,
running into food/energy problems.
The stats are decoupled from reality.
"October 2006 — in an essay titled “Economics: Hallucinated Wealth“?
The economy of markets and statistics has aptly been compared to a circus, and like any other circus, it serves mostly to distract. While interest rates wow the crowd with their high-wire act and clowns pile into and out of various speculative vehicles, the real story of economic decline will be going on elsewhere, in the non-hallucinated economy of goods and services, jobs and personal income, all but invisible behind a veil of massaged numbers and discreetly unmentioned by the mainstream media. There’s good reason for that to be tucked out of sight, too, because it won’t be pretty at all."
Sincerely, James
Again. 1979 to 83 never bothered me at all with oil supplies.
The 1973 Embargo did.
I did conflate the Embargo with
the Iran/Iraq War. You're right there.
There was great change in my life, but no problem finding
gasoline/diesel. And I never saw prices over 79 cents and definitely
no gas lines in the Memphis/LR/New Orleans area.
Yes, you're right. It was the Iran/Iraq Wars, but the US instigated
this war. If the US was hurting we knew how to get more oil.
Stop what we were doing.
But now, we can stop what we're doing (gonna have to) and still we won't
get more oil.
Which is the point I'm making. And the fact that you so easily dismiss the Olduvai. And anyone bringing it up. Even as we slide into it.
Such very stupid hyperbole has no place on this list.
And making demands somehow shows your manly-ness?
Showing WHY such a position is wrong is how things have historically been done in these parts.
Eric, did you not even bother to read the rest of the post, and my follow up post with source and numbers? I showed exactly why his hyperbole was dramatically wrong!
Reading the entire post before replying with some smart ass remark is how things have historically been done in these parts.
Ron Patterson
Eric, did you not even bother to read the rest of the post,
Yes I did Ron. Any you were in there a-swinging the hyperbole all about.
"the grid" has many parts, and more than a few parts did have brownouts, rolling blackouts and other issues. Thus 'not once' ain't right. Now, you wanna post links defending your statement?
To compare the grid design and loading of the 1960's and 1970's grid with the 2008 and beyond grid ignores reports like this:
http://www.cfr.org/publication/13153/
McGowan needs to do a better job of making the case of grid fragility today and a delta in oil production tomarrow. Because claiming a direct oil to grid tie would be hard to prove. If a sub-station goes poof! by sabotage and one group claims responsibility to draw attention to the US presence in the Middle East - is that an oil tie?
Onto other matters:
Now I note how you did *NOT AT ALL* address the part about your demand of "Such very stupid hyperbole has no place on this list." But that is fine, I'm sure you'll say 'mea culpa' when you do the 'stupid hyperbole' dance in the future. You can start with the mea culpa on "the grid did not even dim once."
You are right on target and my report explains how it will happen:
Peak Oil means that the U.S. lacks the energy necessary to provide for transportation, food production, industry, manufacturing, residential heating, and the production of energy. Oil shortages and natural gas shortages will generate multiple crises for the nation: (1) Shortages in gasoline, diesel, and jet fuel will limit travel to work for oil rig/platform workers and technicians, coal miners, highway maintenance personnel, and maintenance workers for electric power generation stations and power lines. (2) Without truck and air transport, spare parts for virtually everything in the economy won’t be delivered, including parts needed for highway maintenance and energy production equipment. Simmons notes that 50,000 unique parts are necessary to create a working oil field. Many more parts are necessary for ultra deep water drilling operations, including a variety of high tech ships, remotely operated underwater vehicles, seismic survey equipment, helicopters, and technologically complex platforms (see The New York Times and click on Multimedia Graphic). Thousands of corporations around the globe manufacture these parts, and many of these corporations will fail in the Peak Oil crisis. (3) States governments will lack funds for maintaining the Interstate Highway System, including snow plowing, bridge repair, surface repair, cleaning of culverts (necessary to avoid road washouts), and clearing of rock slides. A failure in one section of the Interstate highway will cut off transportation for that highway and everything it carries: food, emergency supplies, medicine, medical equipment, and spare parts necessary for energy production. (4) The power grid for all of North American will fail due to a lack of spare parts and maintenance for power lines and electric power generators, as well as from shortages in the supply of coal, natural gas, or oil used in generating electric power. Power failures could also result from the residential use of electric stoves and space heaters when there are shortages of oil and natural gas for home heating. This would overload the power grid, causing its failure. The nation depends on electric power for: industry; manufacturing; auto, truck, rail, and air transportation (electric motors pump diesel fuel, gasoline, and jet fuel); oil and natural gas heating systems; lighting; elevators; computers; broadcasting stations; radios; TVs; automated building systems; electric doors; telephone and cell phone services; water purification; water distribution; waste water treatment systems; government offices; hospitals; airports; and police and fire services, etc. Phillip Schewe, author of “The Grid: A Journey Through the Heart of Our Electrified World,” writes that the nation’s power infrastructure is “the most complex machine ever made.” In “Lights Out: The Electricity Crisis, the Global Economy, and What It Means To You,” author Jason Makansi emphasizes that “very few people on this planet truly appreciate how difficult it is to control the flow of electricity.” A 2007 report of the North American Electric Reliability Corporation (NERC) concluded that peak power demand in the U.S. would increase 18% over the next decade and that planned new power supply sources would not meet that demand. NERC also noted concerns with natural gas disruptions and supplies, insufficient capacity for peak power demand during hot summers (due to air conditioning), incapacity in the transmission infrastructure, and a 40% loss of engineers and supervisors in 2009 due to retirements. According to Railton Frith and Paul H. Gilbert, power failures currently have the potential of paralyzing the nation for weeks or months. In an era of multiple crises and resource constraints, power failures will last longer and then become permanent. When power failures occur in winter, millions of people in the U.S. and Canada will die of exposure. There are not enough shelters for entire populations, and shelters will lack heat, adequate food and water, and sanitation. (4) Water purification and water distribution systems will fail, leaving millions of metropolitan residents without water. (5) Waste water treatment systems will fail, resulting in untreated sewage that will contaminate the drinking water for millions of residents who consume river water downstream. (6) Transportation and communications failures will cripple federal, state and local governments -- leaving and residents without emergency services, emergency shelters, police and fire protection, water supplies, and sanitation etc. (7) Mechanized farming will cease, and harvested crops won’t be transported more than a few miles. (8) Food won’t be transported from the Midwest, California, Florida, and Mexico to the U.S. population. (9) Fertilizer, pesticides, and herbicides won’t be produced. (10) Due to limited farm acreage, most cities and towns will be unable to support their populations with sufficient food from local farming (see Paul Chefurka and Paul Chefurka). (10) Homes across the U.S. will lack heating. Even if homes are retrofitted with wood stoves, local biomass will be insufficient to provide for home heating, and it will not be possible to cut, split, and move wood in sufficient quantities.
In the coming years, the U.S. faces multiple energy crises. Each crisis will generate delays in handling other crises, thus making it more and more difficult to address multiplying problems. The worse things get, the worse they will get. A grid lock of crises will paralyze the nation.
They won't let me post the link here, but you can get it by googling: clifford wirth and peak oil.
And the skill for dividing a text into paragraphs will be lost. :-)
Paragraphs are for Swedes!
Exactly! Two page paragraphs are impossible to read, so I did not even try.
I just skimmed it, but it still scared the crap out of me.
I better read it.
The scenario assumes that fuel resources wont be prioritized via higher prices or rationing and force people to stop non essential traveling like vacations or visiting far away relatives or by moving closer to work or bicycle. It also ignores all the resources made available by depression of consumption of goods.
And it probably understates the redundancy in the grid and the grid support industries. But it is a good idea to add more levels of redundancy since the grid realy is life critical and critical for an economies efficency.
.. and it's a Cut and Paste identical to what he put up here a couple days back.
Repeat it enough times .. and nope, it still doesn't answer the challenges he's been invited to answer.
Here, I'll try it one more time..
Cliff, why is Electricity Useless?
Bob
EDIT (Computer has to be on to answer..)
There are two number fours also.
I got to Shortages in gasoline, diesel, and jet fuel will limit travel to work for oil rig/platform workers and technicians, coal miners, highway maintenance personnel, and maintenance workers for electric power generation stations and power lines. and gave up, based on assumption that evidently when the value of this commodity goes through the roof the staff involved in the means of production of this commodity will be the first to suffer, get real, this is a bad sci-fi movie plot
Neven
I am assuming you spent some time and thought in putting together this post. It has been said before but I repeat. If you really want anyone to read your post, include some paragraphs.
Re: Electrical grid vulnerability.
I spent 10 years in the electrical distribution industry. A transmision and distribution system is a complex high maintenance system. It requires alot of trucks on the road (diesel), good roads, lots of copper, aluminum, insulators (petrochemically produced),wood, steel and concrete poles, transformers, autoreclosures, and hundreds of other complex components that require frequent adjustment, and replacement. Electrical transmission and distribution networks are like a spider web. They are constantly damaged by the elements and physical stresses. Each day they require repair.
As FFs become scarce we may see less trucks on the road, issues with roads, and shortages of components. These issues could possibly drag response time down to the point that repair rates may not overcome day to day damage. It is conceivable that utilities may one day have to use triage to decide who gets power. I think we have seen this occuring in some areas of the world.
Ontario, there is no doubt that long term maintenance of the grid depends on petroleum being available. But the grid will not collapse simply because the supply of oil drops a few percentage points. If one would wish to claim that the grid will collapse when oil supply drops a slight amount then it would behoove them to explain why the grid did not collapse when the world oil supply dropped 15 percent in four years. And it was over 15 years before oil production rose above its 1979 level.
The oil supply rose very slowly from its 1983 low. In 1995 oil production was still below the 1979 level. And the grid did not even burp!
One should not make extraordinary claims without extraordinary evidence. Claiming that the world is going to collapse when oil production drops 3% is just way over the top. We peak oilers are fighting the "chicken little" complex already and this sort of wild grandiose claim really makes things a lot worse.
Ron Patterson
Agreed. That is the problem with people throwing out unsubstantiated numbers. It discredits the premise. I am convinced that the reliability of infrastructure (electricity, water, transportation, telecommunications,food) is inversly proportional to the cost and availability of FFs. But at what point.... who knows. A good example is the climate modeling. They have an idea that things don't look good, but who knows when the tipping point is.
I just wanted to defend the premise.
Cheers
Ontario, there is no doubt that long term maintenance of the grid depends on petroleum being available. But the grid will not collapse simply because the supply of oil drops a few percentage points.
Agreed.
Parts of the grid goes dark when things like squirrels get in the works. So something as simple as a rodent can cause darkness in parts of the grid, but a constraint of oil will not?
To claim 'the grid will not collapse simply because the supply of oil drops a few percentage points.' is silly hyperbole - as how can one PROVE that for the want of X not gotten to location Y in Z time due to a lack of oil?
Once again, Mea Culpa time for Ron.
If you think that we will migrate from a centralized grid connected electrical system to individual solar power your dreaming. My town has 100,000 people with a peak demand of 200 MW (megaWatts). At $10 per watt that is an investment of $2 Billion or $20,000 per person. Project that over 30 million Canadians that is $600 billion. In a financially and resource depleted world, the only thing that would make this work is a visit from the techno-fairies.
I might not pay $20K immediately, but I would definitely pay $10/W * 50W = $500 for the capacity to continuously run a fridge. Or even 10x that.
But here in Ontario we're mostly [ > 50% ] covered by the nukes and the hydro.
That's still a fairly small fraction of the $50k to $100k and beyond per person sunk into housing. Never mind all sorts of infrastructure, especially roads. If it ever came to a choice between a $20k system and the far more costly alternative of no electricity, lots of people could and would do it. Indeed, some have already done it. The real problems lie elsewhere.
First, a $20k solar system doesn't really deliver much electricity. It's only maybe 2kW, give or take, of installed, finished nameplate capacity that is only delivered in bright sunshine. At night you get zip, and on cloudy days you get next to nothing. Second, the biggest problem of all is that until and unless really huge, but yet affordable, storage is invented, solar systems will deliver essentially zero, zip, nada, to Canadians throughout the short cloudy days of the dead of winter.
This assumes BAU, electricity just freely available to those who can pay the price. Plug it in, turn it on and go. We're trained to just flip the switch and have everything we want readily available.
Instead assume you will be allowed to use electricity from the grid for 2 hours per day. You'll need a very good job to even pay the bill for those 2 hrs.
even Iraq has more power per day than that.
if we ever get to 2 hours of electricity per day we will
http://www.scienceshareware.com/bike_gen.htm
picture 5 people coming over in the morning to pedal power into batteries which you'll use through the day or days!
and if costs are $10,000 a person? and if they buy wind instead? and if we have solar paint?
No, you are right, putting up enough PV capacity on everyone's rooftop to supply ALL of their present electric demand won't happen. I do think that it is likely that we will see a lot of rooftops with PV panels on them, but those panels will only be supplying enough power to keep a refrigerator, furnace fan, a few lights, and a few other essential household appliances running. In other words, most people are going to have to power down to a considerable extent. Thus, reducing your figures by a factor of four or eight starts to get us into the realm of reality.
Occam has a razor and he's not afraid to use it. Going from a shortfall in oil supply to everyone sitting in the dark, starving, and freezing to death is quite a reach. When a certain threshold of suffering is reached then the political will to adapt will arise so basic needs are supplied to most everyone. Priorities will be recognized and resources will be allocated to supply substitutes for oil in keeping people adequately fed, supplied with clean water, and warm in the winter. This may mean that certain products will not be manufactured in order for more important things to be built like spare parts for food production and distribution equipment. Having enough aluminum for power lines may mean doing without beer cans. Having enough steel for wind turbines may mean doing without new SUVs for several years. I see the oil shortfall as a WW II scale problem requiring a WW II scale response.
Entries like this are wirthless. Use paragraphs and formatting.
I have read this blog thoughtfully for a while and I am of a mind that "there's a change a comin'" but I think a lot of this notion that we will be living in a Mad Max environment any time soon is flat wrong. I think we are looking at peak oil right now and the higher numbers in production are based on a lot of factors like ramping up other forms of fuel production (ethonol, tar sands etc...) in response to high prices. But we are a long way from the "Olduvai Gorge".
What is going to occur on a long term basis will be demand destruction rather than dangerous shortages. The airlines are the canary in the mine and with Delta Airlines cutting 10% of flights and retiring employees early - that's just the start. You'll see increasing bankruptcies and cannibilization in the industry for years to come. The truckdrivers are struggling to make payments on 1/4 million dollar rigs and pay for fuel. A lot of them will go out of business. Transportation costs will skyrocket which will lead to more consolidation.
As fuel costs skyrocket you will see demand following FF production instead of the other way around. And then there are the politicians telling the "voters" that high prices are due to evil corporations. It's already starting and I just have to shut it out. Any intelligent energy policy will be shouted down...
All of this will mask Peak Oil for a long time. But nobodys going to starve...at least not in the U.S. We Californians might not be driving to Vegas for a 2 day blowout however. But that Indian Casino is just up the road...
OK sir, would you please step out of the thread please, stand over here for me please. Good, now I'm going to hold this light in your eyes, I want you to hold your head still and follow the light as it moves...ok. now I want you to hold your arms out to your side and lift your right foot up as far as you can...ok. now I want you to close your eyes, and with the tip of your left index finger, touch your nose...ok, now I want you to walk toward me on this line right here, placing your right heel against your left toe and then ooops...ok sir put your hands behind your back, you have the right to remain silent...
THIS olduvai gorge?
WHATEVER HAPPENED TO RICHARD "OLDUVAI" DUNCAN?
http://peakoildebunked.blogspot.com/2005/08/31-whatever-happened-to-rich...
"OLDUVAI" DUNCAN RESURFACES IN RACIST PUBLICATION
http://peakoildebunked.blogspot.com/2006/03/255-olduvai-duncan-resurface...
mcgowanmc,
I don't think we know what the percentage is -whether it is 3% or 5% or 20% - but the whole system (not just the grid- financial system, transportation system, everything else) is so interconnected, I am willing to bet it is not going to take a whole lot to start having grid problems in parts of the country.
This is a link to a Platt's article called Long-term droughts in California, Southeast seen as threat to grid stability.
It's a bit like tossing a new ball to a Labrador Retriever, isn't it? They get all focused on one thing and forget this is a systemic problem with multiple issues hitting us all at once at the macro level, and only God knows how many at the micro...
New Rules:
No discussing Peak Oil without at least keeping in the back of one's mind
- AGW
- Sea level rise
- ecosystem disruptions (migrations,etc.)
- costs of recovery from disasters/prevention/relocation
- preventative measures
- ramping up/building out new technologies/infrastructures
- destruction of decaying infrastructure
- reduced food production from disasters
- resource wars (water, in particular)
- affects of lost snowpack
- Etc.
- Peak Oil
- crumbling grid
- lack of personnel
- Peak
- resource wars
- bottlenecks due to infrastructure (decrepit/lack of)
- Peak Other Things
- Lack of Time (Peak Now/Peak Soon See: Hirsch)
- Silence from the political front in the US
- Lack of rapid transit (U.S.)
- Energy price-driven inflation
- French Revolution/Russian Revolution? Down with the monied?
- CO2
- Economic Recession/Collapse
- Ummm how we gonna pay for that?
- deflation
- hyper-inflation
- destruction of the Middle Class (US, other developed nations)
- Wealth/Power ever more concentrated
- increased crime
- tight/no credit
- Resource wars
- Hoarding
- Fear (Blackwater, InfraGard, wiretaps, KBR contract for mulitple Manzanars, No-Fly list, etc. Do you trust YOUR neighbors?)
- Unemployed
- homeless
- systemic collapse
Etc.
Cheers
Sounds like you are saying Peak Oil is a function of personal wealth.
If that is the case, I'll be one of the last to suffer from peak oil since I make more than 93% of US households, according to IRS statistics.
This is really good news. I thought Peak Oil meant I wouldn't be able to fill my Prius because there wasn't anything to fill it with.
With this logic, I would prefer 10 bucks a gallon now, as I suspect that would free up even more lanes for me to drive in. Hell, I'd pay 20 a gallon just to knock 15 minutes off my commute.
Math is a funny thing when misapplied.
I'm demanding a 16oz bar of gold for ten cents. Such is not available, so I guess that the supply of gold does not meet demand.
Not necessarily...If you want the 16oz gold bar enough you will bid more than 10 cents for it (ie, you can resell the gold for a profit or you want to retain it for a store of value or you want to use it to purchase another, more needed, commodity...and, as you haggle with the seller of the gold bar someone that really wants it (much more than you) steps up and out bids you.
Before bidding you need to think through exactly what you are going to do with the gold and what your potential profit will be.
Nonsense! I am offering a one ounce gold bar for $20,000 and I get no takers. Seems to me that there is an oversupply. Of course there is an over supply at $20,000 an ounce and an under supply at $.10 an ounce.
There is absolutely no shortage of $1,000 a barrel oil. There is a severe shortage of $10 a barrel oil. That's how it works. There is a median somewhere in the middle where the price is just high enough to make supply equal demand.
from Answers.com
demand, meaning in economic terms:
.... but a dictators demands would be met without any other questions nor arguments... that's why I hate dictators!
You are not understanding value. It is buyers point of view, not the sellers. Price is based on desire to have, not desire to sell. What the seller wants is irrelevant. What is the bid?
There is no conclusions to be drawn from a sellers desired sell price, particularly when they are unreasonable, and in your case absurd. When price falls there is generally more supply, when price is rising there is generally a perceived undersupply. It is entirely predicated on the buyers point of view.
You are dead wrong. Value was the entire point of my post. The value of any commodity has two inputs, the value to the buyer and the value to the seller. They must come to an agreement. Oil in the ground has value to the seller. It has value for domestic consumption as well as future value that the seller might get for the oil in the future.
It is just absurd to say it is entirely predicated on the buyers point of view. The seller is one half of any buy/sell contract. He is half the equation. If he is not willing to sell for what the potential buyer is willing to pay, then there is no sale. If it was entirely predicated on the buyer then he could simply demand the commodity at his desired price and get it. No, the seller can veto the sale if he does not like the offer. Get real Scotjen, you are talking nonsense.
Ron Patterson
"where the price is just high enough to make supply equal demand."
But that's not good enough.
This isn't wheat. This is the "once in 12 000 years energy source" that will never be again.
"just high enough" brings you "just enough" to take care of what you
have.
There can be no growth with this and must be contraction.
So, again, during this "no growth, contraction" phase,
where will the wealth come from to make supply equal demand.
OR easier, who will do w/o, another form of wealth creation (see Iraq,
New Orleans), so that "supply meets demand" for the rest.
http://www.dieoff.com/page236.htm
"#2. A fundamentally inverted world view: the economist sees the environment as a subsystem of the economy, rather than the other way around. In other words, economists are trained to believe that natural resources come from "markets" rather than the "environment". The historical analogy is Johann Kepler and Tycho Brahe watching the dawn together. Kepler sees the sun come into view as the earth turns; Brahe sees the sun begin its daily journey around a static earth.
The corollary is that economists believe that "man-made capital" can substitute for "natural capital". Nobel Laureate Robert Solow:"... the world can, in effect, get along without natural resources ... at some finite cost, production can be freed of dependence on exhaustible resources altogether... [ 1974 lecture to the American Economic Association cited in p. 117, STEADY-STATE ECONOMICS, Herman E. Daly; Island Press, 1991; http://www.amazon.com/exec/obidos/ASIN/155963071X/brainfood.a ]
But the First Law of thermodynamics tells us there is no "creation" -- there is no such thing as "man-made capital". Thus, ALL capital is "natural capital", and the economy is 100% dependent on the "environment" for everything.
lol re: Solow's comments. Just goes to show what a Nobel Laureate in Economics is worth.
But I do think Solow's been slowly getting schooled:
From "Fear of Fallowing: The specter of a no-growth world" by Steven Stoll, Harper's, March 2008.
Thank you Moe.
or that they would rather use increasing productivity in the form of leisure..."
I can see 25-30 million people in the US in a couple years "Increasing Their Productivity in Leisure Pursuits" without the stigma of a having a job.
So, We're gonna increase our skills of doing nothing?
D@mn, do we need practice?
What I'm thinking is that before 05 the economy's of various countries were not controlled by the availability of oil. You paid a few dollars more and got what you needed, now it is beyond the ability of some countries to find the means to purchase. Demand has driven the price beyond their reach.
I never noticed that before. What a great indicator. Very sharp--thank you.
Dipchip,
I think your comment captures very nicely one of the key end results of the complex nature of the supply demand relationship of oil products. This is something I have been grappling with for some time, and I still do not feel that I have got my head around it.
However I will share where I am on this topic here, in case it is of interest to anyone, and hopefully to get the benefit of other people's insights: (everything below is just IMHO) (all references to gallons are for US gallons, and all prices for gas are the price per US gallon))
1. In any one market (defined more or less by a band of wealth which customers fall into) there is a large price range over which the short term price elasticity of transportation fuel (and of most other uses of oil products) is very low. In other words a significant change in price has remarkably little effect on demand in the short term, over this range. So taking the US as an example, the increase in price of gas from $1 a gallon to $3.50 had remarkably little effect on demand. Equally, if a reduction from $3.50 to $1 were to occur over the next few months, demand in the short term would probably not increase by much.
2. There is a point where, for any particular market, significant increases in price will cause a significant reduction in demand. This is probably the point at which price is beginning to force significant 'unwanted’ and inconvenient but not punitive or damaging short term changes in lifestyle. At a guess, this price point might be in the $5-$7 range for gas for the majority of people in the USA. As the price goes higher a price range begins to be reached, where the short term changes are really painful, as prices increase further the effects are punitive, and the effect on demand is marked. While it is almost impossible to say what this price range might be, a guess would be that it might begin at about $10 in the US, and would be probably be much in evidence at $20. Thus there is in principle a price point for this market at which, and beyond which, demand becomes and continues to be elastic in the short term. Economists must already have a term for this, but let's call it the ‘short term elastic threshold price’. Let’s call the range of prices below this the ‘short term inelastic price range’.
3. I would restate the point you made as follows: the ‘short term elastic threshold price’ is different for different markets (each market being more or less defined by income band). So although $3 a gallon is perhaps below the ‘short term elastic threshold price’ for most people in the USA, it is probably above the ‘short term elastic threshold price’ for significant groups of poorer people in many developing countries. In these countries there will be large groups of people who are reducing the number of kerosene lamps they are using, who are halving their bus travelling, and for whom previously ‘essential’ activities are being curtailed. As the world price of oil goes up, the ‘short term elastic threshold price’ will be exceeded in more and more markets.
4. In the exact sense, as many people are saying, supply and demand are always in balance, with price being the factor which establishes the balance (in the absence of rationing or other forms of 'artificially' controlled distribution))
But I think that in the case of oil product prices, this is also a misleading statement. Apart from the well known temporary crises, for the last five decades (or more?) people in almost all markets have adopted lifestyles where fuel prices have pretty much always been well within the ‘short term inelastic range’.
I think it is fair to say that for any market where, for the first time in people's lives, the changes in worldwide supply and demand force local prices well above the ‘short term elastic threshold price’, the local subjective experience, and arguably the objective experience, is one where 'world oil supplies are no longer meeting demand'.
5. Long term fuel price elasticity appears to be quite different. In the UK, due to high motor fuel taxes, we have been paying $6 for gas as long as I can remember. Presumably this is has over time had a significant effect on our vehicle purchasing choices, and accounts much for the observation that the mpg of cars purchased in the UK is about twice that of cars purchased in the US. It would also now appear that gas at $3.50-$4 is starting to impact US car purchase choices. US gas at $5 might, over a long enough period, have a significant effect on the average mpg of the US vehicle fleet, and thus a significant effect on demand. Thus on this set of guestimates, whilst $3.50 a gallon might be below the typical US ‘short term elastic price threshold’, at this price the market may well exhibit a long term elastic cahnge in demand. My guess is that over a long enough term (e.g. at least the time for replacement most of the local vehicle fleet with new vehicles), oil product price-demand is quite elastic over a very wide range of prices, including the whole of the $1 to $4 a gallon price range experienced in the USA over the severl decades.
6. A minor but still perhaps interesting point is that the ‘short term elastic threshold price’ may be significantly related not only to the wealth band of a particular market, but also to the extent additional factors have habituated that market to a certain price range. Thus in the UK and much (all?) of the EU, taxation has exposed us to 'high' gas prices for decades, and the market has evolved and adapted itself with these sorts of prices in place, a ‘habituation effect’. Thus in the UK , the recent increase in our gas prices, now $8-$9 a US gallon, has had very little short term impact on lifestyles, I would guess far less than the impact of $3-$4 a gallon in the US on US lifestyles. I am just guessing, but I judge that our long-term 'habituation' to higher gas prices means that our ‘short-term elastic threshold price’ is higher here than in the US. Another minor point, in the UK heating oil, and diesel for farmers, has always been relatively untaxed, and so the recent price changes in these products are just as painful for us, as they are in the US.
7. Because of this ‘habituation effect’, I think that governments that have 'artificially' kept gas prices high, have placed their public in a relatively good position to cope with higher world oil prices. People in the UK and Europe may be able to be able to carry on with ‘business as usual’, at oil prices which would already force painful short term changes in the US. Equally, because of the habituation effect, countries which subsidise gas prices are setting up their economies for a worse crisis when the time inevitably comes when they have to give up the subsidies.
In summary I think that the extreme short term inelasticity of demand for oil products, over the range of prices experienced at most times in the period 1960 to 2003, means that recent price levels are such that in some markets customers are beginning to be subject to the experience that 'worldwide supply is no longer meeting demand', and that the higher the prices go, the greater the number of markets for which this is the case.
Mike
Homo Semi-sapiens
Demand has driven the price beyond their reach
That's the "5 guys standing in line to buy a barrel of oil each. One is Bill Gates, a couple average guys, and a couple others. With oil at $30 everybody bought the 1 barrel each, price goes up to $70 and a couple of the guys don't have the money. Bill Gates says, I'll take mine and I'll buy the other guy's barrel since he ain't going to use it...."
Bill will feel the pain last. 3rd world'ers are the first to drop out. As WT and others have postulated, that the trouble starts when there ain't enough people "Dropping Out" fast enough to satisfy the Bigger Player's needs.
Or in another context, We're down to only carnivores left circling the shrinking water hole. Which, within all contexts, means life.
I doesn't quite work like that. For the poorer, they will cut back their lower-value uses, like joyrides on the motorcycle, and pay up for the higher-value uses, like cooking fuel. The US middle class will cut back on lower-value uses, like central heating, and possibly long commutes, and pay up for higher value uses, like electricity to run their personal computer. The richest, like Bill Gates, aren't really subject to price concerns, but they too will reduce their usage, if only because it becomes unfashionable to blow $120,000 on fuel oil to drive their yacht around.
I find it interesting that now that oil has momentarilly dipped down below $100/B, every clown that gives his opinion to some news show talks about the wonderful drop in oil prices! How upsurd! We have ~500% growth in prices in the past few years and every little momentary downtick is a sudden sign that everything will be just fine.
That's exactly the kind of idiocy you want to hear. I bought this morning.
The price had dipped to a predictable bottom, and that was why I bought this morning. We got a confirming buy signal at the close (a simple price signal).
If you've been waiting to make an investment, such as buying into a royalty trust, or something else where you were waiting for a dip, and you know what you're doing, a bet right now on oil prices would have a very strong edge.
Remember, an edge is an edge, not a guarantee. Also, I am not an investment advisor.
I filled a limit order for PBR (Petrobras) but not a second order.
The best oil company buy ATM IMVHO.
Alan
Good and helpful calls on the recent short-term tops and bottoms for crude, Moe. You seem to be able to take the emotional factors out of the equation well.
Don't believe in either belief or dis-belief.
Was that a statement or a suggestion?
Inherently, there is nothing wrong with belief. Beliefs usually have reasons. If the reasons behind a belief are sound, and the argument is sound, and it resonates with your personal experience, you will be helpless to believe otherwise.
I believe in entropy, inertia, conservation of mass, thermodynamics, gravity, electromagnetism, and complexity because the reasons and supporting evidence are sound, the proofs are sound and have been tested and verified myriads of times under the dictatorship of the scientific method, and because I have also experienced all of these personally.
Put another way, the story of science is so compelling to me, I can't deny it.
Belief without reasoned examination is usually called "faith" or "wishing it were so".
Put another way, most of the stories of most salvationist religions are contradictory, one-dimensional, barbarous, unverifiable, and completely lack resonance in regards to interactions with the living world.
Don't believe in wishing or faith.
No 79 virgins for you.
There are some amongst us who think this whole virginity thing way over rated ;-)
Yeah, but, but.. 'If you choose not to decide, you still have made a choice..'
(Because Oz never did give nothin' to the Tin Man that he didn't didn't already have!)
Couple of good articles in today's WSJ.
Costly Fuel, Economic Woes Weigh Down U.S. Airlines
White House Sets Long View on Oil (by Neil King Jr.)
Why all the concern for airlines? Yes, it is important for business travelers to reach their destinations quickly, sometimes, but how many business flights are absolute musts? When I was young none of my contempories had ever taken a flight on an airline yet many managed to 'see the USA, in a Chevrolet' as the adds on Dinah Shore Variety tv advocated. Flying is not vital for wealth accumulation...One of the ten richest men in the SE US never traveled out of the county he was born in and never got on an airplane in his life. Flying was a transport option for the wealthy and perhaps it will be so again. Of course a reduction in cheap air transport will impact tourist destinations but all businesses, and individuals, are going to be impacted by more expensive FFs.
Of equal or more importance, but much less glamorous, is what is happening to the trucking industry. Fuel costs are causing independent drivers to park their rigs and some drivers have advised the banks to 'come get the rig'...a type of 'jingle mail' that is flying under the radar. Independent drivers have so far been unable to pass on the costs of rapidly rising diesel to consumers. Large trucking companies have mitigated costs somewhat by buying large quantities of diesel when prices dip. How will the loss of trucking effect prices of 'must have' consumer commodities...like food? I believe that a contraction in trucking is as detrimental to the economy, or more so, than airline contraction.
At the grocery store, standing in the flour aisle looking at my favorite regional brand...
Last year $1.79 for 10#
Last weeK $4.39 for 10#
This morning $6.59 for 10#
The lady next to me looked at the flour, looked at me. She said:
"It's the diesel."
I kid you not.
Hi Will
Great comment.
In my career, I found that the vast majority of trips could have been handled by video conferencing or a conference call. But people got on the plane at the drop of a hat. Seems like it gave them a feeling of importance or maybe they just wanted to get away from their spouses.
The impact:
At our local Sams Club for many years (8) they would buy a truckload of bananas every week and sell them prepackaged for 99c for 3 lbs. They typically sold 10% of their bananas. The rest rotted and were disposed and replaced with a fresh truckload.
For the past 12 months prices are up to 1.19 for 3 lbs - that is 1.5% annualized over the past 10 years. The weekly supply is now 1/5 of a truckload, and they are wasting maybe 25%.
Let us pray for $10/gallon diesel so that they are forced to ship less and we waste only 5%.
Yeah. I work in retail and I see this a lot. It's amazing how much perishable stuff is trucked in just to make the shelves look full and then thrown away when the holiday it's marketed for is over. It's so wasteful, but it's sanctioned in this consumer-driven economy that we have. And they don't even compost!
You know, I am a Democrat, but I have to say I respect the Bush administration for telling the truth about this, even though they're late and helped screw things up along the way to this point.
They are increasingly moving toward making an explicit case that staying in the Iraq is necessary to maintain access to and/or control of oil reserves in the Middle East, i.e., Bush & Cheney, IMO, have gradually been tiptoeing out of the Peak Oil closet.
The tiptoeing is being done very cautiously. One could see it in the latest Natl Geographic TV Documentary about oil extraction in Alaska. Inserted into the middle of scenes of pristine Alaska habitat were short flashes of soldiers standing in front of raging oil field fires (looked like the Kuwaiti fields burning in the first Gulf War). Really hellish desert scenes, the surrounding sands blackened and smoke obscuring almost all background. The message was subtle but it was there.
I flew over the Kuwait fields in early "92. AT 30,000 FT, a sight I will never forget. A nightmare at 1 am local time. So much waste....so much stupidity.
BZ
I wonder when the USA is finally going to drop the pretenses, and just admit that we went into Iraq for the oil. I'm not hearing that yet. Just yesterday on the 5th anniversary of the US invasion of Iraq, Bush gave another deceptive speech saying that we're in Iraq to protect ourselves from the same kind of terrorists who attacked us on 9/11. Gee, and I thought that we were there to find non-existent weapons of mass destruction. Or was it because we want to bring "freedom and democracy" to the Iraqi people.
I wish somebody would inject Bush with sodium pentathol just before he gives one of his speeches. Now that would be one speech I wouldn't want to miss.
Uhhh...now we seem to be remaining in Iraq in part
http://blogs.chron.com/txpotomac/2008/03/text_of_president_bushs_speech....
It's the (world) economy stupid.
Not that there isn't possibly a shred of truth in that. Amazing how can you take credit for preventing something that might happen due to the unwise decisions you made - oh - five years ago.
Pete
You know, it was not that long ago that there was an embargo on Iraq, preventing them from selling their oil on the world market, which is what they wanted to do.
It's not about the oil. The oil was always going to be sold on the world market. It's about what happens to the MONEY that comes from selling the oil.
Also from the WSJ:
http://online.wsj.com/article/SB120597773713950721.html?mod=todays_us_pa...
A Run on Banks: Food Charities Feel the Pinch
Food banks and soup kitchens are being forced to make up for a loss of government-provided surplus items as more people struggling with mortgage woes, rising gas prices and layoffs turn to them for help.
ELP Plan (April, 2007)
http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-prod...
OMFG, too sick.
Post it everywhere. ;}
Inspired my blog today:
http://www.energyfarms.net/node/1506
I saw this today, had a morbid laugh, then got pensive.
(cartoonists web site: http://www.ibdeditorials.com/cartoons.aspx#cararch)
A couple of years ago, biofuels were hot. There were the promoters touting "green" fuels, getting off "foreign oil" and helping "American farmers." A perfect set of environmental, geopolitical and populist allies created a basket of incentives to boost corn-based ethanol production.
A few of us were decrying this as bad policy. The net energy of ethanol was around break even, so it couldn't be climate neutral or help with oil dependency. The rise in food prices would impact the poor around the world, causing much pain and unrest that could destabilize nations. And American farmers would go through another painful boom-bust cycle rather than transition to a sustainable agriculture system that is realistic about energy constraints.
Other issues are exposed by this fiasco. Why is it that so many people ARE dependent on cheap, often imported grains (especially in Africa)? Some have ridiculed the local food movement for potentially depriving farmers in the developing world of their markets in the wealthy nations. But if these developing nations are ones who can't feed themselves, shouldn't we ask if it might be better for them to focus on food self-sufficiency rather than production for export? Especially if our energy and financial policies can cut them off from our food so blithely.
Take a look at not only corn in the fuel tank, but coffee, tea, coconuts, palm oil, cane sugar, papayas, bananas, out of season vegetables, etc. All these tropical products may be produced in places dependent upon trade for money that is used to buy imported staples such as grains. What if they decided to relocalize instead? Would they be better off?
Anyone? Anyone? ... ... ... Khosla?
UNREAL! The guy in the suit would NEVER say "Excuse Me"
it's not unreal. it's the core of politics and (american) businessman, ripping everyone else while having nice shiny smiles and saying "thank you".
this needs spreading
Takinf food for fuel isn't businessmens fault. In the US its an alliance betweent the Greens and the farm states lobby. In Europe its the greens lobby getting the Brussels beaurocrats to decree that all Europes fuel must be 10% renewable by 2020. Why would business get involved with somthing which will cost them more to produce than they can sell it for?. You are aiming at the wrong target. Whatever the sins of business biofuels arn't one of them.
I would agree with that statement if you substitute "agribusiness" for "greens". I consider myself "green", and I am strongly opposed to corn for ethanol. I do not know a single environmentalist that is in favor of the program. ADM, however, loves it.
you can blame anyone in this mess :). the government, the final consumer, the business, they all have ther fair share of the blame.
If the american businesses have built cars like europeans and japanese, diesels that easily get 50mpg highway / 30city, then biofuels wouldn't have been such a big issue. corporate greed killed a lot of innovation
The guy in the suit is any American consumer who drives a car.
Bullshit, bullshit, bullshit. Few if any environmentalists in the U.S. are for ethanol fuels. I certainly am not. Environmentalists take into account fossil fuel inputs and the impacts on soil and water resources and food supplies and consider it a dangerously counterproductive move. It is big agribusiness who love corn-based ethanol.
Hi, Cosgrove.
Unfortunately, there were many of my colleagues who at one time were pushing biofuels as a lower carbon solution to diesel and gasoline. When it started to become clear that biofuels had unfortunate consequences, the justification then became that corn-based ethanol was a stepping stone to cellulosic ethanol, which wouldn't require the best arable land, wouldn't require as much fertilizer input, etc. You'll still hear this rationale.
Of course putting fuel into competition for food is a terrible idea because the market needs to be considered as a whole -- the farmer can make the most money selling their food crop (of any sort) to the highest bidder and if they have to take corn out of production to start growing switchgrass, say, they will do that. It's far easier and likely economic to do that than attempting to grow a new crop that might need new harvesting equipment for the farmer on marginal land -- such land that they may or may not yet have access to (path of least resistance).
-André
In Europe the farm lobby is even more powerful than it is in the US. Thats why food is so expensive here compared to the US. When the Eurocrats made that commitment to 10% biofuels they didn't give a minutes thought to where the extra crops were going to come from. Or that biofuels use as much oil to make them as they save. I suppose it was farmers welfare with a green vaneer.
That green veneer is not painted by the greens. BP used it for a while, ADM is masterful at sidling up to the 'Wholesome Healthy' crowd and looking innocent and sweet.. but read the label, it's really HFCS, not love of Gaia.
*high fructose corn syrup
I'd say it's Corporate welfare with Greenbacks. But keep trying.
Bob
Now don't go equating all biofuels with corn ethanol. The EROEI of biodiesel is roughly 3:1 or 4 times better than corn ethanol. Not all biodiesel feedstocks are equal either WRT displacing food production. Removing the oil from soybeans still leaves all the protein intact for use in food products. Jatropha bushes can reduce wind erosion in arid regions and therefore can increase food production. Anaerobic digesters produce both fuel and high quality fertilizer by using waste products thereby creating value from parts of plants not suitable for food. Firewood is still the most common of all biofuels as is the charcoal used by our summer grills. Some things are just too complicated for those who prefer ideology over facts.
Where I live in Spain, food - particularly fresh food - is drastically LESS expensive than where I used to live in California.
http://energyanswers.blogspot.com/2006/01/greenpeace-supports-cellulosic...
http://blogues.greenpeace.ca/2007/08/16/ethanol-mais-la-%C2%AB-ecologica...
http://members.greenpeace.org/phpBB2/viewtopic.php?t=338
http://forum.greenpeace.org/int/showthread.php?t=3916
Just as a few for-instances. The "green movement" as a whole most certainly *did* support ethanol production. At least back before the inevitable unintended consequences became obvious. This does not imply that many of those who regularly read TOD supported it. But to deny the green push toward green fuels is ludicrous.
Why did you leave out the Feminazis?
do you have a link to a jpg or site? this one's getting forwarded to everyone in the in-box.
The cartoon is from Michael Ramirez over at IBD. Here's the main link to the site: http://www.ibdeditorials.com/cartoons.aspx#cararch
(though I cannot seem to find the exact day of publication to link to...anyone know?)
The date is October 30, 2007, via this batch of thumbnails. (The resolution of these "originals" seems to be poorer, though - strange.) One might not have expected it to be greatly older, since the (partial) turning of the ethanol tide (in any mainstream sense) is fairly recent.
Edit - direct link.
just right-click any image and click "open image", there you go, the link is shown in the URL-window in your browser. Alternative, right-click select properties....
I think everyone is missing the true point of the cartoon, though the cartoonist probably did not think of it either.
The problem isn't taking food from hungry people for autofuels. The problem is this depicts very clearly that there are too many mouths to feed on the planet, and food production cannot meet the demand. If there was more than enough land and huge surpluses of food the issue of turning it into fuels would not be an issue. But it is an issue because the human population is so far over the planet's carrying capacity that turning food into fuel exposes that reality.
Prepare for world wide starvation on mass.
"food production cannot meet the demand. If there was more than enough land and huge surpluses of food the issue of turning it into fuels would not be an issue. But it is an issue because the human population is so far over the planet's carrying capacity"
Is this really true?
I keep reading stories on line about people growing all there food in their suburban back yards, are those stories wrong?
Seems to me there is lots of land we could grow food on, beside roads, playing fields, shopping malls and offices all have gardens growing nothing we eat.
Is it really true that if we cultivated all this land we could not feed the world?
In temperate climates you need 1 acre of land for each person. Back yard "farms" won't cut it. Do the math for your area. I did for mine, London, Ont. We would need an area 35 miles in radius, which overlaps other near by cities, and this does not include having to grow food for the "Golden Horseshoe" (Toronto to Hamilton). Thus Southern Ontario does not have enough land to grow food for the current population. Don't forget not only land to grow for direct consumption, but land to grow food for animals as we are going to soon need many more horses. It also means no fresh foods for 9 months of the year save for meats and eggs.
The only reason we have the volume of food we have today is because of oil. Once in depletion there is no way we can feed our current population. We are witnessing the beginning of the greatest cull of humans.
Actually I think (quaintly?) that taking food out of hungry mouths is a problem.
Over population is a problem but not the only one. Why would I bother with such a quibble? Because your phrasing is tailor made for all us comfortable folks to give ourselves a complete moral exoneration. To many mouths to feed, throw up hands and jump in car to go get a double cheese burger.
No. Structuring a system that prices food out of the mouths of hungry people so that others can keep "happy motoring" is a morally wrong. Period. (I do not ascribe this motivation to jrwakefield)
Question for you then. What is the percent of fuel alcohol produced compared with ingestable alcohol produced? I suspect there is much more ingestable alcohol produced. Thus is you think it is morally wrong to grow food for fuel just to feed our cars, then it too must be just as morally wrong to grow food just to make beer.
When oil hits $1000 per barrel and higher, which is just around the corner, and could be here tomorrow with the right mix of world problems, the cost of coal will increase too. A lot of oil goes in to mining and transporting coal. And if the gas stations are closed, how will mining trucks get diesel, and how will miners and train personnel get to work? And if we can't transport coal, then we don't generate electric power, and then nearly everything goes out, including home heating. Just what will happen when the northern part of the nation has no heating for just a month in winter? As surely as Peak Oil is a geological fact, this will happen.
Waaaah!! I miss my Leanan. Well, at least she won't be taken for granted.
Amen. Since discovering The Oil Drum, the daily DrumBeat has been my morning paper.
Me to! Hurry home Leanan! We are in withdrawal...No posts by you to get us started in the right direction. We are milling about, aimlessly.
Let Leanan enjoy spring training. She deserves a break. :)
Yes, Prof. Goose, she deserves a break.
But she IS missed!
I love her contributions to this board. I look forward to her stuff every morning, and miss it when its not there.
Steve
While I appreciate Leanan's contributions as much as the next person, this might be a good time to explore emergent self-organization, instead of always relying on hierarchy.
But I do anticipate Leanan's return.
Now now - lets focus not on whining but solutions - who wants to pick up where she left off for a few days
....anyone?....
Oh - me? - "whine"
*boggle* Helpful Governments
http://econ.worldbank.org/external/default/main?pagePK=64165259&theSiteP...
A low-carbon world
http://www.unep.org/labour_environment/PDFs/Green-Jobs-Preliminary-Repor...
Climate Change Report Buried by DOT; Author Blocked From Reporters
http://www.whistleblower.org/content/press_detail.cfm?press_id=1334&keyw...
And this would never make the cut for the top with L...
A new report by consumer advocacy group Food & Water Watch arms consumers with the facts about a major player in the meat business, Smithfield Foods.
http://www.foodandwaterwatch.org/press/releases/new-report-highlights-th...
AN INDUSTRY RUNNING ON FUMES: As soybean prices rise, hopes for biodiesel fall
And of course TPTB had this from the get go.
Negative EROEI doesn't go positive on a bigger scale.
Another waste of capital.
That for sure, but maybe they can hammer the steel onsite to build cubic footage for storing I-NPK for my 'Federal Reserve Banks of I-NPK' suggestion. IMO, these spots of land are already optimally placed in the ideal, centralized locations for my non-FF powered SpiderWebRiding Networks. :)
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
totoneila, you're in Phoenix, I'm in Vegas. What are we gonna do for water in about 6 years?
Move to New Orleans ?
Sources of potable water are not one of our problems :-)
Alan
From the Frying Pan into the Gumbo Pot, huh? Sounds tasty.
Hello Moe_Gamble,
Sorry for the late reply, but I had run some errands and go to the dentist.
Gotta have healthy teeth so I can on-the-run-->chew Jumping Cholla, Cacti, and Cresote Bush, while dodging deathsquads that will want to force me into a desert Deathmarch under the blazing summer sun. :(
For water, maybe moisture-recycling suits like in Frank Herbert's book, 'Dune' will be the desired desert fashion.
But I think what is more likely is that eventually people will postPeak realize that the natural watershed boundaries needs to be the basis of demarcation and lifestyle organization, not the crazy, arbitrary boundaries we currently have that are politically derived.
Making a boundary the middle of a river is just asking for future conflict when water gets scarce [Ex: CA/AZ border], and pumping water uphill to money won't last without plentiful energy. So, I would eventually expect an eventual return to the old Western Water-Wars [Whiskey is for drinking, water is for fighting] once the legions of water-rights lawyers cannot agree to compromise anymore.
Map of Colorado River Basin [scroll down a little]:
http://geochange.er.usgs.gov/sw/changes/natural/codrought/
As you can see from the dotted redline in the graphic: a very small part of CA's terrain contributes a vanishingly small part of runoff water to the river, but the state takes a lion's share of the total flow. Which was fine back in the days of low pop. and cheap energy, but this will not work at some future postPeak tipping point. My speculation is that this could get really ugly because nothing is more precious than cool, clean water.
The Sea of Cortez and the Mexican Colorado Delta ecosystems have been profoundly affected by the reduced flows, and the upstream states are already highly agitated that the snowmelt from the western side of the Rockies must be allowed to flow downstream. IMO, these facts combined with Mexico's collapse, climate change, Overshoot, and other dire Peak Everything effects will lead to a huge clusterf**k. As posted before: I expect a huge migration to Cascadia and other places that get more moisture.
The question is whether those currently there will welcome a multi-million people invasion; we already know that the people around the Great Lakes won't condone their water being pumped south, even if a Mr. Fusion can be bought at Wal-mart for $100 bucks.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Somehow they put up with the Chicago River sucking water from Lake MIchigan so the area's sewage can flow toward's the Mississippi. What we objected to is pumping water from Lake Superior up to the Wyoming coal fields for a slurry pipeline to Midwest powerplants. Lakes Superior, Michigan, and Huron have seen their levels drop in recent years possibly due to climate change so the water may not be there to share.
Hello Thomas Deplume,
Thxs for responding with more info. Maybe someday us humans will learn that controlling our headcount to easily live within the environment is key, but I am doubtful. I even think there was plans at one time to pipeline-pump Columbia River water from WA to CA/NV, besides towing Antarctic icebergs to the global cities for water-harvesting. Voluntary vasectomies would be much cheaper and take a hell of a lot less energy.
Well Bob,
The truth is that Californians (and others) have already pretty much outnumbered the locals in Oregon. Anytime I was in a group the recent arrivals vastly outnumbered the natives. At some point it doesn't matter what the Cascadians think, because they are far outnumbered.
However, since I have recently moved back to coastal CA, (Thank God!) they can all have the dreary, grey, cold endless drizzle for themselves.
You know - how effective are the native Americans these days in stopping the gringo's from having their way?
Soybeans are a lousy biodiesel feedstock. Rapeseed (canola) or sunflowers yield much better.
Anyone have any cost analysis for these?
Here is a comment I made a week ago.
How will Minnesota maintain its mandated and increasing bio-diesel blend?
Soy beans $12.70 and 60 pounds per bushel
Soy meal is $308 per ton 3-20-08
Meal is 44 pounds per bushel
Meal is 45 bushels per ton
Oil is 18% by weight
Oil is 11 pounds per bushel
SB Bio-diesel is 8.8 pounds per bushel 80% yield
SB Bio-diesel is 1.3 gallons per bushel
SB meal is $5.21 per gallon
At $12.7 beans are $9.77 per gallon
Add 70 cents for processing, facilities, labor etc.
977+70-521=526
Can you sell Bio-Diesel for $5.26? Not when the pump price for #2 diesel is $4. Then add taxes and subtract the subsidy.
Perhaps another oil crop can be found. I suspect all grain price increases to rise faster than oil in the future. It sure has in the past 12 months.
Oil extraction cost trumps reserves
Andrew416 comments: "The worry is that today's spending is not delivering many more barrels, just more expensive barrels. The cheap barrels are out of reach in Iraq, Iran and Russia. It's not peak oil we have to worry about but oil inflation"
It's a strange method of dealing with energy security when we deplete our own reserves, deplete our friends reserves, deplete the remaining willing sellers and then who's left? Depleting our enemies? That doesn't seem like oil inflation but rather a desperate and irrational method of getting energy that results in a natural progression toward no one having enough fossil fuels to get comfortably by.
It used to be called "drain America first".
Bizarre ... oil price inflation is the very essence of peak oil ...
Peak oil production of an individual well is caused by geology ...
Peaking production of an oil field, country or the world is caused by the need for the wells, in total, to make a PROFIT ...
If there is enough profit at any particular price more wells will be brought into production and supply will increase ... if it maximised profits the oil companies would put in a well every few feet!
There are still huge amounts of oil in the world, but if it is exploited to maximise profits the 'net export' flow rates don't meet that needed for BAU let alone growth.
Sadly, it looks like the demand for conventional crude at ~$100 a barrel is past peak and the oil producers won't or can't sell it for less. That probably means the end of economic growth in some parts of the world and things in those countries, like pensions, that depend on growth.
On BNN today talking about Oil below $100, this one analyst said that this is a temporary drop and prices will soon hit $120. When queried as to why. His answer "disconnect between supply and demand." Though the others on the panel expected oil to drop because of dropping demand due to the US resession, this guy disagreed and bascially said that supply was the problem.
Purely anecdotal - A 30 something (year old) gal came into my shop the other day and ordered, setting her purse and a book on the counter.
The book was Investing for Dummies.
I said “well that sounds appropriate”
She giggled and said, “yea, I’m so excited. I’ve been wanting to start investing for a while now and I recently got layed off so now I’m just going to focus on this. I’m not even looking for a job.”
She said she knows tons of people who work from home investing.
Makes me wonder how many nation wide are trying to work this.
I decided I would not say anything more to her as it would be a bit of a Pandora’s Box so I just gave her the Posole and took her money.
Sounds like a day-trader from the late 1990's. It surprises me that there are people that still think that they can do this.
It reminds me a bit of a line Woody Allen had in a movie once. His character was a financial planner, and he said that he "managed other people's money until they didn't have any more".
Yeah, but you can do it. The reason I keep posting trading things here is because I want the people here to know they have this way to hedge for the future and to earn money if they get laid off.
Moe, don't know if you have seen this one regarding Citi...As Mish said these comments by Citi anylists come as close as we will ever see...to a bank putting a sell rating on itself.
The Great Unwind
'In a better late than never message Citigroup warns The Great Unwind Has Begun.'
'The Great Unwind has begun, Citigroup Inc. strategists warned on Wednesday.'
'As markets and economies de-leverage across the globe, investors should avoid companies and countries that have grown to rely too much on borrowed money, they said.'
'"The banks have a long way to go," the strategists said. "We would continue to avoid the sector while they are de-leveraging."
"We are now confronted by a broad bloodbath in the credit markets," Citigroup said. " The most leveraged paper is falling in value because it is leveraged, and now the least leveraged paper is also falling in value because it is owned by leveraged investors."
Investors should also avoid hedge funds themselves, along with private equity, Citi added. Both types of investment rely at least partly on borrowed money to generate returns.
"The U.S. shows up as the world's greatest consumer of external capital," Citi noted. So it "has the most to lose as this capital becomes less freely available.'
complete comments at: http://globaleconomicanalysis.blogspot.com/
Thanks, River.
Here's the thing though. When a group like Citi puts out a piece like this with all this fanfare, why are they doing it? To be honest and helpful? No. What's the play?
Yes, you are right. I am also a huge skeptic and wonder about motivations constantly. Right now I haven't figured what the upside is for Citi to come out with a sell recommendation on themsleves and all leveraged entities. It is the 'mulling over' process and the 'aha' moments that makes the game fascinating.
At first sight it appears that they are trying to attract shorts to the financial sectors...Of course, they could be employing the old reverse psychology scheme. Since I am not notable for my trading prowess I will think about it some more...then, probably make the wrong move. :)
Maybe they've got some hedge funds they want to pick off like Bear Sterns.
Maybe they want a shot at $30B or so before going down?
cfm in Gray, ME
But it's like saying you can become an electrical engineer.
"Selling a soybean contract short is worth two years at the Harvard Business School." -- Robert Stovall.
Only after all debt is eliminated, should people even think they can do this.
People definitely have to save up some money to be professional traders. But it's a lot easier than electrical engineering.
Look at what you're saying, Moe.
"have to save up some money".
This lady/potential trader doesn't have a job.
"But it's a lot easier than electrical engineering."
I don't know about that.
An EE out of college can make $45 000 per year.
What are the odds this lady can do 4 years in the pits, survive and make
$45 000 per year.
Nil, if she's reading Investing for Dummies.
But a number of the people hanging around here could do it. I don't think it's a mass solution. It's not like the entire world is going to make a living trading commodities with the rest of the entire world.
It's more of a solution for friends around here who clearly have the intelligence for it and probably have sufficient money to get started or to at least improve whatever they're currently doing with whatever money they have.
People can pick up the essentials with a few good books. Curtis Faith's Way of the Turtle is an excellent introduction to system trading, system design, and bankroll management. Victor Sperandeo's Principles of Professional Speculation and Methods of a Wall Street Master should be read by anyone interested in trading. There's a solid introduction to price signals in Timing Techniques for Commodity Futures Markets by Colin Alexander.
There's this huge mystique about trading, and most of the mystique is complete b.s.
Thanks for the recommendations, Moe :)
Thanks Moe,
You seem to bring a level of reality to the trading discussions here.
Are you thinking about another Turtle experiment using TOD population?
More seriously - for those who really want to know what drives markets, I would offer Jesse Livermore and his autobiographical Reminiscences of a Stock Operator ostensibly authored by Edwin Lefevre but later found to have been penned by Livermore himself.
Livermore, of course, was arguably the greatest trader to walk down Wall Street,
"Experience has taught me that the way a market behaves is an excellent guide for an operator to follow. It is like taking a patient's temperature and pulse or noting the colour of the
eyeballs and the coating of the tongue."
An old broker told me that playing the market is gambling. He advised investing in companies based on sound fundamentals. If you wanted to gamble go to the track. He owned a few race horses.
Wow, you treat your customers harshly.
I was intending to follow up by pointing out how all the investors in Bear Sterns, Enron, WorldCOm, etc. must have read that book.
Got me to thinking...maybe there is a market for a book titled "Peak Oil for Dummies".
Pete
Since the dummies get their information from TV (or talking to each other on their cell phones), a book probably wouldn't get thru to them. It's easy to dismiss a book, since they have little emotional impact. However, there are some DVD's out which might, such as "Crude Awakening". Al Gore's lecture/movie "An Inconvenient Truth" has produced a wide impact, even though there were some minor errors in it.
E. Swanson
If there was, there would probably not be a need for this site..
Bob
haha
"NO SOUP FOR YOU!"
*cough* SKF *cough*
(disclaimer -- do not mess with this fund unless you really know what you're doing)
My retirement funds have taken a hit this week. But as a result of reading here and related blogs over the last couple years, I'm not freaking out and selling everything. I anticipate that my bearish bets will rise in the not so distant future, on news that has not yet been announced, but is an inevitable consequence of our recent history.
This story reminds of of the part in JHK's The Long Emergency about how America has transformed from a nation of people who believe in working hard and that you can't get something for nothing into a nation of free-lunchers. This is the perfect expression of that. Before we would make the wave, now we just try to ride it.
You can work hard
AND
ride the wave.
Commodities: Latest Boom, Plentiful Risk
And this graphic:
http://www.nytimes.com/imagepages/2008/03/20/business/20080320_COMMODITI...
The article doesn't make the argument that commodities speculation has had a significant impact on oil prices, but I think the evidence is there.
I've been used to thinking about a fall in oil prices caused by recession-induced demand destruction. But what about a major fall in oil prices precipitated by the financial market downturn/liquidity crisis? (I know: you say tomato, I say tomahto). Based on the graph for the growth in assets under management in commodity funds, and the way the commodities markets have been connected to the equities markets through ETF's, this seems very plausible.
There's been a growth in assets in commodity funds, but that doesn't mean this money is all going into longs.
There's also been an enormous increase in speculators going short.
What you need to know to evaluate the claim that speculators are causing the commodities boom is the net spec longs and net commercial shorts. You find this information posted weekly at: http://www.cftc.gov/marketreports/commitmentsoftraders/index.htm . But it's no good just looking at the numbers for any one week. You have to track these numbers over a long period (at least a year) to know what normal levels are, and when numbers are getting excessive.
Net spec longs in oil have been high, but no higher than they were in August 2007 as the price was approaching $78.
The increase in spec money will have no effect on prices other than making the markets more liquid. Commercial interests want spec money in the market. The purpose of speculators in the markets is to absorb price risk that producers don't want to take. Producers actually pay speculators to absorb these risks. For example, backwardation is really a premium paid to speculators to absorb price risk when prices are "high." Contago is a premium paid to speculators to sell when producers believe the price will go up.
Rest assured that I will not be doing that. But I do appreciate the link and the insight into commodity price hedging.
kenny, here are some numbers for you:
On 7/31/07, commercial traders were net short on WTI by 119,688 contracts. Large speculators were net long by 127,491 contracts. (The difference was made up by non-reportables--smaller speculators.)
That was the biggest extreme in at least the past five years.
On 1/8/08, the large speculators were net long by 94,923 contracts, while the commercial traders were net short by 100,506 contracts. That was the start of the January crunch from over $100 to $86ish.
On 3/11/08, large speculators were net long by 113,307 contracts, while commercial traders were net short by 97,231 contracts. This was before the crunch down from $110ish to $98ish. So, it was high, but not a record. It wasn't speculators who drove the price from $78ish at the high in August 07 to $110ish at the high in March 08.
Even if you look at total open interest in WTI contracts, it was higher in July 07 than it is now: 1,521,327 WTI contracts in July 07 versus 1,484,417 now.
M_G, thanks for taking the time to give me a remedial lesson in this stuff. I went back to the CFTC site and am learning how to read these tables for the first time. Exciting stuff, and an eye opener.
FWIW, William Calvin's new book "Global Fever: How to treat climate change" is now shipping from Amazon. With the caveat that I'm only to chapter 3, his previous books are good reads and this one looks to be as well. He has posted the table of contents on-line and will upload the full text.
Japan to Pay Billions to Cut Emissions
Let's see - that's $50 billion a year, or about 1% of their GNP. Not bad! A much better investment than buying hundreds of billions in evaporating dollars to prop up the American empire.
Weekly NG storage report:
Summary
Working gas in storage was 1,313 Bcf as of Friday, March 14, 2008, according to EIA estimates. This represents a net decline of 85 Bcf from the previous week. Stocks were 215 Bcf less than last year at this time and 29 Bcf above the 5-year average of 1,284 Bcf. In the East Region, stocks were 14 Bcf above the 5-year average following net withdrawals of 66 Bcf. Stocks in the Producing Region were 33 Bcf above the 5-year average of 457 Bcf after a net withdrawal of 22 Bcf. Stocks in the West Region were 19 Bcf below the 5-year average after a net addition of 3 Bcf. At 1,313 Bcf, total working gas is within the 5-year historical range.
Do we have any kind of decent number on how much natural gas is going into producing ethanol?
Yes I lost track of my ref. For plants using NG as an energy source for distillation, it's about 1 million Btu's per 20 gallons of ethanol.
Thank you. And the last thing I read said we were adding 5 billion gallons of ethanol capacity in the first six months of this year.
Do we have any kind of decent number on how much natural gas is going into producing ethanol?
Moe, I put something about this in the ethanol FAQ I still haven't managed to finish. This comes from Ethanol Producer Magazine:
http://www.ethanolproducer.com/article.jsp?article_id=2544
I have been warning about this for a long time. The people who think Big Oil is trying to block ethanol must not realize that the same Big Oil makes most of the natural gas. They are laughing all the way to the bank as the ethanol industry drives up natural gas prices.
I saw a story last year where ethanol producers were arguing that they needed cheaper natural gas supplies from Alaska to remain competitive. Sounds renewable, eh?
Thank you very much, Robert, especially for answering from India.
Hi Robert,
This story is a bit old by now (December 2006). Here's an interesting comment about using biomass instead of NG.
I also noticed mention of, methane digesters to provide some of the methane. Do you have any thoughts about more recent trends in the use of biomass to provide the energy to power the ethanol plants?
E. Swanson
Mideast Purim War?
Israel's intelligence community has gained possession of fragments of information hinting at plans for a Hezbollah revenge attack in coordination with Iran and Syria. Although this intelligence is partial and unfocused, it was enough to send into high alert troops of the Israel Defense Forces at the northern border.
http://www.haaretz.com/hasen/spages/966023.html
The Purim holiday coincides with the end of a 40-day mourning period for Hezbollah commander Imad Mughniyeh, who was killed in a car bombing in Syria last month. Israel has denied involvement, but the Lebanese guerrilla group has blamed Israel and vowed revenge.
The 40-day mourning period ends Saturday.
http://www.iht.com/articles/ap/2008/03/19/africa/ME-GEN-Israel-Palestini...
There is a Jewish Holiday, Purim, that commemorates the deliverance of Persian Jews from a great and evil oppressor, not unlike the evil current day oppressor and hater, in the same place and in the same land.
As recounted in the Book of Esther, in that time, the King appointed a regent, Haman, who publicly announced that he would eradicate the Jews.
The people, he said, would take up arms and would eliminate the Jews, once and for all. The Regent, Haman, believed that if he could intoxicate the people of Persia with hate for the Jews, they would not see the path of destruction the Kingdom was to unleash in the quest for more power and a greater empire. The peace of the nation would be shaken as they were led from a time of quiet into a time of upheaval.
He casts lots to choose the date on which to do this - the thirteenth of the month of Adar. That's today.
As in days of old, Iran is once more threatening the People and House of Israel.
http://sigcarlfred.blogspot.com/2006/02/iran-bomb-and-purim-holiday.html
Israeli air strike on Gaza
Israel's air force has attacked a group of Islamic Jihad militants in the northern Gaza Strip, wounding three of them as well as a bystander, the faction and hospital officials said.
An Israeli military spokesman confirmed the air strike in the town of Beit Lahiya, saying it targeted two senior Islamic Jihad members who had been involved in cross-border rocket fire.
Islamic Jihad resumed its salvoes against the Jewish state last week after Israeli troops killed four of its members in the occupied West Bank.
http://tvnz.co.nz/view/page/411366/1646654
Egyptians again cancel trip to Israel
Egyptian intelligence chief Gen. Omar Suleiman Tuesday delayed a trip to Israel alleging Israel's "lack of commitment" to end the conflict in Gaza.
http://www.upi.com/NewsTrack/Top_News/2008/03/18/egyptians_again_cancel_...
Israel Denies Warship Entered Lebanese Waters
Israel denied claims by the Lebanese army that one of its warships had briefly entered Lebanese territorial waters and was intercepted by an Italian ship operating there as part of the UN peacekeeping force.
http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080318%5cACQRTT...
some of the missiles Iran transfered to Hezbollah have a maximum range of 300 kilometers, "capable of reaching the Dimona area from Beirut." According to intelligence so far available to Israel, the maximum range of missiles in Hezbollah's arsenal had been 250 kilometers.
Beiditz said that the missiles currently in Hezbollah's possession are more accurate and capable of carrying larger warheads.
http://www.haaretz.com/hasen/spages/961107.html
The only concrete threats I'm aware of are Israel's threatening to attack Iran.
Ahmadinejad made a statement some months ago which said, in effect, "the state of Israel shouldn't exist". This was mistranslated by a partisan Israeli group as "Israel should be wiped off the face of the map." This mistranslation was broadcast far and wide and even entered into the Congressional Record. When Dennis Kucinich tried to get an accurate translation by Farsi scholars entered into the record, it was voted down. AIPAC has a long arm and a powerful lobby. In any case, Ahmadinejad has zero influence over the Iranian military, and any military pronouncements he makes have no more impact than those of Nancy Pelosi.
Unlike Israel, Iran has not attacked another nation in centuries. Jews in Iran are treated better than Palestinians in Israel. However, Israel's Likud party policies dominate in the US, and so we get endless fear mongering and war mongering directed at Iran.
Anything to justify a new war. Expect the propaganda to be jacked up in coming months both in volume and hyperbole.
When Dennis Kucinich tried to get an accurate translation by Farsi scholars entered into the record, it was voted down.
Have not seen that claim. Gotta link?
It's funny, Eric, but I couldn't find any US news links to this.. but here's a taste from some rabble-rousing website.. Bob
"In his testimony, Kucinich quoted from significantly different translations from MEMRI and The New York Times’ Tehran Bureau. The members remained unimpressed, and the suggested documents were dismissed without any logical explanation. Congresswoman Ileana Ros-Lehtinen (R-FL), who herself has publicly called for the illegal assassination of Fidel Castro (which she denied and later admitted to), gave the baffling reasoning, “I would hate to have Ahmadinejad's statements be included as a part of the record in this part of the debate where we are saying that he is a despot.” In other words, she and her colleagues, like countless others, have already made up their mind. "
http://www.mohammadmossadegh.com/news/caught-red-handed/
Ya think it would be part of the congressional record somewhere.........wonder if contacting his office would get a pointer or a copy of the record b4 such goes down the memory hole.
..scrolling to the end, I'd have also included this reference..
"[4] Congressman Dennis Kucinich, June 18th, 2007: “At this time, Mr. Speaker, I would like to ask unanimous consent to include a New York Times translation of the text of President Ahmadinejad's speech, a translation by the Middle East Media Research Institute of his speech, articles relating to an analysis of the speech, and the words that were used by Virginia Tilley of Johannesburg, South Africa and by Arash Norouzi written on the 18th of January 2007.” "
Bob
Hey Cid, get back to me when nuclear-armed Israel suddenly announces that God actually gave Abraham all the land from the Sinai to the Euphrates - and presumably the oil too.
What a joke. The leftist Zionists in the '40s didn't even believe in God. But their guru Jabotinsky did say that the settlers must eradicate the Palestinians from the land just as the American settlers eradicated the Native Americans. I'd call that ethnic cleansing.
couple of things
I have very little understanding of your point in throwing all this Israeli stuff on here
Israel is not a significant producer of oil or natural gas, so explain how these really are important to understanding peak oil?
Iraq IS a major oil producing nation - as is Iran, so what happens there is important - but other than some sort of general middle-east interest, I don't see the point in your postings
can you explain how Iran can attack Israel? - I'm pretty confused on the geography and strategy there - US fleet sitting in the Persian Gulf, US bases across Iraq, bases in UAE and Kuwait - bases in Afghanistan, Kazakhstan, Turkey - looking at a map of the middle east and IRAN seems pretty hemmed in from all sides by US bases
Syria does have the capability geographically, but really, is there ANY indication that Syria has the military strength to do anything to Israel? I mean, at the end of the day, Israel is a nuclear armed power, and Syrian isn't - other than Syria's quiet support of Hezbollha etc. - and that's pretty low-level stuff - hardly threatens Israel's existence...I've seen a couple of Israeli invasions of it's neighbors in my lifetime, but it's been quite a while since the reverse has happened
as for the "as in the days of old" comment - the exile to Babylon (which is doubted among historians) - would imply IRAQ as the source of the destruction of the (so-called) "nation" of Israel way back in Biblical times - not Iran
later muslim takeovers of the region were under various groups - but not really Persian or Iranian (the Turks being the most long-lasting and recent)
what I'm getting at is your grasp of history and strategic capabilities seems a little loose
so what's your point here?
I will try to educate you. If Iran and Syria become involved in an Israeli war, Do you think the US would stay out? Iran would strike US assets pre-emptively. A regional war in the Middle East will significantly impact oil production and especially transport.
You are obviously uninformed about the Russian weaponization of Syria. Syria has been provided with state of the art anti-aircraft defenses that recently forced Israel to violate Turkish airspace to strike a target within Syria, rather than just cross Syrian airspace as they had done with impunity up until that point. Russia has also supplied Iran with the air defense systems.
Russia has outfitted Syria with both Mig-31E's and Mig 29M/M2 aircraft. Russia has also supplied Syria with Strelets Ballistic Missiles and Pantsir-S1E artillery missile systems. Iran and Syria over the last several years have worked to ensure their armed forces can work in concert. Also, Iran regularly bases it's fighters in Syria as part of a mutual defense pact.
Syria has more troops and tanks than Israel and the addition of Russian aircraft and air defence systems puts Syria on parity with Israel in the air. Russia has modernized 1,000 of Syria's T-72 tanks and has provided them with T-90Cs.
Russia is also believed to have provided Syria with the 9M123 anti-tank missile system. This missile is both radar and laser guided and can take out the latest generation of main battle tanks like the M1A2 from 3.75 miles away, giving it a greater range than most main battle tanks.
Russia has deepened and upgraded the port facilities at Tartus in Syria with the intention of housing their Mediteranean Fleet there.
Air defense systems around Tartus are the the most advanced Russia has and are manned by Russian personnel.
A naval group flagged by the Missile Cruiser Moskva are now based there. Russia has also provided Syria with 2 project 1650 diesel submarines, considered the quietest in the world.
Iran now has Ballistic Missile systems that can strike anywhere in Israel from Iran.
Hezbollah in Lebanon have now been armed with Ballistic Missiles that can strike Israel from Beirut and no longer need to base in southern Lebanon to strike Israel.
Hezbollah has also been provided with C-802/Noor Anti-ship cruise missiles. One of these severly damaged one of Israel's most modern corvettes, the Hanit, last year.
Israel has recently recovered Russian made 9m133 guided anti-tank missiles from Lebanon showing these too have been provided to Hezbollah.
On top of all this, Egypt has been having discussions with Iran and Syria and has been accused of allowing the arming of Hamas in the Gaza by way of the Sinai. It is also believed that they are allowing Hamas to establish a base in the Sinai.
China has provided Iran with a wide range of weapons systems.
http://www.strategycenter.net/research/pubID.117/pub_detail.asp
The answer is, They can now take the fight to Israel, not just defend against them. It appears they intend to do so.
IMO you vastly overstate Syrian capabilities. Recent Russian weapons are generally inferior to recent US weapons (look at R&D budgets for both nations) and Israel routinely enhances US weapon SYSTEMS.
Israeli competence and experience in using SYSTEMS of weapons is FAR superior, as is their pilot training. OTOH, recent recruits to the IDF are not as tough as those of the 1960s and 1970s.
The Israeli military budget (much paid for by USA) is several multiples of the Syrian budget.
A US military surrogate with domestic enhancements vs. a 3rd World nation with inferior weapons.
Alan
I think the first Gulf War is instructive - we rolled right over the top of Soviet equipment and training, and the Soviet Union came apart not long after that. Any pretense of a European ground war being an actual contest was over.
The Israelis are not worn down from endless fighting in Iraq and they won't get draw into trying to occupy more territory if they do choose to go after Syria and/or Iran. They'll get in, savage infrastructure such that both parties are in a world of hurt in perpetuity, and then get out. Imagine Iran if they lose a couple of refineries that make gasoline. Local supplies plummet, the dissent capping smuggling that has been going on will stop, and then what? Their baby boom was conceived in 1980 - 1988 ... and they're not in line with the old guard's thinking.
"Top Soviet equipment and training". You really ought to ease off the crack. Saddam had obsolete junk. His top of the line tank was the T-72 without any upgrades. More importantly Saddam did not have any of the serious anti-aircraft missile systems such as the S-300, which was top Soviet equipment at the time.
The 2006 Lebanon invasion disaster shoots down your ridiculous claims about inferior Russian weapons. The vaunted Merkavas, supposedly the best armoured tank in the world, were turned to trash by lowly RPG-9s. It is not merely chance that there is open talk of using nuclear weapons on Iran. US war planners know that they will not have air superiority over Iran and without this they basically have NOTHING.
So you have yet to explain how Iran, surrounded on ALL sides by the MUCH better armed US, is going to attack Israel
are they going to fly across (US controlled) Iraqi airspace? Are they going to sail out of the (US fleet controlled) Gulf? Maybe up through the Suez and into the med with their small speed boats? Perhaps they will fly over (Sunni controlled) Saudi Arabia and then Syria to join Syria in this purported attack on Israel?
as for Syria's weapons systems - it comes back to Cheney's "So?"
Israel has nuclear weapons - do you think for a MOMENT in a major attack by Syria (especially combined with a completely geographically and religiously [Shia-Sunni] unlikely attack by Iran) and a nearly impossible to understand attack by Egypt, that Israel would fail to lob nukes into Tehran, Damascus and Cairo?
you name a bunch of nice weapons systems as if that means these countries have the desire or ability to attack Israel - or would risk their own complete destruction for what exactly?
This is just pro-Israel screed without any basis in reality - Israel's treatment of their own (native) muslim peoples and its' repeated invasions of it's neighbors hardly make it look like an innocent lamb waiting for the slaughter
personally I would love to see the US cut funding for EVERYBODY in the middle east - let them do what they will, sort it out, fight it out - whatever - f-em all I say - they hate each other so much, let them figure it out
supporting Israel has done NOTHING to increase the security of the US - and our troops being over in the region decreases out security here - the 3 trllion we are spending in Iraq, combined with all that juicy cash and weapons we hand Israel and other (Arab) states in the region would be much better spent here on solar wind, nukes and electrified and expanded public transport - get off the oil teat and give the whole region a big US-made middle finger
Israel Suffers Worst Drought in Decade
Israel is suffering its worst drought in a decade and will have to stop pumping from one of its main sources of drinking water, the Sea of Galilee, by the end of the summer, an official said Wednesday.
Water Authority spokesman Uri Schor said Israel must start pumping more ground water from aquifers that are already depleted.
"The situation is very, very bad," Schor said. "As we pump more from the aquifers, the quality of the water will go down."
http://biz.yahoo.com/ap/080319/israel_drought.html?.v=1
The Jordan is used up in 1 1/2 years.
Israel must capture Hebron by the end of this year.
OR, of course it can start living w/in it's means.
One or the other.
Peace Through Thirst.
THE WALL STREET JOURNAL article by Susan Carey and Melanie Trottman "Costly Fuel, Economic Woes Weigh Down U.S. Airlines" got me to thinking. When oil hits $1000 per barrel and higher, which is just around the corner, and could be here tomorrow with the right mix of world problems, the cost of jet fuel will increase too. And if the planes are grounded because few can afford high airfares, how will oil field and oil platform workers get to their jobs to pump oil? And if we don't pump oil how will we farm, transport food, and mine coal, and how will miners and train personnel get to work? And if we can't transport coal, then we don't generate electric power, and then nearly everything goes out, including home heating. Just what will happen when the northern part of the nation has no heating for just a month in winter? As surely as Peak Oil is a geological fact, this will happen.
Because journalists often Google their stuff to see where it goes, I included their names and article title in hopes that they would read this and get some Peak Oil and TOD perspectives. I have been sending my report on Peak Oil to the journalists at the WSJ and it appears that some journalists thre have read it. Thanks.
You're talking about a nedative feedback loop. As oil becomes harder to produce, we produce less. Then that makes it even harder to produce oil, compounding the problem. What you get is a runaway crash of oil production.
It's not a good thing to consider.
You meant "positive feedback".
Runaway = positive feedback (think "runaway greenhouse effect")
Control = negative feedback (think "thermostat")
Positive and negative in the context of feedback have nothing to do with "good" and "bad".
Positive is positive in the sense of "the more of something, the more of something". The warmer it gets, the more the Arctic ice melts. The more the Arctic ice melts, the more dark sea surface is available to absorb solar energy vs. ice that reflects solar energy. So it gets warmer. And, of course, the warmer it gets, the more etc. etc.
That's positive feedback. Runaway.
Negative is negative in the sense of "the more of something, the less of something". It gets warmer until the thermostat kicks in and turns off the furnace, and then it gets cooler until the thermostat kicks in and turns on the furnace. Etc. etc.
That's negative feedback. Control.
sgage,
You are correct, i did misuse the term, but its really more of a semantics thing.
In any case, it's a "runaway decrease in oil production."
No problem, lots of people make the same mistake. I just thought I'd put out a little illustration for folks.
But it's not a semantics thing at all. It's how the terms are defined and used. No ambiguity about it.
Errr, should anyone worry that you are planing on being an aerospace engineer?
At least I didn't create a graphic with wind turbine blades rotating backwards, like Al Gore did. (i.e. Blogads to your leftand at the top)
I believe -though could be wrong- that comments are set-up to be outside the reach of google searches, by design.
Not so, that is how I find some of my comments on TOD, ie Google.
Guys, is this new system of delayed "drumbeat" making you search the comments for links? If there are no new articles posted in the article body, i look at the next best thing - comments. Before this happened, i was just reading the body, and some comments every now and then.
tod might have accidentally discovered a new way of making readers participate :D
PG can correct me but I believe the Drumbeat threads are auto-started by a background "bot" job. Leanan is the one who populates these threads with tons of information and current articles. Leanan is apparently away for some time. Until then other TOD staff will add articles as they are able but I don't believe any of them have the time or the resources already developed to gather news articles the way Leanan does.
When Leanan returns, Drumbeats will return to their prior full format.
exactement, GZ.
What we need is a way for any registered member to post a story in the drumbeat with a sample paragraph (limit the characters to prevent posting too much and copyright violations). Then it could be edited by one of the staff members to remove unappropriate entries. Or perhaps voted by the members. Too many negative votes (like five) and the story gets removed.
"Michigan congressman wants 50-cent tax hike on every gallon of gas"
http://www.foxnews.com/story/0,2933,339589,00.html
" 48 percent don't support paying even a penny more, 28 percent would pay up to 50 cents more, 10 percent would pay more than 50 cents and 8 percent would pay more than a dollar."
"Is it going to go green? I don't see any green things anywhere."
We'll explicitly subsidize gas before we ever raise gas taxes any higher (IMHO).
Dingell just wants to pad his retirement account.
NASA climatologist James Hansen has come out with his latest paper
"Target Atmospheric CO2: Where Should Humanity Aim?"
http://www.columbia.edu/~jeh1/2008/TargetCO2_20080317.pdf
Darn. And here I was feeling happy we did not have enough fossil fuels to poison ourselves. Darn.
He's been saying this for a few years now. What changed his opinion to this even grimmer view was the discovery that it took under a century several million years ago for sea levels to rise 25 meters during a rapid CO2 buildup like we are seeing now.
CO2 has doubled in the last 150 years. Before that CO2 hovered in a narrow band, oscillating over hundreds of thousands of years as we had ice ages and interglacial warm periods. Now we've doubled that CO2, a 100% increase, and we expect no impact?
Finally, I want to call attention to the following reality - Hansen has consistently been more pessimistic than almost any other professional in the climate community. Going back to the 1980s every time he made a prediction he gave a best case, median case, and worst case model. In every single case of which I am aware, the reality of climate has always exceeded his worst case predictions.
Think about that for a moment. The climatologist who is called a "sensationalist" by some ignorant journalists has consistently made extreme predictions that were wrong by being not extreme enough! Are you getting a bad feeling about this yet?
That's why I keep asking people to read this:
www.climatecodered.net
How many here have read it?
Reading it now - Thanks Jason.
Just finishing up the Antarctic ice sheet chapter which comes after The Arctic and Greenland.
A few take-aways for far ("paraphrasing" what I have read):
1) The scientific method causes some scientists to understate what they really believe is happening. In the case of melting ice sheets and glaciers there is, by their admission, the early (too) simple melt models at odds by under predicting effect (or is that affect) compared with observations. This leads to some odd "predictions" in reports such as the early 2007 IPCC report which the MSM picks up - if they do at all - and reports a things as actually better than (scientist) at first reported when in some scientists believe (but cannot scientifically substantiate) things are more dire than reported.
2) The potential downside of the situation puts a strain on the scientific method in terms of the rigour usually required to be sure or to prove something. There is no time for 5-7 more years of study.
3) Nor is there time for the "political process" to achieve results much less relying on "business as usual" to change. Heck the IPCC publication cycle is too long.
Thank goodness for the likes of Hansen - and others - who will step outside box.
The scope of action in the time frame required seems to hinge so much on human rational behavior. I dunno...
Still reading....
Pete
I've read it. Lovely peace, I like the straight-talking style and didn't spot any exaggerations.
Increased weather is another outcome of all this. Where will all the water come from? Ice melt, and also just plain ole rain showers. I do wonder at times like this last week when flooding was hot and heavy if all this water is just a result of melting elsewhere and falling where we need it, but don't need it in 6 to 8 inch amounts.
I had standing water in my yard, even though I am no where near a flood plain, there was just to much water to soak into my already wet soil. The way the yard is built up there is no run off for most of the water.
Increased weather disrubtions. More Thunderstorms, More tornados, and more Floods.
We've increased CO2 from 285ppm to 385 ppm. That is about a 40% increase. It was as low as 170ppm during the ice age. It seems unlikely to me that we will fix things before 450-550, which is close to doubling. The climate response is proportional to the logarithm of the concentration. What that means is that the increase of a factor of 1.4 we have already done, will have half the effect of a full doubling.
Now that doesn't mean we don't have a serious problem. We have yet to see anything close to the full effects of 385ppm. Pertly due to inertia of the system, and partly because aerosols (visable pollution particles) are masking some of the effect. Hansen argues that the IPCC is looking at only fairly shortterm feedbacks. If you include longer term feedbacks, such as ice sheets vanishing (and not being there to reflect sunlight), and warmer oceans releasing some more CO2 etc. that the climate sensitivity to CO2 is about twice what the IPCC uses. It is uncertain how long these long term feedbacks take to be effective. If if takes them longer than the timespan for the human CO2 spike to be absorbed (or humans get smart and become CO2 negative in the future) these longer term feedbacks may not matter.
There is a lot of uncertainty involving the timescale of things like deglaciation. The last decade certain gives us reason to be wary that if could be a lot faster than expected, but we really don't know if the recent changes are shortterm fluctuations, or the beginning of a rapid state change. It is nearly settled that if high GHG (CO2) were maintained for thousands of years that we would have large (say 25M) sea level rise, but if the time scale is 5000 years its not much of a threat. I doubt the issues involved in determining these timescales will be quickly resolved.
All of the discussions of how to control global warming have centered on demand side solutions. Various governments pledge to reduce emissions by some percentage at some future date. Treaties are negotiated requiring reductions in emissions by those nations willing to ratify the treaty.
A major difficulty in achieving these agreements is they are perceived as requiring a sacrifice by those whose consent must be attained.
Why would elected leaders agree to emissions cuts if they could result lower incomes and fewer jobs? Why ratify treaties with the potential to limit growth when other nations are continue to expand their economies and there emissions at a rapid pace? Why agree to reduce emissions when the likely net result will be the export of emissions and the associated jobs overseas?
Even in Europe, which has taken the lead in ratifying treaties limiting emissions, there has been discussion of exempting some heavy industries from the emissions cuts to preserve competitiveness.
I’d like to propose an alternative method of controlling greenhouse gas emissions: a supply side solution.
Instead of pushing nations to agree to reduce the use of fossil fuels target the producers.
Persuade the producers to limit the production of oil, natural gas, and coal.
Some advantages of a supply side solution to global warming:
1)Little or no sacrifice is required of those who must take action. If enough agree and production increases are slowed or eliminated profits will expand as demand growth continues.
2)The agreement of fewer nations is required. The reserves of the various fossil fuels are concentrated in a limited number of nations.
3)Agreement of a nation to limit its production is unlikely to result in only the shift of jobs and emissions overseas.
The easiest place to begin is with oil. An organization controlling the production of oil already exists: OPEC. For several years around the turn of the century OPEC maintained relatively fixed production. During the last few years OPEC has constrained production enough to stop the increase in world oil production.
All that would be necessary would be for some of the prominent leaders in the fight against climate change to persuade the rulers of the OPEC nations to hold a press conference announcing that in the interest of limiting climate change OPEC will cap production at current levels. Furthermore, in a few years OPEC will reduce production as necessary to stop the growth of world oil production and eventually make the cuts necessary to reduce world oil production.
Achieving the same for coal production will be more difficult as a substantial share, ~40%, of world production is in China which would be unlikely to agree to production limits. In this case again targeting the exporters may be an easier option. As with oil coal exports are concentrated in a small number of nations.
A cap on coal production in exporting nations while only having a limited impact on the growth of coal production will have a significant impact on price. Higher coal prices would make alternative energy sources more competitive and will discourage the continued building of coal power plants which has recently been accelerating in developing nations.
At this point in time, I can't even conceive of a rational global based decision to act on CO2 levels. It's building too fast and has outstripped the mechanisms of possible political action.
Short of a dozen Class V hurricanes hitting the continental US in one season or hundreds of tornadoes a month in the mid-west or the ocean rising 10 feet from one Friday to the next Monday, I don't see the political will to act and cancel out climate change denier's propaganda. I suppose an enlightened dictator could act (simply out of self interest i.e. greed) in time, but even that seems too far fetched for now. (Geez, I don't even have faith in greedy Despots abilities.)
Any rational thoughts or actions appear beyond human comprehension and capabilities at the present moment. The IPCC doesn't even have any shame at their crappy track record with the 'reality based community' of observable events. They are the world's A Team?
I'm just hoping for some observable natural crisis in the Headlines that is dramatic enough and un-spinable enough that even the most moronic among us has to finally pay attention.
Hello Break Even,
I think a huge, sudden 'oceanic fart' would do the trick:
http://www.theoildrum.com/node/3257/265879
http://www.theoildrum.com/comments/2006/10/30/81957/678/107
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Call for opinions:
How long can TOD operate as it does today before the world economy no longer supports the infrastructure (servers, electrical power to users, etc) to keep it running? When will the accuracy of this website's predictions cause it to shut down permanently?
Pt 2:
What does TOD hope to accomplish before that time?
The text communication parts of internet could with todays technology and some manual sorting and specialized databases instead of Google etc run on a small fraction of todays power. We will have better electronics tomorrow if only from the inertia in the present development. And cross ocean and continent cables were laid a century ago.
My guess is that we indefinately will have an internet and that it probably will be better then what we have today. And if things go to hell a fraction of todays capabilities is enough for voice, text and distribution of critical data plus text-only MUD instead of WoW.
Yup. The old store and forward UUCP method will allow for communication, even if the links are spotty.
/usr/ports/net/freebsd-uucp Not in the core, but still there.
Hello Freeyourmind,
"What does TOD hope to accomplish before that time?"
My Peak Outreach efforts are based on that TOD, other websites, books, organizations, communities, etc, is the largest, grassroots 'charity through awareness' project in the history of the human race.
As a fast-crash realist, I think most of us will not die of old age in a soft, comfortable bed; more likely something much worse. Such is life.
But if our efforts help shift enough minds towards optimizing the coming Bottleneck Squeeze and additionally help prevent the human-caused extinction of just 10,000 other species-->I will consider our aggregate efforts to be a roaring success! Time will tell.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Lets hope. The point I was aiming at was the real time constraint on the efforts of TOD. Time is running out, fast. And most (Americans, at least) still seem to think that high gas prices are just about Exxon lining their pockets.
The server farms can move beside renewable energy sources and run for a long time; this is already starting to happen and you should hear some announcements from a major company "soon."
I imagine we'll prioritize providing electricity to run core fiber lines but the electricity to keep the connection up for the last mile will be increasingly iffy.
It's quite possible that land connections will become so unreliable that satellite connections become preferred. But the throughput difference between fiber on the ground (very high) and the space connection will likely be very great...perhaps we are approaching Peak Throughput, too?
-André
More on possible depegging of the Dinar, and others.
On March 24, senior economists, private business leaders and chambers of commerce officials from around the GCC countries will converge in Bahrain to attend the conference organised by the Bahrain Chamber of Commerce and Industry entitled, 'The phenomenon of price rises in Gulf states: causes and future directions'.
Isn't Chenney still over there?
Yes, and right after Greenspan.
I don't think I saw this posted yesterday:
Comment: Real rates key to commodities prices
Interesting...part of the article seems to hint that real interest rates have been low in recent years...with perhaps the implication that this is due to actual inflation being higher than reported?? Maybe I'm just reading something extra into it.
Something really strange is going on. Three posts that I made today have vanished. What's up?
No, nothing is "up." I am just not in the mood for hard core whoring for anyone today. If you don't like it, sorry.
What, pray tell, is "hard core whoring?" Does it have a definition? Why is it men are always so glib and quick to refer to anything that makes them feel coerced as "whoring?" Could you not have chosen a more appropriate metaphor and still have accurately described your intention? Why the need for a clearly gender based and wholly repulsive reference to a practice plagued by rape and murder, and drug, alcohol and physical abuse? Surely as a member of the esteemed profession of education, you’d be capable of describing your intent without demeaning not only yourself but the entire female gender of your very own species.
Oh, please. Boo hoo.
men can be whores as well as women; "whore" is defined as a prostitute - so whoring would be selling oneself for sex, which is gender-neutral
and if the shoe fits, allow the OP to wear it - self-serving posts and links to for-profit sites that are not contributing to TOD by buying ad space should be axed
re "hard core whoring": Goritsas, I agree with you. But you have swerved far to close to social reality and are being rejected for that reason.
I agree. Funny, it's exactly like Peak Oil, it too swerves far to close to physical reality and is thus rejected.
Also, I wonder where Darwinian is in this discussion. After all, he's always worried about "conspiracy theories" and inaccurate data tarnishing TOD's reputation. I guess "hard core whoring" references won't bother the more than fifty percent of the world population that are female. That's one good way to gain traction, insult half the population. No problem there then. TOD's reputation is safe.
It must have disappeared, because I haven't seen it. :-)
Obama's energy policy. Leanan would have caught this.
Yes, Leanan would have, because Leanan is a better person than I am. :)
Now top article.
Thanks for the chuckle, Prof. Goose. And thanks for everything you do to bring light to the dimly lit.
I meet a well known blogger# (Daily Kos, Energize America) at the monthly "Energy Conversation" across from the Pentagon (Amory Lovins that time, author of Plan B 3.0 next month).
He said that Obama had a much better set of energy advisers than Hillary, although Hillary was more astute/knowledgeable about energy.
BTW; I asked a question (gave my name) and had a back & forth with Lovins. Afterwards I was asked if I was available to speak in a future time slot. Very odd feeling !
Best Hopes for Energy Policy after 1/20/09,
Alan
# I am unsure if the comments were made in confidence or not, so I withheld the name.
Ah well its Easter.
Lets have something light for a change.
http://www.ecoenquirer.com/
A lot of people will hate this
http://www.technologyreview.com/Energy/20448/
Cheap, Efficient Thermoelectrics
Subaru shows off R1e electric car
http://www.forbes.com/markets/feeds/afx/2008/03/20/afx4799774.html
Shells Inspire Nano-battery Research For Cell Phones, PDAs
http://www.sciencedaily.com/releases/2008/03/080319135829.htm
I want to make one statement about charging batteries. All battery types have internal resistance (R) which varies depending materials for anode and cathode. Ohm's law gives us this equation: W (power usage) = R x I*2 where I is the amps going through the battery. Some of the energy (W x t) goes into the chemical reaction that creates the battery's stored energy and the balance is heat. As the amps increase, given that R is constant, the energy lost to heat is greater along with charging being faster. Thus these batteries that can be charged quickly may be less efficient since more energy is going to heat generation, especially since resistance goes up with temperature in most materials.
Another problem that I can see with quick charging is too much demand when cars arrive home after the evening commute. Too many electric car owners trying to get a quick charge to do evening errands or to go out for the evening.
The math is right.
But fast charge batteries have low internal resistance.
This makes them particularly efficient.
More efficient on slow charge than fast, but efficient either way.
In general, internal resistance goes down as a battery warms up.
Might have been posted already...
Oil's Wakeup Call
I miss Leanan... ='(
From the article up top, it appears that Obama feels that, in part, our predicament can be addressed by making the top oil companies more competitive in somehow yet to be defined, or clarified way. Perhaps this includes breaking them up and creating some new era of competition which is supposed, from classical economic theory, to lead to lower prices. After we achieve these lower prices, we can then fill up the SPR.
However, to actually make this scheme effective, he will need to break up a number of oil producing nations in the Middle East and South America, for starters, because that is where the true strength and relevance of the oil cartel lies.
Neither Obama or likely any of the other candidates get it. We are in an era, the pain of which will not be assuaged by a little micro economic tinkering here and there. They act as if the major oil companies control the price and flow of oil. Methinks one really needs to look elsewhere, to those who own most of the oil.
They need to quit talking about increasing oil flow and lowering prices; but then we knew that decades ago.
There is little doubt whether or not Obama is a great speech maker. Suggest one of his next speeches address peak oil, carrying capacity, overshoot, and what he is going to do about it. Silly me.
I noticed that Obama actually said the SPR was big enough or something. Isn't he in for a surprise.
However, it seems to be a whole lot of campaign BS to me. Based on some anecdotal evidence, including this MSNBC discussion, which I made a few posts in, people seem very quick to blame the major oil companies or the Bush administration for the oil prices. While I do hate both oil companies and especially the Bush administration, it's painfully obvious, especially to everyone on this website, that they have about zero control over oil prices.
If Obama ever really did start screwing with the SPR in any other way except enlarging it, and we'll have real problems.... sooner than we would otherwise.
Hello TODers,
Another signpost that Peakoil is a huge concern to the Petrol-BigBoys?
http://www.bloomberg.com/apps/news?pid=20601102&sid=aAEbxz0dSW4Y&refer=uk
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Russia Charges TNK-BP Employee, Brother With Spying (Update2)
March 20 (Bloomberg) -- Russian investigators charged an employee of BP Plc's Russian venture and the head of the British Alumni Club in Moscow with industrial espionage, the main successor of the Soviet KGB said.
Ilya and Alexander Zaslavsky, brothers with Russian and U.S. citizenship, were detained March 12 for trying to obtain classified information that could give foreign energy companies an advantage over Russian rivals, a spokesman for the Federal Security Service, or FSB, said by phone today on customary condition of anonymity.
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I think a certain degree of industrial espionage has always gone on. But now at $100+/oildrum: any little info can be crucial; huge sums are involved, besides national security. As posted before: expect frozen corpses sprawled atop red snow; this downslope ride will be much more than any Tom Clancy novel.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Unfortunately my favorite candidate seems to be pandering here. The demographic that we like to call Joe & Jill Sixpack simply wants cheap gasoline, and thinks it is all because of a conspiracy by the international oil companies. Campaigns have always been advised "don't try to educate the voters". So when the voters believe in the tooth fairy, you have to make them think you have the best chance of actually producing her. Ohh, if only our votes would be weighted by the IQ of the respective voters!
Israel Suffers Worst Drought in Decade
Israel is suffering its worst drought in a decade and will have to stop pumping from one of its main sources of drinking water, the Sea of Galilee, by the end of the summer, an official said Wednesday.
Water Authority spokesman Uri Schor said Israel must start pumping more ground water from aquifers that are already depleted.
"The situation is very, very bad," Schor said. "As we pump more from the aquifers, the quality of the water will go down."
http://biz.yahoo.com/ap/080319/israel_drought.html?.v=1
Here's an MSN video of alternative fuel cars from the automotive x-prize. [JHK, eat your heart out. ;-)].
http://video.msn.com/?mkt=en-us&fg=rss&vid=496657af-5eb0-4e33-adc9-99c2b...
Billions at risk from wheat super-blight
Exclusive from New Scientist Print Edition.
“This thing has immense potential for social and human destruction.” Startling words - but spoken by the father of the Green Revolution, Nobel laureate Norman Borlaug, they are not easily dismissed.
An infection is coming, and almost no one has heard about it. This infection isn’t going to give you flu, or TB. In fact, it isn’t interested in you at all. It is after the wheat plants that feed more people than any other single food source on the planet. And because of cutbacks in international research, we aren’t prepared. The famines that were banished by the advent of disease-resistant crops in the Green Revolution of the 1960s could return, Borlaug told New Scientist.
The disease is Ug99, a virulent strain of black stem rust fungus (Puccinia graminis), discovered in Uganda in 1999. Since the Green Revolution, farmers everywhere have grown wheat varieties that resist stem rust, but Ug99 has evolved to take advantage of those varieties, and almost no wheat crops anywhere are resistant to it.
The strain has spread slowly across east Africa, but in January this year spores blew across to Yemen, and north into Sudan (see Map). Scientists who have tracked similar airborne spores in this part of the world say it will now blow into Egypt, Turkey and the Middle East, and on to India, lands where a billion people depend on wheat.
There is hope: this week scientists are assessing the first Ug99-resistant varieties of wheat that might be used for crops. However, it will take another five to eight years to breed up enough seed to plant all our wheat fields.
The threat couldn’t have come at a worse time. Consumption has outstripped production in six of the last seven years, and stocks are at their lowest since 1972. Wheat prices jumped 14 per cent last year.
Black stem rust itself is nothing new. It has been a major blight on wheat production since the rise of agriculture, and the Romans even prayed to a stem rust god, Robigus. It can reduce a field of ripening grain to a dead, tangled mass, and vast outbreaks regularly used to rip through wheat regions. The last to hit the North American breadbasket, in 1954, wiped out 40 per cent of the crop. In the cold war both the US and the Soviet Union stockpiled stem rust spores as a biological weapon.
After the 1954 epidemic, Borlaug began work in Mexico on developing wheat that resisted stem rust. The project grew into the International Maize and Wheat Improvement Center, known by its Spanish acronym CIMMYT. The rust-resistant, high-yielding wheat it developed banished chronic hunger in much of the world, ended stem rust outbreaks, and won Borlaug the Nobel peace prize in 1970.
Yet once again Borlaug - now 93 and fighting cancer - is leading the charge against his old enemy. When Ug99 turned up in Kenya in 2002, he sounded the alarm. “Too many years had gone by and no one was taking Ug99 seriously,” he says. He blames complacency, and the dismantling of training and wheat testing programmes, after 40 years without outbreaks.
Now a Global Rust Initiative (GRI) is under way at CIMMYT. It’s head, Rick Ward, blames the delay on cuts, starting in the 1980s, in CIMMYT’s funding for routine monitoring and maintenance of crops and pests.
“CIMMYT was slow to detect the extent of susceptibility to Ug99 [because] it didn’t have the scientific eyes and ears on the ground any more,” says Chris Dowswell of CIMMYT. “Once it did, it had to start a laborious fund-raising campaign to respond.”
Ward is now being promised adequate support as fears grow in rich wheat-growing countries, but meanwhile Ug99 has got worse. It was first noticed because it started appearing on wheat previously protected by a gene complex called Sr31, the backbone of stem rust resistance in most wheat farmed worldwide. Then last year it acquired the ability to defeat another widely used complex, Sr24. “Of the 50 genes we know for resistance to stem rust, only 10 work even partially against Ug99,” says Ward. Those are present in less than 1 per cent of the crop.
The first line of defence is fungicide, but the poor farmers who stand to lose most from the blight generally cannot afford it, or don’t have the equipment or know-how to apply it. CIMMYT is considering “fire brigade” spray teams armed with cheap, generic fungicides in poor areas. However, they will be competing with the rich for fungicide, and depending on where Ug99 strikes, stocks could be limited.
Even rich countries face problems. The US has been fighting soybean rust with fungicide ever since spores blew in on hurricane Ivan in 2004. If Ug99 arrives as well, the US could be in trouble because it doesn’t make enough fungicide for both crops. Kitty Cardwell of the US Department of Agriculture says there might be enough if the US fights Ug99 the same way as it is tackling soya rust: spotting outbreaks with a fast DNA-based field test and posting the results on an interactive website (www.sbrusa.net), so farmers spray only when danger looms. Ultimately, says Ward, the only real answer “is to get new, resistant varieties out there”.
CIMMYT has been working on this by taking countries’ top-yielding varieties and crossing them with wheat from its seed collections that does resist Ug99. For two years now the crosses have been tested for resistance at field stations in Njoro, Kenya, and in Ethiopia, where it is safe to release Ug99 as it is already there. Resistant strains are sent back to CIMMYT in Mexico and assessed for yield and other qualities, then sent out again for further tests. Resistant lines are now being grown on 27 plots in Nepal, India, Afghanistan and Pakistan.
So far so good, but the real challenge is multiplying up enough resistant seed so that if Ug99 hits, there will be enough to plant the next crop. This takes time - and it will only happen if the new resistant varieties match or exceed existing yields. Nor is it an exact science. No one knows why wheat that looks good in Mexico might grow as well in Egypt, say, but fail in China unless it is crossed with a local variety.
There is nothing for it but to do the tests, says Ravi Singh, the GRI’s chief wheat pathologist. The resistant lines must be just as good as the ones people are growing now, he says, or farmers won’t use them, and government-owned seed companies that dominate the wheat industry in developing countries won’t sell them, no matter what new disease the scientists say is coming.
Singh calculates that if he can get countries to devote 3 to 5 per cent of their wheat-growing area to resistant varieties, the seed harvest will be enough to plant the whole country with resistant wheat if Ug99 hits.
So it’s a race, and who wins depends on what Ug99 does now. Stem rust can arrive in a new area and lurk for years before it gets the right conditions for an outbreak. “It won’t suddenly explode everywhere. It will be like a moving storm,” says Dowswell.
However, Ug99 has another ace up its sleeve. The spores blowing in the wind now are from the asexual stage that grows on wheat. If any blow onto the leaves of its other host, the barberry bush (Berberis vulgaris), they will change into the sexual form and swap genes with whatever other stem rusts they find. Barberry is native to west Asia. “As if it wasn’t challenging enough breeding varieties that resist this thing,” laments Ward. “All I know is that what blows into Iran will not be the same as what blows out.”
What’s more, Ug99 will find agriculture has changed to its liking in the decades stem rust has been away. “Forty years ago most wheat wasn’t irrigated and heavily fertilised,” says Borlaug. Now, thanks to the Green Revolution he helped bring about, it is. That means modern wheat fields are a damper, denser thicket of stems, where dew can linger till noon - just right for fungus.
Another worry is that travel has exploded in the past 40 years. There have now been several documented cases of travellers carrying rust spores on their clothing. Some fear Ug99 will hitchhike as much as it flies - and its spread need not be innocent. New Scientist has learned that the US Department of Homeland Security met in March to discuss the possibility that someone could transport Ug99 deliberately.
Even at 93, Borlaug is looking to the long term. Eventually, scientists will have to create wheat with a wide spectrum of resistances. The genes may be hiding in other grains and grasses. “Why has rice had no rusts for millions of years?” he asks.
For now, Borlaug says, we have to rely on fungicides, wheat breeding and luck. “We’re moving as fast as we can now, but we started three years too late,” he says. “We’d better have some good luck. Governments think this is still small and local, but these things build up.”
From issue 2598 of New Scientist magazine, 03 April 2007, page 6-7
Wheat killer detected in Iran
Ug99 strikes Iran, countries east on High Alert
A new and virulent wheat fungus, previously found in East Africa and Yemen, has moved to major wheat growing areas in Iran, FAO reported today. The fungus is capable of wreaking havoc to wheat production by destroying entire fields. Countries east of Iran, like Afghanistan, India, Pakistan, Turkmenistan, Uzbekistan and Kazakhstan, [& China] all major wheat producers, are most threatened by the fungus and should be on high alert, FAO said.
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comment stolen from PO:
Lose 80% of worldwide wheat production and you’ve got your overshoot die back. It won’t happen all at once. It will progress around the globe. Although, with planes, the spores could be transported on clothing anywhere overnight.
If so, then it is quite likely, that rust will be deliberately spread by few [or lone] apocalypse seeking peoples [there are very MANY of them], possibly religious ones
[aka “medieval voodoo mumbo jumbo nutters”].
1. Go on holiday to affected country. 2. Visit their countryside and deliberately contaminate your clothes with rust spores. 3. Return to your or travel to another country. 4. Visit wheat growing countryside wearing the same clothes.
That’s easy. You can disrupt [global] food chain [supply] with a $1000 budget.
Makes me wonder if you can give those 'Africanized Killer Bees' a whopping case of Colony Collapse Disorder?
Also out today is Lester Brown's latest on glacier loss and food.
http://www.earthpolicy.org/Updates/2008/Update71.htm
I added rye flour to some bread I made today.
Chris
Hi everyone,
I promise not to do this too often. There's a lot of energy stories today on my site that you might be interested in seeing. Little things like a strike in Tahiti causing some fuel problems and a blown generator in Ulan Bator, to big issues in Pakistan and Argentina. Interestingly, the little things add up ... I think Simmons calls it "rust."
If you're so inclined please visit http://energyshortage.org/.
My friend and I are also working on a new geo rss mapping module to give a more accurate representation of these issues. Stay tuned!
Interesting! I notice that besides articles about energy shortages in English, you also have some in Spanish and French. It looks like quite a bit of the world is affected.
Thanks very much Gail. Yes many places in the world are affected and that's why I try and include articles from non-English speaking countries. I reckon that with Google language tools it's not too big a deal for English only speakers to translate them so that they can at least get the main idea presented in the story.
I also wanted to try and provide a bit of a visual overview so that folks can see that the whole world faces energy challenges, and that those challenges include little things like blown Soviet-era generators in Mongolia, and big things like Bolivia's issue with natural gas exports and Eskom's problems in South Africa.
I have been collecting the stories since late July of last year, and I feel our energy issues are not really getting better. Sometimes one country, for example Ghana, will come off the list. Then I'll read a story a few months later and it will be back on.
One thing my friend and I are trying to do is to fix the mapping up a little to try and real-time the issues a bit better. The Drupal module we're developing will, hopefully, provide a better sense of the issues and their nature and timeliness.
It's a really big project for me and it makes me feel a little bit more connected to the world, albeit in a sad way since I'm only reporting negative news.
Hello TODers,
More evidence that sulphur pricing is driving I-NPK mfgs crazy?
http://english.vietnamnet.vn/biz/2008/03/774395/
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Fertiliser supply short, price skyrockets
..Last week, Vietnamese importers had to pay $1,100/tonne, CFR, to buy a small volume of product from South Korea.
Importers are worried that DAP prices will further increase. The sulphur market, the main material for making phosphate, is very hot with short supplies. Moreover, the policies applied by the government of China have been putting heavy pressure on the world’s DAP/phosphate market. It is estimated that the DAP supplies will decrease by 700-800,000 tonnes in the first six months of 2008.
In Vietnam, according to the Vietnam Chemical Corporation (Vinachem), the sulphur price has increased by 10% over the previous month, now trading at over $600/tonne. The high price of sulphur has created big difficulties for phosphate producers. Lam Thao Phosphate Company has to raise the sale price to VND2,400/kg. However, according to Vinachem, with such a price, the producer still incurs losses due to higher material prices.
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In the included photo: I bet the guy shlepping the 100 lb sack on his shoulder would think a SpiderWebRiding railbike/barrow would be a good idea. I wonder how many roundtrips and total km distance he covered to get his purchases home.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Hello TODers,
Does this article help show how difficult it might be for those are trying to have a minimal environmental impact?
http://www.haywardwis.com/articles/2008/02/27/news/doc47c585736de1596022...
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Judge gives zoning officials go-ahead for removal of ‘mud house,’ ‘humanure’ crib near Winter
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Hello TODers,
Great food for thought!
Please read the original link below [not my teaser cut & paste segments]!
http://entropicjournal.blogspot.com/2008/03/kunstlers-nightmare.html
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Kunstler's Nightmare
I’m sorry, Mr. James Howard Kunstler, you’re gonna hate me for saying this, but I have a sneaking suspicion that the “warehouse in wheels” you despise so vehemently will work equally well in reverse...
“Whaaa?” you ask. “Howz that possible?” Easy! All they gotta do is convert their US stores into sweatshops and their Chinese factories into Supercenters....
Yes, there will be mighty rivers of Amerkan-made stuff flowing the other direction this time – back to China, back to Thailand, back to India. Using the same old containers piled high on the same old ships. But not just extraneous kitchen gadgets and whole phyla of stuffed toys – they’ll be hauling away nearly every kernel of wheat and corn, nearly every ingot of steel and coil of rebar, and – too bad for all you carnivores out there – most of “our” beef...
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Makes a lot of sense if America goes from burning 25% of the world's oil to just 5% of the world's oil to match our population percentage. Even cheetahs and lions in the Serengeti cannot keep it 'floorboarded' energy wise for long in their sprints.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
More petroleum and NG production from the Gulf of Mexico scheduled for 2008-2009 in the third largest oil producing nation:
http://www.upstreamreview.com/subpage36.html
This is highly speculative. Most of these projects, like Thunder Horse, will not come on line until very late 2008 and will not reach full production before 2010. In the meantime depletion of current fields in the GOM have some of the highest depletion rates anywhere.
Production in the GOM will likely increase but nowhere near the figures projected here.
Ron Patterson
It's good that they found some more, but ~300,000 B/D is basically a drop in the bucket on top of ~80 MBD current production. There needs to be alot more additional oil production to have a significant effect any time soon.
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