DrumBeat: June 25, 2008

McCain Declares Energy Independence: Unveils Energy Plan 'The Lexington Project'

Sen. John McCain put a name on the strategic energy plan he has been piecing together for the last several days, likening it to President Kennedy calling for a mission to the moon in the 1960s and declaring that the United States “will break the power of OPEC over the United States.”

...McCain’s plan, which he has laid out over the past two weeks, is designed to get America off foreign sources of oil. It includes investing in new technologies, such as wind, solar, as well as more controversial measures such as off-shore drilling along the continental shelf, investing in nuclear technology, and utilization of so-called “clean coal” technology.

“In a world of hostile and unstable suppliers of oil, this nation will achieve strategic independence by 2025,” McCain declared.

Ernst & Young study: US oil reserves holding flat

HOUSTON, June 25 -- US proved oil reserves for 40 exploration and production companies increased 2% during 2003-07, reported Ernst & Young in a benchmark study released in Houston.

Estimated proved oil reserves held flat in 2007 at 16.1 billion bbl, however, said Ernst & Young, which complied and analyzed annual reports filed with the US Securities & Exchange Commission.

Dow: Energy Efficiency Not Offsetting Rising Costs of Energy

MIDLAND, Mich. -- Dow Chemical Co. has taken steps to reduce its energy consumption and reliance on non-renewable feedstocks to make products that sell in some 160 countries around the world.

Yet even a company making gains in trimming its costs and operating more efficiently is not immune from feeling the pinch caused by the endless upward march of energy and hydrocarbon costs. Dow said Tuesday it would raise prices for the second time in a month, idle plants and impose fuel surcharges as it struggles to stabilize its shrinking profit margin.

U.S. May Have Hit Peak Oil Demand in 2007, Yergin Tells Panel

(Bloomberg) -- The upward price trend of oil could ease in the years ahead as U.S. demand may have peaked in 2007, a Pulitzer Prize winning energy author told a congressional panel today.

Daniel Yergin, chairman of Cambridge Energy Research Associates, told the Joint Economic Committee that oil prices are being driven by ``new fundamentals'' involving the merging of oil and financial markets. He added that the price of oil has hit a ``break point'' where the U.S. will begin to seek alternatives.

``In our view, 2007 may well have been the top, the break point in terms of U.S. gasoline demand,'' Yergin said in prepared testimony.

The Olduvai theory and catastrophic consequences

Our century-old industrial civilization and its luxurious standard of living may be about to end. The energy prime mover of this civilization, oil, is about to drastically dwindle in supply.

Brazil may overtake US oil production

Brazil's offshore oil discoveries, including the Western Hemisphere's largest since 1976, may push the country past the US as the world's third-largest crude producer, president Luiz Inacio Lula da Silva said.

A National Intelligence Estimate (NIE) for peak oil?

Because we won’t know until after it occurs, there are different answers from various experts regarding when Peak Oil will occur globally. Some say it happened a couple years ago. Others think we’re a few years from Peak Oil. While others say we have several decades.

Surely there is an official US Government answer to this question, but your government isn’t giving it to you. Because of the strategic importance of the answer, there is undoubtedly a National Intelligence Estimate that provides a forecast that should be guiding government policies and legislative action. But getting our government to share its insights is seemingly impossible.

Vectren Ohio issues early warning for winter heating bills

Although the winter heating season is more than four months away, Vectren Energy Delivery of Ohio (Vectren) is already undertaking proactive steps to encourage customers to prepare now given the natural gas commodities market for the 2008-2009 winter heating season is pointing to much higher prices than last winter.

Year-round demand on natural gas, spurred from an increase in the use of natural gas to produce electricity, continues to force prices higher. In fact, the prior winter heating season saw market commodity prices that averaged about $8 per dekatherm, and the forecasted 2008-2009 heating season has prices hovering well above $12, according to the New York Mercantile Exchange monthly settlement futures prices. Because the cost of natural gas is passed on to the customer on a dollar-for-dollar basis, customers will be faced with these increased costs in the coming months.

Highway Users Lead Call for Increased Oil Supply

The American Highway Users Alliance (Highway Users) today called for Congress and the President to enact a comprehensive energy policy that includes more oil supply. Today, the Highway Users hosted diverse consumer and business associations at an event where the groups called on Congress to approve more access to domestic resources and encourage the production and use of oil from Canada, a friendly and highly reliable trading partner.

"Motorists, truckers, bus companies and recreational travelers are being hurt by the high cost of gas at the pump, which is a direct result of the current price of crude oil," said Greg Cohen, President and CEO of the Highway Users. "Congress must come together, overcome partisanship, and increase the supply of oil so that these prices can come down. Americans are hurting enough!"

Russia may supply gas to Georgia rebel region

MOSCOW (Reuters) - Russia is looking into building a gas pipeline to Georgia's breakaway Abkhazia region, a proposal likely to alarm Western governments who say Moscow's support for the separatists risks stirring up tensions.

The idea is also almost certain to anger aspiring NATO member Georgia, which accuses Moscow of trying to annexe the Black Sea region and views as illegal any business dealings with the separatist administration.

Offshore drilling questions - “when?” “how much?” etc.

In 1973, after the OPEC oil embargo caused gasoline shortages, votes in Congress suddenly materialized to approve construction of the delayed Alaskan pipeline. Four years later, crude started to flow from fields proven back in 1968. Result: a slug of oil from Prudhoe Bay helped reduce our imports for eight years, and US oil production increased modestly for five years.

Soon history may repeat itself, but with some key differences. As soon as this week, elected officials in Washington D.C. may be staring at a vote to overturn the 27-year moratorium on offshore drilling plus open up Alaska’s ANWR. Are voters fried enough about $4/gal gasoline to pressure their representatives and senators to support drilling? Maybe. But this time around the offshore really isn’t a cavalry waiting to save the day. Happy motoring has hit the skids.

Ed Koch: A Transportation Stimulus

The availability of the hydrogen-powered car, the Honda FCS Clarity, just leased to several hundred people in southern California, reinforces for me the need for an urgent government research program devoted solely to ending the energy crisis. Last year, $327 billion flowed from the United States to oil producing countries, hugely contributing to our current economic crisis. This year the dollars spent on importing foreign oil are undoubtedly far greater: oil in 2007 ranged from $60 to $92 a barrel and last week reached $139. America's estimated annual oil bill for 2008 will be $400 billion.

The Moses of a post-peak oil world

Peak Oil is here or close enough, thank you. Those of us who've been dreading this moment for years are now waiting for the other shoe to drop, ie: the s*** to hit the fan. When that happens, who will be the leaders who will carry us kicking and screaming towards the sustainable way of life that we should have been leading all along?

Wind turbines are 'unreliable and will cost each home £4,000' claims think-tank

The Government's plan to build thousands of new wind turbines across Britain is misguided, doomed to failure and will cost every household at least £4,000, a new report claims.

Rather than trying to solve the UK's energy crisis by investing in wind power, ministers should focus on tidal energy, clean coal and nuclear power, it says.

UAE inches closer to nuclear milestone

Faced with an expected shortage of natural gas and possible global taxes on carbon emissions, officials hope to rely on atomic energy to produce a third of the nation’s power within a decade.

Oil sands industry faces rough going in reaching out to green groups

CALGARY, Alberta: Oil sands producers in Canada have a rough road ahead persuading environmentalists and an increasingly concerned public that they are serious about protecting the environment while investing billions of dollars in new projects.

The industry's lobbying group and several chief executives began a new communications campaign this week aimed at countering a full-court press by environmentalists over the impact of oil sands development on air, land, water and local communities.

Life on the fringes of U.S. suburbia becomes untenable with rising gas costs

ELIZABETH, Colorado: Suddenly, the economics of American suburban life are under assault as skyrocketing energy prices inflate the costs of reaching, heating and cooling homes on the outer edges of metropolitan areas.

Just off Singing Hills Road, in one of hundreds of two-story homes dotting a former cattle ranch beyond the southern fringes of Denver, Phil Boyle and his family openly wonder if they will have to move close to town to get some relief.

...Life on the distant fringes of suburbia is beginning to feel untenable. Boyle and his wife must drive nearly an hour to their jobs in the high-tech corridor of southern Denver. With gasoline at more than $4 a gallon, Boyle recently paid $121 to fill his pickup truck with diesel. The price of propane to heat their spacious house has more than doubled in recent years.

Though Boyle finds city life unappealing, it's now up for reconsideration.

26 things you can do to RIGHT NOW manage your anxiety

If you aren’t feeling some degree of apprehension right now, you aren’t reading the news. Here are some of my thoughts for turning that emotional energy into constructive action:

1. SET A GOAL TO CUT YOUR EXPENSES by some concrete number—10%, 20%, 30%, even 50%, and set up a plan to do it. Reducing costs is the fastest way to increase your income–faster than making more money.

2. LOOK AT CASH YOU ARE WASTING without enjoying its benefits, such as lights that get left on, computers that stay on day and night, “phantom loads,” like microwave clocks that use more energy than the microwave itself. If you get to know your electrical meter, and record the setting before and after you shut off those phantom loads, you’ll have concrete proof that you are saving money.

FACTBOX: The world's oil shocks

The previous crises were caused by a sharp reduction in supply preceded by political turbulence and war.

This time round, booming demand from emerging Asian and Middle Eastern economies has pushed the price of oil to real-money highs even as consumption slows in the developed world.

Japanese fisherman to strike over fuel prices

Japan's fishing industry will grind to a halt next month after the country's fishing associations today agreed to hold a one-day strike to protest at rising fuel prices which they say are threatening to put thousands of members out of business.

GOP bashes bike to work

“Colorado families are struggling at the pump and the answer we are getting from Colorado Democrats is shut down oil and gas production in Colorado and ride your bike — unbelievable,” said Rep. Frank McNulty, R-Highlands Ranch. “I’d like to see how they expect a mother of three in my district to get her kids to school and to buy groceries for her family using a bicycle.”

Debating Coal's Cost in Rural Va.

If it were possible to build a coal-fueled power plant in Virginia without controversy, it would happen here. In the state's Appalachian southwest, there is coal in the hills, coal in the rail cars, and coal in family histories that stretch back to picks and shovels.

Apparently, it's not possible.

"I am opposed to this plant," Wise County resident Jaculyn Hanrahan told the Virginia Air Pollution Control Board on Tuesday. "Because I am opposed to respiratory illness, smog, neurotoxins and acid rain."

Saudis rely on Khurais to speak volumes

The Khurais oil field development is expected to add 1.2m barrels a day of light, highly desirable crude to Riyadh's reserves. It is a critical element of the country's energy investment plan, which was initially expected to eat up $70bn (€45bn, £35.7bn) but has since ballooned.

The plan, which is little more than half way to completion, will increase Saudi Arabia's oil capacity from 9.5m b/d to a targeted 12.5m b/d, almost 15 per cent of current world demand, by the end of 2009.

It would also go some way to silencing the kingdom's doubters. One reason international oil prices are trading at record highs of about $140 a barrel, double last year's level, is that traders worry that Saudi Arabia is having trouble meeting that target amid an industry-wide shortage of skilled labour and equipment.

Saudi drive to boost oil reserves

Saudi Arabia is pushing ahead with a drive to hunt for more crude and boost its proven oil resources although the Gulf Kingdom already controls nearly a quarter of the world's recoverable crude deposits, according to its state oil company.

Iran Ships Can Hold Months of Saudi Oil Pledge

(Bloomberg) -- Iranian supertankers now in the Persian Gulf could store the equivalent of five months worth of the additional crude oil Saudi Arabia pledged to pump to curb prices, according to ship-tracking data compiled by Bloomberg.

Drill, Drill, Drill: My Interview with Anadarko Petroleum CEO James Hackett

Kudlow: …What do you say to the peak oil crowd? You don’t sound like you believe in peak oil.

Hackett: I think that the peak oil is determined by price. And I think that it is also determined by what you allow to be alternative forms of energy. I think there are places in the world where peak oil has not occurred. I do think that oil will not be able to grow to the sky in terms of supply, forever and ever. I think it’s harder to get. It’s getting more expensive to get. I think that we need to continue to develop a broad based fuel sourcing, including nuclear energy. But prices are having some effect. It’s both impacting demand, which we all need to conserve a lot more than we do. We’ve become a very lazy country since the late 70s. Nobody talks about conservation. They’re talking about taxing the oil industry, instead of talking about turning off your air-conditioners, or driving smaller cars, which is what we really need to do. It has that immediate impact.

The energy farce

Last year, world-wide oil consumption increased by only 1.1% Yes, you read that correctly. Even in the rapidly growing Asia/Pacific region which includes China, consumption only rose 2.3% last year. In America, our energy conservation efforts are already beginning to pay off. Our oil consumption decreased by 0.1%. Meanwhile, worldwide oil production fell by just 0.2%. If you add biofuel (ethanol, biodiesel, etc) production to the mix, fuel production actually increased slightly. The “sky is falling” argument when explaining oil prices holds no water.

Beyond CRM 2.0

The price of oil and the disruptive force of a changing energy infrastructure is touching nearly every corner of the world's economy, and that includes CRM (Customer Relationship Management). Get ready for fewer face-to-face meetings and even more reliance on technology and over-the-Web interactions.

Grassroots alliance seeks task force to study local impact of dwindling oil

For the past two years, the world’s demand for oil has begun to exceed the supply. And much sooner than expected, governmental units at all levels will be feeling the effects.

David Suzuki reflects on 50 years of the planet’s destruction

Today, thanks to computers and the Internet, and television, radio, and print media, we have access to more information than humanity has ever had. To my surprise, this access has not equipped us to make better decisions about such matters as climate change, peak oil, marine depletion, species extinction, and global pollution. That’s largely because we now have access to so much information that we can find support for any prejudice or opinion.

Don’t want to believe in evolution? No problem – you can find support for intelligent design and creationism in magazines, on websites, and in all kinds of books written by people with PhDs.

Barrel Fever: Does anyone know how much oil there is in the world?

Here's how arcane the oil guessing game can get. Saudi's Ghawar oil field is the world's largest; it's been pumping out oil since 1951 and holds 7 percent of the world's proven reserves. Overall Saudi production has been falling since 2005, yet the number of rigs in use has tripled since 2004. Why is that? Some analysts believe the increased rigs are intended to compensate for declining production from Gwahar. Others argue that the Saudis are operating strategically, shutting their most productive wells as prices rose and opening smaller wells to better manage supply.

BP May Struggle to Boost Russian Output on Dispute, Old Fields

``If the conflict escalates and continues for some time, it will have a negative impact on the company operations,'' Polovets, who represents the partners, said.

At the same time, advanced techniques aimed at improving oil recovery are ``not proving to be as successful as we had hoped,'' according to Polovets.

House fails to move gas price gouging bill

WASHINGTON (AP) — House Democrats failed Tuesday to resurrect a bill to punish price gouging at the gas pump, while maneuvering to block Republican attempts to expand offshore drilling, an idea gaining in popularity amid $4-a-gallon gas prices.

Action on legislation that would assure continuation of the ban on oil and natural gas drilling in most of the country's coastal waters was put off until later this summer after it became increasingly clear that Republican lawmakers may have the votes to lift the drilling moratorium.

Oil Woes Fail to Stir Leadership

Why is Rep. Randy Forbes all alone out there?

Rep. Forbes is an earnest Republican congressman from Virginia who has distinguished himself by calling for a "Manhattan Project" to fully end the U.S.'s dependence on foreign energy within 20 years. The Manhattan Project label harks back to the government's crash project to develop and field a nuclear weapon within just a few years to prevail in World War II.

Big Oil isn't the big problem

The recent past suggests that, in fact, efforts to influence the supply of energy can actually boomerang, driving up prices and consumption. Rather than demonize Big Oil, lawmakers should focus on tamping down demand.

McCain runs into opposition over offshore oil plan

SANTA BARBARA, California (Reuters) - Republican presidential candidate John McCain on Tuesday ran into opposition in environmentally conscious California to his policy switch in favor of U.S. offshore oil drilling.

Opec shuns calls to produce more

Opec president Chakib Khelil has said the cartel of oil producing nations is pumping enough output, and that high prices are down to other factors.

He put the current price rises down to other factors outside Opec control, such as US pressure on Iran and the weak US dollar.

Authorization bill targets DoD energy usage

Stronger leadership, better accounting, and more money are the main drivers in the House’s latest attempt to help the Pentagon improve how it manages and conserves energy.

U.S. expert says traditional factors responsible for oil prices

NEW YORK: One of the leading energy experts in the United States was expected to tell a congressional committee Wednesday that traditional economic factors were responsible for most of the run-up in oil prices and caution against looking for simplistic solutions to one of the world's most complex markets.

Daniel Yergin, the chairman of Cambridge Energy Research Associates and a Pulitzer Prize winning author of a history of the oil industry, who was scheduled to testify before the Senate's Joint Economic Committee, was expected to pour cold water on the momentum growing in Congress to blame only institutional investors for record high prices.

An alternative scenario for oil

Apart from hiking prices to curb demand, you can expect moves to curb speculators.

Nigeria: Chevron Union Shuts Down Offices Nationwide

Petroleum and Natural Gas Senior Staff Association of Nigeria (Pengassan) and Nigerian Union of Petroleum and Natural Gas Association (NUPENG) union members of local Chevron unit yesterday began strike at the Chevron's administrative offices throughout the country.

The action has led to the closure of all Chevron offices in Nigeria but production has not been shut down and this is pending further meetings with the federal government.

Report: Saudi Arabia arrests 520 for terrorism

Saudi Arabia has detained 520 suspects who are "involved in terrorism," state television reported on Wednesday.

As tire prices rise, drivers delay purchases

Keith Price, a spokesman for Goodyear Tire & Rubber, says the price of oil, now at all-time highs, makes up 60% of the raw materials cost for a tire. Natural rubber, a commodity nearing 28-year price highs, makes up another 25%.

Many car owners, already feeling pinched by inflation at the gas pump and supermarket — and deflation in their home values — are responding by driving on tires until the tread is practically bare, a worrisome trend.

Fill 'er Up: Gas Is Cheap in Tijuana, So Californians Buy Big Fuel Tanks

Gasoline is selling for six pesos per liter across the border in Tijuana, which works out to about $2.50 a gallon, way cheaper than gas prices approaching $5 a gallon in San Diego County. Diesel fuel is cheaper still -- $2.19 a gallon.

All of this is a boon for James Blue's auto shop, located in a strip mall in the arid hills east of downtown San Diego. His business, Express Performance Center, installs extra-large fuel tanks in pickups and other work vehicles used for runs to fill up with cheap gas in Mexico.

$9 Gasoline Will Make You Love Public Transportation

David S. Mack, a vice chairman of New York's Metropolitan Transportation Authority, which is the agency charged with moving New Yorkers around, on June 18 told reporters that he might not ride the Long Island Rail Road anymore if his free passes are taken away. The state is trying to cut down on the use of free perks like this.

What Mack said after that observation, however, is what touched off a bonfire of indignation.

``Why should I ride and inconvenience myself when I can ride in a car?'' asked Mack.

SUV, truck sellers encounter a tight market

As gas prices soar, many Americans are trying to unload their bulky SUVs and pickup trucks in favor of smaller vehicles. A shift in preference for more fuel-efficient cars has left a scarcity of buyers. And with supply outweighing demand, owners are watching the value of their vehicles decline each passing month.

"The price can drop dramatically in a week's time," said Jim Fleming, president of the Connecticut Automotive Retailers Association. He noted that while dealers still accept large vehicles in trade, customers may be disappointed by what they receive in return. "The price of those vehicles is coming down because there are more of them."

Indonesian police use water cannon in fuel protest

JAKARTA (Reuters) - Indonesian police used water cannons to disperse about 500 protesters who threw rocks and bamboo sticks at police and broke a parliament building fence on Tuesday to protest against a hike in fuel prices.

Authorities blocked a key highway as the slogan-shouting activists burnt tyres outside the sprawling parliament grounds to protest against the government decision to hike fuel prices by almost 30 percent last month.

South Africa: Country Can't Afford to Neglect Energy Needs of Mines

SA is in danger of losing its day job. We've moonlighted with manufacturing, but mining still lies at the core of the economy. Now we have electricity cuts that target the mines.

The end of the rolling blackouts makes it easy to forget that the mines are still hurting. Six months ago, Eskom imposed a 10% cut on major users, virtually all of which are mines or smelters. Most mines remain at 90% of their December level, with only a handful allowed up to 95% to avoid major job losses.

A new model for nastiness

If we believe that the downturn is likely to share some of the characteristics of the 1930s, rather than being simply a repeat of the 1970s, then it is unlikely that oil producing countries and commodity exporters will escape problems. Oil prices have been driven up to levels considerably higher in real terms than the 1970s by demand pull from China and India. If China and to a lesser extent India suffer severe downturns, then oil demand must drop off correspondingly and it becomes unlikely that the 1970s pattern of continuing high oil prices even in a recession will be repeated.

If oil prices drop sharply, the political effect on oil producing countries will be considerable, and not necessarily pleasant. The Shah of Iran basically fell because of the 1973 oil price rise.

A Cost-Effective Way to Save the World?

If you had $75 billion to spend, how would you save the world? Would you invest it all in alternative energy research, to fight global warming? Would you revamp America's border and port security, to fight terrorism? Would you sign Kobe Bryant, Paul Pierce and Tim Duncan for the Philadelphia 76ers? (My personal choice.) Most of us might would make such a decision based on emotions - witnessing the pain of hunger, or experiencing the fear of nuclear terorrism. But what if there were a way to calculate the exact value of global priorities, a way to figure out just how much human suffering we could alleviate per dollar spent?

Carbon cuts are just a fantasy

VANCOUVER — I have bad news for Stéphane Dion. Out here in B.C., the people are revolting. Gordon Campbell's much-applauded carbon tax was pretty popular in February. But now, as people are being hammered by record gas prices, the enthusiasm has cooled. A new poll says a whopping 59 per cent of British Columbians now oppose the tax - and it hasn't even kicked in yet.

Branson says airlines should pay tax on emissions

GENEVA - Virgin Group chairman Richard Branson told a forum on climate change Tuesday that aviation is a dirty business and that airlines should be willing to pay for the damage they cause to the environment.

Warming May Make 'Perfect Storm' of Disease

A "perfect storm" of diseases can get unleashed by the kind of extreme swings in weather expected with global warming, triggering mass die-offs of wildlife or livestock, research now reveals.

Now the first clear example of such a perfect storm of diseases has been discovered by an international team of scientists.

Some ethanol stories. It sounds like full steam ahead, regardless of the consequences, at least on these pieces.

Biofuel Bean Counters Forget to Count the Beans

When the president’s top bean counters at the Council of Economic Advisers rushed to downplay ethanol’s impact on food inflation, they forgot to count the beans. . .

The problem? It didn’t count the impact of biodiesel production, which uses soybeans as its main feedstock, according to USDA chief economist Joseph Glauber. It also didn’t count the impact higher soybean prices have had on global food prices.

It turns out that makes a difference. In the past year the price of soybeans, one of America’s biggest crops, has soared as more of the beans were used for biodiesel and since fewer acres of beans were planted last year to accommodate more acres of corn for corn-ethanol.

Sweet Sugar Ethanol Coming Stateside

The American ethanol industry, the world’s largest, is about to get a little sweeter. Louisiana Green Fuels (LGF), an international investment group, says it is on schedule to open up the first commercial sucrose-to-ethanol plant in America. LGF, which is 80 percent owned by Inverandino, a Colombian business group, tells Earth2Tech it plans to have four ethanol plants and three sugar mills in operation in Louisiana in the next 10 years pumping out 100 million gallons of sugar-based ethanol a year.

Oil-Dependent Japan Tries Turning Rice Into Fuel

While the country imports most of its raw materials and food, it is self-sufficient in rice production, and even has a surplus. A change in the Japanese diet has significantly reduced rice consumption over the past decades, but government subsidies and farmers' persistence have kept rice farming popular. Warehouses are brimming with rice and the countryside is dotted with rice paddies left fallow or converted temporarily to other crops to prevent overproduction.

"We have the land, people and technology to make this happen in Japan," says Shigenori Morita, a professor of agriculture at the University of Tokyo.

It might have already been mentioned, but another side effect of ethanol production is the eventual decline in consumption of sugar and corn syrup in North America. This would result in a pretty large health benefit. These products are currently way too cheap considering all the health care costs associated with them.

There are big health benefits to reduced use of corn for corn syrup, meat and eggs.

Citing global impacts for ethanol use is a straw man argument since in the Post Peak Oil world exports of corn will have to be reduced anyway because of lack of transport fuel. We can not afford to continue to ship a low value course grain around the world for animal feed and ethanol use IMO.

Other countries will have to figure out their own energy solutions using the resources they have available just like we do. We have large corn resources that are currently being misallocated to high fructose corn syrup, excessive animal feeding as the the result of cheap subsidized corn over many years and exports of the same cheap corn.

This all has to change and the change will not be easy for those who are in the animal feeding business or are exporting corn. Unless meat and other animal product prices rise dramatically, ethanol will out bid them for corn as ethanol prices rise in line with high gas prices.

The scary ELM is powering this change. Ethanol producers are under stress but then so are oil refiners. Change isn't easy, but there is no other way to maximize the utility of available resources.

but there is no other way to maximize the utility of available resources


Repeal the 50 cents/gallon corn ethanol subsidy, and lower the tariff on imported ethanol.


Better yet, eliminate ethanol entirely. Ethanol amounts to pandering and handouts to farmers, with no real advantage. Invest in nuclear and wind to build support for an upcoming electric vehicle fleet. It amazes me that such stupid technologies are allowed to continue. If we were using sugar cane instead of corn and willing to sacrifice a lot of protected lands that would have the right climate, then ethanol might make more sense. Corn ethanol is insane.

And this will help our current accounts problem, how?

Sorry, I'm entirely ignorant of the politics behind this. Whats the problem?

The current account is the difference between exports and imports. Atm America imports more than it exports hence the current account is in deficit. Importing more ethanol will increase the deficit.

This argument is pretty useless in regards to ethanol though, given the large comparative advantages enjoyed by some producers compared to inefficient American corn ethanol.

I know what current accounts are, I just never had anyone explain to me why its a problem.

If we import (rather than locally produce) Ethanol, presumably it displaces imported oil, or oil products. Assuming we only import ethanol which is actually cheaper than the oil it replaces that would be a net reduction of imports. But, probably more importantly we would have more farm produce to export. It sounds to be like either win-win or maybe draw-win.

I made more or less the exact point in response to a graph from the Economist titles "Betting the farm", posted by Richard in the Jun 19 drumbeat. The graph showed sugar beet as needing the lowest % of arable land to produce 5% of transportation fuels. I pointed to the abundance of sweet crap available in US and UK supermarkets and convenience stores that, I had observed on recent visits to both countries. With the ONLY nutritional value of sugar being raw energy and it's rfairly obvious surplus in the western diet, it is one food we could probably use less of.

There is going to be some resistance to this idea coming from the soft drink and confectionery industries. My bias is that I live in a country that had sugar as a mainstay of it's economy for a couple of centuries before the advent of sugar beet.

Here's hoping for less sugar and more ethanol!

Alan from the islands

It might have already been mentioned, but another side effect of ethanol production is the eventual decline in consumption of sugar and corn syrup in North America.

tell me about it. I"m paying $1.65 for a 20 ounce soda.

Your 20 oz. soda has about $0.04 corn in it.

no idea my personal battle on hfcs was this steep

A question for you in your capacity as an actuary.
When you reach 65 the government life expectancy tables says you have ~20 years left. Is this a 50% probability? Is there a table for a 10% probability at maybe 30 years left? Sorry to be off topic but I'm doing some planning and would like to see what kind of safety factor is in those tables. Thanks.

I've been playing with financial models that combine uncertainty about time of death along with uncertainties about returns on various investments. Here is one source I found for some statistics about death:


What I haven't managed yet is to correlate assets with health, or maybe expenses with health. One question is, how much does it make sense to spend on preventative care, like better food or replacing running shoes more often etc. The other question is how to estimate and manage the occasional crisis, e.g. medical insurance etc.

Of course, the world is always changing, and probably more so in the coming decades. Past performance is no guarantee of future returns!

I was watching Frontline/World last night on PBS (one of my favorite shows). http://www.pbs.org/frontlineworld/stories/africa705/ They had a section on climate change and Africa. A particular section caught my interest:

"There’s an area of currents off the coast of Namibia, one of the few noncoral fertile areas in the oceans. There’s been a massive collapse in fisheries there, and scientists are trying to understand what's going on and what prompted that.
Well, I think it's important to understand that it’s very unlikely that global warming is the only cause of a lot of things that we're seeing. But it does add a terrible stress on overfished areas. Clearly, we have population growth. You also have temperature change, which makes things less hospitable and therefore makes diseases more likely in fish, and then you have the overfishing, so you cross a threshold, and you get a collapse."

They said how the fishing has dropped over 90%. There are many discussions here on TOD about fast crash vs long declines. What I found interesting is the comment about a certain threshold being reached which triggered a collapse. I guess it made me think how this ecological/climate change example would apply to peak oil.

I wonder if it has something to do with fertilizer runoff from the Niger river or Congo river. It could cause algae to grow which ends up eating up the oxygen in the water and killing the fish. This could happen for patches of oceans hundreds of miles across.

The Gulf of Mexico should have a record dead zone this year. More corn planted last year plus high runoff (both this spring and recent floods). It will hurt our fisheries.

Thanks Corn Ethanol,


Map's already out.

Covers almost the entire LA Coastline.

Do you have a link for that? I can't seem to find it.

It's been there for a long time. What was it before? Cattle Feed?

Treat it like a big aquarium!
You have plenty of wind in the gulf, so just put up some big wind turbines with air compressors instead of electric generators and run the compressed air down to the sea floor and to a series of air bubblers like you have in a home aquarium.
Plenty of oxygenated water for the marine life PLUS all the free fertilizer producing extra plant life for the marine life to feed off of.
Farmers have to pay for their land and equipment, so I don't see any reason that the gulf fishing industry that would directly greatly benefit from the wind turbines oxygenating the former dead zones shouldn't be paying at least part of the cost of the wind turbine air compressors?

That is so crazy that it might work. God only knows what would end up living in this area, but some of it would be edible.

I think along this part of the African coast, the strong current is coming up from south to north. I was in Namibia in January once and the Atlantic was really chilly for swimming. So the Niger/Congo River idea couldn't be right because their mouths are farther north than Namibia. The only major river mouth south of this coastline is the Orange River.

Yeah I know this can be modeled with a forced logistic equation.


The problem is that because the solution is chaotic the exact dynamics are sensitive to the input condition. They diverge exponentially overtime with a small change in input parameters.

About all you can predict it seems is that if you can prove you have a forced biological system then its sensitive to collapse.

Also the forcing function is some incredibly complex feedback function representing the environment interacting with the system. You can think of it as inertia.

Or more correctly a change in the inertia of the system. The forcing function can be viewed as something that can change the inertia of the system and make mass disappear. Think about walking along on the beach and suddenly getting lighter than air and floating.

However it seems that you have a sort of heuristic in place. The long the system resists collapse the harder the collapse. The natural or best collapse is a exponential decay which allows the system to degrade gracefully if this route is for some reason blocked then the system generally seeks other more explosive decay routes. In short the pressure builds.

This means of course that if this model is correct the longer the system manages to balance all the various pressures the higher and higher the probability goes that it will experience a even harder collapse.

In terms of our oil based economy as a whole the longer we attempt to maintain business as usual and resist the natural decline that would be painful but predictable the more certain that we face a catastrophic collapse.

Given that the overall system has been under artificial boost since the 1970-1980's when the switch to pure fiat currencies really kicked in and the green revolution took off we can be pretty sure that over pressurization if you will has been in force for some time.

This is basically where I'm at. The net result is that collapse is in my opinion certain the question is when and what feedback loops will exponentially explode causing collapse. We have so many potential candidate routes to collapse that are known and I've discovered more that are not well known. That even trying to guess how we collapse is itself a unsolvable problem. From what I can tell what seems to be happening is the number of candidate collapse modes are now themselves exponentially increasing and exponentially growing. Only one has to go hyper exponential to cause a cascading collapse.

A way to look at it is swinging a plastic bag full of sand around in a circle with someone shooting holes in the back with a large arsenal. Some rifles, pistols, pellet guns and at different rates. Right now even people that are enlightened about peak oil and our overall economy can only see the holes in the plastic letting the sand out. The huge mistake is that everyone thinks this is the problem however the real problem is the holes are forming a network and a big patch of the bag can fly loose at any point in time allowing all the sand to fly out.

So you see where my little inertia/collapse law comes from. The longer the bag is shot at but remains stable the more holes are formed and the greater the probability of collapse. The collapse is certain but you can see that the mean time to failure is almost useless to calculate but its a lot faster than the people watching the sand trickle out of the holes realize.

I personally can't solve the problem in the sense of giving a concrete time all I can say is that if I'm right then collapse will happen and happen faster then anyone else predicts.

The only answer is to immediately quit shooting your bag of sand full of holes.
Since I think I'm one of the few people that actually understand the problem the chances are zero that this route will be taken.

Interesting analogy.

Hello Memmel,

Great explanation for the fast-crash! IMO, Jay Hanson's Thermo/Gene Collision timeline prediction window and Duncan's Olduvai Gorge have got it nailed unless the planet does a quick 180 in goals.

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


I'd like to add that the nature of the problem makes it impossible to calculate when we would collapse using physics. This is for multiple reasons. First to even begin to attempt to calculate it you would need perfect detailed information about the status of the bag at all points in time. So even a classical solution is daunting since its divergent (chaotic). Finally the actual collapse is started down at the quantum level as the plastic would rip. Quantum does not even allow us to determine the information we would need to determine the unsolvable chaotic problem. It seems that information theory has some sort of law that the time of collapse of complex systems is unknowable. This is probably because they perform calculations and all I may have discovered is a more general form of the halting problem.

So regardless both quantum mechanics and classical systems complex enough to exhibit chaos are capable of computation ( in general state changes ) and thus are undecidable ala like the halting problem.

To see that they perform calculations you can take some readings or measurements of a complex system and convert them to color and display them on a screen.
Given enough time and ingenuity you could ensure they print out hello world.
The fact we are not using the computation does not mean its not being performed.
A computation at its heart is nothing more then the change in state of a system.


One can argue that physics is one group of probabilistic automata.

Wolframs book a new kind of science followed this approach and was soundly
rejected by the scientific community.

The reason was it did not easily give real results but as you see from what I've written real world important problems actually are often undecidable. I refuse to simply draw some pretty graph from faulty data and claim that I've solved the peak oil problem.

Its obviously not unknowable in fact we know a lot about the problem and can probably even get some idea about the probability of collapse.

Right now all I have this simple heuristic that simply states the longer the system resists collapsed when forced the greater the chance of collapse. If we had full data transparency about oil then we probably could figure out better where we are really at. Lacking this it seems that once we start declining the forced system generally follows a sort of stair step pattern downwards. Collapsing some which relieves the pressure then holding for a bit before further collapse. Using my back of sand analogy some balls of Fix-A-Flat are mixed in with the sand that allow the tears to be temporarily patched. So its slightly more complex but once you go through a few stair steps downwards you can empirically determine the forcing function. Given that these steps could be quite large having this late solution is not all that helpful. I will pursue this with vigor once we have obviously gone through our first and second step down.
I'm pretty certain we have already started real declines from peak not just export land but I'm also pretty certain that now that production is a political hot potato that the data is being corrupted. Eventually the decline will have gone far enough that it can't be hidden.

Translated to our oil economy this means that dealing with declining oil by doing nothing basically ensures certain collapse.

Translating the stop shooting bullets in the bag to our oil economy means the only solution is to force our economy into a controlled collapse and rapid move away from oil. Since people that are optimistic about getting out of this generally propose solutions that allow us to continue business as usual by making changes that resist collapse my model suggests they are simply wrong.

You have to take the pressure off the system and forcefully reduce demand basically below its "natural" forced level.

For example given the current high price for oil what we would have to do is heavily tax oil usage that not part of our core economy or conversion from oil.
This would also include extreme 100-200% import duties on consumer products to
force demand reduction in our trading partners that refuse to enact similar taxes.

This would force the price of oil down to say 50 dollars a barrel. The tax money would then be rerouted to infrastructure. The dropping real oil price would force oil producers to slow internal growth and eliminate subsidies.

The free market cannot make this type of transition.

Of course we may luck out and the bag might not break and we might deflate slowly. But its pure blind luck if we manage to transition off of oil without collapse. Its one of the solutions but its also in my opinion the least probable outcome. Its like throwing dice with five of the sides with a one spot and one with six spots and betting everything we get the six. The probability seems to be a lot less than this more like 1% but you get the picture.

You're thinking too hard.
It's a positive feedback loop.

The solution is obvious.
Fewer people..a lot fewer people.
In 1900 there were 1.65 billion people.
In 2012 there will be 7 billion people.
What is the carrying capacity of the earth without fossil fuels?

Even back in Malthus's day there were concerns.

Eventually depopulation will be the PREFERED solution
over 'infinite complexity'.

Certainly population is a problem but I'd argue the real problem was distribution or better concentration of wealth. The fact that birth rates drop in the wealthier nations is very well known. So if the worlds oil wealth had been distributed more equitably then we probably would not have had the population explosion in the first place. Blaming the result of our oil economy as the cause is not correct. This would have meant that oil would have been used in a far smarter manner ( retain rail etc )

Religous/Cultural issues are also a big factor in the population explosion. We did not change quickly in response to medical advances etc. Simply put we did not give women control of childbirth via readily available birth control.

The population explosion is a symptom of our disease if you will not the cause.

But more wealth means longer lives and lower deaths from illness. And the worse part is that raising the living standard reduces resources and the carrying capacity of the planet.

Besides your faith in the Demographic Transition Model is misplaced. How many people will become middle class
in a world of falling resources?

A better definition of middle class is security and ability to buy wants not needs.

These wants need not be resource intensive they could be a good violin passed down from generation to generation etc. Energy neutral building and with PV even energy positive buildings are possible. Romans did it using slave labor and renewable resources but we could have done it with steady innovation removing the need for slave labor. We could have also taken the route of a few valuable well built possessions instead of mass production. Works of art for simple objects instead of mass production. Products could be made to be upgraded and if needed recycled.
More long lasting stone in buildings instead of wood etc etc. If a building is well designed we need not even give up having ample space. Small is not absolutely required although small well designed spaces are just fine. With things like computers or the internet you have chances for more people to work from home or in walkable remote offices etc etc. The point is a renewable modern lifestyle is and has been possible for a long time. Instead of building new small homes we could have built larger multi generational dwellings for example that allowed the overlapping generations to live together. Communal living for the single people could have made sense. Sort of a more sedate fraternity life the extended into the early work years.

I think thats enough to show that a rich middle class lifestyle is possible without anywhere near the current resource usage levels. What I'm describing is a proud population that cherishes art/science education etc. Most would be able to become experts at something giving them self worth. Critical assets such as houses could be held in family trusts preventing any one generation from blowing the family inheritance. Overtime a certain number of idle rich on limited stipends would be possible. So a social safety net would or could exist without massive government. We probably could have kept the tribal like social structures that worked well in the past. Kibbutz show that these work even in a modern society and you have the Amish etc life styles.

Your argument is flawed in that your assuming the American style of middle class living is the only one that matters. I'd argue that a better one was possible that did not need wasting of resources.

The only critical factor that makes this different from the Romans who basically had this type of lifestyle is that technology would really be used to replace slave labor. This eliminates the need for a large poor/slave class needed to power the renewable societies of the past.

I'd argue that Demographic Transition concepts work quite well even without wasting or resources. You may notice that individual wealth is eliminated and replaced with communal wealth at the family and tribal/group level. Instead of corporations you have the concept of a "individual" extend to a family name or other group with lifelong commitments. This is nothing more than the traditional route of accumulation of wealth practiced by the various nobility overtime.

Sure wealth still rises and falls with the group its not a perfect system but it does provide the critical stability needed to reach the wants not needs level that allows people to transition into a low birth rate lifestyle.

Looking forward I happen to think this is probably exactly the type of living that will be undertaken to preserve a new type of modern life style where possible.

I'm afraid that given the current huge population that we will also revert back to a slave like society at least in the short term but I really think that over the long term given we understand birth control well and this genie won't go back in the bottle as long as we can make latex that populations will decline and we will eventually eliminate slaves. This means of course that we would also find it more practical to use robotic/mechanical labor and not slave labor but again I don't see the scientific principal disappearing and done correctly technology beats slave labor any day of the week. Overtime the groups that use technology instead of large slave populations will eventually surpass the slaved based approaches. The twin legacies of a huge population and global warming will certainly cause problems for centuries to come but on the same hand the will I'm pretty sure subside in time. I'd note that we are entering our crash conditions with diseases such as AIDS uncured and the large populations make outbreaks of epidemics certain if medical care is withdrawn. Slaves with AIDS are not all that useful so safe sex at least in the slave population pretty much ensures birth control. Depending on how draconian the elite is forced sterilization may become popular. I don't think we will fall into this slave based society in my lifetime or at least I'm hopeful that all we will face is poverty I really don't want to see or know about this phase in human history.

But given the lack of resources facing 7 billion people this sort of brutal society is almost impossible to prevent sort of a replay of the 15-17'th centuries.

But again this is a legacy result of the crazy 20'th century something like global warming which may take centuries to undo but eventually I think we will.


This gets us back to 3 billion by 2042 and 1 billion by 2082. So the time period that a slave based intermediate society would exist is pretty short a few generations. So we could be back on track hopefully the right one in a few hundred years instead of the 500 or so years before we really recovered from the fall of the Roman empire. I'd have to think that a hundred years of watching 7-8 billion people die might finally cause people to cherish life and take birth control seriously. I can't imagine that future generations will come through this fire with our current stupid religious/cultural systems that prevent effective population control. They may be a fairly brutal people but over the next few hundred years a life of leisure and real wealth should hopefully mellow them out.

These generations and probably centuries of horror misery and sadness will I'm sure become the legacy in history of the end of the oil age. The brief 70 or so years of time it took to set off this chain of sadness won't be looked at kindly but on the same hand the aftermath will dwarf our current little time span.

We are certain to be despised and hated for hundreds if not thousands of years into the future. I suspect that the atrocities we probably will commit in the future will make the Nazi's look like bumbling amateurs. But this is what happens when you screw over 7 billion people for a McMansion and SUV.

I'd have to think that a hundred years of watching 7-8 billion people die might finally cause people to cherish life and take birth control seriously.

You'd be terribly, terribly wrong. That kind of horror has been the norm for most of human existance and even today the poorest most horrible places have the highest birth rates.

...I can't imagine that future generations will come through this fire with our current stupid religious/cultural systems that prevent effective population control.

Effective birth control is automatic from simply having economic prosperity because it tends to make life less harsh and cheap, affords more sensitivity to the needs of other's, spare time, education, condoms and the liberation of women. The population growth is currently sub-linear and in a BAU scenario the UN forecasts a peak of 9.2 billion in 2075(forecasts have been repeatedly revised down, not up).

Consider for a moment that the morals of Adolph Hitler would not have been anything out of the ordinary in the 19th century. Consider that setting fire to cats and watching them die was a popular form of entertainment as late as the 16th century.


I love it.


This is a common problem in complex and chaotic systems, and you point out exactly why: the butterfly effect. That the system will approach a given state is certain, but the path toward that state is unknown, because we don't have accurate enough information on the relevant variables. And the very act of getting that information changes how the system unfolds.

There are too few people who understand this problem. Unfortunately, the bag is already weakened, whether or not it's being shot at. Just the centrifugal force of continually swinging the bag will eventually be enough to have it start spraying everywhere. Just a matter of time.

The potential major interconnected threats are climate change, oil depletion and peak energy, and species extinction. These may bring about food shortages, water shortages, war, the spread of disease vectors and pandemics, social chaos, economic collapse, and systemic collapse.

You forgot the fiat currencies and infinite growth paradigm and associated debt and housing bubbles and misallocation of resources and EROI and EROEI issues. And regional resource allocation issues like export land and subsidies but yeah pretty much :)

It wrong to look at oil production post peak in isolation without considering the pressure on oil production and distribution we have today. Its probably orders of magnitude greater than what spurred the development of advanced extraction methods through the 1990's we invented stuff like horizontal drilling to extract cheap oil. Given the obvious pressure my model and the fact oil production is not increasing and probably already in decline you can see some cause for alarm.

Throw in some mass psychological effects like hoarding, resource nationalization, and straight on panic to complete the picture!!


Yeah thats why I'm saying the number of feedback loops that can go hyper-exponential and initiate a collapse is itself increasing exponentially. WT discovered a big one with export land that I think caught all of us me included off guard but it did make me start looking for other potential similar loops. The net result is there be dragons.

The explosion of problems seems to be the biggest problem and is the actual cause of collapse in my opinion. Eventually one or a few will swamp the rest and historians that overlook the work on the oildrum will probably not realize that these "causes" where only the ones that succeeded in a sort of reverse survival of the fittest mechanism.

I've realized I made the same mistake in my attempts to review the fall of the Roman Empire to try and understand why civilizations collapses. In reality once you think about it the Empire was facing a large array of small problems and small problems becoming big problems. The invasions of the barbarians widely cited as the reason for collapse is not correct. The real reason was that they faced a explosion in the number of problems they faced and all choices where fatal. I don't know how to extract this information from the historical data simply because the original historians that can read the surviving texts don't know to look for this.

This does a good job of outlining a lot of the factors that may have contributed.



One factor was that Roman military technology seems to have stopped evolving while the Barbarian tribes learned Roman tactics by the time Rome fell the barbarians and Romans where pretty much evenly matched.

With my new understanding the critical factor was the way the problems multiplied not the particular problems that became dominant. They where simply selected for out of a rich set of potential candidates.

Yes...borrowing from evolutionary terms...there were "preconditions" that aided collapse. Those preconditions on their own were pretty harmless to the group, but under the right, or in this case, wrong environment, those preconditions amplified the collapse.

The first clue might have been the phrase: "Overfished."

BTW, according to the Argos Buoys the Ocean Temperatures have been falling for the last 4 years.

I guess you haven't heard about the new paper that was published in the past week or so. The Argos buoys were miscalibrated & giving readings that were too low. You can read about it here at Real Climate.

In particular, the long term (post 1970) observational trends are now a better match to the models, and the response to volcanoes is seen clearly in both. The recent trends are a little lower than reported previously, but are still within the envelope of the model ensemble. One interesting discrepancy is noted however - the models have a slight tendency to mix down the heat more evenly than in the observations.

This isn't going to be the last word on OHC trends, and different groups are going to be publishing their own versions of this analyses relatively soon and updates to the most recent years are still forthcoming. But the big picture is that ocean heat content has indeed been increasing in recent decades, just like the models said it should. [emphasis mine]

I really hope the fishing industry goes out of business soon. They deserve it.

Sure, but given the demand for protein, what will replace it? Chickens raised in filth? Cows shot up with hormones? All the meat industries have turned pathological.

Shame because I really like the stuff.

Why do you think something will replace it?

When the fisheries collapse, which will happen soon, what then indeed?

There is no "solution" to the "problem". It's all about carrying capacity.

Your Frontline piece is a common tragedy from a common commons. Obviously the glacier thing is greenhouse-gas related, but fisheries have collapsed every time they've been exploited by industrial fishing. Steinbeck set a couple novels at the site of one such collapse in Monterey, California.

Closer to home, Cape Cod was named for the once-abundant fish which still exist, but are now relatively scarce. We in the USA have had a government agency tracking these abuses for more than a century. Decade after decade, they would write reports recommending protecting some area of the sea, and every time their advice would be trumped by industry lobbyists.

Strip-mining the biosphere that way always results in "peak biosphere"...

Iceland went to war, twice, with the Royal Navy to establish their fishing rights after herring stocks collapsed from over fishing.

They have what is considered the best fisheries management in the world and stocks are stable and close to the maximum sustainable levels.


The real crime of it all is that we have known perfectly well how to manage fisheries for maximum sustainable yield for many decades now, yet we don't do it.

Many ancient societies practiced ancestor worship as their religion. Will future generations practice ancestor cursing as their religion?

Breaking News From CNBC: EIA predicts $186 oil price by 2030

At the current rate of increase, we will be in excess of $186 by the end of the year.

Maybe they mean it will be back down to $186 by 2030.

Hey, what happened to my comment quoting Reuters that

Saudi Arabia will remain the world's biggest oil producer in 2030, but just barely with expected output of 13.7 million bpd. That's way down from the 16.4 million in Saudi production, the EIA had forecast in last year's report.

Russia's output is forecast to be 13.5 million bpd in 2030, up sharply from last year's EIA forecast of 11.5 million bpd


I dunno. I deleted a post because it was the entire contents of yesterday's Whiskey and Gunpowder, so if your post was a last-second in reply to that, it went, too. Otherwise, I haven't a clue.

It was a direct reply to Westexas post at the top of this thread. It was there for at least a few minutes and appeared immediately after your reply. Then I made a minor edit to it and it seemed to vanish just after that. Although I notice you seem to be having some server problems right now. Perhaps related?

Now that you mention it, I did see your post. Not sure what happened to it.

And yes, we did have server problems a few minutes ago.

In any case, I did not delete your post. It's a great link.

"It's a great link."

Yes. The EIA never fails to keep coming with false promises. 13.5 mbd from Russia in 2030. Right! We have to much solid numbers on Russia to believe this one.

I don't KNOW about KSA, but in my OPINION 13.7 mbd in 2030 is a fairy tale.

I will be thoroughly surprised if total WORLD production is 13.7 mbd in 2030...

Oh, what, seriously? You think that you're going to see global decline of 10% in 20 years?

A quick spreadsheet tells me that at a constant decline rate of 9% per anum, we'd get to 13.7mbpd in just under 20 years. Not entirely out of the question. What does your crystal ball tell you?

Alan from the islands

It tells me with new fields coming on line and old ones being depleted at a far slower rate than 9% per year, that we'll be producing not less than 60 million barrels per day in 20 years before you get into funky alternatives like CTL and tar sands.

There are notable exceptions to the rule, but 9% is just too damned aggressive, especially when high prices make enhanced oil recovery that much more attractive.

Hey Jeff, whats your call on this? I bet Matt Simmons wouldn't think an average 9% decline per year is all that crazy. Don't get me wrong, if that were to happen, I'd be very lucky to survive the riots here, so I'm not saying I expect that to happen. It's just that there's a low probability that it could happen. On the other hand, EOR hasn't done much to halt the decline of the lower 48 so, I guess the probability of your scenario of slightly less than 2% decline per year, is equally as low.

Here's to less people drinking the Kool-ade.

Alan from the islands

Well, the problem is we haven't even seen 2% decline globally yet. As for EOR, these large capital projects take a while to develop and for a long time oil has been at $20 dollars a barrel or lower, which sort of reduces the incentive to invest in maintaining flow rates for US fields.

What amount of oil is produced by fields with vertically drilled wells with a decline rate of 4%, and what amount of oil is produced by fields with horizontally drilled wells with a decline rate of 0% till it is suddenly 30%?
Somebody in KSA knows. Somebody in KSA would rather that I didn't know. Possibly he has my best interests at heart and doesn't want to confuse me with too much information.

Horizontal drilling is EOR?


This led me to believe it was gas injection, thermal recovery, or chemical injection.

Production of 13.7 mbpd is not a 10% decline, it's over 80%.

The way that could happen is war. You want to grab the other guy's oil, but you must destroy his production to prevent him from defending himself. He does the same to you. We all go down together.

I'm glad I copied and reposted it elsewhere before you vaporized it.

Why? It's on the web, at their own site, for everyone to read.

Cuz it was here, and so was I, and I don't go there, normally.

Yeah, well, a link and an excerpt would have been fine. Most welcome, in fact. But posting the whole thing is not allowed under our guidelines.

Yup, I would have gone to the link, mice elf.
But I copied faster than you could delete, and now there is finally proof that the scream of dying electrons echo thruout the universe, maybe forever.
If you listen close enuf:>)


some days i read comments and they just seem to make little or no sense to me

this is one of those comments, wonder if it's gonna be one of those days

I show KSA producing between 5 and 8 mbpd (total liquids) in 2030. I also show them consuming between 4 and 5 mpbd. Therefore, I have KSA exports in 2030 anywhere from zero to 4 mbpd.

And here's how we're supposed to get to 2030 according to the EIA Reference Case

And here's how much Carbon Dioxide we'll pump out.

This is insanity. So, we're going to reverse the trend of finding less than we consume AND reverse the trend of consuming more than we produce (world oil stocks have declined)? REALLY?

By my calculations (my trusty spreadsheet), if you knock decline down to 1% and demand down to 1%, you STILL need a minimum of 33,000,000 b/d of new production between now and 2030. So, we're going to find an entire new OPEC and have it pumping full throttle by 2030?


OK, fine... Let's say we get crazy and replace some of that oil use with renewables, electric, etc. And we'll start it as of now. To show this we'll call demand a negative number. Say, -1%/yr. on average. Then, with decline at 1% and demand at -1% we can tread water. But are those numbers realistic? And are they going to kick in tomorrow? No.

If we give a more realistic, but conservative, decline number of around 4.5% (CERA), we still need 32,500,000 b/d of new production. Heck, toss in -2% because, by golly, we all start saving AND a bunch of renewables/electric gets built up. We STILL need 20,000,000 b/d by 2030.

Those people are smoking that oil, I think. BAU in any sense of the phrase is just not likely to happen. I'd give it something between 1% and zero chance of happening.

It's amazing what clarity one can get from just punching in a few numbers. Al Bartlett is right: if you don't know exponents, you don't know jack. And our politicians, at least, are dumber than yeast.


No, those would be "New Dollars", after some zeroes have been knocked off.

Possibly they mean $186 a gallon by 2030.

This is starting to feel like a surreal Price is Right game. OK I'm gonna bet $187... :p

Barring some unforeseen stupidity in the middle east or some very serious terrorist attacks beyond one platform/pipeline, I doubt we'll hit $186 this year. $150 and POSSIBLY $160, but at $186 I think the demand destruction will be too great. Of course $186 is probably a lot closer than the EIA is predicting. I do expect we have a good chance of testing $200 in a relatively short period of time, maybe even next year. If so, $186 or $200 don't bode well for the global economy.

Possibly, but currently China is restricting oil demand by putting limits on car ownership. In predicting future oil prices in dollars, the eventual value of the Yuan is seldom factored into the equation (check out the Yuan/dollar chart).

I checked the 120 chart and all I can say is wow. However, if the values get too out of whack, too quickly... trade will be destroyed.

The only problem I see is that I think the USA is even more oil hungry than China. So we will pay any cost where the Chinese will back off and say the oil is too expensive. Worse than keeping Chinese middle class consumers out of cars is keeping unemployment up because of lack of oil for manufacturing/industrial use. Chinese can live without cars, yet they need jobs more than cars.

The tables may reverse of course and China could somehow find themselves in a stronger position than us to purchase the oil. They are now the 2nd biggest consumer behind the US. How quickly do you imagine things might change in best vs. worst case scenario?

IMO China is controlling the rate of change. A weakened Yuan has been useful however with the oil situation I think their leaders are transitioning slowly toward a stronger Yuan. Interestingly, there is zero coverage in the MSM re constant new highs for the Yuan being set almost weekly.

I think that we have two types of forced demand destruction (Rising Costs & Declining Income): (1) Rising Costs-- A college kid can no longer afford to drive home every weekend to see his girlfriend; (2) Declining Income--The college kid's dad is laid off from his high paying job, causing a huge drop in energy consumption by the entire family.

A third type of demand destruction is the ELP type, i.e., a voluntary reduction in consumption as one restructures one's lifestyle in anticipation of a continued increase in oil prices.

Offsetting this is an accelerating rate of decline in net oil exports, and a presumed requirement for an accelerating rate of increase in energy prices as forced energy conservation moves up the food chain (the bidding gets tougher between those that still have strong incomes).

So, it's a horserace between declining net oil exports and various types of demand destruction, all offset by the presumed effect of tougher bidding as forced energy conservations moves up the food chain.


Would be, if there weren't so many "important people" who took this crock of s#@t seriously. Somebody should invent a board game called "EIA Forecasts", where you roll a dice and wherever it lands...... It'd probably produce some more credible forecast, as long as there were some low ball ones on the board!

By the way, anybody have a clue as to what these forecasts are based on?

Alan from the islands

I believe they have a staff Proctologist who retrieves them from various member's backsides.

Summary of Weekly Petroleum Data for the Week Ending June 20, 2008

U.S. crude oil refinery inputs averaged nearly 15.3 million barrels per day during the week ending June 20, down 181 thousand barrels per day from the previous week's average. Refineries operated at 88.6 percent of their operable capacity last week. Gasoline production rose last week, averaging about 9.1 million barrels per day. Distillate fuel production increased last week, averaging about 4.6 million barrels per day.

U.S. crude oil imports averaged about 10.3 million barrels per day last week, down 8 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged nearly 10.0 million barrels per day, 86 thousand barrels per day below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged nearly 1.2 million barrels per day. Distillate fuel imports averaged 107 thousand barrels per day last week.

U.S. commercial crude oil inventories (excluding those million barrels from the previous week. At 301.8 million barrels, U.S. crude oil inventories are near the lower boundary of the average range for this time of year. Total motor gasoline inventories decreased by 0.1 million barrels last week, and are in the lower half of the average range. Finished gasoline inventories increased last week while gasoline blending components inventories decreased during this same time. Distillate fuel inventories increased by 2.8 million barrels, and are in the middle of the average range for this time of year. Propane/propylene inventories increased by 1.2 million barrels last week but remain below the lower limit of the average range. Total commercial petroleum inventories increased by 5.4 million barrels last week, and are near the bottom of the average range for this time of year.

Hmmm. Looks like there's a typo.

And here is what they were expecting:

Data from the U.S. Energy Information Administration to be released later Wednesday morning are expected to show U.S. crude oil inventories falling by 1.7 million barrels last week, according to a survey of analysts by energy research firm Platts.

"With storage costs soaring and prices remaining near all-time highs, refiners will likely remain reluctant to build inventories as has been the case throughout the second quarter," said Linda Rafield, Platts senior oil analyst.

Analysts expect gasoline inventories to fall by 750,000 barrels while stocks of distillates, which include heating oil and diesel fuel, were projected to grow by 1.7 million barrels.

Oil falls as crude supplies rise

Light, sweet crude for August delivery fell more than $3 to less than $134 a barrel on the New York Mercantile Exchange. Oil had been trading down $1.30 before the report's release.

The U.S. Energy Information Administration's weekly petroleum report showed that oil supplies rose by 800,000 barrels during the week ended June 20. Economists had expected supplies to fall by 1.7 million barrels last week, according to Platts information service.

The Gulf Coast numbers were a bit odd. Finally, a large increase in crude inventories, but a decline in oil imports. I assume that they must have had a decline in refinery utilization. BTW, I think that the decline in Nigerian exports has started showing up on the East Coast (or maybe not, see edit below)

Hmmm . . . this is interesting. The East Coast showed a huge weekly drop in crude inventories, 2.6 mb. This would be equivalent to total US crude inventories dropping by about 50 mb in one week. And there was no corresponding drop in imports. Note that Gulf Coast crude inventories increased by 2.5 mb.

What if the Gulf Coast refineries were bouncing along summertime MOL, and they bought some crude from the East Coast (or did an intracompany transfer)? There was a pretty good drop in refinery inputs on the Gulf Coast, which would be consistent with refiners running up against the seasonal MOL.

Price Elasticity of Demand
4 Week Averages 08 vs. 07 plus % YTD 08 vs. 07

Finished Motor Gasoline. . 9,281 . 9,484. -2.1% -1.1%
Kerosene-Type Jet Fuel. . . 1,585 . 1,645 . -3.6% . -3.8%
Distillate Fuel Oil. . . . . . . . 4,062 . 4,108 . -1.1%. . -2.3%
Residual Fuel Oil. . . . . . . . . . 612 . . . 739 -17.2%. -16.5%
Propane/Propylene. . . . . . . 1,020. . . 965 .+5.7% . -4.5%
Other Oils. . . . . . . . . . . . . . . 3,673 . 3,764. . -2.4%. -3.2%

Total Products Supplied. 20,233. 20,703 . -2.3% -2.7%


I predict that the EIA will not exist in 2030. Really, these people actually get pretty respectable salaries for coming up with such nonsense.

Electrified Rail Around the World

Singapore is to invest $US 14 billion to double the size of the island's Mass Rapid Transit (MRT) metro network by 2020. ... Two new lines will be built, existing lines will be extended, and the Downtown and Circle lines will open ahead of schedule.

The 27km Thomson Line ... will have 18 stations and will open in 2018. The 21km Eastern Region Line will run from Marina Bay to Changi via Tanjong Rhu, Siglap, and Bedok South. The 12-station line will open in 2020.

The 33km Circle Line will be completed next year, a year early, while the final section of the 40km Downtown Line will open in 2016 instead of 2018.

In addition,..

The plans will effectively double the size of the MRT network from 138km today to 278km in 2020, and passenger numbers are expected to increase from 1.4 million per day to 4.6 million

The governments of Chile and Argentina have abandoned plans to rebuild the Transandean Railway from Los Andes to Mendoza, opting instead for a proposal for a 28km tunnel...

The tunnel would be built at an altitude of 2500m with the same 1676mm-gauge track used on most of the Chilean and Argentine networks, which would allow trains to carry cars and lorries.

The project will cost a total of $US 2.8 billion--$US 1.2 billion for the tunnel, $US 897 million for the lines from the tunnel to Los Andes and Mendoza, $US 210 million for electrification, and $US 510 million for associated power generation infrastructure.

Adopting the Cosa proposal would allow a capacity of 30 million tonnes per year instead of 5 million tonnes using the old metre-gauge alignment

IMHO, there is value is seeing what others are doing, it expands the vision of "what is possible".

If you would like for me to post periodic reports (often months old) of growing Non-Oil Transportation around the world, give me a +1, if not a -1.



I suspect we will all be riding around in trains like this one in India someday in the near future:


On Indian Railways, all major trunk routes with the exception of Mumbai-Chennai have been electrified. See this PDF from several years ago. Electrification of additional routes is proceeding rapidly. All aspects of the electrical infrastructure are now locally manufactured.

For those interested in Indian Railways, Please do take a look at http://www.irfca.org. I started this web site a few years ago and am now a part of the team that runs it. The FAQ section about electric traction is pretty interesting : http://www.irfca.org/faq/faq-elec.html

I was going to include a recently approved 801 km Barauni- Katihar- Guwahati electrification project in India on my next "Electrified Rail around the World".

I visited your site a couple of years ago. Very good and very useful !

Congratulations :-)

Best Hopes for Moving with the Speed of Indian Bureaucrats,


Alan, is there any organization or website that tracks if/how many rail projects are being started in the States? I'm curious how many local and state governments are getting ahead of the curve here and authorizing mass transit expenditures.

GWB has run an EXTREMELY effective birth control program ...

for new Urban Rail. AFAIK, only Norfolk was been approved in recent years.

A list of "on the shelf" projects at


Best Hopes,


Yeah that's right. As the last resort they have the head of the dept. of transportation just veto the project like he did with the Dulles airport metro. line.

Thanks for the link. Seeing how completely underfunded and underplanned this alternative truly is, is frightening.

Thanks for your kind words. I should explain that the IRFCA is run by an informal group of railfans. We are not associated with the railways officially. That said, we often have more up-to-date news about the railways on our web site than the railways own site :-)

Overall, I found your site to be the most technically interesting rail fan site that I have ever read !

You do know your stuff !

But what else would one expect from India :-)


Mexico May numbers here:


Mexico's oil production managed a slight increase of 22,000 barrels in May compared to April, but it reported a 9.3 per cent drop in total volume in the first five months of this year compared to the same period of 2007, for an average of 2.859 million barrels per day.

With that, oil exports from January through May totalled 1.462 million barrels per day, i.e., 252,800 barrels less than in the same period of last year. That represents a 14.7 per cent drop [...]

In May alone, crude oil production was 2.798 million barrels per day, or 312,000 barrels less than in the same month of last year. That was the result of the decline of Cantarell, whose production fell by 439,000 barrels compared to the same month of 2007,

And from the PEMEX data below it looks like exports in May were only 1.376mbpd, that is the lowest in recent times, and down almost 30% from a year ago.


I assumed a flat consumption level of 2.1 mbpd, which would put net oil exports at about 1.4 mbpd in 9/07 and at about 1.1 mbpd in 5/08.

At this volumetric rate of decline, Mexico would hit zero net oil exports in the Fall of 2010.

At half this volumetric rate of decline, Mexico would hit zero net oil exports in the Fall of 2013.

Assuming the exports keep dropping at 14.7%, that's roughly 4.76 years before they have no exports. I suspect that is a rosy prediction.

Like the ELM, the UK and Indonesia, Mexico is currently showing an accelerating net export decline rate (and like them, Mexico was consuming about half of their production at final peak). The year over year changes in net exports, from the initial decline, to the final year of net exports, for the ELM, the UK and Indonesia (from the Khebab/Brown top five paper):

Note that a steady exponential decline would show up as a flat line, parallel to the horizontal axis. The numbers for each region, with arrows, refer to the overall rate of change over the decline period.

Mexico is currently showing an accelerating net export decline rate

it should be noted that mexico subsidizes and americans just to go Mexico to get gas so all of that should be factored into the ELM.

The ELM is a simple mathematical model, and I assumed a +2.5%/year rate of increase in consumption, resulting in net exports going to zero in 9 years. With no increase in consumption, Export Land would go to zero in 14 years--not a big difference.

Also, the UK heavily taxes energy consumption, with a high per capita income, while Indonesia subsidized energy consumption, with a low per capita income. As you can see from the chart, not a whole lot of difference in the outcomes.

The rate of change in post-peak consumption will simply result in a somewhat sharper decline or a somewhat slower decline, and our model, recent case histories--and the ongoing crash in net exports from Mexico--all support this premise. So, once the production from an exporting region starts declining, their fate as a net exporter is pretty much sealed.

So, once the production from an exporting region starts declining, their fate as a net exporter is pretty much sealed.

what about demand destruction?

The problem is that at least in the short run we are probably seeing a positive feedback loop more than anything else, e.g. Saudi Arabia is on track to double their consumption from 2 mbpd in 2005 to 4 mbpd by 2015.

How do Mexico's import of gasoline from the US factor into the equation?

It's reflected in the consumption number.

Just released.....

EIA's high price case for 2008 from their International Energy Outlook shows a peak in conventional oil production in 2010.


Table G5


and archives for earlier data...


Something does not add up here.

You talk of conventional oil production, which the graph shows to be 85 mbd in 2010

Of the present production of (around) 86 mbd total liquids, I suppose about 10 mbd are from unconventional sources.

There is no way that conventional production reaches 85 mbd in 2010.

Or the EIA and I have a totally different definition of conventional oil.

It would have been better if I had said "conventional liquids".

Here is the EIA's definition:

Note: Conventional liquids include crude oil and lease condensates, natural gas plant liquids, and refinery gains.

..from the table G5 from which the 2008 data above was take from

Ok, thanks. Still think it is odd the EIA appearantly includes syntetic crude from tar sands, deepwater, ethanol etc. in their "conventional liquids".

not sure about deepwater, but they explicitly don't include tar sands and ethanol in conventional liquids.

this was posted a while back which would show the breakdown better....

it's from this EIA presentation in April showing the preliminary high price case. They are a little more optimistic now for 2030. They have upgraded their 2030 projection from 76.1 (in the preliminary report) to 80.3.


judging from this their current estimate of conventional crude oil production during 2030 is around maybe 63 million barrels per day.

That should be the headline

EIA model assumes that oil production will decrease if oil prices are high. The reason is that oil exporters will have less incentives to increase production.

I assume you are joking. Aren't they assuming that the price is high because supply is low, or do they assume that production will be low because demand is low due to high price?

More precisely:

The world oil price is the annual average U.S. cost of imported low-sulfur light crude oil in PADD2. For the low, reference, and high oil price cases, prices reach $42, $70 and $118 per barrel in 2030, respectively, in 2006 dollars. The reference case assumes that OPEC producers will continue to demonstrate a disciplined production approach. The low oil price case reflects a market where all oil production becomes more competitive and plentiful. The high oil price case could result from a more cohesive and market-assertive OPEC whose long-term goal might be to maintain a constant market share

Ref: Assumptions to the Annual Energy Outlook 2008: International Energy Module

The composition of supply differs substantially between the reference and high price cases. High prices encourage the development of previously uneconomical unconventional supplies, which account for a much larger portion of total liquids supply than in the reference case in 2030 (nearly 20 percent, as compared with about 9 percent in the reference case). Conventional supplies decline over the projection period in the high price case, by 1.5 million barrels per day, compared with an increase of 21.0 million barrels per day in the reference case. The high price case assumes that OPEC member countries will maintain their production at near current levels. As a result, OPEC is willing, in this case, to sacrifice market share as global demand for liquids continues to grow. The high price case also assumes that oil resources in non-OPEC countries will be less accessible and/or more expensive than in the reference case.

Ref: International Energy Outlook 2008, page 3

see also the appendix G for production forecast for OPEC (http://www.eia.doe.gov/oiaf/ieo/pdf/ieopol.pdf):
Reference case: 37.4 mbpd (2010) 40.9 mbpd (2015)
High case: 37.3 (2010) 35.4 (2015)
Low case: 38.4 (2010) 45.3 (2015)

With all of EIA's assumptions, world oil conventional production barely declines after 2010 peak, and unconventional more than makes up the difference.

In the high price scenario, world oil production is 84.9 million barrels a day in 2010 and 80.3 million barrels a day in 2030.

World unconventional (ethanol, CTL, and oil sands/oil shale) increases from 2.6 million BPD in 2006 to 19.0 million BPD in 2030.

In the high price scenario, US conventional production increases (LOL!) from 7.8 million BPD in 2006 to 8.6 million BPD in 2030. US unconventional is 0.2 million BPD in 2006 (biofuels). By 2030, US unconventional increases to 1.2 million BPD biofuels, 1.2 million BPD coal to liquid, and possibly (OECD total) 0.1 million BPD shale oil. Based on this, the US is still expected to be a big imported of oil in 2030.

'Thomas Palley: "Beating The Oil Barrons" and (The Misunderstood Role of Inventory)

I believe that we all know that the price of oil, storage, futures contracts, taking delivery, availability of oil for purchase, crack spreads and the actions of markets are a very complicated subjects...Therefore, I would like anyone commenting on this post to please read the entire link first. Others can simply push the nitwit arrow.

I would also like to point out a belief that I (and many others) hold. Intelligent people change their minds when new evidence comes to light. PO is not a football game or a popularity contest to determine who will be the new president. Let us attempt to keep open minds when examining new, or old, evidence. No one that accuses you of 'waffling' is worthy of wasting time in discussion with for they are closed minded and your effort will be futile. No one that starts posts with 'That is absolutely impossible...' is worth wasting time with, either. There are some interesting graphs, and discussion, on site that show 'return to storage'...a term almost unknown here.

...snip...'Refiner crack spreads have suffered (and actually went negative a few weeks back) b/c there has not been a concomitant increase in distillate prices.

That is, the total refined products have been selling for less than the price of raw oil...that's why refiners are at sub-90% capacity (and bottomed in the low 80%'s...aka Katrina/Rita levels).

Put another way, there is more demand for oil than there is for the actual distillates...or, one more way - the distillate paper market isnt responding like the crude paper market is (aka one of them might be broken).

In either case, this is the point where traders would short oil and buy distillates, arbing away the spread...but, as we saw last week, the shorts keep getting leveled, so that trade doesn't work...

"The fact that refiners are willing to pay a higher price for physical supplies than the futures benchmark lends weight to the argument that speculators are not the cause of record oil prices."

If anything, that makes me think speculation is even more of a problem given that the primary consumers in futures markets can't rely on these markets to lock in the contracted future/spot prices.

Why can't refineries lock in delivery at futures prices like they always have? That sounds dangerously similar to what is happening w/ grain markets where farmers are dropping out due to lack of reliability in spot/future convergence.'...snip...

and Krugman's views are presented...

...snip...'...in the world of energy trade, there is lack of fungibility that has always broken down thus: Electricity, non-storable -- Natural gas, more storable -- Crude oil, mostly storable

Although easiest of the three, oil storage has been historically inelastic, no matter the price... Over the last 4 years (and for most of my trading life) forward stocks have always hovered between 50 and 55 days -- storage is expensive and limited, and just not efficacious.

This is why, at least in my view, that supply arguments are often overblown in oil pricing theory -- supplies remain closely aligned to demand and rarely overrun -- as OPEC members have time and again explained but are ignored. This is why President Bush can walk in to a meeting with Saudi ministers and be patted on the head like a silly schoolboy -- "you don't understand, Mr. President -- we've got nowhere to SELL any more right now" and Bush will run home and talk about increasing domestic supply as if he hasn't heard a thing.'

and Naked Capitalisim...

'In Congressional testimony last fall, oil industry expert Phillip Verlegger explained that the role of inventories in the oil industry is misconstrued, particularly in a world with stores of value other than oil stocks:

Inventories are the most misunderstood economic phenomenon in the energy business.

Time and again, one reads statements by energy policy officials commenting on low stocks. Invariably, these officials call on OPEC to boost output so stocks will rise. The economic ignorance displayed in these appeals is appalling.'...snip...

'Bodman’s statement makes it sound as if commercial inventories will increase if OPEC boosts production. But doesn’t something else have to happen for this to occur? Don’t companies have to agree to buy the oil? Suppose, given the current financial crisis, that companies choose not to buy the oil? What happens then?

The data demonstrate that companies accumulate incremental stocks oil only if it is profitable to do so. Since May, it has not been profitable. Since May, companies have been dumping stocks. This story is told with two charts.

Figure 8 shows data on “returns to storage” for crude in 2006 and 2007. Returns to storage will be a new concept here because, to my knowledge, neither the Energy Information Administration nor any other organization follows the idea. However, the concept goes back to John Maynard Keynes, who, whatever his other vices, was one of the world’s great commodity traders. Returns to storage measure the financial return earned by purchasing a physical unit of a commodity, selling a future for delivery at a later date, and storing the commodity. If, for example, one buys crude for $50 per barrel and sells a future for delivery a year hence at $100 per barrel, one earns a return of 100 percent. The trade, referred to as cash and carry, can be very profitable. Rumor has it that Keynes once filled the basements of several colleges with wheat when the returns were really high.'...snip...

and from Palley...

'Unfortunately, proving that speculation is responsible for rising prices is difficult, because speculation tends to occur during booms, so that price increases easily masquerade as a reflection of economic fundamentals. But, contrary to economists’ claims, oil inventories do reveal a footprint of speculation. Inventories are actually at historically normal levels and 10% higher than five years ago. Furthermore, with oil prices up so much, inventories should have fallen, owing to strong incentives to reduce holdings. Meanwhile, The Wall Street Journal has reported that financial firms are increasingly involved in leasing oil storage capacity.

The root problem is that financial markets can now mobilize tens of billions of dollars for speculative purposes. This has enabled traders collectively to hit upon a strategy of buying oil and quickly re-selling it when end users accommodate higher prices – a situation that has been aggravated by the Bush administration, which has persistently added oil supplies to the US strategic reserve, further inflating demand and providing additional storage capacity.'...snip...


There was a lot in the Naked Capitalism, more even than what you quoted, and I'm not going to comment on all of it. There were a few good points in the article, but mostly it stank of hide-bound conventional thinking.

Like nearly everyone who is not PO aware, they talk about supply and demand, but then ignore supply. For example, they use shrinking crack spreads as an argument that the problem is not demand based, therefore it is not supply-demand ("This is not definitive, but the fact that refiners are getting squeezed is not consistent with the notion that crude prices are driven by end market demand."). If commodity prices were being pulled up primarily by robust demand for finished products, they would be right. But like even Nobel-prize winning economists (Stiglitz had said the price rise wasn't caused by supply-and-demand because traders had already taken demand from China and India into account), they can't seem to be able to even imagine supply constraints. However, if commodity prices are rising because of supply constraints, then crack spreads will shrink if refiners are unable to pass their costs onto consumers. This is also true of cereal manufacturers, steelmakers, and anyone else who processes commodities.

They are right that inventories are misleading, which is why I often make trades on TWIP day counter to what conventional wisdom about inentories said. However, the effect from the author's point of view is to undermine the one and only piece of evidence they could have for manipulation. So they're basically back to square one: they're convinced it is speculation, but they have no evidence and no testable hypothesis.

They make a point about how expensive it is to store oil above ground. Well, duh. That's one reason why speculators aren't manipulating the oil market. They then segue into producers are "speculating" by not pumping. Well, that may be. It is impossible to know whether oil producers aren't pumping because they can't or because they choose not to. However, the effect is the same: supply constraints that drive up prices, i.e. fundamentals. To call that speculation and conflate it with futures traders or big brokerages using the Enron loophole is just dumb.

Like Krugman, I'm getting very frustrated by the magical thinking behind the "blame the speculators" crowd. They have produced precisely zero evidence of speculation or manipulation affecting oil prices, and are basically reduced to "you can't prove me wrong!" Well, I expect more out of a hypothesis than that.

They also fail to provide any mechanism by which speculation can affect oil prices, other than oil sequestration (for which they provide no evidence, invoking the Rumsfeld Defense: "absence of evidence is not evidence of absence"). You can believe that the position of the sun in the constellations influences human behavior, but until you can provide a mechanism for how it does that, you're just an Astrologer.

Against this magical thinking, we have a hypothesis that supply constraints caused by the approach of peak oil is driving up prices. There are refinements to this with ELM and net energy considerations. This hypothesis has hard evidence. It makes reasonably accurate predictions.

Magical thinking vs. a well-supported hypothesis? The choice is not hard for me to make. If the "blame the speculators" guys want to be taken seriously, they need to make a real hypothesis, support it with data, and make testable predictions.

Like nearly everyone who is not PO aware, they talk about supply and demand, but then ignore supply.

to be fair people who are PO aware tend to ignore the demand side of the equation and focus too much on the supply side.

Thats not true demand has been discussed.


Basically in the US flattening or dropping of gasoline demand in the US closely follows the housing cycle its not tied to prices. When we have housing busts demand flattens or falls. We are right in the middle of the biggest hosing bust ever and commercial real estate is now failing. As the construction sector implodes demand in the US will continue to drop. Once the collapse of the housing industry is finished then this source of demand destruction is removed. Commercial real estate just started it big slide downward so we probably will continue to see demand drop at least into 2009. But the gains from the crashing housing industry are already starting to slow. My best guess is it can at best cut in half again and we may get another few percent from commercial real estate collapsing. So maybe a 5% drop or so over the remainder of this year and next year. In general this is seasonal with housing starts dropping in the winter and commercial real estate construction slower so we will see less or no demand drop from this source as we head back into the winter months.

But given the source of the demand drop this is not good news for the US economy.
Other sources of demand drop such as conservation are in my opinion noise vs the collapse of the construction industry and related industries.

In any case we won't really know how the rest of the demand side will behave until after this big one blows off. Given the scope of the collapse the fact its only showing up as a few percentage change in overall consumption is not heartening.

IMHO this emphasis on the supply side is justified. When an oil province goes into terminal decline, there is very little than can be done to influence the rate of decline in the long term. We have little or no control over when a province goes into decline and how fast it declines once it's past peak.

When a country like mine makes a major investment in an oil or natural gas power plant, you're talking about a 30-50 year investment. When someone buys an SUV, that is a 10-15 year investment. When prices go up ther is a limit to how much one can reduce consumption given the long term investments that have been made in oil consuming technology.

Case in point is all the stories about people who invested in big honking SUVs, who now have a choice of selling a year and a half old SUV for less than 25% of what they paid for it, or paying out a disproportionate amount of their income for fuel. Ever heard of being caught between a rock and a very hard place? When people make long term commitments to consume, we have to worry about the possibility oof short term supply constraints. It's not that we don't think demasnd destruction won't happen, it's just that we think it'll be a little uncomfortable 8-(

Alan from the islands


You might make a case for supply/demand shortage in light/sweet but you cannot make the same case in heavy/sour. Fact is, the market is well supplied with heavy or tankers full of oil would not be sitting in the Persian Gulf and all of OPEC would not be saying that the refiners are not asking for more oil (heavy sour, I presume). If we have an oil shortage now it is because of a lack of refining capacity for the less desirable oil.

You are correct that you have a hypothesis. I am waiting on the outcome and am not particularly interested in all the predictions around the hypothesis. I believe, in this case, that a rear view mirror look will tell if the hypothesis is correct. ELM is, imo, no doubt correct. The timing of ELM remains to be proven. Some countries that were net exporters no longer are and more will follow them. Some new discoveries might take up some of the slack or KSA/Iraq, et al, might have lots more oil than anyone here is aware of. Be that as it may, what is under discussion is the current price of oil and whether it is demand driven or driven by some other means or a combination of many factors. I can see no reason for a rush to judgement about PO timing...Unless one is attempting to influence current market prices or sell books about PO and make the tv circuit.

This line from the NC site sticks with me: 'Why can't refineries lock in delivery at futures prices like they always have? That sounds dangerously similar to what is happening w/ grain markets where farmers are dropping out due to lack of reliability in spot/future convergence.'...

the market is well supplied with heavy or tankers full of oil would not be sitting in the Persian Gulf and all of OPEC would not be saying that the refiners are not asking for more oil

The market is well-supplied with all kinds of oil. That's what rising prices do.

I do not know the situation with OPEC as a whole. However, Iran has been asking more for its heavy than the market is willing to pay. Likewise, Saudi Arabia has been trying to sell light sour oil at about a $3 premium, and refiners are unwilling to pay the price. In both cases, refiners are telling the producers to lower the prices, and they will buy. They're not asking the prices to be lowered to $60/barrel, just to let the market set the price. However, the Saudis & Iranians are holding out and claiming there is no supply problem, because they can't get premium prices for 2nd grade product.

Basically, the market is well-supplied with $135 light sweet crude. There is a surplus of $135 heavy and sour crude. As more refineries capable of handling heavy and sour grades, I would expect the price of heavy and sour crude to go up. The price of light might come down, assuming the complex interplay of depletion & demand destruction allow it. However, all that demonstrates absolutely nothing about speculation or market manipulation. It just reflects the fact that light sweet crude is in decline and bringing on alternatives isn't going smoothly.

As an aside, it is fundamentally wrong to believe that the Iranian tankers are there because the Iranians can't sell the oil. If Iran couldn't sell the oil, they would stop pumping it. They might have been caught with the first few VLCCs they couldn't sell, but for them to keep allowing the crude to pile up and to continue to lease VLCCs means it is a deliberate act on their part.

They have some reason they want that oil mobile on short notice. Otherwise they would stop pumping. It could be because the oil is under contract but the recipient can't take delivery yet. It could be they have some inscrutible military use in mind for them. It could be they are gambling (speculating!) that the world will soon be so short of oil that they'll be happy to pay a premium to whomever can deliver it on short notice.

I was wondering what you thought of my East Coast/Gulf Coast inventory observation up the thread:


There was a drop in overall utilization, if I remember last week's number correctly. Unfortunately, I haven't had time to go dig through the numbers to break it down by region. I would expect to see a drop on the gulf coast and maybe a rise on the East coast. Unfortunately, I actually had to pay some attention at work today, so I didn't have much time to spend digging. :)

As you've pointed out, if the gulf refiners are having trouble getting oil from VenMex, they don't have many choices. They either have to bring it in from elsewhere (and we haven't seen signs of that yet, that I know of) or they have to cut refinery utilization.

I guess I wonder what the utilization on the East coast was. Would a company transfer crude oil from the East coast? Or would they transfer finished product? If oil, how do they get it there on short notice? If they moved oil by tanker, we should see a comparable surge in inventories on the gulf coast by the July 9th TWIP, depending on how EIA accounting works. Curious stuff.

Thanks for bringing up the fact that most of the worlds oil is priced at a premium or discount relative to the openly traded spot markets. If speculation was driving the worlds oil prices then these other grades would all be sold at a steep discount vs the the WTI prices. The fact that they are not indicates that the Market in general has done a good job of determining the price of crude.

From the Palley article:

But some unilateral populist action is possible. A major form of gasoline storage is the tanks in cars. If people would stop filling up and instead make do with half a tank, they would immediately lower gasoline demand. Given lack of storage capacity, this could quickly lower prices and burn speculators.

(Emphasis mine.) This is really ironic. Palley is saying it is all because of the speculators yet if this worked it would prove it was all about supply and demand! Palley is an idiot!

Ron Patterson

ROFL! I missed that howler from Palley. If people only filled up half way, it would lower demand for about 2 days, then demand would go back up to where it was before (less the extra weight carried, plus the extra gasoline consumed by more frequent trips to the filling station), unless he thinks it is sort of like putting your car on a diet.

I also like that it would "burn speculators". Well, even if such a gimmick would lower oil prices (highly unlikely, because of the lag between oil sales and gasoline consumption), it would only burn speculators who were long. It also seems to be part & parcel of the "blame the speculators" crowd to believe that speculators only make money if oil goes up. Speculators don't care which way oil goes. They'll make money in either direction. But no one complains when the crack dealer lowers cocaine prices.

What you are missing is that, by virtue of the fact that the term "speculators" has been bandied about so imprecisely throughout this debate, the consumers themselves are, by indefinition, speculators. The speculation argument can not be wrong because anyone who even mentions the word "oil", or who even is thought to be thinking about it, seems to be considered a speculator.

Just a neighborly visit from Constable Bob of the Semantics Police..

Saying certain posters are 'Not worth arguing with' seems to be essentially as hard-headed and extreme as those who accuse others of 'Waffling', or who start posts with 'That's Impossible!' ..

You and a few of your standard challengers are easily as stubborn and hotheaded as you are useful to this conversation, and I hope you're willing to show a continued degree of flexibility, even when (and especially when) someone else is being obtuse, rigid and hyperbolic.


(ps. That was a very long post. Must have been a lot of work, but I skipped through it to find lower hanging fruit..)

Bob, It's ok that you skipped through it, you would not have understood it anyway.

I don't believe that anyone died and left you in charge of deciding who is 'useful'. I have never found one of your posts that was interesting or enlightening or in any way challenging to the 'standard PO line' as found on this discussion daily. If you can't think out of the box or are afraid of being ostracized by the 'mainstream thinking' here, then for me your posts are not worth reading. I can understand your reluctance to stray from the herd...and, I feel sorry for you.

Thanks so much River. I welcome your pity with open arms.

Who said I'm in charge of anything? The 'Semantics Police' bit was kinda trying to keep it light, eh? But the way you've been rolling for the last couple days should have warned me against such attempts.

No, it's not the 'PO line' that I find reason to challenge, but the rock-headed ignorance displayed when otherwise smart posters open up a can of stupid in the way they treat each other and so kill the discussion. Maybe it's semantic, but that doesn't make it useless, when this forum is as much about the 'Discussion' as it is about the 'Energy Future' that this discussion covers. Antisocial behavior does little to make your own contributions interesting or enlightening.


The Great Oil Hoax

There is really nothing new here, at least nothing that the folks at The Oil Drum hasn’t known for years. The great hoax is that Saudi Arabia does not have nearly the oil reserves it claims to have. And neither do the other OPEC nations. But….the word may be getting out. And when the world understands that those vast Middle Reserves are simply not there, it will be a bombshell.

Ron Patterson

Darwin...You do not have a clue what KSA or any other oil producer has in reserve. All you know is what you read in books touting PO and PO NOW scenarios...and, of course, what you absorb from TOD which is basically the same thing day after day. I suppose when you were working in an OPEC country that the King singled you out for a briefing? I thought not.

When PO arrives it will be a bombshell...no doubt it will...so, why are you in such a hurry? Do you want to run up and down the streets among the unprepared mobs, yelling, See, I told you so? Hmmm...now that I think about it that sounds like something you might do. Good luck avoiding the gunfire, and stones.

BTW, while you are waiting for PO and the mobs to hit the street you might consider what is going to happen when $3,000,000,000 of US credit card lines are withdrawn. You might pay a bit of attention to what is happening with the world economy for it is going to be a disaster, and you can celebrate it before PO arrives.

there is a very big difference between trying to figure out what's coming and when so one can adjust - either individually, as part of a group, or a society-as-a-whole - and wishing for what's coming

it's a typical straw man argument used by the bury-the-head-in-the-sands crowd in order to negate debate

it's stupid - and just being ruder and more snippy in your comments doesn't make them more valid


You need to take a deep breath and then go for a walk around the block. Telling people they don't a clue isn't a way to carry on any kind of a debate, especially when it applies to nearly everything that's posted here, including your ideas about speculation and the economy.

My suggestion is for you to insert mentally the words "I think" or "IMO" or "I believe" in front of everything people post here to remind yourself that people are giving you their interpretation of the data. You may interpret the same data differently. That's fine. Give us your interpretation. But saying "you do not have a clue" is basically an ad hominem attack that undermines your point; if you had a logical argument to make, you would have made it instead of the attack (though to be honest, I'm not sure what your point was in this post).

I think River is out riding his Harley. If he comes back, we'll know for sure, he's a masochist ;-)

Alan from the islands

The irony of pointing out that Darwinian doesn't have a clue when you yourself don't have a clue about what Darwinian does or doesn't know or have insight on.

In fact, we do have a clue. Since the middle of last year we have learned of a secret memo on Kuwaiti reserves,

January 2006, the magazine Petroleum Intelligence Weekly declared that reserves of Kuwait were in fact only 48 billion barrels (7.6×109 m3), of which only 24 Gbbl (3.8×109 m3) were "completely proven", backing this statement on "leaks" of official confidential Kuwaiti documents. The value is half of the official estimate.[50]

A quickie link as I am at work... http://en.wikipedia.org/wiki/Oil_reserves#Kuwait

...another insider comment on another OPEC member's reserves... (I'm blanking right now...) and we have a very definite statement from Sadad al Husseini, former head of production at ARAMCO, that OPEC and/or ME reserves are overstated by 300,000,000,000 barrels.

So quit talking foolishness.


Justices Cut Damages Award in Exxon Valdez Spill

WASHINGTON (AP) -- The Supreme Court on Wednesday slashed the $2.5 billion punitive damages award in the 1989 Exxon Valdez disaster to $500 million. ...

Souter said a penalty should be ''reasonably predictable'' in its severity.

Exxon asked the high court to reject the punitive damages judgment, saying it already has spent $3.4 billion in response to the accident that fouled 1,200 miles of Alaska coastline.

The Supreme Court divided on its decision, 5-3, with Justice Samuel Alito taking no part in the case because he owns Exxon stock. ...

The commercial fishermen, Native Alaskans, landowners, businesses and local governments involved in the lawsuit have each received about $15,000 so far ''for having their lives and livelihood destroyed and haven't received a dime of emotional-distress damages,'' their Supreme Court lawyer, Jeffrey Fisher, said when the court heard arguments in February.

Buffet on CNBC says speculation has nothing to do with the price. Stated that if they totally closed down the trading (NYMEX, etc) the price would not change. He is the dems guru when he says raise taxes and helps fund their campaigns. It will be interesting how they respond to this. Also, states that so-called windfall profits taxes make no sense. But, he wants increased payroll taxes (which are supposedly "insurance" payments per Supreme Court decision) and increased taxes on the "rich."

Just a suggestion: how about a decrease in the number of clueless articles linked. IMO everyone realizes at this point that there are a lot of highly paid morons/liars discussing the energy topic. IMO these articles don't move the discussion forward, rather they are frustrating.

NO Please! The articles, posted by Leanan every day, are what I really look forward to. These are NEWS articles and regardless of the intelligence of their authors gives us a true picture of what people are thinking about the oil situation. Also many of the articles are simply news releases from oil producing nations or other people in the oil business. I find them absolutely invaluable. Or at least far more valuable than a lot of the idle chatter by most posters.

Ron Patterson

Absolutely right BrianT...What we need here is more group think! Anyone that disagrees with anything said by the 'favored ones' here should be kicked off this site.

I have had a sufficient dose of group think for the day. Time to get out a Harley and burn up some gas while I can still get it. I will let you know if their is no gas available at the stations.

it's not about reinforcing group think

it's about informed debate... when you're not having an informed debate, people are pulling stuff out of their asses, then it's not really adding value... i believe is the point being made

i can see the point - i have to say i skip over most of the clueless articles, as i know the points being spouted and the arguments both ways... with the general NO PEAK arguments... where there are articles where people are trying to make a fact based and researched based argument as to why production can grow - i find them worthwhile to read, though find the comments helpful on here that point to counter-arguments where relevant

but there are a lot of clueless voices out there and they get boring after a while

Many people who are talking about the oil market are clueless.
It is frustrating to sift through much of the bunk, but it is important to remain outward facing. Challenging our own comfort level is critical to remaining relevant. These banal arguments still have meaning to many people who in many cases are very smart, but who have paid little attention to the oil market.

The New York Times this morning also has an article on gas "tourism" to Mexico, covering El Paso and Ciudad Juarez instead of San Diego/Tijuana.

At the Servicio Herrera service station here, the manager, Jorge Salinas, estimated that Americans were now 30 percent of his customers. They arrive at all hours, Mr. Salinas said, from 6 a.m. to midnight.

I wonder how long that will continue. Saving on a fill up now looks to be a high risk proposition.


kinda funny - - we sell them gas cuz they're underinvested in refineries and they sell it for less than they paid for it - - then "we" buy soem of it back. . .

a car sharing program should be a good way of mitigating peak oil. it should leave more money to cope with peak oil prices rises and take cars off the road.

Ithaca program offers way for residents to share cars

In a related topic, our Post Carbon group is experimenting with www.rideamigos.com for ride sharing in our community.

I checked out a bunch of them and this one seemed to have the best interface and functionality.

Would love to hear which are the favorites of others.

Darn it, sharing is Communistic.

Next thing you know the UN-Communist conspiracy will make us share our houses and hamburgers.

Big difference between "sharing" and "forced sharing."

What percent of the population, if they have the money to afford otherwise, will voluntarily choose to carpool?

If it's involuntary, it will feel like it's forced, and people still won't like it.

U.S. May Have Hit Peak Oil Demand in 2007, Yergin Tells Panel

I wonder if anybody told the congressional panel about Yergin and CERA's track record for predictions? To me, this ranks right up there with when they invited Michael Crichton to discuss climate change. On one hand, you've got a guy whose company is so bad at making predictions that you would have made money betting against them every time they made one (even worse than random chance). On the other, a guy who writes stories about theme parks with robots (westworld) and dinosaurs (jurassic park) going awry and killing everyone commenting on potentially the biggest environmental problem we've ever faced. To paraphrase Ken Deffeyes:

It would be funny, except that my tax dollars are paying for it.

Yergin's prepared testimony, along with that of other presenters, can be found at the Joint Economic Committee's web site.

E. Swanson

Thanks for the link, it's interesting to read Schumer's remarks in that he put up this chart that says that OPEC is withholding 3.5 million barrels a day of spare capacity. Here's a quote:

The only short term way to increase supplies right now leads directly to the sands of Saudi Arabia. As we see here, OPEC is producing oil well under its capacity, despite record oil prices. Saudi Arabia is the 800 pound gorilla of oil production and even after modestly increasing production this weekend, they still have considerable excess capacity. Most experts believe that they could produce another million barrels, which would have an immediate impact on price. Saudi Arabia is actually producing below their 2005 production levels.

So now we see that KSA's wildly overestimated reserve claims are coming back to bite them because these congress critters, or at least Schumer, seems to believe that KSA is holding out on us. I wonder in what way they will find out that the KSA was lying to them and what will happen?

If I were Saudia Arabia I would come out and state that they are at peak oil (whetyher they are or not) and are not capable of producing more than they are currently.
This would get the world off their back and at the same time it would raise oil prices quite a bit putting more money in their coffers?

That, my dear friend, would probably cause world wide panic. No, we do not want that. At best, I'd say we are not sure we'll be able to increase production but, we'll try. Or just what they're saying now.

Alan from the islands

Well, if demand peaked in 2007, isn't that just a back-handed way of saying that supply (at prevailing prices) peaked in 2007? Is Yergin just saying that he agrees with Peak Oil?

This is all spin B/S. Every industry or company accounts for revenue in currency. The global oil industry is growing very strongly and has not topped out at all. Gasoline revenue in the USA is growing strongly and has not topped out at all. A true transition from gasoline starts when gasoline expenditure as a % of total expenditures starts to decline-not a moment before. It is still rising very strongly.

There is a inner paradox in his reasoning: "prices will fall because the US has hit a peak demand in 2007", but demand will go up if prices are falling! demand is not lower because the US consumers voluntarily chose to cut their consumption, it's because of high prices. If gasoline price goes to $2.50 tomorrow, I'm pretty sure consumption will go back to previous levels.

Yep - you can view it as the market is now 'testing' how high of a price it can charge without lowering demand too much. Unfortunately, in a free market this is not a smooth process. There will be several oscilations before supply and demand balance out at a new equilibrium.

I agree. There's way too much of a "it's different this time" line to his reasoning. In the dot-com boom we heard "It's different this time, it's a new economy." Before the housing bubble burst, we heard, "It's different this time, lenders have packaged their loans in such a way to minimize risk." During the early stages of the current oil price increases we heard, "It's different this time, the U.S. economy is less reliant on oil than it was in the 1970s." Now it's, "It's different this time, prices will fall because of a peak in demand."

I'm rapidly coming to the belief that there are no improvements in economics, only the same mistakes being repeated and all new mistakes and all the elegant justifications about how much we are improving are just rationalizations for what people want to believe. Mayan empire, here we come.

Scientists use mathematics to predict the future.
Economists use statistics to predict the past.

No no, you've got it all wrong...remember all those politicans and pundits telling us that we needed to stop wasting oil and conserve? Cut out unnecessary shopping trips? Don't buy that SUV and McMansion?


Then why does 'The Energy Farce' article above say:

In America, our energy conservation efforts are already beginning to pay off. Our oil consumption decreased by 0.1%.

Did I miss something? Sounds like telling someone that can't afford food that their diet is working.

Neon - When oil prices were $8 / barrel, I did lose that weight. Walked out one lease, got my exercise and ate those $8 beans when I got home. I also got to know nature, and saw lots of little critters and quite a few deer. I had to use a vehicle some, since 5 HP motors are kind of tough to lug around over rough terrain, but that didn't happen all that much.

We have a lot of excesses we can cut, and I think by the end of summer we will have a pretty good idea what they are.

Homeostasis, anyone?

IEA: "Global energy demand grows despite the sustained high world oil prices that are projected to persist over the long term," said the report. Oil could cost as little as $113 a barrel or as much as $186 a barrel in 2030, the analysis assumed in making the demand forecast."

-so what they are saying is basically: OK, prices are not going to fall to $50 a barrel like we thought due to the demand -in fact they're probably going to stay quite a bit higher than that BUT not too much higher...

-Look what its done the spot oil price! We're saved, Hurrah for the IEA: one report can do what no Western Leader can accomplish!!


Re: Olduvai theory.

I just don't see why the lights go out once oil has been in major decline. There are plenty of other things to make electricity out of.

Mining is a very energy-intensive operation. Once the coal or uranium has been mined, it must be transported to the power plant. Transportation is almost entirely dependent on oil. Infrastructure investment requires both energy and capital, both of which will tend to be scarce post peak. I would say that electricity production is every bit as dependent on oil as food production is. Both will be problemmatic post-peak, unless we manage a smooth transition to alternatives.

Mining is a very energy-intensive operation.

what if it isn't energy intensive in the future? what if we use renewables?

Transportation is almost entirely dependent on oil.

transportation can go electric and we can always switch to rail and water from whatever truck use we have.

Infrastructure investment requires both energy and capital, both of which will tend to be scarce post peak.

I would call energy and capital scarce, especially in a post peak world when it's used for producing energy and essentials. energy and capital will be diverted from frivolous things like SUVs and other toys to producing and saving energy.

look to the economies of commodity and oil producing countries. some of the sovreign wealth funds have more money than they know what to do with.

john15 - I cannot wait to see the FedEx or UPS boat dock at your house or see the rail spur unload there.

Both docks and rail lines are within walking distance of my home :-)

Best Hopes for Energy Efficient Transportation,


And the docks will get even closer the next time a big hurricane hits. :)

Some who vociferously decry the unsustainability of our present transportation industry and fail to see the hypocrisy of bragging about living on a site below sea level prone to flooding from storm surges will probably never understand why their proposals aren't met with more critical acclaim.

"Dynamite the freeways!" and the levees as well.

Yo! Spacey! You DO realize there there is ZERO connection between theorizing on energy demand, energy production and transport and where one lives, right?


Whether he trusts the levees and/or is simply hoping for a great deal of luck has no bearing on his knowledge of the issues he posts on. You do know that, right?


Sadly, since you *did* make the post we must all assume you've got the education of 6th grader because you wouldn't post such crap *just to be an ass*, right?


Some just can't help removing all doubt...


Yo! Spacey! You DO realize there there is ZERO connection between theorizing on energy demand, energy production and transport and where one lives, right?

At least in the case you are trying to frame your argument in.
Alan has made no secret of his desire to have some version of TOD service his beloved N.O.

Whether he trusts the levees and/or is simply hoping for a great deal of luck has no bearing on his knowledge of the issues he posts on. You do know that, right?

Only a simpleton would suggest that another trusts to luck a levee system that has already failed to live up to its design criteria.
My observations lead me to believe that coastal regions, including N.O., will need to be abandoned in the coming years.
To actively insist on increasing expenditures on an area that logic says will shortly be abandoned strikes me as lunacy.
At the very least it is merely replacing one failed system for another.

Sadly, since you *did* make the post we must all assume you've got the education of 6th grader because you wouldn't post such crap *just to be an ass*, right?


Some just can't help removing all doubt...


"Cheers" is a salutation commonly given preceding the consumption of alcohol.
And the bravado of your attack suggests to me that you were inebriated when you wrote this post.
If this is a habit of yours it most certainly will decrease your chances for survival post-peak.

New Orleans has a resource no other coastal city has, the MASSIVE silt in the Mississippi River. It can be diverted (especially in the spring, 17' above sea level @ New Orleans this year, most years 15' to 16') into the swamps (as nature once did) and build up protection lost to the oil & gas production (their canals, etc).


Yo! Spacey! You DO realize there there is ZERO connection between theorizing on energy demand, energy production and transport and where one lives, right?

At least in the case you are trying to frame your argument in.
Alan has made no secret of his desire to have some version of TOD service his beloved N.O.

Feels like you got somethin' agin' NO... You're a bit angry, it seems, for this is simple logic. One's motivation does not = one's ability, though the former may well shape one's conclusions. But Alan has spoken of rail, etc., in a very wide range of contexts, so your argument is... um.... bull excrement. That is, illogical. (That does not mean he does not wish for advantages for his city. But it would be rather idiotic not to, would it not?)

Whether he trusts the levees and/or is simply hoping for a great deal of luck has no bearing on his knowledge of the issues he posts on. You do know that, right?

Only a simpleton would suggest that another trusts to luck a levee system that has already failed to live up to its design criteria.

Oh, come on. You cannot possibly think this answer addresses the point I raised.


My observations lead me to believe that coastal regions, including N.O., will need to be abandoned in the coming years. To actively insist on increasing expenditures on an area that logic says will shortly be abandoned strikes me as lunacy. At the very least it is merely replacing one failed system for another.

I don't really disagree here. I have a brother in NOLA, and have made the point. However, you are wrong in the time scales we are discussing, most likely (but not absolutely). However, it is highly unlikely sea level change will swamp NOLA in Alan's or my brother's lifetimes. It is also highly likely it will within the century. But it is their gamble to take.

Personally, I wouldn't invest in infrastructure for NOLA.

"Cheers" is a salutation commonly given preceding the consumption of alcohol.

Or just to say, "Bye!" Don't be an idiot, eh?


I don't really disagree here.I have a brother in NOLA, and have made the point. However, you are wrong in the time scales we are discussing, most likely (but not absolutely). However, it is highly unlikely sea level change will swamp NOLA in Alan's or my brother's lifetimes.

Oh but you do.
The whole point I have been making has been the inconsistancies in Alans message:
"Get rid of cars and lock yourself into electrically powered light rail for a sustainable future"
And what we know about the greenhouse effect spells doom for NO.
The speed at which the ice is melting destroys your presuppositions.

"'Cheers' is a salutation commonly given preceding the consumption of alcohol."

Or just to say, "Bye!" Don't be an idiot, eh?



One's motivation does not = one's ability

In your case I am in 100% agreement.

So the oil producing countries are going to lend us money to help us switch our infrastructures from oil to renewables? That would be mighty magnanimous of them!

Alan from the islands

Kuwait has lent the Kyrgyz Republic $100 million to electrify 1/3rd of their railroads. Norway has built several hydroelectric dams.

Best Hopes for recycled Oil Money,


I think it boils down to the old argument we've had repeatedly here: fast crash vs. slow decline (or none at all, for the technocopians among us).

The argument is that peak oil is peak energy, and with energy scarcer, all of our technology will become more difficult, even impossible, to maintain. Nuclear, wind, coal, solar...right now at least, it's all very oil-dependent. Even if we somehow adjust...with more and more of our economy devoted to extracting energy, there will be less and less available for everything else. And if things go non-linear (nuclear war or something like that), the collapse might be quite rapid.

In the long run, I suspect that is probably correct. But I wouldn't want to bet on the timing. I think we will adjust, better than many think. In the end, we could be making things worse, of course.

Kind of like the panic over the economy a few months ago. Some were predicting that we'd have an economic collapse in January. Things got a little hairy, but most people didn't even notice, and there was no collapse. The fundamental issues are still there, and there may yet be a collapse...in a few months, years, or decades. But Bernanke kept all the balls in the air, when many feared it would be impossible.

Similarly, if you go back to the early days of this site and read some of the comments...many thought $100 oil would be catastrophic. That if oil reached that price, there would be nuclear war, or we'd all be living in the woods scrounging for mushrooms and berries.

It hasn't turned out that way. I am not trying to dismiss the impact of peak oil by any means, but I do think it may play out very differently than many here expect.

with more and more of our economy devoted to extracting energy, there will be less and less available for everything else.

Why would more and more of the economy become devoted to extracting energy?

One of the great aspects of most renewable energy sources is that they don't require the constant input of fuel, meaning every btu of fossil-derived energy that's replaced frees another tiny piece of society's resources from the constant quest for fuel. As Pickens says:

"Oil fields have a declining curve - you find one, it peaks and starts downhill, you've got to find another one to replace it. It drives you crazy! With wind, there's no decline."

If society adapts to the extent that renewable energy sources start replacing oil (and other fossil fuels) to a significant degree, there's a good chance that the portion of society's resources devoted to extracting energy will go down rather than up.

I am not trying to dismiss the impact of peak oil by any means, but I do think it may play out very differently than many here expect.


A substantial number of people seem convinced that they know how things are going to turn out. Such feelings of certainty about the future are almost always misplaced.

Why would more and more of the economy become devoted to extracting energy?

Tainter talks alot about this in his book. It has to do with declining marginal returns.

Renewables would help, and could lead to a temporary increase in marginal returns. But renewables aren't eternal, they have a fixed lifespan and need constant maintenance during that lifespan. Eventually your marginal returns begins to decrease again.

Of course "fast" and "slow" are in the eye of the beholder.

I suspect that in thirty years collapse (by then long in the past) will look fast to just about everyone.

...Some were predicting that we'd have an economic collapse in January. Things got a little hairy, but most people didn't even notice, and there was no collapse....

"I don't worry about All Hell Breaking Loose, I Worry only part of it breaks loose and no one notices"

George Carlin.

It will be this Aug-Oct timeframe. The market lives in Cartoon Reality where you don't fall when you first go over the cliff, you can go out 10-15 feet first, look back at the camera and then fall.

The coyote just looked back at the camera and is now holding the little sign saying "Oh-Oh" and is ready to fall.

I think it boils down to the old argument we've had repeatedly here: fast crash vs. slow decline (or none at all, for the technocopians among us).

...with more and more of our economy devoted to extracting energy, there will be less and less available for everything else. And if things go non-linear (nuclear war or something like that), the collapse might be quite rapid.

In the long run, I suspect that is probably correct. But I wouldn't want to bet on the timing. I think we will adjust, better than many think...

many thought $100 oil would be catastrophic... It hasn't turned out that way. I am not trying to dismiss the impact of peak oil by any means, but I do think it may play out very differently than many here expect.

Those first few bifurcations come on relatively slowly, but it is an exponential process, as you know. Don't get too comfy just yet.

1. We have yet to reach the peak of the economic crisis. Hell, we haven't even hit the peak of mortgage resets, foreclosures, etc.

2. We have yet to hit serious decline vs. new production.

3. Despite 1 + 2, we are seeing problems cropping up around the world... small so far.... so far....

The critical point will be when serious deprivation hits and too many are unprepared to cope. It's not yet, but I don't see avoiding it if global net oil production declines of 4% or more set in any time in the next 10 - 20 years.

Hirsch was right, I suspect.


Despite 1 + 2, we are seeing problems cropping up around the world... small so far.... so far....

I think that's the key. That's what many fast-crashers did not anticipate. The future is here, but it's not evenly distributed...and it may remain unevenly distributed far longer than many expect.

Simmons pointed out that this is where Limits To Growth went wrong. They were expecting the rest of the world to catch up to the US. Instead, the gap between the haves and the have-nots widened into a chasm.

Some seem to expect the have-nots to take to the streets with torches and pitchforks, and in some cases they have. But it may be a lot longer than many expect before it actually becomes de-stabilizing. Many of the have-nots still believe they will one day be haves, and as long as that dream remains, they aren't going to get too upset.

Nor did it take fossil fuel for Romans to build aqueducts and arches, learn how to read, or organize an entire continent. Yet the skills to do all these things were lost when sufficient system failures occurred. The question is, how many system failures will be caused by oil decline, and when do these failures begin to interact so as to outrun the ability of people to adapt while preserving civilization?


Something I thought about, Don't know what significance it is but...

Around 1900 when my father was born, I would say that about 90% of the people understood the principles and mechanics of about 90% of the things they used on a day to day basis.

Now, I would say that about 90% of the people don't have a clue how about 90% of the things they use on a day to day basis work.

Read the article a while back on EnergyBulletin that "People Don't Know what tree produces Acorns" That's where we are at. Eloi and magical things around us.

I think Greer(archdruid) said that if a crash happens fast, enough people usually survive that knew how things worked and after things settled down, they could teach or show other people.

But if the crash takes a lot of time, knowledge will be lost for good. or something along those lines.

Samsara, fully agree. One consideration for our present society is how we are now victims of our own technological success. Frequent examples are give of how Cuba is still managing and has cars from the 1950s still on the road, etc. Of course McGyver could probably keep those cars running with duct tape and paper clips, not pretty, but functional. The level of complexity in so many of our common conveniences now is such that when the black box dies, it is beyond our understanding or capability to fix it or jury rig it.


My 90 year old dad's generation knew how things were done before the age of oil. He knows how thing were done before the green revolution really took hold. Unfortunately there aren't many of his generation left with their brains and other bits intact. Fortunately he passed on his penchant for avoiding waste and recycling to me but, I figure there's lots more stuff I need to learn from him, while he's still around, that I didn't think was important before I became aware of PO.

Here's hoping for the re-education of the buzz saw generation!

Alan from the islands

I don't consider myself a tree-hugging environmentalist, but I do like trees. And I do like the resurgence of forest land in developed nations for the past 100 years or so. what scares me is one of the big reasons we have been leaving the trees alone has been fossil fuels.

I hope we do not revert back to wood as a major fuel (inefficient and environmentally destructive) and convert over to nuclear instead.

I like trees too. But I also spend enough time around them to know that there is a significant wood resource which is currently going unused and which, used intelligently, could help to displace at least some of our current fossil-fuel usage.

Yesterday, I used a chainsaw to cut a medium-sized tree apart (box elder, some 40' high, 10-12" DBH). It had fallen across a trail several weeks ago in the wet & windy weather, and I wanted to get it out of the way. Currently, the remnants of this tree lie adjacent to the path, discarded, although it probably represents several days of winter heat for a small house. As costs for heating fuel (mostly natural gas and propane in this region) continue to increase, I expect that we will eventually reach a point where the removal and use for fuel of this tree is a smart economical choice, but for now it remains just a headache.

As long as wood fuel can be used sustainably (returning the minerals to the site, and not removing more wood than can be grown), I would hate to see it ruled out as an option. Silver BB's. The challenge, of course, will be to keep the pendulum from swinging too far the other direction, and ending up with a Haiti-like landscape. So, consider this a plea for smart use: use the resource sustainably, but don't destroy it.

Around here (central NH), if a tree blows down across/near a road, it's in someone's woodshed pretty darned quick.

As costs for heating fuel (mostly natural gas and propane in this region) continue to increase, I expect that we will eventually reach a point where the removal and use for fuel of this tree is a smart economical choice, but for now it remains just a headache.

You're nose will be hurting too, box elder stinks as it burns.

Living less than 100 miles from Haiti, their situation is never far from my mind. Propane/NG have become the staple for fuel for cooking here. If the prices rise out of the reach of the poor, they're either going to cook less or turn to alternatives. Fortunately we never need fuel for heating, although many people complain when the temperature drops below about 72F (it's in the high 90s now).This is going to be interesting.

Alan from the islands

Are solar ovens not catching on in Haiti?

Don't know about solar ovens in Haiti but, I live in one here in Jamaica. I've been monitoring the temperature of my concrete slab roof and the roof is now at about 97F and it's humid here. I have had a steel frame made that, I am going to stretch heavy duty plastic tarps over to shade the slab. It should make a difference. This heat makes me extremely aware of just how much energy we have beaming down on us every day. Convinces me that, solar is the future baby!!

I do my laundry in a laundromat that has several clothes dryers (mde by the American Dryer Corporation). Now, it strikes me as wasteful that, these dryers are burning propane/NG, while the sun is beating down on the roof above them. In addition to which, they do not have heat exchangers to use the hot exhaust air to preheat the incoming air. I see so much areas of waste but, because our major supplier happens to be the US, efficiency has not been a big thing. For example, if solar water heaters were really big in Miami, they'd be bigger here. I was in Miami in January and don't remember seeing a single solar water heater. I guess for now, electric is still cheaper.

If there are any resources to develop a new generation of appliance post peak, stoves for sale close to the equator will have concentrated solar collectors heating a working fluid with a high boiling point. This working fluid will be piped down into the stove and circulate through the "burners" to cook food. The same working fluid could also be the heat source for an absorption refrigerator, like the old ammonia filled ones.


Alan from the islands

I am of the belief that latex paint watered down several fold can effectivly paint concrete. If something else needs to be added to prevent slow chemical reactions with the concrete feel free to chime in. In any case painting the concrete white should substantially cut its surface temperature.

It did make me chuckle too shargash. Important because our subject matter can be a downer sometimes.

He may be confusing his half-tank theory with some old stories of the "gas shortages" of the late 70's. Long after the political dust settled over the question of where Big Oil was hidding all that gasoline inventory that suddenly disappeared the truth surfaced. And it was that half-tank of gas. As Palley implies regarding current conditions, folks back then began changing their fillup timing when they perceived a potential shortage and thus created a shortage (at the gas stations). When the assumption was made that folks were carrying around an extra X gals per car and then multiply by the number of cars you came up with the amount of gas that suddenly disappeared from the reserves.

As far as my own personal fillup schedule I do as most do: wait till I'm very low. It my case it has nothing to do with inventories, price speculations, etc. I'm just lazy. In fact there are stories of folks running out of gas because they avoid filling up to long (exaggerated numbers I'm sure).

But his comments do point to a potential period when folks do start to anticipate a real shortage. I can only assume they'll react as they did in the 70's. It won't matter what starts the run (military conflict, negative pronoucement from the KSA, etc)there will be a short term shortage until the refiners can rebuild inventory. Given the developing PO restraints this might take a longer period of adjustment then was needed way back then.

Just some ramblings from an old fart that saw the gas lines first hand.

We need to be clear of the cause for the gas shortages in the 70's - Government Price Controls. The cap in the price set by government destroyed any incentive for the refineries to produce gasoline.

We can agree on one thing: gov't price controls drove down investments in oil development projects leading to declining drilling activity and the subsequent drop in oil replacement rates.

As far as an gasoline shortages we disagree. There was no shortage of gasoline. I was a young buck who started wroking for Mobil in 1975 and spent a lot of time on the road driving from drilling rig to drilling rig. I also lived an 80 mile round trip from the office when I wasn't on the road. In other words, I did a lot of driving from 1975 thru the "shortage period". Not once during this entire time was I not able to buy gas when I needed it.

Did you???????

If you've been a victem of revisionist history I apoligize for my tone.

Since I was born in 1976, I cannot say I have first hand experience. I can only go by the reports of lines at the service stations and the flags the service stations put out (red for no gas available, yellow for restricted and green for no restrictions). So there must have been some areas with gasoline shortages.

I would love to hear more about it from somebody with first hand experiences...

Yes there were consumer-level shortages, but they were sporadic and regional; at times, poorly thought-out government meddling inhibited the shipping of gas to where it was most needed. Said meddling was resented in the Oil Patch, giving rise to "Let 'em freeze in the dark" bumper stickers. Some of the meddlers famously installed large gasoline storage tanks in their yards to avoid the consequences of their own actions.

Some people (yourself apparently included but other people's "mileage varied") never had much trouble getting gas. Others, especially in some urban areas, had very very long waits. In early 1974 (IIRC) the New York Daily News ran an article, "Now It's All Nite In The Gas Line", or something to that effect (my physical clippings file is not at hand), describing a situation on Staten Island when the problem was at its worst. As always with this sort of thing, busy people in the affected areas were in real trouble, while non-producers with plenty of idle time on their hands had far less difficulty with the long waits.

However, AFAIK there was never much trouble getting airline tickets. After all, while, for example, college students already flew home for Christmas, flying was on the whole still a semi-elite activity, and thus somewhat protected.

It was before my time, but I'm told that distribution was very uneven. There were no shortages in some places, while in others, you had to camp out all night to get gas.

A friend of mine in Florida used to park his van at the pump and sleep in it to make sure he was first in line the next day. He worked as a cable installer, and used up a lot of gas driving from house to house.

It was firmly in my time :-/ I never had a problem finding gas, just paying for it sometimes.

I was living in LA at the time, and did have several waits in line in the hours, and some non availability.
You could still fly from LA to San Francisco for $20.00 anytime on PSA, and flights left almost on the half hour.
Just showed up at the airport and got on, no security, no problem. Delta had a plane they needed to get to LA from San Diego at midnight, and you could fly for $6.00, but no checked baggage.
I drove to Costa Rica from LA, gone 8 months, spent less that a $1000.00 on the whole trip.
Those days are getting further and further away---

As I recall, the shortage was addressed by allocating the available supply according to previous sales. That is, each station was allowed a fraction of it's sales level before the Embargo. What happened next was that lots of people decided not to travel. As a result, there was lots of gasoline out of town on the freeways, but the folks that stayed home added to the local demand in town. The resulting shortage resulted in the gas lines, IMHO.

A neighbor and I drove across the country to visit parents for Christmas 1973. I had no trouble finding gas, even though I drove straight thru. On the return trip, I did run out of gas, but that was because I missed a fill up before the gas stations closed for the night. By then, the 55 mph speed limit had gone into effect.

E. Swanson

I got my driver's license in 1968 and my first car in 1970, so I was around during the thick of it. I never had to wait in a long line, nor did I ever see a gas station that was actually out of gas. I know those things did happen in isolated places, just not where I was (various places in SE and central Pennsylvania). I only vaguely remember the even-odd day thing, as it had a minimal impact on me. I distinctly remember the price going up and up, though. :)

Found the New York Daily news article:

Now It’s All Nite in the Gas Line
Sunday News, February 17, 1974, Page 163

What’s the newest way of spending Friday night in swinging New York City? Why, camping out for 12 hours or so at your favorite gas station in the hope of getting filled up on Saturday morning, that’s how.

Countless New Yorkers, faced with the possibility that most gas stations will be closed until Tuesday morning, because of the Washington’s Birthday holiday, loaded their cars with blankets and groceries and began lining up at their favorite gas pumps long before midnight Friday and simply spend the night there.

With little or no regard for Gov. Wilson’s voluntary even-odd license plate rationing plan, early-bird gassers sporting all the numbers seemed determined to get tanked up one way or another since many took their trusty flasks along to protect themselves from the bitter cold of course.

At a Hess service station at Hylan Boulevard and New Dorp Lane on Staten Island there were 170 cars lined up at 3:30 in the morning. The station was scheduled to open at 6 o’clock.

[...reporter talks to a couple of people in the line...]

The same scene was repeated in stations throughout the city, causing monumental traffic jams in places like Riverdale and Astoria.

I don't think there was a national shortage, but rather that an inflexible regional rationing formula was followed. Some regions, especially California and the northeast had serious shortages. I was in Colorado at the time, and there were no shortages. Although interestingly Colorado had shortages several months earlier, but they were over before shortages became a widespread phenomena.

But his comments do point to a potential period when folks do start to anticipate a real shortage.

Agreed. I think the problem will be temporary, however. People are only going to be able to store so much, and then they'll have to stop, or start using their store, especially because other people storing will make it harder for get gasoline to consume.

That's the dynamic of trying to influence price through storage. The effect of X gallons stored decreases over time, like ripples in a pond. To have a constant effect on prices, you'd have to store a constant percentage of the new gasoline being refined.

Still, I will never underestimate the power of people to hoarde when in panic mode. I have seen people with 6 or 8 gallons of milk in their shopping cart at 10pm before a (minor) hurricane is about to hit. People will hoarde stuff in excess of what they can possibly consume before it spoils. They'll even hoarde stuff they don't use.

Book suggestion for peak oil for the HS Graduating son who's off to college that will have a chance of getting past his filters? I could get a book that I think portays the future, but the lad might not read it. (If he did, he might think back and say 'gee, I was told') Son likes riding the ATVs and motocross bikes bought by parents.

Mom is a teacher, still has her 'clinton sucks/GW Bush rules' bumperstickers on her car. Dad peeled off his GW sticker he runs a mens group that talks about Jesus. FOX news is on at all times in kitchen. Upside, I was just blind copied in a mailing on Nanosolar so they are not totally blind. And the Dad respectfully listens to me on passive solar and considers what I have had to say.

I do plan on putting a copy of parts of the USGS on Phosporous and Oil pointing out how this issue hits during his lifetime, no matter what book is chosen.

"FOX news is on at all times in kitchen" - in 2008

likely lost cause

Sonia Shah's "Crude: the story of oil" for starters.

Lots of different comments on Amazon

The Long Emergency, or The Upside of Down. If finished, either one should do the trick of inducing awareness of the coming "issues."

Re the article on Bloomberg “U.S. Gas Demand May Have Peaked In 2007 According to Yergin”

Yergin’s article was published by Bloomberg on June 25, 2008.

My post on another string here on TOD on June 24:
“Of course, whether or not GM makes it, the cat is out of the bag. Pretty soon, folks will be driving their own "hacked" Prius',
and Toyota has committed to the factory plug hybrid Prius by 2010. Daimler Benz has already tested a pilot version of a plug hybrid C class Mercedes.

What I am waiting for is for A123 to start selling the battery pack to hobbyists for full electric conversions, much the way the Altair and original Apple were sold as kits to home computer geeks.
A123 has never gone public and probably never will. The insider venture capitalists, hedge funds and big banks will never let this one into the hands of the public, and the equal of Vanderbilts and Carnagies and Mellons will be born out of what will be the greatest revolution in energy and transport the world has ever known.

Sorry for GM if they can't stay up, but we have to give them credit, they are running at nearly wartime pace in the implementation of the Volt. They know how dire their situation is. But, the revoulution has started, and whether GM gets to the starting gate in time is of interest only to GM shareholders and employees. It has no effect on the revolution, which is now past the point of being stopped.

Brief aside, if KSA actually has the oil they say they do and can produce it, they have made a horrific error. They waited too long. We have probably already seen the peak in crude oil and gasoline demand in the United States, Japan, and Western Europe. China and India will have to rise some, but the curve will begin to flatten very rapidly. Peak demand has always been a fear of the Saudi's. In the developed Western nations, it is here. French Total Chief
Christophe De Marjorie famously said a year or so ago, "100 million barrels a day...never."

He was more right than even he probably knew.
The oil and gas industry has been running a TV ad in which they claim the world will need twice as much oil and gas in 2030 as now. To which I say..."never".
The EIA is betting otherwise:
When I agree with Yergin this closely on both view and timing, then I know either I need to get a new job and be paid more, or Yergin has fallen off the turnip truck and bumped his head.

But I am now about to type the words that may very well cause TOD to completely lock up, shut and go into safe mode: This time Yergin is right.


Not really interesting, your comment.
Of course is Yergin right, the US hit peak demand. The whole OECD hit peak demand, that is roughly 2 years ago. Demand is flat resp. decreasing. Everybody knows that with a decent insight view, since the data is available.


This year, emerging markets combined (China, India, Russia and their other "life in the fast lane" buddies) will pass the U.S. in oil use. Going forward, global oil consumption is expected to keep climbing even as U.S. / OECD consumption eases. After all ...

Americans each use 25 barrels of oil per year.

The Chinese each use 2 barrels of oil per year.

And the folks in India each use just 1 barrel of oil per year.
Where do you think the growth is going to come from? The rest of the world wants to live and drive like Americans!

Price goes up, consumption goes down.

Who would have ever thought it?

I guess it takes a Pulitzer Prize winner to come up with insights like that.


GM may have a few other roads to profitability. A year ago I read a story about the most profitable model GM sells. I don't recall the exact numbers but I believe this one model generates more profit for GM then all other models combined. It was described as a crappy little 4 cylinder station wagon they make and sell in China.

Any confirmation out there?

No, both you, Roger and Danny are completely wrong on this one-USA gasoline revenue is growing strongly and hasn't even levelled off yet, much less gone into decline. In the ECON 101 universe, it doesn't really matter if a steadily increasing % of the country's wealth is being allocated to gasoline expenditures, as long as the volume of gasoline purchased declines. Patently ridiculous, but par for the course.

the revoulution has started, and whether GM gets to the starting gate in time is of interest only to GM shareholders and employees.

Not entirely true; I would imagine that a successful rollout of something like the Volt would significantly speed up the electrification of private transport.

I agree with you that things seem to be moving in that direction regardless of what GM does, and that at this point GM wouldn't be able to stop that trend, but I would argue that GM could speed it up.

Brief aside, if KSA actually has the oil they say they do and can produce it, they have made a horrific error. They waited too long. We have probably already seen the peak in crude oil and gasoline demand in the United States, Japan, and Western Europe.

There's an outside possibility that that's one of the reasons they're happy with high prices.

Assuming typical rates of return on investment, the net present value of $1B/yr for 50 years is about $12B. What that means is that, for the Saudis, it's worth more to sell 3Gb/yr of oil at $120/bbl for 4 years and then never sell another drop than it is to sell 3Gb/yr for 50 years at $30/bbl.

If oil is going to become progressively less important as an energy source, it makes quite a bit of economic sense for them to get what they can from it now. The interesting caveat is that they need somewhere stable and prosperous to invest their earnings, meaning it's also in their best interests to ensure the world economy isn't hurt too badly by oil prices.

So I see peak demand as a compelling reason to raise prices moderately; while it may hasten the decline of oil use, it'll increase the long-run generation of oil profits, which is probably what the Saudis are more interested in.

I agree with you that things seem to be moving in that direction regardless of what GM does, and that at this point GM wouldn't be able to stop that trend, but I would argue that GM could speed it up.

Not necessarily. If people get burnt by a bad GM volt, it could sour them to the whole EV/PHEV concept.

Perhaps the Volt is rushed into production but because of this rush the batteries aren't fully vetted. Possibly a large percentage of Volt buyers get saddled with defective cars/expensive repairs/recalls etc. Consumers associate EVs with this failure and the whole movements is setback by years.
Or Maybe GM is forced to recall and replace thousands of batteries at their own expense. This is the straw that breaks GM's back. Other car makers take note of this and delay their entry into the market for fear this may happen to them.

I'm not saying this is going to happen but its conceivable.

I saw this sort of thing happen in the computer industry, a great idea whose initial product implementation sucked would get such bad PR, that it would be decades before anyone would dare try it again.

The only thing that is likely to be shocking about the transition from gasoline to electric is its speed. Twenty years ago cell phones were virtually non existent the internet was university/defense only (where i used to bug a friend of mine in the columbia comp sci department to print out cold fusion papers as they came on line). Global cell phone sales will hit near 1.2 billion this year.
Once electric cars become available to the mass market (36 months) they will completely dominate sales. Who is going to buy a 10 - 15 year appliance based on tech that they know is being phased out with operating costs way higher than the new stuff? All you have to know is that electric equivalent @ about 20 MPG is < $1 and you can fill up at home, while giving the finger to some oil despot in a random direction.
The only thing peak about oil is today's price and demand.
Think Whales.

Once electric cars become available to the mass market (36 months) they will completely dominate sales. Who is going to buy a 10 - 15 year appliance based on tech that they know is being phased out with operating costs way higher than the new stuff?

People that can do math?

Toyota Yaris vs Norway THINK. 12000 miles per year and $10 per gallon gasoline.


The Toyota Yaris (*est. $11,050 to $14,150) comes in as a replacement for the now-defunct Toyota Echo. According to EPA estimates, the Yaris should average 34 mpg/city and 40 mpg/hwy; a review in Car and Driver notes that road testers got 36 mpg from the Yaris when running errands, a figure also supported at Consumer Guide.

$14,150 + ((12000/36)*10*7) = $37483 worst case (I know mainenance, oil changes blah blah are left out and [sarconal] electric cars will never need any maintenance. [/sarcanol] but you get the point.)



$25,000 +($200 * 12 *7) = $41,800 (Notice no additional charges for the electricity.)

Considering the falloff in sales now, trade in values plummeting for SUV's now and all gasoline vehicles by then, and the economic problems that are still not done panning out I'd bet very few $35,000 vehicles of any type will be selling. The THINK seems to be the closest solution for me. The price point is beyond me though. (51 mile one way commute. and no I didn't move to that commute, my job did.)

Cell phones were given out 'free' with 1 and 2 year service agreements. We all knew the companies were getting their money back, but we are talking a couple hundred bucks at most spread over 1 or 2 years. Start giving away free electric cars and I'm certain that they will take over as fast as cell phones. But electricity will go from 6 cents a kwh to $1 as the electric car companies will charge the electric companies to get their money back.

I think you are overlooking the fact that in a few years gasoline will not only be very expensive, but it will also be hard to get. The owner of Yaris will have to deal with shortages and rationing. The owner of Th!nk doesn't have to worry about that.

Apples to apples a Volt is probably no more than 10k more expensive than the comparable ICE car, a lot of this is the battery. As time and tech marches on this number is going to go only one way and that is down. The government is going to probably kick in 5k in tax rebates. The next 5k will come in fuel savings pretty quickly if gas is at $4/gallon. If say 60% of your driving is off the battery and you do 15,000 miles per year then compared to a 25mpg car the math is ICE 15000 * 4 / 25 = $2400 per year fuel. VOLT 15000 * .6 = 9000 * .02 + 6000 * 4 / 50 = 660 or $1740 per year fuel savings so payback is under 3 years for the 5k.
Five years from now the battery tech will probably improve to the point where the serial ICE is no longer needed and both the fuel cost savings will go up and the car price will go down.
If you want to compare a Volt to a motorcycle you can certainly make the case that ICE powered vehicles will remain competitive.

"Five years from now the battery tech will probably improve to the point where the serial ICE is no longer needed and both the fuel cost savings will go up and the car price will go down."

That is opposite published reports that state that rather than improvements from high tech batteries, what engineers are encountering is how limiting the batteries performance is.
This is especially true of onboard electronics which have to be reengineered for both weight and power comsumption.
If a car co. can't pull parts "from the shelf", they certainly can't control costs.
Recall my earlier posts that in the grand scheme of things, plug-ins are SUPPOSED to be CHEAP TO BUILD.

You have to be kidding me! I gave you what I thought was a very good "apples to apples" comparison and I get "Volt is PROBABLY..." "...a comparable ICE..." ".... government is going to PROBABLY..." and "...25mpg car...".

According to intellichoice the Corolla is the best cost of ownership vehicle for 5 years in the compact category $22,388. Wiki says the Volt is considered a compact. So here we go AGAIN.

$22,388-$7451= $14,937 This is the cost without their fuel calculation.

$14,837 + ((15000/28) * $10 * 5)= $41,622 (Again this is WORST case.)

With the Volt supposedly coming in at $40,000 unless gas gets to $10 really soon I am going with the Toyota.



PS Just so everyone knows, I am a fast crash doomer. As the failures stack I believe eventually the dam will break. I don't honestly think we have 5 years. Battery technology isn't going to impove hundreds of percent in the next few years. And how you are going to make the materials to make a battery some huge amount cheaper when manufacturing costs are not the number 1 reason for the price now, I have no idea. The costs are high because the materials to make the batteries are expensive.


I have a Yaris, and one can get 40+ easily on the highway--
The question is availability of fuel in the future. Of course, the infrastructure delivering electricity
will be starting to crash at this time also. I personally don't believe there will anyone to answer the phone, let alone keep infrastructure together.

David, As pointed out by ceiii2000 in the previous post, a Toyota Yaris at $10/gallon is still more economical thank a Think City. So, why is it that a 62.77mpg Peugeot 308 diesel is going to be a bad investment, if world oil production is not due to go into decline?

I agree that the pace of development and adoption of EV technolog is likely to be frenetic but the installed base of ICEs out there is huge. Even the EVs that are coming on to the market by 2010, will still only be a fraction of total vehicle sales. How soon do you see sales of EVs, of any kimd, overtaking sales of ICEs, in the absence of PO?

Alan from the islands

i think the tipping point will be when for an apples to apples comparison there are electric vehicles that will pay back in fuel savings in 3 years or less including govt rebates in the form of tax incentives. two things will drive this from an emotional standpoint. one will be coolness, the other will be a huge pent up anger at oil producers and a way to stick it to them permanently.
in the end, electric tech is going to work way way better than ICE, for all sorts of reasons and the environmental payoff will be huge.

The population of the USA is supposed to go from 300 million to 450 million by 2030(?). With a dramatically increasing population the demand in the USA is going to increase. All those extra people are going to want to be consuming energy just like the rest of us!
It would be interesting to be able to ask Yergin what he things all those extra people are going to do for energy?

Ahhh...I think Mr. Yergin has just betrayed an implicit belief in PO.

Alan from the islands

For those with access to the CBC (Canadian Broadcasting Corporation), tonight's National newscast will have a special feature report on "our energy future" (I don't recall the exact words, but something along those lines). The promotional clip shown on last night's broadcast featured part of an interview with JHK. It will be interesting to hear what they have to say.


The Energy Farce


Oil Woes Fail to Stir Leadership

Both these articles suggest embarking on some government-ran "Manhattan Project" to wean ourselves off of foreign oil dependence.

But I for one am not quite ready to completely throw liberal economics overboard and turn my energy future over to the government.

The underlying problems as I see them are as follows:

1) The Saudis can at any moment open the valve, flooding the world with oil and driving the price of oil down. This of course may or may not be true, but as long as the possiblity exists, it puts a damper on investment in alterntives and conservation measures that only make economic sense if the price of oil is high.

2) Free markets do not operate in such a way so as to price in the costs of damage to the external natural environment by economic activities.

3) Free markets have no mechanism to protect the poor.

4) Democratic governance in the United States is in crisis, as the corn-ethanol fiasco amply illustrates. It is the poster child for how special interests have come to dominate policy making in the United States and gives insight into what a government-run "Manhattan Project" might look like.

So my question is this: Could we not have some hybrid of free market and government? Could we not have some tariff on imported oil that would kick in if oil prices fell below, let's say $110/barrel? Could we not have a below-cost "lifeline" amount of energy for the poor? Could we not have a carbon emissions tax?

In other words, can't we create some sort of a floor below which energy prices will not drop in order to encourage investment and conservation? Can we not provide for the poor? Can we not tax pollution? And beyond this, keep the government out. The goal is to create a level playing field where a thousand flowers can bloom.

Both these articles suggest embarking on some government-ran "Manhattan Project" to wean ourselves off of foreign oil dependence.

The thing that keeps striking me about Manhattan Project calls is: the Manhattan Project was to develop one single key gadget that only had to be used and work in very limited circumstances. As another Manhattan Project type example, consider the development of the programmable electronic computer at Bletchley Park. That was in many ways very restricted and not directly usable outside the experience Bletchley personnel. The "computers" we have today helps with many problems ranging for supercomputers for scientific simulation to the embedded microprocessors in microwaves are in many ways very dissimilar and have been developed in many different places with different goals, ie, not in a Manhattan Project style.

Unless one thinks there's likelihood of some near-term, relatively low-level physics discovery making available plentiful, low-cost energy in a way that only needs to be done in power stations (ie, something like cold fusion), then any technological aids are likely to be many, diverse technologies each of which help a little bit and which need buy-in/use-by end-users. I don't think there's evidence that Manhattan Project style centralised efforts are effective in those cases.

Well, when I hear about a "Manhattan Project" as it relates to energy, I don't think that anyone so far has called for relying on one technology to fix the problem or there only being one path to the end result. I think the centralization implied when people call for a big government led energy push is a centralization of funding and accountability. As for who would get to chose what projects get funding is a detail I would be most interested in.

What we're talking about is not merely a "Manhattan Project", but an entire lifestyle-shattering, population-transforming World War Two. Supposedly with no bloodshed.

But that's my point: if you're exploring a plurality of approaches and just an overall lump of money being thrown at things, that's great but then that's very unlike the actual Manhattan Project, and conclusions drawn from the effectiveness of that project don't automatically carry over. In fact, just giving something a raised priority is not particularly different from what research calls at the moment do, and they create increased progress but not the dramatic, earth-shattering changes people seem to envision from a concerted effort.

Ie, I'm all for more funding but I worry when the politicians and pundits create expectations based on a completely false analogy.

The "Manhattan" project created more problems than it solved... Think about it?

We don't need the government to solve this problem.
McCain simply wants to show that he cares, so that he can get the votes.
Maybe someone will soon find a viable solution, and publish it, so the government can go back to protecting the country from invaders.


That's why I suggest the government's role be limited to creating a fertile, level playing field that treats all contenders equally, and then let a thousand flowers grow.

We will be automatically weaned off of foreign oil dependence in about 9 years when all exporting countries are no longer exporting enough to supply America.
There will be no need for a price floor, because there will be none for sale to us.
Others will choose to keep what they have to survive.
Protect the poor! We will all be poor, except for a few elites like Bill Gates.
Carbon emissions tax! What company would have any money left to pay it?
The government will go broke too, so we do not have to worry about keeping government out.
It will be every man for himself.
We will then truly pursue our own other forms of energy, or just fade away into the land of 200 years ago with horses, buggies, farms, and hard labor.

A recent opinion poll by LATimes/Bloomberg put Bush at 23% approval rating (link). This itself isn't major because these things are best looked at by an average but he is now beating Nixon for lowest approval ratings made by the major pollsters. Truman still has him by one point at 22% for worst ratings ever. (link, another link with a nice graphic)

Apparently high gas prices make people annoyed, who'd of thunk it? Are we going to see similar discontent with congress in the upcoming elections?

Are we going to see similar discontent with congress in the upcoming elections?

I'm wondering that myself. If so, it's bad news for the Democrats, since they are the majority now.

As we saw with the choice of having Yergin testify in Chuck Schumer's (D-NY) panel you posted earlier, no party has the monopoly on bad policies. It's a question of whose is worse.

When it comes to energy...I think they're both equally bad.

I do think it's interesting that McCain has apparently decided that energy will be the #1 concern of the voters by November.

I agree with you there, they're both bad. That article you just posted is probably the first reasonable thing I've heard out of McCain this whole campaign (besides not raising his hand for the evolution question during the primary debate). In Schumer's defense, before he started going on about OPEC he was sounding pretty reasonable too:

I think everyone would like to believe that high oil prices are a bubble – but they may not be. Many would also like to believe that there is a silver bullet that can pop the bubble.
But if there is no oil bubble, or prices temporarily decline and we put off doing the necessary things we have to do – like conservation or investing more in alternative fuel incentives – we’ll be even further behind than we are now from breaking our foreign oil dependence.

McCain didn't think of this "Lexington Project". People at DOE have been rumbling about a "Manhattan Project" for solar since at least last summer (or at least, that's when I heard about it from two separate sources) and I know they've been going around making clean coal technology a centerpiece of their research effort. McCain just happens to be rebranding it, but whatever, a rose by any other name smells as sweet.

The article linked above, Saudis rely on Khurais to speak volumes, makes me doubt either my reading comprehension or my ability to do simple mathematics. The article says that

The Khurais oil field development is expected to add 1.2m barrels a day of light, highly desirable crude to Riyadh's reserves.

and goes on to say that

The plan, which is little more than half way to completion, will increase Saudi Arabia's oil capacity from 9.5m b/d to a targeted 12.5m b/d

Now, I don't quite follow how a 1.2 mbpd development will add 2 mbpd to total KSA capacity. Does this mean that Saudi capacity is actually just 60% of whatever they claim it is? Or is this just sloppy reporting that neglects to mention other projects that are claimed to be coming online around the same time?

In this case, just sloppy reporting. Current production (might be) 9.5, whereas 12.5 is projected capacity -- and this includes other projects such as Shaybah, Manifa, and probably even Khursaniyah.

My Solution to Peak Oil

Alright that may have got some attention and I'll start by saying for some reason today I've got a whole crock full of ideas;) However, the central one I believe is important and so I post.

First off, as disclaimer, I am not dismissive, nor have been in the recent past of either the magnitude or immediacy of the problem of Peak Oil.

Second, PO is now causing suffering, disruption and dislocation. Yes, best case scenario increased production from places such as KSA, Iraq may buy us some time and allow the market to somewhat cushion the blow, but such developments, as many on this board point out, don't get at the heart of the problem. And yes, when the birds aren't chirping, one wonders whether that may be sound of the four horsemen galloping in the distance.

That said, while I am not a technocornucopian the problem of PO is imo "solvable" by the application of reason and current knowledge towards the valid concerns of others and the earth. One reason I say this is that, industrial societies have not known what to with the excess productivity of their citizens. To me the reason PO is likely going to be one gawful problem potentially filled with the horseman's war famine and pestilence is our how western society and especially banking is arranged. Don't want to get off topic so I'll post on that latter but just to say now the incentive for conspicuous consumption does not stem of necessity from a free market (think Linux) but likely more from a debt based monetary system.

Alright, my solution ... telecommute. Before you dismiss this give it a moment. I decided upon it when planning to pass on Alan's electrified rail ideas to my congressman, but think about telecommunication for a moment before possibly replying from 100s or thousands of miles away.

1) It is achievable. The government could say tomorrow, "all government workers must telecommute one day per week, all government workers must be given the option of telecommuting three days per week. State funding is then tied to similar proclamations. Tax credits could be passed tied to private companies increasing the percentage of workers who telecommute.
2) There is next to no infrastructure which needs to be put in place.
3) It is net energy positive, i.e positive EROEI. Not only is the energy of commuting saved, but the use of a computer for work at home is offset by a computer not being used at work. Finally, the decreased traffic should allow for more efficient commuting on those days necessary.
4) Most people don't do anything anyways, especially in government :0) But really most workers are not laying bricks for a house, performing open heart surgery, or spreading manure on flower beds. (these people absolutely need to commute - not the rest). A power point presentation on the latest company initiative or piece of government legislation can be done just as well at home.
5) My understanding is studies find workers are happier telecommuting
6) My understanding is studies find workers are more productive telecommuting
7) Along with helping the environment it also may strengthen community and family ties. Someone, perhaps on TOD posted on this development with Kellog decreasing the work week and how gardening, hobbies and community interaction all increased.
8) Extremely complex undertakings can be successfully performed by telecommunication. Again think Linux. Arguably the most advanced operating system available has no plant and is developed by workers from around the world, often with no direct compensation. In fact, when I think of it, to me, Linux is one of the most hopeful developments of the past couple decades.
9) It might help suburbs

Alright I guess I'm supposed to have one more, anyone, anyone? maybe, its way cool, or, you can read TOD in your spare time!

I believe in telecommuting and have been doing it for several years. I have saved a lot of money with using less gas. IF all the people that work on computers telecommuted, it would save a tremendous amount of energy. Here's the but.....
A lot of people don't work on computers.....farmers, factory workers, sales people, builders, fishermen, etc....They have to commute in to work on their job. As the cost of energy continues to rise, product costs rise, and more people are driven into poverty.

One other area to consider too is home-schooling. IF all the kids in school did not have to go to a building, we could reduce the cost of teachers driving, buses driving, heating and cooling the school buildings. We could even save money by not building so many new schools. We could have virtual class rooms via the internet. If the parents were at home telecommuting it would be possible with a few adjustments. The bottom line is we will all have to consider "Do I really have to travel or drive to another place to do this job?"

Well information technology and medicine are really the only two pieces of high tech we have developed that I think are truly useful. Given global trade most of the changes in farming manufacturing etc are probably not really needed.
Birth control would ensure the population remained stable.

We don't really have robots but if we did then automation of some tasks without requiring infrastructure would also be a plus. Although weird a robot setting at a old fashioned spinning wheel or loom is not a bad outcome for technology. SO a few general purpose robots would be/ could be a good outcome. If you enjoy plowing with a mule or spinning wool then you can do it or you could let the robot do it.

Also PV cells and electricity are good stuff for the most part.

The point is we could create a really nice mixed high tech/low tech lifestyle that if anything is richer than we have today.

We could still make advanced materials but they are not really needed in day to day living. It would be a life much like the Romans but with robotic slaves and instant information instead of human slaves. Overall we don't need fast travel expect for emergencies simply because we would have time to enjoy the trip in sailing ships or solar blimps or via train or even on horseback.

Technology would be woven into a fulling existence and for those unhappy with this lifestyle we would have enough resources to explore space. If immigration was high enough into the solar system and beyond in time given the natural tendency toward smaller families with wealth the need for stringent birth control measures would diminish overtime.

telecommuting == good
home schooling == good
(telecomuting & home schooling) != good

I agree if people who could telecommute would, this would save a tremendous amount of energy. A 2006 pool found 2% of people telecommuted full-time and 9% part time. (http://afp.google.com/article/ALeqM5iGlg2C-bVbf2t_XQjE4BjIdG2mxw)

What if strove to double these numbers in 2009. I think it is possible and costs very little. You are right that farmers/builders/fisherman etc must have fuel. All the more reason to allow a scarce resource to be more plentiful for them while giving those who buy their products more money to spend on them.

The main obstacle is not whether this is practical, it is that the very rich like to control their wage earners (serfs). I am optimistic that this has a chance to succeed because most people who can telecommute are fairly well off and in this way are a formidable constituency. Also many well-off people use disproportionately larger amounts of fossil fuels. Also if people are more productive telecommuting gives a competitive advantage.

The real question to me is do people view this as an emergency, if so then such a change makes sense. What would be the effect of going from 2% to 4% full time telecommuters, while not a full "solution" I doubt it would be insignificant. Really, what the hell is there to lose? If I could tell my friends and family one easy (note easy) change to make regarding PO it would be - see if you can telecommute.

Thanks for joining in!

There surely are jobs that could make good use of telecommuting, and it should be looked at for its possibilities.

Consider also another variation that was being played with a few years ago is to have generic office space available in small communities.. maybe such as cubicles at the local Kinkos Photocopy stores, or something maybe a little more conducive to working in, but where you as a worker are not going to be distracted by household things, hobbies and chores.. and where you won't be distracted by isolation, either. It could be set up by a number of individuals as shared space, or it could be that you lease or timeshare a cubicle so many days a month. Supplies, Printers, Watercooler and Coffeepot/Teapot, Lunch-runs could be shared among several people.

I work at home on many of my video jobs, writing, editing, billing and building things in my basement workshop.. it can be heaven, but it does also get a bit lonely, and it can be a big relief to join a crew again and be with people, even peripherally.


Yes, I agree. Telecommuting does create a social problem. We all need to feel part of a group, physically. Now, perhaps that need can be met elsewhere in the local community, but you would need to find the time outside your telecommuting job to do that.

I like the local, shared office space idea you have. You could bring your own laptop to this area, but then use the telecomm apparatus set up at the common location. One thing that is becoming more commonplace at my job are phone conference meetings at our desks. This way, all participants do not have to waste time travelling on campus to get to the meeting and the programmers in India can also participate (7am meetings only for that...early evening for them). These could be done at home just as easily.

I have worked at home before and it is quite lonely and there are many things to distract you. It takes a lot of discipline and is NOT for everyone.

your mistake - IMO - as revealed by the emphasis on telecommuting, is to see Peak Oil as a transportation problem

indeed that is probably the smallest of the myriad of problems we face, in terms of finding a fix in isolation (electrification etc.)

problem is these things won't be fixed in isolation - we're talking gross systems failure

Not entirely certain what you are getting at, perhaps I should have emphasized the four horseman of the apocalypse a bit more? Is it better to take actions which do not have a reasonable chance of mitigating the problem at low cost? I would say that my title of "a solution to PO" was a bit "tongue in cheek" however, as I thought about that colloquialism I realized I have no idea what it's getting at either and no how matter how I parse it I find it at least vaguely disturbing.

Kunstler was very good on the CBC national tonight, very toned down message. Ruban came off as a bit of a jerk. All together a good segment. Fairly middle of the road IMO.

The entire news broadcast is here and seems to play fine:


The segment videos don't seem to be playing yet for some reason, maybe tomorrow:


Also, some interesting energy back and forth from our old TOD:CAN friends today for those who want to know more (or less). Check the comments at the bottom of the page.


Thanks-great show. I personally like Rubin's straight talk style. The second part was quite the showcase for JHK.