DrumBeat: June 22, 2008

You. Will. Not. Be. Able. To. Get. Food. - report on trends

You. Will. Not. Be. Able. To. Get. Food. Need this be spelled out any more plainly? It is time to consider that the stage has been set for petroleum-induced famine.

We have "innocently" accommodated rising population with greater and greater food production via technology and the profit motive. But now we have run out of room to grow, as biotechnology, for example, has severe limitations -- major ones being petroleum dependence and topsoil loss. The biggest wild card for our existence is climate change, as we see with floods and other extreme weather affecting our food supply.

Next Great Depression? - Greed and high oil prices could spark meltdown

"A very nasty period is soon to be upon us -- be prepared," Bob Janjuah, a credit strategist for the Royal Bank of Scotland, wrote in a report that sent shockwaves through the global financial community.

Janjuah is warning that these skyrocketing energy prices are inflicting big damage by fuelling inflation and paralysing major central banks, who may be forced to hike interest rates at a time economies are slowing and the U.S. subprime crisis is sending a tidal wave around the world, sparking a global credit crunch.

Women Worst Hit by Food Crisis

The current food crisis is yet another reminder of the feminisation of poverty. Women produce most of the food in poor countries, yet they have less access to seed, fertilisers and extension services. They are also the most hungry -- about seventy per cent of the people who do not have access to enough food are women and girls. Women form the bulk of the working poor -- they toil long hours without reaping enough to enable them to climb out of the dollar-a-day absolute poverty bracket. In some countries women widowed by HIV and AIDS are routinely disinherited, and in these and many other countries women's lower cultural or legal status means that they do not own the land they till. The food crisis has inevitably taken a greater toll on women, and consequently the well-being of whole communities is affected.

Food crisis a threat to urban population

Food and energy crisis is likely to have devastating effects on African urban dwellers, Executive Director of the UN-Habitat Dr Anna Tibaijuka has said.

The UN Habitat director said urban dwellers’ dependence on nature puts them at great risk as prices are skyrocketing.

"For services such as water, the urban poor depend on vendors and pay prices that are much higher than those paid by the urban rich who are often connected to subsidised municipal supplies," Tibaijuka said.

Dearth of Ships Delays Drilling of Offshore Oil

As President Bush calls for repealing a ban on drilling off most of the coast of the United States, a shortage of ships used for deep-water offshore drilling promises to impede any rapid turnaround in oil exploration and supply.

Diesel shortage hits other cities

ROSARITO BEACH – Despite the arrival of a gasoline cargo tanker yesterday, the diesel crisis in the Tijuana area has extended to Baja California's other major cities.

Pumped up, tapped out: As gas prices soar, more people stand on the edge

Dan and Daniela Ayers are a typical middle-class couple with a home and a budget, a spending plan under siege by the fuel pump.

Today, gas siphons off money they used to spend dining out, on camping trips to the north end of Carolina Beach and on visiting relatives in Raleigh and Charlotte, among other things, said Daniela Ayers, who works at a Wilmington architecture firm.

Thirst for oil will keep prices high

WE'RE all being affected by the rise in global oil prices. The big question is whether the recent rally is caused by an imbalance between global supply and demand, whether it's the result of speculation, or both. Oil prices have doubled over the last 12 months even though global demand growth has slowed.

How do we explain this? Let's look at the evidence.

Pump pain: Gas stations blaming Wall Street speculators

Washington's gas stations don't want to be held responsible for high oil prices — they say they're just passing along the cost.

So now they're passing the buck to where they think the blame lies: Wall Street.

The Washington Oil Marketers Association (WOMA) is putting brochures, fliers and signs in gas stations, urging customers to lobby their legislators "to fight back against oil speculators and control runaway oil prices."

Blame central banks, not speculators for oil price

As was the case in the 1970s, the oil price is rising in response to a falling greenback and rising inflation at the end of a long period of economic expansion.

Slower world growth, lower inflation and a firmer US dollar would set the market back to rights. The question is whether that can be achieved gradually or will be forced through the shock of a global recession. Politicians would like a simpler solution.

Air Travel and Carbon on Increase in Europe

MURCIA, Spain — The boom in low-cost air travel has turned this corner of southern Spain into a thriving tourist destination, and retired plumbers and schoolteachers into Europe’s new jet set.

But it has done more than democratize air travel and offer new vistas to working-class people. It has also opened a new dimension to the global warming crisis.

Sea of Trash

The world’s oceans are filling with bottles, wrappers and other flotsam. Is there anything better to be done than picking it off the beach, one piece at a time?

The Saudi Spigot: Riyadh is about to open the oil tap wider, but what happens when it's tapped out?

The question, though, is whether it is still within the Saudis' power to bring oil prices down dramatically. With 260 billion barrels of proven reserves -- a quarter of the world's total -- and an estimated productive capacity of 11 million barrels a day, they remain the likeliest source of fresh supply. But even an additional 500,000 barrels a day is only about half the increase in global consumption last year, almost all of which occurred in Asia. And it will take years for the Saudis to raise their productive capacity even higher, as they say they want to do. Some energy experts think the legendary Saudi fields are far closer to being tapped out than the secretive kingdom admits. Matthew R. Simmons, an investment banker specializing in energy, has published a much-discussed paper suggesting that Saudi oil production is already near its physical limits -- a conclusion the Saudis vigorously dispute.

Jeddah energy summit seeks answers to oil price crisis

SAUDI ARABIA. Leaders of global oil powers and consumer nations gathered in Jeddah on Sunday seeking ways to control spiralling oil prices seen as a mounting threat to the world economy.

Oil prices have rocketed on the back of a falling dollar, global political tensions, limited spare capacity and what many say is pure speculative trading.

Peak Carbon

So, now my prediction: Peak Carbon occurred in the US in 2007.

Oil crisis - maybe we just need more strict speculator controls

At the moment, however, we’re facing an emergency which might have disastrous consequences for the forwarding, logistics and transport industries, consequences that will be reflected in increased prices to end users, cobwebby distribution patterns and the demise of shippers who can’t hack it in the face of rapidly-rising prices.

The soaring price of oil isn’t because we’re almost out of the stuff, although the peak oil purists do have a point if only they would dilute their ideological hyperbole.

Drill Deeper

IF THERE IS a silver lining in the price of gasoline shooting past $4 a gallon, it's that it has sparked an intense debate in the United States about its energy security -- or lack thereof. President Bush and Sen. John McCain (R-Ariz.) have given the impression that relief for drivers lies in off-shore drilling and the construction of nuclear power plants. In fact, those solutions wouldn't produce results for years. But if this level of passion and debate continues through the fall election and is followed up by action, the nation will be better off.

Wishful Thinking at the Economist

The Economist's view that all is for the best in market-land is plain wrong. Oil is being hoarded. So can we blame sheikhs rather than Wall Street shakers? No. When Aramco decides whether to turn the taps, it judges whether its oil will be worth more later. As it sees speculators continuing to buy, it is confident that prices will continue to rise. When Goldman Sachs talks of $200 oil by year-end, then like Gladys with her house, Aramco waits.

Supervisors get grim forecast about oil supply, economy

AT THE COUNTY Civic Center, the Board of Supervisors' weekly agenda is set by the board's president.

Often, it's a more bureaucratic exercise than political one.

But board president Charles McGlashan has his colleagues muttering after he had them sit through "a primer" on "peak oil" and a consultant's warning that we are five years away from a steep decline in global oil supply, depression and "public panic."

China securing access to Middle East oil

Dubai recently announced its partnership with China in the creation of a billion dollar investment fund. Saudi commitment to double oil exports to China by 2010. These two announcements exemplify China’s Middle East energy strategy: to entrench itself economically in the region, even at a loss, so as to obtain the political leverage required to secure access to oil and gas.

Tariff dispute unsettles Argentina

Road closures, export shutdowns and a sense of looming calamity have replaced the relative calm and prosperity of recent years in Latin America's third-largest economy, after Brazil and Mexico.Scattered shortages of food and fuel have shaken consumers already anxious that rising prices and a looming energy crisis may signal a new downturn in Argentina's long history of boom-and-bust cycles.

Surviving peak oil will require rethinking our transportation policies

There should have been banner headlines in every newspaper in the country. It should have been the lead story on every newscast. On June 7 U.S. Energy Secretary Samuel Bodman announced that the world had reached peak oil output and that demand was outracing supply.

Instead, Bodman's pronouncement in Japan, before the energy chiefs of eight industrialized countries, drew virtually no notice. Bodman did not use the term "peak oil," but the situation he described, flat global oil production dating back to 2005, coupled with ever-increasing demand, including hefty increases in demand from China and India, precisely fits the paradigm of peak oil.

Economy crisis used to force lifestyle change

Kunstler and others in the Smart Growth, New Urbanist and environmentalist movements have been calling for the same policies long before gas prices have increased, but the gas spike provides new impetus for their plans. The only way, of course, that any of Kunstler’s ideas could be implemented is through government coercion.

He’s radical, but even mainstream thinking is echoing Kunstler’s ideas. A recent CNN.com article, probing the subprime crisis, asked: “Is America’s suburban dream collapsing into a nightmare?” The solution found in the article: “walkable urbanism.”

The 'Peak Oil' Myth: New Oil Is Plentiful

The data is becoming conclusive that peak oil is a myth. High oil prices (USO) (OIL) are doing their job as oil exploration is flush with new finds.

Gordon Brown calls for drop in oil prices at Saudi Arabia summit

Prime Minister Gordon Brown today held out the prospect of a fall in the cost of oil after a global summit in Saudi Arabia at which he said major producing countries accepted for the first time that prices are too high.

Mr Brown declined to predict what level prices would reach at the pump, but said agreement had been secured with members of the Opec cartel that record crude prices of almost 140 US dollars a barrel were causing damage and investment was needed to increase supply.

Comment: Peak Oil

In the background however ones mind starts wondering if we are living in a post Peak Oil society. Peak Oil refers to the point in time at which the production of oil has been reached and from that point production will gradually decline. There is however many opinions on if we have passed peak oil, about to pass peak oil or if it will be in another 10 - 20 years. The majority however seem to think that we have or are about to pass the peak oil point. What are the implications of this. The first one, because demand will outstrip supply, will be an increase in prices. The next one will be further increases because forecasters can see the supply and demand problem getting worse in the future rather than better. Then producers, who are the only people who accurately know their own reserves, might see the benefit into holding onto as much reserves or stock given the future scarcity.

Vermont: Dubie's declaration spurs action

On June 11, Lt. Gov. Brian Dubie held a press conference to declare an emergency in advance of this winter's heating season. Dubie admits he has no explicit authority to declare such an emergency, but he thinks that just saying the word "emergency" can focus people's attention and spur collaborative activity.

Philippines: Dealing with the oil crisis

What is so shocking about the current state of affairs is that our capacity to influence developments in oil has deteriorated from 25 years ago. Then we had a pro-active energy strategy, we had a government energy complex working to diversify our energy sources and we had mechanisms to influence the domestic price of oil.

Today, in the era of oil deregulation, we are 100% at the mercy of Chevron-Caltex, Shell and Aramco, which controls Petron — the Philippines formerly state-run oil company. The OPEC countries that dominate the production of crude are often cast as the villains, yet the last few years have been years of record profits for the oil majors.

Australia: Nats want petrol tax cut of 20 cents

The Nationals would like the petrol excise slashed by up to 20 cents a litre if the economy allows it.

And with voters spooked by sky-high oil prices, the Liberals hinted they could raise their five cents a litre excise promise.

The coalition launched a petrol excise price war, sparked by a Liberal backbencher who last week proposed a 10 cent cut.

Planet’s greenest person won’t be a Boston Celtic

When Jordan Wirfs-Brock decided to go green, she did so with the fervor of a convert. She ditched her car, gave up meat and traded in her degree in aerospace engineering from MIT for a career writing for a “green” company.

According to 3rdwhale.com, she’s a contender for the Greenest Person on the Planet award.

...“We’re trying to make stars of ordinary people going to extraordinary lengths to reduce their impact on the planet,” said Boyd Cohen, chief Beluga officer and founder of 3rdwhale.com, likening the contest to “American Idol.”

Minister: Saudi Arabia can increase oil production

JIDDAH, Saudi Arabia - Saudi Arabia's oil minister says the kingdom is willing to produce more oil if customers need it, but he cited no specific production increase.

The kingdom will pump about 9.7 million barrels a day beginning in July because of recent increases already announced.

But Saudi Oil Minister Ali al-Naimi says it can produce more than 9.7 million a day if customers request it.

The oil minister also says the kingdom can increase its pumping capacity long-term by as much as 2.5 million extra barrels a day.

Amid doubts, oil powers seek tonic to record prices

JEDDAH, Saudi Arabia (Reuters) - The world's top energy policy makers meet in this Red Sea city on Sunday for emergency talks on halting oil's unrelenting rally, but hope for an immediate solution to record prices appeared dim.

David Strahan - Hope springs eternal but the oil won't: a Russian lament

It must be lonely being Tony Hayward. As the oil price continues to soar, there is a gathering consensus that global production of the black stuff is nearing fundamental geological limits. Yet BP's chief executive continues to argue valiantly that the causes of the current oil shock are "not so much below ground as above it, and not geological but political".

Since his company's Russian joint venture, TNK-BP, is under ferocious assault from both its Russian shareholders and the Russian state, Mr Hayward can be forgiven for thinking the industry's problems are man-made rather than natural. But this is a false distinction, and closer analysis suggests BP's predicament is itself evidence of looming geological constraints to global production, or "peak oil".

Talks on new Iraq oil law to resume this week

BAGHDAD - Officials from the Iraqi central government and the self-ruled Kurdish region in the north will resume talks this week in Baghdad to try to settle their differences over a proposed new oil law, a Kurdish spokesman said Sunday.

Iranians told to save energy or face loadshedding

TEHRAN: Iranians on Saturday were told to cut their electricity consumption by 10 per cent or face daily power cuts because of a severe drought and low production by hydroelectric power plants.

Residents of the capital Tehran could face up to four hours of blackouts each day, officials said according to media reports.

Dotcom crash, credit crunch, oil bubble?

LONDON (Reuters) - The Dotcom boom and bust shook the world economy almost a decade ago, last year the credit crunch seized up financial markets, now an oil price bubble may cause more havoc.

U.S. cities cut services, raid reserves on fuel cost

NEW YORK (Reuters) - Surging fuel prices are forcing cities across the United States to cut back on services and dip into cash reserves to keep their fleets on the road, according to a survey released on Friday.

Ninety percent of the 132 mayors surveyed by the U.S. Conference of Mayors reported that climbing fuel prices have had a significant impact on city budgets and operations.

Big cars rule Gulf roads amid record oil prices

DUBAI (Reuters) - Luxury sports cars, gas-guzzling SUVs, even tank-like Hummers all jostle for space on Gulf highways, their owners buoyed by record oil prices that have forced some motorists to ditch cars for bicycles in the West.

Not only has government-subsidized gasoline prevented motorists in the Gulf Arab region from feeling the pinch at the pump, but windfall revenues from $140-a-barrel oil have fuelled an economic boom and put deluxe cars in more people's reach.

Lofty oil could lead to more-resilient economy

WASHINGTON (Reuters) - The wrenching adjustments U.S. consumers and businesses have begun to make to cope with sky-high energy costs mark the start of a painful process that should lead to a more energy-efficient, resilient economy.

U.S. households, forced to spend more at the gasoline pump, are shifting away from pricier items and cutting down on miles driven, while companies are planning to invest in more energy-efficient equipment to control costs.

FOX News Poll: Americans 'Energized' for Action

Nearly two-thirds of Americans (62 percent) say they expect — within the next six months — to wait in long gas lines to fill up their cars; moreover, almost half (48 percent) claim to have changed their summer travel plans because of prices at the pump.

...After taking the body blows of higher energy prices, Americans seem more willing than ever to fight back with bold initiatives. For example, just over three-quarters (76 percent) support immediately increasing oil drilling in the United States — a position recently espoused by presumptive Republican nominee John McCain. More than seven in 10 Democrats (71 percent) also hold this view.

India’s Growth Outstrips Crops

JALANDHAR, India — With the right technology and policies, India could help feed the world. Instead, it can barely feed itself.

India’s supply of arable land is second only to that of the United States, its economy is one of the fastest growing in the world, and its industrial innovation is legendary. But when it comes to agriculture, its output lags far behind potential. For some staples, India must turn to already stretched international markets, exacerbating a global food crisis.

U.S. May Free Up More Land for Corn Crops

CHICAGO — Signs are growing that the government may allow farmers to plant crops on millions of acres of conservation land, while a chorus of voices is also pleading with Washington to cut requirements for ethanol production.

The Midwest floods have washed out an estimated four million acres of prime farmland, crimping this year’s harvest as the world desperately needs more grain. With corn prices setting records and soybean prices not far behind, the Bush administration is under intense pressure to do what it can to bolster the food supply.

Small farms best for environment: organic group

MODENA, Italy (Reuters) - Small-scale, not industrial farming, is the answer to food shortages and climate change, organic farmers argued this week.

Daimler to offer electric Mercedes in 2010: report

FRANKFURT (Reuters) - Daimler plans to roll out a Mercedes-Benz model that runs on electricity in 2010, its chief executive said in a newspaper interview.

"We plan an electric Smart for 2010 and for the same year a Mercedes (electric) model as well," Dieter Zetsche told Frankfurter Allgemeine Zeitung in comments to be published in the Saturday edition.

Three strikes and we're out

A scientific and political consensus now exists on the threat posed to our civilization by climate change. The problem is generating the political will to take the steps necessary to radically reduce our consumption of fossil fuels.

The present oil shock provides the answer to that problem - if our leaders have the courage to use it.

Did The Iraq War Cause High Oil Prices...$40 per bbl?

'Salameh told a British parliamentary committee last month that Iraq had offered the US a deal, three years before the war, that would have opened 10 new giant oil fields on "generous" terms, in return for lifting sanctions. "This would certainly have prevented the steep rise of the oil price," he said. "But the US had a different idea. It planned to occupy Iraq and annex its oil."...snip...

' An oil economics specialist, Mamdouh Salameh, who advises the World Bank and the UN Industrial Development Organisation, contends that oil prices would be at less than 1/3 of their current level had the US not invaded iraq.'...snip...

'Mamdouh Salameh believes the oil price would now be no more than $US40 a barrel, less than a third of the current price, if not for the Iraq war.

An oil economist adviser to the World Bank and the UN Industrial Development Organisation, Dr Salameh says that among the world's biggest oil producers, Iraq alone has enough reserves to increase flow substantially. Production in eight others - the United States, Canada, Iran, Indonesia, Russia, Britain, Norway and Mexico - has peaked, he says, while China and Saudia Arabia, the remaining two, are nearing the point of decline. Before the war, Saddam Hussein's regime pumped 3.5 million barrels of oil a day, but this has fallen to just 2 million barrels.'...snip...


How many billions of barrels of oil are still left in the ground in Iraq due to the war? What kind of effect has this had on the peak production date for Iraq?

I've seen this discussed a lot. It would have been far cheaper for the US to have bought all of Iraq's oil up front than to launch the invasion. Assuming that cheap oil was your goal.

From the Reuters article about Daimlers E-cars:

"Daimler currently has in London a fleet of 100 first-generation Smart cars that run on electricity."

In the German interview Zetsche mentions the congestion charge in London as a motivation for e-cars (which are exempt from the CC.)

I have tried to buy one of these but despite my many arguments/pleading they are unwilling to sell any just yet:-(

My guess is that they want to have an extended test period and only sell the second generation.

Unfortunately Daimler/Mercedes are selling a fleet that is very much gas guzzling. The Smart cars are a tiny proportion,.

The Th!nk should be on the UK market fairly soon:
UKP14,000 TH!NK city electric car ready for showrooms

You have to pay a battery charge too:
motoring.co.za - TH!NK electric city car ready for sale

Those of us in the UK are getting together to try to take whatever action we can, and staying in touch via e-mail.
Since we haven't got your e-mail address, you might like to contact me via my e-mail, address in my profile, if you are interested.

Lots of cheap talk coming from Saudi. If the promised new capacity is light-sweet, it will get snapped up in no time and price will not drop except in the very short-term. If the new capacity is heavy, the price will continue to rise because refiners want light-sweet. So, either way price continues rising and then we will have another round of recriminations followed by another conference. The Libyans get it: They understand the market for $136 light-sweet is presntly well supplied. It seems they are more interested in meeting the demand for $150 oil. I think they will see it sone enough.

I'm beginning to wonder how much the relative importance the stability of the international oil market has acted as a deterent to militarilly attacking Iran. I know it was always significant, but I can't help but think it's become the world's saving grace.

Saudi Production & Consumption: To Infinity & Beyond?

I have previously compared a HL plot (showing a steady linear progression with a plausible P/Q intercept) to an airplane on final approach for landing. If the plane falls below the glideslope, the pilot (hopefully) pulls the nose up until the plane is back on the glideslope. If the plane rises above the glideslope, the pilot pushes the nose down until the plane is back on the glideslope, on track for a landing (see an example in the article linked below).

I have frequently posted the Texas & North Sea production graphs, with their respective peaks lined up with each other. My point is that peaks happen, even in the best of circumstances:


The pre-peak Texas HL plot is quite noisy, but the overall plot shows a steady linear progression. The North Sea pre-peak plot is quite consistent, as are the post-peak data.

I have previously described how the post-1970 and post-1984 cumulative Lower 48 and Russian production numbers are basically what the HL models predicted, using only data through 1970 and 1984 to respectively construct the models.

Last year, in March, one of the objection to the Saudi HL plot was that the observed production decline was sharper than what the HL model predicted. I responded that I therefore expected to see a production increase.

This year, one of the objections to the Saudi HL plot is that we are seeing increasing production. I have responded that I expect to see a resumption of the production decline, probably in 2009.

We can say that is quite likely that Saudi Arabia will have shown three straight years of annual production below their 2005 rate, at about the same stage of depletion at which the prior swing producer, Texas, peaked.

Which brings us to consumption.

The revised 2006 and 2007 data show an annual rate of increase of about +7.2%/year, which makes extrapolating future consumption pretty easy (at this rate, it doubles every 10 years). Extrapolated out, it would like look this, on 10 year intervals (total liquids production from Saudi Arabia in 2005 was 11.1 mbpd, EIA):

2005: 2 mbpd
2015: 4 mbpd
2025: 8 mbpd
2035: 16 mbpd

You see the problem. Of course, it’s usually a mistake to extrapolate an exponential increase forever (especially when one resides in a finite world), but there are some powerful forces driving the increase in Saudi consumption, at least for quite some time.

In any case, for the sake of argument, from 2005 to 2015, the Saudis would have to add about 200,000 bpd per year, just to meet domestic consumption.

Subsequent decades would look like this:

From 2015 to 2025, 400,000 bpd per year.

From 2025 to 2035, 800,000 bpd per year.

From 2035 to 2045, 1.6 mbpd per year.

The Saudi HL plot is showing a steady linear progression, with a plausible P/Q intercept. After 2008, Saudi Arabia will show lower production, flat production, or increasing production. My bet is on lower production, but time will tell.

But any way you look at it, I think that it is hard to make a case for a steady increase in net oil exports from Saudi Arabia.

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

Out of Gas

To Infinity & Beyond?

Suzuki expands SUVs in Saudi

Suzuki Saudia announced its plans to boost the availability of its sport utility vehicles (SUV) and family cars in Saudi Arabia. Suzuki Saudia will focus on its Grand Vitara, XL7, SX4 and Swift models to accommodate both single and family lifestyles.

Ah yes, the SUV lifestyle.

Future generations can use their camels to pull their SUV homes around. We, of course, don't have to worry since we have all that oil in Alaska and off shore.

China has also announced its intention to increase its auto industry's penetration of the Saudi market. IMO, this is an overlooked aspect of China's industry, as we often look just at China's domestic vehicle sales rate, which is on a pace to increase 14.1% Y/Y during 2008. I've posted links for the fisrt two items already; this link provides some additional info, particularly it indicates how Ford is able to stay in business through its China sales. Something to remember is that while the price of transport fuel continues to rise, many people around the world continue to buy vehicles that use them.


I love the work you have done on the ELM, but I think you are way off on Saudi. But let me be clear:

1. They do not now have 12.5 mb/d capability.

2. They do have the ability once they build the infrastructure.

3. They do not have the ability to go above 12.5 without damaging their fields.

4. They can go above 12.5 if they want to damage their fields.

I base this primarily on the comments of al Husseini last October and since, which I am sure you are familiar with. There is little point in arguing over and over exactly what KSA *can* produce since they will never go above 12.5 in order to preserve their fields and their future... unless at gun point, which is entirely possible. Or at the end of a wheat pitchfork, also highly possible.

My point really is that your work on the ELM is good enough. Playing prognosticator on one nation's fields and risking being wrong isn't worth the damage it does to your other work. Understand this: general intelligence is falling, not rising. There are too many people who either don't have the ability or are politically inclined to attack all your work for failure on a separate issue.

Besides, I am 95% certain you are wrong on the KSA ability to produce. Caveats: Ghawar being in seriously deep decline and lack of steel/rigs to keep drilling new wells.

But all that is moot given so much of the rest of the world is going into decline, so who cares of the KSA can go up to, say 15mb/d? It changes a peak by, what?, a year?


I'm afraid it's a little late to be taking a more cautionary stance on Saudi Arabia, especially given the near certainty that their 2008 annual production will be below their 2005 annual production rate, which would mean three three straight years of production below their 2005 rate, at about the same stage of depletion at which Texas started declining.

As I have said many times, Peak Oil does not mean that we stop finding new fields, the problem is that we can't fully offset the decline from the larger, older oil fields. The problem that the Saudis have is that the bulk of their production comes from a collection of large, old oil fields.

Consider the simple fact that, though March, 2008, the Saudis have produced more than half a billion barrels less oil than they would have produced if they had simply maintained their 2005 annual rate of 9.6 mbpd (C+C, EIA).

When I combine WT's analysis with the Saudi's behavior, that is, plans to diversify away from dependence on oil revenue by building an industrial base (4 new cities), this tells me that the KSA knows the end is near, very near. Otherwise, they could just sit back and rake in the $$$$ like they've been doing for 60 years.

building an industrial base (4 new cities), this tells me that the KSA knows the end is near, very near.

Says to me that KSA is looking to 'value add' to the energy - by producing finished goods.

ASPO predicted global peak oil in 2010.

Some people on this board declared 2005 as world peak oil, only to be rebuked when oil production increased in 2008.

OPEC indicated they wanted to build 5 million barrels of spare capacity.

Saudi Arabia may have spare capacity being held for emergencies or to offset declines between projects. NGL's are not considered to be crude under the OPEC quota system. Iran, Algeria, and others were increasing NGL's production. Did you not consider NGL's in your Texas and North Sea models?

NGL's were counted in total world liquids production.

How many years of declining production must occur before you declare peak oil?

Some people on this board declared 2005 as world peak oil, only to be rebuked when oil production increased in 2008.

How many years of declining production must occur before you declare peak oil?

I don't think TOD'ers 'declare' things very often. Rather they suggest and give their reasons. Most of which are often very good.

Hubbert peak concerns reservoir based crude oil, not the silly total liquids EIA is counting. World crude oil production peaked 2005 and since we have managed to hold it steady while being slightly successful in doing magic tricks with tar sands and NG. However in this we are dangerously fooling ourselves as we should know that such tricks have a hugely low EROEI and their potential flow rates can never replace the huge flow rates that the old depleting reservoirs have provided us until recent years. For all practical purposes in the real world peak oil was when sweet light crude production peaked - after that civilization became ever more expensive to maintain - 'the party was over'...

Hubbert peak occurs when the reservoir peaks, occurring approximately halfway along the depletion curve or later depending on the technology used to pump it, this is the flexible and confusing bit for many - however the law sais that 1. it will occur eventually, always, and 2. the later you trick it to occur the steeper will the decline be for the rest of the way.

However many people consider peak oil from a wider perspective such as peak energy, or even peak civilization. For many it is irrelevant if peak oil comes in, lets say, 2010 at 500 dollars a barrel - for the airline industry peak oil is now here already. It's up to you to make the subjective choice where you draw the line for yourself. Or perhaps the exact date of the peak is really irrelevant and we should concentrate on doing something about the problem...

Some people on this board declared 2005 as world peak oil, only to be rebuked when oil production increased in 2008

Didn't increase by much, though. Worldwide C+C has only increased by just over 1.1% since the 2005 peak.

Do I think they hit some unexpected difficulties in '06 and '07? Yup. But there really is a lot of oil there. There are untapped fields. They could, manpower and other resources permitting, get those numbers up. How long? Who knows. But I am sure they could.

It was just a little friendly advice. I know you feel they are pumping all they can. I think they are *almost* pumping all they can. In the end, the difference between the two is not going to change anything, so why sweat it? The difference between where they are now and 12.5 is one years depletion rate. That is far more important to get across to people than whether they have actually hit peak because in the long run it just doesn't whether they have hit peak already.

I also believe that an attempt might be made to unify the PO message. It seems to me we are reaching a critical point or window of opportunity to do something about PO. As you can see from this little charade in the desert, the propaganda machine is gearing up. The same sort of machine that denied AGW for so long. If that is allowed to occur again, we are all well and truly screwed.

Maybe the battles need to be picked more carefully?


Agree with you that current oil prices are a significant deterrent to a military strike against Iran and the net result is short term stabilty. However I think there is significant potential for further regional conflict.

A year ago King Abdullah was quoted referring to the "illegal US invasion of Iraq."

If foreign oil companies enter Iraq and develop the fields (and this appears to be likely) then the additional supply will put downward pressure on prices. KSA cannot be happy about foreign occupiers of Muslim lands having the potential to adversely impact the sole source of KSA national income. The potential for significant conflict between KSA and the US appears high.

If the US acts in its own interests and expands Iraqi supply it can be expected that this will reduce the market price of oil. If the US respects KSA interests then it acts to support a higher price and essentially collaborates with OPEC in maintaining a "managed" price. To put it bluntly, what is good for the US is economic disaster for KSA and OPEC, and what it good for KSA is economic disaster for the US.

Not sure how this will play out.
I do suspect that the public in the land of free enterprise will react negatively to evidence of their own government acting in collusion with a Muslim cartel. The solution to this is to make sure the evidence never gets out and the US mainstream media have lots of experience in this.

If KSA does feel threatened I can see them acting to provide covert support to a resumption of the Sunni insurgency in Iraq. They did it in Afghanistan and that threat was far more distant; in the present case a hand is closing around their jugular.

I think it's too soon to exclude the possibility of an attack on Iran. There are interests that think they will thrive on the ensuing chaos.

This capitulation by the Saudis means some deal was worked out. Bush himself once mentioned that perhaps the Saudis weren't increasing production because they couldn't. So how can they now? SA abuts Iraq.

I do suspect that the public in the land of free enterprise will react negatively to evidence of their own government acting in collusion with a Muslim cartel.

This already happened in OPEC's formative years prior to 1973 and was facilitated by the Texas Railrod Commission, upon which OPEC modeled itself.

I also don't see enough supply coming forth to depress the price, as I note upthread. Any large additions to supply will be sucked up because there is a lot of demand for oil at slightly lower prices. This is why we see a volitile see-saw, sawtoothed, yo-yo-like action with price. One way to see if the Saudis mean business regarding their pledge to increase is to scrutinize the tanker market, although the pledge is rather paltry--it will take 10 days of the additional 200Kbpd to load one VLCC.

In other words, I see no reason to become a Bear on oil price.

Keep the "bull run" dream alive (LOL). All I know is that I will take extreme personal satisfaction in seeing all of the greedy investors, Wall Street and private investors, losing their friggen shirts when the speculation game is up.

There are plans afoot by the US Government and regulatory agencies in several countries to remove a large number of speculators from the oil markets, and if they are successful, and there is reason to believe they will be, then it will be loads of fun watching the losses mount at all of the large Wall Street investment firms.

Gambling (futures trading in its' current form) on necessary commodities should be outlawed. Oil is a necessity, and futures prices should not be subject to the whims of wealthy investors and hedges funds. It should also be banned from trading in dark markets without regulation.

There are many on this forum who would like you to believe that the reason oil prices are high is due to the so-called "Peak Oil" theory, but that's all bullshiite. It is very likely that peak oil proponents are part of the conspiracy to keep prices artificially high so they can reap profits from their oil futures contracts. Don't believe the peak oil hype.

Based purely on supply and demand fundamentals, and production/transportation/storage costs, oil should be around $40/bbl.

I'll be the first one to have a party to celebrate when the speculators lose everything they have because of greed.

Well, you could probably hold a somewhat smaller party since it was rumored that Boone Pickens' Hedge Fund, BP Capital, went short earlier this year and really took a bath. I think the comments were that covering those shorts was a big part of what drove up the price just before one of the contract expiration dates, like March or April.

Party on, while you still can.

Damn. Where do I apply to get my conspiracy paycheck? I could really use it. Lame.

I get a check from the Mossad each week.

Spindoc I would like an explanation of how the speculators close out their contracts when they expire if the price dictated by supply/demand is $40. If I could buy oil on the spot market at that price I could make a lot of money fast by shorting oil for delivery in August (I can sell that contract now for about $134). Come August I could buy on the spot market do an exchange of futures for physical and make a killing.

If you believe that speculators are driving the market please explain to me how they impact the spot market without actually buying and storing the oil I would love to get in on that racket.

By pure coincidence, my place of employment is having a special on 10 metre rolls of alfoil this week. Tell your friends!

In an interview just broadcast on BBC Radio 4 'The World This Weekend' Gordon Brown stated that 'there are 25 billion barrels of oil still remaining in the North Sea' (the interview and feature on KSA meeting is just over 15 minutes into broadcast). Apart from irony of this statement coming from the former UK Chancellor who imposed a restrospective higher tax regime on N Sea oil industry and so did much to discourage investment the figure quoted is totally at odds with either the 3.9 Gbbls from BP Statistical Review or 3 - 5 Gbbls from Hubbert Linearisation For Mearns2.

The question is therefore raised as to whether GB really believes his quoted figure for 'reserves' (which amounts to some 6 times the other forecasts), is simply taking at face value what a combination of his own civil servants and Peter Odell are saying or cannot admit to the lower figure lest UK economy be undermined by an old fashioned 'run on sterling'.

As many of us from TOD have been stating repeatedly here and elsewhere - the situation desperately needs some realism and honesty rather than simply 'clutching at the most optimistic estimate available at the time'. Based on this interview nothing whatever has changed.

Did he actually use the term reserves or its equvalent? Or perhaps, remaining to be found?

Transcribed from Gordon Brown's broadcast statement:

For Britain I pledge that by examining incentives for greater recovery of oil and for smaller fields we will do more to exploit the 25 billion barrels of reserves still in the North Sea.

I noted that GB did not specify 'UK N Sea' but presumably he meant just the UK sector as he's not in a position to directly provide incentives for the Norwegian sector.

Thanks for the clarification. Sounds to me like he's fishing for oil using pound sterling as bait.

Some time ago John Prescott said on Radio 4 that '.. a pledge is not a promise'. It took me a while to calm down I can tell you.

The only job Gordon Broon is good for is cleaning toilets in a plague hospital.

we will do more to exploit the 25 billion barrels of reserves still in the North Sea.

I wonder what sort of surreal conversation went on between the King of KSA and our PM, both sides talking complete and utter bollocks!

Actual UK production has been ~25 Billion barrels with only about ~5 Billion barrels more if we are lucky.



put graghically

he isn't talking complete North Sea either


Chris - we got a post on UK nat gas going up tomorrow and on Tuesday I'll have a post on the UK energy situation ("A State of Emergency") based on a presentation I received from BERR - so carry this post over then and we can have a discussion about it.

From The Automatic Earth:

A thought I had this morning: Britain’s economy is sinking so deep and so fast, if I were PM Gordon Brown, I’d consider writing a law that bans the possession of pitchforks.

The "winner" of the presidential election here might want to do the same thing.

Hah! Who needs a pitchfork when you've got a rifle in the cupboard?

Yikes. You two guys enjoy your visit from the secret service. :O

Very interesting comment in The AZ. Republic Newspaper this morning. Looks like maybe the MSM in AZ. at least are beginning to "get it"


Just noticed that E85 now costs more than $5 based on AAA's BTU/MPG rating. I can't but wonder why folks would pay so much more for less, but then they propably don't know the massive BTU difference unless they track their mileage. Anyone in E85 country have an angle on this?

Karlof, a lot of ethanol supporters (myself included) wouldn't buy E85 at those prices. It's pretty well accepted that most people will want a discount in the 20% range to make up for the decreased mileage (some cars will do better than this, but some will do worse.)

There are, thankfully, many stations where you can buy E85 in the $3.10 range. I'm giving the link for Missouri Stations; but, you can check other states by going to the map, and clicking on the state of your choice.


"E85 in the #3.10 range." Those must be rare puppies as my AAA link says avg E85 is $3.834 up from $3.192 one month ago, a rise of .642 versus regular gas rising .198 during the same period.

I can't but wonder why folks would pay so much more for less

I think they probably want to support the local economy and not depend on furin oil.

OK, how misleading is all this:

When I first saw this story on CNN on the front page, it read "Saudi Arabia Raised Oil Production". Then, it changed to "Saudi Arabia raising oil production". If you click the link, the headline changes to "Saudi Arabia to produce more oil: World's largest oil producer says it will increase daily oil production to 9.7 million barrels from 9 million in July."

So, CNN wants those just scanning the headlines to think it's a done deal, but if you actually click the link and read the story, it says that that this:

Saudi Arabia will increase its daily oil production to 9.7 million barrels from 9 million to counter the sharp rise in international oil prices, Saudi King Abdullah said Sunday.

It is being portrayed as a done deal with no additional details. What bugs me is that a promise of intent is being sold as a done deal and we all know that it will buy time in the market until something happens a week or two later to say why it could not happen. It is an example of the MSM playing up the world on the promise that may or may not happen.

Interesting that he reports current production at 9.0 mbpd.

Definitely interesting. Hey, you guys gotta realize that all amounts to an attempt to "jawbone" prices down. KSA has done a veritable blizzard of contradictory PR in recent months. This is Kennedy era BS campaign. Watch the price this week -- I bet it will have no effect.

Interesting that he reports current production at 9.0 mbpd.

I suspect he's not doing so. That's not a quote - it's CNN's words, not the Saudis' - so making guesses based on the precise phrasing is probably not wise.

I haven't been able to find a direct quote, so it's difficult to tell, but I would expect phrasing something like "Saudi Arabia is raising oil production to 9.7Mb/d from 9Mb/d [because we're such swell guys]." Phrasing like that would likely refer to the in progress increase from 9Mb/d (early this year) to 9.7Mb/d (target production level for July), rather than any new increase. As people have noted, most of the Saudi increases have already been announced, so he was probably referring to the whole package of increases, rather than the just the part announced on Sunday.

Whatever the actual phrasing was, I suspect reading it as "Saudi Arabia is producing 9.0Mb/d in June" is an overly narrow interpretation, and is reading way more into it than was actually there.

Correct me if I'm wrong, but the output from Jeddah looks to raise prices on Monday.

Firstly the headline figure has all already been announced and priced in. There is no extra on top, just a promise that they would do more if needed (talks cheap).

However second they are talking about $1bn in loans to poorer countries to help them with higher prices. Not only does that mean these countries are in debt to Saudi and the money comes back in oil revenues anyway. It also means that the demand that had been driven off the market by high prices will be back - pushing prices even higher.

Now $1bn won't go far, but its equivalent to 7.5 million barrels of oil, more if the poorer countries take funds they won't have spent on too expensive oil and add it to these loans.

Couple all this together with the hopes and expectations and $140 is quite possible if the markets are paying attention.

Yes...there were a few other little things thrown out from this meeting that look like specks of dust in a storm. What makes my jaw drop about this meeting is how amazingly anticlimactic it has been. That's all...that's it...KSA saying they will open the spigots a little (which may or may not happen and may or may not help in view of VENMEX decline) and they will give some monetary assistance to poor countries to pay for some rice? That's it??

Why the hell did they call for all world leaders to come to Jeddah for THIS important announcement? They could have done it on a conference call and save a lot of $$$.

Something...does not add up here or perhaps I was hoping Bodman would jump on a table screaming "Peak Oil is here. Peak Oil is now. WE MUST PREPARE!!!" I am so damn idealistic I guess.

What happens if they try to bribe us by making the increases contingent on the OECD nations taking actions to deter demand destruction. They might say the will produce more only IF gasoline taxes are reduced, and subsidies maintained or increased. That would put the OECD leaders in the position of haiving to say no to short term lower end user prices, or to climb ever higher up the oil addiction slope. It might be politically difficult to do the right thing.

"Why the hell did they call for all world leaders to come to Jeddah for THIS important announcement? They could have done it on a conference call and save a lot of $$$."

Getting them to fly there in their individual megajets uses up lots of fuel and increases demand for the KSA product...


A Suggestion

I noted yesterday that I liked TOD better in "the old days" when the DB consisted mostly of links and information with little commentary. I'd like to suggest that TPTB consider having two DBs a day. The first would be devoted to links/information - Drum Beat - Links and Information with zero comments. This would be similar to what Leanan provides up top each day. It would be nice if each link could be provided with a number so that it could be referenced in...

... a second DB - Drum Beat - Commentary. To me, the volume of ancillary commentary has gotten so totally out of hand that it takes me forever to re-find a link I want to look at later. While commentary can lead to further insights, much of it now is just wasted bandwidth.

What ya think?



It is awfully hard to make it thru a 300+ comment drumbeat. And since, as stated yesterday, TOD is planning on growing, I guess the good old days are gone.

I am not a fan of the rating system, but what about this hybridized Todd idea:

A Drum Beat with only 'Primary' posts, no comments. These would be links, important stories, big ideas, whatever. Folks could then comment on the posts they wish, but these would be 'collapsed'. The number of 'sub-comments' would be listed at the parent post.

These primary posts could then be rated. Is it a name-calling food-fight? Or is it a quality discussion? Rate it. Highest rated initial posts and (collapsed) comment threads could drift to the top of the Drumbeat, and worthless, deceptive, cornucopian (it's a joke) posts would sink to the bottom. Individual comments would not be rated, only the parents.

Thus we would have a smaller number of 'big ideas' to look at, a way to rate their worth and assess further involvement, and an organized way to fight it out.

Thanks Todd

Have you considered putting two "more" links on the DrumBeats (or any front-page article, for that matter)? One link would go to the "below the fold" part with comments (the way it is now), and the other link would go to just the article, without comments.

Edit: It's there! I didn't notice it before, sorry! (or was it just added?)

the article, without comments.

Been there for a long time.

State officials said lightning started more than 500 fires during the weekend.
SACRAMENTO, California (AP) -- Wildfires were scattered around Northern California on Sunday in the heart of wine country and in remote forests, the latest in what has become an unusually destructive year.

I saw about 5 plumes today between Todd's place and mine. Fighting wildfires is terribly energy intensive; bombers, choppers, cats, moving firefighters from one end of the state to the other. We even have a team from NC out here. I wonder how much fuel will be allocated to CDF in the future.

Americans feeling that "verything is spinning out of control". This article is in the "most popular" list today on Yahoo News. Alas they (the writers - and the nation) don't realize that energy is the matter...

Is everything spinning out of control? Midwestern levees are bursting. Polar bears are adrift. Gas prices are skyrocketing. Home values are abysmal. Air fares, college tuition and health care border on unaffordable. Wars without end rage in Iraq, Afghanistan and against terrorism. ...

The can-do, bootstrap approach embedded in the American psyche is under assault. Eroding it is a dour powerlessness that is chipping away at the country's sturdy conviction that destiny can be commanded with sheer courage and perseverance.

[ big snip ... ]

Residents of the nation's capital and its suburbs repeatedly lose power for extended periods as mere thunderstorms rumble through. In California, leaders warn people to use less water in the unrelenting drought.

[ big snip ... ]

Why the vulnerability? After all, this is the 21st century, not a more primitive past when little in life was assured. Surely people know how to fix problems now. Maybe. And maybe this is what the 21st century will be about — a great unraveling of some things long taken for granted.

It's Bush's fault, he said "bring it on" and thus challenged the gods of fate :)

The Saudis are exhibiting self-destructive behavior. Any oil exporter with a trade surplus would be wise to delay production to a point where total world production has dropped significantly. A likely scenario is that oil production will drop 20% by 2018, but the price could easily triple. There is no better investment than keeping the oil in the ground for future production.


Will another 500,000bpd make difference? Can the Saudis produce it? And can they produce the new "cushion" 12.5mbd?


When I talk about PO with people I stress the fact that America was built with super cheap oil. We were getting 100 barrels for every 1 barrel of energy used. 100 to 1 is nearly perpetual motion, almost free, huge amounts of excess, and therefore very cheap.

Now we are getting on average around 10 barrels of oil for every one. New discoveries, biofuels and unconvential oil are very energy intensive, some are 2 to 1 or less. This explains alot of the problems we see in regards to energy, food, and thus the economy.

This makes all the hype about "New Discoveries" or OPEC cranking up the flow a non issue.

I just had a guy who I had talked with come up to me at the farmers market and say that when ever he hears about new finds or drilling in Alaska he askes himself "how cheap and easy will it be to get".

Bam! Got him.

A friend from college (we are both 50) explained to me that the solution to US oil needs lies in the shale deposits in US mountain west. He went on to say that in this shale the US has much more oil than Saudi Arabia. Like most typical US consumers my friend was mislead by stories in the MSM about things like tar sands, shale oil and Brazilian deepwater fields: all do contain oil but at huge cost and effort to extract. And many sources like oil from shale will never be economically viable to produce.

I went on to explain the problems with these unconventional oil sources and proceeded to dampen his optimism of the future. But now he understands that high prices are caused by supply problems and solutions presented by the MSM and politicians are often not pratical.

Still most people don't understand peak oil and many turn away from any discussion of a bleak future due to energy problems.

A friend from college (we are both 50) explained to me that the solution to US oil needs lies in the shale deposits in US mountain west.

He's right! All we have to do is bury most of the Democrat and Republican politicos and the majority of the bureaucrats under all that shale and a solution will lend itself as the idiots blocking any sort of appropriate action will no longer be in the way.

He's right! All we have to do is bury most of the Democrat and Republican politicos and the majority of the bureaucrats under all that shale and a solution will lend itself as the idiots blocking any sort of appropriate action will no longer be in the way.

And as a bonus in a few million years we'll have a few barrels of new oil (although it be a bit rancid).

"When I talk about PO with people I stress the fact that America was built with super cheap oil."

oil hasn't always been cheap. was it cheap during the 70s? what about most of the 1800s? cheap energy was the period from about 1985-2000.

oil hasn't always been cheap.

Well then, man up and give a graph.

was it cheap during the 70s?

a ? means that you do not know. Yet you claim

oil hasn't always been cheap

So what is it? Is your statement correct or not?

Go ahead - show us how "oil hasn't always been cheap" Now I do not have the power to back up 'put up or shut up' - but do put up.

a ? means that you do not know.

no. it means I'm asking you a question.

So what is it? Is your statement correct or not?

do question marks confuse you.

John15 you actually asked two rhetorical questions that were then anwered by a statement that the period between 1985-2000 was the period of cheap oil. It is disingenuous to claim that were just asking a question after using the grammatical device to make a point. See http://en.wikipedia.org/wiki/Rhetorical_question .

As far as cheap energy I remember the days when I was able to purchase a new car for less than two thousand dollars, fill up at thirty five cents a gallon, and cruise all day and night without a much a care in the world. This was before the eighties.

I also suggest that if you have a point to make back it up, as you always seem to demand of others. You could have made an argument showing who as a proportion of income and with inflation that energy was really only cheap for a given period. Not an argument I'd buy, but one that could be made somewhat honestly.

It is disingenuous to claim that were just asking a question after using the grammatical device to make a point.

why? I am asking a question in part to prove a point.

One doesn't prove points by asking questions. One proves a point by supplying data to back it up. Where is that then?

John rarely, if ever has any data. He's got lots of opinion, but precious little in the way of data. This is, of course, expected of someone with an agenda rather than an honest actor gloing where the numbers lead.


For me from *roughly* the 1880's to now is pretty much "always"


souperman "...the hype about "New Discoveries" or OPEC cranking up the flow..." Had to go to Las Vegas this weekend for a wedding. After seeing what looked like record crowds arriving via the freeways bumber to bumper for the last 100 miles you wouldn't think there was any shortage of fuel or cash to buy it at $4. a gallon. I was being run off the road by tourists in large SUV's rushing to get to the gambling halls.

I have to think that the overwhelming majority of people are tone deaf about "limits to growth". At the wedding the small talk was all about the cost of gas. I casually asked a woman sitting across from me why she thought the prices were rising so quickly. She said it's all about "ripping us off". So I followed it up with, "So you think there's plenty of oil". "Absolutely", She replied, "as soon as they get the price where they want it there will be plenty of oil just like in the 70's and 80's."

I didn't have the inclination nor the energy to argue with such profound logic.

Lets kill all the Speculators!!!!!!!!!!!!!!

This is the latest CFTC report
----------------------... NONREPORTABLE
203,806 191,094 219,645 825,031 823,129 1248482 1233868 86,725 101,339

-14,678 -2,144 -25,976 -57,714 -73,551 -98,368 -101,671 14,826 18,129

15.3 14.3 16.5 61.8 61.6 93.5 92.4 6.5 7.6

85 121 126 85 100 256 270

Yeah speculators are net long a whopping 12,000 contracts. You know how many they were long when oil was at $78 last august? 110,000 contracts. So the price went up 80% and the number of net long contracts fell by 90%. Oh my *** our politicians are geniuses....There is a positive correlation. Lets stop the presses. Our Senators have discovered the damn truth.

You persist in trying to confuse us with facts.

face it
+90% of the posters in the db's are invested in oil/commodities, one way or another
that huge pool of money that fed the credit bubble needs to settle somewhere and it's only natural that some of it would find it's way into commodities
CalPERS is in commodities
TOD, by it's very nature is driving oil speculation
the problem with the oil market is obvious, supply and demand. If I can figure it out why not speculate my way to a profit?
The gov meddling in the market is how depressions happen

ps I'm way over my head talking about money and markets, so be kind

Of course the futures markets are about speculation. How significant TOD is, no one knows. Or could there be a poll of speculators? We know what drives speculators, but what do the speculators drive? That is the 64 billion dollar question. My propane company hedges by being in the futures market. Thus far, that has been a very good thing as my propane prices would be much higher otherwise. This could, of course, reverse. That's why they call it speculation.

Could the futures market prices on Monday be a good indicator as to how seriously speculators take Saudi Arabia's promises?

The mere fact that KSA felt like they alone needed to call such a meeting is cause for concern. If there were no problems with production, etc., why would they need to call such a meeting. Aren't the normal OPEC meetings good enough? Unless, unless...KSA no longer feels that OPEC represents their viewpoint OR the other OPEC members feel that KSA is doing things they do not wish to do...hmmmmm.

Dragonfly, one other possibility is that they wanted to yell "Ghawar is very near the end!", but decided instead to inform the leaders in camera.

There are various types of folks who could be mis-classified as speculators. Should we classify airlines - Southwest, e.g. - as speculators? They would be hard pressed to accept delivery, as an airline, of unrefined crude oil, but have to protect their future costs. I would think of that as a hedge, myself.

If you hold a bunch of stocks which are petroleum price sensitive, as CALPERS probably does, are you hedging, or simply protecting your position?

How about some little oil producer who is concerned that a Presidential Candidate will be successful and wipe out a lot of their net worth? :(

I would think of a speculator in crude oil, anywhere on the globe, as someone who is dealing in quantities far in excess of their exposure, and many of those folks would use options, doing spreads or strangles, or just going naked in a position. While having an excess of long positions open in the market might indicate a lot of naked positions, it may also indicate a lot of well thought out (and that doesn't mean they are right) trades which are entered into for good reason, by INVESTORS, who are a lot different from speculators.

I think if you take all of these folks out of the picture, you could find the true number of speculators. Probably some hedge funds, Boone Pickens, and some really rich gamblers who don't want to waste the jet fuel to go to Vegas or Monaco.

Read last line of above report. The total "small traders" i.e non re
portable positions are around 550 ( 250+270). That means from around the world the number of people that trade on NYmex (sure there are other exchanges)is 550. Holy Cow Batman. That is about how many people day traded in my apt complex at the peak of the Tech bubble.


I started very small time investing in oil futures as part of my Peak Oil preparations some time back. (ie: this isn't about 'making money' it's about hopefully providing a solid basis for a self-sustaining community by moving profits into productive, shared assets)

This was after I'd spent quite a lot of time at PO.com, but before I quit there for TOD.

Next time I talk to my broker I will ask how many customers like me he has. At first that number of 550 seemed absurdly low, but when I figure that there are prob about 30ish of us posting here at TOD, and you'd expect many small investors to be here, maybe there really are that few of us.

I have of late decided to keep quiet about investing in oil. As a result of the OPEC PR/propaganda mantra that speculators are responsible for high prices (something I believe to be logically impossible over any period longer than a month without building physical inventories in the traded oil grades) I have noticed just in the last couple of weeks a change in mainstream media reporting:

Whereas they had been saying that speculators are accused of, or may be, driving up prices, I have now seen several reports which state speculators ARE driving up prices, and this is mentioned almost in passing, as though it's a commonsense background fact.

So I will keep quiet from now on, because now the MSM buys the story, so do the masses. I will keep investing, because I think it's appropriate, and in no way inethical to play the system that bought us here at it's own game.

That means from around the world the number of people that trade on NYmex (sure there are other exchanges)is 550

Isn't it even smaller than that?


Either way, under a thousand traders, worldwide? Clearly a issue that needs sorting right now! Damn those evil speculators!

face it +90% of the posters in the db's are invested in oil/commodities, one way or another...

I don't believe that for one moment. Posters on this list are mostly intelligent people who see peak oil coming and see it having a devastating effect on the world. Most of us hope to find a way to mitigate the effects of peak oil, if not for the whole world, at least for ourselves. We are not here to find a way to make money!

Some are of course, but they are, I believe, a tiny minority of the people on this list. And I would bet that only a tiny percentage of the posters on this list invest in the oil futures market, or even commodity futures in general.

As for me personally, I once invested in both the stock market and commodities market. For a period of about six months, back in 1986, I was a stock and commodities broker. I left that job when I found out that the word "Stockbroker" was only a fancy term for "Salesman". And I was a terrible salesman, I simply was not a good enough liar. Also I had one quality that no good stockbroker can possibly can possibly have, a conscience. I am now out of the market all together.

Ron Patterson

I said one way or another to let myself off the hook
I see a Malthusian sh!t storm on the horizon therefor I'm speculating I ought to be buying hard assets and trying to get my community involved in food production
as far as future traders posting here, beats me. But, we do talk markets here all the time. Moe Gamble, Self Aggrandized Trader ( were is that guy?)
and by my estimation if you traded in the futures market and didn't read TOD daily your a fool, its track record is just to good
I can see you not being a good salesman, I have a hard time handing folks plates of bs also

We are not here to find a way to make money!

In a spirit of full disclosure, one of the reasons I started trying to figure out if peak oil was in near future, partly through reading and commenting here, was to see if there were business (as opposed to investment) opportunities. (The kind of business that's not supported by government subsidy or law or other shenanigans.) However I've never invested in shares in any way based on peak oil, and any business I might start would be so small that it's success would be dependent on peak oil effects actually manifesting themselves to give customers compelling reasons to use my services; there's no way I could talk-up a non-existent peak oil to get customers. (That, along with scientific inclination, are one reason I keep trying to separate elegant rhetoric from empirical observation and theory here; if I'm thinking about making life choices and putting my money behind things I want to understand the real world rather than follow whoever "wins" an argument.)

It's interesting to note that the MSM has primarily got interested in peak oil not because there's suddenly a more vocal advocate but because price levels suggest something new is going on.

In the same spirit of disclosure, I am using the data from this site to budget our monthly beans and ammo expenditures without using a credit card. ;-)

Since gambling doesn't appeal to me I don't invest in stocks, bonds or commodities at all. Only FDIC insured CDs. I realize that this is a gamble on the government not defaulting on its promises, but less of a gamble than the markets.

We are not here to find a way to make money!

I read the site out of interest and concern about peak oil primarily. However, I do invest in energy futures as a way to hedge against post-peak oil uncertainties. I'm mostly setting aside profits to finance a future move from the city to either a exporting country or to a rural area - either way I think it's a smart strategy.

speculators are net long a whopping 12,000 contracts

Not even that. Look at the nonreportables, because they are speculators too, and they're net short.

Overall, speculators were net short as of the latest report, and commercials were net long.

Damn speculators bringing down the price of oil. Round up the usual suspects. Perhaps congress may be giving second thoughts to cracking down on speculators. No?

There is so much talk about speculation but I still have not figured out how speculators could drive up the forward month. At the end of the month anybody who is long must accept the oil at the price they bought the contract at or sell the same contract to cancel there position.

I have been told that they "roll over" their positions but that still involves selling the expiring contract. Can anybody explain exactly what the speculators are supposed to be doing in actual terms of contracts bought and sold? I don't see how just adding money to the market would drive up prices unless the speculators could actually accept and store the oil.

GoodTower, you have hit the nail on the head.
I was actually thinking of writing a detailed article for TOD about speculation unless it has been covered before .Anyone know?

Banning speculation as a way to hold down the price of oil strikes me as similar to breaking your mirrors as a remedy for being overweight.

Please do write that article. I think the financial side of the oil market has not been examined in nearly the detail the physical side has.

I think that depends. If you have an ability to take delivery as it's been reported that some big banks do via their commercial trading then you would have the ability to bluff the price at month end (because you can hold unsold oil if need be). If the final buyer MUST have the product then the fact you want to sell it doesn't mean you need accept a price lower than you think it will get. This is all about testing the market to see what oil really can fetch. I don't think that is bad but actually part of the whole purpose of the market - discovery. The fact is that a lot of people don't like the "discovery" of just how much they need oil.

That's my point in a speculative bubble somebody is owning the commodity that is being driven up by speculation. Since futures contracts expire they would have to be able to store the oil.

I have heard speculation that some financial institutions have bought storage facilities but we know that the amount of stored oil is not going up. Even if you owned some tanks you would not be able to artificially drive up the price on a long term basis if there really were a surplus of supply over demand unless you could keep building new storage capacity.

The people crying "SPECULATION!!!" seem to think that the flow of the money into the market alone is enough to drive price but they never explain in detail what the speculators are doing. I can see how an influx of speculative money could drive the long contracts (delivery in 2015 etc) because those will not be tested against the actual availability of oil for a long time. However if you look at the futures market the long contracts are below the spot market, in other words the consensus of investors is that oil will become cheaper in the future.

I would like to see a detailed explanation of the futures market on TOD, I have learned a great deal about the physical side of the oil market here and there is clearly a great deal of ignorance about the futures market.

Finally to Spindoc I would like to say that you have a great opportunity to put your money where your mouth is. At this moment somebody is offering to buy oil for delivery in Dec 2015 for $137.19/barrel. You can enter into a contract to deliver 1000 barrels with about $10,000 in earnest money. If you are confident that speculation is driving the market and the removal of the speculators will bring the price down to $40 you could make about $100,000 on a $10,000 investment by entering into that deal. Please post again and tell us if you are doing this.

Paul Krugman on the effects of high oil prices on globalization.

I’ve written before about the CIBC study suggesting that high oil prices, by making shipping much more expensive, may reverse a significant amount of globalization.

A new NBER working paper by Koopman et al provides some numbers for a thought I’ve had about this: that the effects of higher transport costs may be especially large because so much of world trade these days involves vertical specialization.

From "Minister: Saudi Arabia can increase oil production" link:

"The oil minister also says the kingdom can increase its pumping capacity long-term by as much as 2.5 million extra barrels a day."

So often we read all of the links quickly, even as we study them in detail, only to miss the really big points. Even if KSA is able to temporarily increase to the 9.7/10 MMBOPD, I think that the above quote is very telling, assuming it was correct. It seems to me to be an admission that KSA is acknowledging a top limit in their productive capability. It is possible that this is just a number picked out of the air, but I would think not.

If we were to assume that the postulated current increases, however vaguely presented, were a possibility, the eventual limits are what is truly scary, and this is at least an indication of the mindset that there is an upper limit. If the limit is an additional 2.5 MMBOPD, the KSA limit should be reached within two years as the rest of the world continues to decline. Extrapolate that, everybody ! (Intended as a fun challenge. BTW.)

The world is in this for the long haul.

you're quite right on the parsing of the Kings words... but I have doubts that the Saudis can produce the 12.5mbd cushion they're claiming to attain. The 500,000, I think will be a stretch.

Doesn't matter. 2.5 is nothing. It's well under one year of declines... insignificant. Sounds good to the huddled masses, but it means exactly squat in terms of avoiding collapse.

That is, it's propaganda, really.


Well, I think we also have to factor in what kind of oil, not just productive capacity itself.

Hello TODers,

Posted for your consideration [or not]:

Why does Wood Dale, IL --> just totally pegs the Google Trend Chart?


I'm off for some shuteye, finally.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

I'm not sure if this has been covered...


Chevron Corp.'s Nigerian onshore oil output remained halted following an attack on a pipeline ... Chevron Nigeria's Abiteye-Olero pipeline was "breached" on June 19 in a suspected act of sabotage ... About 120,000 barrels a day of crude have been halted by the attack ... Royal Dutch Shell said on June 19 it shut down the Bonga oil field in Nigeria because of militant action, halting shipments of as much of 190,000 barrels a day.

Contrast that with an additional 200,000 bpd that is so significant that leaders from all over the world have to burn aviation fuel to travel to KSA for a meeting.

And Saudi domestic consumption will probably be up by around 200,000 bpd in 2008, over 2007.

So the MSM tries to ONLY show one side of the story? They will ONLY report on increases to production front and center and hide these potential decline stories on the back pages.

Is this fair and unbiased reporting? Once again, my idealistic brain weeps.

Yeah it is fair and unbiased..kind of like Fox news...we report we decide...or is it you decide?

You might be thinking of CNNNN. "We Report. You Believe." ;)

While India has stated a 5% mandatory ethanol use directive set to expand to 10% ethanol blending goals, one state has banned the use of sugar to make ethanol. India is scheduling the conversion of some of its agricultural lands to sugar and corn ethanol production.


China's auto sales have been falling for two months and are likely to fall further with higher gasoline prices being posted across the nation.


Low grain stocks after monstrous efforts to create ethanol/biodiesel biofuels might contribute to a global recession. The crop failures came year after year around the globe. The cost to haul wheat by rail was pennies per ton.

The United States and some E.U. zones made speculative real estate loans and the collapse thereof was rattling the financial markets.

In Alaska the cost of some household monthly utility bills were higher than the monthly mortgage payments. Three families were living in one house.

one state has banned the use of sugar to make ethanol.

Errr, than what is yeast supposed to eat if not sugar?

Soylent Green.

Pathetic, really. As long as we don't execute plans to get off oil, we just remain pathetic. But we of course don't need KSA because we can reverse oir downward domestic trend line by drilling in ANWR and offshore. And there will be plenty of rigs,manpower, and ships to go around for everyone. And all those idle fields that have already been leased will be drilled ASAP as well. When it comes to oil, our resources are unlimited. When it comes to alternatives to oil, we can't spare small change.

I personally only have so much capital. I have to spend it wisely. Short term thinking says I should just roll the dice and blow it on propane next winter. Longer term thinking says I should invest at least $2500 in more insulation. Somehow, however, the limitations of capital do not apply on the national level. In ten years, if we are lucky, the oil from the OCS will start flowing. And what then? Would it have been wise to use all capital elsewhere. Not if you are an oil company and all you know is oil, I would guess. It is our future. And the future is too important to simply let the oil companies and the oil countries dictate. Their interest is not our interest unless of course your President and VP are both oil men.

Watching the local news channel last night I was alerted to the issue of "hot gas". It's been in the mid 90s all this week in my neck of the woods. I quick search yields several articles from past years on the same issue. Just a little more something to squeeze our pocketbooks!


Take “hot fuel,” briefly a war cry a couple of summers ago, then all but forgotten until this spring. Hot fuel is when higher temperatures make gasoline expand; that means there’s less energy in the same volume. So a fill-up at a hot gas pump, like those in southern and western states, can shortchange people buying gas—by about 7 to 9 cents a gallon in really hot weather. Nationwide, that’s about $3 billion a year, says consumer advocacy group Public Citizen.

Judging by the above articles about food shortages and cities raiding reserves, a stockpile of beans and ammo may be the only way to get a good nights sleep on a regular basis. Is it just me or does the bad news seem to be going "nonlinear" or logarithmic?

Was in Europe last week for work and we had our rental car broken into. Damn thief broke a window in broad daylight on a busy street in the center of Maastricht. In the 15 years I've been going there, never imagined that would happen during the day. Cops saying its happening all the time now, time doesn't matter. Hertz said the same thing when we returned the car....."Oh crap, not another one?!?!"

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This stuff works--and as many people come through here daily, we should be rocking those link farms like other sites do!

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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.

You. Will. Not. Be. Able. To. Get. Food. Need this be spelled out any more plainly? It is time to consider that the stage has been set for petroleum-induced famine.

We have "innocently" accommodated rising population with greater and greater food production via technology and the profit motive. But now we have run out of room to grow, as biotechnology, for example, has severe limitations -- major ones being petroleum dependence and topsoil loss. The biggest wild card for our existence is climate change, as we see with floods and other extreme weather affecting our food supply.

Oh, my God. We fed the pigeons and rabbits, did we?

"...After taking the body blows of higher energy prices, Americans seem more willing than ever to fight back with bold initiatives. For example, just over three-quarters (76 percent) support immediately increasing oil drilling in the United States"

Too bad that "more willing than ever" attitude does not start with demand reduction, like using less and conserving more. I do not believe we will be able to resolve this situation with just supply side solutions.


A bold initiative would be not to drill. It doesn't take any courage, sitting on your ass somewhere in front of the TV or in your SUV, to encourage other to drill. We will,however, take the line of least resistance and wake up in five or ten years and realize we are totally f***ed.

The Jason Schwartz story (The 'Peak Oil' Myth: New Oil Is Plentiful) is good for a laugh; I almost suspect it of being satire. His case is built on the following points.

An offshore find by Brazilian state oil company Petrobras (PBR) in partnership with BG Group (BRGYY.PK) and Repsol-YPF may be the world's biggest discovery in 30 years...

A trio of oil companies led by Chevron Corp. (CVX) has tapped a petroleum pool deep beneath the Gulf of Mexico that could boost U.S. reserves by more than 50 percent...

Kosmos Energy says its oil field at West Cape Three Points is the largest discovery in deep water West Africa and potentially the largest single field discovery in the region...

A new oil discovery has been made by Statoil (STO) in the Ragnarrock prospect near the Sleipner area in the North Sea... No size estimate.

Shell (RDS.A) is currently analyzing and evaluating the well data of their own find in the Gulf of mexico to determine next steps. This find is rumored to be capable of producing 100 billion barrels...

In Iraq, excavators have struck three oil fields with reserves estimated at about 2 billion barrels...

Iran has discovered an oil field within its southwest Jofeir oilfield that is expected to boost Jofeir's oil output to 33,000 barrels per day...

The United States holds significant oil shale resources underlying a total area of 16,000 square miles. This represents the largest known concentration of oil shale in the world and holds an estimated 1.5 trillion barrels of oil with 800 billion recoverable barrells...

In western North Dakota there is a formation known as the Bakken Shale...

Then he goes after speculators:

The peak oil theory is a money making scam put out by the speculators looking for high commodity returns...

And for the coup de grace:

Just like global warming, the rationale for peak oil sounds great, it makes sense, but there is just one small problem, the facts don't support it.


Yeah, saw that too, and was blown away by his ignornance. But then this guy sells "securites" so what do you expect. Hey, got a few good deals on bank stocks for you!

And as I have previously noted, the Texas production decline was due to a little known communist takeover of the state in the early Seventies--with the Texas Politburo headquartered in the Midland Petroleum Club. The party hacks put in charge of production have caused production to decline at about -4%/year since 1972.

And of course, since tofu wielding Vegan terrorists seized control of key producing platforms in the North Sea in 1999, production has fallen at about -4.5%/year.

george carlin would have been proud of your sense of humor

(r.i.p. george carlin)
P.O. --one of the 7 phrases you can't utter on polite MSM

Indeed. Time to repeat the point that so many fail to get: peak oil is not about stocks, it's about flows. There may be a 1.2 trillion equivalent barrels stock in the oil shale in Colorado, Utah, and Wyoming, but the effort and costs to produce a million barrel per day flow are staggering. Ditto the low-permeability reservoirs under North Dakota. Ditto the ultra-deep water fields.

That uninformed little bugger deleted my post! It was the third post there. In it I stated that the 48 billion barrels in his first two points amounted to about 19.2 bilion recoverable, which he dishoinestly neglected to mention. I said that would equal about 220 days of global oil consumption, which he failed to mention. I added the shale oil deposits in the US were only about 4.5 billion recoverable... which he failed to mention. I stated the fields he mentioned were oil and gas, which he failed to mention.

I think he took offense to my taking offense to him essentially being dishonest about the real numbers.

Lying little twit.


'The trouble with these Gentlemen's Agreements, is these Gentlemen ain't Gentlemen!'
- Sam Clemens

At least you get to see what he's about, and he can see that you can see it.

I think you are about 12 or 13 comments down...

I was third. When I checked after this thread was posted, my comment wasn't there at all. I looked repeatedly to be sure. If it's up now, I guess I owe the little bugger an apology for saying he removed it.

The rest stands.



Where is "there" an who is the bugger? The way TOD posts sequence it is not always obvious which post you are referring to.

I think he means the author of the piece over at SeekingAlpha linked at the top of the subthread.


Oh dear.

Jeremy Clarkson has worked out the same thing I worked out a while back. As prices rise the value of nicking a tanker becomes more worth the minimal risk.

The first episode of the new series of Top Gear had him suggesting that it was worth £50,000 - more than an armoured van. How long till the first report of a hijacking now?

I'd hoped it was going to be past rationing was introduced before someone realised.

Still, his reports on fuel economy were funny.

Considering the pinch that truckers worldwide are in, the risk really is minimal..."just let me get my things and you can have it".

Trying to hide the tanker, well that is a problem but I'm sure there are farmers who would be willing to empty it rapidly at half pump price prior to you abandoning it downtown. Nice little profit for a couple of days work, atleast until the "shotgun" seat actually contains someone with a shotgun.

I come from Northern Ireland, where oil smuggling is common due to the price differential with the southern republic due to taxes. Criminal gangs can easily get hold of the equipment and infrastructure necessary to fence the stolen oil. I'm not sure exactly how they get it to consumers though.

I belive they also set up factories to strip the dye out of 'red' diesel, this is fuel sold only for agricultural use with a lower tax rate, and illegal for any other purpose. It contains a red dye for enforcement.

FYI, the dye can be removed with cat litter.
Often when the red diesel is stolen from a farm it is put into a tank in an "ordinary" van so it is not apparent that the van is transporting fuel.

Sounds like a good plot for a future Bond movie. You know, OilFinger... who's hijacking tankers worldwide and has a hologram device that can make them look like school buses.

Hello TODers,

U.N. report: Palestinians risk starvation

"The agricultural sector in the Gaza Strip is close to collapse, as no exports are allowed, and there is a total unavailability of fertilizer, pesticides and other crucial inputs," the report said.

...A WFP spokeswoman said that support from donor countries has also dropped sharply.
Just more Porridge Principle of Metered Decline, IMO. I eventually expect the same type of phenomena to postPeak occur in the NA Southwest as Overshoot decline kicks into high gear. Is Cascadia ready? :(

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Doesn't anybody sh!t in Gaza?? Surely there is some pro-Palestinian reader of TOD who can send them a few thousand copies of "The Humanure Handbook".

Hello TODers,

Global Quandary: How to Feed a Growing Planet

"The world is running now to keep up with demand," said Abdolreza Abbassian, a grain analyst with the U.N. Food and Agriculture Organization. "Any interruption in the global picture affects supplies."
I wish this UN FAO grain analyst would factor in the likely postPeak cascading blowbacks arising from just these few sentences from the UN FAO Report [57 page PDF Warning]:

Current world fertilizer trends and outlook to 2011/12

[Page 14]...High oil prices could depress the use of oil-based fertilizers which have been behind much of the increase in farm production during the past half century.

[Page 15]...Freight rates have become a more important factor in agricultural markets than in the past. Increased fuel costs, stretched shipping capacity, port congestion, and longer trade routes due to altered trade patterns, have pushed up shipping costs...The impact of transport costs on fertilizer prices will grow as fertilizer is produced in fewer localities close to raw materials and ample energy availability.
My guess is that he would be fired if he honestly tried to disclose the coming truth. Recall that the POT topdog, Bill Doyle, stated that we simply must have record harvests everywhere, from now on, if we wish to avert a huge famine. As if the 800 million already suffering from hunger is not bad enough, plus the tragic 35,000 deaths per day of kids under five. Such is life--as other TODers have stated many times before: Thermodynamics doesn't care what we think.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Bob, did you catch my (our) plea to you at the very tail of the drumbeat-before-last?



Hello Jaymax,

Thxs for responding. I may not have the time or skills to be able to write a detailed report. In the meantime: read the tutorial links at Bill Doyle's POT corporate website: potash.com, plus read the USGS PDFs for sulphur, potash, phosphate, then read the UN FAO PDF. Read them all, plus google for much more info, then analyze with a Peak Everything mindset.

Consider this new weblink:

..Battered by soaring fertiliser prices and rioting rice farmers, the global food industry may also have to deal with a potentially catastrophic future shortage of phosphorus, scientists say.

Researchers in Australia, Europe and the United States have given warning that the element, which is essential to all living things, is at the heart of modern farming and has no synthetic alternative, is being mined, used and wasted as never before.

“Peak phosphorus”, say scientists, could hit the world in just 30 years.

That is just the rock in the ground [the reserves], but as we have already seen: some poor farmers cannot afford to buy it now, as the transport cost is beyond their reach [they have no effective flowrate from the reserves]. So their farmland then starts heading to a Liebig Minimum-- miniscule yield to no harvest at all. That is why I suggest a huge ramp in O-NPK recycling.

From the same article:
“Phosphorus is as critical for all modern economies as water. If global water supply were as concentrated as global phosphorus supply, there would be much, much deeper concern. It is amazing that more attention is not being paid to ensuring phosphorus security.”

Because supplies of phosphates suitable for mining are so limited, a new geopolitical map may be drawn around the remaining reserves - a dynamic that would give a sudden boost to the global importance of Morocco, which holds 32 per cent of the world's proven reserves.

Natural distribution of phosphorus could create a small number of new “resource superpowers” with a pricing control over fertilisers that some suspect could end up rivalling Opec's control over crude oil. The economic battle to secure phosphorus supply may already have begun...

I have previously discussed this geo-political importance in prior postings months ago, and you need lots of sulfur to beneficiate phosphate rock. IMO, this helps explain why sulfur, extracted from sour natgas & sour crude, is going to be increasingly strategic, and the current skyrocketing price is evidence of this trend, which will only get worse as postPeak time goes on.

Another simplified example for further illustration:

Picture Morocco as having the world's biggest, undrinkable river; 32% of all the water in the world, but the addition of sulfur is what beneficiates it into potable water. I believe control of sulfur and phosphate will be that important--much more important than the Guano Wars of an earlier time.

We are evolved to sit in the dark, the problem is starvation.

Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Hello TODers,

UAE sulphur output to quadruple within five years, predicts Adnoc

..According to Al Murar, current sulphur prices have jumped more than 10 fold over the average price of the first-quarter of 2007, reaching a record $600 per metric tonne, the highest level through history. Nevertheless Al Murar expected another record high price level during the year 2008.

He attributed the unprecedented price rise to a sharp increase of fertiliser demand worldwide, led by the surge in bio-fuels production and the efforts to avoid shortfall in food and grain supply worldwide, which in turn contributed to a sharp growth in sulphur demand and lack of sufficient supply.

Representatives of Morocco, Algeria, Senegal, Togo, Tunisia, and Jordan-meeting in Dakar—have agreed to form a PHOSPHATE EXPORTERS CARTEL. The participating nations account for around two-thirds of world phosphate rock exports and about four-fifths of known phosphate reserves ....

Seed companies report the BIGGEST BOOM IN VEGETABLE GARDENING SINCE WORLD WAR TWO, as evidenced by the fact that vegetable seeds are now outselling flower seeds by a ratio of 7 to 3. (Just six years ago, gardeners bought seven packets of flower seeds for every three of vegetables)....

and of course a hat-tip to TODer Big Gav:

Smells Like Guano To Me - Living With the Fertiliser Cartels

Tom Philpott at Grist notes that of the 3 major inputs for industrial agriculture, 2 are controlled by cartels and one is produced using natural gas. Get used to high prices - Industrial ag-onistes (subtitled "The WSJ on fertilizer markets so manipulated, they might make a Saudi prince blush").
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

Solar Costs Heading Down

With silicon supplies tight, the price per watt of solar panels (below) started rising in 2003, ending more than two decades of steady declines (in 1980, the price was $30 per watt in today's dollars). Most observers agree that solar-power prices will now drop.