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DrumBeat: July 9, 2008
Posted by Leanan on July 9, 2008 - 9:07am
$4 gas helping revitalize small towns
THOMASVILLE, Ala. - Residents in once-sleepy Thomasville have started complaining about traffic jams on Route 43, which runs right through the town.Much of the new traffic is coming from shoppers, squeezed by $4-per-gallon gas, who are staying closer to home instead of driving 100 miles each way to the nearest malls in Mobile or Montgomery.
"I just don't drive as much," said Herman Heaton, a 72-year-old retired lumber mill worker, leaning against a Chevy Silverado pickup that now costs him $80 to fill up. "We don't go to Mobile as much as we used to for shopping." Heaton said he now spends about $600 a month on gas, about 10 percent of his income and about double what he spent last year.
So now he says he's shopping locally.
Lula May Increase Brazil's Oil Take as Tupi Spurs Rules Review
(Bloomberg) -- Brazilian President Luiz Inacio Lula da Silva may boost the government's stake in oil fields after the largest discovery in the Americas since 1976 prompted a review of rules for how petroleum deposits are developed.Lula is examining how Brazil and producers will share revenue from offshore deposits that may hold more than $6 trillion of oil at current prices. Lula said the Tupi discovery and nearby prospects will at least triple Brazil's crude reserves, and he wants the wealth to be shared nationwide.
OTTAWA – Soaring oil prices are proving too much of a good thing to energy exporting Canada and the high price of crude has started to deliver more pains than benefits to the overall economy, says a new report.An analysis by Bank of Montreal economist Douglas Porter argues that oil prices at about US$120 or US$130 a barrel have passed the ``tipping point" where they become a net drag on the Canadian economy.
Americans have spent the past year or so complaining about the rising price of everything from bread to gas, and bemoaning the ways in which it has changed their lifestyle.Now, as the reality of a down economy begins to sink in, experts say consumers are starting to embrace the simple life: staying close to home, cooking more, planting a garden and even delighting in bargain hunting. Some retailers, trying to make the best of the situation, have begun looking for ways to latch onto the trend as well.
Kazakhstan: Work begins on gas pipeline to China
Construction on a gas pipeline linking energy-rich Kazakhstan with China started Wednesday, a Kazakh construction company said.The pipeline should be completed by June 2010 and will have an initial annual capacity of around 160 billion cubic feet of natural gas, Kazstroiservis said.
Russian environmentalists push pipeline reroute
A pipeline for an oil and gas project led by Exxon Mobil will threaten endangered whales and other species, Russian environmentalists said in a letter to the company's chief executive on Wednesday.Twelve environmental groups, including WWF and Greenpeace Russia, asked Exxon Mobil Corporation CEO Rex Tillerson to consider other routes for the oil pipeline at the Sakhalin-1 offshore oil and gas development project in Russia's Far East.
Mercedes to cut petroleum out of lineup by 2015
In less than 7 years, Mercedes-Benz plans to ditch petroleum-powered vehicles from its lineup. Focusing on electric, fuel cell, and biofuels, the company is revving up research in alternative fuel sources and efficiency....Mercedes is looking into electric vehicles, both battery-powered and fuel-cell powered. Not only are models in development, but we’ve also seen the company making steps towards its zero-petroleum goal right now, from better cabs in London to li-ion battery improvements. The company also has about 100 Smart electric cars undergoing testing in London, with that favorite 2010 year as the projected market release date.
Mercedes is making serious investments, already putting nearly $4 million into the pot of its long-term Sustainable Mobility plan, with another nearly $1.4 billion going in before 2014.
Argentina's military threat raises fears over Falklands
Argentina raised the prospect of posting military forces in the Antarctic region yesterday, with the announcement of plans to use troops to defend its interests.President Cristina Fernández de Kirchner told defence chiefs that Argentina must be prepared to assert its sovereignty and protect its natural resources, as nations compete to claim areas of the region believed to be rich in oil.
Gazprom Offers to Buy All Libya's Oil and Natural-Gas Exports
(Bloomberg) -- OAO Gazprom offered to buy all of Libya's oil and natural gas destined for export as Russia's largest energy producer strives to expand on global markets.
Global Fertilizer Demand May Rise 14% on Higher Food Demand
(Bloomberg) -- Global fertilizer demand may rise 14 percent by 2012 as farmers increase plantings to benefit from high prices and growing food consumption, the International Fertilizer Industry Association said.Demand may increase to 193 million metric tons by 2012, from 169 million tons in 2007, the Paris-based industry group forecast today during a presentation at a Shanghai conference.
Top Democrat may back new offshore drilling: report
NEW YORK (Reuters) - A top U.S. Democratic senator said in a newspaper interview published Wednesday that he would consider supporting opening up new areas for offshore oil and gas drilling."I'm open to drilling and responsible production," Senate Majority Whip Richard Durbin told The Wall Street Journal, adding that Senate Majority Leader Harry Reid could also support the move.
However, Durbin said his support for opening new areas to drilling was contingent on setting requirements that oil and gas companies begin production within a specified time frame on acreage they have leased from the government.
Entergy rate hikes in Miss. slammed by consumers
"Mississippi rate payers are taking a hit," he said. "They face higher fuel costs, higher food costs and now they're taking a hit with these increases. The question that comes up is we're taking a hit, are their shareholders taking a hit?"Louie Miller, director of the Mississippi Sierra Club, called for a freeze on Entergy Mississippi's current 28 percent rate increase, which is in effect through September to defray fuel costs that the company said were unexpectedly high.
Data center power: the cost reality
More IT executives are coming to grips with a grim reality: Data-center power and cooling costs are the hidden enemy of IT departments. They creep up on unsuspecting CIOs like deadly mists and choke off their ability to deploy new equipment and applications."If a CIO has not had to build a new data center recently, this is likely to be a huge surprise," says Ken Brill, founder and executive director of the Uptime Institute, which provides consulting services to more than 100 data center operators.
Two years ago I began this column, thinking The End of the World would always be fun. The web-postings of survivalists, religious wacko-bongos, free-market fundamentalists, and paranoid old farts would always provide something amusing to write about. And there wasn't much chance their apocalyptic scenarios would come true....But lately The End of the World isn't fun anymore. It's not only because George Bush, contemplating his place in history, keeps saying, "Like I care? We'll all be dead then, anyway." It's also because a good many intelligent and sane people keep saying that It's The End of The World As We Know It.
A Different Climate Change Apocalypse Than the One You Were Envisioning
The world has gotten a bit warmer and a bit drier over the past 50 years. The presumption is that it will get even warmer and drier over the next 50 years, so if economic changes from the past can be understood, perhaps future economic changes can be estimated. Here is the gist of their findings:Our main results show large, negative effects of higher temperatures on growth, but only in poor countries. … In rich countries, changes in temperature have no discernible effect on growth.What does this mean? Among other things, it may mean that many Americans — who are by definition rich — are worried about the wrong thing. Instead of thinking about weather apocalypses, they should instead be thinking about border invasions: the huddled masses from the poorest countries who will be seeking refuge as their own economies collapse. This would be Darwinism on the most epic scale imaginable — but instead of the finch with the shorter beak becoming extinct, it’ll be the poorest millions, or perhaps billions.
Last exit for the Holocene: What follows is a place unfit for the human race
"Damn! I think we just passed the last exit for the Holocene!""I'm sorry, honey, I wasn't looking."
"We have to get off this highway. What's the next exit?"
"It's a long way ahead. Goes to somewhere called Perdition."
(Ragged chorus from the back seat) "Are we there yet, Daddy?"
Kevin Rudd: Doing nothing is not an option for survival
THE science tells us that continued high levels of carbon pollution have led to global warming and if the world continues on a business-as-usual trajectory the consequences for us all will be significant. The economics tells us that the cost of responsible action is much less than if we as a planet fail to act on climate change now. The longer we delay, the higher the cost.And Ross Garnaut tells us the case for Australia is particularly acute because we are already a hot and dry continent.
That is the reality the Australian Government faces today.
The chickens have come home to roost
I will make one prediction: As the cost of energy continues to rise, the influence of extreme environmentalists will decline. If Americans can't have both, they'll choose the smell of money over fresh air.
Kenya: Farmers Buying Fertiliser to Be Vetted
The National Cereals and Produce Board will vet those buying fertiliser that the Government has imported to ensure only genuine farmers benefited."The board will verify that those purchasing fertiliser are genuine farmers and not businessmen out to rip off farmers and if anyone is found masquerading as a farmer action will be taken against them," said the board public relations manager Kipserem Maritim.
The Toxic Consequences of the Green Revolution
JAJJAL VILLAGE, INDIA—Four decades after the so-called Green Revolution enabled this vast nation to feed itself, some farmers are turning their backs on modern agricultural methods—the use of modified seeds, fertilizer, and pesticides—in favor of organic farming.This is not a matter of producing gourmet food for environmentally attuned consumers but rather something of a life-and-death choice in villages like this one, where the benefits of the Green Revolution have been coupled with unanticipated harmful consequences from chemical pollution.
High Oil Prices: Hype's Impact
By 2015 the world will be faced with a legitimate and serious oil supply-and-demand problem. Many oil insiders have told me that it will be an enduring energy crisis that has the potential to radically reorganize our economic society.
Australia: Energy crisis tipped to drag on
The State’s energy woes appear set to drag on for longer than expected after revelations there will be delays in plans to fire up old coal plants in Collie and in fixing a gas-fired plant at Pinjar.
Real reasons for hiking oil prices
The world is facing price increases for every commodity and service, and not just energy. By the way, when we talk about an energy crisis, it is misleading to single out oil as the core of it. Oil meets no more than a third of global energy requirements, and the other two-thirds are met by gas, coal, nuclear and other types of energy. So, why is this unnecessary emphasis on oil? Most probably because most of it comes from Middle East and Russia, two regions the West can not fully trust - again, an oil conspiracy! Some credible economists see the energy crisis facing the world as an issue of scarcity. Whether global oil production has peaked or is about to, there seems to be a consensus that cheap oil is over. Natural gas cannot plug the gap in energy supply if oil is not enough to meet rising demand.
Russia has overtaken Niger to become the world's fourth largest uranium producer, after Canada, Australia, and Kazakhstan. Russia received its new rating in 2007, when it produced 3,527 tons of uranium.It has ambitious plans to mover even further up the league, based on promising deposits in Eastern Siberia and other regions, and opportunities for mutually advantageous cooperation with countries rich in uranium ore.
Hidili Says Coking Coal Prices to Trade at Record
(Bloomberg) -- Hidili Industry International Development Co., southwestern China's largest producer of coking coal, said purchases by steelmakers for rebuilding after the May earthquake will keep prices at a record through 2009.
Viet Nam - Power producers should feel at fault for shortage: official
The country’s energy shortage is undermining economic growth, said a government leader Tuesday, urging state-owned corporations to expedite electricity and fuel production projects.“No matter what the cause, the energy sector should feel at fault any time its people experience a power shortage,” said Deputy Prime Minister Hoang Trung Hai at a Ministry of Industry and Trade session in Hanoi.
Tight supply, strong demand drive oil prices higher: BP official
Doha • The key driver of higher oil prices is tighter supply and demand fundamentals rather than speculation and tighter refining capacity, according to Mark Finley, General Manager, BP Global Energy markets and US Economics.He said if there were refining capacity constraints there would have been large quantities of crude oil on the market forcing the price down which is not the case.
Soaring aviation fuel costs ground many pilots
WICHITA, Kan. - Soaring aviation fuel costs are grounding many pilots from recreational flying, extending the reach of the economic drag on the nation's general aviation industry.While much public attention has focused on the financial woes of struggling airlines, the myriad of aircraft companies that cater to private pilots are scrambling, too. Makers of piston-powered aircraft favored by leisure flyers saw their shipments plunge during the first quarter of this year, while pilot training schools, fixed base operators and others have watched fewer pilots take to the skies.
America and China: The Eagle and the Dragon Part Three: onward and upward
Now, at a time when the most important global debate is about dwindling resources and the perils of untrammelled growth, China - a culture where as recently as 40 years ago personal possessions were regarded as a symbol of pernicious bourgeois decadence - is staking its future on becoming the biggest consumer society on earth.
Why Europe backpedals on biofuel targets
London - Europe is signaling a retreat from its bold commitment to biofuels as concern mounts that the plant-based alternative to gas and diesel, once heralded as a panacea for climate change, is contributing to spiraling global food prices.
Inflation surge hammers construction industry
ABU DHABI // Contractors who enjoyed lucrative returns as recently as last year are now being swamped by rising costs that have left many struggling to eke out a profit.Record fuel prices, the skyrocketing cost of building materials and shortages of skilled labour are rapidly eroding financial returns.
Why Brazilians Should Demand the Renationalization of Petrobras
It is imperative that the Brazilian government follow a major global trend and start renationalizing as soon as possible the Petróleo Brasileiro SA (Petrobras).
US Senate bill has money for N.D. refinery study
BISMARCK, N.D. - Sen. Byron Dorgan, D-N.D., said a new appropriations bill will include $500,000 to study the costs of increasing petroleum refining capacity in North Dakota.
The problem isn’t that Charles Schwab chief investment strategist Liz Ann Sonders has concluded that oil prices are in a “bubble” that is going to burst. The problem is in how she arrived at that conclusion. Her methodology raises serious questions about Wall Street’s ability to analyze oil at a time when every investment decision in the world is affected by the crisis in oil.
Australia: 'Coast could become economic backwater
TOWN planner Roger Brewster has slammed the Federal Government's climate change report for avoiding the oil crisis.The former president of the Royal Planning Institute said the report by Professor Ross Garnaut had ignored the long-term effect on food prices and overcrowded cities, which could have a flow-on effect on the Gold Coast economy.
Russia mulls cutting oil export duties - Sechin
MOSCOW (Reuters) - Russia's government is working on its pledge to cut oil export duties as part of a wider tax reform but is unlikely to make further cuts to the mineral extraction tax on oil, a top government official said on Wednesday.Deputy Prime Minister Igor Sechin told a briefing he was not concerned about stagnation of Russian oil production in the first six months of this year, as new fields were coming on stream to help the country sustain production levels.
Shell ends force majeure on Nigeria Bonga exports
LAGOS (Reuters) - Royal Dutch Shell lifted force majeure on oil exports from its Bonga offshore field in Nigeria on Wednesday, three weeks after an attack by militants forced it to shut the facility for several days."We lifted force majeure at Bonga at 12 noon local time (1100 GMT)," said Precious Okolobo, a spokesman for Shell in Nigeria. He declined to give any further details.
Scramble for oil profits puts Nigeria reform at risk
LAGOS (Reuters) - President Umaru Yar'Adua risks undermining Nigeria's hard-won reputation for fiscal discipline if he fails to keep the country's cash-hungry state governors from squandering its soaring oil revenues.
Pelosi Asks Bush to Draw From Petroleum Reserve to Combat Surge in Oil Prices
House Speaker Nancy Pelosi asked President Bush on Tuesday to draw down a portion of the country's Strategic Petroleum Reserve as a way to reduce crude prices and help motorists who are suffering from the rising cost of gasoline.The House Republican leadership responded to Pelosi's proposal by noting that she was supporting a supply increase — something the Republicans have rallied behind in the form of increased offshore drilling, which the Democrats oppose.
Sue OPEC? Congress Should Sue Itself
Over the last 30 years, elected U.S. officials blocked nuclear build-out and spent fuel storage construction; impeded the construction of oil refineries; refrained from passing meaningful alternative energy legislation; imposed an import tax on cheaper Brazilian ethanol; prevented offshore drilling in Alaska, California and Florida; delayed tighter auto fuel-efficiency standards for 30 years; blocked the construction of liquefied natural gas ports; killed wind farms in their own backyards (and back bays); and neglected opportunities for public-private sector partnerships on energy research and development.
S Korea to take further steps to tackle oil price surge
SEOUL, July 9 (Xinhua) -- South Korea will enforce extra energy-saving measures earlier than planned if international crude oil prices surpass 150 U.S. dollars per barrel, Yonhap news agency quoted the Ministry of Strategy and Finance as saying.According to the ministry, the second-phase contingency plan could include restriction of private-sector vehicles and outdoor lights usage in addition to possible oil tax cuts.
Nuclear 'scare' against Iran exposed
WASHINGTON - A 15-page paper on the process requirements for casting and machining of uranium metal into hemispherical forms - said to useful only for making the core of a nuclear weapon - has been raised by the United Nations' International Atomic Energy Agency (IAEA) in recent months as evidence of an alleged Iranian intention to build nuclear weapons.
Economic chill looms heavy over Ireland, Vancouver
"You guys should stop spending money on gadgets," said my father to my brother and me last week. My brother was examining my sleek, video and wireless-enabled MP3 player."You're going to need your money for gasoline and food."
My father, in his 80s, doesn't understand why my brother and I are interested in sleek, video and wireless-enabled MP3 players. But he also went through the Depression, the unimaginably bleak 1930s which as far as post-millennial public collective memory goes might as well have been the 1830s. Having grown up on a farm where the family at least had food but no cash, Dad is intimately acquainted with scarcity. His warning about an impending need for thrift, a notion also long disappeared from collective memory, is part of an increasing unease in the land about our economic future. Canadians are wondering if they should be scared.
Remember when oil ran up back in 1979 and 1980, when the entire Iranian oil industry collapsed in the wake of Ayatollah Khomeini’s Islamic Revolution? About five million barrels of oil per day simply left the world marketplace. It was gone — poof! Not there. No tankers.Even though five million barrels went away, people could still look to places like the North Sea, Alaska, Angola and elsewhere. And they could feel certain that sooner or later, there would be future oil supplies flowing down the pipelines.
But that’s not the case today. When people look ahead now, they don’t see from where the oil of the future will come. Most of the world’s current large oil fields are in decline.
Bin Laden, Oil Prices & Inflation
Sometimes your worst fears come back to bite you in the rear. Case in point: In the New York Times, on October 14, 2001 the managing director of an oil consulting firm warned: "If Bin Laden takes over and becomes king of Saudi Arabia, he'd turn off the tap ... he wants oil to be $144 a barrel."At the time, oil traded at $23, and $144 a barrel seemed downright impossible. Well, terror mastermind Osama Bin Laden, safe in his undisclosed rat hole, must be grinning like a Cheshire cat, because last week oil soared past $144 a barrel.
Peak Oil: Crisis alters lifestyles
Aaron Newton has a foot in two worlds.Four days a week, the 33-year-old husband and father of two works as a land planner in Concord.
In his free time, Newton prepares for a time when energy could become unreliable or too expensive for his family.
“I don’t know exactly what is going to happen because I don’t know what that future is going to look like,” Newton said. “It’s important to be flexible.”
If reporter Morgan Josey Glover's "Peak Prospects" series wasn't enough of a wake-up call concerning America's shaky future with oil, take a look at what happened when Hurricane Katrina affected energy supplies in North Carolina.Similar disruptions could occur during "peak oil," the time when global demand for petroleum products exceeds supply, creating higher prices, shortages and other instability. Many energy experts think we are already, or will soon be, at peak oil.
Volkow also said the report does not properly factor in the impact of peak oil on transit in the next 30 years.Peak oil describes the time when worldwide oil production reaches its maximum. Some experts believe this will be followed by a sharp decline in oil availability.
A Burnaby staff report says that, while Transport 2040 does mention peak oil, the discussion is incomplete.
"It gives the impression that we have many years in which to prepare," the Burnaby staff report said.
Can We Harness Hydrocarbon Energy without Burning Hydrocarbon Fuels?
Perhaps the first question to be asked is whether or not petroleum is running out. Most evidence suggests that the world’s major deposits of petroleum are in fact being diminished at an unsustainable rate, even as global demand increases at (economically and ecologically) alarming rates. The scientific world is not, however, completely unanimous as to the finite nature of petroleum deposits.
Report urges U.S. to embrace nuclear power growth, despite risks
WASHINGTON (UPI) -- A report from a State Department advisory panel says a coming large expansion in global nuclear power generation poses proliferation risks, but the United States must embrace it to ensure that nuclear supplier nations build safeguards into the growing market.
GM installs world's biggest rooftop solar panels
The largest rooftop solar power station in the world is being built in Spain. With a capacity of 12 megawatts of power, the station is made up of 85,000 lightweight panels covering an area of two million square feet.Manufactured in rolls, rather like carpet, the photovoltaic panels are to be installed on the roof of a General Motors car factory in Zaragoza, eastern Spain.
Environment: Queen and Charles join race to build government-sponsored ecotowns
The Queen and the Prince of Wales have joined the race to be part of the government's controversial ecotown scheme, with the crown estate acting as partner in a consortium that hopes to built a town of 5,000 houses near Nottingham.
Alberta to spend billions to cut emissions
CALGARY, Alberta (Reuters) - The oil-rich Canadian province of Alberta said on Tuesday it will put C$4 billion ($3.92 billion) into two funds that will be used to pay for carbon capture and storage programs and to boost use of public transit to cut the province's carbon-dioxide emissions.
Suit seeks ban on oil companies disturbing wildlife
ANCHORAGE, Alaska (Reuters) - Two environmental groups on Tuesday filed a lawsuit seeking to overturn new federal regulations that grants permission to oil companies working in the Chukchi Sea to disturb the polar bears and walrus that live there.
Russia limits oil, mining share sales to foreigners
MOSCOW (Reuters) - Russia laid down official limits on the sale to foreigners of shares in strategic and raw materials companies on Wednesday, giving new regulatory force to the government's grip on Russia's natural resources wealth.The new ruling by the state markets regulator codifies what the Kremlin has long made clear: the government is loath to see more of Russia's strategic and extractive industries fall into the hands of outsiders.
Iran test-fires long- and medium-range missiles
TEHRAN, Iran (AP) — Iran test-fired nine long- and medium-range missiles Wednesday during war games that officials say are in response to U.S. and Israeli threats, state television reported.Gen. Hossein Salami, the air force commander of Iran's elite Revolutionary Guards, was quoted as saying the exercise would "demonstrate our resolve and might against enemies who in recent weeks have threatened Iran with a harsh language."
Learsy: High Oil Prices: Is That The 800 Pound Russian Bear Dancing In The Trading Pits
OPEC, speculation in commodities market, hedge funds, the falling dollar, peak oil theorists, all play a part in the current run up in oil prices. Yet one of the major players has escaped both scrutiny and careful analysis.
The Market Is Responding to the Oil Shock
The leaders of the G-8 and of major developing countries will discuss how to respond to energy security and climate change tomorrow. Their first instinct will likely be to propose new regulations. Yet market forces may already be solving these problems, as high oil prices drive a shift away from the polluting, petroleum-fueled internal combustion engine to cleaner forms of transportation.
I can't work up much passion for blaming speculators and manipulators for the predicament we're in. My faith in human nature, especially when it comes to energy traders, is shallow. However, my faith in the power of financial gravity is bottomless. If speculators and manipulators have somehow managed to get prices too high, then those prices will come back to earth as surely as apples fall from trees and meteors land in Arizona. The price decline will inflict billions of dollars of losses on those speculators and manipulators—just desserts.On the other hand, if by some chance the speculators and manipulators are correct—that oil prices could go even higher, based on supply and demand—then they will have done all of us a favor by ringing the alarm bell. High prices today are inciting suppliers to produce more oil and consumers to use less, which will ease the transition to a future of costly energy.
Gas-saving products boosted by high fuel prices
NEW YORK - With fuel prices soaring, sales of products designed to boost gas mileage are also rising — even though the government says they're not worth the money.
School cafeterias struggling to keep food on the table
Rising costs for fuel, food and labor are forcing school cafeterias nationwide to raise prices, cut jobs and, in some cases, dip into "rainy day" funds to put food on trays, according to congressional testimony to be delivered today.
A Peak Oil Prophet Imagines Life in America After Wal-Mart (interview)
James Howard Kunstler's new novel describes a small town in upstate NY where a chain of global crises has forced the community to fend for itself.
Funding rises for clean-tech start-ups
Despite the slow economy, venture-capital funding of clean-tech start-ups in the USA and abroad is on pace for a record year, according to a report released Tuesday.In the second quarter, venture funding for nearly 100 biofuel, solar, wind and clean-water start-ups hit a quarterly record of nearly $2 billion — a 58% jump from the same time last year, says the Cleantech Group, a market research firm in San Francisco.
Bush: 'Significant progress' on climate change
TOYAKO, Japan - President Bush on Wednesday hailed the move by G-8 leaders to coalesce behind a broad climate-change strategy, saying in a valedictory to summitry that "significant progress" has been made on global warming.
Rich nations pledge action on food, oil, but deadlock on climate
TOYAKO, Japan (AFP) - Leaders of the world's eight richest top industrial powers vowed Wednesday to act to bring down soaring oil and food prices but failed to bridge deep differences with poor nations on how to fight climate change.
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Forced Commodity Long-term Investment liquidations Coming?
http://www.marketoracle.co.uk/Article5046.html
That's just dumb. The Hunt Brothers held 55 million ounces of silver, 10% of the world supply. They weren't buying futures contracts and rolling them over.
Edit: link for those who care: Hunting for oil villains
Right. The only way they were able to manipulate the silver market was by insisting on physical delivery of silver.
The only way oil speculators would be able to manipulate the price of oil would be by insisting on physical delivery of oil, and they couldn't do that because there's no way to store it. It's not something you can store in your garage.
The CFTC has done studies on the positions held by large funds, and they found that as the number of longs held by the funds grew, the number of shorts held by other market participants grew.
This is just more ignorance from someone who doesn't understand the markets at all.
Hey Moe;
Off Topic, but if you're still dropping in at the RIO for the World Series events, come by the ESPN final table and say hello. I'm on the camera crew. Noon to 1am most days..
We just bid adieu to Ray Romano last night. Nice Guy, did a lot with a short stack.
Bob
The point (and benefit) of speculation is that it helps to moderate prices and prevent wild swings... By speculating, buyers can (try to) lock in a low price for a longer term, and sellers can (try to) lock in a high price for a longer term. These two forces help stabilize prices in the long term (although 'stabilize' is a relative term when oil prices are rising about 1% a week). Without speculation, both the buyer and seller are subject to the forces of the market at the time of the transaction... The buyer could pay much higher (or lower) on one day than the previous day, and the seller could do the same, which would result in wild price swings.
The uncertainty that wild price swings would bring could force the seller to produce less, and the buyer to consume less; in the case of oil, it would mean that oil producers would pump less and/or refiners would refine less, causing more serious issues for the end consumers (us).
By having speculation present (but no hoarding), all of the bumps are smoothed, the markets operate more efficiently than they would without speculation, and in the end the consumer benefits by having more stable (relatively) prices for gas, diesel, distillates, etc. It is to the end consumer's advantge to have speculation present in the market, and if/when (probably when) it's taken away, the results are going to have some nasty consequences for all involved... Like, I'd be willing to bet $20/day swings in oil prices could begin to happen...
Well, it's important to make a distinction between speculation and hedging. An actual consumer of oil might hedge by locking in a long term contract. This helps them in planning long term finances for the company (see SouthWestern Airlines for example). Both buyer and seller in this situation value the stability of a longer term price than the opportunities for short-term profits on day-to-day market swings.
I don't believe (though I could be wrong) that congress is aiming at hedgers, but only at the speculators who are not actual consumers/producers of crude oil or its derivatives.
Every contract requires 2 parties. When a hedger wants to hedge one way or the other, they need someone to take the other side of the contract. That's where speculators come in. Without speculators, it becomes harder to hedge, and harder to hedge at the economically efficient price. The volume traded on the exchanges goes down and volatility goes up.
JD has a post on FUTURES PRICES DETERMINE PHYSICAL OIL PRICES. ACK, WISH HE'D LOSE THE CAPITALS. He says futures actually do have a role to play:
That's from OPEC Pricing Power (PDF). This is what Paul Krugman et al don't know about, sez JD. What think you?
Some private sales are set based on futures prices. Some are not. That's old news, and it doesn't mean that futures prices determine oil prices. The Saudis, for example, change the formula all the time when they don't like it. There was just a headline this week that they were raising prices.
The thing JD misses is that, if fundamentals don't support the price the Saudis want to charge, NO ONE WILL BUY THE OIL. In fact, exactly this is happening to Saudi Arabia (light sour oil) and Iran (heavy sour oil). They are asking more than people are willing to pay, so people aren't buying.
Prices are set by supply and demand. I just don't get why that is so hard for people to understand. If there is excess supply, suppliers will undercut each other until the price falls far enough. If supply is unconstrained, prices will usually fall to close to the production price. Otherwise, suppliers will ALWAYS charge the maximum price the market will bear. That's what businesses do. And that's what is happening with oil now.
You propose that by taking away the flood of hot cash that speculators use to take positions in the market the volatility will INCREASE?
I would recommend that we all stop talking about whether the "philosophy" of speculation is good or bad and start looking the actual issue at hand - oil prices. Pragmatics and the ability to look at a situation with "soft eyes" should trump ideologies.
Historically the oil futures market was dominated by oil producers who sold forward to end users such as refineries and airlines who needed to lock in a price in order to do proper accounting. They were buying insurance policies, so to speak, that allowed them to determine what their costs would be several months in the future. I have no problem with this kind of market. It serves a useful purpose.
Now enter the "speculators." These are everyone from pension funds to purchasers of USO shares who wish to buy a claim on oil but will never take possession of the product. These "speculators" are in direct competition with the original hedgers - the airlines and refineries. If an airline needs to lock in a price for oil three months hence they have to make a bid even though the price is much higher than it would have been had the non-using speculators with their hot money were not in the market.
Because of the inelasticity of the market (changes in actual oil consumption due to price changes takes significant time to develop) the speculators can force the actual buyers to pay a premium due strictly to the fact that they have bid up the price on a product they have no intention to use. The "speculator" is free to enter and leave the market at will - there is no inertia because there is no product changing hands.
The real issue is HOW to remove the speculators. That's a very tough issue. If we pass a law saying that pension funds can't invest directly in oil futures and force them to divest their holdings it could have a temporary effect of driving prices down a bit. But the real "speculators" in the sense of controlling the market just may be the national oil companies. Consider how many US Dollars are being sent to OPEC and Russia right now. Wouldn't the sovereign investment funds of those countries have an interest in using the incoming dollars to take a position in oil futures if they believe oil is going up? In effect they would be exchanging dollars for a claim on oil. It's what I would do in their position.
If that's so then they can invisibly regulate the price of their product. When the price gets too high they can sell off their positions and force it lower. But, given their vast reserves of cash, they remain firmly in control.
I think governmental attempts to regulate speculation that eliminate ETF's and pension fund investment or require oversight of OTC exchanges will fail simply because the big players in the market are outside the US borders. All the US can do is make it impossible for the little guys to play.
False statement. They are not in direct competition and until you understand why, you are missing how the market works. Since this has been explained repeatedly here and you have apparently ignored it, I'm not going to explain it yet again.
Greyzone,
LJR is just echoing an argument made here:
http://www.nakedcapitalism.com/2008/07/hussman-likelihood-of-60-oil.html
I don't know anything about LJR, but there are some of us who are new to the game and would like to see a rebuttal. Most of the commenters on Naked Capitalism agree with Hussman's analysis and think it shows some wonderful new insight. I suspect Hussman's argument is flawed, but don't know enough myself to make an intelligent rebuttal. Naked Capitalism has become such a hot bed of bubble and conspiracy theorists that one can no longer have an intelligent, dispasionate discussion there concerning oil prices.
I read all of Hussman's piece, and I see some serious deficiencies in his overall framework of inflation vs. deflation into which he fits oil prices. He seems to think there is little probability that those countries who already hold huge reserves of U.S. dollars and continue to accumulate them will either stop accumulating them and/or want to divest their accumultions. Hussman's real blind spot seems to reside in his failutre to notice that the US is no longer captain of its own ship. It's like the guy who wants to buy a new car. If he has the cash in the bank, he can just go down and write a check. However, if he doesn't, he is dependent on someone else to loan him the money. There's a big difference, which seems to be lost on him.
Down South...Thanks for your post. I read Hussman's article at Naked Capitalisim and purpously avoided posting a link to it here because TOD has become, to a large degree, a hot bed of anti-bubble posters.
No one can mention the fact that tons of money has fled into commodities markets because there is no other area of the economy where a return over inflation is available. Granted their are a few stocks that are doing ok but who is good enough to pick them consistently?
No one can mention that some of the excess liquidity created by the Fed and intended to help out Wall St and eventually Main St instead found it's way into the commodities markets.
The slightest hint from a poster here that oil prices might be somewhat effected by refinery constraints or huge liquidity flowing into the commodities brings cries of derision.
There is no intelligent debate, only rage by those bent on retaining their imbedded notions. If it looks like a duck, walks like a duck, and quacks like a duck, it is probably a duck. The same is true of bubbles. I have seen a lot of bubbles come and go and this steep commodity run up, in all commodities, in such a short time span certainly has aspects I have witnessed in past bubbles. Even Greenspan famously said that bubbles are difficult to identify except in hindsight.
Then there are the posters on TOD that are talking their book. They have no place in the debate and should butt out. Otherwise, they are simply charlatans.
One last thought...
'In the choice between changing ones mind and proving there's no need to do so, most people get busy on the proof.'
John Kenneth Galbraith
or YOU could be wrong and it's not speculators (since we have seen demonstrated again and again that lately there have been net SHORTS, not longs) - explain to me again how more $ betting that oil is going to fall, than rise, results in the price going up?
you can mention "all the $ pouring into commodities" as much as you like - and when you demonstrate in any coherent fashion how that effects the market I will sit up and take notice - until then I will listen to people like Moe who actually put their $ at risk every day and actually prove their points with references and links - rather than yet more shrill cries of "I'm being shut out! We aren't allowed to express ourselves at TOD!!!" - hmmm, maybe if you actually tried to prove your point with #'s and charts and links, your conspiracy of speculation would be taken more seriously
it's all a conspiracy! and the TOD posters who patiently explain to you over and over again that speculation can't really drive the price up much at all are all a part of it!!!
or am I just trying to kill debate?
But you can do it without hindsight, right?
I agree wholeheartedly. It is why I'm so harsh on the bubble types -- not a shred of proof, just a lot of untrue and misleading statements based on a lack of understanding of markets. But then you don't need proof if you can identify bubbles without hindsight, I suppose.
Hey River,
Yes, I've seen how they beat up on you here on TOD sometimes. It's unfortunate that it's broken down into these two Manichaean camps. But I suppose that's just human nature. As Jacques Barzun writes:
Gauging by her comments that accompany her posts, I don't think Yves is quite so extreme, and most of the topics that she posts on don't evoke such passion. But when she posts on oil prices the discussion becomes entirely too one-sided. Everybody wants to be part of the chorus. I personally don't believe that, anything short of a prolonged world-wide recession, we will ever see prices drop below $100 per barrel again. And we might not even see them then, as things are not exactly the same as they were back in the 80's when prices came crashing down. But no, some insist that we can have continued economic growth and abundant, cheap oil for at least another 50 years. Life is all cherries and cream!
As to speculation, I saw an article on Fortune yesterday that said the reason the controversy cannot be resolved is that there just isn't enough information. I suspect that comes closer to the truth than either one of the warring camps would like to admit. The recomendation was to put some surveilance in place to better observe what is going on. Wouldn't that tell us once and for all what's going on? Would that be so unlike the frequent calls from Peak Oil advocates to send auditors in to do reserve assesments in Saudi Arabia?
And as to oil prices, I beleive there are entirely too many wild cards. Will China and/or the OPEC countries de-peg from the dollar? Will Bush and/or Olmert bomb Iran? Would OPEC curtail production in order to defend some price floor? Will the Fed raise interest rates sufficiently to provide a real positive rate of return? These and many others are all policy decisions that entail human actors. A broad range of human emotions will therefore come into play, making the outcome all that much more unpredictable.
"I personally don't believe that, anything short of a prolonged world-wide recession, we will ever see prices drop below $100 per barrel again." And such a recession would surprise you? I hope you are right but I'm not betting on it.
No, Doom and Gloom Dad, it wouldn't surprise me at all. But the flip side of that is, instead of deflation, we could just as easily have run-a-way inflation. And I can't think of any better hedge against inflation than oil in the ground. So if it's deflation, cash is the better investment. But if it's inflation, oil reserves are the better investment.
It all goes back to what Niccolo Machiavelli said in The Prince:
I don't think I will ever be certain one way or another what the impact of speculation is. I do the best I can in reading the various analyses and then trying to reach some sort of tentative conclusion based on that. Sometimes, what seems like common sense or what looks like a duck just isn't.
Everyone is free here to give their best shot supporting their position. I don't think you have done that and have decided just to attack TOD and people that hold a position different than years. Give the argument your best shot. Then let the chips fall where they may. Don't complain just because people don't agree with what you think is obvious. That won't cut it here. People here are just too damn smart for that.
If there is derision, deal with it and then make your best argument. This is a tough crowd.
TstreeT, Down South, I was out checking on a rental. All ok, I replaced a hw heater. I have a couple of rentals that I should have sold some time ago but did not. Luckily they are on beach side and renting them is easy and they are not costing me much. :)
I do not mind derision, I do not mind tough crowds, I do mind personal insults but I can and do dish them out as well when I receive them. I believe that the line should be drawn at personal insults and snide but meaningless remarks. That is up to the board monitors to control or not.
I cannot prove that we are in a commodities bubble and with some demand destruction going on in the US and probably elsewhere one more factor has been added to an already very difficult analysis. We have an administration that is full of former oil people. Cheney conducted a lot of secret energy meeting before becoming VP and after. This admin has stood by and in some cases aided in the rape of the US economy and the debasement of the dollar. I do not believe for a second that they would not manipulate commodities if there was a dollar to be made doing it. I do not believe that there is any market anywhere that is immune to manipulation...shrewd people will find a way.
I believe that we are in an oil bubble based on the speed of the run up and the amount of hot money that has rushed into the oil sector compared to the amount of demand increase (which is really anybodys guess based on a bunch of guys gauging the tanker levels sitting in bays around the world and other inacurate and partial data from various questionable sources). In the past I have seen these two simaltaneous actions create bubbles. Hence, I am saying that I have a hunch we are in a bubble in oil. Nothing scientific about a hunch, just a feeling based on what I have seen happen in the past. Take it or not, I don't care...But I would be extremely careful about taking long positions in oil now, regardless of the claims of some on TOD that crude oil prices are going to the moon. Some are talking their book. BTW, I have never held any position in any commodity. Read 'Way of The Turtle' and then read 'The Black Swan' and then tell me about experts in the commodities, stock, bond, insurance or any other market. I am a gold bug and have delt in physical gold for a very long time.
As far as future prices of oil...who can say. PO is a fact but the timing is unknown and I contend that it is unknowable except in hindsight. That does not mean that preparations should not be underway. I think high oil prices have the benefit of encouraging some to prepare. Down South is right about all of the variables that he pointed out. Anything might happen and it will depend on the actions of those that we have no influence over. Just sayin...
Peace, brothers...Remember, I am pulling for ya', we are all in this together. Red Green.
My operating assumption is that oil is a commodity, and like all commodities its price goes up and down. I am also assuming that the long term trend will be up, meaning that there will be more ups than downs, and the ups will be up more than the downs will be down.
You assume that all the speculators are buying oil. If that was so, then that probably would drive up prices. But most, if not half, of the speculators are selling oil, so the whole theory fails.
The idea of distinguishing between hedgers and speculators is absurd and completely unworkable. Every individual and every company, even pension funds, directly buys oil derived products, therefore everyone could legitimately claim to be hedging.
If you want, go ahead and close the oil exchanges for 2 months, and see if it makes any difference. I predict that won't happen, because it will remove a convenient excuse for inaction, and people might then have to deal with the real issues.
LJR - all garbage. If you and I bet on the price of oil, say you bet up and I bet down, we are not driving the price of oil either up or down are we? Did all of those people who bet on the New England Patriots drive the team to victory? How about the triple crown Big Brown bettors - did they drive Big Brown to victory? Bettors, gamblers, speculators, whatever you want to call them do not determine the outcome - that is why it is a bet, that is why they play the game. These people are just bystanders trying to make a buck.
Exactly. We have at least one historical case, as described at this Wall Street Journal article: The Onion Ringer.
Also take iron. There is no futures market for iron. Iron has gone up as much as oil has (BTW, that's a real problem for the "blame the speculators" types, but you won't hear them talk about iron). The global iron market is in the process of creating a futures market for iron to restrain prices and reduce volatility.
I will try to explain this once again. Supply and demand drive prices. The product that is traded on oil futures markets is oil futures contracts, i.e. pieces of paper. If the supply of paper was limited, and lots of money flowed into the market, then the price of the paper would go up.
This is what happens with stocks. The number of shares outstanding is limited. If you want to buy a share of stock, you need to outbid the other people who want to buy a share. This drives up the price.
This is not what happens on oil futures markets. The supply of contracts is not limited. Anyone can create a new one at any time. The people who talk about the "hot cash" flowing into oil futures invariably point to the huge increase in "open interest" as evidence of this. However, an increase in open interest represents an increase in the supply of futures contracts, not an increase in demand. One can reasonably infer an increase in demand from the increase in contracts, but one cannot reasonably infer any change in the balance between supply and demand. Remember: contracts are the product traded on futures markets. Therefore an increase in open interest represents an increase in the supply of what is traded.
Furthermore, every futures contract has one person betting prices are going up and one person betting prices are going down. That, coupled with the dynamic supply, means that money flows are neutral. Prices respond to other things, but they do not go up just because money is flowing in. What makes the idea even more absurd is that speculators are now net short. How can people shorting something drive the price up?
In short, the "hot cash" flowing into futures markets isn't "hot cash". It is liquidity (in the proper sense of the word). It makes it easier to buy a contract and easier to convert a contract into cash. It greases the wheels of the market and makes it more efficient. But guess what? The price of oil is going up. Liquidity isn't going to keep it down. Shooting all the speculators isn't going to keep it down.
I can understand how a peak oil denialist would look to blame the high prices on anything but supply problems. What I don't understand is why people who are peak oil aware can't accept the basic principles of Econ 101. Production has been flat for 2+ years. Net exports are down. Net energy is down even more. Demand over that time has increased. Reserve oil capacity is almost non-existent, and what there is, is mostly heavy and/or sour. What more evidence do people need that the driver behind oil prices is (at least in large part) a supply-demand imbalance? This is almost exactly like global warming denialism: the evidence is right out front, but people are still digging around in every bush looking for an exaplanation other than what is right in front of their face.
Would you mind emailing the above explanation to our elected officials? My senators don't seem to get it. This is the most clear explanation I have seen to date.
The issue of whether large amounts of investment money from index commodity funds has contributed to high oil prices is being tested in the NYMEX crude oil contract as we speak. In fact I think it's giant unreported news! The total open interest in crude oil peaked in July of '07 at 1549425 contracts. It is now down 16 percent to 1294480. That drop is explained by the steady liquidation of commercial long positions, a category that I believe has included index fund positions for the past several years. The commercial long position has not been this low since January of 2007! In the normal interpretation of the commitments of traders report this would be very bearish. I believe that the rising prices in spite of this trend reversal is stunning and probably speaks to the fundamentals.
The other interesting (scary)speculation for me is the possibility that the "authorities" are getting ready to nuke the NYMEX somehow to punish speculators but the smart (or inside info) money is wise to it and is getting out as suggested by the linked article at the top.
By the way, it's possible to be smart enough to grasp the fundamentals of peak oil and also realize that trends in futures markets tend to get overheated by speculation and rise and then fall more than the fundamentals explain. The two aren't mutually exclusive.
Give me an example of a base commodity futures market that got "overheated by speculation and rise and then fall more than the fundamentals explain". And absent the growth of inventory or some other physical factor, how could you possibly know it is more than fundamentals explain?
What you're basically saying is that someone can understand peak oil, understand that peak oil has put upwards pressure on price, but they just know, despite having no expertise in the area, that the price of oil has gone up "more than fundamentals can explain", so it must be speculation, despite not being able to give a coherent explanation as to how speculation is driving up prices.
What I want to know is how they know that the price rise is unsupported by fundamentals. Give me some evidence that the decline in net energy coupled with the rise in demand is insufficient. Don't tell me you "know a bubble when you see one". Such pronouncements are worth doodly squat.
There are dozens of examples of that. But I notice that you seem to have staked out the position that you are right by definition (Econ 101 says it all) until someone proves you wrong to your satisfaction. I suspect I’m not going to be able to do that.
The sugar bull market of 2005 is an example of a market that got overheated. It got so crazy that the floor brokers were only taking market orders for a few weeks. When it went parabolic at the top it rose 4 cents in 2 weeks and then dropped back down just as fast. Now you will do some Google research and come back with the fundamentals that got that bull market rolling. (I got into October 2006 around May of 2005 on fundamental arguments. Sold prematurely at 12 cents.) I’m with you that market trends are driven by fundamentals. But I’m not the one being an absolutist and I didn’t use the phrase “I know”. I started trading futures in 1992 and to say that markets can’t overshoot on the upside because of speculation seems silly to me.
I’m not going to be a good straw man to knock down for claiming that oil isn’t rising on fundamentals. I’ve been long since Christmas of 2004.
The list of markets that went crazy for a while is endless.
Shargash...thanks for your reply. I have read it before and I comprehend what you are saying.
I am saying that there is no market in the world, and never has been, that is not subject to manipulation by very shrewd people with large amounts of money and very close contacts with producers and control over vertical management structures, thus, the end users. The situation is an invitation to manipulation because on the surface it looks legit. So does three card monte.
Shrewd people are like casino owners. The odds are always in their favor, even though a very good black jack player can cut the house odds to about 1 1/2%. I am not talking about card counters because that does not work with six deck shoes and resuffles halfway through the shoe. How does the casino owner avoid getting wiped out by a high roller that is an excellent black jack player? The house sets the table limit so that a very good black jack player cannot bet $1 billion on one hand and then split a pair or go down for double on an eleven or whatever. Table limits are in place today but when Benny Binion was still alive he was the only owner in Vegas that would cover any bet placed by a gambler. Benny almost lost his casino a couple of times. Casino owners today do not do what Benny did.
The administration could be working in concert with SA or any oil producer to game the commodities system. These guys are not above anything and that sould be obvious to anyone that has followed their economic policies and foreign policy. Call me a conspiracy theorist and you will be right. Conspiracies happen every day. As Gobbels said: 'The bigger the lie the more easily it is accepted.' Are there any posters here that would claim that this administration has not lied, and lied consistently, about just about any topic one would care to mention?
We have an admin that is stacked with oil people that have close contacts with some OPEC producers. We have a crashing economy. We have an economy that offers few prospects to earn a return above inflation. Lots of liquidity offered by the Fed has managed to enter the commodities markets because that was the one area left where decent ROIs were possible. We have had hot commodity markets...But I am the only one that smells this combination and decide that it stinks? I don't think you guys have taken lumps like I have. I learned from those lumps and when I smell a dead fish I stay away. Good luck to the oil longs...and the shorts.
Hello Moe_Gamble,
Your quote: "It's not something you can store in your garage."
Just wait until the First World feels the need to store and hoard bags of I-NPK in their garages [plus bigbuck$ speculators hoarding large amounts in megawarehouses]--> it will effectively price most of the poor farmers and gardeners out of the market. Time will tell.
Did you see my earlier weblink that POT just announced a $250/ton price increase? Don't forget to add the rising transport cost, which in some far inland locales can now be cost prohibitive.
Recall my earlier link that said there was 3 gallons of gasoline equivalent energy-embedded in a forty lb bag of I-NPK fertilizer. Can you think of a better way to hoard FF-energy?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Timothy McVeigh would agree with that statement wholeheartedly...
...Which brings up an interesting point: In a post-peak world, would you want tons of
I-NPK fertilizerexplosive material lying around in people's garages? Would the government? I can imagine the government using this reasoning to round the stuff up and keep it 'under guard', and maybe it would be for a good reason...Hello Geckolizard,
Thxs for responding. Ammonium nitrates are a specialized subclass of I-NPK. Even then, it takes diesel and an explosive to set it all off [as Timothy McVeigh sadly demonstrated].
Any Home Depot, or Lowes, has lots of I-NPK & O-NPK on shelves, perfectly safe. If a fire gets started, I think the Fire Dept is more worried about exploding paint cans, and the other tightly contained household, pool, and construction chemicals, than the possible dangers in the plant & nursury dept.
Most fertilizers are in bags that will quickly melt; further precluding a high explosive risk. Another example: I have never heard/read of a batcave full of guano spontaneously erupting into a huge subterranean explosion. Yet, this guano may be thousands of years old.
My thinking is the Govt, then eventual warlords, want to eventually control I-NPK so as to eventually control the people--"makes us your slaves, just feed us". Tadeusz Borowski, #119198, shows what can be accomplished by this method.
OK, so I'm wrong... Happens from time to time... :) Yeah, I knew about the diesel fuel part as well, and in retrospect diesel probably won't be something to easily come across in a post-ff world.
But hey, it doesn't mean that the government won't want to do a 'background check' on folks with orders of I-NPK. It'll be another level of control, if the government chooses to excercise it, just like all the post 9/11 levels of control.
I know what NKP is but don't know what the I- and O- prefixes represent? Google is no help what so ever.
The O stands for organic - as in made from natural materials like urine, bloodmeal, phosphate rock, etc.
The I stands for inorganic - as in made from chemicals, often from natural gas or chemical salts.
(at least I think that's it...)
Industrial produced
versus
Organically
sourced
Something is going on there...
"CFTC's New Enforcement Head to Face Political Unrest "
http://www.bloomberg.com/apps/news?pid=20601087&sid=a5glx48Vx2nk&refer=home
From the Learsy article, talking about the single goofy trade on the Nymex that first went over $100:
What a jackass. Is he really that stupid?
Yes but so also are 95% of the public. This stuff is fed through the MSM and the people just eat it up and regurgitate it to their friends.
Most of my family still believe half the crap/propaganda the press excrete and no amount of logical explanantion is able to remove their heads from their asses.
Marco.
Yes, the man is really an idiot and Arianna Huffington cannot be too smart either for allowing the man to continue to post such garbage. (Though I must admire Ms. Huffington for other reasons.) Anyway Learsy expounds on this theory in a January 7 Huffington Post article:
The Trade That Brought Us $100/bbl Oil Teaches Us to Be Afraid, Be Very Afraid
"All oil produced or shipped, bought or sold in the United States" and "markets throughout the world" were marked up 45 cents at that instant. Wow, what an idiot. And this later article was published six months later! Did not someone, in that six months time, point out to him the stupidity of his earlier statement? The fact that such ignorance could go uncorrected, for six months, in one of the nation's most popular blogs, really says something about our gullible public.
Ron Patterson
Stupidity is a factor. So, too, is spin.
Obfuscation not erudition is the modus operandi here. In other words, If you can't blind them with brilliance, baffle them with bulls#!t!
If obfuscation is effective enough, it can take a long time for people to realize that the Emperor is not just undergoing a wardrobe malfunction, there really is nothing there.
IMO, the problem is not so much a gullible public as it is "experts" trying to preserve their turfs at any cost. Clear speaking and thinking, like their counterpart values honesty and integrity, have become rarities in the public domain.
Yes, he is really that stupid.
For anyone who doesn't understand how stupid that is, there was only 1 contract involved in that first transaction over $100. That means that the maximum barrels of oil that any producer could have sold at $100 on that day was 1000 barrels. All the other barrels actually delivered as a result of contracts bought and sold that day were delivered for a lower price.
A contract affects only the barrels actually delivered as a result of that contract (and 1 contract = 1000 barrels)--and definitely NOT all the barrels sold that day or delivered that day.
Thank you, Moe.
If he believes it, he should sell an August contract for $30/bbl and single-handedly bring the price of oil down to a reasonable level. Think of the billions of dollars he would save consumers, and it would only cost him $100,000. Take one for the team, buddy.
Or, just have the government short the market all the way down. Problem solved!!
I think the government is indeed shorting the gold market all the way down. I don't think the government is going to be paying off all those contracts, though.
Unless they found a huge new IOCOG deposit and they can actually make delivery of the gold, albeit in one ton boulders or equivalent? IOCOG is iron-oxide copper-oxide gold, like Olympic Dam in Australia.
He should first buy a bunch of "put" options at the lower strike price. Then when he drives oil down, he can cash out his options and make many times his $100,000 investment. In fact, this scheme is so easy, I can't imagine why hundreds of people aren't doing it with billions of dollars at stake.
Russian Car Market Passes Germany as Europe's Biggest
Not unexpected, but maybe a little sooner than people thought.
This is why I think all long term predictions are overrated. As far as I know, not one person predicted this 20 years ago.
I think you might have meant 10 years ago
Russian Financial Crisis 1998
I wonder what that is going to do to net (oil) exports?
On a recent trip to Italy I saw a brand new Bentley with a Russian license plate being driven on the autostrada. They are flaunting their new found oil wealth. The ELM will be kicking in big time.
Also it wasn't too many weeks ago that Russia announce a MASSIVE investment programme for their road network. This link is older than the one I looked at a few weeks ago:
http://www.businessweek.com/magazine/content/07_49/b4061073.htm
Marco.
http://www.nytimes.com/2008/07/09/washington/09cong.html?hp
Congress Feeling Pressure for Action on Oil Prices
The underlying assumption that both political parties largely operate under is that we can have an infinite rate of increase in our consumption of a finite fossil fuel energy resource base. There are two types of Americans: those who now realize that we live in a finite world with finite fossil fuel reserves, and those who will realize that we live in a finite world.
The US has been a net oil importer since the 1940's, but we export some crude and petroleum products. Note the discussion of curtailing exports--very similar to moves by Russia to exert more control over their natural resources. This is a key ongoing trend, where food and energy exporters restrict food and energy exports in order to meet domestic demand and to keep prices down.
After meeting with some relatives recently, I am more pessimistic than ever concerning the political response to oil depletion. Their strongly voiced opinion is that oil depletion is a scam (there is enough oil in the tar sands to fuel the world for 50 years-they saw a real expert on TV say this) and the #1 threat to North America is Muslims. If that isn't enough of a downer, Iran should be levelled as a war will fix the economy just like in the 40s. The bonus was Al Gore (and econuts like him) is responsible for the downturn in the economy. I realize my relatives are pretty frigging stupid and I guess the hope is they are in the minority.
My frequently used Titanic analogy. Two types of passengers, after they hit the berg. Those who then realized that the ship would sink and those who would realize that the ship would sink, with some realizing it as they drowned or died from hypothermia. The most interesting group are those people splashing around in the freezing water, and encouraging people to jump in--the water is great!
Had a chat with a young couple, who live simply in a rented apartment. She has a short commute, he takes mass transit. They have one small, paid for car. One of their friends is drowning in suburban debt and can't pay their bills from cash flow. They are going further into debt every month. Their "friend" tells them on a monthly basis that they are crazy to be throwing their money away in rent, and they need to buy a suburban McMansion just like theirs. Needless to say, I encouraged the young couple to stay the course. They said that I was the first person to tell them that they were doing the right thing.
Unfortunately, I've heard a resurgence of 'advice' lately to buy McMansions (as they will be going up in price soon).
However, NPR's program yesterday would suggest otherwise:
http://www.npr.org/templates/story/story.php?storyId=92304458
Hope is found in the fact that the politicians and the people have given up control of their energy use to the market. Demand destruction is in the drivers seat and prices will rise to force conservation. Perhaps, as the public is forced to change, they will choose intelligent change. I was at a subcommittee meeting in a midsized Progressive North Carolina community where a city planning person suggested bus service was likely to be curtailed because of high diesel prices. I am still fuming, but also 100% dedicated to ensuring no reduction in bus service. Obviously, we have our work cut out for us.
Ugh. Why is it either/or a Suburban Mcmansion with a Tahoe or a Rented apartment with you? There are so many other in betweens and variables, and EVERY real estate market is different. Obviously a Mcmansion purchase is not a good idea, but that doens't mean all purchases are bad ideas right now. I contend now is a GREAT time to buy a condo, or townhome located near mass transit in new urbanism or established urban communities. The demand for these types of units will only increase with time, and most likely supply will not be able to keep up with the demand for these units!
It's true that real estate in New Urbanism areas, especially along mass transit lines, will do better than outlying suburban areas that in many cases are rapidly transitioning to slums; however, the question is if they will increase in value in the context of a severe overall economic slump, especially as the discretionary side of the US economy continues to implode. Also, one has to look at the economic prospects for a given area. IMO, the risks of buying, in most cases and in most areas, outweigh the possible upside, but people will have to make their own decisions.
I don't know about the States, but in the UK house prices as a multiple of earnings are still around 60% higher than the average level - and that assumes that wages do not fall.
You would be basically making a bet that the real value of your loan would be inflated away, which may be a better bet in the US than in the UK as getting away with the inflation may be harder here as it is not a reserve currency and does not have the clout of America.
In fact, in the British market flats in town are more or less unsaleable, as many were bought on a buy to rent basis and the rent no longer covers the mortgage.
Presumably with increasing transport costs that will reverse at some stage, but the bottom appears to be a long way off.
One of my best friend’s former finance’ was a real estate agent in London during the boom. Not any more. Stuff was impossible to sell. Last I heard she was involved in a private mail delivery service there.
As a minimum, wait until we are soundly on the negative side of the red line, then look for BTL landlords being repossessed in city locations. Then make a lowball offer and wait until you find some bank desperate enough. You should be paying less than £100k.
We have a long way to fall yet.
"We have a long way to fall yet."
Not this far I hope.
What if it costs me $396 to pay my mortgage in Houston, while renting a house the same size would run me nearly twice as much? That's not uncommon in Houston. Ultimately, I can't trust any landlord not to kick me out at the first available opportunity, or to hike my rent due to double-digit inflation at some point during the next 30 years.
Renting is how poor farmers became serfs.
You need to look at the total cost of ownership, usually about 5% or so of the value of the house per year, even without a mortgage payment (property taxes, utilities, maintenance, insurance, etc.). So, for what it would cost you to hold on to a $300,000 house, even without a mortgage payment, you could be renting something for about $1,200 per month, and not have the $300,000 tied up in a house.
True, you are exposed to the vagaries of the rental market, but if you own you are exposed to the vagaries of the real estate market (a 5% decline would cost you $15K), and as I noted up the thread, one has to evaluate each area in light of the economic outlook.
BTW, Mish has a good article, and an interesting story from a reader, about the growing labor surplus:
http://globaleconomicanalysis.blogspot.com/2008/07/confessions-of-former...
One of the advantages of ruthlessly implementing the ELP plan is that it allows one to offer to cut one's salary in order to stay employed. I did this in 1989. At the time, I was the highest paid of about 10 people, and I suspected that job cuts were coming. I proposed a 50% pay cut, in exchange for an equity interest in deals that I generated, and the owner accepted. I moved from the most expensive to the least expensive employee. And as I expected, he laid off five people.
I just have a bad feeling that rent, like medical bills, education bills, and just about everything else needed for survival, will always go up faster than wages, no matter what market forces are supposed to dictate. It's about class blackmail, not a transaction between equals.
By buying a $70,000 house in the Heights in 1999 I got out of having to rent a small apartment for $400 a month in Montrose. I knew rents were going to go up there so I had to get out. Now the house is assessed at $120,000, which is absurd, but even if it falls back to $70,000, I have to compare that to spending $800 to rent a small house for the last 108 months. If we do have general inflation and the rent for the next 20 years averages $1500 a month, then that's another $360,000 to put against the guaranteed $96,000 in mortgage payments and well over $80,000 in taxes over the same time.
At the end, though, I will be turning 65 in 2029, and will own a house, instead of not owning a house. Right now I trust that more than I do money in a bank.
http://www.energybulletin.net/node/45813
The media will tell them whom to blame and it won't be the owners.
What if it costs me $396 to pay my mortgage in Houston, while renting a house the same size would run me nearly twice as much?
This has to be the single most ridiculous statement I've seen today. After the largest housing bubble in our lifetimes --possibly the largest in more than a century-- where exactly is it possible to purchase a house anywhere in the U.S. for less than it costs to rent an equivalent house, much less *half*? Houston may not have seen the gigantic price:rent multiples now common in CA or FL, but that doesn't mean it was completely immune from the housing bubble or the crazy-credit lending that spawned it.
No way monthly PITI (+ property taxes & maintenance) could possibly run half monthly rent on a house in any major city (possibly barring Detroit) since at least the early 2000s. Unless, of course, one uses "creative" financing, and is basing the Howmuchamonth "cost" on the neg-am teaser rate.
Property taxes in Detroit are enormous, especially considering the lack of services.
For example, residents have to pay a $300 annual fee to have the garbage picked up.
Detroit has an income tax of 4.5% and non residents who work there pay 3%.
Now I work with many folks who have bought several homes and/or apartment buildings in Detroit but mostly in the surrounding 'burbs and lease them out to people who they claim "make their payment" for them.
Not a lot of immediate profit but there are tax benefits that renders this deal profitable in the longer run.
So, under this scenario, how can the renter avoid paying these costs?
The landlord is just passing them down to them.
The reason I rented prior to buying my home was because I never had stable employment or a down payment large enough to swing a home loan.
First off, condominiums are still grossly overpriced in many urban areas (I’m familiar with the Chicago area, especially the south loop). Now in order for that purchase to be worth it, your employment has to be with the proximity of public transit or close enough to save energy. I don’t know about you, but I change employment all the time, and this appears to be a growing trend. Everyone is temporary. So a location that was convenient with one job wont be for another. The days of working thirty years with IBM are gone. Then there is selling your unit. Good luck. Yes, there will be some people that benefit from the “new urbanism”, but I don’t think the solution is as cut and dried as you present it.
I don’t know about you, but I change employment all the time
Good point, but that argument further supports a devaluation of suburbia. Compact areas of cities with a dense mix of residential/commercial will have far more job opportunities in close proximity than the leapfrog development in the middle of nowhere where your options are that 1 large employer (say, an Intel fab) or Wal-Mart. If you lose your job at Intel, you're toast if you're stuck out there.
But the question is not one of living in the city, (which I promote everyone to do! yeah, yeah, that's it) but whether you should buy at still historically high prices which have not hit bottom when you could rent for cheaper and leave yourself more flexibility is just plain…Do I need to say it?
I agree that staying away from some overheated condo markets like Miami, LA, and others (not sure about Chicago) is probably wise. Even though prices have fallen in these markets by 20-30% they could fall further. In these markets, you may be able to get good rebates on rents as these units come back on the rental market (many were taken off during the bubble with conversions and drove rents up, and most haven't come back down yet) But, the rental rates probably won't drop so low that the owners take significant losses. It's likely many will be foreclosed on and fire-sold by the banks. I'd be looking at the foreclosure market for well-located condos if I were in the market right now.
However, I think this question (rent vs. own) also depends on how you see Peak Oil playing out. If you see inflation risks, buying may be the wise move, as rents rise with inflation, debts fall and interest rates rise. No doubt, ill-located real estate will depreciate significantly, so if your job is located in a car-dependent area, renting would probably be wise. Generally, if you are in a walkable area with a dense mix of uses, however, your property should hold it's value or even slightly appreciate, IMO.
there are pros and cons to renting and owning (and note i said owning, not buying) i argue that one need not treat the house as an investment. a house that you can afford, in good times and bad is, imo, more than an investment.
you from rio rancho by chance? Intel did massive layoff here and banged alot of people
Wow! What area of the country do you live in? I would guess the south, which is where I'm from. Most people here seem to only watch Fox News.
I am not proud to report that my relatives live near Niagara Falls, Canada.
Fox "News" really is a cancer on honest social / political debate. They poison discussion with half-truths, misleading commentary, spreading of slanderous memes, fear mongering, inciting hatred, and traffic in outright lies.
Deliberately, knowingly, broadcasting lies to the general public with the intent to do harm to others (specifically those who question their lies or politics) should not be protect as free speech any more than the proverbial shouting FIRE in a crowded theater without cause. Broadcasting hate speech and lies does have serious consequences for the nation. As such, Fox's style of broadcasting, itself propaganda worthy of any Ministry of Information of your average totalitarian state, should be cleaned up or face being SHUT DOWN. They are doing immeasurable harm to the USA.
Beyond this, the Corporate media needs to be broken up and re-regulated to disperse the power they have accumulated to manipulate public opinion in favor of rabbid right-wing extremism where: all brown people are terrorists, war is peace, it is unAmerican and pro-terrist to point out that torture is not only wrong but also a tool of Evil and is used to practice state terrorism against the citizenry, and being spied-upon by our own government without a warrant is Freedom because it protects us from terrists under every bed.
Yep. Problem is that the regulators and TPTB mostly agree with their propaganda.
Problem is that the regulators and TPTB mostly agree with their propaganda.
Or perhaps the large cane of regulation and the IRS help to keep the pigs trotting around the show yard?
http://oklahoma4h.okstate.edu/projects/literature/N-389web.pdf
The Fox "News" cancer has spread throughout the body politic. It is perfectly acceptable now to call for the death of innocent human beings. The main stream media silence at one more joke about killing muslims/the Other really shows that we have lost our moral compass.
http://blog.washingtonpost.com/the-trail/2008/07/08/mccains_latest_iran_...
Our current period certainly disproves the theory of moral progress.
Do read John Pilger's "The New Rulers of the World". It was written after 9/11 and when the preparation for the war on Iraq was being planned. It is a great account of how some lives are always less equal than others and how globalization has come at a heavy price to the world's poorest.
Half a million Iraqi children died after the sanctions enforced after the first Gulf War. Apparently depleted uranium was used in armour piercing shells
http://seattlepi.nwsource.com/national/95178_du12.shtml
The number of Iraqi children with cancer went up significantly after the war. And Madeline Albright's response "We think it was worth it". And the right wing media supported it all along.
Srivathsa
Now wait a minute!
Don't you know there are already too many children in the world?
And Maddy Albright was appointed by Al Gore's boss so she must be OK.
-sarconal off-
You guys are just too hard on Fox.
Where else can you see gems, at least in the "family sense", like this?
Jesse Jackson wants to help Obama control overpopulation.
He's offering to "cut his nuts off".
The first amendment to the U.S. Constitution guarantees to U.S. citizens the right to free speech. Free speech with regard to politics is especially important, as it allows people of diverse political viewpoints to be heard and helps prevent political repression. Fox news has a conservative slant and most other broadcast news outlets have a liberal slant (this can be measured by the professed voting habits by journalists in the business). We shouldn't wish to shut any of them down. It's a free country.
I don't think they should be shut down, but I would like disclosure. It's fine to be biased, it's not OK to mislead the public about it.
The journalists count for nothing. The bosses and the advertisers control the news. All you people who have been surprised by America's growing problems would not have been surprised if you were getting your news from alternative and anti-war media. They've been right about almost everything, and the giant corporations are being proven wrong about one thing after another. Where's the bias in that?
Opinion, political opinion is one thing.
However, what about deliberately spreading lies with malicious intent?
Do I have a right to call for a prominent political figure to be assassinated? Is that protected Free Speech? Or is that incitement to violence, likely encouraging some nut to actually murder someone? Society rightfully should protect itself against this and deem such speech illegal, especially the right to broadcast such toxic nonsense to millions.
Do I have the right to lie about someone, to injure their career? I think not: I could be sued for slander or libel. In politics, why should this be held to a different standard. Malicious lies, knowingly spreading damaging falsehoods, as protected Free Speech... no way.
My point is that there are legitimate limits to free speech and Fox "News" crossed most of them a long time ago.
Don't worry. As stated in WestTexas' article above:
We haven’t seen this kind of class rage in over a century. So far these Americans have been quietly complacent, waiting for the fundamental change that never comes.
It will manifest what has always been the single greatest fear of America’s ruling elite: “There’s a f*ck-load of them, and they have guns.”
The worm is about to turn
What the author doesn't realize, is Joe-Sixpack is already there. It will only take a spark, something that initiates a mob response.
And whom will they go after? They'll get that info from Fox.
If people were prosecuted for malicious lies etc you would have to throw most politicians in jail and who would run the government? Besides who decides what is malicious lies etc. You could have a charge like that of anti Soviet propaganda in the old eastern bloc. In Britain people are charged with such things at the behest of the state and jury's are reluctant to convict. Don't go there.
...Deliberately, knowingly, broadcasting lies to the general public with the intent to do harm to others...
Take a good look at the techniques used. Photo doctoring, etc.
http://www.alternet.org/blogs/peek/90323/
http://www.nytimes.com/2008/06/28/arts/television/28rati.html
Here's alink to its key graphic:
http://www.nytimes.com/imagepages/2008/06/27/arts/28chartready.html
Everyone should read the 25 Rules of Disinformation
(Do a google on that title.)
Here's one example
http://www.proparanoid.net/truth.htm
These are the Techniques. The unsuspecting public is unprepared for it. They still believe that "They would say it if it wasn't true" to a great degree.
Or just listen to some Old Zappa.
I Am the Slime.
steve001 - a bunch of El Toro poop
BrianT,
Your relatives are in the majority. The majority of people I run into that talk about oil think that there's plenty of oil, and it's just someone's stupidity/ignorance that isn't allowing us to reach our full potential. I think it's a culturally ingrained assumption.
This is my observation... I have no solutions.... Although Peak Oil theory IS gaining ground.
They are correct, there IS plenty of oil in the world, probably at least a trillion barrels.
Unfortunately PEAK OIL HAS NOTHING TO DO WITH HOW MUCH OIL THERE IS LEFT IN THE WORLD. I think this should be written on the headline banner of TOD as it is such a misconception by the world at large.
Wrong, it is just the normal operation of the free market - when something gets more costly to supply (like oil, as the easy stuff is gone) prices must rise to ensure profitability and if the costs go up less will be demanded. This is basic, very simple, economics - there is something very wrong with the education system that people don't understand this.
It really starts to make history more understandable, doesn't it?
We ask ourselves over and over again wrt to one folly after another: "How could they be so stupid?"
Now you know.
Many people I talk to and know, either in real life or online, have almost the exact same beliefs/outlook on all the topics you mentioned.
I think the majority does in fact think this way.
I don't see any way out of all the messes we are in/causing. ZERO.
I actually forgot about the best one-Barack Obama is a sleeper cell Muslim whose entire agenda is to attempt to turn the USA into some sort of Muslim state. I swear I am not making this up-my imagination is not that good. I think my relatives deserve their own reality show.
CNN concurs...
And it doesn't help that Obama's middle name is Hussein either...
Yeah, for many people name recognition is all that matters in the voting booth. That's why there has been either a Bush or Clinton as president or VP since 1980 (and depending whom Barak chooses, there may be a Clinton as VP until at least 2012...)
In the Republican Party, there has been either a Nixon, Dole, or Bush on the ticket every election but one (1964) since 1952.
Your relatives reflect the sorry state of human nature in general. Unfortunately the vast majority will go to an early grave without ever even understanding what happened to them.
If we could have a complete sampling of public opinion, I wouldn't be surprised to see these attitudes expressed by 40 - 50% of the population. Maybe even more. They are depressingly common in the responses (where responses are possible) to nearly every article I read in the news regarding the energy situation....right down to the "nukeing Iran will somehow improve things & Al Gore, etc. is to blame" bit. Really, there isn't enough time to deprogram and re-educate all these poor sods. That will fall to conflicts, price shocks & shortages.
Expect to see this level of ignorance and obscurantism exploited to the max by the GOP as it attempts to maintain its hold on the Presidency. (And no, I am NOT pro democrat, pissants that they are.)
There's the big problem right there! TV! I had the benefit of growing up with parents who essentially thought TV was a bad thing for kids. We got our first TV in 1974 when my family moved from the a deep rural fishing village that, didn't receive TV signals to a rural town that did. My sister and I were never allowed to spend all day watching TV and in those days before cable, the local TV stations didn't broadcast all day anyway.
TV viewing gradually increased here starting in the 80s with the advent of satellite and then cable TV, which fed fed us a steady diet of North American based programs. It has reached the stage now where people are immersed in a distorted reality field. There's a TV on in many of the business places you go to here, especially places where you have to wait to be served and if you're lucky it will be showing news from CNN or sports.
Music videos are very popular among young people and here, the genres of choice are local urban reggae and US black urban contemporary. These genres are very similar and feature singers/rappers, surounded by expensive vehicles and scantily clad, gyrating women. It is not too surprising then that, in the absence of good family settings, a lot of urban ghetto males have aspirations of being an entertainer or a gangsta and the females aspire to be some rich man's b--ch.
The overall message from TV these days is consume, consume, consume. It's in the movies, the music videos, the sports and the news not to mention the advertising. I have a hunch but, it seems Nielsen has virtual monopoly on viewing data so, I had a really hard time finding any data that could back it up. I think the History Channel, the National Geographic Channel and the Discovery channel, must be the least watched channels on cable, in that order. Yet most of the programming on these channels is probably the most educational stuff on TV.
We are all being fed a diet of fast paced action and fantasy via TV. Even so called "reality TV" is a sick joke. A lot of what people see and hear around them is heavily influenced by TV hence an individuals perception of reality will be distorted by the TV programming they watch. Even the news cannot be trusted since we all know how unbiased the news can be. Just watch Fox news or CNBC for proof. While people control their TVs by remote control, they are being controlledremotely (brainwashed) by their TVs.
Yesterday, there was a post the pointed to a the documentary "Crude" being shown on the History Channel. It is also available on the Australian Broadcasting Corporation website here:
http://www.abc.net.au/science/crude/
Other interesting stuff on their website is a documentary entitled "Peak Oil?" and a 13 minute ABC Catalyst feature on Peak Oil.
Any day programs like these are shown on US MSTV, during prime time, this site can be shut down, our work will be done and we will all be able to move on to creating a post peak future. My bet is that, it will stay on the History Channel till well beyond the point when Peak Oil is history.
Alan from the ilands
Yeah, I have a little gadget that I bought. A sort of universal remote that has only one function - to turn a TV off. I use it with success in lots of places where the TV is just oppressive (especially if they are showing Faux Snooze).
Lots of gas stations these days have a TV for no apparent reason.
All quotes courtesy of 100 Voices, compiled by AC Buchanan & DK Klingsporn, FrontPorch Books, 1999
WT, Give it a name. It is strong nationalist sentiment from any angle and I said some time back that the economic shock to world economies, due in part to increasing oil prices, would lead to protectionist sentiment.
People are ignorant but they are also frightened and ticked off. As BrianT pointed out above they take a simplistic view of what created their economic ills. If they become aware that 'their gas' is being refined in the US of A and then shipped out of 'their country' while they are continuing to pay over $4 at the pump, what do you think they will say?
As the MSM make a few more tid bits of info available the situation will get worse...and we are only in the second inning. As time passes we will see trade barriers lifted and export bans are already in place in some countries. Every time this has happened it ended badly.
You do have to appreciate the irony of a country like the US that is absolutely dependent on the free flow of exported oil trying to restrict the small volume of petroleum that we export.
Why do we export? I know we export to Brazil... but why?
We export almost no oil. According to today's TWIP report, we exported 27,000 barrels/day out of our 5,087,000 barrels/day of production. That compares with 10,056,000 of imports. We do export some finished products (~1.4 million bbls/day), but we import more than twice that much. Not every country in the world has adequate refining capacity, so they have to get their product from those who do. We probably aren't importing the same things we are exporting, at least not from the same places.
I seem to recall hearing during the post-Katrina gas crunch that what we export is gasoline that doesn't meet our environmental standards.
Shargash, you and I know what you have posted. JSP does not. MSM would probably report the small quantity of gas being exported in their usual dramatic fashion and JSP would go probably go ballistic, simply because 27,000 barrels a day = a lot of fill ups for his vehicle. JSP is going to translate what he hears into terms that effect his day to day existence. I said that they are ignorant, not dumb. They are capable of learning (the vast majority) and that should be one of the goals of this board...education.
The USA exports petroluem all the time. Its called arbitrage.
Maybe for samples to put in a petroleum museum?
I think we export a lot of gasoline to Mexico. They do not have refining capacity to support their own consumption even though they export a lot of crude oil.
Here is the DOE page showing American crude oil exports:
US Crude Oil Exports
The only crude exports in 2007 were 27,000 b/d to Canada.
Quaker State motor oil used to advertise that they used exclusively 100% Pennsylvania crude for their products. Could be that the exports are high-quality crude for niche products like this.
Refined products are exported to several countries:
US Petroleum Product Exports
Mexico is the biggest recipient of products followed by Canada. 25,000 b/d are even exported to Venezuela.
Mexico imports 40% of its gasoline.
"Quaker State motor oil used to advertise that they used exclusively 100% Pennsylvania crude..."
i think it was pennslyvania GRADE crude oil, but i dont really know what that means. oil of pennsylvanian age ?
This is a great quote, if you don't mind I'm going to "borrow" it.
Wrong. There are still large number of Americans who believe that the earth is flat, that the earth is 7,000 years old, and that Elvis is alive. There will always be Americans who believe just about anything, including that resources are infinite.
I have never met anyone who believes that the earth is flat.
Elvis does. He just told me!
I used to argue about that with my grandfather, sigh....
Visit Kansas.
Have you seen Kansas?
The underlying assumption that both political parties largely operate under is that we can have an infinite rate of increase in our consumption of a finite fossil fuel energy resource base.
Some minor quibbles:
(1) in the context of political parties, an exposition of this concept may make little difference. After all, it is rooted in calculus or advanced algebra, depending on how one chooses to frame it in detail. That puts it in an entirely different universe from the one occupied by Average Jane and Joe, who were far too shiftless (and in some cases too stupid, too oversexed, etc.) to have cared about high-school math or high-school anything else, but who are nonetheless the ones to whom the parties must pander for votes. The typical panderer, a politician-lawyer who learned early on to make a living by cheating others out of their own money, and who therefore has no need for math (or science), won't do much better with it.
(2) when you put it that way, the tautology is too trivial. What counts is whether the finite resource becomes exhausted (or diminishes to a non-useful flow rate) within a time frame anyone genuinely needs to care about. That's a harder, non-tautological question, and said hardness is the reason TOD and such-like exist. After all, even the sun will be exhausted in due course, but that's a philosophical matter of little practical import.
(3) it's not an infinite rate of increase. It's a perfectly finite, perfectly tractable quasi-exponential. Nothing infinite shows up at any given moment or ever appears over the course of any future scenario. In view of point 1, this property may make the argument especially hard to understand.
Is significant progress on climate change a deadlock, or is it the other way around?
And is it useful to vow to bring down oil and food prices? Isn't that like promising to wish on a cursed monkey's paw?
Well, even though global growth has "moderated", according to the rich nations in attendance at the conference, they are apparently positive on future growth. Like a cancer cell that's currently running out of body tissue to cannibalize but which has faith that there's still more flesh out there to gobble up. A malignancy with a positive mental mindset, unaware that it's killing the system which sustains it.
That's how we will solve our problems, by getting bigger, because it's the only solution we can implement in the face of unmanageable complexity.
And that solution will work, until it suddenly doesn't.
“A malignancy with a positive mental mindset…”
I love it.
Your diagnosis is never more true than with local city, county, and state gov. I have been communicating with local officials and they are 100% trapped in the growth paradigm. They all but come out and admit that in fact the future growth that WILL happen is already in the bank, and already spent too.
It’s not our addiction to oil that’s the problem, it’s our addiction to DEBT.
Cheers?
First round's on me. Here's looking up your old address! :)
Thought I should push for my Greasemonkey script again.. If you like to see the origin of links in Drumbeats and other posts, like this:
Do this:
Get Firefox
Get Greasemonkey
Get the script
I have removed the dependence on jquery so it should load faster and (maybe) work in Safari too. It will now also display domains in comments. If you already have installed it, just re-install it to get the new version.
Thanks for that, Berserk. Just tested it on Safari 3.1.2 and it works perfectly.
Instructions for Safari:
-André
P.S. Nice to have the domains beside every link, too.
I edited the todban script to try to get it working again. It mostly works now except it doesn't delete the first reply to a banned user. I'll keep working on it, but for now I suppose it's better than nothing.
You can find it here: http://userscripts.org/scripts/show/29814
I already wrote a todban that works and posted it on yesterdays drumbeat...
It didn't work for me. All it did was delete the username, but left the post intact.
I came across this quote from Margaret Mead (1901-1978, American Anthropologist) yesterday...
I'm not knocking what we are doing here on TOD - and I occasionally do find myself in the role of doom prophet - but this quote sure did remind me of my longing for "a bearable alternative". Seems we spend a fairly small portion of our mental energy on exploring new ways to live in a decreasing energy world. (ELP, electrified rail transport, and O-NPK being our prime exceptions)
Are there discussion type sites out there that focus more on finding a better way to lead our daily lives? (not just other ways to power a car please)
PeakOil.com has separate forums for doomers, moderates, and cornucopians. It's an attempt to allow people to talk about solutions without getting shouted down by doomers. And vice-versa: a way to let doomers talk without the discussion be derailed by technocopians wandering in and telling them not to worry, we'll be driving SUVs fueled by algae soon.
I think the doomer forum is far and away the most active, though.
For a lot of us here the answer seems pretty simple, I guess that's why we don't talk about it much.
Use less, do more, learn what you can, teach any who will listen.
Living up to this ideal is much more easily said than done, but even in the small ways I have managed it there are daily rewards that I had long forgotten about.
For specific things to do:
Learn durable skills, like gardening, crafts, and music.
Live within your means.
Keep 30 days supply of food on hand.
Have plans for wtdwtshtf, having a plan reduces the stress of thinking about such things.
Greg, believing that finding this massive detritus of fossil fuel has enabled our population to explode, and simultaneously believing that, when this detritus is used up, will lead to a corresponding massive population decline, is not a trap that anyone has postulated! It is a simple observation, and a conclusion drawn from that observation.
Don't we all. So find this "bearable alternative" then sell it to the world as "Greg's bearable alternative". Lots of luck! You are not going to change the world Greg, and neither are the collective efforts of people on this list, or other lists. The idea that we have the power to alter the course of the world is....is....something that a lot of people believe they are capable of doing. Most of them are evangelists but some of them are people who just wish to fix all that is wrong with the world. You are just an observer Greg, and that is all.
Of course, as I have said many times before, you may alter the course of your own future, and that of the members of your family who do not take you for some kind of freak and are willing to follow you, but not the entire world.
Ron Patterson
I can't see how you can be absolutely sure that your analysis is totally correct.
The advantage of not accepting it would also appear to be all on one side.
If you don't try, you fail, simple as that.
I doubt that Alexander accepted your reasoning, or he might have called it a day in Macedonia, and it would seem that the world would have been considerably different as a result.
Dave, you are absolutely correct, I am absolutely sure that I cannot change the entire world. I am just as sure that neither you nor Greg can change the entire world either. My certainty comes from my experience over my 70 years. I have been watching people try to change the world for well over half a century. None of them, no not one, has made even the slightest dent in altering the course of the world in the direction which they sough to alter it!
But...that is not to say that your actions, however small they are, do not change the world. "You move a pebble on the beach, you set up a new pattern, and you change the whole world" It is called The Butterfly Effect. A change of anything, anywhere, however small, eventually changes the world. Alexander, Christ, Genghis Kahn and many others, by their actions, actually changed the pattern of all the future. In fact, we all do. But that is not to say that we moved it according to our will. All we did is change the pattern, the general flow of things the same way you would change the flow of a stream by throwing a stone into it.
But you and Greg, are talking here, about moving the entire world according to your will. No, you are talking about far more than that. Here is what you are talking about. First the problem.
The human population of the world stumbled upon an enormous amount of detritus from past life. This detritus enabled the human population to explode. And this huge population has played havoc with the earth's ecosystem. It has polluted our atmosphere and waters. It has caused rivers and lakes to dry up, it has caused water tables to drop by meters per year all over the world, and among many other things, it is causing a very large percentage of the world's species of plant and animal species to go extinct.
And now we can see the eventual end of that supply of detritus. And we can also see the consequences of such. And you Dave, with the sheer power of your will, propose to fix that problem! I am sorry Dave if I seem so god damned cock-sure that you will fail. But that is exactly how I feel.
Ron Patterson
Well, Ron, my comment was rather more general than that, rather than a declaration that I thought of myself as Alexander!
It seems that the argument you are making is not just for personal impotence, but collective impotence.
I also in no way indicated that the changes we hope to make have the effects intended.
A good example of this might be Churchill, who it seems on first blush made some difference on a number of levels.
He lived to see the British Empire, the maintenance of which was his great goal, fade away.
This does not mean that his deeds had no effect, but is a further example of how difficult it is to predict the future, as it tends to catch us out.
Of course, in the relatively short term we can say that oil is going to get more expensive and scarce, and so on.
Determining what the outcomes of this vastly complex system will be in 50 years or whatever is not possible, although we all have our best guesses.
You have jumped straight to the Nietzchian super man thing, which is not a viewpoint I would concur with.
Both the conviction that we are inevitably doomed, and its converse, that by an act of will be can determine the future seem to me hubristic.
In reality we have a much humbler part, to try our best in a very imperfect world, where the outcomes of even the best intentioned acts may go astray, but occasionally we do get lucky.
Our grandparents expressed the idea of the small part we have to play but our absolute duty to try very simply, that we should do our best and trust to God for the rest.
Like mushrooms?? May be that's why so many people like being in the dark:-)
Ron is old, and therefore knows everything.
You young guys know nothing, you're all doomed - doomed I say!
And some people simply do not have the intellect it takes to make a logical argument and therefore must be satisfied with making very stupid sarcastic remarks. Pity them.
Ron Patterson
I would argue that Rosa Parks managed that.
And Gandhi. And Mandela. And Reagan. And Watson&Crick. And Brin. And Carson. And...
As I see it, quite a large number of people have had quite large goals (ending racial discrimination, freeing India, ending apartheid, toppling the USSR, increasing scientific and medical knowledge, increasing access to information, launching an environmental movement) and have moved the world quite far in the direction of those goals.
Do you disagree? Do you believe that none of these people managed to move the world in the direction they wanted?
Which is fair enough. It's important to recognize, though, that feelings are less reliable than careful, reasoned analysis, especially about complex problems. You and Dave may feel differently, but that doesn't change the facts of the matter, so the facts are what should be discussed and used to arrive at conclusions.
Non sequiturs and not even backed by data. Sad.
What Ron has is scientific data - every mammalian species (and almost every single species) that has experienced overshoots this large in the past has experienced serious population die off as the resource base was exhausted.
In fact, in homo sapiens evolutionary ecological niche, we are hunter-gatherers and the population was reasonably stable around 10 million for tens of thousands of years. That's how we evolved and that is how the ecology was stable - with 10 million of us in it. Yet in the last 10,000 years the population has grown by 65000%. In fact, the population has grown by nearly 1000% alone since 1700. On a geological time scale this is nothing but the growth is extraordinary.
Yet people like you think we can either keep this up or at least not experience the crash that almost always occurs when populations reach such extremes. Amazing.
It is rather more difficult to determine when that overshoot has occurred save in hindsight.
Also, the fact is that we have not experienced such an overshoot as an advanced technological civilisation before, so we don't know the extent to which mitigation is possible.
You are also assuming that I am arguing that a crash is not possible which is far from the case.
It is not the thesis that seems problematic to me, but the conclusions drawn from it, which are based on assumptions which may or may not be valid.
IOW, I don't know a lot of what the future holds, and it seems unlikely that anyone else here does, although we will all have our own opinions on the probabilities.
If you tell me what the result of tomorrows 3.30 will be, then I might start to have more confidence in absolutist projections into the future for the next 50 years or whatever.
In human history there are ZERO cases of civilizations facing a resource crisis (or multiple crises) that has not reacted in one of the three following ways:
1. Reorganize at a higher level of complexity, using more energy to maintain the civilization.
2. Reorganize voluntarily at a lower level of complexity, using less.
3. Reorganize involuntarily at a lower level of complexity, using less (collapse).
Now, of these three, looking at the resource crises that have occurred throughout history, a small number of times we have seen response #1 but this relies on successfully acquiring a higher energy source than what was then currently used. In a few very rare cases, there are records of response #2. And in the vast majority of cases, there is response #3.
This is my opinion but there is no way in hell that homo sapiens is going to globally do a #2 voluntarily. It's not going to happen and the voluntary powerdown people are smoking crack and completely whacked in the head. This leaves #1 and #3 (collapse).
So we have two choices, power up or crash down. And the switch out of fossil fuels does not appear to be occurring at a rate sufficiently rapid to avoid a crash. How far we crash is open to debate. Can we grab hold of ourselves going down and make the switch under crisis conditions? If we can do that, then the death toll may range from a few hundred million to a few billion. Can we respond before we reach a catastrophic crisis state? Yeah, theoretically we can but so far we are not so I don't put much stock in the techno cornucopians who say everything is going to be alright. It's not going to be alright for extremely large numbers of human beings.
And as for powering up other sources to combat the energy crisis, I don't see how we can avoid both coal and nuclear, and both of those have environmental issues. Further, even if we do solve the energy crisis, we have not solved the climate crisis or the water crisis or the arable land crisis.
That leaves response #3 as the most likely, both historically and from what we see in the political process thus far. It's not that #1 cannot occur. It can but will it occur? So far there is very little evidence that we're serious about path #1.
And despite all this, you want to assume that the best can happen from this unfolding disaster? Wow, that's religious faith, man. Pure, unadulterated religious faith. Where's your altar and what god do you worship?
Can you name one? I am not aware of any cases of societies voluntarily powering down or reducing populations.
An excellent book to read on this is "Constant Battles" by Steven Leblanc. Leblanc is and anthropologist who has studied human behavior in the past. In every case all over the world people have over-exploited their environment, been unable to control their numbers, and ended up going to war. That's it in a nut shell. It's how we are hard wired.
Those who think we are going to muddle through this and find a non-violent solution need to read that book.
Tainter points to the Byzantine empire as an example of a society that voluntarily simplified in the face of declining marginal returns.
And there are examples of societies voluntarily reducing population today. Japan and several European countries have shrinking populations, and it's not due to dieoff. It's due to people not wanting to have kids for various socioeconomic reasons.
Wow. Blackwater has an end game.
The interesting part is when they give up on the detritovore lifestyle; the process of when they mostly decide to flip into Earthmarines in support of Elysian Fields. Time will tell.
See my earlier posting series for brief details. Recall the earlier weblink when brother-clan Somalis fought to the death over protecting vs harvesting a forest.
The various socioeconomic reasons boil down to living in a wealthy country with:
- educational and career opportunities for women
- social services like healthcare and pensions
- secure borders and high tech military forces
The future prospects for wealth to pay for these things are pretty grim, at least in the model of European style social democracy.
You are correct, it was an excellent book, one of my very favorite. LeBlanc is an archaeologist at Harvard, not an anthropologist. Here is one of my favorite passages from Constant Battles.
Not only are human societies never alone, but regardless of how well they control their own population or act ecologically, they cannot control their neighbors’ behavior. Each society must confront the real possibility that its neighbors will not live in ecological balance but will grow its numbers and attempt to take the resources from nearby groups. Not only have societies always lived in a changing environment, but they always have neighbors. The best way to survive in such a milieu is not to live in ecological balance with slow growth, but to grow rapidly and be able to fend off competitors as well as take resources from others.
Steven LeBlanc, Constant Battles: Why We Fight
And that, dear hearts, is why we behave in the manner we do. It is in our genes. Those who, in the past, did not behave in such a manner became eliminated. They were selected out of the gene pool.
Ron Patterson
Before we were hunters we were scavangers, and we have always been better scavangers than hunters (felines have us beat by a mile). Thieving is in our genes, it is what we humans do best.
I don't know what is going to happen in the future, and in spite of clever constructs I don't thinks you do.
The guys like the economists made aup a nice story, where demand automatically created supply, and their picture appears to be inaccurate.
Yours may be too.
You also persist in wrongly characterising my views, claiming that I am saying that we will pull through in reasonable shape.
I have made no such prediction, and if you want to continue to claim this please cite the reference.
Here is my recent median guess on population, for instance:
http://www.theoildrum.com/node/4267#comment-376371
4267
which is very different from the UN projections, which do not take account of peak oil.
On the contrary to your allegations that my statements are faith founded, that would appear to be a critique which should more reasonably be laid against yourself, as you appear to imagine that you know for certain what the outcomes will be, whereas I have no such certainties, and hence should more properly be characterised as agnostic.
GZ, and Ron, RIGHT.
DaveMart, wanna see our future in graph form?
(and the backup story).
An oldie but goodie on this topic.
THE INTRODUCTION, INCREASE, AND CRASH OF REINDEER ON ST. MATTHEW ISLAND
http://www.dieoff.com/page80.htm
You seem to miss the fact that the debate is about the degree of certainty possible that a crash will happen, not about it's possibility.
Reindeer also AFAIK did not get on the internet to discuss whether anything could be done! :-)
You can't push analogies too far, although they can be valuable.
Would those who downrated the above post please explain in what way it breaches site rules?
Or alternatively what they do not understand about the stated purpose of the rating system, to downrate only those posts which breached site rules, and not to indicate agreement or disagreement?
It appears we have now entered some sort of Eurovision Song contest, where those too lazy or incapable of arguing their point can simply click a button, thereby reducing debate to the lowest possible level.
I would argue that you've just touched on the fundamental point of disagreement here. I would characterize it as:
#1 is probably the simplest question to answer. That's the one people are addressing when they talk about electric cars and rail.
#2 is substantially more complicated. It's the question people are addressing when they talk about the amount of resources needed to build these replacements.
#3 is by far the hardest question, as it's reliant not on technical issues but on social ones.
You're addressing the third question here, and suggesting its answer appears to be "no". It's a very, very difficult question to be at all certain about.
Classic Straw Man fallacy.
You have entirely misread what he wrote. Far from assuming the best will happen, he explicitly noted that all manner of outcomes were possible, and that he wanted to examine the assumptions which led to different conclusions. Please try to read more carefully in the future.
Dave, if it were not in hindsight then it would not be overshoot. We are already deep, deep into overshoot. If it were not so then the rivers and lakes would not be drying up. The water tables would not be dropping. The rain forests and dry forests would not be disappearing. Species would not be going extinct. And a thousand other environmental problems would not be happening if we were not in overshoot.
No, that is not the argument at all. I am arguing that a crash is inevitable and you, I assume, are arguing that it is not.
Dave, now you are being silly. You are comparing specifics with generalities. You cannot do that. That is why there are no rich fortune tellers but dozens of rich insurance companies. That is, an insurance company can tell you, within a certain percent of error, how many people will be bitten by a dog in New York City next month. But no one can tell you exactly who will be bitten. It is a lot easier to predict the future of the masses than that of any individual.
The population of human beings is already well past that which the earth can support, in the long term, even if we never ran out of fossil fuels. But when our energy source, and the source of food and employment for the vast majority of the earth's people, starts to disappear, then the obvious will happen sooner rather than later. To believe that 6.6 billion people can be supported when that energy, and consequently food and employment, disappears, is akin to believing in magic.
Ron Patterson
What a ridiculous statement.
There is plenty of energy available to us, and we don't need to use nearly as much as we do, to believe otherwise is akin to ignorance.
Again, that is a sarcastic statement, not a logical argument. What energy, other than fossil fuels, can possibly food, clothing, shelter, and employment for 6.6 billion people? What type of energy, other than fossil fuel, that was produced without the aid of fossil fuel?
The food we eat today was produced with the aid of fossil fuel. Our employment depends on fossil fuel. Describe a world without fossil fuel Bob. I know we once had a world without fossil fuel. That world had about half a billion people. We now have over 13 times that number. And it was that fossil fuel that enabled that population explosion. It is magical thinking to think that that 6.6 billion people could be supported on the same resources that could only support half a billion people before.
Ron Patterson
Irrelevant, as we currently have the fossil fuels to produce alternatives, and have begun doing so in earnest. Several of the alternatives can be self-reproducing, as long as the necessary dopants hold out.
Not to mention that many sources (direct wind/hydro for mills) do not require fossil fuels to produce.
Unless we bomb ourselves back to the stone-age over the course of the contraction, I expect that suffering will tend to be localized to areas so badly in overshoot that they can't support themselves with the resources we know how to exploit now that we didn't 100 years ago.
I agree. There is a lot of flexibility. In 1950, the world produced about 13m barrels a day if I recall. The population was about half of what it is today. But, since then we have had many advancements that could be used to make things quite a bit more comfortable while using much less energy. I'm talking about stuff at Home Depot. Fiberglass (or other kinds of) insulation, CFL and LED lights, good solar and wind, hydro and nuclear buildout, etc. As for food, we don't really know what's possible. There is a lot of unused farmland in the US, and probably elsewhere as well, abandoned due to decades of rock-bottom food prices. We could get multiples more from the oceans, with no effort whatsoever, if we only allowed the fisheries to recover for a decade or two.
Consider if: we lived in 300sf/person apartments/cottages that were all superinsulated and passive-heated to the extent that they required no heating at all in winter. We rode bikes for distances less than three miles, and took trains for distances greater than that. Our energy needs would be microscopic, maybe 10% of today's usage, but we would have all the comforts that we have today, and actually some new comforts as well.
I have argued that the energy system of the future is already built: It's the hydro and nuclear-powered electrical grid, plus additional wind and solar build-out. Hydro and nuclear already accounts for about 40% of all electricity generation in the world. With more solar and wind, we could have 50% of today's level. If we then reduced usage by 70% (anyone using offgrid solar typically uses about 10%-20% of the typical US household), that would leave 20% for powering things that now run on fossil fuels, notably transport, which would be mostly electrified rail. A little bit of petroleum could be used in places that need it, maybe 5m barrels per day.
I suppose someone would argue that "people would never do that," but in fact, everyone would do that, if the price of energy was high enough.
I find you post very valuable.
Just splitting a lot of city centre houses into apartments and insulating them would appear to do most of the job, although it should be noted that one of the guys here has actually insulated several houses in Canada and they used very little heat even though they were large properties.
Perhaps it is worth pointing out also that the nuclear fleet will need replacing at some stage, but if you just used current sites and built the new 1.6GW twin reactors on them (some would not hold two, but a lot would hold 4) then you could generate around 300GW of energy - with heat pumps plenty for needs in the scenario you suggest.
"It is a lot easier to predict the future of the masses than that of any individual."
Asimov's Foundations used this fact to implement Optimal Overshoot Decline and speedy Paradigm Shift. There is a reason why this book series was voted the best science fiction ever [Hugo Award Winner].
I suggest you read Taleb's 'Black Swan' Ron, where it is argued that faith in gaussian distributions in the financial services industry has effectively bankrupted them - they are on life support.
What is certain is that in time they will be wrong, and there certainties based on sand.
It is surely not valid to substitute one proscriptive formula for future events with another, this time leading to doom instead of endless growth.
The appearance of greater certainty in insurance compared to predicting an individual event is illusory if the wrong framework is chosen.
Simply, it appears to me just as fallacious to infer the certainty of doom as previously to infer endless growth.
If you ask me what I think the odds are of pulling through in reasonable shape, I do not think they are good, and for much of the third world disaster beckons, but I do not think it is possible to predict for sure how things will pan out.
There are too many discontinuities in the system.
Darwinian, your insights are always valuable, but I think you may have partially stumbled into the fallacy of the excluded middle.
In doing so, you have missed a huge swath of landscape that exists between JAFO and "changing the entire world".
If it were not possible to have an influence, the memes of peak oil, climate change, ecological destruction, and overshoot would not have gained mindshare, and this blog would likely not exist.
So here's a bearable alternative to being buried by the avalanche above us already in motion: get out of the way.
Hey, 710:
Here's an included middle for you -
Unincorporated Washington County, OR, just outside of Portland, lies in the ag area of Tualitin Valley. We're close to light rail, there are many progressive people, and we have LOTS of water.
As predicted, the whole of Oregon is slowly being squeezed out of the travel mainstream -
"Delta to end Eugene-Los Angeles direct air service"
http://blog.oregonlive.com/breakingnews/2008/07/delta_to_end_eugenelos_a...
- which isn't a bad thing, considering that this county alone is still growing by a thousand people a week.
Now everybody wishes the door would slam shut right behind them, but somehow we have to find a way to continue to accept newcomers without being swamped by them. It may be that costly travel, deteriorating roads, and massive unemployment are just the ticket for preserving a lifeboat community here for a few generations.
710, we all have influence. I like to think I have had a great influence on my children. And almost everyone has such influence, be it good or bad. And often, as in the case of teachers, that influence has an effect on their students. Also we are influenced from books. The book "Overshoot" by Catton has had an influence on me for sure. In fact every such book influence a lot of people who already have a susceptibility to be influenced by such books. And the higher oil prices go, the worse the economy gets, the easier it will become to influence people with books about peak oil. That is the point 710. People are influenced when they are ripe to be influenced and not before.
Some people, of course, see the problem long before others. Because they are smarter? Perhaps that is part of it but other factors come into play also. The world flows 710. Events cause people to be ready to be influenced. Then someone who saw the problem earlier explains it all to them.
A few people, a very few, can see the problem in advance and try to alert the world. But by and large, no one pays any attention to them. Then events change things. Events make them susceptible to making changes or seeing problem that no argument, however strong, could ever do.
The world now has over 6.6 billion people. The world fifty years from now will have only a fraction of that many people. Do you, 710, have the power to change that, what I believe to be a fact? Or, are you, I, and everyone else just observers?
There is a tremendous difference 710, in understanding the problem and fixing it. Some, but very few, can be influenced enough that they can understand the problem. But as far as fixing the problem, we are all just observers.
Ron Patterson
Dear me, another ridiculous statement. It's just not even worth analysing, it's so wrong.
Do you have any hard scientific data to back up your statement here, besides the adjective "ridiculous"? Have you perhaps earned a degree in anthropology or biology? Perhaps a PH.D. (my husband, in wildlife biology), or an MEd. (myself in education)? Ron, I was a member of ZPG in the late 60's...talk about seeing the problem ahead of time and nobody paying attention. I had two kids and had my tubes tied. Neither of them have kids now..thank goodness. My husband and I moved to an area that has good water and fertile land 20 years ago, for the very reason that we both saw what was going to happen, eventually. BIG garden this year. Son growing one as well. Good luck to you BobCousins if you haven't made any such plans.
Please analyze it for us, anyway. Not all of us intuitively grasp how ridiculous the statement might be. Could it be that we have reached and perhaps even surpassed the earth's carrying capacity? Could it be that the current very large population is dependent upon resources like, say, oil? Could it be that we are running out of fertilizer?
False.
First, ridiculous statements are worth analyzing to show why they're ridiculous, as that will help people avoid making or believing other ridiculous statements in the future. Critical thinking takes practice.
Second, he might not be wrong. You're committing exactly the same error he is, by presenting your beliefs about the future as if they were 100% certain facts. If neither of you give well-supported arguments, "no you're wrong" is no more convincing than "yes I'm right".
As it turns out, I agree with you that Ron is most likely wrong. What I think is a key difference, though, is that I have and give particular reasons for that belief (e.g., posts on modelling of baseload electricity from renewables, analysis of how quickly non-fossil energy sources could be built, analysis of how quickly and effectively infrastructure could be converted to non-fossil-using, etc.).
The reason that's key is because beliefs are not evidence. The mere fact that I believe something should not persuade you it's true; same for your beliefs, and same for Ron's. The reasons we believe those things, however, will be evidence that you can use to draw your own conclusions and come up with your own beliefs. If Ron and I disagree, we will presumably have different evidence we're considering, as well as different inherent biases on that evidence. If we present our evidence, you can consider it directly, without having to suffer from it being filtered through our biases, and hence you'll be in a better position to make a well-informed decision.
Fundamentally, saying "I think you're wrong" should almost always be followed with "and here are the reasons why."
You don't seem to distinguish sufficiently between a fact and an opinion, Ron.
It is a fact that the world now has around 6.5 billion people.
It is an opinion that in 50 years time there will only be a fraction of that number.
It is an opinion which may be well-founded, and one I would not necessarily differ from, but it is not a fact.
This is not hair-splitting, as this false sense of certainty leads to falsely proscriptive remedies, based on an altogether erroneous and impossible assumption of knowledge of what will be the result of present conditions.
I most certainly would not impute any lack of humanity to you, but the sense that 'there is nothing that can be done' may lead others to act without a due regard for human life - after all it is hope that makes it seem reasonable to strive to improve the lots of others.
You may have a good case, and it may all seem perfectly logical to you, but you really, really do not know for sure how things will turn out - and neither do I.
You keep falling back on this argument. And not just here, but in other discussions.
I think you are missing a very important point. Yes, no one knows the future. But you can know the present. And the present puts severe restraints on the future.
With enough understanding of the restraints the present is imposing, one can predict the future in broad strokes. Wether its solar panels on cars, or population die offs.
Complaining its merely "opinion" does not lessen the weight of Ron's argument. Nor does it add any strength to yours.
You seem to be falling into a common fallacy where you give equal weight to all possible future scenarios (or at a minimum fail to exclude improbable/impossible scenarios). Its comforting when you don't have to exclude hopeful predictions.
Asimov here writes about the Relativity of Wrong
http://chem.tufts.edu/AnswersInScience/RelativityofWrong.htm
He could have just as easily wrote about the Relativity of right as well.
Your assumption that I give equal weight to all future scenarios is invalid, and unfounded on anything I have actually argued.
However, the further you go out, the more 'fuzzy' things get, as unexpected turns of events occur, and many of the results are at least partly the outcome of human decisions.
Fro my central scenario of demography, which is not very developed, , but at least takes some account of peak oil which the UN forecasts do not see here:
http://www.theoildrum.com/node/4267#comment-376371
4267
Is a higher forecast possible? Of course, if people display there remarkable capacity to adapt when pushed, and something like high altitude wind works out.
Is a lower forecast possible? Yep, all the way down to near zero.
In fact, all my life it has been possible to draw scenarios where the population virtually disappears, from nuclear war and attendant damage.
So of course I have central working assumptions, and in my view it is not helpful in dangerous circumstances to assume the very worst, the most useful assumption is one which allows some elbow room for impacting the result.
My attempt, and it is no more than that, is to steer some sort of middle course, take whatever lumps fate gives, but try to come out with some sort of viable game plan which is enabling and enthusing instead of deadening and disimpowering.
For me, there is little interest in proven academically right, my interest is wholly practical.
Since you choose to border on the realms of popular psychology with the assertion that my judgements may be chosen because they are comforting, it is perhaps interesting to note that doomer psychology bears a remarkable resemblance to clinical depression, however my own preference is to deal with arguments on their own merit rather than muddy the waters with that sort of judgement.
Business life is full of examples of people who in tough times give up, and also of those who rely on stupidly optimistic forecasts that 'something will turn up'
It is also full of those who have managed to muddle through, perhaps against all reasonable expectation.
The degree of certainly expressed about outcomes many years ahead is what I find unpersuasive.
Dave,
You seem to not object to Ron's assertion that the world is in overshoot, at the very least you have not objected to it.
If this is the case then any future scenario that does not include a population die off is for all intents and purposes impossible.
If you do object to Ron's overshoot assertion, then you need to make that clear and make that the central objection. Once you do that then future scenario's that do not include die off are plausible.
Or at even just make some sort of argument that a overshoot does not require a pop die off (good luck with that one).
What you can not do is include all future scenarios (even if weighted differently) at the same time.
And you cannot dismiss Ron's very thought out scenarios with a simple hand wave and insistence we do not know the future. Just the same way as you cannot insist that solar panels could someday be useful on a car because you and I don't know the future.
We do know the present. And we know the restrictions the present is imposing on the future. These restrictions make some future scenarios impossible. No matter how much of a middle ground you want to steer.
You must make some sort of concrete objection to Ron's argument that die off is avoidable. Claiming we cannot know the future is a weak argument at best. An outright fallacy at worst.
You seem to entirely mistake the nature of the argument.
My point is a simple one, that some things with a short time horizon and defined limits we can be relatively confident of, but that the further out you go the more likely it is that events will occur which disrupt predictions, and our probability of successful prediction decreases.
That is without taking into account that many of the results depend on unknowables, both in terms of external events such as Global warming and as some of the results depend on human action - someone might press the button.
I have already given my central prediction in the case of demographics, but to ignore significant alternative possibilities on both the upside and the downside is simply incorrect.
It is clear that we are entering a period when previous increases in life expectancy are unsustainable, but the extent and nature of any decline is much more doubtful.
To give one example, we cannot know if pressure in Bangladesh will lead to an authoritarian government, capable of imposing Chinese-style birth control, and the degree to which organic fertiliser can and will be substituted for inorganic is difficult to determine.
At its simplest, at the moment and for the population projected by the UN for 2050, it is entirely possible to feed the whole world's population.
The chance of that being imposed seems to me vanishingly unlikely, but since it exists it cannot be wholly discounted.
I would regard claims that solar energy would become cheap enough quick enough to greatly alter the world's energy position and hence affect many things such as fertiliser production as absurd in in 5 years, very improbable in 10, and in 15-20 years I am confident that it will have major effects, but how much it is not possible to determine at this stage.
Would that be enough to prevent all the die-off? I doubt it, although it should be noted that die-off includes a multitude of possibilities, including the reductions in life expectancy in Russia in the 1990's.
Will it be in time to prevent a major proportion of them?
I don't know, and since I see most of the deaths happening in Africa, it is pretty difficult to determine.
Nigeria, for instance, has a far lower density of population than India. let alone Bangladesh, and so may muddle through, perhaps.
I have two major gripes with some of the presentations of futures here:
One is the mutation from likely to 'this is going to be the result in 2050' or whatever.
The statement has seamlessly transmuted to prophecy from an estimate of probabilities.
The second is that it doesn't actually tell us very much.
Sweeping generalisations covering the whole world on some sort of first principle basis sweep too much under the carpet.
What estimates can be made, on what time horizon, with what degree of confidence, for which region, and why?
That is a tough and worthwhile question.
To take a specific example, Nigeria, why should the population not be sustainable in, say, 2030, and if one wants to argue specifically that it will not, what is going to run out and prevent that?
Suppose fertiliser was the chosen input, how much difference would a change to organic make, and what would be the new estimate?
It is just not worthwhile or productive IMO to make broad-brush predictions of doom, or to assert that human ingenuity will overcome.
The argument needs to be much more defined thatn that.
You said:
That's what I was objecting to.
Knowing the input conditions you can predict with relative confidence the outputs even far into the future.
If I drop an object I can be relatively confident it will fall to the ground.
If I have 6000 deer on a small island with a limited food source I can be relatively confident there will be population die off.
If I have 6.5 billion people on the earth and suddenly remove the source of 95% of their power I can be relatively confident there will be a population die off.
You cannot just claim the future is unknowable and leave it at that.
I didn't. You have chosen to entirely disregard my points regarding the possibility of solar power having a major impact, together will most of the rest of my post.
Under the circumstances I can't see further discussion being productive.
Dave,
The dieoff argument has been done to death many times over. (and I don't really care to do it again just for your edification).
You come in, make a weak stab at doing it yet again. Then dismiss everyone with the unknowable future argument.
And not just this once, but again and again. Several of those quotes above were from different drumbeats from completely different conversations. And I could have pulled more if I was so inclined.
Its a weak childish argument. If you want to argue the die off argument again then do so. Don't dismiss Ron by telling him the future is unknowable.
If that is your argument, then make it and make it clearly. Don't take a weak stab at it and then end the argument by telling us the future is unknowable.
But I warn you, Ron is no dummy, nor did he fall off the turnip truck yesterday. Like I said this has been done to death many times over and the impact of solar has not been overlooked.
Hmm, for some odd reason you seem to think that if an issue has been discussed before and you have made up your mind on it then it is settled and indisputable.
Further debate is pointless, as I had thought that we would be able to discuss levels of confidence, but it is apparent that it is outside of your sphere.
No Dave, not at all.
Stop being so childish.
I merely said I don't want to argue it again at the moment. Especially because that's not the point I want to make.
If *you* want to argue it again with Ron or anyone else, go ahead. But do so with a better argument than the future is unknowable.
Only for extremely simple systems, which this is not.
In fact, even very simple systems can exhibit strong sensitivity to small changes in input conditions, such as this three-body system. Considering how enormously more complex human civilization is than a three-body system, and how much more poorly we understand its current parameter values, it is an enormously strong claim to suggest that you can predict how it will be 50 years from now.
Perhaps, but that's not the situation we're in.
First, oil is only 37% of world energy, and fossil fuels in total are only 86% even in raw thermal terms. Accounting for energy use (i.e., electricity > thermal), fossil fuels are about 68% of world energy use. Instead of 5% left, that gives 32% left, which is an enormous difference.
Second, there's nothing "sudden" about it. Even oil - generally believed to be the first to go - will be produced at more than half of its current rate for another 30 years (based on the ASPO forecast). Thinking of 30+ years as "sudden" in human terms is a significant mistake; recent history has shown that's enough time for multiple large changes (Roaring 20s --> Great Depression --> WWII --> Golden Age 50s).
The world is more complex than you appear to be suggesting.
Neither can one simply accept the claims of others to know the future, which is why he was asking you for details of how you went about predicting the future. Without knowing what evidence someone has for their predictions of the future, those predictions are best ignored as functionally irrelevant.
And with good reason. Based on your argument here, it appears that you're taking such a vastly over-simplified view that any conclusions you draw from it will have no bearing on the real world.
Any intelligent and well-reasoned analysis of the world and human civilization will have to take into account the fact that it's mind-bogglingly complex, and that that complexity will largely prevent definitive answers on what will happen. Yes, that's a whole lot less satisfying than black-and-white answers, but it's also incomparably more useful, just like a measurement which is accurate but not precise will be more valuable than a measurement which is precise but not accurate.
It's the difference between "I understand I might be wrong" and "I don't understand I might be wrong". You might be wrong whether you understand that or not; all that changes is how misleading your statements will be.
A three body system is an extremely poor analogy for this case. But yes, I agree, some simple systems can be extremely sensitive to small input changes.
Perhaps a better analogy would be yeast in a petri dish. Go ahead and vary the initial conditions considerably, the end results will always be the same.
Its not?
I agree. And I wasn't making any predictions in such a vacuum. Like I said, this die off thing has been argued to death and I wasn't attempting to re hash the whole thing.
It's not an analogy at all; I'm just giving an example of how unwise it is to assume that outcome can be predicted from initial conditions.
I don't think any simplistic analogy would be appropriate, considering how massively complex civilization is.
That's a misleading analogy at best, as it begs the question.
It is technologically possible to run our civilization on non-fossil fuels. Assuming unlimitted clean energy (wind/solar/hydro or whatever), we could desalinate and pump all the water we needed for agriculture, synthesize feedstock inputs from atmospheric CO2 and H2O, power all manner of infrastructure, and so on. I'm not saying it will happen, of course, as the process of transitioning is tricky, but there are plenty of ways to get high-quality energy that don't involve fossil fuels.
It is also highly likely, according to UN and US Census projections, that world population will start declining this century, even in the presence of an abundance of resources.
Between the two of these, humans are like yeast only if yeast can replenish the food in its dish and voluntarily stop growing.
No, it's not, misleading graphs notwithstanding.
The relevant timescale here is decades, as that's the time it will take for fossil fuels to undergo substantial depletion (~50% in 30 years for oil, according to ASPO). That's also the timescale for massive changes to infrastructure, so it's the sensible period to look at.
Sure, peak oil is abrupt on a millenial timescale, but so is infrastructural change, technological change, and just about everything else. Looking at a millenial timescale doesn't tell us anything useful.
You may believe it's been "argued to death", but I have yet to see a well-supported argument for why it's likely.
This article and its comments had the best attempt at that I've seen yet. In this subthread we directly address the problem of trying to support a claim that a crash is inevitable, or even likely. Doing so appears to be very difficult, precisely because the situation is so complex.
Lots of questions have been argued to death, but that doesn't mean they've been answered. Think of philosophy and theology, for example.
I agree. But some are more appropriate than others.
I think that a 3 body system is also begging the question.
I disagree. What we know as normal is really an aberration on the whole scale of human civilization. And that aberration is due entirely to the tremendous amounts of almost free concentrated fossil energy.
The above grave illustrates that clearly.
Completely agree. But if you are going to reopen such a dead argument it helps to bring something new to the table that would help illuminate the issue. Unless of course you are doing it just for your own edification. If that's the case then I respectfully bow out as I have little motivation for such at the moment.
No. It's simply pointing out the fact that even many simple systems are very difficult to predict from initial conditions. It's not an analogy at all.
Writing is an "aberration" when compared to the length of time our species has been around, but that doesn't mean it's necessarily going anywhere. "Different" doesn't mean "temporary".
Not that that seems to have anything to do with my point that the appropriate timescale - for oil depletion as well as for technological and infrastructual changes - is decades, not millenia. There's no way you can predict what the world's technological or infrastructural level will be in 1000 years without completely assuming your conclusion, making it a less than valuable timescale to consider.
Begging the question. If the point of contention is whether or not there will be a dieoff, you can't just assume it'll happen.
You appear not to have understood what I meant.
I'm not saying there is an abundance of resources; I'm saying that the population projections call for a voluntary peak and decline this century even if there were to be an abundance of resources through the entire century.
Yeast won't do that; ergo, yeast is a poor model for humanity.
You are dragging me into the die off arguement I was trying to avoid :-)
It is a relevant analogy.
What makes it relevant is both populations (human and yeast) overshoot their carrying capacities and suffer a die off.
If the human population overshoots its carrying capacity (say 7 billion like the club of rome simulated) then it makes no difference if humans (theoretically) stabilize their population at some point higher than that. The analogy still holds.
I also take objection to your clause "even in the presence of an abundance of resources." Abundance has little to do with it. You can still have an abundance of resources even (shortly) after pop overshoot with yeast as well as with humans (or deer or whatever pop you model).
Well, I have an influence over which people will be included in the fraction left over 50 years from now, and so do you, Darwinian. I can't change the flow of the river, but I can decide if it waters my crops or not. I can't change the volume of bullshit that flows through the world, but I have a say in what it fertilizes.
By participating in a public discussion about these issues, we have left the observation post and are now changing the landscape.
Most problems can't ever be truly fixed. I can't unbreak a glass, unburn a house, or unshoot someone. They can only be avoided when situations re-arise, or possibly prevented through plastic, asbestos, and Kevlar.
There is no undoing the shards, the cinders, or the wounds, but there is preventing them from happening again. We can learn from mistakes. It turns out that we made other mistakes from plastic, asbestos, and Kevlar, because we didn't understand that we weren't looking at the real problems.
Most humans on this planet haven't been paying attention to this colossal mistake unfolding because it hasn't really happened yet. Most people can't see it coming as they have nothing yet to learn from. Most people do learn best from experience, especially when complex experience is coupled with an idea.
Right now, saying, "you can't grow forever on a finite planet" are just words to most people, and they have nothing to tie it to. In 50 years, or in 5, those words will have meaning to the survivors.
By exchanging ideas on this forum, we are starting to fix the problem. It's a problem some 10,000 years in the making, so it's not going to be like flipping a light switch, bringing instant illumination to the darkness. It's going to take a while, perhaps a long while.
Many graduate physics students today understand the Theory of Relativity better than Einstein himself did. And maybe successive generations in the future will understand about a human existence which is bound by the flow limits of matter and energy, better than today's discussions on the blogs indicate.
Einstein played his part, and so do we.
No longer being passive observers, do we want to aim for being part of the solution, part of the problem, or part of the landscape?
Ehhhhh...okay, if you say so. I sense it is now time to end this conversation. Thanks for the exchange.
Ron Patterson
P.S. I really had no idea we were actually fixing the problem. I thought we were just engaging in a logical debate. Nevertheless I will be on the lookout for improvements.
710,Darwinian, DaveMart, et al, please click on link and listen to what George Carlin has to say about people worring about the earth...scroll down to #8...5 minute skit.
http://www.mustsharejokes.com/page/Top+George+Carlin+Bits?t=anon
...and, relax...
http://transitionculture.org/ (UK/International)
www.theyellowhouse.info (UK)
There are loads more out there.
In defence of TOD, I see one of its roles as a bulwark of knowledge against the cornucopians, technocopians, denialsts, conspiracy theorists and others. It's bound to come across as doomerish.
Matt Simmonds reckons that between three and six million people "get" peak oil worldwide. A mighty small straw in a mighty big wind.
One in two thousand to one in a thousand people "get it"? That seems awfully high.
I'm thinking more like 1 in 10,000, 1 in 100,000. I'm thinking there are about 6,000 people who participate in various energy blogs, plus about 100 times as many who read but don't participate or are aware of it through other avenues.
Check out The Geography of Hope by Chris Turner. I'm just starting into it and in the bit I read last night he discusses this issue explicitly. Supposedly the book is all about exploring the bearable alternatives already out there.
Hi, Greg.
I'm just launching my new site, although I can't promise the direction the forums will go:
www.postpeakliving.com
It's got:
The chapter on skills may be interesting to you (http://www.postpeakliving.com/guide-to-post-peak-living/skills). I want that chapter to be very robust but it's not there yet mostly because I'm sorting through that myself.
The Guide is a living document in that every page accepts comments right underneath. My intention is that we can improve the Guide by pooling our knowledge.
-André
(lightly edited)
Question: Recently, I have been reading that INDIVIDUAL WELLS produce oil on a symmetrical bell-shaped curved. I always thought that oil production from a INDIVIDUAL well - unless otherwise regulated - has a triangular production curve that goes assymptotic.
Why am I seeing all these articles that say that oil wells have symmetrical bell shaped production curves?.. that add up to bell shaped production curves for the entire field?
I realize that it takes time for a full field to come up to full production but individual wells are able to run FULL CAPACITY right from the start. I think someone isn't doing their homework. (My opinion.) Yes?.. No?
You can't generalize. Different fields with different reservoir characteristics, different crude types and different drive mechanisms will show radically different production profiles--plus the whole question of secondary and tertiary recovery efforts. Also, individual wells within a field can show radically different production profiles. For example, wells on the extreme west edge of the East Texas Field, close to the oil/water contact, quickly watered out. Wells on the updip edge of the field were capable of producing thousands of barrels of oil per day for decades (the RRC restricted their production though).
But when we do sum the output of all of these fields we tend to get a bell shaped production curve, with either an absolute peak, or a plateau for a few years.
However, there is a special category of fields--the Huber/Lynch type fields--where individual oil wells peak and decline, but the total field production, the sum of the output of discrete depleting wells, increases forever.
westexas,
Thank you.
I know that it takes time to fully ramp up a field, and you may get a bell - or doorstop wedge shaped - curve... but an individual well ISN'T always bell-shaped.
... but I keep reading that well production is bell-shaped; this is written by authors who then get me thinking, "what other technical details did they get wrong?"
The shape of the curve isn't really relevant, it's just a generalistaion - it does 'peak' for an individual well.
However, for a field of wells or the world the shape of the curve is simply determined by market forces balancing supply and demand and the need to make a profit.
Ignorant...
...Read Taleb's 'The Black Swan'. He makes a compelling case against the use of the Gaussian Bell Curve in many cases. The bell curve has it's usefull applications, but many times it is used where it's application gives very poor results when compared to rear view reality and even worse results when used for prediction. Below is just a brief snip from a long and complete discussion.
"Remember this: the Gaussian-bell curve variations face a headwind that makes probabilities drop at a faster and faster rate as you move from the mean, while "scalables," or Mandelbrotian variations, do not have such a restriction. That's pretty much most of what you need to know" 'The Black Swan' pg 234 chapter on 'The Bell Curve. That Great Intellectual Fraud'
Second the recommendation on The Black Swan.
It's on Amazon, Barnes & Noble, and Borders. It's probably at your local library. You can maybe also find the the text and audiobook on filesharing.
Bell Curves also tend to throw out or minimize the impact of outliers. There are times that this is justified, but I've always been interested in the outliers. They could be signals of something different, something that tells you your "normal" distribution is missing something. Assumptions can be dangerous things. Outliers can bite you in the rear if they are indicating a "black swan". Perhaps you sampled something that only grabbed a few of the outliers, but if you moved your sampling area five feet to the right, the outliers would be more numerous.
Absolutely correct. I did not want to post the whole chapter. Leanan would be justifiably ticked and it might infringe on copyright.
I agree with you guys. Curves produced by mathematical models are good for giving one a general idea as to what will happen, but they are rarely "perfect" fits for real world results.
I guess I got ticked lately by articles that mis-inform concerning details. A lot of people (who probably mean well) are not checking their facts and that can lead to problems later on.
But I do like Westexas' Huber/Lynch model.
;-)
I think you mean that the people doing statistical modeling tend to discard outliers on the grounds that, well, they're outliers. If the person doing the modeling keeps them in the dataset they fit a Gaussian to, then because of the rapidly dropping off tails mentioned above the fit gets excessively distorted in order to give the a reasonable likelihood to the extreme point. If you're outlier IS wrong (say your sensor malfunctioned) then the fit is rendered much less accurate. On the other hand, outliers may signal that you're actually working with two different types of data that should be split and modeled separately, as illustrated by your five feet to the right point. (It amuses me to see Peter Huber's views are seen as erroneous here which is completely unknown in the modeling field where he's well known for Huber's robust estimator designed partly to avoid outliers distorting a fit.)
The bigger question, I think, is how reasonable is it to think of the time variation of oil production as a probability distribution. Just because two curves both have a bell shape doesn't mean they have much to do with each other!
No doubt, there is a probabilistic aspect to oil exploration. Given lots of independent exploring around the world, we'll observe something close to the average in each year. The probability distribution will describe the fluctuations we see around that average, quarter to quarter or whatever.
Why does the average change over time? That doesn't have much to do with probability theory! The more we discover, the less there is left to discover! But we keep applying more powerful methods of exploration. It's the interaction of these two forces that gives the large scale structure of the history we observe. Probabilities just determine the fluctuations!
JimK, no one said that the Gaussian bell curve is not a practical model for PO or oil fields. The conversation was about the bell curve missing the outliers, thus the black swans go unseen and many times unremarked except by those they directly effect. Taleb's contention is that there are many more black swans than statisticians, mathmaticians, economists, etc, realize because they are not recognized when using the bell curve but they are easily recognized when using Mandelbrots methods...because data are not compressed to the mean to such a high degree when using Mandelbrot.
I think you would enjoy 'The Black Swan' and your library probably has a copy. Mine did and I live in a small town. Do more with less, support your local library! Unfortunately one of the first things local politicians reduce in hard times is library budgets.
I've actually used fat tail methods, e.g. to analyze run-times to solve random but difficult Boolean satisfiability problems. Plus when I was a physics graduate student, I was on the colloquium committe & suggested Mandlebrot as a speaker, so I had dinner with him in about 1979!
Anyway, what I am arguing is that petroleum discovery or production as a function of time is NOT a probability distribution, be it Gaussian or fat tail or anything else.
I am not expert enough to go into frequentist versus Bayesiam. I think I understand what the frequentist persepective is, & anyway that ought to be the closer fit here, I think. There has to be some random variable that we can sample or measure or generate again and again, holding all the conditions or constraints identical. We do the same thing again and again, but what we observe coming out of our black box is not the same number, but a number that varies. A probability distribution tells us the likelihood of observing this or that number coming out of the black box.
So my main point is: when we discover or produce petroleum in 2008, we are not playing with the same black box that we played with in 2007! The system changes over time! What we are looking at when we graph disovery or product over time is the history of how a system changes!
If we were plotting a probability distribution, note that the observed variable is the X axis and the probability of observing whatever particular value is the Y axis. So the random variable we are observing would have to be time, like year of discovery or production.
It could be that, despite all my complaining, that the discovery or production curve actually does correspond to a probability distribution. I think that radioactive decay is like this. The probability distribution of the time of decay of any particular nucleus is exponentially decreasing, and that same curve is just what we see when we measure how many nuclei decay per time when we have lots of nuclei all together.
This is a dreadful model for petroleum discovery or production, though. Why did all the oil fields decide to get discovered around 1960 +/- 100 years? How about: plot the money spent on petroleum exploration during that period - that is hardly any kind of constant!
If you want to treat the time of discovery of an oil field as a random variable & map straight from there to discovery history as the probability distribution of that random variable.... well, hmmm, maybe for a straight map it would have to be the time of discovery of a barrel of oil! The discoveries of barrels of oil would have to be uncorrelated and the conditions of discovery would have to be constant. Neither of these conditions hold, not even close!
I confess, I didn't plow through all the details posted by WebHubbleTelescope a few weeks ago. But I am not making any complaints about his general drift. It is perfectly reasonable to derive production history from various probability distributions. But to say that the history is itself the same as a distribution - that is a very strong statement and almost certainly false.
I hope you can excuse the rant. But I keep seeing folks somehow identifying the bell curve of the logistic with the bell curve of the Gaussian. They are totally different animals! E.g. I cannot think of a single situation where a Gaussian appears as a graph of the dynamic evolution of a system (whereas that is how the logistic first appeared in population theory), and I cannot thint of a single situation where the logistic appears as a probabiity distribution (whereas of course the Gaussian is the preeminent distribution).
There is at least one very important application of fat tail methods to the history of oil discovery. Pardon me if that is what folks have been talking about all along and I just have been missing the point! But it is obvious that oil discovery and production are dominated by a few monster fields. I think it was in Deffeyes's book Hubbert's Peak that he looks at the distribution of sizes of discovered fields & suggests that there just might be one monster field yet to be discovered, probably in the East China Sea because politics have prevented much exploration there.
A classic situation where fat tailed distributions arise is with flood insurance. The damages caused by floods are dominated by the rare monster, like this year up around Cedar Rapids, Iowa etc.
If you look at a graph of the history of flood damage, it doesn't look like any kind of graph of a probability distribution - it is not bell shaped at all. It is a total zig zag. There really isn't much history to it at all, apart from factors like inflation or increasing development of flood-prone areas, or gradual climate shifts. Maybe a person could parse out some cyclic behavior from El Nino or something. But mostly each year is another independent toss of the dice.
Oil discovery does have a history, of course. It's a bit like a situation where we start with whatever houses & towns we will ever have, and then there is gradual climate change that starts to bring some floods. Once a flood destroys a town, it is never rebuilt. But gradual climate change brings bigger and bigger floods.
Anyway, the relevant Black Swan would seem to be the possible existence of some monster oil field yet to be discovered, that will totally change the shape of the history curve from any sort of Hubbert Linearization anybody might be playing with today.
Depends what you think a probability is: the 100+ year old Bayesian probability
http://en.wikipedia.org/wiki/Bayesian_probability
that's widely used in modeling and decision theory extends classical frequentist probability. But this is a technical point. But what you're saying that models assuming a static technology are inadequate is perfectly true.
River,
Good point. But you left out an important caveat.
One has to know if they are dealing with an ExtremistLand (stan) phenomenon or a MediocreLand (stan) phenomenon. The admonition against the Gaussian applies only in Extremistan.
The dynamics of a single oil well lie in MediocreLand. When you add these up, you get something converging towards the Gaussian. Taleb did not say that the Gaussian is always invalid. It is suspect only when dealing with an Extremistan phenomenon (i.e. stock market prices).
Your post just cries out for mention of the Central Limit Theorem...
Note that the central limit theorem is not applicable, at least in any straightforward way, to arguing that petroleum discovery or production history should look like a Gaussian.
The central limit theorem is about the probabiity distribution of a random variable which is the sum of a large number of independent random variables.
The global history of petroleum discovery or production is the sum of all the histories of discovery or production of many separate oil fields.
But the notions here of "sum" are very different!
To add two histories, just add their values point by point. To create the probability distribution of the sum of two independent random variables is a very different operation!
I haven’t posted oil drilling rig basics lately, so I thought I would share this. While drilling for oil, a working rig has some basic requirements. One of these requirements is to remove the material from the hole as it is loosened by the drill bit.
Most of you have used a standard hand drill for making a small hole in wood. This drill has a helical groove traveling the entire length of the drill bit. As you cut the wood, the shavings are forced up the shaft, along these grooves. You can imagine that as the drill bit gets longer, the force required for removing the debris increases.
When drilling a large hole thousands of feet in the ground, the technique described above would not work. A much more elaborate system is employed. The drill bit is attached to a pipe (drill string). The drill pipe extends from the surface (drill floor) to the drill bit at the bottom of the hole. The drill bit cuts a larger diameter than required for the pipe. The rig then pumps “mud” down the center of the pipe, which picks up cutting near the drill bit and returns them to the surface on the outside of the pipe. As you can imagine, this “mud” is pumped at extreme pressure and the deeper the hole, the harder it is to pump. Here is a picture of a typical mud pump.
A standard land rig has three of these, but As we drill deeper, say in the deep GOM, we need four mud pumps with larger pistons. To give you and idea of the work being done, each pump is powered by two AC motors w/ 1000 hp each. These motors are from a train locomotive.
My point in describing this is that it took many years of development to get to this point, and every new depth drilled has challenges with these systems. People who think we can just drill deeper don’t know what they are talking about.
Eastex,
One can also point out that Howard Hughes (The World's richest man at the time) made most of his money by having a patent on one of those drill-bit designs. That's a lot of money (time/effort/etc.) going into producing those drill bits.
Hi, thanks for the info. What happens with the mud flowing alongside the pipe upwards? Do they somehow collect this for recycling? If so how do they do this at the bottom of the ocean? Or do they just let the mud flow out along the pipe onto the ocean floor? I can imaging the you need a lot of mud if you just let if flow freely.
The "mud" is always returned to the surface. In the case of offshore drilling, there is a second pipe called a "riser". The riser is larger in diameter and connects from the ocean floor to the surface.
The "mud" is actually a managed liquid mixture. There is a specialist on the rig called a mud engineer (correctly called a Drilling Fluids Engineer), who analyzes the returning mud to determine the rock formation currently being drilled. The mud is then filtered and returned to the pumps. The consistency of the mud is also changed to modify it's weight. This helps the drill bit float and cut at the right pressure.
Additionally, the drilling fluid suspends and carries any cuttings out of the hole, assisting in cleaning the hole. The fluid can act as a lubricant and cooling agent for the bit. The "mud" can be used to power positive displacement drilling mud motors for directional drilling, and to power Measurement While Drilling Tools (when flowing past an alternator). The same fluid can also be used as a transmission for pressure pulses to pass real time formation evaluation and surveying data to assist in the drilling process.
Mud can be fun stuff!
I'd like to know this as well, since I am involved in water quality issues. I watched one episode of 'Black Gold' and got turned off by the reality show competition of it, but you can see the pools of water/mud beside the rigs...Are they lined ponds? Does it evaporate in the Texas sun and then the waste buried in class III landfills?
Eastex, TOD has a button in the top header on the home page called "tech talk" that links past articles about the technical aspects of the energy business. Maybe it is time to rerun some of these articles or provide their own page with a list of contents of various aspects of the energy business to make it easier to view for those new to the site?
You're absolutely right.
In fact, all this information is available else ware, but I just thought ever once and a while I would bring people back to earth with their visions of techno-solutions. People keep linking to every crazy story they can find. The reality is these systems don't improve fast, people don't all by hybrids tomorrow, and any new technology coming online now will be too late.
Good point. The problem the of slow adoption and development of technology is often not appreciated by people not fortunate to have lived long or have the insight of being in a given specialty. They often only see the results, and have been living with those results most of their life. Us older farts have seen tech articles, usually from Popular Science or Omni, way back of innovations that were supposed to happen and never did - where’s my flying car and personal robot? Sure there are advances, but you’re only seeing the winners. There have been a multitude of missteps that have occurred unseen by most people or forgotten - the silent evidence. Decades of development don’t seem long unless you’ve lived them.
My very first sight of a hybrid car: Popular Science, summer 1973. An old engineer built a giant steel frame and mounted a helicopter turboshaft and an electric motor, then topped it with a blue fiberglass 2-seat body. Using the turboshaft as a generator avoided transmission hassles.
I can't recall if he even used any batteries to store power.
eastex,
Tell them what happens when a drill bit breaks.
You go fishin'.
Fishing, is the term used to describe retrieving drill string with "down hole tools". This area of drilling technology is always improving because loosing a hole to a broken drill string is costly.
My answer when people inevitably ask, so what should we do?, I say LESS.
My wife used to get a magazine called “More”. Very obscene IMO.
I used to say soon we will see a trendy mag called LESS. It will profile couples & families who used to live in a huge Mcmansion but now live in a small cottage with a huge garden. (By the way that’s us)
Best hopes for less
souper-
A Wes Nisker, a dharma teacher, always said we needed "a great leap backward" program when it concerned consumption.
I used to be into more and more until I realized I was getting less and less. Now that I am striving for less, I seem to be getting more. Tomorrow I will get rid of more but I won't have less as less is more. Get it? In order to get it, lose it. The more you lose, the more you gain.
They do have magazines that promise simplicity but only offer more complexity. That is, in order to simplify you life, they tell you about all the things you need to buy to make it more simple. They tell you about better ways to get rid of things by getting rid of clutter. But all they are telling you how to do is hide the clutter which is still filling up your brain.
The Green channel purports to tell you how to be green but then tells you about all the things you need to buy to do so. Get a new green kitchen counter made from reused walnut shells!!! Well, how about just keeping your current counter which is the greenest act of all.
Every day I try to get rid of at least one thing. Storage becomes a non problem. Eventually, I will have nothing, which means I will have everything.
Buddha
Right On tstreet! And about the magazine named LESS...I hope it costs a lot less...Or, better yet, it should be FREE, read, and passed along.
When it comes to informing people, does a blog like The Oil Drum have a better EROEI than a paper magazine?
This is easier said than done. At least for me. I make this resolve all the time, but it seems that every time I get rid of something, something else takes it's place. Got rid of books I had already read, then peak oil books took their place. Got rid of my cassettes and VHS tapes, bought camping gear. etc.
I have boxes of crap I never use, but whenever I go through it, there seems to be a reason to keep each thing.
"Things are easier got than gotten rid of."
H.D. Thoreau
Here is George Carlin's 5 minute skit on 'stuff'. You might enjoy it if you have not seen it...
http://www.youtube.com/watch?v=JLoge6QzcGY
TS
...They do have magazines that promise simplicity but only offer more complexity...
You GOTTA take a look at this cartoon. A GREAT spoof.
"REALLY SIMPLE life made profitable"
Is It Possible to Escape The Consumerist Mindset?
http://www.oftwominds.com/blogjuly08/wushu7-08.html
Pelosi Asks Bush to Draw From Petroleum Reserve to Combat Surge in Oil Prices
Who wants to have the X-mas turkey today , rise your hands ?
We can always buy a new one for X-mas, at double price ... some say ..
The future is for suckers.
Pelosi needs her head examined!
Drawing down the reserve is last thing we need to do now.
It will not lower the price of gasoline.
Even if it did it would only be temporary.
It will make us more vulnerable.
The price needs to stay high anyway to get more people on the conservation kick.....
She just wants to get a few more votes for the Dems in November.
What a joke.... That is not leadership!
I wouldn't worry about it-the last time this airhead opened her yap she was promising to get all the troops out of Iraq-if she is as successful on this one that SPR will be topped up just swell.
Her son is green. Green, green, he's green they say... Encountered him once at a meeting of The Commission on the Environment here in SF. He smiles, he shakes hands. He's learned those lessons. The stench of nepotism was in the air... [the] Rising Prince...?? Definitely a "More" mag article rather than a "Less."
It's entirely possible that she doesn't get peak oil. In that case she would logically think that the SPR could be topped up again in the future.
Lots of people are making uninformed decisions; she's not the only one. Just months ago the airline industry was calling for virtually endless growth. Now they are looking at catastrophe.
-André
Nah, it's up, up and away for the airline industry!
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahxX9dT8vKPQ&refer=home
:-) Magic carpets ain't in it! - Magic mushrooms maybe?
I couldn't have found a better post to make the point. Thanks for finding that, Dave.
From the image management department....
[it's also one of those cases where I wished I'd saved the original eye-catching image before it was removed]
The EIA currently is using this image to advertise their International Oil Outlook:
But it was just put up in the last couple of days.
Before that they were using a similar image except that the face was that of an adult male and his face was a deep red.
The net effect was that of a tribal warrior painted for war! Perhaps a war to conquer the world on the warrior's face.
Now if only I could get a copy of the original image....
Did you try the Wayback Machine? They archive graphics sometimes.
Thanks for the tip. Was unaware of that site. However, it turns out that they generally don't make their archived stuff available until it's 6 months old.
I don't suppose we are to make anything of the fact that one eye is centered on Washington DC and the other one on Tel Aviv?
Looking closer at the face..this is no warrior...this is a pretty girl!
Hello Peek-a-Boo,
I would suspect, when the time comes, that a young, pretty girl can swifty swing a machete' into an elderly person's ribcage.
The future always belongs to the young, always has, always will.
If strategic reserves of bicycles & wheelbarrows ever gains importance-- this might help minimize the scale and duration of Machete' Moshpits.
Does the one preclude the other?
I guess my point was that the picture was not meant to convey a militarist attitude. I can see how my point would not be construed the way I commented.
Have you tried to find the image in your browser cache?
Summary of Weekly Petroleum Data for the Week Ending July 4, 2008
And here is what they expected:
According to this article:
So if refiners are reluctant to stock up at the current price, conventional wisdom might say there would be a decrease in oil prices as bidding cools, but is this actually happening?
Either the hedge funds move in hard and fast knowing industrial users have to stock up eventually, or other countries with huge dollar reserves will just be thankful we cooled our buying and continue at full speed their importing of marginally cheaper crude. Maybe both could happen and US refiners will realize they should exit the industry, surrending their assets to the vertically integrated firms. Could we say that a great way to short oil is to buy stock in a refining company?
Maybe some day there will be a huge realization that without a DRASTIC, global increase in the volume of liquid fuel supplies brought to market, there won't be any relief in sight. Since this appears unlikely to happen (my dad suggested we nuke our way down to Bakken), we can see independent refiners caught between a rock and a hard place.
--Jack
This looks very much like a Catch 22 trap.
When prices retreat, refiners will top up their storages thereby increasing demand that results in a northerly pressure on oil prices.
Or, maybe refiners see demand remaining weak and also preparing for fall maint.
Another Gulf Coast crude oil inventory drop--2.1 mb. I think that they are down to about the lowest previous summertime crude oil inventory level.
Heh.
The two really interesting items in the report were the 8% decline in West Coast crude oil stocks ( no reports attributing this to fog, or smoke, in California tho'! ), and the fall in domestic crude production to under 5 million barrels per day ( on a net weekly basis - the US lost 1 million barrels in domestic production, and this is without any media reportage of production outages or pipeline closures ).
My guess is that the West Coast lost the bidding war for some crude oil cargoes, that ended up going to Asia--and of course, Prudhoe Bay is in terminal decline.
A one-off, if it turns out that way, week-on-week decline of 160 kbpd is more suggestive of some sort of production glitch or outage somewhere - but it got kept damned quiet. Still, overall, in spite of the highest prices in history, US production is now guaranteed to be lower this year than last! Ouch!
The West Coast is following in the Gulf Coast's footsteps - excess inventory continues to be shed, and the US, in aggregate, is heading back to the 2002-2003 crude stock levels of 260-280 million barrels.
Any chance they are waiting for Pelosi's cheap crude (Strategic Petroleum Reserve) to kick in?
Note that in order to keep our total petroleum imports at a constant level, our consumption has to fall at about the same volumetric rate that our domestic production declines.
"Figures from the Energy Information Administration showed U.S. oil supplies fell by 5.9 million barrels last week, a decline of 2 percent. That is far above the 1.9 million barrels forecast by analysts surveyed by the energy research firm Platts.
Prices often rise in response considerably to large drops in U.S. oil supplies. But Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, noted that much of this week's inventory decline was concentrated on the West Coast and was not representative of supplies overall."
http://news.yahoo.com/s/ap/oil_prices;_ylt=Ai8hPyztrWt8D0xu.xWySqGAsnsA
Anyone for why the west coast is so unimportant? 5.9 million barrels is 5.9 million barrels. It's like if it doesn't affect the east, it's not news.
The lowest level for PADD3 since 1990 is Jan 9/04 at 131.9.It got down to 138.2 on Sep 17/04(Cane Ivan?).Lowest this year has been 141.1 on Jan4/08.Yes you are correct,typically they are at the highest level of the year in the Jun-Aug period.
Here's the Gulf Coast chart now that the full report is out.
Could quickly recover, but that fog sure is lingering.
So, let me get this straight... We're in hurricane season, oil and gas prices are at an all time high, and there's abnormally low inventory in the Gulf?
Sounds like a 'Perfect Storm' for an oil/gas price spike to me (pun entirely intended) if we get hit by a nice Category 4 or 5, like a Rita or Katrina...
My thesis is that Gulf Coast refiners have not been able to fully offset the respective decline/crash in net oil exports from Venezuela & Mexico, and as I previously outlined, the obvious "solution" is the SPR, even without a hurricane.
Looking a little further ahead, Reuters have a breaking news item reporting that Enbridge is delaying its plans to build a pipeline to transport Canadian crude to the Gulf Coast. Originally scheduled for 2011-12, they're now saying 2014. Tankers will be used in the interim.
It's pretty clear why.
Net oil exports from Canada fell last year.
Gasoline and aviation fuel use was down, but this is interesting:
There's not much diesel demand destruction happening yet, and since diesel demand is probably largely driving oil demand, it explains why oil prices are still high. Demand destruction of gasoline & jet fuel isn't going to do much to oil prices as long as diesel demand remains strong.
Implied demand includes EXPORTS.Diesel exports are close to 500m bl/da;up from 250 in Dec/07.Domestic demand is prob down.
"Implied demand includes EXPORTS."
Yep, this is an important point.
In the weekly EIA product supplied (=implied demand) estimates, exports are a bit of a fudge number because the EIA doesn't actually survey this data itself. Export data are compiled by the US Census Bureau on a monthly basis and these are reported to the EIA seven weeks after the end of the reporting period. On a weekly basis therefore, all the EIA does is use a guesstimate based on recent data trends.
As a consequence there can be some very large revisions in product supplied numbers once more accurate export data become available. For example, as the EIA itself pointed out recently, March demand for all petroleum products was revised down some 600,000 bpd when the monthly numbers were eventually released, and 540,000 bpd of this was due to previously underestimated exports.
In short, the implied demand numbers in the WPSR should be treated with extreme caution. It's surprising really that the EIA hasn't implemented a reporting system that would give the agency earlier access to petroleum export data.
Dist prod at 4641 is the highest in history.Looks like there is some wiggle room in the cuts(gas/dis/res)!The mkt works!
Price Elasticity of Demand
4 Week Averages 08 vs. 07 plus % YTD 08 vs. 07
Finished Motor Gasoline . 9,322 . 9,522. -2.1% -1.2%
Kerosene-Type Jet Fuel. . . 1,623 . 1,660 . -2.2% . -3.5%
Distillate Fuel Oil. . . . . . . . 4,167. . 4,115 . +1.3% . -1.8%
Residual Fuel Oil . . . . . . . . . 594 . . . 725. -18.1% -16.5%
Propane/Propylene . . . . . . . 959 . . . 959 . . 0.0% . -4.8%
Other Oils. . . . . . . . . . . . . . 3,696. . 3,746. . -1.3%. . -3.1%
Total Products Supplied . 20,361. 20,727 . -1.8% -2.6%
Could someone confirm if YTD includes revised April #s ?
Alan
Nope, they are still using out-of-date data.
I don't know why they are doing it. But the net effect is to inflate demand beyond what they know it to be according to their own data released a couple of weeks ago.
http://www.theoildrum.com/node/4245#comment-373170
WTI down despite the heavy draw. I wonder if the refiners aren't buying much at this price in order to trigger a SPR release in the near future.
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The delusional headline of the day award goes to: Boeing Lifts 20-Year Jet Delivery Forecast on More Air Travel.
From the Bloomberg Report:
"We assume that fuel over the near term will continue to be high and volatile and then at some point in the future supply and demand should align and fuel will be priced more at the marginal rate of production," Tinseth said.
Hello? Anyone in the Risk Management department?
IMHO what people miss is that management of these companies are not stupid, they just don't care. They cart out this lackey to say "we assume oil prices will fall" because that is what fits their agenda-IMHO management of Boeing could care less waht condition the company is in 5 or 10 or 20 years from now, their whole focus is keeping the plates spinning (anything to keep current stock price up) right now, because that is where their bread is buttered. If it was more advantageous to assume oil prices would rise, lackey boy would be saying they assume prices will rise.
I didn't go the track for the 400 mile race last Saturday but many of my friends received free tickets and attended. Anecdotal report: Huge numbers of empty seats, thus the free tickets. It always looks better to have people in the stands when the tv camera pans. Back in the early 1980 there were always free tickets being given away but that stopped when NASCAR racing became very popular...and boring.
The crews are having lots of trouble lining up sponsers and some crews have thrown in the towel.
'CHARLOTTE, N.C. (AP) -- Chip Ganassi shocked the NASCAR industry when he shut down Dario Franchitti's unsponsored race team, putting last year's IndyCar Series champion and 71 other employees out of work.
That it happened to Ganassi, a multi-car owner who just six weeks ago won the Indianapolis 500, was a wake-up call to every team owner not named Childress, Gibbs, Hendrick or Roush.
These are tough economic times, and the sagging market is finally affecting NASCAR in nearly every facet of the industry.'...snip...
http://biz.yahoo.com/ap/080707/car_nascar_in_the_pits.html?.v=1
What, they're forecasting Zeppelins?
Lead ones.
Yes.
"CALGARY - Aircraft maker Boeing Co. (NYSE:BA) is teaming up with private Calgary firm SkyHook International Inc. to build a new commercial heavy-lift rotorcraft.
The aircraft, which combines elements of a helicopter and a blimp, can be used to transport materials and equipment in remote areas.
The SkyHook JHL-400 aircraft will be able to lift a 40-tonne slung load and transport it 300 kilometres without refuelling, which is a big advantage in remote places like the arctic."
The 300 km range will allow it to move loads between lakes and rivers - sort of an aerial "portage" system.
A concept that has been around for years is to build oilsand processing equipment in Asia and move it by barge up the Mackenzie river. The skyhook solution would allow heavy units to be moved into the oilsands without the time and expense of building roads.
Mackenzie River
I'm Russian, and I’m don't like Putins radical-liberal energy-donor policy.
We sell out our coal, ores, metals and energy resources for green fantics. That green fantics we exchange with US Treasures.
On that borrowed funds US financing color revolutions around our borders, paying salary to Russia-hating president of Georgia, planning to build anti-missile infrastructures.
That’s ultra-liberal policies we should stop. We should ban export of natural resource and reduce trade surplus (15% of our GDP). Trade surplus is the major cause of raising inflation (from 9,1% in 2006 to 15% in 2008) in Russia.
If we don’t ban resource export, our economy gets worsening of the Dutch disease.
Hi Gusev,
Speaking from the end of a very long natural gas pipeline, I don't think you need to worry too much. From here, it looks like Putin has been efficiently re-establishing government control over your natural resources, and systematically raising export prices as fast as the market and geo-politics would bear. He is too clever to provoke either economic collapse or military stupidity in his major customers. The situation is volatile, and it will help no one to provoke violent nationalism in any ethnic or regional group (not that the US won't try...)
We Europeans need your resources, and we will not rock the boat as long as you keep up a reasonable supply...
Russia should say to Europe that there should be no missiles between friends - remove them and the people who agreed to put them there. Why should they supply Europe with energy when Europe is active in compromising Russia's national security?
Russia is constantly holding a hand out to Europe and Europe seems to respond by spitting on it. I imagine Russia is going to lose patience with this situation, probably when Europe is at its most vulnerable.
You are correct but unfortunaely the rub is fairly obvious: they need the revenue from oil exports just as much as we need their hydrocarbon.
However, in favour of your argument, unless you accept the idea that oil is 100% fungible (which has been fairly discredited) they could sell their oil to others and it would likely hurt us.
Marco.
You are correct but unfortunaely the rub is fairly obvious: they need the revenue from oil exports just as much as we need their hydrocarbon.
That’s not true.
Our trade surplus is about 15% of GDP. Compare with United States: trade deficit is about 5% of GDP. It’s unnecessarily convert too much of finite natural resources to risky US Treasures with negative real yield or even paper Euros.
It's your country. Do what you think is best.
Do most of your neighbors share your point of view?
This reminds me of a Danish independent parliamentary candidate in the 1970s who ran on a platform of replacing the Army with an emergency recorded phone message in Russian: "We surrender".
Not an unreasonable response against the power of nuclear weapons or fossil fuels.
We Europeans need your resources, and we will not rock the boat as long as you keep up a reasonable supply...
I agree we can supply European economy with natural resources. But European Union must pay for it adequately. Not for paper dollars or paper euros.
It may be high technologies and factories on the Russian soil.
Russia needs to reduce its per capita consumption of natural gas. Germany has about 90 million people and uses around 100 billion cubic meters of gas per year. Russia has 142 million and uses over 420 bcm per year. Europe could improve its natural gas supply security by helping Russia modernize its gas powered electricity generating plants and district heating plants. There is a housing boom in Russia already so heat loss should not be as bad as with the old housing.
Russia needs to reduce its per capita consumption of natural gas.
Russia is much colder country, then we fairly energy efficient. It's fair to compare us with Canada.
Total Primary Energy Supply by country:
Country tons of oil equivalent per capita
Canada 8.43
United States 7.89
Norway 6.95
Russia 4.52
France 4.40
Germany 4.18
Japan 4.15
People's Rep. of China 1.32
Many of energy wasted by produce unnecessarily energy dense export goods, for example, metals. If we ban finite resource export, energy using per capita reduces significantly.
You should trade the oil only for gold. Let's see what kind of ruckus that raises.
Putin is accumulating gold on a very large scale. He is not a fool.
I've never heard Putin referred to as Liberal before. In fact liberalism is quite unpopular in Russia, as I understand it, and is mostly represented by that chess player guy and generally gets less than ten percent support. I believe the nationalists have most of the support, with the communists in second and the liberals a distant third.
That being said, I don't disagree with you about the US trying to surround Russia with missiles, that's certainly not going to help anything.
And hasn't Russia been slowly re-nationalizing most of your resources since the "liberal" phase of the nineties (when everything was sold off)? Isn't this what the west is always complaining about?
I think Russia certain has the right to save some of its resouces for the future and shouldn't have to produce everything at full tilt with no regard for the future. (I would say the same about Canada.)
Unfortunately I hate too see all the money going to the oligarchs who don't give a crap about the people.
Liberal means neo-liberal aka monetarist. If you listen to Finance Minister Kudrin and Kasyanov before him then you will hear monetarist-speak. The Russian government swallowed the advice in the 1990s and still holds to it quite faithfully. Spending on social programs is small, there is a 13% flat tax rate on incomes and the budget is always in surplus to the tune of tens of billions of dollars annually.
There is a high level of hypocrisy in the west. Through the IMF and and the State Department demands are made on third world countries (e.g. Nicaragua, Venezuela) to run their economies in a fashion nothing like that practiced in Canada, Western Europe and even USA. The USA routinely supported death squad regimes in Latin America that spent most of their time killing union activists and others who wanted the same style of life as in the USA and Canada.
If Putin is a nationalist for extending state control over vital fossil fuel assets then what the heck is Norway? There appears to be no uniform set of standards being applied. It is always us good, them bad caveman primitivism. The super depression that occurred in Russia during the 1990s should have spawned a real Hitler-like tyrant based on historical precedent. Instead you have neocon nitpicking about Russia's democracy: if the National Bolsheviks don't win then Russia must be a dictatorship. Retarded, infantile smear is all this is.
'Halford Mackinder
The doctrine of Geopolitics gained attention largely through the work of Sir Halford Mackinder in England and his formulation of the Heartland Theory in 1904. The doctrine involved concepts diametrically opposed to the notion of Alfred Thayer Mahan about the significance of navies (he coined the term sea power) in world conflict. The Heartland theory hypothesized the possibility for a huge empire being brought into existence in the Heartland, which wouldn't need to use coastal or transoceanic transport to supply its military industrial complex but would instead use railways, and that this empire couldn't be defeated by all the rest of the world against it.'...snip...
There is nothing new with the foreign policy that the US is now pursuing with regard to Russia...For a short time there was a pause but the current administration has resumed the hard line policies of Regan and many other dead presidents.
http://en.wikipedia.org/wiki/Geopolitics
Those Peak Anxiety Blues
I woke up feeling angry. Raised in the Sixties, I saw the promise of The Space Age. I was enchanted and bewitched by the great science fiction authors -- Asimov, Clarke, Heinlein, and yes, Campbell. We were destined to go to the stars! (Is it only the fans of hard science fiction that can look past their collective noses?)
Human nature pissed in my Cheerios. Peak Oil and Climate Change have forever altered - yea, stolen - my dreams.
The shrill screams of "drill more oil" and "clean coal will save us" ring hollow in my ears. What the hell? Do we have no vision? 'Tis a sad day indeed when at the pinnacle of civilization, this is the best response we can muster. These measures can only deprive our species in the future, when these resources will be sorely needed. What happens when the next Glacial Age (to which global warming is the prequel) removes those pleasant climes which we take for granted? Sure, we could weather a deep winter for a few years, our numbers dwindling yet still hoping for the best. But if the past record is any guide, we are in for a winter that is beyond imagining -- say fifty, or even a hundred thousand years.
Let that sink in.
To put it in perspective, the entire recorded history of our human race has occurred in the most recent "interglacial period," which is due to end right about now. And there's no "if" -- it will happen. We see the signs of climate change, yet we insist that our standard of living is "non-negotiable." Huh? Let me be the first to clue you in, if you didn't already know: Mother Nature does not negotiate.
Fifty thousand years of winter. That's many times longer than all of recorded history, ladies and gentlemen. Plenty of time to forget what we've learned, because we'll be preoccupied with the basics of sheer survival. Wouldn't it be nice to have some coal handy?
I know it sounds like science fiction, but there's a storm coming, and those who are wise are already preparing as best they can. Our flawed human nature will not allow for a rational response en masse. Alas, I weep for the things that might have been...
I've always thought that what many people interpret as over the top anger from JHK is really a profound sense of mourning--for what we were, for what we have become and for what we could have been.
I've thought the same about Sam Clemens, too. It's easy to become despondent over human folly. I'm just having one of those days, and wanted to rant it out of my system.
I agree WT - the feeling I get from JHK is a general sadness at what might have been.
I feel the same way.
It would be nicer to have a giant space mirror supplying additional sunlight to our solar deprived planet.
But then again, what's that got to do with next quarter's profit reports?
Heh, nicely put.
Wow, oil inventories really fell today. The big refineries must be trying to hold off buying until the oil price drops a lot, which is not going to happen. It seems like they will have to start building oil inventory again soon, and that should puch the price over 150$, in my opinion. And then expert analysts will scream that oil prices should not be going up because inventories are rising, and the stupidity will continue.
Many talking heads assume or talk as though oil supply globally is equal to what happens to US inventory levels. What can we do?
--Jack
Brilliant!
Can we copy your statement to the related news on the side of the oil price page at Bloomberg.com?
Warning: this post is for those interested in monetary issues.
There have been some articles lately in Economics blogs about the appropriate exchange rate regime for Gulf countries, with suggestions that they should, at least partially, peg their currencies to the oil price.
http://blogs.cfr.org/setser/2008/07/08/the-ft-joins-the-chorus-arguing-a...
http://www.econbrowser.com/archives/2008/07/uae_other_gulf.html
I posted some comments on those blogs, drawing from a recent Catham House paper "Resource Depletion, Dependence and Development: Can Theory Help?" by Paul Stevens and John V Mitchell.
As an aside, if currencies of Gulf countries were completely linked to oil ("Gulf oil standard"), they would become the hardest currencies in the world, and speculative international financial funds would probably try to get parked in them. Actually, those currencies would effectively replace oil futures (as there were no gold futures when the gold standard was in effect) and ETFs based on them. Therefore Gulf countries would add a Capital Account surplus to their already huge Current Account surplus.
Interestingly, in a scenario of constrained global oil supply (no longer restricted to the “Peak Oil Now” camp, as can be seen in the PDF of the release speech of the 2008 IEA Medium Term Oil Market Report) the motivations that the Catham House paper gives for Gulf countries to set up reserve funds just vanish. From page 30:
“stabilizing revenue streams by countering commodity price volatility;”
Unnecessary if the price tends to go in only one direction in the long term.
“providing an intergenerational saving mechanism;”
With the ongoing loss of purchasing power of their financial assets e.g. in terms of food, clearly that objective is being missed big time. This is not a necessary outcome of constrained global oil supply, but of the current monetary policy of central countries.
“avoiding Dutch disease effects by sterilizing the impact of foreign exchange inflows;”
Gulf countries do not need to avoid Dutch disease.
Thus a constrained global oil supply scenario restricts the sensible options for the oil revenues (page 13) to just two: consumption and real domestic investments (which should themselves be sensible, prioritizing e.g. solar thermal desalinization plants over theme parks).
Now, in contrast with factory countries like China, revaluation by itself cannot stop accumulation of foreign financial assets by oil exporters if they do not cut oil production significantly (even more so if they start receiving significant financial inflows).
The only way to break this logic would be pegging the currency of the biggest oil CONSUMER to oil (within a wide band, as in the example in comment 39 to this post in the Brad Setser blog). That would trigger a deep US recession, bringing down its imports (oil and non-oil) and reducing its Current Account deficit. Which is one way of achieving what page 6 of the IEA pdf says: “If supply is constrained, demand has to fall in the OECD”. The other way is a plunge in the USD value, with consequent skyrocketing commodity prices in USD terms, as the USD is no longer used for pricing them.
A simple yet realistic enough model can show why depegging their currencies from the USD is not enough for oil exporters. Let’s assume that GCC countries achieve monetary union Eurozone-style, with the Gulfo (GLF) as their common currency. Let’s assume that the Current Account surplus of the Gulfozone is always half their oil exports, implying that as the oil price goes up they spend more abroad. We now consider two possible monetary regimes for the Gulfozone and see what happens per each TWO oil barrels exported as the price of an oil barrel (b) goes from USD 100 to 150 to 200.
Current regime: 1 GLF = 1 USD
1 b = 100 USD; Gulfozone accumulates 100 USD of reserves and prints 100 GLF
1 b = 150 USD; Gulfozone accumulates 150 USD of reserves and prints 150 GLF
1 b = 200 USD; Gulfozone accumulates 200 USD of reserves and prints 200 GLF
Gulf oil standard: 100 GLF = 1 b
1 b = 100 USD; Gulfozone accumulates 100 USD of reserves and prints 100 GLF
1 b = 150 USD; Gulfozone accumulates 150 USD of reserves and prints 100 GLF
1 b = 200 USD; Gulfozone accumulates 200 USD of reserves and prints 100 GLF
Clearly, pegging the GLF to the oil price prevents the acceleration in the internal inflation rate that the current exchange rate regime is causing, but does not prevent the acceleration in the accumulation of USD reserves. Therefore in both monetary regimes Gulf countries are trading their only resource coming from a finite, exhaustible endowment for printed paper worth less and less. This case is completely different from that of factory countries like China, which by revaluating their currencies would render their exports less competitive and eventually bring their CA surplus to zero. That does not happen with oil exports, as oil has no viable substitute and its demand is highly inelastic and moreover has enormous growth potential (unless the Chinese can be convinced that driving cars and SUVs is for losers and that they should keep biking). Therefore, as long as a country can pay for oil with printed paper, it will print as much paper as needed while that paper is accepted as payment.
This problem (for the oil exporters) cannot be solved by switching oil trade to other fiat currencies such as EUR or JPY, because if the problem arises from the fact that the US is getting a free lunch (by having its currency used as the international trade and reserve currency), the solution cannot possibly be just taking that privilege away from the US and granting it to another oil importer like the Eurozone or Japan. The solution can only be that NOBODY gets a free lunch (gold used as international trade and reserve currency) or that Gulf countries themselves start getting a free lunch (GLF used as international trade and reserve currency). The only way to prevent this outcome is to guarantee that the printed paper used today will not be worth less and less, which requires that the USD be pegged (within some reasonable band) to the oil price. This would be equivalent to the person having the free lunch privilege committing to restraining his food intake as necessary so that, in a scenario of constrained food supply, the others can eat too.
Under this hypothetical regime, if the oil price tended to rise too much, the US (biggest world oil consumer) would lower its demand as a result of tighter monetary policy. If on the other hand the oil price tended to drop too much, oil exporters could help support it by lowering their production. Needless to say, this regime would delight both Peak Oilers and Global Warmers.
Needless to say too, this regime implies that the Fed can no longer act as Lender Of Last Resort to the US financial system, so that some banks and broker/dealers would probably go down. This must be viewed in the perspective of the significant pain that many poor and lower middle class Americans (WITH jobs) will suffer as a result of high gasoline, natural gas, heating oil and electricity prices (because the USD peg could probably not be much lower than 150 per barrel to be realistic). In that context, the fall of some Wall Street entities could work as a token signal for that people that they were not the only ones feeling pain.
Ummm, did not really understand all of this, but haven't Ron Paul and the gold bugs been arguing for a return to pagging the dollar to gold or some kind of basket of commodities?
The GLF in your example is actually pegged to oil production, not oil itself. Oil is consumed, and so cannot represent a store of wealth. As for oil production, it rises and falls according to Hubbert's curve, and so also does not represent a (permanent) store of wealth--at least in the way that standards like gold and silver do.
hey WT,
Are you already compiling data to show the ELM in action?
Something like US imports average miles to port, as it changes over time.
I assume that as VenMex drops, the average miles to port goes up.
I love charts. :)
Just a reminder for all chart fanatics (like myself) that the Energy Export Databrowser is an interactive site that makes consumption/production/import/export charts for Oil and Nat Gas. It is based on the data from the 2008 BP Statistical Review.
It's a particularly good at visualizing the Export Land Model in action. Check out the following:
Also note that the UK is not an example of ELM as it does not have rising consumption of Oil over the last two decades.
Happy exploring!
Once an exporting region peaks, the net export decline rate is a function of consumption as a percentage of production at peak, the rate of change in production and the rate of change in consumption.
With a -5%/year rate of change in production, and a +2.5%/year rate of change in consumption, Export Land goes to zero in 9 years. With no increase in consumption, they would go to zero in 14 years--not a big difference.
WT, BTW, did you see this one on the July 4th DB ?
Export Land Model - well explained in a major Norwegian Financial Magazine ...... WT/ Jeffrey Brown credited as the man behind ELM
over here : http://www.theoildrum.com/node/4253#comment-374242
Thanks for the link. I didn't see it. I was at a secure, undisclosed location in the Texas Hill Country on the Fourth of July weekend, without Internet access.
I sent the story to a Norwegian diplomat I know (he is of the techno-optimist persuasion).
Continuing irony. As far as I know, the Dallas Morning News, at least in the news department, continues to mostly ignore the export issue.
BTW, would anyone in the Midland area be interested in talking, on camera, to a reporter about Peak Oil and their preparations for same?
westexas at aol.com
Here's an idea for a bit different graph.
Plot the inverse of "miles per million barrels" vs. date. Since the monthly data from the EIA gives imports from each producing nation, the distance from each nation and mode of transport to the U.S. could be easily found. The aggregate data could be plotted as "million bbls per transport mile" for each exporting nation. Then, calculate the energy per mile required to move the product via the appropriate mode of transport, be it truck, pipeline or supertanker. Another plot could be produced as "million bbls per bbl fuel used", also vs date. The result would be a plot of transport EROEI vs date. Might be an important perspective, when added together with the other components of EROEI.
E. Swanson
I think everybody could use a laugh, so I am posting a link to a report recently produced by the House Natural Resources Committee. It's about how "Big Oil" is supposedly sitting lease on federal lands that contain bazillions of barrels of oil. Mind you, these morons are running the country, so maybe it isn't so funny:
http://resourcescommittee.house.gov/images/stories/Documents/truth_about...
Here is the funniest statement:
"If we extrapolate from today's production rates on federal land and waters, we can estimate that the 68 million acres of leased but currently inactive federal land and waters could produce an additional 4.8 million barrels of oil and 44.7 billion cubic feet of natural gas each day."
Drainage! Drainage, Eli, you boy. Drained dry. I'm so sorry. Here, if you have a milkshake, and I have a milkshake, and I have a straw. There it is, that's a straw, you see? You watching?. And my straw reaches acroooooooss the room, and starts to drink your milkshake... I... drink... your... milkshake!
CERA's Michael Lynch was just on Bloomberg. Here's a few points he made.
Yes, he really said all of the above.
Again, Michael Lynch is not associated with CERA. You perhaps misunderstood the announcer. What he/she must have said was "Michael Lynch of SEER" Michael is president of his own company which professes to be an energy Seer, or one who can see into the future.
SEER - Strategic Energy & Economic Research Inc.
Yes, but the Bunny Ranch in Nevada is losing customers left and right because of gas prices.
If this is the mother of all bubbles, it certainly is a bubble with a very tiny pin hole.
NOT gas prices. Most of the "Business" is from truckers and at the price of diesel there are not so many independants on the road any more that can afford to stop ...
Rich people in Hummers are still having no problem getting there.
Incorrect. Overpopulation is the mother of all bubbles. And when it pops...
You got that one right!
http://www.theoildrum.com/files/evoltuion_timeline.JPG
"Price will be below $100 barrel by the year end"
that is entirely possible.
i don't often agree with john15.
i noticed oil equities dropping well in advance of the recent peak oil price(pop). and until recently, equities seemed to be moving in the oposite direction as the dow. and at that time, i wondered, what's going on here, are insiders aware of news the general public is unaware of ? this is usually the case when a stock makes a move. something about buy on rumors, sell on news.
demand destruction takes a while to kick in. look at what happened from about '79 to about '84. against this trend is supply. we have a declining base production and promises of new megaprojects. presumably china will stop stockpiling diesel soon. imo, it's anybody's guess. $100 seems entirely reasonable by ye, not just entirely possible.
Toyota Hybrid Car Engineer Dies from Overwork
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/07/09/financial/f0...
So, we know that Toyota's working hard in the face of peak oil...
Exxon/Mobile has these soft focused commercials with their employees talking about the serious work that they are doing to address the energy issue. I doubt that many are working themselves to death like the Toyota employee, or even losing much sleep (their starring on tee-vee commercials for crying out loud).
I do wonder, however, how the labor issue is playing out in the oilpatches. There's a lot of anecdotes about labor shortages in Anthabasca/Ft. McMurray...and apparently TX, CO, and WY are buffered from the economic downturn...any more substantial reports?
The anecdotes about the labor shortage are very true. I am currently working on a drill rig in north eastern BC. Canada has I believe about 600 drill rigs. Close to 500 are working right now and there is as usual a shortage of men to work these rigs. There are not enough men to man all the Canadian rigs. Ft.Mac is bringing in workers from all over the planet. I know for a fact that many Canadians and Canadian rigs are working in Wyoming(the Bakken field) and overseas. Apparently if you have a tough job to do in the patch and want it done on time and on budget you use Texans or Canadians. From what I gather the shortage of experienced oil field workers is world wide and getting worse quickly as the oil situation gets worse. Hope this helps..Terry..
Sad, if true.
Especially sad as we don't even need the stupid hybrid vehicles. His time would have been better spent designing a vehicle to do a 100mpg or more with existing technology.
The small cars of yesteryear were so small you could hardly get in them. Today the same range of car is so big you could squeeze an entire extended family into the freaking things.
I dare say common sense would have a vehicle capable of 100mpg on the road in no time, but common sense is in steep decline alas.
The people of yesteryear were smaller as well. Americans, however, demand bloated vehicles. They want their bloated,powerful vehicles and they also want high gas mileage. Ain't gonna happen without a change in technology. The bloat is also a function of safety regulations. Perhaps we should declare that vehicles meeting European and Japanese safety regulations are adequate. Desperate times call for desperate measures.
In the mean time, I will continue to drive my stupid hybrid and get 46 to 48 miles per gallon, on average. If I were the only one driving it, I could do better.
Good explanation of why it won't be an ICE vehicle.
http://www.uwgb.edu/dutchs/pseudosc/200mpgcar.htm
That link has lots of hand waving claims, but we know that a 200 mph car is possible, since they have already been constructed. The VW 1 litre is such a vehicle. Of course, it doesn't look like a Ford Explorer, nor can it carry the same number of passengers.
http://en.wikipedia.org/wiki/Volkswagen_1-litre_car
http://www.ultimatecarpage.com/car/1316/Volkswagen-1-Litre.html
Such a vehicle would be a great commute vehicle, as long as the diesel fuel were available. The soccer moms would hate it though, unless they were a 1 child per couple family...
E. Swanson
And the exotic materials to keep the weight down. In the article the 'car' was estimated at 2200 lbs. This is closer to motorcycle weight. So much so that adding two 200lb americans to it almost doubles its weight. NOW how good is the mpg?
Getting rid of SUV's sounds great, and it gives the world somebody to blame for global warming, smog, oil depletion, etc. However I came from an area where a pickup/SUV was as much a tool as a chainsaw or plow so I don't see them as evil. Also there is a LOT of the economy besides the manufacture of these vehicles that is taking a hit as they do disappear.
I don't think I'm going to be able to pull a very big trailer with this thing. Camping could be tight.
Exactly.
In this case "less will truly be more"$$$$
However I came from an area where a pickup/SUV was as much a tool as a chainsaw or plow
What did they do before 1988 (or so) when SUVs did not exist ?
S in SUV stands for "sport", not work. SUVs were never designed for work and utility purposes. Look at the miserable space utility. A van has them beat by a "country mile".
And compare a 1960s Ford F-150 to what the dealer sells today. Just shrink the F-150 back to what it is.
Best Hopes for Functional Vehicles that match the work actually done,
Alan
http://www.edmunds.com/insideline/do/Features/articleId=46027
http://en.wikipedia.org/wiki/Chevrolet_K5_Blazer
Also see IH scout and Ford Bronco, both in production before the Blazer. Not everybody commutes to work on 10 miles of paved road to a 'Cubicle Jockey' job.
My grandfather tossed 6 tons of hay every day in the winter using a Ford Ranger (HD suspension, V6, 4wd). 800 acres of Kentucky Bluegrass. He was critical of those with much smaller farms and bigger trucks, asking how they got the bigger trucks "to pay".
Back when gas was cheap.
I have been driven (pax) in a 4WD Subaru through 1 meter of fresh snow in the Icelandic Highlands, 50 km from the nearest village.
Best Hopes for small economical cars and trucks,
Alan
I haven't moved a fraction of the hay your grandfather has, but I've moved enough to know you don't need a big truck to do it. If they're stacked, tied, and driven appropriately, the size of the engine (or bed) doesn't matter much.
Bigger trucks probably make it a little easier, but they're by no means necessary. It's worth looking at how hard machines like trucks are pushed in areas that aren't as rich as the West; I saw bigger loads on bicycles in India than I have on most of the pickup trucks I've seen in the West. There's an enormous amount of spare/wasted capacity floating around.
Vehicles purchased so far in the US this year are 20% more efficient than what was purchased last year. Efficiency is even becoming a big issue for pickup trucks and WalMart.
I suspect we'd both like to see more and faster improvements, but a 20% improvement in one year is a nice start. That alone should lower US consumption by about 1% next year, and the year after, and the year after...
(50% of miles driven are by cars <= 5 years old, so ~10% of gas per year = ~5% of oil for this year's cars. 20% more efficient = ~20% less gas per mile = ~4% to drive the same number of miles = ~1% less oil consumed in the US. It may not seem like a lot, but it's almost as much as Thunder Horse produces.)
The Citroen C1 diesel is a standard production car that achieves 80(UK)mpg (3.5 l/100km - 67(US)mpg). I get 50(UK)mpg (5.65 l/100km - 42(US)mpg) from my standard (petrol) Fiat Punto, which I haul all my firewood for winter with. And they're cheap.
I believe there is much more that can be done with existing technology. To me the hybrids are merely nonsense and a substitute for common sense.
As for the case that cars must be designed with bloaters in mind, pah! If they want to get in the car, then they'll just have to lose weight. I weigh 100kilos and have no problem with the Fiat Punto.
I think most of the problems seem to be related to perception and even on TOD people seem incapable of perceiving life fundamentally different to what it is today.
This is sadly a very common problem in Japan.
There is even a word for it, karoushi. It translates as death from overwork.
Its a common part of Japanese life where the most adult men are suffering ill-health from long hours. They just accept it as a fact of life.
Its one of the scarier aspects of life here.
Since my company is now "global" we have plenty of Asians around.
Almost all of them smoke and, I suspect, drink large quantities of alcohol.
Hardly any Americans I work with smoke but most still drink plenty.
The stress at times can be phenomonal. At the end of one recent program I contracted pneumonia and a week later my most dilligent team member got it as well.
That team was the first I'd led that English was their second language.
Since that bout with illness I have noticed myself laying back and not jumping through so many hoops.
Unfortunately this causes another type of stress. :)
I call BS on this. An ICE that runs on biofuels can just as easily run on oil.
And set theory says your BS call is BS.
The set of ICEes that use rock oil typically excludes bio-fuels.
If one does not design for bio-fuel, one does not get bio-fuel.
And one can design an alcohol engine that won't survive gasoline.
The modifications to qualify a diesel engine for biodiesel or an Otto engine for E85 are minimal, even more so for a company with the engineering resources of Daimler Benz.
I know it's possible to build a high compression Otto engine to take advantage of ethanol's high octane rating just like it's possible to build a race engine that runs on 110 octane race gas, but it's much more likely to be a flex fuel engine.
I know it's possible to build a high compression Otto engine to take advantage of ethanol's high octane
And thus you have refuted your own claim of BS.
The BS part of a fleet of cars running on biofuel would be the lack of enough biofuel to keep them all running for the same driving habits and same population level of say, 2005.
Now, if one could adjust the demand downward....
Hello Leanan,
Thxs for the toplink: $4 gas helping revitalize small towns
It would be real interesting if a state would specifically target a small community to leapfrog ahead in postPeak preparation. Recall my earlier posting series on initializing, then the subsequent enlargement of biosolar habitats.
I am picturing a small town, in a good overall ecosystem-resource location with good water, that is on a major railtrack. The state then proceeds to solarize every household, builds a local transit system [Alan Drake's idea], strategic reserves of wheelbarrows & bicycles, then proceeds to build out a SpiderWebRiding network into the surrounding ag-areas for O-NPK recycling, and to preclude a future Nuahtl Tlameme backpacking scheme. With the state's encouragement and funding: picture this town also stockpiling a 10 year supply of seeds, I-NPK, guns & ammo, plus anything else deemed vital for the change ahead. Then, start repeating this targeted development pattern in other towns.
My bet is that they would have no problem attracting young, Peak Aware people to further advance the Paradigm Shift, and/or die defending it, if required.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I'm thinking of anonymously donating every book I have on peak oil and related subjects to my small town library. Better yet, I'll buy multiples of these books in used condition.
Yeah, people are shopping more locally and having sex more locally....
Global warming may bring beneficial changes to some areas as the glaciers on Mt. Shasta are growing:
http://www.usatoday.com/tech/science/environment/2008-07-08-mt-shasta-gr...
Maybe ??
http://www.mountshastaecology.org/15watershed02glaciers.html
Sorry Charlie, but "americans" are just like the rest of humanity. They will choose food and heat.
Environmental concerns are becoming a "luxury" that only the wealthy (i.e. warm and well-fed) can afford to worry about.
It's not that the environment doesn't matter, it's just that staying warm and eating will take priority.
Ask starving or freezing third-worlders about environmental concerns and I'm sure they will be able to explain it to you.
Some interesting comments:
http://americanenergycrisis.blogspot.com/2008/07/armageddon-and-end-of-i...
Armageddon and the End of Income Redistribution
Demand destruction hasn't even begun to lift it's ugly head.
It is over!!!!
The only economic recovery there will be, will be after WW 3. Then they can have their NWO
- with whats left of us.
Perhaps dumb question but if someone with a chemistry background wishes to chime in, could a nuclear plant, perhaps coupled to a fuel cell, produce hydrocarbons from CO2 and H20 and what might be the energetics? Thanks
Sandia Labs is working on it: http://www.eetimes.com/news/latest/showArticle.jhtml?articleID=205100670
I thought that it might be a way to store energy from wind generators for use during low wind periods.
Ammonia synthesis would be better. Storing in pumped storage would be best.
Best Hopes for more Wind Generation to Store,
Alan
I hear those guys are pretty smart fellas. Glad to learn I wasn't as absolutely out in left field as I might have thought.
Yes, but orders of magnitude away from economic.
Alan
You are likely right Alan, but let me expand on my thinking a little bit.
Nature has taken the position that hydrocarbons are a good way of storing radiant energy as chemical energy, as the downstream poster correctly points out photosynthetic plants do this. Short term, glucose is used, longer term, carbohydrates and fats. Though if I can speak closer to my knowledge base, very short term, a carbon hydrogen bond isn't used to shuttle energy around but a phosphate bond (Adenosine triphosphate <-> Adenosine diphosphate or ATP/ADP) and phosphorylation of numerous enzymes, for example the serine and threonine kinases plays a significant role as a switch for regulating metabolic processes.
Off the top of my head all major renewable energy sources generate electricity and not hydrocarbons. While infrastructure for electrified transport will no doubt be expanded and improvements in storing electricity are apparently occurring, there is a problem today with lack of hydrocarbons and nature has pointed out that hydrocarbons have many advantages as a source of stored energy. So at present could we generate hydrocarbons from electricity? Unfortunately photosynthesis is not fully understood which precludes artificially using this method. There will also be a loss in efficiency in going from one from of energy to another so you can't take a coal plant turn the coal into electricity and the electricity into oil, also any use of different fossil fuels for hydrocarbon production will increase atmospheric CO2. You would need a huge source of energy to make any appreciable difference. This leaves, at present, hydro and nuclear. As hydro can't be expanded too much further, this leaves nuclear.
A fuel cell is an extremely efficient means of generating electricity. My understanding, which may bear correction, is that with a proton exchange membrane fuel cell you could feed in electricity and run it in reverse. I believe this was even talked about as part of the "hydrogen economy" years ago. But once you have the hydrogen, I suspect, again with a loss of some energy, you could fairly easily react it with CO2 to 1) create hydrocarbons and 2) do it in a way that doesn't increase atmospheric CO2 when later it is burned as fuel.
Certainly, it's a bit of a stretch but we might wish to start thinking of different possibilities now rather than if oil were at 300/barrel. Heck bring home half the subs and aircraft carriers and you have your nuclear plants. Better yet, outsource it to Iran, sorry, sorry, sorry. You know with FISA having just passed, I didn't mean to ridicule our bizarre, arrogant attempts to start WWIII, I meant, of course, to say "I pledge allegiance ...".
While perhaps another time we might discuss the risk/benefit ratio from limiting use of lower EROEI fossil fuels over concerns about AGW, it did occur to me very recently that 1)for long chain hydrocarbons the percentage of carbon will never be less than methane CH4 2) with an atomic weight of 12 for carbon and 1 for hydrogen methane is by mass 75% carbon. So whenever you burn a tank of gas, somewhere over 75% of the weight of that tank has been expelled into the atmosphere as carbon, does give one pause.
It has already been done, there are very efficient devices that exist for doing this. They are called "plants".
Did anyone else read Dmitry Orlov's new book "Reinventing Collapse"? I thought it was excellent, perhaps the best of all the peak oil books I've read (and I've read a lot of them).
Here is one pithy quote from p. 25 "Once a significant portion of the (American) population finds that cars have become inaccessible to them, the effect on the national psyche may be so profound as to make the country ungovernable."
Disagree? Agree? Care to outline your reasoning?
Haven't read it yet, but bought the book recently and am hoping to get to reading it very soon. I've read one or two of his pieces online a while back and really enjoyed them.
-Gazoo
I read Orlov's book recently. One point he made that really resonated for me is the idea that an economy can collapse overnight, but generally a civilization takes centuries. I also liked his idea that it might be a good way to get by, to be a kind of nomad, but one that rotates between a few fixed locations. Don't be too much "one of us", but don't be too much a stranger either.
Last week I got my Trek 520 touring bike tuned up & the front rack mounted.
Saw this satirical piece in The Onion today and had a good chuckle. Title of the article is:
Article here: http://www.theonion.com/content/opinion/were_investing_so_much_in
-Gazoo
How does all the talk of alternatives miss 2 major ones. We can discuss improving switchgrass yields and food-crop displacement, but never giant mirrors in space feeding desert solar arrays (or converting to microwaves in orbit and then transmitting)
Bussard's crew was running around looking for a tiny bit of funding (they even solicited google) for fusion, a new design completely unrelated to the Tokamak money pit design. The concept was reasonable, they'd gotten nice returns out of small scale and shoestring budgets, and they wanted mere millions to continue testing.
Sunlight collected in space is many times more powerful than collected after it goes thru the atmosphere. Shipping truckloads of foil into space (geo) is a reasonable engineering undertaking. Basically non-poluteing, should last nearly forever, expensive solar panels are easy to fix/upgrade on the ground. In space you just have cheap mirrors.
Fusion of course required a technological leap. You can't predict when those happen, but that doesn't mean you only fund the one approved money pit. Spread it around to various pits.
Yes, Bussard, polywell, wiffleball fusion design, I'm pulling for it. Though I'm not positive mankind, as wicked as we are, would even currently benefit from a solution which gives us so very much more power. Still, talk about revenge of the nerds, you know he was a sci-fi writer? Hence the Bussard collector in ST TNG.