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DrumBeat: June 18, 2008
Posted by Leanan on June 18, 2008 - 7:47am
Oil Crunch Trumping Climate Concerns?
In 2006, I interviewed dozens of experts on energy, climate, and the economy for a story in our ongoing Energy Challenge series, and more than a few warned then that, in the world of politics and policy, the need to deal with a growing global oil crunch could well trump the need to curb greenhouse gases and limit long-term climate risks.President Bush’s statement today on oil could be interpreted by some as proof positive, at least for the final months of this administration, that oil still trumps broader energy and climate issues. In his Rose Garden speech, Mr. Bush briefly noted a planned boost in fuel-mileage standards for vehicles and technologies that might move the country away from petroleum in coming decades. But the four prongs of the speech were not about using less fuel, but boosting supplies: drilling offshore, extracting oil from shale, drilling on the coast of the Arctic National Wildlife Refuge, and adding refineries.
Home buying practices adjust to high gas prices
In his hunt for a new home, Demetrius Stroud crunched the numbers to find out that, with gas prices climbing, moving near an Amtrak station is the best thing for his wallet.Stroud was looking in Elk Grove., Calif. — about 85 miles away from his job in the San Francisco Bay Area — because homes there are more affordable. But with gas at $4.50 and a car that gets about 22 miles per gallon, Stroud would be pumping $560 a month into his tank.
So instead he made an offer on a home near the train station in Davis, which will shave $160 off his commuting costs.
Oil price spike puts farmers in grim situation
“I’ve been farming since the 1960s,” said Texas Farm Bureau President Kenneth Dierschke, a San Angelo-area cotton and grain farmer. “In the years since, we’ve all seen dozens of grim situations in agriculture. They pale in comparison to the major problem that is shaping up in our industry at this very moment.”
May oil demand down 0.1 pct from year ago: API
WASHINGTON (Reuters) - Demand for crude oil and petroleum products in May fell a slight 0.1 percent from a year earlier, and U.S. gasoline use for the January-May period dropped for the first time since 1991, as record-high pump prices dented demand, the American Petroleum Institute said on Wednesday.Total petroleum product deliveries, excluding exports, averaged 20.614 million barrels per day, down 17,000 bpd from May 2007, the API said in its monthly oil report.
Fuel price protests hit Brussels
BRUSSELS (Reuters) - Belgian farmers, truckers and taxi drivers staged protests against soaring fuel prices on Wednesday, the latest in a series of demonstrations across Europe and Asia as oil has hit record highs on world markets.Hundreds of tractors clogged traffic as they converged on Brussels, while truckers and taxi drivers staged a go-slow on the city's inner ring road.
Tornado-damaged power lines cause ComEd congestion
NEW YORK (Reuters) - Crews at Exelon Corp's Commonwealth Edison subsidiary continued to repair power lines south of Chicago damaged by a tornado on June 7, a spokesman for ComEd said Wednesday.The damaged lines, coupled with heavy West-East power transfers, have resulted in increased congestion in the ComEd and NIPSCO systems, PJM, the Mid-Atlantic/Midwest power grid operator, said in a June 17 report.
Poll: Fuel spike curbs vacations, dining out
WASHINGTON - Many Americans will forgo vacations and dine in more often to combat soaring fuel prices, while 1 in 10 are rethinking where they live or work, according to a Reuters/Zogby poll released on Wednesday.Nearly 39 percent of those surveyed said they were considering changing vacation plans, while 31 percent plan to eat out less often. The poll of 1,113 likely voters found that 58 percent intended to drive less, and 2 out of 10 said they would rely more heavily on mass transportation.
Oil - paying the political price
Consumers are worried about how they will afford the growing costs of petrol.Economists are worried about the effect of the high oil price on the national and global economy.
Well here is another oil-related issue to worry about: the effect of the high price on international politics.
Australia PM sees gas crisis hitting economy
SYDNEY (Reuters) - Australia's economy is under threat from a power crisis in the country's west, the premier declared on Wednesday, and ordered the navy to divert diesel to keep mining and other industries running.The state of Western Australia, which is five times the size of Texas, lost a third of its gas supply two weeks ago when a gas plant blew up.
The loss could weigh on the Australian economy, one of the world's healthiest, thanks in large part to the injection of billions of dollars from the state's mining exports.
Bush sending energy chief to Saudi oil parley
WASHINGTON (AP) -- President Bush is sending Energy Secretary Samuel Bodman to Saudi Arabia for a one-day meeting of oil producers.Bodman is leading a U.S. delegation to the meeting on Sunday in the port city of Jiddah in Saudia Arabia, the world's largest oil producer. Saudi Arabia has called the meeting of oil producing countries and consumers to discuss ways of dealing with soaring energy prices and preventing further increases.
Iran Slams Saudi Over Upping Oil Output
Iran says Saudi Arabia should not be increasing its oil output unilaterally, claiming such decisions require a consensus from the Organization of the Petroleum Exporting Countries (OPEC).
City of Idaho Falls Considers Fuel Storage Facility in Case of Emergency
In the event of a natural disaster or fuel shortage -- if gasoline couldn't be delivered to our area how would our emergency vehicles operate?Right now we have a two to three day backup supply of fuel, but what if that wasn't enough in an emergency...That's why some city officials are proposing construction of a fuel storage facility that could sustain services for a month, by holding 50,000 gallons of fuel, including unleaded, diesel and biodiesel.
EDMONTON - Getting a litre of fuel out of the Athabasca Oilsands and into your automobile is a complex process requiring huge investments, a labyrinth of technology and the mastery of several goofy-sounding words.
U.S. Concerns Over India-Iran Gas Pipeline
To fuel its growing economy, India is turning to Iran. A proposed 2,600-kilometer gas pipeline would carry natural gas from fields in Iran to India to satisfy the country’s increasing demand for energy. The proposed 7.5-billion dollar pipeline would run through Pakistan. Iranian President Mahmoud Ahmadinejad and Pakistani President Pervez Musharraf cleared obstacles to the planned pipeline after the Iranian President’s recent visit to New Delhi and Islamabad. Washington continues to oppose the pipeline because it believes the pipeline will bolster Iran.
Sinopec opens Qingdao refinery
(China Knowledge) - China Petroleum & Chemical Corp (Sinopec), China's largest oil refiner, has started its 10 million-ton-a-year refinery in Qingdao, East China's Shandong province, to help ease domestic supply shortage of refined oil products.
UK: Strike sparks extra tanker call
More fuel tankers could be requested for Devon and Cornwall to ensure the counties do not experience fuel supply problems, a minister has said.Nearly 600 petrol stations in Devon and Cornwall ran out of supplies on the final day of a four-day industrial dispute by tanker drivers over pay.
Cheap airlines face fare hike choices
Discount carriers are being forced to find ways to fit in fare hikes without scaring away customers as oil nears $140 a barrel.
Fresh protests in Nepal capital at fuel price hike
KATHMANDU (Reuters) - Taxis, buses and cars went off the streets in the Nepali capital on Wednesday, as hundreds of students burned tyres and blocked roads in new protests against a recent hike in fuel prices and transport fares, police said.Last week, Nepal's state-run oil firm increased petrol and diesel prices by about 25 percent, to cut losses due to a global rise in fuel prices and meet a domestic shortage of fuel.
Pakistan: Loadshedding becomes a nightmare
KARACHI - The Karachiites continue to suffer with prolonged power outage while riots erupted in various areas on Tuesday.The temperature of the City has increased up to 37C as Karachiites suffered with sizzling heat till the evening and also faced unannounced loadshedding in several localities.
Nevada panel endorses toll road plan
Advocates for privatization say the tool is an option for the state because of a shortage of funds available to build needed roads. They cite rising costs for construction materials, including asphalt. Also, the governor is opposed to increasing taxes to pay for such projects.Opponents say more conventional alternatives should be pursued. Boosting the state’s fuel tax rates is one possibility.
Mexico, Industry to Fix Price of More Than 150 Items
(Bloomberg) -- Mexico's government reached an accord with industry groups to fix the price of tuna, coffee, beans and more than 150 other items through the end of the year after inflation accelerated to the fastest in three years.The agreement with the Confederation of Industrial Chambers, an umbrella group of industry organizations, also covers tortillas, wheat flour, ketchup and cooking oil, said Ismael Plascencia Nunez, the president of the confederation.
In its latest drive to curb the use of cars, Norway's government is considering forcing shopping centers to charge customers for parking in the centers' lots or garages.The goal, according to a report prepared by the state environmental ministry, is to discourage customers from using their cars for shopping trips.
Ride for free on 'Dump the Pump Day'
NEW BEDFORD — There is relief, at least for a day, from the spiking price of gasoline: Bus rides will be free on Thursday.The Southeastern Regional Transit Authority will cover their fare boxes Thursday, their tribute to national Dump the Pump Day, sponsored by the American Public Transportation Association.
Nigerian environmentalists support coal mining
Nigerian environmental experts have called on the government to reintroduce coal mining in a move aimed at solving the country's current power crunch and salvaging its disappearing forests.
Study: Solar energy cost will plummet by 2025
A new study makes the case that solar power is emerging as a cost-effective hedge against fossil fuels and is likely to reach parity with retail electricity rates in most regions of the United States in less than a decade.
The easily obtained supplies were running out. To get more of the energy source that fuelled a nation, workers had to explore and dig to unprecedented depths. Costs rose steadily and some experts were certain there was no solution. Progress would halt. In the future lay crisis and collapse.The year is 1712. The nation is England. The energy source running dangerously low is coal. I didn't mention this at the beginning lest the reader think these facts are somehow obscure or irrelevant to the struggle for energy we face today. They are neither.
A most widely-cited factor behind the recent US wars of choice is said to be oil. “No Blood for Oil” has been a rallying cry for most of the opponents of the war. While some of these opponents argue that the war is driven by the US desire for cheap oil, others claim that it is prompted by big oil’s wish for high oil prices and profits. Interestingly, most antiwar forces use both claims interchangeably without paying attention to the fact that they are diametrically-opposed assertions.
As the price of gasoline soars, Americans are forced to think in ways that they haven't in generations: to drive, or not to drive?Do they park the car and opt for public transportation?
Or do they try to sell the ole gas guzzler (better known as SUVs) for a tiny foreign import?
For most of the latter 20th century, a car was seen as an American right, more sacred than freedom of the press, for while many may've felt that the functions of a free press was problematic, the freedom to drive (with relatively cheap gas) was part of the national psyche.
McCain's Nuclear Solution a Threat To Us All
In a speech late last week, Sen. John McCain stated that we must develop nuclear plants all over the country while pointing out that Sen. Barack Obama's campaign website contains no mention of nuclear power as a solution to the current energy crisis."We're not going to attain energy independence nor will we reduce green house gas emissions successfully without rapidly developing nuclear power plants all across this country," McCain said.
McCain's Sea Change On Offshore Oil
While Democrats want to continue to outsource our energy supplies to the likes of Hugo Chavez, John McCain wants to repeal the federal ban on offshore drilling. The energy tide is turning.
Boone’s Farm: Oilman Asks Feds to Help Distribute His Wind Power
While a parade of experts from the DOE to wind-energy lobbyists testified, the choicest remarks came from oilman-turned-clean-energy maven T. Boone Pickens.Mr. Pickens, who’s building the world’s largest wind farm, in the Texas panhandle, cut to the chase: America can curb its dependence on foreign oil by adding more power lines. His idea? By making wind power a bigger part of the electricity mix, other generation fuels will be freed up to power cars, cutting oil imports.
South Africa: Gas Fields 'Could Solve Energy Crisis'
The gas fields off the West Coast must be developed if the country is to solve the energy problems strangling economic growth, says the Cape Town Regional Chamber of Commerce and Industry.Chamber president Gerald Wolman said the gas, which was discovered nearly a decade ago, could be a primary fuel for industry and be used to generate electricity to ease the current crisis.
Lithuania's Mazeikiu refinery shut down after power cut
VILNIUS (AFP) - Lithuania's trouble-prone Mazeikiu Nafta oil complex, the only refinery in the Baltic states, was shut down in an emergency on Monday after electricity supply problems developed, its operating company said.
ND utility to unveil plans to capture C02
BISMARCK, N.D.—Basin Electric Power Cooperative is unveiling a project to capture carbon dioxide at its coal-fired power plant in central North Dakota, then pipe the gas to Canada where it will be pumped underground to force oil to the surface.
Gazans make own fuel amid Israel restrictions
GAZA CITY, Gaza Strip - Taxi driver Saif Khadour swears by his recipe to keep his cherry-red Mercedes Benz on the road: four parts cooking oil to one part turpentine.Other motorists have experimented with different concoctions added to cooking oil, including shots of diesel, motor oil, kerosene, pesticides and even air freshener, as ways around Israeli-imposed fuel restrictions in the Gaza Strip.
Still others have converted gas-run cars to electric batteries.
IEA Seeks Increase in Oil Output at Saudi Meeting
(Bloomberg) -- The International Energy Agency is seeking an immediate increase in oil output at this weekend's producer-consumer summit in Saudi Arabia to ``calm markets'' in the wake of record crude prices.``The main message that will be very good is if we see an increase in production now,'' Fatih Birol, chief economist at the IEA, said today in an interview in Istanbul. Oil producers should also agree ``to increase spare capacity for the next years to come. This is what the markets need to hear.''
Tom Petrie: As price rations consumption, 'it's not all a bad thing' for oil
Q: Are you concerned the high prices will trigger retraction or demand destruction?A: They will, and frankly, we need it to happen. If we don't destroy some demand and therefore change patterns of consumption in this country, I don't see how we really can balance the equation this time. If I'm half right about this idea of practical peak oil, then we need to use price as a way to ration consumption. It's not all a bad thing.
Dutch expect more Saudi production after summit
The Dutch government expects Saudi Arabia to increase oil production when ministers from producing and consuming nations meet in Saudi Arabia on June 22 to discuss soaring oil prices."We expect an announcement of more production," Minister of Economic Affairs Maria van de Hoeven told a press conference today in The Hague. Van de Hoeven will attend the meeting in Jeddah to find out what's driving record prices, she added. "The market has to become more transparent and there must be more investments."
Mexico May Raise Daily Oil Output 4.3 Percent by 2009
(Bloomberg) -- Mexico may increase crude production to 3 million barrels a day next year as state-owned Petroleos Mexicanos pumps more oil to make up for the biggest drop in output in a dozen years at its largest field, the country's energy minister said.
Oil, gas supplies from Sakhalin II may start in Dec. - Gazprom
MOSCOW (RIA Novosti) - Oil and gas supplies from the Sakhalin II project off Russia's Pacific Coast may start in December 2008, Gazprom's deputy CEO said on Wednesday."The company is making every effort to keep to this schedule," Alexander Medvedev said.
The launch of supplies was previously planned for early 2009.
Kazakhstan Exempts PSA Holders From New Oil Production Taxes
(Bloomberg) -- Kazakhstan exempted international oil companies such as Chevron Corp. acting under current so-called production-sharing agreements from taxes on output that come into force next year.A sliding scale on crude output will start on Jan.1, the government said today in a presentation released at a conference on taxation in the capital, Astana.
Norway oil rig workers reach deal, strike averted
OSLO (Reuters) - Wage talks between Norwegian drilling rig owners and three trade unions reached an agreement overnight, avoiding a strike at four offshore rigs, the Norwegian Shipowners' Association said on Wednesday.
High oil price? Just blame the consumer
Saudi Arabia's decision to pump more oil could mean that it thinks oil prices are too high and that increased supply will cause them to fall. It could mean that it thinks prices have peaked and that it can now maximize its profits by increasing production. It could mean that King Abdullah, on sober geopolitical reflection, decided to do U.S. President George W. Bush a personal favour. Or it could mean that the Trilateral Commission (or take your pick: Masonic Order, the Rockefellers, Boy Scouts of America) conspired to make it happen.The marvellous thing is that the reason doesn't really matter – at least not in allocating the use of an apparently expensive natural resource. A billion people, more or less, will decide this issue, based solely on home economics, all by themselves.
The Great Oil Swindle:
manipulation or fraud?
For months we’ve been told that the soaring price of oil has been the result of Peak Oil, fighting in Iraq, attacks on oil facilities in Nigeria, labour problems in Norway, and (the all-time favourite) growth in China. It’s all baloney. Just like Goldman Sachs prediction of US$200 per barrel oil is baloney [all amounts in US dollars: US$1 = AU$1.07]. If oil is about to skyrocket then why has G-Sax kept a neutral rating on some of its oil holdings like ExxonMobile? Could it be that they know that oil is just another mega-inflated equity bubble — like housing, corporate bonds and dot.com stocks — that is about to crash to earth as soon as the big players grab a parachute?There are three things that are driving up the price of oil: the falling dollar, speculation and buying on margin.
Oil shale and the current energy crisis
On Sunday I read a rant about oil shale on a midwest blog (Sorry, I don't have the link). The author said that he was, "sick of the Left," blocking energy projects. He mentioned the estimated trillions of barrels of oil locked up in oil shale in Colorado, Utah and Wyoming. As I read his post I quickly understood that he thought that oil shale technology was far enough along that the nation is being denied its benefits both for lower energy prices and independence from foreign oil.In case there are other readers out there that are thinking along similar lines I feel compelled to let you know what I know about the current situation.
Gas prices in the United States are above US$4 a gallon; global food prices surged 39% last year; and an environmental disaster looms as carbon emissions continue to spiral upward. The global economy appears on the verge of a technical knockout, a triple whammy from energy, agriculture and climate-change trends. Right now you may be grumbling about the extra bucks you're shelling out at the pump and the grocery store; but, unless policymakers begin to address all three of these trends as one major crisis, it could get a whole lot worse.Just ask the North Koreans.
Oil shortage to have widespread impact
Depleted oil reserves may not only be tough on your gas tank, it may also be hazardous for your health.Peak oil is a term that will become more and more familiar as the world's oil stocks become depleted and harder to reach, said Dr. Donald Spady, an associate professor of pediatrics and public health sciences in the faculty of medicine and dentistry at the University of Alberta.
Australian leader says he is ready to control oil stocks to meet state's energy shortfall
CANBERRA, Australia: Australia's government is ready to take emergency control over the nation's oil stocks to meet energy shortages in a mining boom state caused by an explosion at a natural gas plant, the prime minister said Wednesday.Western Australia state, a major exporter of iron ore and natural gas, lost 30 percent of its natural gas supplies on June 3 when Apache Energy's plant at remote Varanus Island was shut down by a pipeline explosion. No one was injured.
Gas generates 60 percent of the state's electricity.
Thousands of state workers are being laid off or asked to take vacation leave until gas supplies are resumed, while other business are turning to diesel-powered backup generators.
Suspicious of oil prices, commodities cop takes action
The push to improve the integrity of the white-hot oil futures market is gaining momentum.With suspicions of oil speculation on the rise, the USA's top commodities cop announced steps Tuesday to close some regulatory loopholes that hindered its ability to detect market abuse. The moves are designed to make it easier for U.S.-based regulators to monitor investors that trade U.S. oil on foreign exchanges and identify ones that try to game the system.
Bush to urge lifting of ban on offshore drilling
WASHINGTON (Reuters) - President George W. Bush on Wednesday will call on Congress to pass legislation lifting a ban on offshore oil drilling as he seeks remedies to record-high energy prices, the White House said."With gasoline now over $4 a gallon, tomorrow he will explicitly call on Congress to also pass legislation lifting the congressional ban on safe, environmentally friendly offshore oil drilling," White House spokeswoman Dana Perino said on Tuesday.
Japan to announce joint gas exploration with China: reports
TOKYO (AFP) - Japan is to announce on Wednesday an accord with China to jointly develop gas fields in the East China Sea, resolving a spat that was a thorn in relations of the two major energy importers, reports said.Japan will announce the deal on the long-running spat at an evening press conference by Foreign Minister Masahiko Komura and Economy, Trade and Industry Minister Akira Amari, Jiji Press news agency and other media said.
BP, Russian Partners Vie For Control of Oil Venture
MOSCOW -- A bare-knuckles boardroom battle has broken out between the British oil giant BP and its Russian partners over the direction and control of a prized joint venture, TNK-BP, which is Russia's third-largest oil producer and a key source of oil reserves for the international energy giant.
Rebels could hit Chinese oil interests in Sudan: US activist
UNITED NATIONS (AFP) - A US human rights activist on Tuesday warned China that it risked rebel attacks against its oil interests in Sudan unless it put pressure on its ally Khartoum to end the violence in Darfur and south Sudan.
It’s hard to convince most Americans that there is a silver lining to $4-a-gallon gasoline. But General Motors provided a nugget of good news when it announced that it would shutter much of its production of pickups and sport utility vehicles — and might even get rid of the Hummer, the relative of the Abrams tank unleashed on the streets in the cheap-gas days of the 1990s.It’s hardly the solution to global warming, or the country’s dependence on imported oil, but it’s a start.
Speeders to pay extra for police fuel
HOLLY SPRINGS, Ga. — The surging price of gasoline has come to this: a "fuel surcharge" on your next speeding ticket.Drivers caught speeding in this north Atlanta suburb soon will have to pay an extra $12 — to cover $4-a-gallon gas costs for the police officers who stop them.
According to Rep Peter DeFazio (D-Or), the entity that owns the most oil in the United States right now is not ExxonMobil or Chevron or Valero: it’s Morgan Stanley. So what’s Morgan Stanley doing with all that oil? Speculating on the petrofraud bonanza.
A new series called Black Gold debuts tonight on TruTv (formerly CourtTV).
From the creator of Ice Road Truckers and Deadliest Catch comes a one-of-a-kind series about Texas oil men who gamble everything for a chance to strike it rich. Wildcatters risk their life savings and roughnecks risk their lives. Black Gold takes you inside the action as the race for oil heats up.
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While catching up on TOD reading, I noticed this comment from Monday's DrumBeat:
I tried to find the article with Google searches, to no avail. Can anyone provide a link?
It's currently behind a membership wall, at least it was Monday when I looked here.
I asked last night at the bottom of the last drumbeat, but I'd like to ask again here.
Could someone please show me some sort of graph showing demand vs. production? Whether that be in % moves, or what. Whatever makes sense, but we always see all these graphs of price and supply which sort of imply demand, but never a real trend of demand itself.
Thanks
Chrisale, it is not that simple. Demand is not something you can really plot. You can plot how much oil is produced, or consumed by certain nations, but you cannot plot how much oil they want. Demand depends, to a large extent, on price. If the price is very high then fewer people can afford it therefore demand drops. However if the price of oil is very cheap then there is a high demand for that very cheap oil. People do more driving, boating, flying and other things if they can easily afford to do so. But when the price of all those things gets too high, they cut back, decreasing demand.
So no, there is no such thing as a graph showing demand vs. production. You can however show production vs. consumption. And the difference shows up in lesser or greater inventories. And when inventories get too high, the price drops, increasing demand and vise versa.
Ron Patterson
Chrisale, at any market clearing price supply and demand are equal.
If you look at the historical data you will see world supply/demand increase by around 2% a year, so that is why the IEA says we need 2% more each year for BAU.
Since we haven't had anything like 2% a year growth in supply for around 4 years now, either the IEA is wrong or somebody somewhere in the world doesn't have BAU demand - most likely a bit of both.
All you can be sure of is the price you have to pay for fossil fuel - that seems to suggest somebody, somewhere, is being priced out of the market - most likely a poor guy, in a poor country, just using a small amount of fuel to try to feed his family - actually quite a lot of poor (and hungry?) guys if the demand destroyed is now ~8% of current usage.
Darwinian, it's helpful to see this stated so succinctly. It bears repeating, often, as we discuss oil production.
Agreed. We tend to talk about demand as though it can increase beyond supply. The terminology that we really need to be using is that marginal demand elasticity is decreasing or increasing. That's a bit more complicated, but is a much more accurate way of conveying what is generally meant when one says "demand is increasing above supply."
According to the EIA, U.S. gasoline demand is down 1.8% from a year ago, that is from their products supplied column. That demand measurement is the amount of gasoline actually purchased. This runs contrary to the theory that world demand is increasing two percent per year. At $70 a barrel oil demand might increase 2%, but not at $130 a barrel. Gasoline demand is finite and elastic. Inelastic demand would not be possible with the finite data available.
Darwinian -
I'm glad you put it that way.
I have always had a bit of a hangup with the way that economists use the word, 'demand', almost as if it were a tangible phyiscal thing rather than an abstraction.
To say that, by definition, supply always equals demand strikes me as a form of circular reasoning and produces a definition of 'demand' that to me is not very helpful.
While it may not be correct with respect to economic dogma, there is a far more common usage of the word demand that I think conveys a lot more of what is actually taking place.
If say your household has historically used 1,000 gallons of gasoline per year for mostly utilitarian purposes, such as commuting to work and shopping, I think that in a loose rather than a purely technical economic sense it is legitimate to say that your household demand for gasoline is 1,000 gal/year.
Now if the price of gasoline increases ten-fold and you can no longer afford to drive, your demand for gasoline, as I am using the term, has not really gone down, it's just that you are no longer financially able to fulfill that demand.
So, I guess I can't seem to reconcile the economist's narrow definition of demand from the notion of normal wants and needs. Maybe a there's a better term than 'demand' for what I am talking about.
Anyway, it is always good to remind oneself of what is a tangible physical thing and what is an abstraction. As an example, the other day I got into an argument with a non-technical person when I stated that a horsepower is not a physical thing but rather an abstraction and that you cannot directly measure horsepower. I argued that you can measure the torque put out by an engine's shaft, and you can measure how fast it's rotating, and you can then mulitply those two numbers together to come up with another number that we call horsepower, but you cannot actually measure horsepower directly. I didn't get very far in getting this notion across and gave up trying.
I think the reason that laypeople (such as myself) get confused by this is that economists focus (exclusively???) on "the marketplace".
Remember the Simon-Erlich Wager? The bet was whether some commodities would be higher or lower in price ten years hence. If laymen know one thing about economics, it is "supply and demand". Erlich is a biologist, not an economist. He knew that the supply (of high-quality ores in the ground) would be lower after being produced for 10 years, and that demand (given increasing population and industrialization) would be higher, thus a higher price. He lost all the bets because the supply IN THE MARKETPLACE was greater (relative to demand) over that period.
I think we have the analogous disconnect with regards to "demand". Economists talk about demand IN THE MARKETPLACE, from people who have money to buy (at some particular price). People who have needs and wants, but no money to satisfy those needs and wants, are not part of the marketplace, and therefore do not exist. Economists have set themselves up as the ones who get to define what "demand" means, and the rest of us are wrong for using the word any other way.
Peak Oil folks are breaking the economic rules by talking about shortfalls of supply (to the marketplace) based on physical limits rather than just mis-allocations of capital or "interference" by government regulation. Doomers are breaking the rules by talking about the needs and wants for commodities by people who have been priced out of the market (their "demand" has been "destroyed").
GreenMan -
Well put!
I think the key thing in what you said is that people priced out of the market essentially become invisible to the market, though they will hardly be invisible with regard to the problems they can and surely will create.
In general, I think that classical economics is going to prove to be a very poor means of explaining all the scary things that are about to take place. Yes indeed, the rules, not only in economics, but in many other areas are going to be sorely tested, and in many cases broken.
OK, thank you all for your responses I'm sorry I couldn't respond earlier.
I understand the notion that demand must always equal supply. So perhaps I need to ask the question another way.
Do we know precisely how much demand has been "destroyed". Is there a measure, perhaps of how much oil a certain amount of GPD consumes?
I want to know if and just how much demand is being pinched by supply. There must be a way to measure that, and no, googling has not produced anything satisfactory for me.
Surely when the IEA and EIA use some sort of GDP numbers when they estimate their demand figures for the future.
It's just something that bugs me. We have all this hard data on supply and production but when it comes to how much oil people actually *want* it becomes very... nebulous.
Hello chrisale--The term you want to investigate is Oil Intensity. Stuart Staniford wrote this piece about the subject. I suggest you also peruse this google search result set and feel free to modify the search keywords to find other items.
As for what bugs you, people will take as much oil as they can get if free. A way to compare is to look at percapita oil use and a country's fuel price average during that amount of usage, and don't forget to include the country's percapita income. The data's out there, but you'll need to do the search this time.
Demand = Supply
The variable here is price, the demand is simply how many people are willing buy oil at that price, otherwise the concept is meaningless. You could break supply into two groups, say supply from new production and supply from inventories, and say what portion of demand is being met by each portion of supply I suppose. But demand cannot in the economic definition exceed supply.
Of course more people might want to use some oil, but will not or cannot pay the price. Hence they are no longer part of the demand as they're not actually using any oil, they can't be, they haven't paid for it!
No, no, they don't really want that oil.
Remember Economics Joke No 1 on 'revealed preference':
Two economists walked past a Porsche showroom. One of them pointed at a shiny car in the window and said, "I want that." "Obviously not," the other replied.
"Demand = Supply"
i propose: demand = supply - net inventory
and,
net inventory = crude oil + refined products - refinery gain
correction:
make that demand = supply - change in net inventory
I suspect you mean demand = production +/- change in net inventory.
"I suspect you mean demand = production +/- change in net inventory."
supply = production
this would assume that tanker inventory + pipeline inventory is constant. but hell, changes in the amount of oil in transit could blow any other inventories out of the water(pun intended).
supply = production +/- change in net in transit +/- change in net in pipeline +/- change in net inventory?
Chrisale--You could have done a google search and gotten this list of results and then sifted through them for the graphs you seek.
Well no he could not have found the graphs he seeks with that list. The graphs he asked for simply do not exist so he could google until the cows come home and still would not have found a graph of supply verses demand.
Ron--The second link on that list is from ASPO-USA, and its second graph is a comparison of OECD versus World DEMAND. Whetehr or not it's one of the graphs he seeks only HE would know, not you nor I.
Karlof1, what that chart represents is OECD consumption. The EIA labels it demand simply because that is the amount of oil they used. World DEMAND can be found here:
http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcc9Pn1LZbJRCA&hl=en
And world oil PRODUCTION can be found here:
http://spreadsheets.google.com/ccc?key=pL1ZqwKbkFcdIkyXIxZFtJQ&hl=en
All this is all liquids.
The difference between the two is simply production plus or minus change in inventories. However that was not the question as I took it. The question concerned demand plotted with supply. That is the oil demanded verses the oil produced. Demand always equals production!
Ron Patterson
Caption next to second graph is ASPO-USA link reads: "Demand growth outside the OECD has accelerated in the oil producing and developing economies (graph left)." The caption for the graph beneath it reads: "A second graph (left) shows the historical oil demand for the U.S., Europe and Japan from 1990 through 2006."
We are quibbling about semantics here. Chrisale made a request he could have fulfilled him/herself by using the same search terms I did. I provided that result. Until this person makes a response, we will not know what was actually hoped for outside of the request's verbiage. We have all seen EIA and IEA demand projection graphs, or what can be termed the needed future level of production to satisfy anticpated demand.
Enough.
I suggest we move on to trying to determine how much oil production consists of light-sweet and how much heavy and heavy-sour, so we can see if light-sweet has indeed peaked.
BTW, the EIA does not keep records on the quality of crude oils in inventory. So, we don't know what percentage of inventories are light/sweet versus heavy/sour. Of course, with only two days supply in excess of MOL, it may not matter a whole lot.
Thanks. I knew that from searching EIA for such data. Somehow Collin Campbell is able to get it in order to incorporate it into his Peak Oil Model. For example, 2.8Mbpd is shown as the 2006 annual rate for Heavy etc. http://www.energiekrise.de/e/aspo_news/aspo/Newsletter080.pdf
With Chavez saying that Venezuela has 300+ Bbls of recoverable oil from an estimated 1.2 Trillion in the Orinoco Belt, I think it paramount that we get a better handle on this resource, aside from the Canadian tar sands, which have gotten a lot of exposure. An excerpt:
It should be noted that the recoverable reserves figure predates Chavez, as noted by this item, http://www.gasandoil.com/goc/news/ntl85039.htm
I have always seen the Orinoco bitumen/asphalt as being the premier unconventional oil resource.
Easier and cheaper to extract than Canadian tar sands.
Best Hopes,
Alan
Respectively, I've done as much research as I thought I could before asking the question... but the results always seem to be the same. There are lots of projections of future demand but there never seems to be a tracking of demand that has gone unsatisfied, or that remains unsatisfied. The purely economic definition of supply and demand just doesn't satisfy me, maybe I just need to get over it. :)
How do you propose to track something lacking data? If I don't buy something, there's no record of a purchase, but also no record of me wanting, or not wanting, to buy that item. The only way such data would occur is through a poll. This also relates to the concept of utility. I may really want to buy a second mochajava, but for some reason don't. Is it because I don't have the money, or for some other reason?
One way demand destruction can be tracked is by looking at poor countries unable to purchase fuel and oil and measure the drop in gdp relative to the drop in fuel and oil use. Of course, it is possible that GDP will rise instead of fall. Quality of life might also improve instead of decline, as is assumed.
I believe economists make a distinction between "demand" and "product delivered" and, obviously, "demand" in this context would have to be an estimate based on whatever formulae these guys use.
The best graph and explanation I've seen is from The Age of Aquarius at the ASPO site.
Supply, Demand and Price to 2012 - click to enlarge
For more info, please see section 1 of http://www.theoildrum.com/node/3623
Historically, supply is not exactly equal to demand due to inventory changes.
http://bp0.blogger.com/_yr3xF4J1UVg/SDVfxAwJk2I/AAAAAAAAAXE/8I6arHUlslQ/...
Here ya go, from Robert Rapiers blog.
Hello all
I wonder if someone could help me get a feel for how the crude oil market actually works. I live in Atlantic Canada, so suppose I built a new oil refinery on salt water. I presume that I would design it to refine heavy, sour crude as that seems to be most readily available these days.
How would I buy crude oil? I presume that I would want to buy regular boatloads of crude so the refinery always has oil to work with. With whom would I make a regular deal for oil? A broker? one of the major oil companies? A national (state-owned) company in Iran or Venezuela? How would I actually pay for it? To whom would I write my cheque, and when? When the boat leaves Iran, when it arrives here? Would I be buying futures contracts steadily to ensure that I always have crude coming my way so my customers can count on refined product?
Thanks for this . . . Jack
Because you do not want to spend too much on bunker fuel, contact Venezeula. About ten days econo-cruise to Quebec (you want that cheap electricity as well). Perhaps 40 days from Iran.
You want a regular contract from a NOC for at least 80% of your capacity. Maybe 50% Venezuela and 15% Saudi and 20% Iran (spread your risk). Iran only takes euros to Asian banks.
Get some of the rest from PetroBras (even though they are still a net oil importer, they do buy some light sweet and sell a bit of heavy sour).
Alan
Alan, OT, but I haven't seen you write on the savings possible on road repair budgets by moving goods to rail.
A heavy lorry does of the order of 10,000 times more damage than a car, and this is not paid for by the truckers.
They also cause a lot of other damage, with pollution etc, but what is likely to impress a cash-strapped state official it is the possible savings which might do the trick in getting him to press for moving goods to rail.
Do your presentations and costings take account of this?
This is a strong argument for the non-peak aware, and for those of us who are stretching our infrastructure as far as possible is imperative.
Here are a couple of links for the UK and UK:
http://project151.wordpress.com/2008/05/14/new-national-poll-shows-ameri...
New national poll shows Americans dislike larger, heavier trucks on U.S. highways. « Project151.org
http://www.bettertransport.org.uk/media/press_releases/april_2008/lorries
Taxpayers are subsidising lorries on Britain’s roads, new research shows | Campaign for Better Transport
I am well aware of this, but it is a "complex" concept and I have not pushed it so far. Damage proportional to the 4th power of axle weight is not an easy concept for lay groups.
Best Hopes,
Alan
I wonder if you would or could get together a key post on this issue, Alan?
I am, of course, completely unsurprised that the issue was well known to you!
It would be of interest tough to get an idea of what the costs of switching to rail freight are when road damage is allowed for.
Back-of-the-envelope stuff, of course, not the huge amount of work needed for precise estimates!
Regards,
Well for back of the envelope stuff, i don't know any numbers, but the formula could go something like this (and i bet the numbers are easily obtainable by someone more knowledgeable than me):
let Mtruck = average maintenance cost per truck mile of the US road system, to be replaced by rail in this plan
(for a simple version this could just be total [maintenance cost of US road system] / [total number of truck miles driven] for any fixed period)
let Mtrain = average maintenance cost per train mile of the rail system added to replace the road trucking
let N = the number of trucks per train, replaced as an equivalent amount of good stransported
then
(Mtruck x truckmiles) - (Mtrain x trainmiles) = COST SAVINGS
where truckmiles = total number of miles by truck replaced by rail in this plan
and where trainmiles = total number of miles of rail added to replace trucks
and where COST SAVINGS is the figure we're trying to find
well, Mtrain = truckmiles/N
so COST SAVINGS = truckmiles(Mtruck-(Mtrain/N))
Which would mean we need to find a number for the truckmiles likely to be replaced by rail in whatever region you are looking to do the cost benefit analysis for; and have a maintenance cost per truck mile for roadways (which could be simply guestimated as above); and we need to have a similar idea of maintenance cost per train mile of the rail system; and finally we need to know how many trucks can be taken off the road per train added (which I bet Alan knows without thinking)
so i have no clue of numbers but if anyone else does...
Redbriars--You would want to establish a bilateral contract between yourself and whomever you choose as supplier. You would then let tanker leases on a schedule based on your supply profile. Payment would be made from either a line of credit or from an account filled with your profits established to meet current debt, and timed based on your contractural arrangements. If futures are made in the grade of oil you need and delivered to the port you've contracted tankers for, then you might do so as a hedge against any unforseen interruption in your bilateral contract(s). You would also need to contract for the delivery of your product.
In essence, the oil biz is the same as other manufacturing biz: you contract to buy your raw materials, produce your product line, and sell it wholesale or retail or both.
Or you could do what Irvin Oil is proposing in a joint venture with a company(BP) with crude to supply.
http://www.oilandgasonline.com/article.mvc/BP-Joins-Irving-Oil-In-Propos...
Following the Eider Rock process would let you have a virtual experience in your project.
I had been wondering why this questions never comes up in the debate (complaints) one hears in the media about why the US hasn't built a new refinery in decades. Even if one does not believe in peak oil, building a refinery seems extremely risky. Certainly all the oil produced in the US is already spoken for (as is everything produced in N. America for that matter, unless oil sands ramp up quickly). So even if we ignore the environmentalist and legislative barriers that are blamed in the media, anyone intending to build a new refinery in the US would have to negotiate with remote producers for 100% of their need or pay a premium to steal production from existing refiners. I don't think any company or group of investors could see this situation as a reasonable risk considering it costs billions of dollars to build a refinery and the pay off is many years.
This was the problem with the proposed refinery in Yuma Arizona.
Mexico declined to guarantee a crude supply (Duh !) and the Canadians never built the proposed pipeline to the Pacific for syncrude from tar sands. Shipping it south from Prince Rupert (USA was against that pipeline since it might have been shipped west to China).
Now a South Dakota refinery working off a syncrude pipeline is possible.
Alan
Today on NPR (from Phoenix) Janet Napolitano (gov of AZ) said the refinery didn't do ahead because the funding wasn't there...ie., noone wanted to put forth the money for it (it takes private investment).
Pipeline from Alberta to PR (Prince Rupert) is going in now I believe. Things are about to get interesting!
It's worse than that. The fact that US refinery utilization is down and dropping never comes up. Only a fool would build new capacity when there is growing excess capacity already in the system. One would think that was kind of self evident and at least worthy of some discussion. Instead it is "ZOMG! NO NEW REFINERIES HAVE BEEN BUILT!!!"
How's the weather in Houston been this week? ;}
Daylight followed by darkness...with a possibility of fog.
8D
There's a Monty Python skit like that.
And the Sinclair Refinery in Coffeyville KS:
http://www.crh.noaa.gov/ict/hwo/hwo.php
901 AM CDT WED JUN 18 2008
THIS HAZARDOUS WEATHER OUTLOOK IS FOR PORTIONS OF CENTRAL KANSAS...
SOUTH CENTRAL KANSAS AND SOUTHEAST KANSAS.
.DAY ONE...TODAY AND TONIGHT
MORE THUNDERSTORMS ARE EXPECTED TO DEVELOP OVER WESTERN KANSAS
THIS AFTERNOON...AND COULD CONGEAL INTO A COMPLEX OF
THUNDERSTORMS FOR TONIGHT. IF THIS COMPLEX OF THUNDERSTORMS
DEVELOPS...IT WOULD TRACK SOUTHEAST TOWARDS CENTRAL AND SOUTH
CENTRAL KANSAS TONIGHT. DAMAGING WINDS AND TORRENTIAL RAINFALL
WILL BE THE MAIN HAZARDS WITH THIS COMPLEX OF STORMS.
HOWEVER...A FEW STORMS COULD PRODUCE QUARTER SIZE HAIL.
.DAYS TWO THROUGH SEVEN...THURSDAY THROUGH TUESDAY
SEVERE WEATHER CHANCES WILL CONTINUE ON THURSDAY...AS ANOTHER
COMPLEX OF THUNDERSTORMS COULD MATERIALIZE AND MOVE SOUTHEAST
ACROSS THE REGION. DAMAGING WINDS AND TORRENTIAL RAINFALL WOULD
BE THE MAIN HAZARDS FROM THIS ACTIVITY.
A FEW STRONG THUNDERSTORMS COULD LINGER OVER SOUTHERN KANSAS ON
FRIDAY MORNING...WITH SMALL HAIL AND GUSTY WINDS TO AROUND 50 MPH
POSSIBLE. STRONG THUNDERSTORMS WILL BE POSSIBLE AGAIN FOR
SATURDAY NIGHT OVER CENTRAL AND SOUTH-CENTRAL KANSAS.
.SPOTTER INFORMATION STATEMENT...
SPOTTER ACTIVATION MAY BE NEEDED TONIGHT OVER PORTIONS OF CENTRAL
AND SOUTH-CENTRAL KANSAS...GENERALLY WEST OF THE FLINT HILLS.
SPOTTER ACTIVATION MAY BE NEEDED AGAIN ON THURSDAY.
Somethings Gotta Give on the Gulf Coast
Gulf Coast refiners need more oil—either from imports or from the SPR—and/or they have to curtail refinery runs.
They can’t keep indefinitely drawing down crude inventories, especially at the rate we have seen in the past four weeks, 800,000 bpd.
I continue to suspect that there might be a move afoot to do a coordinated release of oil from emergency reserves in OECD countries, because of a “temporary” decline in world oil exports. The rationale presumably would be that it's just a temporary fix until new oil supplies come online, so that we can then continue with our fossil fuel fiesta.
The problem of course is that I think that we have a long term structural problem with oil exports, especially with the rapid VenMex declines in oil shipments to the US, and especially with Mexico fast fading away as a net oil exporter right on our doorstep. If you haven't seen it, you might want to take a look at Rembrandt's production chart for Mexico on his Oil Watch Monthly post.
Talk in the industry is that refiners are trying to reduce their crude stocks to cut financing costs - ie they are moving to even greater just-in-time modus operandi. Tesoro explicitly stated this a couple days ago. That is the given explanantion for the recent drop in imports - no refiner demand to maintain stock levels.
If true, it is scary to think of the potential implications of a logistical issue such as shut-ins in the GOM due to hurricanes. The supply line is so much longer now due to VenMex situation. In the event of logistical constraints I think there will be no choice but to utilise SPR.
Note: this does not mean I do not buy into the ELM and other theories, but it is possible that the recent counter-seasonal drop in imports is more due to fiscal constraints on (independent) refiners than it is to macro-petroleum issues.
I'm not arguing that this might not be a factor, but the problem is that something like 95% of the crude oil inventory drawdown has been on the Gulf Coast.
And to the extent that refiners were "on strike" over high crude prices, it doesn't appear to have worked, since crude is up about $10 over the period of the crude drawdown.
A wow number. If we use 3.2 mbpd for current total liquids production for Mexico, an average of the past two months, and assume no increase in consumption, their net exports would be down to 1.2 mbpd, versus 1.5 mbpd average for 2007. This would be an annual decline rate of about -67%/year. Wasn't there some kind of production disruption in the spring?
Any chance that this new "just-in-time" idea, covers their butt when congress says its their fault?
I mean, if the refiner bought the oil just yesterday at $135 / bl and refines it today at a reasonable markup, you can't blame them for the price, right?
Iowa scale flooding in their major on-shore oil producing Nov. 2007.
Not sure about this spring.
Alan
Considering that the Gulf Coast is responsible for some 2/3 of US imports, it's hardly surprising that it would be the first region to shed inventory, as it is where the bulk of the US's excess storage is located.
As far as I can tell, the US is simply, in aggregate, returning to the crude inventory levels that prevailed in the August 2002 to March 2005 period - ie between 260 and 300 million barrels. The reasons for this aren't particularly mysterious - at current prices, the associated finance/insurance/cash-flow costs of holding excess crude inventory cannot be justified. In relative terms, the crude share of US inventories is going to decline, whilst the product ( and more "liquid" ) share is going to increase.
In aggregate, US commercial inventories don't strike me as being in parlous territory - they'd need to come down to below 920 million barrels before anyone had chest pains, let alone a heart attack - that would be an across-the-board decline of some 50 million barrels, at a time when aggregate inventories appear to be stable.
In the past four weeks, the Gulf Coast accounted for 60% of US crude imports, but Gulf Coast crude oil inventories are only about 50% of total crude oil inventories. And total US crude oil inventories are at about two days of supply in excess of MOL.
In any case, the problem is that the decline in net exports from Mexico is not going to stabilize, and perhaps not from Venezuela either. We are going to have to constantly bid against Europe and Asia for more crude oil cargoes from the Persian Gulf and Africa. Through April, assuming no increase in consumption, it appears that total net oil exports from Mexico were down by about 300,000 bpd from their 2007 average rate, from 1.5 mbpd to 1.2 mbpd.
BTW, I would argue that the increase in oil prices over the May average of $125 is what was necessary to get a greater share of oil from the Persian Gulf and Africa, but as noted, this an unstable situation, which requires us to keep trying to get more oil from other sources and/or cut our consumption, at the same time that Europe has problems with exports from Norway and Russia. And as of last week, Gulf Coast crude oil inventories were still falling, although at a lower rate.
. . . And I think that this lack of stabilization in oil prices is what has everyone in the conventional wisdom world confused. The assumption is that--worst case--oil prices stabilize at some level. However, with an accelerating net export decline rate, this is unlikely to happen, at least in the short term (absent a release of emergency oil reserves).
Correct me if I'm wrong, but the Gulf Coast accounts for about 25% of US refinery capacity, whilst it holds 50% of US crude stocks......
Over the past 4-6 weeks, Gulf Coast crude inventories have declined by a greater amount than the entire crude inventory level held in either Padd 1 or Padd 4. If I'm not mistaken, there was a week recently that saw an inventory decline of some 5.6 million barrels in the Gulf Coast - an inventory decline of that magnitude would probably not be possible on the East Coast or Rocky Mountain regions.
Whilst the medium to longer term trends aren't exactly wholesome, the short term inventory move in the Gulf Coast region is a shedding operation that is an entirely consistent and predictable response to the current price environment.
The EIA broadly defines "Gulf Coast" as Padd III, which has about half of refining capacity, and half of crude oil inventories--about two days of supply in excess of MOL.
I think the problem is short term, medium term and long term.
But any way you slice it, we have:
(1) An annual decline in total net oil exports from VenMex (which accounted for more than 20% of total US imports in 10/07);
(2) A very steep decline in oil specifically delivered to US shores from VenMex (-32%/year annualized rate, based on most recent six months of data);
(3) A continuing decline in Gulf Coast (Padd III) crude oil inventories.
(4) And the most recent data from Mexico suggest an annualized net export decline rate of something like -67%/year.
As I said up the thread, Gulf Coast refiners are going to have to continually try to shift crude oil cargoes away from their traditional destinations and to the Gulf Coast, in order to offset the declines in exports from VenMex, while Europe will be trying to do the same thing because of Norway and Russia, while Asia wants more oil to meet higher demand.
I think we'll see an answer to the question in the next few weeks. If it is a voluntary inventory reduction, it has to stop soon. If not, we should see utilization start to drop. Either way, I don't think the inventory drawdowns can continue much longer.
But you do bring up a good point. The key metric is crude oil inventories specifically on the Texas & Louisiana Gulf Coast (not all of PADD III), since the crude oil inventory declines have almost certainly been concentrated in these areas. Unfortunately, it looks like the data have not been updated since March.
If inventories are going to cut that thin, then keeping the tank in one's car > 1/2 full and maybe even keeping a spare filled gas can or two (don't forget the StaBil) is sounding like a very good idea.
A large hurricane evacuation will cause a spike in demand on the Gulf Coast (or Lower Atlantic coast)
Over one million vehicles driving for many hours of stop & go driving, and more beyond that once the congestion breaks. Thousands of cars were left stranded without fuel during the Houston evac (not so the New Orleans evac, everything went extremely smoothly and well, despite 40 hours warning for Katrina versus 90+ hours warning for Rita).
I keep a minimum of 13 gallons in my tank (capacity 18 gallons) plus another 7 gallons of diesel in cans. A quick trip to top up at the first sign of concern.
25 gallons will get me VERY close to my parents in Georgetown KY if I drive slowly. I have noted that gasoline runs out before diesel in an evacuation and one fill-up (or even 5 gallons) along the way will get me there safely.
On a broader level, a hurricane in the western or central Gulf of Mexico that disrupts production and shipping (probability 80+%) will interact quite poorly with low inventories. Add a surge of demand for evacuation and things could get tough.
Texas and Louisiana have refineries and the historic precedent is to stop shipping gas & diesel north and supply it to local stations as a hurricane approaches. Florida, Georgia and the Carolinas do not have that option.
Best Hopes for No evacs this year, or next,
Alan
Why don't you just buy 1 more 5 gallon gas can and then you don't have to worry at all?
Course you could just live in a city above sea level, but I won't go there :-)
Limited storage space (you do not want the smell of diesel in your living room). Fairly good confidence that I can get just a bit of deisel along the way.
Houston, above sea level, killed about 40 people in their evac for Rita.
Alan
Poor Mexico and Venezuela -- no customers for their oil. I expect their production should start dropping now.
Why would the OECD make an emergency release to refiners unwilling to buy oil to run their operations?
November 4, 2008
This answer makes no sense. Will an extra 6-8% in refinery utilization reduce fuel prices in any particular fashion, if that is indeed the unstated goal? Why not just lower the price of gasoline being exported to the USA from OECD refineries?
Drivers Turning to Lower-Grade Gas
Anecdotal evidence of shortages of regular gasoline as high end gas consumers substitute lower octane gas for premium.
I don't understand this. I used to use regular in my Honda which needs premium when I was young(er), broker, and the price difference was 20%. Now it's what, 6 or 7%?
Of course I don't drive much anymore either.
Are you seriously saying that your Honda won't work without premium? Or just that you much prefer using premium to regular for whatever reason? If it is the second, the reason for the falling price differential should be obvious.
Huh? No, I'm saying that the maker of the car said to use premium. When 87 octane was 20% cheaper, I could put up with some pinging and/or reduced performance.
When it's 6% cheaper, why not just use what the manufacturer recommends?
The price differential is the same as it was in 1999, or just a little more, in absolute terms, i.e. 20 to 30 cents from 87 to 92+/- octane. It's the percentage that has dropped as the price of gas has risen from $1 to $4.
Some cars with higher compression ratios tend to require the higher octane gas to keep from pinging/detonation. They can sometimes use the lower grades if you back off the throttle, rev higher under higher loads, and you can also sometimes retard the ignition. If you have a car that says it requires premium and don't have a clue what I just talked about (don't know how to recognize the signs of detonation), you're likely to shorten the lifespan of the car running it on regular.
Yes, that was my thought...I would espically use regular if I was going to be driving long distances on the highway with few starts and stops.
But with the low % difference now, plus in my own situation my car isn't getting any younger, I can't imagine not spending the few extra cents.
Most modern vehicles that require high octane fuel have a knock sensor - if you use regular and it detects detonation, it will retard the spark. You just loose a little power, and perhaps efficiency.
Brazil Now consumes more Ethanol than Gasoline. Really.
http://domesticfuel.com/2008/06/17/consumers-choose-ethanol-in-brazil/
So do I.
Can I have a dime for a cup of coffee?
August West
I'll give you a Dollar if you can tell me where to get a cup of Joe for a Dime. :)
Speaking of 10 cents a cup...
"What do you mean high oil prices? Oil is cheap. Oil is 15 cents a cup, does that strike you as high? When you take a barrel and divide it by 42 you get an American gallon, you divide that by 16 and you get a cup. Most of the liquid things that we as consumers buy, we buy by the cup, so oil is cheap." - Matthew Simmons, March 28, 2008
$134/barrel = 18 cents a cup.
http://www.gulfnews.com/Business/General/10200964.html
Brazil Now consumes more Ethanol than Gasoline. Really.
Of course they consume more diesel than both put together. If you look at BP's Statistical review, you will see that indeed ethanol production spiked in 2007. Yet they still consume 20 times more oil than ethanol. Per BP data, in 2007 they produced 11,264 thousand tons of ethanol (some was exported), and 217 million tons of oil. However, the oil stat includes ethanol. Back that out, and you find that ethanol as a percentage of oil is about 5%. As I always say, their "energy independence miracle" is overwhelmingly due to their oil discoveries.
And they don't use their natural gas to distill ethanol. They wisely developed a large CNG fleet - 8 times the size of ours in the U.S. So they use their natural gas a lot more efficiently than we do.
Finally, 2007 saw the highest oil consumption in the history of Brazil. So the comment at your link: "The oil company now is in a corner”, is just a bit of fanciful thinking. Personally, I like the Brazilian model, but let's not get carried away with propaganda.
Are they using oil to generate electricity?
Less than 3% of their electricity comes from oil.
The fact is that Brazil is very dependent upon oil. That's why I jump on statements from people who imply that Brazil is running a major part of their country on ethanol. They use a lot of ethanol, but they use a whole lot more oil. The danger in thinking they are running their country on ethanol is that our political leaders are then led to believe that we can be "just like Brazil." They are chasing a myth, which results in a misallocation of resources and loses precious time.
Less than 3% of their electricity comes from oil.
But, how many Tons is that?
I'm thinking that most of Brazil's freight is shipped by truck. (I haven't read Anything about Brazilian railroads.) That would use a Lot of Diesel.
Any figures on, exactly, how much diesel they use? How it's divided between electricity, trucks, cars?
But, how many Tons is that?
The vast majority of their electricity consumption comes from hydroelectric power, and that is only about 90% of the BOE value of their oil consumption. So the number of tons of oil used for a electricity as a percentage of the total oil used is less than 5%. So you aren't going to find the answer you seek there.
Any figures on, exactly, how much diesel they use? How it's divided between electricity, trucks, cars?
I have that buried somewhere in a graphic from Brazil's Department of Transportation. I will be talking about this as the ASPO conference, so I will have to dig it out soon.
You can get all these data directly from the Ministerio de Minas e Energia here
In 2006 (the latest full year bulletin available), ethanol comprised 3.4% of Brazil's final energy consumption (Table 1.3b, page 40).
But everyone keeps pointing to Brazil as an (ethanol) "sucess story" that should be emulated.
How far can a mental disconnect go?
If USA per capita consumption were as low as Brazil's, we could export oil from Louisiana.
Low per capita consumption (despite being the #2 ag exporter) is the *REAL* Brazilian secret.
Alan
That's the point I made in "Lessons from Brazil", one of the first stories I ever wrote for TOD:
http://www.theoildrum.com/story/2006/5/31/175512/149
If you want to be like Brazil, slash your energy consumption. I noted that if we had triple the per capita oil usage of Brazil, we could be energy exporters. The problem is that we use over six times what the average Brazilian uses.
We ARE becoming more like Brazil. Right now, we are very busy converting all of our suburbs into favelas.
Yup, we would be a net exporter of about 2.5 mbpd.
Not to worry though, Brazil's consumption went up by about 6% last year, while ours was flat.
I suspect that a lot people, given media reports about offshore production, think that Brazil is a major oil exporter. Actually, they are still a net importer, although by a small amount. In any case, it will be a long time before they reach major net oil exporter status.
NEW LIFE FOR SUV's
As I watch those car carriers entering the port of Jacksonville it occured to me that they could solve the problem of unwanted SUV's. They now come in full of cars, but leave empty. Why not fill them with unwanted gas hogs and take them to Russia where they have the need, the money and cheap gas.
No need to go to Russia- they are buying European and Asian vehicles.
Gasoline price in Caracas, Venezuela: 14 cents/gallon.
http://money.cnn.com/pf/features/lists/global_gasprices/price.html
You can drive your unwanted SUV to Caracas and sell it yourself. Trip of a lifetime.
If you survive the "Trip of a lifetime", you will spend your profit on the flight home.
Huh? Gas prices in Russia are about the same as in the US (there are no government subsidies, except diesel for the farmers IIRC). Average incomes are lower compared to the US, so buying an inefficient vehicle does not make financial sense for most people.
There is no "need" for gas hogs, as there is excellent mass transit in all large and medium-size cities. My impression is that SUV's are more popular among the nouveau riche and in rural areas where the roads are poor and mass transit is either marginal or non-existent. Also, Russians seem to prefer German and Japanese cars, as they tend to be better engineered and of better quality.
This is the Pavlovian response that the western media elicits in the public. Most articles in the west moan about cheap gas in producers nations. They never bother with specifics. The occasional article such as the one in USA Today that gives some numbers does not have much impact on the herd.
RE: 'Suspicious of oil prices, commodities cop takes action'
The ante has been upped in the witch hunt. As usual, when the government doesn't know what is going on, the solution is to throw more money at the mystery. In this case the CFTC budget is getting a >%20 increase to find out how the 'speculators' are influencing the price of oil on the commodities exchanges and to oversee foreign and domestic exchanges to insure that no one makes any money...err...to insure that no one is 'gaming the system'.
Of course Bernanke and Paulson would like to see the money that they created exit the commodities exchanges and re-enter the micro-controlled world of stocks, bonds, RE, treasuries, ad infinum. Of course this will not happen. New commodities exchanges will open elsewhere and the commodity speculation will go where they will not be irritated by bs rules imposed by brain dead bureaucrats and congresscritters.
This attempt is akin to a bunch of fools trying to herd a pasture full of cats. But, as usual, our fearless leaders are more interested in 'showing the people that they are doing something' than actually preparing the US for the reality of PO and it's consequences.
'The CFTC has been hamstrung in its surveillance because it had been able to closely monitor trading activity only on U.S.-based exchanges, such as Nymex. It had less access and power to gather information about trades taking place overseas on markets such as ICE that it doesn't regulate. That setup made it easier for traders to build, disguise and hide big positions that could be considered speculative or even manipulative.'
My question: Has anyone found any evidence that 'manipulation' is occuring?
'At the hearing, Sen. Richard Durbin, D-Ill., chairman of the Senate Appropriations Subcommittee on Financial Services and General Government, said the government is still trying to figure out the cause of the oil super spike. He suspects that something other than supply-and-demand is at play. He wouldn't rule out speculation or manipulation.
"No one knows for sure what's going on here," Durbin said in prepared remarks.'
and another question for Durbin: Would you know 'what is going on here' if someone explained it to you?
Sometimes I don't know if these congresscritters play dumb, or ARE dumb. If I am a bean farmer, and I sell kidney beans on the market, but my neighbor farmer also grows kidney beans for a lower price but of the same quality, I will have to lower my price on my kidney beans in order to sell them, UNLESS...
A: Potential buyers cannot access the other farmer's beans due to logistics, contracts, etc.
B: The other farmer runs out of his beans, yet there are still bean buyers that want or need more beans than the other farmer can provide. Thus, such bean buyers come to me to buy my more expensive beans. Thus, demand has sustained my price. (Next time, the other farmer might raise his price, since he sold out last time.)
C: The other farmer AND I BOTH sell out of our beans, meaning next harvest, we both raise our prices on beans.
If a broker/dealer/middleman buys beans from me at my more expensive price to sell them to bean end-users, and he cannot sell these beans at a price that covers his cost, then he either has to hold onto the beans or sell them at a loss. In such case, he won't buy any more beans from me at the higher price unless they are sustained by the bean consumer.
To sum up, if the supply wasn't limited, the price wouldn't be so high on beans, oil, whatever. If buyers are willing to pay the price, the price will rise until buyers are unwilling to pay the price. This is what I can't understand about these congresscritters, and why they can't wrap their heads around this concept.
In the end, I guess it's all a hill of beans...
durandal...Over my lifetime I have watched politicians issue detalied explanations regarding the actions they are proposing or taking...to the current state of affairs where politicians can issue statements like Durbin's 'No one really knows what is going on here'...and, Durbin's statement doesn't seem to shock anyone.
Truman, Eisenhower, FDR and JFK might not have known 'what was going on here' but they would never have made such a stupid observation. Truman would have said 'the buck stops here', and he would have found out what was going on. FDR knew what was going on for he was ahead of the curve all the time. Eisenhower liked the German Autobahns and decided we needed an interstate hwy system and iniated the project, he also warned of the Mil/indust/congress complex. JFK said we are going to the moon and we did.
All of these past presidents made lots of mistakes but they were all in tune with what was going on and what would and would not work. When the alternate party came to power most Americans supported them. Many of the congressmen, statesmen and economists that worked with these presidents were giants in their own right.
Imo, it all changed with the murder of JFK. Johnson did not know what he was doing in the Nam and the military waste really took off during and after the loss there. Nam divided the country and it is still divided. America has been headed down hill ever since that debacle. Lots of political dirty tricks, little is accomplished except fraud, waste, mismanagement.
I suppose that I am getting older and have a difficult time tolerating the idiots that I see running our once excellent country into the abyss. I never wanted to be part of an empire...I liked the old republic. America was never a perfect place and made lots of mistakes but this current crop is the worst that have been in power in my life. As a group they are simply incompetent...imo. My state, Florida, is being run for the most part by a bunch of ex-realtors that haven't a clue how to run this state. Sorry for the rant but I am really fed up with government at all levels.
Actually, while LBJ was a poor president and does not deserve to be let off the hook, the really huge portion of blame for Vietnam deserves to be placed at the feet of Robert McNamara. "The Best and the Brightest" - BS!!!
Daniel Ellsberg concluded in The Pentagon Paper that each president from Truman to Kennedy did the least he could to accept what was going on in Vietnam, and kicked the problem to his successor while protecting his own rear.
Given that the current leaders are midgets compared to those men, I think we should expect them to handle all problems that way.
I've heard that he was sleepless and couldn't stop thinking about Vietnam and the young men dying over there. He died only 4 years after leaving office. I think his concience weighed heavy on him (which isn't a defense of his aweful policies regarding Vietnam). Also Johnson atleast was willing to put his sons in harms way, what President Dipshit is unwilling to do with his daughters. Unlike the current group of asshats who would to paraphrase a scumbag criminal like Charles Colson 'would run over their own grandmother' to give themselves and their crones more of everyone elses pies. Stone Cold Bastards. Not arguing with you just venting about just how bad this group is.
Let's not forget the war criminal
Walt Whitman Rostow
What they seem to believe is that by buying bean futures speculators can drive up the price of beans. So I buy a contract on bean futures, say 100 bushels, for $50. Then I sell it to you for $60. Then you sell it to me for $70, and back and forth till you've bought the contract for $100. Somehow beans will now magically sell for $100, even though all the bean farmers have plenty of beans for sale. It is the "magic bean" theory of commodity speculation.
But that only works until delivery date.
It only has to work until you can climb up the beanstalk and make off with the giant's gold. Or is that the giant's gold futures contracts?
Actually it works fine on delivery date if there is no one else to buy from and you really must buy.
RE: 'Bush to urge lifting of ban on offshore drilling'
Of course McCain is all in favor of this idea and the current Governor of Florida, a wannabe vice presidential running mate, quickly followed with his approval. Crist is the ultimate suck-up so no one is Florida is really surprised by his seconding of the Bush/McCain idea to 'drill everywhere now'. Here is the story as carried by the local paper:
'Crist rethinking gulf drilling
Like many other Florida politicians, Gov. Charlie Crist has long criticized proposals to allow oil drilling off the state's gulf coast.
But with motorists paying $4 for a gallon of gas --- and Republican presidential candidate John McCain signaling he is open to more drilling --- Crist is rethinking his position.
Crist said today he thinks the state should study the possibility of drilling in the Gulf of Mexico. He pointed to gasoline prices that have "gone through the roof'' and said Florida families are suffering.
"We have to be in tune with what's happening in our country,'' Crist said at the Capitol.'
http://blogs.news-journalonline.com/politics/2008/06/crist_rethinking_gu...
river,
obama's response was that drilling would only have an effect 5 yrs from now(end of explaination)and a wpt*. i doesnt seem that either one has a decent response to po, such is the nature of politics.
* if a wpt is a good idea, why not a wpt on prescription drugs, insurance companies and microsoft to name a few.
He's a girly man; an appeaser; a panderer...
McLear said Tuesday that Schwarzenegger opposes lifting the federal moratorium.
Let the drilling begin. It has been touted that just removing the restriction on drilling will lower the price of oil. This argument won't go away and now the american public is beginning to rally behind the drill drill drill mantra. Let's get it over with. I think it was Leanan who said..heck let them drill on the white house lawn! Once this is underway then I think the collective big gulp can finally occur.
As reported in a similar story which appeared in today's NYT, there are already something like 68 million acres of Federal Lands leased in the Gulf of Mexico which have NOT BEEN DEVELOPED!!
Is it possible that the oil companies want to lock in the other areas before Obama can be elected? That way, they could take their time and not worry about problems if the climate change situation actually results in their being forced to curtail production. Nothing like a "crisis" to kick the politicians in your direction. Tells again, oily guys, just WHO IS messing with the markets?
E. Swanson
I guess your point is that we're not drilling wells fast enough and that all undeveloped leases will be productive and should be developed instantly. If you would, could you send us some more of these mega-million dollar platforms, lay us a few thousand miles of pipeline and improve the technology to allow drilling in any depth of water. We could sure use the help!
BTW, we could sure use some more casing, too. It seems that China has shut down their steel mills so the visitors to the Olympics won't be covered in coal soot. Oilfield tubulars are in short supply.
Did Pittsburgh stop making oilfield tubulars: "Jun 12, 2008 ... The US steel industry is enjoying a new era of prosperity less than a decade after crippling production costs and lower-priced imports ..." http://www.courant.com/business/hc-steel0612.artjun12,0,3657386.story
Not to belittle the problem with support structures, but doesn't your point go against the argument for opening up more OCS? Why sell leases if they cannot be developed anytime soon? Even Bush said this only would "yield about 18 billion barrels of oil." While Reuters points out "That's enough to meet current U.S. consumption for about 2 1/2 years, but it likely would take a decade or more to find the oil and produce it." http://www.reuters.com/article/vcCandidateFeed2/idUSWAT00968520080618
Bush's premise implies that this will provide a fix since "Every American who drives to work, purchases food or ships a product has felt the effect, and families across the country are looking to Washington for a response." Ibid.
NO QUICK FIX TO OIL PRICE CRISIS is what headlines should scream.
Families looking to Washington for a response are doomed families and foolish families. Better advice would be to look within, become educated, learn how to conserve, figure out a way to drive less, buy a small used car, ride a bicycle, insulate, on and on and on. Yes, the overall problem needs to be addressed by all levels of government but one would be wise to figure out a way to take care of oneself first.
This pointless pandering coming out of Washington is criminally and ethically wrong, irresponsible, and immoral. But people need to learn how to take care of themselves in the mean time. Demanding a solution right now from Washington is asking for very stupid solutions that definitely will not fix the short term problem and won't do much for the long term problem either.
Yes, I drive, when I have to, a smugmobile (Prius) and am getting smugger by the minute.
The best thing politicians can do right now is provide assistance and advice as to how individuals can mitigate the pain, instead of promising solutions which will only make individuals even more delusional and screwed than they are already are.
Best hopes for realism in energy policy and prescription.
When I still see people still go into the local post office and leave their SUV/Trucks running, I just want to scream in disgust.
I've got you beat on smugness. (My car is smaller than yours! As opposed to the opposite a few years ago, My SUV is bigger than yours!)
'85 Honda CRX HF - Rated 57mpg highway. I normally get 50mpg.
Cost: $350
Insurance: Liability Only
Used vs new: (Re-using portion of the RRR mantra.)
The best thing about it is, it's so old, so beat up and as a result ugly, I can park where I want, not care about door-dings, and all those people in their Lexus and Mercedes vehicles avoid you like the plague.. Ugly car wins!
Good for you. Although I looked up 1985 on the EPA web site and the rated mileage is lower than what you said. Where are you getting that 57 mpg number?
But what number did you find? I looked on fueleconomy.gov which is run by the DOE, and I found the following page:
http://www.fueleconomy.gov/feg/noframes/5263.shtml
It shows 50mpg highway, which what I can get with the car with its COMBINED mileage. This is their new revised rating which is changed to match if the vehicles were rated the same as 2008 vehicles. When the car was rated, it was rated at 57mpg highway. (Considering how I get 50mpg combined, it probably DOES get 57mpg highway.)
But, for a nice article that mentions the 57MPG rated Civic CRX HF, check out CNN..
http://money.cnn.com/2007/12/17/autos/honda_civic_hf/index.htm
I guess that's why it's called the Rust Belt. Alot of the US steel production has moved in search of cheap labor. Then you have to discount the remaining capacity to account for structural steel, like I-beams, for construction. Also, oilfield applications require seamless pipe for high pressure use, not the seamed pipe that is used, say for the gas line to your house. Regardless of the reasons, much of the oilfield tubulars currently being run in wells does come from China. They are also building alot of the new rigs, especially workover rigs for performing maintenance on existing land wells. The quality of these has been mediocre at best.
As I understand the President's reasoning, just showing the market that we somewhat understand our problem and are willing to take some concrete steps at dealing with it should, in itself, bring the prices down. By how much and for how long would be anyones guess.
As to the undeveloped leases, many of these leases have been sold numerous times as the lease term expires. They create a nice cash flow for the gov. Some are bought on pure speculation, hoping that a major will make a new discovery close by and make the investment pay off. (My father-in-law used to participate in the Wyoming lease lottery, speculating in similar fashion - lease expense is dirt cheap compared to actually drilling.) Some are bought for protection. Company A has a nice prospect (or existing production) and is fairly certain that the outlying leases are non-productive but buys the leases anyway to protect against Company B drilling a lucky offset and draining part of the dearly paid for reserves from Company A. Lastly, on this point, these new leases are in shallower water, closer to shore and much cheaper to bring online than most of the currently undeveloped leases. They are prime targets for rapid development and I'm sure will demand a premium when they become available.
One last point I'd like to make is about the "it'll take ten years" crowd. BFD (sorry for the French). Do these people really think that it'll make no difference ten years from now what our available supply is? Someone please show them a decline curve!
Not just cheap labor. Cheap energy. And freedom from environmental regulations. We've outsourced not only labor, but energy consumption and pollution.
It is my understanding that about half of the imported and exported steel for the USA crosses the Napoleon Avenue wharf in New Orleans (about 1.5 miles from my home).
Specialty infrastructure and skills are required to handle bulk steel shipments and no where else in the USA can handle these quantities. There was a crimp in steel supplies post-Katrina and restarting this wharf was a priority. Longshoremen were housed alongside other emergency workers.
Alan
Was just listening to "Rock Island Line", as sung by Lonnie Donegan (1957), and thought of you, Alan.
"Now, the Rock Island line is a railroad line, and it runs down into New Orleans, and just outside of New Orleans is a big toll gate" ...
"I fooled you, I fooled you
I got pig iron, I got pig iron
I got all pig iron"
Good song.
OKOilman--Thanks for your response. As you may have read, I favor opening these regions because of the very long lead times and understand the downslope of Hubbert's Peak. My point is the vast majority have no clue that there's no quick fix. Bush/Cheney tried that in Iraq. Closer to the point-at-issue is the similar reliance on foreign steel production and its contribution to long lead times. We would encounter this problem whether building wind machines, geothermal equipment, or oil rigs. The Corporate-led Globalization crowd has significantly hurt the US's ability to construct its way out of the energy crisis, as Alan notes. The public needs to have the dots connected as the blame for our dilemma cannot solely be laid at OPEC's or LittleOil's feet, and like it or not, the Blame Game is already being played with many leading actors ignored.
Agreed that there is no quick fix - probably no fix at all. I have no illusions that we will be able to drill ourselves out of this mess, short of a new major discovery; but we will need all the oil we can get while alternatives are developed.
Speaking of wind, there has been a major buildup of wind farms here in Oklahoma for the last few years. Wind resources are also being developed in Texas, New Mexico, Kansas, the Dakotas and Wyoming. My electric bill at the house is pegged to wind production, so I haven't been subject to increased rates for Natural Gas used for generation. The midwest will be in alot better shape than other parts of the country as NG prices continue to climb. Although GE does build some of these generators, most are coming from Europe where they have been building and deploying them for some time.
As to the Corporate-led Globalization ... I wouldn't be so fast to jump on that bandwagon. Globalization happened. Corporations were either going to participate or close down. Wages are just too high in the US (don't get me wrong, I love my paycheck) for us to compete in most of the nuts-and-bolts industries. We need to export some big government and big labor to the developing countries to boost their cost of doing business. Maybe the recent spat of product recalls that China has had to endure has increased their bureaucracy just a touch.
Oh, and I would love to blame OPEC ... just a little.
Drilling is hugely expensive these days, especially offshore, and the rate of dry wells has been increasing for years. Besides the equipment shortages, there is also a limit on how much money any corporation can throw into risky ventures with payouts that won't even begin for 10 years, if the ventures ever pay off at all.
Geologists know what kind of rocks you are likely to find oil in. All the formations that were easy to get to with a (relatively) high probability of finding oil have already been developed. Any large areas that are undeveloped are undeveloped for a reason -- a combination of high cost and low probability of success. Welcome to Peak Oil.
http://www.eia.doe.gov/neic/infosheets/crudeproduction.html
EIA Report shows the trend in "production costs" for U.S. offshore oil trending as follows:
2001-2003: $15 barrel
2002-2004: $35 barrel
2003-2005: $50 barrel
2004-2006; $70 barrel
The line is shooting up; all production costs are going up but none as quickly as offshore American oil.
Is this an indicator of ERoEI?
$10.00 oil (1998) to $100.00 oil (2008) in a 10 year peroid.
This is the 100/1 to 10/1 rate of decline.
As I understand the proposal, the Dept of Interior will share royalties with states that agree to allow offshore drilling. Maybe Crist is looking hard at a new revenue stream with the housing market falling all around him.
I am sure Crist is 'looking hard at a new revenue stream' because of deflation in housing. I have no idea how much money the new oil leases would bring into state coffers. Housing sales down, commercial RE down, tourisim down, retail down, ag is ok.
I would be in favor of oil rigs off the Florida Coasts if the oil were going to be used productively. If it is going to fuel SUVs then I am against it. I have not seen the current Fed Administration doing anything beneficial for America, except that which benefits Wall St or the defense industry. I say leave the oil in the ground until America is ready to become a republic again. If it requires a constitutional convention to accomplish that, then so be it.
This is more a desperate attempt to keep the Republicans in power in the White House and to staunch the bleeding on the congressional level. Given the complexity of offshore drilling and the risks involved, this stuff won't be flowing for at least ten years. A bit late for the housing crisis, tourism, retail, etc. Make no mistake. This is not about getting oil down or gas down, this is about saving Republicans' asses. They can always worry about reality once they are elected or reelected.
When will people get sick and tired of political posturing which will do nothing to help them where the rubber hits the road -- at the pump. Unfortunately, this old and well worked ruse might just work, given the ignorance of the sheeple.
Might as well go ahead and foul the beaches, seeing as they will soon be underwater anyway.
That's the real advantage of incompetence amongst people in high places. Eventually the consequences pile up to such an extent that a few more really don't matter all that much.
Summary of Weekly Petroleum Data for the Week Ending June 13, 2008
And here's what they were expecting:
Natural gas liquids
Does anybody have an explanation for the dropping NGL:
Natural Gas Liquids Prod. (4) 2,288 2,402 -4.7
Four week averages, thousand barrels per day, this year, compared to last year. Taking natural gas liquids out of the natural gas stream should be economically attractive at the present price differential between oil and natural gas.
That's the first time recent reports have shown either diesel or jet fuel demand to be down. Last week the 4-week moving average for jet fuel was +0.4%. For a 4-week average to go from +0.4 to -1.9 implies a pretty big difference between the week that dropped off and the week that was added.
Announced airline schedule cutbacks, if and when they actually take place, are designed to have an effect on jet fuel demand. It has to show up in the data somewhere.
Gulf Coast crude imports were up, but still not enough to avoid another crude inventory drawdown, down 800,000 barrels for the week.
Price Elasticity of Demand
4 Week Averages 08 vs. 07 plus % YTD 08 vs. 07
Finished Motor Gasoline. .9,291 . 9,464 . -1.8% -1.1%
Kerosene-Type Jet Fuel. . . 1,602 . 1,633 . -1.9% . -3.6%
Distillate Fuel Oil. . . . . . . . 4,072 . 4,090 . -0.4%. -2.3%
Residual Fuel Oil . . . . . . . . . 702. . . 743 . . -5.5%. -15.9%
Propane/Propylene . . . . . . 1,052. . .970 . . +8.5%. -4.6%
Other Oils . . . . . . . . . . . . . . 3,696 . 3,777. . . -2.1%. -3.3%
Total Products Supplied . 20,415. 20,677. -1.3% -2.7%
Not Much Hope,
Alan
Any speculation as to why propane is the outlier on the plus side?
Fewer backyard cookouts?
Shuttered factories, idle forklifts?
Slink,
lost your new email, drop me a line.
Bob
Cold winter?
Another peak forecast:
Yes, We Will Have No Bananas
http://www.nytimes.com/2008/06/18/opinion/18koeppel.html
United Fruit can put their bananas where the sun don't shine. Fortunately for me the sun shines a lot here and I pick bananas from the trees in my back yard.
Bananas, citrus, figs, tomatoes, spices. Men and women do not live by bread alone. :)
I can live without oil, but not bananas. They are a staple of my diet. After reading that NYT article, I really want to try one of those Gros Michel bananas - it's hard to imagine something better tasting than our current kind, but apparently those were superior.
Looks like it's plantains for you then. :)
I'm just old enough to barely remember the old Gros Michels, and yes, they were considerably more tasty than the Cavendish (which tastes very bland in comparison).
I also have no memory of having seen a green banana in those days. I grew up in the midwest, and by the time the bananas got to us, they were always yellow (rarely) or yellow with black splotches (more commonly).
The disappearance of the Cavendish banana does not mean there will be no more bananas. A relatively new variety called the Goldfinger is resistant to Panama fungus:
http://en.wikipedia.org/wiki/Goldfinger_banana
My understanding is that it tastes different, more tart. I'm sure that we can get used to that. My guess is that when peak oil hits with a vengeance, consumers will be lucky if they don't have to eat soylent green.
Sierra: Congratulations.
James Bond: Thank you.
Sierra: Mr. Ramirez and his friends will be out of business.
James Bond: At least they won't be using heroin flavored bananas to finance revolutions.
-First four lines of 'Goldfinger', 1964
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I suspect it's more like what politicians need to hear than markets. Markets are the mechanism for transactions and don't give a hoot about the price being charged.
Tom Petrie on demand destruction needs to read the letters[PDF] contained in the linked pamphlet entitled The Collapse of the Middle Class: Letters From Vermont and America before he makes such cavalier statements. Demand Destruction=Real People Being Hurt Hard, and in some cases DYING.
imo, petrie is saying conservation in politically correctspeak. conservation is blasphemy to an infinite growth capitalist. demand distruction is code for conservation.
FedEx Doesn't Deliver
From CNNMoney.com, an investor's look at the effect high oil prices are beginning to have on the transportation industry.
"FedEx issued a nasty surprise to Wall Street this morning.
"The package shipping giant, largely viewed as a barometer for the overall economy, said that its results for fiscal 2009, which ends next May, would be much lower than analysts were forecasting."
I wonder how much longer Amazon.com's Prime shipping will last. For only $79/year you get free 2-day shipping and only $3.99 (or less) for overnight delivery. I use it all the time.
That's a good point. That and the free shipping option. I love shopping online versus going to the store, from the time saved, the driving saved, and resulting gasoline saved.
I think that UPS and Fedex could likely have a cheap residential delivery service that is based upon weekly or twice weekly delivery schedule, where in a given area, the truck only will come by on certain days, allowing the efficient consolidation of deliveries. :)
allowing the efficient consolidation of deliveries. :)
Good TOD allows that already. I have seen UPS park, make several deliveries in a 4 block square, move 2 blocks down, repeat.
Alan
I've noticed a trend in recent years: single orders of multiple items from a mail-order shop tends to arrive in 2 or 3 boxes, often a day or two apart. It seems that they think that the customer appreciates fast delivery more than anything. I suppose they'll soon decide that the customer likes low prices even more, and consolidate shipments: one order = one box. Even if they have to ship the other pieces in from other warehouses (in full trucks with other items of course), to allow the final shipment to go out from one warehouse. This will of course delay shipment by a few days.
Combine that with delivery companies consolidating days (serve any given neighborhood only on some days) and the savings would pile up.
I've wondered about that for some of my internet orders (where all the items were claimed to be in stock), and I wonder if for some companies we have the mistakenly think that they have one big warehouse when they have several warehouses (possibly in completely different places) and it's cheaper at the moment to just stick the set of items from each warehouse into a parcel and dispatch it rather than have to send parts of orders to one warehouse and then combine them, as you'd probably need to pay employees to check and repack things (you want to do this properly since you don't want to have to process large numbers returns due to wrong items being delivered).
Of course when package transport gets even more expensive the balance may tilt.
For the places I order from it depends on their warehouse structure. Newegg (for example) has a warehouse in NJ, one in California, and one in the Midwest somewhere (at least). The warehouses don't all stock all the same items. It makes sense for them to ship separately from the separate warehouses. In the end, it is not only faster, I imagine it is cheaper as well.
Related...
Hawaiians hit by skyrocketing shipping costs
But at least they'll still be able to eat bananas!
The Asia Times article : "Are We All North Koreans Now", http://www.atimes.com/atimes/Global_Economy/JF19Dj03.html is most excellent. Highly recommended.
It uses North Korea as an example of the desperate measures taken when the food/fuel crunch hits.
That was a sobering article.
It even shoots down the New Green Revolution argument.
Restaurants, like airlines & refiners, caught between rising costs and the prices their customers can and will pay
I noticed another restaurant closed in our neighborhood the other day. I had never been there, but I noticed that the landlord had put a notice up that he had changed the locks and had a lien on the kitchen equipment, etc. It made me wonder what corners they were cutting in their last few weeks in business.
What is more than a little disquieting is when you think about all of these restaurants caught between a rock and a hard place--between rising costs and what their customers can and will pay. Many managers are going to be tempted to cut costs however they can, and to use food beyond the expiration dates. I have noticed that the number of restaurants that we go to is steady dwindling, as the perceived quality declines.
I remember reading that restaurants are among the most volatile and risky of businesses. Even in good economic times lots of them go belly up. It stands to reason that with much less discretionary money floating around, dining out will give way to bargain grocery shopping and using the home kitchen. Another risky business is the filling station.
The rule-of-thumb once was that 8 out of 10 restaurants would fail during the first year because of lack of start-up capital to meet expenses during the tryership period. Also, unless it's very mismanaged, a restaurant will not serve outdated product, for what should be obvious reasons.
Casual dining chains are in trouble. On the one side, they're facing rising food prices. On the other side, their middle class customers are paying more for gas and therefore 1) have less money to spend on dining out in general and 2) are making fewer trips outside the house to save money on gas.
Add to that I think is the major build out of these chains (Applebee's, Cheddar's, Baker's Square, Bennigan's, Denny's, Chili's, Perkins, etc.) in strip malls located in the far outer envelope of suburbia where development after development is now stalled or being abandoned as foreclosures mount and people begin to seek refuge from long, expensive commutes.
Yes. This had been a trend for awhile. The people who used to eat at Denny's are now eating at McDonald's. The fast food places are doing well. I wonder how long that can continue, though.
Probably for quite a while. Here in Ontario, McDonald's has started going "upscale" on burgers. The "Angus Burger" is quite tasty; it's served on a denser focaccia-like bun and it browns up like a real burger, not the greyish towel we've come to expect from McDs.
If the economy goes totally down the drain, they'll serve rice balls with a bit of egg. They've got lots of recipes from worldwide localization. Worst comes to worst, they'll start really promoting veggie burgers.
You forgot to mention, that the "food" served in these disgusting US chain restaurants is just awful, has ever been.
The "ambiance" in those establishments is even more striking. Political correct is the name of the game. Smoking banned. Drinking more than a bottle of wine? How could you? And just after you have eaten the last piece, the waiter is asking: Can I have the cheque?
But it is typical for US business alike: MASS CONSUMPTION ON GROWTH. GROWTH. GROWTH.
There must be economic GROWTH, consumption GROWTH, profit GROWTH, turnover GROWTH, immigration GROWTH, population GROWTH, etc. etc.
The US will go under together with its Nanny state art.
Fixed address restaurants may go out of business, but we may see in upsurge in the pushcart and street market business.
Just yesterday I saw a group of 3 kids (probably all from the same family) wandering around a mall trying to sell candy, chewing gum, cigarettes, etc. This was in Texas. I have seen this many times in Third World countries. A sign of things to come.
Restaurants have a few strategies for responding to increasing input prices:
1) Reduce portions and maintain prices. My local tacqueria must have cut the pollo asado burrito down 25% -- and I'm not unhappy about it.
2) Maintain portions sizes and increase prices. A local diner is charging in the $10+ range for omelettes and burgers, up 30% or so from what they used to charge (which was a couple years back, admittedly).
3) Try to maintain portion and price, and cut costs (and corners).
Combinations of reduced portions/increase prices/cutting costs are possible of course.
I suspect that larger chains hedge where they can or enter long-term fixed price contracts where they can, so they may not be hit as badly.
Yes restaurants closing here too. Especially the ones people have to drive to. The ones near pub. trans. centers like trains stations and bus terminals are doing O.K I think. But there is a kind of desperation in the shops---too many sale signs and too few customers. Still they say Japan's economy is still growing for now. I think people are just kind of hanging on by their fingernails.
Pat Lang is an analyst consultant for many television and radio broadcasts.
He has: posted “ OK, folks. let's start a pool on where the price is going. Remember, the argument is not about long term supply and demand. The argument is about this year.”
I have seen comments referencing theoildrum.com there before.
The article up top about Idaho Falls considering a "strategic petroleum reserve" of its own seemed like quite a portent. You always think of "hoarding" as the work of undisciplined masses, but what happens when cities and corporations and school districts are moved - rationally and with discipline - to begin their own hoarding ventures?
The "problem" with hoarding is that it is a perfectly rational response to shortages. I guess it is something like the "tragedy of the commons", where everyone maximizing their personal well-being damages the well-being of society as a whole. I will also note that there is a big difference between hoarding when there will not be a lasting shortage (e.g. the people I see buying 6 gallons of milk before an approaching hurricane) and hoarding when there really is going to be a shortage.
But what if you aren't sure?
Many, many folks are still working on the assumption that as soon as the Saudis or Iraqis or *somebody* starts pumping more oil, we'll be back to 99 cent gasoline and everything will be hunky dory.
After Katrina, half of Texas panicked over Rita because the images of people stranded on their rooftops in the 9th Ward were still fresh in their mind. Didn't make sense - the topography of Galveston / Houston is not like N.O., let alone the 9th ward - but try explaining that to the folks that were running to the stores.
They faced massive fatalities from storm surge, and weeks/months afterwards without electricity, potable water, sewage and even streets with one cleared lane for transportation in and out.
The same FEMA to co-ordinate the federal response, but since these would be Republicans in distress, they would move faster and more effectively than in New Orleans.
Alan
FYI, made quite a bit of sense to stock up if a hurricane was heading there. Galveston topology hasn't changed much since the 1900 hurricane killed 8,000 (on an island of 38,000). Still flat, and still right on the Gulf.
Interesting...a sign of de-centralization of government here in the US. There have been other signs of states moving away from the federal government on a number of issues.
i think idaho(e) falls is controlled by those of polygamist genes(mormons). not saying that being prepared is bad, but hoarding wimin is going a leetle far.
Corn and Wheat rising
http://www.cnbc.com/id/15839171/site/14081545/
Due to Speculation ... Right ?
Congress should investigate
Oil rising too (now over $136).
Maybe the hedge funds finally got their rebate checks. :)=
Seemingly 3.3m acres of crops may have been damaged in Iowa, also Indiana has seen the worst flooding in 100 years, plus levees along the Mississippi are overflowing.
Sounds pretty bad. Also, in China, food prices have risen 70% in areas affected by flooding in the Pearl river and the Yellow river is looking to flood too.
Net exports of food to suffer world wide?
The Weekly Petroleum Data report from EIA and the weekly crop reports from US Dept of Ag now ring like ominous church bells. Here in the Midwest, it's not just wet- it's cold. Plants are growing slowly (if at all), the soil is not drying out, fields cannot be worked, and there are critical flowering and fruiting events that must take place more or less on-schedule lest more crops fail.
RBS issues global stock and credit crash alert
On CNBC this morning, they were joking (hoping?) that Janjuah had already been fired.
If this happens won't there be a massive panic by oil traders as they all rapidly develop a view of significantly reduced demand, leading to a price collapse well below $100?
The never ending coal boom.
It's not just places like the UK that are going back to coal. This week gas-rich Western Australia has de-mothballed 3 coal plants and now it seems Nigeria is thinking of turning to coal. Diminishing hydro on several continents has seen a big return to coal with world prices increasing perhaps 50% a year.
We're all wondering about the effects of $200 a barrel oil. By that time the international price of a tonne of semi-bituminous thermal coal could also be $200. Perhaps $200 is the magic number, the cost to fill the tank on a tiny car or the monthly electricity bill.
Easter-island Giant-Stone-Head update from my island, oahu.
Worst traffic jams in the nation on an island only 30 miles across. No agriculture. Grid electricity from burning oil. Yeah, this'll be the place to be once oil is less available.
http://starbulletin.com/2008/06/18/news/story02.html
if ever there was a place screaming for rail transportation. I know all previous efforts to do so have been thwarted, I think because of the sacred ground arguments. They should just build on top of the existing freeways I think.
I only caught the end of the interview this afternoon but CNBC had Matt Simmons on and I particularly liked his smackdown of yet another interviewer grasping at straws...
She asked Simmons about the Arctic and how it's been said that there's 3x more oil there than in Saudi Arabia.
To which he replied "... 40 years - 220 dry holes..."
Since these clowns just keep ratcheting up the ever more ridiculous 'solutions' to high gas prices I suppose it will only be a matter of time before they seriously point out the "vast reserves of hydrocarbons available on Titan..."
Absolutely clueless people on that network - I would so love to see them hire a couple scientists as talking heads.
The disturbing thing is that Congress doesn't seem to sound anymore clued in than the networks.
Here's a link to the video:
The Truth About Offshore Drilling
Thanks for posting that Leanan.
Although now that I got to watch the entire interview it's even more annoying than I originally thought.
When the host first introduces Simmons she says (paraphrasing):
"Matt Simmons who subscribes to the peak oil theory - that we've found all there is to find..."
Can these people be this stupid, repeatedly ? Or is CNBC et al truly in on a grand scale conspiracy to slip in propoganda at every turn.
She just kind of innocently says that peak oil = we've found all the oil there is to find. That's not what the "theory" is about at all. They just do whatever they can do to plant a seed of doubt in viewers minds so they can easily discount peak oil as nonsense ("Of course there's more to find - what the hell are those crazy peak oilers talking about ?").
Sorry about the rant... I did like how Simmons had the last word when he said "...travel less."
China gets Peruvian Copper at Bargain Basement Price
Saw this yesterday on BBC in America and did not understand why Peru would do this. Is there a reason Peruvians sold off this natural resource so cheaply? Couldn't they have done this job themselves, by buying those big trucks on loan. The technology for extracting copper is not exactly cutting edge. This just does not make sense.
An extremely uninformed story by BBC. That orebody has been known for at least 40 years - extremely large, but extremely low grade. No one has cared to develop it, because of the difficulties involved. Some of these include its elevation (on the continental divide, between 15,000-16,000 feet - just short of 5000 meters), where the air is so thin as to be nearly unbreathable (unless you grew up there), extreme dryness (whereas large quantities of water are needed for mineral processing), lack of infrastructure or power, location in a politically unstable country, and so on. The mining costs are certain to be very much larger than those quoted - the $3 billion figure is, I presume, merely the initial capital outlay (itself incredibly expensive for a single mine), needed before the first copper can be produced. Few organizations other than the Chinese government would have the deep pockets and long range outlook needed to undertake such a venture.
Incidentally, the story completely leaves out the fact that Morococha is an old mining town. It is common to move old mining towns as copper mines change from underground to open pit mining - the same thing has happened many times in the USA. The old mining towns were typically built right next to the headframes of the old underground mines. Morococha was no exception (I've worked in Peru).
Thanks. I don't know what to believe, but the BBC version makes the Peruvians out to be complete dupes. So, hopefully, you are correct and the BBC was not.
Well, let's just say that Peruvians have mined metals for several hundred years longer than Saudis have extracted oil, and leave it at that (although I can't deny that the Saudis get more money for their oil).
north dakota's april'08 production exceeds their previous august'84 peak.
https://www.dmr.nd.gov/oilgas/stats/statisticsvw.asp
the williston basin is at least one area where oil price has resulted in increased supply. still looking at 40 bopd/well from 3767 wells.
From the article linked up top:
Oil prices doubled from May, 2007 to May, 2008--from $63 to $125. Prices in June are on track for another doubling by May, 2009. Whether they will get there is a different matter, but at present we are on track.
I expect there to be significant demand destruction as the financial mess wears on, but it just hasn't happened yet. 0.1% is nothing, completely dwarfed by growth in India & China. Nonetheless, a lot of analysis talks as if the demand destruction has already happened.
What's that about looking at the data three times...
However, it won't be demand destruction of oil at first. When household budgets get tight because of gas prices, families don't cut back on gas. They cut back on everything else like dining out and vacations because you need to drive to work and drive to buy food. It's only when you're broke and have no job that you finally cut back substantially on gas. As Dmitri Orlov said, the car always gets to eat first.
Yes-it is surprising how this is overlooked-like you state, major gasoline demand destruction in the USA means a depression on the scale of the 30s (if it happens).
Cars eat before houses, too.
It's going to be an "interesting" political season, with both parties trying to pretend that we can have an infinite rate of increase in our consumption of a finite energy resource base. Headline from the Drudge Report:
House Democrats Call For Nationalization Of Refineries
I say we subsidize gasoline consumption. Instead of Americans putting gas on their credit cards, let the government charge it, and fill 'er up!
Nationalizing the refineries would help a lot. The government could just pay the oil producers as much as the oil producers want, and then turn around and sell gasoline to the public as cheap as the public wants. It's a win-win situation. Everyone will be happy.
PG just opened a new post regarding this.
The Southwest Farm Press article has it spot on. More than ever, our processing company is having to engage in partnerships with farmers to guarantee production for our plant.
A lot of people advocate the ending of corn ethanol subsidies as a measure to lower food costs. While I will never advocate the subsidizing of corn ethanol, I also don't advocate a price collapse in food commodities. If the price of food drops, and inputs remain the same, nobody is going to plant a damn thing.
No easy answer for this one.
--Jack
I've just heard the UK Energy Minister Malcolm Wicks on TV -what a clueless, spineless muppet this guy is -
"No one predicted this (oil) price rise" (erm, yes they did...)
"no one knows what the price will be (by Xmas), let's wait and see what happens",
"you can't have a society where you are old and cold"??
The UK -and quite frankly at this point I don't care which government is in- needs a mass mobilisation ASAP. In 5 years we face massive imports of FF causing massive deficits causing ruin to the nation... I figured this out years ago -how come the people in power with all their highly payed consultants not get it??? Its a sad state of affairs.
Nick.
I would like to write some letters to my elected officials (Governor, Senators, Representative, won't bother with President) about peak oil. My plan is this: first describe in the briefest terms what the problem is, and point them to the Hirsch report for more information. Second, praise them on the positive steps they've taken to deal with it (all of them have done at least a few things right). Third, I want to talk about a positive step they could take.
Having read a lot of the articles and forum posts here at The Oil Drum, I have concluded that developing electrified rail is the most effective long term action that our government can take. For that, I am looking for a good, "politician-friendly" source of information I can send them that outlines specific proposals. I probably want one specific to Washington State to send to the governor, and a national proposal to send to Congress.
Any suggested changes to how I write the letter?
Thanks in advance.
Perhaps this is what you are looking for.
http://www.aspo-usa.com/index.php?option=com_content&task=view&id=168&It...
If not, let me know.
Alan
Thanks Alan, I knew I could count on you. As a practical matter, would you recommend I print this out and send the document with the letter, provide the URL in the letter, or do something else? I have little experience in writing to politicians.
Perhaps use it as a reference. Some staff member will look at it and if THEY think it is a great letter , it gets passed up & around the office.
In addition to electrified railroads there is a new trend in Rissia - trains powered gas turbines (turbines use natural gas).
NOW I'm scared.
Edit: Others quicker on the draw then me.
Hello TODers,
How about this for cascading blowback?
http://www.news.com.au/story/0,23599,23884726-2,00.html
---------------------
The parched Murray-Darling river system has started to die, turning into acid capable of burning human flesh, an expert has said as a leaked report warned the iconic waterway is on the verge of dying.
"If you put your hands in it you get burnt," Prof Young said. "This is sulfuric acid.
"Once you get to there, then there's no turning back. Those systems are now dead forever."
----------------------------
Gee, I can hardly wait until that happens here in the Southwestern US, especially the Colorado River. Is Cascadia ready?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Another line in that story says that the acidification happened "as underwater soils became exposed to the sun". This seems unlikely in the Southwestern USA, because there presumably are few "underwater soils" as such - the water table is deep, especially near the Colorado River and Grand Canyon, and stream flow tends to be seasonal or episodic, rather than constant. The problem for agriculture tends to be excessive alkalinity, not acidity.
That story doesn't say so, but presumably the Australian acidity is generated as bacterially-deposited iron sulfide ("bog iron") in the underwater soil is oxidized upon exposure to the air, creating an acid mine drainage type chemistry. As a guess, you might create a similar problem in the Southwestern USA (or elsewhere) if large, algae-filled lakes or bogs were drained or dried up naturally, leaving foul-smelling sulfide-rich muds (incipient oil shale) to oxidize and turn acidic. As with acid mine drainage, the acid could be neutralized with crushed limestone (not a particularly cheap solution).
Well, the Salt River that flows in AZ is named that for a reason. Also, saline soils around Yuma are a massive problem. Droughts exacerbate the problem as they allow salt and acid concetrations to rise, which you seem to know.
Good point above about mining towns being eaten by their mine.
After the irrigation buy-backs, what steps will they be able to take when the rains continue to be sparse? Looks grim for that region of Oz.
' "If you put your hands in it you get burnt," Prof Young said. "This is sulfuric acid. '
Isn't there money in sulfuric acid these days?
I liked that article about protesting Belgian farmers. They don't like the price of fuel but they can happily drive 5 mile a gallon tractors around the streets of Brussels. Things can't be so bad.
Interesting part of Bush's speech today:
"Recent changes in the makeup of our fuel supply, upgrades in our refining capacity are urgently need.[sic]"
http://www.washingtonpost.com/wp-dyn/content/article/2008/06/18/AR200806...
I read this as peak light, sweet.
I weep for my country.
We have a president that can only be described as, well, I can't really say it here on family OilDrum, can I? Suffice it to say it rhymes with "oronic ucktard".
Seriously, the depth of denial, scapegoating, and all-around general idiocy that has already kicked in is a really, really bad sign.
I weep for my country. We are so screwed.
Welcome to the main reason fast crash doomers are so pessimistic.
I'd love to give you a word or two of encouragement. Unfortunately, all I can offer you is a hand on the shoulder, a knowing look, and a gentle nod of the head.
And I sincerely thank you for that, SA.
I've been around for a while, and I feel now like things are just going to play out, no matter what I or anyone else feels about it. It's like a juggernaut... get out of the way...
I have already seen human suffering of people I know, or just part of the community I love. Couples living inside their gutted home with the only utilities being water and sewage. Others in tents under the overpass after poison in the FEMA trailers force them out, traumatic stress, depression in epidemic levels.
Two dry statistics with enormous meaning behind them.
Suicides triple with a reduced population.
Overall mortality increased by 48%, despite the removal of nursing homes and most cancer patients (both traditionally a large % of mortality).
There is life on the other side of the end of the world as we know it.
Thus my signature,
Best Hopes,
Alan
Yes Alan,
We all need to be reminded that "statistics" are not abstract nothings, but actual real people. We need to be reminded regularly, I think.
Here on TOD we sometimes talk about rather vague and vast trends and such, and it is a struggle to remember that all these trends involve real people trying to do what they can to get by as best they can for themselves, and their children and future.
Sometimes it seems that nothing useful gets done because we are all so good at abstraction and statistics, and we forget about real people, really hurting.
But then there's the risk of just being overwhelmed, and being swept under.
If you think at all, we live in really trying times...
Best hopes indeed, for a collective awakening.
The oronic ucktard is on his way out. There's hope.
"There's a war outside still raging. You say it ain't ours anymore to win..." --Springsteen
And just think - Dubya was an oilman... So one might assume he has at least some idea of the bigger picture.
Except for a very few outliers, the other members of gov't are even more clueless.
Somehow I don't think this is going to cheer you up - sorry about that.
BTW I totally agree with you (especially your last two sentences - those exact thoughts seem to run through my mind on a neverending loop these days as we witness the Great Unraveling occuring in real-time).
Minor correction: He was a FAILED oilman.
Hi sgage,
Lets look on the bright-side;1) Gasoline prices have finally risen high enough for people to seriously start conserving,based on yesterdays blog about vehicle fuel efficiency, we can expect to have 4-6% pa increases in fleet fuel economy for the next decade. 2)Gasoline prices at $4 a gallon are still very cheap and lower than most countries. Western Europe can manage on $8-10 a gallon, so no reason not to think US can adapt to at least $250 per barrel oil prices. 3) price rises are occurring while peak oil is at a plateau, we have time and a good warning to start to adapt before a 4-8% pa decline in production starts. 4) US per capita consumption is so high that big savings are possible, for example reducing shopping and recreational use could give immediate 30% savings, a 100% improvement in vehicle fuel efficiency is technically possible over a 15 year period.4) US has very large electricity generating capacity, and alternative renewable and non-renewable resources not dependent on imported oil. 5) Bush has only a few months left to not take action.
It's not that they do not know, nor that they don't believe exactly as you do. They are not interested in taking action to save the masses.
They all have their off-the-grid neo-feudal estates prepared, their network of support and post crisis means of exerting power in place.
They know that they themselves and their 'equals' will survive nicely and have ensured they will come out on top.
Those of the masses that don't die will make a suitable peasant(or slave) class. The rest needed to be culled anyway.
They are Machiavellian(or Evil) ucktards, depending on your point of view.
Probably looking forward to a little Ius Prima Noctae.
In todays news
Amazing how 4% swings like this have already become so blasé?
Volatility is increasing....
We are becoming acclimated to volatility, aren't we? It is amazing how quickly things can change, but also how fast we can get used to that change.
Arctic sea ice melt
http://news.bbc.co.uk/go/pr/fr/-/2/hi/science/nature/7461707.stm
You can go to the NSIDC Sea Ice Index here:
http://nsidc.org/data/seaice_index/
There is a new service that tracks the daily changes. On the left side set of menus click on Daily Sea Ice Images. You have to go look each day because the image changes and I have not yet found a repository for past days. It is fascinating to watch it day-by-day. The changes are clearly visible.
Here's the latest trend:
http://nsidc.org/data/seaice_index/n_plot_daily.html
The latest extent:
http://nsidc.org/data/seaice_index/n_extn_daily.html
The latest concentration:
http://nsidc.org/data/seaice_index/images/daily_images/N_daily_concentra...
This last is important because of the low concentrations in areas of wha was recently shown as multi-year ice. Here:
http://nsidc.org/images/arcticseaicenews/200806_Figure4_thumb.png
And here is the most recent overview of conditions:
http://nsidc.org/arcticseaicenews/
GM Reassigns Large-Truck Team in Small-Model Shift
Why don't they just go all out and reassign this team to design and build bicycles and mopeds instead? I have ridden only bikes for 12 years (no car in the family) and there are so many different kinds I can think of I'd like to have but they aren't out there.
For example: heavy-duty hauling bicycles for heavy loads, like saplings from the nursery and groceries
and a bicycle that has a little egg-shaped plastic shell around the torso of the rider so that the rain is kept off (I actually don't mind rain that much, but if it's very cold rain, or if one's clothes get wet on the way to work it's not convenient to bike and I am forced to take the bus)
and a bicycle that makes transporting children and pet carriers a bit easier and safer.
I like tricycles for the stability but they are so slow. Maybe a new design could help?
http://www.exertrike.com/tri-hybrid.html
http://www.engr.mun.ca/~tariq/trike.pdf
Hello TODers,
http://www.siouxcityjournal.com/articles/2008/06/19/news/top/8cb43d9a9d7...
-------------------------------
Would you believe $10 corn? How about $15?
Grain prices soar in face of Iowa flooding
-------------------------------
Yikes! This could get real serious if the weather keeps whipsawing farmers around the globe.
http://seekingalpha.com/article/81877-going-double-long-on-agriculture-w...
-----------------------
..Analysts estimate that flooded Iowa and Illinois and the other corn states might produce 15% less of the grain than last year. Some believe the shortfall will be larger...
..."This is a pretty big train wreck developing," said Steve Meyer of Paragon Economics in Adel, Iowa.
----------------------
http://www.reuters.com/article/latestCrisis/idUSN18274360
-----------------------
Flood damage to Midwest soil may block replanting
Fields that have been underwater for close to a week were facing damage that could give farmers headaches for years.
"There has been a tremendous amount of soil erosion," said James Fawcett, a field specialist in southeastern Iowa with Iowa State Extension Service. "The fields will not be as productive as they have been in the past."
Fields along flooded rivers will have to be cleared of sand and debris before they can be planted again, Fawcett added.
About 20 percent of Iowa's corn crop was either ruined or is in serious jeopardy, Iowa State University agronomist Roger Elmore said. The remaining 80 percent is not in good shape.
---------------------------------
Bob Shaw in Phx,Az Are Humans Smarter than YEast?