DrumBeat: June 26, 2008

Oil prices soar past $140 on OPEC, Libya comments

NEW YORK - Oil prices are soaring further into record territory, breaking past $140 a barrel after OPEC's president said prices could rise well above $150.

Reports that Libya is considering cutting oil production are also sending prices higher.

Light, sweet crude for August delivery has traded as high as $140.05 on the New York Mercantile Exchange.

Libya May Cut Oil Output on U.S. Threat to its Assets

(Bloomberg) -- Libya, the holder of Africa's largest oil reserves, threatened to cut oil output in response to a U.S. law that allows terror victims to seize assets of foreign governments as compensation.

Mexico Cantarell oil field output falls again in May

MEXICO CITY, June 26 (Reuters) - Crude output from Mexico's struggling Cantarell oil field fell in May for the eighth month in a row to 1.038 million barrels per day, its lowest level in more than 12 years, Energy Ministry data showed on Thursday.

The fading jewel of Mexico's oil industry, Cantarell has declined rapidly since 2004 and is pulling down overall oil production in the world's No. 6 oil-producing nation, threatening Mexico's status as a top supplier to the United States.

Brazil Oil Reserves to at Least Triple on New Finds, Lula Says

(Bloomberg) -- Brazil's President Luiz Inacio Lula da Silva said the country will at least triple its oil reserves from exploration of a new offshore area that includes the Western Hemisphere's largest discovery since 1976.

The grasp of BP on oil assets in Russia gets more tenuous

MOSCOW: The grasp of the British company BP on its extensive oil assets in Russia became more tenuous Thursday after its Russian partners said a general shareholders' meeting for BP's joint venture here had been held in violation of Russian law.

The Russian partners said the board elected at that meeting was illegitimate. If upheld by a court, that stance could cripple BP's ability to manage its pumping assets and refineries in Russia.

Nigerian gunmen free 4 foreign oil workers - army

PORT HARCOURT, Nigeria (Reuters) - Nigerian gunmen have freed four foreign oil workers kidnapped in two separate incidents in the Niger Delta last month, a military spokesman said on Thursday.

John Michael Greer: The 'Silent Running' fallacy

It’s in this context that we can define the Silent Running fallacy; it’s the mistaken belief that human industrial civilization can survive apart from nature. It’s this fallacy that leads countless well-intentioned people to argue that nature is an amenity, and should be preserved because, basically, it’s cute. That sort of argument invites the response, just as stereotyped and more appealing to our culture’s governing narratives, that hard-headed practicality takes precedence over emotional appeals and nature can therefore be ravaged with impunity.

Yet nature is not an amenity, and the “practicality” that leads current political and business leaders to ignore the disastrous consequences of their own actions doesn’t deserve the name. If anything, industrial civilization is the amenity, and it’s not particularly cute, either. Nature can survive without industrial humanity, but industrial humanity cannot survive without nature – no matter how hard we pretend otherwise, or how enthusiastically we stuff our brains with science fiction fantasies of electronic reincarnation and the good life in deep space.

McCain's Energy Plan: Correct Diagnosis, Killer Prescription

John McCain seems to have identified our energy problems accurately. But are his solutions equally laudable?

June 26, 2008 - by Jérôme Guillet

With gas topping $4 per gallon and oil prices seemingly reaching new highs every week, more pain at the pump is certain in the foreseeable future, and energy policy is rightfully claiming its place as a major topic of the 2008 election. Indeed, John McCain gave a major campaign speech earlier this week in Houston specifically on energy (the full transcript can be found here) and addresses the issue again this week in Santa Barbara. It is worth looking in more detail at how he describes the current situation, and what he is proposing.

Note: the full version of this text, by our very own Jerome a Paris, will be posted in full on TOD over the week-end.

Pay Attention to Oil Decline Rates

We commonly hear that the reason oil prices have risen is rapid demand growth in developing countries, particularly China and India. But the decline of mature oil fields throughout the world is a much greater source of demand for new oil supplies than the growth of end user demand. It has been estimated by CERA that declining fields lose 4.5% of total oil production per year thus requiring about 3.9 mb/d of new oil each year for the global oil supply to stay the same. The growth in end user demand, on the other hand, varies from only the currently estimated 800 kb/d this year to about 1.5 mb/d in recent years, much less than the estimated 3.9 mb/d per year of declines. (Frankly, I’m not certain either the decline or the demand number is accurately known; I take all oil statistics as estimates at best.)

OPEC president: Oil could soon hit $170

Crude oil prices will likely rise to between $150 and $170 a barrel this summer, OPEC President Chakib Khelil was quoted as telling a French television station.

Iraqi Oil Workers' Union Threatens Strike to Block New Oil Law

(Bloomberg) -- The Iraq Federation of Oil Unions, which represents more than half the nation's oil workers, will consider striking to stop the passage of a national oil law.

Hawaii suffers a tourism blow

High fuel prices have caused airfares to skyrocket. And the economy has caused some Americans to postpone or downsize their travel plans. Fewer tourists are coming to Hawaii, and some think the problems are only beginning.

ATA and Aloha Airlines have already gone bust. And starting next week, two Japanese airlines will increase fuel surcharges on flights to Hawaii by 43%. American Airlines just announced plans to eliminate its Chicago-Honolulu route at the end of the year.

Singular Simplicity: The story of the Singularity is sweeping, dramatic, simple—and wrong

So on what do intelligent people base the idea that technological progress is moving faster than ever before? It’s simple: a chart of productivity from the dawn of humanity to the present day. It shows a line that inclines very gradually until around 1750, when it suddenly shoots almost straight up.

But that’s hardly surprising. Since around 1750 the world has witnessed the spread of an economic system, by the name of capitalism, that is predicated on economic growth. And how the economy has grown since then! But surely the creation of new markets and the increasingly fine division of labor cannot be equated with technological progress, as every consumer knows.

Move over London and N.Y., there's a market shift going on

There are efforts to establish commodities markets in the Gulf and the Far East. Hong Kong has just announced plans to establish a fuel oil futures contract. Dubai Mercantile Exchange has already launched a sour crude futures contract with the help of Nymex, home to America's benchmark crude futures. Sour crude represents the majority of the world's oil and it is growing in dominance as the popular light, sweet crudes diminish in volume. The Dubai contract struggles to gain acceptance as Saudi Aramco is still unwilling to use it as a benchmark to price its own crude.

There is little doubt, however, of the logic that suggests the focus of oil trading will shift to the main suppliers as North Sea and U.S. supplies begin to dwindle. It's a challenge for London and New York, and attempts by the U.S. Congress to strangle the trade in futures out of fear that speculators are manipulating the oil price is dangerous and naive.

American financial fiasco could take down world economy

Frankly, all financial institutions are in deep trouble, and the reason is the American dollar. The situation is so dire that it's not going to make a hoot of difference who becomes the next president of the United States: it's beyond the power of the rulers of the American political and economic system to curtail severe damage to its entire economic enterprise. Neither Obama nor McCain can do anything to stem the disaster that will be fully employed by the end of this year.

Part of the cause is that the USA happens to be the most indebted nation on the planet and its people the least prepared to cope with peak oil and peak food. Even now Americans throw away up to 40 per cent of the food they buy, their high-powered and fuel-thirsty automotive park cannot be converted to more efficient vehicles for many years, while their exurban lifestyle makes car-sharing and mass transport impossible for most.

The link between oil and xenophobia

The problem is that our global economy can't function in the way it does currently with significantly less energy. To keep on growing, it requires more and more energy. The phenomenal growth we are seeing in India and China is keeping demand high.

Over the last three years production has flattened while demand has risen sharply. Prices have reached all-time highs and we haven't yet started the decline in production.

The effects of rapidly rising oil prices have been varied and widespread. Oil permeates almost every sector and every country.

'Shortage psychology' driving oil prices up, analyst says

WASHINGTON — Growing global demand for oil and the fear of supply disruptions have created a "shortage psychology" that is helping keep fuel prices high, a leading energy analyst told Congress on Wednesday.

Many speculators now are convinced the world is "running out of oil," energy expert Daniel Yergin told a Joint Economic Committee hearing. "As prices go up, this psychology becomes self-reinforcing," sending prices higher still - at least, until consumption patterns change dramatically.

New-car owners less satisfied with miles per gallon

DETROIT — Drivers of new cars were less satisfied with their vehicles this year for the first time in at least five years, due mainly to rising fuel prices, according to an annual survey released Thursday.

West Australia Says Gas Blast Cut Supply to Pilbara by 45%

(Bloomberg) -- Western Australia said the gas plant explosion that cut almost a third of the state's supplies has reduced deliveries of the fuel to the mining industry in the Pilbara region by 45 percent.

Australian Truck Drivers Protest Fuel Prices

Mathaba.Net - Australia's National Secretary of the Transport Workers Union (TWU), Tony Sheldon, addressing the media outside New Parliament House in Canberra, said that tens of thousands of truckers and small businesses face collapse due to the rising fuel prices.

This affects safety on the road and the lack of government help means workers will have to work longer and harder. 228 lives should not have been lost due to deaths in the past year due to the pressures of rising fuel costs, he pointed out, and criticised the lack of "cost recovery" action by the Australian regime.

Nepal: Strike over fuel price hike paralyses Kathmandu valley

Life in the Kathmandu valley came to a standstill Thursday as four minor parties jointly called for a shutdown to protest the hike in fuel prices.

Alberta ignores U.S. oil critics at its peril

There was a time when being Alberta's man in Washington D.C. involved golf rounds and cocktail circuits of non-stop fun.

As America's most reliable energy supplier, the province rated a red-carpet reception in a national capital thirsting for secure oil. Not any more.

Analysis: Americans may hold a key to gas prices

WASHINGTON — A decline in Americans' demand for gasoline is keeping record prices from skyrocketing even further, a USA TODAY analysis of gas and oil prices shows.

The price of crude oil has nearly doubled in the past year, while gas has risen in the U.S. by about one-third, according to statistics kept by the Energy Information Administration. Oil prices are being driven up by rising demand in developing nations. But U.S. drivers have cut back, causing a 1% drop in demand for gas this year compared with the same period in 2007. That has forced refiners and retailers in the U.S. to reduce their profit margins.

"Whenever you look at $4 gas, you feel to some degree that you're being taken advantage of," says Eric Wittenauer, a Wachovia Securities energy futures analyst. "Unfortunately, it could actually be worse."

A world less flat

If the price of oil remains high, we may see drastic changes to America's cities, economy and way of life.

World Economy Would Collapse If Oil Hit $200, Deutsche Says

(Bloomberg) -- The global economy would collapse if oil hit $200 a barrel, said the top energy analyst at Germany's largest bank.

``Two-hundred dollar oil would break the back of the global economy,'' Deutsche Bank AG's Chief Energy Economist Adam Sieminski said in an interview today in Tokyo. ``Next step after $200 would be global recession and bad news for everybody.''

Americans, Hurt by Rising Gas Prices, Curb Spending

(Bloomberg) -- Most Americans say they are feeling the pain from rising gasoline prices and many are tightening their belts in response, a Bloomberg/Los Angeles Times survey shows.

``It costs me double to fill up the tank,'' says J.L. Harder, a 75-year-old retiree and poll respondent in Peoria, Texas. ``We don't go on vacation and don't visit the relatives.''

He isn't alone. Seven in 10 of those surveyed say higher gas prices have caused them ``financial hardship.'' More than 1 in 3 respondents say they have cut back on their spending over the last six months as oil and food prices surged and

Tokyo Electric May Post Bigger Loss on Fuel Costs, Shimizu Says

(Bloomberg) -- Tokyo Electric Power Co., forced to shut the world's biggest nuclear plant, may post a wider first- half loss than the utility had forecast as fuel costs soar.

``With the closure of our Kashiwazaki Kariwa nuclear plant, we're in the most difficult phase ever,'' Masataka Shimizu, who took over as the company's president today, said in an interview in Tokyo. ``We will be hard-pressed to achieve the earnings targets we've announced.''

Japan govt to help fishermen pay soaring fuel bills

TOKYO (Reuters) - The Japanese government hammered out steps on Thursday to help businesses and individuals cope with soaring energy prices, including footing some fuel costs for the fishing industry.

Soaring oil prices have led to protests across Asia and Europe, and the threat of a strike by Japanese fishermen has highlighted the impact on the nation's already struggling small to mid-sized companies.

Major turbulence ahead for airlines

New York - America's aviation system could be at risk of collapsing by the beginning of next year.

That warning from aviation experts has prompted some industry leaders to call for re-regulation, something considered almost heresy until now. Others are urging Washington to do more to rein in the oil speculators pushing up fuel costs.

Fuel costs drive bus company out of school contract

A major bus company is walking away from a five-year contract with Nova Scotia's Acadian school board, blaming high fuel prices.

High fuel prices put brakes on indie band tours

For months, the 23-year-old singer-guitarist had been budgeting money and booking show dates for Something Fierce's third tour, but skyrocketing gas prices have put the brakes on those plans.

"Once I ran the numbers, it was a 'there's no (expletive) way' kind of moment," Garcia said. After much hand-wringing and grumbling from bookers who'd scheduled the band to play, Garcia canceled the tour.

New faces join ranks of nation's homeless

Those facing homelessness include the working poor, who were among those hardest hit by the collapse in subprime mortgages. But others are middle-class families who scarcely expected to find themselves unable to afford their homes.

...In addition to foreclosures, other factors are driving families to the edge of homelessness: mounting utility bills, the surge in gas prices and the rise in unemployment, which jumped from 5% to 5.5% in May, the government reported. Often, those factors make it harder for families to afford their mortgages — especially for those who bought homes with adjustable-rate mortgages that have reset to higher rates.

Thieves target farm diesel supplies as prices soar

LORENZO, Texas (AP) — With the price of diesel skyrocketing, farmers and ranchers around the country are being targeted by ne'er-do-wells armed with syphon hoses and pumps.

Sheldon Wilder, who owns a cotton gin 30 miles east of Memphis, Tenn., has endured worse already. Twice in two weeks, he had diesel drained from saddlebag tanks on a truck at his gin. The second time the thieves left the hoses loose and what diesel they didn't steal drained out onto the ground.

Highway deaths down in 35 states

Harsha says high gasoline prices discouraging some Americans to drive might be a factor in the decline of fatalities, but it's "premature" to draw that conclusion. Other factors might be stronger laws for seat-belt use and stepped-up enforcement, she says.

Some police officials attribute the decline to fewer vehicles on the roads. "Although I have no data that would clearly indicate this, I do believe part of our reduction in traffic collisions and deaths can be attributed to fewer miles being driven," says Capt. Curtis Henderson of the Iowa State Patrol. "I think that the only explanation for that kind of decline across the country is fewer vehicle miles traveled."

Agencies brace for higher fuel costs

It's not just home owners looking ahead to a hard winter because of high heating oil prices. The Central Vermont Community Land Trust, which owns 372 units of affordable housing and manages almost all of them, is expecting a huge budget crunch this winter.

And that's going to mean rent increases.

Drivers mixing ethanol with gas to save money

Auto manufacturers warn that ethanol can corrode fuel lines and damage hoses, seals and the fuel pump in cars not made to carry ethanol. That can lead to bad gas mileage, poor performance and may even affect the vehicle computers that warn of problems.

The EPA says it can damage emission control devices.

Yet with the price for a gallon of gas hitting a string of record highs this year, motorists are paying little heed, even at the risk of voiding their warranties.

US oil demand slides

America's seemingly never-ending demand for oil appears to be abating as a direct result of the surge in prices.

Data from the US Department of Energy revealed a large build-up in oil inventories in the last seven days, knocking more than $5 off the price of a barrel of oil at one stage.

Speculating on why oil, gasoline prices are soaring

Severin Borenstein, director of the UC Energy Institute, said Congress and some members of the media had spent considerable time theorizing about the role fund managers have played in driving up oil prices.

"The theories may have some initial appeal," he said, "but then they run headlong into some difficult realities."

British prime minister calls for investing billions to reduce dependence on oil

LONDON: Prime Minister Gordon Brown has called for Britain to invest 100 billion pounds (US$200 billion; €128 billion) to reduce its dependence on oil.

Brown says the government proposes investing that amount of money over a dozen years to develop more renewable energy sources and to find ways of living and working more efficiently.

Libya May Cut Oil Output as Market Is Oversupplied, Ghanem Says

(Bloomberg) -- Libya may cut oil production because the market is oversupplied, the nation's top oil official said.

``We are also weighing such a move because of the threats and intimidation against OPEC,'' National Oil Corp. Chairman Shokri Ghanem said in a telephone interview today from Tripoli. ``We have to protect our interests.''

Saudi Net Crude Oil Exports

From this it can be seen that Saudi oil production and net exports peaked in 2005, while domestic production steadily increased. In fact, net exports reduced by 10.5% in the two year period 2005-2007, of which a reduction of 6.7% occurred in 2007.

Net exports in 2005 were 9.223 million barrels per day, 8.848 million barrels per day in 2006 reducing to 8.269 million barrels per day in 2007.

The most dangerous form of Peak Oil

The oil-rich peoples of the Middle East long believed their oil reserves to be unlimited. During the past decade they slowly realized their error, the “Bedouin to Bedouin over five generations scenario.” This insight changed the world. Consider their choice: after pumping enough oil to meet expenses, is it better to pump more and invest the surplus - or leave it in the ground for future generations? The latter looks like the superior bet, given the inevitable peaking of oil and the paucity of potential substitutes over the next few generations.

Province gives cold shoulder to energy-saving AC program

Across Toronto, 40,000 homeowners have volunteered to let Toronto Hydro shut down their air conditioners for short periods on very hot days to conserve scarce power.

There's just one problem, says chief executive Dave O'Brien: No one has ever asked Toronto Hydro to put the system to use.

..."Never been asked to do it," O'Brien said. "We've never once been called ... to activate our system in lieu of going to buy coal-fired power on the spot market."

China wind power capacity growing

BEIJING (Reuters) - China's installed wind power generating capacity is expected to top 10 gigawatts (GW) by the end of this year and to exceed 20 GW in two years, far above government targets, the official Xinhua News Agency said.

Beware the Silver Bullet ...

I am a bit of a techno-optimist. I believe that scientists and engineers provide part of our solution paths forward. I believe (know) that there are tremendous things being developed in laboratories and garages around the world that will help us (the US) deal with the challenges we face. Yet (that "but"), I am weary of leaping upon the latest news, the item from the laboratory, the newest press release that screams "PROBLEM SOLVED" because, for whatever reasons, those miraculous answers all too often head back to the laboratory, turn out to be more difficult and costly than first described, and end up doing less than imagined.

We can feed the world: look at all the space

It's no wonder food prices are rising. We are exploiting less of the planet for agriculture than we were only a few years ago.

Obama adds to oil sands pressure

OTTAWA — Canada's oil sands producers are facing new pressures to slash their greenhouse gas emissions, with the latest salvo coming from the campaign of Barack Obama, the presumptive Democratic U.S. presidential nominee.

U.S. not on board for 2050 emissions cut goal - source

Japan has yet to persuade the United States to agree to a global goal of cutting greenhouse gas emissions by 50 percent by 2050 at next month's G8 leaders' summit, a Japanese government source said on Thursday, raising the prospect of a diplomatic failure for Prime Minister Yasuo Fukuda.

California unveils ambitious climate plan

LOS ANGELES (Reuters) - California on Thursday took a major step forward on its global warming fight by unveiling an ambitious plan for clean cars, renewable energy and stringent caps on big polluting industries.

The plan, which aims to reduce pollutants by 10 percent from current levels by 2020 while driving investment in new energy technologies that will benefit the state's economy, is the most comprehensive yet by any U.S. state.

Ex-EPA official critical on climate change

WASHINGTON - A high-ranking political appointee resigned from the Environmental Protection Agency after concluding there was no more progress to be made on greenhouse gases under the Bush administration.

Declining Russian Oil Production Could Lead to $200 Oil and “Global Recession,” Says Deutsche Bank

"Two-hundred dollar oil would break the back of the global economy," Adam Sieminski, chief energy economist at Deutsche Bank AG (DB), told Bloomberg News in an interview yesterday (Wednesday) in Tokyo. "Next step after $200 would be global recession and bad news for everybody."

There has been considerable discussion on this list as to what $300, $400 or $500 oil would do to the economy. Perhaps we do not need to get that high before we create a global recession, perhaps $200 oil would do it. And of course a global recession would kill enough demand to keep oil from going any higher…for awhile.

The problem would be, of course, that we would never come out of that recession because the supply of oil would never increase. Global oil supply will continue to gradually decrease. And the global recession will simply get a little worse each year until it is a full scale depression. And the recession will get a little worse each year until it turns into a complete global meltdown, a total collapse of the world as we know it.

Of course that is the best case scenario. It may not be gradual. Hoarding and warfare may cause the decline in oil supplies to be rather dramatic instead of gradual. In that case the collapse would be sudden and dramatic rather than gradual.

Ron Patterson

Very soon after learning about Peak Oil, I came to the realization you just summarized. Expensive oil (whether technically peak or not) will put the breaks on the world economy. However, even if demand is reduced, depletion continues, so any equilibrium point will only be temporary until it is eroded by depletion and the decline continues. Any atttempt at recovery will kick up demand, which will kick up prices and strangle the recovery.

I think this will happen to a greater or less extent, even if we're successful at developing alternatives. Alternatives will take time and money, and both are going to be hard to come by. The transition is going to be painful.

We do, however, have a lot of control over how painful it is going to be. I'm just not very optimistic that we will do the right things as a society. I'm pretty sure we'll panic and make the problem worse, maybe a lot worse. I hope I'm wrong, but I'm trying to be prepared for the worst.

This is partly why I have always favoured power-down scenarios (having less children to achieve smaller populations, working towards low energy life-styles, etc (note: that does not mean anti-technology or not using technology as some people seem to get fixated on with power-down talk)).

Every time we try to find alternatives to power and supply raw material for BAU, we will be strangled by the continuing depletion and erosion of the very system upon which we DEPEND for survival. As one article above notes, we are not separate from our environment. The techno-fix ideas always come across as very simplistic, and seem to willfully fail to take into account the complexity of the systems that drive our economies...

I am in favour of many technophile ideas, but only if they are not being touted to keep BAU ticking along in what appears to be an unrealistic and deluded way.

The problem with this Deutsche Bank release, like so many similar, is the two zeroes.

Because it means that they have no idea what price the market will sustain before collapse. If they had a model to feed $200 into, and analyse the results, they could ask the model about $190 and $180 as well.

Whether the motivation is name recognition for Adam Sieminski, 'advertising' for the bank, or some sort of market influence, I have no idea.

What it's NOT about, is the bank having any idea how the market will react - the two zeroes prove that much, at least.

Thanks for pointing out what is not obvious to many-these are advertisements for Deutsche Bank.

Jaymax, everything is just an estimate. All Deutsch Bank can possibly hope to do is just get it in the ballpark. If Deutsch Bank said something like "$205 oil will cause a worldwide recession" we wood whoop to the high heavens and ask "how can they be that precise?" We all realize that the $200 figure is just a wild ass guess. We all know they really mean "somewhere around $200 oil will cause a worldwide recession".

Come on, quit nitpicking and give them a break. I appreciate the estimate even if they cannot be precise.

Ron Patterson

Hmmm, I disagree - I think they pretended to provide information, which doesn't entitle them to a break - but anyhow - this is much less interesting than the remainder of your post which it triggered, so I shall shut up anyhow :-)

Whilst oil is at the highest price it is still not as high as the previous oil shock when compared to GDP of the world. To reach that it would have to go to about $195 and of course then we had a pretty serious recession. Of course supplies of oil increased soon afterwards which they probably won't this time round.

"People will wonder why every new recession is a little worse than the previous one"

Richard Heinberg in "the end of suburbia".

BTW, I see an upbeat in war retoric towards Iran.

"President George Bush intensified the rhetoric against Iran last week, accusing Tehran of putting the Middle East “under the shadow of a nuclear holocaust”. He warned that the US and its allies would confront Iran “before it is too late”."

"THE US military chief is to meet his Israeli counterpart in Tel Aviv this week in a move that gives new impetus to speculation about a pre-emptive strike against Iran's nuclear capabilities.

Tensions were further heightened by a suggestion from former US ambassador to the UN John Bolton that the US and Israel could attack Iraq's fledgling program between the time a new president was nominated in November and the date the incumbent, George W. Bush, left office in January. "
(That should not read Iraq, but maybe they copy-pasted from early 2003)

"The trip has been scheduled for some time but U.S. officials say it comes just as the Israelis are mounting a full court press to get the Bush administration to strike Iran's nuclear complex."

"Tensions were further heightened by a suggestion from former US ambassador to the UN John Bolton that the US and Israel could attack Iraq's (sic) fledgling program between the time a new president was nominated in November and the date the incumbent, George W. Bush, left office in January. "

My, oh my! Let's hope George Dubya isn't too caught up in the 2008 holiday spirit. What a nice Hanukkah present to the Israelis and office warming Christmas gift to a new administration. Then again, if the general public is miffed over the dearth of sugar plums and play stations and SUVs under the yule tree b/c of struggles to pay fuel and transportation costs (if they have a place to live at all?) then what a wonderful light display to keep everyone festive and amused.

All cynicism aside, though, I don't think the US will attack Iran despite Ahmadinejad's rhetoric, the neo-cons ambitions, or Israeli anxieties. Yes, George Dubya may want to be remembered as a courageous war president who faced down America's enemies, but I suspect even he knows that this action would be a deadly genie for everybody, including Americans. Posterity is likely looming larger in the President's sights these days.

I hope, here, reason will prevail.

The US doesn't have to bomb Iran, Isreal has said they will. Just a matter of timing .

If Israel bombs Iran, Iran will launch various attacks conventional and unconventional near and far. At that point the US will have to bomb Iran.

Israel is a state of the US isn't it? I mean they will be bombing Iran with US Funded US built planes what the difference?

So by that logic, Iraq and Afghanistan are states of the US. We gave them weapons too.

If they were a state they would pay taxes. Israel is a very great net liability to the US.

I believe they pay us through intelligence information!

they are a co dependent state. we give them a billion of arm's and financial aid. while they keep the arab world divided so we can get cheap oil.

It is painfully obvious that what is about to happen on the macropolitical scene is of Biblical proportions. I am not one to blame any particular individual, like all of these demagogues on talk radio blaming everyone from the current Chief Executive to Rosie ODonnell; No, we are all to blame on this one. The grace period on payments for our profligate lifestyles is just about up and the only thing that will help us through this unprecedented period of time will be faith and hope. Faith that God will see us through it, and hope in the coming Kingdom of God that every human being will hear about before the end comes. It will not be by might or power that we will justify ourselves - that mistake is a constant axiom of history - it will be by the Spirit of God, if I may be aloud to say so.

"...Faith that God will see us through it,..."

IMO thats what got us into this mess, what allowed us to rape the planet, allowed us to forsake nature, indeed provided the mandate to over power, subdue, conquer nature.

Placing faith in God in light of what's about to come down will guarantee that the wrong paths will be followed.

Strip yourselves naked (metaphorically) and succumb to NATURE or NATURE will take care of you, but not in a nice way.

It's not nice to fool Mother Nature


Cool it on the rant, souperman2. For you, faith (trust) in humanity and reason may offer the best path to solutions ahead. Fair enough. Please bear in mind, however, that faith in God and the use of reason are not always estranged bedfellows. Some of the best minds in human history have been attached to very devote people. Intelligence and religious expression need not be seen as mutually exclusive.

Collectively, whether religiously minded or disengaged, we've all had a share in enjoying the benefits of the fossil fuel age. The pending fall-out from our over-indulgence and cavalier attitude towards nature could very well be severe. But how best we will be able to face that severity, even in a worse case scenario, will depend upon how well we treat one other. Our personal survival could well depend upon neighbourly values, order and decency. The best in human beings: love, gentleness, kindness, self-control, generosity, honesty, may in the end prove to be invaluable. Many people see these things as divine gifts.

Secularists, regardless of background, do not have a monopoly on virtue. Atheists can be as obdurate, narrow-minded, and zealous in their treatment of others and as blinded to wise decision-making as anyone else. It doesn't matter if you're an Osama Bin Laden, an Ian Paisley, a Stalin, or a Robespierre, the result is the same. Fanaticism can show itself in many forms and in many guises.

Meanwhile there are devote people everywhere who are keenly aware that humanity has much to answer for in its stewardship of creation.

My final thought. All the power to you as you place your hope in the faculty of reason and common sense. But to others, if faith in God will see you through this, then all the power to you too. Respect is a good first step in building and bridging those relationships that we many come to count on.

Right on, Souperman2.

Zadoc seems an excellent guy and a smart poster, but since he has asked you to cool your rant, I'll ask you not to. Thus do i refute the up and down arrows.

Human delusional thinking and ability to rationalize anything that feels good has laid waste to the planet, and this continues apace. Airing one's delusions makes them fair game for comment.

And if you want anyone to listen to you about anything, first, they have to respect you. A belief that telling someone they are delusional is somehow going to help, is considerably more delusional than the very beliefs you are attacking.

At the very least the delusion that treating someone's belief as 'fair game' is likely to somehow influence those beliefs can much more easily be shown to be a delusion than the beliefs attacked, and is therefore less rational.

I stand by my up-arrow :-)

EDIT: 'cos I'm revising for an exam tomorrow on Science Communication, here's the slide that just popped up:

• Your goal is to have your intended message be the message that is actually communicated.
• It is your responsibility to deliver your message in a way to prevent or reduce the message from being distorted
• The only message that matters is the one that is received
• You must become audience focused

Fundamental truths. How does attacking someone's beliefs, even if you can prove they are delusional, achieve anything, other than build a tighter and smaller in-group with those who already vigorously agree with you?

If humanity is delusional, why follow?
Did I say follow humanity, or follow God?
I think you missed the point.The Bible teaches to deny yourself and that the greatest is the one who serves others.Does that sound like feel good rationalizing.

Thats alright greenish, God will give you a chance to put your money where your mouth is, if you really care about the earth and the well being of humanity - when TSHTF you will have a choice - conform or be cast out.
Better to be cast out, believe me.

"... IMO thats what got us into this mess..." i.e. Religion.

Believe it or not souperman, If you are referring to man made religions I would agree with you to a point - secular humanism is a religion likewise - people who put their faith in men.

I do not adhear to either one however, for in truth both are very similar to one another. They both have a misguided faith in men. Yeshua (Jesus) was perhaps the most anti-religious human being to ever walk the earth. If you carefully read the accounts in the Gospels He consistantly went against the prevailing man made systems that were in place, because in reality, these systems are always at odds with the truth.Religions of every kind, be it Christian, Judaism, Islam, Buddism et. al. may start of with knoble intentions but always invariably morph into man made systems that glorify men and follow mans principals and not God's.Humanism likewise follows this axiom of history.Communism, though atheistic, was a cult based upon the personality of one individual - first Lenin, then Stalin.Shall we even mention the Nationalist Socialist movement in pre war Germany.We should not deceive ourselves into thinking that we ourselves are immune to this kind of deception.

You could say however, that I myself am in this category by putting my complete fath in Yeshua (Jesus) and what He taught.And honestly you would be correct.But as Bob Dylan once said "you gotta serve somebody."

Now the American form of Christianity is perhaps the most misguided of all, but they, in reality, are not faithful Christians, but faithful Capitalists.Again, whether it is Capitalism, Socialism, Communism or any other so called civilized order of government, they are all man made and in the end will not work in bringing true egalitarianism to the world(which is the goal God has established by bringing Yeshua into the world).Read Zbigniew Brzezinski's new book "The Choice", and this eminent statesman will bring you too the same conclusion. Unfortunately, he leaves you hanging with a fatalistic point of view concerning the future if you wish to ever see true egalitarianism.

Ones politics IS ones religion.

One thing that you will never hear on your television, or radio, or any other form of religious or secular outlets is a scripture found in the Book of Revelation chapter 12 - "...God will destroy those who destroy the earth..."
When I read these words they convict me, for I know that, realistically, I have played a part in the systematic disorder of the balance God has established in creation by my own consumerism.And no green movement of any kind - unless it means going back to the horse and plow (producing, not consuming) - will ever work.

There is only one way "...Do unto others as you would have them do unto you..."

"...earn your bread by the sweat of YOUR brow..."

If everyone lived by these rules, the world would be a much better place wouldn't you say?

God is very fair with mankind, and He will provide a way out for individuals who seek the truth.To find the answer, however, you have to read the Bible for yourself. No one can seek God and truth for you but you yourself.

Atheists versus Believers

This is an unfortunate topic that keeps rearing its ugly head up on TOD.

While I am squarely in the atheist camp, I used to be in the believer camp and understand how it "feels" to those who remain committed to their beliefs.

To my fellow atheists I say:

Forgive them for they know not what they are
and they have no free will over it anyway.

It does no good to preach truth to those who were born and raised in the lie. Their brains cannot absorb the noises that you make. So why waste your time?

Do you actually believe that your fellow species mates are "rational" and can be changed by speaking rationally to them? If so, you are the irrational one. All of human history, the wars, the overpopulating, the rise and fall of grand civilizations points to one conclusion:

We are no more rational than yeast.

So if some yeast mates in our petri dish choose to believe in the great Yeast-oh-whoa, or whatever name their deity goes by (and the miracle of the unleavened yeast), then I say, God bless them. Let them go on in their stated state of mind. Converting them won't really change the outcome. Yeast will be yeast. Just as beast will be beast. They are all merely trying to be fruitful, to multiply and to gain dominion over the Earth. Why agitate our petri dish with some more of this useless noise? Let it go.

Our last energies should be focused on how to survive without the spice, not on how to convert them that can't help themselves anyway.

Good advice and well-said.

But as a matter of aesthetics, kowtowing to the insane leaves much to be desired. Those with imaginary friends are free to listen to the voices, but if they inject them into conversation, they DO become fair game for comment.

I'll meet folks halfway, though: don't tell me about your deities and I won't say you're delusional. Can't say fairer than that.

Yep. It's been cooking for a long time, but the window in which it can happen is narrowing. Fallon the unwilling was replaced by Petraeus the willing. Plus many other pieces have been put into place.

This will throw all our linear and not-so-linear projections into the wastebasket. Chaos and disaster. Which some apparently believe they can find advantage in. Woe betide us.

Interview with Ray McGovern:

Yes, unfortunately Congress is in the process of abdicating it's Constitutional right to declare war.

Right now their are 208 cosponsors on HR 362 that calls for a blockade of exported petroleum to Iran. This is a brilliant measure to put pressure on the Iranian regime. What could go wrong?

The bill also calls for boarding ships departing from Iran. This is it. The bill passes through the House and the Senate tag along bill SR 580 passes. Bush forms a blockade. The clock begins to tick. Iran runs the blockade- shots are fired. Bush orders a bombing. Not only did Bush not start the war but Congress is the one that called for the action. The missiles fly from Iran and destroy the sitting duck fleet in the Gulf. Now anyone that opposes this war is Un-American.

Game, set, match Cheney---- unless the American people can stop these bills from going through.

I think BushCo. waited too long to move against Iran. Anything aggressive done between now and the elections will be viewed as a 100% political maneuver to help McCain's campaign. The US mood will not go as before with Iraq guaranteed and would only help Obama. I don't think for a millisecond that Obama couldn't turn any of that into a win for him. He's a pretty savvy framer in his own right.

Yes Bush's approval rating going down to 23% does make the possibility of an attack on Iran less likely BUT not outside of the realm of possibility.

This is a stealth plan---HR 362-- read the bill and marvel at the evil genius of it made by a very desperate group of individuals who have billions of dollars riding on an invasion of Iran.

Cheney can not be counted out yet. As long as he is in power he will hatch plans to bomb Iran. This current bill in the House and Senate is absolutely masterful.

The American people are absolutely against invading Iran but they want to put pressure on the country. Therefore HR 362 will go through. AIPAC doesn't waste so much time and energy on frivolous bills. This is important to them and they have sunk a lot of effort into this.

Explaining the logic of the bill involves going over a lot of history that is old hat for TOD readers but oh well---

While FDR was on vacation Dean Acheson passed the law that made it difficult for the Japanese to buy petroleum.

The law did not declare war on Japan. It did not authorize force. It did not even call for an embargo on Japan.

But the result was that the U.S. that provided 80% of Japan’s petroleum disallowed the Japanese from purchasing oil from the U.S. Thus Japan needed to invade the Dutch West Indies or pull out of China. In order to protect themselves from an American countermeasure they destroyed the fleet at Pearl Harbor.

The neocons know their history. They know that Iran doesn’t refine their own oil. They know that once we stop petroleum shipments the clock is ticking for Iran. They either run the blockade or their military is inoperable and their economy is destroyed. They will commit force first which will allow the U.S. to “defend itself.”

That is the brilliance of the bill. Of course the bill does not authorize force. The authorization will be given by Iran.

Or... Iran experiences enough unrest to shake off the control the Mullahs have over the troubled country (Iran is barely 60% Persian, and the Mullahs have antagonized most of the minorities there for a long time),

Or... Iran's junta decides to stop funding its puppet militias in Iraq & Lebanon, and retreats from antagonizing the US.

Iran's junta decides to stop funding its puppet militias in Iraq

You mean the al-Maliki government? I guess we'll have to step up funding if Iran cuts back.

No, I refer to al-Maliki's competition.


After all we know about the run-up to Iraq you think that there is anything the Iranians could do to appease Bush. As McClellan has said: once he decides to do something he doesn't listen to anybody.

This is not about nukes or militias this is about controlling the Persian Gulf after we have gone over the peak.

As much as I enjoy reading West Texas I know that the neocons are not going to allow the ELM to play itself out. They are not going to be caught looking stupid and incompetent after the peak. We will blame the Mullahs for the gas lines not the incompetency of Bush/Cheney.

It's more like the CGM--- the Chaos Gulf Model. Create war in the Gulf- cut off the Chinese and play a game of last man standing.

"cut off the Chinese and play a game of last man standing."

I'll one up you. New virulent strain of Bird Flu cycles through Asia and the third world and we rapidly deploy a vaccine to ourselves and allies. Too bad we did not have the ability to make more and share. Theres some demand destruction.

The al-Maliki coalition is comprised of the most pro-Iranian forces in the country. His competition is anti-Iranian (Sunnis) or neutral towards Iran (Sadr). The latest version of the neocons "big lie" is that Iran is opposing the al-Maliki government. Bush has in effect handed Iraq (at least the non-Kurdish part) to Iran on a silver platter. That's why US troops can never leave. That's why the neocons are so adamant about attacking Iran: they've done nothing since day 1 that didn't benefit Iran.

And what makes the irony meter go entirely off the scale is that Chalabi (who sat behind Laura Bush at the 2nd inaugural and who was telling the neocons the US would be welcomed as liberators with flowers in the streets) was an Iranian agent all along. In effect Iran suckered the US into taking out Saddam for them -- not that the neocons needed a lot of encouragement. But then that's the source of the old saw, "you can't cheat an honest man".

None of the Shia factions in Iraq harbors overt pro-Iran sentiment. The Iranian regime has been racist towards its Arab minority, and all the Iraqi Shia know this. Iranian militia sponsorship has been purely for reasons of expedience, to make sure nobody in Iraq gets a monopoly on the use of force. Hence their back&forth on that with the different factions.

Al-Maliki rules at the pleasure of the Supreme Council of the Islamic Revolution in Iraq (SCIRI), which has changed its name recently to hide its ideology better from its new American allies. SCIRI was formed in Iran, and organized Iraqi exiles to fight for Iran in its defensive war against Saddam Hussein. These exiles now form the Badr militia that murders opponents of the current government. SCIRI is taking money from both Iran and Bush to pretend to deliver their agendas, and stealing money from the Iraqi people. People are rising up against such a treacherous government and taking aid from anyone they can.

America is the imperialist. Do you understand? We were the bad guy in Vietnam. We are the bad guy in Iraq. We will be the bad guy in Iran. We are starting wars that would not have happened without us. Saddam Hussein attacked Iran years ago thinking his buddies in Washington would approve. He attacked Kuwait after clearing it with the US ambassador.

Do you think everything would be great in the world if we had gone to war in 1979 to keep the Shah in charge? I say the world would be better if we had not overthrown Mossadegh in 1954. The only way to begin to make up for our past crimes is to stop committing new ones.

Bases in 120 countries is an empire. We are imperialists.

The competing Shia militias were brewed out of the same batch, for the same reasons.

As for being the "bad guys" in Vietnam, I went to school with ex-boat-people. They know full well who the bad guys were and who the worse guys were. It takes a will-to-believe to make America the big bugaboo here.

You went to school with the boat people. You didn't go to school with the Viet Minh fighters who rose against the horrible French tyranny (slave labor in the 1930s) and defeated it against overwhelming odds, only to have half their victory stolen by US conniving at Geneva. You may hate it, but the Communists beat white Christian capitalists, and their corrupt Catholic puppets were given half the country on the expectation of a referendum in 1956 that the US told the Catholics to cancel. The CIA found Ngo Dihn Diem in a monastery in California and put him to work organizing Catholic land barons fleeing the north to steal land in the south - they weren't even from there! Diem then murdered perhaps two hundred thousand of these brave Viet Minh rebels because he knew they were plotting against him. That's more than all the people murdered by Communist re-education camps. But it's dwarfed by the 1 to 2 million Vietnamese killed mostly by US forces and US taxpayer-financed forces in the war to prop up a fake government that hated it own citizens.

But the Reds murdered rich, honkie-dressing folks. Our boys murdered poor people who couldn't stand it anymore. Will we repeat this pattern of bigotry and mass murder everywhere on Earth where we now must steal oil? Our leaders want everyone who says NO to American corporations to be branded a terrorist and exterminated. Their way will cost us 3/4 of a trillion dollars next year, and rising.

200,000 dead in Guatemala
500,000 dead in Indonesia (1965-66)
Hundreds of thousands more dead in Indonesia (East Timor)
A million dead in Iraq.

These people all died because they got in the way of American power. Like the starving people of Sadr City who denounce the new oil deal. Explain to me why they deserved it.

Well said.

They deserved it because they were not superior beings equal to us Ayria-mericans. It pains me because I love this country, but we in the USA are not all that much different than the citizens of Nazi Germany. Our leaders play on our fear of the stranger and on our need to feel that we are superior. We, for our part, all too willingly rush forward to suck on that self-gratifying teat.

One scene I keep seeing over and again in my head is from Michael Moore's "Fahrenheit 9/11": an Iraqi mother who has lost her child to an American bomb looks up to the sky and begs god (her god) to explain to her why she deserved this? What did she do that was deserving of this horrible punishment?

The answer: She was born not American.

"Rich honkie dressing folks:" you mean Viet-Kulaks, perhaps?

No. The boat people came from all walks of life. They were not necessarily rich, nor Catholic, nor French-influenced. Simply people written off by the communist regime for any of a wide number of reasons. And being written off in Vietnam is a permanent, inherited status, as shown by those wealthy Catholic Montagnards.

In order to protect themselves from an American countermeasure they destroyed the fleet at Pearl Harbor.

Even there! Read Day of Deceit by Stinnett, based on FOIA material. They were set up (not that the Japanese regime were nice guys by any stretch), just as they are trying to do to the Iranians. Stinnett, a veteran of that front, doesn't criticize FDR for having done it (only way to get us in the war on the Eastern front) -- only for having hung Kimmel and Short out to dry.

Unfortunately, FDR's maneuver is the model for these guys (and undoubtedly he wasn't the first).

Japan was engaged in an aggressive war just as much as Germany was. It was certainly justifiable to go to war to prevent such brutuality. I wish it could have just been done more plainly. The US could have just declared war against Japan, saying they were engaged in a war of aggression and were responsible for torture and executions and other war crimes (which is completely true) and the US would come to the defense of Korea, China, etc. No subterfuge needed, and they would have still had the extra fleet!

I am more ambivalent about our right to go to war against Japan.

America caused the Great Depression. The GOP Congress in 1930 passed the Smoot-Hawley tariff act which wrecked Japan's economy. FDR was a free-trader, but by the time he got into power the trade war could not be stopped. Japanese fascists argued that the West betrayed Japan, and the lost trade must be replaced by a brutal empire in China. Because of US neutrality laws and our weak military, FDR had very few options to punish Japan for its vast crimes. But the trade sanctions he chose were a mistake. Japan's erratic policies were a result of its very fragile resource base; without our oil Japan had to chose between total collapse and all-out war. Never, ever try to force a military government to back down in the eyes of its own people. The generals, like their current counterparts in Burma and North Korea, justified their rule by their ability to be strong, so they couldn't back down. A better option would have been to arm China, which was against the law then, and America had no real weapons industry before 1940. China's ruler Chiang Kai-Shek was a mass murderer in his own right.

We needed better options, but our ignorance about Japan and how it would and could respond was large. Economic sanctions have been proven again and again to backfire, yet after Vietnam and Iraq I think any civilized person would consider invasion to be insane. The problem is, the more options you give a president, the more damage you do to the Constitution. Besides, we know perfectly well that America is very hypocritical in which aggressors it chooses to punish, and which it chooses to cover up for. Ask the generals of Indonesia (East Timor, etc), or Saddam Hussein (Iran, 1980).

While, I would agree that the US has done some bad things and some dumb things in the early 20th century, that doesn't let Japan off the hook. Moral principles need to be applied equally to different parties.

As many people say (and I would generally agree) the US has largely created its own problem with regards to oil supply. They used up most of their own (and polluted the world in doing so) and now are dependant on others. They are taking virtually no steps to conserve and switch to alternative energies and social arrangements necessary to maintain order and at least some minimum living standard. The US has become arrogant and assumes everyone's oil is theirs even though it happens to be under "their" sand. The US has no right to anyone else's oil. They need to balance their books.

So, if we are to be consistent, we must say essentially the same thing about Japan. They didn't *have* to go on an imperialist rampage of murder, torture and occupation in order to get "their" resources. They could have also chosen to live within their means.

Now, in both cases, it would be nice if all the countries in the world would agree to trade fairly and help each other out, but I don't see that happening any time soon.

Also, note that I'm talking here about a country deciding to add tariffs to some of its exports, or deciding it doesn't like some other country and doesn't want to trade with them. Any country certainly has that right, even though it might not usually be a smart thing to do. Setting up blockades is completely different and would be properly viewed as an act of war.

I really really have a lot of respect for s390. However, I think this goes too far (not the the US doesn't deserve a significant part of the blame), but there clearly were a lot of other players whose ignorance and greed set up the depression, and the militarist/fascist response to it. No doubt our blunders, and our insulting racism helped the militarists gain power in Japan. I also admire Japan, and her people. But at the same time, I find them a bit scary. We've seen them go off the rails once, and their particular determination of seeing a path taken through to its logical end -no matter the cost, -or even the value of the end, nearly destroyed her in 1945.

H.R. 362: 10,000 Teachers, 10 Million Minds Science and Math Scholarship Act

Title I - Science Scholarships
Title II - Mathematics and Science Education Improvement

But the scariest part is Section 207 -

Replaces the term "master teacher" with the term "teacher leader" each time it appears in the Act.

Or even worse, Section 209 -
Requires the Director to report to Congress within two years on the extent to which IHEs are donating used laboratory equipment to elementary and secondary schools.

Boarding ships was the sticky point in the Cuban Missile Crisis, the closest we ever got to Armageddon. Thank God we had grownups in charge back then.

I agree. Looking back at the Cuban Missile Crisis, the world went to the brink and only stepped back because Kennedy put McNamara in charge of the blockade and was willing to bargain away the Jupiter missiles in Turkey.

But as you know this is the opposite situation. This is a blockade to start a war.

The plan was most likely hatched when Bush visited Israel. After his meeting with Olmert both men were all smiles and Olmert came out of their meeting confident that the U.S. would confront Iran.

Later Nancy Pelosi met with Olmert and they discussed the plan. Pelosi has denied that the request for a blockade was made by Olmert.

After Pelosi came back AIPAC launched their hundreds of lobbyists to push bill HR 362 and SR 580

The campaign has been very successful keeping under the media radar and gathering 208 cosponsors in the House.

Once the bill passes, then the arch-duke will lie dead and events will quicken.

Thanks for your perspective neoconned.

You are a true patriot and I applaud your efforts.

I would venture to speculate that if we had GWB/Cheney in the White House then we would not be here to talk about it now.

Can anyone find a credible link to this HR 362? The Library of Congress is showing this as invalid.

This is what I found on house.gov:

H.R.362 : To authorize science scholarships for educating mathematics and science teachers, and for other purposes.

I did not find anything relevant to the topic on HR 362 with a quick look, but this:


sounds like what neoconned is talking about.

Thanks, I found it here too.


Don't know why I couldn't find it going through the House bill search system, "Thomas". Found this through a Kos diary.

I think it's important to differentiate two different economic scenarios involving rising oil prices:

1. Oil prices increases in an environment of increasing total energy availability to the global economy will cause reallocation of economic activity--the money is still being spent, it's just being spent by Saudi princes on Gulfstream jets rather than by Ohio factory workers on a new Ford F250. This has the potential to slow economic growth as the new allocation of economic activity results in many prior capital expenditures (e.g. the Ohio factory) being underutilized. However, it could also spur increased economic growth (in global aggregate) as new infrastructure projects are required to accommodate the redistribution (see UAE for an example). It isn't clear to me that increasing oil prices--no matter how high--are enough to break the world economy IF the total amount of energy available to the global economy continues to increase.

2. Oil price increase in an environment of declining total energy availability will lead to less total economic activity over the long-term. This is the effect warned against by Deutsche Bank, but I don't think they adequately separated out the difference between 1 and 2. I don't think we will necessarily see a GLOBAL recession/slow crash until the total energy availability begins to decline. Thoughts?

You nailed it. Total global energy and wealth continues to increase-a lot of the USA problems would exist with $20 oil. If you were titled the Chief Energy Poobah at Douche Bank people would be very impressed.

It sounds as though you are looking at a longer time scale than Deutsch Bank.
In case 2 you are both in agreement, but even in case 1 you are perhaps assuming more fungibility of energy sources than is realistic, at least in time spans of less than many years.
Leaving aside the difficulties of oil exporters spending the money with any efficiency at all, and the ill-consequences for them of the cost of their imports also going through the roof, you have disruptions galore putting a spoke in the wheel of the world economy.
With petrol at $200/barrel, many in America will be thrown out of work, or unable to afford to get to work - how then are they going to pay for still more expensive oil?
In Europe gas prices and home heating are likely to match oil price rises, with disastrous effect.
Huge amounts of the capital of economies would be worthless, from homes in the exurbs and SUV's to aircraft factories.
How would an increase in Saudi's current account surplus repay that?
Longer term it might be possible to stage some sort of recovery, if solar panels for instance fell enough so that total energy inputs could be increased, but in the interim the world economy would have suffered a huge blow, and the value of capital stocks would be much lower.
This is on the bright side - chain reactions of bankruptcies by Governments, companies and individuals could drag things down to a much, much lower level.
In addition, the demand destruction will happen where most of the production of everything but oil is done.
To give a concrete example, high natural gas prices raise fertiliser costs, and in poor countries especially this will greatly reduce food yields, and mean that even such disposable income as they have is lower, so they can't for instance afford that new solar cooker, hitting the people who would have made it and further shrinking the economy.
In richer countries it will make the financing of alternative energy sources much more difficult.
So much of the money is reallocated to luxury expenditure in oil exporters, new SUV's for instance,from essentials and additions to productive capacity in other countries.

Great analysis Dave, you make some important points.

Are you suggesting oil will rise to $200 with no additional inflation?
I think fast rising fuel prices will leave wages/salaries, business and other remuneration behind in the short term but food, consumer goods and services prices will rise in proportionally to the rising cost of energy with lag times governed by the various government's economic and industrial legislation.
If the cost of energy rises too fast for the economy to compensate then that would lead to a crash. Probably the airline industry would be an example.

IMO an actual scarcity of energy, (not rising costs if they can be passed on) which prevents business from continuing their normal profitable practices will fuel (a pun) the coming economic crash.

I don't believe or understand this or maybe it's just cornucopian dreamin'.
"if solar panels for instance fell enough so that total energy inputs could be increased".

You may have inflation or no inflation, but either way you have an increase in real costs - ie a lot of money which would have been used for personal consumption in the oil importers will end up in the pockets of oil exporters, however you slice the inflationary pie it is a loss of disposable income.
In my view oil at $135/barrel is already plenty high enough to lead to a crash - it is just being masked as different fiddles are used to disguise that fact that the banks are bankrupt.

I'm not sure what you are saying about solar panels.
The costs from First Solar which has audited accounts were $1.29/watt in the first quarter of 2007.
They were aiming to reduce that by around 50cents to achieve true grid parity.
However since the price of other electricity sources has risen since that we will be nearer to grid parity now.
Prices do not reflect costs at the moment as demand is high, but a lot of extra capacity is due to become available within two years.
In many areas of the world then, although importantly not in most of Europe or Japan it is likely that within, say, five years more electricity will be available at reasonable cost, although probably well above the very low prices the US has historically paid.

None of that helps that massive amounts of capital will be rendered useless, and hence production will have taken a huge hit.
The easy way of looking at it is at a personal level.
If your job was in the aircraft industry, and you had a nice house in the far suburbs and drove a SUV to get there, so you and your family were worth $1 million, how much would that now be worth?
Everything you had would have melted away.

The enormous numbers of jobs in the financial services industry are mostly engineered products, a result of inflating the money supply.
That trick is now being seen through, and millions of jobs will go.

Don't buy any hotels in Hawaii, either.

The money that is lost and the assets made worthless do not go anywhere, they do not get transferred to the oil exporters and continue to have value, they are pure loss. If they were sold to the oil exporters as part payment, they would still be worth virtually nothing.

The losses amount to many trillions of dollars.

I am afraid those loses are largely going to be realized. But of course savy people with the right timing will do very well picking over the remains of the bad investments. It may very well be very remunerative to pick up those Hawaiin hotels -but not until their price has completely crashed, and they can be had to a penny ot two on the dollar. Likewise with the physical, and intellectual property of the American automobile industry. A lot of infrastructure, and industrial equipment will be sold off at bargain basement prices. That could be an enormous opportunity for the people who can figure out how to make good use of it in the post peak world. But of course, the value of the new usages will in nearly all cases, be much less than what had been planned by their earlier owners.

"...Likewise with the physical, and intellectual property of the American automobile industry..."

I have very little sympathy for the American automobile industry. GM with Exxon & Firestone bought up street car systems around the country and scrapped them.

The American automobile industry have fought hard to shape the CAFE laws so they can be worked round = avoided. Just what is so wrong with producing economical cars???

I had a similar thought this morning after seeing the GDP #s

The US and indeed the World can have level or even growing economy. It just means a lot more money being juggled around by a lot less people.

How long can this trend continue before it can no longer be hidden?

Whose GDP numbers? Don't believe everything you read...



That CPI number certainly feels a lot more "right" than the official one.

Ministry of Truth (from the novel 1984):

The Ministry of Truth is involved with news media, entertainment, the fine arts and educational books. Its purpose is to rewrite history and change the facts to fit party doctrine, for propaganda effect. For example, if Big Brother makes a prediction that turns out to be wrong, the employees of the Ministry of Truth go back and rewrite history so that any prediction Big Brother previously made is accurate. This is the "how" of the Ministry of Truth's existence.


In general it reasonable to me but in both cases it appears that you may be ignoring the breakdowns in the supply chain that occur with shortages.

Shortages will make everything, in both cases, much, much worse.

I can see a relatively healthy economy take small and intermittent shortages in stride.

But significant, long-lasting shortages will soon turn a healthy economy into a very unhealthy one. Imagine if your heart randomly stopped working for a few minutes every day. In no time you'll cancel your vacation plans and turn your attention inward instead of pursuing whatever you have going on at the moment. Quite quickly your time will be consumed with figuring out how to alleviate the heart stoppage, how to work around it, etc. etc.


I don't think shortages will be quite as catastrophic as that. If your heart stopped working, you'd be dead. Mere shortages...I think we'll adjust to them. They already do in many other countries. Fuel and food is rationed, factories shut down due to lack of parts or power and workers go home without pay. There may be electricity only part of the day, or to some industries but not others.

I've lived in places where the power supply was uncertain or nonexistent, where the roads might be closed for weeks due to bad weather, cutting off supplies...and people adjust. They expect such things to happen, so it's not nearly as disruptive as it might be in the US.

Shortages of computer parts leads to no internet. Routers don't last very long and we don't make them. Thinka about it.

I think we'll adjust to living with a sporadic or even nonexistent Internet. Believe it or not, there are people alive today who lived just fine without the Internet.

As I have argued before, I think that some form of Internet will survive for a long time because the EROEI of the information it contains is so high. People in dire straits will find they can live without cable TV, but that the Internet contains a lot of priceless information that will help them survive. (For example, information on energy conservation techniques, growing food, etc.)

Even if bandwidth is much reduced and we're only connecting thru dial-up or public access terminals, I think it will last much longer than you seem to.

Also don't forget that the Internet's very structure as a relatively decentralized network will make it far more resilient than many other networked system we depend on.

Maybe we should try to make it even more decentralized. How about using the evolving cell-phone networks to act as a serverless Internet, with every cell as valuable as every other, acting as relays?

An interesting idea, Having just gone throught a cell phone debacle(losing cell phone and getting new one) I suspect that when power that runs all the towers that are used for the phones, or the satellites that are part of the overall infrastructure get into trouble, the cell phone network will crash.

Maybe we should try to make it even more decentralized.

Look into INN and UUCP. The way the 'old timers' (post Bnews) would have passed about alt.physics.oil.is.gone

People in dire straits will find they can live without cable TV, but that the Internet contains a lot of priceless information that will help them survive. (For example, information on energy conservation techniques, growing food, etc.)

But why would it contain that information?

IMO, this is what the "Internet is too valuable to die" theory misses. The information on the net is there because 1) someone is paying for it or 2) someone is making money off of it. That's going to change, and when it does, the Internet will be far less valuable.

Think of all the valuable sites you visit, and ask yourself who is paying to keep that site online and spending their time updating it...and if they will continue doing so if there's a second Great Depression or worse.

The Internet may survive, but I think it will be a form far less useful. Either as a kind of ham radio or telephone type communication to other people, or as a way to deliver government propaganda.

Not just government propaganda. Look at all the ads! The trend may be towards a different form of television where the vast majority of the content is prepared ahead of time for the "consumer's" consumption and paid for by someone who is looking for a positive monetary return on their investment. That means information for the sake of information will not exist, it will be information as another means to a profit, like what the cable news shows are now.

"The internet may survive"

Your comment hits the core of what many users of the internet miss. The internet is dependant on the energy infrastructure, and if it goes down, then the internet goes down.
All of the towers and satellites can only deliver their content IF the power to run them is up and running.

Also, there is the loads and loads of servers out there that are expensive and time-consuming to maintain and upgrade. If there is not profit to be made from it or if govt funding gets pulled for that purpose then there is no reason to keep them running or at least they will not be carefully nurtured. This will in turn leave them vulnerable to a host of secondary problems, like hardware failure and cyber attacks.

Since certain servers are so vastly interconnected, this can have a cascading effect in certain branches and regions of the internet infrastructure. As fast as the internet bloomed, it could as quickly be winnowed or snuffed.

The internet is a distributed collection of autonomous systems. Most of those will keep running. The infrastructure - IANA, RIPE, APNIC, and the DNS cabal are all very lean and will keep working. High bandwidth commercial ventures will fade away but as long as there is any telecom equipment powered up the net will be there. We may see lower bandwidth and a return to the preweb days in terms of what it does, but the value will be retained. Google has become our library of Alexandria and I don't see that going without catastrophic issues taking it out ...

Google has become our library of Alexandria and I don't see that going without catastrophic issues taking it out ...

Disagree. Google is a for-profit corporation. They make their money selling ads, among other ways. They have their own gas-fired power plants to support their massive server farms.

What happens when the cost of running their server farms spikes, while their ad revenue plummets? Corporations aren't really designed to contract. I suppose the government might take it over and run it as a public service, but think about how they've politicized things like the CDC and the EPA, and ask yourself if Google will still be valuable when it's run by the government.

People invest in ventures like Google because they expect them to grow and make money. When it becomes clear that that's not going to happen, who will want to invest, and why?

At 1.6 megawatts -- and with an electricity output capable of powering approximately 1,000 average California homes -- Google said its project is the largest solar installation to date on any corporate campus in the United States and one of the largest on any corporate site in the world.


They used to monitor production here, but I can't find it.

This was from about a year ago, the first week it was up.

Solar Electricity Generated at the Googleplex

Last 24 Hours: 9,900 kilowatt-hours
Last 7 Days: 19,368 kilowatt-hours
Since Jun 18, 2007: 19,368 kilowatt-hours

9,900 kilowatt-hours is equivalent to ...

alarm clocks for 24 hours
dishwasher cycles
hairdryers for 15 minutes
loads of laundry

Yeah, and it's still just a drop in the bucket compared to their total energy use. A stunt, some have said.

I would also argue that Google is not really our Library of Alexandria. They prune dead links very quickly, from their cache as well as from their search results. Google is a great way to find what's online now, but it doesn't save information from sites that are gone.

The Wayback Machine might be a better candidate for a Library of Alexandria comparison. They do keep archived versions of web sites, including those that are no longer on the net. But I don't expect them to survive a Great Depression type economic crisis, either.

The problem with the library at Alexandria is that it was a case of too many eggs in one basket. One big fire and it was all gone.

We do still have a lot of ancient texts, but that is entirely thanks to documents being stashed away here and there. Distributed, rather than concentrated, storage of knowledge is our best bet for long term preservation of our civilization's technological and cultural patrimony.

Acid-free archival quality paper is still the best bet for long term storage of texts. Anything that is technology-dependent is also vulnerable to technological obsolescence or just plain technological non-availability.

One of the best works of fiction to actually think about these issues was Millers' A Canticle for Liebowitz. An order of monks was formed in the aftermath of a nuclear holocaust, and one of their rules was to always carry a book with them. They called themselves "bookleggers". Maybe this idea should commend itself to each of us: make an effort to accumulate a personal library of books that are really important to have and to preserve, and then make a point of entrusting them to someone that values them when it is time to pass them on to the next generation.

Yes. I remember the dot-com crash. Suddenly, things many of us had taken for granted, like free Internet connections, went away. My web hoster went out of business, and I had to find a new (and more expensive) one.

I could afford to pay for services that had once been free, but some of my friends could not. It was serious hardship for them.

And I think the dot-com crash was small potatoes compared to what's coming. This has been the worst June since the Great Depression.

Sometimes I wish I was one of them ;-)

We may lose YouTube and lolcats will be a thing of the past (Leanan is excited by this pronouncement) but the internet will be one of the last human communication endeavors to fail. So long as anyone at all builds a PC of any sort we can keep something up and running. I curse ethernet for the goofie LAN protocol that it is, but the whole planet runs on it now and we'll keep it moving with whatever junk we can scrounge for a long, long time ...

We do have the historical precedent of other societies that have collapsed, or just found themselves isolated from the rest of the world. There is a progressive giving up of things as they must concentrate their scarce resources and limited time and effort on only the most important things. The most complex technologies are usually the first to go. The only exception is where religion is involved. The Easter Islanders gave up their boat building and sailing technologies, even though those would have allowed them to stay in communication with the rest of the world and were thus extremely valuable. They kept up their stone idol production technologies right to the bitter end, because their religious beliefs told them that those were important.

What we could see is an inexorable giving up of the internet, webpage by webpage, link by link, IP address by IP address, until it gets to the point where a critical mass is lost and it goes back into a number of non-connected nets, which then gradually shut down one by one until there is nothing left but fading memories, then legends, then myths.

Catastrophic collapse usually happens in systems which can't degrade gradually, especially in those that are highly centralised.
The reverse of the internet, in fact.

Server farms do indeed use a lot of power, so they have tended to be placed where they can be guaranteed supply, by hydroelectric, for instance.
You also have the issue of how profitable the use of the power is - sure, the PV array by google is mainly for PR purposes, but even if they had to pay for a substantial amount of their power that way, they are well placed to do so.
Whilst coal is still cheap they may not bother though.
If fuel is more expensive then as computers are replaced that will assume more importance as against power.

Then you have the question of what could be done to degrade the system gracefully.
I have a 2MB bandwidth. Would the old 56k still be useful? You bet.
That is 32 times less info going through the pipeline.
However, the airline industry is also in very great trouble, so compare the energy needed to videoconference vs fly to meetings.
Not much power in the house?
Internet on the phone will do the trick.
It will be one of the last products of man to fail, if it does.

Routers last for decades: They have no moving parts. I won't speak for disk drives.

The Sputnik generation has a couple of decades left, and there are thousands of us who can still build a router out of old televisions.

Usenet, which needs neither routers nor nailed up connections, remains the 80/20 point of the internet.

there are thousands of us who can still build a router out of old televisions.

Theremins? Probably. Routers, not so much.

"there are thousands of us who can still build a router out of old televisions."

Well, maybe out of newer televisions with FPGAs.

Consumer electronics do not have FPGAs. They have ASICS. Similar in development, but very different in production.

there are thousands of us who can still build a router out of old televisions.


But do go ahead to prove this claim.

Show where a 100 transistor (or so) TV can work like a 100K+ transistor router.

Another issue tied up in your argument is to what degree the wealth being transferred to a Saudi Prince gets reinvested in economic activity vs. being "sunk" into hard assets (eg. gold, real estate) that would not generate any increased economic activity. If the energy pie is increasing then investments in growth make more sense than in an environment where decreasing energy supplies make economic growth a steeper hill to climb. If it was my oil and I believed total energy was decreasing, my best investment might be to leave it in the ground until I needed it.

It seems to me that the high price senario doesn't choke off investment money, it just changes who has ownership of it. There is at least anecdotal evidence that the Gulf states are making substantial investments in alternative energy. I could easily imagine them funding the industrial investments needed to function in the world economy, even in places such as Europe, America, and India. Its just that the new captains of global industry will soon from a completely different nationality than we are used to seeing (i.e. primarily Arab). We might be uncomfortable with that, and our new bosses may be less sympathetic to our needs than the current crop, but it doesn't sound like a total disaster.

It will be interesting when global trade comes to a grinding halt and the U.S. finds itself with no manufacturing capability. Hammering out spoons by hand will be fun! Oh, yeah, and all our computer stuff isn't made here either. As they say, I wish us rots of ruck.

I'll flip your burger, you"ll flip mine
see? it works

Increasing prices of transportation fuels are slowly unwinding the gains many companies reaped from "globalization" just a decade ago. The natural evolution in such an environment is to "reinvent" our companies once again to depend on more regional/local service and resources. THIS is a bust for huge growth plans of many large companies, but it will be a hard and necessary lesson. Contraction is the name of the game for survival.

I was in a workshop about the future of world oil supplies with Adam a few months ago, and though I can't write what he said in specific, I can say that his remarks made it very clearly obvious that he is just a traditional commodity market analyst and really does not understand energy in a fundamental fashion, nor the role that oil in particular has played over the last century. He was absolutely vehement that "everything will turn out ok" and rejected analyses by other well-known energy and oil experts that we face a transition that we are totally unprepared for. He's a very nice guy, otherwise.

The TED spread is increasing again (view here). It just moved over 1, which puts it in what I consider the "danger zone". It is a measure of financial risk. In normal times it should be under 0.5. In the financial crises last year and this past March it moved sharply up towards 2. So we're not in meltdown mode yet, more like "here we go again!"

The TED spread is the difference in yields between inter-bank and U.S. Government loans. It is a measure of how risky banks consider loans to other banks to be.

I expect the this quarter-end for banks to be bad. With the downgrading of the monoline bond lenders, there will be more downgrades to reflect. This next quarter, it will be harder for banks to find new sources of capital, and that may lead to insolvencies. I also expect disintermediation from some of the hedge funds at quarter end.

On a different subject, my updated Peak Oil Overview post is now up, and we recently got Digg and Reddit buttons added. Even if you read the story before, please stop by and Digg and Reddit it (or some other web sharing service). This is especially for newcomers. My apologies for the interruption of the line of discussion.

I see the Dow is down -230 points. The headline is

Blizzard of Acute Downgrades Put Pressure On Market

Fresh trauma over the magnitude of credit-related losses in the financial sector and worry about the stability of auto makers sent the Dow Industrials plunging through the blue-chip index's closing and intraday lows for 2008.

I see Citigroup was one of the downgrades. Also, Chrysler denied rumors that it would seek bankruptcy protection.

See also calculatedrisk:


He questions whether we are approaching the 4th wave.

Dramatic opening to pit trading on the NYMEX today. $3 up in the first three minutes, before easing.

Don't imagine it's anything other than a bit of built up pressure, but I'm sure the finance media will come up with something... Were there any finance stats due out right on 9am?

May have been Libya, threatening to cut production to "protect our interests."

Yeah, but they announced that first during the Jeddah summit. I guess the media wasn't paying attention. Bloomberg:

Crude Oil Rises on Lower Dollar, Possible Libya Production Cut

I think today's announcement was significantly more threatening. Instead of just "the market is oversupplied," it was:

``We are also weighing such a move because of the threats and intimidation against OPEC,'' National Oil Corp. Chairman Shokri Ghanem said in a telephone interview today from Tripoli. ``We have to protect our interests.''

I suppose this refers to the newly imposed sanctions on Iran and fresh war retoric.

It also could be a response to the saber-rattling in the U.S. congress. My guess is that to OPEC it might look like a face-saving way to reduce their production, but it will do nothing but breed more bitterness in the hearts and minds of the SUV driving public against OPEC.

Yes. Also the threats to sue OPEC.


Libya May Cut Oil Output on U.S. Threat to its Assets (Update1)


Does petrodollar recycling make sense when assets can be confiscated on any judicial pretext?

From the seers at Bloomburg et al:

``OPEC's president said prices might be going to $170 at the same time Libya said it may cut output, which touched off buying in a market that was already moving higher on the weak dollar,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``Traders then piled on because they were afraid they missed something.''

``These days there are so many people with fingers poised on the trigger that moves are exaggerated,'' Ritterbusch said. ``Now that it's clear there was nothing that important, prices are dropping back down.''

Except that, of course, as of writing they're all the way back up again...

And to think, when I was young we used to give weather forecasters a hard time...

I assume you are talking about the futures market. For those who take the point of view that speculators have little or nothing to do with the price of oil, my question is this. If this is true, why should we care what future contracts are selling for if the relevant price of oil is what is settled in the spot market?

On the other hand, I hear experts on CNBC state without absolute certainty that the speculators are driving the oil market without regard to supply and demand fundamentals.

This article talks about "buying" being touched off. But what are these traders buying. If they are just buying future contracts, why should we care unless we are directly involved in the futures market.

Just asking.

Two reasons, but you hit on one of them already.

Reason one: A fair few of us here at TOD are financially involved in the futures market as part of our Peak Oil preparations.

Reason two: 'cos it's endlessly entertaining* to watch the commentators coming up with best-guess rationales for everything post-hoc, and get all het up over the little things, while missing the BIG PICTURE entirely.

[* laughter is a wellness-promoting coping-mechanism for dealing with the stupidity that surrounds and often infects us all]

why should we care what future contracts are selling for if the relevant price of oil is what is settled in the spot market?

The futures market tells you what market participants think prices are going to do in the future.

For example, this morning's opening price jump took the price to the top of the current trading range. Normally we'd expect to see commercial traders jump in and sell in response. What's interesting about today's market is that so far we're just not seeing that much selling in response to the jump. In fact, we're seeing big lots of shorts getting closed out.

The market close will be interesting.

The market close will be interesting.

You were right as usual. That's $140 hit.

Well called.

Here's the close:

For a lengthy, more technical discussion, with my perspective at least, see http://www.theoildrum.com/node/4207#comment-367883

I don't believe there is NO impact from futures to spot prices - higher futures today can drive higher spot prices tomorrow - it's just not sustainable for any real duration if the movement is away from the fundamentals.

But what are the fundamentals? There is a blockage of information in the system. Oil is not as plentiful as advertised. Speculators are taking advantage of this. But the price might not move up as quickly as they, on average, assume. Hence there maybe a fall back and there will be cries of the bubble bursting until the next run up starting from a higher base than the last. Futures can effect the market.

The fundamentals are just the supply and demand curves of the end consumers and the oil producers.

Yes there's noise, distortion, and delay in the middle, due to time delays, information delays, and the number of steps involved - but ultimately, any impact that futures trading has are ironed out - as you point out, if they overprice the market, the 'bubble bursts' or there is a 'fall back' or 'correction' - ie: the effects are transitory.

I think of it kind of like waves in a really long spring - movement in each segment affects the bits either side. Different news might induce, reduce, or reinforce existing signals, and the people at the ends feel the jolts and variations. But over all, over any meaningful length of time, it all nets out - all that really matters over time is how hard the customer and supplier are pulling on their respective ends.

I was not asking for an abstract characterization of fundamentals but asking about our particular situation with respect to oil. Yes, a speculatively induced price increase will fall back if fundamentals in your sense so dictate. If I were you I'd be very careful in betting on the price of oil falling (as dictated by fundamentals). I understand that this going back and forth between theory and the concrete can get confusing. I realize that it might be thought that I am saying the speculation is a component of the rising prices. What I am saying is that that is an empirical matter to be determined and cannot be ruled out a priori on the grounds that no stockpiling is taking place.

If I were you I'd be very careful in betting on the price of oil falling (as dictated by fundamentals).

I knew we were misunderstanding each other somewhere along the line... I'm very much betting on the price of oil INCREASING (as dictated by fundamentals).

I'm long long-dated futures, and hold a range of options eg: $250/bbl for mid-2009. My bad if that wasn't apparent.

Tstreet, I don't know of anyone who says that speculators have nothing to do with short term swings in the price of oil. As for myself, I have stated, many times on this list, that speculators have everything to do with short term swings in the oil market. I have also stated that speculators have absolutely nothing to do with long term trends in the oil market. And since the spot market in Cushing is indexed to the NYMEX, speculators do affect the day to day prices of WTI crude.

Speculators are always guessing which way the oil market will move. And over the long haul, they do a very good job at doing that. But they often miss, by a long shot on the short term. When oil shoots up several dollars in one day you know one of two things is true. Either the shorts were wrong or the new longs are wrong. Eventually however, the price will reach its true value according to supply and demand. That could take days, or even a week or two.

If oil were way too high, due to speculation, then there would be a glut of oil on the market caused by demand destruction plus increased production if indeed, any nations could possibly increase production. But right now there is no such glut. This tells us that oil, somewhere around $135 a barrel is a fair price for oil.

WTI Cushing is not the only oil market. Oil is fungible and is priced, according to supply and demand, all over the world. If WTI gets too high, then lower prices in other parts of the world will pull it back down. Speculators, over the long run, are always chasing the price of oil, they do not lead the price of oil. The price, in the long run, is always determined by the fundamentals, supply and demand as well news events that may or may not affect supply and demand in the future.

Ron Patterson

Today's move was probably a reaction to the news. The people who put on shorts yesterday saw the news and didn't want to be short.

Now it looks like everybody's deciding whether they want to put those shorts back on or not. Every time some big lot of shorts are put on, somebody else comes in and buys to close a big lot out.

If the commercials feel that future supply is fine, they will be selling and it doesn't matter what specs do. But if commercials feel that future supply is fine, why are specs getting paid a premium to short?

The US Senators might be correct that there is a speculative premium built in to oil prices - and it is one that they entirely control.
The speculation is of course on the possibility of a strike on Iran.
Take that off the table and it can only help.

You're right. No politician is allowed to say that our Iran policy is in any way related to Iran's oil production.

It is a matter of common causes. Most of the same things that cause the futures market to go up will cause the spot market to go up. To use my favorite example, if freakish weather destroyed 90% of the coffe crop in South & Central America, coffe prices AND coffe futures prices would both skyrocket. This is not because speculators are speculating, but because supply disruptions will move prices of both the futures and the spot markets. There is a common logical fallacy here. If event A causes both event B and event C, some people will believe that event B was the cause of C. In fact, B & C could be completely independent of each other.

Now, in the case of oil, the futures and spot markets are not independent of each other. If the spot market moves, the futures market will follow (any relationship in the other direction is very weak at best). However, spot prices are not nearly as visible as futures prices. So we watch the futures prices as proxies for the spot prices. Basically, oil futures will follow spot prices, so they are a good proxy for the price of oil. The magical thinking is believing that the spot prices follow the oil futures price, not in thinking that they are related.

I don't think it's true that it's weak in the other direction.

A rally in the futures market will cause traders in real gloopy product to take their product off the spot market, and take out a contract to sell it on the futures market, the moment the profit differential makes it more economic to store it in the tank for the month.

The effect dramatically weakens the further out the futures chain you go, because storing 42,000 gallons of crude for two months costs a whole lot more than one month etc etc, so spot traders are only affected by the very front months.

That is a very strong mechanism for futures speculation to affect spot prices, But for hopefully obvious reasons around the impact in the physical market, it can't persist for any length of time.

I don't disagree with your mechanism, just in the characterization of it being strong. Only a small percentage of the world's oil is sold through the futures markets, and only a small percentage of that winds up being subject to deferred sales (and as Krugman has pointed out, if that were happening on a large scale, we'd see the effect; also futures prices have lagged spot prices for quite a while now, so there's little incentive to do it). In any case, I think we agree that the effect will be temporary.

Although I am not a trader, this is how I have worked it out from my own research. Futures can influence but not lead real prices.

I think the classical analysis being applied here might not tell the whole story. Classically speaking, if speculators push a price to high, demand from immediate buyers will go down, supply up, price down. With the imperfections in this particular market and the central role the oil plays, the immediate buyers may not be the ones to push demand down. It will be pushed down by the general level of the economy. Hence price could overshoot lead by speculation.

While classical analysis might not predict for fundamentally limited resource very well, I don't think changes the basics of how the market works.

It could get pushed down by the general level of the world economy - but that's true for goods in a recession generally as well.

I don't see how that means 'price overshoot' - Do you think the price will overshoot if expressed in terms of loaves of bread per barrel of oil? I think we are seeing a slow correction as the market adjusts to the fundamental realisation that oil supply is finite and will reduce soon.

That may trigger a recession, economic collapse - but I don't see how that invalidates the value that the market attaches to a barrel, nor do I think it will decrease.

[nb: I do see a clear possibility for short term (say a month) of severe futures-led overshoot, when we see a barrel go from say $400 to $500 'overnight' etc - but again, these will correct in short order as per any futures market]

PS: I think I'm missing something in what you're saying - the reason I keep replying is 'cos I want to get my head around what it is, if I am.

Thanks too all for your answers/comments to the above post. I am still working at it, but this whole speculation issue is becoming clearer as I get direct answers to my direct questions. It would appear that congress would have a better handle on this if they gathered testimony from the people here on TOD. However, I am not sure that they want the truth; they simply cannot handle the truth. The truth is that there is not a damn thing the congress can do in the short term to address higher prices. And they don't have the courage and wisdom to do what is necessary to realistically address the problem in the mid or long term.

And then there is the Obama approach. Give people money to compensate for higher prices. Where does this money come from? The tooth ferry,apparently.

Wait, you mean all the talk about dragging OPEC in front of the WTO and declaring them illegal and what not - all that was a stupid idea that could only backfire? Color me SHOCKED!

If OPEC and congress are serious about "playing hardball" this will escalate. However, these congresspeople could be just trying to find a convenient scape-goat to redirect the public's rage at someone besides them. If that's the case, they'll back down after the election. The same goes for OPEC, this could all just be face-saving excuses for production changes that were going to happen anyway.

Sounds like "resource nationalization" to me!! More to come...

I think the triggering threat was aimed closer to home (Libya). Congress supposedly passed a law to allow victims of terrorism (Lockerbie) to sue. The Libyan government probably considers that we are going back on our word, when they decided to regain the trust of the west via forgoing their nuclear weapons ambitions. IIRC we had made a deal with Japan at the end of WWII, which doesn't allow WWII POWs to sue.

Heavy rail, light rail, rapid transit, regional rail, commuter rail....

For those of you who, like me, confuse their rail terminology, I think this link will be helpful:


It turns out that many rail systems are hard to classify and may fit into multiple designations.

The Passenger and some of the excitements being one ...

Anyone see this in the Asia Times?

Are they really oil wars?

The view that recent US military adventures in the Middle East and the broader Central Asia are driven by energy considerations is further reinforced by the dubious theory of Peak Oil, which maintains that, having peaked, world oil resources are now dwindling and that, therefore, war power and military strength are key to access or control of the shrinking energy resources.

Not only is Peak Oil theory unscientific, unrealistic, and perhaps even fraudulent; war and military force are no longer the necessary or appropriate means to gain access to sources of energy - resorting to military measures can, indeed, lead to costly, not cheap, oil.

I guess there must be some other reason the Russians are training their troops for arctic combat. Maybe they expect an invasion of polar bears looking for a place to live.

I think Jeff was wrong. We clearly have not reached Peak Delusional Thinking. I predict Yerginistic production gains in that area in the near future.

This autor is completely clueless. Look at his terminology:
"The Peak Oil thesis maintains that world oil reserves, having reached their maximum capacity, are now dwindling..."


"Significant policy and/or political implications follow from the view that oil is running out"

Actually, like many other people, I am predicting a parallel increase in delusional thinking, as oil prices increase.

Here is a post from a Dallas Morning News blog. The topic was hybrid cars versus hybrid SUV's:

I drive an F-150, and honestly I think, man if that little hybrid cuts me off or slams into me, it will get cumpletly torn apart, meanwhile all i would have to worry about is fixing the small ding it made on my truck.

My response:

An analogy. After the Titanic hit the iceberg, there were two types of passengers: those who then realized that the ship would sink, and those who would realize that the ship would sink. Some of them realized it as they were drowning or dying from hypothermia.

Two types of Americans today: those who now realize that we live in a finite world, with finite energy resources, and those who will realize it. Some will realize it as their SUV's and trucks are being repossessed and as their suburban McMansions are being foreclosed upon.

For my recommendations, do a Google Search for Jeffrey Brown + ELP Plan.

My bad. I thought you'd asked a while ago whether we'd hit PDT. I should have looked the quote up. :)

Eh hem - http://www.theoildrum.com/node/4204#comment-366676

Anyway, if it was WT it'd have a catchy acronym by now :-)

[EDIT - urm, PDT - quite - how'd I miss that]

I was driving my Prius down an uncrowded rural two lane mountain highway yesterday and a very large black truck was tailgating me at about 60 miles per hour. I felt more intimidated than usual because I had the feeling that he resented the fact that I was getting 50 mpg while he was probably getting about 15 mpg at the best. There was no good reason why he should be tailgating me because there was so little traffic.

I was wondering if others have had the experience I had and feel that these kinds of incidents are increasing.

It also could be that since I don't drive very much I am just not used to road rage.

This reminds me of a bumper sticker I saw which read, "If you are close enough to read this bumper sticker, please wait while I reload" My sentiments exactly.

In a situation like this gradually reduce your speed-I have slowed trucks to an absolute crawl.

I thought I was the only A-Hole who did this. When tailgated on an uncrowded road, I slowly reduce speed until the person backs off. You don't make any friends, but it works.

I'm worse than you-if someone honks at me to hurry up e.g. making a right turn, I sometimes will just sit there-for every sound of the horn I am giving them an extra 10 seconds. Bonus points if you can get them to leave their vehicle.

I just flip the cap off the stick-shift on my Austen Martin and push a hidden button which releases pure crude oil on the road behind me sending the tailgater into a terminal spin-out.

whats the big deal guys?

Seriously, come on.

Yup I do it too, except I drive a big 20 year old SUV.* In fact, I lived in Wyoming for five years where the state troopers give you $55 speeding tickets for anything more than 5 mph over the posted speed limit. I learned to drive the speed limit there, and it's just kind of stuck with me since then. You should see how the Atlanta area drivers hate me!

*I would buy a more fuel efficient vehicle, but I drive fairly infrequently and often when I do drive I'm hauling things like kayaks and camping gear. This one just keeps running so I hold onto it.

Don't you ever consider pulling over to let them pass? If there's no other traffic it should be easy. And the polite thing to do.

My working assumption, especially here in Texas, and especially in regard to pickup drivers, is that all drivers have a loaded gun sitting on the seat next to them and they have the following characteristics: (1) They just got laid off from their job; (2) their dog died; (3) their wife filed for divorce; (4) their mother just got run over by a train, in her own pickup truck and (5) They are looking for someone to take it out on.

BTW, in light of the recent news about the Second Amendment, there is a case in front of a grand jury that tests the outer boundaries of the new "Castle Law," that a homeowner can use lethal force to protect property. There have always been some quirks in Texas law. I think that a key difference in the past was whether it was night or day. In any case, a guy killed two burglars, who had broken into his neighbor's house and were walking away with the goods. My prediction: he will be no-billed. No charges will be filed. In an ABC news segment on this story, they interviewed another guy who had shot and killed someone trying to break into his own house. The reporter asked him what the probable outcome was for criminals trying to break into houses in Texas. His response: "Death."

It sounds good in Texas. In England if you threatened a burgler you would have to pay him damages for inducing mental stress.

How have America's owners managed their restless white minions for 400 years? By giving them the power of unpunished violence over blacks, Indians, gays, Communists, Arabs, atheists, tree-huggers, hippies, and miscreants. More categories are being prepared.

They value that power more than they do their own freedom of speech, worship, or thought. More than they do their objective economic prospects or their quality of life. They call that power decentralized government, then vote for tyrants. That power deludes them into believing that as armed defenders of private property they are more akin to Bill Gates or Lee Raymond than to the slightly worse-off folks who are trying to rob them. It will keep the blinders on their eyes until they face starvation, as they did in 1932.

J. P. Morgan said he could always hire half the working class to shoot the other half. In fact, all he needed was for half the working class to be reduced to robbing the other half, and all 100% will be shooting at each other.

Ducking in Texas,

I am stunned that anyone would suggest such a move.

It isn't polite, it is subservient, especially since even mountain roads have passing zones.

I frequently drive Highway 36 from Fortuna to Mad River (California). 40 miles. One very short passing lane going east. NO passing lanes going west. There are three or four places where the double yellow is broken, but these are also very short and usually only allow one vehicle to pass at a time.

I don't think you would get shot for not pulling over, but it is certainly considered rude by the locals. Nothing worse than being stuck behind an out of state RV who is waiting for the highway to bust out into eight lanes and knowing it's not going to happen. I say, let the slow be slow and the fast be fast.

EDIT to add: I also drive on Highway 299 a lot which is more typical with decent passing lanes going up hill and no passing lanes going down. I actually spend LESS time behind cars on 36 because as soon as approach someone from behind, they pull over and I don't have to wait for a passing lane.

This isn't vindictive, it's saving my own skin. By slowing down gradually when being tailgated I am protecting myself from getting rear-ended at high speed should I have to stop suddenly. Don't you know the 2 second rule? (4 to 5 seconds on highways) On multi-lane highways I already stay over as far right as I can get and in a passing zone on a two lane road I'll get over as far as I can and slow down while they're passing me.

Remember: motor vehicles are highly dangerous machines, about 40k people are killed in the U.S. every year by them. Complacency breeds contempt -- just because you spend four hours a day in your car commuting doesn't mean you are immune to their dangers and can drive irresponsibly.

That is in fact what I was taught to do if tailgated: slow down so as to encourage them to pass.

And if I wanted to pass, I was taught to pull as close to the car in front of me as safely possible, both to signal that I wanted to pass, and to minimize my time in the other lane.

if I wanted to pass, I was taught to pull as close to the car in front of me as safely possible ... to minimize my time in the other lane.

I've never understood this logic. If you start your pass right on the other guy's bumper, you're starting your time in the oncoming lane at 0 MPH relative to the other guy. In my mind, the thing to do is to lay back five or ten car lengths, plan your moment, and then accelerate so that you're going 20 MPH relative to the guy in front of you when you switch to the oncoming lane. Much less time in the danger zone...

I'm with you, brother (or sister). If people behind me won't drive safely, it's up to me to leave myself an extra buffer in front of me.

Similarly, I don't pull right up behind people at stoplights--I leave a buffer there as well. I can't tell you how many idiots I've saved from rear-ending me by being able to jump 20 feet forward as they're about to plow into the back of me.

Now, if there was just something I could do about "frontgating" (people pulling into my lane right in front of me)...

Yeah I do this, or if I'm extra annoyed I give a quick but aggressive tap to the brakes. Dangerous I know, but it usually wakes the tailgater up real quick and makes them back off.

Okay, I'll come clean. In my (much) younger days, I would either A) suddenly downshift to 1st gear, or B) use the emergency hand brake. Either way you slow down rapidly without benefit of brake lights. I was wicked back then. I would be afraid of doing that now for fear of a fusilade of bullets heading my way.

Why not just tap the breaks as you're still going? The mere flash will, provided they're not blind, get them to wake up. After all, if they rear-end you, it's their insurance and legal issue.

Unless you're in a Smart and they're in an Escalade. In which case, scratch that idea.

I've been known to tap the emergency lights on rare occasions, but mostly I try to stay sanely with the flow. It occasionally plays havoc with the mileage on my Prius (53 MPG so far this week) but it's good for my karma mileage.

Forty years ago my brother had a friend who had an aged Volkswagen transporter - built in the days before automatic back-up lights. He installed a pair of appropriate white lights to the back, and had a toggle switch mounted on his dash.

"Hey, what's that switch for?"
"Oh this? It's the brakes for the car behind us."
"Oh, Comm'on."
"Here, watch this..."

Sure enough the car in back laid into the brakes the instant he thought the car ahead was just jammed into reverse. Please don't try this at home. Or if you see my red Prius two cars behind.

No, don't try THIS at home. My step-dad told me how when he was young and bad he and his buddies rigged up the trunk so when they threw the switch the trunk lid would open up and two super bright floodlights would blaze forth. I'm not sure I would want to completely blind the driver behind me, especially if they were tailgating, but I guess they had some kind of fun with it.

I agree. I drive a VW Jetta with my own homemade biodiesel. I always drive above the speed limit, but I drive cautiously enough that I can time stop lights and coast to stop signs. This gives me an average of 51 to 53 MPG on my commute. When I'm tailgated and there is plenty of passing room, I will slow down in 5 MPH increments until the other driver backs off or passes me. By slowing down I have the added benefit of increasing my MPG on my commute by another 1 or 2 MPG. Ah the job of numbers!

The other thing that gets me is that on my morning commute so many people are speeding. I have my commute planned out so that I arrive to work no more than 3 minutes early but never late. The last thing I want to do is be EARLY to work. I think the speeders must have much better jobs than I do and they are eager to get to work. Or eager to escape their families. Not sure... I guess the next time one of them crashes into my back bumper I will ask them.

I have come to the conclusion that most people literally cannot see more than 10 feet in front of their vehicles. This is why they tailgate. Yes some are aggressive about it, but that’s because they only see YOU in front of THEM. They don’t see anything up ahead, so that even if you are in heavy traffic, they don’t see all the traffic in the lane ahead. I have done “experiments” to confirm this, and every one has yielded a positive result. I have always wanted to rig cameras in my car to capture it, but don’t have the resources or skills for that. Here is a recent example. Near my mothers house there is a very busy four-lane divided highway (not controlled access). When you pull out and go south, you are going up a pretty good grade for about a mile. At about this point (the top of the grade), the road also widens out, adding a lane on the right. One weekday morning during rush hour I was headed out this way. I was in the right lane behind a large truck which was having trouble getting up the hill. There was too much traffic in the other lane to move over, and I wasn’t in a hurry so I stayed there, waiting for the road to widen. Behind me was a guy in a small car that was (of course) tailgating me. I was staying back from the truck about 40 – 50 feet. I made a bet with myself about what would happen when the road widened – and it turned out I was spot on. As the road started to taper out to the right, the truck started moving over that way. I waited until the truck cleared the lane before I started to speed up and pass him in what was now the middle lane. What did the guy behind me do? As the road tapered out to my right, he jerked his car over to the right to pass me. Oops, big truck there. He literally never even saw the truck, or realized it was the truck that was holding up that lane, until he was on the trucks bumper. It was ME who was in his way. By now I am accelerating up to the speed limit (50MPH) and passing the truck. When he got to the trucks bumper, he jerked his car back to my lane and was on my tail again. Needless to say even 50 did not suit him, and as soon as we both passed the truck, he was back in the right lane passing me.

Is this inability to look "up ahead" and "into the future" related to an inability to comprehend things like Peak Oil or Climate Change? I am no behavioral psychologist, but I think they must be related.

On bumper stickers, I have always wanted one that says “PLEASE TAILGATE - the money from the judgment against the last idiot that rear-ended me is almost gone.”

I'll reply to that. I do study cognition as part of my research. And I don't think that there is any good evidence that humans are in some way (epigenetically or phylogenetically) unable to plan for the future, either in the case of driving on the road (planning a few seconds ahead) or in terms of peak oil and climate change (planning a few centuries ahead. I do buy into the concept of satisficing (see Simon 1956). However, the part that Simon missed was the criteria on which the organism satisfices. Simon's basic idea is that an organism performs whatever task it needs for its survival until it has satisfied it's need. He was trying to counter the ridiculous idea that organisms optimize. (Satisficing is a counter to optimizing). Sadly many economists still haven't grasped this point. Too bad for them...

So some people have jumped on this idea and decided that because humans are satisficers, they can't plan for the future: You do what you need to do in the present to get your next meal, then stop until you're hungry again. However, if you look at a perceptual experiment like Dan Simon's gorilla video: The experiment instructions explicitly say "count the basketball passes." It doesn't say, "look for the gorilla." You see what I mean? If the experimenter said "look for the gorilla," everyone would see the gorilla. I.e., we satisfice on whatever criteri we believe are the important ones at that given moment.

Which brings us back to the car situation. If you have never thought about the flow of traffic, or looking ahead a couple of cars, why would you attend to it? Humans have limited attentional capability. On the other hand, from cycling, I've learned to attend to what's going on at least 10 cars ahead of me. It's either that or death. So it's very easy for me, when I'm driving, to maintain an awareness of more than one car in front of me. I'm satisficing on different criteria. Same argument for long term things like climate change.

Thank you very much for that reply dtbks. That is why I like it here- you can usually find someone who knows what they're talking about! I can certainly relate what you are saying to what I observe.

I think you may be running into a demographic thing here. In my rural area the high price of gas has meant that there is a relative premium placed on the more fuel efficient vehicles, ie dad or mom and dad both are using the car to drive to work. Which leaves relatively more trucks available in the rural landscape for junior to drive.

That is, starter cars used to be the family's 14 year old Honda but now it is as likely to be a truck, and don't ask me how kids afford to fuel them, but you know kids.

At least that has been my experience- that when one is being tail-gated or sees most any form of reckless driving that nine times out of ten it is the usual suspect, the darling of insurance underwriters, the 18-30 yo (usually male) driver.

So I would say that if you want to attribute malice that it was less from envy than stupidity, inexperience, and hormones.

Several years back I was driving on a twisty mountain road, and some guy was tailgaiting me.

There can actually be a legitimate reason for this: passing zones are few and short, so you don't have an extra half-minute to close the distance to the car in front of you and still get around him in the short zone.

We got to a passing zone, no oncoming traffic, he doesn't pass. We get to the next zone, I slow down to maybe 45 to make it easier for him to pass. He doesn't pass. I speed back up to 55. He is still tailgaiting. I signal and pull off the road to let him by, coming to a complete stop. He pulls off the road behind me and stops, then guns his engine, pulls in front of me, an jumps out.

I roll down my window. "Can I help you?"

He says (I'm not kidding) "Well, don't you want to fight?"

"No!" sez I.

"Then why did you stop?"

"I thought you were having trouble trying to pass."

"Uh ... oh." He gets back in his truck and leaves.

That's an amazing story. Could see it around here.

My wife and I were driving the Prius for cycling and supplies near Spokane a few days ago. I drive 55 on a two lane with passing lanes and I watch not to hold up 5 vehicles. When I pulled over on one of the lanes a double cab P/U pulled within a foot of my door and romped on it hard while displaying the one gun salute. (yeah I gave it right back)

I doubt if I had been grandpa in a farm truck it would have produced a ripple.

I think in my area it is actually getting a little less frequent. At least some drivers seem to think yeah I should probably drive slower too. As recently as six months ago the primary reaction was "another god&^%* treehugger hippy, its all his fault that I can't afford gas. At least in Cal;ifonia I think this attitude is in slow decline.

Actually the vast majority of tailgaters are just mindless drivers responding to their emotion of frustration.

I haven't driven a Prius, but the Honda Civic hybrid has gages that can really tell you how efficiently you are driving particularly with respect to stopping and starting slowly in traffic. This sort of driving is NOT popular with others on the road.

No need to worry, he was probably just Hypermiling. http://www.hypermiling.com/

Yeah, judging by the comments under the Guardian article linked above ("A world less flat"), there is certainly still plenty of finger pointing and wanton ignorance. It seems the survey discussed in the Bloomberg article above didn't even offer respondents the option of supply/demand or geological constraints as possible reasons for high oil prices. There is clearly an entire labyrinth of misguided thought to explore before considering the obvious.

My favorite is still the people who are like, hey, we just discovered that US oil production is in decline! Maybe! (Or maybe it's just those dang treehuggers preventing us from drilling ANWR.) Of course, one of the reasons I read this site is because I was so surprised to find this out a few years ago myself, so I guess I can't be down on them too much. An example from the DrumBeat today:

There is little doubt, however, of the logic that suggests the focus of oil trading will shift to the main suppliers as North Sea and U.S. supplies begin to dwindle.

Oh, yes, the focus will shift, since U.S. supplies have just recently begun to dwindle in, you know, 1971!

Ha...I saw that article about Russian (and US troops, btw) training for Arctic combat and immediately thought of the James Bond movie with soldiers on skis and white uniforms...reality stranger than fiction?

Ski troopers are common in many northern armies. I imagine the 10th Mountain Division at Fort Drum, NY has some too. Don't forget that Pakistan and India fought a border war a few years back on mountains at up to 10,000 feet high. Wasn't even any oil in them.

As Super390 says, that's fiction mirroring reality. I'm sure of 8 countries with troops trained to fight in snow and white camouflage uniforms stored away, and I'd bet there's more. US, Canada, Norway, Sweden,...

More propaganda by an economist. He claims there is no evidence that "oil has peaked" but as we all know, by the time you know for certain that oil has peaked, it's 10 years after the fact and probably too late to do anything about it. The rest of it, as far as I can tell, is the usual cornucopian list: new energy-saving technologies, new discovery and extraction technologies, non-conventional oil sources.

Granted if the U.S. were really only after Iraq's oil, it would have been better to trade with Hussein. Howver, my guess is that congress would never have approved the war without the promise by that ill-informed moron Wolfowitz that Iraq's rebuilding would pay for itself in oil revenue.


Yes, I saw that.

The guy is a real ideologue who, like all ideologues, tend to tailor the facts to fit their ideology.

His goal is to remove the oil industry from the three-member coalition that urged us on to war in Iraq, that coalition consisting of the oil industry, the military industry and the Zionists. This has nothing to do with enhancing the image of oil men. What it does have to do with is the further demonization of the militarists and Zionists. His thinking seems to be that if you remove the practical motivation for the war, which is the oil, then that only leaves evil motivations, which he can then attribute to the militarists and Zionists. He's got no hard on for Peak Oil. It's just collateral damage.

For a more realistic view of oil's role in the war, I recommend:




Excellent point. I expect all members of that coalition to try to rewrite the history of their own roles in this disaster.

What's more amusing is watching Republicans act as though they and their beliefs weren't to blame in any way for George W. Bush or the war. They've already thrown him in the memory hole.

I think we can save an enourmous amount of electrical energy by designing home appliances with the same methodology that we use in our battery operated gadgets (cell phones, iPods, etc.) There are lots of tricks that can be used to reduce power consumption. I'd like to see electrically independant homes powered with wind/solar.

I am going to start a research prodject to quantify the potential savings in typical home appliances. Anybody know of any existing data to get me started?

search the site for "net energy"

That sounds like a good project to undertake.

I'm generally working on alternatives for homeowners, from lighting to heating, cooking, washing and refrigeration changes that would reduce a homeowner's 'imported energy' costs, and increased resiliency against power costs and disruptions.

Some of them are extremely obvious, but a bit annoying to implement, like my 'winter-fridge', which asks why we are ALL running refrigerators through the wintertime. Even if only a quarter of the 24hr day is colder than fridge temps, it shouldn't be all that difficult to grab some 'coolth' and store it in a tank of antifreeze solution to hold the fridge constant until the next night. This would be a retrofit onto a regular fridge, probably, so that the regular compressor would kick in a few degrees above the renewable cooling, so you don't have to do anything if you hit spring or a warm spell.

I'm also going to retrofit one of my disused chimneys (I hope) to send a tracked beam of concentrated sunlight down into a solar-oven that will be right adjacent to the kitchen. If I'm not baking anything on a given winter's day, the oven would be kept open, and probably have a big tank of water sitting in there for some added thermal mass. Simple, as long as I can keep it 'fire safe'..

'It's 10am, do you know where your light switches are?'

Bob Fiske
Portland, Maine (Sunny and Cool!)

I can't direct you to the proper dataset, but here in Holland we have this mandatory rating for home appliances from G in dark red, to A in light green, indicating energy use. So when you go out to buy a new freezer you can instantly say which one is the cheapest to operate. Mostly, as one would expect, the more expensive home appliances get rating A.
Next, for every appliance purchased, ranging from cars to electric toothbrushes, we pay a certain amount which is used for its eventual disposure. This pays for recycling all re-usable parts of the appliance.

Note this is all mandated by law, so possibly it is a good idea to have your government set higher efficiency standards to manufacturers of all appliances, including cars.

The solar energy crowd has been working on that for decades. Just go to a solar energy store like backwoodssolar.com for low energy use appliances.

The typical US house uses about 30kwh/day of electricity. Many solar types do fine with 3kwh/day, and don't give up any significant modern conveniences.

There are some huge savings to be had just by making absurdly simple design changes. Here is an article about converting chest freezers to refrigerators: http://www.builditsolar.com/Projects/Conservation/chest_fridge.pdf

It uses 0.1 kWh per day.

Most of the people I know would have trouble with hammer and nail.

hey thanks so much for this link
does it pass the sniff test? is this guy really cooling food with a pv system?

It's a good article. I have heard he got the calc's on savings wrong, but I bet it's still a considerable advantage doing this. The improved insulation and the Chest format alone will take care of a bunch of that.


my concern is the initial amp req. I don't have a massive inverter/ battery bank
my focuses is storing/moving produce say 100 miles in a 6x12 cargo trailer for say 3 days tops (in chest freezers?)
come on bob kick down some help I've reinvented the wheel to many times with my "little" project and the pig weed is killing me.
If you can point me to some resource I would consider it a heavenly act, and take it as a sign that the great mama in the sky wants me to stop posting here after 6 beers and 14 hrs in da field and leave these reasonable folk at tod alone.

I've had one of these setups for over a year now. It's just a standard chest freezer, plus a temp controller I built (although apparently Ebay has some attractively priced ones now). It uses about 0.25 kwh per day, but of course you need a freezer too (0.6 kwh/day in my case). Note that it's cranked down to just above freezing.

I think the main advantage is the condensation control. A normal refrigerator drains it off and evaporates it. Obviously it's easier to condense down to 100% humidity than 10% or whatever a normal refrigerator works at. Since things don't dry out, you just set stuff in instead of sealing them up.

The main problem is the condensation... it quickly builds up, so you get used to placing the bottles and cans at the bottom, where the puddle won't hurt them. The seams rust, and anything can mold (though quite slowly, due to the low temps). All in all, it was a decent investment... way over 100% return on investment, even with power under $0.08/kwh. A SunFrost is still more efficient, but just barely.

Edit: The run power is about 100 watts, even for good-sized freezers. Start current isn't much more. Essentially any inverter could handle it.

Look up "energy conservation" in Wikipedia. In this entry there are some average estimates of house-hold energy consumption both by the worst offending appliances and for space conditioning etc. This will give you a starting point about which appliances to target first (the worst offenders).

Just a heads-up so you don't waste your time: The three worst energy hogs in an average house are: 1) space conditioning, 2) water heating, and 3) lights. Solve those three and you've already resolved over 50% of the energy consumption. Fiddling with a more efficient washing machine, dryer, and/or dishwasher is a big waste of time IMO. They consume less than 10% of your household energy combined. Go after the big hogs first.

I would strongly recommend looking up "Passivhaus" or "passive house" - an excellent place to start, since it solves the space conditioning problem to a large extent. I suspect from your name (middle-west) you may live in the US mid-west. IF so, the closest resource on passive house design (to me anyway) is Katrin Klingenberg in Urbana, Illinois.

One last thing. The worst energy hogging appliance in the house is the fridge. What I learned from a particular Japanese reality TV show is that you can easily halve your fridge's energy consumption by simply being extremely strict about opening and closing the door. I saw people doing things like placing a map of the interior locations of fridge items on the door and when you plan to use the fridge, you take out everything you need as quickly as possible in a single go. Don't underestimate the power of the low-tech approach to solving energy problems.

Remember the windows with the rubber gloves in them which nuclear workers used to handle hazardous materials? How about getting fridges like those, and a tiny door into which you could pass the items using the gloves?

It would certainly send a message to fat people about the hazardous materials within.

I've not done an analysis of the total energy consumption of our refrigerator, but it has one very cool item: there is a mini door on the front where you can put high frequency use items, such as drinks, etc. It's set in the front of the fridge door, of course. I'd say it saves opening the fridge door a minimum of ten times a day.

After reading all this, I'm going to rearrange all our food this weekend.

BTW, anyone know if you could put a fridge on supports and lay it on its back? Maybe have to shift the pump? (I've never really understood why you can't lay them down...) Seems like you could turn any fridge into the sort described in the .pdf file simply by doing that.


You brought up another important point about fridges. High Efficiency (HE) fridges all have this small door - that's how they achieve the "HE" label. There is very little gain you can make by making the compressor more efficient (just because it is hard to make big gains in heat engine/heat pump efficiency) Your idea of laying the fridge on its back is rather amusing. Please let us know if it works!

Please let us know if it works!

Laughter is the best medicine, or so say Reader's Digest and Norman Cousins. I decided to google this since there were no responses. It seems you don't lay a fridge down for two basic reasons: compressor oil getting where it shouldn't and damaging coils with things moving around inside and/or getting bumped on the outside.

So, this would seem doable. Best practice would seem to be to

1. discharge the system
2. disconnect refrigerant lines (etc.)
3. remount the compressor to allow the refrigerator to be laid on its back and not leak into the coils
4. reconnect the lines
5. recharge the system
6. start the refrigerator

Non-best practices would be to

1. turn off the fridge
2. unmount the compressor
3. carefully change the position of the compressor and refrigerant lines while being careful not to distort the lines or allow compressor oil to leak into the lines (a goodly number of friends might be good here!)
4. mount the compressor (might need to add new mounts, etc. no?)
5. start the refrigerator

So, I don't see any reason why this can't be done. The one caveat is that I know squat about compressors and really don't know what's going on with the compressor oil, so may be missing something obvious to others.

The question is, why? If the fridge is already HE, what will you gain in energy savings by losing less air when opening it?

Ah, an observation on the freezer fridge use: the .pdf write-up said gains are made because less cold air flows out when open. So, what, if anything, is gained by opening slowly so as to mix the air as little as possible, also?


You know, opening a fridge from the top is the obvious way to save energy. However, you're going to sacrifice a lot of convenience locating stuff... I guess that's why fridges are always upright. Note that chest freezers are efficiency winners because of this. My physicist wife rolled up her nose and looked funny at me when I asked her whether the speed of opening the door would matter or not. She thinks not. Basically the cold air is going to slosh out at the base and hot air is going to run in to the top of the fridge. You may as well be as quick as reasonably possible about opening the door and getting stuff out.

There was a misunderstanding. Perhaps you didn't read the .pdf that was linked up thread. The fellow was saying that the energy savings in using a chest freezer comes from cold air not being able to flow out of a box. With uprights, the air immediately flows out, of course. My question was not about uprights, but about the chest freezer and/or my idea to alter a regular fridge by laying it on its back.

Will that fellow save a large enough amount of energy to make it worthwhile to always open the lid slowly? And if so, how slowly? I suspect most of us open our fridges/freezers in about a second or less. What if you took 5 seconds? (Sounds like short time, but try it... it's slow!)

Hey you did good !

I'm retraining into the HVAC/R field - compressors and refrigerant and all that.

"what's going on with the compressor oil"

The oil is supposed to stay in the compressor. But not all of it does. Some gets suspended in the refrigerant and thus cycles through the system.

Other considerations:
Copper tubing work needing soldering with an open
Refrigerant handling. See EPA if US resident.

So, this should work, then? Seems it would be a hell of a lot cheaper than all that conversion and additional electronics...

As for the EPA and the rest of the government.... I'm thinking they may not be too relevant for a whole lot longer... and if they are, are not going to be able to afford to harrass the millions of us adapting to survive...




Only mentioned them due to
hazards of refrigerants :)

I've wondered sometimes if having several small refrigerators wouldn't be more efficient than one large one - IF it meant that you could reduce the number of times that you had to open up each one. For example, have one mini-fridge for things you need to access frequently (milk, juices, etc.), another one for things you might need to get to only once a day or so; maybe even a third for things you need to keep refrigerated but only need occasionally.

There are probably trade-offs. Maybe the smaller refrigerators have less efficient cooling equipment, so you might lose any energy efficiency gains you might achieve under this scheme - I don't know.

This might make more sense for chest freezers. Two small chest freezers might very well be more efficient than one large one, if you distribute the stuff that you are going to access soonest in one, and the stuff you are going to access latest in the other. This would clearly be an improvement over the typical refrigerator/freezer combo.

Food Shortages, Rising Prices, Stagnant Wages:Welcome to the 13th Century

As a people prosper and multiply, the demand for goods like food and energy outstrips supply, causing eras of rising prices. Long periods of stable prices (supply increases along with demand) beget rising wages and widespread prosperity. Once population and financial demand outstrip supply of food and energy--a situation often triggered by a series of catastrophically poor harvests--then the stability decays into instability as shortages develop and prices spike.
These junctures of great poverty, insecurity and unrest set the stage for wars, revolutions and pandemics.


Nice catch. I'd like to see some theorizing on Chaotic cycles applied to the current situation... Also reminds me of Kennedy's work on Rise and fall of the Great Powers. Other aspects of the book get more play, but what struck me was his presentation of social cycles...

It was something like small groups/agrarian age --> towns/militaristic age--> intellectual age --> acquisitive age --> back to stage one.

Care to guess where we are on that flow?

Also, Ravi Batra called the 1990 recession based partly on economic cycles.


In France protests are still daily but receive no or very sparse media coverage.

Latest protests yesterdy in France are a bit more visible because beeing rather dramatic (here a dramatic video embedded in a news link in French but visually talking) and showing that some people get rather desperate about their conditions. Here it were winemakers from southern France who feel strangled by high fuel prices, fertilizer pesticides and heavy bureaucracy.

After Gail's post about energy requirements in modern hospitals I realized that things can go really bad if the electricity went off. In Saint Antoine's hospital in Paris last night a sudden failure has certainly shown how vulnerable we are. I found that murphy's Law works perfectly in real life in that not only the main supply failed but the auxiliary systems didn't work well. Food for thought.

*** Warning, not related to oil and energy ***
And at last, for those who still think that we are a rational species despite all what Nate Hagens has written, I am totally baffled that people can believe that French biking champion Jeannie Longo doesn't take doping drugs. She has won a race in the french championship. She is 49 years old ... Believing that this is possible without doping is like believing in a Texan communist politburo (see WT). People do always surprise me but it explains a lot.

Neuroil: Your attack on Longo is without merit-if you have evidence that humans of any age can become biking champions without drug use, present it. If she passes her tests, her credibility is at least as high as Lance's.


I didn't attack Longo : I didn't say she took any drugs (wink wink). I just pointed to the fact that the media can make you swallow anything if you don't pay attention. We, the public, probably have a need to believe in miracles. This is what I learned with this snippet.

For the french readers who want to go further, JP Escande has written an excellent book on doping in high-level sport. As for the evolution of muscular power vs age, medline through pubmed and google is really full of links.

Longo is clearly an outlier, it would be difficult to prove anything to those who doubt about doping or not. Even if she takes drugs, to still be able to win at 49 years is remarkable. But for me, as a neurologist, having worked in an EMG-lab, believing that she can win without drugs is like believing in abiotic oil, fairies in oil fields, the texan communists ...

Neuroil: You are the expert-maybe you should help the Olympic poobahs http://www.iht.com/articles/2008/06/26/sports/26doping.php


H2O, CO2 injections in aging oil fields without MSM noticing, EPO, synthetic hémoglogin and hormone injections in aging or young athletes without MSM noticing, what a world ...

I really hope this won't end for us all as it sadly does for a lot of those athletes : heart failure at 58, muscular dystrophy, ALS (lou gehrig disease), brain attacks before 60, psychiatric disorders to name but a few.

Just broaden the definition of terrorist and throw them in Gitmo-make an exception for the ones (probably 85%) that thank Jesus for their victories.

If she passes her tests, her credibility is at least as high as Lance's.

Is that approaching zero? Better hope her doctor's name isn't Michele Ferrari (Armstrong's doc who was convicted of doping).

Beryl Burton won her last time trial at 49. I do not believe she ever took drugs.

If anyone would know for sure, it is you.

Yeah, alright its what I want to beleive

IMO you just summed up the reason for the entire situation-the public wants/needs superheros and drugged up superheros are hard to market.

Burton was always an amateur and was an unknown in the UK throughout her career outside the cycling world and was never marketed by anyone.

Jeff Rubin was just on CNBC. He predicted $150 oil in 2009, $200, in 2010. He said that most Americans, especially middle/lower income range Americans, who live within 30 minutes walking distance of mass transit will be taking mass transit in 2010. He said that for every one American forced out of driving, there are 10 potential drivers waiting in the wings in developing countries.

I believe that he called for an emergency mass transit building program.

Why did "no one" warn us before now that we need an emergency mass transit building program?

Not arguing with the emergency mass transit building program bit, but why would the 10 potential drivers in the Third World be able to afford to drive a car if Americans can't? Their economies have been developing thanks to the process of globalization, which has only been possible due to access to oil at $10 per barrel.

Very cheap cars, carrying lots of people, and lots of scooters.

My third world view says that, if the price of gas is forcing Americans out of their cars, the rolling stock where I live will be falling apart. The owners of the very cheap cars carrying lots of people will be spending ALL their money on gas and have none left over for tires and maintenance.

The only time they would be happy to see Americans forced out of their cars would be, if demand destruction in the US drove oil prices down. Then....guess what?

Alan from the islands

As someone who drives a 20 year old SUV, I can tell you it's always cheaper to repair an old car than buy a new one. Americans may buy $50k SUVs every eight years but in Cuba they've been driving more or less the same cars since the embargo started in 1960. Repair is low-tech and parts are cannibalized as often as possible. Think about the savings by doing that!

Another thing to keep in mind is the scale of things. The world population is 6.6 billion. In the U.S. we have 301 million. Yes, proportionally we have more cars but there are so many more people in the world that even if a much smaller percentage of people become well off enough to afford a car worldwide, it'll swamp the U.S. in terms of sheer numbers.


Developing Economies is not the same as Third World.

Emerging-Middle-Class Indian or Chinese disposable income is (I expect) well ahead of breadline US disposable income. Anyone have data?

I think it's the owners of the oil that will be buying the most cars. Venezuela, Russia, the Middle East, etc.

...add to that tanks, ships, planes, bombs and missles!!

Look at it in a less binary way and maybe it can make some sense. After all, the real world is more analog than digital, so economists usually discuss elasticities rather than the much rarer abrupt population-wide discontinuities.

Americans (and Europeans) have had many years to incorporate lots of comparatively frivolous driving into their schedules. As costs go up, some of that will go first. For example, here and there, someone will realize that contrary to what they might wish, the odds that their cosseted little darlings will become Olympic soccer players are vanishingly small, so that in truth there is no need to drive them halfway across the state every week in order to find worthy opponents. Someone else will realize that, gee, it isn't worth driving an extra 30 miles a day to make an extra 15 cents an hour. And so on.

However, new drivers in developing countries will tend to start off with the most valuable or essential driving, as happened in the West when cars first entered general use. They might be able to take a job that is dramatically rather than just trivially better than what they have now, or to make an occasional family trip. So they might well be able to afford to add some, limited additional new high-value driving, even while Americans (and to some extent Europeans) might be feeling pressure to cut back on the hyper-abundant fluff. And there are a lot of people in developing countries, so per-capita, they really only need to drive a smidge more to offset a lot of American (and European) fluff-cutting.

IOW, as things unfold, the movement of conservation up the food chain may be more complex than Westexas' mantra of geometric price increase would suggest, because the value of miles driven (and other energy uses) varies all over the lot...

The one that drops will not be from the same economic statum as the ten that are added. The BRICs have a rapidly growing middle class. America has a shrinking middle class. I don't think it is a stretch to believe that BRIC countries (which have ~10x the population of the US) will add same percentage of new drivers as the US loses, at least until the US-spawned global financial meltdown hits the BRICs like a, well, brick.

My guess is that melt down could happen soon, but my guesses haven't been so good lately. I thought the sequence would be (1) financial melt down, (2) peak oil, (3) climate change/water shortage.

So for every 1 American that keeps driving we are keeping 10 potential drivers off the road?

Drive on dudes!

Here is the Video link to Jeff Rubin's interview


Bush and Cheney are "oil men" of course, not "mass transit men". I wonder if they've actually ever ridden on a train or bus ever. Maybe not.

A Voluntary Evacuation

I live about 200 miles north of San Fransisco in Mendocino County which is mostly rural and lightly populated. Last week a lightening storm occurred which started over 150 wild fires. This included one a few miles from us that has probably burned a thousand acres or so to this point.

Yesterday, the sheriff was driving around handing out notices that people might want to consider voluntary evacuation because one could be mandated if things got worse. Now, this was mostly a CYA move on the part of the county but it struck me that this notice is similar to what we TODers having been trying to get people to understand about peak energy, peak water, peak food, et.al.

It is somewhat easier to make necessary changes such as ELP now. However, people who delay making these changes will eventually face a crisis where rational action becomes difficult and, in some cases, impossible.


BTW, the fire appears to be moving away from us so we should be alright.

I'm going to the Kate Wolf Music Festival in Laytonville tomorrow---
Any news from that area?

Hi Hightrekker,

I live about 8 miles or so north of Black Oak. There are two fires a few miles north of me: one is probably 1,000+ acres on Red Mountain and another one that looks like 4-500 acres just southwest of it, sort of between Cummings and South Leggett on the east side of Hwy 101. There is tons of smoke!! It's 77 degrees and somewhat humid (2:55PM). There are no fires near Black Oak itself.

I don't see a problem for the festival. But, they are predicting around a 20-30% chance of thunderstorms Friday night through Sunday night. This could mean even more fires and a wet night for you if you are camping there. You might want to check out http://www.wrh.noaa.gov for an updated forecast.


Thanks Todd-
Thins are chaotic in Norther Cal at the moment.

So far, the air quality reports for Laytonville are "moderate air pollution". The bulk of the smoke has been further south, in the Ukiah Valley, where air quality is "unhealthy". The air gets better after you cross Ridgewood Grade, but conditions change from day to day. Today has been the most overcast, but the smell isn't as bad as it has been.
There are still 87 fires in the county, some not being fought yet.

Looks like high gas prices are starting to get enough attention that Ohioans are at least contemplating changes in transportation infrastructure.

Ohio's future transportation system may involve less focus on highways

Ohio's transportation emphasis will shift from highways to more public transportation if some Ohioans have their way The state has formed a task force that is holding public hearings across Ohio to help shape the state's transportation future. Last night, the task force came to Cleveland.

The Hawaii video was fascinating-they are doomed. Someday they will pay $8.50 a gallon for milk like the lucky residents of Toronto who are not stranded in the middle of the gigantic ocean.

It is kind of scary. Even though it's not unexpected, I find it unnerving to hear that a jar of peanut butter is $8 in Hawaii now, or that American Airlines will no longer be serving Albany, NY. They're signs that our way of life is really going to be changing.

We're paying something like $5 or more for a small jar of PB. We pay about $1.80 a liter for milk. I buy about a quarter or third of a loaf of wheat bread for about $1.90. LPG is over a dollar a liter... Costs me over $40 to fill up for LPG!!! Not gasoline, LPG...


I see Hawaii as a microcosm study of the unraveling of globalization that will hit all continents soon.

All countries will be forced to look at their neighbors and their proximal locale in a different and more meaningful fashion.

On the local news last nite, they noted that the inter-isle airfares, which have recently been low due to fare wars, are now climbing. A year ago you could get fares are $19 each way, but as of yesterday a RT between oahu and an outer island would set you back $280 on Hawaiian, plus a second bag charge.

Within a year, things may be quite tough here in terms of unemployment due to lots of business models crashing.

$8 for a jar of peanut butter strikes me as a bargain.

$19 is ridiculous-a RT cab/limo ride from downtown Toronto to the airport is $110.

Agreed, ridiculous... and they got down to $9 actually. Just trying to drive one another out of business. Though some of the $19 fares were no bargain; the Mesa air pilots fell asleep twice in a week and overshot the islands significantly.

And to also take in the comment below about SuperFerry, they're running a promo $100 RT now, but what you'd think would be more economical may not be: the vessel uses jet fuel and turbine engines to make the trip in 3 hours, so the drag penalty is considerable - I wonder whether it's actually much more fuel-efficient than the Boeing 717's Hawaiian flies. There is also reportedly a high puke factor.

There will be a niche for a turboprop airline, for awhile. Be interesting to see who starts one. Hawaiian would be smart to do it rather than waiting.

In the long run, SLOW boats will be a quite economical way to get from one island to another, but that'll require a changed mindset.

Air planes are nice but ships are cheap. $280 for an interisland flight ... or ride the ferry? I'm sure there will be plenty of small boats making runs as the planes stop ...


SCT, I came across this on a new process to produce ammonia borane the other day, and thought it might be of interest to you:

Nope, this is a distraction - expensive, hard to make, hard to handle, and a darling of the DOE. I asked those in the know and they shouted it down :-(

I just read that the Gov of Hawaii intends to veto The Right To Hang Clothes bill that would allow condo and townhouse owners the legal right to avoid the $.30 plus kilowatt/hour cost of using a clothes dryer at the expense of Condo Assoc. rules demanding proper appearances as a priority. A void in leadership to the very sad end.

Now that is sad.

In Ontario, Canada, our provincial government recently did the opposite, overruling stupid municipalities and neighbourhood covenants, giving everyone the right to hang out his or her undies.

It has been fascinating on the local news watching people try and spin the end of American in Albany as a good thing, because it opens up more potential ticket counters for other airlines who will want to bring air travel to Albany.

Ummm...yeah. Sure.

As for the shock, I think a lot of people who have been prognosticating for a long time are a little shell-shocked. It isn't that we weren't doing the best we could, but it seems strange (and sad in many ways) be right so fast and so hard.


Not sure if your mental picture of Canada is of frozen tundra and igloos or something like that but Toronto actually has a reasonably long growing season from April to October with summer temperatures that often hit 90 deg F and as a consequence is surrounded by lots of fertile farmland complete with many dairies much the same as northern US cities like Chicago. Ontario also runs most of its electric grid based on nuclear power produced by a nationalized utility using Canadian developed and owned CANDU technology with uranium mined in Saskatchewan so staying warm in the winter months shouldn't be a major issue.

Not sure if your mental picture of Canada is of frozen tundra and igloos or something

You mean like this?



Ontario Power (formerly Ontario Hydro) gets about 30% from hydro. Current generation by source is on-line at


They are building the world's largest diameter tunnel, 14.5 m, to get more power out of Niagara Falls. Less power lost in resistance and greater flows to the power plant during peak water flows. 1.6 TWh or 1.5% of total Ontario demand from this new tunnel.

Best Hopes for Ontario Hydro,


McCain's Energy Plan: Correct Diagnosis, Killer Prescription
John McCain seems to have identified our energy problems accurately. But are his solutions equally laudable?
June 26, 2008 - by Jérôme Guillet
With gas topping $4 per gallon and oil prices seemingly reaching new highs every week, more pain at the pump is certain in the foreseeable future, and energy policy is rightfully claiming its place as a major topic of the 2008 election. Indeed, John McCain gave a major campaign speech earlier this week in Houston specifically on energy (the full transcript can be found here) and addresses the issue again this week in Santa Barbara. It is worth looking in more detail at how he describes the current situation, and what he is proposing.

Note: the full version of this text, by our very own Jerome a Paris, will be posted in full on TOD over the week-end.

I'm pretty impressed with McCain's statement - it at least touches all the right bases, although maybe the strength and mixture need adjusting.
I haven't bothered following closely, but mainly what I hear of from Obama is yet more subsidies for ethanol.

The good thing about McCain, and what some have called flip-flopping, is that he is not afraid to change his stance unlike Bush who will not change his mind if his life depended on it.

McCain is not an idiot and if finds something that is an immprovement of his previous thought, he will use it. That's OK with me. I like my humans to admit when they aren't perfect.

Either way, McCain or Obama, we will be better served. I really don't care about party affiliations. I just want someone that can actually help our approaching situation.

As I said yesterday, what I find most interesting is that McCain has apparently decided that "It's energy, stupid." His campaign thinks energy will be far and away the only thing that matters by November. So he's taking some chances - risking the ire of Californians with his call for offshore drilling, giving speeches in support of nuclear power in the state where Yucca Mountain has been so controversial - hoping it will pay off by Election Day.

If McCain continues to oppose ethanol, he will lose in Iowa and other Midwest ethanol producing states.

He is managing to offend nearly everyone. What is his strategy?

IMO he doesn't have one. At least one that makes any sense.

Yeah, he seems to be basing his statements on what he thinks is best for the country.
What kind of a crazy strategy is that?
He is also undoubtedly guilty of having got older as the years roll by - let him try to talk his way out of that one!
At one stage I thought he was the one most likely to get us blown up, but Obama's 'Israel, right or wrong' sycophantic support is starting to make me doubt that.
He is also a genuine military man - they tend to hate war, and avoid it if at all possible, unlike a recent draft-dodger in high office.

Genuine infantrymen hate war. Genuine fighter pilots love it. Genuine bomber pilots worship it as a solution to all problems.

As an A-4 pilot, McCain should be somewhere in between the fighter guys and the bomber guys.

The only antiwar combat pilot I ever saw was George McGovern.

Somehow I think his stay in the Hanoi Hilton probably took the gloss off of any lingering romance he attached to war.

Or it made him believe that America had the right to destroy anyone who got in its way. I haven't seen any evidence that he believes in co-existence with anyone. You hit me, I hit you back harder, ad infinitum.

I've seen him sing "Bomb, bomb, bomb,...bomb, bomb Iran..." with a big goofy smile on his face. So I don't by the notion that his experience in Viet Nam sobered his affinity for combat. I'm afraid it may have done the opposite.

The great tragedy is that GWB was the Republican nomininee rather than McCain. I suspect that McCain would have been quite a bit less gung ho about barging into Iraq, and he certainly would not have been so stupid as to go in with no plan.

I am afraid that he is well past his sell by date now, unfortunately.

The man spends 10 years trying to become President.

The man spends 10 years bashing Ethanol.

The man knows he has to win Iowa, Missour, Indiana, and Ohio to win the Presidency.

The man knows that ethanol is very popular in Iowa, Missouri, Indiana, and Ohio.

The man is, simply, Too Stupid to be President.

Maybe he isn't trying to win. He could be setting Obama up to be the next Hoover.

That's clever.
The Presidency will be the proverbial poisoned chalice, no matter who wins it.

I wonder what this means for Artic Oil?

"Study finds Arctic seabed afire with lava-spewing volcanoes"


"The team explored the volcanoes last summer as the Russians were planting a flag on the nearby sea floor triggering an international flap over ownership of the seabed."

"...his crew of 30 researchers from the U.S., Europe and Japan chuckled over the "grandstanding" as the Russians rumbled by in their icebreakers."

This could explain reported rises in methane levels over the Arctic Ocean.

Re: Decline rates above: How did i miss these numbers? Anyone got a link to them?

Statistics put out by the IEA and published by the Oil & Gas Journal (4/7/08) indicate that non-OPEC decline rates averaged 7.7% for the period 2000 - 2007. The IEA also said that the decline rates over that period did not “accelerate markedly” which suggest some growth but not much - at least to me. That covers fields with consistent declines for at least 12 - 18 months. For all non-OPEC fields - those in decline and those not - the IEA estimates a decline rate of 4% - 5%. Interestingly, that is a fairly large range amounting to 860 kb/d, or equal to all the growth in new demand that is projected for 2008.

...The Middle East. They were about 3% in 2000 and had risen to about 13% last year.

Is anyone clear on whether "decline rates" means, generally, all fields or does it apply only to declining fields? I mean, if the ME and OECD are declining, mustn't the entire world be declining? I am obviously missing something here.


Here you go:
EIA - Appendix G-Projections of Petroleum and Other Liquids Production in Five Cases Tables (1990-2030)

I didn't look closely at their definitions and so on, as their figures seem to be pretty much the usual twaddle, although one set does show a peak in 2010, by and large they still seem confident on bringing the oil fields of Titan on line shortly.

IEA only estimates decline rates for OECD countries. The reason for that is simple: OPEC countries do not have (cannot have) decline rates.

It is really a total mad situation: All oil exporters in OECD have proven decline rates, it is internationally audited. But only in OPEC countries in the middle East, the "proven" reserves are STILL going up! Perhaps the reason for that is, that they have ALLAH, who protects them from depleting.

"Is anyone clear on whether "decline rates" means, generally, all fields or does it apply only to declining fields?"

The text you quoted gives a decline rate range for all non-OPEC fields, 4-5%. That's in line with CERA's assumed overall aggregate decline rate of 4.5% (they include OPEC).

Remember the CERA decline rate study from January?


They note that "The aggregate global decline rate is 4.5 percent, rather than the eight percent cited in many studies, based upon CERA’s analysis of the production characteristics of 811 separate oil fields." That eight percent from "other studies" looks like it could be the 7.7% from IEA. CERA/IHS comparing apples and oranges?

As an aside, it's comforting to know that "Only 41 percent of production is from fields...that are beyond the plateau stage and into the decline phase of their production lives." Since we need to, and by extension, will produce an extra 30+ mbpd in nine years just to offset depletion, we can only expect to see that percentage drop.


"The aggregate global decline rate is 4.5 percent, rather than the eight percent cited in many studies, based upon CERA’s analysis of the production characteristics of 811 separate oil fields."

This is exactly my point: if there were an aggregate decline rate globally, production would have FALLEN by that 4.5% and would not have set new highs this year. So, I'm asking.... how the hell do you have a global decline rate but claim production is going up?

I want a NET number: what is the true production when you take all production together: if we set new highs this year, we cannot be in decline. Period.

So, the "decline rate" can only apply to declining fields. Thus, it is NOT a number that is a percentage of ALL fields and ALL production...

What the frick is the net?

So, I think it would be useful for people to be clear that decline is only from fields currently in decline. The PROBLEM here is, is 4.5% for those fields, or does the decline rate equal 4.5% of TOTAL production?

I'm sorry if this seems elementary, but it seems different things are said at different times. Maybe I"m just being thick, but...


Westexas notes below, "And of course, any field in production is depleting. Production can be increasing, be stable or be declining, but depletion marches on, no matter what the production rate. Matt Simmons defines the gross production decline as the decline rate from existing wells. The net decline is gross decline + new wells and workovers, etc."

I was actually going to suggest something like this originally, but wasn't sure if it made sense.

E.g., last year you produced a record 10 Mbpd. This year you produced a record 11 Mbpd. If the depletion rate averaged 10% during that period, you needed to pump an extra 2 Mbpd instead of 1 Mbpd to reach a new production high.

Take what I'm saying with a grain of salt, though.

Did anyone catch on CSPAN yesterday the BP 2008 Statiscal review of world energy by one of BP's energy economists(forget his name, but Amy Jaffe was hosting for Rice Univerty and Brookings Intitute)? I found it pretty fascinating and liked that it covered all forms of major energy supplies. Some interesting tidbits for me:

- Nuclear. Out of the 400+ Nuclear plants in the world...there are currently only 7 new plants beginning construction. Additionally, the older plants (not sure the #) are reaching a stage where they will need to be decommissioned. 7 plants are currently being decommissioned.

- Renewable. Renewables are growing significantly, about 30% a year...but still only make up about only 1% to total energy supply globally.

sorry if this is old news (the bp statistical review)

Here is the link...see presentation (slide and speech) as this was what was on CSPAN


This macro view of energy is seldom discussed by the media. Many industries grow at a 30% rate when they are tiny.

I couldn't spot those figures on nuclear plant - thanks for the link, BTW, but this link perhaps gives a fuller picture of what is happening in the nuclear field:

Yes..the info on the nuclear info (plant commissioning/decommisssioning) was presented verbally by the BP econonmist.

In round numbers, from fossil fuel + nuclear sources, worldwide we burn through the energy equivalent of about one Gb of oil every five days. We burn through the equivalent of Prudhoe Bay about every two months (from fossil fuel + nuclear sources).

Louisiana signs \"non-corn\" ethanol bill into law: efficiency and sustainability boost to industry

Louisiana's governor Bobby Jindal has signed into law the Advanced Biofuel Industry Development Initiative, the most comprehensive and far-reaching state legislation in the United States, enacted to develop a statewide advanced biofuel industry. Louisiana is the first state to enact alternative transportation fuel legislation that includes a variable blending pump pilot program and a hydrous ethanol pilot program. The initiative will also give an efficiency boost to the ethanol industry in the state by supporting high yielding non-corn crops.

Read sugar cane and sweet sorghum. We grow some corn here, but it is exported (close to the port) and corn is not as powerful as in Iowa, Illinois, etc.


I suspect Verenium is a player in this development.

BTW, Alan what's the area around Jennings like ?

I was minutes before AD's post
doing a Google maps search on
(Jennings La)Verenium and cellulosic ethanol.

Still looking for a new state residence after my HVAC/R
graduation of 12/08 ;)

Acadiana (Cajun Country), halfway between Lafayette & Lake Charles on I-10 (probably just a bit too far inland for storm surge), residual oil & gas production, agricultural economic base. Flat, green, hot & humid in the summer, mild winters (some freezes, winter low of 30 F or 27 F).

Depends what you are looking for :-)

Best Hopes,


Cane sorghum is way more efficient, but try and do anything with it and USDA changes the game plan on you half way through the project. I know someone working in the field and they're totally frustrated with it ...

Could it be that they want Sugar Cane Ethanol ?


Unfortunately there's no easy answer to what "decline rate" means. You'll have to pick apart every statement to learn what they mean by "dr". Every field in production is in decline even if it's still producing the same daily volume as it did the first day of life. Each field has an ultimate recovery thus every bbl produced pushes it closer to depletion even if the rate remains unchanged for a period of time. Part of what I do is estimate recoverable reserves. A field that appears to have 10 million bbls recoverable might produce 1 million bbls and not yet show a drop in rate. Another might show a very dramatic drop.

Complicating "dr" even more is when it's applied to a company, a country, a particular play, etc. A company may see a decrease in its existing fields drop 10% in a year but may also drill new wells that add the same 10% back onto their cash flow. Thus they'll report that the company's production has seen 0% decline. And it gets even more murkey when you look at a country like Saudi Arabia. They had a dramatic decline in production during the 80's. But this wasn't a result of a decline in the ability of its fields to produce but rather a voluntary cut back due to lower demand.

And that brings us back to one of the biggest question of the day: Is Saudi depleting, holding back production for stratigic purposes or are there limitations in their production infrastructure causing a decline in their ability to handle all the oil they are able to produce.

Don't get frustrated. I do this for a living and half the time I'm not sure what some of the pundits are trying to say with their "decline" statements.

And of course, any field in production is depleting. Production can be increasing, be stable or be declining, but depletion marches on, no matter what the production rate. Matt Simmons defines the gross production decline as the decline rate from existing wells. The net decline is gross decline + new wells and workovers, etc.

ExxonMobil puts the gross decline rate from existing wellbores worldwide at between 4% and 6%. Some sources put it higher. If we just assume 6%, we need about 4.5 mbpd of new crude oil production every single year--a new Saudi Arabia every two years--just to maintain flat production.

...gross decline rate... If we just assume 6%, we need about 4.5 mbpd of new crude oil production every single year

Once again, if we get that 4.5 mb/d, then we aren't declining. This is where the clarity is lacking. Is that a % of the production of declining fields or of total production?

I suppose I would hope for something like this:

The decline rate from fields currently in decline is 4.5% of total production for the previous year. New production last year equaled a five percent increase from the previous year for a net increase of .5%.

I suppose that is asking to much...

Good enough would be to know for certain that "decline rate" equals decline as a percentage of global production.

Let's assume that you have 100 wells producing on January 1st, with each well producing 1,000 bpd, so have have 100,000 bpd of production. Over the year, these wells declined by 5%, to an average of 95,000 bpd. This is the gross decline rate.

But you add three wells producing an average of 1,000 bpd each, so your total production during the year 98,000 bpd.

And your net decline rate was 2%.

Worldwide, if we assume a 6% decline rate from existing wellbores, we have to add an average of 4.5 mbpd in new crude oil production every single year, in order to maintain flat production.

Right. This all makes sense. I understood all this before I asked the question. My actual questions is: can we get people to start speaking/posting in terms of gross and net decline rates? All you ever see is "decline rate." Of course, we can assume it's a gross vs. net when the numbers for total liquids are going up, but at some point they won't be. And for specific liquids, they are already in net decline... at least temporarily. Light sweet is likely in net decline, no? C+C, too, no?

Just looking for a little clarity in the dialogue. When things are getting hot and heavy it's easy for misunderstandings to occur. Worse, we all know there are less-than-honest actors out there that seize on every little misspoken word to claim all is right with the world.

Thanks for your time and attention, folks,


Rockman, could you hit Reply rather than Post Comment when responding to someone, so the posts go into the same thread? Otherwise it's hard to see which post you are responding to.

Thanks martinw. I wasn't sure how that worked

I think we have a new record on the Nymex: looks like it just topped $140 before it backed off a bit.

Looks like it just broke $140... So, doesn't that mean it's time to get a new poll up since the old one has now been fulfilled?

What highways will resemble post-peak

Seeing as though I just started my summer vacation, I was out at a friend's camp, in a rural-esque area of the city. Since I'm an avid cyclist, naturally I decided to bike there.

By the time I headed home, roughly 2:00 in the morning, the ride back proved to be really eerie--a possible glimpse into what the roads will look like in the near future.

The trip back was a little more than twelve kilometres, taking 26 minutes. It started in a rural area, with hardly any lighting (no houses near the road, no light standards). I had a small, one-watt LED light on my bike. Suffice it to say, you cannot appreciate how amazing car headlamps are until you do without. Travelling on a bicycle, easily reaching 30 km/h, with nothing more than a small lamp pointing the windy road ahead is a scary feeling.

As well, this trip took me on a route that made me realise that our roads are high-maintenance. Multi-tonne vehicles pounding the asphalt and freeze-thaw cycles are relentless in their damage to the roads. The roads I travelled were low-traffic, thus poorly maintained. It was treacherous on my road bike, with gravel scattered everywhere, huge gashes and potholes lay in the road ahead.

These unilluminated, poorly maintained roads, likely to become commonplace in the future, pose also another threat: when you're not in a metal cage, you are subject to many more risks, such as wildlife. In the back of my mind during much of this trip was the threat of black bears, which can easily travel 50 km/h and spontaneously attack humans if you smell of food, or inadvertently threaten the bear's young.

However, the most eerie part of the trip was not these back-roads. I travelled on a major highway which is usually packed with traffic. It was near lifeless. Over 5 kilometres on this highway, I encountered two passenger vehicles. At times, there was no traffic on this four-lane highway as far as the eye could see. Albeit, I later ran into eight or so transports, rattling by in the early morning.

What's the point of this long, seemingly pointless rambling? Well, I just finished reading Last Light, by Alex Scarrow, a novel portraying a world post-peak or affected by an oil shortage. Yet the scenario it depicts is terrifyingly plausible.

This cycling trip in the early morning evoked a very eerie feeling, almost indescribable. The lifeless highways, and the lack of fossil-powered transport were remarkable. The parallels between the world depicted in Last Light and the situation I encountered were astounding. If you want to feel what highways will be like post-peak, then I highly suggest taking your bicycle out for an early-morning ride, and observe your surroundings. If nothing else, cycling at night is a great opportunity to reflect about the world around you.

Anyone have a link to that fictional account of life in the 12 months or so after a severe disruption in oil supplies from the Middle East? The guy chronicled the changes he saw as he rode his bike back and forth to work.

Sadly, I haven't heard of that. Is it a blog post or article, as opposed to an actual novel?

But I'd definitely be interested in reading that because I find that cycling is the best time to reflect about anything and everything, and you are so much more observant whilst cycling than in a car.

Sixty Days, Next Year

I think it was actually posted back in 2003.

Bingo. That's it. I'll bookmark it this time.

July 21
The car dealers are just barely hanging on--selling only the smallest cars they have and giving just about zip for any larger trade-in. The real money makers right now are real estate agents--putting people in houses closer to work! (Whooda thunk it?) It's like a giant shell game all over town, with everyone trying to move closer to work. I'm ok where I am--I've got my daily pedal down to about thirty minutes. Not bad, for a newbie. Now if I could just figure out the best way to ride out to a movie theater.

mcgrawj -

Supposedly there's a partially completed section of highway (2 or 4 lanes I'm not sure) somewhere in Pennsylvania that runs for several miles and doesn't link with any other roads that are in use - I think you may have to mountain bike to get to the "section to nowhere". Cyclist use it as a safe haven without traffic concerns.

If I remember correctly I read about it in Bicycling magazine - my first thought was that riding that would be a preview of what it would be like to bike in the post-auto era (minus any accompanying chaos, of course).

Hard to imagine how one could get heavy construction equipment and materials out there.

It would surely interconnect with another highway (unless it was on an island) and starting from the existing ROW would be MUCH easier re: equipment & materials.


Somewhat related, there's a small convoy trying to get from Michigan to Iowa to deliver concrete for a wind turbine project. They've been stuck in Peshtigo, WI for 10 days, passing time until the bridges in Iowa can be approved for their loads. They're told it could be another 10 days before they can deliver the material.


A stretch of little maintained road got some attention because a big shot lived on it, but then the feeder roads to it did not. Highways 32 and 68 in northern Massachusetts are like this - mottled, multicolored modern art masterpiece highways that jolt and rattle one, and then curious smooth strips with the rough stuff on either side.

I have a tiny, fuel efficient car, but I suspect I'm going to be missing my Jeep before too long as things get tougher. The Ford Escape would appear to be the very best hybrid to own for the sake of business continuity.

well, actually very close to my home, they are building a new, four-lane, controlled-access highway from my city in Northern Ontario to Southern Ontario.

There's a section with lights, an interchange and all built around 5-6 kilometres from my place. I think the stretch is at least a few kilometres long, but I don't know if it's paved yet (I never go in that direction, and it's off of the old highway.

If it's paved now, then it would be just like that 'section to nowhere'. And seeing as though this highway project isn't slated to be finished till between 2012 and 2018 (or never), this may become another 'highway to nowhere'. I'll have to go cycling around there sometime and see if it's paved... it would definitely be fun to see that highway, and at night it would be even better.

and, yeah, another thought I got while biking this morning was along the lines of: "Everything is so calm, eerie yet peaceful. If I see this same scene after substantial pain from fuel shortages, etc., how peaceful will everything be?"

This is probably what you are talking about:


(From the above linked wiki article) "Pike 2 Bike." I like that! Much better than "Rails to Trails." Keep the railways and convert the highways to bikeways.

Heard on CNBC about an hour ago - one of the show hosts asking another who has apparently been around Wall St. for quite awhile how the mood today compares to other sell-offs.

Her reply was that she could definitely feel the mood turning to where there could be "blood on the $treet..."

She also said re: The Oil Crisis that she got the impression that it wouldn't be long before Americans were willing to "throw Bambi under the bus" to bypass "strict" environmental regs that prevent using heavy sour crude. To paraphrase her - once gas prices get high enough people will be willing to sacrifice environmental concerns.

Minor concerns like breathable air I suppose - so we can keep on motorin'

My overall impression was that they were all a bit rattled by today - and that was before the market lost it's final 70 points right at the end of the session.

Well they might better get used to the blood, because there's gonna be a hell of a lot more of it.

You have this incredibly bloated fiancial sector. A year ago financials constituted 25% of total market cap. Historically they have amounted to only 2% or 3%. They have fallen to 17%, but they still have a long, long, long way to fall.

Meanwhile, the energy sector shriveled up to where it represented less than 10% of total cap.

My prediction: By the time this thing is all over, it is energy stocks that will constitute 25% of total market cap, and financials will fall back down below 5%.

Just imagine how incredibly perverse things had gotten, where the productive sectors of the economy were dwarfed by non-productive sectors like banking and finance.

Finance is productive, it just has to be proportioned right. If you want to build something and not pay cash up front ... well ... do you have another means besides that one?

The 25%/5% turn around sounds about right ... lots of out of work bankers are what we need after the current debacle.

Hello TODers,

This is bad advice from 'US News & World Report', IMO, especially if gasoline, food, heating oil, etc, continues to rise at a fast clip:

Tips on Selling an Unloved SUV

...Wait for winter:

If you can, wait to sell your SUV until winter, when people are more apt to invest in four-wheel drives and bigger vehicles. "There will be an uptick in buyer interest in SUVs as we approach winter," says Jack Nerad, executive editorial director for Kelley Blue Book. Even with gas at $4 a gallon, Nerad says, "hanging on to your current vehicle and riding out the current gas prices could be the most economical answer." If you've got a four-wheel drive, it makes sense to wait, Vander Baan says. Right now, "it's the shock in the run-up of the gas prices" that is keeping people from buying SUVs. "Later in the year, it will have diminished."
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?

When they can't sell their SUVs in the winter, I wonder how many more people will sign up for the rotisserie program:

Debt-weary SUV owners contacted the finance manager, hoping to trade in their gas-guzzler for something cheaper. They were then put in touch with an arsonist who told them to leave the keys in the ignition and $300 cash in the glovebox. An arsonist would then take the car to a remote location and set it afire. After the car was torched, the owners would then contact their insurance company and report their vehicle stolen

They must have weird insurers in the US.
Don't try this in the UK - the price you get will be based on what they reckon you would have got for a trade in.
The only way you might come out ahead is if the manual they use is out of date with current prices - they usually use Glass or Parkers.
You might eventually be able to get a bit more if you could show they gave you under the specified value there, but they are likely to fight it, as believe me they are going to be very suspicious about any gas-guzzlers that get burnt out.

It might make sense to track the costs that these arsonists charge, as ignition materials inevitably follow oil trends.

Don't try this at home, kids. If an SUV burns these days and you aren't right there in traffic when it catches the insurance company will send it to your local police for an arson investigation and they'll hold your payment.

This was a cottage industry right when the troubles started, say 2006, but its time has passed. Perhaps the next move will be Earth Liberation Front kids just picking machines at random and clearly marking which ones they've tended to???

Any chance the airline industry might try this?

Seems unlikely - planes operate in a pretty tightly controlled fashion. I recall a nice Google Earth file post 9/11 - many, many commercial airliners sitting idle in the desert. I just spent some time with Google and I can't find it now ...

Try here

lots of pretty aircraft, all in a row. there are more elsewhere certainly but a good number are here.

Hey! Thats a great idea and when the Mcmansion is repossessed the SUV is big enough for the whole family to live in. Plus the commute to work, assuming the parents still have a job, will be really short. All they have to do is find the closest sheltered parking to the office. Better yet, sleep in it in the parking garage overnight!

Alan from the islands

Economists at the investment bank predict that motorists will see the price of gas rise to $7 per gallon within two years, a 75 percent increase.


That is the in-house TOD economist. Leanan has him on retainer.

You mean, she found the sensible one?

Rubin has really taken this ball and run with it-I guess he is given a bigger leash than most MSM economists.

Hello Jmygann,

Thxs for the link. At $7/gallon--even a small ICE scooter will probably get too expensive for many to buy, insure, and fuel up. But in the meantime:

Scooters zipping off lots

At Motorsport Scooters in North Park, owner Alex Cohn said he has sold out his entire inventory of imported Taiwanese motor scooters – and 50 customers have put their names on a waiting list that requires a $500 deposit.
I hope many here took my advice, from a few years ago, to buy a good, used scooter while they were still very cheap. Now, the difficult task ahead will be trying to keep your scooter from being stolen!

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

I have already had one e bike stolen

Working on my 3rd EV ... Similar to these but with side by seating



Hello TODers,

Recall my earlier posts where I detailed my reasons why I think I-NPK prices will rise faster than crude prices, basically due to the double-whammy effect:

Fertiliser price rise makes crude oil blush

...An official study on price movements of select food, energy and fertilisers shows that prices of some key fertilisers far outpaced the price hike in food or oil. Prices of rock phosphate, used in production of di-ammonium phosphate (DAP) and Muriate of Potash (MoP), have shot up by a mind boggling 707.69% by April 2008 over an average of January-March 2007.

...The delivery cost of fertilisers has risen in the past one year, from anywhere between 48% to 517%. This is unsustainable for governments and farmers,” Mr Sarma pointed out.
Of course, sulfur has skyrocketed even more, as you need sulfuric acid to beneficiate phosphate rock. Have you hugged your bag of NPK today?

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

So which of these elements is the bottleneck that keeps NPK prices rising? Or is it all three?

I think I understand the phosphate situation pretty well, it seems the most straightforward; lots in the US, Russia, China and Morocco, but being mined and used pretty rapidly. The world has about 120 year supply at current usage levels.

For Nitrogen, the main source is air, processed with natural gas, which is the limiting factor.

What is the situation with Potassium? I never see this one discussed. For Sulfur, won't there be a lot available from the processing of Heavy Sour Crude?

Hello Consumer,

Thxs for responding. I think all three flowrates of the NPK Elements, plus sulfur, are potential bottlenecks because the soil ideally has to have an optimum ratio based upon soil tests and the desired crop. These elements, the soil biota, and the plant all work together in an intricate, convoluted, feedback network to make hundreds [thousands?] of biochemical compounds to result in a healthy, productive harvest.

The UN FAO report detailed the various future global flows of each Element that need to continue for the best continental soil matching:

[page 11 of PDF]

Africa will remain a major phosphate exporter and increase
nitrogen exports while importing all of its potash.

It is expected that America will continue to be a net importer of nitrogen and that the region will move into increasing phosphate deficit during the outlook period while remaining a primary supplier of potash.

Starting with a small deficit, the Asia region is expected produce a rapidly increasing surplus of nitrogen, but will continue to import phosphate and potash.

According to forecasts, Europe will be the major nitrogen and potash
exporting region in the world and will continue to produce surpluses
of phosphate though decreasingly so.

It is expected that deficits of all three nutrients will persist in Oceania.
Obviously, more detail in the report, but one also needs to consider postPeak effects that might reduce the global supply-chain flowrates, or political repercussions that might make some of the elements Unobtainium.

For example, if Oceania is a net energy-importer, and ELM collapses their economies: they won't have the money to buy hardly any I-NPK. I sure hope they are working on ramping O-NPK recycling because we have already seen weblinks that detail plummeting food-aid and I-NPK-aid programs.

Another example: Bad things happen in Africa if they cannot afford to import Potash [potassium: K], or fail to O-NPK recycle their native amounts. Having plenty of N & P on hand is pointless if your soil is at a K-Liebig Minimum--pretty pathetic plants--- and moving multi-millions of tons of potash from far-inland Canada to far-inland Africa does not come cheap at all.

As posted before: the size of the reserves is not important, the flowrate is what is key. Just like in FFs.

Recall my posting of manually extracting a 40 lb potash boulder a mile underground, reducing it to powder with a sledgehammer, then foot-hiking it to the tip of South America for a small garden in time to synchronize with the planting season. If your one person-power supply chain fails, next the crop fails, then people starve.

I suggest that we are already seeing evidence of this in some places: thus the Asian farmers rioting and/or comitting suicide.

I am obviously not a military expert, but I would be willing to bet money that Russian ICBMs are ground-zero targeted for the huge sulfur stockpiles in Canada, and the US has likewise targeted their stockpiles. The vaporization of this crucial Element has to be high on the list because this is the essential input 'Lifeblood' to fertilizer, mining, and industrial processes. Let's hope that never happens. :(

If Al-Quaeda took out the Vancouver port with some terrorist action: a possible three-for-one blow--> with FF, sulfur, and potash exports crippled for a hell of a long time, the markets worldwide would go absolutely nuts until repaired and flowrates globally restored, but I assume that the Canadian Mounties are on the job here. The Mounties are sure not going to reply here on TOD on what measures they are taking to secure these essential flowrates.

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

Looking at DIGG, the high numbers of DIGGs scored by stories about gas possibly falling to $2USD/gal, say a LOT about the mentality of the American public. Bad news is hard to swallow, but throw out a crumb of insane news that supports the status quo of 5 years ago and watch the gullible folks lap it up.

Hello Knightrd,

Yep, that link has comments that make for really depressing reading for us TODers. :(

Consider this one:

snea on 06/25/2008

I'm all for fuel efficiency, alternative forms of energy, and transportation, but if gas dropped back down to $2, I'd walk around with a boner for about a week.
Sadly, that is a one sentence summation of Jay Hanson's Thermo/Gene Collision.

Thanks for the news Leanan.

So we need a new poll already. Last time, I voted for 140 bucks before we reach... I don't remember what lower limit, anyway.

I still vote for crude oil reaching 200$ before our time measurement reaches 2009 AC, whatever happens.

As a physicist (not known at all), I also notice that a huge inertia rules among world political leaders about the issue of PO and that even though it's on the news now... well, it's gonna make the news for a long time! On the markets, higher prices are ordinary admitted to possibly be achieved quite soon, but not higher than 150 (for many among the oil "bulls") to 200 (for the mads and Goldman Sachs) dollars a barrel. I also noticed when this Backwardation to Contango phenomena appeared on the oil futures market a few weeks ago (see NYMEX and a great post from I don't remember who on TOD). Maybe on TOD too, I read the beautiful Gandhi saying something like :

"First they ignore you, then they laugh at you, then they fight you, then you win."

Beeing myself a petty member of a french important economic internet forum (boursorama.com), I have the strange feeling that someone like me, saying what I've just said about oil prices reaching 200$ soon, finds himself pretty much located between the two middle stages. Heading fast to the "they fight you" stage... still far away from the last one.

Go TOD ! We need to think non-linear now.

Chapichapo, I'm in for the poll and the non-linear thinking now. Back around New Year's one TOD post asked readers to speculate where they thought oil prices would be in January 2009. At the time, if my memory serves me right, I think I said $200/barrel. No science or crystal ball or linear thinking on my part. Figured that since oil prices roughly doubled in 2007, then why not double again in 2008.

Yes or no to $200/b before Y2-9? Sure, why not.

Hello TODers,

Recall Jeff Vail's recent keypost on the Nigerian attack on the Bongo Platform, the reduced flowrate, and how MEND is rattling global oil markets. Then extrapolate this thinking to Morocco and their huge phosphate flowrate:

Sahrawis impatient with UN, warn of "explosion"

Morocco vigilant after Spain’s Islamization fears are revealed

The Moroccan government is said to be uneasy following revealations that the current economic climate in Spain could prompt a huge influx of returning émigrés.

...Le Maroc claims if implemented, the move could affect around 200,000 Moroccans whose return home could “create a huge problem”.

Hunger Strike by Hundreds of Islamists in Morocco Jails

If you think phosphorus [P] fertilizers are expensive now, just wait until widespread NorthWest African conflict and civil wars break out.

Blowing up mining equipment, beneficiation factories, power plants, port facilities, etc, will make I-NPK pricing rise so fast that your head will spin.

As posted before: there are No Substitutes to the Elements required to leverage photosynthesis above a Liebig Minimum. Logistics is critical too: farmers must synchronize their seeding and NPK soil-prep efforts with the seasonal window to get the best results. My feeble two cents.

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

I noticed that natural gas is dwindling.
Down 15.8% from last year.

Libya seems to be looking for excuses to voluntarily cut its oil production. Perhaps Libya's oil production cuts will be involuntary.

The EIA is estimating Libya's oil production to fall from 1.74 mbd in March 2008 to 1.70 mbd in May 2008, with no surplus capacity.

Libya has a serious shortage of new oil projects to increase production. There are no scheduled upstream projects past 2008, according to OPEC

Wiki Oil Megaprojects only has one oil project past 2008, in 2009, at 90 kbd.

In 2005, Jean Laherrere, estimated that Libya's ultimate recoverable oil reserves (URR) was 40 Gb (Wood MacKenzie) and 60 Gb (IHS). Libya's creaming curves are shown in the chart below.

click to enlarge
source http://www.cge.uevora.pt/aspo2005/abscom/ASPO2005_Laherrere.pdf

My forecast of Libya below assumes two scenarios of URR 40 Gb (black lines) and URR 60 Gb (blue lines). The increase in production rate from 2003 was probably partly due to lifting of sanctions against Libya, enabling foreign oil companies to temporarily boost production.

The scenario of URR 60 Gb indicates a depletion rate of remaining reserves of 1.8%/year. This appears unusually low. Instead, my preference is for the URR 40 Gb scenario which is showing a depletion rate of 4.4%/year which is more appropriate for large fields.

Libya's recent talk about production cuts is probably a disguised warning that Libya's oil production will fall off its minor peak plateau which started in 2006.

click to enlarge

Thanks Ace, very informative.

I'd have given that up arrow a couple more clicks if I could :-)

ace...I gave you another rating +1...you always deserve it.

What freaks my cheeks is how all these countries/fields can be peaking so close in time to each other (Mexico, Russia, Libya, Venezuela, KSA?). It really looks like this is happening now, but how can this be?

It sort of makes sense when you see this chart.

Is it just me, or did today feel like we crossed a threshold of new uncertainty. It wasn't just the 140 level, but a resignation by the financial markets that everyone is in unchartered territory.
I think the smoke and fires in Northern California also added to the mood.

Cowpoke posted an excellent video w/Kunstler in Wed. DB.
This begs a larger audience.
I haven't been able to peruse The Oil Drum at length lately, so if you have already done so, my apologies.

We usually do a peak oil media roundup on Saturdays. This will be one of the items featured tomorrow.


The Price Of Food: 2007 - 2008

For example wheat up 80%, eggs up 28%, corn up 47%

Hello Rethin,

Thxs for the link. Yep, things are starting to look pretty grim: more heavy rainfall across the Grainbelt, and drought elsewhere:


plus Mexico is even worse:

...President Felipe Calderon says the poorest citizens in Mexico, where the minimum wage is 52.59 pesos ($5.11) a day, are suffering the most as inflation accelerates, especially for food.

Record grain prices have had an outsized impact on Mexico because the country imports so much of its food, said Merritt Cluff, a senior economist at the United Nations Food and Agriculture Organization in Rome.

``Mexico prices could go up a lot more this year,'' he said at a conference in Mexico City this month.

Grain Imports

The cost to import grains soared 62 percent to $1.6 billion in the first four months of the year, according to the national statistics agency.

Hello TODers,

Uhh--anybody notice the price of crude? Is it gonna reach $145 at tomorrow's close?!?

Hello TODers,

This is a fascinating article:

Supply on demand

Buyers like China are bypassing commodities markets altogether and going right to the source

..."They didn't care about the price," the oil executive says. "All they cared about was locking up the supply."

...These kinds of deals are suddenly everywhere, to the point that some energy and mining bosses think that the whole concept of open and transparent global commodity markets, where the highest bids get the shipments, is coming to an end.

...The off-take sweepstakes may just be getting started. Other commodities, including liquefied natural gas, rice, wheat, fertilizer and water, may be the next lock-up targets. Sovereign wealth funds from China and the Arab world may wade into the game. Inevitably, more and more commodities will be taken off the global markets. At some point, the Americans and the Europeans will realize that paying market prices alone is not enough to secure supplies. As more supplies are locked up, geopolitical tensions are bound to rise. What can't be bought might simply be taken by force.
Bob Shaw in Phx,Az Are Humans Smarter than YEast?


I agree--a very interesting article.

There's a new day dawning around the globe, and unfortunately the United States is just now waking up to the fact.


Actually, these "vested interest" deals are not new although they are perhaps becoming more common or perhaps just more noticed by the public. Almost 10 years ago China paid over $200 million dollars for a field in Venezuela that was producing only 200 bopd. But similar fields in the country had been redeveloped and were producing 40,000+ bopd.

Along those lines I saw one news spot that I've not seen repeated elsewhere: China was evaluating the economics of constructing a crude oil line from the Canadian tar sand fields to the Pacific coast. The benefit to China of such a symbiotic relationship is obvious. And for Canada it would allow a broader market for the synfuel which is just good business sense.

There have been some rumors that the US would try to somehow unify Mexico, Canada and the USA with one currency called the "Amero". The rumors haven't made it clear how this would happen (militarily or otherwise). Yet it seems quite plausible that the much discussed and anticipated and also dreaded attack on Iran by the US could be combined with this Amero thing and both sold to bolster "security" or "energy security". Some people are saying this Amero scheme will definitely happen in the second half of 2008.

I suppose the Chinese would then NOT get any of the oil from the Canadian tar sands or Iran.

Has anyone else heard about the Amero idea?

Why would the Canadians sign on? Seems like there is nothing in it for them.

I assume the benefit stressed to Canadians would be increased access to the USA-either as an employee, investor or retiree. Canada is a great country, but if you are not into cold weather, it is not for you.

Wow. Didn't see THAT coming. Anyone see this info as a de facto declaration of war? How does this not lead to conflict with major players all making secret deals to get the energy? The markets become meaningless and useless, no? That leads to greater uncertainty, greater instability and direct competition over resources as opposed to market-based competition, no?

We are one giant step closer to things being FUBAR.