DrumBeat: July 13, 2008
Posted by Leanan on July 13, 2008 - 9:16am
When ends won't meet: Soaring gas prices mean financial hardship, major cutbacks for low- and middle-income households
Jeanne Renner's financial consulting business is devoted to households that have found themselves financially adrift in a sea of burgeoning debt, higher prices and stagnant wages. Renner worries about how they will be able to cope in a world of radically higher gasoline prices.In the meantime, she is shepherding clients through financially trying times by stripping them of their credit cards and putting them on budgets that include only nominal spending for entertainment.
“I have people who come to me right now and say, 'We're headed back to the hills to live off the land,'” Renner said. “People are learning to do without the things we believe are necessities.”
Gazprom ready for Iran energy deals: report
TEHRAN (AFP) - Gazprom's chief on Sunday assured Iran that the Russian energy giant was ready to participate in major Iranian oil and gas projects, days after Total dropped out of a multi-billion dollar gas deal.
Decisions Shut Door on Bush Clean-Air Steps
Any major steps by the Bush administration to control air pollution or reduce emissions of heat-trapping gases came to a dead end on Friday, the combined result of a federal court ruling and a decision by the head of the Environmental Protection Agency.
Are you gonna eat that? How to curb food waste
Amidst growing concerns about rising food prices and global warming, many Americans are taking a closer look at what they do — and don’t — eat.Research in the U.S. estimates that at least 14 percent of purchased food ends up in the garbage.
The Militarization of Energy Security II
The possibility that access to energy resources may become an object of large-scale armed struggle is one of the most alarming prospects facing the current world system. The political stability of advanced societies, and the continued prospects for economic and social improvement in developing countries, are both linked to the operation of international energy markets. The increasing scale and complexity of these markets since the end of the Second World War has been one of the primary drivers of global economic growth. Like all international markets, the market for energy is sensitive to war and upheaval, whatever the cause. Energy markets are efficient at discounting risk, and there is a long history of price spikes and shortages whenever large-scale violence, chiefly but not exclusively in oil-producing regions, threatens established patterns of production and consumption. Strategic planners in the United States and elsewhere are well aware of the degree to which the anticipated effect of military operations on the price and availability of oil and natural gas needs to be considered in their work.
Despite 800 billion barrel potential, oil shale a hard sell
If the oil industry can learn how to extract oil and gas from the oil shale in a cost-effective manner, the United States could lay claim to oil reserves totaling, perhaps, 800 billion barrels — three times Saudi Arabia's.With oil prices riding high and conventional crude reserves ever more difficult to find and produce, companies including Shell Oil Co., Chevron Corp., Exxon Mobil Corp. and Schlumberger are conducting research on a resource that could forever alter the geopolitics of energy.
But the history of oil shale has been a story of grand plans and locked gates.
Gazprom considers gas sales to UK households
LONDON (Reuters) - State-controlled Russian gas giant Gazprom is examining a possible entry into the UK retail gas market, a spokesman for the company’s UK unit said on Sunday.
Kuwait oil sector cuts power, water consumption; 16, 13 percent
KUWAIT, July 13 (KUNA) -- The Kuwaiti oil sector has managed to cut its electricity and water consumption by 16 and 13 percent respectively by using steam turbines in oil refiners, a power official said here Sunday.It has also saved 23 megawatts of electricity by scrapping an ammonia plant, Adel al-Jassem, assistant undersecretary of the Ministry of Oil for control and media affairs, told reporters.
Thailand - E85, cheap diesel oil from Russia will tackle energy crisis: Samak
Prime Minister Samak Sundaravej said his government would buy cheap diesel oil from Russia and support the use of E85 vehicles as parts of the government's measure to tackle energy crisis.
U.S. Considers Increasing Pace of Iraq Pullout
The Bush administration is considering the withdrawal of additional forces starting in September, as the need for troops in Afghanistan becomes more pressing.
Bush, Democrats spar over gas prices
WASHINGTON (AP) -- President Bush on Saturday tried to pin the blame on Congress for soaring energy prices and said lawmakers need to lift long-standing restrictions on drilling for oil in pristine lands and offshore tracts believed to hold huge reserves of fuel.
Big Oil Not Sitting On Oil Acreage Despite Democrats’ Claims
Congressional Democrats now have their unified response to increasing calls for oil exploration in Alaska and in the waters off our shores: The energy companies, they say, are already sitting on plenty of oil, refusing to recover it.But is that true?
New England will freeze without fuel aid
With mid-July temperatures in the 80s this weekend, most people are more concerned with paying to fill the gas tank for summer vacation at the lake or the beach than about keeping their families from freezing next winter.But unless the federal government gets serious about the energy crisis that is wrecking the economy and hitting families financially, New England faces a possible catastrophe in a few months.
Today's economic crunch feels like the '70s
"There was a kind of extremism in the air," said Herb London, president of the Hudson Institute, a conservative, Washington-based think tank. "Conditions now are also kind of frightening. But the situation is not as extreme."Still, today's list of potential villains sounds like a cast from the past.
Rural airlines take flight: Service is too costly; passengers are too few
Airline woes that make flights from hubs such as Las Vegas, Phoenix or Salt Lake City less convenient are making it downright impossible for rural residents to fly from small towns across America.High fuel costs, lousy airline balance sheets and a shortage of suitable planes have left more towns than ever without scheduled air service this year, despite the government spending more than $100 million annually to subsidize routes to isolated airports.
The path traced today by planes arriving at airports is a tangle of wasted time and fuel. A startup near Seattle has a program that makes landings simpler, shorter - and smarter.
This is a story of selfishness and greed, of self-centeredness, envy and the ignorant folly of a person too short-sighted to realize she should count herself lucky because her college education didn’t have to be paid for with the milk of a goat.The tale could be called: I Can No Longer Afford to Drive My Car.
Green motorists face 20-week wait for eco-cars
GORDON BROWN'S desire to have all UK motorists driving electric or hybrid cars by 2020 could be undermined by a shortage of the most popular hybrid models on the market.The increasing cost of fuel alongside the heavily discounted level of road tax for vehicles such as the Honda Civic Hybrid or Toyota Prius has led to an unprecedented demand that has caught car manufacturers by surprise.
So, just how green will the eco-towns be?
The plan to build 10 new eco-towns across the UK has been beset by fierce local opposition and concerns over the state of the housing market. But there has been little examination of the towns' green credentials.
Diesel hits record, gas ticks higher
NEW YORK (CNNMoney.com) -- The price of diesel fuel hit a record high and gasoline resumed its march upward, a daily survey from auto club AAA showed Sunday.The price of diesel, which is used to power most trucks and commercial vehicles, hit $4.817 a gallon. It had dipped to $4.811 on Friday and Saturday after reaching a record $4.814 last week.
A New Fashion Catches On in Paris: Cheap Bicycle Rentals
A year after the introduction of the sturdy gray bicycles known as Vélib’s, they are being used all over Paris. The bikes are cheap to rent because they are subsidized by advertising, and other major cities, including American ones, are exploring similar projects.
Say good bye to the good old days
Here's what we know for sure about the latest energy crisis. The cost of virtually everything is going up. Our freedom to roam anywhere we want by car or by plane is being curtailed sharply by fuel costs. As rising prices force us to buy less, jobs will be lost, possibly our own. Interest rates are going to go higher, squeezing our finances. At the same time, the economic turmoil is shrinking our RRSP nest eggs. And no one really knows how bad it's all going to get.
Vanpooling can keep you and your wallet happy
BALTIMORE (Map, News) - With prices at the gas pumps continuing to skyrocket, most commuters are turning to alternative ways to travel. One convenient and affordable option that often goes overlooked is vanpooling.Vanpooling became popular during the United States’ last major energy crisis in the 1970s, and it has seen a revival in the past six months. The country’s largest vanpooling organization — VPSI Inc. — reported a 48 percent increase in applicants this May compared with last year. Paul Volden, VPSI’s marketing coordinator in the D.C. area, said interest in vanpooling has almost doubled in this region from April to May, and he expects to see similar leaps when the June numbers are made available.
Ford SUVs sales ride high in Middle East
Ford, Lincoln and Mercury retail sales grew by 21 per cent in the Middle East during the first half of 2008, setting a record performance for the three brands across the region.Led by a strong surge in Ford utility vehicle sales (up by nearly 50 per cent), the results show an increased consumer preference across the range and Ford believes this trend would get stronger with the launch of the all-new 2009 Ford Flex full-size crossover in the next quarter.
In UAE the trend was similar with an increase of 25 per cent.
Indonesia: Exploding Subsidies
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Even though the wasteful burning of money through fuel subsidies has increased steadily to exceed even the combined spending on education, health and other social services, the President still doesn’t get the real message. |
Energy war: India and China face off in Central Asia
This week, as the oil prices soared to $147 per barrel, the world energy scenario became bleaker. With the market analysts frequently talking about oil climbing up to $200 by early next year, now there is no doubt that another oil shock — worse than its previous avatar in the 1970s — is staring at all the energy-hungry economies, particularly India and China.
TWO VIEWS: Tapping oil reserves would free us from clutches of OPEC
WASHINGTON -- To burst the oil bubble, use a drill! If Congress stands up to special interests and develops domestic energy sources, oil prices will tumble.
TWO VIEWS: Renewable energy offers path to independence as oil production drops
BLOOMINGTON, Ind. -- The United States, like any forward-thinking investor, needs to diversify its energy portfolio. The country is not going to be able to drill its way out of this energy crisis; oil will not save us.
Maine: Governor touts energy Web site
AUGUSTA: Gov. John E. Baldacci has unveiled a new Web page for consumers and businesses that want to find ways to reduce their energy costs. Before the development of the page, energy resources were scattered among various state government and private Internet sites, making information difficult to find.
Obama to meet Energy Smart Debbie
Amid skyrocketing oil, gasoline, coal, and electricity (coming to a neighborhood near you) prices, 2008 offers Americans quite serious and stark choices between knowledgeable, impassioned, and thoughtful candidates when it comes to finding paths toward a prosperous 21st century economy, on the one side, and Fossil-Fool candidates focused on tightening our shackles to the ever-more costly (pollution, financial, otherwise) and archaic oil-coal based energy system.One of these stark choices comes in California's 46th district, where Huntington Beach Mayor Debbie Cook is running against ten-term Congressman Dana Rohrbacher.
Debbie was one of the first on the Energy Smart Act Blue page. Tomorrow, Barack Obama is going to meet Energy Smart Debbie. Let's hope that this is not for the last time. Let's look at some indications as to why.
Oil production is peaking worldwide, at the same moment that global warming has emerged as the greatest environmental threat of the 21st century. This perfect storm has finally convinced the world that the time to act to avert disaster is now.
Technology is there: More electric power and use of rails can offset the so-called energy crisis
Those in the “peak oil” camp, who predict that we are about to run out of easily accessible petroleum, warn that the drop in global oil production will bring dire consequences. Writer James Howard Kunstler, and like-minded groups such as the Capital Region Energy Forum, predict the collapse of Western Civilization and the establishment of an “Amish Paradise.” Yet they forget history and underestimate the technology available to sustain our technological civilization.
Capitalist answer to economic woes
Under that definition of course we do not live in a capitalistic society by any means. And that is Mr. Donlan's point and main complaint. The real distortions, inequalities and environmental threats we face in this summer of discontent stem largely from efforts by governments and other special interests with power to affect outcomes through interferences of one kind or another.The first case in point is the current version of the energy crisis that might better be classed as an extraordinary delusion and crowd madness. We have a sitting president doling out tax dollars so SUV owners can fill their tanks while his putative successors demand an America free of oil imports and the punishment of the very oil producers who are supposed to provide that freedom.
Public transport not prepared for more passengers: Report
The capacity of bus and train services are not prepared to cope with rising passenger numbers, a spokesman from the Australian Association for the Study of Peak oil has said.Convenor for AASPO Bruce Robinson said that motorists should prepare their own fuel shortage plan in the wake of a CSIRO report that petrol may reach up to eight dollars a litre by 2018.
Iran discovers new oil field to hold 1 billion barrels of crude
TEHRAN (RIA Novosti) - A new large oil deposit with estimated reserves of more than 1 billion barrels of crude has been discovered in Iran, the Iranian oil minister said on Sunday.Gholamhossein Nozari said the oil field, located in the southwestern province of Khuzestan, is believed to contain 1.1 billion barrels of crude, with recoverable reserves of about 220 million barrels.
Saudis can't save us: Beseeching oil sheiks to open their spigots and bring back cheap oil for Americans doesn't work any more
For almost four decades, when Saudi Arabia spoke, oil speculators listened. That is why U.S. presidents, starting with Franklin Roosevelt and including most recently George W. Bush, have courted the king of Saudi Arabia on matters related to oil.The problem is that the reality of Saudi oil power has faded and no one, not even our so-called "oil" president or the Saudis themselves, seems to have acknowledged this new fact of life.
Let 'peak oil' concept lead to peaks in other undesirable trends
As doomsday scenarios go, "peak oil" is pretty frightening. It's not as dramatic as, say, an asteroid hurtling in from space.But with gasoline at $4.25 a gallon and our economy in shambles, it's gaining a sobering amount of currency.
A recent book, "Gusher of Lies," by Robert Bryce, a former fellow at a think tank funded in part by energy interests, described energy independence as a "dangerous delusion." And a 2006 Council on Foreign Relations task force went so far as to accuse those promoting energy independence of "doing the nation a disservice by focusing on a goal that is unachievable over the foreseeable future."Ignore them. Energy independence does not mean that the United States must be entirely self-sufficient. It simply means reducing the role of oil in world politics -- turning it from a strategic commodity into merely another thing to sell.
Do you want to know why Iran has a nuclear program?
This is where Iran’s nuclear program comes in. You see, even though we may be under the assumption that an oil well will produce oil indefinitely, reality is much different. One of the most important observed properties of oil wells is that they follow Hubbert’s peak theory postulate, “that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve.”
Guatemala added to Venezuelan oil pact
MARACAIBO, VENEZUELA — President Hugo Chavez said Saturday that he is expanding his Venezuela's Petrocaribe oil-supply pact to include Guatemala.Through the pact, oil-rich Venezuela provides nations with oil under preferential terms, including long-term loans and the option of paying for at least some of the costs with goods and services.
"It is an obligation to help the weakest" countries, Chavez said in a televised address.
"The United States would pay us $200 a barrel for oil - give it to me then," said Chavez, whose nation is the world's 10th largest oil producer. "Now Haiti, no. Haiti gets preferential treatment. Socialism says: To everyone according to their needs."
UAE's oil reserves to last 92 years: IEA
The United Arab Emirates (UAE) has total oil reserves of around 98 billion barrels of crude and, at current rates of exploitation, the stocks would last 92 years, the International Energy Agency (IEA) said in a report.
'Professionals' blamed in Fayette County rail theft
A nonprofit Fayette County economic development agency is offering a $5,000 reward for information leading to the arrest and conviction of the people responsible for stealing about 400 feet of steel rails from a little-used railroad spur in Smithfield Borough and Georges Township.Related: Metal thefts pose problems for railroad
Brits raiding savings to pay bills
Nearly two-thirds of people said they had seen a noticeable increase in the cost of food during the past three months, while 61% said they were spending more on petrol and energy, and 44% faced higher council tax bills.
Airlines, truckers point fingers over speculation
SAN FRANCISCO -- Two of the industries with the most at stake from efforts to curb financial speculation in oil ratcheted up their marketing campaigns this week, with an eye on influencing a raft of new bills in Congress.The public pressure dovetails with another round of new records reached for crude-oil futures and a growing exasperation among many lawmakers that they must act to reverse climbing prices before leaving for their August recess.
So, he asked me, when will oil come down?
MADRID (Reuters) - I sank into my seat in the air-conditioned taxi. Heading home from the World Petroleum Congress, exhausted by days pestering top oil producers about when prices might come down, I gazed at the parched scrubland around Madrid."Tell me," the taxi driver interrupted. "When are fuel prices going to fall?"
He peered accusingly in the rear-view mirror.
"Every day they just go up and up. But when are they going to go down?"
That question again.
37 arrested at Australian climate protest: police
SYDNEY (AFP) - Thirty-seven people were arrested at a climate change protest in Australia on Sunday when they blocked a railway line delivering coal, police said.Organisers said as many as 1,000 people attended the protest march from Newcastle to the nearby Carrington coal terminal, where some demonstrators broke through a fence and chained themselves to a stationary coal train.
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From the "Saudis Can't Save us article, by Amy Myers Jaffe, linked uptop:
"No one?" Didn't someone publish a book in 2005 warning that Saudi oil reserves were overestimated? Of course, Ms. Jaffe, a long time critic of Peak Oil, attributes the Saudi problems to a lack of investment, and not depletion, but the tone of the article is definitely interesting. I suspect that it is a more a CYA effort than anything else.
A group of unpaid bloggers (here) manage to make predictions years ago which are coming true all too rapidly, and the 'professionals' cannot even speak of what most of the readers of TheOilDrum know-that Peak Oil is upon us, and that we live in a finite world.
Tractor production is rising yet again, Comrade!
yep, tractor production is increasing. around here though they are powered by chickens. If you don't know about "chicken tractors" suggest you go to google. one is in the future of most of us.
Well I googled "chicken tractors" - they may still be in the future of most of us, but to be honest I'm a little disappointed.
I just painted my new chicken coop. I live in the city (yes zoning allows us to keep chickens here) and only have small area but thought this would be good to leanr NOW, rather than later when I may really need it. I have chicks on order and hopefully will have a few fryers and later some eggs in a few months.
Like all of us, I am getting older. Each year, I run the Bolder Boulder. As I get older, the trend is that I get a little bit slower each year. If I "invested" a lot more each year in my conditioning, I could seem to reverse this trend in a particular year but the overall trend would still be slower running times. At some point, no amount of investment can reverse the trend. It is exceedingly difficult to overcome entropy. Maybe you can seem to do it for a few years (which I have), but the long term effects of aging are just too great to overcome.
Yes, no doubt SA could have done even more investment and eeked out a few more barrels because of that. But those calling for more investment push the false hope to the addicted that the basic overall trend can somehow be subverted and reversed. This is a criminally irresponsible approach.
Simmons is becoming more and more blunt in his warnings as he joins forces with what is perceived as the radical fringe. But really. Bland warnings have been demonstrated to be ineffective. Perhaps the "shrill" approach won't work either. But it is worth a try when everything else has failed.
I'm mad as hell and I can't take it anymore.
Tstreet, have you thought about it this way?
Hokay, so Simmons gets his message out and everyone knows what's up. Then everyone shifts as much as possible to 'clean alternate energy'. The demand for oil drops . Will the flow rate drop or will we still be using every bit as much oil and polluting just as much, or maybe even more with that added use of alternate energy, just at a cheaper price?
I suppose given time and a bit of work I could think my way through this but I am in an energy efficient mode today, usually I am just lazy but this being Sunday I might as well dress it up a bit:)
Maybe we got to think outside of energy for a best solution?
This is why I mentioned that the chart below should be prominently displayed on this site.
Yes, you have offered up a potential problem even if we start really cranking up alternatives. But you said the oil demand drops. So I am not sure I understand your conclusion that we end up using just as much oil anyway. Anyway, without understanding that there is a problem, there clearly won't be a solution. It's a start. One of Simmons' concerns is that we think we can drill our way out of this. Both Pickens and Simmons clearly state that this is a non starter. Maybe we don't know precisely what will work, but we do know what won't work, at least with an acceptable level of certainty.
Demand, as I understand it, is what we need to pay and are willing and able to spend on a barrel of oil. We can desire more oil but unless we have the loot to pay for it there is no demand. As price falls it allows ineffective desire to be translated into real demand as it will be more affordable. Flow remains the same, aside from peak restraint conditions, but price is a variable influenced by those alternate energy replacements. (now if you can see a way of using those alternate energies will forestall the use of coal ... :))
Anyway, without understanding that there is a problem, there clearly won't be a solution.
Right! And without clearly understanding how the problem might be structured there will be no solution. (pretty safe statement there ,eh?)
tstreet-
As a runner, albeit much more casual than you, I just wanted to take a minute and complement your analogy between increased investment in your race prep and increased investment in aging oil fields. This seems like the type of analogy that could be understood by a wide range of people who have just been introduced to the concept of peak oil.
Ms. Jaffe also says in her article:
Has Ms. Jaffe been falling asleep in front of her TV set?
We have always had "leadership". Leadership's answer is "stay the course ... only cowards cut and run."
The problem lies not in our leadership but in our followship, as in lambs eagerly flocking forward to the slaughter house and turkeys gobbling happy songs to each other on the week before Thanksgiving.
____________
Overheard at the Animal Farm: Tom Turkey to his friend Jerry Turkey: What we need is a good old fashion Mangobble project or an Apt-polo project. Why if we can send a turkey to the outer trough (the moon), we can do anything.
This article brings up an interesting paradox for many of the bubble and conspiracy theorists. They see Saudia Arabia as a White Knight whose role is to flood the world with oil so as to rescue us from $200 per barrel oil. On the flip side, however, in the event of a severe World-wide depression and declining demand, they perceive Saudia Arabia's role is to do nothing. This leads them to predict $30 oil, $60 oil and so forth. They base this on a sole data point--the decade of the 80's.
But is it reasonable to believe that Saudia Arabia, and its fellow OPEC members, would not try to defend some price floor? Could they defend a price floor?
I bring this up because I believe there is another data point besides the 1980s, and that is the 1930s.
It's a fascinating history, which one can read here...
http://www.tsl.state.tx.us/exhibits/railroad/oil/page6.html
or here....
http://www.tsl.state.tx.us/exhibits/railroad/oil/page6.html
But the bottom line is this: even in the midst of the Great Depression and in spite of the discovery of the hugely prolific East Texas Field in 1931, the Texas Railroad Commission and the Roosevelt administration did manage to put a floor back under oil prices. So it can be done, even during a prolonged, world-wide depression.
In that turbulent era, as the fortunes of the regulatory attempts to curtail oil production rose and fell, so did the price of oil. It was a wild ride, as these data points gleaned from the two histories cited above amply show:
1929: $1.00 per barrel
Summer 1931: between $0.02 and $0.10 per barrel
Sept 1931: $0.85 per barrel
Fall 1932: $0.30 per barrel
Winter 1932: $0.85 per barrel
Spring 1933: $0.50 per barrel
Summer 1933: between $0.04 and $0.10 per barrel
Winter 1934: $1.12 per barrel
But in the end regulation prevailed. The price of oil was restored.
The oil bubble and conspiracy theorists who rely on the 1980s as their sole data point to model their oil price predictions use an amazingly blinkered version of history. They assume that OPEC either would not come together in attempt to defend some price floor, or could not defend a price floor.
The fact that non-OPEC Russia has indicated much more hawkishness on oil prices over the last month or so also seems to belie the oil bubble and conspiracy theorists' pet nostrums.
Also, it appears that world oil consumption in 1938 was higher than in 1929. And BTW, shortly after the end of the Second World War the US became a net oil importer, more than 20 years before our production peaked.
Down South...I have had many thoughts about SA but I never, ever, considered them a 'White Knight'...I find that suggestion amusing. :)
While in the navy I spent quite a bit of time in the Med keeping an eye on CCCP subs. We were, to a man, well aware of why we were there.
It was about keeping the sea lanes open to tanker traffic then...as it is today.
Lots of cheap money has fled into commodities markets, because there are few rocks to find a possible profit under in these troubled times and lots of slosh. I believe when sufficient refining capacity for heavy/sour crude is on line that OPEC will have more influence than currently have...OPEC has lost some of their pricing power because they do not have enough of the grades of crude that are most in demand. I have made money on gold and am not complaining but I continue to believe that we are seeing a shortage of refining capacity for heavy/sour crude and have reached, are past, or are very close to, PO in sweet/light. I have a strong hunch that there is some 'overshoot' in the oil price now...call it a bubble if you want, I do. Many on TOD believe that the commodities market is immune to manipulation. I believe that no market is safe from manipulation by shrewd people and governments with lots of money, influence, and the ability to write laws and regs that are beneficial to themselves. I don't see my view as a conspiracy theory or even an unlikely scenario.
In any case I am not going to make or lose money in the oil market. I don't have a horse in this race. What you hear from me is from someone that is more interested in how much the dollar/oil relationship will effect gold prices...and, how much our own governments neglect and incompetence is effecting the dollar...which effects all of us.
One of the greatest insights of this article is to point out the extent to which the Saudi royal family finds itself between a rock and a hard spot. The puppet regime is sandwiched between the competing demands of its sponsor, the United States, for lower oil prices and the demands of its own vassals, whose interests are served by higher oil prices.
The situation is complicated for the Saudi royal family because the mystique and prestige of its sponsor's military has been greatly eroded because of its failures in Iraq. As Nathan F. Twining said: "Forces that cannot win will not deter." The natives are becoming emboldened, and it is Bin Landen's avowed life's ambition to overthrow the ruling family.
One of the finest discourses on Saudia Arabia and OPEC and how they can affect the markets is to be found here...
http://www.oxfordenergy.org/pdfs/WPM31.pdf
The reason I like this analysis is because it imagines another framework in which we can fit Saudia Arabia's actions, other than the materialist one of Saudi Peak Oil. I realize such vitalist explanations are anathema to many advocates of Peak Oil, such as westtexas who, back up the thread, expresses disdain for vitalist explanations: "a long time critic of Peak Oil, [Jaffe] attributes the Saudi problems to a lack of investment..." If I were forced to choose, I would have to choose westexas' explanation over Jaffe's, but I nevertheless think it best to be aware that scenarios other than Peak Oil exist that can just as accurately explain the behavior of Saudia Arabia's ruling family. Of course my pet belief is that it is a combination of both materialist and vitalist phenomenon.
The idea the the Saudi Royal family is a US puppet would surprise both of them and the US. By the way Bin Laden doesn't want to depose the Saudi Royal family, he just wants them to pursue a more pure form of Islam.
'The United States of America are my favourite slaves.'
Google it.
Just for the record, I don't believe it is immune. I just believe that there would be evidence of manipulation other than high prices (which can have many other causes). Absent that evidence, I apply Occam's Razor.
As to overshoot in prices, there could be some overshoot in near-term futures prices. Until they settle, they are just peoples' estimates of where prices are going to be on settlement day. But in longer-term futures, I think there is considerable undershoot. I don't it is very likely that oil will only $140/bbl in 2014, which is what futures say today.
I'm very interested in seeing what happens as we switch from light to heavy oil. Coking is a more energy intensive processe than fractional distillation (as least that's my understanding...I'm not in the business). Assuming that's true, EROEI decline will accelerate as we switch increasingly to heavy oil. So far we've mainly dealt with EROEI decline from light fields that are harder to discover/develop or are mature and require additional energy inputs to keep up production. I have no idea how many barrels of heavy oil we'll need to replace each barrel of depleted light oil, but I'm pretty sure it is not 1:1.
Yes, No One.
The dominant class maintains dominance so long as they can render their competition invisible. When the thin veil parts and everyone can see the sham (The Emperor's New Clothes), then the last defense must be "no one could have forseen, no one told me."
The relentless search for truth requires one to remain forever at odds with the dominant order, because the new truth is also just a partial truth, and the new ruling class that emerges will be just as resistant to new ideas.
Already, it is obvious that "Peak Oil" has been appropriated by the rulers -- who not more than a year ago were still ignoring it when they could, and vigorously proclaiming its error when they couldn't. And of course, in becoming part of the dominant paradigm, it loses its clean, sharp edge. In service to The Empire, the scientific observations of peak oil become a Kiplingized Just So story that hardly resembles its parent.
Watch Out! Peak Oilers-- the term is about to become irrelevant.
We have seen the same problem with "organic" as applied to food, and "sustainable" with respect to development.
Pioneers have to work awfully hard to stay ahead of the pack, and to maintain the roughness of their hair shirts, which are forever threatening to become smooth and comfortable.
For one thing, one has to ask continually, "what's the point?" Running water and central heat and easy transportation are really very nice.
Never LNG,
Thank you for putting up the post that I was thinking of. Incompetence is going to become the number #1 excuse for the coming wave of fascism. As it has become the number #1 excuse for the Iraq war in best selling works of fiction like Fiasco, Cobra II, No End in Sight etc. There is a growing understanding by posters who "get it." Cid Yama, DownSouth, Super390, DaveMart, Wolverine and a hand full of others understand that there are a group of elites that are positioning themselves for Peak Oil. "Getting it" politically is as important as "getting it" geologically.
James Woolsey, Buzzy Krongard, James Schlessinger, the CIA, Amy Jaffe, James Baker, Dick Cheney and believe it or not even the grinning chimp boy know that peak oil is here. So why aren't they doing anything about it? The answer is they are.
They now have an army of 21,000 people(Blackwater)--- just one of many private armies that they can employ. The executive orders for martial law have already been put on the books. The FISA bill has been passed. In many different small towns and big cities the Taser guns have been purchased. The elites have been quietly reinvesting their money. Don't get me wrong I don't think they will be successful but I think it is going to be a tough fight to keep our freedom. It's going to be messy to say the least. Am I paranoid? Perhaps but it doesn't mean I am wrong.
I don't necessarily think that these elites all sat around in a room puffing Cohibas and plotting one world government but I do think that there is a growing understanding by the owners of our society who want to keep their wealth and power after a collapse that they have known was coming for at least a decade.
neoconned said: "Don't get me wrong I don't think they will be successful but I think it is going to be a tough fight to keep our freedom."
I've been giving this subject considerable thought the last few days, not just the fact that America's ruling elite now appears hell bent on colonizing its own people, but also whether rulers can successfully do this while simultaneously pursuing a program of external conquest. Reviewing my history books, I find no evidence that similar attempts have met with success in the past. The problem is that if you set out to screw your own people, the internal economy always falters before the imperial mission can be accomplished. Imperial enterprises are extremely costly, and need strong internal economies to finance them.
France
Luis XIV's minister of war, Francois Louvois, "fed the king's dreams of glory" and helped to "bring about the four costly struggles that made France the warmonger nation for over a century and a half." His belicosity won out over the Superintendent of Finance, Jean Baptiste Colbert, who, as Jacques Barzun sumises, "there is no doubt that the aim [of his peaceful plans] was to promote the general welfare."
The wars did anything but "promote the general welfare." Dissention and revolt were the result, as this passage exemplifies:
The end result was of course disastrous for France. A broken, defeated, bankrupt country, Luis XIV had learned that glory cost money, not sheer derring-do: "Victory," he remarked, "lies with the last gold piece."
Spain
AS J.H. Elliot explains in Imperial Spain: 1469-1716:
No middling group of solid, respectable, hard-working bourgeois developed to bridge the gulf between the extremly rich and extremely poor. In Spain, these people, as Gonzalez de Cellorigo appreciated, had committed the great betrayal. They had been enticed away by the false values of a disorientated society--a society of "the bewitched, living outside the natural order of things." The contempt for commerce and manual labour, the lure of easy money from investment in censos and juros, the universal hunger for titles and social prestige--all these, when combined with innumerable practical obstacles in the way of profitable economic enterprise, had persuaded the bourgeoisie to abandon its unequal struggle, and throw in its lot with the unproductive upper class of society.
None of this disabused Spain's monarchy of its imperial ambitions. It pursued global hegemony up until 1640, until the country completely crumbled in upon itself, its armies defeated and its internal economy in shambles.
Rome
There is not as much known about Rome as is known about later empires, and there are hundreds of theories as to its fall. However, in The Fall of Rome and the End of Civilization, Bryan Ward-Perkins concludes,
Three pertinent observations from Ward-Perkins:
1) The credit mechanisms did not exist in Antiquity that would have allowed the empire to borrow substantial sums of money in an emergency. Military capability relied on immediate access to taxable welath.
2) In 444, when Valentinian III instituted a new sales tax, matters had certainly reached a parlous state. In the preamble to this law, the emperor acknowledged the urgent need to boost the strength of the army through extra spending, but lamented the current position, where "neither for newly recruited troops, nor for the old army, can sufficient supplies be raised from the exhausted taxpayers, to provide food and clothing."
3) There was a "close connection between failure 'abroad' and the usurpations and rebellions 'at home'." There does not exist sufficient data to confirm what caused the internal unrest, but it is known that there were slave uprisings as well as other social strife. One thing is for certain, and that is that many of the rank and file were not happy with the status quo, and this discontent contributed greatly to the fall of the Roman Empire.
Good post, this bit is really exemplary of what's happening today, especially in the US:
The elite pay little or no taxes and enrich themselves via the public purse which is filled by the taxpayer. The thing is that the elite have now mastered the technique so well that the taxpayer doesn't even seem to notice or care.
I guess the elite have now learnt that the cycle usually ends in revolt and are now busy preparing for it - at taxpayers expense of course. Having learnt history's lessons they now believe they have the wherewithal to successfully colonise their own people.
As far as I know this the first time in American history that the government has cut taxes during a time of war.
I don't think that the neocons are really concerned with empire. If they wanted to really control the Persian Gulf then they would have operated under the Powell Doctrine and brought in 500,000 troops. Instead we worked under the Rumsfeld Doctrine which was to bring in a slim fighting force and then build it up with KBR, Wackenhut and Blackwater. If they wanted empire they would have started a Marshall Plan, instead we have projects like the Laura Bush Children's Hospital -- hundreds of millions of dollars sunk into a dilapidated structure.
These neocons aren't ultra-nationalists; they are parasites. Much like the House of Saud they will suck away at the host until they kill it or until we brush off these leeches.
One can certainly never overestimate the deleterious effect of incompetent leadership. But is incompetent leadership a cause, or is it a symptom, of a decaying society?
Rome
Ward-Perkins, in analyzing why the Wetern Roman Empire fell and the Eastern Empire didn't:
France
Pierre Schneider, The World of Watteau: 1684-1721,
Spain
J.H. Elliott, Imperial Spain: 1469-1716
While you were waving flags and putting your right hand on you left breast, and watching Faux News and going to Nascar rallies, the Top One percent were fleecing you.
Some say that patriotism is the last refuge of the scoundrel.
I say that patriotism is the last act of an idiot.
Do you really think that rich kids will fight and die in your wars?
Anyway, we will find out tomorrow.
2 pm my time, 8 am your time.
Freddie and Fannie...
lets all see how it pans out...
I reckon on bailout...hocking your kids for about 200 years.
It has to be said though that old Louis was a bit short on full-auto weaponry, nerve gas, cluster bombs, IR and GPS satellites, scrambled radio comms, cell taps, bit filtering firewalls, fingers on the food/power/water supplies etc
Quite a different scenario : ( info x firepower ) - scruples = dominance
A few angry rednecks with pump 12 gauges and deer rifles would be so much duck shooting.
The rednecks aren't the problem. It's the janitors at the munitions factories that are the problem. One match and all the tanks stop working when that particular spare part wears out.
Do you seriously believe that the US establishment can protect the US munitions factories and their infrastructure against the US people? Who live here? Who work in them? Who are guarding them? Who are supplying and fixing them?
Now if we were using Soviet weapons to colonise America, there might be a chance fo controlling America without the American people rebelling, but that's not very likely, is it?
Don't look now, but it looks as though TPTB are going to go yet another bridge too far:
http://www.timesonline.co.uk/tol/news/world/middle_east/article4322508.ece
At this rate it will be a miracle if we make it to 1/21/2009 without another major armed conflict breaking out in the Middle East.
Then again, neither of the two presidential candidates has done much to assuage me they will behave more peacefully AFTER 1/21/2009.
Nope. At least from the samples available to me, I can assure you the "owners of our society" are for the most part sure of continuing abundance. You have to be a bit of an outsider to see the likelihood of massive systemic failure. That's why so many insiders got so enthusiastically caught up in the tech bubble, the real-estate bubble, and so on.
I certainly don't think there is anything like elite consensus. The split in the elites is seen on an attack of Iran.
The MilitaryIndustrialComplex/AIPAC/Cheney/Neocons/LeftBehindLunatics are looking forward to the chaos that will follow from bombing Iran. Bill Gates on the other hand doesn't have a thing to gain from war. But the former group are the ones calling the shots at least for now and they are very aware of Peak Oil.
Your comment on how power structures assimilate dangerous ideas is quite profound and spot on....
“First they ignore you, then they laugh at you, then they fight you, then you win.”
Except that Ghandi doesn't quite get the last step right.... because the victory is often a false victory. "They" take the idea, or the words that express the idea, and use them to describe a reality that fits the existing power structure.
You only think you've won. You may well have simply been assimilated. It's still a housing development, but now it's called "Sustainable Eco-Green Hills".
It's still an oil company, but they call it "Beyond Petroleum."
It's still Exxon (in 2030), but now they've bought half of the thermal solar generating capacity and most of the land in the Southwest, and still run Washington. Etc.
You're comment about Ghandi reminded me of a demotivational poster I saw once about Che Guevera. Something to the effect of, "Failure: You can spend your whole life fighting the forces of capitalism and still end up being on a t-shirt sold at The Gap."
I think capitalism is a lot preferable to what che Guevara had to offer.
I wonder what Che would think of the prospect of the USA federal government (taxpayer) as the main lender of mortgage money to homebuyers.
Capitalism..."you keepa using that word; I don't think it means what you think it means" Inego Montoya
Inconceivable!
Or more likely, a temporary one. And then you start over trying the next step and find that you are starting from scratch again. And Gandhi was speaking from a winner's perspective. Usually they fight you, and you lose. But it's still worth trying.
Unfortunately India didn't really win much. Yes, the British left and gave up conventional colonialism, but this was just the start of the switch to neo-colonialism. It was a managed retreat.
Also, what success Ghandi did have wasn't so much because of his pacifist approach. There were a lot of real militant resisters to British occupation, and a lot of fighting (and the British slaughtered a lot of people.) Ghandi had power to effect change because he was able to indirectly reference the real armed threat that existed. Without that threat, they would never have given him a thing.
(As an aside, Martin Luther King Jr. also played a similar role. He denounced violence, but he would always mention in speeches that if rights weren't granted people continue to rebel and fight back. Without the black nationalists and other militant activists, his words wouldn't have carried much weight.)
It's called "co-opting", and it's something that modern corporatism does very well. It's basically how the hippy movement was rendered safe and useless - ditto the environmental movement. Just commercialize it, turn it into fashion statements, or "lifestyle" "choices".
Voila! Whole new markets to sell stuff to!
Excellent thread, everyone involved! (particularly the 2nd half)
The philosophical/political aspects of PO and how our societies will integrate it/heed it/spin it, are worth careful consideration as we attempt to keep focused on the big picture.
"We have seen the same problem with "organic" as applied to food, and "sustainable" with respect to development."
Yup.
Andes face glacial meltdown
http://www.guardian.co.uk/commentisfree/2008/jul/13/climatechange.colombia
I didn't want to lead off DB with the first post of the day but it's almost 9:30 am and I have finished the Sunday paper and perused numerous economic sites...so, reluctantly, here goes...
This might be the most important scribbling that Denninger has ever posted at Market Ticker. It is important to all of us that know the US economy is in deep trouble but don't quite understand what is wrong or what could be done to minimize the fallout. Denninger takes a stab at it and, imo, does a good job of bringing the problems into focus. Unlike many, he takes a shot at what can be done to keep the ship from sliding beneath the waves. Personally, I would be reluctant to venture out on that limb but Denninger is a savy guy.
'Ok folks, its time for a long sit-down type of Ticker - the sort that I usually don't write.
Let's start with Fannie and Freddie.
As anyone who has been reading The Ticker knows, I have been saying for quite some time that Fannie and Freddie are in fact "short to zero" candidates for the common stock. This is simply due to the mathematics of their financial situation - they are levered up anywhere from 60 to more than 200:1, depending on what you include and exclude from "capital" and "credit book."...snip...
'Now we are faced with the reality - Fannie and Freddie, under fair value accounting rules, are insolvent (if you listen to Bill Poole.) What does that mean? It means that if Fannie and Freddie were to sell their assets and net it out today, you'd wind up with a negative number. That is, its assets are less than its liabilities.
The question now comes down to "what do we do about this?"
There are several choices, all of which will have bad side effects. It is critical, however, that we understand those side effects and choose the path forward that represents the least risk to the broader economy and to the government, not just the most expedient or the one that the people who would lose will scream most loudly about.'...snip...
and...
'Even worse, Fannie and Freddie, who guarantee their own bond issues, started buying their own paper. That is, they are writing insurance on a hurricane when they are both the writer of the insurance and the loss payee. This looks brilliant in that the "expense" of providing that insurance effectively disappears, thereby making the entirety of the spread they get from their source-of-funds to their paper issue theirs to keep, but that's the wrong way to look at it.
In fact that paper is uninsured, because the money comes from one hand goes to the other, attached to the same body.'...snip...
Me again. This is one of the huge problems with derivatives of many sorts. Counter party risk, a type of insurance. Meaning that the insurance provided by a counter party is probably useless when the entire financial system is in crisis. Much of the counter party risk has been transferred several times so the original purchaser might have a difficult time locating the current holder of his risk. It's a very convoluted system and it works well untill it doesn't.
Here are the options:'...snip...
See link below for options...
http://market-ticker.denninger.net/
The word is that the government will inject $15bn to prop them up.
http://news.bbc.co.uk/1/hi/business/7504122.stm
That's option 4, but to a fraction of the level mentioned.
garyp, you are right. Another short to zero alternative for F&F stockholders. There are no painless choices unless some brilliant thinker comes up with a bright Idea. Unfortunately, as John Kenneth Galbraith once famously commented 'economics does not lend itself to innovative solutions or new ideas' (paraphrased). I think Galbraith was correct.
Denninger said that the $15 billion that you mentioned in your post would be 'like peeing on a forest fire in an attempt to put it out.' Apt analogy, I say. Yet politicians and 'their' economists feel compelled to make some gesture, no matter how futile, to put off the pain to voters and stock and bond holders for one more day. That, in a nutshell, is what our government has devolved into...One more day.
Here I have listed Denningers 'choice number 6'...
'OFHEO could step in and declare Fannie and Freddie "severely undercapitalized" and put them into "conservatorship." The next obvious step would be to place them into runoff, where they slowly divest their bond portfolio as it matures over the next 30 years. This would have the same impact on mortgage money as (5) above, but current bondholders would see different amounts of damage depending on exactly where they are in the capital structure and what and when they bought. Those who bought "trash paper" backed by what amount to no-doc loans would get creamed, while those who bought paper backed by 80/20 loans would likely lose nothing.
The only sane path forward, folks, is option #6.'
#6 is probably the course of action likely to do the least damage to the US economy and would be the least likely to crash the dollar and the US government...Therefore, I find it highly unlikely that #6 will be implemented. :)
Turns out its a bit of 1 and a bit of 4 if they really have to.
In other words its temporary liquidity with the threat of special shares if the investors don't play ball. Nothing which deals with the long term and large scale of the problem.
Let's see if things get worse by the end of the day.
Sounds like it's "4" to me. They are opening the discount window, but Fannie and Freddie say they don't need it.
Karl is mostly pessimistic in his writings, but this time, I agree with you.
What he points out in todays blog is 100% correct. We are in for a world of hurt no matter what the Fed's do or don't.
River: We had this discussion the other day-I was telling you that people are going to be shocked at the extent of federal government spending-all these "injections" are simply that. It hasn't even started yet-they are still spinning no recession. Exactly how extreme do you think the debasement of the currency will get when this elevator drops a few more floors? Every single problem will get taxpayers' money thrown at it without an actual plan out of the pit (just like right now). On the positive side, this is great for long commodities investors and especially oil and gold.
BrianT, Yes we did have a discussion about the creation of new money vs the impact of falling prices in many areas of the economy.
The current score is dollars destroyed 14 vs dollars created 1.
I believe that you are mistaken if you believe that the Fed/Treasury can create dollars endlessly. What is at risk is the dollar's world reserve currency status and the impact of foreign purchases of treasury issues. Recent treasuries offerings have been characterized as 'disasters' with few to no foreign purchasers participating. If the trend continues the credit rating of the US will be downgraded followed by what lies over the edge of that precipice. It doesn't take a lot of imagination. Once the lack of foreign participation in treasury issues ceases the US will not be able to finance the current acount deficit. Game, set, match.
We have not begun to discuss what would happen if the US Dollar loses it's status as world reserve currency.
Well, borrowing billions and pointing to our grandchildren and saying "You kids gotta pay this back" is a way of just creating money out of thin air. And of course if the government happen to be so lucky as to survive that long, then our grandchildren, who will likely pay nothing back but only borrow more, will point to their grandchildren and say "You kids gotta pay this back!"
What would happen, and what will happen, is the dollars will simply be inflated away. That is, the real value of the debt would be reduced by inflation. And massive inflation is one sure way to insure that the US Dollar loses its status as world reserve currency.
And by the way, our country does not really print greenback currency except to replace old greenbacks and to supply banks who write a check for the greenbacks they order. What they do is print the debt. That is they print notes, bills and bonds. Which is exactly the same thing as printing currency, they just call it something different because they claim they are only borrowing the money, not just printing it willy-nilly.
Germany, after WWI, simply printed Marks, the German currency. We all know what happened to the German economy because of that folly. I believe we are doing the same thing and we will likely suffer the exact same fate. That is one reason I despise G.W. Bush so damn much. Clinton balanced the budget and Bush destroyed it.
Ron Patterson
What they do is print the debt .... That is one reason I despise G.W. Bush so damn much.
The hate for the money system should be spread about, and for years before you were born. Because the hands that have gotten us here are many and dirty. Bush the later is but one set of grubby hands.
45 mins of your life - money as debt.
http://video.google.com/videoplay?docid=-9050474362583451279
If you wanna hate on GW Bush - http://rawstory.com/news/2008/Red_Cross_finds_Bush_admininstration_guilt...
Don't forget Chris Martenson's The Crash Course. Very well done and thorough.
Thanks for the google link. Very informative. Once again amazed at how on the ball all u TODers are.
Also, for whoever posted it, thanks for the century of self link a few days back.
I hate to say it, I do not think we are headed towards deflation. Although the decreased money pool mechanism makes the absent 20%ish inflation I had expected perpetually for the last two years finally make sense! Thank you!
Much of whether this deflationary pressure shows up as negative inflation (imo) relies on
1. How gradual our economic decline is
2. How accomodating our wellfare system is, and how generous our better-off are (Extreme poverty would affect the reporting).
(3. Globalization ought to decrease individual markets' deflation (lucky us).)
I don't think this decline can be all that gradual (man i sound like a gloomer), and I know from experience we are apt to be ungenerous. We may very well be in our deflationary period NOW.
Ron, you are right. Just consider the current situation in housing. If housing prices drop 40%, and some consider that a conservative estimate now, the economic loss is $12 Trillion dollars. That money is gone, vanished. This does not include the losses in credit card defaults, student loan defaults, vehicle loan defaults, commercial RE defaults, etc.
This is a deflationary scenario writ large. If the Fed/Treasury cannot create $500 Billion to bail out Fannie and Freddie how would they create enough digital/treasuries/paper dollars to off set a $12 plus trillion dollar loss in housing? The same scenario is playing out in Spain, England, Ireland, Italy and many other countries.
I believe that anyone should be able to look at these numbers and see our future holds deflation, not inflation. There are some rising prices now but those will be overwhelmed by falling prices and severe credit contraction in the near future...imo. WT was right when he said 'get thyself from the discreationary side of the economy', and 'get out of debt'.
River: The word is Depression, not Deflation. Not one person who foresees hyperinflation in the USA is predicting a bouyant economy. Will food, energy, health care, taxes all rise dramtically as a % of real estate values in the USA-definitely. You can label paying $30 for a gallon of milk "deflation" if you want.
BrianT...Perhaps you can explain to me where the grocery shoppers will get paychecks to allow them to pay for $30 milk? When the consumer does not have the money to pay for higher priced items, demand destruction occurs untill those items are priced where they will sell. Period. The same will occur for every item that you listed in your post, including energy prices. I am not fond of semantics but here you go: Deflation, from Wiki...
'Deflation is the opposite of inflation. Therefore, under the usual contemporary definition of inflation, 'deflation' means a decrease in the general price level.[1] Alternatively, the term was used by the classical economists to refer to a decrease in the money supply; some economists, including many Austrian school economists, still use the word in this sense. The two meanings are closely related, since a decrease in the money supply is likely to cause a decrease in the price level.
Deflation is considered a problem in a modern economy because of the potential of a deflationary spiral and its association with the Great Depression, although not all episodes of deflation correspond to periods of poor economic growth historically.'
If you find some milk for sale for $30 per gallon please let me know. I contend that long before milk reaches that price level it will sour on the grocers shelf. If wages were rising rapidly then milk could reach $30 per gallon but in real terms wages have been stagnant or falling for a long time. What gives you the idea that prices in groceries, medicine, energy, taxes, etc, can rise when wages are stagnant or falling. We had this discussion a few days ago. How many times must we cover the same ground?
When $12 Trillion plus dollars have vanished from the US economy what effect do you think that will have on banks, businesses, wages and lines of credit for busiesses and consumers?
here is an example of what is happening: A bank that made a home loan for $400,000 with a no doc alt a loan suddenly receives jingle mail and finds it has just added more REO (real estate owned) to it's books. Since the bank originated the loan the value (actual price that the home can be sold for) has dropped to $240,000 (40%). Since the loan is non recourse the bank cannot go after the purchaser. The bank has lost $160,000 and must raise capital to offset the loss. Meanwhile more jingle mail is arriving daily at the bank. Some from spec builders that cannot find buyers, some from commercial real estate ventures that have soured, the bank owns lots of vehicles it doesn't want, and the bank suddenly finds that it's REO is a huge part of it's balance sheet. Will the bank be anxious to loan money to businesses? Will the bank be anxious to loan money to finance autos? Will the bank be anxious to loan money for any reason? Hell no. The bank is attempting to hoard money to balance it's books. The bank wants to survive and retain bank jobs. The bank doesn't want to see it's name in the newspaper anymore than you and I do.
Banks, large and small, are going to go belly up. Credit lines will be cut or reduced. Wages will not rise because companies cannot borrow for expansion or to bring out new models or to service current and past debts. Deflation will occur, followed by recession or depression. Maybe you are in denial about what is happening? Think about it.
River: Denial. Have you noted that food and energy prices are falling as the USA economy implodes? If you have medical insurance, have the premiums dropped because of the poor economy? Nobody has a crystal ball, but my point is that you are talking about a depression-if the economy goes into a deep hole with dramatically higher prices for life's necessities, that is not deflation. It appears that you feel that hyperinflationary depressions are literally impossible in an economy like the USA, ever. That farmer and food mart that sells you a gallon of milk for $30 might have incurred $27 of costs along the way-they are going to continue supplying you cheap milk because of your economic theories? No-you are not going to be drinking any milk.
BrianT, We can agree to disagree. I agree that I will not be drinking $30 milk but I believe the reason is that the farmer will not receive loans from his bank to produce milk that is not selling due to demand destruction. $30 milk will not be produced on a large scale without increases in wages. That begs the question: How will wages rise in a recessionary invironment, with a consumer economy accounting for 72% of GDP? The consumers are tapped out, their credit cards are maxed, credit is going to tighten, not loosen, due to the reserve requirements and fractional reserve banking. The small banks cannot get away with 'level 2 and 3 assets' like the Wall St banks. The small bank has to meet requirements set down and enforced by the Fed via FDIC. The consumer has watched as his home's equity has fallen to the point that borrowing against it's value is not possible. Where will the money come from to purchase $30 milk?
You mentioned that the government would print money like confetti. Well, they can do that but the result will be that the dollar will no longer be the world reserve currency. More fallout will occur as the credit worthiness of the US Government will be questioned by foreign purchasers of US Treasuries. The US cannot go far down the 'confetti road' without destroying the government and the economy.
Let's take a look at the airline business where demand destruction is currently on going. Fuel costs for airlines have risen rapidly and the airlines have cut every imaginable corner to reduce costs. Airlines have attempted to raise prices and it has worked on some routes but overall they have encountered demand destruction on flights to many locations. The airlines, like many businesses, depend on 'economy of scale', meaning that they are large business operating on a small net profit from a large gross income. The demand destruction in airlines is currently happening by resistance to higher fares on routes that are not necessities. Is the flight for Joe and family to Las Vegas or Orlando a necessity? No. Well, it's off Joe's agenda. Joe might need that air fare cost to buy gas to go to work. The airlines have highly paid people that do nothing but figure out ways to cut costs. They are stymied. The airlines have so many pilots and personnel that they can lay off, they have so many large jets that are not economical on many routes, the capital costs to replace the jets that they have with more economical turbo props or smaller jets would be enormous. Then we are right back to the banks: Will the banks be willing to lend the airlines money for a business model that has become questionable? The CEO of the average airline has no more idea of what future fuel prices will be than a guy with a crystal ball. Some airlines have locked in prices by hedging with futures, some have not been so far sighted or fortunate.
I hope you see my point of view. I am not asking you to change your mind...just put yourself in the airline CEOs shoes for a minute and think about his problems from his perspective. His entire business is based on a model that no longer works. Thanks for the interesting discussion.
The problem with the Deflation/Inflation debate is that it is being conducted by Americans. You think that if a huge amount of debt/money disappears, the value of the dollar will go up because there are less dollars. And prices will go down because there is less demand (in dollars).
Hello, rest of the world calling!
There will be less dollars - but if the USA economy is ground zero, who wants the dollar? International demand for dollars can fall far enough to make the dollar worth-less even if there are fewer dollars around.
A falling dollar then makes the price of internationally traded goods rise in dollar terms. Milk may well be $30 per gallon if that is a bargain price in Euro or Yen - milk powder and butter can be shipped overseas.
During the Great Famine in Ireland there was plenty of food being produced - it was shipped over to England because the Irish had no money to buy it.
But I'm not really interested in arguing over milk. Grain prices would be a better example as it is very easy to ship abroad.
And oil is the best example of all.
Yes. They can do that, they will do that, the result WILL be the end of the dollar as a reserve currency.
It really isn't complicated.
"They can't do that - it would be stupid" isn't a logical argument, unless you are dealing with an infallible Decider.
I have spent the last year or so watching Denniger and his fans say "they can't print the money, it would crash the bond market". And then he gets shocked as yet another step towards monetarization is taken.
But it seemed obvious to me last year that the US taxpayer would end up on the hook for the whole $10 trillion, or whatever this mess comes to. Sure, that will double the US national debt. That means it is an extremely bad idea. But just because it is a bad idea doesn't mean they won't do it.
On the contrary, the moment I realised how disasterous it would be is the moment I felt certain they would do it.
Debts are always paid, if not by the debtor, then by the creditor (or possibly the taxpayers). I'm not quite sure how, but it seems increasingly likely to me that most debtors--from a lower income family to the federal government--are basically just going to walk away from their debts.
Or let me put it this way. I think that the markets are fundamentally mispricing most debt and equity holdings--simply because their is not nearly enough exported energy available to generate the economic activity necessary to pay off the debt and to generate the earnings that the stock market is expecting. Or, what can't be repaid, won't be repaid.
Think of it this way. Given a choice between servicing the federal debt, or making good on Social Security and Medicare payments, which one will the federal government choose? For a family, do they make the debt payments or feed their children?
WT: Re your analogy, what would you do if you could electronically create currency? You do both. Every employee paid in US dollars, every creditor pays a bit of the price through continual debasement.
A debt paid by a creditor doesn't make a bit of sense. If I loan Joe a hundred dollars and he doesn't pay it back I certainly don't pay it myself. I lose a hundred dollars. Period. To gussy that up with fancy rhetoric that implies I pay the hundred to myself doesn't wash.
Actually, I think that it makes a lot of sense. Let's assume that you have a net worth of $One Million, and your friend Joe has borrowed $100,000, not necessarily from you.
Case #1: you pay off the loan on his behalf, as a gift. Case #2: Joe borrowed the money from you as an unsecured loan, and you find out that he is unable to pay the loan back, so you have to write off the $100,000.
The end result in both cases is same--your net assets decline by 10%, from $1,000,000 to $900,000.
WT, What you left out is that Joe is not off the hook for the $100K cause the loan shark sent Fat Tony and Mumbles over to Joe's place and the big boys broke Joe's leg. They also told Joe that if he didn't come up with the 100 large that Joe would be toast, and they would burn down his place and pee on his dog.
Joe did get the money and paid back the boys. Joe's life isn't that great but he is not so sure about the alternative.
Sorry, I couldn't resist fleshing out the story with a little narative.
LOL @ Mumbles :)
Err yeah, thats about right.
I've said before:
Clinton used interns for sex (big deal):He ran a surplus.
Cheney has a very small willy (true- I have seen it - in a pissoir in Aberdeen) that's why he hates the world and wants to destroy it.
Bush - well he is just a glove puppet.
The belief that possession of a small organ compels one to engage in sociopathic behaviors is complete phallusy.
The "fun" part is that it isn't just the current account deficit. As I posted the other day (http://www.theoildrum.com/node/4284#comment-378455), the deficit from Reagan's first term and the deficit from Dubya's first term will both come due at the same time: 2011-2014. We're refinancing the very small Carter debt right now, which is just a blip compared to the current deficit.
The combined debt incurred each year during those two administrations is bigger than the current deficit. As I asked rhetorically in my post
While we wait for global money meltdown, cheer yourselves up with some samples from my favourite cartoonist, Steve Bell in the Guardian:
Bomb Iran?
http://www.guardian.co.uk/world/cartoon/2008/jul/11/george.bush.iran.bomb
$150 a barrel?
http://www.guardian.co.uk/world/cartoon/2008/jul/01/iraq.oil.business.ex...
The dollar retreat from Iraq:
http://www.guardian.co.uk/cartoons/stevebell/0,,2265365,00.html
Bear Sterns:
http://www.guardian.co.uk/cartoons/stevebell/0,,2266294,00.html
A sharp financial downclimb:
http://www.guardian.co.uk/cartoons/stevebell/0,,2266507,00.html
Bank of England Bailout
http://www.guardian.co.uk/cartoons/stevebell/0,,2267322,00.html
BobE
As another poster said when reading your post. You have nailed the doomsday date.
I am beginning to believe the Mayans had a view of the future.
Oddly enough I saw a recent special on the
HitlerHistory Channel about Nostradamus. Their conclusion was that good ol' Nosty foresaw the rise of the Antichrist and an apocalypse during the period 2000-2020.Just sayin'....
Naaah,
you dont need the Mayans, or Nostradamus to do the end of the world stuff.
The USA is technically insolvent.
Right now.
So what happens next?
If I wuz George , I would start a war....
Well...He already did that and look what it got us.
Besides, wars are expensive and another one would need to be financed with borrowing. Who would be the lender to finance Gee Dubyah's next Crusade? The Saudis? The Chinese? And, where would the manpower come from, without a draft?
E. Swanson
So the government declares all its bonds, notes, etc. to be currency and the debt is paid off. All the former creditors try to use this currency to buy "real" stuff, at electronic speeds no less. hmmmmm
River: I think we can agree that at this point the USA is insolvent. The question then becomes how the situation is handled-without a massive devaluation of the currency, the debt would be defaulted on and creditors receive nothing. With massive devaluation, creditors are going to get less than full real payment. Those are the only two options-at this point option 3 (raising rates a la Volker) is long gone-even a cursory glance at the numbers shows this.
At some point a third option occurs to creditors to get payment. When a currency devalues it gets to a point where the value of the metal in the coin is worth more than the face value. It only takes a small number of creditors demanding payment in coin rather than worthless paper and at that point Greshams Law takes effect. Billions of dollars of coins will vanish to be hoarded (like pre '82 pennies or silver coins) and the mint will be unable to replace the coins quickly enough leaving retailers unable to make change for purchases. When that happens the consumer will realize the true mess with the dollar, the economy and the credit rating of the US.
BrianT...I am expecting an announcement any day that governments of the world will meet for 'Bretton Woods 3'. Predicting the result? I am not going out on that limb. Perhaps some poster here is a political scientist/international business phd/Nobel economist/et al/ and enjoys making predictions based on hypothetical meetings? :)
Down South...Care to take a stab at this one?
"...at this point the USA is insolvent."
you get no argument from me about the mismanagement of the country's finances.
however, insolvent implies that the assets are not enough to pay the debt.
i do not believe that to be the case. when the usa actually defaults on a debt, then a creditor will theoretically be able to seize us assets. that day may not be that far away.
No. This is unsecured debt.
none the less insolvent implies that the assets are not great enough to pay the debts.
from dictionary.com
1. not solvent; unable to satisfy creditors or discharge liabilities, either because liabilities exceed assets or because of inability to pay debts as they mature.
in a bankruptcy, unsecured debt still gets a place in line. and what debt of the us's is secured ? so the unsecured debt is right up there, behind payroll.
What are you counting as US assets? It also depends on how you calculate the debt. By the accounting rules that every company in the US is required to use, the US has debt obligations approaching 50 trillion dollars. The 10T that is usually counted as the national debt only includes money actually borrowed. It does not include promises of future payment. Future obligations ought to be included in the solvency balance sheet as well.
I'm really not sure whether the US is solvent or not by the technical definition of the term. There are too many unknowables. Is there any gold in Fort Knox? How much would we get for Theodore Roosevelt National Park if we auctioned it to the highest bidder? The US has many "level 3 assets", and those buggers are notoriously difficult to mark to market.
oil,gas, minerals, land ,buildings, equipment, cars, trucks, airplanes, ships, tanks, guns, bombs, missiles, and possibly even some gold and silver, to name a few.
When you owe the bank $1000 they own you... when you owe the bank a million dollars you own the bank.
Our bank is China...
China can't afford to destroy the U.S. economy... we owe it too much.
They can however afford to do a slow bleed (probably.)
The U.S. military makes "seizure of assets" sort of irrelevant here doesn't it?
River said: "...#6 is probably the course of action likely to do the least damage to the US economy and would be the least likely to crash the dollar..."
What an incredibly depressing subject for a beautiful Sunday morning.
That said, #6 seems to mirror the "Roubini" option that was discussed the other day on Naked Capitalism:
http://www.nakedcapitalism.com/2008/07/roubini-restructure-fannie-freddi...
The problem with this approach, as one of the commenters pointed out on NC, is that this entails a "cram down" of substantial losses for the holders of the Freddie and Fannie bonds. This might act as a disincentive for future buyers of US debt. It would be tantamount to going to your banker and saying "I'm not going to pay you back that money I borrowed three years ago, but could you loan me some more?"
Down South...It is the 'Roubini option'. It is depressing. Interestingly, I found yesterday that China is owner of the lions share of said bonds...along with some other foreign holders. I will try to find the link.
Here is the China link to F&F bonds...
...snip...'The top five foreign holders of Freddie and Fannie long-term debt are China, Japan, the Cayman Islands, Luxembourg, and Belgium. In total foreign investors hold over $1.3 trillion in these agency bonds, according to the U.S. Treasury's most recent "Report on Foreign Portfolio Holdings of U.S. Securities.'...snip...
and...
...snip...'FreedomWorks President Matt Kibbe commented, "The prospectus for every GSE bond clearly states that it is not backed by the United States government. That's why investors holding agency bonds already receive a significant risk premium over Treasuries."
"A bailout at this stage would be the worst possible outcome for American taxpayers and mortgage holders, who have been paying a risk premium to these foreign investors. It would change the rules of the game retroactively and would directly subsidize the risks taken by sophisticated foreign investors.'...snip...
http://caps.fool.com/Blogs/ViewPost.aspx?bpid=70324&t=01007146184382914537
There is a whole story behind the Cayman Islands (and Luxembourg) being on that list. Many hedge funds and SIVs wound up in the Caymans (and other British Crown Colonies) to avoid having to pay taxes. Bailing them out would be bailing out many of the people who created this mess in the first place (and who then ducked out to a tax haven to avoid oversight and regulation, as well as taxes).
Of course!...and Belgium, where Prescott Bush funneled money from Brown Brothers Harriman to the Third Reich before and throughout WW2. FDR shut down Prescott's operation the day WW2 in Europe ended. The FBI did the closing down, not Treasury or the IRS. Long and interesting story about the funding of the Third Reich and where the money originated.
The fat cats are whining for a bailout as usual. Privatize the profits, socialize the losses.
Privatize the profits, socialize the losses
That is how capitalism is practiced here and now in the US...I wonder if it has ever been different.
Britain urges return to WWII food frugality
http://www.boston.com/business/articles/2008/07/13/britain_urges_return_...
What probably hasn't made foreign press is that the UK press picked up on the fact that Brown made his statement whilst on the plane to a G8 meeting with a 15 course meal, so it's pretty much at the level of ridicule in here. This is a shame because it's a reasonable message.
The worst thing is that by scrapping our immigration controls his government has guaranteed that we will have millions of extra mouths to feed. And we weren't self sufficient in food before they did this. things could get nasty.
Most of those immgrants will be better at feeding themselves than the natives. It's the second generation that is going to be the problem - picked on for being different, looking at a crappy future without the consolation of pulling through past tough times, and unable to reconnect with any prior traditions.
We are still self-sufficient in food though. We'd have to go mostly lacto-ovo-vegetarian.
official government statistics say UKPop is 66 million.
Tesco, and other supermarkets reckon we have a pop of 80 million.
The people in charge of our sewage reckon we have between 77 - 82 million.
Who to believe?
You decide - The shit guys , or the bullshit guys....
In the aftermath of Katrina, there was a need to estimate the daytime and over-night population of New Orleans. Someone had the bright idea of measuring sewage processed during the day and night and compare to historical #s.
All well and good, until someone pointed out the obvious flaw. FEMA employees are so full of Sh!t that they would skew the statistics horribly.
Alan
Who do you think feeds you? Yes, illegal immigrants, doing the scut-work on farms all over the country.
You are clueless.
There has been much hope here for expanded rail to be a viable and efficient form of transportation salvation in the near future. With that hope comes the question: will the time and capital necessary for transition be available to us?
I have been thinking that there will also need to be a high degree of stabilized social order in place to ensure the safe and efficient use of such an expanded system. What if the aching stomachs or disenfranchised expectations of the desperate masses results in for-profit pilferage?
I just tripped across the first indicator, albeit a small one. But just imagine the problematic possibilities going forward, from seemingly harmless spike thief to intentional hijack derailing.
http://www.katu.com/news/local/17126571.html
It's one thing to steal guardrails and copper pipe; quite another to potentially bring a system to it's knees.
What's that saying?..."You can never do one thing".
I have to think that some of this can be solved via the scrap dealers. "What exactly are you doing with a bunch of railroad rails and guard rails and manhole covers and street lamp posts, anyway?". If thieves can't sell it, they will stop stealing it.
There have been several arrests of scrap dealers in New Orleans recently.
Alan
That is in fact how they are dealing with the problem. They are passing laws forcing scrap dealers to get names and addresses from their sources, to report when anything suspicious comes in, etc.
The flip side is that it's kinda creepy in a Big Brother sort of way. Privacy is likely going by the wayside anyway in the post-carbon age, though.
Creepy? It's already done in all pawn shops that I'm aware of (in the US). Not that it helps much. Here in Florida you apparently have to pay to get your stuff back if you do discover some thief has pawned it. I'm not sure why asking for ID when you sell a few hundred linear feet of aluminum guardrail or steel train tracks is creepy.
It's my understanding that pawn shops in places like France are already basically owned by the local government.
I had the same thought, but given the rampant thief of copper piping in the present moment, with no effective enforcement that I am aware of, can we be assured of it?
We do have to consider that if things get desperate enough an expanded underground, black market would emerge. Sabotaging the tracks on a remote freight line would be any easy way to garner all manner of goods.
Targeting scrap dealers is certainly a place to start, and something I support, but the problem is increasingly global. Especially with higher value by weight scrap like copper, it's being loaded directly onto shipping containers and goes to scrap purchasers in E. Asia. That's not impossible to stop, either, but it adds another layer of complexity and cost. Also, I'd suggest that as long as there's profit to be made, people will find a way around regulations and law enforcement efforts--witness our stunning "success" stopping the drug trade through regulation and law enforcement.
witness our stunning "success" stopping the drug trade through regulation and law enforcement
I'd argue that the War on
FreedomDrugs has proven the failure of Drug *Prohibition*, not regulation. If the U.S. were to legalize and tax (regulate) casual drug use, prices would plummet and there would be a whole lot less drug-related crime and far less mafia cartel involvement.in some areas, a person has to show an id to sell copper. a lot of damn good that does. imo, scrap copper is fungiable.
Gal Luft at iags.org recommends energy independence in "Can we break free of oil" by mentioning 4 countries strategy for energy independence:
Iran: Natural Gas Vehicles
Brazil: ethanol
China: methanol made from natural gas, coal, industrial garbage
Israel: Electric vehicles
If America switches our fleet to NG vehicles, how long before we have rolling blackouts? We are already having trouble buying LNG due to competition from Asia.
Biofuels are a short path to food shortages and have been shown to be a disaster on ecological front. Is anyone in DC looking at ecosystem services? Ie. the services that Nature provides for free that we can no longer take for granted.
Methanol seems to be a fuel made from other fuels that are in short supply. Didn't China just shut down their Aluminum plants because of coal shortages.
Israel's electric vehicles are a great solution for short trips. It is not a complete replacement for the gas powered car.
America needs something better than all of these solutions. Can we find it?
Not sure whether anyone's posted this already, might be of interest:
The Great Biofuels Con
http://www.telegraph.co.uk/earth/main.jhtml?xml=/earth/2008/07/12/eabio1...
What makes the great con possible is the fundamental misunderstanding that energy is "generated" by some human activity.
If people really understood that energy on earth comes from the sun, that it is transformed by various human and non-human activity, but that each transformation costs energy to perform, then possibly a rational system could emerge in human culture.
Still, as long as people go to Las Vegas, where you can put your credit card into the slot machine, and continue to believe that if they just spend enough money they will make it back plus more, we can expect "dramatic reversals of received wisdom".
The sad thing is that people can be beaten or starved into submission, but no amount of force will create wisdom
You are absolutely right. In addition most people have zero intuition as to the magnitude of energy it takes to accomplish various functions - how much energy is in a D-cell battery vs. a gallon of gasoline. I think this is because we've been surrounded by virtually unlimited amounts of almost-free energy for generations now, and we simply cannot see it. This leads to silly concepts of what can effectively replace gasoline, and to the endless articles of what the new energy source will be. One by one we'll find out that they won't replace petroleum.
How much energy does it take to move a 4000lb vehicle 15 miles? Maybe we can stick a solar panel on the roof, or maybe we'll just ferment corn. If people could relate these things back to manual labor that they personally had been involved with, then perhaps they could gain a perspective.
Let me try:
" Maybe we can stick a solar panel on the roof "
EV-1 battery: 26,000 Wh, energy needed for one charge 40000 Wh
Charge with 4 hours of sun light x 10000 W of panels, cost of array: 50,000 USD
" One by one we'll find out that they won't replace petroleum. "
one down, many more to go...
Well, I suppose if you want to make 26kwh sound a lot you can express it as 26,000 watt/h.
You can then throw in the energy losses to call that 40,000watt/h.
You can then make it sound worse by choosing to power it by solar. which is currently very expensive.
Of course, you could actually provide for the transport needs of over half of Americans with the plug in Prius and it's circa 4kwh battery pack when it arrives in around 2010, if you charged the battery at work as well as at home.
Any way you slice it, an EV vehicle fleet would take an energy flow of under 20% of current electricity generation, which is well within the amount that could be conserved at fairly low expense.
You would also have saved umpteen hundred billions a year on oil imports.
just to make sure I understand - you are saying that starting in 2010, we replace half of the vehicles presently in regular use with the PHEV Prius? How long do you estimate this would take, and what would it cost?
Sorry that I was unclear.
Nope, I am certainly not arguing that Prius plug-ins will be available in any quantity before, say, 2012, and it will take years to replace much of the fleet, largely due to the poor state of the economy.
In the interim much lower performance electric bikes and trikes are likely to be very useful, and much cheaper.
The 50% of Americans I was referring to are those who could complete most of their business with a car capable of 10 miles there on all-electric, then 10 miles back after recharge.
Here is the information I base this on:
http://www.evworld.com/article.cfm?storyid=1432
EVWORLD FEATURE: What Price Lead?: Battery | Electric Car | Commodity
Unfortunately the 50% of American's the Prius would do fine for won't be able to get their hands on them anytime soon.
This morning I saw this and wondered if there was any point in linking to it here
VIDEO: Hank and Joe, the electric car guys
I suspect there's going to be a lot more like this. For a look at photos of a growing list of DIY projects visit http://www.evalbum.com/ . This is one way some number of the existing ICE fleet could be transformed into EVs albeit with a fair amount of restrictions. There are actually a couple of folks who use their creations as daily drivers and drag race them on occasion.
My personal hope is that the quantity, quality and costs of EV conversion options improves before then fan is completely fouled by the brown stuff. Gear heads like me would certainly relish the opportunity.
I just had a strange sense of deja vu. Back in the mid 90s, I had an 82 VW diesel van and wanted to swap the unreliable, pathetic 52 hp motor with a 100+hp gasoline motor. I turned to the internet but couldn't find much in the way of advice or assistance. I figured it out anyway and successfully did the swap. I eventually found out that a couple other people were doing a similar swap at about the same time and were chronicling their experience on their web sites. Now there are whole web pages dedicated to VW Vanagon engine swaps. Here we go again?
Here's hoping for kits to go from ICE to electric.
Alan from the islands
Twilight...I believe that all 'energy' should be reported in regular form but also beside that a 'man hour equivalent'.
Perhaps below those two listings could be a statement: The average working year (man/woman year) is 2,080 hours...or, pick a number that suits you.
This would make people aware of how much energy they are consuming in terms they could understand...if they read the lable.
Add
France, Germany, Switzerland, Japan - Electrified rail, inter-city and Urban
Netherlands, Denmark - Bicycles.
France has a goal of 10% of urban trips by bicycle by 2010, but only 3% as of 2007.
Best Hopes for Non-Liquid Fuel Transportation,
Alan
Electric cars are the way to go.
When a new battery or type of capacitor is developed that will run 500 miles.
Then we can use whatever form of local energy that is most available to provide the charge.
We can use hydro, wind, solar, thermal, wave power, etc. to charge the cars.
There is enough heat power deep in the earth to provide power for 1000s of years.
We are in a transition phase off of fossil fuels to clean fuels.
The quicker we make the transition the better.
Someday people will say why did we burn fossil fuels???
It will take centuries to clean up the pollution damage - mercury, acids, fine particles, ozone.
Walking, bicycles and electrified rail are the way to go, more than EVs.
EVs will take dramatically more electricity (see coal and natural gas in the next decade) than the preferred alternatives. A rough estimate from earlier posts in 17% of US electricity versus less than 4% (depends upon assumptions) for the preferred alternatives.
Alan
But, won't that require a massive reorganization away from the suburban sprawl model of development to a higher density, neighbourhood model? I expect such a reorganization would take a lot longer (a few decades?) than rolling over much of our automobile fleet to include high-efficiency ICEs and PHEVs. Over the short to near term, I think we're stuck with the infrastructure and living arrangements we got now...
An all-electric range of 10s of miles would make a big difference in average liquid fuel consumption per mile based on average daily drive statistics. Surely electrification of personal transport with PHEVs, BEVs, scooters, etc., will have a role to play during this long period of reorganization.
The USA recently managed to utterly transform it's urban form in just 20 years (significant effects/changes were seen every 5 to 7 years).
From 1950 to 1970 (roughly) the USA trashed EVERY bit of prime commercial property (once called "downtowns") and many well built established neighborhoods.
We did it once, we can do it again !
Alan
Can you really? The previous reorganizations was done during boom times and a lot of the existing infrastructure has been built up in this high growth, cheap energy economy, on the assumtion that it would continue for ever. Concrete structures like bridges and highway overpasses, can last hundreds of years with very little maintenance, especially in the absence of below freezing temperatures. A lot of these structures were very energy intensive to build but, energy was cheap. They are going to take just as much energy to demolish but, now energy is expensive.
The question has been asked and it bears repeating, given that the world at large has invested so much in an unsustainable infrastructure, energy prices are skyrocketing and some of the countries that really need to invest in mitigation are literally insolvent, how are these countries (eg. USA & UK) going to undertake the massive investments needed?
This question is especially relevant since it seems that TPTB in the US and the UK at least seem intent on carrying on BAU and there don't seem to be enough wealthy people around that, have a grasp of the problem like T. Boone Pickens does.
Alan from the islands
I have to agree about the problem of removing cement buildings.
In some cities in Japan there are a lot of ugly cement houses the govt built for govt workers. They are closing these down now because they don't have budget to maintain them.
In my local area, the first parcels of old cement buildings were sold three or four years ago and demolished to make way for housing dev. (very ugly tiny plastic houses not selling well)
Subsequent closures of the cement housing (there are acres of them) have led to no bids because the costs of demolishing the structures are huge now. And the economy is tanking so no one wants to buy a new house. (Also the population is shrinking).
There are many vacant boarded up cement apartments now. With no hope of any future. It's easy to extrapolate this widely because this is just the start:
A cement bridge needs repairs but diesel costs tooo much. The whole road for miles is just huge cement trash. Train overpasses too.
Airports that are increasingly empty-----cement trash.
Condos where people couldn't get manage to get a reasonable supply of food and had to leave----cement trash.
The cement trash problem in my opinion will be the "localized" form of the "debt" problem. (They are related because the debts went to pay for these structures). Unmoveable. Unmanageable, A barrier to further anything (because you can't grow food on them or pasture animals in them).
How can people with just hand tools remove these structures? They can't. No one will have enough food to justify expending their human energy to get rid of these things. And return on the investment--a field on which to grow food--is so far in the future. A 14 story condo is massive. It would take years to remove it by hand, possibly decades, even with a small band of people.
But I guess Mother Nature will grow ivy on these things and little by little the bugs will find homes that open up cracks. Freezing and weather exposure too. In short, entropy will eventually win! It always does.
Alan Weisman wrote a book last year 'The World Without Us' that documents how long it would take the Earth to recover from human civilization. Certain items like Nuclear Radiation from Nuclear Reactors would live on for eons but city buildings, bridges and other structures would disintegrate relatively quick.
New York - 15,000 years dust and no memories.
A McMansion - 500 years
One thing that would live on: bronze. They don't know about stainless steel though.
Here is a web-site that gives some cool videos that break down things:
http://www.worldwithoutus.com/multimedia.html
Geez man, where do you live?
Around me they are tearing up farm after farm for new housing development. Just for kicks I toured a model home nearby my place. Tiny. I could stretch out my arms and nearly touch both walls of the living room at once. If you open the window, you could reach out and touch your neighbors house. (pretty typical for Japanese housing if you're not familiar with Japan.)
They were asking half a million dollars for it and its a good 3-4km from the train station.
They're selling too. That one development I toured is half built in just a couple of months. I dunno if they've sold the empty lots or not.
It did come with CHP though.
This proves the point. Cement structures are expensive to demolish so, it's much easier to use undeveloped land. I suspect this will be an increasing trend with developers avoiding the costs of removing existing structures and favoring land with wooden or steel structures, With the cost of steel being what they are, steel framed buildings can always be sold for scrap and even wood can be reused or recycled. What can be done with used concrete?
Alan from the islands
You can cut up old concrete houses with regular diamond saws and reuse the pieces when building new houses. This has been done twise as a full scale recycling experiment in my home town Linköping while building student housing. The first interation ended up a lot more expensive then all new concrete and the second try were about as expensive as using all new material. One main difference were that the second batch used the old building segments in a more efficcient manner.
Either that or we get really, really fit as a nation. We could go from fattest to fittest if we just look at this an opportunity.
;-)
Not everyone will want or be able to live in urban areas.Personal transport will still be needed for country people.In the longer term electric will be the way to go.
Public transport - electrified rail,tram,trolley bus will be required.There is no reason why public and private transport have to be mutually exclusive.The technology is there.What is needed is the will.
I couldn't possibly live in an urban area. I will have "personal transport", if it means walking.
Yes, but this is a tough sell. People *really* don't want to give up the personal mobility that a car offers, and there are lots of people who don't want to give up suburban living. They insist that they aren't about to let others tell them what to do, but ignore the possibility that simple economics will do the forcing for them.
People who haven't ridden bikes since they were kids will also vastly underestimate how far a person can realistically ride. I suspect part of this is really just a strawman argument that they are using as they aren't willing to let go of the car.
I was talking with a friend the other day - she was going on and on about the speculators. You all know the drill. I tried to convince her otherwise, but she wouldn't let go of the idea that it was all the fault of speculators. I have the oilposter at home, but didn't have it handy to help make my argument.
I try and make the argument to people that rail in various forms will be the way in which we will get around in the future. They ask of course where this rail is - again since the rail isn't there now, they argue that it is in some way an impractical suggestion.
I was talking with a friend the other day - she was going on and on about the speculators. You all know the drill. I tried to convince her otherwise, but she wouldn't let go of the idea that it was all the fault of speculators.
The answer to speculator delusion is tar sands. Ask them why the Canadians are cooking 2 tons of dirt to get one barrel of oil. And keep asking it until the light goes on...
"...-she was going on and on about the speculators."
does she perhaps spend a lot of time listening to rush limbaugh or ann coulter ?
Yes, but I am not sure how easy it is to argue against this. People are holding onto this belief that it is speculators because the other alternative is too painful to even acknowledge. I tried to explain that if there were adequate reserve production capacity that speculators would get burned, but that didn't make an impression.
What made it bad is that we were in the car at the time of the conversation, and we were listening to the BBC on the radio. And guess what - a story on the radio about speculators, and there was some wanker suggesting that half the cost of a barrel of oil might be related to speculators.
It sounds like Congress might do "something" about speculators. I suppose it is inevitable, in a way, and once "something" is done then it will be clear what part of the price is due to speculators. And I suppose at this point they will look for a new boogeyman.
lots of people who don't want to give up suburban living.
Sub-urban living allows for a economic class seperation. Keeps the poorer folks away from you.
The difference between the models is that the EV case is giving about the same or at least similar levels if mobility to today, with similar numbers of vehicles and miles drive, whereas the alternatives case gives a lot lower levels of mobility.
Presumable if the figures were adjusted so that the EV's gave a similar level of mobility the energy consumed would be closer
The cost of the EV's would need to include costing for maintaining the road network, and also for same extra rail as it does not seem on the cards to retain all long-distance trucking.
That is on top if the cost of the EV's, but the Toyota Prius plug in which would do most of the job only has a likely premium of perhaps $4k on an equivalent ICE.
You would also need to budget for generating the extra energy, or simply saving the equivalent amount. Since a great deal of electricity is used for space heating then improving insulation, doing small redesigns of existing structures to reduce cooling bills and utilising heat pumps would be likely to make this the cheapest way to go.
As against this though, if it were possible to replace the entire fleet of ICE vehicles then the housing market would not need as extensive contraction as under a public service vehicle only scenario.
Even placing a much reduced value on property stock due to the housing bubble it would seem that losses would be a lot less than under a public sector transport only scenario.
Actually, two things will likely mitigate this scenario. It will not be possible to build EV or plug-in cars fast enough to make a smooth changeover of the current fleet even if finances allowed.
As against that electric bikes and trikes could certainly be introduced, and the power drain and cost of them would be much less whilst still providing much more mobility than a rail and bus only scenario.
It therefore seems to me likely that a large but not complete replacement if the present fleet by this means will take place, and consequently somewhat less destruction of the suburbs than would occur with a public transport only solution, and rather greater incentive to keep considerable parts of the road network operational, although likely of a much lower standard.
This would be the lowest cost option, as the property stock would retain far more of it's value.
Of course, this will not please those who disapprove of present society in principle.
However, this may be of limited importance as the vast majority are likely to wish to try to save as much as they can.
Some also seek to argue that progressive deterioration will mean that not even simple measures can be taken, such as the provision of suitable charging points, or maintaining any of the road network to passable standards.
Well, if you assume that nothing at all will be done and no measures taken then it is not too surprising when you come up with a result where everything falls apart.
On the other hand if you assume some flexibility then measures readily to hand seem to mean that although stock in the remoter suburbs might be surplus and valueless, a lot of the value of the present stock can be retained and it is cost effective to do so.
Someday people might also say, "why did we think everyone needed a personal car?"
I fear that a future of all-electric cars would be just as ugly as what we have now, were it even possible. I'm kind of glad it isn't, in the context of Heinberg's Peak Everything. Were we to attempt a transition to electric, people would be in a frenzy to extract the last deposits of rare earths and metals, etc., with the resulting continuing destruction of the biosphere.
No, we need to leave the personal car idea behind. Ride a bike lately?
Chris
Ideally, any kind of car would fill a small niche role, where absolutely nothing else would be adequate. Of course, my definition of niche would probably differ considerably from others.
Not to burst your bubble or anything (my family doesn't have a car and we bike everywhere, or train train, bus) BUT we bicyclists DEPEND on the car culture for our mobility. WIthout nice smooth roads, it is hard to ride a bike safely. Without our nice repairman, who comes IN HIS LITTLE TRUCK to take our bicyles away and fixes them for a small fee, we are sunk! We desperately depend on fossil fuel inputs to groom the bike paths and park roads. Our wonderful bicycles were delivered to the store via truck on big ugly roads and all the parts to fix them were too.
I do still love my 10 year old Miyata 3-speed more than any other piece of equipment I own. I desperately need it for mobility. But if the cars go, I think the bikes follow.
Don't worry I have no bubble to burst, or illusions about maintained roads. They have already seriously degraded in my county. I do think however that bikes can make use of roads no longer suitable for cars. After all you can swerve 'round the potholes. And don't forget mountain bikes. A smooth ride is nice but not required.
Chris
Remember that damage to the roads is proportional to the fourth power of axle weight. It's the trucks that do the damage.
Before the First World War, the main roads in the UK were amazingly empty, because everything (and most everybody) went by train. They were a paradise for cyclists.
BobE
The Wright brothers, and lots of blacksmiths and tinkerers, built bicycles by hand prior to the nice interstate highway system or even paved roads that now exist. If the Wright bros wanted sprockets, chains, tubing, etc, they could order them from a machine parts manufacturer in Chicago and it would be delivered by rail.
Few roads were paved in the Wright Bros day but bicycles sold well. The bikes were not built for speed but reliability. Motorcycles were the same.
Harley, Indian, Excelsior, and about 2,500 more motorcycle manufacturers built machines by hand, one at a time. These MCs were not built for high speed because the roads were either mud or graveled and were sometimes impassable. Many streams had to be forded because lots of crossings didn't have bridges. In times of high water in streams travel stopped or someone would build a ferry if the amount of traffic warranted the time and expense. The bicycles and MCs had to be rugged, not fast. Gearing was low, horsepower was low, torque was high(long stroke low reving engines)...just the ticket for low speed, rutted, wash-board, roads. 15 mph was considered a fast average speed on a MC.
Henry Ford put just about all makers of bicycles, MCs and other auto builders out of biz when he developed the assembly line. Ford could sell a car cheaper than a hand built MC and many hand made bicycles of the time. Economy of scale...and, to the poster that used the phrase 'simple economics'...There is just economics, nothing about it is simple.
Man, where do you live that you need repairman to come in his truck and repair your bike? I ride my bike to repair shop for regular repairs, and if I got flat tire, I fix it myself. In every neighborhood you can find at least one bike repair shop with kids being the most frequent visitors. I think it is similar in small towns.
What worries me more is that our comfort and relatively empty bike paths depend on large part of population driving cars and using public transit. I don't like to imagine what would it be like if only 20% percent of current commuters decided to hop onto bikes. So instead of long lines on the roads we would get long lines on bike paths, collisions, jamming on intersections etc.
On the brighter side, as less and less cars use the road, maybe we'll get one lane for ourselves. :-)
If cars go, imagine all that rubber and metal to be recycled...
Lessons from a wildfire...
As I've posted before, there has been a wildfire near us. It has burned over 8,000 acres but is now pretty much contained and the voluntary evacuation notice was lifted Friday after three weeks. We're safe - for now. But, what did we learn from this experience?
1. Although we all knew the threat of a wildfire always lurked in the background, none of us had really done enough clearing around our properties. I believe this is germane when it comes thinking about the future of society. What we often hear on TOD is lots of talk but no action whether individual or community.
I accept that some people see those of us who are trying to somewhat insulate ourselves from potential future problems as doomers, but isn't this analogous to clearing a fire break around your house?
2. Information from "authorities" was skimpy at best and we had to rely upon people actually on the fire lines because CAL-Fire was afraid people would "panic.". In a way, this is like reading TOD, the PTB are not providing useful information so you have to go to the best source there is.
3. People really came together to help one another. Phone and email trees were established to provide any kind of information. Yesterday my wife and I hosted a cookout for the neighbors - being the boondocks, some are a mile and a half away from our house. Everyone really enjoyed getting together and we plan on doing it more often.
One of the things we prepared was a map of everyones land so that everyone would know we everyone else actually lived. It also included phone numbers and email addys.
We also had time to talk about forming our own little volunteer fire company and to get appropriate training. Many of us will also take CERT (Community Emergence Response Team) training when it is offered again. We also touched upon the possibility of having group runs to places like COSTCO if/when gas becomes too expensive.
I think one crucial realization was that we, as a group and individually, have to be far more self-reliant and not place our trust on outside agencies. This fire could have turned into a fire storm and, perhaps, burned 100k acres. I think that people need to view the future of society in the same light. What is available today (in this instance, fire suppression) may not be available in the future.
Todd
Glad to hear you're safe Todd! Sounds like a pretty scary experience.
I've been thinking of bring up the subject of "group runs" with some of the villagers or even the Mayor. Looks like we're already beginning to look at picking the low hanging fruit.
Myself, I've cut the shopping run down to once a week, started buying bread from a bread van that comes to the village and let the grass grow to reduce mowing (I normally use 10litres of petrol each time I mow the grass at 1.50€/ltr).
I view goods transport as an essential service and possibly one of the more sensible uses of electric vehicles.
Whereas I've been preparing for a sustainable lifestyle for some time, I'm surprised just how fast things are now moving. Certainly faster than my original planning allowed for and I thought I was ahead of the curve. Time to pick-up the pace.
Burgundy,
Yes, things are moving fast. What many people do not seem to realize is how long it takes to accomplish some things. My personal feeling is that people should at least have the foundation of their plans in place.
I've been on this self-sufficiency/self-reliance path for over 3o years. There is no way that I could put in place what I have now in less than 7-10 years. And, having been down this path for a long time, I recognize more than most the many holes I have. IMO it will be the holes that get people. This includes not only physical stuff but, especially, the psychological aspects.
Todd
Todd - I often wonder what will happen to rural firefighting as gasoline / diesel become ever more expensive, and generally more scarce ? I live in Osage Co., OK, and the ranchers here burn approx 1/2 of the county each year, as it is too rocky to brushhog. Osage County is the largest in OK, and covers 1,746,000+ acres. I assume after the first disasterous fire which cannot be controlled they will stop, but what about WHEN that last burning takes place. We have some of the most industrious individuals around as volunteer firefighters, but with an area this size to protect, it is going to come to disaster, or more so than it already is each year. I have two spray rigs of my own, but can only keep each in one place at one time.
Good luck, and I do hope that the fires are truly contained.
Woody,
I agree about fuel costs; even red diesel is expensive. Just overall costs to fight fires are going to become difficult to handle as government agencies see their budgets cut. For example, a CAT (and operator) under contract to Cal Fire gets $4,000 per day even if on standby. Then you have helicopters and air tankers, etc.
It would be nice to go back to the old, old days when the Indians burned forests all the time so there was never a chance for understory fuel to build up. Even 50-60 years ago, all of the ranchers did controlled burns of their range land around here.
Unfortunately, it's too late to go back now. For example, as I mentioned in a previous post, the fire was started by lightening on BLM land and they wouldn't let CATs on to make fire breaks so what would have been a large, but not dangerous fire, grew into one that even threatened a small town and lots of us in the mountains.
Todd
I know they are called "controlled burns", but it is absurd to burn every year. The soil is being destroyed, where there was knee high fescue on dryland pasture in 1988, today, it is not even knee high. This changed at a time when the area rainfall increased dramatically. We are 18" above normal for the year, and were 8" above at this time last year. And, the "ranchers" (I think it is cow farming if you just drop the cows and go to the bar for 4 months) cannot always control the fires, especially where their land is up against some really rough country (this area is called the Osage Hills) and it jumps past you.
I do pity ya'll out there, however. Those fires hit like Alan's hurricanes. Just get a short warning and get out os the way. With a tornado, only a fraction of the area is hit, and everybody helps afterward.
I wish I could get that $4K / day when they burn around here. I've got the best little JD 450 around, with lots of steel left on the grousers.
Woody,
What they usually want is big stuff with something like a 10' blade, enclosed cab w/AC and screened windows run by someone who has attended the pre-fire season Cal-Fire workshop. Look at it this way, you have to have a regular semi-tractor, a low boy and a, what, $80k+k crawler. All the expenses are yours even if it is a 100 mile run as well as the fuel and operator cost.
My neighbor was running a D-5 without protection on private land followed by a D-650 to widen the path. At one point the D-650 couldn't see my neighbor 50' ahead and he assumed that Dave had been lost in the fire along with the CAT. They were on hills so steep that they could only backup them. This was on a north slope with black oak trees with moss that caught fire. With the flaming moss, the trees would collapse forward 20+ feet in front of the CAT spreading the fire. It was really the shits but they did what they had to do because that's the way it is in the boondocks.
These folks put their lives on the line to save people's asses like mine.
On top of that, our friend would call if he got home at night to let us know what was really happening after, maybe, 20 hours on the line.
Todd
Hey, Todd.
We're slowly getting there. They expect total containment within the county by Thurs. What's that? 4 weeks?
This was in the Journal...
http://www.ukiahdailyjournal.com/ci_9824986
On Saturday, the Bear Divide Hotshots reported to the incident and brought another group with them -- a crew of 20 firefighters hailing all the way from Saipan, the largest island and capital of the United States Commonwealth of the Northern Mariana Islands.
Further east, they had to evacuate Feather River Hospital; 2 days before my boss was supposed to go check out their co-generation facilities.
M
Yes. Back in student days we would do runs to the places where real people really shopped. We really couldn't afford to pay double or triple for wilting, moldering, and/or rancid rubbish as offered by cheating chiseling thieving downtown merchants with their nice cozy little positional monopoly, so fatuously and mysteriously beloved of, say, Jim Kunstler. Good riddance. Oh, and unlike Jim, I didn't and still don't give the proverbial rat's behind that said thieves might support Little League or whatever as part of their advertising. Those who want Little League can jolly well pay dues. Besides, with spectator sports, for each physically active person a dozen others sit or stand around idly on or near the field, while dozens more sit in the bleachers stuffing themselves to bursting with the Four Spectator Food Groups - sugar, salt, fat and cholesterol. Oh, and limitless time is squandered immobilized in the car on the way to and from games and practices. And most people give up spectator sports and move on by the end of college or high school. So they do little for the kids and subtract mightily from the physical fitness of the adults, and for my money they can all go get stuffed. Better that the parents should go together with the kids on bike rides, or swims, or anything else that the kids might actually continue to do as adults; get that house in order before considering spectator sports for even a nanosecond.
But I digress. I think responses such as these group trips are a reason why at least some suburbs may not be quite as dead as people who choose to despise them on snotty pseudo-philosophical grounds seem to wish:
(Quote from Lou Grinzo, who AFAIK gave up posting here quite a while ago.)
IMO nobody has claimed that suburbia is dead. Suburbia is dying, not dead. This LA article conveniently failed to mention that LA area foreclosures are running at an incredible pace 15X that of NYC.Not dead, just dying.
Paul,
Let's put this into my context: I'm in the real boondocks not some exurbia. We have known almost everyone for a minimum of 10 years (the "new" people) and about 30 years in most cases. Life is hard here...but we are all here because we love it. There are no "bad actors" except one family and they never participate. He's into major dope growing hiding behind a contractor's license. We've watched kids grow up. People have died or committed suicide within our friends families and we have shared the grief. Some have gotten married or divorced. My point is that can you really say this kind of interaction is true of suburbia?
What brings us together is that it is like an extended family. Here are a couple of examples:
Many years ago one close neighbor (1/4+mile away) had trouble with his spring so we supplied his water for, I don't remember, 3-6 months because it was "the right thing to do." I even paid for the pipe since they didn't have much money at that time. City people don't understand how this works ... I didn't "have" to do this but why would you screw neighbors? But, he had an unsaid obligation and that's how this works. We all "owe" each other. Like he is going to loan me his commercial chipper to handle the umpteem small trees we have to take down and I'll "owe" him.
Similarly, we have "city" neighbors with a nice vacation home who come once a month or so with a huge fir and oak that would have burned the place down if they ignited. I took my tools and truck down and we limbed the hell out of them. (I also provided scrap wood, tools, etc. after the fire started so sparks couldn't blow under the house) weeks ago to cover his foundation vents.
My point is that how many people in suburbia have these kinds of relationships...where people actually like each other and know each other? These are not Mickey Mouse/short term friendships. Real life is shared. And, some times it is tough.
But, these relationships have not been one night stands. I'm currently reading Plain Secrets by Joe Mackall, ISBN 978-0-8-70-1045-5 about a Swartzentruber Amish family in Ohio where relationships not only with the church but each other are everything.
Todd
Last Wednesday there was a fire in the St. Stephens Full Gospel's new church building (one before was flooded in Katrina).
This morning they had services in Temple Sinai, a Conservative Jewish synagogue.
Immediately after Katrina, 50% of the population lived in the 20% of the homes not flooded plus a few private trailers, tents, etc. Many people sleeping in living rooms, and hallways.
We have a community here, with deep roots.
Best Hopes for Community,
Alan
"Best Hopes for Community,"
At the end of the day, that's all there is. But you know what? Humans do "community" pretty well. It's really the only hope...
In Australia,which has a high fire risk climate and vegetation there is a very extensive system of Rural Fire Brigades.These are overseen by the various State Emergency Services who provide equipment and vehicles.
There is a small cadre of professionals but the grunts are volunteers,and proud of it.There are very few hamlets or villages without a fire shed.In some places it is just a locality and the shed is about all there is.
Todd,maybe the people in your sort of high fire risk area need to look at this sort of organization.It is also a good way of getting communities to pull together for fund raising and fire awareness.
Glad to hear you're OK, Todd.
Re: Iran discovers new oil field to hold 1 billion barrels of crude. Does this mean we can begin preparing the "they were asking for it" defense for our aggression?
No, 1 billion barrels would only last the world about 12 days at current levels.
It would only last 50 days for the US alone.
Read it again. It is only 220 million barrels of recoverable reserves. That is about three days worth of world crude only use.
Concerning the above link: Iran discovers new oil field to hold 1 billion barrels of crude
Okay, the 1.1 billion is OOIP, recoverable reserves are said to be 220 million barrels. That's only 20 Percent?. At any rate Iran claims to have 138.4 billion barrels of proven recoverable reserves. Rank Order - Oil - proved reserves. 220 million would raise those reserves to 138.6 billion barrels. That would be an increase of .16 percent. That is sixteen one hundredths of one percent. Why is this news?
Of course we can answer our own question. It is news because Iran has nowhere near 138 billion barrels of recoverable reserves. They are pumping oil flat out and expect production to start falling very soon. In fact Iran is already in decline. They are producing one third less oil than they did at their peak in 1974 and 5 percent less than their secondary peak in July of 2005. So in reality 220 million barrels is quite a big deal to a country that is desperately worried about declining oil reserves.
I have always thought Iran to be sincere in wanting nuclear power because their oil supplies are really in decline.. But I would not speculate on whether they want nuclear capability for other reasons also.
Ron Patterson
Assuming vast resource overstatement and a closely pending or recently passed Iran peak, the best thing Iran could do for their nuclear ambitions (for good or ill) would be to clearly and openly state their true reserves and transparently communicate the peaking projections. I'd rather see that news clip than a 1B bbl find.
Of course if civilian power was the real concern you'd think they would be pushing solar and wind as well, but then the US didn't do much when it crossed its peaks did it?
Ali Morteza Samsam Bakhtiari
He got into a lot of trouble for his peak oil activism and died last year apparently of a heart attack after having travel and communication restrictions imposed last year.
Interviewed in "The End of Suburbia"
What sort of trouble...did his former employers make it clear they didn't like what he was saying?
His last post said the following
http://www.sfu.ca/~asamsamb/sb.htm
He took no further part in Peak Oil related discussions as far as I know. Four months later he was reported dead.
I remember reading this rather cryptic message a year ago. I could never figure out what exactly he was talking about, what sort of trouble he faced in Florence. I was actually planning to go to that conference in Florence but something else came up. Does anybody, like Ugo Bardi for instance, know what happened, or is this something that we're not supposed to discuss? Bakhtiari was definitely a great man, so such an obscure end seems bizarre.
I have always thought Iran to be sincere in wanting nuclear power because their oil supplies are really in decline.. But I would not speculate on whether they want nuclear capability for other reasons also.
Alas, governments do not operate with one mind, one purpose. Thus within any government you will find people who will follow a path that is contrary to the official public position.
So I would not be shocked if genuine documents could be produced to show there is still an active weapon program.
does it not prove, though, that iran can find its own oil reserves without the ioc's ?
they don't seem very efficient at eor do they ? or maybe the 220 mmbo is only primary reserves and no secondary or eor reserves are given because they are not for now deamed proven.
Iran's recent oil production decline from 2005 is likely to continue. The creaming curve of Iran is shown below and the Wood MacKenzie (WM) 2004 creaming curve gives an estimate of ultimate recoverable reserves (URR) of oil of 110 Gb.
source: page 30 http://www.peak-oil-crisis.com/Laherrere_PeakOilReportMay2005.pdf
The OPEC Annual Statistical Bulletin 2007 states that Iran's cumulative production to Dec 2007 was 61 Gb. This implies that Iran's remaining URR is 49 Gb.
http://www.opec.org/library/Annual%20Statistical%20Bulletin/ASB2007.htm
In February 2006, Bakhtiari's estimate of Iran's remaining proven oil reserves was 35 to 45 Gb.
http://www.ker.co.nz/pdf/Peak_Oil_Review_20_February_2006.pdf
Assuming that Bakhtiari's estimate was for Dec 2005, his estimate adjusted forward to Dec 2007 would be adjusted downwards by Iran's two years of production of 3 Gb. His new range would be 32 to 42 Gb remaining proven reserves. This proven reserve range is lower than the assumed 49 Gb remaining URR which includes probable, in addition to proven reserves.
The chart below is an attempt at forecasting Iran's crude and condensate production. Iran's production has passed its minor peak of 4.1 mbd in 2005.
It is assumed that Iran's production will continue to decline at a slow rate of 0.5%/yr to 2018 due to sanctions on Iran and insufficient new projects.
http://en.wikipedia.org/wiki/Oil_Megaprojects
It also appears that sanctions could increase and transform into a military blockade as US Congress Resolution 362 is likely to be passed, even if some changes are required. This would further limit Iran's ability to maintain oil production.
http://www.peacenow.org/pr.asp?rid=&cid=5100
http://www.stopaipac.org/iranresolution.htm
Colin Campbell's forecast for Iran is slightly more optimistic than the one above. He forecasts Iran's production to be 3.92 mbd in 2010, 3.92 mbd in 2020, and declining to 2.95 mbd in 2030.
page 5, June 2008 Newsletter http://www.aspo-ireland.org/index.cfm/page/newsletter
The reserve growth enigma solved:
http://mobjectivist.blogspot.com/2008/07/role-of-dispersive-discovery-in...
This basically explains the whole puzzle. I made the key find yesterday morning so excuse any typos. The math looks pretty solid.
I'm still trying to understand what you've written (my shortcomings, not yours) but it seems to me that this merits a guest post.
Don't feel bad. I would venture a guess that there is a rotating pool of about 3 of us out there at any one time willing to peek at the mathematical guts of oil depletion.
The basic idea is to understand why estimates on a given oil reservoir's capacity, i.e. the reserve, seems to creep up over time. What everyone has tried to fit (given the fact they they have given up the understanding part of the equation) is the seeming order-of-magnitude increase from a reservoir's initial capacity estimate.
The best swag that the USGS geologists have come up with is this heuristic formula:
This of course has no physical meaning, but the blue curve I show above does. TOD is probably the best place to post, as it does generate some discussion and some scrutiny as well.
in the old day, that was about 1975, major oil companies often had more projects/prospects than they could fund or at least wanted to fund. e & p was essentially a service company for refining. if the refinery needed more crude, or if production was declining, they turned on the funding for drilling and workovers, and presto, production and reserves were increased. this is no doubt the source of some of the reserve growth.
that and the crew cut sportin', slide rule wielding, pocket protector wearing engineers were a pretty conservative bunch, thus reserves were stated conservatively.
I don't think that "conservative" decisions is the way that reserve growth works. I would change "conservative" to "non-predictive" and "safe". I can point to lots of other engineering areas where through the routine process of characterization one is able to make equally conservative estimates, but they do a good job of predicting the asymptotic behavior. As an example Andy Grove was the first to characterize silicon dioxide growth by evaluating simple models and thus began Intel. Getting oxide thickness correct could be a process where they check the thickness every two minutes like they were watching a loaf of bread rise, but they are way beyond that now in Silicon Valley and China. Not so with the oil industry however; to the untrained eye it looks like they use the primitive trick of plunging a thermometer into the turkey roasting in the oven. This is safe but, jeez, how primitive!
Besides, don't forget that overestimating the size of a reservoir has significant financial advantages. You can attract mucho initial investment capital if you exaggerate a claim. But this can also attract charlatans. So the SEC put the stops on that practice and the oil companies tried to make their estimates as high as they could without overdoing it. But they still had no ideas on how to characterize their estimates (not smart? who knows?).
Bottom line, I believe the estimates are safe and non-predictive, but the underlying reality has to do with the dispersion of searches through the volume of a reservoir. This makes it potentially predictive. The simple model I use for reserve growth is complementary to what Andy Grove did in the 60's. Unfortunately, it is the next century, and some nobodies are finally figuring out what was staring them and the USGS in the face for years.
The other debatable point is that engineers have any control over marketing decisions. The "marketing" engineers were likely stooges of upper management. It's possible that oil industry engineers knew about this characterization I discovered all along but were superceded by the board's decisions.
It's fun to speculate on oil industry psychology, but right now I am serious about substantiating the model. I am sure we will get some more good feedback and this will become a solid model.
Here's a nice train article for Alan
French rail company makes $1.7 billion profit in 2007
This autobloggreen post is sourced from The Guardian.
Does anybody know if the French are more Peak Oil aware than the rest of the world. They seem to be the best prepared for post peak existence: best high speed electrified rail network, highest proportion of electriciy generated by nukes, home of the world record holding Peugeot 308 HDi and good electrified local public transport. I guess all they need to do is overhaul their sewerage treatment plants and solid waste management to produce large volumes of O-NPK and produce enough biodiesel to run their farm machinery and they should be pretty much set for almost BAU.
Alan from the islands
IMO France is a lot more patriotic and democratic than the USA. Again IMO the number of Americans who have been and are peak oil aware is dramtically understated. Gates and Buffett making large investments in rail years ago with nary a mention of oil depletion is par for the course. Compared to France, America is a competitive nation where important info is usually not shared freely IMO, certainly not by the MSM or guv.
I've been living in the US since 1999, since 2003 in rural Maine. I am from Paris originally.
I also have been talking about oil, and energy generally, to my family and friends in France for 8 or 9 years.
Culturally and psychologically the French and Americans are very similar… First reaction is always denial, followed eventually by faith in technology and confusion between the latter and energy.
Witness the strikes where truckers and fishermen want the French gvt. to lower oil prices… I see no difference between there and here, except for the strikes, which is an entitlement in France and blasphemy here.
I am not sure nuclear power will enable BAU in France, even though gas and highway tolls are prohibitively expensive compared to the US, people are still buying cars and driving. Truck transportation is of foremost importance, just in time delivery as present as here etc. etc.
Socially I do not think France can survive energy starvation without violent civil disturbances. There is a large underclass where employement is scarce and desperation and nihilism omnipresent. Without talking of rampant racial tensions…
Of course this is IMHO…
How's that for optimism?
The French will suffer severe economic dislocation and social adjustments if they have to cut their oil consumption in half or by 2/3rds by 2012. They will just be MUCH better off than the USA.
Germany and Switzerland and some smaller EU nations will be in the same boat.
Best Hopes for "better than it would otherwise have been",
Alan
I live in Southern France part of the year..... like now.... and my FR friends are quite aware of PO, climate-change & negative effects of GM-food crops....
They easily understand that their nukes are providing an electrified transportation-future which is out ahead of most other places. And as was said the light rails, like in Montpellier, are very much used, almost always running with nearly-full loads, etc.
Italy which prides itself in NO NUKEs, buys its Elect. from FR.
( There will presumably be an equivalent ELM effect happening there at some nearfuture date ??? )
This year there are palpably ( anecdotally ) far fewer tourist vehicles here. OTOH too many FRs continue to "show off" by buying rediculously huge SUVs to cram down the throats of the narrow village streets!
I've seen 3 Prius's in 1.5 months.
VWs LUPO which runs 2x as far and with ~0.7 times the CO2 emissions of the Prius, is strangely "not for sale" in FR.
Montpellier has two tram lines in operation, of 15.2 and 19.8 km A third line of 22.4 km is scheduled to open in 2012 and extensions of 10 km and 0.5 km are being considered for the first two lines.
The 1999 census gave a population of 225,300, metropolitan area 459,916.
Best Hopes for France,
Alan
Lupo production ended in 2005.
Nearest thing VW does now is Polo Blue Motion... next size up and quite expensive.
ck this out.....
deutscvhland different.
http://www.cars-of-europe.com/volkswagen/volkswagen_lupo_12_tdi_3l_ktb15...
Iran discovers new oil field to hold 1 billion barrels of crude
with 220mbl recoverable oil quick calculation says that this would satisfy worlds oil hunger for whooping 2.5 days. great find indeed too bad they don't find these every 2.5 days
Technology is there: More electric power and use of rails can offset the so-called energy crisis
no matter if you make the wheels go round with electric engine or internal combustion one, you need an energy source in the first place.
and thats where world gets its energy, whether its burned directly in the engine or converted into electricity and then makes the wheels go round makes little difference.
Edited to thumbnail the image. If the graphic is wider than 500 pixels, you should probably thumbnail it, or just post a link.
For those who are interested, you can shrink the size image appears on TOD by specifying the width:
<img src="http://the.link.to.the.image.jpg" width="350">Don't do that. Don't use the "percent" tag, either.
It forces people to download the full-sized image, even though they can only see the small size, which is pretty rude. Also, browsers aren't very good at resizing images, so the quality will be poor.
Thumbnail it, or post a link. Sites like Imageshack will automatically make thumbnails for you, and provide the code to post them.
Great graphic-it should be displayed prominently on this site, as IMO very few persons are aware of the puny nature of renewable energy sources.
OTOH, with 30% to 40% annual growth (geothermal only 10% or so AFAIK), this graph understates the future contribution of renewables.
Wind is a very high % of new electrical generation in the USA, for example. Small base, large growth.
Best hopes for Realistic Planning,
Alan
Alan: Good point. OTOH, this 30% to 40% rate is not over a sustained period. The overall global energy picture above is not dissimilar from 30 years ago, at which time there was a similar discussion about the need for a movement toward renewable sources. A tiny company might be growing revenues 40% per annum for a couple years-it is not realistic to necessarily project this many years into the future and state that it certainly will become the world's largest firm-to a certain extent this is exactly what renewable energy advocates are saying. It is a possibility, but far from a certainty-IMO JHK is probably right on this one.
BrianT,
Thanks for pointing that graphic graph out, it will be good to pass on. As well it shows how memory fails, it reminded me that before I came on to TOD I did a bit of comparison shopping of energy sources and wrote to Dr. Suzuki asking why on earth he was eschewing nuclear power, especially, when wind it's nearest clean competitor was such a non starter. Talked to a public relations guy with them who told me that nuclear was out of his area of expertise and that someone would get back to me. Still waiting for well over a year and 12weeks:). I think I will get back to them and see if they are watching TOD and have come up with an answer yet.
My own thought is that it was a political issue with them, as nuclear has such a bad reputation that to support it would likely cause a radical drop in their membership.
Wrong! It makes one hell of a difference. Have you ever heard of EROI? It is the useful energy divided by the total energy required to produce it. Energy with a very high EROI, like the early oil, is very cheap energy. Cheap energy means we can produce stuff very cheap like food and transportation. Very low EROI means that energy is very expensive. In fact, food produced with the aid of very expensive energy is far too expensive for most poor people of the world to purchase.
We are running out of the very cheap stuff and only the very expensive stuff is left. That is why it cost so much to drive these days, and will likely cost much more in the future. But more importantly that is why we are having food riots around the world. It is why people are starving in many places. They must spend every penny they have to purchase the much more expensive food and in many cases that simply is not enough.
Ron Patterson
Where is the electric power, where does it come from, what will the infrastructure to do this, the capital, the R&D and the plans?
I meet your energy graph and raise you with a population graph:
From my previous response to the question "Where are solar, wind, tidal and geothermal?"
and in response to "why does he use a 20% cutoff before including the source as one that raises the population ceiling?"
-André
Last Friday, the U.S. Senate passed their version of H. R. 3221, titled the Foreclosure Prevention Act of 2008. The Senate version contains provisions which extend the current renewable energy tax credits, which are scheduled to expire at the end of 2008. One hopes that our representatives will accept this extension of the tax credits, so that we may see a continuation of efforts by individuals and corporations to add more renewable energy systems to our energy supply. One can look at the text of the amended bill at the Library of Congress web site. To see the text of the amended version, search with the "Bill number" box checked and enter "H.R.3221.EAS" in the search field.
OK folks, time to contact your U.S. Representative and let them know what you think. ..
E. Swanson
Thoughts on this link from today's DB?
"UAE's oil reserves to last 92 years: IEA"
Here are 2 points that stood out to me in the article:
All the IEA do (for now) is take the official figures provided by OPEC countries. They don't guarantee them to be "correct". If you assume OPEC reported reserves are accurate then there is no problem with oil supplies for years to come. Unfortunately the official figures are likely fantasy.
However most of the UAE oil appears to come from the off-shore Zakum oil field so maybe there is some harder data available on this. Anyone know?
Found an old Matt Simmons study...says Zakum upper/lower are about 400,000 b/d oil fields apiece.
http://www.simmonsco-intl.com/files/giantoilfields.pdf
Couldn't find a date on this paper.
In March of 2006 Exxon signed a deal to pump up Zakum production to about 750,000 b/d. Which is lower than the numbers stated in the Simmons paper.
http://findarticles.com/p/articles/mi_m0EIN/is_2006_March_27/ai_n16113079
I don't know. I was taken by this news as well. This is either really good news or another big fat whopper lie.
Here's Colin Campbell and Bakhtiari (Author's range)
From the ASPO-USA Commentary: ON MIDDLE EASTERN OIL RESERVES (Peak Oil Review, 2/20/06) by A.M. Samsam Bakhtiari.
So UAE has roughly half the reserves it states based on Campbell/Bakhtiari
Time to send in the troops to find out what's there ;-)
Our (Khebab/Brown) middle case has the UAE approaching zero net oil exports in about 29 years, in 2037.
From 'When ends won't meet," linked uptop:
This illustrates why I think that the bidding for declining net oil exports gets tougher as forced energy conservation moves up the food chains--higher incomes groups have more discretionary spending that they can forego in order to pay rising food and energy bills. It also illustrates why the discretionary side of the US economy is imploding.
Re: the story about New England heating bills this summer, linked uptop.
Regardless of what people want to do, they need to be thinking about the latter day equivalent of huddling around one campfire, instead of several. Separate households need to be thinking of winterizing and abandoning, for the winter, some homes, and moving in together for the winter.
Heating and cooling use far more electricity than lattes, cell phones, and cable. Do the most profitable energy cuts, not the most painfull. Insulate first.
we've seen story after story of alarming news about a possible strike on Iran. Her is the latest:
http://www.timesonline.co.uk/tol/news/world/middle_east/article4322508.ece
Putting together the pieces of the puzzle.
Cheney/Bush v. the U.S. Military= Deadlock
Cheney/Bush+Israel v. the U.S. Military= War
It seems that the Neocons are positioning Israel to attack Iran so that Bush/Cheney can drag the U.S. into war. Once the Israelis provide the spark then the true fireworks can begin. This is much like stranding a group of Cuban Exiles on the beach at the Bay of Pigs. Too bad for the Dulles brothers that Kennedy was an honorable person and didn't want to invade Cuba.
This is why a lot of the talk about the USA working to mitigate oil depletion is foolish-the people of the USA can't even avoid a war with Iran if a foreign power has determined it will happen, but somehow magically the USA will turn into Sweden or France and pull together for the good of the nation? Maybe.
Will Iran launch pre-emptive strike?
"Before the enemies get their hands on the trigger the armed forces will cut off their hands," the official IRNA news agency quoted Mr Ahmadinejad as telling reporters.
The comments, cited by Iran's state run news agency, came a day after a senior Iranian official said Iran would strike Israel and US bases in the region if the Islamic Republic was attacked over its disputed nuclear program.
Iran has also condemned US Republican presidential candidate John McCain for joking about killing Iranians with cigarettes and said it showed his "warmongering" foreign policy attitude.
Iranian Foreign Ministry spokesman Mohammad Ali Hosseini said: "McCain's crude remark on the indiscriminate killing of the Iranian nation not only testifies to his disturbed state of mind, but also to his warmongering approach to foreign policy."
McCain, known for acerbic comments and for sometimes firing verbally from the hip, was responding to a report that US exports to Iran rose tenfold during US President George W Bush's term in office despite hostility between the two countries.
http://www.abc.net.au/news/stories/2008/07/13/2302442.htm
I acknowledge the bias of the security studies school of thought here, which is prone to believe the worst, doubt the ability of individuals and institutions to act predictably in weighing the costs and benefits in their decision-making process on deciding to use force, note that states have in the past taken decisions to go to war with their best customers, and, last, but not least, that second order effects of decisions made by states can produce unintended consequences that in and of themselves force changes in the cost-benefit calculus of states in regarding their strategic circumstances. One of the celebrated instances of this latter phenomenon is the series of interactions between the United States and Japan that lead to the decision in the United States to freeze Japanese assets in June 1941, which we saw as a way to increase incremental pressure on the Japanese military to get them to cease their objectionable behavior in China. The step resulted in a de facto oil embargo, which, while not initially realized by Roosevelt, is the decisive point at which the Japanese Army signs on to the Japanese Navy's plans to go to war with the United States.
http://www.analyst-network.com/article.php?art_id=2250
Iran is showing every sign of being backed into a corner. And, while it may be fun to watch them squirm, it could result in unintended consequences, just like with the Japanese in WWII.
Yes, but the main difference is that Japan deserved it. They were invading serveral countries, torturing and killing people, using slave labour and taking their resources.
Iran has invaded no countries, isn't torturing anyone and has their own resources.
Or, to put it simply, the US was the good guy in the first case, in this case they are the bad guy.
Not the US, the Bush Administration. It's been a very long time since the will of the American people has had anything to do with the actions of the Bush Administration.
We need to be absolutely clear here on who it is that need to be sitting in the docket at the International War Crimes Tribunal.
But I agree, they are the bad guys. According to international law, Iran has every right to both enrich Uranium and run nuclear reactors. An attack on Iran would violate international law and would constitute 'waging a war of agression', the same war crime the Nazis were charged with at Nuremberg.
Okay, that might be true, but in the end it is the US people who are responsible. In your own example, after the war the German people had to pay massive reparations (rightly so.) That is because they *permitted* Hitler and Nazism. Either they were active supporters, or just indifferent. People forget that even at the very end of the war before the final defeat of Germany, the *vast* majority still supported Hitler.
So, yes, I agree, there might ultimately be a tribunal regarding US crimes. I don't know who would be involved in that either, or who would have sufficient power to force the US to pay reparations.
After which war did the German people have to pay massive reparations? I thought the Marshall plan shipped dollars in the other direction.
I was talking about WW2. But it seems they weren't as massive as I thought, but both the east and west did get some according to this:
http://en.wikipedia.org/wiki/Effects_of_World_War_II#Reparations
Here's what the west got
- coal, machinery, factories
- POW forced labour (100,000 Britain, 700,000 France)
- US got german patents and company assets
- UK and US $100 billion in patents in today's money ($10 billion at the time)
It seems they actually managed to get out of a bunch of it. The east insisted on a bit more (understandbly.) Apparently there were a lot of Nazi apologists after the war trying to say "hey, we weren't so bad" and got out of initial demands for much more.
Wow, now I'm depressed.
http://history.howstuffworks.com/world-war-ii/war-reparations2.htm
reparations from Germany totalled $416 million a quarter of which went to the USA.
http://en.wikipedia.org/wiki/Marshall_Plan
The Marshall plan totaled 13 billion of which Germany got a billion and a half.
In the second world war, unlike the first, Germany did pay net reparations.
In the first world war Germany paid three billion 1919 dollars in reparations and got three and one half billion 1919 dollars in loans that were forgiven.
In the second world war Germany lost millions of soldiers to forced labor rebuilding a part of the damage they had done to Russia, large areas of land owned by Germans given to Poland and Czechoslovakia, and large areas of land in other countries owned by 'German' people who were deported to Germany by those other countries. There were also relatively trivial cash reparations given to other countries such as Israel from the estates of Jews killed or exiled by the German government, or to assets of citizens of those countries destroyed or removed by the German government.
After the first world war there was great resentment by the German people because the armistice agreement was based on the fourteen points by Wilson, and the Versailles treaty was not.
After the second world war there was considerably less resentment because there was no betrayal of the armistice agreement because there was no armistice agreement. Unconditional surrender was the only option available.
Any government of Iran that did not try to obtain/produce nuclear weapons would not be doing its duty to defend the country.
Iran is surrounded by countries with nuclear weapons: Israel, Pakistan, Russia and the U.S. carriers in the gulf. In addition Iraq is highly unstable and Iran has fought a war with them already. And Afganistan to the east is also unstable.
What would an American president do if we were in that situation?
We know. We had the Manhattan Project.
But if Iran has a "Manhattan Project" when it is regularly being threatened by Bush, it must be stopped.
Go figure.
But, but, b-b-but - they're fanatical Mooslims! Gotta shut 'em down!
Whatever happenned to the Canadian and Mexican nuclear weapons? We were surrounded by countries that had nuclear weapons when we started the Manhatten project.
I remember seeing a cartoon which I sadly cannot locate. It was 9 panels in a 3x3 grid that went something like this:
Unsmiling Kim Jong-Il / Mushroom cloud / Smiling Kim Jong-Il
Unsmiling Saddam / Mushroom cloud with "not sign" / Saddam in captivity
Unsmiling Ahmadinejad / Mushroom cloud with question mark / ???
Bush has certainly given Iran enough input to make their decision.
BrianT -
You have very succinctly expressed what I have felt for quite some time.
To put it another way: right at this point in time, 8/13/08, the greatest immediate threat to the well-being of Americans is neither skyrocketing oil prices, energy shortages, or climate change. No, by far the most serious threat we face is the outright global chaos sure to result from a US and/or Israeli attack on Iran. Right now, all else is of secondary importance.
It now appears that since the US military has been vocally unenthusiastic about attacking Iran, the Bush Regime has made an end-run around the Pentagon and intends to get its war with Iran through the back door via Israel.
And the US Congress is not only not expressing any objections, it has by and large given its tacit approval for the Bush Regime to do anything it wishs with regard to Iran, including 'allowing' Israel to make the attack. This issue is not only not being formally debated, it is hardly even being spoken of. As I have said before, if the US did not want Israel to attack Iran, it could militarily prevent it from doing so. The swine in Congress know this but are too cowardly to even broach the subject, lest they incur the wrath of the pro-Israel lobby.
The fix is in.
What things will look like in the weeks following a US/Israeli attack on Iran I don't even want to contemplate.
Iran threatens to retaliate against US-allied gulf oil producers
Oil exports from the whole Gulf region would be at risk if Iran's exports were hindered by any threat, said the OPEC Governor of Iran, which has vowed to retaliate should its nuclear facilities come under attack.
"If there is a threat in our region this will not be just against our exports," Mohammad Ali Khatibi told Reuters in a telephone interview.
"It will affect other producers, not just Iran. I mean the oil exporters Iraq, Kuwait, Saudi Arabia, Qatar and the United Arab Emirates. Any problem from the United States or Israel to the region would be a threat to 40 percent of all the world's traded oil."
Around 40 percent of all global oil shipments leave the Gulf through the Strait of Hormuz off Iran's southern coast and Tehran has threatened to impose controls on shipping in the waterway if attacked, and warned Gulf neighbours of reprisals if they took part.
http://uk.news.yahoo.com/rtrs/20080713/tpl-uk-iran-threat-gulf-interview...
A missile barrage on Abqaiq and Ras Tanura, would take out the world markets, and probably precipitate a global energy war. Main problem is that it's far easier to destroy something than prevent it's destruction.
Cid,
Wouldn't it be the height of stupidity for Iran to attack Abquiq, Ras Tanura, or even Ghawar? Saudi Arabia is not a staging ground anymore for the U.S. military--- as far as I know.
The Europeans would most likely join the U.S. to defend Saudi Arabia.
Even the Chinese would be pissed at Iran.
The Bush Administration would surely nuke them.
Is there any chance that the war could be narrowed?
Or do you just think things will spiral out of control and all rationality will get lost in the fog of war?
Neo-
Iran holds the best hand, and they know it. They can sink the world economy in 15 minutes, and after that display in Lebanon (especially taking out the Israeli ship off shore with one missile), their technology seems unstoppable.
They are just letting everyone know that they are not bluffing.
If I were Iran and the bombs were starting to go off, Abqaiq would be my first target. I'ld get more bang for my buck than any other target, including Tel Aviv. Heck I'ld have every major oil facility in the gulf already targeted for the first round. It would be, if I'm going down, I'm taking everyone with me. And I would feel justified, as my rights according to international law have been being violated, and instead of anyone coming forward and saying that it was wrong, the MF's were applying sanctions and acting like I was the bad guy. I'ld even target my own oil facilities, F them. Let's see how they handle that.
You're lucky I'm not Ahmadinejad, but I would guess he's thinking the same way.
Iran has the capability to knock out 40% of the world's oil supply in about 20 minutes. And it would not be back on line in any significant manner for months maybe years.
Nightmarish enough for you?
Yes, you have satisfied my nightmare quotient for this evening.
Chances are very high that once the bombs begin to fly there will be no way of stopping escalation. That is why the military and many of the capitalists are not on board with the Cheney/Bush plan. I disagree with joule I really don't think the fix is in. People who stand to lose the most from this strike will be fighting it to the end. Even after the passage of HR 362 and SR 580 I still don't think it will be a done deal. Some very rich and powerful people have mapped all this out as well and they are not enthusiastic about the possible end of globalization, the possible use of nukes and the beginning of another protectionist era----- that is very bad for business. Look for some very unlikely critics of an attack to come out of the woodwork---maybe the Buffets and Gates of the world.
So why would Cheney want to roll the dice? Besides making a ton of cash, avoiding prosecution, and maybe consolidating fascism in the U.S., I think it would be a preemptive strike on China's economy. The oil from the Persian Gulf goes to Europe, Japan and most importantly China. China has no SPR to speak of. This is the only way to stop China from surpassing the United States. Cheney and others are calculating that though the United States will take a tremendous hit from this--- other countries will take a bigger hit. Our absolute power will diminish but our relative power to others such as China will increase, or so their thinking goes. This is the ultimate double down for Cheney--- his last big bet. This is Cheney's Barbarossa. There is a good chance, he'll finally wind up at the Hague for this one.
The Chinese does have substantial reserves, having completed the filling of the first of what was announced as five storage facilities, earlier this year. A wiki page showed capacity planned as 101MM barrels of govt storage planned and 250 MM barrels planned private storage (Sinopec and CNOOC). I lost the link to these.
Thye began filling in 2005 on the first, confirmed in 2006. Two links:
http://english.people.com.cn/200506/30/eng20050630_193355.html
http://www.chinadaily.com.cn/english/doc/2005-06/10/content_450449.htm
The Chinses import 40+% of their consumption, but that may have included what was going into their SPR facilities.
Japan has very good strategic petroleum reserve capacity (filled) as well - far in excess of the Chinese, but then the Chinese have substantial production as well - reserves in the ground.
Having just fleeced the world and the US itself, so that it's about to go belly up and start to stink, you need something to blame it on so they don't come looking for you with torches and noose.
I believe obfuscation after the fact is what they are after. You start a global war, and everybody forgets it was you that ripped them off.
From the article:
In other words, this appears to be yet another leak from people in the Pentagon, worried about what Bush/Cheney are up to regarding Iran. It really is amazing that the Congress is so spineless that they are leaving it up to uniformed officers in the military to fight a guerrilla campaign against the Neocons.
Remember the "Sum of all fears" by Clancy? I have no idea if Clancy had it right regarding the authorization for the release of nuclear weapons (actually thermonuclear in almost all current cases), but the story line was that a preemptive attack had to be confirmed by someone who had been confirmed by the Senate. Because of a disinformation effort, an irrational president orders a nuclear strike on Iran, and the Jack Ryan character refuses to confirm and tells the Pentagon that the president has basically lost his marbles. And it turns out that Ryan was correct. What had appeared to be an Iranian sponsored nuclear attack on the US in fact did not come from Iran.
Part of the reason few take the Iran war talk seriously, is that rumors have been flying for a couple of years, and it hasn't happened. It has a similar effect to predicting PO a few years early, the refrain that we've already heard that and they were wrong, is fairly effective in unmoderated debate. Now personally I think the probability of coming to military blows is less than 50%. But there are several ways things could spin out of control, even if no one consciously makes a decision for military action. Outside of the military, we simply aren't giving this absurd situation the attention it deserves.
Incidentally, while I don't think Bush would deliberately initiate hostilites because he thinks that would ring on the second coming. But the very fact that in his mind the downside risk, is something that a lot of Christians are hoping for, makes it a lot easier to play brinkmanship.
Real life parallel, apparently Richard Nixon was prone to getting drunk and issuing orders like that. Once the PLO hijacked a palne and forced it to land at Damascus airport. When Nixon was contacted he was sloshed and ordered Damascus airport to be bombed. Luckily his staff had learned to ignore what he said when inebriated.
Schwarzenegger: I'd be Obama's energy czar
http://news.yahoo.com/s/politico/20080713/pl_politico/11710
"Even though I love all of those things still, for me, it's important to give something back, do my work without getting paid and give something back, no matter what I do. If I have this position or not, I will be traveling around the world and I will be promoting [energy independence], renewables, solar, windmills, … protecting the environment, protecting the oceans.”
Why would he need to travel around the world to promote energy independence? How about TV programs or advertisements? Also I think the requirements for this position would be to take at least one class in thermodynamics and also a class on population and energy resources from Albert Bartlett.
The USA should be fine with grifters like this leading the way.
I just wonder if the Obama campaign is imploding. There is talk of resistance at the coming convention, McCain (McCain!!) is tying him in the poles (and in fact seems to be gaining) and Bush seems to finally be in a rush to reduce troop levels in Iraq. Obama's drift to what is really a non-existant middle America (they were in the LAST campaign--a lot has changed since then) may have damaged his campaign. Some of his recent votes and comments have pretty well turned me off, and I wonder how many other's have started to question the O campaign.
The country seems to be even more adrift than before, and what realistic hope do we have of effective leadership, short of some horrid dictatorial takeover?
Re: When ends won't meet
As someone who has made more than his share of poor choices, I'll refrain from criticizing the couple "[s]addled with payments on a gas-guzzling truck and SUV...", but I take it a lot of these vehicles are leased and sooner or later they'll be returning to the dealership lot. I've never leased a vehicle so perhaps I have this wrong, but if the vehicle's residual value drops like a stone, it's the manufacturer and not the customer who holds the bag, is it not? It seems there was a time, not that long ago, when automotive manufacturers bent over backwards to convince consumers to lease as opposed to buy; presumably those who can toss the keys back to the dealer at the end of their term should count their blessings?
Cheers,
Paul
Yes, the captive automotive finance companies are going to eat these losses:
http://www.autoweek.com/apps/pbcs.dll/article?AID=/20080616/FREE/2741916...
Thanks, Mithras, for confirming this. I expect their value could drop even more -- these things are pretty much the automotive equivalent of a Slim Whitman LP at a charity ball.
Cheers,
Paul
Help me out here.......I'm trying to envision where personal wealth will be preserved. It seems to me we're going to watch 100 years of fiscal growth and financial systems unwind and dissolve.
Homes - traditional safe haven of the American dream. Though this differs by locale, prices overall are eliminating equity, and before long the net will be zero. If you can pay it off, seems to still have value.
401K - bad idea - will go away as stocks crumble, and if there is money left the govt WILL take it eventually.
Mortgage bonds - these become worthless when the homes are defaulted, which is when people can't make payments or choose not to once the house is worth less than owed?
Mortgage companies - worthless
Banking firms - worthless, once credit defaults become epidemic?
Municipal bonds - decaying with energy costs and poor investments, and going away with municipal bankruptcies?
Treasury bonds - good for now, but in danger of default about 2012?
Stocks - varies widely, but likely to lose a bunch of value on average. How much? 50%
Commodities - going up, esp those with heavy energy embedded.
Business Real estate - going down in value, but maybe some long-term vale, depending on locale?
Farm land - May vary as oil-farming flickers and fades, but will always have value.
Material goods - seems like craftsman and trade tools will have value, and practical personal possessions. A steam-tractor hobby might prove valuable?
Utilities - maybe solid IF they are investing heavily in renewables?
Where else can an average Joe put his limited savings for a rainy day (or multi-year hurricane?)?
In cash. Or by investing in some productive asset which will always be needed. You must have physical possession and control over either the cash or the productive asset. All current ideas of investment should be erased from memory, especially those that require trust or a consensus of value.
I think if inflation digs in cash would need to be gold.
As an engineer I'm attracted to the notion of starting a hands-on side business. Even without oil America still has a lot of resources. There should be a resurgence in manufacturing as globalism collapses. Repair trades will grow too, as new products become scarce.
"Even without oil America still has a lot of resources."
One of the resources America has lie in the +/- 30% of the oil we use, produced right here at home. That will not power BAU, but it will move a lot of goods, if TPTB will enforce management in effective ways. To ignore our domestic production and its value as imports fade is wrong. We simply need leadership, maybe in another 4+ years, which will help us to find our way, but I do not see it from the two current candidates.
I think we will see a trend toward getting enough time to grow as much food as we can, where ever we can, and conserve other sources of energy. Clothes lines are a perfect example, albeit a small one - but it is my impression that we all wear dry clothes. Ignoring the Home Owners Association rules whick currently restrict a lot of folks from this easy and energy saving option will be absolutely common in the near term future. Mostly it won't provide fuel to drag the boat to the lake behind the motor home for the weekend, but it will help. Just like CFL's, high efficiency electric motors, super-insulation, etc, we have a lot of slack we can take up in the energy sector right now, and at a fairly low cost.
Maybe enough to power electric rail without having to build a lot of new coal-fired electric generating plants, or totally destroying the landscape with endless wind turbines.
In cash?
Ummm...I still have a 50 million mark postage stamp from a letter mailed from Germany by my grandparents' relatives many decades ago, and I think that stamp was far from the end of the series. And the thump-thump-thump of the squadron of helicopters piloted by Ben And The Congresscritters grows ever more deafening.
Question: how many 401k's worth of cash will it take to mail a letter in 2025?
Your obviously expecting inflation, I'm not. Look around, it is in the news constantly, government, municipalities, businesses, especially banks, people are all looking for cash for survival.
Fannie and Freddie, what do they need? Homeowners facing foreclosure, struggling retailers and businesses, insolvent banks, demand exceeds supply everywhere you look and the demand is for what? Cash!
What's making asset prices fall everywhere, no doubt soon to be joined by commodities? Lack of cash!
The basic principle of investment is to own something that others want and willing to offer a premium to get hold of. People are willing to pay high interest, charges, anything to get hold of cash and soon they'll hand over their assets at pennies to the dollar to get cash, including gold IMO.
The basic principle of investment is to own something that others want and [are] willing to offer a premium to get hold of.
I'm bewildered - what on Earth does this principle have to do with cash???
Dollar real interest rates are already strongly negative even before income tax. Who in blazes is paying a premium to get hold of cash even now, when at these rates the Fed is bending over backwards to pay them to haul it away if they want it???
We seem to be moving back to the 1970s, another time when cash was a mug's game. Nobody has to come to you or me to get cash. It says so in plain language right there in the Constitution: "The Congress shall have the power to coin Money, regulate the Value thereof..." Plenary power to do whatever they feel like it, to purchase the votes of fools. Just wait'll after the election when every conceivable bailout from A to Z will be passing through Congress like greased lightning, each and every one paid for out of trillions in thin air - with not a presidential veto in sight, because after all, society owes free houses to real-estate parasites, and obscene gargantuan bonuses to their irresponsible lenders.
Never let the facts get in the way of a good theory, eh?
The US dollar has lost half its value over the last 5 years. Oil has gone from $10 per barrel to over $140 barrel. Scientfic method dictates that any hypothesis about the working of the economy should do a good job of explaining this trend.
Personally I am working on the theory that the American Empire reached the peak of its power in 1999 and its currency and economy are likely to decline for the foreseeable future.
Because that seems to fit the facts.
When housing crashes, when the stockmarket crashes, when businesses close their doors, when unemployment rises, I expect the value of the US dollar to go DOWN as the US is a net debtor nation, needs to borrow constantly, and foreign investors will not want to touch it - even if there are less dollars than before.
This will result in higher US dollar prices for oil, food etc. The demand destruction that occurs in the US will be offset by growing demand elsewhere.
So I certainly don't think a decline in commodity prices is an inevitable consequence of credit deflation.
The assumption here is that a smaller supply of dollars leads to the dollar being worth more. But a dollar is worth what someone will pay for it. When the game is over the dollar may be worth nothing.
You must be replying to Burgundy rather than to me...?
I'm expecting deflation, too.
Inflation at first, but not for long (relatively speaking).
I think there's going to be a key post about this soon.
That should be an interesting narrative, if you use 'deflation' in the ordinary everyday sense of "declining prices". IIRC we had a discussion somewhere about whether the CPI is a 'cost of living' index as opposed to an 'inflation' index, but while that may be academically interesting, it's otherwise arid. Irrespective of technical usages in the economics profession, in everyday life I care about prices going stratospheric, about those 50 million mark (or dollar) postage stamps, about retirees dining on dog food due to worthless Social Security checks and loss of their effectively-confiscated savings, and so on.
Note that shortness of the duration of inflation may not matter: it only took about nine months for the Weimar inflation to finish off the German middle class (such as it was) and force a good deal of emigration. If something leaning in that direction happens to be followed by crippling deflation of a 'new dollar' owing to dysfunctional reaction to the trauma, that's a separate story.
Right now, every politician in the land is champing at the bit waiting for the election to dynamite the floodgates. So I'm expecting the savings of Americans to be largely confiscated, and so on, somewhat as in the 1970s (except, this time around, the unions in the Detroit auto industry may not profit from the process nearly as lavishly and handsomely.) Now, of course, history doesn't repeat itself precisely. This time around, most oil is imported. We might still be able to use Nixonian price controls to force worthless dollars down the throats of our remaining domestic suppliers (thus finishing them off faster than necessary), but overseas suppliers beyond the reach of the controls will be wanting something real. So every fit of dollar debauchery will further balloon the price of energy - with a ripple effect making the thought of declining overall prices even more preposterous.
But you do say you think there'll be a show, so I'll keep some popcorn on hand...
Probably a good idea... ;-)
Peak popcorn?
We can invest in bicycle, wind, solar, efficiency, software for telecommuting, etc. While things like houses may fall further in value in the US, most value will transfer from SUVs to bicycles, etc. We'll see. I blog about this transition at
http://www.setenergy.org
Dennis
Simple as that:
- Buy commodities, which are essential (Energy and food)
- buy an energy commodity, which is dirt cheap in relation to the energy complex (oil, natural gas and coal). Coal trippled within the last 12 months, NG doubled. Uranium lost 60%!!
- JUST BUY URANIUM.
The best way to do that is buying shares of U:CN (Uranium Participation Corp.). The Company's holdings are physically stored in duly licensed facilities.
That's better than Gold or Silver or any precious metal.
re:Big Oil Not Sitting On Oil Acreage Despite Democrats’ Claims"
well, yes and no. at any time, big oil (or any oil) is sitting on vast amounts of unexplored acerage. so what ? that is how federal leasing works. the lessee is given a primary term, 10yrs typically, to establish production and if not, the lease expires.
on the other hand, in many cases, acerage only gets drilled on as the end of the primary term approaches. sometimes a discovery is made, sometimes a dry hole is drilled. this does not mean that oil co's are sitting on vast amounts of oil. nobody knows. and don't forget that all the easily found oil has already been found.
the argument that exxon for example is not spending enough on exploration and too much on buying back their own stock only implies that there is some right to cheap oil.
eddie chiles used to say "if you dont have an oil well, get one". so if a person doesnt think exxon is exploring enough, go do your own damn exploration.
imo, it all boils down to political bickering. republicans blaming dems for high gas prices and dems blaming big oil.
Hey Elwood, you just touched on my favorite subject. Let's lease some of the acreage the Big Boys want, but have them modify their old leases in two ways as well. If the ANWR is so absolutely sure thing, they will want to comply, and if not, we will know this is just another power play to control POTENTIAL acreage and keep everyone else out. First, many Federal leases had a glitch which is holding up royalty payments to the Federal Government and many of the lessees want to recover thier costs before they pay a dime in royalty. They need to grow up, if they want the new leases and start paying what they should have been paying all along, and pay it back to day one of production. Second, there were posts within the last two weeks that it only takes one year to analyze, drill and get a new, even offshore, well into production. (That does not apply to Jack # 2 or to the Tupi wells, due to the depths and the distances from shore, or otherwise, we wouldn't be looking at 2013, as per the Megaprojects WIKI, for first production from the Jack # 2.) I say the poster then was wrong, and the lessees should get five years - two to evaluate, two to get it drilled and one to get it into production. If not drilled at the end of the fourth year, tne lease should go back into a limited pool to be considered for leasing.
In any case, the royalty rates should be brought up to market, which onshore today is 22 - 25%.
If any environmental damage is due to gross negligence, the lease should be cancelled and the equipment should be offered along with the lease to someone who will be diligent in the whole process.
The proceeds from lease sales and from royalties should be split in such a way which will actually help the American citizen. All proceeds should be specifically segregated in a separate fund and a reasonable allocation be made (1)to fund mass transit projects (one-half each of grant and loan), (2) to research into renewable and alternative energy projects, and (3) to pay for projects coming from the research efforts (again, half grant and half loan.) If the US government owns these resources, the development should be for the benefit of the US citizens, and not IOC's or somebody's "good buddy."
I would welcome any ideas to improve these modest suggestions.
Hello TODers,
Have you hugged your bag of NPK today? Recall my numerous postings on this subject, plus remember that the USGS link stated sulfur pricing increased 80% in one recent month and Fifteenfold in the past year. Sure wish I had a hoarded warehouse full of sulphur to sell.
http://energybulletin.net/node/45880
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UC advisor encourages Californians to plant Victory Gardens
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Recall earlier weblinks that show food gardening is the fastest growing pastime in the US. Bought your wheelbarrow yet? I suggest you do before these become Unobtainium. Don't forget to be energy efficient--> make sure you maximum fill your shiny new 'barrow with NPK and/or garden tools, before leaving the store: so you can fully bask in the dopamine glow as you push your new prizes home.
Richard Rainwater & Matt Simmons are working on their farming lifeboats, makes sense to me. How long until the papparazzi post headline photos of Daniel Yergin loading up in the Home Depot Gardening section? Or will Tiger Woods have to plow Augusta National to finally get the delusional Yerginites into their local, retail gardening centers?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Let's not forget Dylan Ratigan over whose head the lightbulb clicked "on" two days ago when Simmons lectured him about villages and locally grown food.
I think he is next for a "farming lifeboat". I would really like to see that on CNBC. Maybe the whole Fast Money crew can broadcast from his barn one day.
Hello Pi,
Thxs for responding. I would like to see his face contort if only I could tell Dylan the true value of NPK is around $210,000/ton:
[brief cut & paste & edit of an old TOD discussion thread.
--------------------------
Real Gas Price -- $1,400.00 per gallon, or two weeks hard labor
http://valuesystem.livejournal.com/9846.html
Now let's extrapolate this to synthetic fertilizer. My recent posting weblink said there is 3 gallons of gasoline equivalent embedded in a forty lb. bag of I-NPK.
3 X $1,400/gal = $4,200 per bag or $210,000/ton!
One last thing: if your soil has a Liebig nutrient minimum, no amount of backbreaking labor will increase the yield; your simply wasting your precious time--you must have the required Element to add to the soil--No Substitution allowed!
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Thus, there is tremendous scope for ramping O-NPK recycling postPeak--we have no choice. If Dylan & his 'Fast Money' gang fully understood this: the show's format would be 'Slow Compost'.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Oil Crossing $150?
Wow, there isn't even a Special Tropical Disturbance Statement yet on this one. Good catch. Where's this from?
It's on Weather Underground http://www.wunderground.com/tropical/tracking/at200894_model.html
"Invest 94
This area of disturbed weather has the potential for tropical development."
It's also on the Atlantic IR Loop image at http://www.ssd.noaa.gov/goes/east/natl/loop-avn.html and looks to be strengthening at the moment (but I'm no expert)
I couldn't believe what I saw on the TV schedule for Sunday night.
***
American Dream With Jim Cramer
2 KPRC
Sun Jul 13 2008 7:00pm 1:00 hr.
Investment pundit Jim Cramer revs up and opines about money, investing and the economy in a financial special featuring a NASCAR theme. Appearing: racers Kyle Busch, Carl Edwards, Jimmie Johnson, Jeff Burton and Casey Mears.
***
This sounds hilarious. This could be the "Springtime For Hitler" of the energy crisis. If only Bob Hope weren't dead, he could host the show live from the Green Zone with the College All-Americans and the Playboy bunnies, while the Israeli strike force flies overhead on its way to Iran.
Grifter Nation.
While Paulson and Bernanke dressed in cheeleader outfits shout "go team!" from the sidelines.......
It sounds like an over the top JHK rant.
You say that as though it were a bad thing. :-)
Since I don't have cable TV, I don't much about Cramer's usual crap, but he seems much subdued in outlook in this special. He's saying oil will be harder to extract. He's giving advice to people on how to cut their spending, even while he keeps droning on about the American dream. Apparently the American dream doesn't mean what it did 12 months ago.
Best part: he's right in the middle of a rant against ethanol, when suddenly the video cuts and he's playing out to a commercial. The Archer Daniel Midlands guy must have NBC's secret censor on speedial.
You forgot the giant buffet of pork products that should be laid out before the host and guests.
***
I can't decide if I should laugh or cry about this network teevee 'event'.
This letter to the editor was published in the Colorado Springs Gazette
http://www.gazette.com/opinion/lamborn_38140___article.html/military_col...
Alan: My plan to fix the USA economy is to open the discount window to everyone in the country with a pulse. Come one, come all, get your (almost) free taxpayer money. Bring whatever old crap you have in your basement, slap a price tag on it and we will give you full value! Now that will get this stiff up and running.
Ha ha. Very funny. The guy has a very dry sense of humor. It is true, though. If we're going to bail out every schmuck who bought a house they can't afford, maybe we should help the poor SUV owners too. Maybe the government can take a page from Chrysler's playbook and guarantee $2.99 gasoline.
Meanwhile, in the really important news, Australia's Catholic Cardinal Pell sounded the alarm over underpopulation. He said that Western nations including Australia face an underpopulation crisis fuelled by "ruthless" commercial forces. Pell said Western nations were producing too few children as young people continued to accept views popularised through advertising.
Dontcha just hate these friggin' religious idiots?
Good morning from the UK. EADS and Boeing have put a new spin on things:
http://news.bbc.co.uk/2/hi/business/7504364.stm for EADS
http://business.timesonline.co.uk/tol/business/industry_sectors/transpor... - for Boeing.
Basically they are saying they will sell more of their new efficient aircraft due to high oil prices.
This idea is fatally flawed though. It has taken around 20 years to improve the effiency of these jet by around 20%. That 20% got swallowed up in about 2 months worth of fuel price increase. 20 years of technology bought them 2 extra months. That is the problem they are facing.
Marco.
There will be a place for aviation in the post-Peak Oil world as long as social and industrial organization holds together.
Someone will be flying somewhere (Trans-Atlantic, Trans-Pacific, most journeys of 5,000 miles (8,000 km)), it will be expensive but by air.
The most economical a/c will still be flying. A 20% savings on fuel (plus lower maintenance) is just enough (or close, by my calcs) at $142 oil, to justify scrapping an aging but perfectly good 767 and buy a new 787.
The issue is NOT keeping the fuel cost/seat-km constant, but save enough to justify scrapping existing a/c and buying new. Perhaps 3 will be scrapped for every 2 bought, or 2 for 1, and later 6 for 1, but having the most economical a/c is essential.
Alan
Farming troubles ahead?
Farmer Focus: New buzzword hits the industry
http://www.fwi.co.uk/Articles/2008/07/13/111071/farmer-focus-new-buzzwor...
Credit crunch ahead for farmers. But, will it lead into the usual boom/bust for farming where the bank ends up owning the farm?
Now, I like Alan Drake and all. He is trying to get the mentally retarded American Car Nut to think about alternatives, at the kindergarten level. Because, that's where you have to start.
However, there's a lot beyond the kindergarten stage. Here's a train map of the greater Tokyo area, showing the hundreds of train stations that make up this system. You can travel anywhere in the city -- including the burbs -- by train, cheaper and faster than by car. People have cars, of course, but they are mostly toys.
This should help give some idea why Japanese per capita energy consumption is 50% that of the U.S. It's not because they turn the thermostat down and wear a sweater, or because they practice "hypermiling." Nobody is shivering in the dark.
http://www.u-bourgogne.fr/monge/g.dito/poisson2006/images/tokyo_trainmap...
This is a nice graph just to get a little perspective - a scatter plot of per capita energy consumption versus human development index, for various nations around the world:
http://www.nationmaster.com/plot/ene_pri_ene_con_mil_ton_oil_equ_percap-...
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