Sounds good (and oh so tasty!), but what's the EROEI? :-)

The bug burgers need the fat--otherwise they won't taste as good as the beef burgers they replace.

Speculators don't care whether oil prices go up or down. They can make money going both ways. In fact, they would make the most money by driving it up, and then driving it down. That way they could make money on the way up and then again on the way down.

The key thing to remember about speculators is that they don't buy oil. They buy oil futures. The last thing any speculator wants is to be the proud owner of 1,000 barrels of oil sitting in a tank in Cushing, OK. Somebody has to be willing to buy the actual oil at the actual price. If a speculator pays $120 for oil, and real consumers are only willing to pay $90, the speculator is going to lose a lot of money. This puts a limit on the effect speculators can have. In effect, their contracts get "marked to market" on expiration day. In addition, the "commercial interests" (i.e. non-speculators) dwarf the speculative interests in the number of outstanding oil futures contracts, further limiting the speculative effect.

Prices are ultimately set by supply & demand. Speculators have a limited effect on supply & demand, and what effect they have is opposite to the direction of their speculation (e.g. pushing prices down will tend to increase demand & reduce supply, which limits the downward movement of prices). If speculators could just push up prices at will, the Hunt brothers wouldn't have tried to corner the market in silver back in the 70s, they just would have "speculated" it up. They didn't, because cornering the market directly affects supply, which directly affects price. Speculation doesn't.

Speculation actually serves a number of useful purposes. Besides providing liquidity for commodities markets, it also helps contribute to a sort of cumulative wisdom effect. Everyone, both producers and consumers, needs to know what the future price of a commodity will be.

When a speculator thinks the current price is low relative to where it will be in the future, he goes long (e.g. he speculates that the price is going up). When he thinks the price is too high, he goes short. Each speculator makes that judgement himself, and the cumulative ratio of longs to shorts represents the cumulative wisdom of speculators.

The net effect of the speculation is to push in the direction they are already headed, but to get them there sooner rather than later. This sends an earlier price signal to both producers and consumers and allows them to plan accordingly. This early price signal helps prevent future supply problems. Of course, if the cumulative wisdom is wrong, the majority of speculators are going to get crushed.

Right now, anyone who is not drinking the government/MSM Cool-Aide knows oil prices are too low and should be "speculating" that they are going up. If enough people did this, it would signal to the world that we have a future supply problem, and that would perhaps force us to address it before it was too late. Speculators are a convenient scapegoat for people who don't believe in supply & demand or who are in denial about peak oil.

Moe Gamble wrote on tnis topic if speculators influence on price of oil...http://www.theoildrum.com/node/3909#comment-335695

Bottomline or conclusion was:

there is no correlation between numbers of speculator contracts or speculator "herding" or net spec longs and commodity prices

The odd thing is that he used to be a peak oiler.

Here is an interesting argue...which argues that even if there is abiotic oil...it doesn't matter.

http://www.fromthewilderness.com/free/ww3/100404_abiotic_oil.shtml

That's interesting! Pretty much what one would expect.

While all of the goofy lending practices set the stage, what really upset the apple cart was the rise in gasoline prices and food prices. The cost increases were greatest for those with the longest commutes.

Laurence,

Thanks -- though you've spoilt my plans for the afternoon, since this engrossing study is worth reading from start to finish, twice over. Great graphics too -- the 'visual display of quantitative information' at its best. The maps are also of 'award-winning' design quality. A link like this is worth a thousand comments.

This sounds like South East Florida, South West Florida, perhaps most of FLorida. I believe the tri-county area of Miami-Dade, Broward, and Palm beach are number two by a hair in housing price declien percent (behind Las Vegas).

With the possible exception of Jacksonville and Tampa - mebbe Orlando - there isn't a proper central city to be found althogh even for them the publci transporation is abysmal.

I used to put 100-200 miles A DAY in a car as a technical computer sales support person in South East Florida. We coudl easly do call from South Miami to Boca Raton in the same day.

Now I tele-commute for at a different job.

Pete

Seems To Me,

That this study only affirms what James Kunstler and Westexas having been saying steadily for several years.

That being that the outlying suburbs will decline in popularity and eventually whither as the economic worth of mis-allocated resources approaches scrap value.

The days of the "Happy Motoring Lifestyle" do indeed appear numbered.

What I would like to know is how far airlines can extend this principle. One to two minutes is nothing, after all. Suppose they altered their schedules so as to slow their speeds down to two-thirds of what they are now, let's say (so that e.g. a flight that takes four hours now takes six instead). Is such a drastic speed reduction technically feasible? And if so, how much fuel would it save them?

I would certainly be thinking along these sorts of lines if I were an airline executive.

More from the same article:

On one Northwest Airlines flight from Paris to Minneapolis earlier this week alone, flying slower saved 162 U.S. gallons (or 613 litres) of fuel worth $535. It added eight minutes to the flight, extending it to eight hours, 58 minutes.

That meant flying at an average speed of 532 miles per hour, down from the usual 542 m.p.h.

Northwest normally uses huge planes for those flights, so let's guess 500 passengers, a 15% error wouldn't matter much. At 8 minutes each, they spent an extra 4000 minutes, or 67 hours, between them, "enjoying" the miserable conditions that prevail on that sort of flight. The airline "saved" $535, so by dividing we can estimate that the airline valued the passengers' time at $8 per hour. And that's a serious overestimate because I didn't deduct what the airline paid the flight crew and accrued in aircraft flight time and wear-and-tear for those 8 minutes. Had I done so, the "saving" may well have been zero or negative.

Not that it matters. In any case, now we know why air travel has become so miserable. The airlines have such awesome market power that they can charge you north of $150/hour for even the most cramped, awful seat, and yet they can get away with valuing your time at essentially zero. With all that market power in their hands, you've gotta wonder why they can't raise fares instead of constantly yammering for subsidies...

Efficicency in an ic is related more to the temperature of the burnt gases at the beginning of the power stroke and the temperature at the end of that stroke. That is related more to the expansion or compression ratio than anything else.Hence diesels get better efficiencies than gasoline engines. The carnot cycle sets the theoretical upper limit. To be more "efficient" the waste heat needs to be used for something.

Walt, Randy is correct, the waste energy is lost in the form of heat. If gasoline is burned then you get heat and no carburetor can alter that fact no matter how good. The carburetor just mixes gas and air and the optimum mixture will only give you the best mileage, it can do nothing about the energy lost as heat.

But basically people who make these claims about carburetors who will get 100 mpg or cars that run on water instead of gasoline are idiots. These people should be ignored, not argued with.

Ron Patterson

If you want to get more out of the fuel burned in an IC, you have to use the heat in the exhaust gas to produce more work. There's actually a lot there and the temperature is fairly high (like 600 C or more at the catalytic converter), so it's theoretically possible to convert most of it to work, but it could be expensive. Maybe a counter-flow heat exchanger and a steam turbine add-on to a make a 60% efficient combined-cycle car?

Walt - If there ever were any such "patented" inventions that then got bought up and put on the shelf: (1)patents are generally public and can be viewed; and (2) patent lives I believe are only for 17 years. So, unless the uncle with the Chevy just had it happen, the patent is now in the public domain. And, if the item was never patented, well then "anyone" who can come up with any such item would become overnight the richest person in the world (or richest corporation) by licensing the product for royalties. But, unfortunately, facts never sell, but patently stupid conspiracy theories thrive. Which tells you a lot about the human race as a whole.

Xeroid, the man is either a fool or a liar, perhaps both because he states:

As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.

This is simply not true. According to the EIA's This Week in Petroleum US inventories are in the lower half of their five year range and about 15 million barrels below where they were at this date last year.

OECD inventories, according to IEA's Oil Market Report fell 48.9 million barrels in February but stand at about the same point as last December. Checking back through the archives I found that OECD inventory levels, though fluctuating up and down, have remained pretty steady for over a year, though dropping slightly.

To say that inventories are now higher than any time in the last eight years is just a flat out lie.

Ron Patterson

Given that global prices are set at the margin in commodities markets -- markets that can only exist because there ARE speculators -- a case could be made that 100% of the price of oil is established by speculators -- and always has been.

Back in the commodities run of the 1970's, my 80 year old grandfather was delighted to showoff his cabinets full of 5 lb bags of sugar. He purchased 20 bags when the price was very cheap and just starting to rise. By the time the price had doubled, he was confident and correct that the price would double again, he bought 20 more bags. He kept buying more all the way up. I was amazed when he showed me several hundred bags in his cabinets. I knew him to be a man of wisdom, common sense and frugality, but I witnessed a man smitten by a "gold bug".

What an interesting situation this made for sugar producers. At some point, they became aware that millions of people were hoarding sugar at prices way above the cost of production. When the grocery stores put a limit of two bags per customer, my grandfather had one of his sons drive him to two stores every day to buy 8 more bags (my uncle went along with buying 2 bags at each store for him).

The sugar producers knew a crash was coming, but they also knew that until it came, millions of "speculators" would buy more every day at the speculation induced price. Producers cut out new capital projects, but they completed capital spending on projects that had been started earlier. In other words, total production continued to climb but not enough to satisfy all the "speculators", the price continued to rise. The market was tight long after total production increased beyond the amount of sugar that was actually being consumed.

In the past year or so, billions of new oil and equivalents have been discovered (or rediscovered). Fields like the Bakken have been resurveyed. The "official" recoverable reserves have been increased 2500%. Still, the official reserves are now only 3.4 billion barrels out of 200 to 500 billion barrels in place. Of course, if the price stays at the current level or goes even higher, billions of dollars will be spent to find the technology to profitably recover billions more of these known "reserves". The 3.4 billion barrels are "officially" recoverable with current technology.

The huge new discoveries in places such as Brazil, India and the Gulf of Mexico will also cost billions to develop but the oil is there. Please note that oil producers invest for the long-term whereas speculators generally invest for the short-term. Producers are very aware of the trillions of dollars (yes, trillions is spelled with a T) of spending and planned spending on substitutes.

The current rate of technological advance in a number disciplines is incredible. Not a day goes by without an announcement of a significant improvement in one or more alternative fuel sources. A good example is the announcement from Tel Aviv University last week. The researchers there believe they have found a way to reduce the cost of solar panels by a factor of 100 times; they believe they can produce an abundance of solar electricity at a total cost of 7.5 cents per KW!

We all know that many of these announcements include an element of hype but sizable sums are being spent on numerous industrial scale demonstration plants of many types. New bio-fuel technologies look very promising. As a result of the potential of plenty, oil producers must avoid over expansion such as happened in the mid 1980's. Many an oil company went out of business when the price collapsed. Many years of high production at high prices are required to produce good investment returns on "deep water" oil. The fear of plenty has reduced the total amount of investments going into oil projects but, even so, counties such as Canada have quadrupled annual spending over the past 5 years or so.

As a result of significant recent discoveries, the drilling platform situation has been turned on its head from just a few years ago, when rig manufacturers could not make rigs fast enough. Today, there are suddenly a number of massive $300,000 per day drilling ships sitting idle. A $300,000 per day lease works out to about $109,000,000 per year. Who wants to invest that kind of money, plus tremendous other costs to discover deep and expensive to extract oil when there are a few million very smart people on various paths to cheaper alternatives?

The geneticist who claim they will be able to increase the speed of microbial digestion of coal, heavy oil and even corn stalks by 1,000 or even 10,000 times must be taken seriously. These microbes naturally produce clean burning methane. Any investor must think twice before committing $109,000,000 plus top dollar labor rates on a project that even if "successful" might prove to be a poor investment.

Like the sugar "bubble" of the 1970's, it makes no sense to spend billions to increase future production when there are clear signs of a slow down in the actual rate of consumption. For example, in the USA, the consumption of gasoline is about the same in 2008 as it was in 2005. In 2005 there were few compact, sub compact and hybrid vehicles available for purchase. It appears that 2008 will be the first year in more than a decade when more cars than "light" (hehe) trucks will be purchased in the USA. The substitution of one sub compact for one light truck is as much as a 330% decrease in fuel demand.

As you surely appreciate, as soon as the price of sugar dropped more than just a little, my grandfather decided not to buy another 8 bags. Pretty soon, he decided to give sugar to his children and neighbors. It was four years before he bought more sugar.

In economic terms, the supply and demand curves of commodities seldom reach equilibrium. These supply and demand curves trace out a cobweb design. When the price of corn goes up a lot, farmers grow a lot more just when ranchers cut the size of their herds or go out of business. Commodity prices are notorious for going through boom and bust cycles. Ironically, real commodity prices have gone down over the centuries. The cost to make a flint arrowhead was many times the cost of the best quality steel knives. The best knives are now being replaced by laser beams of light, the cost of which has been falling like a stone. The steel knives can cut in ways that the flint knives could not and the laser knives can cut in ways and places where steel knives cannot.

The rational behind excluding the price of food and energy from the CPI is that these prices are extremely volatile. In the short run commodity prices make huge runs in either direction, but commodities are "dis-inflationary" in the long run.

Again, in economic terms, it is the supply and demand for the last unit that sets the price for all units. In the current situation, Canada is increasing the production of tar sand oil as quickly as it can because it has billions of barrels of recoverable reserves at $35 to $55 per barrel. At Bakken, producers are drilling 4 mile long horizontal wells and spending large sums to fracture miles of rock every so many yards because the total revenues expected will exceed the total costs by wide margins. By the laws of economics, investments in these and other projects will continue until the cost of the last barrel of oil produced is equal to the market price. There will be zero profit on that last barrel, but there are billions of barrels currently available at a cost well below the current market price.

As long as there is one speculator willing to pay a higher price, the price will go higher, however, once there is one extra barrel available below the price the last speculator is willing to pay, speculators will find themselves in the same position my grandfather was in at the end of the sugar run (holding a large quantity of a commodity that is falling in price). Under these circumstances, speculators switch from buyers to steady sellers. The downward move in price will be a sight to remember. By the way, the speculators included the millions of people who top off their tanks every time they see gas available at a "good price". These folks will let their tanks run low if they believe the price is going lower.

In the 15th century, there was a tulip bulb bubble. By the peak, speculators paid the equivalent of more than a million dollars per tulip bulb in order to be the owner of a unique multi-colored bulb. At the end of the bubble, wagon loads of bulbs that had been valued in the millions of dollars were worthless. The time will come when multi-billion barrel pools of oil are not worth the cost of drilling. In the same way that walls are no longer made out of wood and water pipes are no longer made of copper, fuel will no longer be made out of oil (as we know it). The earth will never run out of oil is a long term truth, but we are speculating about the short-term. The "low cost" way to propel a car today is by gasoline and this way will continue until the relative cost of substitutes is lower than the cost of gasoline.

By the way, the best indicator that production capacity exceeds demand is the amount of excess capacity. Though the data is imperfect, the indications are that excess capacity hit a low of about 500,000 barrels per day in 2004. By year end, excess capacity appears to be headed to around 3 million barrels per day. Of course, no one can predict the future. There are many possible futures. Based the estimates of experts, there will be new production of about 7 million barrels per day by the end of 2008 and almost as much additional new production by the end of 2009. Based on postings on TOD, the depletion rates will be about 3.5 million barrels per day in 2008 and 2009. The net liquid production which is currently around 87 million barrels per day, should hit 93 or 94 million barrels per day in two years.

In regard to supply and demand, there is only one possible scenario. Supply will equal demand at a price. Only the wisdom of the market will tell us what that price will be. I am willing to bet real dollars that the price will be lower one year from today.

Corn Ethanol might use 40% of the nation's grain (corn + wheat) if grain ethanol caps are reached. It is estimated that the nation is currently using 20% of its grain (corn + wheat) in ethanol production. The national corn harvest was about 12 billion bushels/yr. and the wheat harvest was about 2 billion bushels/yr. Some statistics might confuse bushels of corn silage (on the cob) with bushels of whole grain corn.

In an article in Foreign Affairs, by the Council on Foreign Relations, it was written up to 50% of the nations grain (corn?) might be diverted to ethanol production according to current energy law:

How Biofuels Could Starve the Poor

Keep watching that Farm Bill.

A lot of toes being stepped on.

The MSM keeps saying it's almost done, but the Bill still isn't moving.

The hang up, IMHO, is that the bill must be passed, but extensions are no good for TPTB.

""My friends, I will have an energy policy that we will be talking about, which will eliminate our dependence on oil from the Middle East that will prevent us from having ever to send our young men and women into conflict again in the Middle East"

- John McCain, May 2008 h/t HousingPanic

Barack Obama is a big ethanol supporter. Change we can believe in? Just another slogan.

I yearn to help increase the pressure to phase out food based ethanol. It is a crime against humanity.

I had misgivings with his explanation too. As you point out, his reason just doesn't make sense.

He gives free markets and oil company executives way too much credit, as if these guys could declare Peak oil non-existant and the markets will respond in some predictable way. The notion is nonsensical. The truth is that oil company executives probably don't have a whole lot more control or understanding of the markets than you or me. Witness Chesapeake Energy's first quarter loss due to its hedging activities.

The arguement is that when a major oil company's production is seen by Wall Street analysts to be declining they downgrade the stock which causes it to decline - regardless of whether the profits may be rising. This is a fact. See what happened to XOM when they reported declining production last week - down $3 on the news. Thus when oil prices rise rapidly major IOC's lose production due to their contract terms, which causes a downgrade of their stock which tends to reduce the stock price or limit its rise over time.

It may be true that the IOC can actually make more profit on lower production levels given higher oil prices. But that does not necessarily translate into a higher stock price. In fact, the stock price is more sensitive to the multiples of earnings that analysts think it is worth than the earnings themselves. The multiple goes down when analysts believe production is declining for the company.

He later "clarified" his comments and says he was talking about the first Iraq war. The current one was all about WMD.

Old rule of thumb:

Floods don't hurt crops, droughts do.

It's a signature shortage of socialism.

Yea, sure, whatever. Guess when the East coast was in a blackout a few years ago and suffered a shortage of electricity - that was socialism trying to get a foothold!

Good thing that was fought back as part of the War Against Communism!

It's a signature shortage of socialism

Yes, Sweden was well known for their frequent blackouts during over 40 years of Social Democratic rule. And blackouts (or brownouts) are unknown in any deregulated electrical market, such as California.

Best Hopes for Ideological Purity above all else,

Alan

That tree branch must have fallen off of a communist tree. Good old red sapped capitalist trees don't do that sort of thing!

exactly, that is because petroleum is now supply-side limited! coal, on the other hand is demand-side limited. (Give Chris V the credit for that argument.)

Recall my earlier posting suggesting that Fool's Gold could be more valuable postPeak than the precious metal Gold. I wonder if this was an early attempt gone wrong at a small version of a 'Federal Reserve Bank of I-NPK':

http://www.semissourian.com/apps/pbcs.dll/article?AID=/20080503/NEWS01/9...
-------------------
...Iron pyrite, or fool's gold, is normally a stable material, said John Sachen of the Delta Fire Protection District, who provided hazardous materials analysis to the Scott City Fire Department. However, a chemical reaction resulted in a "slow, smoldering burn," he said. Fire officials have a "reasonable belief" that contamination by ammonium nitrate or another iron compound started the reaction.
--------------------
I found it interesting that "agents from the Federal Bureau of Alcohol, Tobacco and Firearms assisted with the response."

Again consider the monumental BigBuck$$$$ value of a sulphur stockpile--worth more than Ft Knox at $666/ton? Are the ATF and other govt agencies unknowingly protecting the dollar value of these corporate hoards? Consider the legal restrictions against the average J6P stockpiling I-NPK.

Have you hugged your bag of NPK today?

Can someone who can translate post a summary of what that story is about?

Whoa, Nelly! That's a big change! Peak oil is now in the rear view mirror according to ASPO?

Looks like the newsletter is incomplete. Only the first story (China reserves) is there. The rest are missing.