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DrumBeat: June 24, 2008
Posted by Leanan on June 24, 2008 - 9:14am
Kashagan Illustrates Hurdles of New Oil Production
I bring your attention to Kashagan because it does exemplify the difficulties many oil projects are having in coming home anywhere near on time or budget. More important, it also exemplifies the extreme lengths to which oil companies must go these days to add new production.People who doubt Peak Oil and call it a “theory” talk glibly about all the oil under the Arctic and all the oil shale in Colorado and Utah. Well, Kashagan points out the costs of getting oil out of such environments and that is one reason oil is selling where it is.
Russian Army Trains for Arctic Combat to Defend Resource Claim
Bloomberg) -- Russia's military is training its forces for combat in the Arctic to protect its claims to resources on the continental shelf.``After the heads of several countries disputed Russia's rights to the resource-rich Arctic Ocean shelf,'' the military ``immediately'' began adapting its training plans for units ``that might be called upon to fight in the Arctic,'' Lieutenant General Vladimir Shamanov said in an interview published today in Krasnaya Zvezda, or Red Star, the army's newspaper.
Colombia: Caño Limon-Coveñas oil pipeline bombed, shut down
Colombia's 780-km Caño Limon-Coveñas oil pipeline was shut down after guerrillas of the Fuerzas Armadas Revolucionarias de Colombia (FARC) dynamited it in two places in the northeastern provinces of Arauca and Norte de Santander.The oil pipeline, which has a capacity of 240,000 b/d, normally transports about 100,000 b/d to the Caribbean seaport of Covenas from the Caño Limon fields operated by Occidental Petroleum in the eastern Colombian province of Arauca.
State oil company Ecopetrol, which operates the line with Occidental, said the FARC attacks occurred in the municipalities of Tibu in Norte de Santander and Arauquita in Arauca. It said the first attack took place on June 21 when three men dynamited the pipeline at El Progreso, while the second attack occurred on June 22.
Shell restarts Nigeria's Bonga offshore production
LAGOS (Reuters) - Royal Dutch Shell said it had restarted production at its Bonga offshore oilfield in Nigeria on Tuesday after an attack by militants last week."We have restarted production," said Precious Okolobo, a Shell spokesman in Nigeria. He declined to say whether the production had resumed at full capacity.
DOE to Purchase Heating Oil for the Northeast Home Heating Oil Reserve
The U.S. Department of Energy (DOE) today issued a solicitation seeking to purchase heating oil for the Northeast Home Heating Oil Reserve (NEHHOR) using $3 million in appropriated funds. The Northeast Home Heating Oil Reserve provides an important safety cushion for millions of Americans residing in the Northeast region of the country. Due to the modest volume of heating oil expected to be purchased with the available funds, no impact on market prices is expected.
IEA Energy Scenarios: Change We Have to Believe In
The International Energy Agency has published its vision of how a cleaner, less oil-dependent future could look like. Dolf Gielen, one of the study’s lead authors, talks about the way out of the current oil crisis and explains how we can halve carbon dioxide emissions by 2050.
OPEC document warns of uncertainty
BRUSSELS (Reuters) - OPEC faces considerable uncertainty over how much to invest in supplying oil, with crude demand seen in the range of 29 million to 38 million bpd by 2020, a document tabled at EU-OPEC talks on Tuesday showed."Scenarios for the call on OPEC crude oil suggest that the range of uncertainty for OPEC oil is considerable," said the document, seen by Reuters.
Oil speculation: What Congress wants
Lawmakers have introduced nine different bills on speculation - not to mention many more that tackle other causes of escalating fuel and oil prices. Several of the speculation measures have bipartisan support. No fewer than four separate hearings have been scheduled for this week, including a House hearing held Monday exploring foreign trade regulation.On Tuesday, a Senate panel will explore legislative options for ending "excessive speculation" in commodity markets.
Senators seek to block Iraq oil contracts
Sens. Schumer and Kerry appeal to Bush administration to stop no-bid deals with big companies until equal royalty distribution is guaranteed.
Bush administration to leave Iraq oil deals alone
WASHINGTON (AP) -- The Bush administration indicated Tuesday that it had no plans to interfere with negotiations between Iraq and several Western oil giants to boost crude production in that country, despite concerns by some Democrats that the deal could inflame anti-U.S. sentiments.
Iraq to establish new oil company
Iraq will create a fourth state-owned oil company to develop massive reserves in the province of Maysan, the oil minister said Tuesday.
OPEC, European Union Clash Over Record Crude Prices
(Bloomberg) -- OPEC and the European Union clashed over record oil prices as producer countries blamed speculators while EU importers called for more crude output.
Clever and deceptive: API's new ads
The high price of oil has given birth to a thousand solutions. They include such fantasies such as running cars on water and perpetual motion machines. And, they include sensible ideas for quickly cutting the consumption of oil and moving to electricity to power most of our transportation fleet. The American Petroleum Institute (API), the oil and gas industry's lobbying arm, has its own proposals, of course, and not surprisingly they include opening up protected public lands and U. S. coastal areas to drilling.
On New Energy Projects: Time to Get Real
Lately there has been a lot of “supply” side chatter about oil, as people tout various drilling projects as a solution to high gas prices, suggest that various nations increase production, propose investments/projects to help countries like Iraq increase production, etc, etc. The problem with nearly all of the chatter is that it doesn’t take into account the realities of present day oil production, and the ability of a particular project, production increase, etc, to even have an impact on energy prices.
El Paso may cut services to offset rising gas costs
Members of Commissioners Court are concerned about gasoline costs as they prepare for budget sessions, and cutting back on services could be one way to defray the impact."I truly hope it doesn't blow our budget," Commissioner Dan Haggerty said. "I will not vote for a tax increase."
Diesel burnt to power up the west
WESTERN Australia's major energy producer, Verve Energy, is burning through an extra two million litres of diesel every day as it struggles to provide electricity during the state's severe gas shortage.Verve, which supplies electricity to the state's power retailer Synergy, has been burning distillate at some of its gas-fired plants to free up gas for the state's booming, energy-hungry industries, particularly mining.
Australia: Gas crisis may be a summer disaster
WA will still be desperately short of gas when air conditioning use in office blocks and homes starts to escalate with the onset of summer after beleaguered gas producer Apache Energy conceded yesterday it would be December before supplies returned to normal.
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 US 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.
NAFTA and oil: Old ghosts and false fuel fears
Mr. Laxer’s case, just like those of his brethren 30 odd years ago, is based on the alleged fact that we are running out of oil and gas, and thus need government controls to prevent us from freezing in the dark. Canada has only 9.3 years of proven conventional natural gas reserves! How can we dream of exporting any of this precious resource? Mr. Laxer believes, despite a superabundance of evidence to the contrary, that security lies in state control. Lurking not very far beneath the surface of such anti-economic ideas is pure anti-Americanism (although not against Mr. Obama, of course).
Energy Crisis Puts Marshall Islands on Alert
The urban centers of the Republic of the Marshall Islands (RMI) may be without electrical power next month, and government officials are looking for solutions to the pending crisis....The RMI-Marshalls Energy Company fuel crisis has been on-going for several years. Currently, there is a $6.5 million payment due on July 10 to the utility fuel supplier, SK Networks of South Korea.
I have spent so much time writing about the Saudi meeting lately I have neglected reporting on some things happening around the world regarding energy. Without going into detail I will try to hit the highlights today.Russian crude exports fell by 2.4% in the first four months of 2008. Their fields are in decline and lack of investment in infrastructure is taking its toll.
Iran has increased its insistence that it will never back down from its nuclear future despite growing sentiment that somebody will attack it over the next four months. Iran promised a blistering retaliatory strike if anyone dared attack them.
Pakistan gives cues to India to tackle oil crisis by direct subsidy
New Delhi (PTI) Giving some cues for tackling the problem of rising oil prices and soaring inflation, Pakistan told Indian planners that it was proposing to introduce Benazir Card to provide direct subsidy to poor and owners of two-wheelers and small cars."What we are trying to do is to introduce what we call Benazir card, which will give Rs 1,000 per month to every poor and disadvantaged households," Deputy Chairman of the Pakistani Planning Commission, Salman Faruqui, told reporters after meeting his counterpart Montek Singh Ahluwalia today.
Qatar and Shell to Build China Oil Venture
BEIJING (Reuters) - Qatar and Royal Dutch Shell, together with PetroChina, plan to build an oil refining and petrochemical complex in China, the companies said.Although it supplies less than one percent of China's crude imports, the refinery and petrochemical venture represents Qatar's first foray into the massive Chinese oil market, following Middle East peers Saudi Arabia and Kuwait.
"This step will help draw up a road map for setting up economic bridges between Qatar and China and opens investment opportunities," Qatar's Oil Minister Abdulla Bin Hamad Al Attiyah said.
Shipments let stations sell diesel to all drivers
Though relieved the diesel crisis was over, gas station owners worried about what steps national oil company Pemex might take to try to avert a future shortage.Over the weekend in Mexico City, the director of Pemex suggested that station owners in the border region limit sales to drivers from the United States.
Americans fail to face real enemy in energy crisis
Those looking forward to a change of presidents to usher in a serious change in energy policy should consider this: It took Congress more than three decades to increase vehicle fuel-efficiency standards and eliminate a loophole through which SUVs had boldly driven. The inertia prevailed regardless of whether Democrats or Republicans were in charge of Capitol Hill and the White House.
Even the Gas Crisis Needs a Culprit
Michael Masters was quite the star on Capitol Hill yesterday as he testified before the Subcommittee on Oversight and Investigations, a group that is currently tasked with delving into the question of what role "speculation" is playing in soaring energy prices.With just a little prodding from elected officials, he went so far as to say that, if his recommendations are turned into legislation, the price of gasoline will drop by 50 percent within a month.
Let consumers, not pols, deal with high gas prices
But wait a minute. The average price of gasoline in 1979 was 90 cents a gallon. Even after you adjust for inflation, that's still only $2.69 in today's dollars. In other words, when Carter was scaring the bejeebers out of the country, gas prices were about a third lower than today's. That's not to say that the country wasn't suffering an energy crisis back in 1979. It was. And its cause is instructive to the energy situation consumers face today, and what politicians should or, more appropriately, shouldn't do to fix it.
No New Gasoline-Powered Vehicles in the U.S. by 2014 ... Can It Be Done?
LOUISVILLE, Ky., June 24 /PRNewswire/ -- The world seems to be in the midst of an energy crisis, fueled (if you'll pardon the pun) by issues related to petroleum oil and gasoline. Among the consequences of these issues are: soaring prices of other consumer products and services; limited freedom of personal movement; erosion of individual wealth; funding of global terrorism; and the granddaddy of all oil/gasoline consequences, pollution.The remedy may be as simple as the elimination of gasoline-powered vehicles, or at least the elimination of all new gasoline-powered vehicles by 2014. That's the premise of The Auto Channel's new investigative study into finding a solution to the energy crisis, soaring prices, and environmental deterioration.
Skeptics doubt Saudi Arabia can boost oil supply
There are many skeptics. Bruce Bullock of the Maguire Energy Institute at Southern Methodist University says the Saudis are struggling to hit 10 million barrels a day, even though they say they have the ability to produce well above that.Other analysts say the Saudis are making the market even more precarious by cutting into their spare capacity – the cushion between what they can produce over expected demand.
This lack of confidence in the kingdom stems from a theory that predicts world oil supply has peaked and will decline in the future even as demand increases. The only way to get supply and demand in balance again is by raising the price, and there's been plenty of that this year.
The Saudis did not help their cause by decreasing production in 2006 and 2007.
OPEC President: No need to raise supply
BRUSSELS, Belgium - OPEC President Chakib Khelil said Tuesday that oil producers saw no need to raise supply and blamed record oil prices on factors outside the cartel's control, such as U.S. pressure on Iran and the weak U.S. dollar.Following talks with European Union nations, Khelil said oil states believe they are pumping enough oil to satisfy demand and there is also stock and capacity to spare.
Net Exports of Major Oil Exporters Likely to Fall
The table below (from this Oil Drum post), points out that global net exports of oil have been falling in 2006 and 2007. That’s interesting, even dramatic, information because it seems to go a long way to explaining why oil prices have been rising. It also validates a position Matt Simmons has taken that shrinking global inventories are primarily the way that the world has been adjusting to demand outrunning supply in recent years.
There is no oil shortage, not yet at least. The reason oil has skyrocketed to nearly $140 per barrel is because of rampant speculation. The peak oil doom-sayers are simply confusing the issue. This is not about shortages or scarcity; it's about gaming the system to fatten the bottom line. The whole scam is being executed by the same carpetbagging scoundrels who engineered the subprime fiasco; the investment bankers. The Wall Street Goliaths are using the futures market to recapitalize their flagging balance sheets after sustaining huge losses in the mortgage-backed securities boondoggle. That's the whole thing in a nutshell. Now they're on to their next swindle; distorting the futures market with gargantuan leveraged bets on food and oil.
Chevron, Nigeria oil union to meet as strike looms
ABUJA (Reuters) - Talks between Nigeria's oil workers' union and Chevron will resume on Thursday in an effort to avert an all-out strike that could further slash output from the OPEC producer, a top union official said.Union workers continued a partial strike on Tuesday, stopping administrative staff from getting to their offices in Lagos for the second straight day, but oilfield operations were not affected, said PENGASSAN Secretary General Bayo Olowoshile.
Iraq And Energy Haven't Played Out In The Presidential Election The Way We Thought
My Creators Syndicate column illustrates how a couple of key issues--Iraq and energy--seem to be working differently in the presidential election from what just about everyone expected a few weeks or months ago. The success of the surge strategy in Iraq and the sudden appearance of $4 gas have undermined narratives that seemed to be working strongly for Barack Obama and the Democrats.
Iran Seeking Supertanker to Store More Crude Oil, Brokers Say
(Bloomberg) -- Iran, OPEC's second-largest oil producer, is seeking to hire a supertanker to store crude oil in the Persian Gulf for as long as 60 days, three shipbrokers said.National Iranian Tanker Co. is seeking a very large crude carrier, or VLCC, to store oil for 30 to 60 days from July 7, according to Charlie Fowle from London-based Galbraith's Ltd., Nikos Varvaropoulos from Optima Shipbrokers in Athens and Halvor Ellefsen at SeaLeague AS in Oslo.
Iran had to use as many as 15 VLCCs for storage in the last several months while its refinery customers carried out annual repair work.
To be sure, many of those attending the conference saw it as an encouraging sign of recognition that the world does have a serious problem that needs to be addressed. "Everybody tries to blame the other guy," says Jeroen van der Veer, CEO of Royal Dutch Shell. "I really admire them (the Saudis) for showing leadership."But the meeting seemed to be short on substance. One oil company chief sheepishly joked about it being remarkable that the Saudis could snap their fingers and have so many of them dash to Jeddah on a Sunday at short notice. He said the Saudis really hadn't produced much, and called the 200,000-barrels-per-day increase—which had leaked out ahead of the meeting—"a drop in the ocean." It amounts to about one-quarter of 1% of total world oil output. This executive said it was good that energy leaders were talking about these issues now, rather than five years from now when the problems will get more serious.
Aramco hiking production capacity by 850,000 b/d
Saudi Aramco, repeating long-announced plans, will increase production by yearend by a combined 850,000 b/d from its Khursaniyah, Nuayyim, and Shaybah fields, according to a senior official.Amin Al Nasser, Saudi Aramco's senior vice-president for exploration and production, said the company will bring Khursaniyah on stream by yearend, adding 500,000 b/d of oil production, while boosting output at Shaybah to 750,000 b/d from 500,000 b/d, and bringing newly developed Nuayyim field to 100,000 b/d.
Saudi certain new oil mega project will be on time
KHURAIS OILFIELD, Saudi Arabia (Reuters) - State oil giant Saudi Aramco is adamant the biggest new field in its plan to raise oil capacity will arrive bang on schedule in June next year.A chorus of senior executives lined up Monday to tell reporters visiting the Khurais project south of Riyadh the 1.2 million barrels per day (bpd) expansion would avoid the delays that have plagued the global energy sector.
Inside Saudi Arabia's New Mega-Oil Field
Al Khurais is the centerpiece of a Saudi effort to lift production capacity from the current 11 million or so barrels per day to 12.5 million barrels daily by next year. Aramco executives want to emphasize that their approach is conservative and long term. To make the point, exploration and production chief Amin Nasser said that Aramco's average depletion rate—the volume of oil it produces a year as a percentage of reserves—was only about 2%. By contrast, he said other producers and international oil companies average 4% to 9% depletion rates. This approach, he said, lets the Saudis deploy better technology and recover more oil than an energy company under pressure to produce as much as possible before its lease runs out.
Russia may end European gas supplies in favor of Asia - scholar
(RIA Novosti) - Russia could call time on natural gas supplies to Europe in 10-15 years in favor of sales to China and India, a prominent U.S. scholar said.Marshal Goldman, an expert on Russia and the author of the recently published book, "Petrostate: Putin, Power and the New Russia," said the switch was likely because China and India - with their growing economies hungry for energy - were very interested in Russian natural gas supplies. The only question was whether Russia would be able to deliver the gas.
Demand Destruction: A Natural Cure For Peak Oil
Marine Atlantic recently announced that they are tripling the price for the fuel surcharge for all vehicles bound to and from Newfoundland. The surcharge will increase on July 1, 2008 from 9.9% to a hefty 27.7%. Increased rates and fuel surcharges have been the norm on a month over month basis for the better part of one year.From a manufacturers perspective and eventually the consumers, affordability has to becoming into play. When does it become uneconomic to ship to Newfoundland? This also begs the question for shipping anywhere involving long distances where freight charges start to affect the economics of shipping.
Analysis: Middle East nuclear renaissance?
"In the span of the 11 months between February 2006 and January 2007, at least 13 countries in the Middle East announced new or revived plans to pursue or explore civilian nuclear energy," said Chipman.As the IISS director pointed out, this sudden interest by Middle Eastern countries in nuclear energy is "remarkable" in view of the region's abundance of traditional energy sources -- such as natural gas and crude oil.
Contracts for Big Oil in Iraq Confirm Earlier Suspicions
Didn't you just know this was coming?A consortium of Western oil companies -- the very definition of Big Oil -- is on the verge of receiving no-bid contracts in Iraq, giving them access to one of the most sought-after prizes in the petroleum industry, according to The New York Times. Can it be mere coincidence that the leading companies in the deal -- ExxonMobil, Shell, BP and Total -- are the very same companies that Saddam Hussein threw out when he nationalized the Iraqi oil industry more than three decades ago?
UK: Energy bosses warn on further price rises
Centrica and Scottish & Southern Energy today admitted to MPs that UK customers face a further increase to their energy bills, adding to the 15 per cent rise both companies imposed on millions of Britons earlier this year.
BP Russia boss 'should quit job'
The Russian chairman of BP's joint venture, TNK-BP, has called on the firm's chief executive to step down.Speaking to the BBC, billionaire Mikhail Fridman said that Robert Dudley was concerned only with BP's interests and this was "unacceptable".
Even Texan oilmen think energy supplies have to be diversified
The Texan oilmen dining at Midland's Petroleum Club are not very happy with the energy policies coming out of Washington these days.While they're pleased that President George W. Bush is pushing to open up drilling along the coasts and in Alaska, they're frustrated that it's taken so long for politicians to take US energy dependence seriously.
And they have little hope that either of the presidential candidates -- Republican John McCain or Democrat Barack Obama -- are going to make the tough calls needed to prevent a looming supply crisis.
Russian leader says environment problems a security threat
Russia's environmental problems are a threat to national security and could make parts of the country uninhabitable within 30 years, President Dmitry Medvedev said on Saturday.
Surging prices may force more people from homes: UNHCR
The head of the UN refugee agency warned Friday that instability created by surging oil and food prices may force increasing numbers of people from their homes in search of basic necessities.
Flooding muddies push for ethanol
Massive flooding in the Midwest has ruined millions of acres of crops, spurring record corn prices and raising serious questions about whether the United States can meet new requirements for using corn-based biofuels in the nation's cars and trucks.
Bill McKibben: End of the Open Road
In July 1893, 115 years ago, the historian Frederick Jackson Turner told an academic symposium that the American frontier was closed -- a shocking notion for a people who'd defined themselves by their steady expansion across the continent. This spring, something just as profound and defining has happened: Pulled back by the inescapable gravity of higher prices and the growing scarcity of fossil fuels, we're starting a slow recoil into more dense and compact regions and localities. The frontier of endless mobility that we've known our entire lives is closing.
Utilities cut off more customers who are behind on their bills
As skyrocketing food and gasoline prices strain budgets, utilities are disconnecting many more customers who fall behind on their bills, and even moderate-income households are getting zapped.Electricity and natural gas shutoffs are up at least 15% in several states compared with last year. Totals for some utilities have more than doubled.
In a famous historic deal struck just after World War II on an American destroyer, President Roosevelt and King Abdulaziz al-Saud pledged America would help the Saudis find and produce their oil and protect them in return for fair and secure supplies. The meeting is recorded in abundant grainy documentaries and numerous official documents.America and the West have kept their end of that deal for 60 years. Neocons might argue it is time for payback. Crazy as they can be sometimes, they may argue to some sympathy that the health of world economies, indeed world order, demands cheaper oil. One sure way of doing this is by invading and occupying Saudi Arabia’s Eastern Province, the mother of all oil reserves.
Peak Oil and the New Administration
There is a distinct uneasiness in America today. The confidence of the people in our nation has been shaken by a series of serious problems that seem to have descended upon our society at the same time. The housing bubble, sub-prime mortgages, foreclosures, massive Wall Street financial problems, the threat of recession and, at the same time, inflation. But the problem with the greatest possibility of lasting damage to our society and our economy is the specter of Peak Oil looming over us.
Speculators Are Largest U.S. Oil Contract Buyers
(Bloomberg) -- Speculators became the largest players in oil futures markets, nearly doubling their share in the past eight years as prices rose to records, in a ``radical shift'' for the market, according to a congressional committee.
Obama Targets Speculation On Energy
Sen. Barack Obama rolled out a proposal yesterday to curb speculation in energy markets, which his advisers said would help stabilize soaring gasoline prices.
McCain defends position switch on offshore oil
SANTA BARBARA, California (Reuters) - Republican presidential candidate John McCain is defending his decision to switch position in favor of U.S. offshore oil drilling as he seeks votes in environmentally conscious California.In appearances in coastal Santa Barbara and inland Fresno, McCain said on Monday he believed he had made the right decision at a time of record-high gasoline prices but that it would be up to individual states to choose whether offshore drilling is right for them.
Gas at $4 brings promises, pandering
WASHINGTON - Like two rival filling-station owners across the highway in long-bygone price wars, Democratic Sen. Barack Obama and Republican Sen. John McCain keep putting up flashy signs and offering new incentives in hopes of attracting customers battered by $4 gas prices.
Hitting credit card limits at the pump
With skyrocketing gasoline prices, many customers are bumping up against pay-at-the-pump credit card limits -- often $75. Rules limiting these transactions are nothing new, but these days it's increasingly easy to exceed the limit, leaving many customers to face the hassle of dealing with two-transaction purchases.Back in 2003, when Jeff Urban bought his Hummer, paying $75 to fill up would have been unthinkable. Now, Urban said, his goliath SUV will soon be a three-transaction vehicle.
Some signs of relief on gasoline prices
New York - Some of the long-term factors that have pushed oil prices to record levels are starting to change.In large part because gasoline prices are over $4 a gallon, demand for fuel in the US is falling for the first time in 17 years. China is raising prices for gasoline and diesel – a move that might ultimately lower demand. And, on Sunday, there were signs supply might increase as Saudi Arabia's oil minister indicated that the country would increase production through the end of the year if needed. Iraq is also set to sign contracts with foreign companies to hike production.
In attending the Saudi King's energy summit at the weekend, the Prime Minister colluded in a publicity stunt of the first order. Not very long ago, he was so worried about appearing to jeopardise our national sovereignty that he signed the Lisbon Treaty by himself, as far from the glare of television cameras as he could.Yesterday, the cameras charted his every move, as he hobnobbed with oil producers in Saudi Arabia. The clear intention was to convince hard-pressed British consumers that he feels our pain on energy prices and is doing his level best to bring them down.
UK: Action call after fuel raid death
Farmers leaders have called for action to tackle rising fuel thefts after a woman died during a raid on her County Durham farm.
Houston's Pipelines of Prosperity
HOUSTON -- Soaring oil and gas prices may be a fiscal drag for much of the nation, but here in the self-styled energy capital of the world they are feeding an economic surge.
McCain's $300M lure for new, 'green' car battery sparks buzz
The proposed prize would cost $1 for "every man, woman and child in the U.S.," McCain said in a town hall meeting at California State University, Fresno. He called that "a small price to pay for helping to break the back of our oil dependency."Historians said the offer of a multimillion-dollar prize appears to be a presidential campaign first.
Energy is spent to protect birds from threat of power lines
Scientists are increasingly concerned about the number of birds killed by running into power lines and wind turbines, said Al Manville, a senior wildlife biologist with the U.S. Fish and Wildlife Service, but there are reports of success in preventing such incidents — at least in the case of the power lines.
Years Later, Climatologist Renews His Call for Action
Twenty years ago Monday, James E. Hansen, a climate scientist at NASA, shook Washington and the world by telling a sweating crowd at a Senate hearing during a stifling heat wave that he was “99 percent” certain that humans were already warming the climate....To many observers of environmental history, that was the first time global warming moved from being a looming issue to breaking news. Dr. Hansen’s statement helped propel the first pushes for legislation and an international treaty to cut emissions of greenhouse gases. A treaty was enacted and an addendum, the Kyoto Protocol, was added.
Major cities can take climate change lead: study
LONDON (Reuters) - The world's major cities are also among the planet's worst polluters but they have the solutions to most of their problems at their fingertips, a leading environmental consultancy said on Monday.
Former UN sec-gen Annan calls for 'climate justice'
GENEVA (AFP) - Former UN secretary general Kofi Annan on Tuesday called for 'climate justice', saying that it was polluters who should pay for the effects of climate change, and not the poorest and most vulnerable.
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Oil Traders...You might profit from reading this...or, maybe not.
'Bloomberg - Refiner Insiders
Refiner Insiders Buy Most Shares Since 2000 on Bet Crude Falls
Refinery executives are buying more of their own stock than at any time since 2000, prompting investors to bet that a retreat in oil will boost profits and reverse the biggest share decline in a decade.
Executives at 10 refining companies snapped up $2 million of their shares last month, twice what they sold, according to data from the Washington Service, which analyzes insider patterns for 500 institutional clients. That helped raise the average level of purchases to the highest in eight years, data from Argus Research Co. compiled by Leuthold Group show. Before March, insiders dumped more shares than they bought every week since 2003.
Insiders added to stakes following a 42 percent slide in oil and gas processors in Standard & Poor's indexes, the largest drop since at least 1995, after a 40 percent gain in crude pushed down profits. Caxton Associates LLC, Citadel Investment Group LLC and Renaissance Technologies Corp., which oversee $64 billion in hedge-fund assets, also boosted bets that the shares will rebound, according to data compiled by Bloomberg.
''Anyone right now buying the refiners would have to be banking on a pullback in oil prices,'' said Jack Ablin, 48, who oversees $65 billion as chief investment officer at Harris Private Bank in Chicago, which owns shares of Valero Energy Corp. and Tesoro Corp., the largest and third-largest U.S. refiners by market value, according to data compiled by Bloomberg.'...snip...
'''Insiders know more about their companies than analysts or anyone else,'' said Andy Engel, 48, senior research analyst at Leuthold, a Minneapolis-based investment and research firm that oversees about $4.8 billion. ''They probably have a better idea of when business will rebound.'' ...snip...
http://boards.prudentbear.com/bbs_read.asp?mid=692388&tid=692358&fid=1&s...
There was a pretty long thread yesterday which tried to debunk the notion that "speculation" was at the heart of gasoline and diesel price increases -- "it would be impossible to hide all that oil that was being taken off the market", etc.
I really am pretty ignorant of how commodities trading works, but it seems like an oil "bubble" would be just as likely as a housing "bubble". In my area, and I'm sure lots of other areas as well, houses were not only being bought to live in during the last ten years -- they were being treated as commodities, bought on speculation by outside investors who were working through brokers, and in the constantly rising market, "flipped" as soon as they made a profit. That came to a screeching halt recently; the houses are still there, in many cases, no one lives in them, but the price is going down.
It wouldn't take a "conspiracy" in the usual sense to make oil do the same thing, it seems to me. And the fact that oil is both useful and storable (like houses) and not quickly perishable (like fruit or even grain) could be used to hide the speculation which, as always, is driven by people's wish to make something for nothing, and the desire of the media to report that something exciting is happening.
It takes more than a run-up in prices to have a bubble.
Prices have to exceed any reasonable measure of the value of the item - all that is left is speculation value. This might be a stock with a PE of 200, or infinity because it has no earnings at all. It might be a "starter home" for $500,000 that you think you might be able to flip for $600,000, but that you cannot possibly service the debt on with the job you can get there.
Oil is still cheap. If gasoline was three times what it is now, I would be happy to pay it as long as I could still get it.
In the later stages of a bubble you can also expect to see big gains in inventory. This would be zillions of IPOs without business plans, or big overhangs of home inventory, or numerous "luxury condo towers" going up in dubious neighborhoods. We aren't seeing that in oil.
When oil is at $500 plus, and demand has collapsed, and every tank and tanker is full, and producers are cutting back production because there is no place to store any more oil, and prices STILL haven't collapsed, you will have your bubble.
Thanks GM. I'm beginning to understand, I think.
I believe you are right about the need to keep in mind how much work can be done with oil -- and how cheap it is.
How many men would it take to push a Hummer up to the top of Pike's peak? And how much would you have to pay them to do it?
'In the later stages of a bubble you can also expect to see big gains in inventory.'
You mean, like the 30,000,000 barrels of oil sitting in the Persian Gulf in tankers that the Iranian President is begging someone to purchase?
The inventory build would, I think, have to be in the contracted grade. A speculative WTI futures bubble could not be realised via foreign accumulations of Iranian crude.
Hey Jay, what do ya say?
Sorry about the Hemispherocentric post the other day. You must know by now that us Americans are too busy stimulating ourselves and have no time to stimulate the economy or think about others. I love your posts!
I hope the rains gave way to sunshine.
BTW, you can't get a sunburn in California right now with all 800 wildfires blocking out the sun. It certainly looks Madmaxish these days.
jt
Cheers.
I had no idea about CA fires - they haven't made the international news like last time. Less endangerment to property and life?
As you already know from repeated posts, that's heavy oil, and there's nobody to refine it.
I believe that is Heavy/Sour, for which there is insufficient refining capacity at the moment. It is certainly not WTI.
Additionally, it is not unlikely that it is an attempt by the Iranian government to "talk down" oil prices a bit themselves. The Iranian government may not have many friends in Washington, but they do have friends among consuming nations who are being quite hard hit by the price spike as well.
I suppose you could call it "Tanker Diplomacy".
They are also probably not too keen on the idea of being attacked, which seems daily more likely, and so are making any noise which they think might reduce its likelihood.
Yes, one wonders if there are unspoken threats about what may happen to the tankers upon an attack. Would that much oil, if leaked or exploded, be enough to make the Persian Gulf unnavigable? A gulf full of floating oil would be how dangerous to pass through in a tanker of oil? Would it be easy to light such on fire? I don't know the answers to these questions but it does at least seem plausible as a non-nuke deterrent.
Only one way to find out!
Seriously, one tactic is to hide combatants in mosques, locate paramilitary operations in proximity to civilian targets. Human shields. How much less likely is a military strike on a facility that has not only only a tank farm but tankers which will spread their payload far and wide.
Bikkbanana, oil is not explosive, nor is it particularly flammable, although I suspect that once started it will spread. Hardly a useful weapon.
One of the first major oil disasters was in 1967 when the Torrey Canyon struck a reef off the South West UK when carrying 120,000 tonnes. It was subsequently bombed then the oil was set alight with napalm and reportedly flames going two or three hundred feet in the air (for some reason in those days they did not try and offload the oil). The fire was put out by the high tide so my guess would be that floating crude would not burn well but then again the Atlantic is probably a lot rougher than the PG.
IMHO it wouldn't be necessary to set the tankers alight but just sink one or two tankers even empty and this would close down all shipping, which would probably happen in the event of an attack anyway.
The substance of the discussion was that the amount of oil stored is known and it is not rising. To actually drive the price speculators would have to buy up and keep off the market far more oil than is in storage. Keep in mind oil is not a capital good like houses, it is pumped, shipped, refined and burned so creating a shortage would require continuously taking surplus off the market. The fundamental component of houses is land and as the industry likes to say "they are not making any more land".
There has been much talk about speculators in the futures market but the key feature of a futures contract is that it expires on a stated day and somebody long would have to buy at the contracted price on that day. If they have bid the contract above the actual demand they will either have to pay for delivery above the spot price or sell the contract at a loss.
The only party who can hoard oil is the producer. I think much of the noise in the public debate is generated by the Saudis who are trying to deflect blame. Even there the consensus of thoughtful analysts on this board at least is that the Saudis are now at the point where they could not export more even if they wanted to. The problem they have is that for years they inhibited the development of energy efficiency and alternative energy by saying they were going to pump more real soon now and drop the price. Now the world is hurting bad and they are afraid to let on that they have been setting us up.
Thanks, GT. This site (TOD) is absolutely the most mind-clearing experience available at the present time. Do you suppose that Congress knows this-- and they just don't let on?
It seems their only solution to muddy thinking is brainwashing. .. Or drilling for better mud.
Claritin instead of Clarity.
Bob
'There's a lot to be said for brevity' - my brother Todd
Actually, if the fundamentals of supply and demand is what is skyrocketing oil prices (you don't need to convince me of this), then taking the speculators out of the equation (the only washington solution) would be the only way to decouple the future price of oil from that supply and demand (unless I'm missing something here).
Also, as Morgan Stanley is getting into oil storage in a huge way,
it needs to be pointed out that the markets are not paying for
oil storage.
"Morgan Stanley said the fact that he was caught before he could cause even bigger losses, a la Mr. Kerviel, was a testament to its strong risk-control procedures.
Indeed, that loss may have been peanuts compared with the amount of money the firm’s electricity traders zapped into oblivion. It is not clear how much money those traders lost, but the firm’s chief financial officer, Colm Kelleher, told analysts on a conference call that the firm brought in 67 percent less money in the second quarter from commodity trading compared with the first quarter.
With the billions of dollars pouring into the commodities market, this was Morgan Stanley’s chance to shine, because it has been in the game longer than many of the newbies chasing the market.
But it seems to have fumbled the ball. While the firm said it made money trading commodities in the second quarter, it also said that a wrong-way bet on electricity prices caused a loss, which dampened the profits made in trading other commodities. Again, it is not clear how much the firm lost on electricity as it will not break out the number, but it appears to be a lot."
http://dealbook.blogs.nytimes.com/2008/06/18/morgan-stanleys-scary-tradi...
If there is a will there is a way. Wall St bankers/brokers are very good at inventing schemes to manipulate markets, especially when assisted by the Fed, Treasury, CFTC, etc. In the not so distant past we can identify...dot.com...housing...LTCM...Enron...
CITI alone has over 2,000 trading operations and companies spread all over the world. Many of these are not even named in CITI disclosures. CITI is also joined at the hip to the Fed Reserve with a money feeding tube. Purpose of said tube is life support and, hopefully, recapitalization of CITI and other Wall St Banks.
Many of CITI's trading desks and companies are OTC operations that come under the scrutiny of no regulatory agency.
If the Fed Reserve can allow large Wall St Banks to hide assets in recently created LEVEL 3, without marking them to market or taking a write down on them, then the Fed, SEC and CFTC can certainly figure out a way to game the commodities markets.
I have still to hear an explanation of why Iran has 30,000,000 barrels of oil sitting in tankers in the Persian Gulf and cannot find buyers for it. The Iranian Pres pointed this out a couple of weeks ago but it seems to have become an inconvenient truth...at least for those that say there is a shortage of oil available for sale.
River - here's an article on those tankers that you might want to take a look at.
http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=226131...
Some issues;
1) Iran has not said how much oil is actually being stored.
2) The oil being stored is very sour, so the number of refineries that can handle it is limited.
3) Some of this oil has actually already been sold and is simply awaiting refining at refineries under repair (presumably the finished products will then be shipped to the buyers
4) A rather enigmatic claim that the "number of vessels will decrease by the end of June"
Truly an odd arrangement - but recognize that even at 30 million barrels, we are talking about less than half a day's global consumption, scarcely enough to be impacting prices much, I'd think.
That can only be because you haven't bothered to look - the published reason, which no-one has questioned as far as I am aware, has been that heavy-crude refineries have simultaneously closed for maintenance, causing a backlog.
There aren’t that many such refineries, so that seems quite plausible.
This is from about two weeks ago (9-June)
http://www.upstreamonline.com/live/article156718.ece
I don’t understand the ‘expectation’ and keenness for something nefarious or dodgy or conspiratoria1 when a rational explanation is a 10 second google search away...
The oil stored in Iranian tankers is heavy crude. Heavy crude is less desirable than light (at the moment). The Iranians are having trouble finding buyers at the price they want. If they lowered the price, they could sell. You need to distinguish between grades of oil if you're going to analyze the global markets.
In any case, that ain't speculation. Citi didn't charter those tankers. And if the Iranians wanted to speculate by pulling oil off the market, they wouldn't have pumped it in the first place. This isn't Lucy in the candy factory. They can turn off the conveyer belt.
Unfortunately, the ideological lines on peak oil are becoming clear, and they are ugly. The right wing wants to drill everywhere, anywhere, or invade Saudi Arabia if that doesn't work (q.v. the pajamas media article above). The left wing wants to blame big business and thinks that by shouting Enron! over and over they've proved something.
These hardly seem equivalent. Big business is no doubt blameworthy in a number of ways, and Enron's behavior is a cautionary lesson to us all that we would do well not to forget.
I don't personally believe that the price situation is due to anything other than supply and demand, but I also have no doubt that our corporate friends would pull absolutely anything they could get away with...
The equivalence I was drawing between them is that they are both attempts to deny the fundamental issues and to avoid doing anything about them. They both hold out false hope for a fix to the energy crisis that doesn't require anyone in the US to change their behavior in the slightest.
Enron in no way typifies corporate behavior, or even opportunities for bad behavior. Enron was able to manipulate electricity prices in California because of bad California laws causing prices to be set according to the last kilowatt sold. Enron analyzed those laws and gamed them. It was both running a major electronic forum for trading electricity, and trading electricity itself. It had a major block of electricity locked up. It had no equal in the computerized electricity trading market.
Oil on the other hand does not sell into a market as distorted as California's electricity market was by bad regulation. (Note, I'm in favor or strong regulation for electricity since it's a natural monopoly. Very little is next best. In between is by far the worst.) There are multiple markets for oil (Nymex, London, Dubai) and Nymex itself is not a trader in oil. The notion of "speculators" is the favorite of the Saudi royals, and now a variety of politicians of both parties. It avoids blaming supply and demand. It avoids blaming the Saudis.
While it would be stupid to invade Saudi Arabia, they are our enemies. They funded 9/11. Wahabbi Islam is deeply reactionary and hateful, and their state religion. So why especially our Democratic politicians are making absurd statements about how the price of gasoline and heating oil will fall by 50% immediately after passage of a law to "stop the speculators," when this is exactly where the "Don't blame us!" Saudis are pointing, is beyond me. Local heating oil dealers her in New England are strongly promoting that lie too. Shameful, although I can understand why they don't want people fleeing oil heat.
Actually, what happened is that Enron kept electricity off the market to jack up the price. They and their coconspirators shut down plants in California to lower the supply, and then they shut down transmission capacity to prevent more electricity from coming in from out of state.
The natural gas system worked the same way. The coconspirators also shut down or slowed down gas movement through the pipelines. As a humorous consequence of their successful attempt to keep a gas pipeline from being built several years previously on the grounds of surplus pipeline capacity, they got sued by the would be pipeline builders. The case was being tried when the crisis hit and the would be pipeline builders asked for the foregone profits they would have made if they had been able to break Enron's coconspirators monopoly instead of the lower profits they would have made if Enron's coconspirators had not manipulated the markets.
Citi Group’s name comes up as one of the companies supposedly making profits of $50-$70 per barrel of oil. But this is a company circling the toilet bowl and begging for foreign investments and taking them on horrible terms. Where are these fantastic oil speculation profits? Citi certainly isn’t making them they are teetering on the edge of insolvency.
GoodTower...You do not know how much oil is in storage because you cannot trust the numbers that are provided by any government about anything.
Do you really believe that US inflation is only 4.5%?...just one example. We can see the inflation in our daily lives and we know that the 'offical inflation' and 'core inflation' numbers are gamed.
Have you been to every oil storage facility in the world, personally, and totaled up all the oil in storage? If not, you do not have any idea how much oil is in storage.
You are not accounting for scale. There is some oil in storage and undoubtedly some not accounted for but the amount that speculators would need to take off the market to run up price for so long is greater than could be stored in secret. As I said the only party who could play this game is the producers who can just not pump.
On a related topic yesterday I asked you to explain the actual sequence of transactions the speculators are using to run up the price via the futures market because whether or not the trades are public all futures contracts expire and at that point a long speculator will need to accept the oil or sell the contract which would drive down the price.
I wish people would stop posting vague things about Enron and total amounts of money entering the market and explain the actual mechanics of how it works.
GoodTower -
This question is not directed at you per se, but I thought here might be as good a place to present it as any.
In general I understand the main argument against speculators unduly influencing the price of oil: i.e., unless speculators can store huge amounts of oil, they will always be faced with a price correction when it comes time to pay the piper at the end of a futures contract.
Now here's the question: Is there any way for a speculator (or anybody else for that matter) to essentially bet on the price of oil either rising or falling without actually participating in the oil futures market and without having to face the prospect of being stuck with actually taking delivery of said oil?
What prompted this question is that their are now many kinds of derivatives based on all manner of indirect indicators of value that can be traded up, down, and sideways. Trillions of dollars of notional value are now tied up in the derivatives market. So I am wondering if there exists some energy market equivalent in which one can bet on say some sort of oil price index and never have to worry about touching a single drop of oil? And if there is such a mechanism, could it by itself influence the pricing of 'real' oil?
I admittedly know little about the workings of the energy markets, so forgive me if this question is way off base.
There are many forms of futures contracts and options etc. All of them even the ones that settle by physical delivery can be used by "speculators". That is people who are neither producers or consumers of oil. If one is contracted to buy at a certain time in the future at a certain price one can cancel the position by buying the opposite side of the contract. If it is an option that is under water at exercise time one can just let it expire and write off what you paid for it.
What all these financial instruments have in common is that they are a zero sum game. If you make money somebody else must have lost it. If you are asking if there is some way to influence the price via the system I think the answer is not the spot price today and if you buy futures and guess wrong about the spot price on the expiration date you will take a loss.
I want to add something about "speculators". Many people may have a good reason to buy futures contracts even if they do not directly use oil. Think about Southwest Airlines they need JetA not crude and don't own a refinery but they have bought contracts for the future delivery of oil. The plan is that if the price of crude increases the profit they would make on the futures contracts would cover the increased cost of JetA when they buy it.
This is speculation in the terms congress is using it but I submit that it is legitimate and rational business management.
Krugman points out that trading futures has no direct impact on the price of oil. As GoodTower points out, it's only those transactions that deal with actual oil that can directly impact the price.
http://krugman.blogs.nytimes.com/2008/06/23/speculative-nonsense-once-ag...
Like Krugman, I'm getting really tired of the "blame the speculators" crap. Unfortunately, it seems more and more like that is what the Democrats have latched onto as the solution to our energy woes, and they're even getting help from Bill O'Reilly. I expect to see a lot of demagoguery between now & November.
The only saving grace is that Democratic politicians are just as corrupt as Republicans, so once elected they're unlikely to do anything to piss off big business. Even so, I'm afraid my head will explode before we get to the election, even if I tune O'Reilly out.
I was trying to explain to my son that it isn't speculators driving the price of oil and he brought up the guy that wanted to be able to tell his grandchildren that he bought the first $100 barrel(s) of oil and so he drove the price over $100.
So what about that guy?
My thinking is that he was willing to take a loss for his "place in history" and that was not a normal trade.
Am I way off? I know nothing about trading.
He did NOT drive the price of oil higher. He drove the price of paper oil futures contracts higher (for about 30 seconds).
Oil NEQ Paper.
futures trading == sports betting
your bet can't affect the result of the game
each bet has one winner and one loser
"the house" (the futures market) collects a small fee for each bet
MSM blaming oil price on speculators == MSM blaming sports team losing streak on gamblers!
This analogy is perfect.
Since the price went down (to about $97) when that contract expired he must have lost $3000 to make that boast. On the other hand if the price had gone up a little faster he would have made money.
In any case the spot price determines the price futures contracts end at. There is a mechanism called "exchange of futures for physical". If I entered into a futures sell side contract to deliver 1000B oil in Dec of this year (which is about $135/B today) and between now and Nov you think you can game the system by buying more of these contracts (on the receiving side) so that come Dec the price is now at $150 I still have an out. If we posit that there was no real reason for the $150 and that it is "just speculation" then by definition the spot price would be lower. I can enter the spot market, buy oil (for the actual spot price) for delivery to the settlement location and inform the exchange I wish to make an exchange of futures for physical. If the spot price was below $135 I make a profit and if enough people do that the contract will expire at the spot price and you will take a big loss.
Actually, he sold it about 30 seconds later for arround 99.40, and lost $600.
GoodTower, shargash,
Thanks for your explanations. Still no "light bulb" moment, but I'll keep reading until it comes on. I don't know why I have so much trouble understanding the market!
Can you explain to me why the following hypothetical sequence of market effects could not take place?
A savvy speculator concludes that there is a coming shortage of oil, that prices are going to go up a lot.. Speculator buys oil futures on that basis. Seller of oil looks at the rise of the futures prices and says to current buyer, I want to sell at a higher price because, well, look at what I could get if I held out. Current buyer figures the demand he's reselling into is strong enough to accept the higher price, so he pays the higher price. This is speculation raising the price of oil. It works without storing oil. It works because the higher price is coming and people will still buy at that higher price. The speculator in a sense does not cause the higher price, just displaces it in time.
That's NOT a speculative bubble however, that's the very definition of the market finding the correct price that balances supply and demand!!
That speculators have a role to play in that process, by making it quicker and more fluid is accepted economics. The argument you provide works equally either way, ie: just put the speculator as the seller instead (by definition, speculators are equal buyers and sellers of whatever they are trading over time). Also, it's important not to consider 'a speculator', but the net effect of ALL speculators - unless there is something approaching a monopoly.
So, yes, speculators help the market work out how much product people are prepared to sell at a given price, and how much product people are prepared to buy at a given price - that is their function - they are not 'driving' up (or down) the price. Take your text above, if the ultimate consumer demand IS NOT strong enough at the price the speculator has achieved, one of two things can happen:
(1) the speculator drops his prices and sells at a loss, holding down the market price; or
(2) the speculator hangs onto his purchase, in the expectation that demand strength (what people are prepared to pay) will increase.
If lots of speculators choose (2), the price is driven up - but stocks acumulate as a direct result.
In futures trading, speculators can realistically drive up spot prices in the very short term - ie: if the front NYMEX contract is worth more than the spot price, someone holding oil may choose to take it off the spot market expecting prices to go up, pushing up the spot price.
What is the effect of this? Exactly the same: oil is moved from being 'on sale', to 'stored'. If this continues, either stored stocks MUST increase, or spot prices will go up sufficiently that 'stored' oil will be put back into the spot market.
You say "if the ultimate consumer demand IS NOT strong enough "
I think you may be underestimating the strength of consumer demand for oil. I did not claim what was happening was a bubble, merely that the action of speculators was raising the price. This is all such basic economics. I certainly assume that this price effect is what is meant when they talk about speculation effecting the price. What else could they mean? Of course such speculative anticipation of future price can run ahead of itself raising the price too fast and then there will be a correction.
I think a lot of this is because 'they' don't actually know what 'they' mean when 'they' talk about speculation affecting the price. As you say "what else could they mean?" - well, I don't believe they have any idea, other than it's a group of people to point the finger at.
Apologies for assuming the 'bubble' thing - kneejerk reaction - but that is another thing that many believe 'they' must mean when they talk about speculators affecting price.
However, I am not underestimating consumer demand for oil - indeed, THAT (extremely strong demand, combined with weak supply) is what is driving up the price of oil, both in your scenario, and my beliefs.
ie: NOT speculation - supply and demand - market fundamentals.
Of course demand has ALWAYS been very strong, and rather inflexible - what has changed is that (a) demand has got a bit stronger (china/india etc) and supply has got a lot weaker (zero growth).
So speculators don't AFFECT the price, they lubricate it. Without speculators, the price will ultimately reach the same level, but it will be alot less smooth getting there, and can easily get to extremes much higher or lower than the proper (based on fundamentals) price. Prices become like rusty, sticky cogs - volatile swings can be much more extreme and stick for much longer periods.
“So speculators don't AFFECT the price, they lubricate it.” I don't care whether you call it “affecting” or “lubrication”, there's an action that produces an effect. I imagine that your take on markets focuses on their ability to reveal information. However, it is in the interests (in a sense) of many of the players to conceal information. There's a lot of money to be made by information hiding.
“Without speculators, the price will ultimately reach the same level.” To a degree that is implicit in what I was saying. But I think the situation is too dynamic to say there is some sort of level to be reached. The speculators might push the price of oil far towards the point it would reach if demand trends continued and the economy remained relatively orderly. But that price might not be sustainable if the economy cracked under the strain of the high price (plus other disfunctionalities currently in operation).
In my first post I did put in that I was not talking about a bubble, but then struck it out along with other stuff – I was going on at too great length. Also I left out the generalization from one speculator to a herd of them.
You think of speculators as discovering the correct price. I consider them as generally a symptom of some deeper underlying problem. Often this is when increased demand pressure does not produce a corresponding increase in supply. In the case of oil, the cost of old supply production is very disconnected from the cost of new supply production and there is nothing approaching a reasonable market for discovered supplies in the ground ..... again I'm running on too long ...
I guess where we disagree is that I think that the future's price may effect the spot price.
I do think we agree more than disagree. I also agree that future's price absolutely CAN affect the spot price, dramatically so over periods of days, but only for a month in total WITHOUT physical affects also.
I think that, for future prices to affect spot prices for longer than a month (which is still possible) there also has to be a related impact in physical storage levels - that's still possible, that's still futures affecting spot prices, but the impact on the spot market leaves an evidence trail in the physical commodity (which, ultimately, should force things back into balance, but that can take longer)
(one month being the time between contract expiration defining the maximum time such price affects can avoid physical realisation)
Anyway - sorry if it seemed I was arguing, that wasn't the intent.
Everyone claiming a trader bubble is not looking at the fact that most of the worlds oil is sold at a discount or premium to the price of WTI or one of the other oil exchanges. If traders could create a bubble in the grades of oil openly traded and store it then the spreads for all other grades of oil would widen substantially some are also better quality oil. Once you take this into account you see no hint of much of a bubble in oil. We have about a +/- 6 dollar trading volatility factor that could be attributed to speculation but thats about it.
I've posted this a few times and its REALLY important in my opinion. Until WTI is trading at a substantial premium to every other crude we have no bubble.
Correct.
Come on Moe - everyone knows that it is your fault!
Everyone has an opinion. Does anyone know or care to tell me what per cent of KSA crude production is light/sweet vs heavy/sour? If most of KSA production is heavy/sour why is the US demanding more production from them?
Here is another opinion:
...snip...'Now consider the situation today in oil markets: the Gulf, according to Mr Rothman, is crammed with supertankers chartered by oil-producing governments to hold the inventories of oil they are pumping but cannot sell. That physical oil is in excess supply at today's prices does not mean that producers are somehow cheating by storing their oil in tankers or keeping it in the ground. All it suggests is that there are few buyers for physical oil cargoes at today's prices, but there are plenty of buyers for pieces of paper linked to the price of oil next month and next year. This situation is exactly analogous to the bubble in credit markets a year ago, where nobody wanted to buy sub-prime mortgage bonds, but there was plenty of demand for “financial derivatives” that allowed investors to bet on the future value of these bonds.
In short, the standard economic assumption that supply and demand drive prices is only a starting point for understanding financial markets. In boom-bust cycles, the textbook theory is not just slightly inaccurate but totally wrong. This is the main argument made by George Soros in his fascinating book on the credit crunch, The New Paradigm for Financial Markets, launched at an LSE lecture last night. In this book Mr Soros explains how financial bubbles always start with some genuine economic transformation - the invention of the internet, the deregulation of credit or the rise of China as a commodity consumer.'...snip...
http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/art...
Never:IYO what is the current world demand for $65 oil (the price Congress's experts feel is reasonable)? I have no idea but one would assume it exceeds 85 million by a wide margin. Therefore, the $65 oil has to be allocated as not all needs can be met.
BT-- I have no opinion, as I know nothing. But I can imagine that at $65, Congress would expect to have to exclude India, China, Western Europe, etc. By force, if necessary.
The posters on this site over the last couple of years have produced an incredibly coherent, logical explanation of the price of things. And they have refined their explanations to the point that even a total outsider can understand it with only minimal effort.
There is, of course, that minimal effort -- which many in this country seem unwilling to make.
We have seen that the demand for oil is highly inelastic, so shouldn't we assume that also applies as the price goes down?
Speaking of bubbles...
Home prices post record 15.3% drop
I was given advice to buy a house a few years ago... I didn't take it (I still rent). I take sadistic pleasure knowing the person who gave that advice watched the value of their home fall...
The media focus has been on the people who bought close to the real estate peak with very little money down and were almost instantaneously underwater on their mortgages in the the first year of property value declines.
I haven't seen much media discussion about a potential second wave of pain for the people who bought 5, 4, 3 years before the real estate peak and then boosted their spending through home equity loans/home equity lines of credit.
What's going on now with the banks that bet heavily on second mortgages?
Go to Dr Housing Bubble and his Real Homes of Genius.
All 2nd Mortgages are smoking craters now.
WaMu, Wells, Citi are insolvent.
"Core Incompetence
I see that GM now needs the help of Citigroup to dump the Hummer. Two of the most incompetent big caps have joined hands hoping for some Hail Mary play that allows GM to dump the Hummer. GM should have dumped the hummer and GMAC years ago. I said so at the time. It could have done so easily then.
It only fitting that two companies with no core competence seek each other out."
http://globaleconomicanalysis.blogspot.com/2008/06/gms-ridiculous-bluff....
I said at least 5 years ago that GM was toast. But
people will try to save their cars over their homes.
Alt A, $500 Billion in resets, hasn't started yet.
It is appropriate that cars that are as big as houses should have their own mortgage crisis.
Seems the upshot of yesterday's thread is that to speculate, you would need to strategically and secretively acquire millions of barrels DAILY and place them somewhere (just as there were hundreds of thousands of speculative housing units continually being planned, financed, and built- these weren't secret, people warned we were overbuilding, but few listened). The vacant homes you describe are physical evidence of the housing bubble's collapse, and the credit crunch is evidence that the speculation was fueled by socialized risk.
Let's say oil prices drop to $75 a barrel- if the oil bubble were like the housing bubble then we would expect to see massive financial failure (investors losing their bets) and a flood of all that stockpiled oil (millions of barrels per day X hundreds of days of manipulative withholding)coming on to market all at once and like the homes on the frontier (or shares in Pets.com), going unsold. I am not holding my breath for that to happen because there is no physical evidence of massive hoarding and there are clearly buyers at $130 barrel, so there are still more at $120, many moreat $110 and all the way down. The "speculation debate" is another distraction to delay real changes necessary for safely navigating energy decent.
Hmm. Hundreds of thousands of excess houses on hand, and storage for millions of barrels of oils needed. Does anyone else sense a business opportunity here?
This guy seems to have a pretty dispassionate (apart from the title...) take on why it's not all speculation:
The Big Lie About Oil Speculation
The article "The Big lie" that Half Empty cites is in my opinion about the most succinct and sensable thing writen about this speculation business I recomend you read it. I quote more below with my emphasis:
"There is only one thing we can do to reduce our cost of energy and that is to stop using so much of it. In the end either the market or the government will make sure that happens since you can’t have what you can’t pay for unless you steal it without getting caught.
I will say it again: The Saudi oil ministers and OPEC are taking the opportunity divert attention from their refusal to raise output by blaming speculators for the price rise. The Saudis intend to keep the price rising because either they can’t raise production due to depletion, or won’t because their oil won’t last forever. In the end it doesn’t really matter because there is not an infinite supply of oil and we are using it like it was water."
I watched throught the 4 panels of witnesses at the Congressional oil speculator witch hunts yesterday. Coupled with the statements from King Abdullah blaming speculation for the runup in prices and the questioning by the congressional members and the responses from the witnesses...I am certain congress will take action before the August recess to put in regulations to rid us of the bad bad speculators. I think congress sees this as the quickest fix they can put in to bring oil prices down and the witnesses did a good job of convincing them.
The regulations will come in the form of increased margins and greater transparency most likely and I think they will try to impose their will on ICE to come under the same regulations imposed by the CFTC on Nymex. Just my gut feeling from what I heard. My other gut feeling is it will have an unintended ripple effect and well be in some other fine mess. One guy, Mr Greenburg I think is his name (form CTFC head) was so animated he was shaking when describing the speculation issue. He was coming down very hard on the ICE exchange, saying they are a US company not a foreign entity. ICE was represented by Sir Reed? sitting next to Greenburg. Must have been very uncomfortable for him. Greenburg when asked stated that 25-50% of the price of a barrel of oil today is due to speculation. I think a few other witness chimed in with the same stats. The Nymex chief said it is mainly a supply/demand issue. He was in the minority. This was actually a very fascinating session. I think I do believe now that there is some element of speculation to the price of oil...but as whathisname, the billionaire hedger said...it is mostly a froth.
They're buying more shares, but not because they're betting on a pullback in oil prices. Commercials are now long oil. It's speculators who are now short.
Refiners are betting on an increase in the crack spread. Basically, they're betting on an increase in product prices. Ethanol production is down by at least 200,000 b/d, China has stopped exporting product, and also China has been importing product, including a large amount of diesel.
Plus, western Australia is compensating in part for the loss of natural gas supply (from the explosion) by importing more diesel.
Absolutely. And well said. Crack spread can improve from either end.
I find it rather ammusing that this very long thread says nothing about the item River posted at its head. The item's point was refiners are buying back their own shares, and that is supposed to indicate a fall in oil price. Funny, but that's not what Collin Campbell had to say about oil companies buying their shares back; He called it a fundamentally sound business decision for a business whose volumes would be shrinking over time. (This was in one of his Newsletters toward the start of the year.) If your revenues and net income are shrinking and you want to maintain your dividend level, then you must repurchase shares. It really is quite simple.
Now as for oil price rise to be blamed on investors now labeled (correctly for once) speculators, there is likely some influence, but not nearly as much as the sanctions/economic war targeting Iran. Notice how there is zero talk of stopping that behavior to quell oil price rise. As for the tankers sitting around Kharg Island perhaps filled with heavy, heavy-sour crude, most are Iranian registered and their stockpiling might be related to the threats of war made against Iran on a regular basis, that happen to be against international law. Perhaps the plan is to turn the Persian Gulf into a vast oil slick which will then be ignited. (I've puzzled over defensive uses of these tankers, and given the location of Kharg Island, cannot think of many--Kamakazi tankers?) Has Iran ever engaged in such behavior before? From a business POV, it must be more lucrative keeping the tankers out-of-service, which is hard to figure given current day rates, unless they are old, and soon to be decommissioned, single-hull tankers. Perhaps it's an Iranian ploy to restrict net export flow rates? Only the Iranians know, and they aren't telling.
If your revenues and net income are shrinking and you want to maintain your dividend level, then you must repurchase shares. It really is quite simple.
But that's not what's happening. Incomes are sky-rocketing, because prices are advancing faster than production is declining.
Oil companies are buying back shares for a very simple reason: They feel like the market is undervaluing their shares. They also feel like they can get a better return there than with some of the riskier investment opportunities available to them.
You are comparing apples & oranges. River quoted this:
What Campbell said is that oil companies are buying back their shares. It is utterly different. An executive buys stock when he thinks his company has good long-term prospects, and he thinks the share price is going up. A company buys back its stock when it thinks it has bad long-term prospects, and it is trying to prop up the share price by reducing the number of outstanding shares.
Also, there were a couple comments in the thread on the refiner's crack spread, which directly relates to the executives buying back their shares. The author quoted by River misunderstands this and attributes it to the executives' believing that oil prices are coming down. The commenters gave the counter opinion that it is because gas prices are going up: "Crack spread can improve from either end".
Well, it does seem that I conflated the companies vs. their executives "buying more than they sold." But that doesn't negate my main point that the thread discussion said little about that and went on forever off tangent. Sigh.....
So, if refiners are bullish about future crack spreads, then do we get to see pump prices rising again?
I have been trying to create a graphic that underscores the relationship between rising gas prices and home foreclosures. The basic data is available at EIA. Although they stopped updating it in 2004. People had more spendable cash. People drove until they qualified and bought a house. Rising oil prices are crushing ever more people. Until last quarter, unemployment was not a general problem at 4.8%.
Rising gas prices and interest rates forced more and more people to choose between keeping their job by paying for their commute or making their house payment. The number of foreclosures exposed banker misbehavior.
Does this graphic illustrate the connection between Peak Growth (May 2005) and the eroding of economic momentum using foreclosures as a metric?
My connection:
Lumber mills all over Arkansas began shutting down/cutting back
in the Summer of 05.
Home Depot has announced that it will offer CFL recycling at its retail stores; hopefully, this will put an end to the argument that the mercury contained in these lamps pose a hazard to the environment (ever notice the folks who oppose the use of energy saving lamps are often the same ones who champion the construction of more coal fired plants?)
http://www.nytimes.com/2008/06/24/business/24recycling.html?ref=environment
Cheers,
Paul
Do you have an example of someone who both champions the construction of more coal fired plants and opposes CFL's? I suppose that attitude could seem reasonable, but I've never seen it put quite that way.
Hi NeverLNG,
Sure, I'm participating in a debate right now on the alt.home.repair news group related to this video: http://www.youtube.com/watch?v=e-LOtKIIKcg
The text of this speech can be found at: http://poe.house.gov/News/DocumentSingle.aspx?DocumentID=94413
The speech begins with:
Madam Speaker, Congress passed an energy bill which should have been called the Anti-American non Energy Bill, because it punishes Americans for using energy, rather than finding new sources of affordable energy. But the bill does one thing, Madam Speaker, it controls the type of light bulbs that all Americans must use throughout our fruited plains.
and ends with:
Oh, I yearn for the day when America took care of Americans by developing our own abundant natural resources like coal and natural gas and crude oil to provide affordable energy to America. But those days have gone the way of Edison's incandescent light bulb. We might as well turn out the lights, the party's over.
BTW, are those ten gallon hats fitted so tight they cut off the blood flow to the brain?
Cheers,
Paul
Yikes!
Hi NeverLNG,
Indeed. This video was posted three weeks ago (June 3rd) and has garnered over three thousand comments as of this writing. I would encourage you to take a moment and read through some of them when time permits -- no offense intended, but is it any wonder Americans are viewed as being just a tad different from the rest of us?
With a tip of the hat to Alan, best hopes for a little sanity and civility.
Cheers,
Paul
Please do turn out the lights. And if you must leave them on,use CFLs. A btu saved is a btu earned or drilled, for that matter. Haste makes waste. I yearn for the days when thrift was considered a virtue. I will be getting a guaranteed return on my investment that I will be making in insulation this year. If saving during WWII was considered patriotic then, why is saving not considered patriotic now. Mine Detroit first!! What would you rather do? Save money on energy or spend money on energy. Why is it considered on God given right to waste energy. Keep it in the ground. Your grandchildren will love you for it. Or burn it up and be hated. It's your choice.
During WWII saving was patriotic because what you saved went into the war effort. We were essentially producing at an all out pace, just not aimed at consumers but at "defense." What you save today doesn't go anywhere, it is taken out of production. By the logic of the day that is unpatriotic because it hurts the economy.
(Not saying I agree, just pointing out the difference in the times)
Savings is only taken out of circulation if you bury the money you save in the back yard or put it in your mattress. In a sane economy, savings is the engine of all growth, not credit as it is in our economy.
Savings IS problemmatic in our economy, but not because it is unpatriotic. It is problemmatic because it is eaten up by inflation & dollar devaulation. Even so, we're not going to get out of our current debt crisis until people start saving. That's the catch-22. Savings is our only hope, but the Fed is doing everything it can to discourage savings and re-inflate the credit bubble.
"...we're not going to get out of our current debt crisis..."
There, fixed it for you :-)
You doomer!
You are right about savings from a fiscal perspective. I should have been clearer - tstreet used the term "savings" but was referring really to conservation (especially having to do with natural resources).
I considered the possibility that conservation is what was meant. However, the effect of conservation is to free up money that used to be wasted, so it could be savings in both senses of the word. However, in the US it is far more likely to be re-invested in additional consumption. Indeed, that is exactly what the Fed wants, as it tries to goose our borrow-and-consume society.
Actually it goes to China or India. Demand is above production. Oil can't be conserved when demand exceeds production.
Now if the Fed, the EU and other Central banks raised interest rates, it would likely triggler global recession, and cut demand for energy use (oil, natural gas, and even coal). While no one wants a recession, its better than a collapse or all out nuclear war fought over depleting resources.
C-span just had the one-minute speeches on, and a Republican-Pol from North Carolina was complaining that the democrat-induced gas prices were keeping people from 'going on vacation, to the store .. OR EVEN TO CHURCH!' (her order of priorities and emphasis)
I was a little saddened that she didn't find a clever way to put 'Gay Agenda' in there somewhere as well.
Hi Bob,
Let me advance that particular Agenda a little further... where do I send these?
http://www.amazon.com/Soft-Pink-Incandescent-Bulb-Watt/dp/B000TZR0BS
Best hopes for keeping a sense of humour in these troubling times (and for keeping the Accuretic handy).
Cheers,
Paul
At the risk of incurring an OT Ticket, I marched in Portland's Gay Pride parade on Saturday, and someone was carrying a sign that read; 'The Gay Agenda: 1. Fall in love 2. Get Married 3. Buy Milk.' Lots of Dual-mom families in our town. My daughter has two or three classmates with two moms.
In all fairness, I think that the 'Dikes on Bikes' that led the parade would probably eat those soft-pink lightbulbs for lunch. I'd share a foxhole with those sisters any day of the week.. umm, after the resource war started.. and ehhn, as Portland was fending off the Hungry Hordes from Boston and Providence. There! Back on topic in two, easy steps!
Bob
snatches OT ticket from Bob's hand
The Dikes on Bikes always start our parades because none of us would be stupid enough to say no. :-)
Cheers,
Paul
Was the Repug Rep Virginia Foxx from the 5th District of NC?
http://www.foxx.house.gov/?sectionid=55&parentid=54§iontree=54,55&it...
She has been parroting the Repug Party line ever since she was elected. She may have a tough time getting the votes this time around...
E. Swanson
Sounds right. It reminds me how it once seemed that the people in the Capital were somehow brighter and stronger than I ever could be. While that illusion would be inadequate in the best of circumstances, rhetoric like that makes the Local Car commercials not seem all that dumb anymore.
Yeah, it was Ms. Foxx. Here's the quote from the Congressional Record:
E. Swanson
I suggested that this Congressman either resign as he is evidently unqualified to hold office (I refer him to Article I, Section 8 of the US Constitution he was holding up), if he does not know where the powers to legislate and regulate actually exist in the US Constitution.
Rush Limbaugh. He's devoted a number of episodes of his show to railing against CFLs, as well as promoting more coal, more oil drilling.
Interestingly, he's spent the past five years railing against hybrid cars, until last month when GM began sponsoring his show and literally gave him a Chevrolet Tahoe hybrid SUV. Now he sings songs of praise for hybrids (at least if it's a Chevrolet Tahoe). His overnight transformation from hybrid-hater to hybrid-lover was truly astonishing.
If General Electric sponsors his show and starts promoting CFLs, I expect a similar transformation.
The bulbs contain mercury and mercury harms the environment, this is true whether or not you support coal fired power plants or CFL bulbs. But CFL bulbs properly disposed of are better than traditional incandescent bulbs because the energy savings reduces power plant needs and thus reduces power plant pollution.
The concern about CFL bulbs harming the environment and how to dispose of these bulbs however is a legitimate one, as this story in NPR reports CFL Bulbs Have One Hitch: Toxic Mercury
Where I live the bulbs are supposed to be brought to the county's one Hazardous waste facility, which is open only 8 hours a week for a county of over 1 million people.
Currently there are still the two types of bulbs still on the market, (CFL and incandescent) hopefully the people who currently make the choice to purchase the CFL bulbs are aware enough to recycle them properly and the Home Depot initiative will be very helpful in this matter.
The challenge will come when the CFL bulbs are the only ones for sale, at that point there is a chance that many purchasers will be unaware of or not care about the problem and simply toss the CFL bulbs into the trash stream, if this happens a small amount of mercury in a large amount of bulbs will be a serious toxic waste problem.
A solution such as a recycling fee to the cost of the bulbs would do no good because the mercury would still end up in the environment. The solution should be to add a deposit or "core fee" to each bulb, this would be similar to the fee currently charged for car batteries. When a bulb is purchased the fee would be added on and when the bulb is returned the purchaser would get the credit for new bulbs. Escheats, that is the amount of fees that are not refunded, excess to new purchases of bulbs, because of lost or broken or tossed out bulbs could be set aside for environmental clean up projects.
Assuming that coal continues to supply the current fraction of our country's energy, I understand that, even if CFL bulbs go unrecycled, less mercury will be released into the environment overall, due to the mercury content of coal when it is burnt.
Hi Lifeblack,
That's correct. Roughly half of all U.S. electricity is coal-fired and about 60 per cent of that generated by electrical utilities.
Source: http://www.eia.doe.gov/cneaf/electricity/epa/epat1p1.html
For a breakdown by state, see: http://www.epa.gov/cleanenergy/documents/eGRID2006V2_1_Summary_Tables.pdf
FWIW, here's my take on the issue: A Philips 25-watt SLS CFL contains 2.64 mg of mercury and has a nominal service life of 15,000 hours; it produces 1,750 lumens or slightly more than a standard 100-watt soft-white incandescent (1,550 lumens). Over the course of its 15,000 hour life, this CFL will consume a total of 375 kWh of electricity -- the alternative would use 1,500 kWh.
Based on the national average, the extra electricity consumed by this incandescent lamp would result in the additional release of:
* 13.7 mg of Hg
* 1,533 lbs of CO2
* 6.11 lbs of SO2
* 2.37 lbs of NOx
* As, Cr, Cd, Ni and Pb in various quantities
One might also take into consideration other environmental impacts related to the mining, transportation and handling of this fuel, as well as other costs related to power generation, transmission and distribution.
More importantly, with the fluorescent lamp, the Hg can be theoretically recycled or properly disposed in a secure landfill, thereby potentially reducing our exposure to 0 mg, whereas the Hg released from the burning of coal indiscriminately pollutes our air, land and water. That's the key difference.
Cheers,
Paul
CFL bulbs will be the only bulb sold in the US by 2012. The argument for them has been won, it is time to prepare for that time.
I still advocate a deposit system on the CFL bulbs to keep even more toxic mercury out of the waste stream.
Improperly disposed CFL bulbs could cause a trash truck to become a rolling super fund site forcing it to be disposed of at a high cost because of its being hazardous and replaced years early forcing excess use of materials and resources to replace it. Also improperly disposed of CFL bulbs would cause a major health risk to all of the workers in the trash cycle from the trash truck to the transfer station to the dump.
Hi umass82,
I can't speak for all countries, but that's most definitely not the case with respect to the United States; you will still be able to purchase incandescent and halogen lamps well after 2012 if that is in fact your wish. To be clear, the U.S. Congress has not outlawed incandescent lamps; rather, they have established minimum efficiency standards, as they have for other consumer products such as air conditioners and refrigerators. Moreover, lighting manufacturers already sell high efficiency incandescent (HEI) lamps that meet these new standards; these ones are already available at Home Depot: http://www.nam.lighting.philips.com/us/consumer/hes/display.php?mode=1
A 70-watt, 120-volt soft-white Philips Halogená Energy Saver has a 3,000 hour rated service life and produces 1,600 lumens (22.8 lumens per watt). A Philips Duramax soft-white A19 incandescent has a rated service life of 1,500 hours and provides 1,550 lumens (15.5 lumens per watt). Watt for watt, a 70-watt Halogená ES provides 1.5 times more light.
Philips has also introduced their new EcoBoost line of products that kicks things up another notch or two.
See: http://www.lighting.philips.com/gl_en/news/press/product_innovations/arc...
GE is likewise busy developing a new generation of HEI incandescents that will be initially twice as efficient as what is available now and ultimately four times so -- roughly the same efficacy as a CFL but at a lower initial cost.
See: http://www.businesswire.com/portal/site/ge/index.jsp?ndmViewId=news_view...
For now, GE's new HIR Plus lamps provide us with a taste of what's to come. Their 83-watt HIR Plus PAR38 produces 2,030 lumens, which pegs its efficacy a hair shy of 24.5 lumens per watt. By comparison, GE's standard 75-watt halogen PAR38 has a rated light output of just 1,050 lumens, for an efficacy of 14 lumens/watt. In addition to their longer service life, these new HIR Plus lamps are nearly twice as efficient as the conventional halogens they are intended to replace.
See: http://www.gelighting.com/na/business_lighting/products/hir_plus_halogen...
BTW, if you want to worry about a serious toxic hazard, look no further than your PC and all the other electronic equipment in your home.
Cheers,
Paul
I've just been keeping all of my used CFLs in a box - I figured that sooner or later there would be an easy way to recycle them.
Amazing, not a genius and still able to actually deal with a problem!
a genius would sell those used bulbs to an unknown desperate Yerginite!
Bill McKibben: End of the Open Road
I sure do like McKibben's attitude:
"We could debate whether those changes will be good or bad. I think, on balance, that they're positive -- that in the United States sprawl has eroded our sense of community, with grievous results."
The end of cheap energy isn't the end of the world.
Some government agencies are already talking about cutting their employees back to a 4-day work week.
Here's a great article that somebody here on the Oil Drum linked to the other day that helps us envision that the end of our consumerist culture may not be all be bad:
http://www.orionmagazine.org/index.php/articles/article/2962
Bill McKibben is great.
Here's another very powerful article I read last night about drawing a line against climate change.
http://www.orionmagazine.org/index.php/articles/article/3059/
It made me think about how there are people who are very very concerned about AGW, at least as much as us TOD'ers are about PO. I think many of them don't have PO on their radar.
That's an understatement. Would you still advocate a carbon tax or cap and trade if you knew that world oil supplies were about to plummet?
Yes, because there's still coal, and there's still greed.
http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20080624/NEWS/80...
Roads are already in awful condition there...and repairs are still being made to the Gulf Coast road and bridge network damage from Katrina.
Message to Mississippi. Shut down the roads or raise the gas tax. It's your choice. And stop bitching about gas consumption.
But in the Delta from Cleveland to Hernando to Memphis,
the roads have never been better.
They've landscaped 61 for God's Sakes.
And that new interstate that allows folks to bypass
Memphis to Tunica is unbelievable.
The main roads are in pretty good shape here in NE Mississippi. They've been resurfacing Hwy. 45 north of Tupelo. A project is slated to create a four lane highway between Blue Springs (the Toyota plant) and Guntown along Hwy. 9 and Hwy. 348. I'm thinking Toyota holds enough sway that the project will move forward, and I think the same forces will ensure road upkeep in the general area and leading from the plant.
Over the last two decades, Lee County and many surrounding counties have paved all the previously gravel rural roads. Some of these near my home in Union are deteriorating. These need to be patched to keep them usable while they degrade back to gravel. With a little foresight for long term trends, county supervisors can ease us through this transition. If they, and the state, try to maintain secondary roads as per usual, they will face bankruptcy.
I will support a fuel tax increase so long as the administrations adjust their plans to realistically face the transition ahead of us. I won't support a tax increase in a futile attempt to hold onto the entirety of our 1990s style road system. We have to have priorities based on use, and there is nothing wrong with gravel for rural housing and farming areas.
My experience lately is limited to the area around Jackson, since I go back and visit now and then. I can't imagine how people are coping there now, people moved away long ago to get away from the city and crime, very few places have sidewalks and everything is very spread out.
Of course that describes a lot of places I suppose.
Here in New Mexico the lead story on the noon news was that the Albuquerque Public School system is being asked for more money by the bus driving companies, because their previous contracts were written when diesel was 2.99 per gallon. They say they will go broke. So what to do. I can see this happening everywhere writ large. Nowhere a suggestion that perhaps the schools can't afford to be busing students all over the state for various sports activities.
They're cutting back in some places.
At long last, some good news regarding offshore wind power for Delaware!
After over a year of incredible political skulduggery, bad faith bargaining, and just plain bumbling, Delmarva Power, the chief power supplier for the state, and Bluewater Wind have FINALLY negotiated a wind power deal.
Bluewater will finance and build a wind farm 11 miles off the coast of southern Delaware, and Delmarva has agreed to buy power from it at a fixed price at a maximum generation of up to 200 megawatts, or some 600 megawatt-hours per year. There is also a complex deal involving renewable energy credits.
This is considerably scaled back from Bluewater's original proposal of 300 megawatts, but it is at least a start. Depending upon the type of turbine selected, the wind farm will have between 55 and 70 turbines.
My biggest concern is that Bluewater has a two-year grace period in which it can back out of the project without incurring penalties. We are facing in increasingly uncertain economic situation, and the costs of major projects of all sorts have been rising at an alarming rate. Financing is getting increasingly difficult to obtain, and the dollar continues to drop. (I believe Bluewater plans to buy Danish turbines with dollars.) So, it will be a race against time to get something up and running before the economics of building it turn upside down.
Still, it's a step in the right direction. The lesson I've learned from this whole sorry affair is the one should not underestimate the lengths that the powers that be will go to preserve a cozy status quo.
The Saudi's Oily Con Game
"In addition to oil industry knowledge that Saudi Arabia can immediately increase production by 20 percent, it can keep on doing so into the foreseeable future. The country sits atop the world’s largest proven reserves of oil, conservatively estimated at 500 billion barrels."
This is, at best, a distortion; at worst, an outright lie.
Of course, my favorite part of the article was the following:
I posted a note yesterday about what I think most Peak Oilers expect to continue to see--an increase in delusional thinking paralleling the increase in oil prices, and this article is a prime example.
Of course ExxonMobil and Saudi Aramco are seeing some blowback from from their near infinite reserve assertions, with respective calls for a windfall profits tax and discussions of seizing the Saudi oil fields.
Unfortunately, ExxonMobil, Saudi Aramco and CERA have provided plenty of fodder for the conspiracy theorists, while they have at the same time, in effect, encouraged Americans--at the worst possible time- to maintain their auto centric suburban way of life. So, in many cases Americans continue to go into debt in order to hang on to the remnants of the "American Dream," which is quickly becoming a living nightmare.
Legions of FWO's--Formerly Well Off's--are going to be only too willing to believe in conspiracy theories, i.e., the oil is out there, but "they" are holding it back from us.
I saw this great quote in yesterdays' DB along the lines that if you want to live the American dream, you'll have to be asleep.
The end of cheap energy is the great challenge of our era. Americans will have to change a way of thinking, and indeed a way of life, that has been over 200 years in the making. It will certainly bring out the worst in some, but in others it will bring out the best.
Daniel Yankelovich breaks down the obstacles we confront into three categories:
1) Cognitive obstacles are the difficulties associated with perceiving, thinking, judging, connecting, sorting out, and absorbing information.
2) Emotional obstacles involve coping with a wide swathe of feelings and the defenses associated with them: hope, fear, anxiety, idealization, anger, denial, avoidance, resignation, bitterness, self-aggrandizement, self-esteem, and so forth.
3) The moral obstacles involve conflicts between personal desires and commitment to others. They engage the troubled question of when and how much to sacrifice.
He goes on to explain that "when people encounter demands to change their views of the world, they will sometimes go to great lengths to hold onto their own outlooks even if in the process they distort reality. It requires congnitive, moral and emotional strength for those with an idological bent of mind to resolve innter conflicts that threaten their ideology. To preserve it they are tempted either to brush askide all incompatabilities or force them to fit into their ideological preconceptions."
Even if true, so what. Move on. It's their oil. Or did we have violence in mind.
In 1973, Harper's Magazine ran an article by an anonymous government official detailing how easily the US could invade the Eastern Province using its existing forces, "for the benefit of mankind". It came to be understood that the author of the article was no other than Henry Kissinger himself, delivering a veiled threat to his Saudi drinking buddies.
But then saying that Henry Kissinger had violence in mind is as redundant as saying that Henry Kissinger had power in mind or sex in mind. Problem is, the current gang is worse, on at least two of those topics.
DownSouth,
I wanted to ask you how you separated out the Barnett Shale gas production from all of Texas on the TRC web site? Did you do it by geographical region? Meaning, you know where the gas plays are and select only those counties?
It would be really helpful to be able to separate conventional gas from non-conventional and if you have figured out how to do it, I would really like to learn how you did it.
Here's the procedeure:
1) Go here:
http://webapps.rrc.state.tx.us/PDQ/home.do;jsessionid=CLGUte61dXzWjmk8kEbB7MT4CRMO48RDUC4VRg9QKk2Pe4ivmQbs!622569757
2) Right-click on "General Production Query"
3) Right-click on "Search for Field"
4) Right-click on "Containing these characters" and in the box type "Barnett Shale." Right-click on "Search."
5) Right-click on "65280200 09 Newark East (Barnett Shale) and then right-click on "submit"
6) Right-click on "Field" and then right-click on "Submit"
7) Enter desired dates and then right-click on "Submit"
8) Right-click on "Newark East (Barnett Shale) to see monthly breakdown
P.S.
The Arkansas Oil and Gas Commission also has production posted on line, which you can access by going here....
http://www.aogc.state.ar.us/
So if you wanted to take a look at, for instance, Fayetteville Shale production you could research it there on line.
Other states may also have production online, but these are the only two I have used.
Thank you!
Did the lack of future oil stop some road building?
http://www.house.gov/paul/tst/tst2008/tst062308.htm
School Bus Companies Running Dry From Lack Of Funds.
http://www.koat.com/news/16691701/detail.html
Doesn't look too bad yet but I am sure this kind of thing is bound to get worse in the coming months.
snip...The public education department reimburses school bus companies $3.11 per gallon of diesel. The actual cost in Albuquerque for wholesale gas is about $4.35 leaving a $1.24 per gallon shortfall...snip
This is an example of how price signals don't always help conservation. When the bus company defaults on its contract, the parents will have to drive the kids to school, if they can even afford to. Net increase in consumption. Yet if you go to the voters to raise more money for the buses, they will scream because most of them do not have kids riding the bus and just don't care.
It's not just how you price the resource, it's how the burden of the cost is shared.
Couldn't the school bus be managed by the existing system [I'm not in the US, so I don't know the details] but fuel paid for by parents as a hire service? Baby farmers should pay for their liabilites - in my not so humble opinion.
When I was a kid I walked or biked to school, K-12. All the kids living in town walked or biked, except the HS upperclassmen lucky enough to get a car. Only the country kids rode a school bus.
I lived to tell about it, I suspect most of the current generation of kids could too.
Old time school houses were close to the children. The kids walked, biked, or caught a ride in the back of a passing truck. Rather than park the buses, school systems should make the most of the budget they have. Arrange for pickup points around the district. If needed, use a volunteer group of parents to keep an eye on the kids at the pickup points in the mornings. The buses can still take kids to school, but fuel will be saved by the buses not having to drive to each house for each child. After all, we don't expect standard public transit buses to pick individual riders up at their doorsteps.
Yep this is ABQ I am in Rio Rancho just outside. Maybe this is a good ting.. Kids need exercise and parents need to stop being so damn paranoid :)
One can hope anyway.. I for one am tired of the paranoia.. Its almost staggering to me that a few short years ago when I was in school that people were not worried about this kinda thing like they are today.. Whatever happened to dont talk to strangers, run the other way etc etc.. Anyway WALK to school.. Or ride a bike like I did :) Besides I got home faster anyway without harassment on bus.
You know, KSA can say they will hike production 3 million b/d more, but until they do it and I see what the balance sheet for the world is after internal consumption, it means squat.
Is the world waking up to this PR fool's game? One can only hope....
'Iran has put 30 million barrels into floating storage in the Persian Gulf because it can find no buyers'...
Dragonfly, the way I read the announcements is that SA is going to hike production capacity, not production/.
RE: The Saudi's Oily Con Game...
First I would like to ask a question: Is TOD moving to the right? The last couple of days has seen smears of Obama and applause for McCain and now this rediculous article outlinging a neo-con plan to invade SA. Getting a bit beyond the pale boys and girls. Is AIPAC your new sponser?
...snip...'It is worthwhile remembering Iraq was invaded when gasoline stood at only $2 a gallon.
It seems the president did try to explain this to the King. During his last visit, Bush — whose major expertise is as an oilman– told ABC News he explained to his majesty that “when consumers have less purchasing power because of high prices of gasoline, in other words when it affects their families, it could cause this economy to slow down.”
A follow-up can be delivered in inimitable Bush style like: “Hey King, time to fork it out. You’ve got it. We need it. What do you not understand?”...snip...
...snip...'This seems an insane scenario now, but maybe not by summer’s end. As Mr. and Mrs. Smith drive into gas stations to be greeted by $5 or $6 a gallon signs and hundreds of homes prepare next winter for a doubling of heating costs, the Saudis should not sleep too soundly.
No war-mongering intended, but we invaded Grenada in 1983 and Iraq in 2003 for a lot less. Holding that Saudi Eastern Province pumping station under “Western stewardship” for, say, a 99-year lease may sound like fair compensation...'...snip...
Yeah, 'no war-mongering intended'...bs!
and then we have a differing view...
...snip...'During the past few decades, major oil companies have consistently opposed US policies and military threats against countries like Iran, Iraq, and Libya. They have, indeed, time and again, lobbied US foreign policy makers for the establishment of peaceful relations and diplomatic rapprochement with those countries. The Iran-Libya Sanction Act of 1996 (ILSA) is a strong testament to the fact that oil companies nowadays view wars, economic sanctions, and international political tensions as harmful to their long-term business interests and, accordingly, strive for peace, not war, in international relations.
On March 15, 1995, president Bill Clinton issued Executive Order 12957, which banned all US contributions to the development of Iran's petroleum resources, a crushing blow to the oil industry, especially to the Conoco oil company that had just signed a $1 billion contract to develop fields in Iran. The deal marked a strong indication that Iran was willing to improve its relationship with the United States, only to have Clinton effectively nullify it. Two months later, sighting "an extraordinary threat to the national security, foreign policy and economy of the US," Clinton issued another order, 1259, that expanded the sanctions to become a total trade and investment embargo against Iran. Then a year later came ILSA, which extended the sanctions imposed on Iran to Libya as well.
It is no secret that the major force behind the Iran-Libya Sanction Act was the America Israel Public Affairs Committee (AIPAC), the main Zionist lobby in Washington. The success of AIPAC in passing ILSA through both the Congress and the White House over the opposition of the major US oil companies is testament to the fact that, in the context of US policy in the Middle East, even the influence of the oil industry pales vis-a-vis the influence of the Zionist lobby.'...snip...
...snip...'The fact that the skyrocketing oil prices of late have been accompanied by a surplus in global oil markets was also brought to the attention of President George W Bush by Saudi officials when he asked them during a recent trip to the kingdom to increase production in order to stem the rising prices. Saudi officials reminded the president that "there is plenty of oil on the market. IRAN HAS PUT SOME 30 MILLION BARRELS OF OIL THAT IT CAN'T SELL INTO FLOATING STORAGE. 'If we produced more oil, it wouldn't findbuyers,' says the Saudi source. 'It wouldn't affect the price at all.'"
I have four hopes for the next US President...I posted them some time ago. One of them is that the next pres realizes that the foreign policy interests of the US and those of the Zionists and Neo-Cons are not necessarily the same. Of course we will not get a president that is free of AIPAC influence and the results will be devastating for the US and the people of Israel.
http://www.atimes.com/atimes/Global_Economy/JF25Dj06.html
I suspect that Leanan will (accurately) say that posting a link and an excerpt does not constitute an endorsement of the point of view of the writer. See my comment up the thread on this article.
Yup. The article is by the former energy editor of the Wall St. Journal. He's not some random nutcase.
emphasis on random
I think this adequately explains why KSA is holding meetings and declaring that it can and will produce more.
As the leaders of a small and restive country, with the heavily armed and dangerous forces of the greatest military force in the world in immediate proximity they have little choice but to promise everything to everyone, from conserving oil for future generations to their people to rapidly expanding production to the Americans.
It is now clear that the ruling clique in America is willing to contemplate any aggression, at any time, although sometimes Israel may undertake the action directly.
Both McCain and Obama have already bought into this, with both vying to be the most committed to supporting Israel, in a new version of the old saying:
'Their country, right or wrong'
As an added joy it is now clear that Egypt is likely to destabilise rapidly, with increasing food and fertiliser costs - it is one of the highest users:
http://wolf.readinglitho.co.uk/mainpages/countries.html
This link gives an estimate of the relative vulnerabilities of different countries to peak oil, with Bangladesh unsurprisingly topping the list, and Egypt close behind.
Thanks for posting the link, Dave. Very interesting thought experiment. The one thing that jumps to mind that is missing would be some measure of "interdependence." But this is definitely a start. Reminds me of my days studying W.O.M.P.
As opposed to a nonrandom nutcase.
I think that would make him a "predictable" nutcase.
A good article. The only objection is it shows the idea that the Iraq campaign was instigated by big oil for the nonsense it is. We need more grown up aricles like it.
Re: Skeptics doubt Saudi Arabia can boost oil supply
Leanan just posted this column, by Jim Landers, with the Dallas Morning News. I have sent Jim "a few" emails over the years.
WT, let me know when you get back from the KSA. I mean, after you sit down with the king and all his staff and get your in depth briefing on all the fields in the entire kingdom, what the reserves are, what plans for the future flow rates are, etc. I really would like to hear what the Saudis have to say. I am not especially interested in what some Dallas newspaper man has to say.
Why does everybody think they are an expert on KSA oil reserves? Seems to me that one of the most closely held secrets in the world gets more than it's share of speculation. It is just that, speculation. Fun, profitable, or just making oneself a self proclaimed expert on a subject that even the K of SA and his staff might not know completely?
River: Who is the expert? Joe Blow, "managing" 44 trillion dollars at XYZ Bank? WT has built up a hell of a lot of credibility-I have no idea why you cannot accept that fact.
Actually, I think that I have taken great pains to say that I am not an expert on Saudi oil fields (or Russian oil fields for that matter). And that is why I prefer to rely on the relatively objective logistic (HL) method, which allows us to derive some plausible URR estimates, based on the two numbers that we (as outsiders) have the most confidence in, annual production and cumulative to date. We can say that production from Texas (total plot, pre-peak is noisy), the Lower 48, the North Sea, Mexico and Russia are broadly consistent with the HL models. So why should we expect Saudi Arabia to be different?
Following is my last email to the Dallas Morning News folks, including Jim (I think that this arrived after his column was finished, but it is consistent with prior missives):
I'd certainly hope and pray that you are mistaken, west texas, and that the Saudi's are telling the truth, as that seems to be the only hope of a relatively gentle descent into post peak, and the only way that sufficient time to adapt may be available.
Unfortunately the detailed and informed analysis by people like yourself an Kebab leave me little expectation that that is the case.
It is perhaps also worth pointing our that even if the KSA figures are correct, and they can indeed increase production to 12.5million barrels/day, or even 15million, this would still be insufficient to compensate for long for declines elsewhere, or to do much to reduce oil prices.
Perhaps it might be worthwhile showing a couple of graphs which simply accept KSA's projected production figures, and then show the result of ELM and the new trend for exports in world totals.
We would gain perhaps two years delay on a similar price point, would be my guess.
Even if they do everything they claim they won't overcome the depletion from Venezuela and Mexico. Let along the depletion from the rest of the world.
Too little, too late.
River,
WestTexas is a geologist with access to records of KSA's geology before the country was nationalized. Using that geology, he can make high and low end projections on the total reserves the KSA might still have after subtracting their production over the years. I am not a geologist, so I cannot say whether his interpretation of the geology matches up with my interpretation, but he has sourced his information well from what I can tell and others here who are much more in tune with the geology he's looking at tend to agree with him. With that sort of vetting, I see no reason to say that his numbers are speculative in the same way that talking heads on TV's numbers are speculative. Of course his numbers have a greater range of error than internal numbers Saudi Aramco uses, but they're a hell of alot closer than what the non-petroleum bloggers and journalists guess. And I have full faith that if he finds more information on the subject, he's likely to update us at TOD. So before you go attacking him River, think what work you have done to find the truth, because I guarantee you WT is alot farther down that road than you are.
I was not 'attacking' WT. I was pointing out that no one, including WT, the KSA, et al, know exactly or even ball park what the reserves of KSA are. When the KSA runs out of oil we will know by looking in the rear view mirror how much oil they had. Or, when the KSA goes into decline to the point that it cannot provide for it's own peoples then we will know for sure that the KSA is in decline. The KSA has already stated that it intends to leave oil for future generations of it's peoples. Of course, KSA is an oil well owner and therefore a liar.
Why is it that asking a question or making a statement about the questionable knowledge of a news guy is an 'attack'. I question all MSM sources, if I didn't I would be a nitwit.
What can some Dallas newspaper man tell me about KSA reserves?
I have read with great interest WT's interpretations of the HL curves, etc. It is a fine body of work but there is no way of knowing if it is right, almost right, or way off. I believe that WTs work on the ELM is his finest accomplishment on TOD. Personally, I think WT is probably pretty close but we will not know definitely untill a decline begins in the KSA and it is unquestionably the real thing. I believe we are still on a worldwide oil plateau but that is my opinion.
BTW, would you like to take a shot at explaining why Iran has 30,000,000 barrels of oil in tankers floating in the Persian Gulf? ...At a time when oil prices have increased 697% since 2000? Why does no one buy this crude? Also, why do the oil producers claim that the refineries are not calling for more oil? Are the producers all liars?
"BTW, would you like to take a shot at explaining why Iran has 30,000,000 barrels of oil in tankers floating in the Persian Gulf?"
You keep asking this question, different posters attempt to answer you - you ignore their answers and you ask the EXACT SAME QUESTION AGAIN!
This has been going on for days and it should stop! Iran has refineries down for scheduled work - it has nowhere to put the (heavy sour) oil in the meantime. There is not enough heavy sour refinery capability in the world to take delivery of all this excess oil - so they are (at great expense!) storing the excess oil in tankers until there is refining capability available.
so, there is the SAME explanation you have gotten for days on your question - now, you can disagree (and if you want to be a worthwhile contributor to this site) and provide evidence for why you disagree....
or you can ignore the explanation yet again and loudly ask the same question - over and over again
other than some sort of anguished cry of conspiracy, what are you attempting to accomplish with your shrill repeats of the question and your subsequent ignoring of a (reasonable) explanation?
I think that River can read. For two years, this site has been the home of OMG just wait until TSHTF and we enter TEOTWAWKI. Well, why as we enter said place, is everyone questioning speculators, oil states, oil companies? We are getting what was predicted. And, getting wealthy at the same time if we believed it at the time it was forecast. Some posters are acting as if this was unexpected and/or painful for them - WHY? Did they not comprehend what they have been reading here? A talent like Stuart pretty much nailed it. Also, many thanks to Westexas, Moe Gamble, and the rest of TOD.
Is River short oil? I mean, what else is this insane fettish about heavy/sour oil on tankers by Iran?
River has a point ..
Assuming that the Iranians are aware of the limited
market for their sour crude .. ie they have regular
customers that can process it and would presumably be
aware of their refinery maintenance schedules ...
Then it begs the question why was this oil produced
in the first place ?? Would have been cheaper to leave it in the ground than to pump so much that they had to charter
a fleet of VLCCs to store it all ....
Any thoughts or are the Iranians that incompetent ??
Triff ..
Triffin - The oil costs very little to produce. It is probably more expensive to shut it in. Even though there is no immediate demand, the cost of the floating storage has probably been offset by the increase in price. It does seem counter-intuitive to say that an unwanted product is rising in price, but since in is sold at a discount to light sweet crude, that very well could be the case.
I doubt the Iranians are incompetent - it makes no sense to buy up tankers to store crude - it costs a lot of money, better to leave it in the ground for free - tanker rates have doubled in two months or so - have net exports suddenly increased? - I doubt it.
What have the Iranians achieved by spending their money? ... (maybe it isn't their money?) ... A large number of VLCC tankers in dock, going nowhere - at, say 20 knots cruising speed, this represents a pipeline several thousand miles long able to supply of the order of millions of barrels per day?
It isn't the storage of useless oil (that may or may not be in the VLCCs) that is the achievement - it is the removal of a significant part of the world's daily crude supply for the complete period of time they hire the tankers, without firing a shot or exploding a bomb.
Remove a chunk of supply and the price of all the other 'net exports' rises - now, if only I had a futures contract with higher prices ... that's what I call speculation ... or is that too cunning a plan?
Tankers are hard to replace, but you can shrink or expand the supply of 'virtual tankers' just by sailing them faster or slower. A 5% increase in average tanker speed is almost equivalent to a 5% increase in the number of tankers.
Actually, the way I read it, Jim Landers is simply asking the Saudis to put up or shut up:
We had some good threads about why they are using the tankers. I am not buying the refinery excuse. It simply doesn't make sense to store the oil. We're having to get more oil from further away now, instead of Mexico and Venezuela. This means there is additional lag time due to shipping. It is another factor driving up costs. By buying tanker capacity, it leaves less to go around and drives prices up further. I guess the counterpoint is that it would raise shipping costs for them as well, but they are the supplier of the spice that the world wants. It's everybody else, but especially the US who will eat the cost.
I would not expect talking to anybody in KSA to be worth the O2 consumed. In business one never assumes the other party is telling the truth. One judges by their actions. To me the most telling thing is that they have not made a major increase in pumping (in fact they have not increased pumping at all just promised to in the future).
In the past when the US worked on things to decrease out dependence whether it was coal to oil, oil shale, more efficient cars, solar power or anything else KSA would flood the market drive down the price and bankrupt any competing technology. The fact that they have not this time is all I need to know to be certain that their "reserve capacity" is a lie and they are already pumping as fast as they can.
While GTs logic about KSA not trying to freeze out alternatives, via flooding the market certainly has a lot of merit, it doesn't answer the question of why they haven't done it. A few possibilities other than terminal decline come to mind (not saying any of these are the truth, only that they should be considered):
(1) The supply/demand crunch got them by surprise, they hadn't made the needed long term investments in capability in time.
(2) They may not be at peak, but are keenly aware that their reserves are finite and depleting, and have changed their calculus about optimum production strategy. They think the alternatives won't seriously affect the future price, at least not enough to be worth the considerable expense (largely selling oil cheaply for a time) that would be needed to squash them.
(3) They did anticipate the supply/demand crunch, but not the difficulty getting their current projects on line.
River, attacking WT does your case no benefit. I rate WT as one of the finest posters with only Alanfrombigeasy and oilman Bob (RIP) higher in my opinion.
As you had a NEGATIVE 10 rating I think my esteem for WT and my opinion of your ad hominum attacks is shared by others. I just made it negative 11 BTW.
Bottom line, there are people on this site who have opinions I generally disagree with, but I respect their rights to their views as they generally are polite. Learn from them.
You may be mistaken in your assumption that your comment will be read. The way today's drumbeat started out suggests the opposite is more likely.
First I would like to ask a question: Is TOD moving to the right?
'moving to the right'? Asking this is as productive as whining about 'them thar liburals' - that is to say not at all.
Do keep in mind that the US of a would be considered 'right of center' VS other nations, so to say 'moving to the right' smacks of 'just a little bit pregnant.'
Wrong Eric...My question was logical based on Leanan's top posts the last couple of days. Obama bad. McCain good. Invade KSA...from 'Pajamas Media'... 'Youssef M. Ibrahim, a freelance writer and risk consultant, is a former New York Times Mideast correspondent and Energy Editor of the Wall Street Journal.' I wonder what part of the Mid East Ibrahim was stationed in? Or, perhaps he got his columns directly from Tel Aviv while occupying an office in the Times NYC?
I don't care if this site is moving to the right, I am simply a curious observer and asked a logical question.
The DrumBeat is not really representative of the whole site. It's more representative of the media in general, mostly US-based, but not entirely.
There's no original work here, after all. I only post links to other people's work. So if you detect a shift to the right, it's probably because the media coverage of energy and politics has shifted to the right. (A few days is a very small sample size, however.)
I think there may be an actual shift right. One, Obama was guaranteed to get more critical coverage once he won the primary. Two, the American people are shifting right, at least on some issues, as prices rise. Suddenly, drilling ANWR sounds like a great idea. And the "surge" in Iraq seems to be working, so there's less concern over the war.
There will probably be a swing back in a few days or weeks. I don't expect the surge to still be working come November.
All candidates play to their base during the primaries, then move towards the "center" for the general election. Nothing unusual here. They are politicians trying to pander to low-information voters. It will get worse as the election approaches.
Of course, America does not actually have a "center". We have the Capitalist Party, and the Other Capitalist Party. And pundits that insist the "center" is half-way in between them.
Ability to adapt will be the key to survival, both for individuals and societies. America has been the Oak for the last century; we have forgotten how to be the Willow. The storm is coming.
I like to call them the Mean Empire Party and the Nice Empire Party. Everyone overseas breaks out in cheers when they see the plantation is going to be run by a Kennedy, Carter, or Clinton because they won't get whipped so hard or so often.
There is a clear choice for the third world.
Obama intends to starve them to death, by increasing production of ethanol and driving up food prices, and will only kill them by military means if Israel tells him to, as he finds it easier to pledge unswerving allegiance to Israel than the US. which he has been much more coy about his commitment to, after apparently having spent many years in a congregation with his ears closed, as he was unaware of the attitudes which were obviously common currency there.
McCain does not intend being so subtle.
Neither has any intention of prosecuting the clearly criminal activities of members of the Bush administration and its agents.
There is a clear choice for the third world. Obama intends to starve them to death,
Errr, at one time the O man was pitching something about a tax on Americans then sending money to the 3rd world.
Do remember that the best laid plans of the person who gets to play leader are for naught if one can't get the congress to play along.
And from what I can see, Congress and the legal people who own them have no reason to change from the present starve'em plan.
For clarity: I do not think it will make a great deal of difference which of the candidates win the presidential election unless the winner can free himself from the grasp of AIPAC. I do not see that happening. If you read my post above you will see that AIPAC has more clout than the US IOCs on matters of foreign relations, especially in the ME.
If I were head of the RNC and had some influence (doubtful) over Bush/Cheney, and through them the Fed, SEC, CFTC, etc, I would do whatever necessary to lower prices at the pump to the $2.00-2.50 range prior to the election. Near election time the public is going to be riveted to ever worsening economic conditions that will effect everyone and every business in the country. Imo, Iraq will be a distant second to the economy come election time.
I believe that it is a strong possibility that the 'oil deal' with Iraq is signed by July. That will allow the republicans to drop prices at the pump with a stealth draw down of stock piled oil while they claim that it is the 'new oil deal with Iraq' that caused the lower pump prices.
Of course, this is just how I would go about getting McCain elected...and, even if the republicans managed to pull off lower pump prices McCain could still lose. Lots of black swans out there.
Well I don't disagree that there is nothing too devious for the Republicans to try to do to win an election but manipulating pump prices is low on my list of concerns. First I don't believe there is anywhere in the world that much oil could be hidden and second pumping a bunch of oil on the market would just be a gift to China which would use it to build up it's own SPR.
I think the Rove game plan is to start the war with Iran (Or have Israel start it for us) and then steal enough votes to put McBush in.
Maybe this isn't directly related to the above, but in the past few days Obama has come under a lot of fierce criticism from his own supporters for selling out on the FISA telecom immunity bill which just passed on Friday. The blogs on Obama's own web site were filled with harsh comments from disillusioned Democrats - then those comments all got magically deleted by moderators. Alternet.org and Huffingpost.com have been giving the story good coverage, but the MSM has been silent.
Hard to say how that might affect the election. Obama's now-angry supporters aren't likely to vote for McCain, since McCain's position is exactly the same as Obama's on this issue. Maybe they'll go Libertarian, or Green Party - who knows?
We certainly live in interesting times.
Democrats Have Legalized Bush's Crimes
Obama Supports FISA Legislation, Angering Left
One, Obama was guaranteed to get more critical coverage once he won the primary.
The other thing is, he is a fervent supporter of corn ethanol. He also thinks a solution to our problems is a windfall profits tax. (Or he is pandering on that issue). Both of those positions ensure that he is going to get some negative comments on this site.
Wouldn't a windfall profits tax reduce current investment in local oil, thereby stealthily preserving it for future generations? And raise prices by reducing supply, thereby encouraging conservation?
It's a bit of a sham, but I can see the benefits.
And raise prices by reducing supply, thereby encouraging conservation?
Yet his stated intent is to reduce prices, hence his position doesn't make any sense.
We're talking politicians here. Don't muddy the waters by bringing "sense" into it.
Obama would not be where he is now if he were not a fervent supporter of ethanol. It was critical to his success in the Iowa caucuses.
Those who oppose ethanol have to put up or shut up. What is the plan? Conservation, right.
No politician dares mention it except in passing. The details of conservation and its implications do not win elections.
If McCain continues his anti ethanol attitude he is doomed.
Despite all the anti ethanol rhetoric on the internet, ethanol is popular in the real world. Why? Revival of the rural economy mainly.
The local farmers coop is installing E85 pumps at its fuel outlet starting today. Now I will have E85 closer than ever.
People I talk to when I fill up are excited about it. Many have flex fuel vehicles like myself and with E85 priced appropriately relative to E10 for a change, prospects for success look good.
What is the plan?
Non-Oil Transportation
1) Electrify and expand our railroads
2) Build Urban Rail at a breakneck pace, out-doing the French
3) Promote MUCH more bicycling, aim for 10% of Urban trips.
4) Create and move to walkable neighborhoods near Urban Rail, TOD
Best Hopes for Effective Solutions,
Alan
Yes, but there has to be WORK there, Alan.
Oh, wait... no there doesn't...
there just has to be food and shelter.
Hmmm....
Living differently...?
Cheers
Robert,
I was, of course, upset to hear that Obama was proposing a WPT and researched his proposal. He/his staff haven't filled it out yet, but the best I can tell is that it is 20% of the sales price above $80 / Barrel. If they can keep the paperwork down, that will be a sufficient margin for anyone I know of today to make a reasonable profit. In fact, at today's prices, unless you have an unreasonable amount of overhead in the production end of the business, you should certainly be making way over a reasonable profit even after the 20% tax. My only complaint will be that the paperwork will accelerate the accounting burden on small producers, unless it is crafted in such a way as will avoid that burden. Under the last WPT, the burden came where the law allowed recovery of the WPT if it resulted in a loss. How any producer can lose $'s at todays prices is beyond me. Now, if you are an integrated company and have a bunch of folks in the sales and exchange area, and a bunch of traders intent on hedging, and they screw things up, yeah, you can lose money. Drill is also another proposition altogether. Day rates and all services are out of sight, so just produce what you have and keep it simple.
To those who want a link, I was a CPA during the last WPT cycle, and that is in part where I got the $'s to get into production. After that, I learned how to tail rods.
Obama's national co-chair, former Sen. Tom Daschle was interviewed on the Ed Schultz radio show yesterday. I didn't hear the whole thing, but Daschle was defending his own links to the ethanol energy. He started with a somewhat stock response ... we need to look at all alternatives, etc., but then said since "we are approaching Peak Oil".
I was shocked that someone of his stature, and who obviously has Obama's ear, would utter the phrase Peak Oil. (Of course, I'll probably end up disappointed when it turns out "approaching Peak Oil" means to him in 2030.)
We (the commenter community) have noticed a couple of things in the last few days. (1) Obama, for all that we like about him, has close ties to corn ethanol, and did somewhat pander to coal interests during the primaries. (2) While McCain's speech yesterday sounded like incoherent half-baked strategy, at least in spirit it was mostly about trying to move in the right direction. Most likely things will turn back to a more normal direction soon.
This by way of Atrios: In response to the question "What do you see as the gravest long-term threat to the U.S. economy?",
Can't have no stinkin' penalties on fossil fuel use.
Obama backs Ethanol. Are you surprised? Ever been to Illinois? They alone produce more corn that just about every country in the world. It's not pandering when that's what you grew up in.
Corn is the United States' largest crop, in terms of both volume and value. The states of Iowa, Illinois, Nebraska, and Minnesota account for more than 50 percent of U.S. corn production. Other major corn-producing states include Indiana, Wisconsin, South Dakota, Michigan, Missouri, Kansas, Ohio and Kentucky.
The United States grew 42 percent of the world's corn in during fiscal year 2006, producing 282.3 million metric tons (11.1 billion bushels). Other major corn producing countries in 2006 included:
China -139.4 million metric tons (5.5 billion bushels)
Brazil - 41.7 million metric tons (1.64 billion bushels)
European Union - 48.3 million metric tons (1.9 billion bushels)
Mexico - 19.5 million metric tons (767 million bushels)
Argentina - 15.8 million metric tons (622 million bushels)
India - 15 million metric tons (590.5 million bushels)
Reference
http://www.grains.org/page.ww?section=Barley%2C+Corn+%26+Sorghum&name=Corn
Two days does not make much of a trend, perhaps if the data indicating a more conservative bent were to last several weeks maybe, but not two days.
I always thought the oil drum was on the logical end of a logical--fantastical spectrum. This is one place I go to avoid the stupidity of most political thought.
Hey PG--Remember what I said to you in my email's intro to the article I submitted about the political talk heating up as we move toward November? Well, it has, and NeverLNG has labeled most of it correctly.
Is it stupid because you disagree or is it something about the formatting of the opinions?
I think it is important we don't just preach to the converted here. I talk to family back in Alaska by phone and the ultimate answer is military, if convservation and drilling and technlogical progress does not work. This is how I presume Americans think "on average". Being so long in Europe I think I have to keep in mind that the largest military appartatus on earth is in the hands of people with little experience in losing many millions and having their country totally destroyed by bombs and invasions but who think their current lifestyle is to a certain extent a right. At any rate the confluence of US suburban middle class interests and geographic energy availability in the middle East and the political influence of Aipac (and strong positive relgious sentiment towards Israel- a land of imigrants settlers fleeing for religious persecution from Europe- similar to manifest destiny concept in Middle America) would suggest "Scramble" for reserves to neutralize "extremist" Arab/Persian governments and annex the Oil producing regions there and of course in passing, in West africa and Venezuela or wherever else oil can be found available.
I presume the US military is already burnt out and that this policy will result in a draft and very high oil prices, making isolationsim againpopular.
If Israel can be saved after PO limits availabiltiy of oil to their massive fleet of F16s is doubtful. The supply line from USA to Israel is just too long. I am trying to be realistic here and not ideological but practical. Spunk on the part of Israel up to now is very admirable but let's be realistic about long-term prospects without a technological edge over numerous Arab neighbours with a grudge.
I was also struck by this article, but I agree with posting it for information purposes. I don't think anyone with their right mind endorses occupying KSA here, it is just good to know how much ground the pro-war wackos have. Not much as far as I can see.
I also remember reading somewhere that KSA has planted radiological devices in their fields, meant to render them useless in case they become a target of a resource grab. Has anyone else read something about it?
I don't think anyone with their right mind endorses occupying KSA here
No, there have been a couple of posters over time who've advocated it.
At the point where the people endorsing such are willing to be subjected to a 90% tax and a draft...then I will worry about an occupation.
KSA has planted radiological devices in their fields,
Yes, this claim has been made. *I* have no idea of its truthieness, but it does sound like as valid a tatical move as invading KSA and occupying it.
Claims like this:
http://www.tbrnews.org/Archives/a2852.htm
scares me far more than occupying KSA.
Occupiers can leave.
River, I'm with you on most of your points. I'm an economic conservative, but liberal in many ways. There are a lot of disturbing posts yet they add to the discussion. As long as personal attacks don't get out of control I think it's fine.
AIPAC is more radical than many in Israel are, but all politicians bow to them. They are extremely powerful in certain swing states (especially Florida) and have great influence over a large voting bloc.
The thing that concerns me most is that we allowed Iraq to happen. Even if public opinion has swayed because of the huge human and capital costs, the majority allowed it to take place. This doesn't bode well for what is coming. The republic is sick and soon we might see the blame game escalate. My fear is that we might allow years of bad geopolitical decisions to escalate into something we can't handle. Whether it's too late already, I don't know. All I know is that whomever wins the Whitehouse really doesn't matter. The jihad against the USA will not end as long as we are interfering where we don't belong. That was the point that people didn't understand before we illegally invaded Iraq and committed xenophobic genocide. Winning is a matter of opinion. If you've subdued an enemy, but created a generational war in the process.. what has been won? Too many people here (USA) are shortsighted and think in terms of simply winning/losing. Can you win against a stateless enemy? I see this easily having ramifications for 100's of years.
As for Iran, I'm not going to argue that we should coddle them. However, our policies don't make sense. I can easily see us being manipulated into war with them. Right now it seems like consensus is that it can't happen. I don't agree with that. It can happen. Just like invading the KSA can happen. The CIA got burned a few years back after they were found spying on the KSA, though the mainstream media didn't pick up on it and I don't think many people are aware of it. I sometimes wonder how much of what we're facing is blowback from that scandal. We would have been justified invading them after 911 (more than Iraq), yet taking over the homeland of Mecca and Medina just wasn't realistic even then. Any chance to attempt to claim justifiability has passed, so Iran remains the more likely target. The scenarios for doing so seem a bit out there, but history repeats itself (think Gulf of Tonkin).
I hope comments like that are why he is a former employee of both the Times and the Journal. Would we not have a lot of luck trying to produce from those fields under occupation? Have we learned nothing from Iraq?
I'm sure we'll be greeted as liberators...
Isn't this what a gambler on a losing streak does? Double down? Iraq didn't pay for itself, but with all that oil in KSA we would be certain to show a profit! It's a sure thing!
What, Danzig doesn't have defensible boundaries? Then we must invade the rest of Poland to protect Danzig! What, Poland doesn't have defensible boundaries? We must invade the Baltic Republics to protect Poland! What, the Baltic Republics don't have defensible boundaries?
You know what's next.
I especially like 'One sure way of doing this (raising production) is by invading and occupying SA's Easter Province, the mother of all oil reserves'.
Production in Iraq is up so much since the invasion that now we should do the same in the KSA? This guy Ibrahim is not a nut case, he is a Zionist and or neo-con spreading very bad ideas.
Remember 'Real Men Go To Teheran'? Perhaps the loonies have given up on that idea and now intend to push for an attack on the KSA? They should be fitted for little white coats.
Production in Iraq is up so much since the invasion
Which one? Iraqi oil production peaked in 1979, with exports reaching around 3.5mn b/d. So 'up' all depends if you are at the top or looking up from the bottom.
http://www.mees.com/postedarticles/oped/v50n48-5OD01.htm
This was sarcasm. There is a certain condition, I believe, which makes it difficult to pick up on sarcasm. I cannot remember what it is called but I once had a person who worked for me who stated that he had been diagnosed with same. I am not criticizing you; I am just stating a fact which you may not be aware of. Admittedly, sarcasm is sometimes difficult to detect when only the written word is available.
This was sarcasm
Depending on where one picks a date WRT the play date in the giant sandbox part II, there has been an increase in production VS other dates and I have observed/heard electronic reproductions of elected officials at briefings make the claim that production was up.
Hence the post/link.
sarcasm is sometimes difficult to detect when only the written word is available.
Yes, well, not all of us can write as well as Mark Twain.
My bad.
Ibrahim is actually of Islamic descent I believe. However he's a former senior research fellow on the Council on Foreign Relations...
To my Arab brothers: The War with Israel Is Over — and they won. Now let's finally move forward
Wonder if he's about to write a "surrender" letter to Saudi Arabia?
'Violence is Resourcelessness'
As the realization grows of the energy elephant in the room, so will the fear and anger - and with it the calls for 'Tough' solutions to the problem.
Whenever possible, I would encourage anyone who wants to stave off these 'options' to help remind people of whatever tools you know about that avoid that path, and to not be shy about contradicting these calls-to-arms, even if you know you'll get laughed at, berated and despised. (Albeit by frightened knuckleheads) It's their terror talking, and if you can, try not to let it infect your side of the argument. Life is High School. If you could do it again, how would you play it this time?
Stay Frosty.. wussy little Peaceniks!
Bob
If I could do High School again, knowing how futile my life and our lives would turn out, I would have opted for the Columbine solution - which I did consider back in the 1970s. Luckily, I'm stuck with an unknowable future contaminated by a glimmer of hope.
Gosh, that seems kind of grim. (I've never understood, BTW, why the suicidal (some of them, at least) seem so ready to take bystanders with them. Bad karma.)
Anyway, I figure we'll all be dead soon enough. In the mean time
I would have dated the pretty brunette in English class who stared back.
I would have gone out on the track team rather than ridicule those I wanted to emulate.
I would have ridden to school on a harley instead of a yamaha.
Funny that I can think endlessly of the things I would have done differently and never does the thought of killing everyone enter my mind.
Your post should be removed and your account deleted in light of your reference about killing others. That's completely unacceptable and should not be tolerated.
Some people like to bully people. Some people like to kill people who bully people. You don't like the way I dance, don't invite me to the party.
Then again, there is a difference between killing specific people and killing everybody. Columbine was about killing people at random. Not a good solution to a problem.
The only way to hope to have any real success of ocupying and producing the Saudi oil fields would be to "Jericho" all of Saudia Arabia - That is to eliminate every man, woman and child in the country. I would hope that neither our leaders, present and future, or the leaders of other nations would not get that desperate. But -----
If the world got desperate enough for oil, what are the chances that someone would "Jericho" Nigeria to put a permanent end to the problems that have shut in large amounts of the oil production there?
I think that the human animal has the capability to be a lot more malevolent than most would suspect.
"The only way to hope to have any real success of occupying and producing the Saudi oil fields.."
Jon, I know you're just tossing in a hypothetical, but it's based on a complete fantasy, and would have far too many complications to ever become a 'real success'. I hope you can see that. Either you'd get into a bunch of collateral wars with other powers trying to muscle in on your 'kill', or the EU would finally break from Washington and rally other forces together against US.. or it would trigger civil strife and war here at home.
'Pure and Simple?.. Nothing that's Pure is ever Simple, and nothing Simple is ever Pure.'
-Richard Dreyfus in 'Inserts'
Bob
In yesterday's hearing on oil speculation, one analyst stated that speculation was responsible for 50% of the oil price. All on that panel agreed that it was very significant, if not 50%. Most of the congresspersons seemed to agree that speculation was the major cause of our woes, even if we also need to consider the effects of supply and demand.
I was shocked that anyone who is supposedly an expert in the oil futures market could come up with this number. But these were experts in the trading arena and, frankly, even with all the talk about this on TOD, confused me.
Is it that easy?
The analysts were also convinced that there is little danger of new markets being set up to replace the U.S.and UK markets if margins were increased to 50%. Again, I am shocked.
If it's this easy, and the congresspersons agree, then it seems we should be seeing crackdowns in short order. Is there a downside to this?
I found the parallel universe disturbing. One analyst said that the number of oil molecules in the ground was a direct function of the price. More price, more molecules. I assume he was speaking loosely, but still the statement was jarring and contradicted everything posited on TOD.
One of the congresspersons brought up peak oil and Pickens belief that we have reached it. The analysts scoffed at the notion of peak oil and the congressperson retreated and said he must have misunderstood. Pickens must of just been talking about depletion from oil fields.
Oh,I almost forgot. There is plenty of oil out there and we can double domestic production according to one congressman. Just drill everywhere. So what's the problem?
Despite everything that has happened, there is no shortage of magical thinking in Washington. All the superb and brilliant analysts on TOD are apparently wasting their breath and their brain cells.
I disagree that it is a waste of breath and brain cells. Someone has to do the hard work of promoting truth. I always wonder what drives someone to that position -- but there seem to be truth-telling as well as lie-telling genes, and people seem to be as bound by their congenital mental set on that spectrum as they are in their gender identity.
No person in his position could possibly be so out of touch with reality. My guess is he's expecting a big jump in the price soon and reckoned that a congressional hearing is a good place to talk down the market to scare a few investors into selling so his firm could stock up before the jump.
If I were a congressperson I'd call him back to establish whether he was really that dumb. If he wasn't, I'd arraign him for abusing Congress. If he was, it might settle the argument about whether a lot of "clever" speculators are gaming the oil price. Not.
I think the illusion is that the 'voters vote for Hammers', so they make themselves into hammers, and run around looking for nails.
'Speculators' is a nail. You can pound away at it with great sound and fury in a High-Altitude bombing campaign.
'Offshore Drilling Restrictions' is a nail.
'WE USE TOO MUCH OIL' doesn't seem like a very good nail, cause you can't use a courtroom and remorseful bad guy to solve it. It means asking your people to work really hard and disrupt their comfort zones. That might scare retailers who sell unnecessary wares and addictive products like Cigarettes, Candy, Cable, Coke and Video Games.
I'd rather waste my brain cells here than in DC, honestly.. though I do put an effort at writing to my Reps as well. First they ignore you....
Bob
I was shocked that anyone who is supposedly an expert in the oil futures market could come up with this number.
Experts have different opinions, and if Congress was intent on showing that speculation is a major factor, then they would call a witness who is on the record as saying speculation is a major factor. So that's likely the reason.
The Senate Republicans walked out when Pickens started talking about Peak Oil. Just like little children sticking their fingers in their ears and shouting "I can't hear you."
The Democrats seemed to look as if they believed what he was saying but continue to act as if it is all due to speculators who need to be "extraordinarily rendered" to Guantanamo Bay wherever in the world they trade.
Economists (most, except for Herman Daley) and traders believe that any commodity that becomes scarce or too expensive, will magically be replaced by another...due to the ingenuity of man and the inexhaustible supply of stuff out there. They are operating on false assumptions. Thus, they reach false conclusions. (Eg., the number of molecules of oil in the ground directly relating to the price and magically increasing as the price increases..).
tomorrow the EIA comes out with their International Energy Outlook (2008)
for the last few years, even their high price case has been wrong but not as wrong as their reference case
here's a look at their world production projections for the high price case since 2000
notice that between the 2005 (red) and 2006 outlooks (yello), somebody at the EIA got religion! maybe somebody here will know what happened
the 2007 projection was slightly more optimistic than 2006
tomorrow we'll see what they are thinking now
i should add that starting in
20042005, the eia started making projections for conventional oil seperately. Starting then i used their conventional oil figuresSource.....
For 2007, Table g5 (in appendix g)
http://www.eia.doe.gov/oiaf/ieo/ieopol.html
prvious years found in corresponding tables in the archives (but the table is not always g5)
http://www.eia.doe.gov/oiaf/ieo/ieoarchive.html
I just read the link up top, Demand Destruction: A Natural Cure For Peak Oil. I then felt like Jim Cramer, slamming his fist on the table, screaming "They Know Nothing!" There is no cure for peak oil. Demand destruction, conservation, more OPEC production, drilling offshore, drilling in ANWR, all this would help but there is no cure. Some so-called cures, like ethanol, will only exacerbate the situation.
Peak oil is a degenerative condition, it will get a little worse each year, but there is no cure. Lots of the things, like those listed above, will only help to delay the death of civilization as we know it.
About six years ago, when my granddaughter was just entering collage, I tried to explain peak oil to her in order that she might choose proper a major. She said, "Granddad, it is obvious we are running out of oil and the government must do something! And that was the end of that conversation. Two years ago she graduated with a degree in history.
I watch CNBC almost every day, all day long. I keep, Cramer like, screaming, They Know Nothing!
Ron Patterson
Whenever you feel like screaming - find the funny side. Makes no difference to anything other than your mood - I used to think it was rude to laugh at others idiocy, now I realise it's just healthier.
Sometimes I still get angry, but I brush it off in minutes to be substituted with giggles.
Some might say it's inappropriate to laugh at people who are condemning others to fate, I figure getting angry achieves even less.
Laughter certainly is healthier and I find I'm doing more of it.
Then again,anger is a great motivator.
Goldilocks Solution needed,yet again.
Well, she has a degree in history now so she should know that if the government is going to do something, it'll be counterproductive.
Why do you torture yourself? Too bad George Carlin is not here to talk about peak oil. We need someone like that to take the edge off. Humor is our only remaining refuge.
Ron - I'd encourage you turn off CNBC. Hell, turn off the TV completely. It will only give you heartburn and a headache.
Sure there's a cure. Just stop using oil -- which will be the eventual reaction to higher prices in any case. There will be a little bit, for plastics or lubricants or other high-value uses. Cooking fuel is another high-value use I think. Maybe the ultimate use for ethanol will be for cooking fuel. Sure beats splitting wood.
People are terrified of change, but in actuality, change is very common on the personal level, and really no big deal. I had some friends move from suburban coastal Connecticut to Manhattan. Their household energy use (including the car they sold) probably dropped 70%. Just think of the changes anyone has made, going from a college dorm to a city apartment with a job for example. When I moved to Japan some time ago, I took all my things on the airplane, and when I came back, I took all my things on the airplane again. Now it takes one of UHaul's larger models to move it all around, but if I had to put my things on the airplane again, that wouldn't be a big deal either.
What most people seem to be afraid of is economic collapse. Well, you don't need Peak Oil to have an economic collapse. It was quite common throughout the 20th century.
The second concern is apparently food. There is, actually, a lot of food out there, as 70% of US grain production still goes to livestock, ethanol, etc instead of direct consumption. If it turns out that agriculture is a high-value use for fossil fuels, then people will cut back on low value uses (driving) and the remaining supply will go towards agriculture. There will actually be several decades to work all this out. The U.S. has a huge amount of farmland that is not in production, because it is not commercially feasible while food prices remain very cheap. At the food prices of 1900, about five times higher than today, you might see farms in New England come back to life.
Econguy, as Jim Cramer would say: You Know Nothing! Damn, I just broke my coffee table.
Oil is the lifeblood of civilization as we know it. If we stop using oil, which we eventually will of course, civilization as we know it disappears. Farmers depend on oil to plant, cultivate, fertilize and harvest crops. The world depends on oil for transportation. Everything gets delivered by using oil.
You talk about the US is if the United States were an island. All we have to do is cut back and screw the rest of the world. World food prices have risen dramatically in the last two years due to higher oil prices. Many people in third world countries are already going hungry because they can no longer afford to buy food. Understand, many people are already starving because of peak oil! And every year, as more oil disappears from the market, more and more people will starve.
Very cheap fossil fuel, mostly oil, enabled the world to feed billions more people than it otherwise could. And when that fossil fuel starts to disappear, the food will start to disappear and the people that food keeps alive will also disappear.
It is really absurd to say that if we start eating bread instead of steaks and figure out how to drive fewer miles the that is a cure to peak oil.
Damn, can't hit my coffee table anymore so I poked a hole in the wall. All previous economic collapses will be like a Sunday picnic compared to what will happen when the world has less than half the petroleum it uses today. Then later there will be even less...then less...then less... World economic collapse means at first millions, then eventually billions will starve to death. But the people know nothing of what is to come. They are sleepwalking into a nightmare.
Ron Patterson
I for one appreciate your indignation Dar (got a nice slab of old growth maple curing in the side yard if you need a new coffee table;-}).
I get so tired of the discussion becoming simply an academic thought problem that may lead to better investment decisions.
The fact that $ = Grim Reaper has been hardest part of it all for me to come to terms with. It just seems like such a weak determinant for the right to live.
Get mad but get a sturdier coffee table.
Cheers!
I have posted on this before, but it is an important point, so I think it bears repeating. I think that you are right that many will starve, but it doesn't need to be so.
1. There are many countries that seem to be doing just fine using 5-8 barrels of oil per person per year.
2. If the U.S. reduced it's usage to this level (20% to 30% of current) that would put an additional 14 to 17 mbpd on the world market.
3. That would buy time for renewables to ramp up to the point where they could provide for most of the work currently done by oil.
4. This, combined with sustainable farming techniques and desal from solar power, could probably mean that most of the worlds population will be fine.
5. There is a lot of good land around that is not being farmed, that could be.
Of course, we both know that the U.S. won't cut it's usage by 70-80% until the crisis is already upon us and it's too late, so your doomer predictions may come true, but it will be people's fault, not geology.
EDIT: Countries that seem to be feeding themselves on 5-8 barrels per year. Please let me know if there is starvation in these countries, as I have not heard about it:
Argentina, Chile, Belarus, Bulgaria, Czech Republic, Hungary, Poland, Turkey, Malaysia.
China uses 2.17 per person, but they do burn a ton of coal.
the EU uses about 40% less oil per capita and they have the same size economy as we do...
I bumped you up there, John. You're a bit tiresome, but posts should be rated on merit, not the poster, and your post was correct.
Cheers
Well done! There is someone else apart from me who is attempting to use this wholly absurd rating system in the way it is ostensibly meant to be used!
That, and the carbon we will leave in the atmosphere for centuries, to disrupt the lives of all that follow us.
From my POV, the only moral choice is to struggle as hard as one can, with all your intellect and strength and judgment to make the world "not quite as bad as it could have been".
And to set a good example for others.
Best Hopes for the VERY Tough Times Ahead,
Alan
Really,
What kind of Prom Queen voting system gives you 8 votes for that rant. Let's review:
Economic collapse
Billions starve to death
People know nothing.
Sleepwalking into a nightmare.
Let me add one.
Oh f...cking brother... Get a life. Go volunteer at a food bank or something.
As in Alzheimers, the patient is in denial as the cognitive faculties slowly ebb away to be lost forever. It's very painful to observe, like the pickle we are in. Like the howlers that came out of the woodwork to deny The Limits to Growth, we have a return of the same and some new recruits to deny the reality of our Peak Oil disease. I don't know if you've ever tried to get someone whose cognitive functions are obviously deteriorating to admit that they are indeed, and to try and convince that person they must seek some professional advice as to the type of condition and methods of treatment. It's very difficult, even with someone who trusts you. We have a nation and a world filled with such patients, many with very good reasons not to trust or even listen. But if you care, and we wouldn't be here at The Oil Drum if we didn't, then you keep trying to convince people of the disease we all face and how we might go about mitigating its negative effects.
hybrids
plug-in hybrids
electric cars
John, would you please make clear what you are responding to, as in the format on TOD it is difficult to tell.
Perhaps less cryptic comment and a more argued post when you wish to reply would also be more enlightening, as all you have given us is a series of nouns, not any argumentation.
Your minus 2 juxtoposed against his 8 says all I need to hear.
You opinion is not valid because the world doesn't end.
I'm going to bed.
Senator McCain's $300 million prize
I think a better idea would be to create a set of specifications for a enegry efficiency car then put it out for bid with the offer to buy - say 10,000 for the government.
I understand the government is already the biggest purchaser of hybrids.
$300 million certainly sounds like a bargain for a perpetual motion machine.
Kenny, my dear lad... America has done much more stupid things with this much money. If you want to see a few examples, look at Iraq, look at the commercials for the 2008 presidential elections, and look at the trade deficit with oil producing nations. Come on...
I give him kudos for this (I lean left, and it's rare for me to give kudos to the folks on the right). He is asking the public to come up with a solution, and will give a *reward* to whomever finds it. Remember the X-Prize? Guys going into space without government help. Did it with a $10 million prize. Ever hear of the Darpa Challenge? Basically, groups of college kids designing and building cars that can drive themselves. Both of these were successful, because this approach WORKS. Now, $300 million I think is chump change toward a acheiving a big chunk of energy independence. And this again is a REWARD, so if no one does it, the gov't isn't out a dime. It's not for anyone on this board to say it can or can't be done, until they go out and try it and exhaust all the possibile solutions to this problem and THEN tell us it can't be done. I for one am hopeful that this could work... Even in my lifetime, many things that people have said are impossible have come true.
And even if it is a perpetual motion machine, hey... Yes, it would be a bargain.
What I remember about these two prizes is that they successfully produced technology that had no practical application.
We had electric cars in the late-1990s, and the government worked overtime to kill them off because both the car companies and oil companies felt threatened.
A great new battery would be nice, but remember that Chevron bought the patent on the NiMH batteries for the express purpose of keeping them off the market. I wonder if the $300 million will mean that the patent for the new battery will be put into the public domain?
...They did produce technology that wasn't there before. Whether it had an application (especially the Darpa tech) remains to be seen, since there could be a benefit to vehicles that drive themselves from a FF standpoint.
Remember, about 100 years ago a couple of bicycle shop owners from Ohio designed and built something that many thought had no practical application: The airplane.
I would think (hope) that the public will see the wisdom of pursuing this tech and developing it. This tech would be practical and help mitigate post PO issues. Now, as for the primary source of power... We'd need Thorium reactors to charge these babies up. Fuel reprocessing would be good too... Ahh, makes me want to break into song...
Nukes, glorious nukes!
Build that cooling tower!
Nukes, glorious Nukes!
No Fossil fuel power!
Burn up the current warheads
in our reactors, gadzooks!
Oh Nukes!
Wonderful Nukes!
Marvelous Nukes!
Gloriuos Nukes.....!
The issue with these prizes -- particularly the DARPA challenge (incidentally it's not random college kids, this is serious numbers of faculty and grad students orienting multi-year research programmes to be compatible with the objectives of the series of DARPA challenges, partly because academia is becoming infected with the "you must be good, you've been on TV" meme) I know most about -- is that they can provide impetus for development of a "seed" technology that "just works well enough" to win the prize, but do they do more? Clearly it's not advantageous to get your project doing more before you claim the prize as you'll probably get scooped by someone who just works to hit the prize conditions. So the important question is: do the seed technologies thus developed actually "bloom" into more mature products? This whole prize stuff is too new to actually know yet. I think it will, but even then I suspect the prize winning point will prove to be very early in the journey to large scale manufacturing and deployment.
Since there is now an X-Prize for cars, I think McCain should have pledged to add the $300,000,000 to the existing reward. But then that would have meant proving to Congress that the X-Prize criteria are valid, when the Congressmen have 535 individual reasons to want to bias various criteria to favor some campaign contributor.
In fact, the X-Prize is better because it does not say that batteries are the solution, it says that any energy technology may be employed to meet a set of user criteria. I suspect McCain is falling into the illusion that we must create a super-battery that will allow us to power our absurd 5000-pound yuppie tanks for all our absurd activities. The X-Prize is calling for a vehicle that requires us to change our way of life, given that the winner will likely be a lot smaller and have less range than we're used to. It's going to be just good enough to preserve some semblance of personal mobility. And in order to afford it we probably will have to import it from India or China, so we must write off our own car industry.
If by some great fortune we will still be driving at all, it will be in vehicles that optimize aerodynamics, weight reduction, and limited utility (fewer seats) so that we can get by with existing batteries. Now McCain would really impress me if he could explain how we would get 100,000,000 of them on the road quickly enough to make a difference without massive government intervention.
"$300 million certainly sounds like a bargain for a perpetual motion machine."
how is a battery a perpetual motion machine?
My issue with the idea is different. I think the goal is the right one, but this is not the right way to support it.
Research can hardly be stimulated by setting up a distant prize when the research goal is met. Battery researchers know very well that if such a battery is developed it will be worth billions, to which these $300mln. will be a pittance. Just think about the billions promised for a cure for cancer... has this sped up research in any meaningful way?
The problem of research, especially one not backed by huge corporations is simple - funding. If McCain wants to support battery research then he simply has to suggest a program for funding battery research. As a taxpayer I would support these $300mln. to be spent on battery research every year - it will be more than worthed. Prize based stimulation looks more like a populist trick to me.
That is an excellent point.
A million dollar stipend for a machine that turns straw into gold provides little additional incentive.
Thanks.
Specifically McCain said:
"development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars,"
Some hard metrics will be needed, unless there is an unambiguous winner.
Anyway, the prize money at $300 million be very, very small change in comparison to the market profitability of such an invention. Such a design would be worth many billions. (i.e. the $300 million would be gravy, and maybe used to pay for a some really great parties.)
I think a better use of the $300 Million would be to drop it into an energy "Angel" funds, where where it could provide hundreds of researchers with the seed money to develop and test. Sure, 90% of the investments will yield no viable technologies, but in tech, a negative answer is still very valuable data, and might find a real breakthrough in the other 10%.
I like this idea. Government could say:
We will buy the first 20,000 cars that come off assembly lines for $50,000 each (cost $1 billion) that:
1. Hold 5 passengers
2. Get 100 mpg
3. Cost under $40,000 to make
4. Get 5-star crash test ratings.
5. Are made using mass-production techniques
This would get the process started, and allow companies to get back investment.
$40,000 to make... means $50,000 retail. I don't think it will cut it. We need something in the 20K-s if it is going to compete ICE cars.
I think the initial cost to make does not matter that much, as long as it is demonstrated it can drop to more acceptable values with mass production.
Otherwise such cars already exist - for example virtually all of the Think electric cars satisfy all of your criteria.
I think you should also include additional criteria for time to recharge, battery lifetime etc.
Regarding point #5, I think it'd be quite interesting if someone were able to come up with a solution that met the first four criteria and not the fifth...
I guess I could have left out points #3 and #5. Price you are offering takes care of #3, and #3 takes care of #5.
The advantage of this plan is that you don't just have to prove you CAN make the car, you actually have to do it and deliver them. The government could then either use the cars, or auction them off to the public. Companies would have motive to make it as cheap as possible, to maximize the profit per car.
Basically, it would be the Gov putting a price floor on a commodity (high mpg cars).
Payouts to the winner sound good, but that isn't how R&D works.
Somebody has to front the money for the countless failed experiments that go before the breakthrough. Anybody can cash in once the battery (or any other) technology has been demonstrated. But who will incur the risks and costs of all those dead ends, with no sure payoff at the finish line?
This is government's best role, whether through NSF, DARPA, or the rest of the public-funded alphabet soup: Call it a kind of front-end loading of the old socialize-risks-privatize-profits model. But taxpayer-funded R&D has worked well, even miraculously IMO.
Disclosure: I suckled at that teat for decades.
A better $300 million prize would be for the development of a national car pool organizing/registration/payment website with the appeal and adoption-potential of E Bay.
The trick is to make reserving a carpool spot like buying an airline ticket.
I think the assumption, which also underlies the X-Prize, is that Silicon Valley is full of Atlas Shrugged types just itching to throw their millions at a cool project. Well, that might have been true five years ago when the X-Prize was trying a one-shot project, but the Automotive X-Prize now has a more stringent goal of actual mass production. Geek money won't be enough. Luckily there are a few small companies that appear well-enough financed and were intending to attempt production even before the X-Prize was announced. Adding $300 million of Federal prize money will give the winner more means to make the big jump to building a national dealer network, etc.
Of course traditional venture capital is going to vanish in the current financial crisis like frost before a blowtorch.
This one is for antidoomer.
Personal transportation problem solved.
http://www.parabounce.com/video/bike-movie.html
This is from "Utilities cut off more customers who are behind on their bills"
This brings up the question of just how much higher can drilling costs for Nat Gas go? It won't be long now before demand destruction forces the nat gas production curve to start dropping.
Right now we have a plateau of nat gas production in the US. I think this is happening because of cheap credit (either to people or governments). When that credit is gone, and people must pay for the nat gas they use, we will see the production curve drop quickly.
I stand by my claim that "It isn't Gridcrash that Makes the Lights Go Out" for many of us. http://sharonastyk.com/2007/02/19/it-isnt-gridcrash-that-makes-the-light...
I believe strongly that most of us should have a good way of living without the utility companies - because a lot of us may need to.
Sharon
Wow. $500 on heat in Sacramento! Good thing she doesn't live somewhere that, you know, gets cold. Have they not heard of sweaters or long underwear? I wonder how they are coping with the heat. Probably hang out in the Mall, I guess.
Although not politically correct, I agree with you completely. I keep the thermostat set to 53 when I'm not home or when I'm sleeping and set at 65 for the rest of the time. I own several sweaters and blankets. I would guess that with excellent insulation (my house has none at all) I could keep my house above 53 at all times just by using a fan to blow air from the attic (heated by the sun) into the house whenever the house temperature is lower than the attic temperature. I often see attic temperatures above 80 degrees in the dead of winter.
As for air conditioning during the hot summer, I abandon my house for about 3 or 4 weekends per year. During the work-week, I just stay at work late or go out somewhere after work but before going home. Around here the nighttime temperatures always fall below 80 degrees.
Thanks for the reply. Yeah, I have an attitude because I use what I call the 50-5 rule. I don't turn on the heat unless it's less than 50 degrees (10C) inside my house and I will be home and awake for at least 5 hours. I don't care how cold it is when I'm in bed or at work. It makes for some brisk mornings, but I only need to turn on the heat five or six times a year. I wear serious long-johns and heavy sweaters and a thick hat.
I have it pretty easy here on the coastal plain of far northern California, and I don't have small children or elderly parents at home, but I was a little boggled because $500 is almost double my PG&E bill for the entire year.
When I was a child in Los Angeles in the late 1970s, my father turned off the furnace altogether. No heat -- not gas, electric or whatever.
I remember many mornings when there was frost outside (it gets below freezing in Los Angeles intermittently), but, oddly enough, I don't have any memories of actually being cold during that period.
Here in the UK I remember frost forming INSIDE the windows in properties without much heating..
it looks like those days are returning.
Hah. You were lucky. You HAD windows.
In case anyone missed this in the June 22 DB:
http://www.rutlandherald.com/apps/pbcs.dll/article?AID=/20080622/FEATURE...
Vermont Public Radio had an interview with lieutenant governor Brian Dubie on June 12:
http://www.vpr.net/news_detail/80924/
about half way through the transcript, it reads:
(Dubie) "There's intelligence briefings that I'm receiving about Middle East scenarios that are real that could mean supply concerns. There are great tensions between Iran and Israel right now, nuclear plants. There are intelligence briefings that say that there could be a disruption."
I know, you're thinking "What kind of intelligence briefings does the Lt. Gov. of a little state like VT get, and why should he be listened to?" Well, in addition to the Lt. Gov. gig, he is also: currently an Emergency Preparedness Officer in the National Security Emergency Preparedness Agency, currently a Colonel in the Air Force Reserve, chairs Governor Jim Douglas’ Homeland Security Advisory Council, and his younger brother is Major General Michael D. Dubie, the adjutant general of the State of Vermont who serves as "the senior uniformed officer in the state responsible for the organization, training and equipage of the 4,000 members of the Vermont Army and Air National Guard."
http://ltgov.vermont.gov/about
http://en.wikipedia.org/wiki/Brian_Dubie
Could his briefings have motivated his calls for emergency fuel preparedness before this winter?
Back from vacation in Arkansas. I live in California and I guess I've always assumed california was one of the worst wasters of oil but now I'm not so sure.
First observation is that the rural counties are woefully unprepared for peak oil overall in worse shape than the larger metropolitan areas as far as the ability to maintain the mini estate lifestyle common in the region. The population density is low and most type of public transport would be prohibitively expensive. Wal-Mart has removed all traces of a downtown in most of the region.
The demographic split was even more obvious its no longer strictly racial but wealthy vs poor whites and poor blacks with the poor blacks in ghettos and poor whites located even farther from the city center with most of the land surrounding the city overrun with McMansions on 1-4 acre plots.
This does not bode well for attempts to reintroduce public transportation.
The only real bright spot was that the downtown area and parts of the cities inner suburbs had undergone a bit of renewal but with stark divisions primarly across the Wilbur Mills freeway with one half of the neighborhood well maintained and the other fallen into a ghetto of boarded up homes.
The number of boarded up homes both degraded and renovated was astounding. Also even in the city plenty of vacant land was available. This was even more common farther out as developers bought large tracts of land leaving huge holes if you will in the density pattern to build subdivisions.
Finally of course SUV's and huge trucks where everywhere and even the passenger cars where often the largest models with very few small sedans common in California.
Overall I think that the basic sustainability of these smaller midwestern and southern cities exists in the sense that simply by reverting the growth one would be able to create a nice post peak oil city thats matches well with the local agricultural richness and river navigation. But at least Little Rock seems to face the same problems as southern California as its resource allocations are just as misguided as in California.
Unlike southern CA which simply has no reason to have the population levels in the region I did not get a feeling that the absolute population levels in Arkansas was a problem but was surprised to realize that if anything the region was less able to weather peak oil without serious problems then the coast.
For me at least the realization that at best 10% of the population seemed to be in a decent position to deal with spiraling food/fuel costs and crashing land/home prices was a real eye opener. Not to mention the obvious social time bomb and the various segregated groups are forced to live together.
Thank you Memmel for sharing your insights into life in Arkansas in relation to the effects of peak oil and resource scarcity. I live in LA and often debate whether I would be better off in the City or in a small rural community or in the countryside when things get really bad (if they do, and I think they will). I am leaning toward the decision that it will be better to stay in a City vs being out in the "hinterland." The basic reason is that I foresee travel costs as being prohibitive in far-flung areas and I also see access to food and resources easier in the concentration of cities. That's not to mention that law and order may be easier to maintain in the cities as well.
I'd not suggest LA proper in CA the northern central valley region seems to be the most viable as far as large cities go. Sacramento seems to be a good place post peak. In general near the seat of government or near a military base is sensible.
Plenty of food and water available around Sacramento/Fresno. A small town along a existing rail line is also a good bet within 10-15 min of the downtown. It all really depends on what you do. I think its important to have enough land to grow a large garden.
But this could mean a apt or condo in the city and land. My rule of thumb is no city over 200k or under 50k.
Your fine in the country if your not dependent on the city.
Many wealthier Russians had both a apt in the city and a dacha in the country.
Something similar in the US can make sense you can readily buy a few acres with a trailer or small cabin in a lot of the US. California is tough. But renting in the city with a country house near a rail line makes sense.
LA has a lot of other problems with sustainability that would cause me to reject it. Right now I live down in Irvine but I plan to move to northern CA or Oregon soon. The number one problem with southern CA is water if we start having problems a attack on the water infrastructure sending water to the LA area could cause a lot of problems.
A good rule would be to look at areas that have a Amish population.
http://en.wikipedia.org/wiki/Amish#Population_and_distribution
http://www.gameo.org/encyclopedia/contents/C2461.html
http://amishamerica.typepad.com/amish_america/oregon_amish/index.html
http://www.gameo.org/encyclopedia/contents/M3857.html
http://www-personal.umich.edu/~bpl/mennocon.html
I'm not suggesting you run off and join the Amish or Mennonites but if they have successful communities reasonably close ( 200 miles ) then you can assume the local region has decent carrying capacity. Basically keep the same climate as they choose. I've got no problem borrowing what they have learned.
However San Diego with its large military base might be viable post peak but It may become something of a island of stability focused on the war in Mexico.
1.) Live where there is water and arable land.
2.) Live in the smallest city that has your type of job.
3.) Try and figure out a way to have a few acres of arable land within reasonable walking distance. A trailer or cabin with a well and a garden is fine or a larger
yard 0.5 acre (unless this forces you to drive). A currently existing rail commute from a smaller town is often possible. If not get near a freight line since we will have passenger trains if needed.
4.) Look at Military bases ( iffy can be closed ) Seats of state government, Prisons anywhere the authorities would be interested in maintaining local law and order.
5.) Hydroelectric/Nuclear power plant for electricity.
I'd not suggest LA if you can earn a living farther north.
On the other hand I've got no plans to run off and move right away. Right now I'm looking at 2010 as when I'll move. Since I think that home/land prices will drop significantly by then I'm willing to wait. Also I won't take a loan out period.
I can afford to pay 200k for a place myself this will buy a decent house and large lot in most small towns in the US near enough to a rail line to commute so I'm willing to wait. The minimum you probably need if you feel you have to bolt from the city is probably 50-80k for a good trailer and land near a city large enough for jobs. By 2010 this could be 20-30k. So I'd do my best if I where you to keep saving money to pay cash for a place when you feel like its time to move.
I'm guessing if you think staying in LA makes sense that you have a good income so I'd stick with it.
Email me if you wish and I'd be happy to talk with you about my thoughts and how they could work for you. These decisions are really specific for example you could have a medical condition that required specialist care that was not generally available. Family circumstance etc but off the top LA is not a good choice long term without at least a plan B.
Thanks for the info. I agree that LA has quite a few negatives when it comes to post peak life (as in water). I also agree that the Central Valley is probably a better bet since there are several larger cities, but also enough farm land to sustain the local population. Interestingly, I grew up in Fresno and I still have family there (I am presently watching the finals of the college world series, game 2, as Fresno State is trouncing Georgia). For the time being, we are planning on staying here as I do have a good income which would be hard to replace in the Central Valley. Things could change however given the course of the economy. I suspect by 2010, likewise, we will be more in the mood to make the change - but it is purely speculative at this point. We may end up sticking it out here. My wife has relatives in Texas and Argentina. We've thought of both, but Argentina seems too unstable to give it serious thought.
I live in what is probably the world's prime military target. Silicon Valley. Sand Hill Road is where I eat lunch. But I suggest you do as I say and not as I do, and locate upwind and at least twenty miles away from any military base, capital, or major technology district. Nukes get cheaper every year.
Bravo!! We finally get a good, in-depth socio-economic-like report.
Edwards Aquifer customers must cut water use.
I live in western Hays county which gets water from the Trinity aquifer. Andrew Backus, president of the Trinity Groundwater Conservation District had this to say:
Couple of years ago I had to replace a pump for $1500 at one of my rentals. Ouch. Don't want to do that again... guess I'll call the well man.
The Austin American Statesman
I have a question about over pumping aquifers.
In general, what is the possibility that an aquifer can/will collapase or subside when too much water is taken out so that it can never recharge in the future?
Most aquifers will subside, and yes, this reduces their overall capacity. Some subsidence is pretty spectacular over time, like places in the central valley of California where they have signs on top of telephone poles saying something like "1975". Flood? No, that was the ground level back then.
http://water.usgs.gov/ogw/subsidence.html
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4. We really do need and appreciate your support. That and educating folks about the problems we face is what keeps us all going.
Thanks for hanging out, and thanks for making this all worth doing. I learn something here every day--and I apologize for these incessant reminders of things.
Do you have any small graphics that I could put on my blog to link back here? I have referenced/linked to the site in my posts on the oil situation, but I have learned more from the site than I can adequately give credit for. I was thinking about something I could put in the sidebar of the blog, maybe with the Oil Drum logo.
The discussions here made me want to start my own blog, so thank you all for the great information and ideas.
Would this work?
I just took the image off the top of the web site, and reduced it.
If needed, you can make it smaller in HTML.
That's perfect as long as they don't care about someone using the logo. Thanks!
A reminder, it was to be a criminal offense to start a new blog, after July 1, 2008, but reportedly it will be now be upgraded to a capital offense. And there are some suggestions that the penalty be upgraded to being drawn and quartered, with the offender's head being mounted at the entrance to Google headquarters, as a warning to other would-be bloggers.
from an interview with the Kazakh Minister of Transport
http://www.railwaymarket.eu/question/13
Remember that Kazakhstan is a major oil exporter and one of the very few whose oil exports are expected to increase.
Best Hopes,
Alan
UK to Push Rail Electrification
http://www.transportbriefing.co.uk/story.php?id=5037
Best Hopes for British Rail,
Alan
Not only that Alan, but Network Rail is to study entirely new routes as well.
From yesterdays International Rail Journal news:
Best Hopes for bringing some transport sanity to the U.S.
They ain't gonna go sneakily improving the rail service whilst the British establishment is on the case, no sir!
http://business.timesonline.co.uk/tol/business/industry_sectors/transpor...
Network Rail forecasts overcrowded trains, longer journeys and no new lines - Times Online
Iran & Russia sign MOU on Electrifying Railroads
A MOU was signed by Iran and Russia railways on March 29.2008 on rail electrification and construction of railway projects.
Both parties stressed on the electrification of Tabriz-Azarshahr, Bafq-Bandar Abbas and Tehran-Mashad railways.
Meanwhile it was decided to put into operation the tripartite consortium of Gazvin-Rasht-Anzali-Astara railway by forming some working groups. [This is a proposed rail line around the southern end of the Caspian Sea with only one connection to existing Iranian Rail lines, in the NW, on the way to Turkey. I think that this is to be part of the [proposed China-EU standard gauge rail line]
A map of Iranian Railways
http://en.wikipedia.org/wiki/Image:Iran_railway_en.png
These three lines look like 2/3rds of what is needed to electrify their main lines.
Elsewhere there is talk of starting construction of Iraqi-Irani rail links.
Best Hopes for less ELM from Iran,
Alan
FANTASTIC NEWS!
Touring family debunks RV fuel cost fears
Now if you'll excuse me, I have to go bang my head against the wall...
And when you're done, let me have a go at 'er.
What do they get?, 8 MPG?
A more sensible alternative for the RV set:
http://www.airstream.com/products/2008-fleet/travel-trailers/design-reac...
Cheers,
Paul
They are going to have to promote real hard- I recently drove through NY, Penn, WV,NC,Tenn and SC. I literally only noticed 1 RV on the road-I might have missed a few but they certainly did not appear to be numerous. I did see quite a few parked in various locations.
I just traveled from Montana to Texas, and I also saw very few RVs on the road.
This is anecdotal, but I seem to see fewer and fewer of the large SUVs on LA freeways these days as compared to 3 or 4 years ago. I see many more sedans, small compacts and hybrids and the smaller SUVs and cross overs. RVs are virtually nonexistent.
I've seen fewer large SUVs, too. I live in an apartment complex popular with college students, seniors, and young families. The gigantic SUVs in the parking lot used to be insane. My car looked like the runt of the litter, with an Expedition on one side, an Excursion on the other, a Montero the next over, etc.
Now it's a sea of compact sedans, with a few small SUVs (like RAV-4's and Elements). I have a smaller car now (a Corolla instead of a Taurus), but my car is now about the same size as other cars in the lot.
So, what's the theory on where they went?
ie: who are the buyers for second hand personal tanks? Normally in this kind of scenario (rich classes dumping something) the less-weel-off snap up the no-longer-luxury items - but who on limited income want a giant gas muncher?
From my area (SW Colorado), I see near-normal numbers of RVs. All the locals have full-sized pickups. I just saw a new Suburban with temporary plates. No conservation in evidence. "When they pry it from my cold, dead hands..."
I, myself, am still draining the $3.05 diesel from my tank. Ahhh....
Paul, I'm done with the wall, but I left a pretty good dent. :)
Like Brian and Robert, I also have noticed a lot fewer RV's on the road. I drive I-10 between Phoenix and Tucson every week or two (would GLADLY take a train if there was one). Now this is summer in Arizona so they aren't coming here, but there is usually still a lot out on the road passing through to or from California.
This clearly is a case of a press release that was passed on nearly (or totally) unedited by the local paper, who needed space filler.
Heck, they haven't been able to find something to complain about on our new light rail line for nearly a week now, so they're probably grasping at anything they can get their hands on.
EDIT: Sorry about that last sarcastic comment, I just have to get in a dig at the local media whenever I can. Force of habit.
cosmo, I'm a Tucson boy...what's this new light rail line you're talking about?
Chris,
The one in Phoenix. Opens December 27th. Track now complete, slightly more than 1/2 (the east 1/2) now open for testing under power.
http://valleymetro.org/METRO_light_rail/Downloads/Construction_Photos/in...
Here is some video I took a few weeks ago of an LRV being tested on Washington Street between Loop 202 and 56th Street:
http://www.youtube.com/watch?v=wZPuX1YPeBQ
This is a video I took of a ride around the loop in the yard:
http://www.youtube.com/watch?v=GLefhmKHhZk
Y'all in Tucson will get a Modern Streetcar, unless TSHTF first.
http://www.tucsontransitstudy.com/
(They have a very nice video simulation.)
I am pessimistic, but hope for the best. I've been promoting rail passenger service here for about 20 years now. Wrote a White Paper about it 16 years ago for the Arizona Rail Passenger Association. It sits on shelves moldering with all of the other studies. There is currently an attempt to get a measure on this November's ballot (through initiative) that will provide $42.6 billion for transportation needs for Arizona for the next 30 years. It includes $7 billion for intercity rail, commuter rail for Phoenix and Tucson, more light rail in Phoenix and Modern Streetcar in Tucson, and other transit (bus, rural, etc.) The remainder would be for roads, of course. Although I have signed the petition, I think it will be dead-on-arrival if it even makes it to the ballot because: A) its a sales tax and nobody is going to want to pay more for what they're buying; and B) because it's a sales tax any revenue projections they did 6 - 12 months ago are now wildly over-optimistic. Add to that the rabid attacks from the far right (i.e. most of our legislature) against the transit part, and the fact that planning on spending that much on roads at this point is probably more false hope...
Here on the Oregon coast, our parade of RVs continues, although it's hard to say if the volume is larger or not. Other indicators are down, like the fishing charter biz. Building is still quite strong, however. I think it's time for a survey.
I thought the salmon fishery was closed. Or is that just in Northern California?
Well, sort of. There's a token chinook season in the northern quarter of the state, and coho opened here in the central zone. Halibut was very soft and the season extended because the catch quota wasn't met, although those that fished caught theirs. And there's plenty of rock fish. Spring chinook was good in some of the rivers and estuaries. But money's tight, and it's cheaper to buy most fish at the store than fueling the boat and tow vehicle, or buy charter passage. It will be interesting to see what happens when the tuna season gets going in July.
Thank you! Sailing looks better all the time. Have to get a boat...
I mentioned this on another post a few days ago:
We have several RV campgrounds nearby, and they are all jam-packed full of RVs parked year around. The owners pay the campgrounds a monthly rent for this, which is a good deal for the campgrounds as it gives them a year-round cash flow. The owners then drive up in a more fuel-efficient vehicle to vacation there, using their RV as a home base for day trips in the area.
Mr. Herzog has a plan for the future. It's called Migrant Farm Worker Family. Those sons will make fine artichoke pickers in a few years.
Speaking of RVs... We all know the Russians are buying cars like crazy. Well, the other night I saw a news blurb (on Russian TV) about the latest craze there. You guessed it, RVs. They call it "Euro-camping". Now I don't know how many RVs are on the road there but WesTexas may want to factor that into his ELM as well. The ones they showed on the report weren't the huge lumbering RVs I've seen here (USA) but they weren't pop-up campers either.
That's not so bad in comparison to all sorts of other guzzing rich people take for granted. If they drive 5000 miles at 5 MPG they consumed 1000 gallons of fuel. How about instead if they took a family vacation by flying to Europe? That family of 4 could consume 4 * 250 = 1000 gallons far more quickly. How about a trip to Australia?
To whom it may concern.
The 2 energy bulletin links on the home page in peak oil primers go to pages not found.
new link for the primer
http://energybulletin.net/primer
Don't know about a new link for Kunstler
Feel free to do with this post as you please.
One can send them feedback via an email link on their "we're back" page.
BTW, one consequence of the new EB format is that any links you may have saved to old EB pages are now broken. You have to search for the page anew. Or, reformat the URL yourself. E.g., if the old URL was:
http://www.energybulletin.net/44664.html
then the new one is:
http://www.energybulletin.net/node/44664
[edit:] well guess what, they've now automated that URL fix-up so the old links will work.
Blaming speculation for the run-up in the price of oil is analogous to blaming FOREX trading for the fall in the dollar. The dollars fall is inextricably linked to the current account deficit just as the price of oil is tied to the supply of light sweet crude.
In an election year, politicians will point to anything that is even vaguely believable as people rush to place blame others for the consequences of their own actions.
Skeptics doubt Saudi Arabia can boost oil supply
The author gets it exaclty backwards here. He makes it sound as if Peak Oil Theory is prescriptive instead of descriptive.
The Peak Oil theorists' skepticism is well founded. It is obvious to all except the most obtuse or prejudicial of observers that the Saudis long ago started playing politics with oil reserves.
It is the Peak Oil theorists who want to put their theory to the test. It is the Peak Oil theorists who are calling for audits of Saudi reserves by independent engineers and geologists.
It is the Peak Oil theorists, and not Saudi Arabia, who are playing the role of laboratory worker in this quote from Jacques Barzun:
"The laboratory worker's imagination may frame a hundred notions and by experiment settle on one. The lay imagination retains its hundred and utters them, letting them take their chance in the people's minds. The plausible, the picturesque are taken as truths, influence conduct, and generate fears."
Reading over my comment I didn't convey the meaning that I wanted to convey. Please let me try again:
The author states that the "lack of confidence stems from a theory..." But this is not true. The lack of confidence stems from the fact that the Saudis have in the past played political games with their reserves and refuse to allow independent engineers access in order to conduct an independent audit. This lack of confidence then serves to underpins Peak Oil theory.
It is the lack of confidence (granted, along with many other things) that creates Peak Oil theory.
It is not Peak Oil theory that creates the lack of confidence.
DownSouth, two points: You could have changed your comments, to say what you wanted to convey, without posting a new post in reply to your own post. If there has been no replies to your post, you can just click on "edit" and change anything in your original post. But the ability to edit goes away after your post has been replied to.
Second, peak oil is not a theory. It may be a theory as to whether oil has already peaked, or when it will peak. But the fact that it will peak is not a theory, it is a geological fact.
Ron Patterson
It's a theory in the scientific use of the word.
"A set of statements or principles devised to explain a group of facts or phenomena, especially one that has been repeatedly tested or is widely accepted and can be used to make predictions about natural phenomena."
(sorry, this 'it's not a theory' I find as annoying as 'it's only a theory' - the word has quite different meanings depending on who is using it, which doesn't help anyone really - but makes both of these phrases usually meaningless)
This has been considered in other posts, but gravity is a theory, evolution is a theory, and plate tectonics is a theory. On the other hand, depletion of a resource (like picking all the apples on a tree, until there are none left) is, in principle, simple accounting (the mathematics of subtraction), and not a theory at all.
We may disagree on how best to model the exact number of energy apples left on the uppermost, hard-to-reach branches of the tree, and on the exact length of time we can continue to shake those branches to get enough of them, but that does not make the impending outcome any less certain, especially given that we already seem to be shaking the whole tree as hard as we can. Real soon now we're going to run seriously short of apples, and that's no theory.
Sorry, a theory is exactly what Peak Oil theory is, in the way the word in used properly in a scientific context - you are trying to make a distinction that, scientifically, does not exist.
You, and I, discount the biotic oil hypothesis as the rubbish it is. Fine, but flat-earth types don't. The way to resolve this is NOT to argue about whether ANYTHING is a 'theory' or not, because it's pointless.
We agree (I presume) on everything underlying - can you not allow those of us who use the word in this sense to just carry on doing so - there are so many worthwhile things to be debating?
http://en.wikipedia.org/wiki/Theory
Anyone who says it is wrong to call Peak Oil a theory because it somehow has more 'substance' than a 'theory' doesn't understand the scientific use of the word - that's fine - words are allowed to have more than one meaning - but take this opportunity to understand that many of us will continue to ues the word 'theory' in an entirely correct manner to refer to peak oil, and that does not mean we accept it any less than the diminishing number of apples on a tree, or give any more credence to biological oil nonsense, etc etc.
Hello Metalman,
Simply outstanding!-->Post of the Day, IMO.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I never thought I'd disagree with one of your posts Bob. While correct in implication about Peak Oil certainty, Metalman is linguistically and scientifically incorrect in a post about scientific linguistics - and won the totoneila award for best post? Ah well...
Thanks Bob. Jaymax, we disagree on nothing save semantics. Peak oil modeling and prediction may be somewhat theoretical in nature and thus may resemble a scientific theory (a testable hypothesis, among alternatives, that has passed its tests and successfully made predictions), but depletion, the underlying principle, is seemingly in need no proof or tests (except perhaps to those who religiously believe that oil is pulled in from alternate dimensions, or that oil droplets rapidly propagate in the ground like bacteria, or that oil is continuously generated inorganically deep in the mantle, or that an oil fairy mysteriously inserts oil in the ground wherever you drill, or whatever).
Stated differently, we may not completely understand all the principles and mechanisms behind gravity, or evolution, or plate tectonics, but the principle behind peak oil is as simple as 2 - 1 = 1 (rounding to the nearest terabarrel). To call that a scientific theory is perhaps to flatter children who are first learning to count on their fingers (by comparing them to say, Newton, Darwin, or Hess), but you can call it that if you wish. Certainly the "theory of subtraction" will pass any scientific test you ever throw at it, and its predictions will be rock solid.
If I were you, though, I'd try to avoid "theory" because that word tends to confuse nonscientists, particularly politicians and economists (some of whom may still remember how to count on their fingers). Try peak oil "concept" or "principle" instead. Compare WT's much-discussed "ELM" principle - not theory - regarding oil available for export. And thanks for an interesting discussion.
Metalman, we even agree that trying to avoid "theory" wrt Peak Oil is a good idea!
I just react to people who react to 'theory'. And sometimes also, I use it without realising because I'm familiar with that usage.
So yes, we should all try and avoid talking about it as a theory, and also try and avoid saying it's 'more' than a theory - cos BOTH are wrong from some folks perspective - and we end up in a semantic debate...
(Not that I mind, but I understand most of the planet isn't quite so keen on definitions)
Cheers.
Thanks, Darwinian.
I'm frequently not happy with my comments after I see them in their final form, so it will be a helpful tool to be able to edit them in the future.
inflation to the core...
Note to newcomers here: Most of Dow Chemical's products are made from oil and gas as raw materials, using a lot of energy in the processing. Peak oil is expected to make EVERYTHING (including, and especially, food) more expensive. In other words, having less primary energy will reduce our wealth, forcing us to make do with less "stuff". The effects go FAR beyond transportation.
More fun with biofuels...
Wildlife and livelihoods at risk in Kenyan wetlands biofuel project
How much longer must this madness continue? How much more of the biosphere must be sacrificed in a vain attempt to sustain the unsustainable?
"How much more of the biosphere must be sacrificed in a vain attempt to sustain the unsustainable?"
All of it, I'm afraid. We are going to eat the planet. :-(
“God forbid that India should ever take to industrialism after the manner of the West…If an entire nation of 300 million took to similar economic exploitation, it would strip the world bare like locusts."
— Gandhi, 1928
I would not want the job of sugar cane harvesting, with all of those lions and hippos around. I thought they were supposed to be planting Jatropha all over Africa for biodiesel, since it requires little water.
I have to agree with sgage - all of it.
Hydrogen storage using ammonia borane
http://www.gizmag.com/hydrogen-storage-breakthrough/9517/
This article is a bit gee-whiz, but gives a decent link - I thought the process might be of interest to SCT.
Anyone any comments on possible efficiencies?
Borane chemistry is, in a word, bizarre. The compounds are electron deficient, which makes them especially reactive. Well, duh: They wouldn't release so much energy in combustion otherwise.
But boranes also hydrolyze easily, and some are toxic. Tough to manage at industrial scales, and unthinkable for handling by the general population. Still, triethylborane found some use as a starter fuel in the SR-71.
It's moot anyway: At a couple million tons a year, global boron oxide production is insignificant compared to liquid-fuel consumption. But any shift to borane fuel would surely make the Turks happy!
Chinese steelmakers agree to pay Rio Tinto 96% more for iron ore
"Chinese millers agreed to pay Anglo-Australian miner Rio Tinto up to 96.5 per cent more for their ore supplies this year, the largest ever annual increase and well above the 9.5 per cent increase paid last year."
Iron Ore Price Increase
Energy Inflation Loop
Hmm, what's up with this?
Among the headlines posted up top:
And yet...
Today's Dot Earth post is good and relevant. I posted my comment on there, but basically it is: I can't stand Dr. Hansen, but he is right on tax and dividend.
http://dotearth.blogs.nytimes.com/2008/06/23/are-big-oil-and-big-coal-cl...
Consumers have noticed trickling inflation for the past year or so. However, it appears that the speed of inflation is on the verge of accelerating in step with the rise of commodities as the large corporations are finally feeling the heat. According to a IHT article Dow Chemical will raise prices by a whooping 25% in July alone. It looks like things are picking up speed and we better get ready to buckle our seat belts as the next few months may be a ride of a lifetime.
As I've noted above...
Hmmm. Looks like you posted yours while I was reading the thread to see if it was posted. :-) (ships passing in the night) I thought it was too good of an article to be passed up for long.
Half the stories on NPR Morning Edition were energy related, either directly or indirectly. If this continues, we'll have to rename the organization National Petroleum Radio.
Excluding two stories on the Iraq war:
Soaring Food Costs Hit School Lunch Programs
Police Departments Feel Sting of High Gas Prices
With Sales Lagging, GM Plans to Raise Prices
United Slashes Pilot Ranks, Blames Fuel Costs
House Panel Hears Speculators are Key in Oil Prices
Bicycle Friendly: Commuting with a Congressman
Leanan - It seems as if we are at peak blog on the drumbeat. The volume of comments is now overwhelming. What would be easier (for me anyway) would to read the various articles and have the comments attached to each story. Different people have different interests particularly on the Drumbeat.
A modest suggestion:
Split into three daily Drumbeats, with topical focus following the same lines as per the Energy Bulletin: Resources, Regions, and Related Issues?
I think the problem is they really don't want more DrumBeats. They don't want more open threads that push the "real" articles down the page.
Blog v Forum
TOD v PO.com?
A little
mudbitumen throwing...U.S. mayors target 'dirty' oil
Alberta's oilsands industry launched an online offensive in the escalating public relations war over the sector's environmental impacts, just as mayors from major U.S. cities took steps Monday to limit fuels derived from the "dirty tarsands."
The latest outcry came not from green groups, but from political leaders of the largest cities in the United States who called for a crackdown on fuels that they said could cause catastrophic global warming at the annual meeting of the U.S. Conference of Mayors in Miami.
See: http://www.canada.com/calgaryherald/news/story.html?id=61053db5-61e2-429...
Related: http://www.canada.com/calgaryherald/news/story.html?id=e10aa85b-5bf3-4a9...
Edit: Additional context here:
U.S. law puts chill on oil sands
Experts warn of hornet's nest of trade disputes, legal challenges, darkening cloud over investment
See: http://www.theglobeandmail.com/servlet/story/RTGAM.20080624.wroilsands24...
Cheers,
Paul
Well, more power to them. And I'm certain that the Chinese council of mayors will thank them for their generosity.
Enbridge aims for 2014 start
"The project calls for a 36-inch pipe will export petroleum from Alberta’s tar sands to Kitimat, with a capacity of 525,000 barrels per day (bpd)."
Kitimat Pipeline
(Kitimat BC is the Canadian city with the shortest shipping distance to China)
I just have to ask this question.
If the real reason that the price of oil has doubled in the last year is that demand is outstripping supply and not speculation then where are the lines at the gas pumps?
Why are we not facing the 1970's supply shock all over again?
Who is getting priced out of the market? Tell me India and China and then that means demand should be plummeting considering even the US of A has lowered oil demand compared to last year. What does lower demand lead to? Lower demand=double the price? Huh-what?
Speculation makes perfect sense. Let's say I'm a gigantic company with billions of dollars to play with. First I buy oil. Then I re-sell futures to other companies that are mere shell companies that I already own, and keep bidding up the price ON PAPER in between my own companies. I do not pay any more than market price - I can't lose I can only gain.
Think about it. I buy oil at $100 a barrel. I "re-sell" it to myself through shell-companies that are merely fronts. The futures market has to see that lots of money is going into oil futures. The second someone else wants to buy my $100 oil for more than $100 I've bumped up the price merely through speculation. Repeat until win. Poor regulation IS causing this exact scenario to occur right now.
Once again, if there were a true oil shortage, why are there no lines at the pumps?
Assuming you aren't joking, the oil shortage situation appears after you restrict price movement. If prices move up, you don't see a shortage as those without money to pay don't line up.
Your not from Nepal I take it ?
They are getting priced out but oil is still fungible and whats happening is a sort of rolling shortage. A region of the world gets desperately short oil and finally coughs up the money to but more. This causes shortages in some other region. Rinse and repeat. The rolling shortage is starting to reach higher and higher up the socioeconomic ladder. Last year it was concentrated basically in the poor equatorial countries.
Until recently the combination of consistent high oil production and shortages and certainly some demand destruction allowed us to smooth yearly production out to meet the highest demand seasons. Understand that oil usage is seasonally cyclic with the lowest usage in the fall and early spring. Traditionally this is when refineries would do maintenance.
You may have notice lately that diesel is getting ship all over the planet in strange and inefficient ways with oil coming from the ME to the US and diesel shipped to Europe. There is a game called Whack-A-Mole thats a apt description.
But its coming to a end and more persistent shortages are effectively starting now.
Google is your friend you can just watch news about diesel thats good enough.
http://news.google.com/news?hl=en&suggon=0&safe=off&rlz=1B3GGGL_enUS240U...
why are there no lines at the pumps?
Because higher prices reduced demand JUST enough to prevent shortages.
If higher prices had not reduced demand by, say 2%, in the last 6 months, demand would have been 0.02 x 180 days x 85 million b/day = 306 million more barrels burned. Enough to cause lines in many areas as inventories shrank close to fumes.
Lower prices = lines and "No Gas Today".
Expect $5/gallon soon, and then $6, $7, $8, $9, and even $10. Perhaps $15/gallon.
Fewer barrels of oil are being exported, the major fields of the world are drying up and the oil exporters are burning more @ home > less oil to export.
Alan
BTW, if someone buys an oil futures contract, they either have to take delivery (oil is messy and bulky) or sell the futures contracts. Since speculators are not in the business of holding oil, the either buy (or sell) a futures contract (driving the price up (or down), But before the futures contract becomes a "Right Now" contract, they have to sell (or buy back) the futures contract they earlier bought (or sold), driving the price down (or up).
Net effect zero after the second sell (or buy).
Speculators bet on oil going higher or going lower. Sometimes more on one side or the other. They affect the price for a day or a week (higher or lower), but not much longer for the nearest to expiration contract (the one everyone quotes).
There have been speculators and futures contracts for wheat and corn for well over 100 years. Same deal. Eighty hears ago there was a Congressional hearing to see if evil speculators were forcing wheat prices down, Answer, no. Because for every buy, they have to sell, and for every sell, they have to buy.
A good explanation, Alan. The moves last Thursday and Friday are good examples of the phenomena which occurs at contract change. Thursday, starting at about 10 AM EDT (US), the July contract started its slide and lost $4+ for the day. The price moves Friday somewhat offset that, moving back up $2+. I think of this as the end of contract anxiety factor. It is one of the normal things in the oil and gas contracts, more predominately in the oil contracts.
Price controls & rationing are what lead to gas lines in the 70's. We don't have those today (yet)
In places like China where there are effective price contreols via subsidies, there are quite a few long queues for diesel
Well, here are a few.....
http://edition.cnn.com/video/?/video/world/2008/06/20/vause.china.oil.hu...
This is the reason that oil prices didn't go down when China announced it was doing away with some of its subsidies. The effect it will have on demand is all but certain. Higher prices may destroy some demand, but they will also make more gasoline and diesel available at the pump. So the doing away with some of the subsidy could actually increase usage.
I don't know whether to laugh or cry. Kudos to the parents for killing the TV. The kids need to readjust and get library cards. They're young enough to make the transition. We only had three fuzzy stations in the rural town where I grew up, books became my best friends and escape. "Cabel" didn't arrive until long after I moved to college.
http://www.nytimes.com/aponline/us/AP-ODD-Kid-Protest.html
It's funny because after your suggestion to hit up google here's an example of some so-called "shortages".
http://www.landlinemag.com/todays_news/Daily/2008/Jun08/061608/062008-10...
And 3 days later...
http://www.signonsandiego.com/news/mexico/tijuana/20080623-1450-bn23baja...
"Completely running out" is entirely different from "unexpected regional demand shock".
Keep in mind all the diesel those Californians would have bought still exists but it's just nearly three times as expensive lying under Californian gas stations so no one in their right mind would buy it...unless they had to. Isn't the fact that there's enough fuel for those motorists to be choosy about where they buy an indication of the opposite of a so-called shortage?
Add to that articles that are years/months/weeks/days old reporting the same so-called news multiple times over and over again about the same topics. Funny really.
Shouldn't people be aware that all the various fuel-subsidies in place around the globe created ARTIFICIAL and UNSUSTAINABLE demand?
Supa,
Welcome to the Oil Drum. There's a lot of good info here. Oil is a global commodity, and you will have to look outside the US to find the signs you are asking about.
Google Search results on ' Diesel Pakistan '
http://www.google.com/search?client=firefox-a&rls=org.mozilla%3Aen-US%3A...
Here is the first article that comes off that one:
http://sify.com/news/fullstory.php?id=14697118
Bob
I guess I should have concluded then, Supa, do you still contend that this missing Paki Diesel is 'still there', or is THAT the diesel that's instead in a tank in California?
I passed a lumberyard in Western Maine the other day, with a Logging Truck (big one) for sale by the road. Is the diesel that this truck is not burning hauling logs today the diesel that some other consumer gets to choose to buy?
Bob
jokuhl- are you saying pakistan doesn't subsidize because they do?
Pakistan to pass oil spike burden to consumers
http://www.hindustantimes.com/StoryPage/StoryPage.aspx?id=bd9e4851-a920-...
all of these countries facing "shortages" are simply defying laws of supply and demand and failing.
So?
Our subsidies are just better than their subsidies.
"Steal a little and they throw you in jail, Steal a lot and they make you king" -bob dylan
Gasoline Demand Falls 2.7% Amid Record Prices, MasterCard Says
To you, this sounds like good news. To me it says Peak Oil is Happening Now.
The only thing this shows is that people bought less gas with their cards.
There have been multiple reports of gas stations changing over to cash only sales. I wonder how much of this decline is reflected in this?
... In other news, China and India find an additional 250,000 barrels of gasoline per day available on the market, and snap it up with their abundant foreign reserves. The people rejoice! ...
Wow, take a look at this CBS news report on the Iran-Israel situation....
http://www.cbsnews.com/sections/i_video/main500251.shtml?id=4206561n
According to the report, Israel is really putting the pressure on Bush to invade Iran.
This report seems rather unique, as I haven't seen any reports on any other media outlets so alarmist.
Is the situation really so tense as CBS indicates?
The warplan sounds well-developed.
Looks like we will be lucky to make it to November.
I am not sure that Israeli fears of a lack of a willingness by the Americans to make war on anyone that the Israelis don't like is a peril for them after the elections though, as the only competition seems to be how quickly the candidates for President can spit out how they will support Israel whatever it does and under all circumstances.
Waging an undeclared war with a strike on another country would not seem to be a problem.
Oil $300/barrel?
I just hope the CBS report is overblown and that saner heads will prevail. I felt pretty good after they got rid of Rumsfield, brought in Gates and exiled Cheney from the public stage.
As to $300/barrel oil, that may very well look like a bargain if these right-wing zealots get their way.
Why did no one warn us? Perhaps the title of that DVD was too subtle: "End of Suburbia: Oil Depletion & the Collapse of the American Dream"
http://www.iht.com/articles/2008/06/24/business/exurbs.php
Life on the fringes of U.S. suburbia becomes untenable with rising gas costs
By Peter S. Goodman
Published: June 24, 2008
"Life on the fringes of U.S. suburbia becomes untenable with rising gas costs"
fuel costs are having a minor effect on the suburbs. we still don't pay a lot as a % of our incomes and it often doesn't pay to move closer to the city because housing and other costs are higher. the suburbs are hurting mainly because of the bursting of the housing bubble. it's hard to pay for anything when your mortgage is 50-100% of your monthly income. even then you can always sell the SUV and turn down the thermostat.
"fuel costs are having a minor effect on the suburbs."
Your reading skills are poor.
FTFA:
Seems like this link deserves a go up top.
Heavyweight physics prof weighs into climate/energy scrap
Also from Nature's Journal Club column:
I performed the usual Google incantations on Professor David J C MacKay. I'm impressed.
Personal Website (Very Interesting — loads of great links)
Sustainable Energy - without the hot air Energy Blog
Sustainable Energy - without the hot air — Book Site (Yes, you can download and read it here, and there is a link to a 1 hour podcast)
I've been looking though his slide sets and I've never seen the whole energy problem so clearly illustrated for the lay person.
This was briefly discussed a couple of days ago. I skimmed the online book, and it is indeed a tour-de-force. It would make a very good template to adapt for any national or state energy plan.
Hello TODers,
As posted many times before: I believe the best way to use and hoard our depleting FFs for optimal Overshoot decline and machete' moshpit reduction is for massive, biosolar mission-critical investments to rebuild/restock our topsoils, plus a similar effort to soil-strengthen, then protect other non-agrarian habitats.
It was a long time ago when I first asked our Govt to start hoarding of I-NPK thru legislation to jumpstart this pricing signal shift that would ripple through every facet of our society. Alas, they did nothing--I was hoping they would understand the national security importance of building a Ghawar-sized I-NPK stockpile as the real Ghawar peters out.
Job specialization is only possible with food surpluses, and as our society inevitably, and hopefully, speedily shifts 60-75% of the labor force into O-NPK recycling & relocalized permaculture, having a pre-built hoard of I-NPK to help sustain food output until organic methods prevail everywhere postPeak, can be an enormous benefit to reduce our tendency to gravitate towards machete' moshpits.
The beneficiation of FFs-->I-NPK & sulfur, then hoarding and using sparingly this transformed energy to help sustain harvest yields until O-NPK predominates is critical, IMO, to a relatively smooth paradigm shift and optimal Overshoot decline. Unfortunately, we are not going to find a Ghawar-sized batcave full of easily extractable guano.
But, just like guano, I-NPK can have a very, very, long shelf-life if adequately protected, and is generally much less flammable than hoarded crude oil, or its liquid derivatives. The massive amounts of FF-energy-embedded into I-NPK is not reversible, thus the mfg process locks in a future time window equal to a cropping cycle or longer. In other words, the high human discount rate [hat-tip to Nate H] is derailed; it forces one to look months and years ahead to the food harvest, and possibly even further to include future generations as a deep ecologic understanding begins to sink into the mind...
As noted before [see archives]: a biosolar mission-critical investing scheme, at every scale; from the grassroots' effort to buy, then store in your garage or storage shed, just a few bags extra of I-NPK while ramping your individual composting and gardening efforts with a wheelbarrow purchase can greatly help, on up the scale to the investing in companies that make/move I-NPK and O-NPK.
The faster this happens, the quicker Peak Outreach can be successful to alerting the huddled masses of the proper steps we need to be taking, to gracefully as possble, paradigm shift.
I offer evidence that this is gradually happening in this following link [but the key question is this effort happening fast enough to avert much future violence?]:
http://www.resourceinvestor.com/pebble.asp?relid=43881
--------------------
The Potential of Potash
..Farmers therefore have a strong incentive to produce as much as possible; according to the International Fertilizer Industry Association studies have shown that the prices of agricultural commodities have a greater influence – as much as 25 times higher – on farmers’ decisions to invest in fertiliser than do the prices of fertilisers themselves.
Future Outlook for Potash Prices
It seems clear that demand for agricultural commodities will continue to rise and that demand for fertilisers will rise too. As Virtual Metals pointed out in a recent report, the world’s population is set to rise from 6.5 billion to 9 billion by 2030 by which point two thirds of the world will be urban-dwellers. This population will have to be fed from a shrinking arable area which must be more intensively farmed requiring improved crop strains, greater application of technology and increased use of fertiliser.
--------------------------
The UN FAO PDF clearly states that land converted to veggies & fruits will use double the I/O-NPK compared to grain crops--another reason to buy/hoard/compost now before this permaculture trend gains international traction and the price ramps steepens even further than the present steep ramp induced by depleting FFs.
My repeated pleas for massive O-NPK recycling, strategic reserves of bicycles & wheelbarrows, SpiderWebRiding from the endpoints of Alan Drake's RR & TOD ideas, plus other proposals largely originated from the thinking on possible ways to mitigate the energy-embedded rise in I/O-NPK pricing plus the even faster rising price of its global movement logistic costs. Recall that the UN FAO PDF also is highly worried about the transport cost to poor countries.
Anything we can do to avert a quick agricultural collapse to the Nuahtl Tlameme backpacking scheme; by having other postPeak alternatives to more efficiently leverage human effort will be a big plus, IMO.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
The phosphorus article is a real sleeper issue. We are going to have to stop flushing nutrients down the toilet and out to sea, which depletes the land AND suffocates the oceans with anoxic dead zones -- two environmental destructions for the price of one! The fact that Sweden is attempting to engineer toilets that separate urine from other outputs seems like just a repetition of the by-now practically classical mistake of trying to fix all problems caused by technology by heaping on more technology. Maybe we can have a $10,000 toilet that consumes electricity to separate out urine. Then we can install a whole new pipeline network to feed that urine to some central fertilizer plant. Then we can increase the size of the National Guard to make sure we have pipeline security, as we know how much terrorists like to go after pipelines. And they are going to need helicopters. Helicopters that are run on ethanol derived from corn grown from the fertilizer produced from the urine saved by our $10,000 electrical toilets and pumped through the pipeline.
Yeah, that's the ticket.
Never mind that a very old, very cheap system already exists to solve this problem -- called an outhouse.
Straight-line resource flows simply don't work. I have written a little more about this a while ago here:
http://home.comcast.net/~kevin.cherkauer/site/?/blog/view/7/
Anyway, I'm mesmerized on the edge of my toilet seat waiting to see what the Swedes come up with. In the mean time, perhaps I'll go pee on my fruit trees.
Utopia in Decay
http://home.comcast.net/~kevin.cherkauer/site/
Kevin Cherkauer
Hello Kevin Cherkauer,
Great post and welcome to TOD! Yep, I have posted much before trying to warn people about this P-situation, and the possible postPeak effects of a diminishing flowrate.
Have you seen this earlier Aug. 17th, 2007 TOD keypost and following comments?
http://www.theoildrum.com/node/2882
----------------
Peak Phosphorus
This is a guest post by Patrick Déry and Bart Anderson. Patrick Déry is a physicist, energy, agriculture and environment analyst and consultant in Quebec, Canada. Bart Anderson is a former reporter, teacher and technical writer; he currently is co-editor of Energy Bulletin.
--------------
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
One of the very first big issues back in the early days of the environmental movement was the role of phosphates in laundry and dishwashing detergents in eutrophication of fresh and salt water bodies. I thought we had pretty much rid our detergents of phosphates. Checking labels a couple of years ago, I was shocked to discover that there were back in some brands that I thought had removed them. I'm more careful now to only buy phosphate-free brands of detergent.