DrumBeat: April 11, 2008

OPEC: Gas Prices Will Stay High

As gas prices heads for a possible $4 a gallon in the U.S. this summer, it's tempting to blame Big Oil — as many in Congress did last week — for its bloated profits greased by generous tax breaks. But the players in the oil-producing world see things a little differently. OPEC officials, oil executives and oil-rich governments met Thursday in Paris at the International Oil Summit, to share their thoughts on the global energy crunch. Total chief executive Christophe de Margerie and Royal Dutch Shell's exploration chief Malcolm Brinded told officials from oil-rich countries that they needed more access to easily accessible oil deposits, rather than the hugely expensive deep-sea drilling or ultra-deep underground reserves on which they are increasingly relying to expand production. Expanded drilling for less accessible oil has seen production costs double in about four years, according to a report by Cambridge Energy Research Associates. Added Brinded, "Costs are still rising and exploration is at record levels."

Russia's Arctic Oil Could Supply U.S. for 9 Years

(Bloomberg) -- Russia's Arctic region holds as much as 100 billion barrels of oil and natural gas, enough to meet U.S. fuel demand for almost nine years, OAO Lukoil said.

African nations should nationalize oil: Venezuela

DAKAR (Reuters) - African nations should follow Venezuela's lead and nationalize their energy and mining sectors to secure the resources to fight poverty, Venezuela's deputy foreign minister for Africa said on Friday.

Reinaldo Bolivar, on a visit to Senegal, said his oil-rich South American nation would host a summit of African and South American nations in November to discuss cooperation ranging from energy to banking between the two regions.

African nations, which produce 15 percent of the world's oil, could learn from aspects of Venezuelan President Hugo Chavez's nine-year-old leftist revolution, Bolivar said.

Nigeria: Angry youths occupy oil installation in southern oil heartland

YENAGOA, Nigeria: Militant youths occupied a Royal Dutch Shell PLC oil installation in restive southern Nigeria on Friday, shutting down its production of 5,000 barrels a day, the company said.

Aviation sector struggling with rising fuel costs

PETALING JAYA: While some airlines struggle to cope with record oil prices and weakening economic growth, others have been forced to halt their operations.

The latest casualty, Oasis Hong Kong Airlines, was the fourth carrier to shut down operations worldwide in less than two weeks after a 75% increase in fuel prices over the past year.

Australia: Petrol at a premium for holidays

The NRMA is accusing oil companies of stockpiling premium petrol as Canberra prices look set to climb above $1.50 a litre just in time for the school holidays.

Gaz de France, Shell sign LNG supply contract

PARIS (Reuters) - Gaz de France said on Friday that it had signed with Royal Dutch Shell a long-term supply contract for 10 billion cubic meters of liquefied natural gas (LNG).

"The LNG will be delivered to European terminals, in which Gaz de France possesses reception capacity. The deliveries will begin in 2014 at the latest," Gaz de France said in a statement.

Mexico's Calderon Attempts Oil Reform

Mexico's President Felipe Calderón on April 8 sent an ambitious oil reform to the Senate. If approved, reform of state oil monopoly Pemex should attract private investment--domestic and foreign. However, approval probably will face legal challenges and political resistance--both in parliament and on the streets.

Government moves to liberalize Pemex had been awaited for weeks. The bill sent to the Senate on April 8 is ambitious enough to boost oil production and reserves through increased partnerships and contracts with other energy companies without seeking to amend the constitution. It would also allow Pemex to become more operationally and administratively autonomous.

Serbia state power firm mulls tie-in with Russia

BELGRADE (Reuters) - Serbia's electricity monopoly is considering building new power plants jointly with Russia's Inter RAO, sources told Reuters on Friday, in a deal that would give the Russians partial control of Serbia's electricity market.

Olmert vows to strike Hamas, Gaza fuel cut off

GAZA (Reuters) - The flow of fuel from Israel into the Gaza Strip came to a halt on Thursday, one day after Palestinian militants attacked a border terminal used to supply the Hamas-controlled territory.

It's got to hurt before it gets better

There is a solution to the rising cost of oil, but it is a painful one. Let's say there is a lot of $20-a-barrel oil in the world -- deep-sea oil, Canadian tar sands. But who would look for $20-a-barrel oil if someone else (Saudi Arabia) has lots of $5-a-barrel oil? The answer is: no one.

Basically, American taxpayers have to guarantee potential producers that the price in the future will not fall below $20 a barrel and that they will not lose their investments.

Cheaper diesel in Mexico a draw for truckers on both sides of the border

Saldaña bought about 18 gallons of diesel for just under $38, paying 5.76 pesos per liter, or about $2.07 a gallon. Had he waited until he crossed the Pharr-Reynosa International Bridge to top off, he would have paid more than $72 for the same quantity of diesel.

More and more U.S. truckers and other motorists are taking advantage of the cheaper fuel in Mexico, according to one filling station owner in Reynosa.

Oil Crisis?

We are constantly inundated in the press with talk of real or possible fuel shortages and the excuses multiply for increasing heating and motor fuel prices.

One excuse given is the rising Canadian dollar.

Canada has a surplus of oil and gas and is able to export that surplus. Why is our oil priced in US dollars?

Iceland Has Power to Burn

The tiny island nation can teach the United States valuable lessons about energy policy.

Why the future goes flooey

To be fair, plenty of the technologies listed in "You Call This the Future" - ranging from eyephones to invisibility shields - are on their way to becoming real in one way or another. Even in those cases, however, the technologies tend to obey Hofstadter's Law: "It always takes longer than you expect, even when you take Hofstadter's Law into account."

In other cases, what we imagine never gets made. Sometimes the technology seems just plain impossible to realize (for examples of that, check out this interview with physicist Michio Kaku). Sometimes it's possible, but not feasible or affordable (these seven flights of fancy serve as examples). And sometimes safety issues get in the way. (The Federal Aviation Administration probably wouldn't be too crazy about flying cars, though that hasn't stopped some people from trying.)

A message to our grandchildren

My dear ones, your generation will face a series of environmental challenges that will dwarf anything any previous generation has confronted. I'm hoping to add some insights of my own based on things I learned as a policymaker in the 1950s and '60s, when I observed and participated in some monumental achievements and profound misjudgments. As a freshman congressman in 1955, I regrettably voted with my unanimous colleagues for the Interstate Highway Program. All of us acted on the shortsighted assumption that cheap oil was super-abundant and would always be available.

This illusion began to unravel in the 1970s, and it haunts Americans today. Oil lies at the epicenter of a critical energy crisis. Petroleum is a finite resource and is the most precious, versatile resource on the planet. Cheap oil played a crucial role in the development of American power and prosperity, and sustains the military machine that dominates the world today. Oil is now nearing a historic transition that will alter the civilization Americans have come to take for granted. As world oil production reaches its apex and begins its inevitable decline, it will have a radical impact on everyday American life.

Tearing itself down: Depopulation of eastern Germany

The cities of the east no longer imagine they can avoid demographic decline. Instead they seek to manage its consequences, and a few are inventing ways to shrink gracefully. Saxony-Anhalt, which suffered an acute shortage of apartments in communist times, has now destroyed some 45,000 homes with federal help.

The infrastructure that served now-defunct factories and empty apartment blocks must be ripped up too. “Streets cost an unbelievable amount of money,” not to mention water pipes and electric cabling, grumbles Klaus Bekierz, who works for the building department of Dessau, half-an-hour's drive from Köthen. Its population has shrunk by a fifth to 76,000 since the early 1990s. “We can't pay for infrastructure for 100,000 people,” he says.

Americans shaking off distaste for small cars

It used to be if you drove a small car in the United States, you were either a cultural maverick living in California or a Canadian tourist. No more.

Americans appear to have finally cast away their deep fear of subcompact and compact autos. Ford Motor Co. says the trend has been building slowly since 2004 as Baby Boomers downsize and their children start buying cars.

But it is picking up serious speed now as oil prices pierce a record US$112 a barrel, harkening back to the 1970s energy crisis when gas-sucking pigs like the V8-powered Chevrolet Caprice sat on dealer lots while buyers flocked to new four-cylinder vehicles made by Toyota Motor Corp. and others.

Saudi Adds Significant New Production

This may be true or it may be just propaganda in an effort to talk down oil prices. The Khursaniyah field has been said to be coming online for nearly two years now and it never starts. Delays of this magnitude are common but some feel there were serious shortfalls in the capacity being developed and many more wells had to be drilled to produce anything close to what was promised. We may never know exactly how much oil will be produced from this field because the Saudis rarely give any accurate production numbers.

Saudi to lift May crude sales to lone Asia refiner

TOKYO: Saudi Arabia, the world's top crude exporter, will supply a bit more oil to one of its Asian customers next month, but shipments to at least three other lifters will be unchanged, refinery sources said on Friday. Traders had expected Saudi Arabia to tell lifters it would supply them with full contractual volumes following a March agreement by Saudi Arabia and the rest of the Organization of the Petroleum Exporting Countries to keep output unchanged.

Saudi Aramco says intelligent fields (I-Fields) are key to the future

Nasser told conference delegates about the company’s investment in intelligent fields and their implementation, through an integrated process of real-time measurement, optimisation and control. He detailed the use of subsurface and surface sensors, which transmit well and field production data in real time to data centers and asset teams.

In addition, earth models are continually updated to reassess optimisation strategies using integrated simulation environments that combine reservoir, well and surface characteristics.

India Loses Rigs as Saudi Arabia, Brazil Drill Wells

(Bloomberg) -- Reliance Industries Ltd. and Oil & Natural Gas Corp. are among Indian oil and gas explorers losing offshore rigs as rivals such as Saudi Arabia, Nigeria and Brazil step up efforts to drill wells in deep waters.

Oil glitters as world stampedes to 'new gold'

A catchy nickname -- "the new gold" -- has been coined to put in a nutshell the glow of oil on agitated financial markets in the United States.

The price of oil long ago stopped measuring solely its value as fuel, says Cambridge Energy Research Associates. The Boston consulting firm, an internationally known industry pillar led by Pulitzer-winning industry historian Daniel Yergin, came up with the new nickname.

The World Food Crisis

Most Americans take food for granted. Even the poorest fifth of households in the United States spend only 16 percent of their budget on food. In many other countries, it is less of a given. Nigerian families spend 73 percent of their budgets to eat, Vietnamese 65 percent, Indonesians half. They are in trouble.

Protect Water Resources from Climate Change

Washington, DC – Today, U.S. Reps. John Hall (D-NY19) and Maurice Hinchey (D-NY22) introduced legislation that will help protect America's water from climate change. The legislation would direct the Environmental Protection Agency (EPA) and National Academies of Science (NAS) to study the impact of climate change on America's water resources.

Harnessing Biology, and Avoiding Oil, for Chemical Goods

THE next time you stop at a gas station, wincing at the $3.50-a-gallon price and bemoaning society’s dependence on petroleum, take a step back and look inside your car.

Much of what you see in there comes from petroleum, too: the plastic dashboard, the foam in the seats. More than a tenth of the world’s oil is spent not on powering engines but as a feedstock for making chemicals that enrich many goods — from cosmetics to cleaners and fabric to automobile parts.

The New Hampshire working forest is in crisis

Everyone in the forest food chain is being squeezed to the point of no return. As a forest landowner, I checked my stumpage values of more than 25 years ago and found that I received almost twice as much for hardwood pulp at that time than I do today. Loggers and truckers, mills and anyone else using diesel fuel at $4.25 per gallon (and climbing almost daily) are being crushed by these huge fuel bills, along with higher insurance, labor and equipment costs, with likely no chance of passing on these costs. This, along with ever-increasing state rules and regulations and added or higher fees, is having a crushing impact on our business and owning forestland.

Conservative Environmentalism

The fact is that America is in the midst of an energy crisis that has been going on for thirty years. It is clear that oil as a fuel source is dangerous. Not only does it pollute the environment, but it also represents a huge security risk to the United States. Our biggest and most outspoken enemies happen to be sitting on the largest deposits of oil in the world, and they are using the clout that their location provides to bully the rest of the world and in some cases finance terrorism. Without the west’s need for oil, these fanatical countries would lose their wealth and bargaining power, thus adding a layer of security for the United States. So what are the alternatives?

'Peak oil' crisis, and drastic change, coming our way

In the U.S., Al Gore just launched a $300-million ad blitz to increase awareness about climate change, aiming to have his fellow citizens cut their greenhouse-gas emissions by 90 per cent by 2050.

Something similar needs to happen on the so-called "peak oil" front because the world is running out of cheap oil.

So far, that something is not happening. Not here. Not in the U.S., which consumes 25 per cent of the world's oil. In the presidential campaign, none of the candidates is discussing policies to wean Americans off oil. But then, as one-time PM Kim Campbell said in 1993, elections are no time for serious issues.

China's oil imports hit record in March

SHANGHAI — China's oil imports surged to a record 17.3 million tons in March, the government reported Friday, as the country nearly unseated Japan as the world's second-largest buyer of foreign crude oil.

Nigeria oil at record, refinery shutdown hits N. Sea

LONDON (Reuters) - Spot differentials for Nigeria's key light crude have struck a record high this week due to better outlook for U.S. demand in coming months.

In contrast, maintenance at European refineries has pushed down the light North Sea Forties benchmark crude to deep discounts.


The town also happens to sit at the epicenter of the biggest inland oil discovery in the United States in 50 years. Two miles below the surface lies a stratum of oil known as the Bakken formation, holding an epic haul of crude — some surveys suggest up to 200 billion barrels, a near-Saudi-sized reserve. And since the end of 2000, when new drilling technology and rising prices combined to unleash the find, Montana and North Dakota have become the underground rock stars of American oil, among the few states recording production increases. With oil prices soaring above $100 a barrel, it’s like giant vaults of cash opened beneath the MonDak soil.

One Sure-Fire Sign That Gas Prices are Heading Higher

Economic forecasters - especially those employed by the government - have a spectacular history of getting little, if anything, right. Not only that, but according to a study conducted by Societe Generale (OTC: SCGLY), financial analysts lag reality badly and change their minds only when there is irrefutable proof they are wrong.

UK: Energy firms agree fuel poverty initiative

Up to 100,000 households could be lifted out of fuel poverty by an extra £225 million to help with rising fuel bills under a new initiative agreed by Britain's 6 major energy companies - Centrica, EDF Energy, EoN, Npower, Scottish & Southern and Scottish Power.

Under the deal, brokered by Energy secretary, John Hutton, households struggling to pay their fuel bills are set to receive significant extra help with the cost of warming their homes. A fuel poor household is one which needs to spend more than 10% of its income to heat its home to an adequate standard of warmth.

IMF warns of 'fire and ice' threat to the world

The head of the International Monetary Fund has warned that the world economy is trapped between "fire and ice" - the threat of slumping growth and of rising inflation.

Opening the IMF's spring meetings, Dominique Strauss-Kahn told ministers coming to Washington that there was only limited time to repair the financial system after the worst crisis since the Great Depression.

Speaking with oil prices at record highs, he declared that "inflation may be back" and warned the relentless rise of food prices would hit efforts to reduce poverty in Africa and Asia.

Russia Bank On The Prowl

LONDON - First came Russia's great energy push, with Gazprom snapping up assets across Europe. Now comes its banking sector, which is hoping to exploit the subprime woes of the rest of the world.

Sberbank, Russia's largest bank, has emerged relatively unscathed from the credit market turmoil and is now planning to spend "billions" on international expansion. One of its targets for acquisitions could be Dresdner Kleinwort, an investment banking division of German insurer Allianz, according to press reports on Friday.

Pemex and Mexican Peak Oil Equal Expensive Oil

The trouble is that Mexico's government has been using the state oil company, Pemex, like a cash machine that never runs out. Pemex contributes 40% of the total tax revenues of Mexico's Federal Government. It's a resource of the people, for the people, and by geology. But you cannot print oil on a printing press. There is no such thing as "just in time" energy resources.

Mexico's government has not been investing enough in exploration or new production to top off Pemex's reserves. Those reserves are being depleted. What's more, its largest oil field Cantarell, is in an alarming state of decline.

Cap and trade conundrum

The partisan divide over global warming is well-known; however, this year a new element has been injected into the debate. In a series of information hearings, members of the House Energy Finance and Policy Division heard testimony from analysts who said that global oil production is peaking, and that reserves of petroleum, coal and even natural gas should begin to dwindle over the next few decades.

This phenomenon, known as peak oil, presents an entirely different set of challenges to policymakers. But it also begs the question: if we’re running out of fossil fuels, do we really need to worry about reducing our emissions? Beard says no.

“If we continue on the pace we’re on, we’re going to outstrip our supply … so the problem — if you think CO2 is a problem — is going to fix itself anyhow in the next 20 years,” he said.

Scrapping skyscrapers

According to the current thinking of professional planners, tall buildings are our only hope for disinheriting our cars and reuniting with our neighbours---up on the rooftop garden. Urban density also concentrates and thus limits our impact on the land, water and air.

Density is our hope for long-term survival. At least until peak oil.

The problem with these sky-scraping symbols of long-term sustainability, according to Larry Hughes of Dalhousie's Energy Research Group, is "figuring out how to heat the damn things. If we assume the heat source will be oil," he says, "it's very short-sighted, naive to the extreme."

IEA cuts world oil demand growth by most in 7 years

LONDON (Reuters) - World oil demand will rise much less than expected in 2008 because of slower economic growth in the United States and elsewhere, the International Energy Agency (IEA) said on Friday.

The cut to demand growth is the IEA's biggest since 2001 and follows the release of lower economic growth forecasts by the International Monetary Fund (IMF) this week, and the impact of high oil prices above $110 a barrel.

Oil Price Defies Easy Calculation

Is there a fair price for oil?

It doesn't seem that way. Over the past year, the price of crude oil has nearly doubled even though oil inventories are ample, there has been no disruption in supplies, and petroleum demand in the United States, the world's biggest consumer, has leveled off in recent weeks as the economy has slowed.

"There may be [a fair price] but it would be difficult to get consumers and producers to ever agree on it," said Guy F. Caruso, administrator of the Energy Department's Energy Information Administration (EIA). "Ideally, if there was a more competitive market, we might find out. But it's not the world we're living in today."

How soaring fuel prices hurt kids

Across the nation, school districts are slashing spending on teachers, books and computers as filling up the school bus gets more expensive.

NEW YORK (CNNMoney.com) -- The school buses in Dubuque County, Iowa, travel 4,900 miles each day ferrying kids to and from class. That's the equivalent of driving across the entire United States and halfway back again.

The price of the diesel these buses run on has jumped 35 percent over the last year. The extra money paid to fuel the buses must come out of the local school district's general fund - money it would prefer to spend on other things.

Frontier Airlines files for bankruptcy

Frontier, whose major hub is in Denver, has been affected as other airlines have by rising fuel costs and the credit crisis in financial markets.

ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy recently, but Menke said Frontier's reasons for doing so were different.

"Unfortunately, our principal credit card processor very recently and unexpectedly informed us that, beginning on April 11, it intended to start withholding significant proceeds received from the sale of Frontier tickets," he said. "This change in established practices would have represented a material change to our cash forecasts and business plan. Unchecked, it would have put severe restraints on Frontier's liquidity and would have made it impossible for us to continue normal operations."

Aloha may also mean $4 gas

WAILUKU, Hawaii - The average price of regular gasoline on Maui island has reached a record $4 a gallon.

Wailuku is the first area in the nation tracked by AAA's Daily Fuel Gauge Report to hit the $4 mark. In the remote coastal town of Hana, the price is around $4.55 a gallon.

Poor go hungry while rich fill their tanks

Rocketing global food prices are causing acute problems of hunger and malnutrition in poor countries and have put back the fight against poverty by seven years, the World Bank said yesterday.

Leftists lawmakers storm Mexico Congress

MEXICO CITY - Leftist lawmakers took over both chambers of Mexico's Congress to protest President Felipe Calderon's energy reform bill, which would make it easier for the state oil company to seek outside help to develop oil fields.

Legislators from the Democratic Revolution Party and two minor parties stormed the podiums and forced a recess in both the Senate and lower house of Congress. Some donned hard hats with the symbol of the state-owned oil company and shouted, "The country is not for sale!"

The new age of the train

Britain is witnessing the dawn of a new era of rail travel as an unprecedented demand for environmentally friendly transport encourages people to take more train journeys than at any time since the Second World War.

Logging Boreal Forest Could Detonate Massive ‘Carbon Bomb,’ Says Report

OTTAWA - Canada’s boreal forest is a ticking “carbon bomb” and its continued logging could trigger a massive release of greenhouse gases, says a new report.

A Greenpeace study released Thursday says cutting down trees in the boreal forest is exacerbating climate change by releasing stores of greenhouse gases trapped in soil and vegetation.

It also found that logging makes the forest more susceptible to insect outbreaks and wildfires which, if widespread, could cause a spike in greenhouse-gas emissions - the so-called “carbon bomb.”

UN climate chief: US election may help

"I'm really encouraged to see that all three of the presidential front-runners have climate change high on their agenda," Yvo de Boer, executive secretary of the U.N. climate treaty secretariat, told The Associated Press. "So whichever one of them wins, I think it will be good news for climate change policy."

"It’s time to speak the truth. No more disingenuous questioning and wondering. No more exasperated resignation. We know the reason why oil prices are high, and it’s time to admit it and do something about it."

"Furthermore, global production still outpaces consumption, even accounting for China’s unsustainable economic growth rates.

In short, there is nothing in that equation that says oil should cost what it costs today. Nothing!"


Fox news: never afraid of being wrong. Nor apologetic for it.

What ever happened to the "wisdom of the market"? Or the "invisible hand"?

Or Helicopter Ben and his printing presses?

Bush calls Iran one of two greatest threats to America.


Mr Bush...said that Washington was ready for talks with Iran. “We are prepared to do that,” he said. “If the Iranians are ready to sit we are going to point out what they are doing to undermine Iraqi security.”

Yeah. Those talks will go far.

The Bush administration prefers a "diplomatic solution". Iraq-style, I suppose.

Edit: like the Iranians do not know for themselves how they undermine Iraq if they do.

Edit again: like Iraq insecurity was not inflicted by the occupation in the first place.

Lets look at Americas "threats"


Hmmmmm. I wonder what these countries have in common??????
Gee, I give up.

All are ruled by dictators?

No, no, you've got it all wrong "Mr Bush called Iran one of the two greatest threats to America in this century, together with al-Qaeda"

Or was it "al-Qaeda-in-Iraq"? What d'ya say? No link between al-Qaeda and Iraq? Ah, never mind! Be afraid! So the Constitution can be shred and your dollars inflated away to finance a few illegal wars of conquest with your permission.

/Rant off/

Communists are so 20th century, it seems ...

Marco might have meant :

- oil reserves & oil production
- against US unipolar domination attempts
- plus benefiting from the current dollar crisis.

The other one being himself.

America is its worst enemy. Hands down.

The Record Falls. January 2008 is the New Record

The EIA’s latest International Petroleum Monthly report is out. World C+C production for January was 74,466,000 million barrels per day. That is 178,000 barrels per day above the old record set in May of 2005.

More later after I have digested the numbers.

Ron Patterson

The corucopians are going to have a field day on this one. I can sense them jerking off right now.

If you examine the data you will find there is little for the cornucopians to cheer about. The big gains, since May of 05, were Angola-up 822,000 bp/d, Azerbaijan-up 506,000 bp/d, Iraq-up 250,000 bp/d and Russia-up 459,000 kb/d. Angola is almost at her peak and Azerbaijan will get there in just a few months. Russia is now in decline. Iraq is a big question mark.

My math was a little off when I figured the amount that production was up from May of 2005. The amount was actually 168,000 bp/d rather than 178,000 bp/d. I did the data by pencil instead of on my spreadsheet. I should have known better. Sorry about that.

Ron Patterson

Hello DarRonian,
Excellent observations. There are many components to the fugue that is playing. Margin of error seems to be one. What role does Time play? Since we know we have to run harder and faster just to keep up, how much energy is spent acquiring more Energy? Do we naturally use the sweet stuff to extract the harder to acquire Energy? I would say factoring in the 2nd Law were about 5mb/day off where the world needs to be just to stay above the constrains placed on the whole. Am I off base here?
Does the main page have internet indigestion?

Are these stats subject to revision?

Yes, the revisions often go back 12 months.

Thanks. Still, I do hope Jan. 08 was record breaking. That solves my dillema saving or borrowing to get solar power. BTW, many thanks to all who contributed to that discussion in yesterdays' DB. Enlighting, literaly and figurative :-)

PaulusP: "Thanks. Still, I do hope Jan. 08 was record breaking. That solves my dillema saving or borrowing to get solar power."

I hope you're just kidding. You think the global economy is that closely-correlated with the exact number of barrels of oil produced? Reduce the production by 168,001 barrels & it's armaggedon? The critical situation is that world demand for oil is greater than global production, even if production is increasing yet. But I tend to agree with some of yesterday's posters who think that it's better to wean ourselves from electricity rather than cling to the illusion that we can be some of the few bright lights amidst the ruins of civilization.

Thanks for your input.

"You think the global economy is that closely-correlated with the exact number of barrels of oil produced?"

Yes, I do. But not with the "exact" amount of barrels, and neither do I think it's armagedon if you take these 168K off again. I just hope the world is able to keep up plateau production longer then I initially believed. At the same time ramping up production means less will be left for my kids, so I do not endorse unsustainable management of a finite resource (of which the use itself is unsustainable by definition).

I for one, see clearly the limits of "renewables", including solar derived electricity. The limits I talk about is that every renewable energy source is basically dependent on FF in one way or the other. But if I can arrange to get solar power it has added benefits. This includes being secure of power, but last and not least, I think it will save me money. I expect electricity to get more and more expensive. Even now it takes about 15 years to break even on PV, I'm very patient(angling teaches you that, besides other things). And yes, eventually humanity has to do without electricity.

I find a new high to oil production compared to May 2005 to be in the eye of the beholder. On a per capita basis oil production has been falling since 1971 if I remember correctly. Peak Oil has been happening on that basis for over 30 years. Peak Oil is a long term phenomenon and even several months or a few years of up ticks does not invalidate the theory. World population and oil demand continue to grow against a finite resource base.

Logic rules. Numbers are the servant of logic and not the other way around. Do not let numbers and data control!

It is the excessive emphasis on numbers and data here at TOD that lead to the biggest mistakes. Logic takes into account relevant factors outside the realm of numbers and data and it makes sense of numbers and data which could otherwise be misused. It is the boss.

Agreed. Your Olduvai analogy is very relevant to the discussion, oil being the life-juice of an, yet still, ever expanding industrial society.
But I would say oil production not crashing now can be considered "good" news.

Not really-the guys whose oil production forecasts have been most accurate have some scary stuff right up ahead-this IMO is less than a blip.Unrelated topic never discussed on TOD: Canada, a top supplier to the USA, is currently importing more oil per capita than the USA-doesn't look good in terms of ELM.

I once bowled a 280 in a bowling game... Before and after that I was bowling between 80 and 120... I'm sure I'll hit that 280 and hit 300 every time after that, as long as I keep drilling myself on my hooks.

Wait, nevermind, I don't bowl. An abberation doesn't set the standard, just as a win against the #1 team doesn't transport the worst team to the #1 spot. There's bound to be bumps.. What I'm concerned would be a rolling 6 month average. That tells a lot more to me than monthly spikes/declines.

Well, it is an additional supply of 178 seconds (that's almost 3 minutes!) a day of oil use above the old record.

Does anyone know what has happened to spot prices for JetA fuel the last few days? Despite all of the cancelled flights and 250,000 back-logged passengers, I am going to bet the spot price has remained flat or increased.

From the WSJ (through Google News)

Utilities Fret as Reactor-Part Suppliers Shrink

As utilities pursue a U.S. nuclear power revival, they are confronting worries that their dependence on a reduced number of suppliers, including many overseas, could result in shoddy or counterfeit parts being used in plants.

This week, the U.S. Nuclear Regulatory Commission alerted utilities that it tackled two cases of suspected counterfeit parts at nuclear plants last year. The counterfeits didn't result in any equipment failures or safety problems, the agency said. But it warned that vendors, "including foreign companies with little or no experience in the nuclear industry, have entered the market to supply parts and components."

The pullback in civilization's supportable complexity levels will be seen in many indirect ways.... but seldom recognized...

From yesterday's WSJ (but rerun elsewhere)

Container Shortages Puts US Export Boom in a Box

Many U.S. companies hoping to profit from surging exports created by the weak dollar are facing an unexpected hurdle: There aren't enough of the big, metal shipping containers that help form the backbone of the global economy.

What has happened now has thrown a wrench into the works. Cutbacks by U.S. consumers have slowed the growth of imports, while the weak dollar is making the U.S. into an export machine. Meanwhile, the places where most of these exports are originating are far from where boxes are being unpacked and soaring energy costs make it too costly to just load them on trucks and move them around.

I had no idea that Real Estate agents and burger flippers were shipped in cargo containers. I mean, what else could we possibly be exporting?

"The largest US exports last year: nuclear power plants, followed by electrical machinery, vehicles, airplanes, and medical equipment"


From October 2007.

Neither reactor vessels, nor electrical generator turbines, nor vehicles, nor airplanes are shipped in containers. Maybe some electrical machinery and medical equipment if not too big, but some of the stuff we make is too big to fit in containers.

Some gas turbines are designed to fit into a couple of containers (small ones just one).


Also now the US has become a big coal exporter.

The numbers I looked at, for 2005, showed pretty small net US coal exports.

2005 is out of date. There was a link in yesterdays drum beat. In the last year exports have jumped something like 5% or 6%, but because of rising prices have doubled in value. Ports and railways are straining to handle them.

But 5% of a small percentage is a small number. You also have to look at net exports, not gross.

Coal isn't shipped in containers either

I work for a small software company and a significant portion of our customers are small to medium sized manufacturing companies, I don't know if and when the proverbial other shoe will drop, but for the moment there seems to be a growing demand for our product, largely due to the weak dollar being good for exporters.

I am involved in ramping up production rates of 50-gage and 1-mil polyimide films mostly for export to Asian FPC markets.

We are operating in a "sold out" environment and have been for about 6 months.

Manufacturing is far from dead in the US (output is actually still rising), it is just that there is not a growing number of jobs in the sector since it is becoming more efficient. We just cut about 10% of our workforce and are producing more film at better quality than ever.

There aren't enough of the big, metal shipping containers that help form the backbone of the global economy.

They've become popular as stationary storage sheds. Businesses & even homeowners are buying them to store their excess stuff in. There they sit, all around town, OoC for transport. I bet this is contributing to the shortage.

*grumbles about how the shipping container was a plan of mine - and how the price has went up.*

And people are living in them.

My sister has the family photo showing my father, his brother and a good friend, all German immigrants, passing the evening playing chess with light from an oil lamp in a converted rail box car they shared in Alberta during the early years of the last great depression. The parked rail cars designed to ship containers seen in a recently posted story won't be of any use to people as the current economic downturn eases into a greater depression, but hopefully the containers will provide shelter for some. It's unfortunate that the containers don't have a side door like the old box cars allowing for a better division of the available space. Moreover, installing windows is going to be difficult.

best hopes for board games, hacksaws, and early bedtime.

One of my favorite books in my misspent youth was The Boxcar Children.

In Vancouver, containers are still fairly cheap. I've bought "one way" containers for around $3,000. These are made in China, and are designed to handle one crossing, or are older containers refurbished to handle a final trip. Once here, we have nothing to send back in them so they are mostly surplus and make good storage sheds.

To make them here you'd need a modern continous-roll steel mill, and an automated line, in the same place. Detroit/Windsor is about the only place in N.A. like that, and also where the shortage is most acute, so who knows maybe maybe Ford can build a profitable model after all?

There are about 5 of these "continous-roll" steel mills in the Midwest alone,,,my brother runs one in Gary IN for US Steel....


What?! There was an article just a few months ago about all the empty containers piling up in the US because we didn't have anything to ship back on the return trip? I know our exports have improved a little bit recently, but neither corn nor Boeings tend to go out in shipping containers, so this just doesn't add up.

The article kinda explains it. There are containers, but it's not economical to ship them very far.

I know there are stacks and stacks of empty containers piling up in Los Angeles/Long Beach port...

The port of Newark, NJ, too. At one point, the stacks of containers were so high, you had trouble seeing NYC from the NJ turnpike. It was an impressive and sobering sight.

Credit crunch hitting the UK:

Consumer crunch bites despite cut in base rate

Millions of struggling families will be hit by higher mortgage payments after banks raised their charges last night – despite the Bank of England’s quarter-point cut in the base rate to 5 per cent.

The rate cut would normally bring the cost of mortgages down. Instead, four of the biggest banks ignored it and increased charges on a range of loans, adding about £150 a month to a typical mortgage.

And another one from The Times

House prices: disaster ahead

The message from this comparison can be summarised as follows: the boom in the British housing market has been much bigger than the one in America. And the long-dreaded correction in British house prices has hardly even started. So if you believe that events in America since house prices peaked there about 18 months ago could accurately be described as a “crisis” or even a “disaster”, you had better reach for the Book of Revelations to find an appropriate word for Britain's economic prospects in the next year or two.

I noted my mortgage holder does the same. It doesn't care what the Central Banks' interest rate for borrowing capital is. Luckily mine cannot exceed 6.9%(nor can it go lower then 3.5%), and interest on mortgages are tax deductable here.

Hi PaulusP , is 100% of your (UK) interest tax deductable ?
In Norway it's about 28% of paid interests which are deductable.

Comment deleted.

What makes you think I'm British? In The Netherlands mortgage interest is still 100% deductable from income tax.

I guess I was derailed by those linked quotes and posts just above, referring to British housing and bank. sorry.

Funny. In Britain interest on residential mortgages stopped bieng tax deductable a few years ago.

keep it quiet will ya.

I am trying to sell a house...

Dorme bien

I am tired, trying to wade through the global warmist bullshit on heading out's post. (I mistakenly went there looking for stuff on geology and drilling engineering - just got splattered with meusli...)

Any chance you can give them (AGW types) a separate virtual play room, or church or nazi drill hall something?

With all of the airlines that went bankrupt over the last 10 days would this be considered one of the canaries in the coal mine? Do you think that a major airline like delta or AA will file for chapter 11 this year? Or do you think it will be merger town? That raises the question: With the credit crunch will they be able to finance large buyouts/mergers even if they wanted to?

There's always the government.

Grounded flights may pull down wider economy

Politicians bicker with FAA as lost productivity, undelivered cargo mount

Ali Belshi on CNN this morning said the worst day in history for the airline industry was the day of the Wright brothers' first flight. The airline industry hasn't been profitable since.

Warren Buffet quipped that if a capitalist had been
at Kitty Hawk he would have shot the Wright Brothers
out of the sky and saved everyone the subsequent billions
that have been lost in the airline industry ..

Triff ..

Many had trouble passing on increased fuel costs fast enough to customers. Canaries in the mine if you wish.

Delta cancelled a lot of flights to inspect wiring in older planes. It made me wonder if this was the real reason. Lack of fuel perhaps? Or possibly the inability to afford it, measured against the prices people pay for their tickets?

The airlines are the most vulnerable leg of the transportation industry. The airline industry has a long history of adjustments. In 1981 after the PATCO (Professional Air Traffic Controller Orgnaization) strike the FAA ordered the airlines to cut back flights for a period of over one year. The airlines took that as an opportunity to scale back operations because they were reeling from falling profits in the wake of deregulation. After deregulation flights to remote locations were no longer government subsidized. Many of those flights were cancelled and never resumed.

With the hub and spoke system all of the airlines compete for the money slots (e.g. LAX to SFO, JFK to ATL, 3 to 7 p.m.) Those flights have long fed the airlines. The growth of the holiday traveler was gravy. If they raise the prices to reflect high fuel prices the holiday traveler may choose to stop flying in the numbers necessary.

Now with a further threat of a steep recession beginning the airlines would love to take a break and guage what this might mean to the tourist flyer not to mention the business flyer. The problem is they have huge investments in fleets of jets that may need to be idled. How do they idle the debts for those jets?

IMO there will not be a general collapse of the airlines but there will be a long process of restructuring with Chapter 13 re-organizations and merger mania. The one thing to come to grips with is the airline industry in 3 years will be dramatically different than it is today. If a flight costs double what it does today there will be a lot less people flying.

The current cancellation of flights by AAL might allow that company to take a breath and focus on what portions of their business are profitable.

I've long thought that the airlines have provided a vital service that can't be replaced. To allow this critical industry to collapse (prematurely) could be far more costly to a modern economy than the failure of an investment bank.

Should we return to an airline system that is subsidized by the government? If we value it that might be a choice we'll have to make.

I've long thought that the airlines have provided a vital service that can't be replaced. To allow this critical industry to collapse (prematurely) could be far more costly to a modern economy than the failure of an investment bank.

Perhaps you would expand this argument?
To me it seems that a heavy retrenchment of the airline industry will mean primarily that the holiday industry will suffer, and holiday destinations especially in remote locations like the Maldives, although the upper echelons of resorts should do relatively well as richer customers are less price sensitive.

It would also likely mean that a lot more use will be made of teleconferencing for business- an awful lot of time and fuel is wasted at present, and the benefits are doubtful.

In Europe at least high speed trains will likely take op much of the difference, and presumably areas like the US would also start to develop their network.

Bankruptcies in the industry should become endemic though, and a lot of states will not have the resources to switch to a state subsidised airline at any more than a token presence.

You can tell air travel has peaked - Britain has just completed Terminal 5!

'I've long thought that the airlines have provided a vital service that can't be replaced. To allow this critical industry to collapse (prematurely) could be far more costly to a modern economy than the failure of an investment bank.'

"Perhaps you would expand this argument?"

Dave - America is not now nor will it become in the future anything resembling Europe. We have large metropolises separated by vast rangelands. High speed rail, although useful in high populous sectors such as the Northeast or the West coast, will never be practical in the midwest nor most of the south. We depend on airlines and that very infrastructure for such a myriad of vital services such as medical airlift, organ transplant, vital parts that need to be delivered to stop production shutdowns in factories, moving peoples with esoteric skills to places where they need to be quickly and efficiently. Imagine having a close relative dying and being unable to get there in time?

We are a service economy. We can disparage that but that's how a lot of us eat. If the airlines collapse that service economy may collapse along with it.

We need to have an orderly restructuring of the airlines to a smaller and more sustainable system but the infrastructure of a modern aviation system is wieldly and expensive. Airports, Air traffic systems, NavAids, Flight certifications, maintenance schedules the list is endless...cannot be allowed to rust and disintegrate. The downsizing needs to be orderly.

First of all the cost of a ticket needs to rise...dramatically. Fewer people will be flying and there will be fewer airplanes in the air. The flights to more remote locales will need to be subsidized in the future. To shut down less profitable flights will damage rural economies which will in the long run hurt the general economy unnessarily.

The logical choice is to bring back govt. subsidies.

A big chunk of all business air-travel could be executed via the internet and a camera combo a big screen. A lot of time and monies saved for the company. The handshaking could be done another time.

you know joemichaels, the airline business is alive but on borrowed time. Don't be surprised if the steamliners start to pop up again :-)

I believe the airline industry is the most prophetic canary we have. Unlike other transportation forms, it's high energy/density liquid fuel or nothing at all.

I contacted a airline industry analyst I had seen on ABC World News last Sunday. He got it right with his on-air statement, "At over $100. a barrel oil, there is not one airline that can survive in the long run."

But upon speaking with him, he had no concept of diminishing oil supplies. Seems his analysis spoke of the airline's dilemma as a time sensitive, price-only problem, one that could or would be solved through an eventual reversion to cheap oil.

Makes you wonder what a company like Boeing is really thinking...


Interesting comment-even if it is inaccurate, it does imply that air travel on the current scale at e.g. $200 a barrel is unlikely.The scary thing is that generally analysts are far more accurate in their negative predictions than in their positive ones.

I read this comment on another airline industry analyst's site as regards fuel costs. He's blunter yet:

"The only option is to reduce flying. That's because the fleets available are simply incompatible with $3.00 fuel. It's called immediate obsolescence, with no viable replacements insight."

"At over $100. a barrel oil, there is not one airline that can survive in the long run."

Vastly overstates the issue.

Even at $350/barrel, or $550, there will be significant air travel (perhaps a few % of current levels, more likely 33%-50% if we are not in a severe recession/depression). Air fares will be higher and there may be few flights of less than 400 miles where non-oil alternatives exist (The English may still holiday in Spain, but they are likely to take the Chunnel and French/Spanish TGV to get there, if they can afford to).

Southwest Airlines is perfectly positioned to be the "Last Airline Standing" in the USA.

And Boeing is having some initial scheduling issues with it's 787, but making an aircraft 20+% more fuel efficient than the plane it replaces seems like a good strategy. Speculation is rampant about a 787-like replacement for the 737, but more fuel efficient engines are not yet ready. A 787 like composite fuselage with current engines would save only 10% or so.

Best Hopes for Air Travel over Water,


Yes, but air travel at 33% of today's levels is an incredible step backwards and IMO will make the "economic growth" story harder to spin.

The analyst stated to me that 90% of all flights are "bleeders" - lost leaders that make no money. Seems high to me. But even at say, 70%, it's problematic.

Also says that short-hop 50-seaters are highly inefficient and that we will see these scheduled flights disappear first:

"That's because at $3+ a gallon jet-A, the number of communities that can be economically served - regardless of the number of airlines in existence - is going to drop like a baby grand off the 43rd floor. As our Global Fleet Forecast has noted, not one airliner in the US skies was designed with $100 oil in mind."

"Consolidation of airlines may or may not occur. Eventually. What is certain, however, is the near-term reduction in air service levels. What's also certain is that several cost components of the airline business will need to change very quickly, or we're going to see not just less flying, but less airlines - mergers or not."

As our Global Fleet Forecast has noted, not one airliner in the US skies was designed with $100 oil in mind.

And an antique desk wasn't designed with a personal computer in mind, but that doesn't mean it can't function with a computer on it.

If it cost $500 to fly from New York to Florida instead of the current $200, I have to assume that would make that flight profitable with $100 oil. Less people would pay it, and there would be less of those flights, but the ones that still flew would presumably be profitable.

This copy is from an airline industry analyst site:

"What's In The Till Is All There Is. The outer perimeters of the air transportation business will continue to shrink in the coming months. It's a fundamental sea-change, not the result of cyclicality.

And there's no financial cavalry to come and save the day. When the revenues fall and cash runs out, there are very few financial safety nets left for small airlines. Hedge funds and venture capital sources are either tapped out or licking their wounds from earlier airline investments. Reports are that Yucaipa sank over $100 million into Aloha. One of the hedge funds that's been big in playing around with Delta and Northwest stock has told its investors they cannot cash out right now. Nobody knows what the "suitable and sophisticated" Wall Street firms that invested in Skybus are thinking now, except it's a lead-pipe cinch they aren't thinking about doing another airline deal.

The point is that the crisis is not temporary for some of these air transportation firms. It's not even a crisis, really - it's a finality. When the viability of a specific aviation business segment erodes or completely disappears, an infusion of fresh capital only delays the inevitable. It's like tossing money at a company that produces black-and-white TV sets. It may have been profitable in the past, but its product is now economically obsolete. It's the same with some sectors of the air transportation industry."

Basically there is too much capacity in the industry, facing both higher fuel costs (necessitating higher prices causing less demand), and a reduction in flying in general (caused by consumer and business withdrawal from easy-to-cut big-ticket items like air trips). This in an industry perennially plagued by overcapacity as it is.

Thus, their business model doesn't work, and they don't have the resources to transition to a new one, as they were always on the borderline as it was.

However, the air transport industry will continue to exist. The big carriers will merge and the smaller carriers will be liquidated or absorbed, and the physical capital of the system will be reorganized to serve the new, smaller industry.

It might actually be good for the air carrier industry in the long run. They deserve to make a decent return on capital too, and maybe they will in the form of a smaller, more cartelized industry.

Well then, why don't the airlines get together and start building high speed rail lines? Sure capital costs are high for rail, but the same applies for modern aircraft and airports. The only real worry for rail is the cost of electricity, but I'm it must be a smaller proportion of overall costs than jet fuel for the airlines.

They deserve to make a decent return on capital too,

Oh, yes. Eternal growth... that's the ticket!


Correct analysis!

The one thing that people need to realize is that the air transport system is not merely a costly apendage but a vital link in our modern economy. Just as the federal govt subsidizes farming, banking, and commerce they must come to the aid of the airline industry. Allowing the airlines to fail, and canibilize each other with the expectation that we will have a vital link in our infrastructure intact is dangerous.

Prior to Reaganomics and deregulation the airlines were subsidized. If we still value the airlines (and all of the vast infrastructure that supports it) we have to look at subsidies to ensure the health of this vital industry.


You bring up an interesting point, the failure of the aillines (SIC), will pretty much do in the civilian production of Boeing, combined with their recent loss of the Air Force's tanker contract to overseas competition they are going to be in deep dreck.

How do the carriers afford to buy new planes when they can not afford fuel, and how does Boeing stay solvent if they have few or no (paying) customers.

Even if the carriers some how keep in the air they will be reducing purchasing new air ships this combined with metal fatigue and the subcontracting of maintenance the air fleet may degrade even further.

If Boeing had a 797 for sale today, with 80% of the fuel burn of the 737-700 with winglets, Southwest would order 500 (or more) of them.

400 frames is considered the minimum to pay for development costs on most a/c programs.

The 787 has been the fastest selling a/c launch in history.

And the Persian Gulf airlines will order LOTS of a/c :-) (See ELM).

Like the "middle class" in the Irish Potato Famine, someone will have savings with which to buy new, more efficient a/c and serve the remaining market.



I don't disagree with you but I posit a few questions.

How long before the 797 comes out, will Boeing have enough orders to keep going in the meantime and will the promise of the 797 actually prevent orders for their other models?

Also as business is business is Airbus working on this as well, and if so what if they come out first with the more fuel efficient air ship?

Also I wonder if the Gulf states airlines will become more active in the US? Would a sovereign wealth fund like SABICO be allowed to buy an American carrier, like they did with GE plastics, or would this be another Dubai Ports World situation even if it meant that there would be less choices in air travel.

Most likely date for 797 (737 replacement) is 2015. Speculation.

Airbus is behind technologically. Their new A350 will have composite panels attached to an aluminum structure. (a 787/777 competitor).

Both Boeing and Airbus have INCREDIBLE order books for the 737 & A32x narrow bodies. USA is only place in world not ordering in quantity.

I expect many orders to be canceled though.

AFAIK (may have changed) US citizens need to own 51% of US airliens (pun). However, new "Open Skies" will allow foreign airlines much more access to US markets.

I compute ticker costs for profitable airline by using the rough approximation that at $30/barrel, fuel was 10% of costs. Now fuel includes refining (no big increase in mark-up) and airliens are getting somewhat more fuel efficient (older a/c being scrapped, winglets, etc.)

So $400 oil = 250% increase in ticket costs (roughly) over 9/10/2001 ticket prices.

This should cut # of passengers roughly in half or a bit more (best guess in elasticity of demand).


It is my understanding that fuel costs represent on average 30% of an airline's operation cost. Keep in mind that airlines are recapturing only about 60 percent of their recent escalated fuel tab. So they have to recover that nut before they can even think of being profitable.

Factoid: Every penny increase translates to an an additional million dollars in fuel expenditures for the industry.

I disagree with Alan on this. If the 737 is unprofitable at $100 oil, then a "797" with 20% better fuel economy will be unprofitable at $120 oil, which is likely to arrive much sooner than the "797".

I think the current aircraft orders are based on a belief (hope) that oil prices will come down.

In a rapidly shrinking passenger demand (due to general economic ills), and with rapidly declining resale values of older aircraft, and of course tight credit, I expect that surviving airlines will have no choice but to keep the planes they have.

A quick back-of-envelope calc gives me $100,000 per day for fueling an active airliner (at today's prices), or $36.5 million per year. A 20% savings is therefore about $7 million per year. How many years to pay off the purchase cost?

I am still wondering why don't they fly the current planes a bit slower to save fuel? For slower prop planes the fuel consumption for the same distance is proportional to the speed squared. Not sure about jets, but it can't be terribly different, within a reasonable range of speeds.

No airplane is "unprofitable" as long as there are people willing to pay to fly. Basically, economy class tickets and business class tickets will converge somewhat, I think.

What a nonsensical oversimplification from someone calling himself "econguy".

It would seem to matter somewhat how many people are willing to pay how much to fly how often.

If fares increase to make up for increasing fuel prices, which by definition they must in order to be profitable, the ridership will surely go down. The ridership is already down from the general tanking of the economy anyway.

So you (the airline) run fewer flights to/from fewer cities. Flying becomes less convenient and frivolous, an altogether bigger and more expensive deal. So ridership goes down. Etc. Until you can't pay for the aircraft itself.

What would the fare realistically have to be to make a NY-LA flight profitable at $200/bl oil? $300? How many people will be willing and/or able to pay it?


The reduction in the unprofitable, short-hop routes is akin to shooting yourself. These routes "feed" much of the the profitable, longer-range flights.

This is one snake that when you cut off the tail, it does not grow back (and the creature dies).

Let me understand something, damfino.

Are you talking about using regional flights to connect to major airports for the more long range flights? i.e. take a regional jet from upstate New York to NYC so that you can get on the Intercontinential flight in NYC?

I think that's what you're talking about, and you're right about it. But...

If, and that's a big if, there were a more gradual transition in the structure of that industry, a resurgance of rail transportation could replace the regional flights and retain some of the profitibility of the longer flights.

However, I do not think that is going to happen. If there was such an attempt at a restructuring of the long distance transportation industry, it would be too little, too late to maintain efficient air transportation for any reasonable amount of time. At least that would still produce efficient rail transportation.

Yes, that was my inference.

The concept of substituting rail for commuter jets is enticing, but will most likely not happen due to cost, available right of ways, etc.

I think our mind wants to assume that the construct of our government, the infrastructure industries, and the public mandate will be operating as it is now. In a time of contraction, it is doubtful that the funds and will will be available, and I think we will have our sights on more pressing needs, like staying warm and keeping our tummies full.

We can run airlines on synfuels, so do we build an alternate electrically powered high speed railnet, or do we build enough synfuel plants to run the airlines?
We could also build synfuel plants to gas up the cars that are going to be used for the short haul flights that the airlines used to make.
The cost is going to come one way or another.
Oh, we will continue to use airliners to cross the oceans. Beats hell out of high speed passenger liners.

You aren't paying attention. The above poster postulated that the Boeing 737 is unprofitable with $100/barrel oil. An unprofitable "airplane" doesn't really make much sense.

Your post exemplifies a general trend among TOD posters, which is the inability to imagine the evolution to new and different systems. There is a tendency to oscillate between the idea that everything will be just as it is today, perhaps propped up by some sort of technological wizardy, OR that everything turns to dust and we're hoeing vegetables with sticks. I know you didn't make this argument specifically, but it is inherent in many people's comments. The more I think about it, the more it seems to me that the American Way of Life really is "non-negotiable" in people's minds. The idea that people would be just as happy living in something like a college dorm as they would be living in a McMansion meets intense resistance, even though many people did live in a college dorm and they really did like it better (taken in totality) than living in a McMansion.

In this particular case, there is a tendency to think that the air travel industry must exist exactly as it does today, OR that we'll be all getting here and there on bicycles or oxcarts. Conceptually, there doesn't seem to be much in between. Barring various "hard crash" scenarios, there will be an air transport industry in the future. It will look different, of course. And, it will be profitable (assuming it is privately-owned), as that is a necessary condition for continued corporate existence.

As it is, there are quite a few people paying perhaps $1500 or even up to $3000 for a NY-LA roundtrip. They're in business class. In the future, we may have 15 departures per day on that route, among all carriers, instead of perhaps 100 today. Both in pricing and volume, this would basically be a return to something like the late 1960s I figure.

With a little extra dough, the airlines might even be able to pay people better, and we could enjoy a return to the hot-chick stewardesses from that era.

Higher oil prices
higher ticket prices
fewer passengers
fewer planes and airlines
rinse and repeat

In a socio-economic system which only values "growth", this is a death sentence.

As George said in It's a Wonderful Life, "He's not selling, he's buying!" and that's what going to be happening. Consolidation.


All these discussions about reduced capacity and smaller airlines, smaller fleets, etc talk like all the support structures of the airlines can be downsized in a linear fashion. I just took my daughter to the local airport, and they are STILL building addtions and newer parking decks etc.

How about the food supply companies?
Downsized? or gone completely. What is the net "Rippled Thru" effect on jobs on that one?

How about all the shops in the airport malls? Downsized, or gone completely?
What is the net "Rippled Thru" effect on jobs on that one?

Vending companies, valet parking, taxis, bus services etc, etc.

Many MANY of these systems like airlines that worked at a certain level of size and support structure CANNOT be downsized proportionately. They either work at this level or they are gone.

Ken Wilbur's concept of Holons is a good model. Holons breakdown into smaller base structure holon of less complexity and purpose.

Why is it that when I read this stuff about the 797, the image that forms in my imagination is of the last, largest, forever unfinished stone heads on Easter Island?

Because you have a head that is screwed on correctly?

the airlines are the shambling undead. they are dead but don't know it yet.

Let's hope there'll be enough superrich folk needing to fly to fill 500 airframes.

Mass air travel is dead at $120 a barrel.

My theory is that once the airlines have all gone bankrupt (for good, not just "restructured") and sold off their assets at fire sale prices, the new airline companies that buy the planes will operate on something more like a charter airline model. If you want to fly somewhere, you'll log on to a website a little like Priceline, say when and where you want to travel and how much it is worth to you, and if enough people can be put together for a flight, then the plane will fly; otherwise, it stays on the ground. Air travel will be a lot more expensive and a lot less convenient than at present; in general, far fewer people will fly, and they'll fly a lot less often, but it will still be possilbe for those that really need to and can afford it.

I imagine flights to swing back towards the "good old days" in regards to it being a more luxury thing, where every seat is at least "business class" and many seats are first class. As the price goes up, only the more wealthy will be able to afford airfare, and they will expect service to go up as well. I will pay $250 for a roundtrip flight if I'm in a small airplane with tiny seats. If I'm paying $800, I'm expecting a nicer ride.

That is exactly why I fly Northwest instead of Southwest or JetBlue, or whatever airline. I get upgraded to first class, and it's worth it to me to pay the extra $30 or $40 that a ticket usually is compared to Southwest. At the end of the day, I arrive more refreshed due to a less stressful ride.

I anticipate air travel to survive, but become a luxury item like it once was.

I remember flying from the East coast out to LA in the mid-60's with my family for a vacation - my first flight! A big old smokin' TWA Convair 880 out of Idlewild Airport, I mean JFK. It just blew my 11-year-old mind...

It was a very big deal, very exciting, and we got all dressed up for it! I think we'll go back to something like that, or at least transition through it before it devolves to the "charter" model outlined above.

That was when airlines were still regulated. They were deregulated to bring us all cheap and ubiquitous flights. If you could afford it, those were indeed the good old days. And the food, they really had real food, was great.

Maybe the demise of the airline industry will be stopped by reregulation or maybe its demise will help the trains. I hope so. I'm taking a round trip train in May from Denver to San Francisco. And if there were more choices regarding train travel, I would use it as my exclusive form of travel over 75 miles.

We're getting what we pay for, a generally crappy experience.

Hi Alan always follow your rail comments with interest, we could really do with turning the clock back over here in the UK to before the 60's and Beeching, when you could get virtually anywhere in the UK by train and move anything. As a bit of nostalgia shall be up early tomorrow to picture a Gresley A4 steam loco running up the East Coast main line, stable partner to the world steam speed record holder, Mallard.

Anyway digress. I have to say I think you are wrong. The $100 - $120 level of oil is a very significant marker in the Aviation industry. In essence the quote regarding $100 oil is true. Under current airline models there are no US airlines that will survive long term. Southwest is only a front runner through aggresive hedging. The difference between $100 and $120 and higher is to the speed that the stake is truly driven through the heart of this industry. I have qualified this to US airlines only on the basis that with the weak dollar airlines operating outside the US are feeling the pain but not quite as quickly.

My personal view is that we will globally start seeing failures quicken as the price increases. Running an airline is always a balance between costs, fares and load factors. For each hike in the oil price fare increases and load factors have to be carefully balanced to recoup extra money. Modern revenue control and protection systems that airlines use must be a nightmare to constantly tweek. Nationalisation of carriers and the re-instatement of flag carriers I believe is quite probable. There will be a neccessity to maintain certain air routes for stategic reasons. But I think the figure will much lower than you have stated, maybe around 10-15% of todays capacity and only the selected few will travel.

Which brings up an interesting point in respect of Alitalia. The EU will not allow anymore government subsidy of the airline and its only hope of survival is probably the KLM/Air France take over. The Italians in my estimation should not lose their 'flag carrier' So I wonder what the EU's reaction would be to an airline being operated by the military. In essence this already happens with the RAF. There is a Brize Norton to Port Stanley (Faulklands) service that commercial tickets are sold on. So a trimmed down Alitalia operated by the AMI and subsidised by the Italian government where needed protects their national 'flag carrier' for the future. Ultimately what survives of the industry may be run this way anyway.

we could really do with turning the clock back over here in the UK to before the 60's and Beeching, when you could get virtually anywhere in the UK by train and move anything.

Never mind the 1960s - what could be done prior to the 1860s!
Dundee and Newtyle Railway

The Dundee and Newtyle Railway opened in 1832 and was the first railway in the north of Scotland. The railway was built to transfer goods from Strathmore to the port of Dundee and was chartered with an Act of Parliament that received royal assent in May 26, 1826 and opened in 1831.[1] The railway originally ran between Dundee and Newtyle.

The line was originally 10½ miles long with a 4 ft 6 in (1,372 mm) Scotch gauge. Construction costs were obtained from a capital of £140,000 in shares and £30,000 in loans. In 1846, the railway was leased in perpetuity to the Dundee and Perth Company.[2]

The route included three rope worked inclined planes which consisted of stationary steam engines to pull the trains uphill. There was also a tunnel required to take the line through Dundee Law.[1]

Yeah a 10.5 mile railway. If only we could replicate such amazing feats.

It was a "start" and an amazing piece of engineering for the 1830s (tunnels, steep inclines worked with stationary steam engines, passenger services as well as goods). Of course it would become part of the national network and was finally closed as part of the Beeching cuts in the 1960s - 133 years after it opened.

Beeching Axe

Over 4,000 miles of railway and 3,000 stations were closed in the decade following the report, being a reduction of 25% of route miles and 50% in the number of stations. To this day in railway circles and amongst older people, particularly in those parts of the country that suffered most from the cuts, Beeching's name is still synonymous with the mass closure of railways and consequent loss of many local services.

The Allegheny Portage Railroad, opened in 1834, had all that AND they carted barge boats (broken into 3 pieces) over 10 inclines and 36 miles.


Obsoleted by the Horseshoe Curve and Gallatzin Tunnels.

Best Hopes for Railroad History,


I think you ought to incorporate the technology of the Lynton cliff railway into your schemes, Alan!

The railway comprises two cars, each capable of transporting 40 passengers, joined by a continuous cable running around a 5ft 6in pulley at each end of the incline.

Water feeds through 5-inch pipes from the West Lynn River — over a mile away — into tanks under the floor of the upper car. Each car has a 700 gallon tank mounted between the wheels. Water is discharged from the lower car, until the heavier top car begins to descend, with the speed controlled by a brakeman travelling on each car.

The parallel tracks (which bow out at the centre point, to allow the cars to pass) rise 500 feet and are 862 feet long, giving the line a gradient of 1:1.75.


Who is worried about fuel costs or frightened of inclines when you have Victorian engineering to help you out? ;-)

The fuel costs are killing the airline industry, only Southwest has hedged their fuel costs, this results in their success financially,

In July of 2005 David Grossman wrote in USA Today:

Southwest reported a profit of $235 million and saved approximately $351 million during the first six months of this year. If Southwest hadn't hedged, that profit would have been a $116 million loss and the first time in 57 consecutive quarters that the company did not report a profit.

Ironically, in all likely hood Southwest air's savings have been passed on as higher fuel costs to the other airlines.

We may end up with all of the other carriers going under, then sw will be the last one standing and even if their hedging contracts expire or go under water they will be able to price their flights with the power of monopoly.
Unless the government decides that the airlines cannot be allowed to fail we may end up with another bail out with a airline run by the government or a government sponsored entity. Air travel will become the mode of travel of the rich and those who's travel is paid for by their employer etc.

Also companies like fedex and ups will either have to drastically raise prices or change their business model to focus more on ground shipping.

This begs the question who will pay the bond issues on, and maintain all of the nations airports that will quickly become obsolete.

Southwest reported a profit of $235 million and saved approximately $351 million during the first six months of this year. If Southwest hadn't hedged, that profit would have been a $116 million loss

This ignores the income taxes paid on that $235 million. Without fuel hedges, SW would have been at breakeven, + or - a few million.

And breakeven, with their robust financials, pricing power, etc. will allow for survival.


Yes, at $112. I would assume they don't look so strong at $400 oil.

Southwest has what is known as "pricing power". They can set fares and no one will undercut them.

At $400/barrel, they could increase fares 250% (rough calc) and with a good load factor, break even or make a decent profit.

How many fewer people would fly with fares up x2.5 ? How many other airliens (pun) would SW need to compete with for the diminished customer base ?

And how would airport landing fees be changed ? (They still have bond debts, etc.) ?



Southwest reported a profit of $235 million and saved approximately $351 million during the first six months of this year. If Southwest hadn't hedged, that profit would have been a $116 million loss

Kinda makes me wonder... if Southwest had just held their hedges and not bothered to fly at all, how would they have done...?

British Airways says it cannot make profits if oil goes over $120. Low cost operators like Ryanair and EasyJet are struggling with fuel costs despite, in EasyJet's case, a pretty modern fleet.

They are still planning to increase capacity in the hope that passengers will appear to fill the extra seats.

I'm not so sure. Passenger volumes on European flights are falling despite ludicrously cheap fares. People are cutting down on discretionary flying.

Maybe that's currently got more to do with the recessionary loss of consumer confidence than with high oil prices but I suspect that a lot of airlines that might have weathered either a recession or high fuel costs won't survive both.

Hello TODers,

Does anyone know the R-value of the insulation of an aircraft fuselage? I would assume it is pretty high because it is damn cold at 25,000 feet.

There are lots of planes parked in our Southwest [and lots more to come]--could these be emergency A/C shelters? I envision cutting off the wings to make lightweight and strong railbikes, then the fuselages quickly being half-buried or more to reduce solar input, and dirt piled over the fuselage except by the doors.

Or would we be better off to section the fuselages, then quickly strap them to the railroad flatcars [currently sitting unused at railroad sidings] to jumpstart AlanfromBigEasy's ideas? The emergency exit-airbags will be convenient ramps where a train station is required, but no concrete can be acquired.

Uh-oh, it just occurred to me that the fuselage is wider than most train tunnels. Never Mind!

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

Actually Boeing ships 737 fuselage sections from Wichita Kansas to Seattle by rail. Not EVERY RR tunnel, but some fit :-)

Crash worthiness of fuselage sections on railroads "not good",


"Crash worthiness of fuselage sections on railroads "not good","

I wouldnt suspect that they are any better hitting the ground after running out of fuel either.

Does anyone know the R-value of the insulation of an aircraft fuselage? I would assume it is pretty high because it is damn cold at 25,000 feet.

It does not have to be. You can opt to heat the inside of the plane.

The standard polyurathane is R7. Some of the better is R12 per inch.

They would keep out the rain and wind - so as shelter sure. But its a long way from a house to an ex-airplane. :-(

Rice prices 'to keep on rising'


No problem we have lots of oil

This is a new presentation by Al Gore last month. Watch it.


I enjoyed watching this very much, he understands. The media noise machine is off scale blasting the idea of a carbon tax, but there is no option really.

Thanks for the link, Bill. I just watched it and found it to be good.

I still would like to see him incorporate fossil fuel depletion into his message.


IMO Gore does the cause a great disservice by preaching that we can address this huge issue and turn a good profit while doing it.

Talks about conservation (aka, not using energy) being one of, if not the best thing we can do.

Yea, now that’s a big production/profit driver.

How many new industries have been born and bubbled while decreasing total energy consumption?

Is it even remotely possible?

Global warming may or may not be man made, in the end does it matter? Peak Oil is definitly real. And of course, Al Gore is still a moron and hypocrite. Anyone else think he is trying to cover up Peak Oil by raising carbon taxes so high we can't afford them?

We have a carbon tax. It's called $100 a barrel oil. Coal and natural gas prices are bieng dragged up with it.

Right you are. Al Gore is doing a pretty good job at it. The solutions to AGW are exactly the same solutions that can help with PO. However, some of the solutions to PO could be disasterous to the climate (i.e. burning coal). From that point of view it makes sense to push global warming as the main reason to conserve and switch to alternative energy.

If PO was the only problem, coal would be the way to go, and people would push for it. Since burning coal is hazardous to the biosphere, make sure to argue the points that rule it out.

However, he also talks alot about urgency. If he did start talking about resource depletion, it would add urgency to his arguments, because that is a much more immediate threat to the American way of life. In that sense, he should start talking about resource depletion, but he should also make sure to emphasize why coal is not the solution that we need.

And finally, to those on this board who have a negative opinion of Gore's work, while I respect your opinion I think it's somewhat incomplete. While he may be living a very comfortable life because of his work, don't forget that he is doing alot to get the word out and push for alternatives. At least he's doing something at a time when not many others care to do anything at all.

Case in point, Brad Pitt helping to put sustainable housing in New Orleans. Sure, he put a tiny fraction of his wealth toward the project, and sure you could argue he didn't do that much and he still lives a moviestar life. But hey, it's still better than sitting back and doing nothing.

My whole issue with Gore is that he is a politician and not a scientist even though he takes credit for "creating the internet" and global warming research even though Bush's PERSONAL carbon footprint is alot less at his Crawford Ranch.

To me, Gore is no different than Cheney, an elitist who is trying to make sure that we are all his serfs/share croppers in the coming years. Just because the message is different doesn't mean the messanger doesn't have the same motives.

"My whole issue with Gore is that he is a politician and not a scientist"

So? You can't talk about what scientists are finding if you're not a scientist?

" even though he takes credit for "creating the internet and global warming research"

Utter arrant bullshit.

"To me, Gore is no different than Cheney, an elitist who is trying to make sure that we are all his serfs/share croppers in the coming years."

Yeah, sure.

I think you need to get some news from somebody besides El Rushbo.

Hi sgage,

2nd that...


Third. Anyone ignorant enough to repeat that internet bullshit is pretty damned ignorant. Just the kind of fool Dumbya, Cheney and Exxon drool over.


My whole issue with Gore is that he is a politician and not a scientist even though he takes credit for "creating the internet"...



Gore is no different than Cheney

Yup, Cheney is right on track to win the next Nobel Peace Prize! Bwahahahaha!

The whole left/right brain discussion yesterday was rather unsettling to me. Not that there aren't some interesting issues to be examined, but I thought there was a general conflation of a perhaps interesting point about culture, writing and cognition with "being Asian", "holistic worldview", etc.

I inquired of a Chinese specialist colleague about this, and she wrote back with this from a listserve she monitors: "As a cultural anthropologist, I am not threatened by the idea that different parts of the brain are used in reading different forms of writing, but it is upsetting to see how quickly such findings are linked to totalizing conceptions of difference between "Asians" and "North Americans"." [Andrew Kipnis Co-editor The China Journal]

Also, this interesting study on dyslexia just out: http://www.washingtonpost.com/wp-dyn/content/article/2008/04/07/AR200804...

This seems to parallel discourse about "those Chinese" and "the Chinese middle class" being the problem with demand pressures on declining oil supply, ignoring the globalizing linkages between China's booming economy, US corporate outsourcing, and our ongoing voracious consumption (issues which have been raised before on TOD).

I am not threatened by the idea that different parts of the brain are used in reading different forms of writing ... the Chinese specialist wrote. That is consensual, no question. Other qus. relate to culture, stereotype, etc.

That is more or less what I said, about the substantive issues, in post:


There is complete agreement on all this. And the agreement is not self-serving, supporting of that or that Gov, pov, culture, etc. It is basic, well know science, accepted by all professionals.

Loggers and truckers, mills and anyone else using diesel fuel at $4.25 per gallon (and climbing almost daily) are being crushed by these huge fuel bills, along with higher insurance, labor and equipment costs, with likely no chance of passing on these costs.

Good. Leave the trees standing, to provide habitat. Let their leaves & branches fall to rot back into the forest soil, maintaining its texture & fertility and sequestering carbon as refractile humic & fulvic compounds. A single age woody monoculture isn't a forest; it's a tree farm - a type of perennial agriculture. It doesn't support forest biodiversity. Selectively harvest what you need for implements, building materials & fuel, but don't compromise the integrity of forest ecosystems. Destroying a forest for any reason is a crime against humanity & against nature. Following the collapse anyone taking more wood or other forest products than are necessary for meeting the immediate needs of a family will be shot.

That's a pretty quick jump from Holistic Natural Science to Totalitarianism..

Somewhere inbetween lies the truth..

By the way, I do agree that the diesel supply problem is the most hopeful sign for our overzealous de-forestry activities. I'm hoping this really has an effect in the Rainforests.

There have been some very promising moves in Maine as both environmental groups and logging companies have worked together to define healthy forestry practises, while holding larger contiguous sections of woodland intact against development and sprawl.

Knock wood that this continues in a productive and healthy way.

All other things being equal, the most remote logging operations would become uneconomical first, I would suppose. Lots of other factors might still be overshadowing fuel costs though.

Anyone in the logging business who could say if this ("trimming" especially remote operations) is happening?

I just heard a story yesterday that a Maine state Senator proposed a 2 and 3 dollar hike in hunting fees to pay for the increasing fuel costs for Maine Forest Service (Game Wardens) personnel.. it strikes me that again and again, we cut other things and charge other sectors so that we can keep sending that oil money to those producers.. so that I have to accept that energy costs are far from the first to have to face the sacrifices when costs go up.

License fee proposal divides Maine sportsmen

"Sen. Bruce Bryant, D-Dixfield, said the modest increase was needed to offset a funding shortfall that has forced DIF&W to reduce fuel costs by limiting wardens to 60 miles of driving per day. Additionally, DIF&W officials predict the warden service alone is facing a shortfall of up to $540,000 next fiscal year."

EDIT: Probably misspoke with 'Forest Service' >> Dept Inland Fish and Wildlife DIF&W

Got a friend who operates a firewood business. They will no longer take orders for anyone who needs delivery more than 20 miles away. Part of it is fuel cost, the other part is a large increase this year on wood sales close to his home. A lot of people dusted off the old wood stove this year.

Darwinsdog: "Following the collapse anyone taking more wood or other forest products than are necessary for meeting the immediate needs of a family will be shot."

Without the assistance of cheap fossil fuel energy, it will be impossible for individuals or groups to take more than necessary for their own subsistence.

In some places it could net you a big fine, or you might even end up in jail.

Lake Tahoe resident could face prison over tree removal

Environmental cops at Lake Tahoe say Patricia Vincent deserves a prison sentence and a huge fine.

Her alleged crime: chopping down three trees on federal land that improved her backyard view of the lake.

Vincent says it was an honest mistake, but now she's believed to be the first target of criminal charges of illegally cutting Tahoe trees.

It's the clearest signal yet of how serious coniferous crime has become as regulators fight to preserve the Sierra Nevada jewel Mark Twain once deemed "the finest view the world affords."

Since 2002 the Tahoe Regional Planning Agency has fined violators a combined $1 million for such violations. "People up here have an emotional, gut reaction to the cutting of trees. It offends people," TRPA spokesman Dennis Oliver said on a recent afternoon, driving his Toyota Prius through a neighborhood of illegally pruned pines. "The thing is, the lake looks beautiful through the trees, anyway.

EDIT: removed extraneous unfinished comment :)

Leanan: "What if you just 'cut them down because you want a prettier view?'".

That won't happen either. The energy it will take to cut those trees down will exhaust the ability to cut other needed trees down instead, so those other trees will then remain upright. Net result: no unneeded trees cut.

Hello Dunewalker,

Wrong,wrong! Google potash* and the first US patent--people burned trees for a very good living long before FFs were widely used--we are headed back to that economic model unless Earthmarines protect tall trees for the later building of sail-powered Clipperships. I have posted much before on this topic in the archives.

* Hint, hint: pot-ash

EDIT: yes, you will be walking on sand dunes!

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

Bows to totoneila. I knew someone would poke this. Nevertheless, fossil fuels have enabled the mass destruction of the planet's forests. Yes, people wrecked forests long ago. Even Thoreau's Walden Pond--he had 2 acres of beans there only because it had been deforested already and that was in the mid-1800s. Ironically, today, as a state park, his cabin site & bean field are in deep forest again.

Edit (semi senior moment)

Nothing beats the Appalachians for some git down tree elimination. Must be some awesome views.


Sorry if this doesn't link. My html skills are a tad rusty lately. Check this site out tho, if you haven't already. The item at this site I'd like to point out is "Coals dirty secret". Warning: Not for the environmentally squeemish.


RE: "shaking off distaste for small cars"

It used to be if you drove a small car in the United States, you were either a cultural maverick living in California or a Canadian tourist. No more

I note the nicely done journalistic twofer: 1) Notice how the poor or economically disadvantaged get "disappeared", and 2) Never pass up a chance to sneer at California. A totally content free, gratuitous lead. Cliche-based journalism, not really remarkable just tiresome.

RE: Conservative Environmentalism

By nature, every conservative is almost required to be an environmentalist of sorts. If you think about it, certain forms of environmentalism fall directly in conservative territory, but even many conservatives do not realize this because of an impressive PR campaign from the left.

Conservatives have an almost thirty year record of fighting energy efficiency, conservation, or innovation tooth and nail. During the same period, they sided with big business against the environment and the consumer every time ignoring warnings from scientists about PO and AGW.

As much as conservatives denigrate President Carter, he 'got' peak oil. It's too bad the next president we have will deal with PO by looking down from the top, with 30 years of building time for alternative energies, public transportation and smarter building and urban designs wasted.

RE: The New Hampshire working forest is in crisis

Talking with a self loader (logging truck with small crane for small sales) the other day, his fuel costs alone are now over $1 per mile roundtrip. Local mills are laying off, stumpage prices in the basement. Timber communities are getting pinched again. The plea in the article for forest use for energy is not going to work on a scale sufficient to matter, either for the forest community or energy. It's the transport costs that will keep forest biomass receding from it's use as a biofuel.

Prior to trucking, logs were transported by water or rail. It required huge tracts of virgin forest to make that a go. Often more than half of the timber would be used onsite to construct the flumes.

Jevon's paradox at work

Geothermal plumbing doesn't catch the eye like a bank of photo- electric cells. It doesn't turn heads like a windmill.
It just brings 50-degree groundwater inside, where a heat pump kicks it up into the comfort range.
In the past year, the combination cut Williams' utility bill in half; he paid out $300 per month to heat a two-story, 36-by-48 structure with 18-foot high ceilings.

Terra Preta/Biochar

...(charred biomass) has an unprecedented ability to improve the fertility of soil - one that surpasses compost, animal manure, and other well-known soil conditioners.

(emphasis added)

Firefox wouldn't give me the whole url but it is on http://www.eurekalert.org It's article 1031008 released on April 10th.

I think the quote above is amazing!! This is the forth year I've been playing with it and have seen good results which I have to qualify by saying I haven't done any statistical comparisons.

The other thing of note in the article is that they only used 2% biochar. In my first beds, I used 2.5% and 5%. My rationale was that the photos of Terra Preta soil strata looked grayish so I figured it had to have a fairly high percentage of charcoal.


Firefox likes me better than it likes you. :-)

'Black gold agriculture' may revolutionize farming, curb global warming

Thank you Leanan.

I just switched from IE to FF a week or so ago because a few of the TOD links when loading (like sitemeter) crashed IE.


To be honest, I've blocked Sitemeter with the AdBlock extension. It just slows the pageloading down too much.

I've also blocked scripting from TOD, with the NoScript extension. The new collapsible thread thing made the site too buggy. I can't collapse threads any more, but I no longer get weird error message popups all the time.

Same here - the thread-thingy was quite flaky. NoScript to the rescue!

Thank you for stopping the damn scripts!

This is from personal experience but this is already practiced here in the US in a slightly different form.

The spreading of ashes for the purpose of soil build-up and nutrient value has been taught for some time. Farmers “buy” sawmill co-generation ashes and char for the price of free to haul off and spread it on their fields.

Maybe I missed something of why this is a new find? I will agree it is an excellent way to reduce your fertilizer bill.

Ashes are different from charcoal. Ashes provide nutrients, but if you are not careful you will throw your soil pH all out of whack on the high side, leading to issues of nutrient availability and plant diseases. Potatoes are very susceptible to various scab diseases and such at high pH.

The "biochar" or terra preta provides cation exchange capacity to the soil, such that the nutrients are less apt to be leached away, and sort of time released.

In any case, my understanding is that the "biochar" thing is quite useful in wet tropical situations, but much less so in the case of northern soils, where other things are limiting. Like, e.g., cold :-(


If you go to the press release, you'll find that their tests were conducted on winter wheat...hardly a tropical crop.

Mingxin Guo and colleagues state further in the press release, "We want to call it the second agricultural revolution, or the black gold revolution!"

They further noted that even 1% biochar increased yields.

I would like a link to any paper that states that CEC is it's main impact on productivity because that isn't referenced in any research papers I have seen.

In fact, a friend of mine who is involved with a county department of Ag helped his daughter do a science project involving biochar. The experiment was simple since she is in the 5th grade. They used potting soil and added charcoal from me to some of the pot tests. They then applied some 15-15-15 fertilizer and then leached the pots with water to extract the fertilizer. The test crop was corn. The results; the tests with charcoal did better so this doesn't sound like a CEC thing.


??? It sounds _exactly_ like a CEC thing. That is exactly what you'd expect.

And pot tests don't necessarily have that much to do with the real world of real fields.

Look, soils and crops and the soil history and etc. and so forth are extremely idiosyncratic, as I suspect you know. I'm not trying to throw a wet blanket on biochar, but the notion of this miraculous revolution in agriculture no matter where or what is just absurd.

It's not just the cation exchange. That is the purely mechanical, science fare, inorganic type effect.

After a couple of years the bacteria and fungal growth is the point. Those are the things(and nematodes etc) that take the inorganic elements and compounds and bind them into useable organic versions for the plant roots. The carbon charcoal is like a microsopic coral reef for the growing of the microfauna of the soil. It helps generate the micro organisms that support the plant life. We use charcoal for a water/air purifier because of it's surface area and what it does. That same large surface area is what gives home to the bacteria/fungus.

Think total support structure for plant life. Think of all the life in the soil supporting each other.

See these.

Some good photos(See the one of the root tip),
listen to Dr. Elaine Ingham

Soil food web - opening the lid of the black box


The stars of the underground are the bacteria and the fungi.

Among the services that bacteria and fungi provide for plants:

Building soil structure. Bacteria glue together small aggregates (clumps of soil); fungi glue them into larger aggregates.

Storing nutrients and releasing them in forms plants can use. A "microbial sponge" Moldenke calls the phenomenon. One way micro-organisms do this is by incorporating nitrogen and other nutrients in their own bodies - a much less leachable form than if the nutrients were in their inorganic forms

Protecting plants against diseases and pests. Beneficial bacteria and fungi out-compete pathogens and occupy potential sites of infection on the plant.


Symbiotic Fungus: {picture of root tip)

Feeder root of a plant containing the nutrient-absorbing parts (dark blue) of a symbiotic fungus. Vesicular-arbuscular mycorrhizae ("VAM") fungi like this one colonize the root systems of most plants, providing nutrients and water to the plants, as well as protection against parasitic nematodes and root rot fungi.




The Living Soil: The Importance of Soil Organisms

An acre of living topsoil contains approximately 900 pounds of earthworms, 2,400 pounds of fungi, 1,500 pounds of bacteria, 133 pounds of protozoa, 890 pounds of arthropods and algae, and even small mammals in some cases.(2) Therefore, the soil can be viewed as a living community rather than an inert body. Soil organic matter also contains dead organisms, plant matter, and other organic materials in various phases of decomposition. Humus, the dark-colored organic material in the final stages of decomposition, is relatively stable. Both organic matter and humus serve as reservoirs of plant nutrients; they also help to build soil structure and provide other benefits.

The type of healthy living soil required to support humans now and far into the future will be balanced in nutrients and high in humus, with a broad diversity of soil organisms. It will produce healthy plants with minimal weed, disease, and insect pressure. To accomplish this, we need to work with the natural processes and optimize their functions to sustain our farms


our current industrial farming pours thousands of gallons of pesticide on thousands of acers, on to genetically mutated plants that were breed to grow in pure poison.

Our farms grow plants that are like a body builder using steriods. Externally, it has Incredible bulk and tone, but internally, long term it's distroying the body at the same time.


I have studied soil science extensively over the past 30 years, and am a firm believer that we are still only at the dawn of understanding soil ecology. However, I feel I have a fairly rich understanding of the living and non-living components of the soil ecosystem, and their relationships, but learning more all the time. Let's just say that my own vegetable garden is no-till, and rather Fukuoka-esqe.

It's just that the euphoric panacea talk sets off my alarms. I teach sustainable agriculture, and I'm always striving to understand just what is going on in the living soil, and if there's anything I've learned, it's the idiosyncratic nature of each soil/climate/plant system.

The soil is an ecosystem, and each soil in each climate has a different set of challenges and limitations (from a plant's point of view). In some cases, for sure, biochar might just be the ticket. I simply shy away from the notion that it can make everything better everywhere.

I guess what I'm saying is that one size does not fit all.

PS - I really like the notion of charcoal structures as "coral reefs".


Sorry, my post wasn't in reply to your statements really, I just didn't know where I could throw the above into the conversation on charcoal. I am just a student of soil myself. A freshmen at that. But I can "Feel" it's right path. The two articles kinda sum up my current feelings. I'm also reading a lot of Albrecht et al.

Feed the Soil, The Soil Grows the Plants. I also think the coral reef thing is a good mental picture. The Round-Up Ready/ BodyBuilder on steroids is another mental picture that strikes me as true.

I agree on the idiosyncratic nature of each place and soil. One size or practice certainly does not fit all.

I am learning how different weeds and pest/diseases are symptoms of different soil problems. How taproot weeds go deep breakup soil, and bring up minerals from the depths.

I was wow'ed when I first saw a cross section picture of a wheat plant that had 10'-12' deep roots, and that beets go 6'-8' deep and that good soil should look and feel like dark chocolate cake. Moist, with cavities and air holes all thru it. NOT walked on or packed down.

Lot to learn, lots to share.


is charcoal from either soft or hardwoods ok?

i seem to get more charcoal left in my woodstove, naturally from softwoods ; pine especially.

i'll give this a go. thanks.

In BC we've been hit by a mountain pine beetle (MPB) epidemic that has decimated the lodge pole pine species. The total area affected might be larger than Montana.


We've entered into a stage of using this soon to be dead wood for biomass electrical generation. A company based in BC has developed an industrial scale pyrolysis system for converting wood chips and waste into gas, oil and char. The economics are exceptional. The syn-gas (very clean and dry) would be used for firing a turbine for electrical generation; 20% of the oil is fed back to fire the system and the balance will be sold for either home heating or bio-diesel production; and the char can be used for boiler feed or fertilizer. We might be able to combine the char with the large amount of cow manure in the local ranching areas to create a great fertilizer.

I knew the char had high agricultural value because I've used the ashes from my charcoal BBQ in the garden for years. If we want to get the enviro-nazis on board with this type of development, knowing we could be feeding the world with non-chemical based fertilizers might raise the warm and fuzzy quotient.

Sounds about right.

The savings are even more significant for blue-collar companies and institutions with massive fleets of trucks. The most dramatic impact of hybrids is likely to be industrial. Business investment may be in danger of slumping, but companies that make hybrid-drive trains for trucks are booking new orders. Eaton Corp., which makes hybrid-power systems that can be incorporated into trucks, has made deals with Federal Express and Coca-Cola, which in February ordered 120 hybrid trucks. (Here are some other wins.) Today, Eaton announced it would build 207 diesel-electric hybrid systems for buses in China. Oshkosh Truck, which makes even bigger trucks, introduced hybrid-drive-technology vehicles in 2006. Its new ProPulse technology is being used for military vehicles.

Pretty much every blue-collar blue chip is getting into hybrid trucks. UPS is experimenting with hydraulic hybrid technology. Wal-Mart last year took delivery of its first hybrid trucking rig. Last month, Peterbilt Motors said it was starting full production of medium-duty hybrid trucks. And it makes sense. The gas savings and tax incentives rise with the size of the vehicle. With gas at $4 per gallon, a trucker who drives 30,000 miles annually at five miles per gallon could save $4,000 a year if he could increase fuel efficiency to just six miles per gallon.


I've been following a thread on the rec.auto.makers.chrysler news group entitled: "American's Don't Love their Trucks Anymore". It's always interesting to see how people react to high fuel costs, particularly owners of full-size trucks and SUVs. Here are a few comments that caught my eye (I'd laugh if it weren't so sad):

Hmmm. I still "love" them. I've got three. They may not be the best business decision for some folks, but I'd have a hard time hauling three dirt bikes around in a Prius.

Full size Chevy with a small V8 and I can get ~20 on the road if I'm being conscious of it.

Yes, I can't wait until it gets back down around $2.00 or so, but I'll just bag one or two long trips this year and stay a little closer to home. Works out for everyone.

I just convinced two of my staff members - owning a Yukon XL and F150 - not to trade in their 'gas guzzling' trucks for some POS subcompact eco-unfriendly battery mobile like the prius or the volt.


Before you trade in your Hummer for a Prius, read this: http://clubs.ccsu.edu/recorder/editorial/editorial_item.asp?NewsID=188

I have a 2004 F-150 4x4 that I will be keeping. It gets fairly decent highway mpg and isn't anywhere near as bad as large sedans of the 60's and early 70's.

I had been looking at a 2008 F-250 4x4 turbo diesel, but after seeing diesel going for $0.90 more than the regular that my current truck uses, I think that I will stick with my truck and buy travel trailers that are within its pulling range. At $4.129, it would be a pain in the wallet to fill-up the F-250 with diesel.

I love the "I can't wait until it gets back down around $2.00 or so comment. Comforting, too, to know a Hummer is less environmentally damaging than a Prius. Life's damn good when you disconnect from reality.


"Yes, I can't wait until it gets back down around $2.00 or so, "

That's a good one.

New cracks suggest largest remaining Arctic ice shelf destined to disappear

WARD HUNT ISLAND, Nunavut — New cracks in the largest remaining Arctic ice shelf suggest another polar landmark seems destined to break up and disappear.

Scientists discovered the extensive new cracks in the Ward Hunt Ice Shelf earlier this year and a patrol of Canadian Rangers got an up-close look at them last week.

“The map of Canada has changed,” said Derek Mueller of Trent University, who was amazed to find how quickly the shelf has deteriorated since he discovered the first crack in 2002.

“These changes are happening in concert with other indicators of climate change.”

Nonsense.. the 'Arctic' is just a theory!

now if only those climate scientists had some oil engineers on the case - then we could maybe believe in the artic...

No no, it's really there. Lake Arctica. Fond child hood memories. My dad had a cottage up there right on shore. We'd go up there on the weekends in the summer to water ski and go tubin'. Oh what precious memories. We'd have to constantly dodge those blueish white thingies floating all over the place, but that was half the fun!

:^) Jeff

It isn't really ice. The liberal media just fake the ice with big styrofoam blocks.

They film all those arctic pictures on the same lot where they faked the moon landings!

For much of the earth's past the world has been free of ice, even at the polar extremities:


The worse ice age created a snow ball earth.

It is not as if by refusing to use fire building technology invented about 100,000 years ago we might be able to control the earth's climate. The expanding population has been making the deserts green with irrigation. Less light and infrared energy was reflected back to space as it was absorbed in the greens layers of desert irrigated crop lands.

Global warming critics may be vain in their efforts to cool the globe without achieving voluntary zero population growth/decline. Even without humans impacting the scene, things might heat up. As time goes on the sun might evolve into a red giant star eliminating any hopes of global cooling and potentially extinguishing life on earth as we know it. There were also threats of super radiation shock waves from hypernovae within the Milky Way galaxy.

Carpe diem.

Cept our cereal crops are evolved to thrive in a very narrow band of climate/day lengths.

So it might not be a big deal for the earth to be ice free. Such a climate might not be so good for your food production.

Never mind the billions living along the coasts.

Ok, I get it, the earth is warming. No problem
I also get CO2 allows light in but does not allow as much heat, infrared radiation, out. No problem

So we can use the Al Gore strategy of wealth redistribution, buying and selling of carbon credits, to continue putting CO2 into the air, but we can share the wealth, and blame, with those country's that don't actually polute. Just explain to me how exactly this helps?

I have a better 'plan' Monday morning we wake up and shut down ALL coal powered generators, outlaw all ICE engines, outlaw pulling up any more oil, outlaw cows, outlaw volcano's, outlaw farting, outlaw....

Because the change HAS to be drastic and RIGHT NOW. No more small steps in the right direction because we already hit the tripping point.

So 300 Million plus people can now throw everything away they worked for, because we all know that the ACT of being born in the USA makes you an inherently evil consumer that spews CO2 out every oriface and throws garbage out of every window you walk by. Then we can all move into mud huts and wait for China to invade our country, because our GDP went to almost zero and we stopped paying our debts, and bulldoze our mud huts with their diesel powered tractors.

A waste of bandwidth.


Of course. But one more club over the head with "The sky is falling." and 4 snarky comments directed at those that question the scientific theory and response to same, isn't.

Sorry if this has already been posted, but The NewsHour with Jim Lehrer is running an interesting series of interviews on issues related to oil. You can listen to an audio recording on their website. There have been two so far, but more are to come:

Tracking Oil's Journey From the Pipeline to the Pump
The price of oil fell slightly Thursday after reaching a record high a day earlier. In the second installment of our series on the consequences of the high price of oil, Lisa Margonelli, a fellow with the New America Foundation, discusses her book "Oil on the Brain: Adventures from the Pump to the Pipeline." (Scroll down to April 10 for this one.)

Economics Writer Examines Oil's Shifting Market Position
In the first in a series of NewsHour interviews on oil's standing in the rapidly changing world economy, author Vijay Vaitheeswaran discusses the causes and effects of the recent rise in oil prices and how energy technologies will impact future business practices. (Scroll down to April 9 for this one (and get out the blood pressure pills)).

Here's the link: http://www.pbs.org/newshour/newshour_index.html

George (formerly of Vermont)

Vijay Vaitheeswaran is an optimistic bugger isn't he? "The best thing for high prices is high prices"

If you read the article he is optimistic. He thinks high prices will wean us off the stuff, which can't be bad.

This one was on PBS last night

Lisa Margonelli, a fellow with the New America Foundation, discusses her book "Oil on the Brain: Adventures from the Pump to the Pipeline."

Conclusion ..... expect gas to go higher ....

As of last night, regular unleaded gasoline in Nova Scotia is selling for $1.21 per litre or $4.55 per U.S. gallon -- according to one local fuel provider, it could come within spitting distance of [or even surpass] the $5.00 per gallon mark by mid-summer. Road diesel is already selling at $1.39 per litre ($5.23 per gallon) and the march upward looks unstoppable.

Source: http://thechronicleherald.ca/Business/1048907.html


Hello TODers,

Interesting article on Brazil & Potash:

Banking on Brazil
Canada's potash mines feed growing world appetite
Summary: sky is the limit until roughly 2015 when new mines are going bigtime.

But, as I have detailed in earlier postings, a FF-depletion crunch may make the currently easy and cheap global transport of I-NPK real problematic by then.

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

Hello TODers,

Gee, does this sound familiar--> rising food and fuel prices, an invasion of immigrants, then add a few load-shedding incidents and voila':

SHOOT THE BASTARDS...AND SHOOT TO KILL: South African minister tells police to show criminals no mercy

Susan Shabangu, the country's security minister, told officers not to worry about regulations, negotiations or warning shots.

Aiming her words at police chiefs, she said of criminals: "You must kill the bastards if they threaten you or the community. You must not worry about the regulations - that is my responsibility. Your responsibility is to serve and protect.

"I want no warning shots. You have one shot and it must be a kill shot."

"I won't tolerate any pathetic excuses for you not being able to deal with crime. You have been given guns, now use them."

Scott Petersen and OJ Simpson are lucky to have committed their crimes before Peak Everything! How many bullets can be bought by the courts foregoing the est. $20 million spent on legal fees?

Recall my posting yesterday: Pakistani lawyers have now moved their legal deliberations to the streets. Recall that lawyers are specifically trained to be skilled negotiators for achieving compromise!

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

We believe in legal remedies.



from New Mexico

Smiles from New Mexican Victorio