DrumBeat: June 20, 2008

Saudi's Oil Fields on Viagra?

Saudi Arabia has long been the world’s preeminent oil producer and the kingdom’s royal rulers want to keep it that way.

But there is another possible narrative to the kingdom’s likely future – and ours too - which is far less comforting.

Rather than a petroleum stud with enough hydrocarbon juice to carry the world gradually into some kind of greener, post-petroleum energy era, Saudi Arabia may be far closer to running dry than we realize, because of years of overexploitation.

Michael T. Klare: Anatomy of a Price Surge

As the pain induced by higher oil prices spreads to an ever growing share of the American (and world) population, pundits and politicians have been quick to blame assorted villains--greedy oil companies, heartless commodity speculators and OPEC. It's true that each of these parties has contributed to and benefited from the steep run-up. But the sharp growth in petroleum costs is due far more to a combination of soaring international demand and slackening supply--compounded by the ruinous policies of the Bush Administration--than to the behavior of those other actors.

”Irrational” to call for more OPEC oil: President

ALGIERS — Demand by consumer countries for OPEC to increase its offer of oil is “illogical and irrational,” OPEC President Chakib Khelil told the Algerian official news agency APS.

“Asking OPEC member countries to increase their offer is illogical and irrational,” Mr. Khelil told APS in an interview published on Friday.

Fos-Lavera strikes cost refiners 20 mln euros

PARIS (Reuters) - Strikes at France's Fos-Lavera oil hub have cost refiners 20 million euros ($31.06 million) so far and forced some to operate at lower capacity, the head of French oil industry association UFIP said on Friday.

"The strike is costing around 20 million euros," Jean-Louis Schilansky told reporters.

Chavez may stop selling oil to Europe

CARACAS (Reuters) - Venezuelan President Hugo Chavez on Thursday threatened to stop selling oil to European countries if they apply a new ruling on illegal immigrants that is criticized in Latin America and by human rights groups.

European Union lawmakers ruled on Wednesday that illegal immigrants can be detained for up to 18 months and face a reentry ban of up to five years.

Diesel shortage grips Pakistan

ISLAMABAD: Diesel supplies across Pakistan have begun drying up, largely due to a squeeze caused by a payments crisis, and some 15% of outlets in the country have stopped selling the fuel.

China coal price freeze could tighten supply

SHANGHAI -- China's decision to freeze thermal coal prices is an attempt to avert possible power shortages this summer, but could further tighten domestic coal supply by encouraging exports.

Food shortages worsen amid Argentine farm strike

BUENOS AIRES (Reuters) - Food shortages at Buenos Aires grocery stores deepened on Thursday as farmers kept up a protest over soy export taxes that has sparked a political crisis for President Cristina Fernandez. Truckers and some farmers manning roadblocks have virtually paralyzed cargo traffic in key areas across the country for nearly a week, leaving trucks carrying food, milk and other goods stalled on highways.

A new House effort vs. oil trading

NEW YORK (CNNMoney.com) -- "Speculation," a dirty word across America as Wall Street traders take the blame for record oil and gasoline prices, drew more attention Friday from Congress as three Democratic House members introduced yet another bill attempting to limit activity.

Officials say South Dakota needs road money

"Both in South Dakota and across the nation, we are facing a crisis in maintaining and building highways," said Darin Bergquist, state transportation secretary.

The state fuel tax and the excise tax on vehicle purchases account for the bulk of non-federal money that's spent on roads in South Dakota.

But high gasoline and diesel fuel prices have taken a toll on those revenues as motorists cut back on the miles they drive.

Shrimpers head to Mexico to fuel boats

Like other industries in the United States, shrimping businesses have been hit hard by soaring fuel costs and some are finding relief, if only temporary, by filling up their tanks on Mexican shores. And it's legal.

"The bottom line is that if we weren't going to Mexico for fuel we would be out of business," said Carlton Reyes, president of the Brownsville-Port Isabel Shrimp Producers Association.

SUV bargain bin

Tumbling sales of truck-based SUVs are bad for Detroit, but if you're in the market, the deals are great.

Was solution to energy crunch offered in 1995?

Could the current U.S. energy crisis have been averted? One member of the U.S. Senate believes a solution was offered, but rejected, in 1995.

Americans are facing the highest energy prices in the nation's history. But according to Senator Roger F. Wicker (R-Mississippi), the whole crisis could have been averted back in 1995. That was when Republicans sent then-President Bill Clinton a bill to open up the Arctic National Wildlife Refuge (ANWR) for oil exploration.

Fuel oil dealer tells of plight of small firms

WESTMINSTER -- While any Vermonter who heats a home with fuel oil will be challenged this winter with high bills, the state's small independent fuel dealers are also facing hard times due to the growing energy crisis, Vermont Fuel Dealer Association Director Matt Cota told a group of Rockingham business leaders Thursday.

Green plan urged for upgraders

EDMONTON — Alberta should not approve as many as six more oil sands upgraders near Edmonton until the province has a solid plan to limit the huge amount of fresh water they will use and to better manage the pollution they will produce, a new study says.

Garrison Keillor: Eulogy for the Winnebago

Eighty-six percent of the American people believe the price of gasoline will climb to five bucks a gallon this year, a big shift in public opinion from a year ago when most people felt that oil prices were spiking high and would soon return to normal—which is 35 cents a gallon, same as a pack of smokes—and we'd be able to head west in our Winnebagos for a nice summer vacation.

This does not appear to be in the cards and Winnebago stock has fallen about 50 percent in the past year.

State talks a great green energy game, but leaves production to neighbors

The reason for supply shortfall is largely political; many of the large-scale clean energy projects such as Cape Wind in Nantucket Sound and Hoosac Wind in Western Massachusetts have been mired in controversy and bureaucracy, forcing local utilities to look out of state for renewable energy sources.

Nicaragua Seeks Bids on Energy From Largest Volcano

(Bloomberg) -- Nicaragua plans to open its largest volcano to geothermal exploration as record oil prices force the government to seek new sources of energy.

The End of Suburbia As We Know It?

When James Howard Kunstler describes the future of the American suburbs, it sounds like he's describing a disaster movie.

The housing crisis, he says, isn't just a low point in a real estate business cycle. High gas prices aren't just a temporary problem for suburban commuters. None of those problems will go away.

We're at the end of the suburban phase of American history, he says. "We've invested all our post World War II wealth in an infrastructure of daily life that has no future."

It’s Put-Up or Shut-Up Time for the Kingdom

The scuttlebut is that Saudi Arabia may be set to announce an increase in oil production at this Sunday’s special meeting of OPEC members in Jeddah.

So will they or won’t they? The drama is almost as good as watching Top-Chef. A better question to ask is... can they raise production in a meaningful way?

Ready For the Blame Game?

We are starting to hear much stronger rumors suggesting Saudi officials are going to scold the consuming nations for not planning ahead for increased demand by increasing their refining capacity to accommodate the lower quality grades of crude, which are still plentiful. Quite a few nations would have to plead guilty to that crime.

The oil companies don't want to spend $7-$10 billion and 5-7 years to build a new refinery only to have peak oil arrive before they can get it completed. Their plan is to continue bumping up capacity where possible at current refineries to minimize costs and time. Some of that new capacity has been heavy/sour crude capacity simply because that oil costs about $13 a barrel less than light/sweet crude. It is a profit motive for the switch not specifically a switch to a different standard.

Warning that oil summit could push price up

An unprecedented meeting of oil producers and users in Saudi Arabia this weekend, aimed at ending the rise in petrol prices, could propel the cost of energy higher, Gordon Brown was warned last night.

Oil speculation theory taken to the woodshed

Beyond wasting some time at Princeton, Engdahl apparently has no credentials at all in the realms he tackles. His books are not scientific in their approach, consisting of sheaves of unsubstantiated charges and guilt-by-associations all patched together into dark conspiracy tales for the "His Holiness Obama Will Save Us" crowd. Documentation and footnoting are extremely sparse, and there is a major amount of "an analyst said..." and "Paul Ehrlich charged..." It doesn't get any lamer than this.

In my opinion, Engdahl's article is a tour de force of disingenuous disinformation. In the interest of time, I'll just pick out a few of the more egregious statements and apply the pooper-scooper.

Another silicon valley?

WIND power works, and will work better in the future. But wind is only an interim stop on the way to a world where electricity no longer relies on fossil fuels. The ultimate goal is to harvest the sun’s energy directly by intercepting sunlight, rather than by waiting for that sunlight to stir up the atmosphere and sticking turbines in the resulting airstreams.

Bangladesh is set to disappear under the waves by the end of the century

Bangladesh, the most crowded nation on earth, is set to disappear under the waves by the end of this century – and we will be to blame. Johann Hari took a journey to see for himself how western profligacy and indifference have sealed the fate of 150 million peoplewent to see for himself the spreading misery and destruction as the ocean reclaims the land on which so many millions depend.

Energy Future: A Significant Period of Discomfort (an interview with Robert Hirsch)

You were the lead author of a groundbreaking 2005 study on future oil production and declining reserves. How is the situation three years later?

Today, the situation is worse, and the reason for this is that it is now obvious that world oil production is already on a plateau. It has reached a high level, and has leveled off. The point at which oil production will decline is probably not far away.

The Peak Oil Crisis: A Meeting at Jiddah

If the only purpose of the meeting was to celebrate the Saudis opening the taps a bit at a new oil field in response to fears that their customers will soon be priced out of the market — that would be nice. However, it seems there will be more to the meeting than an increase in oil production. The White House is already suggesting that the proper way to solve the growing world oil shortage is for the OPEC countries to stop going it alone and let the big Western oil companies with all their technology, know-how, and investment capital back into the OPEC oil fields. The implication is that a few years with Exxon in charge of the best remaining oil fields and we will be back to $2 gasoline again.

Despite Reality, Belief in Peak Oil Persists

But once again, their crystal ball has failed. Petroleum production for the first quarter of 2008 rose to 74.5M bbl/day -- 1.2M higher than the 2007 average. Those figures don't take into account Saudi Arabia's recent pledge to pump another half-million barrels a day, a promise they've already met by the first 300,000.

Wall Street Lobbies to Protect Speculative Oil Trades

Wall Street banks and other large financial institutions have begun putting intense pressure on Congress to hold off on legislation that would curtail their highly profitable trading in oil contracts -- an activity increasingly blamed by lawmakers for driving up prices to record levels.

Energy Fears Send Dems, GOP In Opposite Directions

As gas prices soar past $4 a gallon, Congress and the presidential candidates are hard at work trying to assign blame for the record prices, and when they finish that, suggesting fixes.

For Republicans the answer is simple: We need more energy and the best way to get it is to expand domestic production through new drilling. For Democrats the problem is the energy industry itself -- both domestic and foreign -- and it needs to be brought to heel under new regulations.

China fuel price hike may not sap demand

SHANGHAI, China - The jump in China's state-controlled fuel prices will inevitably squeeze consumers at both filling stations and grocery stores. But analysts say the hike is unlikely to make an immediate or huge dent in the country's hunger for oil.

Nigerian Oil Union Plans Strike at Chevron Next Week

(Bloomberg) -- Workers at Chevron Corp.'s Nigerian unit plan to strike on June 23 after talks with management failed to resolve a labor dispute, a union official said.

Production is unlikely to be affected on the first day as a skeleton staff remains in place, Jonathan Omare, secretary of the local Chevron unit of the Petroleum and Natural Gas Senior Staff Association of Nigeria, said. Output may be affected o the second and third day of the strike should the union decide to escalate action, he said.

High gasoline prices changing lawn-mowing habits

When Eric King moved from his apartment in Pittsburgh to a single-family home with a lawn, he bought a manual lawn mower instead of the usual gas-powered kind. He figures he's putting money in his pocket and saving trips to the filling station.

He's got plenty of company. Sales of manual — or push reel — mowers with the cartwheeling blades are on the rise this year. Officials attribute the surge to increased environmental concerns because of emissions from gas-powered mowers, the faltering economy that makes the generally less expensive push reels more attractive, and $4-a-gallon gasoline.

Hope arises for Iraqi oil production

Concerns over security, sabotage and smuggling are fading as the government in Baghdad takes control of oil-rich areas that were run by rogue Shiite militias just a few months ago. This month, the Iraqi government expects 10 major foreign oil companies — including ExxonMobil, Shell and Chevron — to sign modest contracts that could be a first step toward bigger investments.

Deepwater oil fields are a final frontier

ABOARD THE CAJUN EXPRESS, Gulf of Mexico — Five miles straight down, past the prowling barracuda and tuna, lies a massive sandstone formation marbled with oil. Extricating the inky fluid, which has lain undisturbed for millions of years, and shipping it 150 miles to land won't be easy.

But with rising global demand pushing the price of a barrel of oil near $140, securing new oil supplies from deep, distant spots such as the field code-named Tahiti is critical.

IRAN: Stop nukes by bombing oil wells, neocons suggest

Why attack Iran's nuclear facilities when striking their oil infrastructure would be much more effective in the scope of a US-led preventive war? Sure, oil prices might skyrocket and the world economy might collapse. But, hey, that's the price you pay for security.

The Big Pander to Big Oil

It was almost inevitable that a combination of $4-a-gallon gas, public anxiety and politicians eager to win votes or repair legacies would produce political pandering on an epic scale. So it has, the latest instance being President Bush’s decision to ask Congress to end the federal ban on offshore oil and gas drilling along much of America’s continental shelf.

This is worse than a dumb idea. It is cruelly misleading. It will make only a modest difference, at best, to prices at the pump, and even then the benefits will be years away. It greatly exaggerates America’s leverage over world oil prices. It is based on dubious statistics. It diverts the public from the tough decisions that need to be made about conservation.

Mile-per-gallon ratings may mislead

WASHINGTON - With the price topping $4-a-gallon everybody wants to save gas, but depending on those miles-per-gallon ratings may be misleading.

Strange as it may sound, rating cars at gallons-per-mile may be more useful, say a pair of university researchers.

Battery leasing could help ease anxiety about hybrids

DETROIT — Greener cars that rely more on electricity than gasoline may also generate more consumer concern about the longevity of their costly, high-tech battery packs.

Industry executives believe one way to quell such worries — and lower the initial price for such vehicles — may be to lease their batteries to buyers.

Greenland Ice Core Analysis Shows Drastic Climate Change Near End Of Last Ice Age

Information gleaned from a Greenland ice core by an international science team shows that two huge Northern Hemisphere temperature spikes prior to the close of the last ice age some 11,500 years ago were tied to fundamental shifts in atmospheric circulation.

Extreme weather to increase with climate change

WASHINGTON - Droughts will get dryer, storms will get stormier and floods will get deeper with changing climate, a government research report said Thursday. Events that have seemed relatively rare will become commonplace, said the latest report from the U.S. Climate Change Science Program, a joint effort of more than a dozen government agencies.


Washington, June 17, 2008 – With the official beginning of summer just a few days away, consumers are beginning to think twice about their July 4th plans. According to the National Retail Federation’s 2008 Independence Day Consumer Intentions and Actions survey, conducted by BIGresearch, 59.4 percent of consumers say increased gas prices will impact their spending for the holiday, up from 42.1 percent of consumers who said so last year.

Kilroy says:

''What's all these silly little green numbers?''.

I bumped you up one, MUDLOGGER. You owe me.

Ha Ha!

I dont care.

Its the first step on the path to enlightenemt...

MUDLOGGER...The little green number is assigned by the thought control police (tcp). A high number indicates that you are thinking and posting according to tcp guidelines. A low number indicates the opposite. At this time we do not know what the guidelines are. Eventually, as we post more and watch our little green numbers we will know what is 'good' and what is 'bad'.

Right now we are in a training period. Obviously some posters, those that have little green numbers in double digits, have been pre-approved by the tcp.

BTW, I have heard a couple of roumors that are making the rounds: 1) If the tcp really, really, get ticked off at us we might be banned from posting...2) I heard that Hothgar is returning from Mt Olympus where he has been studying under Zuse. Hothgar is rumored to have a worse disposition than before. I cannot decide which fate would be worse...tolerating the rath of Hothgar or just finding another site to hang out on. What would you do?

MUDLOGGER...you owe me one also.

Ha Ha!

Live free.

Die Happy.

I would welcome Hothgar back.

I will make a note to ping you lots of greenies.

And yes, as TOD becomes more 'professional' expect more thought control and thereby self - censorship.

... after all , who could face life in the morning with negative greenies? - the shame!

Or worse still : no response whatsoever?

Gadzooks! Peak must truly have arrived: TOD is becoming professional.

"...expect more thought control and thereby self - censorship."


I bumped you up for your post although I would presume you don't care. And, yes, I feel a bit guilty for being part of the system. This is an experiment and may actually result in "better" posts whatever that means. Some or maybe many posters here will try harder to have their posts appreciated by other posters. Accordingly, they will be more careful in the way they express themselves. This is a testament to our educational and work system which encourages behavior whereby we learn to play well with others. Many of the low scorers will be either banned or will wander off elsewhere to the nether regions of the internet.

Personally, I don't mind the people I perceive as dickheads because this forces me to confront the opinions of dickheads, that is, the possible majority of people out there. Alternatively, even stupid opinions are welcome and I fear that this experiment will be too successful.

I assume we are all being watched by the government; I feel this system is kind of piling on. And,hey, a number system might even help the government more efficiently monitor our activities.

And anyone who thinks I am being paranoid hasn't been paying attention to the news for the last several years.

Go visit the tech news site Slashdot to see how it works, they've been using a similar system for years. Basically the idea is to help readers of sites with tons of comments find the most useful ones and skip over any irrelevant ones.

Why would I want to be so sad as to visit a tech news site?

Why would I want to discriminate?

Some are brilliant, some are weird, some are off the wall, some are geeky, some are plainsong, some are exotic.

All are the last bastion of free speech.

Millbrook, perhaps it has not occured to you that if we wanted to hang out at Slashdot that we would already be there? Just possibly, some of us like TOD? I have been to Slashdot and it sucks.

with the rating system in place, this site will become just as bad as there.
no change from popular opinion because those who differ from it are rated to oblivion, once your posts start off with a -1 there they are regulated to the bottom and hidden. don't believe me? try telling slashdot that when you buy a apple pc all your paying for is that apple label, with what inside is normally cheaper then your average dell or hp.

no change from popular opinion because those who differ from it are rated to oblivion

This is a myth, there are contrary opinions posted all the time on slashdot. What you can't do, is put up needlessly inflammatory posts nor ones that are incorrect like your assertion about apple.

No need to react with such hostility, River, and no need to be sarcastic, Mudlogger.

I was recommending neither Slashdot nor the comment rating system, just answering Mudlogger's question about what the green numbers are.

I can see it was a mistake to actually answer the question -- Mudlogger is out to bash the ratings system, not to understand the intent of the moderators in testing it.

Millbrook, I did not react with 'hostility' but I am capable of doing so.

If you have failed to think through the 'ratings system' and see where it will take TOD then it is your fault for not doing so. Lots of people failed to see where the suspension of habeus corpus and the 'patriot act' would take the US. Maybe in time they will 'get it'. Maybe they will be in a 'dention center' with no access to due process or an attorney...but, eventually they will get it.

I strongly believe in being civil, in part because I do not enjoy the stress of trading barbs with people on the internet. Therefore, I do not need a "system" to help me be civil. While others may enjoy conflict, I do not, and primarily come here to learn. If I can provide some constructive ideas, all the better.

On the other hand, I hate this system and do not want to be transported back to grade school.

As I said upside, I appreciate your explaining the system. Now I hate it even more.

And, therefore, I conclude that we should let others decide what is irrelevant. The system, admittedly, is very useful for those who do not choose think for themselves.

I just cannnot imagine looking at a number, such a your number (-1 at this writing) by the way, and then, based on that, skip over it. And how negative does the number be before I should choose to skip the comment?

Although you had a negative number, I found your post useful, as it told me just how truly insane this idea is.

We are two weeks from 4th July. You'll remember that many considered $150 likely by that date (indeed the betting suggests three quarters of people think that).

However the price has been wafting around $133 for quite a while now. What event or action is likely to push it off this plateau (either up or down)?

I expected much more price volatility than we've seen. It's very unnerving that the price hasn't really dropped below $130 in any of its price swings since Memorial Day.

I don't know how much volatility you've been expecting - must have been a lot. Looking at oil prices on the Nymex over the past ten days is like looking at the New York skyline:


That is just the way they have presented the graph.
Variation has been within $10, or around 7-8% since it bumped up a few weeks ago to over $130

Your point is correct that oil has been trading within the $130-$139 range for the past couple of weeks. But within that band it looks like real volatility to me. Moves of $5 or more have been common in recent days.

The graph isn't zero scaled, of course, so that makes the moves look bigger. But those still seem like substantial jumps and falls to me.

Is that the Chrysler Building behind the Met Life Building (formerly the Pam Am Building, since talk about former airlines is popular here at TOD)?


I think commercials are going to be taking down their inventories sharply in early anticipation of the end of the driving season, so we won't see prices go up unless inventory falls below the bottom boundary of the five-year average or we see sharp drops in gasoline or diesel supply, which depend on product buying in China and India, and reduced ethanol production due to the floods and high corn prices.

Or, of course, if a hurricane targets the Texas oil coast. Given that that is fairly likely, I'd expect $150 at some point this summer. The question is if there is something to push prices off this plateau all together.

From what I can see the ~$10-12 oscillation in prices is the action of speculators, but the stories about reduction in usage is what is capping the average price level. People seem to be waiting to see what happens next.

We could also easily see a higher oil price if Israel bombs Iran's nuclear facilities. No telling how long it would last, that would depend on what happens after.

"what happens after."

Fifth Fleet sunk or bottled up.

Millions die.

Refineries in flames.

Russia will not standby.

Baghdad cut off.

Troops should have evac plans ready. Turkey, Jordan destination.

Don't be silly--we will welcomed as liberators! The Iranians will offer us flowers and their daughters. This the Neocons tell me so...

and during all the confusion, Taiwan is toast

I have been thinking, if china is on iran's side. if it is when isrial attacks iran(considering they will have to fly through us controlled airspace) taiwan would be toast as well.

If Westexas is correct, the gulf refineries can't take their inventories down sharply. The nation as a whole is at the bottom of the 5-year range, which means the gulf refiners are probably already below it.

In a normal year, when does the inventory drawdown begin? The end of the driving season isn't till the beginning of September, which is still more then 2 months away.

Also, I would guess China is going to need to build up some product reserves ahead of the August Olympics. Do you think they've finished their buying binge for that yet? My guess is that the recent reduction in price controls is an attempt to get more product to market (the refiners didn't want to produce because of negative crack spreads). If that's true, China could be ready to ramp up production in excess of consumption in order to stockpile some finished product before August.

Traffic reduction plan for the Olympics in Beijing:

Beijing Unveils Traffic Plan

Starting July 20th, drivers of even and odd-numbers license plates will only be able to drive on alternate days until September 20th, almost a month after the close of the Olympics and three days after the closing ceremony of the Paralympics.

Moe, now that the new heavy sour refinery is on line in China, have we seen any movement of the tankers that Iran has been squirling away?

Jeff, good question and much more relevant than a bong party in Jeddah. I've been pondering the same topic. What will happen once the refineries that can handle heavy sour crude start up and Iran and Venezuela find a customer base expanded by 100, 200, or 300%?

That is, what happens when the only destination port for their oil is no longer Louisiana and Texas? Oops! Did I see an Empire slide into Oblivion?

That sucks. Free markets don't seem so appealing when they actually work, do they? Saint Friedman where art thou?

Scott in the BC

BC_EE...Very good observation. I have been considering this same question. The US will continue to refine mostly sweet/light and the countries that are ramping up refineries for more heavy/sour will purchase the oil for a $13 per barrel discount.

I do not know how the end user price will be effected but if China continues with some oil subsidies they will definitely have a large advantage in manufacturing. China's GDP will increase accordingly.

I still have heard only one reply to the question of: Why did the US not see this coming and ramp up heavy/sour refinery capacity accordingly?

The standard answer is: The US refineries do not want to spend money on refineries when PO is near. That is not a sound reply because if the ratio of heavy/sour crude to sweet/light crude is increasing the US will need to have refinery capacity to deal with that eventuality or we will be SOL when sweet/light crude is totally used up or so expensive that very few can afford it.

Perhaps someone out there has an alternate answer? I believe that with an administration that is full of ex-oil people someone should have seen this problem coming.

This is like waiting for an earthquake, the longer nothing happens, the bigger the tension (and the shock).

I've been seeing this same sort of "concern" in analyst writings on other markets as well (gold, equities, bonds). I don't know how much cross over there is between such analysts, but the expectation seems to be that we won't see much movement in any direction until fall.

The First trading day after July 4 determine sthe trend in grain/fiber markets until
end of October.

USDA comes out June 30 with crop conditions.

Rough SWAG guess. 3MMT of grain destroyed in flood.

Wallaces Farmer
Up To 20% Of Iowa Grain Crop Lost To Flooding ... In addition to the acreage loss, lower yields are expected because of the acres that are replanted at a ...

Comparison. The Ozzies may make 14 MMT of wheat this year.

A must see video on CNBC this morning. Dr. Robert Hirsch explaining why oil prices are high and going higher. He stated “Economists don’t understand the situation!” He also stated, concerning offshore drilling, something to the effect, that when the recession hits and gets deeper and deeper each year and people start losing their cars and homes, opinions are going to change.

Following Dr. Hirsch on CNBC was Alex Sinc, Florida Chief Financial Officer explaining why we should not drill off the coast of Florida. She stated that the US produces 3% of the world’s oil while consuming 25%. Of course that is way off. I just checked the figures from the EIA’s International Petroleum Monthly and the US produces 7% of the world’s Crude + Condensate and 10% of the world’s oil if you count All Liquids.

Ron Patterson

Sink probably meant to say we have 3% of the worlds reserves? That is the # I usually hear thrown around....

And, politicians, journalists, and most people, can't seem to grasp the difference between "reserves" and "production".

I would love to see more reporting on the economics of deepwater drilling. Didn't Thunder Horse basically take 13 years to bring online from the time BP started pursuing its deepwater Gulf strategy? What was its final cost? What are its operating costs? How many barrels of oil, at what average price, over how many years, does a facility like Thunder Horse have to produce to turn a profit? What will the next big deepwater platform cost to bring online?

See http://en.wikipedia.org/wiki/Thunder_Horse for the answers to most of your questions.

And for a picture of Thunder Horse...

This was after Hurricane Dennis. What, pray tell, caused a $1 Billion rig to do this? According to the Wikipedia article... "an incorrectly plumbed, 6-inch length of pipe had allowed water to flow freely among several ballast tanks..." Amazing. Imagine the risk to future oil supply if we have to rely on just a few of these behemoths, and something goes wrong with it...

Thank you for bringing TH up.

Zero pics/info on TH status from Katrina to Mar 06.

And still TH hasn't worked.

Why I advise smaller tractors/harvesters.

According to the news TH is working, but only one well.

I'd heard that.

And so BP has spent how much over 5 years for that?


He suggested the possibility of $500 oil within three to five years.

Oil prices have gone up at about 6% per month from 5/07 to 5/08, from $63 in 5/07 to $125 in 5/08 (doubling in a year, which based on Rule of 72, is about 72%/year).

What is interesting is that oil is having trouble staying below $133. $125 + 6% is about $133.

For the time being at least, 6% per month may be the rate of increase that is necessary to balance declining net oil exports against demand.

I do not think $500 oil (in 2008 $) is possible. Too high a % of world GDP (roughly 1/3rd by quick back of envelope #s).

The Millennium Institute T21 model shows the US economy "cracking" (Great Depression II) at $315 to $350/barrel. Reduced demand drops oil prices back to $200/barrel despite lower supplies. However modeling such cascading economic failures is suspect.

Best ....


One question for you though: if we have a high-oil price induced meltdown of the economy, is it possible for inflation to continue to drive the price of oil up? (i.e., stagflation)

The modeling was with a constant value dollar. Add inflation to taste.


is it possible for inflation to continue to drive the price of oil up?

I think it is largely the other way around. The rising price of oil is driving stagflation.

Stagflation is a bit of a misnomer. It refers to a period of rising prices and slow economic growth. But rising prices is not inflation (despite what the government would have you believe). A too-fast growth of the money supply is inflation. Rising commodity prices actually cause the economy to slow, which may cause deflation (i.e. a shrinkage of the relative money supply), at the same time that prices (of necessities, at least) rise.

In other words, stagflation is caused by rising commodity prices, especially oil on account of its pervasive influence on the economy.

Hah, I forgot about that -- I agree completely. What I was thinking of was in this case was more a 1970s style inflationary spiral where wages are increasing with some sort of assumed increase in cost of living factored in, thus it feeds on itself. (Also maybe a devaluation of the currency from non-oil related circumstances like the housing crisis.)

I'd suggest economies are 'cracking' below that price. Cascade failures from small beginnings are likely when the entire system is under stress.

However I'd suggest a viewpoint from complexity and attractors. As prices rise the 'crack' that happens, at a lower price, permeates the system. But not only does this reduce demand, it acts to shift the operation and drivers of the system into a 'post peak' mode, or at least a transition to it. Rather than prices falling back the desire for continued access drives alternative mechanisms; with supply being curtailed to match these modes and to sustain price (and supply duration).

In essence it become less "how much will you pay", but rather "this barrel is $250 and what other considerations can you provide, best bid wins".

$500 will happen, if only because of the collapse of the dollar as focus for finance shifts elsewhere.

Yeah, my gut tells me that whatever equates to $10/USgal of gasoline will be the upper limit. So that should equate to $300/barrel range prices that should last quite awhile.


I'd posit that the portion of the GDP spent on energy uquals (roughly) the reciprocal of the average EROEI. Thus that portion will go up, although meanwhile the total energy (and total GDP) will go down. Roughly 1/10 now, perhaps 1/5 in a few years.

The lack of wage growth and the decimation of organized labor has put a ceiling over pump prices. $168/bbl at the pump has started to drive down the both the amount purchased and vehicle miles traveled. Stuart has shown how VMT drops consistently show the onset of a recession. As the cost of fuel works its way through the economy we will see more businesses go belly up because these costs cannot be passed on to cash strapped customers. I see $200/bbl unlikely without some very serious inflation.

I do not think $500 oil (in 2008 $) is possible. Too high a % of world GDP (roughly 1/3rd by quick back of envelope #s).

I agree with Alan. I did the same calculation last month and came to the same conclusion. It doesn't make us non-peak-oilers. It's just that people don't have an unlimited amount of money.

Remember that what we are seeing is progressive demand destruction, as more and more people are forced to conserve--so we will see fewer people paying a higher unit price for less volume. And it's why I so strenuously advocated ELP. For most of us, our auto centric suburban way of life is dead, but most of us only see what we want to see.

Everyone constantly refers to this ELP. What is it? Is there a post explaining it you could provide a link to?

Economize, Localize, Produce. From ELWT (Westtexas)

The other thing to keep in mind is that WGDP is measured in dollars (or other fiat currency). If the same (roughly) number of barrels traded hands at $500, nominal WGDP would be considerably bigger!

At the same time you would have price inflation creeping through the rest of the economy, also driving up nominal WGDP. Food prices are going to go up, regardless.

By the time oil is $500 per barrel, it will account for less than 1/3, though certainly more than it does now.

I'm sure we will see $1000 per barrel oil, but that will tell us more about how little the dollar is worth than about what it takes to get a barrel.

Today, the poorest of people spend nearly all their money on food. That won't change. The next tier of people will spend most of their money on food + energy (a much bigger proportion than today). The next tier will spend most of their money on food + energy + health care. McMansions in exurbia will be essentially free for the squatting. A tiny sliver of folks will be able to afford anything else.


But if the cost of oil is linked to other products and particularly food it hardly moves in isolation, so $500 dollar oil could be linked with $50 bread. I get the feeling the obesity epidemic will be solved!


Alan, As for as oil purchases as a % of GDP: It depends on how many barrels of oil are exported. Granted, at current levels of export the oil can't cost $500 per barrel. But what about half of current export levels? Half the percentage of GDP would be required to buy it. Of course. that assumes current GDP levels - which is incorrect.

So I think we have to figure out how much GDP will shrink to at each step down in available exported oil. I think that depends on how rapidly exported oil declines. A slower decline gives more time for economies to adapt and work around the reduced oil availability.

But during most of last year, while the price was going up, demand was stubbornly holding strong. Now that demand destruction has started, does this rate hold up?

Most of the discussion in the last 2 years has been about the demand for oil driving the price of oil. What hasn't been discussed is the extent to which the cost of extracting new oil is driving the price of oil.

The mainstream media talks about "supply constraints" but what does this really mean, and is there a more detailed and economically precise way to frame it than "peak oil."

Forgetting about depletion for a moment, costs of the infrastructure development to bring new oil online are perhaps more inflationary right now than they have been in a generation. These costs are driven by any number of factors, and it's hard to tabulate them all:

1) the technical complexity of deep water/harsh environment oil drilling and production

2) resource competition driving up the cost of steel and everything else involved in infrastructure expansion

3) the rising energy costs of producing the oil

4) rising maintenance costs for the aging existing oil infrastructure

5) industry wide staffing constraints, and so on.

CNBC Poll: Where will oil prices peak?

Three choices:

It's already peaked

Interesting that they don't foresee any possibility of a price beyond $200.

Edit: it's possible that they meant calendar year 2008, in which case I probably would have structured the question the same way, but they didn't specify a time frame.

The dollar itself will be a moving target. So if we want to normalize to constant dollars, do we use Treasury statistics or Shadowstats?

yes Darwinian, a very good 'speaking up' by robert hirsch, sobering but real!

I actually watched this one and read the inverview up top with Allianz (pretty good).

It seems so stupid these TV types talking about how they asked economists and nobody guessed right on the prices, "gee whiz why was that". Are we playing somes stupid game here? Who the ef are economists and these TV talking heads anyway to pronounce opinions what they think will happen with oil prices. Maybe journalists should be foced to take a weekend course in geology or something or they should get off the air and real people like the experts here should tell what's happening. At least Hirsch said it like it is. Unfortunately he ain't pretty, young and blonde(yes sexist comment, go shoot me) and bubbly and so will be ignored by 99% when they switch over to sports or something.

The invention of TV was probably the beginning of the downfall of our civilization as it lowers the general IQ level and intellectual expetations of people to the lowest common denominator. In print at least some logic is coming across, generally???

If a person has a tendency to start arguing with you before you finish your statement, they will be the last to GET IT.

This topic does NOT fit in a sound bite.

I think since people get probably most of their information from TV in 30 second sound bites that reality will be extremely slow to sink in to the general populaces heads. If people were to read or understand charts or something. There is such a disconnect. I realize watching such an interview with Hirsch with supposedly informed journalists who even at this very late date have no idea whatsoever about PO and spout such nonsense (imagine a jorunalist saying "it was cold out today and hot yesterday so I took a poll of people to find out if the ice age is coming or GW is resposnible and nobody really knew so I guess we don't really know") that there is just very little hope, at least in USA.

See funny article about Engdahl above. Such idiots get read by people and are influential, even though he has no idea.

They had a good article on Bloomberg about a "Cityboy", a trader int he London City who explains how financial market is just a con game and these people are supposed to be managing the world's finances intelligently. I bet almost nobody anywhere in a resposnible position really knows what they are talking about. It is all just posturing to get airtime or print space.

That's the problem with television - almost no big picture truths can be told precisely because soundbite memes are usually gross oversimplifications and lies. If you're trying to posit an unpopular but factually true meme (and there are many many examples) - you cannot get anything across except for the fact that you are a freak with "weird" opinions. Everything that doesn't fit the BS corporate propaganda narrative, everything that doesn't match the top performing memes - is ignored. Simple-but-false memes will always outcompete the more complex and nuances truth-memes, unless the reality direct hurts people, forces them to be open to truth memes.

The only real benefit of watching any news at all on TV is:

1) To see for yourself catastrophic events as they happen so that you can make some immediate judgements yourself as to their severity and impact, thus enabling you to react in a more timely and appropriate manner; and

2) To observe non-verbal cues during interviews and speeches of important political figures (not pundits, just people who actually matter) so that you can try to discern their truthfulness, reliability, sanity & stability, and maybe even their true intentions.

Other than that, it really is just a waste of time, or worse.

Solution: Don't Watch TV. You'll miss nothing, and hear fewer lies. I've only watched TV when visiting other people for the last 8 years. I only read newspapers and internet.

When I watch TV now, it's like I'm being blasted non-stop with a continuous stream of blatant lies, horribly weak propaganda and incompetent debaters trying to blabber around their own verbal minefields.

Stop watching TV. Helps your sanity.

Interesting side-effect: Being informed by newssites and -papers from all over the globe, I'm actually better informed than just about everybody in my direct vicinity. I can overhear two people on a terrace talking about a political or historical subject, and hear the discussion being flooded with nonsense, induced by TV. After about fifteen minutes I intercede just for a brief moment, tell them the facts (which are just lying around everywhere on this planet; TV-makers just have their own agenda that doesn't involve facts) and then go on reading my newspaper or book. It's usually a very effective discussion stopper.
The only exceptions are religious freaks like zionists and economists. They don't have to watch TV to live in lies, they're oozing them out of every pore.

Agreed. I gave up TV about three years ago. And I was down to watching only one show for a year before that. I just gave away my last TV a few months back, since it was just collecting dust.

TV makes you stupid.

I am astounded as to why people think they need big-screen TVs. It must make the commercials look so much better.

That's the problem with television - almost no big picture truths can be told

I'm told this is not a problem anymore with the bigger screens and all.

And of course, the truth looks truthier in HD. That's why tha guv'mt is making us buy those HD TV's. It's for our own good.

Hi eastex

re: "This topic does NOT fit in a sound bite."


It's not only TV that causes (or contributes) to people "not getting it".

Ask people what they remember from a live "peak oil" presentation, for eg.

Last night, I searched on "oil price" in recent Google videos. Two TV clips stood out:

The first was a CNN piece talking about "Oil Shale". They had a nice little graphic showing that it now cost $50/bbl to produce oil from Colorado shale and $60/bbl for producing from Athabasca tar sands (probably too low, imho). They overlooked the minor detail that there aren't any commercial plants currently producing oil from shale (and possibly, there never will be). And, where they got the $50/bbl number from, I haven't a clue. Anyway, it certainly *sounded* authoritive.

The second piece was from Fox News - and I forced myself to watch the whole thing. It was an interview with the well known oil expert, Newt Gingrich. He asserted that the "liberals" had enforced an "iron rule" stopping development of oil shale and offshore development. By his calculations, the offshore probably contains at least two Brazilian sized discoveries of 180 bbls, IIRC. Added to this were the huge (Saudi sized) fields in the Dakotas plus the trillions of barrels in the oil shales. He asserted that, if it weren't for the "liberals", the USA would again be the world's leading oil producer.

I had to go outside after watching this just to make sure that I was still on planet Earth. The coming *energy debate* promises to be very entertaining right up until TSHTF.

Did you read "Despite Reality, Belief in Peak Oil Persists" (link above)? I don't know what's more scary --the 'commentary' or the reponses that follow. Cornucopians truly live in an alternate Universe with no limits to anything.

Yes, I read it.

Sometimes I think that James Kunstler is far too pessimistic. I consider how far society would have to fall to have the conditions in "World Made by Hand" become reality. And I say to myself "we couldn't possibly fall to that level unless we really, really tried to screw things up".

Then, I watch the evening news and I realize that the dingbats in government and the media are *really, really, really* trying hard to screw things up. They're giving it everything they've got.

I'm getting tired of sanity. "Beam me up, Scotty..." and let me build a home by the methane lakes of Titan.

I consider how far society would have to fall to have the conditions in "World Made by Hand" become reality. And I say to myself "we couldn't possibly fall to that level unless we really, really tried to screw things up".

World made by hand is not all that far a fall.

When one considers that Man could launch most of their fission/fusion weapons or perhaps the fabled Russian Super-Smallpox or similarly mentioned bio-weapons.

US has 6% of pop. We consume 25%. We borrow 75% of the price.

If energy doesn't grow. Debts can't be serviced.

Depression is here.

We haven't even gotten to Alt A resets yet and CA is in meltdown.

20 000 teachers to be laid off.

Interesting that Hirsch basically blows off AGW. A tad myopic, unfortunately. As is obvious from posts here today about rapid climate change, PO is no greater a threat than AGW, and is, in fact, less of a threat. Yes, PO is a threat to our current economic system and the current structure of civilization, but PO could challenge our very survival. By some counts, there are already enough GHGs to challenge our survival. Any more might guarantee we don't.

I know some claim there are not enough GHGs to take us 6 or 7 C higher, but those arguments ignore other sources, such as methane in the Arctic and methane hydrates in the oceans and the feedback loops that make them possible. There is already evidence of accelerating methane release in the Arctic.

Ignoring one of these crises at the cost of the other is a fool's errand.


The thing is, though, that individual nations and even local jurisdictions can do something about PO, at least as far as it impacts them. For that matter, so can individuals (ELP).

AGW, though, is a global problem, and can only be addressed on a global scale. We don't have a global government, though, so there is nothing that really can or will be done. It is worrying, to be sure, and it might even prove to be fatal to our species. But there is nothing that we can do at the individual or community level that will make any real difference. Even at the national level, there isn't much that any individual nation can do that will make much difference, in less it is done in concert with all of the other nations - or at least with the other nations that are big enough to matter.

Given these circumstances, it really does make sense to focus on mitigation of PO by advocating and promoting energy efficiency + renewables. Such a strategy has the side benefit of also mitigating AGW to a large extent, and is probably the only strategy that has any possible hope of actually accomplishing something positive on that front.

In my above comment, the following should have read: Yes, PO is a threat to our current economic system and the current structure of civilization, but [AGW] could challenge our very survival.

Your comments are wrong on the face of it. Very, very wrong. PO is not going to be solved locally. The issues raised by PO are not just about access to energy. It is about the very strucure of the society/economy we have built and its sustainability over time. While some areas/nations will do better than others, a collapse will affect a great deal and will change the way everyone lives.

If you think, for example, the Chinese economy will survive as it is if the rest of the world goes under, you really need to rethink that. Also, if you think EITHER AGW or PO will be changed without all the small actions of the many billions AND the actions of governments, etc., you need to rethink that.

If we fail at either, it is a very human failure and one more of will than anything else. Also, if we fail at either, we will have effectively failed at both. It will take energy to make wholesale changes to combat or ameliorate climate change. If climate change is too severe, the ability to get and maintain power supplies, food supplies, etc., will be greatly diminished.

In the '70's people DID reduce and re-use to the tune of about 5mb/d in the US. Why can't we do that again? If we don't, we will fail. Ask the yeast.


Hi ccpo,

Excellent point.

re: "Also, if you think EITHER AGW or PO will be changed without all the small actions of the many billions AND the actions of governments, etc., you need to rethink that."

How does one classify the multinational corporations?

They fit in neither category ("many billions" and "governments") and yet influence both sectors quite a bit.

This is one the things that I haven't really seen addressed.

If one looks at the role of multinationals, one can see the effect.
To put into place mitigation measures, then - does this require the cooperation of these "actors"?

Does it require they take the lead? Which goes against their reason to exist (presumably).


First, a note: in teh extended video available at the site originally listed for the videos, Heinberg DOES say what I pointed out before: CC and PO do share many solutions and should be dealt with in combination.

Multi-nationals are in the "etc.", but are not going to be part of the solution unless forced to do so. They are rapacious entities and they sup on profit. I don't think the profit paradigm can survive. Fair and equal trade will become the new paradigm or we will continue to stumble around like profligate drunkards who will one day wake up and find themselves covered in the dirt and filth of the gutter.

That is, multi-nationals must be forced to move in the right directions by the actions of the billions. One thing people have to deal with, and it is glossed over in most discussions, is the question of who "we" is. Who is going to survive? How are hybrids going to save the world when only a small percentage of the world - a very small percentage - can afford them? Passive or active solar homes? Has anyone costed this stuff? Who can afford this? I teach for a living and can't just go out and build myself a nice little passive solar home.

We have to seriously consider and then answer the question: who are we trying to save? Western civilization? Europe and it's bastard children? The First World? Second? Third? All of the above?

I suspect that most don't really think about it and the rest are pretty content to think primarily in terms of First World - whether consciously or sub-consciously.

So, the multi-nationals have to play a role. Big answers are needed for some things if you want to keep some semblance of the current paradigm. (I don't, btw, but recognize that as a tiny minority view.) But they will have to be convinced that survival is better for them than massive profit. But, to convince them of that is to either make them face their own mortality and recognize that it is tied to the billions', or to act in greater concert and simply drive them out of business if they don't work in some degree for the common good.


Well, to be fair, Hirsch never had the opportunity nor was questioned about AGW. And I think he's right about the "mind-set" and how things will change once the economic slide digs in and gets steeper. After seeing him now live and on TV several times and reading his (et al) report, I would say he's a pragmatic doomer.

No link for this yet, but Dante posted it over at PO.com. (He pays for various subscription services, I think.)

OPEC Exports to Fall Back in July: Oil Movements

LONDON, Jun 19, 2008 (Dow Jones Commodities News via Comtex) -- OPEC crude oil shipments are projected to fall by 230,000 barrels a day in the four-week period to July 5, U.K.-based tanker tracker Oil Movements said Thursday.

Shipments from members of the Organization of Petroleum Exporting Countries are expected to total 24.59 million barrels a day in the four-week period, down from 24.82 million barrels a day in the previous four-week period to June 7, Oil Movements said.

Shipments from key Middle Eastern OPEC producers are projected to decrease by 350,000 barrels a day to 17.63 million barrels a day.

So Saudi Arabia will increase production by 200 kbpd in July in fact just canceling this drop and coming back to May levels?

Who knows. Oil Movements projects oil exports by tracking tanker bookings. They aren't always right. And as Westexas would doubtless point out, exports aren't the same thing as production.

Why aren't they always right? Are there pipelines to the west or some other method of getting oil to the our market besides tankers?

And as for exports not being the same thing as production, it matters little to us what sort of production increase the Saudis conjure up if none of it is exported...

You are really going to hate this.

Most estimates on Crude production in the middle east tanker markets are actually based on guestimates by low paid locals sitting on the harbour wall giving an estimate on how low or high the tanker sits in the water with respect to the Plumb Line.

And there you thought it was all done by computers and SatNav...

So long as they pay enough to keep the same folk on the job month-to-month, that doesn't really matter too much. The variation more/less each period is more critical than the absolute quantity being right.

"What the right hand giveth, the left hand taketh away"

This must be the "negative growth" that economist talk of.

When Saudi was talking about increasing production by 250,000 bpd did they forget to put the negative in front of the number or something?

Has anyone gone back to verify the predictive value of tanker counting and subsequent actual export numbers? Without such verification, I fear these reports of tanker movements just get brought out in the service of various folks selection bias.

Hello Speek,

That is a very good point, but I think it takes BigBuck$$$ to get this tanker-tracking report.

Dante has. He's found they're not terribly reliable. Especially the ones like Oil Movements that try to project future production. Just because you make a car rental reservation doesn't mean you'll actually show up to drive the car, and I guess the same thing applies to tanker chartering.

I noticed a strange note in one news article:

Ahead of the conference, a statement posted Thursday on the website of the Saudi embassy in London said the kingdom has decided to boost its daily oil output by 200,000 barrels to help cool record-high crude futures. The statement was later withdrawn without comment or elaboration.

Presumably this has no significance, but one never knows.

Perhaps probing the response of the futures markets for elasticity of demand?

According to a very detailed BP world energy report released Wednesday, demand in Germany was dropping faster than almost anywhere else worldwide in 2007. I'm not sure whether this is due to conscious changes in fuel usage or simple demand destruction.

The review also states that global energy consumption increased by 2.4% in 2007 – down from 2.7% in 2006. EU consumption apparently dropped by 2.2%, while Chinese consumption rose by 7.7%.

Germany Records World's Biggest Cut in Energy Use in 2007

According to the oil company's statistics, German companies and consumers slashed their use of so-called primary energy -- defined as energy generated by oil, gas, coal, nuclear and hydropower -- by 18.5 million tons of oil equivalent in 2007, a 5.6-percent reduction. Only Denmark and Azerbaijan recorded larger percentage reductions last year.

Here's the link to the BP report (6.5 MB PDF):

Statistical Review of World Energy 2008

It might be instructive to have statistics on increases in renewable fuel usage for the same period, especially since all the major sources of energy are lumped together here.

I am glad to see we are doing so well here in Germany reacting to simple price signals in a rational manner although generally I think in most other German public mangement systems (health, education) are poor at best and dominated by industry lobbyist to benefit the rich. It seems though there is room for optimism in that they love to save money by saving on energy in housing and transport and can get things done fast in engineering / construction and making new regulations and don't live in a fairy tale. Having never had any oil/gas industry helps I suppose as Germans do not have a lobby for that and the car and machinery industry just like in Japan loves to tinker and fix and adjust and has mostly not been exported to Asia. Just my luck living here. I will keep my fingers crossed that rational solutions will continue to be chosen and that if 5-10% annual declines of available (PO+ELM) energy occur out to 2020-2030 that solutions will be made to conserve and offer alternatives at an appropriate pace so we don'T freeze and staarve in the dark.

When I lived in Germany in the early 80s, the German's love for efficiency was obvious even then. It is remarkable that they have become even more efficient. Too bad we don't have the efficiency bug here in the U.S. as well. Perhaps that will all change with high prices.

Also, Germany has a carbon emissions tax. I was there last summer and just about every single light switch had been replaced with ones that included timers and motion sensors. They're one of the countries in Europe who is successfully reducing their carbon dioxide emissions.

Amazing what warm weather can achieve...


In the above DailyTech article "despite reality, blief in peak oil persists" one can find the following statement:

In fact, since 1965, we've found five new barrels of oil for every three we've burned.

Could anybody point me to the likely source of those numbers? I imagine that part of the trick is to start counting in 1965 when annual discoveries where close to their maximum. Another question is the total disregard for uncertainty in those numbers (given official numbers, etc). Could it be that it counts in "barrels found" all sorts of sources hard to extract/mine which would not guarantee a flow of 5 barrels for every 3 burned.

Thanks for your help.


God help us when we burn those other two barrels. And do these discoveries include the magical discoveries coming from OPEC?


That's a pretty disingenuous time to start counting. The North Sea, Alaskan North Slope, and Siberian oil discoveries were all right after 1965 (68, 69, & 70, I believe). I think if he starts counting in 1971, he's going to get a very different number. Also, it would certainly include OPEC's phantom increase in the 1980s, as well as the "new oil discoveries" that result from some OPEC countries never lowering their reserves as they pump oil.

Anyway, the article is barely worth the effort to comment on.

Peak oil has little to do with how much oil has been discovered or not discovered - it is about the size of the 'tap' not the size of the reserves. Anybody that tries to argue against peak oil by talking about the size of the reserves doesn't understand Peak Oil or it's implications.

The known crude oil reserve contains literally trillions of barrels of oil, sadly the tap only lets out about 75 million barrels a day and for three years now nobody seems willing or able to open it any wider!

Worse, the world 'tap' is likely to start to close any time soon ...

worse still, the 'net export' tap started to close two years ago!

Exactly, like comparing a fire hose hooked up to a hydrant and a garden hose hooked up to a house tap, even if they both have access to the same water sources the garden hose will will only put out a fraction of the water that the fire hose will.

The article and comments are worth reading, however. I find the comments are utterly terrifying - the politics, conspiracies, blaming - all the usual suspects that go before the march to war.

Thanks Shargash, Xeroid and the rest for the clarifications. I do understand quite well the question of flows vs. reserves. But, does anybody know if 5 barrels have been "found" for every 3 consumed (in that time frame) and if so where I can find that information? (especially what the definition of "found" is). I fully agree that most of the arguments in the article are simplistic or flawed and that the author is light-weight. So it's more for my (our) culture and education, and not so much as a rebuttal. But thanks for the replies

You can find the World production graphed against world discoveries here:

Hi Massagran,

Sometimes people (whether accidentally or "on purpose") mix-up conventional and non-conventional oil. Then, if the extraction technology improves, they have been known to then say this is a new discovery. This might be contributing. I'm sorry I don't have a link handy, but I've seen (misleading) references to the Bakken formation described in this way.

Some of the barrels were "found" on Titan. ;-)

I wouldn't put too much stock in that article. For one thing, the author is using CERA's (=Yergin's) estimate:

Even better, a landmark study of 800 major oilfields recently performed by Cambridge Energy Research Associates (CERA) found that the rate of decline averaged only 4.5% -- about half of what was previously thought. That, coupled with new field development, means the world is on track to be pumping more than 100 million barrels/day by 2017, according to CERA.

Firstly, that 4.5% argument is a straw man -- who previously thought that the decline rate was 9%? Simmons has mentioned it as a possibility for the future, but usually around here IIRC people say something like 5%.

Secondly, he's claiming that depletion is going to be offset by new fields and holds up the one in Brazil and the Kashagan, "Ghawar-sized", field in Khazahkstan. This is incorrect I think, because the reserve estimates for Kasahagan are 9-15 billion barrels (link), whereas Ghawar has already produced 60 billion barrels (link).

Lastly, Yergin's track record on estimates ain't so good, to put it politely. To put it more accurately, it is horse-shit (pardon my language).

I wouldn't pay much attention to Dailytech. It's packed with right wing trolls and Michael Asher is as trollish as they get. Look at his past blog headlines:

Despite Reality, Belief in Peak Oil Persists
June 19, 2008, 10:21 AM
Greenpeace Sued Over False Global Warming Claims
June 12, 2008, 12:40 PM
IEA: $45 Trillion Needed to Combat Global Warming
June 9, 2008, 10:12 AM
SD Voters Approve Nation's First New Gas Refinery in 32 Years
June 4, 2008, 12:34 PM
Climate Change Causes Jupiter to Break Out in Spots
May 24, 2008, 3:36 PM
EU Court to Hear Case Granting Human Status to Apes
May 23, 2008, 10:45 AM
Researchers: Global Warming Halts Until 2020
May 2, 2008, 11:20 AM
Global Warming Researchers Reverse Stance on Storm Intensity
April 13, 2008, 3:56 AM
UN: Global Temperatures Will Decline in 2008
April 5, 2008, 4:31 PM
Britain, France Team Up to Export Nuclear Power
March 24, 2008, 12:25 PM

The crossover was around 1980, i.e the point where we start consuming more than we replace. If he showed the actual chart, it shows something completely different to the misleading stat he gave out.

Basically, the area under the consumption line can't exceed the area under the discovery line.

As you can see, the IEA forecast is just a continuation of past trends, ~+2% a year (easy money if you can get it!) - ask yourself how far that line can go up before the area under the consumption line equals the purple and green bits - after that there is no more crude oil, EVER!

So, does the IEA forecast (which OECD governments use for planning purposes) seem reasonable even in the medium term?Your answer to that question will determine whether you continue to read TOD or not!

Prices Curtail U.S. Gasoline Use

A report by Cambridge Energy Research Associates, an energy-consulting group, says 2007 probably will represent the peak year of gasoline consumption in the U.S., with annual demand dropping this year for the first time in 17 years. "All signs point downward from here," says Samantha Gross, associate director of CERA's global oil-research group and one of the report's authors. ...

Meanwhile, people have begun migrating from far-flung suburbs to urban centers where commuting distances are shorter and public transit is more easily accessed. In a poll this month of more than 900 Coldwell Banker residential-real-estate agents mainly in urban markets, more than 70% of them said their clients increasingly are interested in living in the city to shrink their gasoline bill.

"The McMansion in the half-finished subdivision in a distant suburb has become the equivalent of the large SUV that people can't unload," says David Goldberg, spokesman for Smart Growth America, a group that advocates for more compact, walkable communities.

If people are migrating from the suburbs, what are they doing with their houses? Leaving them empty? If they can't unload, their McMansions, are they just abandoning them in order to migrate? Or are they paying two mortgages.

A report by Cambridge Energy Research Associates, an energy-consulting group, says 2007 probably will represent the peak year of gasoline consumption in the U.S., with annual demand dropping this year for the first time in 17 years. "All signs point downward from here," says Samantha Gross, associate director of CERA's global oil-research group and one of the report's authors. ...

Ok, what? Did I just hear right...? CERA bought into Peak Oil...?

(For those of you who want to see the turn around, check out this article from 18 months ago...)

Meanwhile, people have begun migrating from far-flung suburbs to urban centers where commuting distances are shorter and public transit is more easily accessed. In a poll this month of more than 900 Coldwell Banker residential-real-estate agents mainly in urban markets, more than 70% of them said their clients increasingly are interested in living in the city to shrink their gasoline bill.

"The McMansion in the half-finished subdivision in a distant suburb has become the equivalent of the large SUV that people can't unload," says David Goldberg, spokesman for Smart Growth America, a group that advocates for more compact, walkable communities.

WOW... and item #2- Has everyone bought into Kunstler...?

This just made my day.

I doubt that CERA Have bought into PO. (They would look like followers rather than predictive Gurus)

At least not just yet - until it is safe for them to pretend that they were on top of it all along.

You must remember that these hookers have to try and maintain a reputation. But actually comparing these sleazy weasels with hookers is an insult to hookers.

They are one of the first to grab a claim that 2007-2008 will represent peak gasoline use in the US.

CERA missed Light Sweet PO by a country mile.

Reputations have to be rebuilt if they want to pretend that they are still in the 'prediction business'.

So, they have to 'predict' something else.

Bandwagons are there for the jumping on and it is a fairly safe bet now that track miles and Gasoline consumption will go down: Just delete the average miles times mpg by calculating the drop off in SUV sales, offset by the same in Compacts / hybrid sales.

That will be a safe prediction for CERA to get back on top of the game.

Nice work if you can get it.

Maybe we should have a poll to predict what CERA will call it:

  • Oil Depeletion;
  • Supply Shortfall;
  • etc.

As you say, mudlogger, they can't possibly call it "peak oil".

Or D. None of the above...

They will probably take the angle that it is all demand destruction driven by price. I would expect them to totally weasel out of talking about it being supply related.

RE: Extreme weather to increase with climate change

Well, now we have the official U.S. Government statement on the problem. It's rather funny that these folks are finally getting it. I was soundly berated by the director of NCAR for suggesting the same thing during an AAAS annual meeting back in 1980.

Anyway, here's the link to the US CCSP Press Release...

Now, how do we get this message to Bush/McCain and the RePugs??

E. Swanson

It's interesting because I remember when the paper that came out suggesting there was an increase in hurricane intensity there was an uproar. Specifically I remember a talking head from NOAA debating one of the authors of the paper on PBS saying something like "maybe 5%" of the hurricane strength was to due climate change. Looks like the Bush admin. has replaced the talking point on the political appointees and censors at NOAA now that he's decided he going to do something about climate change (in his last seven months in office).

Oil rebounds on word Israel practiced Iran attack
Friday June 20, 10:08 am ET
By John Wilen, AP Business Writer
Oil prices bounce back after Pentagon says Israeli exercises were demonstration to Iran


A co-worker and I were talking this morning about biking/busing to work. The topic turned to oil prices and she proceeded to blame it all on speculators and not being able to drill. She very firmly believed that. What really struck me was that she was just reiterating all the sound bites she has heard in the MSM. I think I am finally understanding the power of the MSM and sound bites. I'm really starting to think if the scenario unfolded of oil at $500 and economies around the world in smoldering ruins, people would still parrot whatever stupid propaganda the MSM was putting out and not understand the underlying causes.

-- rant off --

I think I am finally understanding the power of the MSM and sound bites.

The power of the sound byte is well covered in studies of Marketing, Propaganda, and psychological warfare.

People hear some sound bite and only vaguely remember the keywords. They never did get the context.

It is all done so that later, all he remembers is "Ya, I heard about that, But I think they have that taken care of by....."

But if you probe what they recall, you (and sometimes themselves) will see that they really didn't learn anything by the sound bite.

It is a way to desensitize an audience to a topic. So the THINK they have been informed, To THINK they heard the background, without ever having either.

Lies are offered freely

Truth has to be searched for. Just look at the cliches we use.

What I find equally amusing is the "peak oil scam" crowd. I keep thinking to myself that this is the worst hoax ever because 99.9% of the population does not even know what it is and if the do they don't fully understand it. Inability to form a general consensus of reality is a problem.

What I find equally amusing is the "peak oil scam" crowd.

Why? There is a demonstrated history of energy firms engaged in lies to 'extract' more money from their customers.

Do you find their naiveté to believe court documents and congressional testimony amusing? Or perhaps a believe that Corporations seeking to maximize profit would do such a base thing?

What about believing that you are being scammed is 'amusing'?

It's not the Mainstream Media. It's the Traditional, Establishment or Corporate Media. They're not in the mainstream.

Look at the issues that the American people are concerned about: the economy, Iraq, health care and the environment. Think about how much time the TradMed spends on these, versus the time it spends on the latest escapades of Brittany, Paris or a white teenager missing from a tropical island. The TradMed is not in the mainstream. When you look at how much analysis they devote in their political reporting to "process" or "horse race" stories, rather than the issues themselves, then you can see the TradMed is not in the mainstream.

The TradMed seeks to shape public opinion, not report it. If the TradMed was in the mainstream, then there wouldn't be any need for it to shape public opinion.

How the TradMed shapes public opinion:

Reporting that is bypassing the TradMed:

Slav farm reserves could avert global famine

Across a great arc of the Eurasian steppe from Ukraine through Russia to Kazakhstan lies enough arable land to feed the world for years to come, with spare for biofuels to help plug the energy gap.


Fertiliser for the Ukraine might not be so easy to come by, with disputes with Russia over NG...

Water is a problem too. Montana has a large amount of arable land. My in-laws inherited some a few years back. Unfortunately, there wasn't enough water to make it useful for much besides grazing. I suspect the same is true of much of Khazakstan. There's a reason the Khazaks were pastoral nomads.

Interesting. Greens and Veggies make a big thing of how much land is used for grain to feed to cattle. they forget that often cattle graze on land which is incapable of sustaining crops, such as Shargash's in Montana. If we stopped eating meat the land would be lost to food production altogether.

Most all of our beef spends a very brief time on grass. It is mostly fattened with grain in enormous stockyards. Since cattle are not meant to eat grain and stand hock-deep in shit, they have all kinds of potential health issues, and need antibiotics to cope. Etc., etc. But they get fat and taste like corn.

If we raised grass-fed beef, you'd have a point. As it is, your comment is nothing more than gratuitous "green" "veggie" bashing, as usual.

Full disclosure: I love meat. I buy local-grown grass-fed beef and free-range chicken. In fact, a couple of nice chicken breasts are about to go on the grill in just a few minutes. Yum!

The point is that livestock can be grazed on land that's useless for anything else. If no cattle were grazed on grasslands it could not be utilised for food production all, since people can not eat grass directly. Near where I live there are windswept hilly area's where sheep are grazed. Nothing edible for humans could be grown there.
Since there is a terrific amount of land in the world like that it would mean a great loss of potential food production. While a lot of grain could be saved by not feeding it to cattle it is no panacea.

Do you know nothing of the energy costs of beef? Apparently not. Do you not read before posting? Apparently not.

Begone, troll.


When you say it can't be used for anything else, you of course mean anything else that directly supports the feeding of human beings. But there are a lot of other uses, such as support of wildlife, which constitute use.

Further, there are a lot of areas unsuitable even for grazing that are grazed anyway and destroyed.

I know there are other uses as there could be for any farm land.But I was refering to food production,especially with regard to current world shortages

Anybody who thinks that Kazakhstan can feed much more than Kazakhs,

...Has never been to Kazakhstan.

Actually, Kazakhstan is a second level wheat exporter and home to part of Khrushchev "Virgin Lands" movement.

Long rows of identical cloned trees (all one female I believe) planted in precise grids to reduce surface wind speeds. Land is allowed to go fallow periodically, allowing soil moisture to accumulate. Annual production varies widely, from bumper crops to failures. Drought 2 out of 5 years.




The bit I went to looked more like the badlands or semi arid cold desert.

There were wolves though.

Starving, Mangy critters.

Cutting a living off rabbits and rats

As for Khruschevs 'Virgin Lands' movement.

That failed catastrophically in the 70's. (catch up on your reading)

Kz is a continental interior. Expect little from it with respect to soil fertility or precipitation.

The new film 'MONGOL' is worth a look. It was shot in the same environment.

Happy viewing.

FYI, Mongolians hate the film!

STATE Honored Figure, People’s Artist and film producer G.Jigjidsuren has come down heavily on Sergei Bodrov’s film The Mongol as an unacceptable distortion of Mongolian history and as a brutal assault on Mongolian sensibilities. Its technical excellence cannot compensate for its consistent misrepresentation of facts and its possible commercial success does not speak for its artistic merit. The film, shown on TV channels in the country, has caused outrage. Echoing national sentiment, Jigjidsuren has said in an interview with the daily Mongoliin medee that he has information people in several other central Asian countries, earlier under Soviet domination, have “also reacted with aversion” to the film. “The memory of the Great Chinggis Khaan and historical truth both demand respect and honesty which the film made by a Russian does not show in any measure,” he said.


So the Mongols have been fed revisionist history just like the Americans. You think this is news?

If Howard Zinn's 'American People's History of the United States' were to be made into a movie it would be met with outrage in America.

Zinn's history was compiled from original source documents. It is the real history of the US. It has sold far more copies than any other history book written by an American and is in it's umpteenth printing. It is the brutal truth.

People believe what they want to believe...


I'm so sorry. I thought a lot of people might not know how the film was received in Mongolia. Evidently I was wrong. Silly me.

I've read Zinn's book, and I think it's great. But the Russian film is hardly a historically accurate documentary, so the comparison is odd.

The Virgin Lands movement was a disaster


Nearly all of the collective farms in the Virgin Lands grew one crop alone: wheat. By the 1960s, the soil had been drained of all its nutrients beneficial to wheat. However, production of fertilizers in the USSR had increased during this period and so the loss of fertility was principally due to poor planning as the fertilizers were rarely available where they were needed. Before long, due to lack of any measures to prevent erosion, much of that soil was simply being blown away by the wind to leave bare, useless steppe behind. In 1963, Kazakhstan was lashed by hurricanes and millions of hectares of soil were rendered unusable.

Also, much of the crop that could be harvested was wasted, as there were not enough storage silos, so it had to be thrown away. Furthermore, the Soviet infrastructure was unable to cope and so much of the grain produced did not reach the towns, which was where it was most needed.

Therefore despite the initial success of the Virgin Lands Campaign, the Soviet Union was forced to buy 20 million tonnes of grain from Canada to meet its needs and avoid famine. This constituted a huge humiliation both for the USSR and for Khrushchev, who had boasted that the Soviet Union would oustrip US agriculutural production.

Re: Despite Reality, Belief in Peak Oil Persists

We have had a fair amount "inside baseball" discussions of monthly production data and peaks versus annual average, which of course is pretty much irrelevant in the grand scheme of things, but, like a lot of cornucopians, the author of this article (linked up top) wants to use monthly data to show that the Peak Oilers are wrong about a near term peak. I believe that he goes on to say that Peak Oil is decades away, and then it will just be a very gradual decline, with alternatives coming on line. BTW, as a near term peaker, who supports Deffeyes' logistic (HL) estimate, I have been accused of "Killing the Peak Oil Movement" all by myself. Who knew I wielded such vast power?

In any case, one point that is easy to overlook is that the HL method is best used to estimate the area under a production rate versus time curve, i.e., the URR for a region--and not the production rate for a given year. For example In the following article (linked below), I showed how the HL method was quite accurate in predicting the respective post-1970 and post-1984 cumulative production for the Lower 48 and Russia, despite wildly different looking curves, but the point is that the models accurately predicted the areas under the respective curves (using data through 1970 and 1984 respectively to generate the models). The Lower 48 was relatively smooth, Russia had a sharp decline, followed by a rebound, and now their cumulative production has "caught up" to where is should have been, and their production decline has resumed (and exports are falling at a pretty brisk rate).

So, what about Saudi Arabia?

I don't have the projected HL based C+C decline rate for Saudi Arabia, but the P/Q intercept suggests that the decline rate will be less than Texas (-4%/year). Khebab shows a middle case of -2.7%/year for C+C+ NGL, so let's assume -3%/year.

The observed versus predicted C+C rates (assuming -3%/year) are as follows:

2005: 9.6 mbpd
2006: 9.2; 9.31 (predicted)
2007: 8.7; 9.03 (predicted)
2008: 9.2 (to date, EIA); 8.75 (predicted)

Through 2008, the cumulative difference between 9.6 mbpd and the predicted annual production rate for each year should be about 621 mb. The actual shortfall at the end of 2007 was 475 mb, which suggests that the 2008 shortfall (between 9.6 mbpd and actual) should be about 400,000 bpd, which suggests an annual production rate of about 9.2 mbpd. We shall see what happens in the second half of the year, but I expect to see annual average Saudi production in 2008 come in below their 2005 rate, and then resume a production decline in 2009.

BTW, this is not an ex post facto argument. In March, 2007, in response to a comment by Stuart that the Saudi production decline was below what the HL model predicted, I responded that I had been speculating about a rebound in production for that very reason (and I did say a sharp decline followed by a rebound to a level "well below the 2005 rate").

Finally, the monthly versus annual record keeping needs to be put in some kind of economic perspective. Let's assume a country that does 10 mbpd in January, and then 5 mbpd for the rest of the year. From the point of view of the oil consumers in the country, which number is more meaningful, the monthly peak of 10 mbpd or the annual average of 5.4 mbpd?

In Defense of the Hubbert Linearization Method (June, 2007)

errr, will the rating system include who rates what what way? Because I'd love to know how the parent (by Westtexas) was worth a downrate.

Somebody is going around rating all the comments down, it's not just westtexas' comment. I think the thing to do is follow the slashdot example further and start using karma and only give out moderator points to commentors who continually demonstrate they can contribute constructively. Making moderation public would be good too.

First, I would like to assure you that I am not the one 'going around rating all the comments down...' But, I did give you a negative. The reason is that the thought control police do not need to do more to destroy this forum...they are doing a fine job without your suggestions.

BTW, I am willing to have any of my 'moderator points' made public...and, in your case, you have an explanation already.

The reason is that the thought control police do not need to do more to destroy this forum...they are doing a fine job without your suggestions.

What are you talking about?

Bumped up for being sane. River, you apparently are not being perceived by others here as being constructive. Back to grade school for you! No soup for you, either.

Daily Kos only allows trusted users, i.e., those with significant posting experience and high-rated comments and few to no downrates, to downrate anybody's comments. You can only recommend (uprate) a comment if you are anybody else. This eliminates the ability of trolls and drive-by users to downrate comments. We might want to look at some adaptation of that strategy on this board, if we are going to stay with rating people's comments.

Bring on the trolls!! Down with suggestions to create our very own elitist society here on TOD. Oh, we should all play nice over the next few weeks so we can be part of the elite corps who gets to down rate others. This is turning into a nightmare. Next, we will have to post our pictures.

BTW, this quantitative model based discussion of Peak Oil/Peak Exports, especially in regard to Saudi Arabia, generally brings out the Cornucopian Goon Squad in full force, so it will be interesting to see who shows up.

Well,if they are going to show up, I'd rather they show up with comments that can be debated rather than ratings. Or, perhaps, you planned to debate the ratings. Btw, before I upgraded your comment above, it read 0. After I upgraded it, it read 6. Does that make sense? The rating I am talking about is not related to your comment immediately above, but two comments above. That is, your initial post.

Russian oil export falls 4.2% in Jan.-April, to 81.4 mln tons

In April, oil production in Russia fell 0.7%, year-on-year, to 39.7 million tons, domestic sales rose 0.2%, to 18.1 million tons, while exports fell 7.3%, to 20.3 million tons.

I gotta hand it to you WT, you really stay 'on message'. Had you been working as a pr guy for GWB his popularity ratings would probably be up around 70%.

Man, I could really use 30 or 45 of those + greenies. Maybe I will adopt your style. Yeah, thats it! I will find a message and stick with it.

Best Hopes For Staying On Message And Avoiding The Thought Control Cops...

WT understands how most human brains work. They only get the message with repetition. This is to counter the repeated and powerful messages, backed up with million dollar commercials, of the iron triangle. Tell them what you are going to say. Say it. Rinse and repeat. But it is not just that. People here agree with the message that is being transmitted because they think it makes sense. I think it makes sense. People are free, of course, to present alternative messages.

Re: Despite Reality, Belief in Peak Oil Persists:

Articles that try to debunk P.O. while in reality the world is driving off the energy supply cliff will do nothing but further complacency, the delay caused by such complacency could very well cost many lives.

Over the last several years I have spent an enormous amount of time reading and studying on a variety of websites - TOD being the best of them all. In many ways it has been like a second education, and it has been personally very rewarding, as well as quite sobering. In that time I have reached the point that I am comfortable with the big-picture understanding I've gained in many areas, including peak oil, climate change, the geopolitical maneuvers that are presently occurring, and to a lesser extent the financial situation. It's not that I feel I am an expert, and I believe the details of how things will play out are unknowable. Ironically, it is the details that will matter most of individuals.

In general though, I feel that the die is cast, and lately I'm feeling like the large amount of time I spend reading on the web has become nothing more than an obsession. There are a couple of ares I need to understand better, mostly on the economic front, but it seems as though it is time to focus on Jeffery's ELP - not just physically, but but to think locally too. While I am fascinated by how all this is playing out in the world, I have absolutely no influence upon it. Wouldn't it be far better to spend that time on real projects around my home, and of course with my family? What I do locally will have a far bigger impact on the lives of my family than what I understand on the other side of the world.

So that is to be my new plan - to keep enough of an ear to the ground to remain aware of what is happening, remain receptive to changes, but to drastically reduce my on-line time. I think that I will be more productive and less distracted, and somehow I think the collapse of Western Industrial Civilization (which is what I think this is the beginning of) will continue on regardless of whether I am watching or not.

Despite all the time I spend reading here, I feel the same. What I read never changes my opinion or my outlook, it simply reinforces it. For me, the response is the same, regardless: We must go to renewables and we must recreate our world in a way that is sustainable. What can I do? Get off grid. That's a simple enough, though not easy, thing to accomplish.

So... why do I need to read more stories, more stats? I don't.

Perhaps it's just frustration at not being able to do more at the moment.


In many ways I have arrived at the same place over the past four years. The technical discussions and the vast amount of data on TOD are wonderful and will always be worth reading. However I have arrived at the conclusion that that the die is indeed cast and are in the air about to land. As far as planning for the futre I think Jeffrey's "ELP" is as detailed as advice can be from afar. Each person will ahve to do the detailed planning of what ELP might mean for them. I have a large family that maybe should be gathered together, you may have many friends who think lkike you and can work together, Leannan might have a congregation to build upon etc etc etc
However i think we might get a few more months, weeks, days or hours of warning from TOD about impending developments than we will from the MSM. I try not to be too obsessive reading TOD.

I've been lurking for over a year now, posting for a few months... it's been like watching a train wreck for me. (I know, a horrible macabre thing to say, but...)

Every day, hoping I'm wrong but fearing I'm right. And, every day, I'm slowly watching my fears slowly come true. Maybe I'm here to see an end to this... Maybe I'm here to try to rationalize this as a bad dream, and it'll be about 8 years ago. Maybe I'm hoping that the last decade (9/11, GWB as prez, Iraq war, Peak Oil, the shrinking middle class and the slow economic disintegration of America) didn't happen. Maybe I, like everyone else, was wishing this is a nightmare from which we will wake up from, rather than a nightmare into which we are falling into...

But, what can I do? Continue to dream the dream or fear the reality?

No sense worrying about things you can't control, but no sense being an ostrich with your head in the sand either.

I think it is useful to come quickly to the understanding that unless one is in the top 1% or so of the income/wealth distribution, you are probably not going to be able to end up being very much better off than your neighbors. You'll be doing good to just not end up being worse off. Too many people get too stressed out worrying about how to maintain their BAU standard of living, regardless of how much and how quickly the surounding economy goes down the tubes. Forget it, when the economy starts going down, so will your part of it. Let it go, and be at peace about it. IMHO, the sooner one can make this basic mental adjustment, the sooner one can get on with the work of adjusting one's lifestyle to the way it is going to have to be, and making whatever transitional arrangements and preparations one needs to make so that it will go better rather than worse for you and your household.

I agree - much better to have realistic expectations. I have no intention of being an ostrich, but balance is important. It really changes nothing if I read all of the [new] comments in every daily DrumBeat. The time would be better spent talking to my kids, or getting to sleep so I can get up earlier and work on projects - there's that hand well pump that's been in the barn since last fall, the garden to work on, some old pasture to clear, and always more firewood to be gathered.

Agree and disagree. I have learned a lot here, and continue to do so, but I'm not sure what benefit it will actually have on my life. It's important to balance your priorities, and spend time on what you enjoy and/or is important to you. I wouldn't be on here if I didn't enjoy learning this stuff.

That said, some stuff/posters are more useful than others. Lately, I have been learning a lot from totonelia and his fertilizer posts. Less useful are the twelve comment long strings of arguments about who made the first ad hominem attack.

Hmmm... it depends what you mean by the "die is cast". Things are changing and are unfolding in even higher speed than I initially expected.

Personally I have made up my mind how things look like, to a great extent I am also convinced of what should be done about them; what I really don't know is what will be done about them. This is why I continue actively following things - my own micro planning and my opinion of what will be the outcome of all of this evolves with what is happening on day to day basis.

To me, "the die is cast" means that he broad outlines of what is ahead are clear, even if the details will remain foggy until we are upon them. While it is fascinating to look at it, doing so isn't changing anything. Unlike you, I make no distinction between what can be done and what will be done - there have been many things that could have been done over the years, but they were not. All of that is incorporated into my own view of what is coming.

To me, "the die is cast" means that he broad outlines of what is ahead are clear

Care to elaborate? Personally I think we will transition to nuclear & solar economy after several more or less turbulent decades. But along the way I'm not excluding neither of economic collapse, hyperinflation, deadly wars, collapse of third world countries, mass migration, ecological collapse, pandemics etc. I'm not even excluding that these will lead to a series of cascading collapses and the end of our civilization, I just don't think it is very likely (I put it to say less than 0.1%).

I think it makes a huge difference whether we'll have those events along the way or not. They will also determine how long the transitioning period will last. Simply put - we can go through it the easy way or the hard way. This period I'm talking about is likely to go on through the rest of my life so it's understandable I want to figure out how the details will look like.

Actually, twilight, 'the die is cast' meaans that the speaker has committed to a course of action but has not yet any idea of the outcome - the rolled die has not yet come to rest. The saying is usually attributed to JC upon his army's crossing the Rubicon on its way to Rome [the Rubicon was considered the northern boundary of the Roman homeland.

Your way of thinking about the future is wrong. What all of us usually fail to consider is the possibility of a 'Black Sway' event. Black Swans can be good or bad, they are, by their name and nature, unexpected.

For instance: What if Pakistan launched an all out surprise nuclear attack on India? What chain of events would this trigger?

Alternatively: What if tomorrow someone made a real breakthrough discovery in production of cheap, easy and safe fusion reaction created energy? What chain of events would this trigger?

We create narratives of possible scenarios of the future in our heads. We are almost always wrong, or, we are right no more than half the time. No better than a coin toss.

You should read Taleb's book: The Black Swan. It will give you a very different view of the way humans think, store, process, and retreive information from our brains. It will also explain that even professionally trained statisticians almost always fail to calculate the real odds of a random event in thier every day lives. Not to single out any discipline because we all make the same mistakes. Interesting book.

I guess I did not do a good job of explaining - I think the most important thing anyone can do is to keep an open mind and be ready and willing to embrace change. To me, the "black swan" event you describe is simply a typical possibility in a world under severe geopolitical stress from the effects of PO, climate change, etc. It's well within the outlines of what I expect - I do NOT have some kind of detailed roadmap in mind, rather I expect major geopolitical problems.

But I did not intend this to be a post stating my vision of the future, the point is that what I see is in broad terms not really changing based upon my incessant reading at this time. If something like the attack you describe happened, I would pay attention to what was going on and attempt to adapt as best I could.

Now I'm off for a week of vacation with my family, and I will use it as a good way to break the cycle.

Having just (nearly) read Taleb's book, a couple of questions spring to mind:
It seems to me that a lot of the stuff which has modelled peak oil and climate change has probably used Gaussian distribution curves.
This could, with a difficult to determine probability, lead to the chances of other super-large fields of oil, gas or coal being underestimated, as might the conditions under which they would form.
On climate change, similar considerations might apply to the models, and not only would significantly worse or better outcomes have a higher probability, but a lot of the assumed causality might need at least re-assessing.

These are just initial thoughts on a very complex subject - what do others think?


Your sentiments struck a note with me. I feel that my time will be better spent working on my personal lifeboat strategy. Those who have been paying attention know what is coming down. Dr. Gary North summed it up very well 8 1/2 years ago.

We're on the Titanic. It's time to start moving toward the lifeboats. There aren't enough of them for every passenger. Let the folks in the grand ballroom enjoy their evening. They don't want to hear bad news; they're having the time of their lives. Meanwhile, collect your valuables, put on a life jacket, and grab a blanket. It's going to be a long night.

Best regards,


That Gary North quote was referring to the coming Y2K disaster.

Y2K is frequently held up as a doomer prediction that went wrong.

It is actually a doomer prediction that was averted successfully by the efforts of the IT industry quietly getting on with the job in advance of a specific bug occuring at a specific time..

Sure, some of the doomer predictions were pretty wild and apocalyptic, and the world carried on. But one of the great unknowns is what would have happened if Y2K had been ignored. Not much perhaps, unless you were on a passenger aircraft of the Pacific that suddenly shut down. Then you would have undergone a personal apocalypse.

Just think. If ten years ago the scream of PEAK OIL! had been taken seriously by Governments and industry just has Y2K had been taken seriously.

Who knows these things?

We fixed the bugs because we could actually show the management types what would happen if we didn't. It was easy. Just reset the clock and watch the computers do amusing things to their paychecks.
If only peak oil was that easy...

I know a lot of money was spent by the IT industry on Y2K work, encouraged by IT suppliers and contractors. This is held as proof that disaster was averted, but in my experience little of this effort was actually needed. A lot for example was spending on new systems that were guaranteed Y2k compliant rather than take a risk with older systems. The older systems were due to be replaced sometime, so capital expenditure was brought forward. Many countries spent next to no money on Y2K work and suffered no ill consequences, so we actually do know what happened if Y2K was ignored.

We did find some Y2K bugs at our company, but nothing major, and was no greater workload compared to the bugs raised every week. The idea that "planes fall out of the sky", traffic lights failing etc, is and was utter hype, mostly put about by ignorant media people looking for a story.

The meme of "industry scare mongering" is quite wrongly often applied to PO, and comparing PO to Y2K does PO a great disservice. Skeptics like John Denver easily pull apart doomers like Kunstler for his belief in Y2K.

This comment about a reader's personal experience with the topic of the thread - Y2K bugs - currently has a -3 rating. Yet the comment it's in response to, which contains no experience with or information about the topic but has a popular view, is rated as +3.

Consider the stated intent of the rating system:

Down ratings should be reserved for comments that violate the reader guidelines. Do not rate a comment down just because you disagree with the opinion being expressed.

Reading through the reader guidelines, I think it's pretty clear that the instructions for downrating are being utterly ignored, and that ratings are being used simply to express agreement or disagreement.

That may or may not be a valuable addition to the site, but I think at this point it should be fairly clear that the odds of the "ground rules" being followed are approximately zero.

I pretty much knew my comment would get downrated before I posted it, because it obviously runs counter to the groupthink. I still made it because I cling to the idea that there is a genuine discussion going on here.

There is. But strenuous efforts appear to be being made to stop it. :-)

The thing is the quote is quite appropriate under the current circumstances as well, perhaps more so.

In general though, I feel that the die is cast

I have been thinking the same thing recently. The time to tackle this problem was years ago. At this point it seems to me that there are absolutely no easy solutions for governments. So they will incrementally manage the problem until the political climate changes and everyone gets a crises mindset. By that time will be smack bang in a 20 year Hirsch depression. There just seems to be too much worldview inertia and fingercrossing from politicians. At present, they won't level with the public that BAU is not a sustainable business model, show the politically suicidal leadership needed and institute radical and painful change. Too late for problem mitigation - just crises management.

and lately I'm feeling like the large amount of time I spend reading on the web has become nothing more than an obsession

Once again I emphasise. And from the look of the positive ratings, so do a lot of people here. My problem is that is no longer gives me the intellectual thrill that it once did! I have looked at the world through the peak oil/limits to growth/sustainability perspective for many years now, and now that it seems confirmed with the flood of recent evidence...I find myself a bit bored just reading things that confirm my general opinions on our current trajectory.
Not to say that there is not a lot of analysis that needs to be done! For example - The 1-2 punch of Energy scarcity/Climate change and the knock on effects to Defence are not covered in TOD (John Robb was a fine addition-savaged abit by people on here) much but may be one of the scariest aspects of the situation.
I look at my neighbourhood in South East Asia and think conflict is a real possibility over the next 40 years. By that I mean persistent and widespread Insurgency, sabre rattling and or limited strikes to force energy/food trading, and possibly a good old fashioned high intensity conflict are real possibilities. Once crises mode hits -the moderate governments of today could quickly be replaced with strongman, or crime gangs (hollow government ala John Robb) or just fall apart under civil unrest and/or ethnic splits. In such a geopolitical landscape anything is possible. It is a good bet that war will be a growth industry. (That is an open invitation to any budding Int Analysts to knock up some posts on your own area - my knowledge is modest and my training schedule murder :)

So that is to be my new plan - to keep enough of an ear to the ground to remain aware of what is happening, remain receptive to changes, but to drastically reduce my on-line time. I think that I will be more productive and less distracted, and somehow I think the collapse of Western Industrial Civilization (which is what I think this is the beginning of) will continue on regardless of whether I am watching or not.

I think that this problem will soon stop being a far away internet thing and will soon be crawling through the windows, so to speak. Still, since you have educated yourself and internalised the "collapse" worldview you are a fully prepared and politically "useful" citizen. Now as for the remaining several billion...

1. Just a reminder, thanks in advance for clicking the "SHARE THIS" buttons (which are available on all our posts) and vote for our work on various sites like reddit and digg. Those link farms help us get a lot more eyes, which means more ad revenue to support the site--it's worth ten seconds to do it, I hope.

It's easy. Give it a shot. If even 50 of you of you do this for our posts, I guarantee you we get 5000 readers out of it. Yesterday's cement post really hit, just because it got upmodded a bunch of times on reddit and digg. This stuff works--and as many people come through here daily, we should be rocking those link farms like other sites do!

2. TOD is on twitter now with our RSS feed: http://twitter.com/theoildrum. If you are a tweeter, erm twitterer, erm, give us a follow...and tweet your friends about our posts now and again. 210 followers and still growing.

3. If you have a blog, or are a member of a messageboard, or play at a link farm like metafilter or anything else, the more you plant links to our stuff that you like, the more eyes it gets...it's that simple. Every little bit helps. Submit our stuff to those link farms or use the ShareThis buttons found around each post, they're simple (as long as you are logged in to the respective sites).

4. Tell your friends! :) We really do need and appreciate your support. That and educating folks about the problems we face is what keeps us all going.

Thanks for hanging out, and thanks for making this all worth doing. I learn something here every day--and I apologize for these incessant reminders of things.

We Can’t Drill To Lower Fuel Prices

And so why do I oppose opening additional, ecologically sensitive areas to offshore drilling?

Consider that companies already have more than enough resources available to them. Between 1999 and 2007, the number of drilling permits issued for development of public lands increased by more than 361%. In the last four years, the BLM has issued 10,000 more permits than have been used. That means the oil and gas companies are actually stockpiling extra permits, and that these companies hold leases to nearly 68 million acres that are not in production.

This is particularly true for offshore areas. On the outer continental shelf, there are 7,740 active leases and only 1,655 in production. Only 10.5 million of the 44 million offshore leased acres are currently producing oil or gas. Moreover, four times more natural gas is contained within the waters already open to drilling than in those protected by the ban.

"If you don't eat your meat, you can't have any pudding! How can you have any pudding if you don't eat your meat?" - Pink Floyd

Is there a futures market in drilling permits? If not, there should be. The general public should be able to get in on this scam.

An interesting write-up on the work of Professor David J C MacKay of the Cambridge University - looking at the various options for a post-peak / post-carbon world.

Anyone with even a slight grasp of energy units should know that this is madness. Skipping one bath saves a much energy as leaving your TV off standby for over six months. People who wash regularly, wear clean clothes, consume hot food or drink, use powered transport of any kind and live in warm houses have no need to worry about the energy they use to power their electronics; it's insignificant compared to the other things.

You can even read his book on his website.

That's an interesting and useful analysis. I like his willingness to explore many scenarios and the realistic impacts. The suggestion of an online tool for people to explore their favorite policies is a great one; hopefully he'll get some help with that. He is very sanguine about the economics of nuclear power.

Not leaving electrical items on standby doesn't affect your quality of life much - not doing all the other things does and that is why people are reluctant to cut back unless they have to - so, if they can afford it they will pay what it takes to get a gallon of gasoline.

Anyone with even a slight grasp of human nature should know that once you have a lifestyle dependent on consuming FF for a considerable period of time, especially when it is whole nations, it is very difficult to stop using FF.

Even better would be government action to ban standby mode [hell, just any government action would be an improvement]. Consumer goods only need to be on or off. This would allow you to properly use one switch power savers like this:


These claim to "say goodbye to standby", but of course are useless for multiple equipment with standby modes, since you still have to turn all the damn stuff on!

Your answer is coming soon - take a look at this:


What this means is that every thing that draws current from the unit will communicate and have the ability to enter various standby modes (down to no-load). This means that instead of each vendor supplying a power adaptor, there is a single extensible adaptor that can manage power to all of the devices.

(I have nothing to do with this company but I can see lots of good opportunities here)

Very interesting. I like this quote:

The one thing I am sure of is that the answers to our sustainable energy questions will involve numbers; any sane discussion of sustainable energy requires numbers. This book’s got ’em, and it shows how to handle them.

Alas, from reading that article (I havn't read his book), I see a major neglect of doing the numbers on efficiency and conservation. He assumes that "Most of us don't see basic hygiene, decent food and warm houses as sinful luxuries, but as things we can reasonably expect to have. This means that society as a whole needs a lot of energy" - about as much as it uses now.

I think that the real "solutions" will come from figuring out how to use a lot less, while still remaining reasonably comfortable. It will require giving up, or drastically cutting down on, some things, that will become to be seen as "sinful", or at least unsustainable:
* the personal automobile
* houses with poor insulation
* incandescent bulbs
* much outdoor lighting
* detachment from nature's schedules
* large "conditioned" living space
* large lawns
* much food from far away
* much intercontinental travel

Just for one example, he considers dozens of KWH/day/person insufficient. My (2-person) household usage of electricity is about 3 KWH/person/day. (That's only electricity, the other energy uses are higher.) If I were to remove the power strip that keeps my TV from being a 20-watt (measured) phantom load, that would increase my household electricity usage by about 10%.

Nothing wrong with a "large lawn" as long as you have some sheep, cattle, goats, etc... out mowing the grass for you and some chickens out spreading the free fertilizer, supplied by the mowers, around in their hunt for something to eat (bugs). And the mowers will even do the trimming around the trees without having to ask them!

Well Said! We really need to understand that lawns will convert quickly to pastureland. I can see young people shepherding goats, sheep and cattle from lawn to lawn in suburbia.

"The lord is my shepherd, I shall not want
He makes me down to lie
Through pastures green he leadeth me the silent waters by.
With bright knives he releaseth my soul.
He maketh me to hang on hooks in high places.
He converteth me to lamb cutlets,
For lo, he hath great power, and great hunger.
When cometh the day we lowly ones,
Through quiet reflection, and great dedication
Master the art of karate, Lo, we shall rise up,
And then we'll make the bugger's eyes water."
- 'Sheep', Pink Floyd

Cover Art for the album featuring this song:

Interestingly enough, this is of the now defunct Battersea Power Station . This station (see link) has been the subject of a debate about what to do with such a building... Folks want to tear it down or refurbush it. Funny, when PO hits, we'll have quite a few of these buildings around...

It is now TATE!

Or the Tate Modern Art Gallery.

It is where the Glitterati go to be seen on opening nights of new and highly disturbed young artists.

No, Tate is a different beast (but designed by the same guy).

Nice try... but... close enough to warrant a decent comment.


The Tate Modern in London is Britain's national museum of international modern art and is, with Tate Britain, Tate Liverpool, Tate St Ives, and Tate Online, part of the group now known simply as Tate.

The galleries are housed in the former Bankside Power Station, which was originally designed by Sir Giles Gilbert Scott, the architect of Battersea Power Station, and built in two stages between 1947 and 1963. The power station closed in 1981. The building was converted by architects Herzog & de Meuron and contractors Carillion[3], after which it stood at 99m tall. The southern third of the building was retained by the French power company EDF Energy as an electrical substation (in 2006, the company released half of this holding).

Since the museum's opening on 12 May 2000, it has become a destination for Londoners and tourists. Entry to collection displays and some temporary exhibitions is free.

You beat me to it! Battersea power station incorporated a district heating system using waste heat for heating a development of apartments on the other side of the Thames.

er.. no, actually.

the Tate Modern is the old Bankside Power station, which is roughly across the river Thames from St Paul's cathedral. AFAIK, the old Battersea Power Station (further up river) is still a shell waiting for a use.


But this was a coal fired station, if it still had its turbines P.O. may have brought it back to operation. I fear that P.O. may bring back old retired coal fired power stations, as a last resort to keep BAU.

The best you'll get will be goats foraging and returning to some sort of stable at night, which is already SOP in parts of Africa. These are your little 18" high at the shoulder jobs mind, not your walloping Alpine things. Not worth wasting time following them around.

I should think the embodied chemical content of an average suburban house and garden would make it fairly toxic grazing though.

Indeed he is right. I think that all serious discussions about our future should involve numbers. Lots of them. Unfortunately there are less and less people nowadays who can deal with numbers. And I'm not talking about higher math skills here but just basic proportions and scales.

We had an argument with a friend of mine here who insisted that turning off and unplugging appliances for the night at his home would save significant amount of energy. I did the calculation for him on paper with some comparisons for using the Sauna (electric), cooking food on an electric stove and having the computer run all night as a server. Just daily cooking and refrigeration of food uses many times more electricity than running all the electronic appliances in the house...

Here in Finland the houses are significantly more insulated than in the states, with things like triple windows and heat salvaging from the air conditioning. With a well insulation of the house, you actually end up with almost nill net energy use because all the appliances do is turn electricity into heat which then heats up the house. In response to this the thermostat turns down the heating of the house (yes, here we have to have some sort of heating of the houses almost all year around) and thus saves an almost equal amount of energy. So in a well insulated house it doesn't matter if you use incandecent bulbs or run your computer and TV 24/7 because thermodynamically you'd use almost the same amount of energy anyway.

I suggested to him that he could make a real significant contribution to energy use with cycling to work instead of driving (for him its within range with good cycling roads here) and going vegetarian (he's having digestion problems so it would be good for his health anyway). Sadly people don't want to hear solutions that inconvenience them.

Imagine that, someone ignoring advice on diet and exercise.
Nah, gimme a pill, Doc, one that'll turn my pizza 'n' burger waste into biofuel: Soylent Sour.


That's one of the best links of all time! Thanks.

Read the whole article (and it is long - 6 web pages - but very worthwhile), it is not about TV standbys vs. other conservation measures. It is really about the author's comprehensive analysis of UK energy supply and demand, and various possible scenarios for the future. It sounds really impressive, I'll try to work my way through his free online book during lunch.

This seems definitive. Thanks for the link.

OK, I did a very quick skim during lunch of his whole draft book here:

Sustainable Energy - Without the hot air

It is truly an impressive piece of work. This deserves an article of its own and wide discussion. Maybe Euan could take the lead with this over on TOD:Europe?

The format and methodology utilized by the author would work very well as a template for other national and state/provincial energy plans.

I did an Open University course on sustainable energy last year. My tutor highly recommended David MacKay's site as an example of how to think clearly about energy production and consumption.

Drilling for Oil (1 hour radio show)

Yesterday, with four-dollar a gallon gas and voters in pain, George W. Bush - the son - called for drilling up and down America's shores. So, this week, in a turnaround, has John McCain.

A federal report says the drilling wouldn't budge oil prices until 2030, and then insignificantly. Barack Obama says this is dodging the real energy issues again.

This hour, On Point: the debate on whether to drill or not.

Why the U.S. Is Not Addicted to Oil, or How PHEVs Can Help Solve the Energy Crisis

These people aren’t addicted to oil. They just don’t have access to the vehicles that can get them to and from work, everyday, without using the stuff. But they do exist. And it won’t be much longer until consumers will have the option to purchase these things at their local dealerships. We’re not talking about decades anymore, either. We’re talking about three to four years! And when this happens, you’re going to see the true power of consumers, as their purchasing decisions will reflect the demand for real fuel efficiency—thereby continuing the transition of the personal transportation marketplace. This is why PHEVs have a real shot at being the first alternative transportation technology to become integrated on a large scale.

It's a good article, but some of the comments below it are more telling...

"The vehicles exist right now."

Correction. PROTOTYPES exist now. CONCEPTS exist now. One-off hobby cars exist now. Conversions that cost half as much or more than the original car exist now.

When I can walk into a dealership and buy one off the lot, then, and only then, will they "exist" for all practical purposes.

Sadly, all-electric vehicles existed in the late-1990s and were killed by the car companies. All-electric vehicles are, in my opinion, even better than PHEVs.

I sincerely hope the PHEVs, or all-electric vehicles, come on the market next week. I'd love to buy one. I am not holding my breath though.

They are on the market now, although not in great quantity.
The Th!nk as mentioned here is not out yet, at least in the UK, but earlier versions are:
UKP14,000 TH!NK city electric car ready for showrooms

When I can walk into a dealership and buy one off the lot, then, and only then, will they "exist" for all practical purposes.

You can today do exactly that (at least in Europe or India): http://www.goingreen.co.uk/store

I've seen a few (not many!) of these parked around London.

Some wikipedia quotes: http://en.wikipedia.org/wiki/REVA

REVA (REVA G-Wiz in some markets) is an Indian electric car intended for use as a City car. More REVAs have been produced than any other currently selling electric car [1] and sales are increasing[2].


the G-Wiz was named as Top Gear's "Worst Car of the Year". Presenter James May called it the "most stupid, useless, and dangerous car to stalk the earth".

antidoomer wants us to think there's an easy way out of our oil addiction. Clearly (and Gee Dubyah has said so too), we are addicted to oil, since withdrawal form our present installed base of oil consuming systems will require considerable changes, which will be painful and costly. PHEV's may become a part of the answer, however, the time and expense of building these vehicles and adding a major increment to the electric grid to "fuel" them may be impossible, if the decline in the availability of oil happens faster than these can be built and paid for.

E. Swanson

Re: miles per gallon or gallons per mile

As an European myself I once gave a thought why vehicles around here are rated by MPG instead of the other way around (gallons per mile or liters per 100km as is in Europe). I came to the conclusion that the reason is cheap gas: if you are used to paying 1-2$/gallon, you don't really care how much gas you need to take you 100km; you are more concerned how far what you put in the tank will bring you, simply because gas is so cheap, that most people don't care about this expense.

But if they have to pay 5-8$/gallon as has been for decades in Europe, people start to think the other way around - how much fuel will this or that trip cost. Once americans start adopting this mindset (and I feel at $4/gal they are already starting), I expect to see miracles of conservation and cutting back in this country. We are simply wasting too much, because we had too much for so long. At some point of time US can adopt the gallon per mile measurement - or a gallon per 100miles as more practical. Thus a 10MPG Hummer would spend 10gal/100 miles, while a 50 MPG Prius will spend just 2gal/100miles

Besides, with the American mentality of "bigger is better", they have a hard time with indices where a larger number is worse.

I didn't think of that :)

Maybe I'm naive, but when I bought my car I figured out what gas was going to cost me for how much I was planning to use the vehicle as well as looking at expected maintenance and depreciation costs. I would assume that most people do a similar calculation when they buy their vehicle and as long as you report the fuel consumption using a consistent methodology that produces reasonably accurate results it shouldn't matter whether you use miles/gal or gal/mile (or probably gal/100 miles).

The point of an indice is to be convenient. If I plan to take a 50 mile trip and I know that my car spends 3gal/100miles it is a momentary calculation to figure my trip will take me 1.5 gal. (if I decide to think about it!)

However 3gal/100 miles equals to 33MPG, if I have to do the same calculation using this figure I would have to divide 50 to 33 and I'll have to use a calculator. That's the point I'm trying to make - outside of the US most people are actually thinking how much each and every trip will take them in terms of fuel. I know most of the people here would find it hard to get their heads around this, but these are the consequences of living with expensive fuel.

Gallons per mile or miles per gallon - doesn't make much difference to me. But I do hope that one of these days, the USA will discover the metric system.

I read not too long ago that only 3 nations in the world don't use the metric system - the USA, Burma (Myanmar) and Liberia...Ah, just checked Wikipedia, and they confirm that:


Perhaps the USA is hoping to attract Burmese and Liberian tourists?

You have to use a calculator to divide 50 by 33? Is that in the rule book somewhere? ;-)

Me - not; 95% of the people - yes. Mentally division is harder than multiplication. A more real world example: 45 miles on a 28MPG car. How long it will take you to divide 45 to 28 in your head? My calculator shows: 1.6 gal

On the other hand 28mpg is 3.6 gal/100miles, if you asked me how much is 45 times 3.6 it would take me couple of seconds to figure out it is about 160 (both numbers round to 4), then division by 100 (another 0.01 sec of biological processor time) gives 1.6gal give or take. So without a calculator you can do approximate multiplication most of the time. I realize this could also be a strain to many people, but to a lesser extent than division would be.

Seriously. Anyway, most people are terrible at division...the easiest way is to multiply - and leave a wide margin.

50 miles at 33mpg... 33X2=66...so the trip will be more than one gallon and less than two.

Alternately... 50-33=17...one gallon will leave you with 17 miles left, and 17 miles is about half of 33...so about 1.5 gallons. This is fairly easy to do in your head.

What if your car gets 2.75gallons/100 miles and you want to go 42 miles? I think its much easier to know the car gets 36mpg and that 42 miles is 6 miles past 1 gallon...totaling about 1 and 1/6 gallons.

It becomes harder when the result is bigger than 1. How much is 123 divided by 29? After some thought (which consists of testing reverse multiplication!) one can figure out it is a little bit more than 4.

However 123 times 3.5 will almost immediately result in "about 4". And this is all you need for all practical purposes.

I think it all comes down to that we were taught "table of multiplication" in school, not a "table of division".

I do not get it. 123 x 3.5 = about 4? Maybe you meant about 400?

I deleted by 100 automatically... too lazy to type, sorry

It is about what you've been taught and how you've come to see things.

How much is 123 divided by 29?

Round 123 to 120, and 29 to 30... so to get 120 from 30 it's the same as getting 12 from 3...4X3=12...4. Thus we arrive at the same answer.

Probably you are right. It's because I have more experience with multiplication, but so do most people - multiplication is much more necessary in everyday life (how much money do I need for 5 pieces of bread $2.50 each).

Still there are tricky situations in division too. How much is 179 miles div 27? You can not round to tens because it's a great margin of error. My initial hunch is to round 27 to 25 and start multiplying by 4-5-6 until I reach an approximate number and then figure out the result would be slightly less.

slide rules will be coming back.

nobody should be allowed out of 6th grade without learning their use; because as well as it being quite feasible to build your own from scratch, using one means you need to have at least rudimentary estimation skills to place the decimal.

30 years ago I did a couple years teaching science in what was supposedly a college-prep school. Noting the innumeracy even in students getting ready to graduate, I gave an impromptu multiple choice test asking the students to place the decimal in the right place in several simple problems where the answer was given. The results were horrifying, and I doubt that situation has improved.

I got them all cheap slide rules and took a week off the course schedule to impart that skill. The math dept hated it and I got fired. The end. Still....

One of my college professors (probably 25 years ago) was of the same school. This was a math course taught by the engineering college, rather than by the math department. His opinion was that as an engineer you had to be able to come up with the right answer in your head in a meeting and give the right recommendation, and then go back to your desk and actually pull out the reference books and do the math to get the exact answer.

Exams were 40 questions, multiple choice, four answers each, two with the same value but different magnitude, two with the same magnitude, different value. Any given problem might take 10 minutes to do on paper. In order to pass the exam, you HAD TO estimate pretty much every problem.

I really liked that class.

greenish -

Having graduated from engineering school in the 1960s, by the time my senior year rolled around, I could do all sorts of mathematical gymnastics on my trusty K&E LOG-LOG DECITRIG, as could everyone else in class. Man, for a time I could really make that thing hum!

Don't feel bad, a friend of the family who graduated from college two years ago and is now a math teacher at a junior high didn't even know what a slide rule was when I showed her my old one.

One thing I noticed is that young engineers do not have a very well developed sense of physical proportion or much of an ability to do rough mental estimates. As you know, one thing a slide rule does is to force you to keep track of orders of magnitude if you want to get the right answer. Using a slide rule gives you a feel for that sort of thing in a way that an electronic calculator can not.

I'm not saying that we should replace electronic calculators with slide rules, but there is something to be said for learning how to use one early on, just for the practice in dealing with quanitities.

Another thing which I think has taken away the feel for physical quantities and the ability to visualize spacial relationships is the use of CAD systems to produce engineering drawings instead of actually drawing something on paper. In the case of the latter, carelessness and lack of attention to detail can be painful, as you often have to redo a drawing all over again, whereas with CAD you can make as many screw-ups and preliminary versions as you like without expending much effort.

And finally, canned engineering programs may allow one to spit out answers quite rapidly, but they also deny the user of a real deep feel for what he/she is actually doing.

I am hardly a Luddite and realize the value of the calculator, CAD, and canned programs, but I think it would be beneficial if young engineers had to spend some time as an apprentice doing things the old fashion hard way, just as a naval cadet has to go on a summer cruise on a sailing ship to learn the rigors of sailing and to develop a respect for the ways of the sea.

I have been so sorry I got rid of my slide rule 20 years ago.

I wouldn't know how you would even go about teaching logarithms without use of a slide rule.

I thought that gallons per mile was a relevant metric for Hummers and RVs.

Quoting vehicle gasoline consumption in MPG rather than GPM or l/km was already accepted practice in US when I was in college in the early 1950s and gas was selling for ~$0.18 per gallon on east coast. I think we are now very fixed in our ways, and not likely to be responsive to any argument no matter how rational it might seem to others. For example, we are very unlikely to switch to metric measure for civilian and commercial use, even though our military training is all in metric.

RE: Ready For The Blame Game (link up top and below)

SA is going to attempt to remove the very harsh spotlight from their kingdom by televising to the world proof that no country that wants oil is unable to buy it. KSA and OPEC are trying to throw the hot potato back to the consuming countries by showing that there is plenty of unused capacity of heavy/sour crude that is wanting for buyers even at a $13 per bl discount...because consuming countries have lacked the foresight to build enough refining capacity for heavy/sour crude.

We had this discussion a few days ago on TOD DB. Several of us pointed out at the time that from the point of view of the oil producers, the oil consumers were well supplied with oil, all be it heavy sour. We also pointed out that it is not the fault of KSA or other oil producers if the oil consuming nations have failed to build enough refining capacity for the current situation. If the info at the link is correct KSA is about to make these same points on tv, live, to the world. I will be interested to see how much coverage this meeting gets in the US MSM. In any event, an interesting coincidence...imo.

'Saudi officials are said to be planning a televised session where the speaker is going to ask everyone attending to stand up if they are having trouble acquiring oil. We already know the answer. Nobody is struggling to keep their storage tanks full. They may be paying more than they like but nobody is running dry. Those that can only refine light/sweet crude have to pay a higher premium but it is available. The key point to this open question is to have a visible public demonstration that there is no oil shortage so the press can spread the word and hopefully depress prices.'...snip...

'We are starting to hear much stronger rumors suggesting Saudi officials are going to scold the consuming nations for not planning ahead for increased demand by increasing their refining capacity to accommodate the lower quality grades of crude, which are still plentiful. Quite a few nations would have to plead guilty to that crime.'...snip...

There is certainly no shortage of $130 oil. But there is a damn huge shortage of $100 of oil, while the $60 stuff is most likely gone forever.

In a competitive market there will never be shortages, maybe just temporary ones. I doubt we will ever run out of $1000 of oil for example. Having said that, the Saudis do have a point - I think prices would have been $20-30 less if there was not the heavy/sour refining bottleneck; add another $20-30 because of dollar depreciation and we should have been well below 100$ if consuming nations had a little bit more adequate policy.

Looking at it from aside, this is a spat between the drug addict and the dealer who is to blame. I could care less about both sides of this circus. I have to say I am happy that we received those high prices a bit prematurely, because this leaves longer time for us to transition away from oil. I expect prices to stabilize in the near term, but as long as they are above $100/bbl, count me a supporter to everything that keeps them there.

In a competitive market there will never be shortages

It depends on what you mean by "shortages". If there isn't enough food being produced to keep everyone alive, some people are going to starve to death. The starving would likely view that as a shortage. However, an economist would probably talk about "demand destruction" and point out that the food market is well-supplied with $20 tomatoes.

"If there isn't enough food being produced to keep everyone alive, some people are going to starve to death. The starving would likely view that as a shortage."

People will be starving to death long before "there is not enough to keep everyone alive", simply because of unequal income distribution. Hell there is enough food to keep several humanities alive (if we do let's say on corn bread or rice), but millions of people are starving to death right now as we speak.

The same thing is happening now with oil - the market is obviously "well supplied", but in Kenya and Nepal they are reporting shortages. It will go on like that for many years, before the global oil market fractures and disappears altogether.

The markets will only work, and supply will only equal demand, until they - don't.

Perhaps the Kenyans and Nepalese and Pakistanis will not choose to go gently into that dark night, and their dying struggle against the richer nations will drive us into a new, old paradigm: rationing by shortage, not by price. Then all the economic hoo-ha evaporates, and what remains is sheer, brute force - the original coin of the realm.

That would be great: When the Saudis ask "How many are having difficulty obtaining oil", stand up and say that you are having great difficulty obtaining any $60/bbl oil! LOL!

I think that KSA has peered into the future. This forthcoming conference in KSA is ostensibly about oil and the price of oil, but KSA is almoste entirely dependent upon imported food for a population of approximately 22 million in a land that can barely sustain 500 thousand.

I think its more about trading food for oil in the next 5- 10 years.

Right now, all exporters of staples are restricting exports.

What price oil if the North American Grain harvest shuts down exports?

Or New Zealand shuts down exports of Lamb?

Or India, Egypt and S E Asia shuts down exports of rice?

And 22 million people - mostly young, fit and potentially very angry start to starve?

Remember, they were all taught that 'Allah will provide'.

Well what if he doesnt?

Along the same lines, suppose that KSA in the future makes food exports a contractual requirement for oil exports.

And then the USA has a particularly bad crop year (even worse than this one is turning out to be). We would have a choice of: bare supermarket shelves or empty tanks.

Well that would certainly be funny for those that can afford even $300/bbl. I don't think that those that would go into bankruptcy above $60 will find it funny.

School boards are typically large energy consumers -- notably, diesel to operate the busses and natural gas or fuel oil to heat the classrooms. The budgets for this coming school year will likely be stretched to the breaking point, but probably no more so than in New England where heating oil is the primary fuel used. This New Hampshire board consumes some 180,000 gallons a year and its fuel oil costs are expected to double when its current contract expires June 30th.


In addition to higher energy prices and rising food costs, folks best prepare for higher state and municipal taxes.


School buildings are some of the least insulated building we have. If new school buildings were insulated to R40+ walls and R70+ ceilings, and had reasonable thermal mass in them the mass of warm bodies during the school day would not only heat the building during the day but supply much of the heat at night too. Unfortunately, architects care too much about what the building "looks like" and not enough about what it will cost to operate in energy.
Above is primarily my take on midwest USA school buildings.

Hi Jon,

Unfortunately, many of our schools were built at a time of rapidly rising enrolments and declining energy prices and, today, few boards have the financial resources to address their shortcomings. Better insulation, effective passive solar gain (or control), heat recovery ventilation systems, ground source heat pumps and thermal storage systems are a few of the technologies we could use to bring these costs down. If we had paid more attention to life-cycle as opposed to initial cost, we would have been so much further ahead of the game.


I mused about the impact of rising fuel costs on school budgets specificly in relation to sports, but couldn't generate a discussion. In the USA, Div-1 NCAA sports are well subsidized by TV contracts, so their programs, for the major sports, will continue for awhile. What interests me is the impact on Junior Colleges, highschools, juinor highs, and middle schools. Has anyone visited their local school board to inquire about the impact rising fuel and other energy costs are having on budgets? How about your city council? I'm thinking of an article investigating these points, so I would be interested in any feedback provided.

Our local rural school is cutting back on nearly everything to keep the buses running and the building heated. My guess is that another year into a recession and they won't be able to do that - they'll cut the buses, which in our larger rural district will mean that the kids who can afford it go to school (legally they may not able to cut busing for students with disabilities), and the rest homeschool - whether they actually are homeschooled or not is another issue.

IMHO, unless you can walk to school (and maybe even then) you'll want the capacity to educate your kids or grandkids at home - and books are cheap yet - library sales and other things still make that easily possible.


If you are in a rural setting and deep into a post peak recession then what value will an education be above an elementary level?

Most people will either go without (taking them back about 200 years)or, because of parents, will learn a sufficient amount at home to be considered for supported higher education.

Was it not Kunstler who said ''we will need more milk maids than PR assistants in the future''?.

Government orchestrated mass education was developed in order to supply a technically competent industrialised workforce as people left the land and moved into the industrial cities. Prior to this, education for most was a luxury and beyond reading the bible and elementary maths (reckoning)was mostly considered of no use.

I saw it in the study of my family. Even though they were Farmers who owned some land as Yeomanry they signed wills, probates and other documents with an X through the 16th to 18th Centuries. Witnesses to these documents were always educated local 'men of quality'.

Name spelling in records were entirely dependent upon (semi literate) Parish Priests. I have discovered about 7 different spellings of my Surname (of 4 letters...)

It may be difficult to maintain more than basic and essential educational skills within two to four decades.

Hell, right now in Britain we have approximatly 250 000 teenagers who would already be classed as illiterate and inumerate by the standards of 1905.

What I have a hard time accepting are the school buses transporting the kids that live in town. When I was a kid, I walked (or biked) to school, K-12. Then in the 1970s a few creepy people did some bad things to a few kids, all the parents freaked out, and all the kids had to be transported by bus or soccermom-driven SUV/minivan.

It really would do the kids a lot of good to walk to school again - they really do need the exercise. Vounteers throughout the community need to be organized to provide a protective escort service in the mornings and evenings to make sure that all the kids walk safely between home and school. That would cost next to nothing. I'll bet a lot of people on fixed incomes would rather spend 30-60 minutes a day being a block monitor rather than paying an extra $100/year or more in property taxes.

A lot of schools in rural regions bus kids over 30 miles (one way). Thats one hell of a walk to school. A lot of states have consolidated schools into few much large schools. In a large number of cases, the abandon schools were sold off to developers. If there is no money to fuel the buses, there isn't going to be money to build new schools either.

Personally Schooling Kids isn't the real problem, Keeping them and their parents fed and healthly is the real problem.

I was speaking in the context of kids living in town and within walking distance of school.

Has anyone visited their local school board to inquire about the impact rising fuel and other energy costs are having on budgets

No, but ...the Lincoln NE school system is installing heat pump systems in their high schools. I know this from my HVAC classes in the local community college and the resultant field trip we took to 3 high schools that were in different phases of transition.

We were told cost considerations were integral to the change.

The local paper is http://www.journalstar.com/

Thanks for these replies and bits of information. More would be greatly appreciated.

My father is on the school board of a rural Mississippi county school district. Prior to that, he was the superintendent of the city school system in the same county. I've been discussing peak oil and other issues with him, and the school board is already feeling the crunch. For a few years while he was sup. at the city school, they converted the school fleet to natural gas. He said the drivers all complained about reduced power, but it was a workable alternative. That system got scrapped when gas prices fell again.

He and I have gone metal detecting at old school sites in nearby woods. One was closed around 1900 and the other lasted until about the 30s. Interestingly, there's nothing much left to find even with a metal detector. What strikes me is how many small single room school houses dotted the country-side. Consolidation closed these in favor of one 3 miles up the road near the current community church. Then that was later merged to form one of the 4 county attendance centers. The city schools are a different district serving those kids in town.

My father has pushed for decades for further consolidation. He felt they could offer a better education with one or two large county campuses, at least for the higher grades. The communities won't let go of their local sports teams, so they object. Now the school district is researching a modestly ambitious plan to use distance learning to tie the 4 campuses together. I'm a network admin, and I've told him bluntly that they need a more ambitious plan if they want most of the benefits via distance learning that they envision a single campus offering. I don't have high hopes of the district implimenting that effectively.

The buses are going to pose a problem as gas prices keep rising. A natural gas solution won't be much of a solution, I imagine. Those prices will go with gas. However, I don't see the one room school houses as a good solution for the next few decades. I imagine something of a hybrid of the old and new system to handling the bussing issues. Rather than buses trolling all the county roads to pick children up at their homes, the children could make a walk (or ride a bike or be dropped off by their parents) at locations spread out much like the old small school houses. Then the county school buses would make a trip out to the collection points to pick up the kids in groups. It wouldn't totally solve the problem, but it could realistically cut the miles traveled and fuel used to 1/3 of what is required now.

My father correctly predicts that parents would be up in arms if this were proposed as official policy. However, the local citizens pay the bills. Just like they are very skeptical of temporary tax increases to build new school structures, they will doubtless rethink the situation when the school seeks to pass a tax increase to pay for bus fuel. That's when the idea of pickup locations will make enough sense to be put into practice.

Further down the road, I also envision using rural churches or newly constructed buildings to hold computer labs. When fuel makes regular bussing impractical, the schools may be able to benefit from a caerfully designed distance learning approach to keep the children close to home while not throwing them back to a 1800s era education system.

While I agree that the skills kids will need will change, I don't find it acceptable to throw away the advances in knowledge we have made as a society. As long as possible, we should strive to provide modern educations. The world is going to change, but that doesn't mean we have to become ignorant farmers and milk maids. Educated farmers and milk maids, sure.

This note might be added up top.

Rising corn prices threaten U.S. ethanol output

Ethanol's woes may not hurt pump prices but could harm U.S. biofuel policies

MarketWatch, June 19, 2008

SAN FRANCISCO (MarketWatch) -- Surging corn prices are taking an increasingly heavy toll on U.S. ethanol production, halting new plants, forcing smaller producers to shut down, and inviting policy makers to reconsider the nation's biofuel policies...

Since 2000, ethanol production capacity has quadrupled in the U.S. Capacity reached 9.2 billion gallons this year, according to the Renewable Fuels Association. But Driscoll warned that as much as 2 billion to 5 billion gallons of capacity "could go off-line" in a few months as 118 plants with capacity smaller than 65 million gallons could close their door....

Obvious question: How much extra oil will be imported to make up for the loss in ethanol production as plants close?

E. Swanson

"How much extra oil will be imported to make up for the loss in ethanol production as plants close?"

Not much, since the EREOI of corn ethanol is less than 2 (according to supporters - less than 1 according to critics). Although, much of the "EI" is natural gas, not oil. OTOH much of the oil input is in the form of diesel, which is in short supply and is driving the crude oil prices these days.

This is all the fault of those pesky foreign governments subsidizing food consumption. When will free markets finally be allowed to work their magic?

Seems doubtful. Only about 4% (25,000 bpd) is shut in, at present; and wholesale ethanol prices have risen from about $2.40/gal to $2.90/gal in the last couple of weeks.

These prices will keep all of the players in the game. Demand is pretty constant due to the mandated 9 Billion Gallons this year. The oil companies will have to buy just about all that can be produced.

Oh, corn prices fell $0.18 yesterday; and, they were down while ago about $0.06.

"The USDA projects corn use for ethanol will reach 4 billion bushels in 2009, almost doubling the 2007 level and accounting for 34% of corn production. In comparison, U.S. corn production is projected to rise only 11% in the same period.

For the 2008-2009 harvest, global corn stocks are expected to hit a 25-year low, the USDA said. "

Oh God. I am so happy that corn has gone through the roof. I can see the end of this madness approaching.

MEXICO CITY (Dow Jones)--Mexican state oil monopoly Petroleos Mexicanos said Friday that its crude oil production in the first five months of this year averaged 2.86 million barrels a day, down 9.3% from the like 2007 period.

Pemex said in a press release that exports in the January-May period averaged 1.46 million barrels a day, down 17.3% from the like 2007 period.

The average crude price in the period was $89.40, up from $50.80 in the first five months of 2007.

Natural gas production, meanwhile, rose 13.5% to an average of 6.665 billion cubic feet a day in the first five months of the year, a record for the period, Pemex said.

Pemex said May crude production was 2.80 million barrels a day, up from 2.77 million barrels a day in April but below the 3.11 million barrels a day produced in May 2007.

Link (prob paywalled)

The numbers aren't up on Pemex's site yet, but 1.46 mb/d exports Jan-May would imply May exports of 1.37 mb/d, down from 1.44 mb/d in April and 22% down on May 2007.

Pemex May data now online.

Crude exports in May 1.376 mb/d.

Since they import petroleum products, the net export decline rate is probably worse. The 2007 average net export rate was about 1.5 mbpd. I estimate that their current net rate is down to around 1.2 mbpd. They could easily show a 25% to 50% net export annual decline rate for 2008. As I have said a "few" times: Accelerating Decline Rates. . .

Pemex stats for May 2008
C+C production, up 31 kb/d.
All Liquids production, up 32 kb/d.
Total Exports, Down 63 kb/d.

April exports, 1,439 kb/d ... *Some April exports were delayed because of adverse weather.
May exports, 1,376 kb/d ... *No notice of adverse weather conditions in May however.

Holy cow. I noticed the sharp decline in Rembrandt's graphs, but it looks like 9/07 was the last month that they will ever produce 3.5 mbpd (total liquids). In any case, assuming 2.1 mbpd consumption, flat for 9/07 to 5/08, their net exports were about 1.4 mbpd in 9/07 and about 1.1 mbpd in 5/08. This is an annualized decline rate of -36%/year.

The average annual net export rate for 2008 was 1.5 mbpd. Probably a good guess for 2008 average annual net export rate is about 1.0 mbpd. This would be an average annual decline rate of about -40%/year. Note that this means that net exports at year end would probably be below 1.0 mbpd.

And, at this projected rate, down about 500,000 bpd per year, they would be a net importer by 2010.

Wow. Did I mention problems with oil shipments from VenMex?

Hello WT,

Thxs for the info & analysis. I would hope by 2010 that Mexico is a huge net exporter of one million barrels/day of tequila. My guess is that we humans will appreciate a periodic stiff shot in order to deal/[not deal?] with all the other issues at that time.

This is yet another crisis brewing.

dated 2007:


Mexican farmers replace tequila plant with corn

about one-quarter of those who grow agave, which is used in the production of tequila, are expected to burn their fields to make way for corn, as prices have nearly doubled from what they were a year ago, due to US ethanol demand.

My advice is to stock up on tequila while you still can! A tequila famine is upon us!

Will Mexico even be able to afford to import oil? I think there are some above the ground factors that would come into play.

PEMEX pays very high taxes to the government, (and the government gives some of the money back to PEMEX to subsidize gas), however PEMEX's payments to the government have put it in a financial hole. As Mexico (PEMEX) starts to import oil it would have even less revenue from which to pay the government. Unless PEMEX's tax payments were to be suspended, an outcome that would result in draconian cuts in the Government of Mexico's budget, PEMEX will have trouble financing the import of oil. PEMEX would be hard pressed to purchase much oil at today's prices never mind 2010's.

Even if they could get credit with which to buy oil PEMEX would be buying Oil off of the world market paying a high price for their product that would mean that PEMEX's average cost per barrel would rise. For every barrel PEMEX imports they will have to amortize their costs by increasing the subsidized (actual) price of Gasoline. Without net oil exports the Gasoline subsidy would be hit from both ends; less money to the government to pay PEMEX and higher costs to PEMEX.

The consumer would be asked to pay closer to the market price for their Gasoline than they are now. Drastic price increases would lead to demand destruction.

b>Ku-Maloob-Zaap Offshore Field -- Mexico

Mexico was counting on the Ku-Maloob-Zaap offshore field developments to make up for some of the declines at Cantarrel. The KMZ field is expected to reach peak production in 2010 at about 800,000 bod. In May 2008 the Oil & Gas Journal reported KMZ production of approx. 670,000 bod. In 2010 both KMZ and Cantarrel might be declining in production.

Quite frankly, Mexico's best course may be to electrify. The national railroads had plans set, and even bought some equipment, when they were sold (mainly to Kansas City Southern).

Mexico City has a good subway system (that could be expanded) and plans for other cities. MUCH more could be done !


US got 1207(up from 1196 in Apr/08),China a fat zero!

Just using the numbers in that article, that's a revenue increase of 45.6% as revenue climbed from $89.7 million per day to $130.5 million per day despite the drop in exports.

45% rise in revenues on 17% drop in exports. Wow.

The lower the elasticity of demand, the longer profits will outrun production declines. Right now oil has a very low elasticity. Much more like gasoline itself. This will make the profit making phase I last until there is almost no oil left to export. (But Mexico is declining first, so it will not see as much benefit as Saudi Arabia).

Jeff, have you done any further work on the stability of Mexico post export? Are some regions going to fare better than others? I saw one piece (I wish I could find it) that discussed how Mexico was becoming more attractive as a location for industry and fuel costs to Asia increased.

I'll have an update post out on the topic in the next month or two. Lots of interesting developments in Mexico--huge escalation in the war with drug cartels, rising revenues on oil exports despite declining production, deadlock over keeping PEMEX nationalized or bringing in outside firms in more visible roles, potential for decline in remittance income from migrant workers in US...

Thanks! I am looking forward to it.

I'm sure they didn't get spot price for all those barrels.

The Saskatchewan government has commissioned a feasibility study for two 1,000-megawatt reactors - most likely location is Lloydminster on the Alberta border in the north of the province.
There are heavy oil deposits around Lloydminster which use steam injection to increase flow and nuclear reactors would provide a ready source of heat for steam generation. Also, the city is close to oil sands developments in eastern Alberta which could use electricity generated by the plants.

Saskatchewan Nuclear Plans

Last year, there was a proposal for a 2,200-megawatt plant in Peace River, Alberta and these plans, AFIK, are now proceeding through the licensing process. Peace River is in the northwest of the province. The two locations (Lloydminster and Peace River) can together provide power to most of the oil sands processing plants.

Peace River, AB

My sense is that a lot of development plans are being rushed ahead. I think that governments in Canada are starting get very concerned about the coming energy crisis.

It makes more sense to use nuclear to synthesize oil from tar sands than it does to burn fossil fuels. However, nuclear reactors need a lot of water in their own right. Is there enough water in Saskatchewan for both tar sands and 2 reactors?

Most of the water 'used' by a reactor is just for coolant, and much of it could be returned a wee bit hotter for use in the other processes, and if water use is tight design can be optimised to that end - in the winter the low ambient temperatures in the area are going to help a lot!

The area where the reactors are planned is not particularly dry and there are several large lakes in proximity (eg "Lesser Slave Lake" is about 80 km long). Supply of fresh water has (IMHO) never been an issue for either oil sands or nuclear development. Treating polluted water after use for oil extraction is the real limiting factor.

Probably the reason water supply is often quoted in the media has to do with legal arguments raised by environmental groups. Mineral resources in Canada belong to the provinces but the Federal Government has jurisdiction over navigable waterways. So, one way to stop development in the oil sands is to claim that withdrawing water from the Athabasca river (for example) will reduce the water level enough to impede navigation.

There are only a few places in Canada that are really dry:

  • some regions in the interior of British Columbia between the mountain ranges
  • southern Alberta leeward of the mountains
  • the high Arctic

Most other regions generally have plenty of water.

Lloydminster is a bit of an odd choice to me.

SaskPower seemed to think Lake Diefenbaker was a more logical location. I'd be inclined to agree.

Either way, I don't see that they've picked a site yet. We'll have to see.

More signs of the times: Ford cut estimate of sales of F-150 pickemups...again.

'[Ford] pared its 2008 U.S. industry sales forecast to a range of 14.7 million to 15.2 million cars and trucks, down from its previous projection of 15 million to 15.4 million vehicles. Ford cut its third-quarter production plans to 475,000 vehicles, 50,000 units lower than prior targets ...
Apparently June auto sales are looking really weak according to this article in the Detriot Free Press:
[I]n November ... executives were assuming Americans would buy ... only about 15.5 million [vehicles in 2008]. ... [S]o far in June ... J.D. Power and Associates and Citigroup are seeing a sales pace that is almost 20% lower -- only 12.5 million vehicles per year.'

and from the same link (at bottom of post)...

'Chris Thornberg: Possible 50% House Price Declines in SoCal'

'[Economist Chris] Thornberg, founding partner at Beacon Economics and former UCLA economics professor, said home prices would have to fall about 40% from peak to trough to return to the historical norm. But add in the impact of rising gasoline prices, the subprime mortgage meltdown and rising foreclosures, and it’s likely prices will fall 50% peak to trough.'


So, 6/22/08 is fast approaching and we are all "speculating" what will be discussed by KSA and the "world leaders". It might be fun to put up some hypothetical conversation snippets from this meeting.

KSA to world leaders..."OK, please off your knees....thanks so much for the all the gifts and trinkets you have brought to us....now...you all have your bidding numbers in your hands...who will start us off...do I hear $250 for the lightest and sweetest crude you have ever laid your hands upon?"

"It's Put Up or Shut Up Time for the Kingdom"

Great article.

The author gets it right.

This is a link to It's Put Up or Shut Up Time for the Kingdom from Burnick's Global Market Beat.

An excerpt:

In fact, the Saudis helped put us in this pickle in the first place by cutting crude production from 9.6 mb/d in early 2006 to just 8.5 mb/d in April 2007. The Kingdom has boosted production again since then, but the damage is done.

Less Saudi oil on the market – combined with falling production from Mexico, Venezuela, Nigeria, and others – led to a loss of almost 1 million barrels a day in global crude oil inventories last year!


Let me make sure that I have this right: It is the fault of KSA that we are not ready for the fact of Peak Oil? I was under the impression that the KSA is a soverign nation and could do as they pleased with their resources. I was also under the impression that the USA is a soverign nation and that the US would be prepared for any eventuality, especially PO, which has been common knowledge for some time.

By this inane line of reasoning it will be the fault of all foreign soverign nations if they stop buying our worthless treasury issues, it will be the fault of all manufacturing nations when they stop selling us stuff on credit, it will be the fault of soverign wealth funds if they stop proping up Wall St Banks, ... Basically, its all someone else's fault.

That is a really, really, stupid line of non-reasoning...It is exactly the way PO deniers reason, they don't.

Neg for posting such garbage.

Uh, he was saying that by cutting production last year the KSA helped create the price jump we now face.

If you'd like some help with comprehension, let me know; I teach English.


Rahall to Big Oil: Use It or Lose It

In an effort to compel oil and gas companies to produce on the 68 million acres of federal lands, both onshore and offshore, that are leased but sitting idle, House Natural Resources Committee Chairman Nick J. Rahall (D-WV) today introduced legislation that gives Big Oil one option - either "use it or lose it."

The 68 million acres of leased but inactive federal land have the potential to produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day. This would nearly double total U.S. oil production, and increase natural gas production by 75 percent. It would also cut U.S. oil imports by more than one-third, reducing America's dependency on foreign oil.

Political posturing or is Rahall really calling the oil companies' bluff?

The 68 million acres of leased but inactive federal land have the potential to produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day.

68,000,000 acres would be 106,250 square miles or about one sixth the size of Texas.

4.8 million barrels per day would match Ghawar. We have another Ghawar right here in the good old US of A under federal lands. Somehow I doubt those figures. I guess those are "political figures". I agree they should use it or lose it but we do not need to use absurd figures to goad them into doing it.

Ron Patterson

Well it is a good question: Why do they want/need more when they are doing nothing with what they already have?

Just a note in passing.... I just had a quick look at the CNN "money" page in my morning 30-second scan, and was amused to see that the stories "Oil Tumbles $5 as China Raises Gas Prices" and "Oil Climbs on Iran, China news" are up simultaneously in close proximity on the page.

The illusion of knowing "why" something happened in a single sound bite must be very reassuring, like having your pilot come on the intercom and apologize in a laid-back Chuck Yeager drawl for "a little bit of choppy air" when you'd otherwise wonder if the wings were about to come off.

Yeah, I think that it was Taleb that mentioned something about the idiocy of know-nothing media airheads assigning instant "explanations" to what were essentially random fluxuations.

Yes, you're correct. Taleb calls it 'the Narrative Fallacy' --- Chapter Six of 'The Black Swan'

Taleb explains that it is not only 'media people' that convert random facts and events into narrative form for easier storage and retrieval in the human brain...We all do the same thing!

I watch it happen every day on DB.

In addition to the interesting stories posted by Leanan on today's Drumbreat, there are some additional items concerning electricity shortages at:


Thanks for visiting.

I've added Energy Shortage to my favourites. Certainly 'worth a detour' as they say in the Michelin Green Guides.

Talking of Michelin and energy shortages...
Michelin Tyre Factory, Dundee

We're delighted to announce that the UK's largest corporate wind energy project is now complete at Michelin's Dundee tyre plant. The two 2MW turbines were assembled and commissioned in May 2006 after formal approval was given by the city council in September 2005.

Ecotricity are more than happy to help Michelin reduce their environmental impact, and are thrilled that an everyday product such as Michelin tyres are now produced using clean energy.

The 4MW project will generate around 8 million Kwh of clean electricity every year. The ambitious partnership scheme between green energy pioneers Ecotricity and Michelin will cover around a third of the energy needs of the huge factory.

Hi Undertow,

I'm a little surprised these two units will produce just 8 million kWh/yr. According to the EWEA, the European average for a 2.0 MW turbine is 5.5 million kWh/yr, so I would have expected total production to be closer to 11.0 million, perhaps slightly more given this tyre plant is located in Scotland.


Just a guess but the turbines are close to residential areas. Part of the planning consent was to minimise "sun-flicker" so sensors detect direct sunshine and compare it with the time of day and year. If this would result in light-flicker hitting homes then the turbines actually stop. On a cloudy day (as you say it is Scotland after all) they run 24 hours per day. So the estimated annual capacity may take this into account.

Thanks, Undertow. I thought it might have something to do with a less than optimal location, but the shutdown due to sun-flicker would obviously introduce another limiting factor.

With respect to sunshine -- or, more correctly, the lack thereof -- any Scots who visit Nova Scotia (Cape Breton in particular) will likely feel right at home; in fact, the weather on the Island can be so challenging that many of the Scots who immigrated to Cape Breton in the early 1800's ultimately fled to New Zealand. ;-)

See: http://lemac2.tripod.com/index-66.html


The plant site is likely a less than ideal wind farm site. Still worth doing, in part for public awareness & acceptance (the primary reason for slow UK wind build).

Best Hopes for MANY on-shore UK wind farms,


I cant believe how the mainstream media has created this false oil debate between speculation and environmentalism. My best estimates are that the media as a whole blames speculation for 50% of the increased cost of oil. And environmentalism on 30%. And 15% is dollar devaluation. And 5% is "possible supply issues". (With little mention of "peak oil", "peak energy", "peak economic growth", "peak civilization", as you'd expect.)

It's funny how in reality its probably the opposite. Peak oil being 50%, currency devaluation 30%, speculation 15%, and environmentalism 5%.

Will this deliberate war on truth ever end?

With little mention of "peak oil"

Interesting to compare the ratio of hits for ‘peak oil’ to ‘climate change’ in the online press.
Cumulatively it’s now just over 1:100 for the leading British dailies.
Here are the figures for ‘The Guardian’:

Climate Change
2008 (1623)
2007 (3611)
2006 (2142)
2005 (1753)
2004 (978)

Peak Oil
2008 (47)
2007 (49)
2006 (25)
2005 (14)
2004 (6)

Still, that’s a ratio of 1:35 for the first half of 2008 as opposed to 1:163 for 2004, or a five-fold improvement.

Roughly equivalent to the five-fold increase in the price of a barrel of oil.

I wonder how much the stuff will have to cost before peak oil reaches parity.

A good article ..... for the MSM

Why Oil Prices Skyrocketed


"Meanwhile, predictions that we've reached a peak in oil production or will very soon - dismissed only a few years ago as being alarmist and without merit - are receiving more serious consideration. " ................

I was amazed at the new record coal prices being reported by www.globalcoal.com as ARA coal in Europe just hit $185 per ton (more than double the price last year at this time). They seem to be helping a transition away from oil be a move to efficiency and renewables rather than a climate-dangerous shift to coal. I'm blogging on the subject at www.setenergy.org

Thanks for the info.
Perhaps you could comment on whether US internal coal prices are reflecting the international market at all?
EDIT - Just checked and the US price seems to be around $120/ton
What is this likely to do to US electricity rates?

FPL recently announced a 16% hike in rates. Don't know what parts of Florida that covers but FPL is the largest provider in the state by far.

According to Wikipedia Oil Megaprojects there should be almost 7mbpd of new capacity coming on line this year. Do we have any data on how much has come on so far, how much is still due to come and is not being deferred and how much is actually being late? Is there a way to critically look at past announcements and find a rate of actual new capacity versus announced that might be extrapolated to future projects?

Just an idea.

Wiki oil megaprojects data indicates just under 6 mbd new capacity for 2008, based on a delayed project peak oil basis. An eight year average is a better statistic and indicates that about 4 mbd of new production will come online this year, shown in the chart below.

Below is an updated chart from wiki oil megaprojects. The most recent megaproject update is the delay of Khurais crude, condensate and NGL startup from Dec 2009 to Jan 2010.

World Crude, Condensate and NGL Supply Additions - click to enlarge

There is just enough new production coming online to offset existing total liquids decline for this year and hopefully most of 2009.

World Supply, Demand and Price to 2012 - click to enlarge

However, world crude and condensate project capacity additions are unlikely to be sufficient to offset existing C&C field natural decline rates, resulting in irreversible net C&C decline.

World Crude and Condensate Production to 2012 - click to enlarge

Every update to Ace's charts deserves its own top level post! These are one of the most useful products of the entire TOD community. (Not that the rest aren't useful, but these? These are pixelated gold.)

Seconded. Thumbs up for Ace's work and his consolidation of data/projections into three clear graphs.

ANWR won't make the US any more independent than the 25 billion barrels of Prudhoe Bay oil did back in the 1970s. Not only was Prudhoe Bay bigger than ANWR, but US oil consumption was lower back then as well.

" In direct response to the [1973] oil crisis, President Nixon signs the Trans Alaska Pipeline Authorization Act into law. Nixon introduces "Project Independence" in a televised speech: "Throughout history, America has made great sacrifices of blood and also treasure to achieve and maintain its independence. In the last third of this century, our independence will depend on maintaining and achieving self-sufficiency in energy."

Neither ANWR nor offshore drilling will make the US anymore energy-independent than Prudhoe Bay did. It didn't work in the 70s (when conditions were even better for it) and it won't work now. It's time to leave the failed 20th Century energy solutions back in the 20th Century. It's much wiser to spend the money on renewable energy strategies, than it is to spend it on depletable resources that literally go up in smoke.

Burning fossil fuels is like spending capital, instead of living off the interest.

Hello TODers,

As much discussed before in my earlier postings, the frenzy for sulfur, the Lifeblood for I-NPK and industrial activity continues:

Sulphur, potash prices soar last month as base and precious metals decline

..."Sulphur prices leapt to US$660 per tonne in May-- up 1,100% year on year and the biggest single spike of any commodity in the history of the Scotiabank Commodity Price Index (in data back to 1972)." Mohr said the spike in sulphur prices has surpassed the Hunt Brothers' silver squeeze in early 1980...
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?


I confess I've been half (quarter?) following your posts on this for a while. Thinking 'I must read into this more, soon' for too long.

Any chance you could point us to, or maybe put together, a decent backgrounder that summarises the situation, causes, probable consequences, differences between N,P,K availability, requirements etc etc etc?

I totally agree. This is probably something we should know much more about. If you could do that, Bob, many of us would be very grateful.

Peak Education anyone ?

I bumped into a former student last week. He had left us to study at De Montfort University
in Leicester, UK. A couple of months ago he left his studies and is now working on a building site
in Leeds.
His reasons ?
Whilst part of the campus was in Leicester he was also required to use facilities in Nottingham.
He cited cost and an unreliable public transport system that meant planning and executing group
projects was too unsuccessful. This was a student who had taken a year out in order to work and
save for his first year at Uni. One of our more earnest candidates. Money was also an issue.
He'd calculated that it was likely to leave him up to 25,000 pounds in debt over four years.

Mounting debt, uncertainty about future earnings and frustration with the university and
public transport infrastructure finished his education.
Or was it Peak Oil ?