DrumBeat: June 6, 2008

Oil rises jump more than $11 to new record high

NEW YORK - Oil prices shot up more than $11 to a new record above $139 Friday after Morgan Stanley predicted prices would hit $150 by the Fourth of July. The unprecedented jump is all but certain to drive gas prices well past the $4 mark in the coming weeks.

Oil's meteoric surge, which pushed prices more than 8 percent higher in a single day, added to a huge increase Thursday to cap oil's biggest two-day gain in the history of the New York Mercantile Exchange. The burst higher — which also came on rising Middle East tensions — also raised the prospect of accelerating inflation by adding to already strained transportation costs.

U.S. has few options as oil nations tighten grip

WASHINGTON (Reuters) - Resource nationalism in oil producing countries is cordoning off valuable supplies and the United States has precious few options to battle the trend amid a looming supply crunch.

As oil prices marched above $135 a barrel last month -- and hit a record $137.79 on Friday -- international firms have found themselves faced with tougher terms and shut out of the globe's most promising oil basins, a trend known as "resource nationalism."

Oil Crisis: Your Primer on the Great "Peak Oil" v "Speculators" Debate

Who's right? The truth is no one knows (and anyone who confidently asserts that they do is fooling themselves). Part of the problem is that no one knows exactly how much oil the world is producing, or what the world's actual daily consumption is. What's more, no one knows what the "intrinsic" value is of a barrel of oil.

Taiwanese farmers protest fertilizer price hikes

TAIPEI, Taiwan: About 200 farmers from Taiwan's rural south protested Friday against a 70 percent increase in fertilizer prices, demanding government subsidies to help them offset rising costs.

The protesters, mostly from Pingtung and Tainan counties, held up fertilizer bags scribbled with slogans such as "Fertilizer Prices Rise, Farmers Die."

Last month, the government lifted a three-year freeze on fertilizer prices, allowing suppliers to factor in their rising costs amid soaring global raw material prices.

The protesters said the move encouraged widespread hoarding, leading to a severe fertilizer shortage.

Newly inaugurated President Ma Ying-jeou's administration also has lifted freezes on fuel and electricity prices, setting off a wave of price hikes for everything from food to household supplies.

Chile Supermarkets Run Out of Food as Truckers Strike

(Bloomberg) -- Chilean supermarkets are running out of fresh meat, hospitals may not have enough oxygen and salmon processing plants are shutting down as striking truckers block roads to protest the high price of fuel.

Pakistan: Dealers facing acute shortage of petrol and diesel

KARACHI (APP) - Petroleum dealers were facing acute shortage of petrol and diesel due to non-supply from oil marketing companies (OMCs).

Karachi’s public transport deciding to go ‘private’

KARACHI: In a growing trend, transporters, with their vehicles and business, are leaving Karachi for other more lucrative parts of Pakistan. So far, 8,500 vehicles have moved from the city since 2002. The traffic police, vehicle inspectors, rioters and increasing fuel prices in the city make it impossible for them to sustain their business here, learnt Daily Times.

Heinberg: How Do You Like the Collapse So Far?

Everyone knows things are going wrong. But if you understand ecology, you know this in a way that others don’t. It’s not just that the current crop of world leaders is idiotic. It’s not just a matter of a few policies having gone awry. We’ve been on a perilous track since the dawn of agriculture, capturing more and more biosphere services for the benefit of just one species. Fossil fuels recently gave our kind an enormous economic and technological boost—but at the same time enabled us to go much further out on an ecological limb. No one knows the long-term carrying capacity of planet Earth for humans, absent cheap fossil fuels, but it’s likely a lot fewer than seven billion. The implication is not just sobering; it’s paralyzing.

Blame it on oil? No, blame it on Bush wars

Even a layman like me can see that markets are sensitive to bad news and their short and long-term effects. Especially when it is inspired by the US, the world’s biggest economy and the custodian of the international trade and financial system. And all Bush has done over the past seven years is bombard markets with bad news.

The oil prices began to climb after the invasions of Afghanistan and Iraq and have risen in tandem with the escalation of conflict and turbulence in the Middle East. There’s clearly a method in the madness!

These wars are also contributing to the escalation of fuel cost and economic woes in indirect ways; by plunging the US ever deeper into debt and depreciating the dollar. The oil is largely priced in US dollars. And as the greenback’s value is eroded, oil-exporting countries demand more and more dollars for their produce.

UK: Energy policy – fear of new dark age

THE days of meeting an unchecked demand for energy through monolithic carbon-intensive power stations are coming to an end. On that statement last week from Scottish and Southern Energy, Britain’s second-largest gas and electricity supplier, there can be little disagreement. Centralised, fossil fuel-fired generation will have to give way to a combination of energy efficiency and diversity because the fossil fuels are finite and for the sake of the planet.

Is Famine Inevitable?

The fate of global food production has now become the chief terror of the future.

Debunking the Myths of the Food-vs.-Fuel Debate

Ethanol is currently on trial, charged with causing world hunger and civil unrest. It is alleged that the corn and other grains used to produce biofuels has led to severe food shortage and disrupted food security around the world. Alternative fuel production has been blamed for high food prices at the grocery store and causing a “silent famine” among the world’s poor. Some have gone as far as to claim that production of ethanol and biodiesel from grain is a “crime against humanity.” To the charges, ethanol pleads “not guilty.”

Experts: China won´t trade food for fuel

A Chinese energy expert says China has no plans to sacrifice food for biofuel. Song Yanqin, a co-drafter of China's national energy strategies, said at Asia Clean Energy Forum 2008 in Manila, that food security comes first in China, more importantly than fuel.

Biodiesel's Popularity Causes Shortage

MAKAPUU, Hawaii -- Higher gas and diesel fuel prices boosted the popularity of locally made biodiesel, but people hoping to save money on the environmentally friendly fuel are out of luck because there is no longer enough to go around.

India: Uranium scarcity ails nuclear plants

NEW DELHI: Acute shortage of uranium is badly hitting power generation in the six nuclear plants in the country as the generation is not even half of the current total installed capacity of 3,770 MW. Though the Government is working on new initiatives, the demand for uranium, which is going to shoot up in the coming years to meet the nuclear power generation goal of 20,000 MW by 2020, could be met only from “external sources,” said Union Minister of State for Power Jairam Ramesh.

The Hybrid Holdup: Fresh Batteries

Another problem in keeping up with demand is an acute shortage of the nickel-metal-hydride batteries required for hybrid vehicles. GM's launch of its new hybrid-SUVs has been delayed for nearly three months by a labor dispute at a key supplier of the batteries. And Toyota's chances of getting more hybrids into showrooms is foundering on the battery shortage. "We can't produce enough batteries right now," Carter says. A new plant for the nickel-metal-hydride batteries won't come on line until 2010.

Electric cars will need juice

With gasoline prices orbiting in the stratosphere, Jim Bartlett relies on a cheaper alternative to fuel his pickup truck: a standard wall outlet.

Bartlett's truck is powered by electricity, not gasoline. Bartlett, a mechanical engineer who lives in Cary, juices up his truck by plugging in. Instead of filling a gasoline tank, he recharges 1,600 pounds of batteries.

Could Zeppelin's airships soon be gracing our skies again?

Germany is producing zeppelins again. More than 70 years after the infamous Hindenburg disaster, its latest airship was gently guided out of the hangar doors last month to make its maiden test flight.

Lack of Trust Hurting the Global Market

Yet, the OPEC is fast becoming the target. In the US Congress, a resolution blocking an otherwise normal arms sale to Saudi Arabia was moved unless the Kingdom signaled raising production by some one million barrels per day. And then in an additional move, some Congressmen tried to bring a lawsuit against the Organization of the Petroleum Exporting Countries (OPEC) for collective action. Stakes are indeed getting higher.

The open season seems now having spread to the UK too, where the British Prime Minister Gordon Brown also appeared aiming squarely at the OPEC. “It is, as people will recognize, a scandal that 40 percent of the oil is controlled by OPEC, that their decisions can restrict the supply of oil to the rest of the world, and that at a time when oil is desperately needed and supply needs to expand, that OPEC can withhold supply from the market.”

And some analysts are jumping on the bandwagon too. Sadad Al-Husseini, a former senior Saudi Aramco executive, NOW alleges that some oil-producing countries are inflating the size of their oil reserves by as much as 300 billion barrels by padding supposedly proven reserves with “probable” reserves and tar and oil sands.

Saudi Arabia plans royal treatment for heavy crude

SAN FRANCISCO (MarketWatch) -- Dense, dirty and less profitable, a type of crude oil long marginalized by the global petroleum industry is attracting a wave of new refining investment as the world's supplies of premium crude look set to decline.

Saudi Aramco to invest $50bn in oil production

Saudi Arabia is pushing ahead with an ambitious programme to add nearly four million barrels per day to its sustainable oil output capacity and maintain its position as the world's dominant crude supplier.

One mega project at the giant Khurais oilfield will add around 1.2 million barrels per day of light crude, which is favoured by global refiners for its low sulphur ratio and the fact that it is easier to process, according to an official report.

A Brief History Of: The Oil Barrel

It has been more than a century since any major producer shipped oil in an actual barrel, but the unit has been the industry's standard since the mid-1800s, when overwhelmed Pennsylvania oilmen collected the substance in whiskey barrels after striking their first gushers.

Motiva Port Arthur refinery units restarted

NEW YORK (Reuters) - Motiva Enterprises LLC has restarted the processing units at its 285,000 barrel per day refinery in Port Arthur, Texas, after a power outage on Monday, a spokeswoman for the joint venture said on Thursday.

Gas hoarding leads to fire

DARTMOUTH, Massachusetts (AP) -- Authorities say a couple trying to beat the high cost of gasoline accidentally caused a fire that burned their apartment complex.

Watch Brazil and its oil

Yes, we know that Australia has a rich suite of natural resources, especially coal, iron ore, gold, copper and a host of other commodities, and billions of dollars are being spent, and will be spent in the next couple of years, to bring them into production.

And we know we are going to have a great boost to national income and our terms of trade over the next year or so.

But take a reality check and look at what's happening in Brazil.

Don't give up

Do you feel it's a waste of time trying to prevent climate change? That reducing your carbon footprint is pointless when someone else is happy to increase theirs? That changing lightbulbs is a futile gesture? Well don't, says Michael Pollan, because even small changes in your lifestyle - and your thinking - can help save the world.

High oil prices fuel development of new hybrid batteries

NISKAYUNA, N.Y. - Rising oil and gasoline prices have put a spring in the steps of the engineers at General Electric’s global research headquarters, who’re developing new battery technologies to power everything from hybrid cars to tugboats, city buses and diesel locomotives.

Will the Oil Bubble Burst?

So guess what Rainwater did a few weeks ago, right after oil prices topped $129 per bbl. for the first time? "I sold my Chevron," he says. "I sold my ConocoPhillips. I sold my Statoil. I sold my ENSCO. I sold my Pioneer Natural Resources. I sold everything."

This news, disclosed here for the first time, is a big deal. Lots of Wall Streeters--loudest among them the hedge-fund legend George Soros--have been warning lately that speculation has inflated oil prices into a soon-to-pop bubble. But talk is cheap--this is something more. One of the biggest oil winners of the past decade has decided to get out.

(See also Richard Rainwater turns bearish on oil. For now)

Indonesia not to hike fuel price in H2 even if oil averages $150/barrel - report

JAKARTA (Thomson Financial) - Indonesia is not going to hike subsidised fuel prices again this year even if the country's crude oil price averages at $150 a barrel for the rest of the year, Bisnis Indonesia reported, citing Finance Minister Sri Mulyani Indrawati.

Last month the government hiked fuel prices by an average of nearly 30 percent to cap a rising fuel subsidy as oil repeatedly hit fresh records.

Gazprom Gas Supplies May Fall Short of European Demand By 2015: IEA

The International Energy Agency has warned that Europe may face gas shortages by 2015, largely due to Gazprom's inability to meet growing demand. While this presents short term problems for European supply, Russia also has much to worry about in terms of bringing new fields online as the EU attempts to diversify its supplies beyond its eastern borders.

French oil giant says demand could catch supply

World demand for oil may soon outstrip supply as the cost of replacing reserves reaches $80 a barrel, according to the head of Total SA, Europe's third- largest petroleum company.

"If we aren't careful in the next few years there will be a shortage of oil and gas to cover demand," Total Chief Executive Officer Christophe de Margerie told French deputies at a National Assembly commission in Paris today. "New forms of energy won't come quickly enough to compensate."

North Sea Oil Reserves Could Be Up To 30 Billion Barrels

A report broadcast on BBC Scotland has tonight made the claim that a further 30 billion barrels of oil could still be available in the North Sea. This figure is roughly the same as the amount of oil which has so far been extracted and has surprised many. However, it may not be quite as simple as that........

South Korea Faces Difficulties on Oil Costs, Lee Says

(Bloomberg) -- South Korea's President Lee Myung Bak said the economy faces difficulties from rising oil and food costs and vowed to pursue policies to ease the burden on consumers.

``Our conditions are very difficult. International oil prices doubled in the last year and grain and raw-material costs are surging,'' Lee said in a speech delivered today in Seoul. ``Rising prices and a slowdown in the economy are putting our economy in a difficult situation.''

Investors' Growing Appetite for Oil Evades Market Limits

Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.

Earthquake Lake Threatens China's Longest Oil Link

(Bloomberg) -- China's longest fuel pipeline is at risk of damage from an earthquake lake that's threatening to burst its banks, said the parent of operator PetroChina Co.

Oil, inflation threaten Japan Inc spreads

TOKYO (Reuters) - Japanese bond investors have been slow to recognise the inflationary threat from record high oil prices, and an expected squeeze on corporate profits from steep commodity prices should push credit spreads wider in coming months.

Uranium supply sufficient for next century: Study

Global uranium supply is sufficient for at least the next 100 years and countries going ahead with nuclear energy programme will have enough fuel for their robust demand and growth, says International Atomic Energy Agency (IAEA).

Chile Considers Solar Energy to Help Power Mines

Chile, faced with an energy shortage that threatens to disrupt output at the world's biggest copper mines, may tap solar energy to help avoid power rationing.

Oil prices seep into asphalt costs, detour road work

CHICAGO — Fewer roads will be repaved this summer, thanks to soaring prices of oil-based asphalt.

Some states, cities and counties say their road-repair budgets didn't anticipate asphalt prices that are up 25.9% from a year ago, so they're being forced to delay projects.

"We will do what patching we can, but this will truly, truly be a devastating blow to the infrastructure," says Shirlee Leighton, a county commissioner in Lake County, S.D., where a 5-mile repaving project was postponed after bids came in $79,000-$162,000 higher than the $442,000 budget.

South Africa's Response To Soaring Global Oil Prices

Though it is uncertain precisely when global oil production will peak, and what the post-peak rate of depletion will be, Aspo cites evidence that suggests that global oil production will probably decline between 2007 and 2020, with a significant risk of the decline being rapid, with price spikes.

Will carbon tax get more New Brunswickers off oil?

Do you think this is true?: "The price of oil will go down if we use significantly less of it." The law of supply and demand indicates that if supply is relatively fixed, then demand will determine whether the price goes up or down. So how are we going to use less oil?

Soaring rhetoric down south, not so much up north

Obama is responding to the troubled state of the union by appealing to voters' imaginations, setting out a lofty vision rather than making a litany of pedestrian promises.

He has a receptive audience, people who believe themselves to be part of a country that's the greatest, richest, strongest nation on earth are inclined to dream big.

Reality, however, suggests that global warming and peak oil will make life quite miserable in the next short while, more for Yanks than Canadians.

McCain and Obama: Green Energy on Their Side

Whether it’s John McCain or Barack Obama who moves into the Oval Office next January he’ll have have a deskfull of problems to cope with: the biggest foreign policy blunder in the nation’s history, a lackluster economy, and what appears to be a peaking of the world’s oil supply.

All of which are related, of course.

Our Energy Future

The Oil Drum - TOD is a very interesting community-blog with a focus on peak oil and future energy sources. Lots of data-driven analysis of all things related to energy and energy use, with plenty of debate spilling over into the frequently long-running (and often illuminating) comment threads. Search the blog for past content on just about any energy-related subject or concept imaginable.

How to Bet on Oil — Whether Bull or Bear

Few investors are as bullish as Matthew Simmons, president of Houston investment bank Simmons & Co. International, who predicts oil will hit $200 to $500 a barrel over the next six months to five years. But a growing number of investors think $150 to $200 is within range over the next year.

Carolyn Baker: Location, Location, Re-Location...

Relocation involves much more than logically choosing a geographical area inside or outside the U.S., taking into consideration the climate, access to arable land, water, wood, and other resources for living sustainably-a decision requiring most individuals to carefully weigh the assets and liabilities of any given place and then acquiring the financial resources necessary to make the transition. Just deciding where one wants to live is challenging enough; equally stressful for most people is finding the means to relocate, and as the price of gas and just about everything else soars, it feels as if the sands of time are running out and against those who have not yet made their move.

World needs $45 trillion energy revolution

The world must undergo a “new global energy revolution” and faces the gargantuan bill of $45 trillion (£23 trillion) if it is to halve carbon dioxide emissions by the year 2050, the International Energy Agency has warned.

The coming revolution will require sweeping changes to the electricity and auto industries. More than 215 million square metres of solar panels must be “planted” across the globe and the roads must be populated by a billion electric or hybrid cars, according to the influential agency.

Oil above $130 on weak dollar, Israel comments

LONDON (Reuters) - Oil rose by more than $2 a barrel to above $130 on Friday, bringing gains in the last two days to $8 as the U.S. dollar weakened on signals the European Central Bank may raise interest rates this year.

Comments from Israel's transport minister that an attack on Iranian nuclear sites looked "unavoidable" given the apparent failure of sanctions to deny Tehran technology with bomb-making potential also helped drive prices higher.

Cairn says peak oil fears may have fuelled rally

LONDON (Reuters) - Oil's spurt to a record above $135 last month from around $100 at the start of 2008 may have been influenced by a growing feeling that oil supplies might be peaking, the head of oil explorer Cairn Energy said.

Cairn's Chief Executive Bill Gammell told the Reuters Global Energy Summit on Friday that there was growing awareness in the market about "peak oil", a theory which says that global production is near an apex after which it will decline sharply.

Jeremy Leggett: Seas of plenty?

A BBC documentary implied that Scotland has plenty of oil and gas in reserve. It should never have been screened.

How High Will Gasoline Prices Go?

And then there's the matter of Peak Oil, which I examined back in April. The basic theory says that someday, the earth being in effect a finite reservoir, the amount of oil that we are able to extract per day will begin to decrease.

That fact is unarguable. The only question concerns the timing. What I've read leads me to believe we are nearly there. Yet the concept of Peak Oil remains alien to most Americans. In fact, I recently asked a number of smart people if they were aware of the concept of Peak Oil. Every single one said no.

Energy: Reaching a peak

A report commissioned by the U.S. government in 2005 contained a stark message. The country, it said, would soon face "an unprecedented risk management problem". The Hirsch Report warned the Bush administration of "economic, social, and political costs", which were also likely to be "unprecedented".

These were strong and worrying words. But, despite first appearances, the report was not describing the threat of terrorism; it was about Peak Oil.

So what was the U.S. administration's response to this warning? Firstly, they buried the report for almost a year. Then, when it finally came to light, they chose to ignore its recommendations completely. But the threat of Peak Oil has not gone away.

Pakistan may seek deferred Saudi oil payments

ISLAMABAD - Pakistan’s prime minister is seeking an agreement with Saudi Arabia to defer oil payments as his country struggles to rein in yawning trade and fiscal deficits, an aide said.

British Gas raises tracker tariffs

The increase follows record oil costs driving up wholesale markets, British Gas said.

About 2,500 residential customers have signed up to the British Gas Market Tracker plan. Those on dual fuel tracker tariffs will see a 14% increase.

Chevron to build new pipe on Kazakh Caspian shore

ALMATY (Reuters) - U.S. oil company Chevron agreed with Kazakhstan on Friday to press ahead with a new domestic oil pipeline, due to be part of a broader $3 billion project to link Caspian oil deposits with international markets.

Kazakhstan pumps most of its oil through Russia but it has irritated Moscow in past years by announcing plans to build more pipelines and diversifying exports towards western Europe.

Fuel prices push Britons towards pedal power

LONDON (Reuters) - Natalie Steed knew it was time for a change when her aging car ground to a halt in a country lane while she was on holiday in southern England last month.

With fuel prices hitting record highs, adding to already painful costs of road taxes, maintenance, tolls and parking, a switch to pedal power was a natural response.

"Buying another car just seemed like such a ridiculous thing to do," Steed told Reuters.

Senate action on climate bill seems doomed

WASHINGTON - Senate Republicans appeared ready to turn back an ambitious plan to reduce the risks of global warming after a week in which bipartisan bickering and political posturing seemed to drown out the environmental debate.

Last night BBC Scotland broadcast a followup debate on Peak Oil. Participants were David Strahan (author The Last Oil Shock) and Brian Wilson (former UK Energy Minister). Both were in virtual total agreement on Peak Oil. The presenter was again Gordon Brewer and he is taking part in the discussion at Truth, Lies, Oil and Scotland

UK Only time limited Video of Part 2 of the debate at iPlayer Link
Audio of Part 2 (if you can't access the video) at MP3 link

A reminder that Part 1 of the debate featured TOD's very own Euan Mearns. Audio link for Part 1 is here (MP3)

Toyota rolls out 'greener' hybrid car

Toyota has developed a new fuel cell hybrid, a green car powered by hydrogen and electricity, that can travel more than twice the distance of its predecessor model without filling up, the automaker said Friday.

Sounds great, and then comes the choicest bit of reporting I've seen in a while...

The FCHV-adv from the world's second biggest automaker also comes with an electric motor and works as a hybrid by switching between that motor and the hydrogen-powered fuel cell. Toyota's Prius hybrid switches between an electric motor and a standard gasoline engine.

Uh, so tell me, how does the fuel cell drive the vehicle sans electric motor? ROFL.

Uh, so tell me, how does the fuel cell drive the vehicle sans electric motor?

From the hydrogen in the tank?

Fuel cell vehicles produce no pollution by running on the power of the chemical reaction when hydrogen stored in a tank combines with oxygen in the air to produce water.

I feel like the ignorant one now, I thought people generally knew what a fuel cell was. My bad. (No seriously, I'm not being ironic or snarky as I was in my original post.) From the Wikipedia entry on fuel cells:

A fuel cell is an electrochemical conversion device. It produces electricity from various external quantities of fuel (on the anode side) and an oxidant (on the cathode side). These react in the presence of an electrolyte. Generally, the reactants flow in and reaction products flow out while the electrolyte remains in the cell. Fuel cells can operate virtually continuously as long as the necessary flows are maintained.

I put my foot in mouth all of the time. Once you get used to the taste of gritty rubber, it's not so bad :-)

I am reminded of the message sent from Pearl Harbor on December 7, 1941, "Air Raid Pearl Harbor, This is No Drill."

A message today should probably read, "Net Oil Export Crisis is Here, This is No Drill."

It appears that Morgan Stanley issued a call for $150 oil by July 4th, basically because importers are bidding for available oil exports.

I can't imagine that the problem is more acute than on the Gulf Coast, where refiners have two choices: (1) Bid the price up, and bid it up damn fast and/or (2) Curtail the refinery utilization rate.

As I have previously said, I expect that it is when, not if, that we hear calls for oil from the SPR, specifically because of supply problems on the Gulf Coast. Given the political season, I expect the Bush Administration to give in and release oil. This will be the ultimate sign of Peak Oil/Peak Export Denial--using emergency reserves to keep the cars on the road for at least one more summer of fun.

Over $134 dollars now! What a climb last two days.

I recall many first PO-ers expected increased volatility as an indication of PO. Well, here it is.

Well gosh I was all ready to go out and buy a hummer since the oil bubble had very clearly burst the last couple of days and the price was supposed to go back down to something reasonable. Why is it going up again?! I bet it's speculators, or communists... or hippies. Yeah, definitely those environmentalist hippies, it's all their fault. /sarcanol :)

Sliding dollar. Lack of investment. Resource nationalism. OPEC cartel power politics. Above ground factorzzz. Sure thing.

Thank you, thank you very much...

How to explain peak oil to everybody

If the person is an Aging Hippie:

What to say: "You were right about everything. Absolutely everything. Growing your own food. Renewable energy. The economy. Drugs. How sexy greying ponytails are. Not trusting old people ... oh wait ..." Well, almost everything.

What to suggest: Stop looking so smug.

The DFH Rat :>)

I got no dime, but I got some time to hear your story...

...I'll get up and fly away...

I know that the life I'm livin's no good...I'll get a new start, live the life I should...

The one I'm listening to right now, and that applies to our current "leadership" is..."If you plant ice, you're gonna harvest wind"

Hah! Stop looking so smug: I got a chuckle out of that one. As we've discussed here before though, it doesn't necessarily help you in the court of public opinion if you were right, but at the wrong time! They'll still think you're nuts.

*edit* I moved my nytimes clipping to lower in the thread.

Cassandra Dee Rat runs into that problem all the time.

Never trust anyone over 68. You have to adjust the limit from time to time.

It's all just the declining dollar, Jeff, dontchaknow? :-)=

Seriously, it does look like speculators were temporarily holding the price down. And it does look like things are happening fast. The "bomb Iran" comments by the Israelis aren't helping, but I don't think that accounts for more than a small part of today's runup.

Nymex front month is right around $134 at 9:30.

TPTB have to realize the outcome of an attack on Iran. And it is looking more and more like it is going to eventually happen.

I guess the only question is: What is their primary motivation? I refuse to believe that they are so naive to think that it will end well for anyone.

TBTB don't care, AT ALL, if it will end well for anyone (read: you, me, Iranian civilians). If Iran is attacked you have WWIII. Obviously Iran will counterattack. Even when done unilateraly by Israel US troops in the region are in harms way. Bush has plegded to defend Israel IN ALL CASES, also when Israel is the agressor. Russian officials have already stated that an attack on Iran will be seen as an attack on Russia itself. Russia will not stand by idle. Me thinks China will also join the "fun".

This could escalate much, much faster and serious then even Michael T. Klare can imagine.

This is like watching WWI unfolding live on the Internet. Russia was involved at the start of that one too.

Archduke Ferdinand was assassinated in Sarejevo; Austria sent an army to "punish" the Serbs; Russia intervened to defend their "brothers"; and then the alliances kicked in Russia-France-England+empires versus Austria-Hungary-Germany+empires. 40 million dead and the world map redrawn.

The strange thing is that none of the participants wanted a major war - in fact, most of the monarchs were related to one another.


Of course, this time will be different - I hope :(

The difference, of course, is that energy would have to play a big part in the next war, and with Russia, Saudi Arabia, China, and others closer to the source, the US could be hamstrung very rapidly. What then, nukes?

Um, what makes you think WW1 and WW2 weren't about energy (and oil)? Other resources as well, of course.

Actually, no one is sure of the causes of WWI, but oil was definitely not one of them. The sparking of course was the assasination, but the kindling was a complicated interrelationship of nationalities, past promises, and public and secret treaties. WWII was caused by the insanity of one man: Hitler. The war would never have occurred without his cult of The Leader. Even the Japanese military couldn't work up the nerve to attack the US until they were confident Hitler's invasion of Russia was successful; infact, they had a hard time deciding whether to attack Russia or the US. Unfortunately for them, the early German victories in Russia were a bit misleading. These wars weren't for oil, but for a combination of reasons, including nationalism, colonialism, militarism, and racial pride. Yes, Japan invaded Indonesia for the Netherland's oil, which they needed to continue their expansion; and Hitler went after Romania's oil for the same reason. However, they didn't go to war because they wanted the oil; they went after the oil so they could continue the war.

The Chinese would assert [and I agree with them] that WWII started in the early 1930s in Manchuria. Definitely a resource war.

This is basically true. WWII is something of a misnomer. There were many wars happening at the same time, that involved much of the world. Because the U.S. was fighting in both, from our perspective it was one World War. Although the wars in the 30's were more contained.

If that's the conclusion, then it actually started in 1907 when Japan essentially took control of Korea, then solidified in 1910 when they annexed Korea. The reason? Resources (food, i.e. rice) and the land connection to... Manchuria.

BTW, all with the blessings of the US via the secret Taft-Katsura agreement.

Oh, what tangled webs we weave...


i'll try not to make this a drive by, and go and dig out some links to respond with if i can find them in my way-too-long bookmark list...

but, i do recall reading a very convincing case that overlooked in the WWI triggers WAS a resource grab question regarding oil (iirc Baku)

You are quite mistaken. One of the causes was the Baghdad-Berlin railway. And one of the first British offensives was - guess where? Basra Iraq. The British Navy was already using oil in many of its ships.

Quick question: WWI began and Britain sent if first TWO brigades where?

Answer: Baghdad, to cut off the Orient Express, which was the delivery mechanism for oil to Germany.

In the 1970s, Saudi Arabia cut off the US by a mere few percent and caused all that economic chaos. Back in 1940, the USA was the Saudi Arabia of the world. Roosevelt wanted a way to get into WWII. What did he do? He cut off Japan from oil. Japan imported nearly 100% of its oil from the USA. The USA cut it ALL off. Japan attacked various other nations as a result in an effort to secure supplies of oil (and other things as well).

Energy was not the only factor in WWI or WWII but it was definitely a factor in both wars.

A couple of years ago, Stirling Newberry wrote a piece called Billionaires for Peak Oil. He argues that the world wars were the result of the "energy transition."

That's just the overview, which is why the people on the extreme end of the alarmist spectrum are making dire predictions. They aren't out of line - the last three Europeancentric world conflicts have all had the transition of energy systems as a key component of their continuation. That is, acquisition of energy was a key part of the reason for continued conflict, and the limits of the old energy system - which includes subsistence agriculture - were often a reason for going to war in the first place.

The last energy transition is not reassuring - in the late 19th and early 20th century, internal combustion began to replace steam power. The coal economy of that time could not keep very many people in affluence - though it could keep more people in affluence, and many more people alive than the previous mechanical water/wave economy. The 1899-1918 period saw a series of conflicts which could be labelled "the last of the rock wars" - the last wars over access to coal and gold, the two key commodities in the coal age. Coal ran the economy, and gold measured the economy. Since wealth was created by digging rocks out of the ground and turning them into things, gold was a good measure of the flow of raw value into the society, and therefore a good incentive to productivity.

I've just spent several months studying the causes of WW1, and the main one was the alliance system:

I see a reather scary symmetry here:
Iran-Russia-All the arab countries that hate Israel.

All it takes is for one member (Israel) to go to war with another (Iran) and we have WWIII. But this time we have slightly bigger countries involved. And they have nukes.

Pray that Israel has some sense. Otherwise we are all doomed.


Italy was on the Allied side in WW1.

As Fischer in Germany's Aims in the First World War documents, the Kaiser most definately wanted war, and it was to be a race war between the teutons and the slavs. The authentic German documnets prove these facts.

Get the book. Read it. Educate yourselves.

I believe they were all first cousins, if only Francis F. had put up the top of his convertible and/or drove right out of town after the first attack or even if he had a driver who knew not to stall out a car or if the assassin had not been standing outside the deli when they stalled out WWI would have been averted (until perhaps the next time). Disruption from P.O. will not be so easily avoidable.

I have written before on TOD that the U.S. will not attack Iran over the nuclear issue, and haven't changed my mind. Never going to happen. But as to the Israelis, we can't be too sure. They've attacked nuclear facilities of hostile countries twice before, apparently with good success, and I'm sure they would have done it with Iran already if the risk wasn't so horrific. That's holding them back, and may prevent it from ever happening. Unlike Iraq in 1981 and Syria last year, Iran would hit back.

The Jews won't settle for anything less than 6 million heads. They've been causing trouble in the middle east ever since their inception. How do people stomach their crap? They have one of the biggest nuclear weapon ansenals in the area and constantly bang on about Iran, not to mention the haven't signed the NPT. What I do find amusing more than anything is the amount yank tax money goes into funding Isreaili (or however you spell it) terrorism when the US is going to the dogs. Rant off. If Russia and China (who have vested interests in Iran) jump into the fray then things might start to look interesting.


Being outnumbered and surrounded by people who want you dead will cause you to worry about your neighbors having nukes. I don't think they want any number of heads, but people certainly do want theirs, so they have to be careful. I have known many Jews and have never heard them express any desire to kill.

The reason that the Islamic countries in the ME talk so much about Israel and the US is very simple. It's easier to blame others for your problems than to fix them. It's a lot easier for the leader of Iran to tell his people that the Isrealis are causing their problems, so they don't focus on his lack of good leadership.

I have known many Jews and have never heard them express any desire to kill.

Clearly you don't read the comments section of the Jerusalem Post. Or the Torah/Bible for that matter.

The core problem of the Middle East was the betrayal of the Arabs in 1918 by their British and French allies. The Arabs understood their alliance with Britain to be intended to liberate Iraq, Syria-"Lebanon", "Kuwait", and part of the Arabian peninsula from Turkish control, followed by a single Arab kingdom ruled by Prince Faisal. But the British and French had already signed a secret deal to split these lands between themselves (oil was discovered in Iraq in 1910). The British also had a deal to give some of the land to form a Jewish homeland. Triple-dealing.

When the Arabs rose up against the betrayal, the British and French destroyed them, even using poison gas from aircraft. The Arab regimes that were permitted were traitors to their own people.

That single Arab kingdom would have had Damascus as its capital, then the most sophisticated city in the Arab world, where modern ideas about nationalism were fermenting. It would have had the port of Beirut. It would have had the oil of Iraq and Kuwait, and probably would have absorbed the Saud family's nasty little gangland and gotten its oil too. Instead the Arab world was brilliantly divided between haves and have-nots; the kings with more oil than people had to prevent Arab unification at all costs and became Anglo-American stooges; the Arabs with more people than oil were poorer and organized armies and became radicalized. Do you think the British monsters had no experience in such manipulation? Britain has attacked Iraq in 1914, 1921, 1941, 1968, 1991 and 2003.

The leader of the Zionist settlement movement, Jabotinsky, said back then that the colonists would have to eradicate the Arab presence in Palestine as the whites of America had done to the Indians. That's not my analogy, that's his. He's still a hero in Israel. The whole intent of the leaders was ethnic cleansing based on what was done to Native Americans. No intent to kill? Only if they starve quietly on the reservation.

All in all, it looks like a white plan for Arab elimination to me.

The core problem of the Middle East was the betrayal of the Arabs in 1918 by their British and French allies.

No, the core problem of the Middle East is the same as the core problem just about everywhere else: leadership that doesn't care about the people.

That's not my analogy, that's his.

So some Jewish guy said something bad 100 years ago, and this is currently causing the suffering of the Middle Eastern population?

All in all, it looks like a white plan for Arab elimination to me.

If this was a plan for Arab elimination, it went pretty poorly. There are more than 100 million Arabs in the ME, and less than 7 million Jews. There is/was plenty of oil wealth to go around, but the fact that it was not well distributed and used is hardy Israel's fault.

One should also be careful not to confuse the terms "Isreali" and "Jew".

There are a lot of Jews living other places, and there are a lot of Israelis who aren't Jews. The Druze serve in the IDF and support Israel while the Ultra-Othodox Jews don't. Israel is actually one of the most religiously diverse countries around.

Also, not all of the Israeli Jews are white. Many are black (from Ethiopia).

And Iranians are not Arabs they are Persian.

There is an Arab minority in Iran, but in general you are correct. This is another one that bothers me when people confuse those terms. I think I did say that ISLAMIC leaders in the ME want to blame the US/Israel for their people's problems (I would name the current guy, but I can't spell it).

To me, it's no different from the problems in many African countries currently (like Zimbabwe); or the problems that we will be having here in the U.S. in the future. It's easier for our Gov to blame "terrorists" and Arabs than our own crappy leadership.

A plan for Arab elimination that resulted in the Arab population in Israel almost doubling. Pull the other one, sir.

Being outnumbered and surrounded by people who want you dead will cause you to worry about your neighbors having nukes.

150 nukes. Is there something about this number you do not understand? Israel has all the defense against attack they will ever need.

The rest is just bullshit.

Check out the Israeli's friendship to the US.



And what about those dancing Israelis on 911?

I have no dog in this hunt, but the idea that Israel is a in any way innocent is bull pucky in the extreme.


If Israel were going to strike Iran they wouldn't be announcing it.

In poker, big talk = bluff.

Depends on what outcome you want. Blow things up big time enough and maybe God will step in.

Does God step in to magically change the cards in Poker if you have a poor hand? Do you play against people who believe that she does?

Besides, Israel doesn't have the means to attack Iran directly. Even if they were given permission to fly over Iraq, their planes don't have the legs to make it to Iran, make a combat strike, and return to base without massive refueling. I highly doubt that the U.S. would provide that refueling without participating in the raid itself. Unless Israel has an aircraft carrier hidden away somewhere, they're not going to attack Iran.

6 months ago I was convinced that we were out ouf the woods on an Iran attack. For a number of reasons. Iraq was a mess, the 2nd tier neocons had been forced out of the administration, Rice was given the lead on resolving the Iranian "problem", and most-importantly the NIE came out that said there was no evidence of a weapons program.

It looked like a US/Iranian deal. The US backed down, the Iranians decreased their military aid to the militias. But since then everything has started shifting back. The "surge" has given new credence to the hawks, Fallon is out at Central Command, and sabres have started rattling again in Washington and Jerusalem.

If there is to be a catastrophe, it is due to one particular miscalculation. If the US attacks it will be because they believe that a limited attack will result in a limited Iranian response. And this is wrong. Tehran has been hinting for a couple of years that they feel they can win a military confrontation with the US. Not a narrowly limited engagement (high altitude bombing) like the US seeks. Not an all-out nuclear engagement (of course). But a significantly escalated drawn-out conflict that means ground troops, holding territory, and attrition.

They'll close the straights. They'll target export facilities with ballistic missiles. They'll send the Revolutionary Guard into Basra. They'll pull Israel into any conflict. Their bottom line will be to prevent exports until the US leaves the entire Gulf region.

And a US attack on Iran will rally otherwise unhappy Iranian citizens right back around their flag. The best way for us to change Iran is to not attack them and allow internal dissent to work itself out without any interference from us.

But will we do that? Have we ever done that?

Note that a late summer attack on Iran, if successful helps McCain. And worse, an unsuccessful attack that involves an Iranian response against US forces also helps McCain, at least in the short term. People will want a "military" leader. Politically an attack on Iran looks like a short term win-win situation. (Longer term more people would begin to reject it again but initially Americans will rally round the flag as reliably as Iranians will.)

It would be interesting to see how voters respond when gasoline triples in price...

Even though there is that recommendation "economize, localize, produce" out there, this is in fact intrinsically contrary to the role of the privileged elite (of any society). "..the privileged elite has always--and, I submit, will always--consist of members who perform unproductive services under one form or another. Whatever the title under which this elite may receive its share, this share will never be that of worker's wage." (p. 310, The Entropy Law and the Economic Process

Attacking Iran is the prelude to the rise of the next elite group. Our elite today consists of "captains of industry, commerce and banking" (p.315) but they obviously feel that they can't continue to dominate politics and such given Peak Oil. Little by little their power and position will weaken, their beautiful cars and luxury homes and Ivy League educations will become worthless.

What do they need? They want the next phase----the next elite (they hope to be included)----to rise to the surface. Probably the space in the top of a society as envisioned by Obama doesn't interest them, maybe because Obama doesn't want to let these current elite people continue to play much role as elite (he has said as much). (Obama's message is kind of ELP, for a federal govt). I mean that Obama has a different elite in mind, not the ones that are in power now.

A war with Iran is unfortunately the only way the current elite can see a chance for themselves. Their houses, their cars, stock portfolios, etc, will lose value, but they need to buy some time to put their money into things which will let them minimize their suffering. They need to have the government keep people in line so that they can keep their advantage. They will be fighting so they won't have to "produce, economize and localize". ELP makes them shudder.

Very possibly anti-war demonstrations in the US will also turn into places where people form so-called "rebel" forces to counter the Bush-McCain government's more and more repressive (the govt will be probably trying to stay in power by doing all sorts of unpleasant things) policies. I suppose localization of power will take hold at some point as things fragment.

One wishes that things could be different, that there was a way to accomplish ELP without the suffering, the war, that seems to be rumored now.

I myself personally favor ELP. Yet there are many who really don't want to try it and see no reason why they should!!

There has always been a cyclic process of new money displacing old money, with some old money adapting to the new paradigm. The Imperial process, OTOH, is linear, yet competitive, the latter is something Ted Rall does a good job of explaining, the former being a product of time.

The US Imperial Elite will not allow an attack on Iran, primarily because it's against their interst: The Empire is woefully overstretched both financially and militarily, and they understand the thesis that proves the case of The Rise and Fall of Great Powers. As I have mentioned here and elsewhere, it's in their interest to lead the Paradigm Change to alternative transport and energy systems because that's where the next new money will be made and the new power will reside. The faction of Neocons is quite small in comparison with the whole of the Imperial Elite and had their chance with 9/11 and Iraq and failed to build on those "victories," which is a good thing for the world. You can be certain that without the Iraqi insurgents halting the US Military, the Neocons would have attempted to roll-up Iran and Syria. The Taliban should also get some credit for making Afghanistan a "victory" too.

It should be remembered that the US Empire is very vulnerable on two points: Oil and Finance. Engdahl made himself a fool by embracing abiotic oil, but his analysis of how the US Empire could be attacked and defeated using assymetric methods is excellent and should be read by those unfamiliar with it. Some will recall Bush saying "If this were a dictatorship, it'd be a heck-of-a-lot easier." Well, both him, Cheney and a compliant Congress--excepting a few--tried, but the push-back was forceful and they failed in that attempt too. Yes, the push-back has yet to become a rollback, but the momentum behind that builds as energy inflation races ahead, the economy further deteriorates, and more people fall behind, which will lead to Populism American-style with its demonizing of elites, which is highly threatening to the intersts of the Imperial Elite.

The Iranians bought a lot of the latest Russian advanced weaponry recently including TOR-M1 and Mosket Systems. I don't think an attack on Iran would go as smoothly as most neo-cons would expect. The Iraqis on the other hand only had access to 1970s Soviet arms so were easily overrun.

I wouldn't be surprised if some military analysts in the pentagon have pushed back a bit on the feasibility of a easy/no consequences Iranian strike.

a little tidbit i heard on npr. the us navy is trying to outfit almost all of it's agies cruiser's with the highly controversial(as it does it even work considering the evidence that they scew the tests) anti ballistic missile shield system by october.

Those are some scary remarks by Ohlmert. One of the strongest indications that an attack will happen I've ever seen. But then again, I've been saying for years Iran is toast.

Didn't Bush Jr. just go over there recently and pat Ohlmert on the back for something? I'm sure he supports Ohlmert in whatever he wants to do.

The pat on the back was for joining the corruption club:


Watch the press ditch this story in anticipation of supporting him.

Why bother when we can back an honest madman like Netanyahu instead?

I've said this on multiple occasions before that an attack on Iran will not happen. People and the MSM tend to jump on comments by the Israeli elite and Iranians as if war is imminent. Both sides spew rhetoric, but a war with oil prices in the $130's, the Iraq/Afghanistan fiasco, is not going to happen....There is absolutely no way that the American public would stomach a war with Iran, or Israel ( by proxy the US) vs Iran. Even less likely with an Obama presidency, of course.

wt, would you explain for the benefit of the uneducated (me) what the implications of curtailing the refinery utilisation rate are?
Does this mean that the area would go below MOL?
If so, how long does the 'air bubble' in the supply pipeline usually last, and how is the pipeline adapted to lower levels of supplies?
Thanks - it can be confusing for those of us not in the oil industry!

It's the opposite. If a given market won't support a sufficiently high price for refined products that would allow a refiner to pay the current (hourly?) going rate for imported oil, the refiner will have to curtail the utilization rate, because they will not allow their crude inventories to reach crisis levels. I discussed the issue in this article:

Declining Net Oil Exports Versus “Near Record High” Crude Oil Inventories: What is going on? (September, 2007)

Refiners are unlikely to let their inventories drop below certain critical levels, and given the expectation of declining world oil exports, refiners will have two choices: (1) Bid the price up enough to keep their inventories up and/or (2) Reduce their crude oil input, thus reducing product output.

My contention is that instead of focusing on crude oil inventories, we need to focus on world net exports, crude oil prices, refinery utilization, product prices and product inventories.

I expect to see crude oil exports trending down, crude oil prices trending up, refinery utilization trending down, product prices trending up, and product inventories trending down.

Mark Haines on CNBC this morning:

Something doesn't make sense to me (regarding supply & demand). The refinery utilization rate is only 87%.


Clearly, they should put you on CNBC. I think they would be better off just sticking to one mantra: "supply and demand". Part of the apparent conundrum may be that commentators like Haynes are not focusing on the two variables simultaneously. Just because demand is down doesn't mean prices are set to fall. The decrease in net exports may be more than keeping up with the decrease in demand.

Further, the financial networks really should quit trying to explain the ups and downs of the oil market until they actually begin to understand the ups and downs of the oil market. In any event, the light vs heat ration would be increased if people like you were put on the tube.

You ascribe "bumbling
" as the cause.

I say that people like Haynes/CNBC have a figurative gun pointed at their head
and they say the wrong thing, they're gone, kinda like Donahue.

Global demand is not down. US gasoline demand is down. However diesel demand is up, even in the US, and diesel is driving global oil prices. Declining US gasoline demand is going to do nothing to overall demand for oil, because sufficient gasoline to meet America's needs is produced as a by-product of diesel production.

WT, I agree that the refinery utilization rate is a telltale. Jeffvail is right: contango means that fear has truly gripped the markets. My article on the subject this week:
It Takes Two to Contango

Sorry for being dense here. I am new to the forum and no oil expert, just interested and trying to become informed. I see quite a few acronyms being used. SPR? S P Reserves?

Strategic Petroleum Reserve. When governments hoard oil, they put it in their SPR. In the US the SPR consists of underground storage areas. The government stashes oil there against some kind of an emergency.

In Iran, the SPR consists of tankers on the water.

Strategic Petroleum Reserve


Welcome. The alphabet soup can get kind of confusing around here. Here's a guide that may be helpful:

Acronym Guide

Also, Google is surprisingly useful. Google SPR oil and see for yourself. :-)

Yeah but when I google ELM I get:

Elm - Wikipedia, the free encyclopedia
Elms are deciduous and semi-deciduous trees comprising the genus Ulmus, family Ulmaceae, found throughout the Northern Hemisphere from Siberia to Indonesia, ...


Elm is what we will be cutting down and burning when the ELM really bites.

Export Land Model has a great Wikipedia page :-)

Given the events of today and its portents for the near future, here's another acronym for the list:


F**ked Up Beyond All Recognition.


Situation Now All F**ked Up.

Alternative meaning:

Situation normal, all f&%$#d up.

Situation Normal: AFU

And let's not forget the ever (un)popular BOHICA.


Do you think the acronym guide link deserves a permanent link on the top of the oil drum?

I often have had to break off reading a thread to google alphabet soup.

Having a "quick and dirty" access to commonly used acronyms specific to TOD is quite helpful.

Maybe on the right hand side of the bar with the following?

"< DrumBeat: June 5, 2008 DrumBeat acronyms"


It used to be on the sidebar. Not sure why it was moved. I'll ask.


Crude up $6.45.

TV should be going commercial free now.

Something huge is happening.

We might make my $145 target yet( by today)!

I'm betting it has something to do with Cantarell, the
the loading ports and this:


And Bloomberg specifically mentions shipping patterns cited by Morgan Stanley. It's pretty much Jeff Brown's fault. Whew $10 in two days.

Morgan Stanley, the second-biggest U.S. securities firm, said current shipping patterns suggested that U.S. benchmark West Texas Intermediate crude may reach $150 a barrel by July 4.

Those tanker rates and distances coupled with proximity/demand and falling production from V&M. Oh and we had a crude draw for 3 weeks despite all this demand destuction and refineries stepping up. At the end of a long pipe with plenty of takers along the way.

"It's pretty much Jeff Brown's fault"

This is one of those increasingly doomerish DB's, but I couldn't help ROFLMAO.

It's pretty much Jeff Brown's fault

Oh-oh !

Best Hopes for that "secure, undisclosed location",


Someone speculated about a Nobel Prize for the ELM. I suggested a more likely outcome would be angry FWO's (Formerly Well Off's) going after the Peak Oil/Peak Export messengers with pitchforks and torches (PG chimed in and said don't forget boiling oil).

And why didn't someone warn us of the critical need for electrified light rail and streetcars!

I think you're safe on that count. Nobody will have oil to boil, let alone the fuel to boil it with. ;-)

Maybe tar sands and feathers?

Boil you in vegetable oil, using biofuel. Then they can eat you :(

As noted down the thread, I have decided to tell the truth. My true name is Matt Savinar.

That's a hoot!! Interesting how you can shape-shift too!

And why didn't someone warn us of the critical need for electrified light rail and streetcars!

Yes a measure of bitumen & eiderdown for that one too!

Gawd the panic on CNBC this morning was a riot. Rick Santelli at one point was fighting off the entire cast along with one other voice of sanity. His central point was that all other explanations other than supply and demands would be much easier to solve.

Easier to blame the messengers for sure. (Lime green Volvo's are in contango)

For survival of civilization ELM (as well as understanding of PO) is more important than any of these - http://nobelprize.org/nobel_prizes/economics/laureates/

Gasoline in short supply in Venezuela, the Saudi Arabia of Latin America


Also cooking gas (they mistakenly call it oil in the link above) in short supply. Citizens foraging forests for wood to burn.

What are you seing in this image that I am not? (I can't get the animation loop)

Hello, Marco

I never see storms in the Bay of Campeche. I mean I looked
closely all last year. Every day of Hurricane

But when Mexico closed it's oil ports last year, the pattern looked like
the one you see.

Also,this is the remnants of Arthur, I believe.

Could be reforming.

I don't know, but everything's moving north.



LEVEL TROUGH.-----(my edit)




It's either that or war.

Nothing else can move oil $6.

And someone is going bankrupt right now because they're being squeezed.

Note story above - Israel's transport minister said that they would have to destroy Iran's nuclear facilities since the West has been unable to stop them.

Yes. That's why I said it's either weather or war.

Per the story, BTW-


" "Attacking Iran, in order to stop its nuclear plans, will be unavoidable," said the former army chief who has also been defense minister.

It was the most explicit threat yet against Iran from a member of Olmert's government, which, like the Bush administration, has preferred to hint at force as a last resort should U.N. Security Council sanctions be deemed a dead end.

My Edit- the US controls ALL airspace (E Caspian the exception) around Iran.

Israel cannot get thru unless the US lets them. The instant Israeli jets
get thru the US screen, Russia will know.)

Iran has defied Western pressure to abandon its uranium enrichment projects(not illegal under NPT, which Israel refuses to sign), which it says are for peaceful electricity generation rather than bomb-building. The leadership in Tehran has also threatened to retaliate against Israel -- believed to have the Middle East's only atomic arsenal -- and U.S. targets in the Gulf for any attack on Iran.

Mofaz also said in the interview that Iranian President Mahmoud Ahmadinejad, who has called for Israel to be wiped off the map(he did not. A said the current regime needs to be removed, and Olmert is corrupt), "would disappear before Israel does(while Israel HAs used Shoa and Iran together in the same sentence).

Just to clarify foir future historians, eh? ;}

I just noticed that we were covering the same war with Iran scenario for the rise in prices. The uptick is now $9. I think it means war. The comments by the Israeli leadership seem obvious; we probably have just days...

Don't forget Moe Gamble's suggestion of Chinese buying as well.

Natural gas prices going through the roof and nobody's screaming at all. Nice call in your post the other day.

Cars, and maybe food (in that order) are all people care about.

Until winter. Or until the lights go out.

Sure, but that's later - probably more than a couple of weeks even. Nothing to worry about now!

Nothing else can move oil $6.

You routinely get big moves like this within an expected trading range. Trading ranges will get bigger as the price gets higher, so these moves within the range will get bigger too.

What's more significant than the $6 move is that we moved above the previous record close, tested it twice, and are still well above it. If we were going to stay in a trading range, we should be moving down toward the bottom of the range.

Speculators have definitely been returning to the market today, but not in excessive numbers.

Well looks like there might be a bit of a break out. Oil is now up over $9 and might hit trading limits today ($10 a day?). Heating oil went limit up, I guess that means the same thing...

Right, and with the breakout we see system speculators getting their signal to buy, and bubble believers, who would have sold around the old highs, getting squeezed out of shorts.

But if you look at the market structure, I still don't see that we're anywhere near any speculative excess, even with all the index funds permanently long in the market.

I would think we'd see a lot of short covering today. A short-covering rally could really put a surge on the already-zooming price. I'd wait to see what happens in the next couple days to see if this is really a breakout or whether some part of it panic
selling by people who were shorting earlier in the week.

I agree that normally you'd expect to see these guys putting shorts back on (the price is coming down from the high as we speak), and some kind of back and forth here around the breakout.

But if Morgan Stanley is right and our inventory reports are going to look grim in the coming weeks (and the commercials are certainly getting a feel for next week's report by now) who in their right mind is going to want to go short over the near-term?

But I also agree Monday and Tuesday are very important.

shargash, best guess I think it's the China-finally-buying-for-the-Olympics scenario. A move to close to $150, then a seasonal correction back to $135ish, maybe a buck or two below. Beyond that, we have to see what's going on. I bet China increases gasoline prices to consumers after the Olympics, for one thing.

Good Lord, you guys, are you watching this close?

Over $138 almost at $139 as I type...

I FULLY expected this. Oil at $135=fear. Oil down to $122 in two weeks=greed. Two days later, fear gets back in the driver's seat and a new high is set.

Volatility will increase as we go up the repricing curve...

I say $200+ oil and $7 gasoline within 1 year...

Right, I think it would be embarrassing for China if the TV cameras showed gas lines during the Olympics. They want to showcase their economy and progress.

What I so far not really understood... If the gulf coast has issues get crude short-termish, why should prices elsewhere jump too? How much storage does M$ own and what patters are they referring to? Price jump smells to me like short-covering and nervousness in market, eg speculation.

"eg speculation."

well is the price is rising because there is *****speculation***** of military action in iran, what else can it be called?

As noted a couple of weeks ago, over the last year the price has behaved in two month cycles of down 10%, up 20% for a net gain of 10% plus every two months. This last down and now up fit into that cycle although I would expect the up to start to be much more than 20%. All of this baring anything like a hurricane or war which will distort it a lot. I think the 10% drop reflects Soros' "froth" in the market. Even tho everyone is quoting him as saying there is a bubble my understanding of his words is that he thinks the majority of the price is fundamentals and the rest is misinformed speculative froth. Anyway, storms are fun to watch of you are safely on the beach! Oh my, the tide never went out that far before .. run for the hills!

Yeah, I think he was talking more about the potential for a bubble than an actual current bubble, but of course all anybody ever sees is a headline with the word bubble in it.

I wonder if the $10 rise in the last two days is the market signalling that an attack on Iran is imminent... Someone in the pipeline (pardon, but I couldn't resist) might have knowledge that we don't yet have...though there has been a lot of saber rattling lately.

Time to call/email your congress critters to let them know that you don't want war with Iran (and as a result, the rest of the world!)

I did, and got zero reply. They aren't listening, probably because it's an election year. Or, perhaps, they're out shaking hands at AIPAC.

the latter. most of them get a all expenses paid trip to isirial upon being elected to make sure they tow the line.

Hey...BushCo has to stop the Obama campaign somehow, don't they? Obama might give away all the secret budgets and agencies they worked so hard on creating these last 8 years.

I have a feeling this may have a little to do with all the sabre-rattling today:



Crude up $6.45.

TV should be going commercial free now.

Something huge is happening.

We might make my $145 target yet( by today)!

Oh, you haven't heard? We're all wrong! Ha!

Why oil prices will tank

An earlier bubble is also instructive. In the early 1980s silver prices jumped from $10 to $50 on the theory that the world was facing a permanent shortage of silver. Suddenly ads appeared asking homeowners to bring their tea sets and jewelry to Holiday Inns for a big price. Silver supplies poured from seemingly nowhere, out of America's cupboards, of all places.

And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.

I remember test taking hints for the SATs. The biggest one, was when you see a sentence with a word of absolution, like 'always', it's usually false.

That's a gem. There are so many good nugs in there. I don't disagree that oil prices may come down a bit, but oil does stuff that other things don't do. That's the point.

I'll have to rush home and go through my heirloom oil collection to see if I have a few barrels in the cupboard I'm willing to part with.

We don't know where the new abundance will come from, we just know it will appear.

Faith-based indeed.

Westexas, I posted this late in yesterday's drumbeat and just wonder what you make of this statement by the president of OPEC.

Dollar Weighs on Crude Oil Prices, OPEC's Khelil Say

Khelil said projections for global oil demand growth this year by the International Energy Agency continue to be ``optimistic.'' The IEA, which advises 27 energy-consuming nations, reduced its forecast in May for the fourth consecutive month to 86.84 million barrels a day. It estimated global oil supply in April at 86.8 million barrels.
``I am not sure that the market will demand an increase in supply from OPEC at least in 2009,'' because non-OPEC producers such as Russia will meet additional demand, he said. ``Non-OPEC supply was important this year and is expected to be very important next year.''

That OPEC, in aggregate, can't increase production.

"Non-OPEC supply was important this year and is expected to be very important next year"

Is this an admission OPEC peaked? This year, non-OPEC supply is "important", but the next year it is "very important"? Or, if Iran is indeed attacked, that will also explain it.

And a message to Bush/Cheney perhaps: "Don't bother begging us for more oil. Try begging to Putin. PS: Good Luck!"

I would be interesting to know who is the current governing person in Russia. Sure, Putin is still powerful. However I presume it neither Putin nor Medvedew. Russia's become a very politicall and economically powerful country with a lot of wealth concentrated in a few person's hands (this is at least the picture which is told here in in the european mainstream media.

I expect Russia to become even more powerful in future. This is a time for oil exporters.

From Bloomberg:

"Oil yesterday advanced $5.49, or 4.5 percent, to $127.79 a barrel. It was the biggest one-day gain since March 26. "

According to my records its the single largest one day gain, period(maybe not in percentage).

Notice the way the Chinese have been allowing the yuan to appreciate. It's a good bet that they will allow it to appreciate a loooooong way, albeit slowly, if they feel they need to bid for those exports. That's power.

US has been haranguing China for years to allow the yuan to appreciate. I think it may be our worst nightmare.

There is another big increase in inflation feeding into the costs of everything Chinese sailing to ports around the world. The cost of shipping a standard container is skyrocketing along with the fuel oil needed to power the container ships. Here are some numbers compliments of the great, all knowing, seer, guru, swami, oracle and connoisseur of pizza and beer...the one and only... (imagine a drum roll)...Mogambo Guru.

'Exploding transport costs may soon remove the single most important brake on inflation over the last decade - wage arbitrage with China."

How "exploding" are these transport costs? Well, the report finds that "the cost of shipping a standard 40-foot container from East Asia to the North American east coast has already tripled since 2000 and will double again as oil prices head towards US$200 per barrel." Double!

The report notes that "it currently costs US$8,000 to ship a standard 40-foot container from Shanghai to the North American east coast, including in-land transportation. That's up from just US$3,000 in 2000 when oil was US$20 per barrel. At US$200 per barrel of oil, the cost to ship the same container is likely to reach US $15,000."

To see how this is reflected in prices, Mr Rubin says, "To put things in perspective, today's extra shipping cost from East Asia is the equivalent of imposing a 9% tariff on East Asian goods entering North America. And at oil prices at US$200 per barrel, the tariff equivalent rate will rise to 15%.'...snip...


China and Kazakhstan started construction of an electrified standard gauge (Russian Empire used broad gauge) rail line from China to the EU earlier this year.

Two paths, one south from Caspian Sea to Turkmenistan, Iran, Turkey, Bulgaria. The other north from Caspian Sea through Russia and Ukraine to Poland. Negotiations continue as tracks are laid in Kazakhstan.

Best Hopes for Electrified Rail,


You may have just described the center of what will remain of civilization one day, just as it was after the fall of Rome.

Very interesting. Do you have a link about this new rail connection?


It does not cover the Northern alternative as well as the Southern route.

Best Hopes,


Thank you!

I read that article this morning. Gotta love the Mogambo.


So right about the enraged villagers demanding SPR release. But we'll have to wait to see George's response. IMHO, I bet he won't. I've never expected the SPR to be tapped, to any significant degree, for public consumption. Though it was never admitted, I suspect it has always been reserved for the military. The US DOD is the largest single user of oil on the planet. The DOD doesn't publish their fuel reserves for obvious reasons but we've all seen various estimates of consumption in the Iraq theater alone. Given the potential for increased resource conflicts involving our military I really wouldn't want the SPR squandered on civilian use.

On the otherhand, the gov't does have another option few are aware of: in 2007 the US gov't was the largest seller of crude oil in the US: 585 million barrels. This was the royalty oil the Feds receive mostly from the offshore. Second biggest sellers was BP at 525 million barrels. The royalty oil is titled to the gov't and thus they can take it in kind and sell it to whomever they want. The gov't could, in theory, transfer title of some of that oil to the DOD and they could send it to the refiners and pay to have converted to military fuel. But that would, of course, take oil out of the public market and would likely raise public prices. And there would be political hell to pay when/if they angry villagers learned of that ploy.

Bush needs the SPR to fuel planes, tanks, and trucks. This is a reserve for the war with Iran, which is why they have been pumping (at Cheney's direction, since he has been given charge of the project -- or took it over) at a furious rate. When war starts (and a $10 increase in the price of a barrel may now be indicating it is just around the corner) fuel will eventually have to be rationed in the U.S. (Those drivers who think they will get to use refined product from the SPR are living in imaginary SUV-heaven.) I can't help feeling something desperate is up, especially when I read links like this from AlterNet titled Rumors of War: Is Bush Gearing Up to Attack Iran?


The lead paragraph includes a comment that on May 8 Rep. Conyers sent a letter to Bush warning him that an attack on Iran would be an impeachable offense.

Pumping at a furious rate?

SPR additions Jan 2002 to August 2005, 150 million barrels in 44 months. That's 3.409 million barrels per month

SPR additions August 2005 to date - 4 million barrels ( net ). If we take the post-hurricane minimum of 682 million barrels of Feb 2006 to date - that's 22 million barrels in 27 months, ie 810 thousand barrels per month ( ie 25% of pre-Katrina rate _

If we take the recent SPR run up that began in September of last year, when the SPR was at 689 million barrels, then it's 15 million barrels in 9 months ( ie 1.66 million barrels per month, which is a tad less than 50% of the pre-Katrina rate. )

The SPR additions will suspend - again - in a few weeks time.

Anybody looking at the pre and post-Katrina figures for SPR additions could quite readily conclude that the hurricane season of 2005 constituted an inflexion point in global oil supplies.

I stand corrected.

Per the EIA: The week before Katrina 700,500,000 barrels.

Currently 704,102,000 Barrels IN SPR.



Yes, I'm back. The runup today so far is $7.00. Can the reason be found in this article? It sounds to me like a declaration of war by Israel without a timeline for execution. Perhaps the oil market has taken note...I don't know, but $7 in one day and $11 dollars in two days should have a solid market reason, or is the result of speculators gone mad, or is just plain wierd...which is it?


It's normal-trading-range + morgan-stanley-report-on-product-shipping-to-Asia-not-here + nobody-wants-to-get-short-after-Israel-threat + (probably) another-drop-coming-in-next-week's-inventory-report.

Whatever portion is the Israel threat will come out of the price fast.

Right now it looks as if commercials expect only a short-term spike, with a price drop late this summer, though not the major price drop the bubble-believers are expecting.

We probably ought to take the comment by Israeli Transport Minister Shaul Mofaz with a considerable grain of salt. Unlike the U.S. cabinet and most countries, the ministers in the Israeli government cabinet do not all sing from the same sheet of music; they are often very publicly at cross-purposes. This current Israeli government is likely to fall in the next few weeks anyway due to a scandal involving the Prime Minister taking cash money in envelopes. Mofaz wants to run for the new head of his party, and most of his comments are for domestic political consumption rather than sending messages to foreign countries.

I've seen similar comments...the problem is, has the market? If there is no war, as mentioned by someone in a previous post, there will probably be a sharp drop in prices. However, we could get the same result if some leading authority in Israel flatly stated that no attack was going to occur (at least anytime soon). So far there has been silence. If Bush and Co. want to see oil prices drop, they should put pressure on Israel to cool their jets; so far, that hasn't happened either.

Interesting, Rockman,

re: "Given the potential for increased resource conflicts involving our military I really wouldn't want the SPR squandered on civilian use."

Without qualification?

And if "no", then is there any limit to US military use?

(Do you consider the military use to be something other than "squandering"? I mean, unequivocally so?
What's your take on the military use for the prosecution of the Iraq invasion?)

re: "The royalty oil is titled to the gov't and thus they can take it in kind and sell it to whomever they want. The gov't could, in theory, transfer title of some of that oil to the DOD and they could send it to the refiners and pay to have converted to military fuel."

Are these sales records public? i.e., is there transparency WRT these transactions?

If so, where does one find the information?

In terms of the price rise, actually, it might be hard to pin down.

Wouldn't this depend on the relative percent SPR-source v. "other", and the timing?

... is there any limit to US military use?

Yes, there is. When the SPR is empty, the military will stop using it.

The McPaper has "oil up $11" as the top story.

Even over "Barry Bonds pleads not guilty to felony charges."

And over at PO.com, people are reporting their husbands and wives are suddenly much more supportive of this "prepare for peak oil" thing.

How about oil at $75 a barrel?

Clément Gignac, chief economist and strategist at National Bank Financial, sees crude prices tumbling to $75 (U.S.) to $80 a barrel over the next 18 to 24 months

OK definitely need to stop banking with National Bank. They must be drinking the blue Kool-Aid.

without lots of bearish participants oil couldn't be as high as it is. If everyone was bullish then all the money would have already been put into oil and nothing would propel it higher (in the short run)

With most bubbles the pool of available fools eventually dries up as dizzying prices are reached. Oil is different...As more people are priced out of oil they will be forced into alternative life styles. Bicycles, walking, public transport, horses, wood stoves, candles, whatever is available to them. Some will undoubtably never comprehend what happened and will live out their lives, perhaps shortened lives, in a state of semi-shock. Others will adapt to a very different world. To borrow and modify a phrase from AC Clark 'the world will be not only more different than we imagine, but more different than we can imagine'.

There are remote people and tribes in the world who's lives have not been touched by oil and the technological world. For them the passing of the age of oil will have little impact...but these remote tribes will still face the spector of global warming and possibly the consequences of a nuclear war for resources. I am pulling for them.

Classic economics at its best

Why oil prices WILL fall

And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does

Capitalism US-style has become a political religion. Here we see the supreme self-confidence of the true believer. It is going to be interesting when he finally realizes his deity is a hollow idol.

To quote another religious source, "Pride goes before destruction, a haughty spirit before a fall."

Shargash - beliefs are a strictly human foible. When the Titantic was sinking many passengers refused to get on the life-boats. They held up pamphlets that said "Titantic Unsinkable".

Perhaps at the end of this century all of the "believers" will be extinct. I'm sorry I won't be alive to see that day.

You know what the funny part is? The guy writes that boom and bust cycles are "inevitable" and just as the housing market collapsed, so the oil price will come down. Funny how so few economists were saying that when the housing market was on the up and up. Proof enough that economics isn't even close to being a science.

"We just know that it will appear"

How does JHK put it? Wish upon a star and your dreams come true.

It is deliciously insane. Here's the whole final paragraph:

And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.

"But we have always lived in the castle."

Could have been funny if the issue wasn't so dead-serious (BTW what you quote was entirely quoted by Francois)

More like crap in one hand and wish in the other and see which one fills up first.

Tom A-B

Oil will come out of our collective asses.

Oil will come out of our collective asses.

Plant to turn sewer gas into fuel

Grand Junction is looking in the sewer to help fight rising fuel costs.

The solid waste that is flushed daily into sewers by city residents gets turned into methane gas anyway during the treatment process, purchasing manager Jay Valentine said.

Currently, that methane gas just wafts into the atmosphere.

But for about $3 million, the Persigo Waste Water Treatment Plant can install some equipment that can capture that gas, remove the smell and the carbon, and change it into compressed natural gas, ready for the fuel pump.


Valentine says the city can produce CNG for the equivalent of $1.29 a gallon, and that it likely would first be used to power the city's sanitation trucks. Later, it might fill up the buses on the Grand Valley Transit System routes...

..."We're turning poop into roses."...


My irony meter pegged on this one. Grand Junction is the epicenter of the booming oil and gas industry in western Colorado. Yet the city is going to use poop power rather than the gas right under their feet. There is a lesson there.

Try this for irony.

There was a TV special last night about the ethanol industry in Canada. The Feds here have decreed that all gasoline sold will be blended with 5% ethanol.

And they gave a $7 million subsidy to a Hong King billionaire to build an ethanol refinery in Lloydminster Saskatchewan.

"Farming and ranching are the chief activities of the region, which has oil, natural gas, coal, and salt deposits."

But 75% of the feed for the ethanol plant will be from (subsidized) American corn.

Here is how I understand it:

  • ship Sask. natgas and potash to american midwest to grow corn
  • then ship the corn back to Lloydminster (which is in northern SK)
  • burn more natgas to convert corn to ethanol
  • distribute ethanol inefficiently in trucks
  • force people to put this crap in their cars
  • charge taxpayers enormous subsidies to keep the insanity going

Lloydminster sits on huge reserves of heavy oil. It's about the last place in the world that needs an ethanol plant and especially one that imports its raw materials.

IMHO, peak oil in itself is a manageable problem. What worries me are the nutcase solutions that politicians will come up with to try to *fix* things.

After watching last night's show, I think that Canadian politicians have just taken a slight lead for the "world's stupidest solutions" award.

As the price of oil went up the potential to make profit from ethanol increased. The oil companies had to pay taxes, but the ethanol industry was supported by subsidy and quotas. The Soviets tried production quota, subsidy, price control driven economics and the people stood in line for bread. Free energy markets might function more efficiently than government market manipulations.

If ethanol were not mandated, it might rise or fall on its own merits. Other fuels and energy systems might compete more fairly.

Efficient renewable energy systems are needed. Mandated quotas and subsidies stiffled development of more efficient systems.

World leaders had an eye on disappearing grain stockpiles. The United States planned to plant 8% fewer acres of corn this season with a large increase in soybean acreage planted. Almost a fifth of the soybean oil produced in the USA was subsidized. Much of this was exported to Europe to satisfy biofuels mandates there. The United States was yet building ethanol distilleries. Trade restraints blocked the use of sugar based ethanol that was more economical to produce than corn ethanol. This created higher gasoline prices instead of lower gasoline prices. Ethanol got 2/3 the gas mileage of gasoline in some vehicles. Part of the increased price at the pump was due to inefficient government policy and tax payers required to pay to convert corn to ethanol and pay a higher price for their food as a result.


Ah yes, "remove the smell and the CARBON".
So, what they are really going to do is run everything on hydrogen?
The lack of basic science knowledge is what scares me the most about the future.

Yup, and the Roman ships from mainland Europe always came to the British isles, bringing goods like pottery, etc. Until they didn't anymore.

"And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does"

Well, that's a relief. I mean, was starting to get a little concerned there for a minute. Guess I can refinance my condo and get some cash out for that late model used Hummer parked down the street with the "for sale" sign on the windshield. Odd thing is how many are of those are coming on the market now...

SubKommander Dred

Where I work, a large part of our revenue is dependent upon people traveling to our events. I've been starting to bring up the subject with my boss how we are at risk do to higher oil prices leading to higher air fares and thus less attendance. (Interesting he is aware of the term Peak Oil, but I think he is a "free markets will solve the problem", "there is plenty of oil off California if we could just drill there", cornicopian type.) Toward that goal, I've been trying to find some historical data on airfares, but have been unable to do so. Does anyone have any links for any kind of historical airfare data? Not really knowing much about the airline industry, I guess I'm thinking that the airlines have been losing money even at 'low oil prices', but know with higher prices they will be forced to substantially raise airfares. Thanks in advance.

Airlines used to be regulated and so they had profits. I would hazard a guess that in real $ terms, it was 4 times as expensive to fly in the 1950's/1960's. Trains and buses had fairly widespread use. Deregulation lowers prices and profits. A long distance telephone call in the 1950's was at least 50 times as expensive as today in real $'s.

"Free markets" always resolve issues but not necessarily in a kinder and gentler way. Free markets can and will kill people to resolve resource imbalances if necessary. Free markets are social darwinism. Is this what you are advocating?

For the record, I think we are ultimately facing a darwinian style solution regardless of free markets or not but I am interested in your response. And no, you can't whitewash this with some hand waving. In the worst case, free markets WILL kill people (via starvation and other mechanisms) so is this what you are advocating?

Hello GreyZone,
I was saying how it was my boss who was taking the free marketing/economics approach to the problem. I am in the doomer camp here. When I approached the subject that air travel is going to get real expensive because of higher oil prices and thus threaten our revenue, his reply was that it wasn't a problem. His reply was that there is plenty of oil out there (off of California - we just can't drill there), or oil shale, etc etc. We just need to build some nuke plants, use alternative sources of oil (shale etc). So again, those were his thoughts, not mine. Once I heard is position, I dropped the issue. I figured the argument wasn't worth it.

This is what I get from my friends as well (drill here, alternate energy, etc...), many of whom are really smart people. Any guesses as to what (if any) will be the magical headline (and/or at what price will a gallon of gas have to reach) that will drastically change people's attitude about the problem? I mean I realize people are taking measures right now to conserve, but conservation doesn't really constitute belief in a major global problem but rather IMO a short-sided "let me conserve and everything will get back to normal soon" mentality.

BTW, thanks for the link to the acronyms.

Hi Shawnott,

I'm just curious...is there any way to morph this business in to a more "ELP"-like -(or, I should say, even genuinely so) - enterprise? Do you think?

What if he heard (really heard) you?

What do you think the moves should be? On his part.

"free markets WILL kill people "

This is the point I tried to make the other day.

I didn't do a very good job of it however.

I think peoples attitude is that they will play that game as long as its the game being played even though the end result is well understood.

My question is how wealthy is wealthy enough to avoid getting cut?

For thirty years I've been searching for the answer to the question, "Why can't the market rate for labor fall below the amount necessary for survival?" Libertarians keep saying mass hunger only happens in inferior pinko dark-skinned countries because they don't have free markets. Now America is depending on those countries to make all its cheap stuff, and I still can't get an answer.

For thirty years I've been searching for the answer to the question, "Why can't the market rate for labor fall below the amount necessary for survival?"

My historical studies have shown it to have fallen below this threshold on numerous occasions. People then take on more emplyment and do what they can to cut expenses. USA farm workers are a modern example where the market rate for their labor is below the amount needed to survive.

For thirty years I've been searching for the answer to the question, "Why can't the market rate for labor fall below the amount necessary for survival?"

The answer is "supply destruction". Starve to death enough laborers and you reduce the supply, thus bringing its price up to at least subsistance levels.

In other words, free markets can indeed kill people. So can socialism. Just because something might sound right to someone in theory does not excuse failure to do the right thing in practice - something that true believers never understand or accept.

In other words, free markets can indeed kill people. So can socialism.

I presume you are referring to the Russian Civil War and Lenin's policy of War Communism that Stalin later employed on the Kulaks in Ukraine. As a historian, I know of only a few genuine cases of socialism, all within "primitive" tribal peoples, none within Western or Asian cultures/societies. Even such socialistic societies could kill Others as in self-defense or, as was most often the case, for religious reasons. Since the advent of the Nation-State, no country has been socialist, despite various proclamations avering to be so.

There is also the Cultural Revolution and the Khmer Rouge. The older Russian example wouldn't be foremost in my mind.

I'm skeptical of the "real socialism has never been tried" kinds of arguments. Every failed utopian idealogue (I'm not saying that includes you) makes exactly that argument. The problem is that utopias cannot exist in the real world outside of small close-knit groups of people, whether it be socialism, libertarianism, whatever. Utopian nation states are doomed from the start and often degenerate into violence in an attempt to force a recalcitant population to behave the way the idealogues imagine they should.

So I would modify the statement about socialism to be: the attempt to embody socialism in a nation state can kill people.

The thing is that human societies and economies are messy things, Human nature has a way of being perverse. Any attempt to impose an ideological template upon a human society is doomed to failure. The killing starts when the template is found to not fit, and inconvenient people start getting eliminated in order to try to force a fit.

To say that China's Cultural Revolution was an attempt to impose socialism is to not know much about that movement or the history of China. I would say the same about the Khymer Rouge or North Korea, which are rough parallels. You are correct about "utopias" [but I wouldn't use that term to describe anything as it implies perfection, something humans are incapable of attaining] and should revisit what I said about the few true socialist cultures I've uncovered in my studies, as "real socialism" has been tried, observed and written about. As recognized by anyone trying to promote real socialism, it must spring from the bottom-up, not imposed from the top-down. Do you know that real, true Christianity is socialist? The Levelers did, as do the Quakers, Amish, and a few others. Bhudism is also socialist.

I work for an events management company in San Fran. I work in the IT dept so I am new to this events industry. I have been here for 1 year and in that time the company has laid off 1/2 of the staff, we all took big pay cuts and business is all but dried up. This place is in panic mode and I don't see the company surviving the year unless something changes for the better.

I think the whole conference/events industry will be one of the first casualties in this oil price run up. I am desperately seeking another job because I can get canned at any moment. I should have stayed put in my old job and even though I have been active in the Po movement since 2005 I never thought things would unravel this fast.

As for Iran, you should check out Nuriel Roubini's article about his take on Iran. he thinks an attack will happen this year to ensure McCain gets the presidency. Roubini has been right for years about the housing bubble and the financial market collapse. He sees things as getting much, much worse.

I completely understand the situation you're in with your job. I work for a company that manages corporate giving. I just can't see it lasting in any kind of real economic downturn. First, a lot of our clients just aren't going to survive. Second, their employees whose donations we process won't have any money to donate. Finally, anybody that is around probably isn't going to want to pay somebody else to cut checks that they could themselves. It's time to either get a nice cushy government job where the printing press is your friend, or take the savings of a somewhat abbreviated career and put into goat farm.

Self-sufficient versus Self-reliant

First my very simple definitions:
Self-sufficient - Can provide for all needs to maintain current lifestyle forever.

Self-reliant - Flexible, adaptable and willing to change as necessary so as to not die. A Boy Scout or mountain man approach to lifestyle.

I raise this issue because there was yet another link yesterday to a guy who was aiming to be "self-sufficient" yet couldn't even provide all of his energy needs.

There are only going to be two groups who have a chance at self-sufficiency; hunter-gatherers and people like Bill Gates who can afford a warehouse of a lifetime supply of "stuff." The best that the rest of us can do is aim to be self-reliant.

All one has to do is think about all the goods an individual would have to somehow provide to actually be self-sufficient such as shoes/clothing, medicine/medical/dental/optical, replacement parts for equipment/structures and on and on.

My concern is that people are being sucked into the idea that they can be "self-sufficient" when they don't have a chance in heck of success. I'm better prepared than 99% of people in the US and my realistic goal is self-reliance.

Here's a simple thought experiment that I call Todd's Container Test - You know with a certainty that society is going to collapse and all goods will vanish for the remainder of your lifetime. You have unlimited money to buy anything. However, whatever you buy has to fit into a standard 8'x8'x40' container. What would you put into the container?


Your point will be that we should store fishing instructions and not fish.

But... I will fill it completely with 3 different sizes of ball-bearings and a sign that says "Ball-Bearings R US".

The single most enabling technology ever in my opinion.


Be careful when you open the doors to that container.


Especially when your neighabors are watching.

Toothbrushes and toothpaste, hand implements to dig and till soil, vacuum thermal cook-pot, ax, good wrench set, all my carpentry tools (only hand operated ones of course), spare bike parts, assorted other tools such as pliers vicegrips etc..., water purification equipment, good knives and sharpening kit, hand cranked pasta maker + spare parts, hand cranked mincer + spare parts, hand cranked burr grinder/miller + spare parts, sharpening wheel, backpack, plastic airtight storage containers (filled with the other stuff on my list so that they don't waste too much space), sealalbe jars, canning stuff, some good sets of outdoor clothes for all weathers, rubber boots, tent, bars of soap, backpacks (empty for now), blankets, nails and screws (assorted sizes and shapes), wood glue, epoxy, scotch tape, duct tape, string, rope, climbing rope, "forever" flashlights, spare LEDs, first aid kit with large supplementary supplies of antiseptics and bandages, I could go on...

But you're right, I feel like I'm back in the scouts preparing for a serious hike (with some extra leeway obviously, since survival is now extended over years, not days/weeks).

I would start by thinking what your children's children would need. By the time they are born, there's the possibility that there won't be enough government left to educate them. Without the knowledge of today's science and engineering, they would be thrown back to Stone Age life as either hunter/gathers or small scale farmers and fishermen, such as one finds in Africa, Asia or the Amazon. What's the point of surviving if your grand kids aren't going to "make it" in the post oil world? Better start by gathering up a batch of the best educational books available. If one knows how to do something that nobody else does and that something is in high demand, one will prosper. Remember the old saying, "Knowledge is Power".

E. Swanson

Home Depot sells a decent shovel for $3.97, and Harbor Freight has a 3 lb. axe on sale for $11.99.

Totonella's "wheelbarrows & bicycles" needs can be met with a single product: the flatbed trike that's ubiquitous in China. Not exactly built for speed, but geared to pull stumps and massive enough to last for generations.


You mean something like this? You can find them in the US here or here. I'm sure there are more sources.

I was in Cambridge, UK a few weeks ago -- it's a city of bicycles, amazing place. Bikes and trikes like these were all over, making deliveries to and from stores.

Yes, I like the detachable trailer.Who knows, maybe you could even daisy-chain multiple trailers? But the China version is made with more robustness at the cost of greater mass - enabling loads to be carried that would taco the wheels on all but the most expensive Worksman. ($700+?!?!?)

One of life's little lessons: ALWAYS buy the "Heavy Duty" model!

Sadly, truck and SUV buyers took this to heart over the last couple of decades.

Sadly, that is about the ONLY case where they took this to heart.

Yep, I live there. I have four tricycles of various designs, plus five other bikes. Never drive if I can avoid it...

Still, not a patch on the Netherlands for cycling.

You can also find a wide variety of bike trailers here http://www.tonystrailers.com/- all custom made.

Good point Black Dog. We can store all the "supplies" we want to, but even the best quality, say, shovel will eventually break. And if you don't have the knowledge required to make a shovel you are in big trouble. To Todd's lead in, self reliance might include knowledge, whereas self sufficient is a snapshot in time?

Todd - I would take the self-reliant path. I would load my container with gold, guns and ammunition. I don't anticipate a world like Jeremiah Johnson survived in. I see a world where humans are still around in sufficient numbers therefore there will be barter systems. Gold is always an item of barter. And I see lawlessness breaking out therefore it is necessary to provide security.


When Olduvai kicks in... It'll be a barter society. An 8' x 8' x 40' stash of Gold should allow me to trade for anything else I would want or need.

Oh, and a few girlie mags- those actually might be pretty valuable too for barter...

When Olduvai kicks in... It'll be a barter society.

I'd be more interested in having steel and lead in the form of firearms and ammunition. One man has gold, one man has guns, one man ends up with both :-)

"One man has gold, one man has guns, one man ends up with both"

a review of "treasure of the sierra madre" is recommended here.

.............three men have gold, humphrey bogart goes nuts and ends up dead, the gold ends up 'blowin in the wind'........but the survivors have a good laugh about it !

I personally think that gold is highly overrated as a survivalist hedge. In a "Mad Max" world, without the means to defend whatever assets you do have, they will most certainly end up belonging to someone else. As a hedge against hyperinflation, economic collapse, etc. I'm also dubious of gold. Didn't the federal government seize gold in 1932?

who said anything about a "Mad Max" world. Those who hedge their bets in gold are demonstrating a belief that at least some modicum of civility and the possibility for economic exchange will survive.

Correct. The "Mad Max" strawman is tiresome. (By the way, gold was barterable even in the Mad Max movies.) Those who "invest" in gold (after investing in other essentials hopefully) are demonstrating a belief that some form of economy will re-emerge after a collapse. This was true of Rome, Imperial China, Babylon, Assyria, Egypt, Ancient India, the Mayans, etc., etc. New economies did emerge and gold provided a way to "move" wealth from one economy to another.

Never ever look upon gold as an "investment". Instead look upon gold as a store of value that works between different economies, including from a collapsing economy into a new one.

Rule Number One of investment is diversification. The question we're really asking is, how much gold, how much .22LR ammo, how many bars of soap, how many bags of fertilizer?

You'll always need to pay your property taxes no matter what, and they won't accept payment in corn. If you live in an agricultural area, there will be a long-term need for fertilizer. Soap lasts forever, and has few substitutes. And of course, a universal caliber like .22 serves defensive, hunting, and barter purposes.

So let's not argue and instead throw out our suggestions for our stockpiles - I like AA NiMH batteries, and I'm intrigued by the idea of sheet glass.

Aluminum foil might be good too: Non-perishable, difficult to make with high energy inputs, very useful (cook a meal on hot coals, build a DIY solar oven, or solar dehydrator, or solar heater).

Go to a warehouse club and get a $17 roll of 45cm wide heavy duty aluminum foil. If it isn't TEOTWAWKI, it'll still be useful for oven-baked ribs. And it works so much nicer than the thin 30cm wide stuff. It's also good for baking bacon.

One man has Gold, one man has Firearms, one man can make "Moonshine." It won't be the man with the guns that ends up with everything; bet on it.

Buy a "Still" while you still (pun, purely unintentional) can.

Or at least bury some copper tubing where the theives can't find it!

Hey Kdolliso,

It seems like maybe you are question your support of mass produced ethanol after all. Local ethanol however, is a good idea, people using stills and such. I actually agree with this believe it or not.

The only question is which one? ;-)


Well, I expected someone was going to fill it with gold since I've posted this thought experiment on other forums.

Here's the deal from my perspective, your gold isn't worth squat to me unless it makes my life better. In other words, I would not trade you a tomato for a ton of gold. Would your gold make my crops grow better? No. Would it reduce my labor? No. Now, the counter is that I can take the gold and trade it with someone else for their stuff or labor.

In reality, any medium of exchange can work, if some sort of currency is desired. A good example of this is a 1956 book by Felix Morley entitled Gumption Island - A Fantasy of Coexistence. I should mention that there are some racist sections. Morley was a Fed governer at the time he wrote it.

My own list of stuff included things like soluble fertilizer, bolts of cloth and thread, work boots, detergent/personal care products, glass, engine oil and filters, replacement water pumps, extra engines/overhaul kits, etc. It is really amazing how much good stuff can be crammed into a container.


I'm with you there. In the Great Depression, people ended up selling their jewelry and other heirlooms for pennies on the dollar. And now, people have a lot more jewelry to sell. Even poor people often have a lot of gold jewelry these days.

The Argentina collapse guy recommended gold, but said to get cheap gold wedding bands. Since you got the same amount for a cheap wedding band as you did for a heavy investment gold coin. Plus, it draws less attention.

The Yugoslavia collapse guy recommended against gold. He said it was useful things that were valuable for barter: cast iron cookware, headlamps, soap, shampoo, toothpaste, cosmetics. As bad as it was, hungry people were willing to trade a meal for toiletries. Because they make you feel human.

Leanan - Jewelry is made from gold and precious stones. It's value is not primarily in the metals as it is in the art. 24 carat gold however is valuable as a metal and will always be an item of barter. The uses of gold in a semi-industrial society are abundant and not merely for jewelry.

What I meant is that supply will increase, while demand will decrease. Fewer people will be buying gold jewelry, and a lot more will be selling it.

Yes, gold has uses other than jewelry. But as the economy sinks, that kind of demand will decrease as well. I'm not saying it will be useless, but it might not be a good investment. That is, the value may decrease. Even faster than cash.

I certainly don't think it's safe to assume "it will always be an item of barter." Like the Yugoslavia guy said, "Even gold can lose its luster. But there is no luxury in war quite like toilet paper. Its surplus value is greater than gold’s."

Don't think of using gold during the collapse. Think about the "other side" of that event. Gold in Argentina or Yugoslavia during those collapses was not so useful, eh? But how about now? Did gold enable someone to get their wealth through the event?

I don't think anyone here will live to see "the other side."

No, not because of dieoff. Because the other side will be a long time coming.

Argentina and Yugoslavia didn't really reach "the other side." They merely re-hooked up with the rest of the world, which hadn't collapsed.

This collapse, OTOH, will be a global one. I expect it to last for centuries.

I don't think anyone here will live to see "the other side."
This collapse, OTOH, will be a global one. I expect it to last for centuries.

You're absolutely right; no one here will be alive in centuries!

OTOH, if it lasts for centuries, it will probably come in waves, and in almost all of those waves there will be trade for which gold and silver will be valuable. Maybe not as valuable as a truckload of toilet paper, but when there is no more toilet paper and there is still gold and silver in the world, you'll still be able to trade the gold and silver for land, food, and security. Even in the middle ages in Europe, you could exchange gold and silver for land, food, and protection.

I wouldn't count on that. I think we may end up with a society very different from medieval Europe. And I wouldn't count on the waves being short enough that you could benefit.

I'm not saying avoid gold and silver altogether. But to put everything into gold...I think that's foolish.

I agree with this. It's called the Dark Ages, coming not so soon to a place near you. Unless we have the nuclear gift exchange(Bob Shaw?), then it could come pretty quick.

So do you expect no economy for centuries?

I certainly don't. During a catabolic collapse I expect economies to form and reform at each stairstep downwards and even between reorganizations for political reasons.

So do you expect no economy for centuries?

Nope. There will always be an economy.

I'm just not counting on it being an economy that values gold all that much.

A few gold coins will probably always have their uses: bribing a border guard, paying protection money to the latest local warlord, etc. Anything above and beyond what you can carry on your person, hidden, is far less useful.

I completely lost my respect for gold when I saw some news bobblehead reporting some banker, sitting on tons of the stuff, was going to dump tons of it on the market.

The price plummeted that day.

It dawned on me that gold was worth what bankers said it was worth. They are sitting on tons of it. And not consuming it.

All it was is a case of "I have it and you don't! I demand $900 per ounce for it!". But what do I do with it once I have it? I now find myself in the same situation as the bank... I have this, and the bank wants $900 an ounce- I will sell mine for a bit less" and hope some sucker shows up. What do I do if the banker dumps? I eat it- big time!

Like many posters here observe, I have a need for shampoo and toilet paper. Gold will demand my protection without offering me any utility for keeping it.

I would gladly trade gold for a solar panel. But not the other way around.

I have already checked with my smoking friends, and they tell me cigarettes have a shelf life. If they did not, cigarettes would be my number one item to use as currency, albeit I do not smoke.

Liquor would work, but the problem I have with alcoholics is that they most likely have nothing to offer.

Smokers are highly motivated once theyv'e run out and often have items I would highly value in exchange for a pack of smokes.

Gold has value not because it's a terribly usefull comodity (although it is in a limited numeber of applications), but because it's of extreemly limited supply. While something like iron can be made rather easily, gold and silver is a bit more difficult to find more of.

With iron, I can forge a hammer and nails and build a shelter and many other productive things. I can't do any of that with gold or silver. In a money economy, gold and silver have a place. But in a barter or scrip economy based on utilitarian items, they are useless. Look at how gold and silver were used by the Inca, Aztec and Maya--they made them into trinkets, icons and jewelry.

"....barter or scrip economy...."

but how does one trade a cow for a loaf of bread ? script ? wont we have the recent example of us script to make us distrust paper ?

I'm also thinking of other 'goods' that will become valuable.

Prescription drugs - anything left over will be worth a fortune.

Alcohol - no matter how bad times get, people need their drink. I'm a fair brewer. It might be a worthwhile skill if things get bad.

Marijuana - without much law enforcement, it would become a more overt cash crop.

Hemp is a dual use crop - very useful for making twine, rope, burlap, etc. It used to be a very important mainstay crop, until the whole drug thing.

and to that point - "cheap" wedding bands cost a whole lot more for the amount of gold than do "investment grade coins."

Interesting thoughts...

...But here's the deal...

Toiletries, toothpaste, food, medicine, oil, beer, etc. eventually get consumed. That 8x8x40 semi trailer of stuff would last the average family, what, the best of a year? Maybe? Come on. Think of all of the garbage you throw out in a year... would it fill this trailer? If true, then this means you BOUGHT these goods over the course of a year to maintain your lifestyle. In other words, 8x8x40 is not enough...

But, what will society look like without fossil fuels? Probably the same as it was about 200 years ago.

There will be the wealthy 1-2%, the landowners or power brokers, and the peasantry. For America, our ugly chapter of this was slavery, but for many parts of the world (think European Middle Ages for one) this meant a HUGE class of peasants and a tiny class of wealthy. Who was better off? The peasants? I think not. The wealthy rarely went hungry, had access to the best services and care, and were able to create structures both physical (i.e. castles) and social to protect themselves. And, they generally had a TON of LAND... Yeah, land doesn't quite fit into that 8x8x40 trailer. But, if you can BUY that land, a lot of things become possible...

So, yes, this is probably a really nasty way of saying this... but here goes: Give someone a fish, they eat for a day. Teach them to fish, they eat for a lifetime. If I own the lake everyone fishes on and 'tax' them, I eat for a lifetime.

But how do you maintain your ownership of the lake? What if the fisherman revolt? What if the government seizes it for back taxes?

Knowledge of fishing can't be taken from you, but real estate certainly can be.

Knowledge of fishing can't be taken from you, but real estate certainly can be.

True, but so can your 8x8x40 container be taken from you... Remember, if everyone is living out of one of these things and society has really broken down, there's no such thing as law or police or jail. What stops someone from stealing from you? And if the law does still exist, would one want to go to prison because of stealing under such a society?

And it's a LOT harder to take from someone who has wealth and power (and hence, paid protection) than it is for someone who does not. Think of it this way: Is it harder to kill someone who has no protection or someone who has hired armed guards to protect them and who lives in a gated street? If you are a country, would it be easier to invade a weak country like Iraq or a strong country like the USA?

Look at it this way: There are many folks who stay in power because they have power and for no other reason. Think Mugabe in Zimbabwe or Hitler in Germany... Yes, VERY nasty people, I don't idolize their utter contempt for human life... But, when their countries went down the tubes, did they go hungry? Did they have problems finding care for themselves and their inner circle? No. Now, yes, fill that trailer full of food, or medicine, or Chuck Berry records... But, at the end of the day, someone has to run the whole show (someone always does, whether we like it or not). The people that run the show, generally speaking, are better off than the people that do the hard work. History is FULL of this; even nowadays- find me someone worth more than $5 million that was not either a CEO/Owner of a successful company or royalty (and this term could loosely mean anyone who is famous nowadays as well), or a direct descendant of either. They don't exist.

And such an arrangement, while grotesque to many of the folks doing the hard work, would be the most beneficial for me and my children post PO.

This is exactly why I've been saying for years that the best investment is knowledge. Everything else can be taken from you.

I do not see a big container full of stuff as the answer. Not least because I don't want to be tied down to it. I want to be mobile.

Being a Mugabe or a Hitler or a Saddam is a high-risk, high-reward proposition. You are likely to live well while it lasts, but there's a good chance of it ending badly (not only for you, but for your family).

And how would you go about it, in our society? Buying a lake won't do it.

Knowledge and relationships. Get to know your neighbors, build a stronger community.

So thats it then?

We all die a slow death, the richer you are the slower, just because we can't get beyond the money thing?

Its as if everyone is resigned to this.

Seems to me we could be a little more creative than this.

Knowledge is fine until someone kills you and robs your family of your former knowledge. It doesn't even require violence. You unexpectedly get the Mexican flu and die 6 days later. What good was your knowledge? Nobody else gets anything from it.

Yes, my first thought was that I want to fill my container with 160 containers small enough to bury in multiple places and transport easily. Probably 2x2x4', with some 1x2x8'. Now, what to put in those 160 smaller containers? And where to bury some of them?

My second thought was to use the infinite amount of money to buy congress and put some valuable changes in place that make society easier to rebuild. It's safer to buy the politicians than to be a dictator. I think the first change would be a real rail transport system.

Knowledge is fine until someone kills you and robs your family of your former knowledge. It doesn't even require violence. You unexpectedly get the Mexican flu and die 6 days later. What good was your knowledge? Nobody else gets anything from it.

Unless you share it. I didn't say knowledge should be hoarded, did I?

And if you're dead...what good is anything? Knowledge might at least help you understand how to avoid getting the flu, and how to treat it if you do. Gold may not help you at all, if no one is accepting it as money, or if the government has confiscated it all.

Fortunately, we are not really in a position of having to choose between knowledge and gold. I good strategy might be to work on both (and maybe some others?)

Though I'm not going to go along with whomever said "soap" - it's just too easy to make, no need to store it up.

I think that in the feudal model geckolizard refers to, the property owners become the government, and get to do all the enduring seizing. The barons were taxers, not taxees.

Of course, that's because the one sort of knowledge that couldn't be defeated until firearms was how to be able to ride around in armor cutting other people's heads off with a sword. This knowledge required both a staff of knowledge specialists and the ownership of enough wealth to pay for the horse. Only big landlords could pull this off.

"...that couldn't be defeated until firearms was how to be able to ride around in armor..."

I think it was crossbows or bows'n'arrows.

I remember the Argentinian collapse guy, and Yuri Orlov the Russian collapse guy, but who's the Yugoslavian collapse guy you mentioned?

And is it getting spooky that there's so many collapse guys around?

For me it would be fags. In the British sense, of course. Or to be more precise, about 50 tonnes of compressed tobacco and 100 million fag papers ( again see above please ).
Cash worth in a war zone : about $250m. Oh that is 1946 dollars, btw.
Barter worth - in Berlin 1946 2 or 3 cigarette would buy as meal or a day's labour.
People sold food, gold and themselves for cigarettes.
So, cigarettes or maybe crack cocaine :)

You know, Orbit, maybe you are on to something...

OK, fine. I change my mind- Not gold, but I'll it full of 'illegal' drugs or cigs.

(Everyone will shoot me about now, and yes, I'm throwing morality out the window. I'm not saying this is the right answer, but it's the answer that is best for the individual who executes it.)

Drugs actually have value that gold does not in a society where the economy breaks down. There is quite a bit I can exchange for drugs... Even land... Same for cigs, or even alchohol. But why stop there?

I would need to also have a way to make the drugs (seeds for plants, etc.) to continue this trade. And, back to the old land issue... Need some of that too.

Now, this is the right solution for the welfare of the *individual*, but I begin to sound like an Afghan warlord. For society, the 'moral' thing is probably is something a bit different. Money being no object, the best items for society is a fusion machine, a method for storing electricity at the same or greater density as jet fuel, the vaccine for AIDS, disease and drought resistant plants of practically every variety, and a machine capable of turning seawater into drinking water with little effort (as well as a way to replicate all of the above for everyone else). Also, things that don't fit in the box but would be critical are societal programs to eliminate population growth, give equal rights for all humans, provide universal education and healthcare, and eliminate defense spending around the world.

But... Isn't that what we should be aiming for all along...?

I would need to also have a way to make the drugs (seeds for plants, etc.) to continue this trade. And, back to the old land issue... Need some of that too.

I'm not so sure that you would need to own the land if you are clever. I ... ahem ... had a friend... who was able to grow quite a few "plants" even while living in an apartment. You just have to know where to go and how to "hide" them.

Gl - "Great minds think alike but simple minds never differ..." anonymous

Your "stash" would be equal to over 1% of all the gold ever mined. But, if you had no food, I could probably trade you a stash of food for all of your gold.

Geeze, Todd, that's almost bigger than my house. Good question.
If I get to start with what I already have,
I'd probably add batteries, 3 more PV panels and another inverter for mice elf, 60 panels and sufficient inverters for my kids, 3 or 4 micro-hydro turbines, wire, etc, lots more preserved seeds, every Psychedelic Rock DVD ever made, Tom and Yvette's Dead tapes, and DVDs of the complete season for each of the Niner Super Bowl wins. I think one of the boys has done blacksmith work, so a forge, bellows, welding equip, if they don't have. Biodiesel still. A lifetime supply of preserved coffee beans. And grow lights; if money is no object, and if I can make enuf juice in the winter, fresh veggies. Electric rechargeable golf cart or something along those lines, with a built-in air compressor and CD set-up. Cross bow and 100 bolts. Electric guitar and instruction book, and lots of spare harmonicas. 5 sacks glacial rock dust, 10 or 20 sacks of chicken manure, 10 of bone meal. 5 gallons Frost Shield. Another sprayer (built into the electric cart?). A homing pigeon trained to go to your place. Then probably more tools, saw blades/chains, canning jars, lids, wax, spare wheels, more pipe, drip stuff, valves and clamps. Horseshoes & nails to trade to the cowboy next door for steak. A ram hydraulic pump; don't ax me why. 10 brood supers, 25 6" supers, all complete. Several grafting knives & 500 large rubber bands in the glove box of the cart. 3 or 4 solar electric fence chargers with a mile of wire. 3 or 4 solar electric pumps. Sharpening stones.
I dunno.
Do I have any more room?


The trouble is, hardly anyone will do that, even if they still had the time and money and awareness of the need for it.

As (not when or if) the crisis hits, you are not going to be coping with it using the gear you would like to have, you are going to be coping with it using the gear you actually do have.

Which is why you strive to move how you will be forced to live so you can adapt now, insted of being forced to adapt when your life depends on it.. When the times get rough, not much will change, as you've already reduced your footprint by a factor of 10x.

all my respect to you but, this is a total mind feck of a thought experiment.
You are, apparently, a 70's back to the lander. You should, at this point, be amazed at how well this house of cards is built. I am.
I've played this game before and frankly I'll opt out of the future you see.
here are some suggestions for a $hit storm future (and keep in mind I have an 8x8x40' container)
hot water
toilet paper
The Prince (that's a book)
anti biotics
A nuclear war head
lots of magic ammo that never goes bad
razor wire
a preacher (I'll write my own bible)
a pack of German war dogs
on and on
here's what I'm trying to cram into my container
a still
stringed instruments/strings
work ethic
the change I want to see

ps I was 30 F last night in the garden, ouch

Hi Earl,

Well, we only went down to 36 degrees last night. This has been a bad weather year for gardening; first, too hot and, then, too cold. Everything has taken it. I had one 20 year old persimmon get just about killed and some grapes were killed back to the ground but are resprouting. Amazingly, our tomatoes survived one night at 30 degrees unprotected and frost.

We all have our own priorities but too much s made of TP. One can obviously wash the area or use rags that can be washed (using the stored detergent naturally) and reused. If it was good enough for babies, it should be good enough for big people.

Yes, besides being old, my wife and I did leave the confines of corporate life in the early 70's. I was a sort of back-to-the-lander since I got a job here and we never attempted to "live off the land."


"too much s made of TP"

Buy a small pump sprayer, heat and bend the wand a bit careful not to kink it.

Wah la portable bidet.

Set it in the sun for a while and enjoy a nice warm rinse.

Thanks, pouperman.

Since you said that what you bought with it only had to fit into it and not stay there until needed, I would say that I would fill it with people. Would try to get a set of skills and attitudes that would make a self reliant group or "tribe' if you will. I don't think that any individual is likely to survive, no matter how much stuff he starts with. Would try to "buy" a lot of the members of tod.

Good post Todd,

A lot of folks are really going to have to eventually come to grips with what REAL self-sufficiency is all about.

For myself(and I would suggest to others as a starting point)....

1. Shut off your air conditioner.
I don't live in my quarters during the day most of the time and now since its really hot I am making sleeping arrangements outside. Right out the back door of the barn. Going to put a simple fiberglass for rain,hand some mosquito netting around my cot and enjoy sleeping in the cool night air. Plus being right next to my garden and my shotgun handy I can keep the deer from destroying my garden.

2. Stop using the clothes drier. Lay the wet stuff over bushes,on lawn furniture or whereever is handy.

3. Stop using hot water for bathing or showers. Really not necessary to bath much in the winter and in the summer a hose laying in the sun can heat up enough water for a simple outdoor shower. Thats what I do.Usually under the fruit trees, a hose hanging from a handy limb.

4. Quit cooking indoors. Build a nice outdoor Pompeii Italian wood burning oven. Or go back to the Boy Scout cooking fire. The best meat is that cooked over wood.

5. Stay out of the house as much as possible. A good shade tree and hammock is a better option.

6. Start to try to get along with candles or kerosene lamps. Better yet just don't turn on lights at nite.

7. Learn to heat and cook with wood. I picked up 3 wood burning stoves last fall for almost nothing. Got my eyes and an old timey wood burning cookstove.

Garden: Hoe your garden plants early in the morning. Its cool and the moisture has put the soil 'in case' making it easy to pull grass and weeds.

Catch rain water off your barn roof and store in barrels to water your garden or take a bath in. I use a horse watering trough.

Dig a big(10x10) hole in the ground to use for a root cellar. Its also a cool place to sleep at night and warm in the winter.

Or sleep in a 'holler/cove' that has a running creek in it. It gets real cool at night.

Lots of other 'possum living' ideas if you just look about at the possibilities plus you are learning how to really 'power down'.

An auction tomorrow has 4 two-man crosscut saws. I intend to bid on all four. Next week another has some motorized mopeds. Upwards of over a 100 mpg.

Folks are going to have to get out of their nice comfy homes and get out in the dirt. Or as the lyrics of an old 70's song go. 'Do it in the dirt'.

airdale-doin it in the dirt...always have and always will

PS. My internet access is very limited so I don't get on that often.

3. Stop using hot water for bathing or showers. Really not necessary to bath much in the winter and in the summer a hose laying in the sun can heat up enough water for a simple outdoor shower. Thats what I do.Usually under the fruit trees, a hose hanging from a handy limb.

Well, no chance of you mixing with society pre or post peak. Really, some people just see anything as an excuse to avoid bath night.

1. Family
2. Guns
3. Tools
4. Heroin

A large library of "How-To" books, a small printing press and plenty of type to reprint the "How-To" books and a lot of paper?
I think I could make a good living with that and it is not the kind of thing that is so "Valuable" that someone is going to want to do you in to steal it.

Companion to article above: Oil prices seep into asphalt costs, detour road work

City cuts road paving projects

County officials announced last week that they were testing equipment that would grind pot-hole-filled asphalt roads back to gravel as a way to save on maintenance costs long term.

This is from a paper in Nebraska. I believe there was a Drumbeat posting a month or two ago that mentioned Michigan towns looking to this same option.

In my neck of the woods they've been doing this for years. If you can afford new asphalt, you add it and re lay the mix. Basically you're reusing the gravel instead of paying to get rid of it and buying new. We are yankees after all.

Since we never did pave most of our back roads we haven't hit the unpaving point yet.

Urban Eco-Transport to Hit the Street

Ultra Motor is currently in negotiations with 12 other major European cities. "We are starting a movement," says Bowman. All over the world, concerns over pollution, traffic congestion, and energy costs are prompting consumers, companies, and governments to embrace cleaner, cheaper, and smaller vehicles, including electric or hybrid-electric cars and two-wheeled electric vehicles.

This is a Spiegel article about Stuttgart's deal with Britain's Ultra Motor to make electric scooters available for rent throughout the city. It's worth noting that Stuttgart is in a narrow valley with steep hills. The bikes apparently provide 'one-third more force than similar electric motors' allowing users to climb steep hills at a decent speed.

we all know about demand destruction, and the concept of rising prices affecting individuals and countries at the bottom of the ladder and moving up.
What about industries?
Which industries are most dependent on, and sensitive to, oil? And how would you measure this?
Which industries are least able to pass on increased prices?
In rank order I would say:
Auto manufacture
Mining and extractive industries
Rail and Shipping
Consumer goods
Media and Entertainment

There has got to be a Economics PhD thesis in there somewhere

There have been some studies done. IIRC, transportation and agriculture are the most oil-dependent industries.

Dunno if waging war is considered an industry, but I suspect it's high up there if it is.

The most important criteria would be which industries are least discretionary, that is, most likely to be in demand at higher prices. Then, which products within those industries are least necessary, thus unable to pass on the increased costs of energy. We all need food, but there are many items on the shelves in the supermarket that can sell only after the basic food needs have been satisfied.

For example, bottled water at a cost greater than gasoline is one likely casualty when municipal tap water is available. Fancy gourmet items in small packages or expensive cuts of meats will no longer sell. My local supermarket tends to have markdowns on dated luxury items, like skinless/boneless chicken breasts or high grade beef, both which taste great, but I would not pay the usual retail, instead buying the stuff at discount as it's shelf life approaches. Besides, I like ground beef, as I can render it nearly devoid of fat by baking it in the oven.

E. Swanson

A whole Econ department I think. Here is a cool paper on Net Energy Analysis that also includes tables on how much energy of each type (oil, gas, coal, etc) are used to produce each $ of good. So you can essentially rank each industry. Now, this is old data, but I doubt many industries have swapped positions.

Bullard C.W. et al, "NET ENERGY ANALYSIS: Handbook for Combining Process and Input-Output Analysis",Resources and Energy 1 (1978) pg 267 - 313.

You should be able to get a copy at any University library.

An interesting quote:

Consumers demand energy in two ways; directly and indirectly. Energy is consumed directly in the form of gasoline, electricity, natural gas, or fuel oil. It is consumed indirectly as energy used elsewhere in the economy to produce the other goods and services purchased by consumers. Indirect energy is by no means negligible; the average consumer demands more energy indirectly than directly [Herenden and Tanaka (1975)].

Consider this was in the 1970's when cars got 8 MPG and houses didn't have insulation.

The hardest thing to notice is the thing that should be there... and isn't.

So what is "not there" in regard to this startling headline (Times Online
June 6, 2008: "World needs $45 trillion energy revolution") pronouncement from IEA executive director, Nobuo Tanaka?

Give up?

Here's a hint: the guy is the DIRECTOR of the International Energy Association.

(enter here a long pause for dramatic effect)

Give up?

Okay, here's what's missing:

The bold pronouncement is completely and utterly lacking any ANNOUNCEMENT that he or is highly paid organization are doing anything to fulfill that direly predicted need.

It is as though he is calling upon some higher authority to step in and fix things, when he himself is the top authority. What does he expect to happen, that I (part time energy crisis volunteer, and full-time pauper) write him a check for $45 Trillion?

I thought that DIRECTING things was HIS job! And if it isn't, then what in the hell is he being paid for?

I feel like a sailor who in fighting to save a ship from sinking has been swept overboard, and the Captain (seeing the accident and watching me drown, but making no move to throw me a life line) climbs up on a soapbox to make speeches on how sailors need better safety equipment.

If one tenth of the money spent on creating the illusion of leadership were spent on actual solutions we would not now be in crisis.

Am I bitter and sarcastic? Damned right I am.

Thank you for allowing me this short rant. I feel better for it, and now I've got to get back to work on saving my own ass since there obviously won't be any help coming from those with the resources to solve things on the larger scale.

I am browsing throught the executive summary now. It is surreal, as if they were discussing thousands instead of trillions.

My take is that this report is mainly intended to provoke discussion, so that people will decide for themselves that BAU is untenable. Statements like "Baseline scenario forecast a 70% increase in oil demand by 2050 and a 130% rise in CO2 emissions" cannot really be serious.

Maybe IEA needs a queue from its sponsor governments before they can report what they really project.

It is not his job to do something. It is his job to report information to the 43(?) sovereign governments that pay him and his agency to do just that and no more.

cf the US Council of Economic Advisors. They do not and are not supposed to do a damned thing except talk. Then the president (and his flunkys) and the Fed actually do something, or not.

Hi Frank,

I stand corrected. Good thing he wasn't within earshot when I read the article or I would have two apologies to make.

First Ed Mcmahon then Evander Holyfield

Former heavyweight champion Evander Holyfield is facing mounting financial and legal woes.

Holyfield's $10 million US estate in suburban Atlanta is under foreclosure, the mother of one of his children is suing for unpaid child support, and a Utah consulting company has gone to court claiming the boxer failed to pay for more than half a million dollars for landscaping.

Can't people who made a hundred million or more get a break ;-)


Seems to me that the rich are doin' just fine, thank you, since their rate of default is so much lower than the general population's:

About 1 in 11 Mortgageholders Face Loan Problems

About 1 in 11 American mortgages were past due or in foreclosure at the end of March, according to a report released on Thursday, a figure that is rising fast as home prices fall and the job market weakens.
The first three months of 2008 marked the worst quarter for American homeowners in nearly three decades, according to the report, issued by the Mortgage Bankers Association. The rate of new foreclosures and past-due payments surged to their highest level since 1979, when the group first started collecting the data.


Saw Ed McMahon on the Larry King last night with that blood sucking Yenta he called a wife airing his laundry for cash.

Apparently Ed's resorted to the old Navjo Indian trick of pleading and begging. There's an online web-site that you can go to to donate. I saw him years ago on an episonde of lifestyles of the rich and famous. Ironic...

Good news from Charlote NC

More Than Just A Train

Now big international companies such as Cherokee Investment Partners, which is involved here in Charlotte, are poised — even eager — to swoop down, buy land and put up pedestrian-friendly businesses and homes around new transit stations. And they're being joined by plenty of competitors. This is not to suggest that progress in Charlotte has been easy. Arranging streets, parking, condominiums, shops, plazas and other components of development around transit here involves many choices. Planners and developers still are struggling to balance the competing needs of parking and active street life in these new projects. But in terms of a market and a vision, there is increasing clarity. Living near a transit stop has become part of a tried-and-true formula of downtown living. Charlotte opened its $465 million, 15-stop, 10-mile "blue line" last November. LYNX, as it is called, has about 13,000 riders daily, well ahead of the low-ball federal projections. Now, the city and region are working on the many other ideas for lines and extensions. A total of 7,000 new condominiums are planned along the line.

Seeing how successful Charlotte's new line is, I start believing what I first dismissed as hyperbole — that it was revolutionary. David King, who helped shepherd through assistance for LYNX from the state's transportation department when he was its deputy secretary, says, "Most people don't realize this is going to change the face and shape of Charlotte."

Interesting Wunderground blog on how Global Warming may be moving the jetstream so that fewer Atlantic hurricanes will curve back out northeast. Seems to me this would put the Texan coast more at risk also.

As the jet stream continues to move northward and weaken as the globe warms, we can expect that hurricanes moving though the Caribbean will be less likely to recurve, resulting in more hurricane strikes in Mexico and Central America.


That would mean less rain in the interior of the US. Bad News.

On the Time article abour Rainwater selling all his oil stakes.

I don't think he sees a bubble. This man is profoundly sophisticated in his analysis. He must have another reason for ditching his shares of oil majors.

He thought it was trading opportunity. He is a Peak Oil believer.

He must have another reason for ditching his shares of oil majors.


War, and the freezing of assets?

Matt Simmons has stated that has zero major oil company holdings. He said he owns smaller independent oil & gas companies and service companies.

I could understand not having major oil company stock. Big Oil is probably not going to weather peak oil all that well.

But Rainwater also sold his rig manufacturing stock. That kinda surprised me.

Peak oil may mean peak oil services.

It seems like it should be the opposite. With oil harder and harder to get, you need more services to get the same amount of oil.

That's what I expected too. But Schlumberger's work slowed down for a while, even as oil prices were rising sharply. Haven't checked them lately though.

It may be that because the remaining oil is becomming so increasingly expensive to get, the scarce investment dollars are having to be spread across an ever fewer set of projects.

This is another one of those ironic unexpected consequences, like the mass transit systems having to cut back due to higher fuel costs just when ridership starts to increase.

Tricky thing, predicting the future!

After the oil/coal shocks of the 1970's people switched from the large cars to small cars, the speed limit was lowered to 55 mph across the nation to save fuel, thermostats in public buildings were set to 68 degrees in public and private buildings to save energy. The price of oil fell again. The world had hundreds of billions of barrels of oil reserves thirty years ago that have since been exhausted. These days we are closer to peak oil production with glutenous energy habits. Only high oil prices might induce energy savings plans.

I do not think Norway went out and sold all its oil fields (stocks) just because the price of oil was high. I suppose some of the oil company stock values no longer appeared attractive to some. Once one sells off stock then one might incur tax liabilities. Frequently short term traders risked selling at a loss. Thinks oil will be valuable for some time to come although the risk of downward volatility is enough to make one try to keep debt/equity ratios low.

If the public decides it no longer needs big oil companies they will stop buying oil and companies will stop drilling.

Big Oil is probably not going to weather peak oil all that well.

I think they will, right up until the government intervenes. What we have seen so far is what I have expected: Revenues rising faster than reserves are depleting. I expect that trend to continue.

Yep, and the government will intervene. I can imagine a plan like this: all domestic oil derived gasoline rationed equally to residents and sold at a "reasonable" profit, maybe $3 (complete WAG) per gallon. Imported oil/gasoline unrationed and sold at market rate.

Testudo, my friend, prepare for a rude awakening: it isn't going to be like that at all.

The US Govt, and especially the military, will get first call. The FedGov will intervene at the moment where it and its military start to have difficulty getting the oil products that they need. There is absolutely, positively no way that they are going to let the USAF and USN planes stay grounded so that all of us can have our equal $3/gal shares.

State & local governments, railroads, essential industries, and agriculture will get 2nd call.

Ordinary people like you and me will get what's left. After the above priorities are met, that won't be very much at all, and it will be shrinking all the time. Unless you are fabulously wealthy and well connected, don't expect to be able to get very much motor fuel at all for very long. Yeah, we'll all get equal allotments all right: all of us will get zero.

I'm figuring that we have several more years at least before the FedGov must begin to implement such a prioritized rationing scheme. I'm also figuring that ordinary people like me will pretty much be frozen out of any motor fuel within about 10-12 years at the most, and am planning accordingly.

My suggestion, look to WWII for the rationing scheme. The Gov. gets all it needs, then rations the rest to us. Farmers get a larger ration, which they will sell at the black market for a healthy profit.

Drive under 35!

A few days ago on the $100 a gallon thread, I was dismissed when I suggested that the government as it may then be constituted would have by that point simply confiscated my puny leases needing the oil for better purposes. What is the difference between then and now? We are nowhere near the $100 a gallon for gas.

The governments are already intervening.

Yep...resource nationalization...coming to a country near you. And it won't just be crude that gets nationalized. Once the big resources get nationalized, then it's REALLY country against country.

Read the article in its entirety. He bailed and is looking for a new buy-in point. Remember that the article is actually not current and was written a while ago. He may have even bought back in at this recent low $120s area or maybe he's still waiting. He does plan to get back in though and said that quite clearly. He's just profit taking for now and still believes the supply/demand problem is not going away.

Again, read the entire article. Your questions are all answered therein.

Thank you for this info--helpful.

Richard Rainwater is LIQUIDATING his assets out of ELECTRONIC money.

Read the RAINWATER PROPHECY. He KNOWS it's about to all go down.


Got your preps?
Got your Garden?

So that now he is out of "electronic" money, did he take in cash and put it under his mattress? Or, did he take physical possession of gold or diamonds? Tell me what you know about this. Cause if he did not do something like that, he is still in "electronic" money. Maybe he has oil in storage and is hoarding it. Or he bought a farm. I wonder....

A smart man knows when to take profits and leave the game.

And a billionaire has many more options than we do, with what to do with the money.

How about buying one of the growing number of defunct banks and using their vault?


IMHO we are so close to a financial inflection point, we can hear the sound of hoof beats.

If the financial system locks up, he will be once again proven a visionary.

I have been a quiet reader of TOD for over a year and found it very informative and useful. I have a question about 'selling' the credibility of the data/information on The Oil Drum. The Oil Drum has a 'gestalt' of being quite credible, at least to me, and I form many of my opinions based on what I read here. However, I am an academic and there may be times when I want to make a reference (for publication) to something said by someone on The Oil Drum. Well, most editors of publications are loathe to use references from internet sources (since they are not 'peer reviewed', and justifiably so. Some of the contributors to the Oil Drum are clearly very credible people and I assume leaders in their field (just from the kinds of detail they provide in their answers, and how other members of TOD respect their opinions), but if I make a reference in an article I am writing and say it is "westexas at TOD" (I chose westexas because it is apparent that he/she is very highly regarded by members of TOD), most editors (or even people in casual conversation) would say that is not good enough.; after all, who IS 'westexas'; he could be George Bush for all I know (no offense). Some other contributors are clearly less credible.
I don't know if there is an answer to my question, but how can I (or can I) usefully use, in an academic sense, the information I obtain from TOD. A lot of this stuff just isn't readily available elsewhere.

IMO...the best thing to do would be to contact the person you want to quote, and ask them. They may allow you to use their real name and qualifications. They may give you sources, or you can list their names and reference it as a "personal interview."

What Leanan said is right, standard practice is to refer to it in a reference as a "personal communication", so it might go:

"Estimated oil tanker travel time from Venezuala and Mexico is about 5 days, whereas travel time from the Persian Gulf is on the order of 30 (Jeffrey J. Brown, pers. comm.)."

It's fine as long as you acknowledge it's a personal communcation, but if your reviewers are skeptical they might ask you to prove it. Most of the data that shows up on the site is publicly available in that case.

I am actually Dick Cheney, in a secure, undisclosed location. However, I am planning to have a sex change operation, so in the future, you can refer to me as "she."

However, if you check out my last guest post on TOD regarding a Net Export hurricane on the Gulf Coast, you will find that my cover has been blown.

Please, give us a hint, are you in a bomb shelter??

At the rate oil prices are going up (and as the shoot the messenger theme becomes more popular), I should confess that my true name is Matt Savinar.

WesTexas is Jeffrey Brown (I am Alan Drake). One can click on our ID's and we have chosen not to remain anonymous.

The Articles do have editorial review (mostly by professors) and should have the same status as serious popular magazines (IMHO). One can quote the National Geographic, Scientific American, etc. *NOT* as good as Science or Nature, but not devoid of creditability.

Best Hopes,


Thanks. I think I get the general picture, and a way to proceed.

What the Export Land Model Means for Energy Prices

"Jeffrey Brown is someone you should know. That’s because he can help you understand today’s high energy prices and that, as an investor, make you a lot of money."

(Sorry if this has been posted before - I didn't see it.)

Gas explosion off Western Australia causes supply cut

Pretty serious for the mining industry up around Karratha. I thought this comment was revealing:

He said Apache would probably have to conduct a worldwide search to locate the valves necessary to repair its pipeline.

Months before Apache gas supply returns

WA seeks diesel to cover Apache gas shortfall

How is this affecting ordinary people? Have they been asked to conserve energy?

Users told to cut showers, limit gas

Fortunately, electricity, and therefore, natural gas consumption is highest in summer when air conditioning is used the most. Clearly diesel supplies will be tight for the next few months. The extent of economic effects remains to be seen, but it will be significant, if temporary.

WA seeks diesel to cover Apache gas shortfall

WA gas blast may cost hundreds of millions

And I thought my garage was cluttered!

Kunstler describes the end of surburbia. One of my difficulties with that scenario was the problem of housing all the people who would leave the suburbs. Yes, there would be the brother-in-law on the couch, but would that be enough?

I have also been thinking about industries that are toast in a peak-oil demise, things like Airlines, Convention Centers and their associated restaurants and Hotels.

But yesterday morning, as I awoke in a hotel on a business trip, I realized that hotels might become dormitories, self contained oases with cafeterias, pharmacies, and even dry cleaners. If I was a 20 something coming out of college, and took a job in the city, it would be cool. It would even keep me from acquiring all that junk that fills apartments and houses. Of course, it would kill the industries that make all that junk, but they're going to get killed anyway. Why cook or clean the kitchen?

The cost savings are there too. Why pay for dining room furniture, when you can effectively share it with your neighbors? Food purchased by a dorm in bulk will cost less than retail?

For entertainment, music is portable, the TV fits on the wall and books are becoming digital.

I have a family of four in a 2600 sq ft house with a yard. We don't need all that space.

Net Oil Exports Revisited
Published on 21 Aug 2006 by GraphOilogy / Energy Bulletin. Archived on 21 Aug 2006.
by Jeffrey J. Brown

A Proposed Triage Plan

I believe that vast expanses of American Suburbia are going to become virtually abandoned in the years ahead. Alan Drake has noted that a good deal of suburbia was so poorly constructed that a lot of it is biodegradable. Alan has outlined how we can go back to what we used to have: electric trolley cars connected to electric light rail lines.

CBS Sunday Morning, on 8/20/06, had a segment on "tiny houses." They profiled a home designer and builder who specialized in building very small functional homes of about 100 square feet. You can find more information on his website.

What this builder has realized, and what millions of Americans are just beginning to also realize, is that anything over 100 square feet or so per person is not a necessity; it is optional consumption, a want, instead of a need.

The US is not Switzerland, but Alan Drake has described how Swiss per capita oil consumption in the Second World War was about 0.25% of current US per capita oil consumption. They did it primarily by electrifying their transportation system.

I propose a sort of triage operation: "tiny" homes and multifamily housing along electric mass transit lines. In my opinion, it is the only way that we can preserve some semblance of a civilized society. The suburbs are, by and large, a lost cause.

"Tiny" Houses:


It’s a simple story about one person’s desire to live better with less.

My name is Jay Shafer and since 1997 I have been living in a house smaller than some people’s closets. I call the first of my little hand built houses Tumbleweed. My decision to inhabit just 96 square feet arose from some concerns I had about the impact a larger house would have on the environment, and because I do not want to maintain a lot of unused or unusable space. My houses have met all of my domestic needs without demanding much in return. The simple, slower lifestyle my homes have afforded is a luxury for which I am continually grateful.

Personally, I'm betting that the suburbs are going to be an excellent place to make a go of it. As all those houses are left abandoned I will have access to a huge supply of materials to repair my house with or to "harvest" for profit (just think of the value of that copper wiring, or just the roof timbers). I will turn abandoned yards into orchards, or at least "famine forests." Pools will require some management, but three or four should be adequate water storage for my purposes.

Perhaps I'm fortunate as my suburb is only a mile or so from a "town center" that should prove to be the focal point of a new small town post peak. But I think almost anywhere that "homesteading" the suburbs will be one path.

How about turning cruiseships into condos? Would save a lot of crudeoil.

I'm sure there will be some of that. However, most of the hotels/motels located near & solely because of major interstate highway exits are probably going to be too far from surviving employers for this model to be viable for them; mysterious fires will probably eliminate some of that surplus capacity. Ditto with those hotels located along beaches and other resort locations; the inevitable decline of tourism is just going to kill them.

There might be another population, though, that could fill up some of these facilities, and those are retirees. Presuming that they can somehow manage to preserve enough of the purchasing power of their retirement investments, they especially might find your model in a resort location to be an attractive option, especially if they have to abandon their suburban houses.

I think mini-bus, car-pool, online shpping and localised recreation (eg community halls) could save much of the suburbs. They just need a mind shift and recognition of the problems to come to collective, co-operative solutions.

Community groups I think will start to make a comeback.


The social isolation endemic in Suburbia works against all of the above.


The social isolation in suburbia ends the moment the power goes out, or more precisely the moment the TV doesn't work any more. I rarely have interactions with my neighbors beyond a wave as I drive in and out of my driveway. But a couple years ago we had a 44-hour power outage after a pair of hurricanes close together knocked down trees all over the area. I spent more time with my neighbors in those 2 days than I had before or since, combined. We made all sorts of plans to get together on a regular basis, none of which happened of course. But I'm pretty optimistic about about the community in a crisis after that experience.

Add to this the likelihood that, over some time, there will be some people fleeing suburbia, and some moving TO suburbia. The two groups will differ in cultural outlook, and this will change the overall culture of what the suburbs will become. E.g., richer people will move to urban condos, gentrifying the downtowns, forcing poorer people out of downtowns. Some of the latter may see a future in suburban microfarms, given that those abandoned suburban houses will be affordable.

Yes, as the US declines and becomes more like a 3rd world country, we need to remember that the typical 3rd world city has the wretched poor ringing the city in shanty towns. The outer suburbs might be partially dismantled to clear & renew land for market gardens, orchards, dairy farms, etc., but the materials from the dismantling might be taken to the inner suburbs to infill between houses and push the densities up tremendously. It won't be a nice type of infill, either.

Here are some ideas:

100 rooms, each 100 square feet in size.

Photographs of residents in their flats in hong kong's oldest public housing estate

1. Thank you for adding to this community. You folks are amazing.

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What is this jump in oil going to do to food prices? Diesal, NG and fertilizer are skyrocketing in price. This fall food prices will skyrocket. The last time I checked, we all need food to live. Nations may be dropping gasoline subsidies, but they cannot drop food subsidies without sparking a revolution. Is it OK to panic now?

This was just on the local TV news here (Czech Republic):
A small village in the countryside had a power failure, a transformer 15 feet up a pole had died. But why did it die? Because someone had climbed up the pole and stolen the coolant oil!

I think we can expect to see more and more of this type of stories.

There are reports in Southern California that truckers are victims to theft of diesel fuel from their trucks. It runs about $1,200 to fill the truck Then the fuel is stolen from their tank and sold on the black market.

FAO World Food Security Summit Final Declaration

RE: biofuels

It is essential to address the challenges and opportunities posed by biofuels, in view of the world’s food security, energy and sustainable development needs. We are convinced that in-depth studies are necessary to ensure that production and use of biofuels is sustainable in accordance with the three pillars of sustainable development and takes into account the need to achieve and maintain global food security. We are further convinced of the desirability of exchanging experiences on biofuels technologies, norms and regulations. We call upon relevant intergovernmental organizations, including FAO, within their mandates and areas of expertise, with the involvement of national governments, partnerships, the private sector, and civil society, to foster a coherent, effective and results-oriented international dialogue on biofuels in the context of food security and sustainable development needs.

Full Declaration: http://tinyurl.com/4ff2gg

"to ensure that production and use of biofuels is sustainable in accordance with the three pillars of sustainable development"

What are the three pillars ??


People (social), planet (environment), profits (economic).

Here is an article at CNN that falls flat on its face - I've got the first comment on, would be good to see other comments that can help wayward readers:



am i missing something? there are no comments associated with the article yet.

They moderate comments at CNN, don't hold your breath. The moderators are watching the price of oil today, of course :)

Oil prices shot up nearly $10 to a new record above $137 a barrel Friday after a Morgan Stanley analyst predicted prices could hit $150 by the Fourth of July. The meteoric surge builds on a huge gain the previous day and sets the stage for the biggest two-day gain in the history of the New York Mercantile Exchange.


When the 'superspike' oil price phaseshift hits, it'll be like musical chairs when the music stops. This could be the beginning of it or just a slight foretaste.

Jeffrey's - I mean Matt's - ELM is hugely important and should have been THE big news in the world since he pointed it out. But there is something a lot faster: phase-shifted perceptions. Drastically faster than standard supply/demand. An entire nation can go from "taking for granted" to "hoarding" behavior overnight. A world, maybe a week.

Are we all where we want to be, with the stuff we want to have? This is rapidly looking less theoretical.

cheers from Easter Island

Rate of change can be disorientating. My feeling a foretaste - but with acceleration...

Falling oil production in Russia, if it continues will IMO signal a new world order.

So how are the bunnies and do you have an instant link that explains this choice of ecological refuge? How is the skiing? And how does Norway measure up?


Heating oil has apparently hit limit up for the day, or at least a temporary limit. Crude oil is flirting with it, with an intraday high so far above $137.50.

They need to think about changing those limits. $10 when oil is $30/barrel is a different story from $10 when oil is $130/barrel.

The limits only cause a 5 minute break -it's not a limit for the day. Apparently traders in the pit all go out for a quick cigarette according to Bloomberg. If they didn't smoke before they presumably do now! Although just what they're smoking by now is anyone's guess :-)

Talking of big changes - Dow down 330 points at the moment.

I know. (Had this out with somebody here recently. They didn't believe me when I said it was only 5 minutes.) But still. What happens if oil gets to, say, $1,000? They'll be suspending trading constantly.

They'll up the limit as the price goes up. They do that periodically, as they did with wheat a few months ago. They really should just set a percentage, but I guess enough people are math challenged that it would be too complicated.

5 minute time out children for not playing nice and trying to break the oil futures market game.


Isn't the spot market driving this thing?

Latest Louisiana Sweet Spot Price: $141.31

Definitely, because look at the market structure for the nearest months vs. later months in 2008.

Boy, are we going to be seeing speeches Monday.

Too bad there's no market for betting on speeches.

For all those who want to fly but feel guilty doing so, now there's Derrie-Air!

P.S. - It's not a real company, but what a great concept!

The volatility of the oil markets is wild, and “price by press” is now completely irrational. The price of oil has been up and down 10% plus in a matter of hours, ranging from the high twenties to the high thirties and back multiple times in the last couple of days, and oil prices have been able to move to by a full third in barely over a half year. All this while oil production itself has not changed more than a couple of percent per year during the last five years (!!)
What we are seeing is full blown market hysteria. Only a rube who just fell off the turnip truck could believe that it has anything to do with supply and demand. What’s the upside possibility? Virtually unlimited until the hysteria plays out and the bubble bursts, we could easily see $200 plus per barrel for short periods of time. Of course that is not a sustainable price. The “greater fool” theory is now in full play, with the brokerage houses trying to drive the trade using the business press as the tool to spread the hysteria. They will say anything. Nothing to do but sit back and watch the roller coaster ride!

Only a rube who just fell off the turnip truck could believe that it has anything to do with supply and demand.

The latest data, through March, show that two critically important sources of imported oil into the Gulf Coast, Venezuela & Mexico (VenMex), showed an annualized decline rate in oil shipments to the US of -32%/year.

And the latest inventory data show a big drop in Gulf Coast crude oil inventories. At the end of May, they were down 35 mb from the same time last year. This is not the lowest five year number we have seen for late May, but I think that is largely irrelevant, since prior years had largely stable exports from VenMex.

The latest data, through March, show that two critically important sources of imported oil into the Gulf Coast, Venezuela & Mexico (VenMex), showed an annualized decline rate in oil shipments to the US of -32%/year.

March US imports from Mexico are up compared to Dec, Jan, or Feb, so it's not clear which months you're looking at.

US imports from those two countries are in long-term decline, certainly, but at the moment all that means is imports are coming from other countries. Nigeria, for example, is becoming more important than Venezuela in for US imports, and was the 4th-highest source of imports in March.

That, and the US simply needs less imports; March08 consumption was down 800kb/d from March07. It's the first time in 6 years that those months have averaged less than 20Mb/d, and it puts the US on track to personally reduce overall world demand by 1% this year.


Don't know if anyone caught this Of course Zimbabwe has alot of problems, but in these accelerating times it is a useful for planning purposes. Looks like a prelude to wider things.

"Ambassador James McGee said the regime is distributing food mostly to its supporters and that those backing the opposition are offered food only if they hand in identification that would allow them to vote."

Nah, it's a "normal" supply/demand spike after people had been strongly encouraged to believe the price was a bubble. If they wouldn't keep deliberately misinforming people, prices wouldn't be so volatile. But it is a spike. The decline rates in production and exports are probably higher than anybody but Westexas thought they would be, but they aren't this fast (yet).

This will definitely affect demand, which would be lower in the fall anyway, and it will probably cause the Chinese to relent and raise the price of gasoline and diesel to consumers there, further decreasing demand.

Still, after a late summer correction, I expect another price rise late in the year.

I think that it basically boils down to a tug of war between the US Gulf Coast refiners and Asian refiners for Persian Gulf oil exports. With Europe increasingly having problems with Norway and Russia, they are going to be bidding aggressively too.

As I said up the thread, I can't imagine that anyone is in worse shape than the Gulf Coast refiners.

During the Enron-induced energy crisis in California, a 2% shortfall in natural gas caused the price to triple. When a critical commodity is in short supply, small changes in supply & demand will create huge price swings. Even a rube should know that.

This kind of volatility is not only normal, it was predicted months and years ago by people knowledgeable about peak oil.

If price is a result of market hysteria, why don't the end consumers just stop consuming at these prices? Speculators can only push prices up as much as consumers are willing to pay, otherwise they necessarily lose the difference because oil contracts are deliverable commodities. Price is the equilibrium point that a consumer is willing and able to pay AND a supplier is wiling and able to supply--even a rube like me understands that.

Wrong. Dead wrong. Again. As usual.

China and India have increased consumption by over 7 million barrels per day since 2004. Oil production is up by about 1.5 million barrels per day since 2004. Ergo, someone else is doing without 5.5 million barrels per day. And that doesn't include increased consumption in Mexico, South Korea, Thailand, Vietnam, Saudi Arabia, Iran, etc. The IEA places the extra demand (above the $40 per barrel mark) at about 12 mbpd.

This, Roger, is called "demand" and "demand" is resolved via "price" which is why the price has risen. Only a rube, a politician, or a paid disinformation specialist would expect price to rise linearly in conjunction with demand.

Now consider that only a few tens of millions of India's and China's citizenry have yet reached middle class living standards and that over 2.3 billion of them still want to do so. Tell me, exactly what impact is that going to continue to have on price? What impact will 50 million Tata Nanos have on price? What impact will 200 million tiny Chinese cars have on price?

By the way, Roger, lots of people have made lots of money so far by betting on continuing demand increases for oil. The major banks LOST about $50 billion at the end of May betting on LESS demand. How much money have you made based on your old prediction of waves of Saudi Arabian oil coming online to glut the market? None? That's what I thought.

China and India have increased consumption by over 7 million barrels per day since 2004.

"Wrong. Dead wrong. Again. As usual."

China's demand has increased from 6.2Mb/d in 2004Q1 to 7.8Mb/d in 2008Q1, or +1.6Mb/d.

India's demand has increased from 2.5Mb/d in 2004Q1 to 3.1Mb/d in 2008Q1, or +0.6Mb/d.

1.6 + 0.6 = 2.2, and that's counting from the start of 2004. How you came up with "over 7" I have no idea. It's pretty funny that you try using that number to berate someone, though.

Oil production is up by about 1.5 million barrels per day since 2004.

EIA: up 2.7Mb/d
IEA: up 4.2Mb/d

Why do you insist on pushing made-up numbers?

IMO, two key factors: (1) Accelerating rate of decline in net oil exports; (2) As forced energy conservation goes up the food chain, energy costs as a percentage of income declines, and the amount of discretionary spending that can be shifted to non-discretionary food & energy spending increases, i.e., the bidding gets tougher.

My opinion for a while has been that these two factors are interacting to produce an accelerating rate of increase in oil prices that is best expressed as a geometric progression: $50, $100, $200, $400 . . .

What is curious to me is how long prices have increased geometrically without significant demand destruction. As the US is one of the most import dependent wealthy nations around it is especially bad for the US as the lack of demand destruction hastens the transfer of wealth from the US to oil exporting nations.

i.e. speaking as an American this incessant line about above ground issues, resource nationalism (uh ANWR), speculation, etc is bankrupting us by delaying necessary demand destruction.

If worldwide demand were to decrease 2-3% a year for the next few years we could, I suspect, see stable prices, during that time.

The overarching question is can economic stability be maintained while decreasing ff consumption. This question has been considered many times on this board and I think it paints the scenario for PO going forward. The example has been given upstream of I believe Norway having something like 0.25% out per capita oil use in WWII - is that for real? Can the US and other consuming nations cut oil usage in half over the next 10-20 years while preserving a viable economy? With good policies I think it is quite achievable - with good policies. Stuart Sanford presented an excellent post on the effect of a 4% per annum increase in CAFE standards. What's happened with SS, anyway, haven't seen his posts in a while, I trust all is well with him.

Did you mean energy costs as a percentage of income "increases" not declines. You lost me there.

Switzerland's per capita oil consumption in 1945 was 1/400th of USA per capita oil consumption (2006).

Their 1948 per capita oil consumption was 1/50th of 2006 USA (by 1948, the aftereffects of WW II oil consumption were gone).

Improved CAFE is "not enough", but an 80% reduction with current GDP/capita is possible.

Best Hopes.


Reduced demand is the only that can burst this bubble in the short term. The long term is an even bigger problem..

It's not the dollar...

In the past two days the dollar fell about 1.5%, Oil rose 13%

It's not speculation..

The only way speculation will affect the market is under inventory accumulation.. we don't see any of that here

except for this perhaps? http://www.bloomberg.com/apps/news?pid=20601072&sid=aCvsbL.iegY0&refer=e...

I would call this hoarding behavior more than speculation...

Supply and demand for the win!

The BBC is in a flafp coming out with the most absurd comments on 'reasons' for the oil price rise.
One of them was said to be ......rising unemployment in the US!
They then had their economic 'expert' on, who admitted that supplies had not grown in the last few years, but then came out wiht the masterstroke:
'oil has doubled in price in the last year, but demand has not doubled, so it must be speculation!'
He does not appear to have heard of pricing at the margin.
This is sheer economic illiteracy!

Economic expert, do they just pull these retards off the street and let them read off tele-prompters? seriously wtf!!!!!

Never mind that's sour crude which wouldn't affect the prices of sweet crude

With crude at $137+, WTI over TAPIS and Israel admitting it will attack IRAN here's another indicator of an interesting day. Set your browser to amazon.com

Http/1.1 Service Unavailable

You don't see that everyday.

Oil now up over $11... almost $139

Yep, same here. Must be the end of the world when amazon doesn't work. But luckily I can get to http://amazon.co.uk though and it just suggested to me the following book:

The Black Swan

The Black Swan: The Impact of the Highly Improbable by Nassim Nicholas Taleb
£8.99 £5.34

Hmmmm :-)

Btw, at $139 we're only $1 away from needing a new poll.

Amazon is back online. Civilization is saved.

If you haven't read 'The Black Swan' yet, you definitely should.

Peak Bandwidth.

I suspect a hiccup in the internets while bandwidth was being allocated to backup Iran.

Matt Simmons may not be able to tell you what the intrinsic value of a barrel of oil is but he knows one thing...the intrinsic value of any specific commodity is whatever a willing and able buyer will give you for it at a given time.

...no one knows what the "intrinsic" value is of a barrel of oil.

Speaking of Matt Simmons:

The Telegraph today.

Peak oil debate will rage as long as doubts remain over Opec’s reserves

Last Updated: 11:56pm BST 06/06/2008

The debate over the cartel's capacity rages as American legislators look to make it pump more black gold, writes Elizabeth Eldridge


>>Matt Simmons, author of Twilight in the Desert, a book arguing that the sun is setting on the giant oil fields of Saudi Arabia, said: "The odds of the kingdom having any spare capacity, in my opinion, are low. The odds that their crude oil production is now starting into permanent decline are getting quite high."<<

>>And as Rembrant Koppelaar, from the sector forum www.theoildrum.com, points out: "The question of spare capacity is a difficult one because it is based on trust, not on any fact."<<

Well Kiddies, the value of oil has tied it's all time high of 6.5 barrels per ounce of gold. Any lower than this and we are in uncharted territory. It looks like PEAK OIL is here for sure.

From Drudge:

SPIKE: Oil rises past $138...
Jobless rates jumps to 5.5%; biggest rise since '86...

TSHTF 6/6/08? I don't know, I think there will be short-term bounce backs on the rocky slope down.

Wonder where we will be on 8/8/08? I said to plan for $8 gasoline on 8/8/08, but I wasn't predicting it.

A doubling of gas prices in 3 months? Wow...I think the only way that would happen would be an attack on Iran (which, hey, Israel may take care of for us) or another hurricane season like '05.

Despite your net export hurricane ("Hurricane ELMer?"), I personally think we'll be around $5 on 8/8/08. With the campaign going on, I think the price will continue to be held back as much as possible so that it doesn't become an even more dominant issue.

Edit...Hmm, that's actually 2 months. I can subtract, really I can...:)

If you're a responsible world citizen you will be glued to your new plasma, watching the Opening Ceremony of the 2008 Olympic Games (8 being a lucky Chinese number), and can spend a glorious two weeks getting very excited about sports that you don't think about for regular four-year stretches (like synchronised swimming, archery, and field hockey).

"Dogs and Cats, living together.."

I think it was Woody Allen who said "Lions and lambs may lie down together, but the lambs won't get much sleep"

My wife has been listening to me quote Kunstler for several years now. Recently, she read "World Made by Hand" -- she couldn't put it down -- and then she tore into "The Long Emergency." While previously, I think she was having a bit of trouble putting world events into context, suddenly she is seeing everything through The Long Emergency prism. Days like today make it real. As a stranger said to me recently during a quick exchange regarding the cost of energy, food, etc. -- "Hard Sledding Ahead!"

"Dogs and Cats, living together..."

Continued: "If I'm wrong then nothing happens and you toss us in the can. But if I'm right, and if we can stop this thing ... well, let's just say that you could save the lives of a lot of registered voters." - Ghostbusters

Heh...that was the movie I watched over and over as a kid with a friend of mine.

What I love is right after this quote, the priest/cardinal/whatever nodding in agreement to the Mayor.

And another thing...they had portable nuclear accelerators back in the mid 80's, according to this movie. Where the hell are they? Energy problem solved. :)

"Lennyyyyyy, YOU will have saved the lives of MILLIONS of eligible voters."

make it DOW PLUNGES OVER 400

sorry, correction from MSNBC ... dow pluges "ABOUT" 400 :-)

I just noticed this on the front page of the NYTimes:

“If oil prices stay this high, you’re going to have to re-examine your estimates for G.D.P., inflation and consumers’ ability to spend outside of nondiscretionary items,” Ms. Krosby said. “This has all of the elements of an investor’s worst-case scenario.”

Look's like Wall Street's decided that oil prices are having an impact and that recession ain't over yet. There was this too:

“The market is meeting its worst fears right now,” said Quincy Krosby, chief investment strategist at the Hartford, a financial services firm.

All this talk about "worst" in that article. If people here are right, we haven't seen the "market meeting its worst fears" yet. It's going to be a rough ride.

And gold is rising along with .....


For a laugh check out today's Daily Express front page from the UK



GREEDY petrol companies were accused of profiteering yesterday as pump prices continued to soar – but the cost of oil fell dramatically

How's that for timing. A lesson in how to look ridiculous in the space of hours! (Btw IMHO you have to be brain dead to buy this rag)

The National Inquirer had a secreted picture of Timothy McVey's body after his execution. Problem was, due to court delays, he wasn't executed until the next day. You gotta love the chutzpah.


A post by Rod Dreher, with the Dallas Morning News (he links to the video of the cubicle guy going crazy):

I guess I shouldn't be telling on myself, but here, courtesy of office hidden camera, is how I dealt with failing to convince the editorial board that peak oil is real. After this, Keven cut out coffee in our morning news meetings:

When I saw $10 rise in crude I thought that we were at war with Iran, this is an extremely volatile market.

I think these guy's are missing something from their agenda listed below.

Bilderberg Announces 2008 Conference

CHANTILLY, Va.--(BUSINESS WIRE)--The 56th Bilderberg Meeting will be held in Chantilly, Virginia, USA 5 – 8 June 2008. The Conference will deal mainly with a nuclear free world, cyber terrorism, Africa, Russia, finance, protectionism, US-EU relations, Afghanistan and Pakistan, Islam and Iran. Approximately 140 participants will attend, of whom about two-thirds come from Europe and the balance from North America. About one-third is from government and politics, and two-thirds are from finance, industry, labor, education and communications. The meeting is private in order to encourage frank and open discussion.
There will be no press conference.

Bilderberg boys will decide who’s Obama’s “chosen” Veep

“It has been announced that Bilderberg luminary and top corporate elitist James A. Johnson will select Democratic candidate Barack Obama’s running mate for the 2008 election and in turn potentially act as a kingmaker for America’s future president.” (Paul Joseph Watson, Prison Planet, May 23, 2008).

Bilderbergers pull the puppet strings of contemporary politicians. While the media tends to present Bilderberger luminaries as bigwigs in pinstripe suits attending endless secret meetings, they’re the global elitists pushing the envelope on one-world government.

Like it or not, CTL will be looked at and an issue this political summer.


Hello TODers,

Oil skyrocketing, grain prices up, stock market tanking, but Potash North [stk symbol: PON.V] up another 23% today to $2.55--What's up! Hell if I know. I am hoping for expert replies on why this stock went from twenty cents/share to $2.55 in just three days.

Potash permit shoots up stock from 20¢ to $1.54 [EDIT-now $2.55]
Jun 05, 2008 04:30 AM

Also, some very scary sulfur notes:

Oil and gas companies hoping to cash in on astronomic price increases

n March 2007, a ton of pure sulphur shipped from North Vancouver or Port Moody would have cost you less than $50. This month, it's about $650 for the same volume -- a 13-fold increase in just 13 months -- and one chemical market analyst is suggesting that another major spike is on the way...

...PentaSul's Clarke said that $600-plus prices are just the launching board for another round of increases when third-quarter contracts open for negotiation in three months.

"In three months' time I can almost guarantee it will be another quantum leap higher," Clarke said.

..Earlier this month, the UK-based CRU Group predicted in its fertilizer newsletter that Shell and Husky were pushing for "substantial" price increases in their next-quarter contracts.

Ammophos. Bigger upside on steeper phosphor prices

We also raised substantially our forecast prices for sulfur, which is one of the company’s core raw materials, on the grounds that suppliers are looking to hike prices in 2008 a massive 5-fold.
Have you hugged your bag of NPK today?

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

Bob Chapham said, that USA has vast oil reserves in the ground and off coust, that USA wants to save for its one needs. Therefore USA uses others oil now.

Well i don`t know if he is right, but according to all posts before me, i think it is time to stock up ala WT ELP(or what it was), and head for the hills.

Good Luck everybody, it seems we are freaking doomed.

You think today's jobless report was bad news? Silly you! You just don't know how to interpret the data correctly. Let J.P. Morgan set you straight: Buy Stocks as Investors `Misread' Jobs, JPMorgan Says

The biggest rise in the unemployment rate since 1986 is an ``aberration'' and investors who sold equities today are ``completely misreading'' the outlook for economic growth, according to JPMorgan Chase & Co.
But ultimately the economic data is showing the economy is pretty resilient.

There you have it! Buy stocks!

Reading the debates about speculation vs. peak oil, I am thinking it could be "a little of both," e.g., some portion of the current price is speculation right now PLUS, some of it reflects increasingly tight supply as we approach the peak (or, at least, *A* peak or a plateau that might not be the FINAL absolutely-highest peak). There might be volatility in price and production for awhile yet). People keep saying, well, speculation is hard to do since somebody has to actually take delivery of the physical oil at some point, but as long as oil demand is relatively inelastic in the short term, many physical buyers probably feel like they have to pay whatever the market is charging. I'm not an oil company expert like some of you, but if you consider that even individual drivers can't immediately change some of their oil usage patterns (e.g. if they live 20 miles from work it would take them some time to buy a more efficient car or move closer-in, unless there's bus service)-- and then you consider that the oil is actually bought by refiners rather than drivers, it makes sense that in the short term physical demand would be very inelastic. Even if drivers ARE cutting back, refiners can't count on further cutbacks when they plan-- they can't just assume all their customers are going to drive 10% less until they see it happen, or else they might run short of product which would make them look bad. I doubt anybody wants to be the first company with physical shortages at gas stations!

So they will end up buying whatever amount they need, trying to get the best price but in the end paying what they have to and passing it on. That is my uneducated guess. And that means that speculation could drive up the price and refiners or other users might not have enough short-term power to push the price back down again.

Does that mean peak oil is a "mistake"? Of course not; to me the arguments that the peak is coming pretty soon are persuasive. I just think there might be some plateaus on the way up to the final peak, or maybe some last gasps of squeezing out a few more hundred thousand barrels (or millions, depending on how long it takes) of production per day, before the all-time final big enchilada.

If anybody has any corrections to my assumptions about how refiners decide when to buy and how much, I'm all ears, my theory is just a guess.

I just want to see hard data, supply versus demand on a global scale. According to the drops in non-OPEC production a rise in oil price is to be expected but without hard data that a sustained drop in OPEC production due to declining supply, i.e. peak oil, is driving up prices, it's hard to say that this current run up to near $140 is not due primarily to speculation, although I suspect that speculators are able to operate in this market because of the tight supply/demand relationship that promotes a sense of unease at every turn of the news cycle.

I believe Simmons has it right.

You want to see hard data ... that does not exist in an aggregated form. One particular someone in Saudi Arabia may have a good handle on what is going on in the Kingdom ... or maybe that someone does not exist.

In any event, nobody has a good handle on global production capacity or reserves. We will only recognize peak oil in our [figurative] rear view mirrors.

IMO, the most stunning admission of late has been discussed in this forum much less than I expected. That admission is the IEA statement that for the first time it is going to actually study productive capability rather than estimate demand and assume that production will meet the need. I am unaware [it's possible] that the EIA has reversed course and initiated a similar study or admitted that its production forecasts are just plug numbers needed to balance an equation that assumes a very high or nonexistent peak.

That potential implications of this lack of analysis should scare everyone in the "business as usual" camp that gives it any thought. Whether [or not] feasible avenues exist to increase production not knowing is lunacy.

The EIA showed a worldwide net export decline, which started in 2006, accelerated in 2007, and as we expected appears to be accelerating further in 2008, led by catastrophic net export decline rates from Venezuela and Mexico to the US. This is really not that difficult--it's importers bidding for declining net oil exports, which are showing an accelerating decline rate.

No doubt this is a major cause of the run up in crude prices over the last few years.

The controller in my office said that if Soros says $40 of the current price is due to speculation, it's got to be true. I couldn't get him to understand the concept of declining exports.

Tell him that Soros explicitly denied that $40 of the price was due to speculation. He said that speculation only added a little "froth" to the price. Any news source that reports him saying $40 is speculation is lying or incompetent or both.

The EIA showed a worldwide net export decline, which started in 2006, accelerated in 2007

Interestingly, the data is not clear on that.

Out of curiosity, I downloaded the EIA data on per-country production and consumption to see how net exports were doing. 2007 production data is available, but 2007 consumption data is mostly not, so I estimated it by applying the 05-06 growth rate to the 06 data. This results in a value 250kb/d too high, so I've subtracted 0.2Mb/d from importers' and 0.05Mb/d from exporters' consumptions to balance. The set of "net importers" is fixed as those countries which were net importers in 2006, and "net imports" is defined as their consumption minus their production.

Calculated net imports were:

  • 2004: 44.2Mb/d
  • 2005: 45.3Mb/d
  • 2006: 45.8Mb/d
  • 2007: 45.8Mb/d

However, calculated net exports were:

  • 2004: 45.0Mb/d
  • 2005: 46.2Mb/d
  • 2006: 45.7Mb/d
  • 2007: 44.7Mb/d

The difference should be reflected in stock changes; for the OECD, those were:

  • 2004: +0.23Mb/d
  • 2005: +0.35Mb/d
  • 2006: +0.21Mb/d
  • 2007: -0.04Mb/d

2007 should have seen a stock draw of 1.1Mb/d, or 400M barrels; since the OECD stock draw was virtually zero, we're left with a few possible conclusions:

  1. Non-OECD stocks fell by 400Mbbl in 2007.
  2. Net exporter consumption grew more slowly than in 2006.

There was a stock build in at least some parts of the non-OECD world, though, arguing against the first hypothesis. Recent IEA OMRs have more information on demand trends, but still don't clear this up. Demand growth slowed greatly in the FSU, but picked up in Americas exporters, and was largely stable in the ME.

It should be interesting to see whether this gets resolved in the revised data.

At any rate, it's very likely that net exports will decline significantly this year, due in no small part to substantial demand destruction in the US (down 0.8Mb/d 2008Q1 over 2007Q1).


This is a good explanation of speculation...

Some words that have been running through my head for the past few days:

Do Not Underestimate The Extent To Which Our Society Is Absolutely and Hopelessly Addicted To Fossil Fuels, And How We Will Continue With Our Addiction Until We Cannot Afford It Anymore And/Or We Are Dead.

Hello TODers,

My thxs to Leanan for the toplinks on food & fertilizer. To reinforce this critical Phosphate as Life's Bottleneck theme, a google of Morocco is always instructive:

Jorf Lasfar refinery plan in Morocco moves ahead

LOS ANGELES, June 6 -- Abu-Dhabi's state-owned energy investment firm International Petroleum Investment Co. (IPIC) has approved a plan for construction of a refinery at Jorf Lasfar in Morocco, the latest of several projects announced for the port on the country's Atlantic seaboard.

Morocco agrees $234 million deal for 24 F-16s
6 hours ago

From the beginning, the objective of Morocco was to create a controlled and safe zone in the area considered as “useful” for its political and economic interests, that is, the Capital Al-Aaiun, the religious center Smara, and the phosphate field of Bu-Craa.

From IAEA [PDF Warning]:


The said feasibility studies concluded that for reasons of insertion into the national grid, the nearest date for introduction of a first unit of 900-1000 MWe, in the framework of the equipment program focusing on the introduction of nuclear energy, would be somewhere near 2016-2017.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Hello TODers,

The Food Chain
Food Is Gold, So Billions Invested in Farming

..But a few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment.

One has bought several ethanol plants, Canadian farmland and enough storage space in the Midwest to hold millions of bushels of grain.

Another is buying more than five dozen grain elevators, nearly that many fertilizer distribution outlets and a fleet of barges and ships.
Biosolar mission-critical investors?

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

Major Investors, Including New York's BlackRock Group, Boost Agriculture Investments

...Former United Nations Secretary General Kofi Annan told the International Herald Tribune, "The era of food aid is over - there is no more sending food from America to Africa."
Uh-oh, that is not good news for the Overshoot Population, IMO.

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

totoneila, I don't understand why Annan said that.

Why not just something like "we're entering an era of decreasing year-over-year food aid."

Why do you think he said "food aid is over?" Is it being completely cut off?

Aangel - The last sentence in the article clarifies what Annan meant -

"In lieu of food assistance, Annan batted for UN agencies to assist African and Asian farmers hike their output. Donor nations are advised to instead send farming tools, fertilizer, seeds, silo and know how."

Cuts down on the food miles and gives the locals something to work at, assuming the land isn't taken away from them. Plus, the production won't have the fate of being made into ethanol.

Amidst the combined existential crises we face daily if we choose to look, the dream makers are hard at work to lull us back to sleep. Today, they kicked the fantasy factory into overdrive:

Levitating train from L.A. to Las Vegas gets boost

Plans for a levitating train from Las Vegas to Disneyland can move forward under a transportation bill signed by President Bush on Friday that frees up $45 million for the futuristic project.

One must wonder if the Imagineers are savvy enough to install flat-panel TVs in place of windows so that passengers lose themselves in Fox and ESPN instead of gazing out at the suburban wastelands and eviscerated city centers that will pass blurrily below them.

Senate Majority Leader Harry Reid, D-Nev., praised passage of the law, saying the MagLev project "will safely and efficiently move people between Southern California and Las Vegas."

It's about time!

Best hopes for reality-based rail,
-- Todd

Well that's just great. The world's going to heck in a handbasket, but Californians will still be able to take a posh mag lev train to .... gamble!

I'm so excited.....

Incident at the pump

Had to share this with the list...

I had to fill up this morning, and pulled into the lowest priced gas in Marin: $4.16/gal for regular.

There's a nearly constant queue of about a dozen cars there these days. Today, you could feel the impatience and anxiety in the air as people waited to take another big hit in the pocketbook.

Even though there are 6 lanes at the station, each with three pumps, there always seems to be a queue, usually with an open spot or two at the front where the line didn't pull up.

In frustration, two vehicles in front of me charged for one of the spots, one pulling forward and backing into it and another pulling in sidewidays behind him, blocking two lanes. They stopped inches short of a collision and hit the horns. Both drivers got out and a shouting match began that escalated in volume. "YOU TOOK MY SPOT" the one guy said, while the other shouted back. It went on for about 10 minutes, while people in the queue starting laying on their horns and yelling out the window "GET OUT OF THE WAY!!"

I thought blows were going to be thrown.

An attendant came out and got involved.

I went in for my change...apparently Arco has had a rash of debit card number thefts (by undisclosed means) from people who used the pump island pay station, so now you can only pay cash, or use your debit card only at the cashier.

The cashier cast a wary glance out the window as he made my change, and made a comment in halting English about how he tries to keep an eye on things out there. I could tell from the look on his face what he was thinking: "I'm making $5.85 an hour for this??"

Eventually the volume subsided and the sideways guy moved out of the way.

I got out of there as fast as I could, thinking about oil's jump from $122 to $138 in two days, and wondering...This just the beginning, right? How much worse is behavior at the pump going to get? When will I hear the news report about a rage shooting at the pump?

"When the going gets weird, the weird turn pro." --Hunter S. Thompson

Drove by the local ARCO station here after watching oil climb all day, and the lines were out into the street. Those who were paying attention took the opportunity to fill up.

Gas prices actually went down to $3.79 where I am in Virginia, no lines here, sorry about your situation though.

In LA, prices have jumped about 30 cents in one week. Reg is at $4.39 to $4.49.

I have nothing but the utmost contempt for people who get into fuel panics. A 20 gallon tank means even a $1 spike overnight adds a measely $20 for a fillup. Not worth risking one's health and dignity.

It's like the newcomers to Boston who do nothing to prepare for winter until the night before the first storm, and then rush out to buy milk eggs and bread. The rest of us mock them for declaring the "french toast emergency" because we have a blizzard's worth of non-perishables stocked up in October so at worst we have to forgo fresh food for a few days.

Ah yes, the Arco next to Goodwin's Hardware----
I generally go to the one in Tam Junction, and pay the extra penny, as I can't stand the TV's blaring at the pump.
As Chomsky has pointed out "Even the bewildered herd at this point knows something is wrong"
The one's who have grown up playing video games will just take what they want, until someone calls them on it.
I spent the day up on Mt. Tam, and did not encounter another person on my 6 mile walk--
One benefit of higher prices will be solitude in more remote regions.

Was this the Shell station in San Rafael right off the freeway?

Following the 'Rule of Page sixteen'
Strategist Coxe has right to say, 'I told you so'

...Whatever you do, he said, don't sell stocks of firms that increase farm yields, namely fertilizer, seed or tractor-makers.

...Having been right twice, isn't it a bit late for Mr. Coxe to be plowing investor money into a sector many believe has been driven to unsustainable heights?

Not quite: "I've told clients that in the next five years, returns on commodity stocks will be better than the last five years," Mr. Coxe told me this week.

Here's what will happen, he predicts: All those agricompanies -- fuelled by ever-growing demand for better food in China and India -- will post stellar results over the next few years.
It would be interesting to hear his take on how Peak FFs will impact agricompanies.

June 5 (Bloomberg) -- Rising food prices could fuel political instability that African governments will be unable to contain, said Jacob Zuma, leader of South Africa's ruling African National Congress.

``The issue of food prices is actually a time bomb,'' Zuma said at a World Economic Forum meeting in Cape Town today. ``An uprising could emerge. I don't think there is lots that governments could do.''
I would suggest a massive Peak Outreach program could do much good, plus a continental-scale program for O-NPK recycling to help augment I-NPK imports.

From the same link:
``Oil prices are driving up food in a way we cannot deal with,'' South African Finance Minister Trevor Manuel said in Cape Town. Governments in rich nations must to do more to contain food demand or ``the wealthy are going to take everything, leaving the poor destitute.''

Thorleif Enger, chief executive officer of Oslo-based Yara International ASA, the world's biggest fertilizer company, said Africa had the potential to increase its food output fivefold. Africa uses about 10 kilograms (22 pounds) of fertilizer per hectare (2.47 acres) of farmland, a 20th of what was used in south Asia, he added.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Hello TODers,

Recall my earlier postings where if everyone in the First World went to gardening that it would suddenly start pricing many poor Third Worlders out of fertilizers. I wonder how close we are to that point when the Wall Stree Journal has an article about home gardening:

The Vegetable Patch Takes Root

...Bruce Butterfield, the association's research director, expects 2008 will be another strong year for vegetable gardening thanks to "the combination of gas prices, food prices, and people staying at home because the world's gone crazy," he says. "At least they can have some control over their backyard..."
Bob Shaw in phx,Az Are Humans Smarter than Yeast?

Hello TODers,

Will the insanity continue, or does the rapid price appreciation in FFs & I-NPK put the kibosh to this:

Golf courses cover over 38,000ha

The number of golf courses which are already operational, now under construction or have applied for licenses now totals 123, according to reports from 51 out of 64 provinces and cities around the country. These golf courses cover 38,445 ha of land, over 15,000 ha of which were used for agriculture. The reports were requested from the Ministry of Agriculture and Rural Development, presently surveying agricultural land being used for golf purposes.

The southeast has 36 golf courses, the nation’s highest concentration.

Saigon Giai Phong (Liberated Saigon)
Tiger Woods has some Asian DNA: I wonder if he is interested in leading the charge to start plowing the golf courses in Vietnam?

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

The image I have in my mind is Claude Raines saying to Humphry Bogart: "I am shocked, SHOCKED to discover that there is speculation going on at this Futures Exchange!"

"Your capital gains, sir"

Canada has a program to blend 10% ethanol/gasoline by 2010. The need for Canada to increase more corn imports from the United States is becoming apparent. While this article did not mention the growing number of ethanol distilleries being completed in Canada, it did report that Canadian farmers abandoned planting corn in favor of producing a larger wheat crop.


There were also reports of more protests over the rising price of corn tortillas in Mexico. Acreage that was once used to grow corn for livestock or human consumption was switched to ethanol production. This report indicated Mexican corn was being exported to the United States.


The world's largest corn exporter in danger of becoming a major corn importer.

There are more problems in Mexico than the price of tortillos. Check out the gangs taking over Mexican towns bordering on the US. The legal cops are resigning in mass. Sometime back there was a coordinated bombing of pipelines and pumping stations in Mexico that cut production for some time (natural gas IIRC).

WT, if the gangs prevail will they have access to pipelines carrying FFs from Mexico into the US? Or, is all the oil/gas transported from Mexico to the US carried via ship?

In any case authorities on both sides of the border fear the violent gang warfare against each other and the police could spill over the border into the US. This could be a significant above ground factor with regard to ELM.

Odd, today everyone is talking about an attack on Iran when we have a major problem brewing on our southern border.


Simply, Mexico is in a guerrilla war and the majority (54%, in a recent Reforma poll) of the population thinks the narco-guerrillas are winning. Last month, the guerrillas decimated the senior staff of Mexico's law enforcement organizations and there are threats of more assassinations to come. In small towns, policemen are resigning en masse as the drug gangs continue their killing spree. Placards and banners are openly displayed in town streets promising death to the police that oppose the drug gangs and/or offers to recruit anybody with military experience.

Calderon's effort to crush the syndicates has backfired. As the top leadership of the syndicates were arrested or killed, a myriad of smaller and more violent groups have emerged to replace them (as predicted by global guerrilla theory). Currently, the groups are fighting each other more than the government, which has reduced their effectiveness. That will slowly change as territories are become fixed, connected to the primary loyalties of village or neighborhood. Eventually, a fully formed open source insurgency will emerge and the government might find itself only in command of the capital. At that point, Mexico will be a hollow state. A government in name only. This is going to be interesting to watch.

NOTE: The only existential threat the US faces in the near term, is from global guerrillas in Mexico and not the Middle East. A breakdown there could result in massive population movements, refugee centers, and the spread of guerrilla warfare into US border states.'


It is doubtful "Narco Guerillas" were responsible for the pipeline bombings, as they are usually always on the Right politically, and it would not be in their interests.
However, there is a another "Guerrilla" movement in Mexico that involves social justice and control of the means of production, the Zapasitas being the major visible group.
I spent last February in Guerrero, and the revolution is quite healthy, and ever present.
I attended a village fundraiser (food and play) to raise money for a child care center, and put together by a left political movement, mostly underground.
The army was ever present, and travel was impeded by road blocks.
I see Mexico on the edge of major change, as the stream of oil money to finance the corrupt business class drying up.

Wow, whatever happened to that shortage of refinery capacity shtick ala last year at this time? Yes, this price surge is scary, but yea, expected for at least the last decade or so. Just a question of when. Volatility has continued to increase. But this is most likely just the beginning stages still. A number of third world economies have/are being priced right out of the market and this will just have to increase to keep demand/supply in balance. Nice to see some evidence of demand destruction in the U.S. finally the last few months. How high will the price have to go to cause enough DD to make a difference and allow the price to level out for a while?

Even the majors have been quietly preparing, as evidenced by the following link-


As an aside, Amoco bought into the solar cell industry back in the mid 1980s...

Who's ready for the "one-world" governement plan?

Japan Urges Effort to Combat `Abnormal' Oil Prices

``It's very important that we issue a unified message to the world,'' Amari said. ``Global energy security will be enhanced through collaborative effort among nations.''

Quoting Japanese Trade Minister Akira Amari
``Oil is already at unbearable levels,'' Amari said earlier this week. ``If these price levels for crude continued, shifts to non-petroleum-based energy will be accelerated further.''
Exactly. Note the certainty with which Minister Amari says this. He does not question whether it can be done. He knows it can be. And now if the price will hold, it will be.


An island nation like japan should be well aware of their dependancy on avaition, and i don't see fleets of nuclear aircraft appearing anytime soon. Bio-a/c fuel +10years away?

I can't see a massive dependency on aviation on Japan's part - the holiday destinations such as Hawaii that they go to are the ones that will feel the pinch.
Most Japanese exports and imports will go by sea, and rising prices of that will have much more effect.

There is a huge class of business travellers between the US, Europe, ME, UK - and Japan. Trust me, I know 2 of them!!

I have constant arguments with them about why they cannot teleconfrence.


Precisely! Hardly dependency, is it? Wasteful is a better term.

Speaking of telecommuting, a Hungarian friend of mine cut to the chase for his holidays, reckoning that they were about sun, beer and sex - he wasn't fussed about sand.
So he stayed home holidays, hired a sun-lamp, stocked his fridge with beer, and arranged visits from, ahem, 'professional' ladies.

We need more out of the box thinking!

Why are people scared of a one world government, Don't they know that the trend will be towards decentralization and not centralization. the more land area you control the more energy it takes to do that. The only way a one world government would come about is if there were an infinte source of energy, hate to disapoint you but...

Complexity requires energy, so eventually there will be smaller, regional entities instead of even larger ones. But there will be enough energy for quite some time to allow some of these fantasies like a NA Union play out, if things go that way.

Right...I think it will be tried and on some levels (i.e., Central Bank linkages and cooperation between different G-7 countries), it's already there. As the wealthy importer countries try to stop the hemorrhaging, they will try acting in unison on policies and actions. Then you will have two huge superpowers; wealthy and powerful importing countries vs. wealthy and powerful exporting countries (NATO vs. BRIC?). Yikes, that kind of World War will make the others pale in comparison.

The Daily Mail is waking up.


>>Nine meals from anarchy - how Britain is facing a very real food crisis

By Rosie Boycott
Last updated at 1:41 AM on 07th June 2008

The phrase 'nine meals from anarchy' sounds more like the title of a bad Hollywood movie than any actually is. genuine threat.

But that was the expression coined by Lord Cameron of Dillington, a farmer who was the first head of the Countryside Agency - the quango set up by Tony Blair in the days when he pretended to care about the countryside - to describe just how perilous Britain's food supply

Scroll down for more<<

The Morgan Stanley analysis pointed to a sharp increase in eastbound oil shipments from the Middle East to Asia and a substantial drop in tankers heading west from the Middle East to Europe and the United States


USA Sect. of Energy "Flat Production behind High Oil Prices"

Production has stalled since 2005 at 85 million barrels a day, while economic growth _ particularly in China and India _ has pushed demand ever higher, Bodman said before a meeting of ministers from the U.S., Japan, South Korea, India and China.

"We're in a difficult position where we have a lid on production and we have increasing demand in the world," he told a small group of reporters, dismissing the effects of speculation and unclear inventory levels and other factors on oil prices



" . . . a substantial drop in tankers heading west from the Middle East to Europe and the United States"

I assume that you are going to post this on the 6/07 Drumbeat.

Hmm . . with rapidly declining exports from VenMex, I wonder what effect this is having on the Gulf Coast?

BTW, had a dinner meeting last night regarding an EOT conference for the fall in Dallas, centered around a presentation by you.

I would be interested !

Please post for me on today's Drumbeat. Busy day today, helping with Arwen's wedding.

Thanks !

Alan (really Kyle Saunders for the post-Peak Oil FWOs >:-)


USA Sect. of Energy, Samuel Bodman sounds like he's as close to being a Peak Oil believer as you could get out of a senior US gov official, especially when the article says:

At the same time, he urged nations to pay heed to an IEA report that the world needs $22 trillion investment in energy supply infrastructure by 2030 to meet rising demand, while developing alternative energy sources.

"We have a situation where we have these high prices and the only solution is to diversify your resources, diversify your sources of fuel," he said, listing nuclear energy, natural gas and renewable sources such as wind and hydropower.

Notice he says "diversify your sources". What he did NOT do is repeat the big oil mantra of opening up ANWR and the continental shelf ie. drill more. He also doesn't sound as if he really believes that much more can be done about production when he says:

"I would devoutly hope we ... see a reduction of the use of oil in the world on the one hand, and an increase in the supply so we can see some mitigation in the pressure on price,"

"I would devoutly hope"? What's that? Sounds kinda like "I really wish upon a star"!


Alan from the islands

Just real quick about the "bubble" debate.

1) That's a heck of a bubble that while expanding drops the stock market near 400 points. Bubbles generally generate (false) wealth n'est pas? That's some bubble that while expanding makes me people on average poorer and risks destroying nations economies. Let's hope the "bubble" pops before more people go the poorhouse. Let's hope the "bubble" pops so the country can become rich again.
2) There was never any "hype" about oil prices rising. Anyone who predicted rises in oil prices of half the magnitude we have seen was derided as a kook, a PO theorist and addressed generally as the retarded step child kept in the closet who was occasionally let out for the awkward amusement of the grown-ups. The idea of a bubble took hold post-hoc as an attempt to explain a completely missed (present company excluded) and unwanted rise in oil prices. There is still no enthusiasm or majority conventional wisdom for increasing prices.
3) Oil, unlike housing, internet companies or tulips is a commodity which is quickly consumed by end-users. Until alternative arrangements are made it is often important if not essential to their livelihood. To call the run-up in oil prices a bubble makes about as much sense as calling a famine a food "bubble".

All that said, I do suspect that people like Rainwater and Pickens earlier in the year may be correct that demand destruction may soon interrupt the current meteoric price rise temporarily. However, this is an issue of supply and demand, sans significant demand destruction or supply increase the overall year to year trend upward continues.