DrumBeat: May 28, 2008
Posted by Gail the Actuary on May 28, 2008 - 9:09am
In Vermont, a Debate Swirls Around an Aging Nuclear Plant
BRATTLEBORO, Vt. — After part of a cooling tower collapsed last August at Vermont’s only nuclear power plant, the company that runs it blamed rotting wooden timbers that it had failed to inspect properly. The uproar that followed rekindled environmental groups’ hopes of shutting down the aging plant.
The proposed closing, albeit a long shot, has gained some support this year among Vermont politicians. The discussion here is bringing into sharp relief a conflict between two objectives long held by environmental advocates: combating nuclear power and stopping global warming.
Grain prices grow, but so do risks
In corn's long journey to market, in which farmers grow the corn but an interlocking web of investors finances it, grain dealers are seeing the cost of doing business rise. And not everyone can manage. Market pressures have overwhelmed some Illinois grain elevators, with at least four closing in the last year. The problem is that grain dealers borrow money to hold and deliver corn. The usual practice is that they agree to buy grain in advance of the harvest, which enables farmers to lock in prices.
State releases analysis of TransCanada plan
The state has just released its full analysis and recommendation on awarding a state license and a $500 million subsidy to potential natural gas pipeline builder TransCanada Corp. Gov. Sarah Palin last week announced that her administration would recommend state legislators give TransCanada the license and subsidy. The administration released only an executive summary of its analysis of TransCanada's proposal.
Today, it posted the full analysis - hundreds of pages of material, including numerous reports from the state's financial, technical and legal experts. The report is here
Sweden turning sewage into a gasoline substitute
GOTEBORG, Sweden: Taking a road trip? Remember to visit the toilet first. This city is among dozens of municipalities in Sweden with facilities that transform sewage waste into enough biogas to run thousands of cars and buses.
Cars using biogas created a stir when they began to be rolled out on a large scale at the start of the decade. The tailpipe emissions are virtually odorless, the fuel is cheaper than gasoline and diesel, and the idea of recovering energy from toilet waste appealed to green-minded Swedes.
Azerbaijan: Newfound Wealth Hardens Baku's Bargaining Position On Karabakh
Touting Azerbaijan's recent economic success and "participation in international life," he boasts that "Armenia is not where Azerbaijan is today."
"To reach that point, to where Azerbaijan is today, they have to do a lot -- they have to get the ticket to the train -- the train of legality, of peace, of good-neighborhood," Azimov says. "If they want to be good neighbors to Azerbaijan, they have to respect territorial integrity."
This, he says, is what Azerbaijan expects from the new president of Armenia; if not, Yerevan "will get something different than what Azerbaijan seeks."
The implication is that Armenia could find itself trying to match oil-rich Azerbaijan in another area: Baku is spending more than $2 billion on defense this year -- more than Armenia's entire national budget -- and is displaying much of its new military hardware for the country's Armed Forces Day on June 26.
Fuel protest: lorry drivers flex their muscles
Hundreds of lorry drivers converged on London yesterday to protest at rising fuel costs. Police closed a section of the A40 — one of the capital’s main arteries — so that it could be used as a massive lorry park.
From there the drivers made their way to a rally at Marble Arch, where they told of jobs under threat, severe belt-tightening and family companies facing closure.
Blackouts hit thousands as generators fail
Hundreds of thousands of people were hit by electricity blackouts yesterday when seven power stations shut down. The unscheduled stoppages were regarded as an unprecedented sign of the fragility of Britain’s power infrastructure.
Operations were cancelled, people were stuck in lifts, traffic lights failed and fire engines were sent out on false alarms. Householders were unable to use any appliances or make phonecalls as the blackouts hit areas including Cleveland, Cheshire, Lincolnshire and London.
Apple raises prospect of solar-powered iPhone
A patent application suggests that Apple is working out a way of powering portable devices with the sun
Russian billionaires fall out with BP
A simmering row between BP and the billionaire local shareholders in the company's Russian joint venture, TNK-BP, has burst into the open.
Yesterday BP and the Russian shareholders were forced to acknowledge differences over strategy, with the Russian billionaires who own 50% of the company arguing that TNK-BP, Russia's third-largest oil producer, should be able to expand abroad even if that meant its coming into direct competition with BP itself.
Oil crisis triggers fevered scramble for the world's seabed
A fevered scramble for control of the world's seabed is going on - mostly in secret - at a little known office of the United Nations in New York.
Bemused officials are watching with a mixture of awe and suspicion as Britain and France stake out legal claims to oil and mineral wealth as far as 350 nautical miles around each of their scattered islands across the Atlantic, Pacific, and Indian oceans. It takes chutzpah. Not to be left out, Australia and New Zealand are carving up the Antarctic seas.
Tidal power fuels Britain's National Grid
Tidal power has been harnessed to generate electricity for Britain’s National Grid for the first time, it has been announced. he move has been hailed as a milestone in the development of marine energy, which could provide up to a fifth of Britain’s electricity needs. It came when a single turbine on the Atlantic seabed off Orkney was connected to the National Grid on Monday morning. The area off the north of Scotland is regarded as potentially one of the best in the world for tidal power and has been described as the "Saudi Arabia of marine energy".
Last-ditch bid to avert Arctic free-for-all
Denmark will today launch an effort to calm the scramble for the Arctic, bringing together the five coastal nations competing for what are believed to be the largest unclaimed reserves of oil and gas left on the planet.
The gathering in Greenland begins in the shadow of a new "oil shock" as soaring prices force governments to reassess their energy policies and heat up already feverish interest in who owns the seabed beneath the Arctic Ocean.
Shipyards to Focus on Energy Vessels
Prime Minister Vladimir Putin urged his government on Tuesday to give Russia a modern fleet of ships for its flourishing energy sector and named his close ally, Deputy Prime Minister Igor Sechin, to manage the multibillion-dollar project. "The principal direction is the creation of a complete line of ships and equipment to extract and transport oil and gas from offshore deposits," Putin told a meeting of top officials in his hometown of St. Petersburg.
RSPP Calls for Clear Rules on Biofuels
The Russian Union of Industrialists and Entrepreneurs, or RSPP, said Tuesday that the country needed new legislation if it was going to become a leading producer of biofuels, as they are currently taxed the same as vodka.
Excise duties on bioethanol make it unprofitable to produce in the country, a situation that leaves a government call for 30 new plants for the alternative fuel unrealizable, participants at a joint meeting of the lobby group's agriculture and energy committees said.
Rosneft and Gazprom Set to Carve Up Offshore
State-controlled energy giants Rosneft and Gazprom have agreed on splitting offshore deposits, limiting foreign and private access, an official said Tuesday.
The government official, who asked not to be identified, said the two firms last year signed an agreement under which Rosneft will develop oil deposits on the country's northern shelf, while Gazprom will explore gas fields.
The Consequences of Rising Oil Prices for Producing Countries
At this point, it is essential to point out, especially for Arab readers who may think that the increase in prices benefits the countries of the region, that this is a wrong and shortsighted impression, and that producing countries bear an unavoidable responsibility to global consumers. Despite the massive financial rents earned by oil producing countries from these prices, prices have serious political and social consequences for the international community in the foreseeable future rather than in the long term.
Natco Technologies to be Used in the Manifa Arabian Heavy Crude Programme
Natco Group announced that it will provide equipment and technology to Foster Wheeler for the Saudi Aramco Manifa Arabian Heavy Crude Programme, in the Kingdom of Saudi Arabia. The development of the Manifa oil field, located in the Persian Gulf, includes construction and expansion of new processing infrastructure to handle an additional 900,000 bpd of Arabian heavy crude. The project is planned for a 2011 completion.
Natco will supply the world's fifth-largest crude oil field with advanced dehydration & desalting technology including design and fabrication of six trains treating a total of 900,000 barrels per day (bpd). Each train will be comprised of one TriVolt dehydrator and two TriVolt desalter units for a total of 18 vessels.
Russia worried as oil production slides
Russia's government has proposed urgent measures to halt a slide in oil production, which threatens to undermine the country's petroleum-fuelled economic boom.
"All the proposals have been accepted and will be submitted to parliament at the end of this week," Deputy Finance Minister Sergei Shatalov told journalists after the Presidium, a group of the most powerful ministers created by Prime Minister Vladimir Putin, met to discuss the crisis on Monday.
June 1: Russian Railways takes over management of Armenian Railways; many Armenian state-owned enterprises have been handed over to Russia, including country's whole energy sector; President Serzh Sargsyan made special speech in February, when still prime minister, to persuade cabinet to accept this latest move (Armenian news agency Arminfo)
Food price crisis to get worse
Rome - High food prices are here to stay for the foreseeable future, potentially forcing millions more people into hunger, two reports from the United Nations and the OECD showed on Thursday.
A surge in commodity prices in the last year was not a blip and prices will remain at or above current levels for at least the next decade as some of the main underpinning factors - demand for a richer diet, the rise of biofuels and high oil prices - will remain, one of the reports said.
Low lakes prompt Contact to fire up mothballed generator
Low hydro lakes and rising winter power demand have pushed Contact Energy to fire up one of its mothballed generators at the New Plymouth (N.Z.) power station.
The power station was closed in December last year after asbestos was found in areas where it was not thought to have been.
Queensland Gas Co looks at power play in NSW market
QUEENSLAND Gas Co has taken the initiative in a long-planned scheme to link its Surat Basin coal seam gas fields in Queensland directly to the New South Wales market.
QGC yesterday announced that it and two joint venture partners were examining the feasibility of a 400-600 megawatt power station in the Hunter Valley – a station that would underwrite the cost of a pipeline from QGC's Surat Basin coal seam methane fields to Newcastle.
Indonesia to withdraw from OPEC
Indonesia will withdraw from the Organization of Petroleum Exporting Countries at the end of the year, the country's energy minister told foreign journalists Wednesday.
Purnomo Yusgiantoro said the move follows declining oil production levels in Indonesia that have left the country a net importer of oil.
Foreign Countries Cutting Fuel Subsidies Will Decrease Oil Demand
Indonesia has decided to decrease their fuel subsidies; thus raising the price of gasoline for consumers at the pump. The new price will rise 28.7% to a price of 65 US cents per liter or $2.46 per gallon. India also announced an increase in gasoline prices to $2.66 per gallon, an increase of about 7%. Taiwan is another country that is ending a freeze on gasoline prices.
These price increases are important to creating more elasticity in the demand for oil. If governments fix the price of gasoline at below market levels, when demand increases there and supply remains constant, the price can only go up. In economic terms, this creates a demand curve that is almost vertical. Small increases in demand with fixed supply can create huge price increases. By passing through the increased price to consumers, demand will be reduced and price will find a new equilibrium point at a lower price point. Could this create a short term top in the price of oil?
Has Russian Oil Output Peaked?
As the world's second-largest oil exporter, Russia joins a growing number of top oil suppliers wrestling with how to address declining or peaking production. Like Venezuela and Mexico, Russia is heavily dependent on oil, which accounts for more than two-thirds of government revenue and 30 percent of the country's gross domestic product. Now, Moscow is trying to remedy a situation caused in part by outdated technology, heavy taxation of oil profits, and lack of investment in oil infrastructure.
Oilsands: Imperial Oil loses bid to get Kearl water permit reinstated
Imperial Oil Ltd.'s attempts to get a water licence reinstated for its $8-billion Kearl oilsands project hit a snag Wednesday when a federal judge dismissed the company's request.
In a decision filed in Ottawa, Federal Court Judge Douglas Campbell upheld an earlier decision to pull the water licence for the proposed development.
The permit was revoked earlier this year after another court ruled the environmental assessment on the project was incomplete.
South Africa's Q1 mine output slumps on power supply cuts
South Africa's Chamber of Mines believes that new figures showing adramatic fall in mine production will strengthen its hand in the struggle with the government for more electricity. At the same time, one of the world's leading gold miners admits this could take years.
Statistics SA, an independent research group, said first-quarter mining output slumped 22.1% compared with the final quarter of last year -- the sharpest fall for 40 years.
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One question for Moe_gamble, or for anybody else with interest in trading:
What's your assessment of the short-term outlook for the oil price? Thanks!
After the massive runup in the last two weeks there just has to be a correction. Whether it stays down depends IMO on how late that long list of 2008 megaprojects actually turn out to be.
"there just has to be a correction."
Every week's inventory number will show that zero
extra oil is coming to market regardless of the price.
How can the price drop?
Only with the dollar getting stonger.
If oil falls back to $100, beer will double in price.
Deffeyes-
"How big is the problem? Multiplying production (barrels per year) times the oil price (dollars per barrel) gives a total cost in dollars per year. It's an enormous number; tens of trillions of dollars per year. To put a scale on it, the three thin curves on the graph show the oil cost in contrast to the total world domestic product; the annual value the goods and services added up for all the world's countries. The three curves show the oil cost at one percent, two and a half percent, and five percent of the total world economic output. At $130 this morning, we are at six and a half percent.
If we see oil at $300 per barrel, we will be looking out over the smoldering ruins of the world's economy.
Oil production obviously cannot consume 100 percent of the world's income. My intuitive, uninformed guess is that it cannot go above 15 percent. If we see oil at $300 per barrel, we will be looking out over the smoldering ruins of the world's economy."
http://www.princeton.edu/hubbert/current-events.html
I agree. When Gold and Silver start bubbling up, old mines are re-opened. People take their hairloom jewelry and silverware and sell it in mass and the supply increases. When the housing bubble rocketed up, there was massive overbuilding. Now with the huge run-up in oil, there are no substitutes and declining supply. During the great whale oil price spike in the mid-1800s, at least there were alternatives.
But what's this?
I love looking at sites that are so correct in their field.
But refuse to believe in civilization ending scenarios
coming from outside their expertise:
"
Oil has gone from $55 a barrel on up to $132 a barrel. Inflation could account for about $30 of that increase. I wouldn't blame this mess on the oil companies, this has all of the ear marks of a speculative corner of the oil market by parties unknown.
The commodities markets are going to have to limit the number of contracts written and only accept liquidation orders like they did with the Hunts. It's kind of like sticking a broom handle into the spokes of a moving bicycle. It will be quick and brutal. Hold on to your SUV and your hat, another bubble is about to pop."
http://greatdepression2006.blogspot.com/
And as this very same site picks up on who really owns the markets.
Let me post this again:
"The commodities markets are going to have to limit the number of contracts written and only accept liquidation orders like they did with the Hunts."
Inflation is responsible for an increase in the price of oil or is it that the price of oil is responsible for an increase in inflation?
Yeah, well that's the question, isn't it?
In my opinion, it's the price of oil that is primarily responsible for the price inflation we're seeing, but there certainly has been a pile-up of dollars in the world over the past few years, which means it's probably both.
Or how about inflation is the result of an increase in the money supply?
As an example:
http://www.futurecasts.com/Understanding%20Inflation.html
Hi mcgo, here is a day later from denninger
"Now with the huge run-up in oil, there are no substitutes and declining supply."
the electricity that runs your computer can run your car. some can use waste vegetable oil. we can use oil most efficiently. those are some substitute.
we still have half our oil left.
"we still have half our oil left."
"Low-hanging fruit" that just bubbled out of the ground.
EROEI is exploding now.
"...the electricity that runs your computer" is taxing the grid.
Tell me why the UK's collapsed yesterday.
This was the kind of outage that happens sometimes, and appears coincidental.
Blackouts from shortages and retired equipment together with short supplies of natural gas is a pleasure that is not here as yet, but it is coming.
"it cannot go above 15 percent [of the world GDP]"
- two comments:
(1) as the rate of oil extraction decreases the same % of GDP will allow a higher price per barrel. (Of course, that's assuming the same GDP, which won't hold, so it's more complicated than that.)
(2) when the EROI decreases to 5:1, for example, then 20% of the economic activity will be in energy extraction. Etc.
Either way, the real consequence is that the economy will fundamentally change, which perhaps is what Deffeyes means by "smoldering ruins".
VTP - Of course Deffeyes means the economy is going to fundamentally change...IT'S GOING TO COLLAPSE. How in the hell can you read some quasi-cornucopian crap into a perfectly straight forward statement? He is saying that energy costs are going to destroy the world's economy.
And, as I have looked at his graph time and again, I am scared shitless because the change looks like it is going to be a cliff not some nice time-line that gives people and government years to adjust.
Todd
"...because the change looks like it is going to be a cliff..."
Yes Deffeyes' recently posted graph is beautiful in its simplicity. Clean, clear and crisp. And I share the same sentiment that you have. The message told in that one plot is very sobering.
-best,
Wolf in YVR BC
"it cannot go above 15 percent [of the world GDP]"
You're probably right. Perhaps it can spike for a bit if people reach into their capital.
The world capital markets are worth about $118 trillion dollars, and world real estate was once worth 75 trillion (ok, it's less now). World GDP is about $50 trillion. [I wondered if we could sustain a larger spike in prices by borrowing against our capital, but this doesn't seem likely].
Imagine that we produce 26 billion barrels of oil in 2013 (about 70 million per day), and that prices have reached $500/barrel. That's $13 trillion, 26% of GDP. It's hard to imagine prices going higher than that. Even borrowing against capital (selling our companies and real estate to Saudi Arabia) won't allow much more. But this is in today's dollars. It isn't too hard to imagine 20% inflation, or even 1000% inflation, in which case nominal prices go through the roof. If inflation averages 15% for 5 years, for example, we might have $1000 oil by 2013.
But I expect that even 15% of GDP going to oil will kill the economy [remember, all other forms of energy and food aren't included in this]. $250 oil is probably a real ceiling on the price.
Figures for world valuation: http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/...
the falacy is the statement that at $300 a barrel the world economy goes into decline lies in the time frame and the amount of oil being produced. It is possible, for example, that in 7 years price levels will be 50% higher than today and the amount of oil being produced will be 15% less than today. In that event, oil could be $500 per barrel and would "only" consume somewhere around 10% of global GDP.
If you keep going out in time and assume lower production each year in a post-peak-oil world when we are transitioning to an electric economy it is perfectly reasonable to see $1000 oil in, say, 10 - 15 years. We might then be using only 65% of today's oil and price levels could be double or more what they are today.
Your argument simply assumes that there is little real rise in the price of oil at all, and that most of it is a rise in nominal terms in a devalued currency.
All the analysis that is done here indicates that real shortages will mean that prices will need to be much higher in real terms to create the demand destruction needed for supply and demand to balance.
The scenario you draw would actually imply weak cost pressures on demand, so there seems no particular reason why it should be so restrained.
I have looked at the argument that if the price of oil goes to $300/barrel, the world economy stops. One serious problem I find with it is that Deffeyes uses the same World Domestic Product (WDP), the one for 2007, for all years in comparing with world oil production (WOPR) times Oil Price (OP). The WDP will increase in years ahead, so when oil is $300 a barrel, the percent of WDP that will be will probably be considerably less than 15%. Further, I would like some justification as to why the dollar value of WOPR cannot exceed 15% of WDP. His analysis does give some sense of warning, however, that perhaps in the decade ahead our lifestyles will change substantially. I would like to see this analysis cleaned up so we can see what is going to happen in the future.
I don't think it is going down. Depletion rates are often left out of the equation when discussing price. Production at Cantrell continues to crash, just like the North Sea crashed. Matt Simmons believes that the big Middle Eastern fields will very soon crash like the North Sea. When interviewed, he sounded extremely confident about this, like it was a near certainty.
My point, which I stand by, is that 20% in two weeks is not compatible with the actual 2-4%/year increase in shortfall, especially as demand destruction seems to finally be biting in the OECD.
Sure the price will be back up soon, but we'll get a few weeks before the next new record.
When one barrel of Pepsi costs significantly more than one barrel of oil, then we can talk about unjustified 'massive price runups'. In the meantime, I expect violent upsurges in price.
People are only starting to grasp the fact that oil is finite. They haven't really begun to realize that net exports will disappear (forever) within the next 20-odd years. As these things become understood, it will dawn on people that oil is currently ridiculously under-priced.
___ cents a cup.
Hi Puntaldia. I think we're seeing a standard correction going into a trading range for roughly a month to six weeks. Could be shorter, going into a price rise, depending on when China and India finally ennable their oil companies to hit the market.
We used to see standard corrections of roughly 10%, with another dollar or two in the panic selling at the bottom, but now corrections are smaller. That's because of commodity index fund buying--they have essentially replaced some of the more volatile spec buying and selling, and their demand is much more stable.
For an idea of what a standard correction and trading range should look like, look at a chart of oil prices from March 17 into the beginning of April.
Most bloggers are screaming for a big correction to $100-$110. I don't think there's any way. Iraq and Saudi Arabia brought on extra production in May (though most of Saudi's extra supply looks like it's heavy oil that no one wants), but that will basically only cover the shortfall from the UK and Nigeria strikes. We still have an ongoing decline in production in Mexico, Russia, Australia, etc. And most important, we have a great deal of pent-up demand now in China and India, where Sinopec announced there would be shortages of diesel at the time of the Olympics unless the Chinese gov't upped their subsidies so the oil companies could afford to hit the markets, and where India is negotiating an increased subsidy with its oil companies, because their gas stations are running dry of diesel.
It's a diesel shortage that is driving the price of oil, and Merrill Lynch doesn't see a solution to the problem until at least late 2009 to 2010, when enough refineries should be updated to process heavy crude. I agree with their assessment.
So, the price could settle into a really long trading range into the fall, and then go up as producers build up winter supplies, like last year. Or the price could trade in a range for a short time, go up with buying from China and India, and then hit another normal-sized correction and trading range in August/late summer for the let-up in seasonal demand, before a likely late-year price rise.
That's my view, anyway.
Thanks, Moe, for your quick and thorough reply! In fact, I had wondered if your absence here (or, more precisely, your reduced presence) over the last days had meant that you lost interest ... happy to see that this is not the case!
You know, I've been really taken aback by the witch hunt against speculators. It's been very disheartening to watch people look for someone to blame, rather than deal with the real problem.
This is an area where those of us who have acclimated our world view to peak oil and resource depletion just have trouble with. We seem to forget just how vested the self identity of most people (especially in North America) is in the highly consumptive "lifestyle."
Sorry for that. The witch hunt certainly exists and gains momentum, but I don't have the impression that TOD and the contents/comments here give particular credibility to "it's all the speculators" claims.
Anyway, I personally really appreciate reading your comments giving the trader's point of view. Please continue, IMHO it's both interesting and useful ...
Puntaldia - I am not trying to be a smart ass. But, Boone Pickens earlier this year said that he has given up trying to pick short-term movements in the energy markets and will stick to identifying long-term investment opportunities. He has traded more energy than any single human on earth, and started when the crude contract was first available around 1984. So, if you figure out how to do it, he might have an opening on his staff.
PS - I responded to Moe re: speculators upthread (just my opinion).
The Boone Pickens staff position should clearly go to Moe_gamble! As far as I can tell, he has an incredible track record with his trading tips here.
I think jbunt makes a good point. (Though I did get a chunk of Boone Picken's money from those bad shorts he put on earlier this year--hardy har har.) It's harder to trade short-term when so much of the price depends on the timing of decisions by the gov'ts of China and India.
Also, with the commodity index funds taking over a bigger share of the long portion of the market, there is less volatility to exploit (or get killed by).
So, except when something major develops, I'm tending to increase the portion of my energy investments that are buy and hold. Add on dips. And remember, no matter how frantic the market looks, there will always be a dip. It will always come just after the psychological pressure to buy gets nearly unbearable.
Moe definitely adds value but he is human too! I seem to remember his previous call was to short or get out of oil at around $110-115. Not the best call in retrospect I do think he is correct on his current calls and also don't think we will see oil break below $110. As for Pickens he has also been a good prognosticator on the oil & gas markets. I would like to buy a piece of Mesa Energy L.P.(windmills) but it appears to be a private entity at this time. If anyone knows how to buy in please let us know.
None of my business, but I recall him saying it wasn't the absolute best time to get in, which is a lot different from saying get out or short it-I don't recall Moe ever calling on the tribe to short oil.
I have never posted any advice here ever for people to short oil. Never. Not once. I don't even do it myself. I said to get out of the market on 3/13 if the price finished up for the day. Anyone who followed my advice sold at around $110, at the high for that run. The price crashed roughly $6 two days later, and continued falling the next two days, for about a 10% correction. On the morning of 3/20, I said I was buying back in. At the end of that trading day, I posted here that we had gotten a low-risk, high reward buy signal. If you had bought on my recommendation at that time, and sold when I told to sell on 4/25, you would have ridden a $17 price rise, having caught it at the bottom.
I then said to sell on 4/25, into the rise in price due to buying because of the UK and Nigeria strikes. You could also have caught the top on that day, before four days of steady price falls. I then said I was starting to buy back in at the low on 4/30. But I said that was something of a gamble, because I didn't really have a proper buy signal. If you had bought with me on that day, you would have been in the market for a $20 price rise. I got busy with poker tournaments at that time, and advised people to work with the price signals in the books I had recommended.
Part of the reason I stopped posting tips was precisely because I was afraid people would catch one tip and then miss seeing the next one, which is what seems to have happened with you, Kansas.
For anyone who wants to trade, read jbunt's comment first about the difficulty of trading these markets short-term. (He points out that even Boone Pickens is dropping out of short-term trading.)
But then take a look at the price signal chapters in Timing Techniques for Commodity Futures Markets by Colin Alexander. (Today gave a buy signal, but you shouldn't buy unless you know the sell signals and how to set stops.)
Also before trading see Way of the Turtle by Curtis Faith, which does a good job on bet-sizing and other kinds of trading systems, and also does a good job of explaining where your edge comes from.
Hey Moe this is the comment on 5/1 I recalled and you're right it doesn't say short the market it does imply that you are out waiting a clear point for re-entry (I assume that means go long again?). You then were occupied with poker or other and didn't post again until May 26th. Obviously a lot happened in the market during that spell.
Again I appreciate your market perspective but am not short termed focused in my investment strategy execution so don't worry about leaving me hanging I am not trading your point of view. I have been (+50% portfolio) long these markets for +6 years and the only money I have taken off the table has been dividends or buyouts in the energy sector. I probably should have been more aggressive in taking some profits at times but on balance am pretty satisfied. So I guess I'm saying I have been less than perfect in my execution my guess that means I'm human. Good to see you posting again. Happy Hunting!
Just showing the volatility I see WTI just hit $129 again after falling as low as $126 earlier.
Volume has picked up too.
The "speculators" can move the price for a day or two, but wonder if most of the speculation isn't selling, moving the price down, only for it to bounce right back from buying by the commercial buyers. That's what the last few months of action looks like to my (admittedly uninformed) eyes.
In my opinion, you're exactly right.
China says it's unwise for them to buy at the current price. They say instead they are going to get energy efficient, like, overnight: http://www.bloomberg.com/apps/news?pid=20601072&sid=aQ.f2ARqEZXE&refer=e...
That probably means they're buying right now, but are hoping for a double dip.
"On Friday, Pemex, Mexico's state oil monopoly, reported that April average daily production had fallen to 2.77m a day compared with 2.85m the previous month and 3.18m barrels in April 2007.
According to Pemex, production at Cantarell – one of the world's largest oil complexes, which accounts for roughly half of Mexico's total daily output – has shrunk 24 per cent in the past 12 months alone."
http://money.ninemsn.com.au/article.aspx?id=569660
Where will the US get our replacement.
"Where will the US get our replacement"
Why is our oil under ???, err exactly where is our oil now??
Conservation?
Moe is the go to person for your question but while you are waiting for him to respond you might be interested in what Mish has to say about oil trading at 'Mish's Global Economic Trend Analysis'. Mish's site is read by a lot of folks.
Today Mish comments about a discussion held yesterday on TOD concerning the possible effects of very large quantities of capital flowing into commodities, including oil (especially OTC commodities not regulated by the CFTC). One thing that is important to keep in mind is that the Fed may be forced to raise interest rates as 'inflation expectations' rise. Of course, if the Fed raises rates the entire economy will be effected. The post by Mish is very much larger than my extracts and contains charts and more comments.
'Commodities Speculation Symptom Of Larger Problem
With a tip of the hat to Michael Masters, it is possible to Quantify Commodities Speculation. Here is the key chart:
Commodity Index Investment vs. Spot Prices
Chart One shows Assets allocated to commodity index trading strategies have risen from $13 billion at the end of 2003 to $260 billion as of March 2008, and the prices of the 25 commodities that compose these indices have risen by an average of 183% in those five years!
What To Do About It?
If speculation is the problem, then the question is what to do about it. Masters proposes three solutions as follows: (go to site to read proposals by Masters and see charts).
'The problem with Masters' solution is that commodity speculation is "A" problem, not "THE" problem. A still better way of looking at it is that commodities speculation is symptom of a much larger set of problems:
Fractional Reserve Lending
Past monetary inflation
The Fed's willingness to blow bubble after bubble
Loose lending standards by the Fed
Carry trades in Japan
Runaway spending by Congress
All of the above points pertain to other central bankers and foreign governments as well.'...snip...
http://globaleconomicanalysis.blogspot.com/
River, the CFTC has already researched Masters' allegations about the impact of index fund trading: http://www.cftc.gov/stellent/groups/public/@newsroom/documents/speechand...
Swap dealers take the short side against commodity index traders. They then hedge this exposure, as commercial traders, with long futures positions.
The CFTC did indeed find an increase in commercial long futures positions over the past couple of years. But they found that it was compensated for by an equal increase in commercial short futures positions.
We see similarly balanced increases in spec long and short positions.
In other words, the market has simply adjusted to these new buyers. Because of these new long-term longs, other traders have decreased their longs. The CFTC found no evidence whatsoever of any effect of index funds on price increases. The only effect they found was that the market was getting slightly less volatile, and that is a good thing because it ennables producers and commercial oil users to better plan for new production and long term hedging.
Every trader I know is absolutely sick of this witchhunt. If the speculator witch hunt continues, every trader and money manager will simply be moving to the Dubai bourse, as soon as they get oil trading going.
$126.36 to $129.60
Gasoline at $3.42
It'll be above $130 again before the close.
So much for the correction.
Don't forget, lots of the clueless to wade through. Let's watch the close.
Knockin' at $130 again, mcgowanmc.
Nice close, mcgowanmc.
Thank you.
Humbly Yours,
James
That post by mish was the final nail in the coffin of my respect for him. Too wrong too often with too simplistic analysis. He sees the data he wants to see. Calculated risk did a number on his analysis of "walkaways" too.
That Michael Masters piece was exactly what everyone wanted to hear, and almost nobody took any time to research his claims. And who is the guy? Had you ever heard of him?
Then of course Soros comes out with his bubble statement, which completely ignored the diesel/heavy crude situation, and was based on his memories of tankers in New York harbor in 1980. Which just proves that even Soros can be misinformed.
Paulson came out at the same time with a statement that the price was due to fundamentals. The CFTC came out with research that showed that Masters' claims were unfounded. But nobody wanted to hear it.
Soros has contradicted himself regarding the bubble. He basically said the bubble will pop when the economy goes into deep recession.
That is not a bubble, but supply and demand.
I interpreted Soros' statements to mean that the oil price could not continue to increase at the recent pace (obviously)-I am not sure he actually used the term "bubble"-I might be wrong.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/05/26/cnsoro...
Of course, that's how the Telegraph reported it. Who knows what he said in between those two sentences. Then John Mauldin reported that he had called Soros, and said Soros had talked about New York harbor in 1980, tankers floating around the Gulf filled with oil in storage, etc.
Obviously Soros was basing his statement primarily on the shape of the recent price move, which indeed did have a shape characteristic of bubbles (though I believe it was a spike based on fundamentals--the strikes and the earthquake and pent-up demand in China, rather than a spec bubble).
But I think you're right, the price probably can't increase indefinitely at the recent pace.
This level of prices must mean recession, or more properly depression, which is surely going to knock the oil price.
In those circumstances the drop in oil prices would not lead to increased consumption, as export markets are destroyed for goods to pay for them.
Additionally the lower than expected returns to the oil exporters, many of whom are suffering from rapidly declining absolute volume of oil exports and need increasing prices to make up.
This all adds up to a deflationary spiral, although it might be masked by inflation of the money supply and hyperinflation in some countries.
In this environment financing higher technology oil extraction methods and renewables or nuclear would be very difficult.
So oil prices might fall, but the degree of demand destruction needed to cause this would mean that we are not going to like it.
Real prices in relation to the much reduced new incomes would continue to rise.
I think there is an SUV bubble and the resale value of SUV's and light trucks is falling. The resale value of my Civic is rising.
I recently switched to compact flourecents only to find I might have to switch to light emitting diode lighting later.
My condo has walls in common with interior space on three of four sides and they are stacked up on top of each other to minimize heat loss through a roof. One of the problems is there are not indivuidual electric meters and those who were energy misers had to pay for those who were energy wasters in the form of condo fees.
Was within about a hundred yards of a metro area bus stop connecting to a light rail/subway system that is connected to a train station and an airport.
Learned how to build an energy stock portfolio and cannot complain about "pain at the pumps."
Some people saw it coming and prepared.
It might just mean that Soros wants to make more money.
As he is a heavy hitter he is in the fortunate position that his statements themselves may move the market somewhat.
So if he comes out with that statement and oil falls by a couple of dollars because of it and that is predictable, there are opportunities to go short and profit.
Many market operators and so-called investment analysts are too heavily involved to be a useful source of information.
Moe, I had never heard of Mike Masters before yesterday when his name popped up on this site: http://www.nakedcapitalism.com/2008/05/soros-skyrocketing-oil-prices-bub... As you can see Naked Capitalisim lumps several articles together.
The NC article is a jumble of info from different sources but from what I gathered Masters was testifying before a US Senate Subcommittee that was investigating large leveraged hedge funds effect on commodities markets. I have no clue where Masters came from or why the Senate decided to hear his testimony...that said, I do not lack imagination and have my own theories.
As I have said many times on this and other sites I believe that we are nearing or past PO but I also believe the fact of PO is going to cause, and is already causing, unknowable above ground distortions of every imaginable type.
All that gave Mish a serious reading this AM saw that Mish thought Masters did not go nearly far enough with his proposals. Personally, I agree with Genesis on Market Ticker...
'Now is there a "speculative premium" in oil? Well, yes and no. The $250 billion in excess liquidity that is flying around has found a "safe haven" in oil and other commodities.
But this is not "speculative premium" in terms of market manipulation or "evil people", it is people buying oil and oil products as a stable store of value!'
and...
'You cannot fault market participants' perception that US Treasury instruments are fundamentally unsound when your own Central Bankers make public statements and take actions that demonstrate their willingness to destroy the credit quality of same!'
http://market-ticker.denninger.net/2008/05/mounting-pressure-monday.html
As we all know smart money is going to go where there is at minimum a reasonable return. IMO, what Bernanke, Paulson, et al, are pissed about is that their attempt to prop up the major banks to reinflate the housing market has blown up in their faces...The money has flooded into commodities instead and now they are stirring up a witch hunt, attempting to force money out of commodities by any means possible and back into a bubble that they can control...But, what is left to blow a bubble with? Not commodities...they will flee off shore...and, the history of economic bubbles show that they do not usually reinflate. I don't think they know what the hell they are doing.
Saudi Arabia Pumps Extra Oil to Match Demand
http://www.cnbc.com//id/24853673
We're saved, the bubble has broken, oil is down to $127/barrel, hit the snooze button, go back to sleep.
It's interesting that CNBC reported a future tense comment (will produce more oil) as a present case story. So, if I plan to date Julia Roberts, I can report that I am dating Julia Roberts?
In any case, my comment on the Saudi rebound follows, from the Ghawar thread:
The initial Texas decline was pretty low. Rounded off to the nearest 0.1 mbpd, the numbers looked like this (1972 was peak):
1972: 3.5 mbpd
1973: 3.4
1974: 3.4
The initial Saudi data are as folllows:
2005: 9.6 mbpd
2006: 9.2
2007: 8.7
(C+C in both cases)
When Stuart did his 8%/year decline rate article on Saudi Arabia early last year, this is one of the reasons that I suggested a future rebound in Saudi production, to a level below their 2005 rate. Basically, I think that the North Gharwar decline took them by surprise, and it has taken them some time to regroup.
But I see almost no chance for Saudi Arabia, in 2008, to match or exceed their 2005 annual rate of 9.6 mbpd (C+C). If the 2008 annual rate is below 2005, it would be three straight years of lower production, relative to 2005, and we would then be looking toward 2009.
So, just as I advised people not to read too much into the initial Saudi decline rate, I would be cautious about reading too much into the recent rebound. The key is average annual production, as depletion marches on.
Edit: A journalist has extracted the 2007 Saudi net export number from the EIA, but I am sworn to secrecy until the article comes out (the total liquids number for 2007 is up on the website, but not the consumption number).
Julia Roberts? Oh, come on WT, you can do better than Julia Roberts ;-)
Since I have told the story before, I won't relate my Julia Roberts story again (in regard to my Peak Oil debate with Michael Ecnoomides), but you are correct, my lovely bride is much prettier than Julia Roberts.
Is she reading this blog Jeffery?
In relation to the eternal speculation question I thought it was pretty clear that the market where funds had the largest presence (i.e live cattle) actually declined over the last 2 years so that is a case closed to me.
Better safe than sorry.
According to this article in Today's Trade Arabia (supposedly based on a May 27, 2008 report from Reuters, which I cannot find) Saudi Aramco production for 2007 was 3.11 billion barrels, an average of 8.52 mbpd, down 4.3% from 2006's total of 3.25 billion barrels. Crude + condensate exports were 6.6 mbpd, down 5.1% from 2006. The entire drop in C+C output is, however, attributed to the 400 kbpd OPEC cuts KSA agreed to during 2007. The article also claims exports of 136.01 million barrels of refined products in 2007, down from 183.96 million in 2006. Refined product exports averaged 0.37 kbpd. Total exports would then add up to 6.97 mbpd.
We shall see when, and if, Saudi Arabia ever again exceeds 9.6 mbpd for a calendar year, while rising consumption continues erode their net export capacity.
I'm not the oil expert here, but I am reminded of the axiom "not all oil is oil" (me).
Could the increased output from KSA be heavy sour crude? And, isn't there a bit of a glut for heavy sour right now as refiners are seeking sweet light for diesel production? I read in one of the threads that Iran had a surplus sitting in tankers.
Isn't this like putting more brussel sprouts on a hungry man's plate? (blech!)
I'm starting to see the oil price rise as more of a diesel crisis...
Diesel=Food
There was a link at TOD a few days ago to an article in which some Saudi oil spokesman said the new production came from Ghawar and Safaniyah. But Safaniyah oil is heavy and high sulfur--the same type that Iran has been storing in multiple tankers because of a lack of demand. Which means that probably a significant portion of the "new" Saudi production will be useless to the market and useless for controlling prices, because the market wants light sweet to meet demand for diesel, the only product with a decent crack spread.
Safaniyah heavy crude: http://www.allbusiness.com/technology/computer-software/816535-1.html
Thanks Moe_G,
Maybe that is why the price is moving around today as the buyers wise up to the subtleties of oil refining. I can envision a room full of traders furiously speed reading through Roberts Refining 201 essay.
And thanks Robert, that is highly useful. I am doing some crash course learning on petroleum distillates to see where our biomass liquids production falls in the market.
Indonesia Joins OFPEC--Organization of Formerly Petroleum Exporting Countries
http://online.wsj.com/article/SB121196122971625667.html?mod=googlenews_wsj
Indonesia to Pull Out of OPEC
By REUBEN CARDER
May 28, 2008 4:47 a.m.
Oh, but Jeffery this cannot possibly be true! After all just two days ago an economist assured us that Oil Exporters would never cut exports in favor of domestic consumption. It Just Can't Happen. He promised to show us the math!
This whole subject does tend to offend the delicate sensibilities of most economists. CNBC had one on this morning promising double digit oil prices by the end of the year.
BTW, I think that Matt Simmons will be on CNBC tomorrow.
Maybe the delicate sensibilities of Economides at least attracted Julia Roberts to date him;-)
By the way, my ELP is in steady progress and delivering. Just paid the reconstruction and new roof on my house(486 square feet, 2 adults,2 infants), without a loan, that is.
And last Sunday I caught 14 mackrels.
Congrats. One of the reporters on CNBC actually used the "Cheap is now Chic" line a few days ago.
And yesterday I started making the window frames for my Passive solar home, the glass is from recycled patio doors, cost a few 2x4 and a lot of elbow grease. I love my new "Jack Plane"
"Indonesia Joins" - looks and sounds like "Indiana Jones"...
Anyway, here is OFPEC
http://ofpec.com/
Seems to be for violent guys...
UK juddering down a rockier policy path than the US
http://business.timesonline.co.uk/tol/business/columnists/article4009709...
Energy giants smell windfall from sulphur
http://business.timesonline.co.uk/tol/business/industry_sectors/natural_...
Incidentally...
How much will the output from existing wells decline by early 2009? Will an additional 50,000 bpd even make up for the loss due to depletion?
Your quote is similar to ones from this article:
North Sea Oil production to be stepped up as Brown fends off protests
Your reaction was exactly the same as mine. It is hard to see that 50,000 will make much of a difference.
Another quote from the article:
It is not exactly good news if there are that many unprofitable parts of existing fields, and 20,000 barrels ( a day ???) is not very much additional / substitute production.
According to the data here (pdf warning) UK oil production in March this year compared with March last year declined by over 200,000bpd. So no, 50k won't even make much of a dent in depletion, let alone turn anything around.
Brown urges increased oil boost
I thought the North Sea was a model of accountability and application of modern oil technologies?
Is he talking about 'New Wonder Tech' here or what?
Nick.
It seems to be about bringing on more smaller fields that couldn't previously be produced profitably. Nobody seems to be even suggesting that the long term decline can be halted.
Gordon Brown: We must all act together
Nick, he's mostly talking, that's what they do. If anything they will promise to do something about taxes. Going on recent performance there will be unintended consequences and a change of plan will be required.
He's also said today "it was time to be "more ambitious" for nuclear plans"
I don't understand the UK government's response to the current high prices of oil. Their response (or at least, their publicised response - which may very well be different to their actual response) seems to be to:
It seems fairly damn clear that neither of these actions will do anything to reduce global oil prices. Talking to producing nations wont do anything - the US have been talking to them for months and all that effort has only produced a lousy 300,000 bpd increase from Saudi Arabia (of unwanted heavy sour crude). Squeezing an extra 50,000 bpd out of the North Sea wont do squat to the global oil price.
WTF are Brown and Darling up to? Are they just trying to look like they're doing something in the hopes that the public will cut them some slack? Or are they actually as stupid as their public energy policy seems to suggest?
And my biggest question: why haven't they ONCE mentioned ENERGY EFFICIENCY in their recent ramblings about oil prices? Surely one thing that is very much under their control and could materially affect the UK's ability to survive high energy prices is to increase energy efficiency. Yet no one from the government seems to be talking about efficiency.
It seems the single most pressing issue for UK energy policy is to get Alistair Darling (Chancellor) and Malcolm Wicks (Minister of Energy) replaced by people who actually know what they're doing.
Thanks Undertow for linking to Gordon Brown's article in today's Guardian. I've calmed down a bit and it appears I owe Gordon an apology. He does understand that efficiency is important. To quote his article in today's Guardian:
I am sure they do appreciate the true problem but the elephant is how to convince the thick-as-mince public ! I think it's highly amusing to see people grouping running a car for 15000 miles a year as a human right along with food and water.
Like the lady in today's Reading Post ( UK ) moaning she has to choose between driving and eating. Fairly easy choice I would have thought.
Politicians can't afford to be right and bang on about things that they don't have the political clout to do anything about.
I'm pretty sure that Brown knew for many years that the only practicable energy policy for Britain means a lot more nuclear power.
Not much use him emphasising it though, as it would have had no chance of getting a Labour majority.
OTOH nothing effective has been done even on issues where the answer was obvious and widely accepted, such as the poor insulation on house.
Even the poor standards on new houses prior to 2005 were rarely enforced - the local authorities could not be bothered - it wasn't a priority.
The lethargy and incompetence of the British establishment is of heroic proportions.
Much of the problem is that most new build is inspected by the NHBC rather than LA building control which is shadow of its former self.NHBC certificates are not worth the paper they are written on IMO
The old guard of local government - building control, city engineers, public health inspectors etc have been swept aside to be replaced by far more useful people with real identifibale job- role definition ;-)
Diversitystrategypartnershipscommissioningequalities executive officer
Our dilemma is that we have to drive to the market to buy the food so we can eat. Got to have the groceries and eat them too!
Dunno why, this reminds me of a story, happened at a craft school with some mischievous glass blowers. There was a bag lady collecting bottles for the (then) $.05 deposit. These guys would get some bottles, expand the opening enough by heating it to put a nickel in the bottle, then close it back to normal size and set the bottle out to be found. Poor bag lady had to decide between the $.05 for the bottle or breaking the bottle for the nickel.
I'm sure these mean glass blowers served time in purgatory for this deed.
IMO we are heading for a 'Weimer Republic' type flip-flopping of Democratically elected governments in the decades ahead who -while in opposition- fall over themselves to slag off those in power and when they get in fail to grasp the real nettle. Does anyone in the UK really think Cameron has any answers to this? (I'm no Labour supporter btw. I've become agnostic to politics, none of them seem to have a clue).
Over taxation will ultimatley fall by the wayside as it is slashed to 'ease the pain on families budgets', other taxation means will have to rise to substitute. By this stage though the high price of the underlying commodity will be doing the original job of the taxation -cutting consumption by demand destruction
Nick.
Methinks those two sentences contradict each other.
Here is one sure fire method for bringing down oil prices: Unemployment
How can Ford, one of the largest companies in the world, be caught unprepared for a rapid escalation in gas prices? Is Corporate America braindead?
I don't think it is fair to call Corporate America braindead, as they make more money than managers anywhere else-are they dangerous to investors and employees? Definitely.
good one !
Local inventor making cheaper gas from coal?
antidoomer, seriously, from all of your reading, how long are we from a decent electric car, and how much of a range will the first mass-marketed models have?
Lots of good stuff out there Moe, but since you asked I was gonna post this artcle I saw today on Shai Agassi's model for electric cars, looks promising:
Shai Agassi\'s Electric Car Plan Good Enough to “Wipe out Gasoline Cars” says Deutsche Bank
also if the long shot EESTORs claims are anything close to reality a transportation revolution will occur everywehre:
ZENN claims they will launch EEStor-powered EV in fall 2009
I think the main thing that will be necessary for it to work well will be a standard battery pack rather than every vehicle manufacturer having their own design. We have seen how a standard shipping container completely changed shipping.
The biggest successes come with making it easy, cars today have very similar layouts for the main controls steering wheels rather than tillers maybe being the most obvious.
$35,000 for a sedan that gets a 200 mile range, and you should see it by 2010. Or, if a 50 mile range is good enough for you, you can spend $8,000 to $10,000 and convert a vehicle you currently have. There are plenty of grammar and spelling errors on the site, but http://www.evworld.com tends to have updated info on EV developments.
~Durandal (http://www.wtdwtshtf.com)
Thank you, both of you. I rather like the Agassi business model--contracting in advance for a lot of recharging stations. The only thing I don't like about that model is the linking of the price to gasoline.
I have a neighbor who's gone ahead and installed solar on his house. I'm totally sold.
And then depreciate any fuel car/truck immediately.
Plus the grid goes down with the extra demand.
Three years before cars won't use fuel anyway.
It won't be there.
Right. What happened to your hoards of southern refugees fleeing their drought to the north? Or the full fledged depression already in place by now? Geez, you make kunstlers predictions look good.
Sorry, Antidoomer, we failed to foresee the Federal Reserve declaring absolute, un-Constitutional power to shut down and merge giant investment banks at will to prevent them from liquidating their mortgage trash and derivatives on the open market and causing a panic. As well as the power to trade treasuries for those worthless vehicles at risk to you and me. Or Freddie Mac and Fannie Mae and FHMA originating 80% of all new mortgages to prop up the industry. Or their being authorized to bail out the private mortgages as well.
All these things were done to prop up the system until November. If it were 1930, would you be one of the many Republicans then saying that there's nothing wrong, it will be over with soon? People like you said that everything that's already gone wrong the last year could never happen. People who predicted those things correctly are saying it's just begun.
And the drought goes away every winter and comes back every summer. Look at the Lake Lanier depth charts. Not good when your economy must grow or die.
When do you recharge your cellphone? I do mine at night, when I'm in bed. I'd be inclined to think that you'll likely recharge your car at home at night as well, when there is plenty of spare capacity on the grid.
Of course, it's never a matter of whether it CAN be done, it's all a matter of IF it will be done. If employers had solar powered chargers in their parking lots, if people had solar panels on their houses, add wind power and V2G tech, we could make it no problem..
But yeah, that's a lot of IFs, now isn't it? :P Anyhow Mcgowanmc, I'll be in the Ozarks with you shortly, with my solar/wind powered home, and soon after that, my electric powered car that I will recharge with said renewable energy. When? I close on my land in June, construction begins in June, house is finished in July, with exception to things like internal finishing.
But hey, I'm not your average American, so we can't expect everybody to do like me. I won't care if the grid goes down unless it's one of those times I'm on my bi-monthly shopping excursion to "the city."
It is unfortunate that during the period of the early development of the auto in the US, electrification was still a long way off in many areas. In fact, there were still battles between Edison and Westinghouse(Tesla) about whether the grid would be AC or DC. (Fascinating fact: the final decommissioning of Edison's DC system in NYC took place just 6 months ago!) There were quite a number of electric cars sold in the early part of the 20th century, but travel outside metropolitan areas with an electric car was difficult due to the lack of a grid over large parts of the country. Thus, the gasoline powered auto took over.
If you play a mind game and move the wide implementation of the electrical grid in the US from the 20's/30's to the 1890s/1900's, I believe all of our oil problems would be moot. If we had developed an electric car infrastructure early on, the idea of burning messy gasoline would just not have gained traction, IMHO.
The common overriding concerns I hear from people about electric cars is: how long does it run on a charge, and how long does it take to charge?
There were electric cars 100 years ago going over 200 miles on a charge. Really. This is not an insurmountable engineering issue.
But, we don't have to care how long the car goes on a charge, IF and only IF, we can avoid another AC/DC, Betamax/VHS, Blu-Ray/HD war. The solution is for electric cars to standardize on the configuration of the battery packs. It is easy to imagine a configuration where the batteries drop out from the bottom of the car. You would not own, but would lease or subscribe to a battery service. You may have the option of charging at home, but on a long trip, you would pull into a station, and the battery packs would be dropped out the bottom using an automated jack system, and a new fully charged pack inserted. You are on your way for another 150-200 miles. Of course, getting manufacturers to agree to this is another story. First, there would be patent wars. Then there is the issue of with all cars using the same batteries, there is no chance for product differentiation there. On the other hand, electrons are electrons..and maybe they will see the light and concentrate on motor/controller design and the usual styling/comfort/suspension factors.
http://www.earlyelectric.com/carcompanies.html
The USA had electric cars traveling for many hundreds of miles across several states IN OPERATION.
http://www.pccmph.com/images/interurbanmap.jpg
Refueling was not an issue, since they had overhead wires and low rolling resistance rails underneath.
Best Hopes for "No battery needed" electric cars,
Alan
We could have a 'decent' EV tomorrow if one of the big manufacturers would pull their fingers out. They don't even have to build a new car, but rather just slot the electric motor and batteries in place of the old ICE.
The first Production EVs will probably have a range of 60km or so, because that's slightly more than the average distance a car goes each day.
Since none of the big guns are yet making an EV, you'll have to do it yourself. $10,000 in Lithium Iron Phosphate batteries, $10,000 for a Siemens motor and Inverter (they're the sex!), and a few hundred dollars in wire and various fittings, and you have an EV with a decent range.
OK, it's a little more complex than that, but it's not hard. You can do it even cheaper if you go for DC instead of AC.
They are going to do better for range than that. The Th!nk is due soon in Norway, and this year in Britain.
It costs around £14k plus battery hire:
http://www.gizmag.com/ukp14000-thnk-city-electric-car-ready-for-showroom...
It is good for about 120kilometres/day
The Mitsubishi will cover around 160km/day and is due out in Japan in 2009
http://www.greencarcongress.com/2007/10/new-li-ion-batt.html
Well, the Germans developed the same technology during WWII. Not meaning to take anything away from the new players but I can't take it too seriously until the economics of the project has been checked out by outside auditors. Just glad to see someone trying something (as long he's not another snake oil pedler looking to fleece investors)
the company that runs it blamed rotting wooden timbers that it had failed to inspect properly.
Ahhh, the hi-tech Nuke plants. Good thing they were using materials that capture atmospheric carbon in their construction, per the claims that nukes can help with global warming.
Well, you know we're all doing what we can. All that concrete, as it ages, is bound to (re)absorb some of the CO2 that was driven off when the cement was fired.
eric blair -
While it may sound incongruous to have wood construction in a nuclear power plant, the fact of the matter is that wood (particularly rot-resistent woods such as cedar, redwood, or cypress) has traditionally been a material of choice for the horizontal slats in a cooling tower down through which the water trickles. However, wood is not used for the structural part of large cooling towers, as the shell of those big hyperbolic-shaped cooling towers you see next to nukes are made of reinforced concrete.
Over time, even rot-resistent wood will rot and degrade, and the other negative feature of wood is that an empty cooling tower not in operation can become a serious fire hazard. Still, it's been cheaper than using plastic.
By the way, one should not automatically view wood as a backward, low-tech material of construction. If used correctly, wood has some very desireable engineering properties. As an example, one of the best fighter-bombers of WW II, the twin-engined RAF Mosquito, had a body made almost entirely of specially molded plywood (to save on stategically important aluminum). Though the plane performed superbly, it didn't hold up very well in the tropics, but the life of these planes wasn't planned on being very long anyway.
"had a body made almost entirely of specially molded plywood"
that's news, the only plywood aircraft i have read about was howard hughes' spruce goose. that was a one flight wonder.
The RAF Hurricane, which actually bore a greater share of the fighting in the Battle of Britain than the Spitfire, was also a wood and canvas job, I believe.
Guess you haven't been doing much reading. Look into early sailplanes, in particular. Spruce Goose was made of Birch, btw.
Currently on the Diane Rehm show - 'Oil Prices'
http://wamu.org/programs/dr/
Tons of great info re water and energy.
This guy is the Matt Simmons of water. (and with just as dire a message too)
“Thomas Rooney on the rampant underpricing of water and its perils.”
Thomas Rooney is Managing Partner, RCI Consulting; formerly CEO, Insituform Technologies.
http://fora.tv/2008/04/18/US-China_Green_Energy_Conference_Panel_2
From the talk;
“Any energy solution will be absolutely driven by water use…”
“We are in a water crisis…”
“Any water solution will be absolutely driven by energy use…”
BTW, this is what happens when you get caught on the wrong
side of an export curb:
"
``The cost of cultivation has more than doubled, but the yield has only fallen,'' said Vasu, pointing at his barren paddy field below a green hill near Mundur, a village 2,665 kilometers (1,656 miles) from New Delhi. ``There's a shortage of rice globally, and the government is finding it difficult to supply enough rice to people at a reasonable price.''
To ensure it can feed India's 600 million poor, the government banned rice exports April 1, contributing to a shortage on world markets that drove the price of the grain to a record last month and sparked food riots from Haiti to Egypt. The curb caused local prices to lag behind the international increase, encouraging Vasu and other growers to switch to more lucrative crops and further reducing supply.
http://www.bloomberg.com/apps/news?pid=20601080&sid=aKifVN0bmi9E
Always good to have a large supply of food on hand, hidden away...
Any chance of a guest post?
Fuel Finance Food and Fluid?
Energy Economy Environment Effluent?
Water Watts Wheat Wadge?
Dow Chemical hikes prices 20 percent, citing energy
Looks like I finally picked the right week to quit sniffing glue.
Pete
What's Really Driving the High Price of Oil? by Ralph Nader
http://www.counterpunch.org/nader05282008.html
I find this very disappointing. Lost a little respect for the man when I read this.
Caution: the link is to an avowedly "left" web site. If that sort of thing offends you, stay away. (Personally, I try to get as wide exposure to different viewpoints as possible. From that perspective, this web site is still right of center.)
I think he's off-base here, but considering that Nader is right about almost everything, I'm inclined to cut him some slack. After all, the oil companies do accept unconscionable subsidies from the government, a criminal energy speculation fiasco did just recently occur (Enron), and if Ralph is not yet Peak-Oil-aware, well, he's got a lot of company amongst people who have a much greater duty to know.
Beyond that, his action items at the end of his essay (drop oil subsidies and tax loopholes, invest in solar/etc, conserve, update vehicle MPG standards, etc) sound pretty good to me.
He makes being wrong look pretty good, compared to the current idiots running the place.
I saw the article too and was going to post the link, but you beat me to it. Anyway, I was also amazed to see that Nader concludes the high price of oil is the result of speculation on the Nymex. He really doesn't get it.
The only saving grace of the article is down at the bottom, where he suggests some common sense ideas such as improving our railroads, promoting solar power, energy conservation and ending subsidies/tax loopholes to Big Oil. Still, the article leaves a bad taste in my mouth.
ozonehole -
The other day I raised the question as to what impact speculation might be having on oil prices, and the overwhelming consensus was that the impact was little to none. Some good reasons were offered, and I was almost 90% convinced that such was the case.
While I am well aware of Ralph Nader's long standing anti-corporate biases, he generally does his homework and is not prone to making rash off-the-cuff pronouncements. So, now I am a bit less than 90% convinced that speculation and hedge fund machinations are playing no significant role in the recent jump in oil prices. Nader does make a good point in that there are currently no shortages of oil and that oil inventories on a global basis are not in bad shape.
The arguments made yesterday were generally that you cannot have a true bubble in a commodities market such as oil because i) prices are 'marked to market' on a daily basis, and ii) oil futures contracts are for a fixed period of time and thus must eventually be settled up, thereby allowing over or under-pricing to correct itself fairly rapidly. This makes sense to me, but we are not talking about a true bubble, but rather the possibility of artificially induced upward pressure on prices.
Regardless, it would seem to me that the huge amount of money now flowing into the oil markets from speculators and hedge funds, much of it leveraged, has to have SOME not insignificant effect on prices, at least in the short term. While it is true that many of these speculators may have overreached and will eventually get badly burned, in the meantime they must in some way be causing SOMETHING to be happening.
I think I am now more confused than when I started asking the question the other day. I can't help feeling that there might be some forces at play here that we are not seeing.
Speculators could bid up the price of far future contracts like Dec 2015 above the level that actual demand and supply at that time would justify. If so they would face the consequences when the contracts expired and they would have to sell the contract at a loss or pay more than the spot price for oil.
On the other hand the contract everybody keeps quoting is the forward month contract, that is for delivery next month. I simply can't see how speculators could bid up that contract above the real demand because it will expire so soon.
Nobody (including Nadar, Big Oil and OPEC) who is blaming speculators can explain how the speculators are getting out of the expiring contracts without taking losses if there is really no shortage of oil.
Goodtower, I agree with everything except 2015. At that time the following will have occurred:
1. Cantarell will be dead
2. Ghawar will be producing much less, if not dead,
3. Many of the currently 'before peak' fields will have peaked,
4. New possible fields will be much harder to find, explore, extract, and transport the oil.
The amount of recoverable reserve left will be down by ~25%. I suggest that the prie will be mcuh higher, barring an economic collapse, or a meteor impact.
While I am well aware of Ralph Nader's long standing anti-corporate biases, he generally does his homework and is not prone to making rash off-the-cuff pronouncements.
The past Mr. Nader knows well is FULL of corporations 'sticking it to the little guy' to 'boost their own bottom line'. (Hint: That is exactly the function of Capitalism)
So he's going off his past observations.
I can't help feeling that there might be some forces at play here that we are not seeing.
Naw, I bet each and every force at play is mentioned *SOMEWHERE* on the Internet. It is a matter of choosing which of the texts is true (and than accepting that truth) and which ones are pure and utterly bogus. And frankly - I can't tell ya which of the parts of the various theories are right. :-(
Too bad we'll have to wait for the oil historian Dan Yergin to write that book.
Call me an optimist, but I believe that the strong market signal of $130+ oil will send us down a fuel efficiency / conservation path that will keep the world economy moving ahead. So I write in detail here:
http://truecost.wordpress.com/2008/05/27/can-fuel-efficiency-save-us-fro...
The EIA projects demand of 120M barrels / day by 2030, and most here, including myself, believe that we'll never see that kind of production. But doubling worldwide fuel economy is quite possible over the next 20 years with today's technology - and that would knock 40M barrels/day off the demand number. 80M barrels/day may be sustainable for quite a while as the world gets its renewable energy house in order.
The truth is usually somewhere in between, and in between the die-off camp and the CERA camp, we have a scenario where a production plateau at 85-90M barrels causes a steady rise in fuel prices, coupled with a steady migration to more energy efficient vehicles, and to less driving per capita.
One word: E-X-P-O-R-T-S
Not fast enough, not soon enough, and we have already wasted 4+ years on the plateau, which will start declining sooner than we want it to.
I sometimes see that plateau years as the "Golden Hour" for trauma patients. The last best time to get serious about mitigation.
We CAN mitigate during decline, but the costs, human & economic, escalate dramatically.
Failure to mitigate during decline does lead to collapse and starvation.
Alan
The USA can't mitigate. We don't have the money and we're in debt up to our nose and we can't borrow any more because there's a credit crunch. Most people don't have the capital to buy a Prius.
that's just wrong. yes some people are in debt and our national debt is too large. we are the top economy in the world. not everyone is broke. something like 15 million cars were sold last year as were millions of homes.
Prius is coming out with a bare bones model of sorts that will cost $21,000.
we can mitigate.
BS. We have plenty of money to mitigate, we are just using it for the wrong things. Plenty of money could be raised through a tax on crude oil for instance.
We currently use about 20 mbd in this country. If each had a tax of $20, that would be $145 billion per year. You increase the tax per barrel over time, so you are collecting the same or more money on fewer barrels.
Who said anything about a Prius ?
I support Non-oil transportation.
They can afford a bicycle, and both new and redirected taxes & fees for Urban Rail and electrified inter-city rail.
Best Hopes for Non-oil transportation,
Alan
The short term problem with the Prius solution, is not the affordability, but the availability. Toyota can't just magically decide to increase production several fold, a major increase in production will take several years. Only w few small wedges can be filled by HEVs, and NEVs for the near term (ten years). Other methods, such as car pooling, mass transit, more efficient and slower driving, bicycles etc. will have to make up the remainder.
Wall Street and the financial media remain eerily silent about the fact that the price of oil has jumped an incredible $85 in less than a year and a half. This signals that something is very, very wrong. Fundamentally wrong.
In January (2007) oil was at $49 a barrel. In January (2008) oil was at $100. Now it’s at $135 a barrel. Your 'market signal' has failed miserably.
Did you see CNBC's America's Oil Crisis last week? It was scary. The reason it was scary is that, despite the $85 moon-shoot, most people don't seem to perceive that there is a supply and demand problem.
As a society, the U.S. has done nothing meaningful to address Peak oil. This all but guarantees that within a decade, there will be millions of unemployed and very angry Americans. Even if the U.S. had the time and resources for building the "latest vehicle technologies" on a massive scale, Americans simply would not be able to afford them.
It is about as strong a signal as what Hitler gave when he moved into the Rhineland. We'll mitigate in about as timely and effective a manner as Chamberlain did.
Six degrees of crisis separation - or - the "housing crisis" begats "propery tax revenue crisis" begats funding for "rail service funding crisis"
Despite growing popularity, Tri-Rail faces crippling cuts in service
Doubly sad since Tri-Rail was on a path to break-even with fares. Tuesday earlier this month they had over 16,000 riders, second best day ever (best was Miami Heat Championship celebration). A few years ago, 5,000 was typical and 24,000 should = breakeven/small profit.
New Miami MetroRail extension north to Broward County will feed more riders into Tri-Rail (and vica versa) when it opens (was going to start construction in 2010 till GWB - see link below)
http://forum.skyscraperpage.com/showthread.php?t=145348
Note that GWB is using the canard that all maintenance of existing rail must be up to date before funding new projects. Since when did all potholes on existing streets have to be filled before a new highway was built ?
"Since when did all potholes on existing streets have to be filled before a new highway was built ?"
Sounds like GWB wants what is currently in place to last as long as possible since the Metro might be going without maintenance before too long. Only thing that makes sense because like you said, potholes last forever.
\'Avalanche Effect\' In Solar Cells Demonstrated
Interesting effect, but here's the bottom line:
The total energy of the "free" electrons, or rather the energy difference between the electrons in their excited state (conduction band) and the ground state, is still limited by the incoming photon energy. The only way that you get more photocurrent is if there is less recombination of these electrons with holes before they are "harvested". Moreover, the voltage will be less because those electrons are occupying states in the conduction band of lesser potential than would be occupied by a single electron which utilizes all of the incoming photon energy.
Recommendation: restrain enthusiasm
Yep, yea canna change the laws of physics.
Energy out < Energy in
Awww, don't ruin the buzz!
From wikipedia
Mania (from Greek μανία[1] and that from μαίνομαι - mainomai, "to rage, to be furious") is a severe medical condition characterized by extremely elevated mood, energy, unusual thought patterns and sometimes psychosis. There are several possible causes for mania, but it is most often associated with bipolar disorder, where episodes of mania may cyclically alternate with episodes of clinical depression. These cycles may relate to diurnal rhythms and environmental stressors. Mania varies in intensity, from mild mania (known as hypomania) to full-blown mania with psychotic features (hallucinations and delusions).
TheAntiDoomer strikes me as potentially manic. Something going on inside his/her head appears to be leading to an unrealistic state of over optimism. Debating with such people is utterly futile.
I am not a Pollyanna and am fairly pessimistic about the future of the human race. That said, you guys are too quick criticize TAD. All he did was post the link to an article. It's not like he said, "Hey read this, we're all saved!" To me the Drumbeat is all about sharing information from various media sources.
I notice that many times when TAD posts, there are many voices that spring up to shout him down. If he were rude in his postings I could see why he might deserve this treatment, but I've never seen him post any attacks on anyone.
Respectfully pointing out why you think such a scheme is unfeasible is one thing. Claiming someone has a mental illness because they don't think the same way as you makes you look like an ass.
We all have our own perceptions of reality. And we all seek to perceive reality accurately and truthfully. So when someone seems to have a very different perception of reality, conversations with them can be very irritating.
There are 2 general ways for people who understand peak oil to react: optimistically or pessimistically and this is decided on by how soon one believes it will be when world oil production starts to decline/exports start to drop noticeably. I think TOD has an optimistic attitude, with the theory being 'get the word out', there's still enough time. People like T.A.D appear to me, with their beliefs that alternatives to oil and the ICE can save us, to be hopelessly optimistic. This would take at the very least 10 years to get anywhere, and that's going at Manhattan Project pace. And the world still isn't close to starting. There is IMO simply no way production/exports are going to go up for the next 10 years. It just defies the trend of the last 4 years too much.
I know that, like everyone, I have 'confirmation bias'. Nevertheless, I feel justified in disliking super-optimists because it is those people who got us into this mess.
Perhaps Drumbeats could alternate with 'Doombeats' and people could read which they prefer.
I've fallen way short many times myself, but I think that you have accurately described the dynamic of differing opinions, or perhaps world views.
What you have written though shows clearly that it must be equally irritating on the other side of the fence, so your justification for disliking those who differ from you seems weak, and more particularly in no way excuses personal attacks.
You have the option using greasemonkey to avoid posts by those whom you find annoying.
Calling TAD hopelessly optimistic is erroneous? But surely he/she is !? The weirdest thing about PO is that fact that to me, as a PO non-optimist, people can embrace it yet stay optimistic. I simply cannot understand, given that so few people so far have embraced PO, that, of the few that have, some manage to remain optimistic. I suspect that the human mind is far more bizarre than I begin to comprehend. God I wish I was still like my 100,000 great grandfather, swinging in the trees! :)
I can see where you are coming from.
Personally I try to avoid both optimism and pessimism - the future in many respects is unknowable, although I would agree that it is apparent that at minimum grave difficulties seem inevitable.
I only really get upset when, in my view, someone is deliberately seeking to misrepresent in order to support their case, presumably on some sort of grounds that they are right in essence, and so the hoi polloi should be told the information that is good for them.
Even when the thinking behind the position is so foreign to me that I cannot find a way to fairly state their opposing case, I usually try to at least present links to those viewpoints.
As something of an aside, I find some of the rhetoric on climate change amusing in the fairly unscientific talk of deniers and so on.
Personally I am pretty happy with the IPCC's view, and certainly have no qualified judgement on climate change, and moreover find some who regularly post on this blog by picking up any titbit of anti-warming propaganda boring.
However, some would seek to characterise any expressed doubt as being inevitably the result of a complete lack of education.
In that respect I would find it difficult to dismiss Dr Mearns as being incapable of any scientific thought, and he has a somewhat reserved position on climate change, so the generalisation seems to me too sweeping.
Before the thread is flooded with the faithful, or for that matter the heretical, I should emphasise that debate on global warming in no way interests me, I brought the subject up purely for illustrative purposes.
I see the TAD as looking for EVERY conceivable path out, and making fewer conclusions
I think it was extremely rude AND specious to speculate about someone's mental health without training to do so (unless you are a psychiatrist ?) and even then you do not have the information to make a proper diagnosis.
I see a desire to require conformity on my part.
I have seen the end of my world as I know it, so my perspective is different. Their *IS* life on the other side. What we do now can make a difference.
Best Hopes,
Alan
BTW, we can electrify all of the US main rail lines (about 33,000 miles) in six years of "maximum commercial effort".
This could easily be amended to...
That street goes both directions.
Phree;
It's not that The Antidoomer is abusive or rude; I have never seen that sort of behavior from him/her and would find it out of character. It's just that as long as I've been comin' round here, TAD has consistently made claims or posted links to technologies or ideas regarding the current fix our society is in rearding our oil/energy Jones that are unrealistically optimistic or just flat out fantasies. Indeed, this has turned out to be the case so often that I don't even bother to read what he/she has posted anymore, as it usually turns out to be a waste of my time. And speaking as someone who is an expert in wasting time, I think I can speak with some authority on this matter.
SubKommander Dred
And then the five or six replies each of his postings generates, and the the additional posts by someone trying to stick up for him. Dammit, I'm contributing more to this thread, how's that for a waste of time?
Can't we al just get along-- Rodney King
TheAntiDoomer strikes me as potentially manic. Something going on inside his/her head appears to be leading to an unrealistic state of over optimism.
Dig thru the past posting history. Self-identified as a geology major working in the DC area if my memory is correct.
Hard for someone to understand the problems if their money-flow requires them to not understand.
Yes energy is conserved but no the voltage in sunlight might not be reduced. A calmer version is here at physorg. See the (greatly oversimplified) figure at the top.
Since the energy extracted from a conventional solar cell is limited by the material's band gap, a lot of energy is wasted by silicon cells, which put out only about 0.5V even, say, for a 2.3 volt green photon. So conceivably there is a lot to be gained by this avalanche process. That's what Science Daily is jumping all over, woefully prematurely. Then they make the breathtaking leap, "Moreover, these solar cells can be manufactured relatively cheaply". No one knows that because practical avalanching solar cells do not even exist. What the researchers have so far is an interesting science project.
Specifically, physorg says:
Now, I didn't feel like spending $25 to access the underlying journal article, so I'm just going to arbitrarily guess that "smaller than previously assumed" is code for "adds between 1% and 10% to what the output would otherwise be". Since lead selenide has a band gap only about 1/5 that of silicon, what the output would be in sunlight is very small indeed. So they'll probably need to make it work in silicon, copper indium gallium selenide, or some such material, first, because there will probably be practical limits to the quantity of avalanching that occurs. After they do that, if they ever do, then they'll need to make it work well enough to be worth the added manufacturing cost, whatever that turns out to be.
Stay tuned if you wish, physics is often interesting. But be prepared to stand by for about 15 or 20 years. So yes, by all means, restrain enthusiasm.
TAD, when you post these things, please try to trace them back a little closer to the original source. Not only will the result be calmer, but it is useful in these discussions to be clear right up front whether something is likely to be useful soon, or whether it is pie in the sky twenty years by and by.
The likelihood that inexpensive 44% efficient solar cells of this type will be manufacturable within a time frame of practical interest to policy makers and business people - who seem to be running low on time - is vanishingly small. What these researchers actually have is an interesting science project that does not justify the breathless Science Daily quote, which is partly Science Daily's fault for leaving a misleading impression, but partly yours for making it even more misleading by pulling it out of context and isolating it.
See my reply to JoulesBurn just above for details. Thanx.
He is hardly alone in that fault.
Where renewables are concerned sense often goes out of the window, and the most untested and provisional ideas and schemes are treated as though they could be implemented on massive scales immediately.
The end result is as grossly misleading to the ill-informed as Gordon Brown's statements that he hopes to increase North Sea output by 50,000 barrels.
Most simply do not realise that this is too small to make any substantial difference at all.
"He is hardly alone in that fault."
Oh, I know. For example, nearly everybody quotes capacity factors for wind turbines that are too high if you would build them on a scale that really matters, because they have high wear-and-tear, and because you can't jam enough of them into the optimal spots. Still, it's always useful to ask for a bit of context rather than pure breathless prose.
Politicians are another matter - in democracies their job is to get elected; elsewhere they do as they please, and too often what pleases them is incredibly vicious and horrifying. Either way it's not overly clear how to keep them honest or even that they can be kept honest. (Which is a reason why the writers of the US Constitution tried to control the damage by prescribing limited government.)
One of the strengths of TOD is vetting ideas for their real world time scale & potential.
It makes for a shorter list of options.
Best Hopes for Realistic Planning,
Alan
Where it could be useful is in harvesting the different wavelengths. A blue photon has considerably more energy than a red one. If the band gap is just high enough for an electron to be harvested after absorbing a red photon, then the entire difference in energy between the blue photon, and the red photon is wasted when a blue photon is absorbed. Perhaps with this model, blue can produce three electrons, and red one, and maybe infrared one. So the upper cap on efficiency is raised.
Brown supports increased nuclear, not just replacement
On the BBC a moment ago, they picked this change out from today's statements.
Shame they didn't decide this 10 years ago, then we might have been able to keep the lights on.
EDIT:
Found the link:
http://news.bbc.co.uk/1/hi/uk_politics/7424158.stm
Worse yet, I read where Sarkozy wants no new French nukes !
Perhaps you can sell some Channel islands to the Russians ... (see the two new nukes for Kalingrad)
Best Hopes for On-Shore UK wind,
Alan
Have you a link, Alan?
I can find no such statement by Googling, save in relation to nuclear weapons.
Last year, the Minister of Environment, Jean-Louis Borloo, while being enthusiastic about French plans for new wind farms, stated that France will not need to build new nuclear plants with all of this new wind.
It is apparent that he has been throttled by both Sarkozy and the PM Fillon, who are more strongly pro-nuke.
So I withdraw my earlier statement, it was in error.
Best Hopes for more UK nukes on French soil,
Alan
Whew! What a relief!
Not that we have any energy worries here in the UK, now Gordon intends to expand North Sea production! ;-)
Quote of the day
By Morris Alderman, emeritus professor of economics at the Massachusetts Institute of Technology and one of the world’s foremost resource economist, from his book: The Economics of Petroleum Supply, 1993.
Reported by Thomas Homer-Dixon in The Upside of Down.
Ron Patterson
Still looking for my Huber/Lynch oil field--where discrete oil wells peak and decline, but the total field production, the sum of the output of the discrete wells, increases forever. It will be found in a land of elves and fairies, with unicorns grazing in the pastures.
THAT I can believe, as long as those Midland Communists are not in charge of drilling (see what a mess they made of Texas oil production).
Alan
Amazing, this guy was/is a professor? Did economists manage repeal the laws of thermodynamics or increase the mass of the planet? There is only so much, and that's all there is. Wow. Anyone know how to get a job like that making 100k a year spouting such nonsense?
Austin can prolly supply a few commies, if Midland runs into a shortage...
Or on Big Rock Candy Mountain.
Or MIT. I only wonder how economics and engineering got intertwined. You'd think the hardcore geeks at what is arguable the premier technical school in the world would have laughed to the point of collapse when somebody suggested creating an economics department.
The MIT Econ department is part of the school of the humanities and social sciences.
It's amazing what money can buy :)
"Minerals are inexhaustible and will never be depleted...."
Surely this must be a joke? How can anyone think that it is possible to extract anything without limit? Maybe it's easier to imagine it in reverse, how long can you continue to extract something at the same rate when the planet shrinks? It should be fairly obvious that unlimited extraction is not possible.
I think that emeritus professors of economics can never be depleted, how many were in the past is irrelevant just like the current one.
If you think that's bad, check out Nobel Prize winning economist Robert Solow's comment that we can 'get along without natural resources.'
You can read more of his nonsense in The Real Oil Problem (PDF)
Thanks Undertow. Incidentally I misspelled his name above. It is Adelman, not Alderman.
Ron Patterson
I found this article interesting
Who is MA Adelman?
Then there's this from the article
Just thought I'd throw that in as I know you love conspiracy theories Ron :-)
Ron: Possibly the stupidest quote ever-the guy makes MIT look really bad.
No No you are missing the point. Minerals are inexhaustible, they do stay on the planet- yes, they just move from below ground to above ground and when we are all gone they will get covered in cosmic dust and drop below ground again.
sarconal off
I'm not defending this particular comment, but I do wonder sometimes why so much bile is reserved for economists here at TOD.
Economics can actually do an excellent job to help explain what will happen if oil supplies plateau and decline. If the supply curve is completely inelastic, and the supply curve shifts leftward over time (a decrease in supply), this models precisely the sort of predicament that most on TOD see coming - rapidly rising prices, and lower available fuel for consumption.
The ELM model presented by Westexas and Khebab is itself a form of economic model - and a good one. Perhaps those inclined (and capable) should try to integrate it with a world supply-demand model?
In terms of solutions, I haven't seen much talk about heating oil lately. I'd like to see the next President institute a crash programs to eliminate heating oil consumption, and replace it with the best viable alternatives in each region. I hope to post more on this soon.
It was probably a slip of the pen in your wording there, but at least for me it's the "explain" that makes me think less of economists. They don't "predict", in the sense of "if my prediction is wrong, I'll have to rethink my theory", because they're always pulling out extra factors to justify why their previous forward looking statements ("predictions") turned out to be wrong even though their basic theory is right, and they don't try to really "understand" because understanding might involve looking at data that proves their personal theory is wrong and admitting this.
Economists spend a lot of time creating theories that fit past data curves... problem is they don't really do much to look forward at discontinuities... the entire canon of Western economics is based on a history of exponential growth
Basic mathematics should indicate that exponential growth cannot continue forever but economists appear to ignore this. So the economics we've worked with to date have little predictive power after the point at which exponential growth hits a discontinuity.
Economists' role in running the world really rocketed from the seventies to the period we live in today. They are, as a class of professionals, involved in most of the roadblocks preventing us dealing seriously with Peak Oil.
Does that mean that there are no economists trying to appreciate late stage capitalism for what it is and look to alternatives? Of course not... but such individuals have little sway over the field today.
First, economics is good at explaining what happned. It's not so good at predicting what will happen. Second, Westexas and Khebab are not economists. Their isn't really an economic one. It's more of a logistics model. Finally, in a lot of places in the North East, the choices are heating oil, electricity, wood, or propane. Electricity is generally more expensive than oil for heating, propane has the same problems as oil, and wood would be used up pretty damned quick if everybody switched over to it. Yes, it would help the oil situation to cut down on heating oil use, but it's got to be matched up with other reductions.
Praveen: IMHO the vast majority of MSM economists (many of great renown) do not believe the crap they are spewing-a good example is the Verleger knob quoted in Dave Cohen's article linked below-there is absolutely no way this guy believes what he saying-he is like a guy going door to door selling vacuum cleaners that don't pick up dirt-but you want him treated like a grand poobah-why exactly? Why shouldn't bile be reserved for those living off the grift?
This rat would make a fine MSM economist-maybe he has a position lined up with TIME magazine http://www.huffingtonpost.com/
Brian,
I assume you're talking about Scott McClellan and his new tell all book?
Becoming an economist is like becoming a Jedi Knight.
The farce must be strong within you.
Praveen,
The problem with TOD readers is that many of them engage in something called "rational thinking". The farce is not strong in these.
To be a Jedi economist if you want to be, uumh, always must you have a master and a gullible disciple. A disciple who questions the farce is apt to face his worst fears in the cave of truths. Harken, I feel a disturbance in the farce. The minerals are not infinite.
Yes you see. Always there are two. A master economist and a student. The farce is with us.
Economics is not science. Economics is a circle jerk of solipsists each attempting to convince the others that he's the only one that exists (and matters).
Yes, I have a lot of bile for the idiots known as economists. SCIENCE is the process of expounding a FALSIFIABLE THEORY and then TESTING that theory, either proving it false, or passing the test, leading to another test. Show me an economist whose "theories" (and I use that word loosely because there is no other way to use it associated with economists) have been enunciated in a falsifiable manner and whose theories have been tested in such a manner.
You won't find too many. But you will find lots of those who meet the general description of solipsists conducting a circle jerk.
More formally, watching statistical trends is not science. Economists are the modern world's version of court astrologers, frequently wrong and always having an esoteric excuse for being wrong rather than admitting their errors.
Speaking of economists---
Friedman and Hayek were flying from New York to London after a successful policy change that forced "common people" to pull themselves up by their own bootstraps, and appreciate the pain of hunger.
After a toast to suffering, the pilot came on and announced that the plane had lost one engine, but not to worry, as they could make the flight with one engine, it would just be delayed a bit. Friedmad turned to Hayek and said "I hope we don't lose the other engine, we will never get down"
Regannomics in action.
Grey mattered one,
There are 10 kinds of readers at TOD:
Those who understand what you're saying,
and those who never will.
____________________________
Oh. And as for the "10": There are those who count in binary and those who don't.
Economics can actually do an excellent job to help explain what will happen if oil supplies plateau and decline.
And yet - for this "science" (What some have claimed Economics is) to be a valid "science" - there has to be demonstrated equations and models with repeatable results.
I keep asking the 'economics is a science' crowd to man up and show the model and results so we could all know what is going to happen WRT oil and the economy. Yet, there is a TOTAL LACK of correct models to date.
So much for the science, eh?
I'd like to see the next President institute a crash programs to eliminate heating oil consumption, and replace it with the best viable alternatives in each region.
Shivering in the cold for rural people? For "The President" to suggest/plan someone else has to do the grunt work. And, why should others pay for 'country people' to get upgrades/new stuff? How is the alternative going to be 'the same' level of labor as the present 'the oil goes in the tank, the home gets warm' system?
I just noticed on CNBC has a permanent WTI ticker overlay through commercials and such.
Wow. It's become the new basic fact of life, like the weather.
Moe - I hope that you saw my reply to your question earlier this morning before the entire early morning comments were wipped out by someone.
jb, I saw it, but I wish it hadn't been wiped out. It was really good advice.
Also in that thread was an excellent response from Oillearner, former USCG I think, on polar-class icebreakers and why getting stuck in ice is a bogus rationale against GW.
Yeah, I thought Oillearner's description was top-notch. Was sad to see the comment deleted.
-best,
Wolf in YVR BC
hmmmm... why was it wiped out? I wish I had cut/pasted it now. It was fascinating reading for me...I have been trying to understand this "speculator driving prices" argument. Some really good explanations have been had here in the last few days on TOD and jbunts was one that helped me more to understand it...
Peak a Boo,
Maybe because of my comment on that thread. I was just now starting a new thread to ask that very thing and before posting did one more run through the threads in case I missed it.. Sorry to jblunt if it was the cause.
---------------------
Here is that question to whoever is the censoring poltroon:
Okay, how come my comment referring to America's God as 'The Invisible Hand', as proclaimed by the (profit) Adam Smith, removed?
------------------------------
If you wish me and my comments off the site, fine that is one thing, but how about doing it up front and without deleting comments of those not involved.
David Strahan just appeared on the BBC's main 6pm News. As well as his name the caption read Author of "The Last Oil Shock". Just a brief non-threatening sound-byte but I hope to see more of him on tv in the future.
Today is Oil Day on the BBC World News channel.
He's been all over BBC News today, various interviews, various soundbites - looks like he's camped out there.
Fueling Change
Coverage on CNN
May 26 - 30
http://edition.cnn.com/SPECIALS/2008/news/oil/
Went to the Massachusetts State House today for the joint committee hearing on peak oil, but Senator Pacheco had to cancel for health reasons. Hopefully next week it will be held.
Apuleius,
Thanks for showing up, we were all disappointed. We are considering re-scheduling for Tuesday (June 3rd) but that's not final yet. When date and location are confirmed I will post here. I cycled 30 miles into Boston to testify but it was a lovely day for a ride, regardless.
One of the other 8 presenters is from API, American Petroleum Institute.
Dick Lawrence
ASPO-USA
That will give me time to go through the current budget bills and look for problem areas. (Continuing centralization of schools, et cetera).
For those interested, in addition to the interesting stories Gail posted about Indonesia and Russia, there are quite a few additional items today at:
Energy Shortage
Photos of May 26 gas lines in China (in the middle of the night): http://cryptome.org/cn-fuel-low/cn-fuel-low.htm
Oil is approching historic lows (6.5 barrels per ounce) in relation to gold. Lower than this and we're in new territory for the value of oil. Today it's 6.8 and falling, getting more valuable all the time in absolute terms. Forget dollar inflation and speculation.
http://thebullishbear.blogspot.com/2008/05/gold-oil-ratio.html
Much ink was consumed a few months ago explaining that oil was only going up as a hedge against inflation. You don't hear that much anymore, now that oil has uncoupled from gold. Of course, it probably was never coupled. They were just going up together, until they didn't any more (not that I think gold is necessarily done going up).
Vermont's naive belief that it can just shut down a nuclear plant and not worry where the power will come from, my home town (Toronto, Canada's) shutting down of coal-fired plants and replacing them with scarce natural gas, politicians advocating cuts in gasoline taxes, all point to one thing --the world is still in dreamland...the implications of a supply that refuses to budge in the face of exponential price increases has not even begun to sink in...all this means $300/barrel WTI and $50/MMBTU natural gas is closer than we dare to imagine.
Vermont is also trying to "keep electricity affordable". Meanwhile, per BTU, electricity here is cheaper than heating oil or propane, so guess what will happen to the grid next winter, even if the nuke plant continues to run. The only solution is to raise the price of electricity (at least after the first X00 KWH/month) but that's politically impossible.
I actually have a Brattleboro mailing address now that I'm here in New England, but I've not yet puzzled out what the source of all this fuss is. There are mobs of people with the anti Vermont Yankee bumper sticker ... and they're the same NIMBYs who show up when someone wants to install a wind turbine ... then they turn up if anyone dares hint they might install a wood burning system, even if it's a gasifier ...
I guess these are people who need some immediate, real world consequences to break them out of their, well, whatever it might be ...
Have you looked into gathering their names/addresses such that after the hearing is over to make sure they get sued so cover the costs of using the 'technologies' they 'approve' of?
If they want to keep things the way they are - I have no problem with that - so long as they pay to keep things the way they are.
My weekly column is out. Tilting at Windmills and Energy Literacy.
This has raised a few eyebrows because I gave the apparently untouchable Paul Krugman a hard time.
I don't think we have time to beat around the bush anymore.
-- Dave
I thought you were spot on Dave. We don't have the luxury of time to soft sell it. That "Soft Sell, better get on board with this" was Carter's Sweater Speech time. We blew it. We went into "Morning in America" with Bush/Reagan.
Well, Now it "Twilight In America" thanks to the last 20 years because of the reasons you stated in your replies to Krugman.
We are BROKE. And we can't/Won't find anyone to buy our SUV/McMansions.
On top of that, the COUNTRY is BROKE. And starting now those retiring Boomers will have NO RETIREMENT funds.
So, let's waste 5-10 more years soft selling what needs to be done....
Is that the sun going down???
you are right to lose patience with the soft sell
the scientific community has seen how effective it's rational reasonably argued efforts have been when it comes to Global Climate Change... where any voice of alarm was internally censored down to a more collegial friendly nudge... and we're up shit creek
Peak Oil - same thing... keep up the good work.
Actually, Dave, I think you overdid it. Yes we need to tell it like it is (and I get a lot of flak for trying to do that). But I think that Krugman article was a good step in the right direction, urging Americans to reconsider their "living arrangements", which is exactly what is needed. Some specific points in your (Dave's) writeup that I have to quibble with:
- nope, it's Berlin he is talking about, while visiting there, and he's saying that it can be a pleasant, even posh, neighborhood without the need for McMansions and SUVs: "neighborhood consisting mainly of four- or five-story apartment buildings".
He's saying that car-free living can work. Americans need to hear that. I agree with you that it won't "work" for us at this late stage in the game, but we can at least try and aim towards that sort of arrangements.
- That's a bit where I too got mad at Krugman, perpetuating the myth that small cars are "toys".
- so what? That's something I hear a lot in America, but it's a red herring. The typical commute is what, 20 miles? So is the typical drive for other reasons. People don't need to drive across Texas, and if they do, they should pay enough gasoline taxes to pay for rebuilding the railroads so others don't need to.
- no, he wrote that we need new urban designs and mass transport.
Yep, rough. And like JHK says, we'll keep doing what we're doing until we can't, and then we won't. There will be no choice, and people will either figure out how to farm their lawns, or walk away from the McMansion. It won't be pretty. As I keep telling people, we will be poorer. Almost all of us. That's not the end of the world, only the end of the American Dream.
He's under no obligation to solve all the details. He shows where we could go. You need a vision to turn panic and apathy into "earnest work" (Kunstler's favorite phrase these days :-).
If Americans actually listened to Krugman (and others), and realized the gravity of the situation, they could do some things. We still have many physical resources in the USA, about 7 mbpd of domestic oil for one thing. We're just pissing them away on wars and junk mail. That could theoretically be changed (but I doubt it will).
U.S. homebuilders make roughly 1 million new homes per year. Until now, these have been mostly suburban greenfield development. If U.S. homebuilders built 1 million urban multifamily infill units per year, near new and existing train lines, we would be getting somewhere.
Many people at TOD are still in the "American Way of Life Is Non-Negotiable" phase. This takes the form of "we CAN'T do that" because of some BS baloney excuse.
Chinese people don't seem to suffer from these mental obstructions. They are moving from rural shacks to newly-built urban multifamily dwellings at a pace of tens of millions per year.
The numbers of homes you could split would be way larger than that per year.
What conveniences you have would vary according to how much you could spend to do so varies though.
Physically you could double densities in a year in many areas though.
How much is done will depend on the economy.
Lots of different possibilities:
-New infill construction on vacant lots.
-Conversion of single family houses into duplexes, with or without addition.
-Remodeling to create accessory apartment in house (basement, attic, wherever), with or without addition.
-Remodeling or addition to garage to create accessory apartment.
-Construction of new free-standing accessory apartments in back yards.
-Remodeling of commercial buildings (or new infil construction in commercial zones) into multi-family residential or mixed use commercial/residential.
The above is not an exhaustive list. It is enough to keep a lot of people busy for quite a while.
- Building duplexes on parking lots, reducing the parking area and increasing residential density. Two projects within two blocks of me.
I have seen all of the above in my neighborhood (Lower Garden District on New Orleans).
Next door neighbor just got permission to turn 4plex (grand home in 1880s) into 5plex with an attic apartment.
In an established, well developed neighborhood it take a delicate touch to increase density, but it DOES happen when demand is there.
Best Hopes for More People in Walkable Neighborhoods,
Alan
It doesn't matter whether the excuse is valid or BS baloney.
Take WNC Observer's list for example. All technically and economically do-able, no question. And every single item will violate zoning law in many if not most places. No point in doing it if you're going to be ordered to rip it out again, or if the municipality will rip it out at your expense, the first time some nosey neighbor snitches.
Your biggest problem is that Chinese experience doesn't transfer.
Most people find nearly-no-tech rural life to be far harsher and less desirable than some of the romantics on this board would ever let us believe. Almost anything else, no matter how horrific it might seem to most of us, is seen as better. You can't keep 'em on the farm except by force - as China used to do. So most Chinese people will see their change as a step up.
By contrast, very few in America will think "urban multifamily infill units" to be a step up. Such things are strongly - and often truthfully - associated with noise, crime, overcrowding, 'substandard' living conditions, bad schools, and a host of other social ills. And a plethora of government agencies have spent a century and countless hundreds of billions, if not trillions, promoting and enabling the single family detached "home" as the only valid life goal.
Such things are too big to turn on a dime. Perhaps transportation issues will go sufficiently pear-shaped to force people into "units", but they will go involuntarily, with bitterness and resentment (that will only make their problem worse, for example by bringing on stupid populist laws that foul up fuel supplies even more than they needed to be fouled up.)
No set of local officials in their right minds will want to deal with any of that. Local officials want to look good in order to aggrandize power by being re-elected continually. So they want to build stadiums, trams, and other stuff as urban jewelry, and show off at conferences with their peers. They don't really want to muck about with social problems or deal with a seething, resentful population, not if they can avoid it.
So unless you can get Congress to do a Federal override - and good luck with that - good luck changing the zoning laws any time soon. And until that happens, all you'll see is a niche development here or there, enough to say, "see, it can be done", and not enough to shift anything on a scale big enough to matter.
Of course nothing is going to change save by force majeur.
The crash starting in 2009 will provide that impetus.
Unfortunately it appears that legislation is in no way going to help in this process, but zoning laws etc will not overcome the raw facts of large areas of suburbia no longer being viable.
Clinging to outmoded patterns will mean that instead of living in relatively crowded apartments many will be living out of the boot of cars for a while, but eventually the new realities will erode the inappropriate patterns.
Zoning codes vary greatly from one municipality to another. In the small town where I live, everything I mentioned would be possible. In some cases, some hoops would have to be jumped through (getting a special use permit, for example), but given enough lead time, someone wanting to do any of those things should be able to do so.
Zoning codes are slowly changing in response to the Smart Grtowth and New Urbanism movements. It is actually the McMansion suburbs that are most hidebound and resistant to change. They may remain that way until the very last resident packs up and leaves.
I live in one of the stricter historic areas (new homes must have wooden windows and pass architectural review, etc.). Yet almost all of the examples given have been built here.
To replace homes burned down in Katrina, review took about 2 months (with a skeleton staff post-K), others about 6 months. Some conditional rejections (all OK but ...) that were then corrected.
Added off-street parking is the most commonly rejected feature. We want greenery, not parking, in the yards !
Best Hopes for Increased Density,
Alan
Most people find nearly-no-tech rural life to be far harsher and less desirable than some of the romantics on this board would ever let us believe.
And with this life you are still subject to the property tax as an example.
Good column, Dave!
I lived in Atlanta for about 40 years. When I finally left (for the second time) in 1998, the move was in part the result of learning about Peak Oil from reading Colin Campbell and others, going back many years to the first OPEC Oil Embargo. Of course, having been trained as an engineer made me more aware than most people and whenever I tried to talk about the future shortage, I hit a solid wall. I'm sure I was dumped into the Lunatic Fringe category as a result of my efforts.
I don't really know whether the world is at Peak Oil or not, but the data sure is pointing toward that interpretation. There may still be a bit of time before the decline begins the inevitable downhill slide. What I do not yet know is how to get the politicians to actually address the problem. Here we are in the middle of a Presidential election cycle and there's still no real discussion of the issues we so often find being aired on TOD. My worst fear is that we will find ourselves in the midst of some other crisis, such as another big hurricane or a military adventure in Iran, which will again divert the media and the politicians from the real problem that's looming like a mountain of stone in the distance as we cruise along the freeways of the "American Way of Life"...
E. Swanson
No update on the oil inventories today? I though that report came out every Wednesday ...?
Monday Holidays (i.e. Memorial Day) delay the report a day.
Alan
Monday was a holiday in the USA.
Thanks, Alan and Brian!
Except when the U.S. has a holiday, then it gets delayed one day. Check it again tomorrow.
Monday was a holiday for the U.S. Government and thus the report(s) won't be released until tomorrow. Today's action on the NMEX looks similar to other weeks on the day before the release of the data. Remember too, now that the EIA is releasing only 4 week averages for supply, the impact of present high gasoline prices as the summer driving season begins won't be clear for a few more weeks.
E. Swanson
It comes out tomorrow, I expect a drop in distillates and a subsequent rise in Crude and RBOB.
Hello TODers,
My ISP has finally fixed their problem after being down all day. :(
http://www.istockanalyst.com/article/viewarticle+articleid_1970727~zonei...
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The Agriculture Bull Market is in Full Swing
...Fertilizer is necessary to replace the nutrients that crops remove from the soil, and a proper balance of the main three nutrients (nitrogen, phosphate, and potash) is necessary to maximize the yield and quality of crops. The value proposition for US farmers is $3 back for each $1 investment in fertilizer, $7.60 back per $1 investment in India, and $9 back in Indonesia.
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This paragraph confuses me [I am not a farmer]. I always heard that US farmers were the most efficient in the world, but this seems to indicate that Third World Farmers do a better job of leveraging NPK efficiency. Any thoughts?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The wording is too vague in that story to decipher what the author truly meant.
Using the term "value proposition" is murky.
One thing to keep in mind is the law of diminishing returns. A marginal subsistence farming culture, when transitioned to one more in line with modern agriculture (e.g., use of inorganic fertilizers), would see large change for small investments (in $). On the other hand, a modern highly optimized Iowa corn field will show modest improvements year over year, those coming from improved hybrids. Don't know if that is what the author is addressing, but it is something to think about.
Or, possibly it is a reference to the production of meat and fruits (as opposed to rice or wheat)?
Good question. I suspect that one of the benefits of local food production is nutrient recycling so that only small amounts of 'synthetic' NPK are needed. These nutrients can be supplied by human and animal wastes with ash and charred animal bones. Parts of Asia exploit the rice-azolla-fish symbiosis which creates starch, protein and crop nitrogen. http://waynesword.palomar.edu/plnov98.htm
Perhaps these farmers only need an extra smidgin of synthetic NPK. The next step would be tillage machines (besides buffalo) that can run on locally made fuel.
Hello InJapan & Boof,
Thxs for the replies.
I believe that inorganic and concentrated NPK is used more sparingly there, because of reasons of affordability to the local farmer and more labor intensive application (an individual may sprinkle a little at the root, as opposed to a large diesel powered sprayer in the USA)
Advantage (India, Vietnam et al) - lower usage, less run-off and water pollution
Disvantage - lower output per farmer => poorer and harder working farmers
Advantage USA: more productive farmer due to mechanization, heavy use of NPK ==> richer farmer
Disvantage: run-off and pollution of water bodies
Worldwide natural gas reserves might last 60 years given current rates of consumption (BP 2007).
If a way to produce methane from methane hydrates is discovered, the world reserves of natural gas might increase to more than 100 years of supply. Some study is being attempted:
http://www.ogj.com/display_article/329239/120/ARTCL/none/ExplD/1/US,-Jap...
"Necessity is the mother of invention" (Plato c. 400 BC)
"Seek and you shall find" (Jesus c. first century AD)
Al Jazeera English has as part of its programme a show by Riz Khan, and on the 27th of May he discussed oil prices, speculators, and some of the politics of oil with John D'Agostino and Dr Ali Hussein. The former was involved somehow in setting up the Dubai Mercantile Exchange and is an oil trader, and the latter is an oil consultant who previously has worked in the Iraqi Oil Ministry and OPEC. Both of them seem to be professional after-dinner speaker. I post this because D'Agostino says some reasonably sentient stuff about how speculators are speculating on something approximate to the reality of future supply and demand. He says speculation might well account for oil being priced at $135 rather than $132 per barrel, but not $135 rather than $70, which is due to supply/demand. No mention of peak oil, that would be too informative, but the discussion on speculation is a good counterpoint to the mainstream media line that the price is vastly inflated by speculators.
Riz Khan - Rising oil prices - 27 May 08 - Part 1
Riz Khan - Rising oil prices - 27 May 08 - Part 2
First post from a long time lurker, be nice :)
Hello TODers,
I have discussed this cascading blowback a long time ago, but I am glad to see others sounding the alarm:
http://www.minyanville.com/articles/ethanol-pot-economy-india-Food-price...
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Quick Hits: Food for the Soil
Without fertilizer, experts predict, there would only be enough food to feed half of the Earth's six billion people. Meanwhile, costs are rising and quantities are depleting - fast.
According to the Financial Post, demand for fertilizers was up 4.5% in 2006 and 6% in 2007, forcing companies like Potash Corporation (POT) to ration the selling of its wares. New plants can help with output, but construction can take up to five years, so sky-high prices are here to stay.
Farmers, especially those in Africa, are feeling the crunch. According to Mediaglobal.org, fertilizer creates a cycle of poverty. Its prohibitive cost limits access. This reduces crop yields, which in turn makes it all but impossible for growers to make enough money to buy fertilizer for future crops. African farmers lack a domestic source of soil enrichment, meaning they're totally dependent on the foreign market.
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Have you hugged your bag of NPK today?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
From the top:
Jees why do we have links to the csmonitor site? It's about the worst news source one can find... Lies and more lies. Oil and gas contributes a much lower shares of Russian GDP: 5.7% (in 2007), and I am sure authors could've spend 5 min just as I did to find this info.
http://en.rian.ru/business/20070921/80301609.html
anectote : remove oil from any country and see where GDP goes (!)
I agree completely, but that's a different topic. I have repeatedly found csmonitor to be consistently unreliable source of information. We should avoid it as their statements or numbers are simply made up by their authors. There is nothing of value (unless you count propaganda as something of value) to be picked up there. IMHO anyway.
There's an interesting article on alJazeera about the US and oil. Written by Michael Klare, who has featured on TOD in the past. This article hasn't been copied across the MSM but it's been covered quite a bit in the independent media outlets.
alJazeera Magazine - Portrait of an oil-addicted former superpower
Hello TODers,
Our TopTODer Westexas has mentioned many times before that, as we go postPeak, this is not a good time to be a net energy importer plus a net food importer too. It appears the UN is now saying the same thing:
http://www.upi.com/NewsTrack/Top_News/2008/05/28/un_food_crisis_likely_t...
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U.N.: Food crisis likely to continue
Published: May 28, 2008 at 6:56 PM
UNITED NATIONS, May 28 (UPI) -- Food price hikes and market volatility likely will continue for the next few seasons, a U.N. report issued before next month's food summit in Rome said.
The U.N. Food and Agriculture Organization listed 22 countries it said would be susceptible to food price increases because they are net importers of food and fuel and already are experiencing widespread hunger, the U.N. said Wednesday in a news release.
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Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Here are those 22 countries, listed in an article in USA Today, along with their exports from the CIA World Fact Book:
Eritrea - livestock, sorghum, textiles, food, small manufactures
Burundi - coffee, tea, sugar, cotton, hides
Comoros - vanilla, ylang-ylang (perfume essence), cloves, copra
Tajikistan - aluminum, electricity, cotton, fruits, vegetable oil, textiles
Sierra Leone - diamonds, rutile, cocoa, coffee, fish
Liberia - rubber, timber, iron, diamonds, cocoa, coffee
Zimbabwe - platinum, cotton, tobacco, gold, ferroalloys, textiles/clothing
Ethiopia - coffee, qat, gold, leather products, live animals, oilseeds
Haiti - apparel, manufactures, oils, cocoa, mangoes, coffee
Zambia - copper/cobalt 64%, cobalt, electricity; tobacco, flowers, cotton
Central African Republic - diamonds, timber, cotton, coffee, tobacco
Mozambique - aluminum, prawns, cashews, cotton, sugar, citrus, timber; bulk electricity
Tanzania - gold, coffee, cashew nuts, manufactures, cotton
Guinea-Bissau - cashew nuts, shrimp, peanuts, palm kernels, sawn lumber
Madagascar - coffee, vanilla, shellfish, sugar, cotton cloth, chromite, petroleum products
Malawi - tobacco 53%, tea, sugar, cotton, coffee, peanuts, wood products, apparel
Cambodia - clothing, timber, rubber, rice, fish, tobacco, footwear
North Korea - minerals, metallurgical products, manufactures (including armaments), textiles, agricultural and fishery products
Rwanda - coffee, tea, hides, tin ore
Botswana - diamonds, copper, nickel, soda ash, meat, textiles
Niger - uranium ore, livestock, cowpeas, onions
Kenya - tea, horticultural products, coffee, petroleum products, fish, cement
Going on the assumption that the food crisis in these countries will adversely impact their ability to get things done, we should see drops in general exports from these countries.
The most common exports among this group are coffee, cotton, clothing/textiles, nuts/cashews, diamonds, sugar, tea, tobacco, electricity, and cocoa. Coffee and cotton are at the top of the list.
We should expect to see faster price increases/shortages in these products on the world market.
The high cost of energy (and everything else), who'd'a thought it?
Sales of Spam rise as consumers trim food costs
Diesel on Kangaroo Island $1.96 per litre,
apparently the sun rose,
Kangaroo's hopped,
Koala's scratched their clyamidia...
Never fear folks. The end is not near. I have it from good sources (ABARE) the Aussy equivalent of the EIA, that prices will fall to the 60's in the next 5 years. Moe, your better change your investment strategy. After all their forecasts have been as accurate as the EIA's over the last eight years. Check the link http://www.industrysearch.com.au/news/viewrecord.aspx?id=32481